Wpp Scangroup Plc · NSEKE:SCAN
Wpp Scangroup — FY2018 Earnings Presentation
40 slides from Wpp Scangroup's earnings presentation, April 2019
Slide 1: WPP Scangroup Plc Investor Presentation 2018 Results
WPP SCANGROUP Plc Investor Presentation 2018 Results April, 2019 1
Slide 2: 11/04/2019
11/04/2019
Slide 3: We are a creative transformation company
WE ARE A CREATIVE TRANSFORMATION COMPANY
Slide 4: Agenda
AGENDA OUR STRATEGY OUR VISION AND OFFER A SIMPLER STRUCTURE TECHNOLOGY LEADERSHIP AND TALENT 4
Slide 5: Technology is fundamentally reshaping our industry
TECHNOLOGY IS FUNDAMENTALLY RESHAPING OUR INDUSTRY MEDIA PROLIFERATION DATA-DRIVEN CONTENT MARKETING CEO CMO CIO TECHNOLOGY E-COMMERCE 5
Slide 6: Our industry is facing structural change, not structural decline
OUR INDUSTRY IS FACING STRUCTURAL CHANGE, NOT STRUCTURAL DECLINE KEY CHALLENGES 1 Role of “traditional” agencies challenged 2 Our clients are being disrupted 3 Consultants competing with technology and talent 4 Facebook, Google and Alibaba vying for talent and attention 6
Slide 7: Our clients are not cutting spend, but looking for broader partnerships
OUR CLIENTS ARE NOT CUTTING SPEND, BUT LOOKING FOR BROADER PARTNERSHIPS MARKETING EXPENSE AS CREATIVITY SHARE OF REVENUE* 14.0 % 12.1% 12.0% 11.4% 11.3% 11.2% MEDIA INSIGHT 10.2% AND PERFORMANCE 10.0% 8.0% 6.0% DATA EXPERTISE 4.0% 2.0% 0.0% TECHNOLOGY 2014 2015 2016 2017 2018 *Source Gartner: Octobe
Slide 8: The new WPP Scangroup starts with substantial assets
THE NEW WPP SCANGROUP STARTS WITH SUBSTANTIAL ASSETS CLIENTS AND SCALE CREATIVITY TECHNOLOGY PARTNERSHIPS • Partner to most of • Global & pan African • Partner to the CMO • Growing CIO the world’s & networks • Understanding of relationships continent’s largest • #1 media buying scale consumers • Sig
Slide 9: WPP Scangroup clients
WPP SCANGROUP CLIENTS SCALE CREATIVITY TECHNOLOGY 9
Slide 10: WPP Scangroup in SS Africa
WPP SCANGROUP IN SS AFRICA BRANDS OGILVY, JWT, GREY, SCANAD, KANTAR, GROUPM, SQUAD, H+K REVENUE: $53 MILLION ADVERTISING 34% MEDIA 8% PR 7% TECH 8% RESEARCH 43% HEADCOUNT: 1200 WHOLLY OWNED MINORITY OWNED KENYA A M PR T R 57% ZIMBABWEA A M NIGERIAA A M PR T R 14% NAMABIA A M GHANA A M PR R 8% IVORY
Slide 11: We will expand our offer in high growth areas
WE WILL EXPAND OUR OFFER IN HIGH GROWTH AREAS COMMUNICATIONS EXPERIENCE COMMERCE TECHNOLOGY 5 11
Slide 12: Technology as an inflection for growth
TECHNOLOGY AS AN INFLECTION FOR GROWTH 12
Slide 13: The new agency model
THE NEW AGENCY MODEL Solutions that Solutions delivered deliver against via technology – Package Industry critical business Leverage Data & AI specific Vertical problems, & exploit to build proprietary Solutions, scaled untapped IP that can deliver globally opportunities those solutions
Slide 14: What solutions are we driving for our clients, leveraging data & tech?
WHAT SOLUTIONS ARE WE DRIVING FOR OUR CLIENTS, LEVERAGING DATA & TECH? • How do we help reduce cost of customer acquisition, & drive sales at scale? • How do we help improve sales efficiencies? • How do we help banks reduce mobile lending default rates? • How do we help Insurance businesses improve
Slide 15: Traditional service industries delivered via technology
RETAIL BANKING INSURANCE TAXI SERVICE CREATIVE TRAVEL MEDIA BUYING Traditional Service Industries delivered via Technology
Slide 16: Optimus marketing automation customer lifecycle management
OPTIMUS MARKETING AUTOMATION CUSTOMER LIFECYCLE MANAGEMENT SOLUTION DELIVERED ON TECHNOLOGY
Slide 17: 11/04/2019
11/04/2019
Slide 18: Packaging industry specific CLM solutions in software, for global shipping
PACKAGING INDUSTRY SPECIFIC CLM SOLUTIONS IN SOFTWARE, FOR GLOBAL SHIPPING Banking Insurance Automate new to bank customer acquisitions, Automate new customer acquisitions and manage leads across channels, and maximize insurance renewals, manage leads across customer lifetime value at scale and spee
Slide 19: Optimus clients
OPTIMUS CLIENTS Across 8 countries Tanzania Kenya Kenya SA, Nigeria & Kenya 3,600+ 80,000+ 190,000+ Active users on Optimus Leads being managed on Optimus Automated, data-driven communications sent out from Optimus
Slide 20: The digital transformation value chain
THE DIGITAL TRANSFORMATION VALUE CHAIN
Slide 21: WPP-Scangroup play: digital transformation value chain
Digital Transformation Competition WPP-SCANGROUP Play Value Chain Old Mutual Problem Identification Consultants such as McKinsey, Accenture, Delloite Old Mutual/Barclays Solution Architecting Consultants such as McKinsey, Accenture, Delloite Platform Identification Consultants such as McKinsey, Acce
Slide 22: Optimus ripple effect
OPTIMUS RIPPLE EFFECT Platform Digital Media Strategy, Creative & Consulting User Experience Design
Slide 23: SMEs – the next growth frontier
SME’S – THE NEXT GROWTH FRONTIER 100 Mil USD spent 1 Mil Small Business 6 Mil Small Business on Digital advertising advertisers on advertising on Facebook in Kenya in 2017, approx. Instagram in US alone in US alone 80 mil USD by Small Businesses
Slide 24: Presenting Optimus Mini – business & marketing automation platform for SMEs
PRESENTING OPTIMUS MINI – BUSINESS & MARKETING AUTOMATION PLATFORM FOR SME’S
Slide 25: Optimus Mini video
OPTIMUS MINI VIDEO
Slide 26: Financial outlook
“©«@e@@e@eeeeeoeee@e-*@ ZRARXIT AAS XT Ree @eeeeoeee@e eceeee »p@e@eeeceoeoQegee e@eee e©6@ecee@Q@eeeoeaervve >> €6@0e@@0C0CCCCe : ee eee @@eeeeee0eoe "ee SS 0ee@@eoe@e ce @e ©8205 cee@ee@2¢eeoe@e Se SF25@S@eeeeeoe@e ee: "> es @e@@a@ee@eeeeeen PpeeeSeeeeeO@ete §: eee@@eeeeeeeren* | p@eeeSeOOSeOe* ee
Slide 27: Headline results audited FY2018 vs FY2017
HEADLINE RESULTS AUDITED FY2018 VS FY2017 Key Financials (Ksh’M) FY 18 FY 17 YoY% Net Sales 4,505 4,123 +9.3% Operating Profit 641 412 +55.5% Interest Income 291 290 +0.2% Profit before Tax 960 696 +37.8% Net Income after MI 554 455 +21.9% EPS 1.37 1.20 +13.9% DPS 1.00 0.75 +33.3% Special Dividend 3
Slide 28: 2018 statutory accounts – P&L
2018 STATUTORY ACCOUNTS– P&L KSH'000 2018 2017 FY FY FY +/- +/- % REVENUE 4,504,904 4,122,869 382,035 9% OPERATING COSTS (3,863,870) (3,710,602) (153,268) -4% OPERATING PROFIT 641,034 412,267 228,767 55% OTHER INCOME (NET OF IMPAIRMENT) 32,907 21,130 11,777 56% FX (LOSS) / GAIN (5,157) (27,395) 22,2
Slide 29: 2018 statutory balance sheet - assets
2018 STATUTORY BALANCE SHEET - ASSETS KES'000 31/12/2018 31/12/2017 +/- • Capex continues to remain under control Non-current assets Equipment 361,613 340,186 21,427 • LT loan receivable converted Associate Investments partly to associate Investments 197,781 4,541 193,240 and partly to receivables f
Slide 30: 2018 statutory balance sheet - liabilities
2018 STATUTORY BALANCE SHEET - LIABILITIES KES'000 31/12/2018 31/12/2017 +/- • Loan payable to a Current Liabilities related party increase Trade and other payables 4,672,024 4,359,821 312,203 due to acquisition Tax payable 204,556 153,692 50,864 which brought in debt Payable to related parties 540,
Slide 31: Geography & medium
GEOGRAPHY & MEDIUM Net Sales by Location FY Net Sales Kenya Nigeria Ghana FWA UK South Africa Tanzania Uganda Zambia 2019 58% 15% 7% 7% 5% 3% 2% 2% 1% 2018 62% 11% 10% 4% 3% 3% 3% 3% 1% • Complete change due to TNS acquisition Net Sales by Medium FY Net Sales Advertising Media Research Digital PR 20
Slide 32: Movement of cost
MOVEMENT OF COST Net Sales inflow 0.92 0.66 3.87 Ksh’ billion 3.71 -0.27 -0.04 -7.2% -0.1 -1.0% -0.08 -2.6% -0.02 3.21 -2.1% -0.4% 13.3% 2017 Op Staff Establishment Personal IT Costs Finance & 2018 Op TNS H2 2018 OP Cost Cost Cost Cost Other Costs cost Like Cost Cost for Like • Cost savings more tha
Slide 33: Movement of cash
MOVEMENT OF CASH Ksh’ billion +0.59 -0.31 +4.38 +0.09 -0.05 -0.30 +0.18 +0.78 +3% -9% -2% +5% -9% +17% +3.40 +23% 28.9% 2018 Op Cash WC Tax Capex Dividend Net Interest Net Cash 2018 Closing Opening Before WC Changes paid Paid & Currency obtained on Cash Balance Changes Loss acquisition • Positive ca
Slide 34: Disclaimer
DISCLAIMER This presentation contains certain forward-looking statements – that is, statements related to future, not past events and circumstances – which may relate to one or more of the financial conditions, results of operations and businesses of WPP Scangroup plc and certain of the plans and ob
Slide 35: Financial outlook
FINANCIAL OUTLOOK WHAT WE ARE AIMING TO ACHIEVE BY 2020 Organic growth from existing clients enabled by data, ORGANIC GROWTH technology and creative MARGIN Headline operating profit margin of at least 20% FREE CASH FLOW Free cash flow conversion of 70 to 80% excluding old debts CONTROLLED CAPEX & IN
Slide 36: Organic growth
ORGANIC GROWTH 2017 2020 Advertising Slow Growth Expected growth with improved economy Media Declining spends Expected growth with improved economy Digital & Technology Growing fast New output focused products will lead growth Research Slow growth Aggressive New Business Strategy Public Relations Sl
Slide 37: Investment
INVESTMENT INVEST IN CREATIVE & TECHNOLOGY TALENT & PRODUCTS INVESTMENT PLAN • Key driver of innovation and competitive advantage TECHNOLOGY • Technology to drive new revenue $400K • Selective acquisition spend of up to $5M Incremental CREATIVE/ • Creative leadership $350K Investment GROWTH • Combin
Slide 38: Dividend trend
DIVIDEND TREND 4.00 - Increase in dividend over the last two years - To maintain a policy of Dividend Payout 3.00 3.00 consistent dividend growth - Part of cash deemed to be 0.75 excess paid off as special 0.5 0.5 dividend 1.00 - Current Dividend yield at 2015 2016 2017 2018 33.33% EPS 1.12 1.12 1.2
Slide 39: Guidance 2019
GUIDANCE 2019 Net Sales +8% to +12% Operating Profit +20% to +25% EPS +12% to 18%
Slide 40: Thank you for your time
2:.° oof ae ee ee’. °.,°@. 7 ,~*.° THANK YOU | FOR YOUR TIME