Group revenue in the 27 weeks to February 2 rose 7% year-on-year to £146.5mln, with the Strategic Marketing segment delivering like-for-like revenue growth of 23% (excluding the impact of currency movements), which more than offset an 11% decline in the Marketing Activation business – most of which it sold off this week for £6mln – and a 10% decline in the Books segment.
Adjusted profit before tax rose to £12.7mln from £9.5mln in the corresponding period a year earlier, though one-off adjustments of £27.7mln meant the group reported a statutory loss before tax of £15.0mln, compared to a loss of £3.1mln the year before.
Net debt at the end of the reporting period had been sliced to £42.2mln from £54.6mln a year earlier.
The interim dividend was maintained at 0.65p.
"Strategic Marketing continues to go from strength to strength and making a significant 85% contribution to adjusted operating profit during the period. Trading continues to be strong in this segment. We are encouraged by new projects won from both existing and new clients, and excited by the opportunities generated from increased collaboration between our businesses,” declared Matt Armitage, the chief executive officer of St Ives.
"Having indicated our intention to remain focused on diversifying into other sectors, we are pleased to have recently announced the disposal of a significant element of our Marketing Activation segment. This significantly reduces the group's exposure to the structurally challenged, commoditised print markets and the risk of further, potentially significant re-structuring costs.
"We remain confident in our long-term growth strategy to generate value for shareholders," Armitage added.
Numis Securities said the numbers were in line with its forecasts, though a “very strong cash performance” meant net debt was much lower than Numis's forecast of around £54mln.
“We view the H1 results as further evidence of the operational progress being made by the group while the balance sheet could benefit from the disposal of the remaining non-SM assets and freehold property. We raise our target price to 135p (was 130p) and remain Buyers,” the broker said.
The broker has increased its profit before tax and earnings per share forecasts for the current financial year by around 5%.
The shares were up 10.2% in mid-morning trading at 81.8p.