Marketing services group St Ives PLC (LON:SIV) has slashed its dividend and swung the axe to cut costs in its marketing activation division.
At the same time as it is saving money by paying out less to shareholders, it has decided to increase the maximum level of earn-out agreements relating to its 2015 acquisition of Solstice to reflect the deterioration in the value of sterling against the dollar since the deal was done.
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In the hope of keeping the Solstice management sweet, St Ives has agreed to increase the maximum consideration payable to Solstice under the three-year earn-out arrangements by up to £3.4mln to a maximum consideration payable of £53.4mln.
Results for the 52 weeks to July 28, announced this morning, showed St Ives’s adjusted profit before tax falling 21% to £24.1mln from £30.4mln the year before.
The reported loss before tax widened to £44.1mln from a loss the year before of £5.7mln.
Revenue rose 7% to £393.2mln from £367.5mln the previous year.
The full-year dividend has been slashed to 1.95p from 7.80p, and the dividend policy remains under review.
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"Trading across our strategic marketing segment has recovered and we have been encouraged by new projects being won from existing and new clients. Our pipeline for the first half of the new financial year is very encouraging and we are excited by the opportunities that the increased collaboration between our businesses is generating,” said Matt Armitage, chief executive of St Ives.
“While trading conditions within our marketing activation segment continue to be challenging, we have taken decisive action to increase efficiency and reduce costs, and remain focused on diversifying into other sectors. Similarly, within our Books business we have taken further steps to ensure that the cost base reflects the future level of volumes we now expect,” he added.
Shares in St Ives were down 1.3% at 78.5p in the first hour of trading.