Slide 1: Final Results – 4 April 2018
Final Results – 4 April 2018
Slide 2: Financial summary
Financial summary • Revenue up 15% to £196.8m (2017: £171.0m) • Organic* revenue growth of 5.2% (UK organic growth of 7.6%) • H2 organic revenue growth of 8.3% • Adjusted** EBITDA up 19% to £34.4m (2017: £29.0m) • Adjusted operating profit margin up to 15.3% from 14.6% • Adjusted pre tax profits up
Slide 3: Corporate progress
Corporate progress • UK investments include the acquisitions of Velocity, Circle, Elvis and Charterhouse • UK revenues grew 36.8% to £58.3m with margin up to 22.3% thanks to acquisitions and operational improvements to drive organic growth of 7.6% • US revenues grew 8.3% to £115.9m with margin of 20
Slide 4: Data-driven, technology enabled
Data-driven, technology enabled • Our customers are asking different things of us; anticipation of customer behaviour, measurement and alignment to business goals, multiple optimisation of spend, technology as a (Creative) service • We are operating in a disrupted industry – advertising no longer ki
Slide 5: Our strategies
Our strategies • Work with and partner with, the companies disrupting our industry FB, Google, MSFT, Amazon • Build and buy technology-enabled content and data businesses • Develop higher level consulting organization able to deliver end-to-end solutions • Leverage US assets and partnerships
Slide 6: Data Technology Content
Data Innovation Technology X Consulting Content
Slide 7: Circle
Circle • A B2B market research consultancy acquired under MIG in July • Clients include Vodafone, Samsung and BSI • Enhances B2B research presence for MIG and brings in further leadership talent • Revenue of £2.2m and EBITDA of £1.0m in last financial year • Paid £3.0m initially for the business, ba
Slide 8: Velocity
Velocity • A UK based content marketing agency with primarily multi-national technology clients, such as Sprint, Xerox and Informatica, acquired in July • 70% of revenue from US based clients • Significant growth potential in US • Revenue of £5.2m and adjusted PBT of £1.4m for last financial year •
Slide 9: Charterhouse
Charterhouse • UK based market research consultancy acquired in September 2017, with clients including Barclays, Royal Bank of Scotland, Lloyds and HSBC • Complimentary to Circle acquisition; access to financial services key management through the Business Banking Survey • Revenue of £1.4m and EBITD
Slide 10: Elvis
Elvis • UK based integrated digital agency focused on consumer brands acquired in September • Clients include Cadbury, Honda, Stella Artois and Kenco • Opportunity to partner with other Next 15 agencies as well as expand geographical footprint • Consideration of £5.5m with £0.5m deferred, representi
Slide 11: Brandwidth
Brandwidth • UK based digital innovation agency acquired in February 2018 • Clients include Toyota, Royal Caribbean, Citroen, Kia and Vodafone • Brings significant digital skills to the Group and exciting voice technology capabilities • Initial consideration of £6.2m with further consideration payab
Slide 12: Today
Today DATA CONTENT TECHNOLOGY Encore Bite Agent3 MIG Global incorporating: Blueshirt Beyond • Morar HPI M Booth Connections Media • Circle Outcast Twogether • VIGA Text 100 Elvis • Charterhouse VRGE Brandwidth Publitek ODD Velocity
Slide 13: Income statement – Adj. results
Income statement – Adj. results £M 2018 2017 GROWTH % Revenue 196.8 171.0 15% EBITDA 34.4 29.0 19% Operating profit 30.0 25.0 20% Operating margin 15.3% 14.6% PBT 29.3 24.2 21% Tax (5.9) (5.3) Minorities (0.6) (0.6) Retained profit 22.8 18.3 24% Diluted EPS 27.8 23.4 19% Dividend 6.30 5.25 20%
Slide 14: Adjustments breakdown
Adjustments breakdown £M 2018 2017 Adjusted pre tax profits 29.3 24.2 Restructuring (1.7) (0.7) Office moves (0.5) - Deal costs (0.5) (0.4) Share based payments (3.1) (10.5) Unwinding of discount and change in estimate (3.2) (4.2) of earnout liabilities Amortisation of acquired intangibles (7.0) (5.
Slide 15: Regional breakdown
Regional breakdown Regions Revenue Organic Operating Margin Margin Comments 2018 growth Profit 2018 2017 £M £M US 115.9 5.1% 23.2 20.0% 20.9% Investment in taking some of our UK agencies to the US UK 58.3 7.6% 13.0 22.3% 18.9% Operational improvement and acquisitions APAC 14.7 (0.7%) 2.0 13.6% 15.2%
Slide 16: Cash flow statement
Cash flow statement £M 2018 2017 Inflow from op activities 33.1 26.5 Working capital (4.2) 6.3 Net inflow from operations 28.9 32.8 Tax (4.3) (2.0) Net capex (4.2) (8.9) Acquisitions (15.4) (21.6) Net interest and dividends paid (6.4) (5.2) Exchange gain on net debt 1.2 0.1 (Increase) / Decrease in
Slide 17: Cash commitments
Cash commitments 31 Jan 18 £M FY 2019 7.9 FY 2020 3.6 FY 2021 8.9 FY 2022 1.4 FY 2023 3.0 Total 24.8
Slide 18: Conclusion
Conclusion Summary of the results: • February and March trading at high single digit organic growth, • Revenue up 15% to £196.8m continuing the growth achieved in • Organic revenue growth of 5.2%, H2 FY18 with H2 organic growth of 8.3% • Group is well placed for the next • Adjusted EBITDA up 19% at
Slide 19: Appendices
Appendices
Slide 20: Management team
Management team Richard Eyre CBE Tim Dyson Peter Harris (Chairman) (CEO) (CFO) Richard joined in 2011, he is Tim joined the group in 1984 Peter was appointed CFO in also Chairman of the Internet and became the global CEO in 2013. He is also a NED at Advertising Bureau. Prior to 1992. An early advoca
Slide 21: 5 year record
5 year record £200 £197 m 5% £180 £171 m 10% £160 £140 £130 m £120 8% £109 m £99 m £’m £100 6% 7% £80 £60 £40 £30 m £25 m £13 m £17 m 15.3% £20 14.6% £9 m 11.7% 12.7% 8.9% £- FY14 Actual FY15 Actual FY16 Actual FY17 Actual FY18 Actual Revenue Operating profit X% Operating profit margin Y% Organic gr
Slide 22: UK growth
UK growth £70.0 £60.0 £58.3m 8% £50.0 £42.6m £40.0 4% £’m £30.0 £27.9m (1)% £23.8m £20.0 £18.7m (1)% (10)% £13.0m £10.0 £8.0m £3.8m £0.8m £2.5m 19% 22% 4% 11% 14% £0.0 FY14 Actual FY15 Actual FY16 Actual FY17 Actual FY18 Actual Revenue Operating profit X% Operating profit margin Y% Organic growth
Slide 23: US growth
US growth $160 $151 m $143 m 5% $140 $127 m 13% $120 14% $104 m 11% $100 $92 m 18% $’m $80 $60 $40 $30 m $30 m $23 m $27 m $22 m 20% $20 24% 22% 21% 21% $- FY14 Actual FY15 Actual FY16 Actual FY17 Actual FY18 Actual Revenue Operating profit X% Operating profit margin Y% Organic growth
Slide 24: EMEA & APAC growth
EMEA & APAC growth £25.0 £23.6m £22.5m 0% £21.5m £21.4m 1% £20.0 (1)% 6% £18.4m (4)% £15.0 £’m £10.0 £5.0 £2.8m £2.8m (2)% £1.8m £1.8m 8% 13% 12% -£0.6m 10% £0.0 FY14 Actual FY15 Actual FY16 Actual FY17 Actual FY18 Actual -£5.0 Revenue Operating profit X% Operating profit margin Y% Organic growth
Slide 25: Top 20 customers
Top 20 customers Alphabet amazoncom al O solarwinds * vodafone he Power to M IT Rcr Schneider shutterstock xerox ©) INTUIT. AIVIERICAN WZ Samsun ui SUNTRUST o TESCO J” 7 a a =a B® Microsoft ie MACALLAN
Slide 26: FY18 revenue bridge
FY18 revenue bridge FY18 Revenue Bridge (£m) 200 + 4.1 196.8 +2.4% +15.1% + 12.8 195 +7.5% 190 185 + 8.9 +5.2% 180 175 171.0 170 165 160 Year to 31 January 2017 Organic growth Acquisitions Foreign exchange Year to 31 January 2018
Slide 27: Our growth 2013–2018
Our growth 2013–2018 112% Google REVENUE GROWTH 191% INCREASE IN EBITDA Alphabet LARGEST CLIENT 184% DILUTED EPS 2018, NOT A 2013/18 GROWTH 2013/18 MATERIAL CLIENT IN 2013 234% INCREASE IN CASH 75% INCREASE IN EBITDA 167% INCREASE IN 18% ADJ ROCE POST GENERATED FROM PER STAFF 2013/18 DIVIDENDS 2013/
Slide 28: Client analysis 2018
Client analysis 2018 9% INCREASE IN AVG CLIENT 44 46% CLIENTS GENERATING OVER SHARE OF GROUP REVENUES YIELD $1M IN REVENUES 2018 FROM $1M PLUS CLIENTS 5% INCREASE IN 16 89% REVENUES TOP 20 CLIENTS IN 2018 IN CLIENT NUMBERS GENERATED IN US TOP 20 CLIENTS 2017 (INCL ACQ) AND UK 12 MONTHS TO JAN 2018 E
Slide 29: Balance sheet summary
Balance sheet summary £M FY 2018 FY 2017 Intangible assets 94.8 80.0 Non-current assets 25.3 27.5 Current assets 74.6 64.8 Non-current liabilities (58.8) (54.2) Current liabilities (59.6) (49.6) Net assets 76.3 68.5 Share capital 1.9 1.8 Reserves 75.0 65.8 Minorities (0.6) 0.9 Total equity 76.3 68.5