Next 15 Group Plc · LSE:NFG
Next 15 — H1 2018 Earnings Presentation
22 slides from Next 15's earnings presentation, Sep 26, 2017
Slide 1: Interim Results – September 26th, 2017
INTERIM RESULTS – SEPTEMBER 26TH, 2017 1
Slide 2: Financial Summary
FINANCIAL SUMMARY • Revenue up 16% to £93.5m (2016: £80.5m) • Organic* revenue growth of 2% • Adjusted** EBITDA up 13% to £14.5m (2016: £12.8m) • Adjusted pre tax profits up 13% to £12.0m (2016: £10.6m) • Interim dividend up 20% to 1.8p per share (2016: 1.5p) • Net debt of £20.8m (2016: £12.2m) • Au
Slide 3: Corporate Progress
CORPORATE PROGRESS • UK investments include the acquisitions of Velocity, Circle, Elvis and Charterhouse • UK revenues grew 27.9% to £25.5m with margin up to 20.2% thanks to acquisitions and operational improvements • US revenues grew 12.5% to £57.0m with margin of 18.1% the result of the investment
Slide 4: Drivers of Our Growth
DRIVERS OF OUR GROWTH Working with high growth clients UK acquisitions with US growth potential Expanded and modernised service offerings Data, content & technology Focus on key geographies US and UK first Simple incentive schemes Agency centric equity schemes 4
Slide 5: Why Are We Different?
WHY ARE WE DIFFERENT? • Our core belief is that marketing is increasingly becoming a technology driven activity • CEO based in Silicon Valley • No traditional advertising or media buying • Portfolio of entrepreneurial businesses encouraged to behave like shareholders rather than employees • Focus on
Slide 6: MIG Case Study
MIG CASE STUDY • Next 15 acquired Morar (MIG), a research consultancy business, in December 2014. • Since acquisition MIG has grown from a £1m MIG Performance revenue business to a £12m revenue business, 14,000 an annualised growth rate of 80% whilst 12,000 maintaining margins above 23%. 10,000 • Th
Slide 7: Circle
CIRCLE • A B2B market research consultancy acquired under MIG in July • Clients include Vodafone, Samsung and BSI • Enhances B2B research presence for MIG and brings in further leadership talent • Revenue of £2.2m and EBITDA of £1.0m in last financial year • Paid £3.0m initially for the business, ba
Slide 8: Charterhouse
CHARTERHOUSE • Acquisition announced today • UK based market research consultancy with clients including Barclays, Royal Bank of Scotland, Lloyds and HSBC • Complimentary to Circle acquisition; access to financial services key management through the Business Banking Survey • Revenue of £1.4m and EBI
Slide 9: Velocity
VELOCITY • A UK based content marketing agency with primarily multi-national technology clients, such as Sprint, Xerox and Informatica, acquired in July • 70% of revenue from US based clients • Significant growth potential in US • Revenue of £5.2m and adjusted PBT of £1.4m for last financial year •
Slide 10: Elvis
ELVIS • UK based integrated digital agency focused on consumer brands acquired in September • Clients include Cadbury, Honda, Stella Artois and Kenco • Opportunity to partner with other Next 15 agencies as well as expand geographical footprint • Consideration of £5.5m with £0.5m deferred, representi
Slide 11: Income Statement – Adj. Results
INCOME STATEMENT – ADJ. RESULTS £M H1 2018 H1 2017 GROWTH % Revenue 93.5 80.5 16% EBITDA 14.5 12.8 13% Operating profit 12.3 11.1 11% Operating margin 13.2% 13.8% PBT 12.0 10.6 13% Tax (2.4) (2.3) Minorities (0.3) (0.2) Retained Profit 9.3 8.1 15% Diluted EPS 11.4 10.5 9% Dividend 1.8 1.5 20% 11
Slide 12: Adjustments Breakdown
ADJUSTMENTS BREAKDOWN £M H1 2018 H1 2017 Adjusted pre tax profits 12.0 10.6 Restructuring (0.4) - Deal costs (0.1) (0.2) Share based payments (1.5) (1.9) Unwinding of discount and change in estimate (1.6) (2.0) of earnout liabilities Amortisation of acquired intangibles (3.2) (2.3) Reported profit b
Slide 13: Regional Breakdown
REGIONAL BREAKDOWN Regions Revenue Organic Operating Margin Margin Comments H1 2018 growth Profit H1 H1 £M £M 2018 2017 US 57.0 1.5% 10.3 18.1% 20.0% Uncertain political environment and strong trading in comparable period UK 25.6 3.5% 5.2 20.2% 17.8% Operational improvement and acquisitions APAC 7.1
Slide 14: Cash Flow Statement
CASH FLOW STATEMENT £M H1 2018 H1 2017 Inflow from op activities 14.5 11.9 Working capital (8.4) 3.5 Net inflow from operations 6.1 15.4 Tax (1.9) (0.7) Net capex (2.0) (6.8) Acquisitions (10.0) (12.6) Net interest and dividends paid (1.3) (1.0) Exchange (loss) / gain on cash held (0.3) 0.1 Increase
Slide 15: Cash Commitments
CASH COMMITMENTS 31 July 17 £M H2 2018 0.7 FY 2019 4.4 FY 2020 6.3 FY 2021 5.0 FY 2022 5.1 FY 2023 3.5 Total 25.0 15
Slide 16: Conclusion
CONCLUSION Summary of the results • August and September trading at high single digit organic growth • Revenue up 16% to £93.5m • Group is well placed to meet its • Organic growth of 2% expectations for the full year • Adjusted EBITDA up 13% at £14.5m • Adjusted pre tax profits up 13% to £12.0m • Di
Slide 17: Appendices
APPENDICES 17
Slide 18: Management Team
MANAGEMENT TEAM Richard Eyre CBE Tim Dyson Peter Harris (Chairman) (CEO) (CFO) Richard joined in 2011, he is Tim joined the group in 1984 Peter was appointed CFO in also Chairman of the Internet and became the global CEO in 2013. He is also a NED at Advertising Bureau. Prior to this 1992. An early a
Slide 19: Today
TODAY INSIGHT: CONTENT: TECHNOLOGY: MIG GLOBAL INCORPORATING: BITE AGENT3 MORAR BLUESHIRT GROUP BEYOND CIRCLE M BOOTH CONNECTIONS MEDIA VIGA OUTCAST ENCORE CHARTERHOUSE TEXT 100 TWOGETHER VRGE VELOCITY PUBLITEK ELVIS ODD 19
Slide 20: Top 20 Customers
20 TOP 20 CUSTOMERS For the year to 31 July 2017
Slide 21: Client Analysis H1 2018
CLIENT ANALYSIS H1 2018 44 CLIENTS GENERATING OVER 34 % SHARE OF REVENUES FROM TOP $0.5M IN REVENUES H1 2018 20 CLIENTS 15 TOP 20 CLIENTS IN H1 2018 IN 88 % REVENUES GENERATED IN US AND TOP 20 CLIENTS H1 2017 UK 6 months to July 2017 except where stated 21
Slide 22: Balance Sheet Summary
BALANCE SHEET SUMMARY £M 31 July 2017 31 January 2017 Intangible assets 91.9 80.0 Non-current assets 27.2 27.5 Current assets 72.3 64.8 Non-current liabilities (62.2) (54.2) Current liabilities (57.0) (49.6) Net assets 72.2 68.5 Share capital 1.8 1.8 Reserves 70.1 65.8 Minorities 0.3 0.9 Total equit