Next 15 Group Plc · LSE:NFG
Next 15 — Next Fifteen Communications Group — H1 2009 Earnings Presentation
20 slides from Next 15's earnings presentation, Apr 21, 2009
Slide 1: Next Fifteen Interim Results
Next Fifteen Interim Results April 21st 2009
Slide 2: Results summary
Results summary Next Fifteen is a • 10% revenue growth to £33.5m (2008: specialist public £30.4m) relations group • 15% headline profit growth to £3.5m with global (2008: £3.1m) • Adjusted earnings rose 11% to 4.47p operations (2008: 4.01p) • Interim dividend maintained at 0.45p • One-off costs impa
Slide 3: Trading update
Trading update • Group experienced budget reductions from several clients in January. Trading has since improved but H2 revenue expected to be 10% below H1. • Cost base adjustments made include: – Headcount reduction of 12% across the Group – Operating expenses reduced by more than £0.5m
Slide 4: Geographic revenue review
Geographic revenue review H12009 • US grew 19% • EMEA grew 7% • APAC grew 23% • UK declined 6% • Our structure: –6 PR agencies –2 research coys H12008 – 18 countries –10 offices in US – 5 offices in UK –12 offices in APAC –10 offices in EMEA
Slide 5: Operational review
Operational review • Consolidate Bite and Inferno businesses to increase competitiveness • Proactively react to aggressive market • Improve flexibility of business model • Invest now for future growth
Slide 6: Brand consolidation
Brand consolidation • Merging Bite and Inferno operations in UK • Strengthens executive team • Expands specialist capabilities • Increases operational efficiency • Accelerates growth and enhances market position
Slide 7: Invest now for growth
Invest now for growth • Increased investment in social media capabilities • Expanding research business • Acquisitions anticipated in APAC/US to expand reach of existing businesses
Slide 8: Outlook
Outlook • Revenues in line with FY08 • APAC still showing good organic growth • Margin focus maintained • Focus also on cash • One or more acquisitions likely in next six months
Slide 9: Financials
Financials David Dewhurst Finance Director
Slide 10: Financial headlines
Financial headlines • Revenue growth continues with 73% of revenue in non-sterling markets • Measures taken to reduce cost base to protect margins • Net debt of only £0.8m with no significant earn-out payments left from past acquistions • Renewed acquisition facilities provide ability to continue to
Slide 11: Income statement
Income statement H1 09 H1 08 Growth £m £m % Billings 39.4 35.7 10.4 Revenue 33.5 30.4 10.0 Adj Operating profit 3.6 3.1 14.0 Adj Operating margin 10.6% 10.2% 3.6 Adjusted PBT 3.5 3.1 15.2 PBT 1.4 2.0 (28.2) Tax (0.5) (0.6) Retained profit 0.9 1.4 Dividend 0.45p 0.45p Adjusted EPS 4.47p 4.01p 11.5 EB
Slide 12: Performance indicators
Performance indicators H1 09 H1 08 • Staff cost to revenue % 66.8 67.1 • Adjusted profit before tax margin % 10.6 10.1 • Net cash from operating activities £m 1.6 2.2 • Adjusted profit by region £m – US 3.3 2.6 – UK 1.5 1.3 – EMEA 0.7 0.4 – APAC 0.5 0.3 – Head office (2.4) (1.5)
Slide 13: Other metrics
Other metrics • 33% of clients are international, representing 66% of total revenue • 82% of revenue from retained client relationships • Top 10 clients represent 33% revenue, 8 of whom > 4 years; 4 > 8 years • US market provides 46% of Group revenue and delivers 55% of the profit
Slide 14: One-off costs
One-off costs • Forex hedging placed ahead of August 08 generated losses of £1.2m in H1 and expect £2.2m for full year, at current dollar and euro rates • Fair value cost of interest rate hedge on dollar acquisition borrowings of £0.4m • Expected cost of headcount reductions is £0.9m for full year a
Slide 15: EPS and tax
EPS and tax • Basic EPS down to 1.71p from 2.52p following one-off reorganisation costs and fair value movements but adjusted number up 11.5% to 4.47p. • Average number of shares in issue increased 3.36% following shares issued for Lexis acquisition and employee share incentives • Tax rate risen to
Slide 16: Balance sheet
Balance sheet H1 09 H1 08 YE 08 £m £m £m Intangible assets 19.2 14.1 15.5 Office equipment 2.6 2.3 2.4 Other non-current assets 2.9 3.2 2.3 Current assets 24.8 22.0 25.9 Non-current liabilities (6.6) (6.2) (5.9) Current liabilities (16.9) (18.1) (20.6) Net Assets 25.9 17.3 19.6 Share Capital 1.4 1.3
Slide 17: Cash flow
Cash flow H1 09 H1 08 YE 08 £m £m £m Inflow from operating activities 3.7 4.0 8.3 Working capital items (1.4) (1.2) 1.3 Net inflow from operations 2.3 2.8 9.6 Taxation (0.8) (0.6) (1.1) Net capital expenditure (0.3) (0.9) (1.9) Acquisitions (4.4) (0.8) (0.8) Own shares (0.1) - (0.4) Interest (0.2) (
Slide 18: Summary
Summary • Group produced good H1 results • Experienced drop in revenue as new client budgets were put in place in 2009 • Have taken action to protect margins • Strong balance sheet • Anticipate small acquisitions in next six months
Slide 19: Group structure
Group structure Next Fifteen Redshift 463 Text 100 Bite OutCast Lexis Research (40%) Context Analytics
Slide 20: Global reach
Global reach North America EMEA APAC San Francisco London Tokyo New York Paris Hong Kong Boston Munich Beijing Rochester Milan Shanghai Los Angeles Madrid New Delhi Toronto Stockholm Mumbai Washington Bangalore Amsterdam Copenhagen Chennai Sydney Oslo Seoul* Helsinki* Tapei* Johannesburg Auckland* *
Next Fifteen Communications Group — H1 2009 Earnings Presentation on 6ix