INTERIM RESULTS 6 MONTHS TO 30 JUNE 2016 26 JULY 2016
Overview H1 2016 o Group revenues £86.6m,+4% L4L +0.3% o Growth in 3 of 4 divisions Health +18%, L4L +11% o Headline PBT £6.4m,+21% Driven by Health and cost savings o Grayling underperformance Revenue -12%, L4L -15% o Accelerated Grayling restructure Exit US State Lobbying business o Dividend held at 0.5p Confidence in future Headline results are stated before highlighted items Interim Results – June 2016 1
FINANCIAL RESULTS
Financial Results – H1 2016 Highlights H1 2016 H1 2015 • L4L growth of 0.3% Revenue £m 86.6 83.2 • 16% growth Headline Operating profit £m / (OP margin %) 7.3 (8.5%) 6.3 (7.6%) • 21% growth Headline Profit before tax £m 6.4 5.3 • 17% growth Headline Diluted EPS (pence) 1.4 1.2 • Grayling - Impairment £m (15.0) (48.8) • Increasing working capital requirements - Net Debt £m 37.1 33.5 • ETR increasing as US profits rise. - Headline Tax Rate % 29% 27% Interim Results – June 2016 3
Financial Results H1 2016 Divisional Results Summary Central Total Costs Revenue £m 41.5 27.8 10.7 6.6 - 86.6 L4L Revenue Growth % 11.4% (14.7%) 4.4% 3.5% 0.0% 0.3% Headline Operating Profit £m * 8.0 (0.1) 1.6 1.2 (3.4) 7.3 OP Growth* 14.2% (125.7%) 5.6% 10.8% 3.1% 16.0% Headline Operating Margin % 19.4% (0.3%) 15.1% 18.2% 0.0% 8.5% *At constant currency Interim Results – June 2016 4
Financial Results H1 2016 Revenue bridge L4L adj (£0.5m), FX £3.6m £0.4m (£4.4m) £0.3m £4.0m £86.6m £3.1m £83.2m H1 2015 FX Impact Huntsworth Red Citigate Dewe Grayling H1 2016 & L4L adj Health Rogerson Interim Results – June 2016 5
Financial Results H1 2016 Red Grayling Revenue by Division CDR Huntsworth Health L4L Revenue Growth 100% 20% 8% 8% 8% 8% 8% 90% 12% 12% 12% 13% 13% 15% 80% 10% 70% 32% 37% 38% 60% 43% 44% 5% 50% 0% 40% 30% -5% 48% 43% 42% 20% 36% 35% -10% 10% 0% -15% H1 2014 FY 2014 H1 2015 FY 2015 H1 2016 H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 Interim Results – June 2016 6
Financial Results H1 2016 OP bridge Translation +£0.7m Loss on swaps -£0.6m £0.1m (£0.9m) £0.1m £1.0m £0.6m £7.3m £0.1m £6.3m 25% conversion H1 2015 FX Impact Huntsworth Red Citigate Dewe Grayling Central Costs H1 2016 Health Rogerson Note: Figures exclude highlighted items and are based on constant currency Interim Results – June 2016 7
Financial Results H1 2016 Operating Profit by Division Red Grayling CDR Huntsworth Health 100% 10% 11% 11% 11% OP Margin % 12% 90% 25% 15% 15% 18% 14% 80% 19% 7% 20% 70% 12% 22% 60% 23% 15% 50% 40% 10% 75% 67% 62% 30% 50% 47% 5% 20% 10% 0% 0% -1% -10% -5% H1 2014 FY 2014 H1 2015 FY 2015 H1 2016 H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 Interim Results – June 2016 8
Financial Results H1 2016 Highlighted items Commentary on H1 2016 H1 2016 H1 2015 £m Goodwill Impairment (non-cash) (15.0) (48.8) • Grayling • Restructuring costs (0.4) (1.3) Grayling US Amortisation of intangibles (non-cash) (0.4) (0.4) Impairment of software development costs (non-cash) 0.0 (0.6) • Reduced earn-out Acquisition and transaction related credit 0.7 0.0 Total highlighted items (15.2) (51.1) Interim Results – June 2016 9
Financial Results H1 2016 Net Debt movement Capex (£3.9m) Other (£0.2m) (£30.4m) £0.1m (£1.4m) (£0.8m) (£0.5m) (£4.1m) (£37.1m) FY 2015 Cash from Highlighted Interest Tax Capex & other H1 2016 operations items Interim Results – June 2016 10
Financial Results H1 2016 Working capital movement £m £2.2m (£1.3m) (£6.9m) £7.7m (£1.4m) £0.1m (£1.6m) £1.4m OP before Non cash WIP Debtors Creditors Provisions Cash affect of Net cash from non cash items highlighted operations highlighted (incl Dep) items items □ WIP - Client profile requires agency to bear upfront costs □ Debtors - Client profile (Health) - worse invoicing terms □ Creditors - Normalised creditor payment terms □ Provisions - Cash payment made for 2015 highlighted items Interim Results – June 2016 11
Financial Results H1 2016 Net Debt Net Debt @ 30/06/16 - £37.1m Circa 2 x EBITDA* Facilities - £70m Term – May 2019 Significant headroom on covenants No deferred consideration due * Analysts consensus - £19.9m Interim Results – June 2016 12
DIVISIONAL ANALYSIS
Huntsworth Health H1 2016 H1 2015 Revenue growth +11.4% on a like-for-like basis Revenue £m 41.5 35.2 Evoke Health +21.9% like-for-like revenue growth 10.3% L4L growth % 11.4% OP £m 8.0 6.6 Apothecom +15.1% like-for-like revenue growth Margin % 19.4% 18.7% Integration of two new agencies, TraverseHealth Strategy and FIRSTHAND Underperforming agencies being addressed Strong revenue growth to continue into H2 2016 Interim Results – June 2016 14
Revenue decline of 14.7% on a like-for-like basis H1 2016 H1 2015 Revenue £m 27.8 31.7 £15m Goodwill Impairment L4L growth % (14.7%) (8.8%) Reshaping the US, commencing our exit from the OP £m (0.1) 0.7 US state lobbying business, rationalising the US (0.3%) Margin % 2.3% PR offering and reducing overheads Continental Europe business remains resilient UK business stabilised META and US work-in-progress Return to stronger profitability in 2017 Interim Results – June 2016 15
H1 2016 H1 2015 Revenue growth +4.4% on a like-for-like basis Revenue £m 10.7 10.0 (7.2%) L4L growth % 4.4% UK L4L revenue growth of +5.3%, following staff OP £m 1.6 1.5 investment Margin % 15.1% 14.7% Asia like-for-like revenue growth of +6.0% New York presence established in January 2016 Brexit uncertainty in the UK France, Netherlands and Asia performing well Interim Results – June 2016 16
H1 2016 H1 2015 Revenue growth +3.5% on a like-for-like basis Revenue £m 6.6 6.4 Margins increased by 1.2% to 18.2% L4L growth % 3.5% 0.7% OP £m 1.2 1.1 Media employer of the year Margin % 18.2% 17.0% Potential for H2 to flatten - off post Brexit Increase focus on content marketing Interim Results – June 2016 17
Outlook o Health set to continue to grow strongly o Complete Grayling restructure to position for 2017 profit growth o Further streamline overheads o UK uncertainties could drag on PR businesses Interim Results – June 2016 18
THANK YOU QUESTIONS & ANSWERS
APPENDICES
Appendices Shareholding at 7th July 2016 Holder % of share capital Number of voting shares Aberforth: ∙ Aberforth Partners 14.3% ∙ The Church Commissioners for England 1.3% ∙ The Wellcome Trust 4.3% 19.9% BlueFocus 19.2% Lake Capital Investment Partners 7.4% Old Mutual 6.0% Aberdeen Asset Managers 5.5% Miton Group 4.5% T Rowe Price Global Investments 4.1% Matthew Rupert Freud 3.0% Various holders each holding < 3% of the Company's voting rights 30.3% Total 100.0% 328,528,010 Interim Results – June 2016 21
Appendices Consolidated Balance sheet £m H1 2016 FY 2015 H1 2015 Non - Current Assets ∙ Goodwill & Intangibles 172.5 178.7 173.9 ∙ Other non - current assets 12.5 9.8 10.7 185.0 188.5 184.6 Current Assets ∙ Trade debtors and other receivables 54.7 44.4 44.2 ∙ Other current assets 5.6 4.0 4.8 ∙ Cash and short-term deposits 10.5 8.9 13.7 70.8 57.3 62.8 Current Liabilities ∙ Trade and other payables (47.5) (44.2) (47.4) ∙ Other current liabilities (1.7) (0.8) (0.9) ∙ Provisions (1.3) (2.2) (1.3) (50.5) (47.2) (49.6) Non - Current Liabilities ∙ Bank loans and overdrafts (46.3) (39.2) (47.3) ∙ Other non current liabilities (1.0) (0.3) (0.2) ∙ Provisions (2.1) (2.5) (2.9) ∙ Trade and other payables (1.8) (1.3) (1.3) (51.2) (43.3) (51.7) Net Assets 154.1 155.3 146.1 Interim Results – June 2016 22
Appendices Cashflow £m 2016 2015 2015 H1 FY H1 Cash generated from operations 0.1 18.2 7.3 Cashflow relating to highlighted items (1.4) (3.0) (1.5) Interest (0.8) (1.8) (0.9) Tax (0.5) (1.3) (0.7) Capex (3.9) (2.6) (1.1) Free cashflow (6.5) 9.5 3.1 Acquisitions and deferred consideration - (0.7) (0.7) Dividends - (3.8) - Other (including FX) (0.2) 0.2 (0.3) Net movement in Debt (6.7) 5.2 2.1 Closing Net Debt 37.1 30.4 33.5 Interim Results – June 2016 23
Appendices Group Geographical Revenue and OP H1 2015 to H1 2016 Revenue £2.6m £0.0m £86.6m £3.0m (£1.4m) (£0.3m) (£0.6m) £83.2m H1 2015 FX Impact United Kingdom Europe META & Asia USA Central Costs H1 2016 & L4L adj Operating Profit £0.5m £7.3m £1.5m £0.2m (£0.4m) £6.3m £0.1m (£0.9m) H1 2015 FX Impact United Kingdom Europe META & Asia USA Central Costs Interim Results – June 2016 24
Appendices Divisional revenue by geography FY 2015 UK US META & Asia Health 1% 16% 83% UK Europe US META & Asia Grayling 27% 30% 31% 12% UK 100% Red UK Europe META & Asia CDR 51% 26% 23% UK Europe US META & Asia Total 31% 15% 48% 7% Interim Results – June 2016 25
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