Slide 1: Preliminary Results 2012
Preliminary Results 2012 November 27th, 2012 1
Slide 2: Agenda
• Highlights • Clients and markets • Digital transition • Financials • Summary • Appendix
Slide 3: Highlights
Highlights • Revenue growth of 6% of which 1% organic* • New business success: Avaya, AVG, BAE, Box, Groupon, IFS, Mozilla, Pinterest, SAP, Sony Professional, Spotify, Viacom, Vodafone • Pure digital and research segment represents 10.2% of group revenues (was 6.5%) and continues to be source of res
Slide 4: Financial year 2012 headlines
Financial year 2012 headlines Resilient results in challenging markets • Revenue up 6% to £91.6m (2011:£86.0m) • EBITDA up 5% to £11.2m (£10.7m) • Operating profit margins before HO costs 15.5% (14.8%) • Adjusted PBT up 14% to £9.6m (£8.4m) • Adjusted diluted EPS up 15% to 10.07p (8.74p) • Dividend
Slide 5: Growth map by geography
Growth map by geography Revenue contribution by geography finals 2012 Organic growth* rate by geography full year 2012 APAC 15.6% 21.6 % UK Next Fifteen Group 11.4% US and Canada 51.4% Europe & Africa -8% -6% -4% -2% 0% 2% 4% 6% 8% • US and Canada plus APAC 67% • Previously reported client losses in
Slide 6: Growth map by function
Growth map by function Revenue contribution by function finals 2012 Organic growth comments 2012 Digital/ research Corp • Tech PR (Total revenues 2012: £61m) – 10% comms 1% fall, progress held back by loss of HP 7% • Consumer PR (£15m) - 10% fall overall impacted by Lexis in UK, US consumer business
Slide 7: Agenda
• Highlights • Clients and markets • Digital transition • Financials • Summary • Appendix
Slide 8: New business update
New business update Region Wins Wins Pure Pure Losses • Busy new H1 H2 digital H1 digital H2 business pipeline US Angies’ List Avaya, Box, EMI Hershey HP AVG Mozilla, Esurance SAP JC Penney in H2 follows Foursquare, Palo Alto Informatica Viacom Salesforce trend from H1 GE, Internet Networks, Novarti
Slide 9: Client development trend via digital
Client development trend via digital • In non digital marketing and PR, Digital product and consumer agencies consumer had operated in different spheres • In recent times, successful tech Eg Facebook, product brands have learned from Google, Twitter consumer brands and vice versa • Digital creates a
Slide 10: Agenda
• Highlights • Client and markets • Digital transition • Financials • Summary • Appendix
Slide 11: Last 3 years: key digital work for key digital brands
Last 3 years: key digital work for key digital brands • California (SF) is home to Digital PR more internet businesses of scale than anywhere else in the world • Next Fifteen’s tech client base Community mgt Social media have been early adopters of the internet and social Digital mediaN. creative •
Slide 12: Digital transition by group brand
Digital transition by group brand • Chart uses management’s breakdown of each key brand’s revenue mix in 2012 • This follows group wide digital function and revenue analysis • Larger international brands showing higher digital revenues in US offices • Pure digital brands up by over 60% in 2012 • Exp
Slide 13: Transition update - beyond
Transition update - beyond • Next Fifteen’s largest pure digital agency, built out from internal team • Revenue growth 39% in FY 2012 to £6.2m • Strong support from digital creative team (Google, YouTube and Facebook) • Content & Motion acquisition adds important third leg to business, i.e. Content
Slide 14: Transition case study - Lexis
Transition case study - Lexis • Lexis is a UK-based full-service Creative heritage agency, 6.5% of group revenues eroded became “safe pair of hands” • Key clients include Barclays, Coca- Cola, Costa Coffee, Pizza Hut and Digital expertise Clients awarding William Hill endorsed by high profile client
Slide 15: Transition and organic growth
Transition and organic growth Growth FY 2012 FY 2012 Interim • Some client adjustments measure 2012 have occurred as group focuses on digital Basis Incl Lexis Ex Lexis As reported techniques and products Total (1) 6% 9% 11% Organic (2) 1% 3% 4% Notes: (1) net revenue growth, (2) adjusted to exclude
Slide 16: Continuing opportunities in digital
Continuing opportunities in digital Product/ service Client demand NFC opportunity Insight Need to make sense of To play a more pivotal role data from multiple sources with clients by building an to both understand earlier stage/ advisory changing customer relationship and thereby demand/ opinion an
Slide 17: Agenda
• Highlights • Clients and markets • Digital transition • Financials • Summary • Appendices
Slide 18: Income statement
Income statement £m FY 2012 FY 2011 Growth/ % • Margins benefitted from: careful cost Billings 108.5 105.2 3 management; Revenue 91.6 86.0 6 improving digital margin; and, higher Adj Operating 10.0 8.8 14 contribution from profit high margin Corp Margins 10.5% 9.8% Comms agencies. Adjusted PBT 9.6 8
Slide 19: Cash flow
Cash flow £m FY 2012 FY 2011 • Net cash from operations Inflow from op activities 9.8 11.1 represents 119% of Working capital 0.3 0.3 Adjusted Operating profit despite impact Net inflow from operations 10.1 11.4 of fraud (£0.9m in Tax (2.5) (2.6) 2012, £0.4m in 2011). Net capex (0.9) (2.0) Acquisiti
Slide 20: Balance sheet
Balance sheet £m FY 2012 FY 2011 Intangible assets 41.0 37.9 Non-current assets 7.2 6.4 Current assets 33.3 34.8 Non-current liabilities (20.1) (20.7) Includes present value of estimated future earn out Current liabilities (24.2) (26.1) commitments (equity and Net assets 37.2 32.3 cash) of £11.9m Sh
Slide 21: Business development update
Business development update Last 3 financial years Amount invested in brand £1.0m incubation (cumul) Key projects Beyond, Bite Asia Digital (and 2012 projects listed below) Net contribution to PBT* 2012 £0.65m/ 6.8% Organic investment/ brand Financial year 2012 incubation at Next Fifteen is the Amou
Slide 22: Recent trading history
Recent trading history Item 2009 2010 2011 2012 CAGR 2009 – 2012 Revenue £65.4m £72.3m £86.0m £91.6m 11.9% Adjusted profit £5.25m £6.61m £8.39m £9.60m 22.3% before tax Adjusted profit 8.0% 9.1% 9.8% 10.5% n/a before tax margin % EBITDA £5.5m £8.4m £10.7m £11.2m 26.7% Net cash from £4.8m £5.1m £11.4
Slide 23: Agenda
• Highlights • Clients and markets • Digital transition • Financials • Summary • Appendices
Slide 24: Summary
Summary Finals 2012 in review Outlook • Digital/ Research and Corp • Encouraging start to FY 2013 Comms showing organic revenue • Strong pipeline across all growth of over 10%.... territories • .......now 20% of group pre tax • Revenue visibility continues to be profits reasonable • Margin developme
Slide 25: Agenda
• Highlights • Clients and markets • Digital transition • Financials • Summary • Appendices
Slide 26: Next Fifteen – investor snapshot
Next Fifteen – investor snapshot • What we do – Provide PR and communication services designed to enable progressive brands to influence buyer behaviour using digital channels. • Our belief – Digital has become the most important channel for influencing buyer behaviour but is still in its relative i
Slide 27: Group Structure
Group Structure Consumer Corporate Digital & Technology PR Comms PR Research Blueshirt Beyond Bourne Animo OutCast 463 (76%) Redshift Text 100 Bite Lexis M Booth (85%) (51%) (90%) (96%) 27
Slide 28: Segmental Revenue and Adj Operating Profit
Segmental Revenue and Adj Operating Profit £m Revenue % Operating Profit % Technology PR 60.6 66.1 9.4 65.7 Consumer PR 15.0 16.5 2.0 14.4 Pure Digital & Research 9.4 10.2 1.3 9.2 Corporate Communications 6.6 7.2 1.5 10.7 Head Office (4.2) Total 91.6 100 10.0 100 28
Slide 29: Geographic Revenue and Adj Operating Profit
Geographic Revenue and Adj Operating Profit £m Revenue % Operating Profit % US and Canada 47.1 51.4 9.3 65.4 UK 19.7 21.6 3.3 23.5 EMEA 10.5 11.4 0.9 6.4 APAC 14.3 15.6 0.7 4.7 Head Office (4.2) Total 91.6 100 10.0 100 29
Slide 30: Contingent consideration and minority interests
Contingent consideration and minority interests Prospective cash commitments: 2013 - 2016 • These figures show undiscounted estimates, Cash commitments £m assuming that shares are issued in those acquisitions where they FY 2013 1.7 form part of the consideration FY 2014 3.6 FY 2015 4.0 • Cash can be
Slide 31: Office locations
Office locations US EMEA APAC San Francisco London Tokyo New York Paris Hong Kong Washington Munich Beijing Boston Milan Shanghai Rochester Madrid Kuala Lumpur Los Angeles Amsterdam Singapore Stockholm New Delhi Copenhagen Mumbai Istanbul* Bangalore Oslo* Chennai Johannesburg Sydney Seoul* Tapei* Au
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