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Aegis Group plc2006 preliminary results
15 March 2007
financial results
Jeremy Hicks, CFO
Excellent progressBest-in-industry organic revenue growth at 7.7%
16% growth in underlying pre-tax profit to £116.2m (2005: £100.2m)
Underlying diluted eps up 14.8% to 7.0p (2005: 6.1p)
Record year for net new business at $2.7bn (2005: $1.6bn)
Reaping benefits of investment in acquisitions, new productsand services
20% of Aegis Media revenue from digital, up from 15% in 2005
20% of our total business today in developing markets
Organic revenue growth
Source: Carat adspend forecast and Synovate
5.0%
5.9%6.6%
7.7%
Aegis Group Aegis Media Global adspend Synovate Market research
9.5%
14.8%6.1p7.0pDiluted earnings per share
16.0%100.2116.2Profit before tax
16.3%115.0133.8Operating profit
12.9%755.0852.1Gross profit
14.5%870.4996.9Revenue
8,230.2
2006
1.9%8,079.1Turnover
Change2005£m
Income statementUnderlying
Profit before taxUnderlying
-1.3-Share of profit on disposal of JV
20.7%20.7%20.7%20.7%94.094.094.094.0113.5113.5113.5113.5Reported profit before taxReported profit before taxReported profit before taxReported profit before tax
-0.96.9Fair value gains
-(6.7)(5.8)Goodwill and other purchased intangibles
-(1.7)(3.8)Exceptional items
116.2
2006
16.0%100.2Underlying profit before tax
Change2005£m
Profit after taxUnderlying
(13.6)%(29.4)(33.4)Reported tax charge
(13.3)%(29.4)(33.3)Underlying tax charge
14.8%6.1p7.0pDiluted earnings per share
17.1%70.882.9Underlying profit after tax
--(1.4)Tax credit on VAT liability
--1.5Tax relief on goodwill
116.2
2006
16.0%100.2Underlying profit before tax
Change2005£m
(18.9)%(14.8)(17.6)Net interest
16.0%100.2116.2Profit before tax
(40.7)%(2.7)(3.8)Minority interest
17.1%70.882.9Profit after tax
(13.3)%(29.4)(33.3)Taxation
16.3%115.0133.8Operating profit
-(0.1)1.2Associates
132.6132.6132.6132.6
2006
15.2%15.2%15.2%15.2%115.1115.1115.1115.1Operating profit exOperating profit exOperating profit exOperating profit ex----associates & JV associates & JV associates & JV associates & JV
Change2005£m
Income statementUnderlying
10bps13.2%13.3%Group operating margin
-7.7%7.7%Synovate operating margin
60bps 19.7%20.3%Aegis Media operating margin
10.4%
2006
110bps9.3%Gross margin
Change2005
Margins
* Operating margin is underlying operating profit before associates as a percentage of revenue
(1.2)2.7Associates and JVs
(74.1)(38.8)Net movement in working capital
31.527.5Depreciation, amortisation and impairment
(17.1)(19.4)Dividends paid
(139.3)(139.3)(139.3)(139.3)(40.9)(40.9)(40.9)(40.9)Net cash flow before financingNet cash flow before financingNet cash flow before financingNet cash flow before financing
39.139.139.139.172.872.872.872.8Net cash generationNet cash generationNet cash generationNet cash generation
(29.6)(25.2)Net capital expenditure
(131.7)(69.1)Acquisition payments
(209.5)(209.5)(209.5)(209.5)(228.6)(228.6)(228.6)(228.6)Net debtNet debtNet debtNet debt
4.08.4Other non-cash movements
68.168.168.168.1124.0124.0124.0124.0Operating cash flowOperating cash flowOperating cash flowOperating cash flow
(3.5)(3.8)Other cash flows
(26.7)(34.5)Tax paid
1.2(12.9)Net interest received / (paid)
107.9107.9107.9107.9124.2124.2124.2124.2Operating profit Operating profit Operating profit Operating profit
20052006£m
Cash flow
Working capital
Average cash balance 2005: £294m
Average cash balance 2006: £305m
Capital expenditure
4.71.2Intangible assets
5.15.3IT software
31.327.1Total capital expenditure
6.16.2Furniture, fixtures, equipment & vehicles
8.29.4IT hardware
6.94.7Leasehold improvements
0.30.3Land and buildings
20052006£m
60bps 19.720.3Operating margin (%)
13.7%106.5121.1Operating profit
60bps7.07.6Gross margin (%)
10.3%539.9595.7Revenue
7,829.0
2006
1.0%7,748.6Turnover
Change2005£m
Aegis Media
Financial summary
* Operating margin is underlying operating profit before associates as a percentage of revenue
9.8%380.7418.1EMEA
12.1%118.7133.1Americas
9.9%40.544.5Asia-Pacific
10.3%539.9595.7Worldwide
2006 Change2005£m
Aegis Media
Regional revenue growth
* Operating margin is underlying operating profit before associates as a percentage of revenue
-7.77.7Operating margin (%)
21.7%25.330.8Operating profit
(120)bps65.163.9Gross margin (%)
19.2%215.1256.4Gross profit
401.2
2006
21.4%330.5Revenue
Change2005£m
Synovate
Financial summary
* Operating margin is underlying operating profit before associates as a percentage of revenue
21.4%330.5401.2Worldwide
20.2%69.883.9Asia-Pacific
5.3%127.4134.1Americas
183.2
2006
37.4%133.3EMEA
Change2005£m
Synovate
Regional revenue growth
business review
Robert Lerwill, CEO
2006: best-in-industry growth
7.77.77.77.7 7.67.67.67.6
5.65.65.65.6 5.45.45.45.4
0.60.60.60.61.01.01.01.0
AegisAegisAegisAegis OmnicomOmnicomOmnicomOmnicom PublicisPublicisPublicisPublicis WPPWPPWPPWPP IPGIPGIPGIPG HavasHavasHavasHavas
Organic revenue growth, %
And a consistent record
Source: Carat adspend forecasts
3.4
6.7
5.25.9
4.4
8.4
7.27.7
0
3.4
0
2
4
6
8
10
2002 2003 2004 2005 2006
Market, %
Aegis, %
Success from strategic acquisitions
Good performance from 2005 acquisitions
� earnings enhancing, returning >group cost of capital in year 1
Focus on emerging markets (BRIC+)
� Control Media, New Voice, Integrator, Infocy, AgenciaClick
Drivers of future organic growth
� new services, geographies and people
Our priorities
Closer than ever to clients
Investment for growth
Business transformation
2,691.72,691.72,691.72,691.7(1,133.6)(1,133.6)(1,133.6)(1,133.6)3,825.33,825.33,825.33,825.3Total
625.1625.1625.1625.1(81.3)(81.3)(81.3)(81.3)706.4706.4706.4706.4Asia-Pacific
107.5107.5107.5107.5(610.5)(610.5)(610.5)(610.5)718.0718.0718.0718.0Americas
2,400.92,400.92,400.92,400.9
Gains
1,959.11,959.11,959.11,959.1(441.8)(441.8)(441.8)(441.8)EMEA
NetLosses$m
Aegis Media
Closer than ever to clients
Record new business performanceRecord new business performanceRecord new business performanceRecord new business performance
Average no. of services Average no. of countries
Aegis Media
Closer than ever to clients
Successful ‘more products in more countries’ strategy
11.711.711.711.712.612.612.612.6
14.714.714.714.7
16.716.716.716.7
19.719.719.719.718.118.118.118.1
2001200120012001 2002200220022002 2003200320032003 2004200420042004 2005200520052005 2006200620062006
4.54.54.54.55.05.05.05.0
2005200520052005 2006200620062006
Aegis Media
Investment for organic growth
5,000 Carat people trained in 3C’s
Vizeum footprint expanded throughout Asia
International expansion of Posterscope
‘Globalisation’ of Isobar
� central client resource, global search capability
Investment in products and services
� Avista, CCS
Aegis Media
Business transformationPenetration of amateur & professional online video*Penetration of amateur & professional online video*Penetration of amateur & professional online video*Penetration of amateur & professional online video*
20%20%20%20%
40%40%40%40%
60%60%60%60%
80%80%80%80%
UKUKUKUK Fr.Fr.Fr.Fr. Germ.Germ.Germ.Germ. ItalyItalyItalyItaly USUSUSUS ChinaChinaChinaChina JapanJapanJapanJapan
Adults with broadband who have everAdults with broadband who have everAdults with broadband who have everAdults with broadband who have everwatched/downloaded home videowatched/downloaded home videowatched/downloaded home videowatched/downloaded home video
Adults with broadband who have everAdults with broadband who have everAdults with broadband who have everAdults with broadband who have everwatched/downloaded TV showswatched/downloaded TV showswatched/downloaded TV showswatched/downloaded TV shows
0%0%0%0%
20%20%20%20%
40%40%40%40%
60%60%60%60%
NewsNewsNewsNews MovieMovieMovieMovie
previewspreviewspreviewspreviews
Music &Music &Music &Music &
amateuramateuramateuramateur
videosvideosvideosvideos
TV showsTV showsTV showsTV shows
What type of video content do you watch online?**What type of video content do you watch online?**What type of video content do you watch online?**What type of video content do you watch online?**
21%21%21%21%
17%17%17%17%
16%16%16%16%16%16%16%16%
11%11%11%11%
9%9%9%9%3%3%3%3%3%3%3%3% 4%4%4%4% NewsNewsNewsNews
Movie previewsMovie previewsMovie previewsMovie previewsMusic videosMusic videosMusic videosMusic videosAmateur videosAmateur videosAmateur videosAmateur videosTV showsTV showsTV showsTV showsSports highlightsSports highlightsSports highlightsSports highlightsFull length moviesFull length moviesFull length moviesFull length moviesLive sports eventsLive sports eventsLive sports eventsLive sports eventsOtherOtherOtherOther
Breakdown of online video content**Breakdown of online video content**Breakdown of online video content**Breakdown of online video content**
* OFCOM/Synovate, November 2006, age 18-64** Piper Jaffray & Company, 2006 online media survey
Aegis Media
Business transformation
7
15
20
45
6
0
5
10
15
20
25
2004 2005 2006
% of Aegis Media revenue from digital
% of global adspend
Aegis Media
Business transformation
Digital at the heart of everything
Paid media
� emerging business models
Unpaid media
� engagement is the key today
All about agility and integration
Synovate
Closer than ever to clients
Very successful global client relationships strategy
Closer to global leadership teams
Grew share of roster in all Tier 1 and 2 clients
� local global
� qual quant
� new practices, eg PD&D B&C
Further initiatives and benefits to come
Synovate
Investment for organic growth
Continued investment in practices and industry groups
� Loyalty, Brand & Communications, Product Design & Development
Launch of Brand Value Creator
� “This is fascinating”; “This is very impressive”; “You guys are absolutely at the forefront in terms of thinking and practice”
New therapy monitors
Strong demand for NADA 24
Connecting 51 countries efficiently to global initiatives
Synovate
Business transformation
Appointed global head of operations
Front and back-office systems investment
� WorkBench and ManageMe
Good progress with right-sourcing strategy
� opening off-shore data centres
� reducing CATI in high-cost economies
Synovate
Business transformation
5555
9999
24242424
2005200520052005 2006200620062006 2007e2007e2007e2007e
% US CATI hours out-sourced offshore
Synovate
Business transformation
How we’re moving forward
Closer than ever to clients
Investment for growth
Business transformation
Good prospects for 2007
Favourable fundamentals
� global adspend growth forecast at 5.8% and market research at 4.5%
Well-positioned businesses
� 20% of group revenue from developing markets
� 20% of media revenue from digital
Record net new business won in 2006
Further benefits of product and service investment
Aegis Group plc2006 preliminary results
15 March 2007