Results for the six months ended 30 June 2018 Driving sustainable growth
2018 Interim Overview Strong progress on profit growth and expansion of Healthcare LFL profits +14% Healthcare +6% 1 Marketing offering strengthened through the acquisition of Giant Strengthened HCP and West Coast capabilities Strong revenue growth from Medical & Immersive divisions Medical Immersive +16% +11% Revenue decline in Marketing & Comms divisions Marketing Comms -9% -5% Interim dividend increased to 0.7p +27% 1. H1 revenues from Healthcare as a % of the Group increased from 58% to 64% 24 July 2018 Results for six months ended 30 June 2018 2
Financial highlights H118 H117 Revenue ( m) 102.2 94.2 +8% -3% LFL Headline Operating Profit ( m) 11.8 11.0 Margin 11.6% 11.7% +8% +7% LFL Headline Profit Before Tax ( m) 11.0 10.0 +9% +14% LFL Headline Diluted EPS (pence) 2.60 2.35 +11% Net Debt ( m) 38.9 26.8 1.3x EBITDA Headline Tax Rate 20% 22% Reduction in US tax rate 24 July 2018 Results for six months ended 30 June 2018 3
Divisional Summary Marketing Medical Immersive Comms Central costs 1 & associates Total Revenue ( m) 33.3 15.6 17.0 36.3-102.2 LFL Revenue Growth (%) (8.5)% 16.0% 11.1% 2 (5.4)% - (3.4)% Headline Operating Profit ( m) 7.4 3.6 2.3 2.7 (4.2) 11.8 LFL Operating Profit Growth (%) (4.2)% 42.6% n/a (20.2)% n/a 6.3% Headline Operating Margin (%) 22.1% 23.1% 13.8% 7.4% n/a 11.6% 1. Includes 0.8m loss on forward hedging instruments 2. LFL results adjusted to include pre-acquisition TCEG results 24 July 2018 Results for six months ended 30 June 2018 4
Revenue bridge: H117 to H118 0.9m 3.0m 2.1m 0.0m 2.1m -3% LFL decline 16.3m -9% LFL decline +16% LFL growth -5% LFL decline 102.2m 94.2m 4.4m 2017 FX Acquisitions Disposals Marketing Medical Immersive Comms 2018 5
HPBT bridge: H117 to H118 +14% LFL growth 0.1m 1.1m 0.7m 1.0m 0.3m 10.0m 2.5m 2.3m -4% LFL decline +43% LFL growth -20% LFL decline 11.0m 2017 FX Acquisitions Marketing Medical Immersive Comms Centre 2018 24 July 2018 Results for six months ended 30 June 2018 6
FX impact Average rates H1 2018 H1 2017 H2 2018 H2 2017 USD 1.38 1.24 1.38 1.25 EUR 1.14 1.16 1.14? 1.13 Impact of 1c movement 160k USD (post Giant) 2018 2017 Movement 25k EUR Impact on revenue (translational) (4.4) (Losses) / gains on H1 forwards (0.3) 0.4 (0.7) (Losses) / gains on H2 forwards (0.5) 0.5 (1.0) Impact from forwards (0.8) 0.9 (1.7) Translational impact - - (0.8) Impact on profit (0.8) 0.9 (2.5) % of revenue 45% USD 38% GBP 9% EUR c. 60% full year post-giant 24 July 2018 Results for six months ended 30 June 2018 7
Net debt bridge: Dec-17 to Jun-18 36.3m Capex ( 1.2m ) FV of derivatives ( 0.7m) 1.7m Other 0.8m 38.9m 0.5m 1.1m 0.8m 3.8m 2.3m Dec-17 Cash from operations Highlighted items Interest Tax Acquisitions & disposals Capex & other Jun-18 24 July 2018 Results for six months ended 30 June 2018 8
Working Capital Working capital outflow driven by: Working capital outflow Changing customer mix Comms c. 4m 24% Seasonality Immersive c. 2m 42% 19% Performance related 2017 bonus payments including 3 year LTIPs Marketing & Medical c. 5m 16% Marketing Medical Immersive Comms 24 July 2018 Results for six months ended 30 June 2018 9
Net debt At 30 June Net Debt: 38.9m Facilities: 75m + 40m accordion Leverage: 1.3x LTM 1 EBITDA 1. Last Twelve Months Post-acquisition of Giant Net Debt: 95m Facilities: 105m + 10m accordion Leverage: 2.5x LTM 1 EBITDA (inc. Giant) Rapid H2 deleveraging 24 July 2018 Results for six months ended 30 June 2018 10
Results for the six months ended 30 June 2018 Divisional analysis
Marketing Lower revenues but managed cost base Revenue decline against tough comparatives Revenues impacted by the loss of certain drug mandates due to normal course regulatory approval process Margin improvement despite lower revenues Acquisition of AboveNation Media in February 2018 Acquisition of Giant Creative Strategy in July 2018 materially earnings accretive in first full year H118 H117 Revenue m 33.3 39.5 LFL growth (8.5)% 21.0% Operating profit m 7.4 7.9 Margin 22.1% 20.0% What we do We market pharmaceutical, OTC and wellness brands to consumers and healthcare professionals, by: - Educating, building awareness, and driving retention for brands among patients and healthcare professionals - Providing a digital-centric service, mirroring consumer and professional behaviour - Creating more valuable and productive long-term relationships between our clients and their customers 24 July 2018 Results for six months ended 30 June 2018 12
USD $m Marketing 50 45 40 35 30 25 20 15 10 5 - Marketing Revenue - Half-yearly H1 H2 H1 H2 H1 H2 H1 H2 H1 2014 2015 2016 2017 2018 H118 was the second-largest trading half on record for the Marketing division 1% sequential growth on H217 Down 8.5% against tough comparatives Easier H2 comparatives 24 July 2018 Results for six months ended 30 June 2018 13
Marketing Acquisition of Giant Giant is a leading independent healthcare marketing agency on the west coast, with revenues of $32m, EBITDA of $7m and c.150 employees It provides full service, multichannel marketing communications services to biopharmaceutical, medical device and diagnostic companies Approximately 80% of Giant s revenues are derived from marketing to healthcare professionals (HCP) 51% of revenues are derived from post-launch drugs, with 27% from pre-launch and 22% from corporate and other activities Materially earnings accretive in the first full year 24 July 2018 Results for six months ended 30 June 2018 14
Medical Strong revenue and profit growth H118 H117 16.0% like-for-like revenue growth 42.6% like-for-like profit growth Margin improvement despite increased investment in staff Strong pipeline and recent new wins but tougher H2 comparatives Revenue m 15.6 14.3 LFL growth 16.0% 15.7% Operating profit m 3.6 2.7 Margin 23.1% 19.0% What we do We support the planning, generation and communication of evidence across medical affairs and health economics We provide publication, medical education and market access services for pharmaceutical and biotech clients We focus on insight-driven strategy underpinned by data, analytics and stakeholder engagement powered by creative and digital experiences 24 July 2018 Results for six months ended 30 June 2018 15
Immersive First H1 for TCEG under Huntsworth ownership TCEG acquired on 1 July 2017 LFL revenues for the division up 11.1% 1 Investment in US and internal communications capabilities 1. LFL results adjusted to include preacquisition TCEG results H118 H117 Revenue m 17.0 1.6 LFL growth 11.1% 1 n/a Operating profit m 2.3 - Margin 13.8% - What we do We engage audiences through the creation and delivery of live experiences, film, immersive, interactive, training and scientific content We work with an international blue-chip client base across a range of sectors, with a particular strength in healthcare 24 July 2018 Results for six months ended 30 June 2018 16
Communications Planned revenue decline 5.4% fall in LFL revenues as planned Profits down 0.6m but include restructuring costs in Grayling to support improved profitability in H2 and beyond Red impacted by 2017 client churn, but recent wins Good performance from CDR H118 H117 Revenue m 36.3 38.8 LFL growth (5.4)% (7.5)% Operating profit m 2.7 3.3 Margin 7.4% 8.4% What we do Grayling is a global integrated communications network, covering public relations and public affairs Citigate Dewe Rogerson is an international financial and corporate public relations consultancy Red is a strategic communications consultancy offering PR, digital and content expertise 24 July 2018 Results for six months ended 30 June 2018 17
Results for the six months ended 30 June 2018 Strategy
Delivering our strategy Our strategy Progress Leverage Huntsworth Health for integrated clients Increased level of joint pitches within the Healthcare divisions Extension of offering into under-served areas: Organic launches Selective M&A in the core business Acquisition of Giant Acquisition of AboveNation Active pipeline of complementary acquisition targets Maintain balance sheet strength Operating well within facility & covenant limits Rapid H2 de-leveraging Increase Healthcare and US presence Healthcare 85% / US 79% of profit 24 July 2018 Results for six months ended 30 June 2018 19
Growing Healthcare and US focus Healthcare % of profits US % of profits 100% 80% 21% 15% 100% 80% 39% 21% 60% 60% 40% 20% 79% 85% 40% 20% 61% 79% 0% 2017 2018 0% 2017 2018 Healthcare Non-healthcare US Non-US 2018 is based on management estimates and is pro-forma including the annualised impact of Giant 24 July 2018 Results for six months ended 30 June 2018 20
H2 Outlook Marketing expected to return to positive LFL growth Medical & Immersive set for further good organic growth Profit improvement in Communications division Reduced FX impact in H2 Deleveraging in H2 to move to < 2.0x EBITDA Active pipeline of further small-scale M&A 24 July 2018 Results for six months ended 30 June 2018 21
Results for the six months ended 30 June 2018 Appendices
Highlighted items m 2018 2017 Acquisition related (0.1) (0.4) Amortisation of acquired intangible assets (1.1) (0.4) Revaluation of contingent consideration receivable 0.6 (0.1) TOTAL (0.6) (0.9) 24 July 2018 Results for six months ended 30 June 2018 23
Like-for-like adjustments m Revenue Operating Profit Headline PBT Foreign exchange 4.4 2.5 2.5 Acquisitions (16.3) (2.6) (2.2) Disposed operations 0.9 (0.1) (0.1) TOTAL (11.0) (0.2) 0.2 Figures represent the year on year movement in respect of adjusting items 24 July 2018 Results for six months ended 30 June 2018 24
Growing Healthcare and US focus Healthcare % of revenues US % of revenues 100% 100% 80% 39% 30% 80% 50% 44% 60% 60% 40% 20% 61% 70% 40% 20% 50% 56% 0% 2017 2018 0% 2017 2018 Healthcare Non-healthcare US Non-US 2018 is based on management estimates and is pro-forma including the annualised impact of Giant 24 July 2018 Results for six months ended 30 June 2018 25
H118 divisional revenue by geography 100% 90% 5% 12% 23% 13% 80% 70% 60% 50% 45% 88% 68% 33% 7% 40% 30% 20% 10% 0% 77% 47% 38% 32% 12% Group Marketing Medical Immersive Communications UK US Europe ROW 24 July 2018 Results for six months ended 30 June 2018 26
H118 divisional profit by geography 100% 2% 7% 17% 16% 80% 60% 54% 82% 66% 39% 40% 20% 0% -20% 83% 53% 37% 34% 18% -8% Group Marketing Medical Immersive Communications UK US Europe ROW 24 July 2018 Results for six months ended 30 June 2018 27
Consolidated balance sheet m Jun-18 Jun-17 Dec-17 Non-current assets Goodwill & Intangibles 185.4 156.0 181.2 Other non - current assets 12.6 12.9 12.8 Current Assets 198.0 168.9 194.0 Trade debtors and other receivables 81.8 62.8 66.4 Other current assets 13.1 8.3 9.9 Cash and short-term deposits 11.6 36.7 10.1 Current Liabilities 106.5 107.8 86.4 Trade and other payables (78.0) (55.3) (67.6) Other current liabilities (2.0) (1.9) (2.0) Provisions (1.1) (0.5) (0.6) Non-current Liabilities (81.1) (57.7) (70.2) Bank loans and overdrafts (49.2) (63.5) (45.7) Other non current liabilities (3.3) (0.4) (2.8) Provisions (4.6) (1.3) (1.3) Trade and other payables (3.7) (2.9) (3.0) NET ASSETS (60.8) (68.1) (52.8) 162.6 150.9 157.4 24 July 2018 Results for six months ended 30 June 2018 28
Deferred consideration and put/call liabilities Above Nation: 0.8m 1.1m 1.9m 2019 (def. con.) 2021 (def. con.) 2023 (put / call) Giant: 6.8m 2021 (put / call) 24 July 2018 Results for six months ended 30 June 2018 29
Shareholding at 3 July 2018 % share capital Aberforth Partners 13.2 Canaccord Genuity Wealth Management 11.5 Fidelity International 9.9 Aviva Investors 7.1 Old Mutual Global Investors 6.5 Kabouter Management 6.2 Miton Asset Management 5.1 Michinoko 5.0 Kames Capital 4.1 Lazard Asset Management 3.3 Other 28.1 No. voting shares TOTAL 100.0 330,171,487 Diluted shares for EPS 334m Jun-18 340m 1 Dec-18 342m 1 Dec-19 1. Management estimate based on expected share awards and vesting period The shareholding figures and percentages in the table above include shares where the holder manages those shares on behalf of a third party (i.e. managed holdings) as well as shares beneficially owned indirectly or directly by the holder 24 July 2018 Results for six months ended 30 June 2018 30