PRELIMINARY RESULTS 2016 PRESENTATION

ANDY BLUNDELL, CHIEF EXECUTIVE

MARK STONER, FINANCE DIRECTOR

MARCH 2017

2

FINANCIAL

Continued growth in profitability and adjusted EPS +17%

Dividend increase by 10%

Improved free cash flow reducing net debt by £9m

OPERATIONAL

Four major new contract wins

Expansion in International sales to 26% of Group revenue

Simplified Group structure

2016 HIGHLIGHTS

3

COMMUNISIS IS AN INTEGRATED MARKETING SERVICES

COMPANY WHICH IMPROVES COMMUNICATION

BETWEEN BRANDS AND THEIR CUSTOMERS.

WE CREATE ENGAGING CONTENT AND DELIVER IT

ACROSS MULTIPLE CUSTOMER TOUCH-POINTS;

IN DIGITAL, BROADCAST AND PRINT CHANNELS.

OUR CLIENTS ARE FACING UNPRECEDENTED CHANGE –REGULATORY, TECHNOLOGY AND CONSUMER BEHAVIOUR.

4

OUR PURPOSE IS TO HELP THEM STAY AHEAD OF THESE CHALLENGES

HOW WE DO THIS 5

CUSTOMER EXPERIENCE BRAND DEPLOYMENT

‘ONE TO ONE’ ‘ONE TO MANY’

Mission critical, personalised communications

to known individuals

Brand activation and retail communication

Integrated agency services: customer

engagement, corporate communications,

specialised content, transactional and

regulatory communications

Shopper marketing and brand activation

campaigns, marketing supply chain

implementation, fulfilment and logistics and

POS procurement

CUSTOMER EXPERIENCE 6

VERTICALS Banking, Utilities, Insurance

MARKETS UK – 2016 revenue £185m

REVENUE VISIBILITY HIGH

Multi year contracts

Blue chip clients

CAPITAL INTENSITY MEDIUM

Fully invested print operations

Leased leading edge print equipment

Increasing technology and people

GROWTH STRATEGY LEADERSHIP

Marketing leadership

Invest in higher margin areas

7

CUSTOMER EXPERIENCE7

8

VERTICALS FMCG, Retail

MARKETS International – 2016 revenue £177m

REVENUE VISIBILITY MEDIUM

Framework agreements

Sticky contracts

CAPITAL INTENSITY LOW

Sourcing model

Technology and people

GROWTH STRATEGY ORGANIC

New clients and new territories

Upsell existing Clients

BRAND DEPLOYMENT

9BRAND DEPLOYMENT

SOME OF OUR CLIENTS

Customer Experience Brand Deployment

11

MARKET DYNAMICS

THE RISING IMPORTANCE OF CUSTOMER EXPERIENCE TO MOST CLIENTS

THE DEMAND FOR RELEVANT CONTENT AND PRECISE COMMUNICATION

DIGITAL IN THE OMNI-CHANNEL MIX

EXTERNAL INFLUENCES – REGULATION AND DE-REGULATION

OUTSOURCING TRENDS

INTERNATIONAL CAMPAIGNS AND CONTROL

12

41%

59%

2016 CONTRIBUTION SPLIT

35%

65%

2016 REVENUE SPLIT

CONTINUED TRANSFORMATION – PRINT TO SERVICES

39%

61%

2015 REVENUE SPLIT

45%

55%

2015 CONTRIBUTION SPLIT

DIRECT PRINT MANUFACTURE

OUTSOURCED SERVICES AND DIGITAL

13SECTOR ANALYSIS

27%

40%

7%

8%

3%

15%

REVENUE BY SECTOR 2015

FMCG / Retail

Banking

Public sector

Utilities

Telecomms

Other

35%

35%

7%

3%3%

17%

REVENUE BY SECTOR 2016

FMCG / Retail

Banking

Public sector

Utilities

Telecomms

Other

14VALUE CREATION

Growth

People Efficiency

Value

HOW WE CREATE VALUE FOR STAKEHOLDERS

GROWTH 15

6 year contract with LV=(Liverpool Victoria Friendly Society) for customer fulfilment services in UK

5 year contract with HMRC for all outbound customer communications

3 year contract with a global healthcare client across EMEA

3 year contract with Sony Europe for a range of customer communication services

INTERNATIONAL GROWTH 16

INTERNATIONAL REVENUE

AS A % OF TOTAL REVENUE

48.9

66.5 64.4

95.8

26%

0

10

20

30

40

50

60

70

80

90

100

2013 2014 2015 2016

£m

18%

1717

COST OPTIMISATION

Simplified two divisional structure

Outsourcing non core activities

Operational efficiency programmes in all main

manufacturing locations

Headcount reduced in year by 8%

EFFICIENCY

PEOPLE 18

ATTRACT AND DEVELOP THE BEST

PEOPLE

Implemented best practice recruitment

tools with Randstad Sourceright

Continued investment in learning and

development

Expanded apprenticeship programme

19

FINANCIAL OVERVIEW

20

Continued growth in profitability

and adjusted EPS

Dividend increased by 10%

Improved free cash flow reducing

net debt by £9m

FINANCIAL HIGHLIGHTS

COMPARISON FY 2016TO FY 2015 £M

AS REPORTED

CONSTANT CURRENCY

Total revenue £362m +2% 0%

Adjusted operating profit £19.5m +6% +2%

Adjusted profit before tax £16.7m +15% +9%

Adjusted earnings per share 6.07p +17% +10%

Final dividend per share 1.61p +10% +10%

Free cash flow £12.9m +7% -

Net debt £30.4m (23)% -

21

Growing revenue base, 26% international

Profitability growth +70% in 5 years

Adjusted EPS on growth trajectory, following

equity raise in 2013

DELIVERING REVENUE AND EARNINGS GROWTH

230.0

270.0

343.0 354.0 362.0

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

2012 2013 2014 2015 2016

GROSS REVENUE

4.51

4.19

4.62

5.18

6.07

3

3.5

4

4.5

5

5.5

6

6.5

2012 2013 2014 2015 2016

ADJUSTED EARNINGS PER SHARE (EPS)

£m

£m

Pe

nc

e p

er

sha

re (

pp

s)

11.513.3

16.0

18.319.5

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

22.0

24.0

2012 2013 2014 2015 2016

ADJUSTED OPERATING PROFIT

22

Increasingly cash generative

Net debt reduced by £9m

Dividend increased by 10% pa

Net debt at 1x EBITDA at Dec ’16

DELIVERING DEBT REDUCTION AND DIVIDEND GROWTH

6.6

-5.6

6.0

12.012.9

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

*2012 2013 2014 2015 2016

FREE CASH FLOW

£m

1.651.80

2.002.20

2.42

0.00

0.50

1.00

1.50

2.00

2.50

3.00

2012 2013 2014 2015 2016

DIVIDEND GROWTH

Pe

nc

e p

er

sha

re (

pp

s)

-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

2012 2013 2014 2015 2016

BANK DEBT AND FACILITIES (£m)

Period end bank debt Average intra period bank debt

Total facilities

23

Revenue driven by International growth in

Brand Deployment, offset by lower print

volumes in Customer Experience

Adjusted Operating Profit +6%

Exchange rate benefit of £0.9m

Exceptional items related to outsource of

non core activities and efficiency

improvements

Effective tax rate of 23%

Adjusted EPS +17%

SUMMARY INCOME STATEMENT

FY 2016£M

FY 2015£M

GROSS REVENUE 362 354

Customer Experience 22.2 23.6

Brand Deployment 16.2 14.1

Central Costs (13.3) (13.0)

Corporate Costs (5.6) (6.4)

Adjusted operating profit 19.5 18.3

Net finance costs (2.8) (3.8)

Adjusted profit before tax 16.7 14.5

Amortisation of acquired intangibles (0.8) (1.2)

Exceptional items (4.3) 4.0

Statutory profit before tax 11.6 17.3

Tax (3.0) (2.8)

Profit after tax 8.6 14.5

Basic EPS (p) 4.12 6.98

Adjusted EPS fully diluted (p) 6.07 5.18

SEGMENTAL OVERVIEW

CUSTOMER EXPERIENCE 2016 2015 VARIANCE

Gross Revenue £185m £210m (12)%Print volume erosion and reduction of postal pass through

offset by higher service revenues

Operating profit * £22.2m £23.6m (6)%Transactional and service improved performance, offset by

Agency reduction(marketing budgets and margin pressure)

Operating Margin * 12.0% 11.2% +0.8% Larger proportion of higher margin services

* Adjusted, pre central and corporate costs

BRAND DEPLOYMENT 2016 2015 VARIANCE

Gross Revenue £177m £144m +23%

Continuing growth through additional territories (Dubai,

Poland, Romania), additional clients through existing

network, exchange rate benefit

Operating profit * £16.2m £14.1m +15% Recovery of Shopper, exchange rate benefit

Operating Margin * 9.2% 9.8% (0.6)% Service mix and entry costs

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25

• £9M REDUCTION IN NET DEBT TO £30M

Reduced levels of capital expenditure

Higher dividends

Foreign exchange benefit £2m

• DIVIDENDS INCREASED 10%, REPRESENTING

40% OF FREE CASH FLOW

• BANK FACILITIES DUE FOR RENEWAL MARCH

‘18, COVENANTS REMAIN WELL COVERED

• £9.3M PROMISSORY LOAN NOTES REPAID

DURING JANUARY 2017

SUMMARY CASH FLOW AND NET DEBT

2016

£M

2015

£M

VARIANCE

£M

ADJUSTED EBITDA 29.9 29.3 0.6

Working capital increase (0.5) 0.2 (0.7)

Pension contributions (2.8) (2.9) 0.1

Interest and tax (4.3) (3.7) (0.6)

Exceptional items (3.7) (2.1) (1.6)

Capital expenditure (5.7) (8.8) 3.1

Free cash flow 12.9 12.0 0.9

Investment in new contracts (1.2) (2.2) 1.0

Dividends (4.8) (4.3) (0.5)

Other 1.7 (0.3) 2.0

Decrease in bank debt 8.6 5.2 3.4

Net bank debt (19.5) (28.0) 9.5

Finance leases (1.6) (2.1) 0.5

Promissory loan notes (9.3) (9.3) -

Net debt (30.4) (39.4) 9.0

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HISTORICAL DEFINED BENEFIT SCHEME, CLOSED SINCE 2005

Good relationship with trustees, independent chairman

Goal of ‘Self Sufficiency’

FUNDING VALUATION EVERY 3 YEARS DRIVES CASH CONTRIBUTIONS

Previous triennial valuation was March 2014, £19m deficit, cash payments £2.9m pa

Next triennial March 2017

ACCOUNTING PENSION DEFICIT

Accounting deficit reduced from £57m in October to £55m at end of December 2016 (2015 £41.1m)

Assets £153m, Liabilities £208m

Discount rate reduced to 2.70% (2015 3.75%)

PENSION WELL MANAGED AND PAYMENTS AT AN AFFORDABLE LEVEL

PENSION

27

OUTLOOK

“TRADING IN THE EARLY MONTHS OF THE YEAR HAS

STARTED IN LINE WITH EXPECTATIONS AND THE

BOARD IS LOOKING FORWARD TO ANOTHER

POSITIVE YEAR FOR THE GROUP”

28

APPENDICES

29BANK FACILITIES

HEADROOM

Total bank facilities £70m

Utilised at December 2016, plus £20m

Bank facility headroom 72%

Average utilisation during the period £33m

Headroom 53%

2 year promissory loan notes (Jan ’17) £9m

COVENANTS 2016 HURDLE

Net bank debt: EBITDA 1.0 < 2.5

EBITA: Interest 22.0 > 3.0

30BALANCE SHEET

2016

£m

2015

£m

Property, plant and equipment 21.6 23.1

Intangible assets 187.9 192.4

Deferred tax and other 7.3 4.5

Non-current assets 216.8 220.0

Inventories 7.0 7.8

Receivables 66.2 55.1

Trade and tax payables (85.9) (75.6)

Pension deficit (55.5) (41.1)

Net debt (30.4) (39.4)

Net assets 118.2 126.8

Share capital 52.3 52.3

Reserves 65.9 74.5

Shareholders’ funds 118.2 126.8