Communisis at a glance

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2 Communisis at a glance What we do Key facts Omni-channel Brand communication services For a better customer experience Marketing communications Design/Deploy Relevant, engaging and captivating content Customer communications Produce Reliable, easy to understand and efficient documents Fully listed (CMS) 105m market cap 4.4% dividend yield employees (150+ overseas) 51 locations in 16 countries Blue chip clients in: Financial services 17% Consumer goods 4% 41% Utilities 7% Government & charities 8% Retail 23% Other 2

3 Communisis today what do we do Add value to brand communications Create and distribute marketing messages and customer communications on behalf of our clients Work B2B, providing services B2C Operate through three segments Design, Produce and Deploy Communisis B2B Our clients B2C Their Their customers Services 3

4 Some of our clients 4

5 2015 Interim results

6 Financial highlights Strong growth in profitability, operating margin and earnings per share driven by: Enduring client relationships Higher margin services Improved free cash flow and reduced bank debt by: Targeted investment Cash control Comparison H to H m As Reported Constant Currency* Total revenue 175m +3% +6% Adjusted operating profit** Adjusted operating margin** Adjusted earnings per share*** 7.2m +18% +25% 6% +16% +20% 2.01p +15% +23% Dividend per share 0.73p +9% +9% Free cash flow 6m + 5m + 5m Bank debt (improvement) 32m - 2m - 2m Dividend increase for the fifth consecutive year, in line with progressive dividend policy * As reported excluding the translation effect of changes in foreign exchange rates **Before exceptional items and the amortisation of acquired intangibles ***Fully diluted and excluding the after tax effects of exceptional items and the amortisation of acquired intangibles 6

7 Operational highlights Continued growth Integrated agency model developed and launched as PSONA Life marketing Agency acquired. Insight-led shopper marketing agency Significant new multi-year contractual relationships secured or retained AXA UK. Six year term. Incoming and outgoing marketing and customer communications EE. Two year contract. Marketing communications Long-standing utility sector client. Five years. Outgoing transactional communications Overseas expansion Three new locations (Bucharest, Milan, Warsaw) New consumer goods clients scaling up the portfolio Innovation New digital services platform developed for multi-channel customer messaging - successfully used by Nationwide Building Society, as it enabled Apple Pay Won gold and bronze POPAI awards for innovative point-of-purchase and in-store communications 7

8 Design

9 Design Marketing communications Activities Metrics Building an integrated digital agency - PSONA launched Bespoke London office opened New capabilities acquired - Life Marketing Agency - Insight-led shopper marketing % of group contribution 11% H1 contribution increased from 1.6m to 2m, +24%. Margin reduced from 13.9% to 12.2%. Full six months revenue from 2014 and early 2015 acquisitions Recovery in data activities repositioning in analytics broader sector appeal Synergy realisation Weighting of certain retail based revenue and contribution to H2 with a more evenly spread cost base 9

10 Design Any channel, any category Capabilities Production & data agencies Creative agencies 10

11 Direct mail programme to merchants 11

12 Digital journey to increase engagement 12

13 Internal communications 13

14 Produce

15 Produce Customer communications Activities Differentiation Outgoing Personalised direct mail Personalised cheque books Personalised statements, billings and correspondence Digital messaging ( /mobile/tablet) new in 2014 Specialist customer communication consulting services new in 2014 Incoming Digital capture, distribution and archiving of customer correspondence new in 2014 Expertise in: Document composition IT integration Process integrity Regulatory compliance Reliable large scale production of personalised communications Investment in market-leading technology, a significant barrier to entry Trusted supplier of business-critical communications % of group contribution 56% 15

16 Produce - Integrated technology & service excellence Correspondence preference database Print Campaign workflow DAM Document composition & production workflow Web Rules SMS Correspondence archive 16

17 Produce Customer communications Trends Metrics Market growth from new outsourcing contracts Incoming and outgoing Market share gains Digital messaging Demand for specialist consulting Migration from paper to digital formats H1 contribution increased from 8.7m to 9.7m, +12% Margin improved from 11.2% to 12.5% New higher margin services Full six months contribution from incoming mail Growth in non print including digital messaging and consulting (now 16% of contribution, nil in 2013) Move to white paper Process improvement and cost reduction Better capacity utilisation on restructured base 17

18 Deploy

19 Deploy Marketing communications Activities & capabilities Metrics Brand activation services - sourcing and distributing point of sale marketing collateral across Europe People, process and technology based service with modest infrastructure costs Clients consumer goods brands in the food, drink, personal care, household, pharmaceutical and technology sectors % of group contribution 33% H1 contribution increased from 5.6m to 5.8m, +3% Margin improved from 20.7% to 24.1% Growth in revenues from new clients and new territories on a constant currency basis Effective sourcing Hubs in operation, scale economies on new clients Euro weakness impacted sterling reported result by (0.4)m 19

20 Deploy - Our presence Hub Client 1 Client 2 Client 3 20

21 Deploy Marketing communications Rapid growth of clients and countries: Countries increased from 19 (2014) to 21 (H ,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, H1 gross revenue by territory 2015) H1 clients grew from 9 (2014) to 23 (H1 2015) Deploy strategic clients and countries Clients Countries 21

22 2015 Interim results Summary financials

23 Summary income statement H m H m Trading Pass through Total revenue Segmental contribution Central and corporate costs (10.3) (9.8) Adjusted operating profit Amortisation of acquired intangibles (0.8) (0.4) Exceptional items (1.4) (1.2) Net finance costs (1.8) (1.6) Profit before tax Tax (0.7) (0.7) Profit after tax Adjusted earnings per share 2.01p 1.75p Operating margin 6.0% 5.2% Revenue increased 3% reported, 6% on a constant currency basis Margin improved and toward the double-digit target Profits weighted toward H2. Full year progress expected Exceptional items include ongoing restructuring costs and acquisition-related fees. Tax charge at the estimated effective annual rate of 22.9% Earnings per share increase +8% (+22% on constant currency) Focused on bottom line growth Pence per share (pps) Adjusted earnings per share H H H

24 Margin & dividend +16% +10% +0% +16% 24

25 Summary cash flow & net debt statement H m H m EBITDA Working capital increase (0.6) (0.2) Pension contributions (0.6) (0.6) Interest and tax (0.5) (1.9) Exceptional items (1.7) (1.9) Capital expenditure (3.4) (5.6) Free cash flow Investment in new contracts (1.1) (1.4) Acquisitions - (5.8) Dividends (2.8) (2.3) Other (0.7) (0.1) Decrease (increase) in bank debt 1.4 (8.5) Improved free cash flow due to Increased profitability Tight working capital management A tax repayment More normal maintenance levels of capital expenditure Acquisition of Life Marketing Agency Consideration comprised new shares and twoyear promissory loan notes Free cash flow improvement trend expected to continue 5.0 Free cash flow Net bank debt (31.7) (33.3) Finance leases (2.4) (2.9) Promissory loan notes (9.3) - Net debt (43.4) (36.2) m H H H

26 Bank facilities m Bank Debt and Facilities 12M to June 10 12M to June 11 12M to June 12 12M to June 13 12M to June 14 12M to June 15 Period end bank debt Average intra period bank debt Total facilities Bank debt less than 50% of facilities 65m Revolving Credit Facility until March m overdraft, renewable annually Average rolling 12 month bank debt 44.5m due to inter-period fluctuations in working capital Bank debt and average bank debt 1.1x and 1.6x EBITDA Interest cover 4x 26

27 Summary balance sheet H m H m Reduction in net assets reflects a 21m goodwill impairment at December 2014 Property, plant and equipment Intangible assets Deferred tax and other Non-current assets Inventories Receivables Trade and tax payables (95.4) (85.2) Pension deficit (39.2) (31.4) Net debt (43.4) (36.2) Net assets Intangible assets Goodwill impairment offset by new intangibles on acquisitions Pension deficit Unchanged from December m triennial valuation deficit at March 2014 Changes principally driven by fall in gilt/bond yields Share capital Reserves Shareholders funds

28 Outlook Confident outlook for the full year with the prospect of: Revenue growth Continuing profit improvement Ongoing cash generation and reduction in bank debt Supported by: Success in winning and retaining multi-year contracts Growing reputation for delivering brand activation services across Europe Strong pipeline of opportunities 28

29 Investment case Management team with a record of achievement and strategy for growth Increasingly profitable and cash generative business Continued move into higher margin services Benefits of operational gearing following investments in market-leading technology and multi-year contracts Client-led international expansion Portfolio of blue-chip clients Differentiated offer and competitive position Progressive dividend policy 29