Slide 1: Investor Presentation May 2018
I nve stor Pre s e ntat ion May 2018
Slide 2: Agenda
Age nda 2017 Highlights Financial Analysis Outlook and Guidance
Slide 3: Mission and Purpose
M is s ion To be the leading, fully integrated Marketing Solutions company across Sub Saharan Africa. Pur pos e Create a continuous, relevant dialogue with consumers across traditional and emerging channels by leveraging data, technology and creativity to build profitable brands.
Slide 4: Key successes in 2017
Key successes in 2017 Restructuring Focus on core Geographical Markets • Physical integration of SCANAD and • Nigeria – Resolved the long running Squad in Kenya dispute with our former affiliate partner. • Co-location of all Ogilvy operations Market research, PR, Digital and Media under one roof in
Slide 5: 2018 priorities for our business
2018 priorities for our business Top Line Growth Continue regional focus Nigeria Diversification • Maintain our • Will consider • Nigeria issue resolved • Intent to enter into leadership position – restructuring our without any branded content “Agency of the Future regional businesses in significant
Slide 6: Key global trends set to disrupt our business
Key global trends set to disrupt our business Shift to Audience based Programmatic Integration of Development of VR/ Multi screen targeting advertising brands in Content AR experiences (Mobile) Linear TV $1.1 B in 2011 to Substantial 27% higher Consumer to be addressable space $45.9B in 2019 allocat
Slide 7: Using data & tech to offer business solutions
Using data & tech to offer business solutions BUSINESS INPUTS BUSINESS OUTPUTS STRATEGY & CREATIVE ACQUISITIONS MANAGEMENT CUSTOMER MEDIA CUSTOMER REVENUE LIFETIME SALES Big Data & AI backed Marketing Automation platform to drive sales & customer lifetime value 7
Slide 8: What does it mean to drive solutions for our clients?
What does it mean to drive solutions for our clients? Align our Output with Client’s Output • How do we help reduce cost of customer acquisition, & drive sales at scale? • How do we help improve sales effectiveness? • How do we help improve customer retention, increased product usage & cross-sell? •
Slide 9: Using data & tech for KCB to accelerate online account opening
Using data & tech for KCB to accelerate online account opening at scale & speed 9
Slide 10: Marketing Automation Platform – Optimus
Marketing Automation Platform – Optimus Big Data & Artificial Intelligence driven Marketing Automation Platform to drive customer lifecycle management • Improve advertising effectiveness with bullseye targeting to reduce cost of customer acquisition, & drive sales at scale • Improve sales effectiven
Slide 11: Financial Analysis, Outlook and Guidance
Financial Analysis Outlook and Guidance
Slide 12: 2017 Business Environment: Kenya
2017 Business Environment: Kenya • Twelve NSE listed companies declare profit warning for 2017 • Prolonged electioneering process • Interest rate caps • Drought • 27 companies declared reduced profits for 2017 Source: Standard Online, Financial Standard, 23rd January 2018 12
Slide 13: Headline Results 2017 vs 2016
Headline Results 2017 vs 2016 Key Financials (Ksh’M) FY 17 FY 16 YoY% Revenue 4,123 4,835 -14.7% Operating Profit 412 360 +14.7% Interest Income 290 407 -28.6% Profit before Tax 696 726 -4.1% Net Income after MI 455 423 7.1% EPS 1.20 1.12 7.1% DPS 0.75 0.50 +50.0% 13
Slide 14: The story of our Revenue
The story of our Revenue Ksh’M 4,835 +138 -850 4,123 2016 -18% +21% -35% +18% 2017 Revenue Revenue -862 +1,000 -1,717 +867 Loss of New Reduced Increased Business Wins Activity Activity Existing Clients • We won more clients in value than we lost • Lost more from our existing clients 14
Slide 15: Geography & Medium
Geography & Medium Revenue by Location Revenue Kenya Ghana Nigeria Tanzania Uganda South Africa Zambia Gabon Rwanda 2017 73% 8% 6% 4% 3% 3% 2% 1% 0% 2016 60% 9% 5% 5% 5% 5% 2% 9% 1% • Almost all locations saw a decline except for Kenya • Reversal of trend as Kenya increased its share Revenue by Medi
Slide 16: The story of our Cost
The story of our Cost Ksh’M 4475 -529 -80 -11.8% -53 -61 -1.8% -40 -1.2% +3710 -1.4% -0.9% Year EBIT % PBT % 17.1% 2014 13% 18% 2015 9% 17% 2016 7% 15% 2017 12% 19% 2016 Op Cost Staff Establishment Personal IT Costs Finance & 2017 Op Cost Cost Cost Other cost Costs • Our cost efficiency measures con
Slide 17: Headline Results 2017 H2 vs H1
Headline Results 2017 H2 vs H1 Key Financials (Ksh’M) H2 17 H1 17 H2oH2% Revenue 2124 1998 6% Operating Profit 313 99 216% Interest Income 150 140 7% Profit before Tax 452 244 85% Profit after Tax 321 157 104% Net Income after MI 309 146 112% EPS 0.82 0.39 112% 17
Slide 18: The story of our Cash
The story of our Cash Ksh’M +571 -94 -352 -2.4% -72 +294 -120 -241 +3,909 -499 -9% -1.8% +14.6% -3.1% -6.2% +3397 +7.5% 13.1% -12.8% 2017 Op Cash WC Tax Existing Dividend Net Minority Nigeria 2017 Opening Before WC Changes paid Reduced Paid Interest & Acquisition Loan Closing Balance Changes Commiss
Slide 19: 2017 Audited Balance sheet
2017 Audited Balance sheet KES'000 31/12/2017 31/12/2016 +/- • Equipment continues Non-current assets to reduce as we have Equipment 340,186 398,730 -58,544 fully amortised the ERP Associate Investments 4,541 4,067 474 system and as we Long term loan receivables 498,684 0 498,684 continue to control
Slide 20: 2017 Audited Balance sheet
2017 Audited Balance sheet KES'000 31/12/2017 31/12/2016 +/- • Trade payables increased Current Liabilities as a result of slower debt Trade and other payables 4,359,821 4,270,656 89,165 Payable to related parties 262,721 178,080 84,641 collections and Tax payable 153,692 212,481 -58,789 consequent
Slide 21: Disclaimer
Disclaimer Forward looking statements contained in this presentation are based upon what management of the company believes are reasonable assumptions, there can be no assurance that forward looking statements will prove to be accurate, as actual results and future events could materially differ fro
Slide 22: FY 2018 Guidance
FY 2018 Guidance Like for Like Organic Revenue Growth 5% Like for like Net Income Growth 10 % 22
Slide 23: The TNS Kantar Transaction
The TNS Kantar Transaction Key Metrics (Ksh’M) Kshs US$ Net Sales 2017 1,856 17.9 EBIT (80%) 265 2.6 Value paid for 80% 1,126 10.9 Net Sales Multiple 0.61 0.61 EBIT Multiple 4.24 4.24 23
Slide 24: Key Statistics
Key Statistics Kshs US$ Shareholding WPP Plc 50.01% Bharat Thakrar 12.05% Others 10.90% Billings 2017 $163M Revenue 2017 $48M Market Cap Average 2017 $48M 24
Slide 25: Thank you for your time
Thank you for your time WPP SCANGROUP