INTERIM RESULTS 6 MONTHS TO 30 JUNE 2016 26 JULY 2016 Overview H1 - - PowerPoint PPT Presentation

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INTERIM RESULTS 6 MONTHS TO 30 JUNE 2016 26 JULY 2016 Overview H1 - - PowerPoint PPT Presentation

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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

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INTERIM RESULTS 6 MONTHS TO 30 JUNE 2016 26 JULY 2016

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Interim Results – June 2016

Overview H1 2016

  • Group revenues £86.6m,+4%

L4L +0.3%

  • Growth in 3 of 4 divisions

Health +18%, L4L +11%

  • Headline PBT £6.4m,+21%

Driven by Health and cost savings

  • Grayling underperformance

Revenue -12%, L4L -15%

  • Accelerated Grayling restructure

Exit US State Lobbying business

  • Dividend held at 0.5p

Confidence in future

Headline results are stated before highlighted items

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FINANCIAL RESULTS

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Interim Results – June 2016

Financial Results – H1 2016

  • L4L growth of 0.3%
  • Increasing working capital requirements

Highlights

  • ETR increasing as US profits rise.

H1 2016 H1 2015

Revenue £m 86.6 83.2 Headline Operating profit £m / (OP margin %) 7.3 (8.5%) 6.3 (7.6%) Headline Profit before tax £m 6.4 5.3 Headline Diluted EPS (pence) 1.4 1.2

  • Impairment £m

(15.0) (48.8)

  • Net Debt £m

37.1 33.5

  • Headline Tax Rate %

29% 27%

  • Grayling
  • 17% growth
  • 21% growth
  • 16% growth
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Interim Results – June 2016

Financial Results H1 2016

*At constant currency

Divisional Results Summary

Total

Central 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%

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Interim Results – June 2016

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Financial Results H1 2016

H1 2016 Grayling (£4.4m) £86.6m £3.1m £83.2m Citigate Dewe Rogerson Huntsworth Health H1 2015 £0.3m £4.0m £0.4m Red FX Impact & L4L adj

Revenue bridge

L4L adj (£0.5m), FX £3.6m

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Interim Results – June 2016

Financial Results H1 2016

35% 36% 42% 43% 48% 44% 43% 38% 37% 32% 13% 13% 12% 12% 12% 8% 8% 8% 8% 8%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% H1 2016 FY 2015 H1 2015 H1 2014 FY 2014 Huntsworth Health CDR Red Grayling

  • 15%
  • 10%
  • 5%

0% 5% 10% 15% 20% H1 2015 H1 2016 H2 2015 H1 2014 H2 2014

L4L Revenue Growth

Revenue by Division

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Interim Results – June 2016

Financial Results H1 2016

Note: Figures exclude highlighted items and are based on constant currency

Translation +£0.7m Loss on swaps -£0.6m

£0.6m £0.1m £1.0m (£0.9m) £0.1m H1 2015 £6.3m £7.3m Central Costs FX Impact H1 2016 Red Grayling Citigate Dewe Rogerson £0.1m Huntsworth Health

25% conversion

OP bridge

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Interim Results – June 2016

Operating Profit by Division

47% 50% 67% 62% 23% 22% 12% 75% 19% 18% 15% 14% 15% 11% 10% 11% 12% 11% 7%

  • 10%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% H1 2014 FY 2015 H1 2015 FY 2014

  • 1%

H1 2016 Red CDR Grayling Huntsworth Health

Financial Results H1 2016

  • 5%

0% 5% 10% 15% 20% 25%

H1 2016 H2 2014 H1 2014 H2 2015 H1 2015

OP Margin %

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Interim Results – June 2016

Financial Results H1 2016

Highlighted items

  • Grayling
  • Grayling US
  • Reduced earn-out

Commentary on H1 2016 £m H1 2016 H1 2015 Goodwill Impairment (non-cash) (15.0) (48.8) Restructuring costs (0.4) (1.3) Amortisation of intangibles (non-cash) (0.4) (0.4) Impairment of software development costs (non-cash) 0.0 (0.6) Acquisition and transaction related credit 0.7 0.0 Total highlighted items (15.2) (51.1)

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Interim Results – June 2016

Financial Results H1 2016

Tax (£0.5m) Interest (£0.8m) (£37.1m) Capex & other H1 2016 (£4.1m) Highlighted items (£30.4m) (£1.4m) £0.1m FY 2015 Cash from

  • perations

Capex (£3.9m) Other (£0.2m)

Net Debt movement

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Interim Results – June 2016

Working capital movement £m

Cash affect of highlighted items

£1.4m (£1.6m) (£6.9m) (£1.3m) (£1.4m) £2.2m £7.7m

Net cash from

  • perations

Creditors WIP OP before non cash highlighted items Provisions Debtors Non cash items (incl Dep)

£0.1m □ 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

Financial Results H1 2016

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Interim Results – June 2016

Financial Results H1 2016

Net Debt @ 30/06/16 - £37.1m Circa 2 x EBITDA* Facilities - £70m Term – May 2019 Significant headroom on covenants No deferred consideration due

Net Debt

* Analysts consensus - £19.9m

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DIVISIONAL ANALYSIS

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Interim Results – June 2016

Huntsworth Health

 Revenue growth +11.4% on a like-for-like basis  Evoke Health +21.9% like-for-like revenue growth  Apothecom +15.1% like-for-like revenue growth

  • Integration of two new agencies, TraverseHealth Strategy and FIRSTHAND
  • Underperforming agencies being addressed
  • Strong revenue growth to continue into H2 2016

H1 2016 H1 2015 Revenue £m 41.5 35.2 L4L growth % 11.4% 10.3% OP £m 8.0 6.6 Margin % 19.4% 18.7%

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Interim Results – June 2016

 Revenue decline of 14.7% on a like-for-like basis  £15m Goodwill Impairment  Reshaping the US, commencing our exit from the US state lobbying business, rationalising the US 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

H1 2016 H1 2015 Revenue £m 27.8 31.7 L4L growth % (14.7%) (8.8%) OP £m (0.1) 0.7 Margin % (0.3%) 2.3%

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Interim Results – June 2016

 Revenue growth +4.4% on a like-for-like basis  UK L4L revenue growth of +5.3%, following staff investment  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

H1 2016 H1 2015 Revenue £m 10.7 10.0 L4L growth % 4.4% (7.2%) OP £m 1.6 1.5 Margin % 15.1% 14.7%

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Interim Results – June 2016

 Revenue growth +3.5% on a like-for-like basis  Margins increased by 1.2% to 18.2%  Media employer of the year

  • Potential for H2 to flatten - off post Brexit
  • Increase focus on content marketing

H1 2016 H1 2015 Revenue £m 6.6 6.4 L4L growth % 3.5% 0.7% OP £m 1.2 1.1 Margin % 18.2% 17.0%

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Interim Results – June 2016

Outlook

  • Health set to continue to grow strongly
  • Complete Grayling restructure to position for 2017 profit growth
  • Further streamline overheads
  • UK uncertainties could drag on PR businesses
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THANK YOU QUESTIONS & ANSWERS

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APPENDICES

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Interim Results – June 2016

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

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Interim Results – June 2016

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

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Interim Results – June 2016

Cashflow £m

Appendices

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

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Interim Results – June 2016

Appendices

Revenue Operating Profit

H1 2016 Central Costs

£86.6m

USA

£0.0m £2.6m

META & Asia Europe

£83.2m (£1.4m) (£0.6m)

United Kingdom FX Impact & L4L adj

£3.0m

H1 2015

(£0.3m) £0.1m (£0.9m)

United Kingdom Europe FX Impact H1 2015

£6.3m £0.2m (£0.4m)

USA Central Costs META & Asia

£7.3m £0.5m £1.5m

Group Geographical Revenue and OP H1 2015 to H1 2016

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Interim Results – June 2016

Appendices

27% 30% 31% 12%

UK Europe US META & Asia

Grayling 100% Red

UK

16% 83% 1%

UK US META & Asia

Health 51% 26% 23%

UK

CDR

META & Asia Europe

Divisional revenue by geography FY 2015

31% 15% 48% 7%

US UK Europe META & Asia

Total

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Interim Results – June 2016

Divisional revenue by Company and Geography FY15

Appendices

Huntsworth Health 37% Citigate Grayling Red 43% 12% 8% £72.3m £63.2m £12.8m £20.0m 7% META & Asia 48% UK US Europe 15% 31% £80.0m £51.5m £12.4m £24.5m

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Interim Results – June 2016

Appendices – Companies quick overview

  • Huntsworth Health – a collection of marketing services agencies that provide a suite of

services for the science, health, and wellbeing industries.

  • Evoke – Consumer marketing agency for pharmaceutical companies.
  • ApotheCom – Scientific publication agency for pharmaceutical companies.
  • Nitrogen and Audacity – Healthcare professional marketing agencies for

pharmaceutical/biotech companies.

  • Tonic – Healthcare PR.
  • Axiom – Training services to the healthcare industry.
  • Grayling – Multinational PR and public affairs agencies.
  • Citigate – Corporate and Financial PR with offices in the UK, US, Europe and Asia.
  • RED – UK consumer focused branding and PR agency.