Aegis Group plc - Dentsu Aegis Network/media/Files/A/Aegis-Group-Plc/pdf/2010prelim... · Aegis Group overview Jerry Buhlmann, CEO Divisional review Aegis Media - Jerry Buhlmann,

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 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


Operating margin 18.6% 18.2% 40bps 60bps


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



Divisional ReviewAegis Media


CEO

£m 2010 2009 Change, %

Constant currency

change, %

Revenue 886.8 825.2 7.5 6.8

Organic revenue change 5.7% (9.7)%


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%)



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


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


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 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


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



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



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


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


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


Financial Review

Nick PridayNick Priday

CFO

Income StatementUnderlying


change, %

Revenue 1,459.4 1,346.5 8.4 6.4

Gross profit 1,237.5 1,147.0 7.9 6.4


Overheads (1,045.3) (976.7) (7.0) (5.3)


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


Net interest


£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


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)


• 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


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)



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)


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


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


Strategic update, summary & outlook


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


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.


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 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


Q & A

Appendices

Maturity profile

£m

Debt term

2011 (H2) 51.4

2012 125.5

2014 48.1


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


- 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


Revenue by currency

% € $ £ Other

2010 27.2 19.3 13.3 40.2

Cash flow statementUnderlying

£m 2010 2009


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


Operating cash flow 250.2 237.6

Tax paid (47.6) (34.2)


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


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



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

Documents

Aegis Group plc - Dentsu Aegis Network/media/Files/A/Aegis-Group-Plc/pdf/2010prelim... · Aegis Group overview Jerry Buhlmann, CEO Divisional review Aegis Media - Jerry Buhlmann,