Next 15 Group Plc · LSE:NFG
Next 15 — FY2014 Earnings Presentation
35 slides from Next 15's earnings presentation, Oct 7, 2014
Slide 1: Second Interim Results 2014
SECOND INTERIM RESULTS 2014 7TH OCT, 2014
Slide 2: Agenda
AGENDA • EXECUTIVE SUMMARY • FINANCIAL REVIEW • BUSINESS UPDATE • OUTLOOK 2
Slide 3: Executive Summary – Record Results
EXECUTIVE SUMMARY – RECORD RESULTS FINANCIAL RESULTS 12M TO JULY CORPORATE PROGRESS • Revenue up 6% to £101.5m, 5% organic • Continued strength in US, UK returning to growth led by US growth • EBITDA up 26% to £12.6m • Significant new clients wins: GoPro, DropBox and BT • Adjusted pre tax profits up
Slide 4: New Business Update
NEW BUSINESS UPDATE Region Wins in 6m to July 2014 Losses • Dropbox is a new global client for Text 100 US Airbnb, Amazon Web Services, Avaya, Lithium, • Agent3 showing Actifio, Assembled Brands, Foursquare impressive pitch Couchbase, Coupons.com, Godiva, conversion rates with GOED, GoPro, Here, Jiv
Slide 5: Client Revenue Analysis
CLIENT REVENUE ANALYSIS £101.5 MILLION GROUP REVENUES IN FY JUL 23% 25 TOP 10 CLIENTS AS % CLIENTS GENERATING > $1M IN 12M TO JUL 2014 +9 % INCREASE IN AVERAGE CLIENT YIELD 2014 VS GROUP REVENUES 2014 2013 2014 (22.8% IN 2013) 78% 7 +67 13YRS % INCREASE IN SPEND LENGTH OF CLIENT GROUP REVENUES TOP 1
Slide 6: Revenue Bridge 12M to Jul 2014
REVENUE BRIDGE 12M TO JUL 2014 REVENUE PROGRESSION (£’000S) : FY 2013 – 2014 • Growth of 6% in the period driven by +1,387 5% organic gains +3,131 • US business grew by 9% in the period or 12% organic +5,247 101,451 • £3.1m from a full contribution of 2014’s acquisitions, £4.5m in total -4,383 • Rep
Slide 7: Continued Organic Growth
CONTINUED ORGANIC GROWTH GROWTH ON PRIOR 6M TO JAN 6M TO JUL 6M TO JAN 6M TO JUL FINANCIAL YEAR 2013 2013 2014 2014 Next 15 group organic revenue 2.2% 2.3% 4.2% 6.7% growth US region organic revenue growth 4.9% 13.3% 13.1% 11.2% • Growth has improved in each successive 6m period • US (57% of revenue
Slide 8: Simplification of the Group
SIMPLIFICATION OF THE GROUP APAC AND EMEA • Merged operations between Text 100 and Bite • Designed to create scale • Will improve operational efficiency • Refocuses Bite • Restructuring costs of 75k in the period plus £0.75m in 6m to Jan 2015 SAN FRANCISCO • Single location for 7 local Next 15 b
Slide 9: Financial Review
FINANCIAL REVIEW 9 NEXT/5
Slide 10: Income Statement
INCOME STATEMENT - £M FY 2013 FY 2014 GROWTH % Billings 113.4 120.0 Revenue 96.1 101.5 +6% • Strong revenue performance led by US Adj EBITDA 10.0 12.6 +26% and return to growth in UK Adj. operating profit 8.2 10.8 • Sustained margin Operating margin 8.5% 10.6% recovery on 2013 Adj PBT 7.7 10.5 +36%
Slide 11: Adjustments to Pre Tax Profits
ADJUSTMENTS TO PRE TAX PROFITS £M FY 2013 FY 2014 Adjusted pre tax profits 7.7 10.5 Goodwill write-off (1.9) (7.0) • Goodwill impairment stems from balance sheet review Amortisation of intangibles (1.4) (1.5) • £1.4m charges for UK/ EMEA Share based payments (0.6) (0.1) restructuring Acquisition obl
Slide 12: Regional Performance
REGIONAL PERFORMANCE £M REV FY GROWTH H1 2014 H2 2014 2014 OP MARGIN 2014 ACTUAL ORGANIC ORGANIC PROFIT 2014 US / Canada 57.3 9% 13% 11% 13.6 24% continued strength UK 21.9 15% (7)% 4% 1.5 7% improving Asia Pacific 12.6 (10)% 1% (2)% 0.6 5% stabilising EMEA 9.6 (9)% (13)% (1)% 0.2 3% stabilising Hea
Slide 13: Cash Flow Statement
CASH FLOW STATEMENT £M FY 2013 FY 2014 Inflow from op activities 9.2 11.7 • Inflow from operating activities up 27% Working capital 2.0 0.7 • Further improvements in Net inflow from operations 11.2 12.4 working capital Tax (2.7) (2.0) • Capex reflects new Bermondsey St office Net capex (1.8) (2.3) •
Slide 14: Balance Sheet
BALANCE SHEET £M FY 2013 FY 2014 Intangible assets 41.4 34.8 • Includes present value of Non-current assets 8.1 8.5 estimated future earn out Current assets 37.6 43.0 commitments (equity and cash) of £11.7m compared with Non-current liabilities (18.5) (8.0) undiscounted total of £13.9m Current liabi
Slide 15: Contingent Consideration
CONTINGENT CONSIDERATION PROSPECTIVE CASH COMMITMENTS: • These figures show undiscounted 2015 ONWARDS estimates, assuming that shares are issued in those acquisitions where CASH COMMITMENTS £M they form part of the consideration FY 2015 (Jan) 4.9 • Cash can be substituted for share consideration at
Slide 16: Dividends
DIVIDENDS • Our dividends for the six month period to end July 2014 are being paid in two parts (1.3p special and TOTAL FULL YEAR P PER 1.0p normal dividend) given our plan to change DIVIDEND SHARE the year end to January FY 2014 (JAN) 2.55 • The normal dividend has been set as a better FY 2014 (JUL
Slide 17: On Going Improvements to Operations
ON GOING IMPROVEMENTS TO OPERATIONS Done Doing • Improved monthly • New finance system management reporting selected with Autumn roll • Key hires in treasury, out procurement, internal audit • UK back office simplified and MIS, Bite UK and EMEA • San Francisco co location • New banking and accountin
Slide 18: Business Update
BUSINESS UPDATE 18 NEXT/5
Slide 19: The Next Five Years - Background
THE NEXT FIVE YEARS - BACKGROUND LANDSCAPE AND POSITIONING • Analytics is a top priority for marketing – death of ‘gut feel’ • Earned media is still very valuable if not more valuable Next 15 Group strategy session – Sept 2014 • Technology playing a larger role in creating marketing solutions • 37%
Slide 20: The Next Five Years - Conclusions
THE NEXT FIVE YEARS - CONCLUSIONS MISSION • Create a new type of integrated marketing group. • One that rotates around the technology of marketing: data, insight, analytics, apps, content platforms and of course content itself • Our agencies, each specialists in their field, will be ‘open source’ bu
Slide 21: Strategies – Focus and Brands
STRATEGIES – FOCUS AND BRANDS THE NEXT FIVE YEARS RECENT ACTIVITY IN NEXT FURTHER STRATEGIES 15 BRANDS OPPORTUNITY Insight & analytics Planners • Obsessive focus on: Insight technologies insight & analytics Developing staff competencies and Panels Agency/ IP M&A content and technology key h
Slide 22: Insight and Analytics
INSIGHT AND ANALYTICS ANALYTICS • The facility to gather • To then research the • AND then the ability to and process multi- live relationships interpret this to add source data and between a client and its value to a marketing opinion customers brief INSIGHT • Increasingly seen as a ‘must have’ age
Slide 23: Content – Story Worldwide
CONTENT – STORY WORLDWIDE • Story Worldwide is a successful US-based content advertising agency. It applies established “STORY WORLDWIDE IS THE storytelling techniques and talent to marketing and WORLD’S FIRST POST- communications ADVERTISING AGENCY – IT CONNECTS BRANDS TO • In October, Next 15 acqu
Slide 24: Technology – Update
TECHNOLOGY – update • Agent3 delivers dedicated software/ consultancy services to improve a client’s sales as well as marketing activities • Built from an internal team, it acquired continuous insight in Feb 2014, a data insight platform • Annualised revenue of circa £3m in 2014, already US launch p
Slide 25: Outlook
OUTLOOK 25 NEXTI!5
Slide 26: Conclusion
CONCLUSION SUMMARY OF THE RESULTS TRADING OUTLOOK • US continues to deliver strong organic • Current trading remains strong in US, gains improving in UK and stable in EMEA and • UK returning to growth APAC • APAC rationalised • Encouraging new client pipeline – client • Balance sheet and cashflow ge
Slide 27: Appendix
APPENDIX 27 NEXTI!5
Slide 28: Next – A Digital Communications Group
NEXT 15 – A DIGITAL COMMUNICATIONS GROUP £102 1,197 MILLION REVENUES STAFF WORLDWIDE (A) 16 12 (A) COUNTRIES BRANDS + LONDON 9.2% 57% 70 % REVENUES FROM US OF REVENUES FROM TECH HEAD OFFICE SAN CAGR REVS 2009-14 (A) (A) CLIENTS FRANCISCO OPERATIONAL CENTRE Notes – (A) Full year to July 2014 28
Slide 29: Key Clients
KEY CLIENTS NOKIA Google xerox €) La AIVIERICAN a === | | EXPRESS . q ————SS SS F Ss solarwinds’ INTUIT a : lenovo Schneider etfecete. GE lectric 2. cisco NEXT 15
Slide 30: The Digital Upgrade Opportunity
THE DIGITAL UPGRADE OPPORTUNITY Adapt and grow Non Digital Digital • The internet is redefining PR from the poor relation of marketing services to the objective experts of digital media Traditional PR Social & earned • Plus trusted adviser status with key clients PR services media, content offers ch
Slide 31: Our Comparative Advantage
OUR COMPARATIVE ADVANTAGE • Our California presence gives us preferred insight into the direction of digital markets CALIFORNIA • Next 15’s tech client base have been PRESENCE early adopters of the internet and social media…. • …and we have developed special relationships with key digital brands • O
Slide 32: 5 Year Growth Track Record (Years to Jul)
5 YEAR GROWTH TRACK RECORD (YEARS TO JUL) FY GROWTH 2009 2010 2011 2012 2013 2014 % Next 15 organic 4 8 11 1 2 5 • Organic growth has remained positive during Actual Revs 65.4 72.3 86.0 91.6 96.1 101.5 financial recession • 2013/14 showing Rev per share (1) 124 133 157 161 163 168 expansion after lo
Slide 33: Progress Against Mid-Term Objectives
PROGRESS AGAINST M/TERM OBJECTIVES KPI GROWTH KPI MARGIN KPI % DIGITAL Improve organic growth Improve group margins Increase pure and after FY 2014 after FY 2014 hybrid digital % revenues • Organic growth now • Adjusted op profit 5% from low of 1% margin of 10.6% • Improving but in 2013, organic (20
Slide 34: New Year End – Unaudited Comparative Data
NEW YEAR END – UNAUDITED COMPARATIVE DATA £M Y/END JAN FY 2014 H1 2014 H1 2015 GROWTH H1/H1 % Revenue 98.7 49.4 52.2 +6% Adj EBITDA 10.6 4.5 6.4 +42% Adj PBT 8.3 3.2 5.4 +69% Diluted EPS 7.4p 2.5p 5.1p +101% Dividends 2.6p 1.9p 2.3p +19% (1.0+1.3p) 34
Slide 35: Approximate IR Calendar 2014/15
APPROXIMATE IR CALENDAR 2014/15 DATE EVENT 5 December 2014 Payment date for 6m dividends to Jul 2014 Jan 2015 Financial year end 2015 and trading update April 2015 Preliminary results for the 18m period to end Jan 2015 June 2015 AGM 2015 and trading update 35