Next 15 Group Plc · LSE:NFG
Next 15 — H1 2013 Earnings Presentation
26 slides from Next 15's earnings presentation, Jan 11, 2013
Slide 1: Interim Results 2013
Si Pr Mc Strategy & Public Relations Marketing Insight Communications Dt Cc Digital & Creative & Technology Content Interim Results 2013 1
Slide 2: Next 15
NEXTI!5
Slide 3: Agenda
Agenda Part 1 • Results summary • Progress of transition Part 2 • The financials • Outlook 3
Slide 4: Executive summary
Executive summary Results Investments • Revenue growth of 3% to • Two year digital transition plan £46.6m (was £45.3m) • Formed new data and insight • Adjusted profits increased 6% business to pre tax £4.5m (was £4.2m) • Merged Bite and Bourne • Dividend increased by 11% to • Acquired Connections Me
Slide 5: New business update
New business update Region Wins Losses • Strong pipeline in all markets US Box, Campari, Good Nokia, Technology, Krug, Yahoo for hybrid and Lancôme, Lands’ digital work End, L’Oreal, • Decrease in Samsung, multi-country Schwan’s, Virgin, Viacom assignments UK Carlsberg, Coca- Nokia • Top 10 clients
Slide 6: The digital transition plan
The digital transition plan Terms Objectives • Two year plan, approximately • Improve organic growth and £2m spend (FY 13/14) margins after FY 2014 • Half of spend will fall in FY • Increase pure and hybrid digital 2013 revenues to be over 50% of • Spend to cover staff revenues by FY 2015 restructur
Slide 7: Transition plan early progress
Transition plan early progress • Merging Bite and Bourne • Investing in new operations • Adding digital talent across the group • Adding new agency capabilities – Connections Media • Pure and hybrid digital services now 43% of revenue 7
Slide 8: Transition plan implications
Transition plan implications Additional Costs • Reorganisation costs over the next 18 months • P/L investments in new businesses and staffing Outcomes • Full service digital capabilities • Improved organic growth and margins • Pure and Hybrid revenues to be greater than 50% Business development • Fo
Slide 9: Focus for transition
Focus for transition Engage Content Build Insight Re-skill Lexis Lexis Beyond Redshift Text 100 Text 100 Bite Bite Outcast Outcast M Booth M Booth 463 463 Blueshirt Blueshirt Invest Bourne/Bite Newco merger Acquire Connections Content & Connections Media Motion Media More complex 9
Slide 10: Key digital clients
Key digital clients • Client Engage Content Build Insight demand across range of capabilities • …and geographies • Larger project client management skills • Connections Media to add to this list 10
Slide 11: Digital client update
Digital client update Client Campaign Arctic Home Brand Lexis Immersive experience with launch event attended by key Promote launch of stakeholders, Friends of the Task WWF partnership Earth and Greenpeace Media pick-up globally generating 388 pieces of coverage with a reach of 65 Cross-platfo
Slide 12: Acquisition update: Connections Media
Acquisition update: Connections Media • Connections is a Washington-based digital agency • Specialises in politics and public affairs • 2012 Webby award winner • Key clients include: Alliance of Auto Manufacturers; Mike Bloomberg; Google; social online advertising campaign PepsiCo; and Starbucks man
Slide 13: Part 2: The financials, Outlook
Part 2 • The financials • Outlook 13
Slide 14: Organic growth
Organic growth Growth Interim FY Interim • Organic growth gains measure 2012 2012 2013 on H2 2012 Total (1) 11% 6% 3% • US was up 5% cf flat performance in FY Organic (2) 4% 1% 1% 2012 – now 52% of group revenues • Tougher markets in UK (flat), EMEA (- 10%, NFC has no Notes: (1) net revenue growth,
Slide 15: New divisional split and digital services
New divisional split and digital services Group brands • Previous structure did Integrated Comms Specialist Agencies Sum (2) not work • Brands now fall in two Traditional 57% classifications, PR/ other integrated Group services communications Hybrid (1) 32% providers or specialist digital agencies P
Slide 16: Income statement
Income statement £m H1 FY 2013 H1 FY 2012 Growth % Billings 54.8 53.8 2 • Flat/ modest Revenue 46.6 45.3 3 operating margins gains Adj Op profit 4.7 4.5 4 • Dividend growth is Adjusted PBT 4.5 4.2 6 measure of management PBT 2.0 2.7 (24) confidence and Tax (0.5) (0.8) impact of the digital transitio
Slide 17: Adjustments interim 2013
Adjustments interim 2013 £m Normalised Acquisition Bite Digital Reported related fraud transition charges costs Revenues 46.6 46.6 • Acquisition charges are standard non cash adjustments Op Profit 4.7 2.5 • No further Bite Amortisation of (0.7) fraud net costs intangibles expected in H2, Equity as (
Slide 18: Cash flow
Cash flow £m HY 2013 HY 2012 Inflow from op activities 4.8 5.3 • Net inflow from operations Working capital (1.3) (0.4) represents 138% of Operating profit. Net inflow from operations 3.5 4.9 • Tax payments weighted to Tax (1.9) (1.5) H1, particularly in US. Net capex (1.2) (0.4) • Acquisition payme
Slide 19: Balance sheet
Balance sheet £m HY 2013 HY 2012 FY 2012 Intangible assets 40.6 40.4 41.0 Non-current assets 7.5 6.2 7.2 Includes present Current assets 33.8 34.4 33.3 value of estimated future earn out Non-current liabilities (18.7) (23.1) (20.1) commitments (equity and cash) of £9.6m Current liabilities (23.9) (2
Slide 20: Summary Outlook
Summary Outlook • FY 2013 revenues tracking close to management expectations • Client demand for pure and hybrid digital services gathering pace • On-going investments in new operations and re-skilling of agencies • US to generate solid organic growth through the transition • Balance sheet to remain
Slide 21: Appendix
Appendix 21 NEXTI!5
Slide 22: Intuit - TurboTax
INTUIT - TURBOTAX AN INTEGRATED APPROACH 3.9M 5Bt+ 75% GOALS PEOPLE TALKING ABOUT — TRADITIONAL MEDIA TWITTER AVERAGE Deliver TurboTax messaging to mainstream TURBOTAX ON IMPRESSIONS DURING FOLLOWER GROWTH FACEBOOK 2013 TAX SEASON consumers during tax season and drive conversion 1 M+ 17% 510M+ APPRO
Slide 23: Lancome & St. Jude's
LANCOME & ST. JUDE’S GENIFIQUE DAY GOALS Raise awareness, build community around the cause partnership and drive consumers to Lancéme retailers by leveraging both traditional and social media channels and creating a unique online experience. APPROACH Create and implement strategic digital assets Cre
Slide 24: Dolby
DOLBY RE-INVENTING THE SCIENCE OF SOUND GOALS Tell Dolby’s story and gain recognition as a core technology element to entertainment experiences APPROACH An integrated program of traditional media outreach, digital influencer engagement and custom online consumer experiences + Owned and earned integr
Slide 25: Contingent consideration and minority interests
Contingent consideration and minority interests Prospective cash commitments: 2014 - 2017 • These figures show undiscounted estimates, Cash commitments £m assuming that shares are issued in those acquisitions where they FY 2014 4.8 form part of the consideration FY 2015 2.7 FY 2016 and later 6.4 • C
Slide 26: H2 2013 EPS adjustments
H2 2013 EPS adjustments • Digital transition costs Impacts PBT and associates (start up costs) • Acquisitions Standard non cash acquisition-related costs • Tax charge Estimate to be same as interims, i.e. 30 – 32% • Minority interests Now includes Connections Media and OutCast equity incentive • Sha