Post on 20-Mar-2018
Aegis Group plc
2010 Full Year Results2010 Full Year Results
17 March 2011
Agenda
� IntroductionJohn Napier, Chairman
� Aegis Group overview
Jerry Buhlmann, CEO
� Divisional review� Divisional reviewAegis Media - Jerry Buhlmann, CEOSynovate – Robert Philpott, CEO Synovate
� Financial Review Nick Priday, CFO
� Strategic update, summary & outlookJerry Buhlmann, CEO
� Questions & Answers
Aegis Group plc | Page 2
Aegis Group Overview
Jerry BuhlmannJerry Buhlmann
CEO
Aegis Group 2010 – financial highlights
� Revenue of £1,459.4m - up 6.4%
� Organic revenue growth of 5.8%
� Operating profit of £192.2m - up 12.3%
� Operating margin to 13.2% - up 70 bps � Operating margin to 13.2% - up 70 bps
� Underlying diluted earnings per share 10.1p – up 4.1%
� Total dividend per share of 2.75p – up 10%
Aegis Group plc| Page 4
Aegis Group 2010 – overview
� Re-focused strategic approach & strengthened management teams at both businesses:
− Aegis Media outperformed the advertising market
− Synovate performance towards the top of its peer group
� Excellent performances in North America and faster-growing regions
� Strengthened financial position enabled re-focus on acquisitions
� Continued strong momentum at both businesses going into 2011
Aegis Group plc| Page 5
Aegis Group Good performances from both businesses
£m 2010 2009 Change, %Constant currency
change, %
Revenue 886.8 825.2 7.5 6.8
Organic revenue change 5.7% (9.7)%
Operating profit 164.7 150.4 9.5 9.9
Aegis Group plc| Page 6
Operating margin 18.6% 18.2% 40bps 60bps
£m 2010 2009 Change, %Constant currency
change, %
Gross revenue 572.6 521.3 9.8 5.7
Organic gross revenue change 5.9% (9.6)%
Net revenue 350.7 321.8 9.0 5.3
Operating profit 45.6 36.9 23.6 19.4
Operating margin 8.0% 7.1% 90bps 90bps
Divisional ReviewAegis Media
Jerry BuhlmannJerry Buhlmann
CEO
£m 2010 2009 Change, %
Constant currency
change, %
Revenue 886.8 825.2 7.5 6.8
Organic revenue change 5.7% (9.7)%
Operating profit 164.7 150.4 9.5 9.9
Aegis Media2010 results summary
� Strong global new business performance of $2.0 billion in billings (2009: $2.7 billion) -momentum carried into 2011
� Excellent performances from businesses in North America and faster-growing regions
� Power Brand strategy implemented across the global network - further strengthened through Mitchell acquisition and Charm partnership
� 32% of revenue from digital (2009: 31%)
Operating margin 18.6% 18.2% 40bps 60bps
Aegis Group plc| Page 8
Aegis MediaQuarterly performance
Change % Q110 Q210 Q310 Q410
Organic revenue 3.0 3.6 8.5 7.4
H110 H210 FY10
3.4 7.8 5.7
� As anticipated, continuing trend of improvement in H2 supported strong organic growth performance in 2010
� Organic growth rate doubled in H2 from H1
� Strong organic growth performance in both Q3 and Q4
Aegis Group plc| Page 9
3.4 7.8 5.7
2010
Aegis Media2010 new business review: $2.0 billion in billings
2007 - 2009
Geographic contribution to new business: 2007 – 2010
Aegis Group plc| Page 10
Europe Americas APAC
Revenue (£m) 2010 2009 Change, %
Constant currency
change, %
EMEA 579.7 585.3 (1.0) 0.4
Americas 189.4 158.6 19.4 14.5
Asia Pacific 117.7 81.3 44.8 34.4
Aegis Media2010 geographic performance review
� Some strong performances across Europe, but Western European markets remain patchy
� Good performances across the Middle East and Africa
� Steady progress made in the Americas
� Significant operational momentum achieved in Asia Pacific
� Mitchell acquisition and Charm partnership strengthens position in Asia Pacific
Asia Pacific 117.7 81.3 44.8 34.4
Aegis Group plc| Page 11
Aegis MediaSummary
� Strong results, supported by excellent new business performance
� Strengthened management team and new strategic focus
� Excellent performances from North America and faster-growing regions
� Geographic profile strengthened through acquisitions in Asia Pacific� Geographic profile strengthened through acquisitions in Asia Pacific
� Outperformed advertising sector growth in 2010
� Increasingly optimistic about the outlook for Aegis Media
Aegis Group plc| Page 12
Divisional ReviewSynovate
Robert PhilpottRobert Philpott
CEO, Synovate
£m 2010 2009 Change, %Constant
currency change, %
Gross revenue 572.6 521.3 9.8 5.7
Organic gross revenue change 5.9% (9.6)%
Net revenue 350.7 321.8 9.0 5.3
Operating profit 45.6 36.9 23.6 19.4
Operating margin 8.0% 7.1% 90bps 90bps
Synovate2010 results summary
� Excellent performance in 2010 with substantial growth in revenue and profitability
� Sales increased 6.7%, gross organic revenue growth up 5.9%
� Continued management discipline on overheads underpinning the growth
� Strong profit performance - up 19.4%
� Contribution to performance from vast majority of business units across the Synovate global network
Operating margin 8.0% 7.1% 90bps 90bps
Aegis Group plc| Page 14
SynovateRevenue performance
H1 10 H2 10 FY10
Change % Q110 Q210 Q310 Q410
Organic gross revenue (1.9) 6.5 11.5 6.3
� Excellent organic growth performance in H2, well ahead of industry growth
� Healthy orders on hand position – increased 8.8% at end of 2010
Aegis Group plc| Page 15
H1 10 H2 10 FY10
2.8 8.4 5.9
SynovateGeographic performance review
Gross revenue (£m) 2010 2009 Change, %Constant
currency change, %
EMEA 239.2 234.4 2.0 0.6
Americas 175.4 151.1 16.1 13.1
Asia Pacific 158.0 135.8 16.3 6.1
� North America delivered an exceptional performance, driven forward by global clients reinstating major programmes
� Growth in Western Europe remained inconsistent but profitability improved significantly
� Solid performances across faster-growing regions, particularly in Asia Pacific
� FMCG was the strongest performing sector
Aegis Group plc| Page 16
SynovateSummary
� Excellent 2010 results reinforced by a focus on driving profitable sales and improving efficiencies
� Synovate out-performed industry growth in 2010
� Management confidence to re-invest in the business through acquisitions, including COMCON which transforms our position in Russiaincluding COMCON which transforms our position in Russia
� Re-focused strategy being implemented in 2011
� Expected 4% industry growth in 2011 but increasingly optimistic about the outlook for Synovate to again outpace the market
Aegis Group plc | Page 17
Financial Review
Nick PridayNick Priday
CFO
Income StatementUnderlying
£m 2010 2009 Change, %Constant currency
change, %
Revenue 1,459.4 1,346.5 8.4 6.4
Gross profit 1,237.5 1,147.0 7.9 6.4
Aegis Group plc| Page 19
Overheads (1,045.3) (976.7) (7.0) (5.3)
Operating profit 192.2 170.3 12.9 12.3
Associates 4.0 (0.3)
Profit before interest and tax 196.2 170.0 15.4 14.5
Net interest (33.8) (19.6)
Profit before tax 162.4 150.4 8.0 7.0
Operating margin 13.2% 12.6% 60bps 70bps
Net interest
Aegis Group plc | Page 20
£33.8m£4.4m £4.7m £1.2m £2.6m £1.3m
£19.6m
2009 Private placement Convertible bond Increase in avg net debt
Other interest rate effects
Other items 2010
Eps and dividend
2010 2009
Underlying diluted earnings per share 10.1p 9.6p
Total dividend per share 2.75p 2.50p
Dividend payout ratio 27.2% 26.0%
Dividend cover (underlying) 3.7x 3.8x
Aegis Group plc | Page 21
Dividend cover (underlying) 3.7x 3.8x
Operating profit
Reconciliation to statutory
£m 2010 2009 Change %
Underlying operating profit 192.2 170.3 12.9
Adjusting items:
• Restructuring costs - (30.5)
• Amortisation of(26.5) (24.2)
Aegis Group plc| Page 22
• Amortisation ofpurchased intangible assets
(26.5) (24.2)
• Disposals of subsidiaries (13.9) (1.0)
• Acquisition costs (4.5) -
• Exceptional debtor impairment (37.0) -
• UK property move costs (8.8) -
Statutory operating profit 101.5 114.6 (11.4)
£m 2010 2009 Change %
Goodwill 1,331.1 1,010.9 31.7
Intangible assets 112.5 85.5 31.6
Property, plant and equipment 61.9 59.9 3.3
Investments in associates & joint ventures 48.5 3.3 1,469.7
Balance Sheet
Investments in associates & joint ventures 48.5 3.3 1,469.7
Other non-current assets 74.1 41.1 80.3
Net payables (441.0) (309.3) (42.6)
Net debt (331.3) (257.2) (28.8)
Earn-out liabilities (63.7) (70.2) 9.3
Liabilities in respect of put options (34.5) (31.4) 9.9
Other (89.2) (88.1) 1.2
Net assets 668.4 444.5 50.4
Aegis Group plc | Page 23
Cash flow statementUnderlying
£m 2010 2009
Operating profit 192.2 170.3
Depreciation and amortisation 31.6 32.1
Net interest paid (26.6) (18.7)
Aegis Group plc | Page 24
Net interest paid (26.6) (18.7)
Tax paid (47.6) (34.2)
Share-based incentives and other non-cash movements 8.2 8.2
Net cash generated 157.8 157.7
Cash flow statementUses of cash flow
£m 2010 2009
Net cash generated 157.8 157.7
Net capital expenditure (28.1) (26.0)
Acquisitions – initial cash (117.8) (12.6)
Acquisitions – earnout payments (38.8) (60.9)
Aegis Group plc | Page 25
Acquisitions – earnout payments (38.8) (60.9)
Net cash after capex and acquisitions (26.9) (58.2)
Net change in borrowings 70.6 (23.2)
Purchase of own shares (16.8) -
Dividends paid (29.4) (28.5)
Other movements 0.6 (2.1)
Net cash before net working capital movements 1.9 4.4
Underlying working capital inflows 18.2 27.0
Underlying cash flow 16.3 31.4
£m 31 Dec 2010 30 June 2010 31 Dec 2009
Gross debt including overdrafts (725.7) (731.7) (648.3)
Cash 394.4 333.3 391.1
Net debt (331.3) (398.4) (257.2)
Net debt & funding profile
� Convertible Bond launched in March, raising £190.6m -due in April 2015, with a coupon of 2.5%
� Revolving credit facility re-financed in July, with tenure lengthened until 2015
Aegis Group plc| Page 26
Renewed focus on acquisitions
� Looking for potential acquisitions that provide:
− Scale
− In-fill
− Innovation
� Targeting bolt-ons – small, medium and relatively large� Targeting bolt-ons – small, medium and relatively large
� Focus on faster-growing regions, digital, as well as media & research in-fill targets
� Acquisitions subject to criteria
� Integration of Mitchell progressing well – expected to be earnings accretive in 2011 by low to mid single digits
Aegis Group plc | Page 27
Strategic update, summary & outlook
Jerry BuhlmannJerry Buhlmann
CEO
Increasing exposure to faster-growing regions across the Group
28% 26% 24% 20%19%
18% 20% 22% 26% 31% 33%
60%
70%
80%
90%
100%
Aegis Group revenue breakdown: 2005 - 2010
54% 54% 54% 54% 50% 47%
20%19% 20%
0%
10%
20%
30%
40%
50%
60%
2005 2006 2007 2008 2009 2010
Faster Growing Regions
North America
Western Europe
Faster-growing regions comprise Latin America, Central and Eastern Europe, Asia Pacific, the Middle East and Africa
2009 numbers reported on a constant currency basis
Re-focused strategic approach at Aegis Media
re-defining media start from a
different place
putting people and
brands together
like never before
performance marketing
specialists
out of home
market leaders
Strategic priorities at Aegis Media
� Increase exposure to faster-growing regions
� Ensure full service of digital and media propositions across brands
� Develop international clients and target profitable new business
� Increase digital profile and capability� Increase digital profile and capability
� Build on leading positions in top 20 markets, especially the US
� Broaden service offering across existing and new clients
Aegis Group plc | Page 31
Increasing exposure to digital at Aegis Media
Aegis Media revenue breakdown: 2005 - 2010
69% 68%70%
80%
90%
100%
14%20%
26% 29% 31% 32%
86%80%
74% 71% 69% 68%
0%
10%
20%
30%
40%
50%
60%
70%
2005 2006 2007 2008 2009 2010
Traditional
Digital
Re-focused strategic approach at Synovate
� Increasing traction and building momentum with key global clients
� Providing competitive differentiation through operational excellence
� Prioritising investment in key gateway markets for international research. These would include US, UK, Germany, Gt. China, India & Russia
� Expanding existing capabilities in key industrial verticals and research methodologies across all of our geographies
� Securing Synovate’s position as a leader in the custom
research industry.
Aegis Group plc | Page 33
Advertising sector outlook increasingly optimisticUpdated Carat adspend forecasts published today
Year on year growth at current prices (%)
Year2010
actuals
2011
forecast
2012
forecast
Global 5.4 (3.9) 5.7 (4.7) 6.2
Aegis Group plc| Page 34Source: Carat ad spend forecasts, March 2011
Global 5.4 (3.9) 5.7 (4.7) 6.2
USA 3.0 (1.1) 3.7 (1.7) 5.9
Western Europe 3.9 (1.3) 3.5 (2.7) 3.3
Central & Eastern Europe 7.4 (5.0) 9.5 (10.2) 11.9
Asia Pacific 7.7 (8.2) 8.0 (7.6) 7.0
Latin America 12.3 (11.2) 13.0 (14.0) 12.9
Figures in brackets show previous Carat forecasts from August 2010
2011 Outlook
� Momentum achieved at Aegis Media and Synovate in 2010 continues this year
� Clients’ current indicated budgets for 2011 suggest positive year-on-year trend
� 2011 Group organic revenue growth to be at least in line with last year
� Underlying operating profit expected to improve further in 2011
Aegis Group plc | Page 35
Aegis 2010 resultsSummary
� Re-focused strategic approach at both businesses
� Aegis Media outperformed the advertising market
� Synovate performance towards the top of its peer group
� Excellent performances in North America and faster-growing regions� Excellent performances in North America and faster-growing regions
� Strengthened geographic profile, supported by targeted acquisitions
� Strong momentum at both businesses going into 2011
Aegis Group plc| Page 36
Q & A
Appendices
Maturity profile
£m
Debt term
2011 (H2) 51.4
2012 125.5
2014 48.1
Aegis Group plc | Page 39
2014 48.1
2015 242.6
2017 110.3
2019 105.8
683.8
Overdrafts and short-term loans 41.9
725.7
Covenant position
31 Dec 2010 30 June 2010 31 Dec 2009
Covenants
- Net debt / EBITDA (<3 times) 1.5 1.9 1.2
- EBITDA / net interest (>4 times) 8.2 8.9 10.8
- EBITDA / gross interest (>4 times) n/a 6.9 6.0
Aegis Group plc | Page 40
- EBITDA / gross interest (>4 times) n/a 6.9 6.0
RCF drawn (£m) - - 113.6
RCF availability (£m) 450.0 450.0 336.4
Total central facility headroom (£m) 450.0 450.0 376.4
Currency impact
Exchange rates
£/€ Change % £/$ Change %
2010 average 1.1663 -3.7 1.5457 1.3
2010 period end 1.1665 -3.4 1.5591 3.6
Aegis Group plc| Page 41
Revenue by currency
% € $ £ Other
2010 27.2 19.3 13.3 40.2
Cash flow statementUnderlying
£m 2010 2009
Operating profit 192.2 170.3
Depreciation, amortisation and impairment 31.6 32.1
Other non-cash movements 8.2 8.2
Net movement in working capital 18.2 27.0
Operating cash flow 250.2 237.6
Aegis Group plc | Page 42
Operating cash flow 250.2 237.6
Tax paid (47.6) (34.2)
Net interest paid (26.6) (18.7)
Dividends paid to equity holders (29.4) (28.5)
Other activities (16.2) (2.1)
Cash flow before acquisitions and capex 130.4 154.1
Net spend on acquisitions/disposals (156.6) (73.5)
Net capital expenditure (28.1) (26.0)
Net cash before movement in borrowings (54.3) 54.6
Net movements on borrowings 70.6 (23.2)
Net cash movement 16.3 31.4
Reconciliation of Mitchell revenue 2009 & H1 2010
For 12 months ending 31 Dec 2009 (£m)As per scheme
bookletAligned
presentation*
Revenue 119.8 56.3
Gross profit 56.3 56.3
Operating profit 14.6 14.6
Profit before tax 14.0 14.0
Aegis Group plc | Page 43
Profit before tax 14.0 14.0
Profit after tax 9.9 9.9
For 6 months ending 30 June 2010 (£m)As per scheme
bookletAligned
presentation**
Revenue 81.1 36.7
Gross profit 36.7 36.7
Operating profit 9.9 9.9
Profit before tax 9.3 9.3
Profit after tax 6.5 6.5
* At average exchange rate of A$1.9814: £1
** At average exchange rate of A$1.7082: £1