Aegis Group plc Half Year Results. 27 August 2010

Transcription

1 Aegis Group plc 2010 Half Year Results 27 August 2010

2 Agenda Introduction John Napier, Chairman Aegis Group overview Jerry Buhlmann, CEO Divisional review Aegis Media - Jerry Buhlmann, CEO Synovate Robert Philpott, CEO Synovate Financial Review Nick Priday, CFO Strategy, summary & outlook Jerry Buhlmann, CEO Questions & Answers Aegis Group plc Page 2

3 Introduction Good performance in H confirms our expectations of a return to growth Strong profit performance mainly due to top line growth and Synovate s return to profitability Progressive improvement in organic growth at Aegis Media Interim dividend increased by 6.8% to 1.025p Aegis Group plc Page 3

4 Aegis Group overview Jerry Buhlmann CEO

5 Aegis Group H results summary Performance confirms expected return to growth Total revenue increased 4.2%, at reported rates, and 2.4%, at constant currency, to 663.3m, with organic revenue growth of 3.2% Group operating margin increased 120 bps to 9.2%, with operating profit up 18.9%, at constant currency, to 61.1m Improved exposure to faster-growing regions Financial position further strengthened revolving credit facility re-financed and convertible bond launched Underlying earnings per share increased 11.1% to 3.0p Interim dividend increased 6.8% to 1.025p Aegis Group plc Page 5

6 Aegis Group Progressive improvement at both businesses m H H Change, % Constant currency change, % Revenue Organic revenue change 3.4% (9.9)% Operating profit Operating margin 15.9% 15.7% 20 bps 40 bps m H H Change, % Constant currency change, % Gross revenue Organic revenue change 2.8% (12.3)% Net revenue Operating profit 4.7 (3.2) Operating margin 1.9% (1.4)% 330 bps 310 bps Aegis Group plc Page 6

7 Divisional review Aegis Media Jerry Buhlmann CEO

8 Aegis Media H results summary m H H Change, % Constant currency change, % Revenue Operating profit Operating margin 15.9% 15.7% 20 bps 40 bps Strong global new business performance of $1.0 billion billings (2009: $1.8 billion) Good performances from businesses in faster-growing regions Operating margin improved 40 bps, at constant currency, to 15.9% Aegis Group plc Page 8

9 Aegis Media Quarterly performance Change % Q109 Q209 Q309 Q409 Q110 Q210 Organic revenue (13.1) (7.4) (11.8) (8.0) H109 H209 H110 (9.9) (9.5) 3.4 Continuation of positive trend over recent quarters 32% of revenue from digital (2009: 31%) Robust revenue growth, reflecting renewed confidence in advertising sector Aegis Group plc Page 9

10 Aegis Media Geographic performance review Revenue ( m) H110 H109 Change, % Constant currency change, % EMEA (0.4) 0.1 Americas Asia Pacific Mixed performance across Western Europe, continued strong delivery in Russia Good progress in US recovery programme, Latin America performed well Solid performances in Asia Pacific, in particular China acceleration of transformation of regional network continues Aegis Group plc Page 10

11 Aegis Media Summary Strong H1 results, supported by good new business performance Overall solid performance in Europe Strong progress in transforming our Asia Pacific network US recovery plan on track Aegis Group plc Page 11

12 Divisional review Synovate Robert Philpott CEO, Synovate

13 Synovate H results summary m H H Change, % Constant currency change, % Gross revenue Net revenue Operating profit 4.7 (3.2) Operating margin 1.9% (1.4)% 330 bps 310 bps Sales and revenue performance well ahead of initial expectations Sales increased 4.4%, gross organic growth up 2.8% Strong orders in hand position increased 9.2% at end of H1 Profitability performance also supported by continued emphasis on efficiency improvements Expecting upward pressure on staff costs in H2, along with more challenging profit comparators Aegis Group plc Page 13

14 Synovate Quarterly revenue performance Change % Q109 Q209 Q309 Q409 Q110 Q210 Organic gross revenue (9.1) (14.6) (10.1) (5.5) (1.9) 6.5 H109 H209 H110 (12.3) (7.4) 2.8 Progressive sequential improvement in quarterly organic growth particularly strong performance towards end of Q2 Aegis Group plc Page 14

15 Synovate Geographic performance review Gross revenue ( m) H H Change, % Constant currency change, % Americas EMEA (1.6) Asia Pacific Strong North American performance ahead of market, despite challenging pricing environment Variable performance across Western Europe, key business units performed well Solid performance across Asia Pacific, particularly in Greater China Healthcare: strong result from ad hoc; industry consolidation & changing market dynamics impacted syndicated Automotive picking up in Asia and Europe, but little sign of recovery in US Aegis Group plc Page 15

16 Synovate Summary A strong recovery performance in H1 2010, particularly in Q2, marked by a return to profitability Performance driven by continued management emphasis on driving sales and delivering operational efficiency Market research industry recovering Synovate in a strong position to take advantage of changing industry dynamics Aegis Group plc Page 16

17 Financial review Nick Priday CFO

18 Income Statement Underlying m H H Change, % Constant currency change, % Revenue Gross profit Overheads (506.3) Operating profit 61.1 Associates 1.5 Profit before interest and tax 62.6 Net interest (14.3) Profit before tax 48.3 Operating margin 9.2% (506.3) (496.5) (2.0) (0.8) (0.5) (14.3) (6.0) (138.3) (129.1) % 8.0% 120bps 130bps Aegis Group plc Page 18

19 Net Interest 8.4m 0.7m 0.1m 4.6m 13.8m HY 2009 Increase in net debt FX and non-cash movements Net movements in rates HY 2010 Aegis Group plc Page 19

20 Profit before tax Reconciliation to statutory m H H Change % Underlying profit before tax Adjusting items: Restructuring costs - (15.7) Amortisation of purchased intangible assets (13.6) (12.4) IAS 39 adjustments (1.8) (9.9) Net loss on disposal of subsidiaries and associates, and related impairment of goodwill (7.6) - Statutory profit before tax Aegis Group plc Page 20

21 Balance Sheet m H FY 2009 Change % Goodwill 1,028.9 Intangible assets 74.2 Property, plant and equipment 57.2 Investments in associates & joint ventures 48.6 Other non-current assets 57.5 Net receivables/(payables) (275.3) Net debt (398.4) Earn-out liabilities (49.4) Liabilities in respect of put options (30.7) 1, , (13.2) (4.5) , (275.3) (309.3) (11.0) (398.4) (257.2) 54.9 (49.4) (70.2) (29.6) (30.7) (31.4) (2.2) Other (48.8) (88.1) (44.6) Net assets Aegis Group plc Page 21

22 Cash flow statement Underlying m H H Operating profit Depreciation and amortisation Net interest paid (13.9) (8.2) Tax paid (25.6) (20.2) Share-based incentives and other non-cash movements Net cash generated Net capital expenditure (12.3) (11.5) Acquisitions initial cash (40.3) (5.9) Acquisitions earnout payments (29.5) (46.4) Net cash after capex and acquisitions (45.4) (23.0) Net change in borrowings Purchase of own shares (9.6) - Dividends paid - (17.5) Other movements 2.1 (1.3) Net cash before net working capital movements 8.2 (29.5) Aegis Group plc Page 22

23 Net debt m 30 June June Dec 2009 Gross debt including overdrafts (731.7) (680.1) (648.3) Cash Net debt (398.4) (362.3) (257.2) Aegis Group PLC Page 23

24 Funding profile US Private Placement Notes issued in December 2009 $225m unsecured loan notes repayable between 2017 and 2019 Successful launch of Convertible Bond in March 2010, raising 190.6m - due in April 2015, with a coupon of 2.5% Revolving credit facility successfully re-financed, with tenure lengthened until 2015 Aegis Group plc Page 24

25 Eps and dividend Underlying diluted earnings per share 3.0p Total dividend per share 1.025p Dividend cover (underlying) 2.9x H H p 2.7p 1.025p 0.96p 2.9x 2.8x Aegis Group plc Page 25

26 Strategy, summary & outlook Jerry Buhlmann CEO

27 Strategic priorities Aegis Group plc Page 27

28 Aegis Media Power Brand Strategy full service media full service media creative performance media out of home Aegis Group plc Page 28

29 Strategic priorities for Aegis Media Market context: media and advertising sectors moving to a converging world Increase exposure to faster-growing regions Ensure full service of digital and media propositions across brands Maintain consistent focus on targeting profitable new business Increase digital profile and capability Build on leading positions in top 20 markets Broaden service offering and geographic reach across existing and new international clients Investor Day on digital and Asia Pacific in London on Friday 3 December 2010 Aegis Group plc Page 29

30 Strategic priorities for Synovate Market context: clients seeking longer term relationships with fewer research providers Consolidate market position through the delivery of profitable sales Maintain drive on improving the efficiency of the way we work Focus on market-leading specialist capabilities Increase exposure to faster-growing regions, in particular China & Russia Build long term relationships with clients in evolving research environment Aegis Group plc Page 30

31 Growing our exposure to faster-growing regions FY 2009 HY 2010 Faster growing regions 27% North America 20% Western Europe 53% Faster growing regions 30% North America 21% Western Europe 49% Faster-growing regions comprise Latin America, Central and Eastern Europe, Asia Pacific, the Middle East and Africa Aegis Group plc Page 31

32 Increased focus on acquisitions Rationale aligned to strategic priorities Looking to capture and integrate potential acquisitions that provide: Scale In-fill Innovation Targeting bolt-ons small, medium and relatively large Focus on faster-growing regions, digital, as well as media & research in-fill targets Increased focus on acquisition strategy in 2010: Charm Communications Inc: shareholding and joint venture Mitchell Communication Group: expected to be completed in Q Aegis Group plc Page 32

33 Advertising sector outlook increasingly optimistic Updated Carat adspend forecasts published today Forecast year on year growth at current prices (%) Year Year Global Global -9.2 (-9.0) 3.9 (2.9) 4.7 (4.0) USA USA (-14.1) 1.1 (0.2) 1.7 (1.4) Western Europe (-11.3) 1.3 (0.6) 2.7 (2.1) Central & Eastern Europe (-21.3) 5.0 (3.0) 10.2 (6.5) Asia Pacific -1.2 (-0.5) 8.2 (6.8) 7.6 (7.2) Latin America 8.7 (4.6) 11.2 (11.2) 14.0 (9.9) Figures in brackets show previous Carat forecasts from March 2010 Source: Carat ad spend forecasts, August 2010 Aegis Group plc Page 33

34 2010 Outlook Macro-economic: Economic uncertainties remain in certain regions, notably North America & Western Europe Signs of rebound in most markets, but too early to forecast consistent sustained longer term recovery Advertisers continue to increase short term budgets - more optimistic sector outlook, with low to medium term visibility Improving market research environment, with consistent evidence of renewed client confidence Aegis: Anticipating continuing trend of improvement in organic growth in second half at Aegis Media and Synovate Expecting Group underlying operating profit to be in line with current market consensus, with modest improvement in Group operating margin Aegis Group plc Page 34

35 Aegis H Results Summary Performance in H confirms expected return to growth Financial position further strengthened Progressive improvement in organic growth at Aegis Media Benefits from management actions continue to come through at Synovate Expecting continuing trend of improvement in organic growth at Aegis Media and Synovate, supported by modest improvement in Group operating margin Aegis Group plc Page 35

36 Q & A

37 Appendices Aegis Group PLC Page 37

38 Maturity profile m Debt due after 1 year 2011 (H2) Overdrafts and short-term loans Aegis Group plc Page 38

39 Covenant position 30 June June Dec 2009 Covenants Net debt / EBITDA (<3 times) 1.9x 1.6 x 1.2x EBITA / gross interest (>4 times) 6.2x 6.1x 6.9x RCF drawn ( m) RCF availability ( m) Total central facility headroom ( m) Aegis Group plc Page 39

40 Currency impact Exchange rates / Change % /$ Change % H average H period end Revenue by currency % $ Other H Aegis Group plc Page 40

41 Tax m Change, % Underlying PBT 48.3 Underlying tax charge 12.0 Effective tax rate 24.8% % 25.5% 70bps Aegis Group plc Page 41

42 Cash flow statement Underlying m H H Operating profit Depreciation, amortisation and impairment Other non-cash movements Net movement in working capital (53.2) (16.7) Operating cash flow Tax paid (25.6) (20.2) Net interest paid (13.9) (8.2) Dividends paid to equity holders - (17.5) Other activities (7.5) (1.3) Cash flow before acquisitions and capex (24.0) 5.3 Net spend on acquisitions/disposals (69.8) (50.0) Net capital expenditure (12.3) (11.5) Net cash before movement in borrowings (106.1) (56.2) Net movements on borrowings Net cash movement (45.0) (43.9) Aegis Group plc Page 42

43 Statutory cash flow m H H Net cash movement (45.0) (43.9) Cash outflow on 2008/2009 restructuring programmes (9.3) (22.2) Cash impact on disposal of subsidiaries (8.2) - Net cash movement (62.5) (66.1) Aegis Group plc Page 43