Post on 30-Mar-2018
Aegis Group plc
Jerry Buhlmann, CEO
Opportunity in a “two speed world”
24 April 2012
Agenda
An evolving market
Market opportunities
Our vision, strategy and operating model
Delivering on our strategy
Acquisitions support our strategy
Q&A
Aegis Group plc | Page 2
A two speed world
Ad-spend forecast year-on-year growth 2012
10.7%
9.5%
1.5%
14.7%
5.0%
Source: Aegis Media estimates
Emerging markets will continue to drive growth
However, North America will remain the world’s largest ad market
Source: Aegis Media
GDP vs. ad-spend growth in 2011
De-coupling effect in faster-growing regions
Source: Aegis Media estimates
Global internet & mobile advertising spend
Share of digital spend will continue to grow
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
0
20000
40000
60000
80000
100000
120000
140000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E 2016E
% o
f gl
ob
al a
d s
pe
nd
Ad
vert
isin
g sp
en
d ($
m)
Paid Search Online Display Online Video Global Internet as % of total global advertising
Source: Aegis Media estimates
CONVERGENCE – EVERYTHING INTERCONNECTED
INTERDEPENDENT AND TRANSPARENT
Time and Effect Exponentially Increases
Earned
Media
Bought
Media
Owned
Media
How marketing budgets changed in 2011
2011 vs 2010 – US clients
Source: Marketing Sherpa
SUPPLY DEMAND
ACCESS
EASE
CONTROL
Drivers of success in emerging media ecosystem
Consumers’ access to online content
CAPACITY
SCALABILITY
SPEED
Emerging media ecosystem
Media ownership model changing
Key conclusions of market evolution
Two speed world for next 5 years
US and China will dominate scalable industry developments
Digital technologies and convergence key drivers for growth
Social media important to consumers and brands
‘New’ media owners attempting to capture ‘total value chain’
Rate of consumer adoption variable by age/geography/access
Impact of market evolution
Potential opportunity for agencies
Consumers assimilating ‘scaled’ technologies at a rapid pace
Evolving complexity creates opportunity
Specialist and integrated required to reflect client needs
Interconnected communication ecosystem creates redefinition of effectiveness
and value
Convergence will require new trading platforms, data management skills and
constant innovation
Emergence of global media and global brands enhances the oppportunities for
‘networks’
Development of the market and Aegis
2010 - 2012
Major market trends 2010 2012e
Two speed world Initiated Sustainable
Convergence Initiated Accelerating
Aegis Group * 2010 2012e
Media 42% ~ 60%
Digital 19% ~ 40%
Market research 39% 0%
Faster-growing regions 33% > 34%
* % of Aegis Group revenue
Aegis Group in 2012
Brands and structure aligned with convergence and client need
1 P&L per
country
Specialist Integrated
1 operating
model per
country
Objectives
Aegis vision & strategy – the opportunity
Aegis Group plc | Page 16
Vision Re-inventing the way brands are built
1. Increase exposure to faster growing regions
2. Grow our digital profile and capability
3. Broaden our service offering across all our clients
4. Grow our international client and new business profile
5. Strengthen leading position in top 20 markets (inc. China and US)
Strategy accelerated by targeted acquisitions
Offer
Outcome
Aegis strategy & model – delivering on the opportunity
Aegis Group plc | Page 17
Model Scaled media and digital group with a
specialist and integrated approach
1. Increased exposure to faster-growing regions
2. Increased proportion of revenues from digital
3. Increased proportion of revenues from international clients
4. Ongoing out-performance of peer group organic revenue growth
5. Improved gross and operating margins
Offer
Delivering on our strategy
Aegis 2011 financial results - highlights
Aegis Group plc| Page 18 All references to Aegis Group relate to the Retained Group, which comprises Aegis Media, Aztec and the corporate centre
2011 2010 Reported change
Revenue £1,135.0m £941.0m 20.6%
Operating profit £197.4m £151.1m 30.6%
Underlying operating margin 17.4% 16.1% 130 bps
Underlying pro forma diluted eps 10.7p 8.6p 24.4%
Total dividend per share 20.28p 2.75p n/a
Delivering on our strategy
Sector-leading organic growth performance in 2011
Good progression in organic growth from H1 to H2
Particularly strong performance in Q4, our largest quarter of the year
Momentum continues into 2012
Aegis Group plc| Page 19
Change % Q111 Q211 Q311 Q411
Organic revenue 10.1 6.1 11.2 12.0
H111 H211 FY11
7.8 11.7 9.9
Delivering on our strategy
$6bn of net new business won in the last 18 months
General
Motors
Co.
North
America
Network
development
$3bn of billings in over 80 markets
around the world
$1.5bn of
additional
billings
$1bn of
additional
billings from
55 market
appointments
Improving our business mix
Increasing exposure to North America and faster-growing regions
Aegis Media revenue breakdown: 2005 – 2011
Aegis Group plc | Page 21
32% 34% 36% 36% 37%
43%
50%
68% 66% 64% 64% 63% 57% 50%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2005 2006 2007 2008 2009 2010 2011
North America & Faster-growing regions Western Europe
Improving our business mix
Increasing exposure to digital
Aegis Media revenue breakdown: 2005 – 2011
14% 20%
26% 29% 31% 32% 35%
86% 80%
74% 71% 69% 68% 65%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2005 2006 2007 2008 2009 2010 2011
Traditional
Digital
Aegis Group plc | Page 22
Receipt of proceeds from sale of Synovate, the market research business:
− Improved our FY11 net debt position
Returned £200m to shareholders via a special dividend in November 2011
− Record total dividend of 20.28p per share for the year
Remaining proceeds being utilised on acquisitions and investments
− Covenant position remains comfortable – supports our financial flexibility
£m 31 Dec 2011 30 June 2011
31 Dec 2010
Gross debt including overdrafts (754.5) (714.8) (725.7)
Cash 626.1 321.5 394.4
Net debt (128.4) (393.3) (331.3)
Sale of Synovate in October 2011 for £525m
Further strengthened our balance sheet
Aegis Group plc| Page 23
Acquisitions will help to accelerate our strategy
Successful record in making acquisitions
− Spent over £760m on around 85 acquisitions and investments since 2005
− Including c.£150m in initial consideration on 22 acquisitions and investments in 2011 and
so far in 2012
Focused on a range of capabilities and geographies
− Scale, in-fill and innovation
− North America, particularly the US, and faster-growing regions, particularly China
Strong track record of integration and management retention
− 70% retention rate since 2005
Continued focus on acquisitions in 2012
− Roundarch in the US and digital acquisitions in faster-growing regions
Aegis Group plc | Page 24
Consistent delivery of acquisition execution
14% ROIC from acquisitions, 2005 - 2011
An industrialised acquisition process:
− Targets identified by local management teams
− Supported by central M&A team
− Monthly review by Acquisition Committee
− Maintain pipeline of 50 – 60 acquisition targets
Measure acquisitions against strict investment criteria:
− Deliver returns of at least WACC plus a margin of 30%
− Earnings enhancement in Year 1
− Strong discipline to be maintained
Acquisitions structured to minimise risk to Aegis:
− Initial consideration limited
− Vendors occasionally retain a minority stake
Aegis Group plc | Page 25
Summary
Optimistic about Aegis’s future prospects
Unique focus as a media and digital specialist
Operating model fully aligned to market evolution
Peer group-leading revenue exposure to digital and faster-growing regions
Strong acquisition track record, supported by robust process
Positive momentum being achieved across our networks
Organisational strength:
− One-company culture and clear vision & values
Aegis Group plc | Page 26
Q & A