Slide 1: Interim Results - September 2024
NEXT15 INTERIM RESULTS - SEPTEMBER 2024 NEXT15
Slide 2: Agenda
AGENDA FY25 Interim results summary Financials in detail Capital allocation priorities Operational progress Outlook 2 NEXT15
Slide 3: FY25 Interim Results Summary
FY25 INTERIM RESULTS SUMMARY 3 NEXT15
Slide 4: The Results
THE RESULTS Net revenue up 0.1% Net revenue flat year-on-year reflecting a mixed performance with (down 2.2% organically) to weakness from tech customers and public sector offset by £286.8m (2023: £286.4m) growth from our FMCG customers Profitability impacted by weaker trading at some of our higher Adj
Slide 5: The Results
THE RESULTS Adjusted diluted EPS Working capital outflow and increase in debtors driven in part by down to 30.3p (2023: changing profile of the Group’s customer base 37.9p) Further reduction in Mach49 earn-out Net debt as at 31 Jul Strong client retention outside of Mach49 large contract 2024 £74.8m (
Slide 6: Financials in Detail
FINANCIALS IN DETAIL INTERIM RESULTS : SEPTEMBER 2024 6 NEXT15
Slide 7: Adjusted P&L
ADJUSTED P&L £M H1 FY25 H1 FY24 Growth/(Decline) % Net revenue 286.8 286.4 0.1% Organic revenue decline (2.2%) (1.0%) Operating profit 48.1 57.0 (15.6.%) Operating margin 16.8% 19.9% Profit before tax 45.7 55.6 (17.8%) Tax (12.4) (15.0) Minorities (1.5) (1.0) Profit after tax 33.3 40.6 Diluted EPS (p)
Slide 8: Revenue Bridge
REVENUE BRIDGE 69.7 3.5% (1.2)% (2.2)% 39.8 The average USD rate in H1 FY25 was 1.268, compared Revenues to 1.244 in H1 FY24. £m NEXT15
Slide 9: Segmental
SEGMENTAL Net revenue Organic Operating Margin Margin Operation H1 FY25 Growth/ Profit H1 FY25 H1 FY24 £M (Decline) £M Customer Insight 27.9 (6.8%) 3.1 11.0% 17.2% Customer Engagement 134.3 (1.0%) 26.6 19.8% 20.2% Customer Delivery 55.0 6.9% 12.0 21.8% 27.3% Business Transformation 69.6 (8.9%) 16.5 2
Slide 10: Cash Flow
CASH FLOW £M H1 FY25 H1 FY24 Inflow from operating activities* 51.3 61.6 Working capital (31.9) (23.6) Net inflow from operations 19.4 38.0 Tax (13.3) (13.8) Net capex (3.3) (3.1) Acquisitions (61.9) (57.6) Acquisition of own shares (5.3) - Other cashflows** (9.0) (11.2) Increase in net debt (73.4) (47
Slide 11: Estimated Earn-out Commitments
ESTIMATED EARN-OUT COMMITMENTS 31 Jul 2024 31 Jan 2024 £M £M FY25 0.6 58.7 FY26 48.6 46.4 FY27 42.2 43.6 FY28 28.1 28.6 Total 119.5 177.3 11 NEXT15
Slide 12: Adjustments
ADJUSTMENTS £M H1 FY25 H1 FY24 Adjusted profit before tax 45.7 55.6 Costs associated with the current period restructure (4.2) (1.4) Deal costs (0.2) (0.2) Charge for one-off employee incentive schemes - (5.2) Acquisition accounting related costs (7.9) (24.5) Statutory profit before tax 33.4 24.3 12 N
Slide 13: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES 13 NEXT15
Slide 14: Capital Allocation Priorities Unchanged
CAPITAL ALLOCATION PRIORITIES UNCHANGED Continue to prioritise investment in internal capabilities Leverage will remain within target levels (net debt below 1x EBITDA) Disciplined approach to bolt-on M&A to enhance key business areas Surplus cash to be returned to shareholders via dividends & share
Slide 15: Mach49 So Far and Going Forwards
MACH49 SO FAR AND GOING FORWARDS Acquired in September 2020 with initial revenues ~$14m and 10% margin. We made an initial payment of $4.7m on completion. By the end of this fiscal year we anticipate the business will have generated approximately $124m in after-tax profits for the Group and that we wi
Slide 16: Operational Progress
OPERATIONAL PROGRESS 16 NEXT15
Slide 17: The Next Next 15
THE NEXT NEXT 15 Earlier this year, Next 15 undertook a detailed review of its operations and strategic options. This showed our market opportunity was huge but that we needed a simpler operating model to execute. It also showed that our market cap significantly undervalues the underlying businesses.
Slide 18: The Next Next 15: A New Route to Growth
THE NEXT NEXT 15 A new route to growth Our decentralised model redefined and improved Synthetic Personas Widespread adoption of automation and tech-led services - we’re tracking 130+ AI projects and products across Next 15 AI products such as mAIstro that will act as the ‘operating system’ for mAIstr
Slide 19: In Practice
IN PRACTICE Delivering Growth Delivering Cost control Invest in emerging client needs Continue strategic bolt-on HO simplification eg retail media and influencer acquisitions marketing Brand simplification Brand simplification Lean into AI product Focus on gross margins development Offshoring & automati
Slide 20: Trading Environment
TRADING ENVIRONMENT We are anticipating a continuation of the current environment within the technology sector. We do expect margin improvements from several businesses as the effects of changes made in H1 to their operating models are realised FY25 H1 % Share of FY24 H1 % Share of Group Net Revenue
Slide 21: Clients: Analysis
CLIENTS: ANALYSIS Client wins: A selection of the Group’s top 10 clients (excluding large M49 client) in H1 FY251: Expanded briefs: Contribution of top 5 clients2 to H1 revenue - 11% Contribution of top 10 clients2 to H1 revenue - 16% Average tenure of top 20 clients2 - 7 years 1 Two clients cannot
Slide 22: Acquisition Strategy and Progress
ACQUISITION STRATEGY AND PROGRESS Continue to make bolt-on acquisitions for our businesses at attractive multiples; multiple range of 3.75 - 5.5x for acquisitions in H1 Bolt-on acquisitions in year enhance offering of the acquiring brand and bring new clients Expect these acquisitions to add £13m ne
Slide 23: Outlook
OUTLOOK Looking forward we are confident of meeting the recently revised market expectations which followed the news about the large contract in Mach49 ending earlier than anticipated. 23 NEXT15
Slide 24: Appendices
APPENDICES NEXT15 NEXT15
Slide 25: Next15 Board
NEXT15 BOARD Tim Dyson Peter Harris Jonathan Peachey (CEO) (CFO) (COO) Penny Robyn Perriss Helen Hunter Dianna Jones Paul Butler Ladkin-Brand (Audit) (Rem) (ESG) (ESG) (Chair) Governance Data Insight B Corp Business Pricing Transformation 25 NEXT15
Slide 26: Regional
REGIONAL Operation Net revenue Organic Operating Margin Margin H1 FY25 Growth/ Profit H1 FY25 H1 FY24 £M (Decline) £M US 146.9 0.4% 35.4 24.1% 30.1% UK 125.9 (5.3%) 20.6 16.4% 17.5% APAC 8.2 (0.1%) 1.0 11.7% 8.6% EMEA 5.8 (3.4%) 1.2 21.1% 23.1% HEAD OFFICE - - (10.1) - - Total 286.8 (2.2%) 48.1 16.8%
Slide 27: Balance Sheet Summary
BALANCE SHEET SUMMARY £M 31 July 2024 31 July 2023 Intangible assets 275.9 261.0 Non-current assets 89.5 102.9 Current assets 224.2 193.2 Non-current liabilities (199.5) (189.3) Current liabilities (220.2) (250.7) Net assets 169.9 117.1 Share capital 2.5 2.5 Reserves 166.1 114.1 Minorities 1.3 0.5 T