Next 15 Group Plc · LSE:NFG
Next 15 — Q2 2024 Earnings Presentation
29 slides from Next 15's earnings presentation, Jul 25, 2023
Slide 1: Interim Results Presentation
Next15 Interim Results Presentation September 2023 © NEXT 15 | PRIVATE & CONFIDENTIAL
Slide 2: Agenda
Agenda Introduction 03 Highlights from the period 05 Financial overview 07 Investment case + operational & strategy update 14 Outlook 22 Appendix 24 © NEXT 15 | PRIVATE & CONFIDENTIAL 2
Slide 3: The Market
The Market Strong client retention remains. Shift away from general brand Spend shifted with unexpected building to retail/customer upsides and isolated areas of interface, accelerated by the weakness demise of the cookie Wage pressures have largely …and Next 15 has navigated disappeared as macro en
Slide 4: Next 15
Next 15 Our businesses are all specialists We have an agile business model in their fields. They benefit from with scale and capital to adapt to group support and have the new trends and invest in new freedom and incentives to grow growth areas entrepreneurially We are a diversified group at the Foc
Slide 5: H1 Highlights
H1 Highlights 3 Bolt ons Operational Strategic client wins savings These add: Head office costs as Significant growth opportunities for Activate, Transform, proportion of Group net M Booth, Outcast and SMG • consulting capabilities revenue reduced to 3.8% to our business from 4.7% in H1 FY23 due tra
Slide 6: H1 Financial Highlights
H1 Financial Highlights Adjusted operating Net revenue up Margin performance Adjusted diluted profit down 7% to 5% to £286.4m of 19.9% EPS down 14% to £57.0m (2022: £274.0m) (2022: 22.4%) 37.9p (2022: 44.1p) (2022: £61.3m) Encouraging performance across all Net debt as at 31 July Interim dividend se
Slide 7: Financial Results
Financial Results © NEXT 15 | PRIVATE & CONFIDENTIAL 7
Slide 8: Adjusted P&L
Adjusted P&L £M H1 2024 H1 2023 Growth/(Decline)% Net revenue 286.4 274.0 5% Organic revenue (decline)/growth (1)% 31.0% Operating profit 57.0 61.3 (7)% Operating margin 19.9% 22.4% Profit before tax 55.6 60.7 (8)% Tax (15.0) (14.1) Minorities (1.0) (0.6) Profit after tax 39.6 46.0 (14)% Diluted EPS
Slide 9: Revenue Bridge
Revenue Bridge 300 3.4 275 (2.9) Revenues £m 11.9 1% (1)% 4% 250 286.4 274.0 225 200 Six months to Organic decline Acquisitions FX Six months to July 31 st 2022 July 31 st 2023 © NEXT 15 | PRIVATE & CONFIDENTIAL 9
Slide 10: Segment Performance
Segment Performance Net revenue Net revenue Organic Operating Margin Margin Operation H1 2024 growth/(decline) growth/(decline) Profit H1 2024 H1 2023 £M £M Customer Insight 27.3 10.6% 2.4% 4.7 17.2% 21.3% Customer Engage 131.1 (1.6%) (6.4)% 26.5 20.2% 20.1% Customer Delivery 51.8 6.1% 2.4% 14.1 27.
Slide 11: Cash flow summary
Cash flow summary £M H1 2024 H1 2023 Inflow generated from operations* 61.6 66.2 Working capital (23.6) (42.2) Net inflow from operations 38.0 24.0 Tax (13.8) (14.0) Net capex (3.1) (3.5) Acquisitions (57.6) (102.8) Other cashflows** (11.2) (6.1) Net proceeds from share placing - 48.6 Increase in ne
Slide 12: Estimated cash earn-out commitments
Estimated cash earn-out commitments 31 July 2023 31 Jan 2023 £M £M FY 2024 5.1 45.4 FY 2025 71.0 62.8 FY 2026 66.2 48.5 FY 2027 45.1 47.7 FY 2028 36.8 39.4 Total 224.2 243.8 Assumes all Mach49 earn-out paid in cash which increases the commitment by £29.1m © NEXT 15 | PRIVATE & CONFIDENTIAL 12
Slide 13: Capital Allocation
Capital Allocation Continue to prioritise investment in internal capabilities Leverage will remain within historic levels Disciplined approach to bolt on M&A to enhance key business areas Strategic acquisition strategy unchanged Surplus cash to be returned to shareholders via share buybacks Share pr
Slide 14: Investment case + Operational & Strategy Update
Investment case + Operational & Strategy Update © NEXT 15 | PRIVATE & CONFIDENTIAL 14
Slide 15: Next 15
Next 15 We deliver business insights through data analytics and online research The business of We optimize customer delivery (aka sales) through digital platforms such as investing in new data analytics techniques and tools maximising e-commerce and demand generation potential Our growth consultanc
Slide 16: Business transformation: Our model in action
Our model in action Business transformation Realising opportunity Unlocking value from Building by bolt-on Well poised to to build massive Engine acquisition and with huge potential capitalise when the consulting business opening up public through digital cycle turns from big data sector opportunity
Slide 17: Mega trends
Mega trends Data-driven Customer Sales Digital decisions experience engagement transformation Data has alw ays been the new oil. Our clients are trying to navigate a Customers are increasingly looking Digital transformation is an ongoing Now AI brings additional pow er to w orld in w hich channels a
Slide 18: Key client sectors
Key client sectors Focus on key sectors that deliver above-average long-term growth Technology 33% (H1 FY23 – 41%) Healthcare 5% (H1 FY23 – 5%) Professional & Financial Services 27% (H1 FY23 – 22%) Public Sector 10% (H1 FY23 – 7%) Consumer Passions 19% (H1 FY23 – 20%) © NEXT 15 | PRIVATE & CONFIDENT
Slide 19: AI and our progress
AI and our progress Efficiency Innovation & Data Group-wide education and information sharing programme Using annual strategy process to reframe what our businesses spreading best practice and what we are learning from client work do and identify new ways to serve clients Pilot programmes exploring
Slide 20: Our ambition: 5 year goal
Our ambition Data science Lead and demand gen Customer Research Customer Connected commerce Insight Customer data Delivery management £60m to £200m 5 year goal £110m to £300m Double the size Customer experience DX Customer Environment shaping of Next 15 Business Financial & IPO advisory Engagement D
Slide 21: Strategy update
Strategy update • Recommitment to our specialist, • Increased focus on high value decentralised model strategic relationships, especially offering more to existing clients • But some simplification and consolidation of our group to suit • M&A driven by megatrends the changing environment • Creation
Slide 22: Outlook
Outlook © NEXT 15 | PRIVATE & CONFIDENTIAL 22
Slide 23: Outlook
Outlook • The business continues to trade broadly in line with management expectations despite the macro-economic headwinds in certain markets. • Performance continues to be encouraging across all four business segments; underpinned by the integration of Engine and the significant growth of Mach 49.
Slide 24: Appendices
Appendices © NEXT 15 | PRIVATE & CONFIDENTIAL 24
Slide 25: Next15 board
Next15 board Penny Ladkin-Brand (Chair) Robyn Perriss (Audit) Helen Hunter (Rem) Dianna Jones (ESG) Pricing Gov ernance Data Insight B Corp Paul Butler (ESG) Tim Dyson Peter Harris Jonathan Peachey Business Transf ormation (CEO) (CFO) (COO) © NEXT 15 | PRIVATE & CONFIDENTIAL 25
Slide 26: Regional
Regional Net revenue Operating Organic Margin Margin Operation H1 2024 Profit (decline)/growth H1 2024 H1 2023 £M £M US 144.5 (2.8)% 43.4 30.1% 34.5% UK 127.7 1.1% 22.4 17.5% 19.0% APAC 8.0 (6.1)% 0.7 8.6% 9.5% EMEA 6.2 7.9% 1.4 23.1% 28.0% Head office - - (10.9) - - Total 286.4 (1.0)% 57.0 19.9% 22
Slide 27: Balance sheet summary
Balance sheet summary £M 31 July 2023 31 July 2022 Intangible assets 261.0 285.7 Non-current assets 102.9 111.6 Current assets 193.2 214.5 Non-current liabilities (189.3) (259.8) Current liabilities (250.7) (248.4) Net assets 117.1 103.6 Share capital 2.5 2.4 Reserves 114.1 100.8 Minorities 0.5 0.4
Slide 28: Adjustments
Adjustments £M H1 2024 H1 2023 Adjusted profit before tax 55.6 60.7 Restructuring (1.4) (3.1) Property impairment - (3.9) Deal costs (0.2) (2.7) Charge for one-off employee incentive schemes (5.2) (0.4) Acquisition accounting related costs (24.5) (59.1)* Statutory profit/(loss) before tax 24.3 (8.5)
Slide 29: Share buyback criteria
Share buyback criteria • We will consider share buybacks if the following criteria are met: • Must be earnings enhancing • Keep net debt below 1x EBITDA • Share price must be below its intrinsic value, kept under constant review • Will purchase between 2% and 5% of share capital in any 12-month peri