AEGIS GROUP PLC 2008 ANNUAL RESULTS 19 March 2009
AGENDA OVERVIEW OF RESULTS John Napier FINANCIAL REVIEW Alicja Lesniak OUTLOOK John Napier Q&A Aegis Group plc Page 2
OVERVIEW OF RESULTS John Napier, chairman and interim CEO
PRIORITIES Review of operating performance Two well-managed businesses, history of strong growth Some commitment to cost ahead of secured revenue Keynesian stickiness of variable wage and performance pay Response to changing market conditions Investment in services to meet client needs Reporting, treasury and cash management Aegis Group plc Page 4
Financial HIGHLIGHTS m 2008 2007 Change, % Constant currency change, % Revenue 1,342.0 1,106.4 21.3 10.1 Organic revenue growth (%) 4.6 9.8 Operating profit 185.4 146.2 26.8 10.7 Profit before interest and tax 188.1 149.4 25.9 10.1 Profit before tax 166.8 132.7 25.7 9.3 Earnings per share 10.3p 8.2p 25.6 9.6 Dividends 2.50p 2.30p 8.7 Aegis Group plc Page 5
Additional FACTORS Currency strongly positive Improved gross-to-net conversion in Synovate 54% of constant currency growth from acquisitions; 20 acquisitions in the year Geographic split consistent with prior year Aegis Group plc Page 6
Aegis Media RESULTS m 2008 2007 Change, % Constant currency change, % EMEA 588.1 471.1 24.8 11.5 Americas 167.3 153.7 8.8 0.2 Asia-Pacific 68.4 48.6 40.7 26.0 Worldwide 823.8 673.4 22.3 10.0 Operating profit 157.9 134.4 17.5 3.0 Operating margin 19.2% 20.0% Good growth, organic revenue growth of 6.1% Acquisition contribution Digital 29% of revenue Impact of Carat US Higher central costs, since addressed Aegis Group plc Page 7
Aegis Media EMEA m 2008 2007 Change, % Constant currency change, % Revenue 588.1 471.1 24.8 11.5 Currency factors, particularly Euro strength Excellent UK result despite tough trading in out-of-home Good organic growth across Eastern Europe and Russia France and Germany strong relative to market Continued progress in Nordics Weaker conditions in Spain and Italy Aegis Group plc Page 8
Aegis Media AMERICAS m 2008 2007 Change, % Constant currency change, % Revenue 167.3 153.7 8.8 0.2 Impact of Carat US client churn Action to address resource levels New Carat US president Positive new business and new hires Other businesses performing well US remains a key market Aegis Group plc Page 9
Aegis Media ASIA-PACIFIC m 2008 2007 Change, % Constant currency change, % Revenue 68.4 48.6 40.7 26.0 Excellent growth in revenue and operating profit Results driven by China, Taiwan and Australia Further business development in Hong Kong and Singapore Steady growth in India, Malaysia and Thailand Some specialist agency issues in Japan and Korea Good overall progress Performance step-up demonstrating market potential Aegis Group plc Page 10
Aegis Media SUMMARY Good performance in a changing year Strategy to take advantage of geographic footprint Maintain and develop in EMEA Fix Carat US Prioritise Asia-Pacific Aegis Group plc Page 11
Aegis Media SUMMARY Continued development and innovation in digital; largest network in the world Growth strategy supported by combination of organic development and acquisitions Effective balance of local and global strengths Excellent new business start to 2009 Aegis Group plc Page 12
Synovate RESULTS m 2008 2007 Change, % Constant currency change, % EMEA 248.4 206.4 20.3 11.2 Americas 145.2 132.5 9.6 1.4 Asia-Pacific 124.6 94.1 32.4 20.7 Worldwide gross revenue 518.2 433.0 19.7 10.3 Net revenue 329.2 273.2 20.5 11.3 Operating profit 42.2 34.9 20.9 13.1 Operating margin 8.1% 8.1% Further growth in revenue and operating profit Better gross-to-net conversion in US Net revenue a key indicator of performance Organic net revenue growth of 5.1%; benefit of acquisitions Continued investment in efficiency and service initiatives Programme to address resource expansion Aegis Group plc Page 13
Synovate EMEA m 2008 2007 Change, % Constant currency change, % Gross revenue 248.4 206.4 20.3 11.2 Net revenue 147.6 124.2 18.8 10.1 Good growth Russia and Africa the strongest markets, followed by Middle East Germany and Scandinavia more challenging Performance improvements in France and Spain UK integration complete; good business wins offset disruption Aegis Group plc Page 14
Synovate AMERICAS m 2008 2007 Change, % Constant currency change, % Gross revenue 145.2 132.5 9.6 1.4 Net revenue 100.5 83.2 20.8 11.7 Net revenue up strongly: offshoring benefits, offsetting weaker US market Significant growth in US operating profit Strong organic growth in Latin America Aegis Group plc Page 15
Synovate ASIA-PACIFIC m 2008 2007 Change, % Constant currency change, % Gross revenue 124.6 94.1 32.4 20.7 Net revenue 81.1 65.8 23.3 12.8 Strongest regional growth in revenue and profit Strong result in Japan after 2007 reorganisation Good growth in Australia South Asia solid throughout; particularly India and Singapore Innovation in products and data collection Data efficiencies offsetting China earthquake and Olympics disruption Aegis Group plc Page 16
Synovate VERTICALS Important for sector focus and excellence Healthcare: slow first half, good second half Good profit growth and margin improvement Syndicated, Asia and Europe all strong Motor: strong year despite industry challenges Benefits from emerging markets and customer satisfaction Retail data and analytics: further strong growth Increased share in established markets Investment in product and international expansion Entry to UK convenience Aegis Group plc Page 17
Synovate SUMMARY A good year, continuing to move forward A new business with a global presence Responding to challenges of rapid expansion and changing markets Continued investment in product and services Continued focus on operational efficiency, marketing and delivery Further efficiencies from cost reduction programme Aegis Group plc Page 18
Cost REDUCTION PROGRAMME Phase 1 in US completed Phase 2 set out today 780 people in >40 countries Total cost of 39.4m 27.4m in 2008 and 12.0m in 2009 22.5m in Aegis Media, 14.2m in Synovate, 2.7m in head office Expected savings of 20m pa Full-year run-rate from mid-2010 Contingency review of variable costs Aegis Group plc Page 19
Group SUMMARY Changing market environment Good revenue and profit performance Strategic agenda Building capability Improving efficiency Meeting clients needs Acquisitions Prepared for 2009 Good progress so far; more work to do Aegis Group plc Page 20
FINANCIAL REVIEW Alicja Lesniak chief financial officer
Underlying INCOME STATEMENT m 2008 2007 Change, % Constant currency change, % Turnover 10,413.8 9,351.2 11.4 0.3 Revenue 1,342.0 1,106.4 21.3 10.1 Gross profit 1,153.0 946.6 21.8 10.4 Operating profit 185.4 146.2 26.8 10.7 Associates 2.7 3.2 (15.6) (18.2) Profit before interest and tax 188.1 149.4 25.9 10.1 Net interest (21.3) (16.7) (27.5) (16.9) Profit before tax 166.8 132.7 25.7 9.3 Aegis Group plc Page 22
Reconciliation to statutory PROFIT BEFORE TAX m 2008 2007 Change, % Constant currency change, % Underlying profit before tax 166.8 132.7 25.7 9.3 Adjusting items: Reorganisation costs (27.4) - Write-off of software (4.4) - Amortisation of purchased intangibles (17.2) (3.0) Non-recurring reconciling items - 0.3 IAS 39 adjustments 6.8 1.7 Statutory profit before tax 124.6 131.7 (5.4) (17.7) Aegis Group plc Page 23
BALANCE SHEET m 2008 2007 Change % Goodwill 1,114.6 796.6 40.0 Intangible assets 104.9 49.2 113.2 Property, plant and equipment 73.5 53.8 36.6 Other non-current assets 52.7 39.1 34.8 Net receivables/(payables) (356.9) (168.8) 72.5 Net debt (297.5) (245.2) 21.3 Earn-out liabilities (197.4) (116.7) 69.2 Liabilities in respect of put options (41.3) (22.0) 87.7 Other 7.2 (79.7) (26.3) Net assets 459.8 306.3 46.1 Euro +23.3% and US dollar +26.6% vs sterling compared to 31 December 2007 Aegis Group plc Page 24
NET DEBT m 2008 2007 Gross debt including overdrafts 710.2 602.0 Cash 412.7 356.8 Net debt 297.5 245.2 Net debt increase due to FX 69.9m Aegis Group PLC Page 25
CASH FLOW m 2008 2007 Operating profit 136.4 140.3 Depreciation, amortisation and impairment 51.7 30.5 Other non-cash movements 18.6 10.5 Net movement in working capital 54.9 (6.3) Operating cash flow 261.6 175.0 Tax paid (46.1) (38.8) Net interest paid (19.4) (14.7) Dividends paid to equity holders (27.4) (22.7) Other activities (7.9) 13.7 Cash flow before acquisitions and capex 160.8 112.5 Net spend on acquisitions/disposals (103.3) (124.3) Net capital expenditure (39.6) (27.2) Net cash before movement in borrowings 17.9 (39.0) Net movements on borrowings (22.1) 92.0 Net cash movement (4.2) 53.0 Aegis Group plc Page 26
COVENANTS AND HEADROOM m 2008 2007 Covenants Net debt / EBITDA (<3 times) 1.2 1.2 EBITA / gross interest (>4 times) 6.0 6.0 RCF drawn ( m) 277.9 264.4 RCF availability ( m) 172.1 185.6 Aegis Group plc Page 27
EPS AND DIVIDEND Pence 2008 2007 Change, % Underlying diluted earnings per share 10.3 8.2 25.6 Statutory diluted earnings per share 7.3 7.8 (6.4) Interim dividend 0.96 0.84 14.3 Final dividend 1.54 1.46 5.6 Dividend per share 2.50 2.30 8.7 Dividend cover (underlying) 4.1 3.6 11.1 Aegis Group plc Page 28
OUTLOOK
OUTLOOK Aegis Too early for a full-year outlook Aegis Media Record year-to-date new business of over $1bn Start 2009 in a good position Synovate Secured net revenue holding up well Product launches planned Greater importance of second half Aegis Group plc Page 30
OUTLOOK Difficult to forecast market environment Country by country GDP variations Future relationship between GDP and media expenditure Marketing mix Brand Media reach Below-the-line Well-placed for both traditional and new approaches Aegis Group plc Page 31
OUTLOOK Focusing on what we can control Service standards and competitive action Cost reduction programme Further variable cost flexibility built in Organic investment in services and products Acquisition strategy to support growth Well-positioned for challenging market conditions Tighter organisation with cost flexibility Management capability to react to opportunity Expect a resilient performance in more difficult markets Aegis Group plc Page 32
Q & A
APPENDIX Aegis Group PLC Page 34
CURRENCY IMPACT Exchange rates / Change % /$ Change % 2008 average 1.2574 14.0 1.8519 7.5 2008 y/e 1.0442 23.3 1.4754 26.6 Revenue by currency % $ Other 2008 32.3 26.0 15.1 26.6 Aegis Group plc Page 35
TAX m 2008 2007 Change, % Constant currency change, % Underlying PBT 166.8 132.7 25.7 9.3 Underlying tax charge 43.1 35.2 22.4 6.4 Effective tax rate 25.8 26.5 (70)bps Effective statutory tax rate on statutory profits: 28.4% (2007: 29.2%) Aegis Group plc Page 36
MATURITY PROFILE m Principal Debt due after 1 year 2009-2010 28.4 2011 308.6 2012 109.1 2014 51.5 2015 81.1 2017 78.9 657.6 Overdrafts and rollable short-term loans 52.6 710.2 As at 31 December 2008 Aegis Group plc Page 37
ACQUISITIONS m 2008 2007 Initial consideration on acquisitions 61.4 79.8 Deferred consideration on prior year acquisitions 47.8 48.3 Other non-cash consideration 0.0 4.7 Total consideration paid in period 109.2 132.8 Future estimated deferred consideration on current period acquisitions 79.3 48.8 * Cash consideration is before cash acquired Aegis Group plc Page 38