AEGIS GROUP PLC - Media & Digital Communications …/media/Files/A/aegis-plc/pdf/prelim2009.pdf · • New business recovery led by Gillette win ... Aegis Group plc | Page 29 £m

AEGIS GROUP PLC

2009 FULL YEAR RESULTS

18 March 2010

AGENDA

INTRODUCTION

John Napier, Chairman and acting Interim CEO

BUSINESS REVIEW AND OUTLOOK

Aegis Media - Jerry Buhlmann, CEO Aegis Media

Synovate - Robert Philpott, CEO Synovate

FINANCIAL REVIEW

Nick Priday, CFO

GROUP OUTLOOK

John Napier

Q&A

Aegis Group plc | Page 2

2009 summary

STRONG PERFORMANCE IN A CHALLENGING MARKET

Aegis Group plc| Page 3

• Underlying profit of £170.3m (2008: £177.0m)

• A strong operating performance in difficult markets due to conditions:

• Strategy of cost reduction and other actions, initiated at the start of 2009

• Further action taken during the year to combat more challenging custom research market

• Margins broadly maintained at 12.6% (2008:of 13.2%) despite 8.7% revenue fall

Financial highlights

REVENUE & PROFITS


• Currency remains a significant factor in revenue trends

• Organic decline of 9.7%; acquisition contribution of 1.0%

• Staff related cost savings ahead of original expectations

£m 2009 2008 Change, %

Constant

currency

change, %

Revenue 1,346.5 1,342.0 0.3 (8.7)

Operating profit 170.3 177.0 (3.8) (14.9)

Profit before interest and tax 170.0 179.7 (5.4) (16.3)

Profit before tax 149.3 166.8 (10.5) (21.8)

Earnings per share 9.5p 10.3p (7.8) (19.9)

Dividends 2.5p 2.5p

2009 highlights

SYNOVATE


• More challenging than originally anticipated

• Renewed management approach in H2; delivered well

• Improved net revenue

• Improved cost savings

• Focus on overheads

• Simplified management structures

£m 2009 2008 Change, %

Constant

currency

change, %

Gross revenue 521.3 518.2 0.6 (8.7)

Net revenue 321.8 329.2 (2.2) (12.6)


Operating margin on gross revenue 7.1% 8.1%

2009 highlights

AEGIS MEDIA


• Consistent performance throughout the year, supported by cost reduction programme and flexible cost base

• Increased monthly sales variability during the year

£m 2009 2008 Change, %

Constant

currency

change, %

Revenue 825.2 823.8 0.2 (8.7)


Operating margin 18.2% 19.2%

BUSINESS REVIEW

AEGIS MEDIA

Jerry Buhlmann

CEO, Aegis Media

£m 2009 2008 Change, %

Constant

currency

change, %

Revenue 825.2 823.8 0.2 (8.7)



Aegis Media

RESULTS


• Full year organic revenue decline of 9.7%, supported by improved revenue performance in Q4

• Revenue performance held up better than reductions in adspend

• Operating margin of 18.2% (2008: 19.2%) supported by cost reductions

• Record net new business performance of $2.7bn

• 31% of revenue from digital (2008: 29%)

• Successful efforts to increase geographic footprint

Aegis Media

QUARTERLY PERFORMANCE


• Q4 revenue performance provides good momentum going into 2010

• Headcount fell 6% and operating costs declined 7.6% in constant currency

• Rate of cost savings accelerated during the year

Change % Q1 Q2 Q3 Q4 H1 H2 FY

Organic revenue (13.1) (7.4) (11.8) (8.0) (9.9) (9.5) (9.7)

Cost reduction vs

prior year2.2 7.0 10.1 9.2 4.5 9.6 7.6

£m 2009 2008 Change, %

Constant

currency

change, %

Revenue 585.3 588.1 (0.5) (7.5)

Aegis Media

EMEA


• Strong performance, given challenging market conditions

• UK and Germany performed well in competitive markets – good client retention and significant new business wins

• France, Italy and Spain had a challenging year – but well placed for 2010

• Nordics faced difficult market conditions

• Eastern Europe performed well – strong outperformance in Russia

• Good progress in Middle East and Africa to increase geographic footprint and upgrade product offering

£m 2009 2008 Change, %

Constant

currency

change, %

Revenue 158.6 167.3 (5.2) (17.9)

Aegis Media

AMERICAS


• North American performance reflects challenging market

• New business recovery led by Gillette win

• Solid performance in Latin America, despite challenging markets

• New affiliates in Chile, Columbia and Venezuela

£m 2009 2008 Change, %

Constant

currency

change, %

Revenue 81.3 68.4 18.9 3.9

Aegis Media

ASIA-PACIFIC


• Another strong performance across the region

• Very good progress in China

• Management changes in India and Australia delivering

• New affiliate agreements in Vietnam, Pakistan, Bangladesh

• Acquisition of 17.7% of Charm Communications and JV in Jan 2010

Aegis Media

SUMMARY


• Resilient performance in a recessionary year

• Effective cost reduction programme

• Good strategic progress in both China and North America

• Record net new business wins – well placed for 2010

BUSINESS REVIEW

SYNOVATE

Robert Philpott

CEO, Synovate

£m 2009 2008 Change, %

Constant

currency

change, %

Gross revenue 521.3 518.2 0.6 (8.7)

Net revenue 321.8 329.2 (2.2) (12.6)


Operating margin on gross revenue 7.1% 8.1%

Synovate

RESULTS


• Satisfactory full year performance

• Net revenue conversion declined to 61.7% (2008: 63.5%) due to pricing pressure and changes in work mix

• Excellent H2 performance, supported by increased cost saving run rate and improved revenues

• New management approach, revitalised organisation and stronger sales order book - well placed at the beginning of 2010

Synovate

QUARTERLY PERFORMANCE


• Progress made during H209 in improving gross and net revenue declines

• Operating costs reduced, reflecting benefits of targeted cost reduction programme

• Rate of cost savings accelerated during the course of the year

Change % Q1 Q2 Q3 Q4 H1 H2 FY

Organic Gross revenue (9.1) (14.6) (10.1) (5.5) (12.3) (7.4) (9.6)

Organic Net revenue (12.0) (18.1) (14.4) (10.8) (15.5) (12.2) (13.7)

Staff cost reduction vs

prior year0.7 7.8 10.8 13.6 4.3 12.2 8.2

£m 2009 2008 Change, %

Constant

currency

change, %

H1 Operating Profit (3.2) 7.9 (140.5) (132.0)

H2 Operating Profit 40.1 34.3 16.9 1.0

FY Operating Profit 36.9 42.2 (12.6) (25.0)

Synovate

HALF ON HALF PERFORMANCE


• A year of two halves

• Strong performance in H2 turned H1 loss into FY profit

£m 2009 2008 Change, %

Constant

currency

change, %

Gross revenue 234.4 248.4 (5.6) (10.2)

Net revenue 138.2 147.6 (6.4) (12.2)

Synovate

EMEA


• Strong performances in UK, Netherlands and parts of Scandinavia

• Other Western European markets weaker

• Excellent performance from Africa – solid revenue growth across the continent

£m 2009 2008 Change, %

Constant

currency

change, %

Gross revenue 151.1 145.2 4.1 (10.0)

Net revenue 102.5 100.5 2.0 (12.9)

Synovate

AMERICAS


• Challenging year for North America

• Consumer and Custom Healthcare resilient

• Automotive and Financial Services – recession impacted

• Good Q4 sales momentum – higher order book carried into 2010

• Solid revenue and profit improvements in Latin America - Strong performances from Mexico, Argentina and Columbia

£m 2009 2008 Change, %

Constant

currency

change, %

Gross revenue 135.8 124.6 9.0 (4.4)

Net revenue 81.1 81.1 - (13.0)

Synovate

ASIA-PACIFIC


• Market research operations did relatively well

• Strongest performance in India, Australia and New Zealand

• China and Japan hit by automotive industry decline

• Good progress on cost reductions

• Strong Q4 momentum – healthy order book carried into 2010

• More challenging markets than originally anticipated

• Continued focus on cost reduction and re-organisation of activities

• Excellent H2 performance, supported by renewed management approach, increased cost saving run rate and improved revenues

• Well placed for 2010

Synovate

SUMMARY


FINANCIAL REVIEW

Nick Priday

CFO

Underlying

INCOME STATEMENT

£m 2009 2008 Change, %

Constant

currency

change, %

Revenue 1,346.5 1,342.0 0.3 (8.7)

Gross profit 1,147.0 1,153.0 (0.5) (9.9)

Overheads (976.7) (976.0) (0.1) 8.9


Associates (0.3) 2.7 (111.1) (110.0)

Profit before interest and tax 170.0 179.7 (5.4) (16.3)

Net interest (20.7) (12.9) (60.5) (69.7)

Profit before tax 149.3 166.8 (10.5) (21.8)



Reconciliation to statutory

PROFIT BEFORE TAX

£m 2009 2008 Change %

Underlying profit before tax 149.3 166.8 (10.5)

Adjusting items:

Restructuring costs (30.5) (27.4)

Amortisation of

purchased intangibles(24.2) (17.2)

IAS 39 adjustments (2.9) 6.8

Write off of software - (4.4)

Loss on disposal of subsidiaries /

associates(0.5) -

Statutory profit before tax 91.2 124.6 (26.8)


NET INTEREST


2008 Increase in

net debt

Net

movements

in rates

Other

including

non-cash

charges

Tax interest 2009FX

translational

impact

£21.3m

£1.5m

£(4.1)m

£1.1m

£1.4m £21.8m

£0.6m

Cost Reduction Programme

SAVINGS RUN RATE

Aegis Group PLC | Page 26

Q1 % Q2 % Q3 % Q4 % FY % FY £m

Aegis Media 2.2 7.0 10.1 9.2 7.1 35.0

Synovate 0.7 7.8 10.8 13.6 8.2 18.8

Group total* 2.0 7.5 10.5 10.6 7.6 55.6

* includes some head office staff cost savings

Percentage movements reflect year-on-year savings in total staff costs (excluding bonus and

severance), stated at constant currency

• Savings run rate accelerated during the year, supported by further initiatives implemented in H2

• Additional protection from reduced levels of performance bonuses

BALANCE SHEET


£m 2009 2008 Change %

Goodwill 1,010.9 1,114.6 (9.3)

Intangible assets 85.5 104.9 (18.5)

Property, plant and equipment 59.9 73.5 (18.5)

Other non-current assets 44.4 52.7 (15.7)

Net receivables/(payables) (309.3) (281.0) (10.1)

Net debt (257.2) (297.5) 13.5

Earn-out liabilities (70.2) (197.4) 64.4

Liabilities in respect of put options (31.4) (41.3) 24.0

Other (88.1) (68.7) (28.2)

Net assets 444.5 459.8 (3.3)

NET DEBT


£m 2009 2008 Change

Gross debt including overdrafts (648.3) (710.2) 61.9

Cash 391.1 412.7 (21.6)

Net debt (257.2) (297.5) 40.3

UnderlyingCASH FLOW STATEMENT


£m 2009 2008 % Change

Operating profit 170.3 177.0 (3.8)

Depreciation, amortisation and impairment 32.1 30.1 6.6

Other non-cash movements 8.2 7.6 7.9

Net movement in working capital 27.0 54.9 (50.8)

Operating cash flow 237.6 269.6 (11.9)

Tax paid (34.2) (46.1) 25.8

Net interest paid (18.7) (19.4) 3.7

Dividends paid to equity holders (28.5) (27.4) (4.0)

Other activities (2.1) (7.9) 73.4

Cash flow before acquisitions and capex 154.1 168.8 (8.7)

Net spend on acquisitions/disposals (73.5) (103.3) 28.8

Net capital expenditure (26.0) (39.6) 34.3

Net cash before movement in borrowings 54.6 25.9 110.8

Net movements on borrowings (23.2) (22.1) (5.0)

Underlying net cash inflow 31.4 3.8 726.3

COVENANTS AND HEADROOM


2009 2008

Covenants

Net debt / EBITDA (<3 times) 1.2 x 1.2 x

EBITA / gross interest (>4 times) 6.9 x 6.0 x

RCF drawn £113.6m £264.4m

Total central facility headroom £376.4m £172.1m

• US Private Placement Notes issued on 17 December 2009 – £25m and $183m unsecured loan notes repayable between 2017 and 2019

EPS AND DIVIDEND


2009 2008 2007

Underlying diluted earnings per share 9.5p 10.3p 8.2p

Total dividend per share 2.50p 2.50p 2.30p

Dividend cover (underlying) 3.8 x 4.1 x 3.6 x

DEVELOPMENT

AND OUTLOOK

John Napier

Chairman and Interim CEO

Aegis

OUTLOOK

• Strong performance in 2009 despite recession

• Sales recovery in Synovate, positive impact in 2010

• Aegis Media well placed in 2010, following strong new business performance in 2009

• More expenditure focus on bolt-on acquisitions and complementary investments

• Gained momentum


Macro Economic

OUTLOOK

• Global economy has improved but significant regional variations remain

• Significant soft spots in Europe, including Russia, the Baltics and Spain

• Emerging markets, including China, remain the highest growth

• US economy is recovering

• Unprecedented policy initiatives


Aegis View

• Momentum and continuity in 2009

• Successful action

• Good start to year

• Aspiration

• Return to modest growth


Q & A

APPENDIX



RESTRUCTURING SUMMARY

£m 2008 2009 Total Severance Property

Aegis Media 22.6 10.6 33.2 29.6 3.6

Synovate 2.1 19.3 21.4 18.4 3.0

Corporate head office 2.7 0.6 3.3 3.3 -

Total 27.4 30.5 57.9 51.3 6.6

CURRENCY IMPACT

Exchange rates

£/€ Change % £/$ Change %

2009 average 1.1229 12.0 1.5659 18.3

2009 period end 1.1269 7.9 1.6148 9.4


% € $ £ Other

2009 31.2 25.4 14.8 28.6

Revenue by currency

TAX


£m 2009 2008 Change, %

Underlying PBT 149.3 166.8 (10.5)

Underlying tax charge 38.1 43.1 (11.6)

Effective tax rate 25.52% 25.84% (32) bps

MATURITY PROFILE


£m

Debt due after 1 year

2011 164.2

2012 118.8

2014 46.4

2015 73.0

2017 107.2

2019 95.5

605.1

Overdrafts and short-term loans 43.2

648.3

STATUTORY CASH FLOW


£m 2009 2008

Underlying net cash inflow 31.4 3.8

Cash outflow on restructuring programme (38.5) (8.0)

Proceeds on disposal of subsidiaries and associates 5.1 -

Net cash movement (2.0) (4.2)

Documents

AEGIS GROUP PLC - Media & Digital Communications …/media/Files/A/aegis-plc/pdf/prelim2009.pdf · • New business recovery led by Gillette win ... Aegis Group plc | Page 29 £m