Operational review and performance


Targeted Media Solutions (TMS)

TMS is Australia’s largest catalogue distributor, delivering to more than eight million households twice a week throughout Australia and New Zealand. It is also the operating division for our technology based digital services, operating under the Salmat Digital banner.

TMS revenue grew $24.4 million (+9.7%) for the year reflecting revenue growth from the digital acquisition and catalogue business. However, underlying EBITA fell $6.3m (-14.8%), reflecting the growth in lower margin sales to large retailers and investments in new sales strategies and the digital business.

Catalogues continue to prove their worth to our customers, and volumes were up 4.0% during the year. Growth was driven by increasing volumes across major retailers and our strategy targeting new markets including SME businesses, FMCG companies and non traditional retailers including banks, car manufacturers, telco’s and utility companies. Revenue growth was in line with this volume increase.

A major focus this year has been to grow the catalogue market in the SME space. We have invested in an internet portal (www.ldn.net.au) that allows a catalogue campaign to be organised on a fully self-service basis, including design, mapping of the delivery area using Google maps, production and fulfilment. There is good momentum coming from this business and we expect the investment will pay back significantly in the coming years. We are confident that we can deliver 1 billion catalogues annually under our new markets strategy in the next 2-3 years, significantly more than the current level of 400 million catalogues distributed via these channels.

In addition, we will be expanding the services that LDN offers to include digital communication, such as email and loyalty programs, to create a one stop shop for SME’s marketing needs.

The strategic journey within the Salmat Digital business continues. During 2012, the focus has been to build a scalable platform based business. The Salmat Digital brand has been launched as specialists in omni-channel communication, commerce and data-driven insights for Australia’s largest consumer facing brands, offering:

In addition, Lasoo and Roamz operate under the Salmat Digital banner, but due to their B2C focus, retain their own branding.

Lasoo has benefited from investment in brand building and greater functionality, in particular, development of the “everywhere commerce” platform that enables seamless access from mobile devices, which has grown 105% during the year. The continued expansion of functionality and audience traffic is the next step in the full commercialisation of this product. Interactions, or “clicks” are the key revenue driver for this business, and they have increased 8.3% in 2012. Page views are also important as a driver for advertising revenue, and they are up 16% on last year.

Roamz is a location-based app aggregating content via social media, to provide users with information of events and activities going on around them. There have been approximately 145,000 downloads since launch in October 2011. Roamz will present an ideal platform for retailers to advertise and promote their brands. Roamz has worked closely with key brands such as Dymocks and TV reality show ‘The Voice’ during the year, generating significant traffic and interest to these brands. We anticipate Roamz to begin rolling out its commercial model in the coming period.

Customer Contact Solutions (CCS)

Our CCS division is Australia’s largest provider of outsourced contact centre and speech services. It also provides e-learning solutions and direct sales services.

CCS revenue was $232.2 million (2011: $293.7m), a reduction of 20.9%. Underlying EBITA was $11 million (2011: $16.0m), a fall of 31.3%. These reductions are primarily a result of cycling out the Telstra contact centre revenue that was included in 2011. There is also a weak performance from the direct sales business, which continues to be impacted by the weak discretionary spending environment.

Good progress has been made replacing the lost revenue and the underlying contact centre business grew at 22% during the year.

The strategy to move the contact centre to more premium services is progressing well. There is a strong pipeline underpinning growth prospects and margins are expanding towards levels seen in 2010. Our New Zealand “near shore” contact centre strategy is providing excellent value for our clients and is expected to continue growing strongly.

The speech solutions business has had a very strong year since the closure of underperforming assets in the UK and USA. A refocused leadership team and product offering are delivering significant EBITA and margin growth. A number of new voice recognition products, including call signature, track and trace and store locators, are being rolled out to major clients. At the same time, a technology platform to deliver these new products is being implemented, eliminating as far as possible the need for bespoke client systems.

CCS has also recently invested in the latest telephony technology – the “Agent of the Future”, incorporating voice, internet and social channels – to greatly expand Salmat’s omni-channel contact centre capabilities.

Our clients expect instant global, multi-lingual support 24/7, to communicate in ways that suit their customer lifestyles and changing demographics. This investment will transform call centres into hosted customer contact and knowledge centres and entrench deeper relationships with our clients. We anticipate the need to have access to this technology will see more clients look to outsource their contact centres. Salmat will be clearly positioned as the leader in the outsourced contact centre market in terms of technology and scale and will expand revenue streams in this division.

Business Process Outsourcing (BPO)

The BPO division reported revenue of $316.0 million (2011: $318.5m) which was 0.8% lower than the previous year and reported very strong EBITA growth of 18.4% to $49.5 million (2011: $41.8m).

Impressions are the principal revenue driver for this business and they grew 2.8% to 3.64 billion, reflecting increasing cross promotions per mail pack. Revenue grew in the second half of the year, reflecting new business wins in Transaction Services and in e-Business. In addition, existing customers increasingly engaged with new e-business services, which is also higher margin business.

The strong margin expansion driving EBITA growth was delivered on the back of operational initiatives implemented by management over the preceding 18 months, in particular, the consolidation of the Ravenhall property and the colour printing platform refresh program.

I would like to add my personal thanks to everyone at BPO for their efforts in achieving these outstanding results, which meant that we achieved a good sale price for our shareholders. They have collectively been a part of the Salmat family for 30 years and we wish everyone at BPO an exciting and successful journey with their new owner, FUJIFILM Holdings Corporation.