Next 15 Group plc

sunny day um it feels somewhat slightly representative of the macroeconomic environment right now um but it could be something that's happening and we have quite a bit to get through today um we've got a run through of last year um which interestingly in some ways I think we, we sort of normally at this point would use last year as a good predictor of the year that we're in. Um, but unfortunately, partly because of, you know, the loss of the large 49 contract and partly because somebody put it to me recently. There is this large orange man that is changing the world, um, partly because of incredibly prudent. It doesn't mean that we're not doing anything. And hopefully what you'll take away from today is actually that we're doing an awful lot across the business to put it in the right place for when normal business resumes, if you want to call it that, if such a thing is going to exist. Peter will walk through the results. which we can go through in glorious technicolor if required. We're going to spend quite a bit of time though on sort of what is next for Next 15. What are we up to? How are we focusing? What are we investing in? How are we investing in those things? Although I think how we see the world is driven much more by macro than anything else right now, just simply because of the way that our customers are seeing the world. At this point, I'll hand over to Peter.

Yeah, thanks Tim. Yeah, so just a few comments to me on the results. Revenue was down 1.4%. That was 4% down organically. One and a half percent of that was because we lost, obviously, the Mac49 contract in January, so it would have been two and a half percent down without that. We had a negative impact on currency. Last year, it was just over 125. Previous year, I think it was nearer 123. And we did have some acquisitions in the year two for MHP. one content business, one tech business, and then Transform, our government agency, did quite a big acquisition of a company called Cadence, which got them into more sort of strategic consultancy with the government. So overall, a reasonable year, but obviously you know, we'd like to have done better. Overall, our operating profit was down 11%, with the margin down to 18.9%. Again, we had good growth from some of our B to C agencies. SMG had a fantastic year. You know, they continue to be our sort of jewel in the crown. And the three Ms, as I described them, M Booth, M Booth Health, and MH all did pretty well and brand with had a good video so overall some good performance from b2c b2b tech continues to be slightly more challenging for us and one of the reasons the margin was down is because the tech tends to have more operational gearing sort of you know more use of tech and data less use of people and obviously more b2c agencies and more sort of people dependent so the mix of revenue i think wasn't wasn't helpful in terms of the margin Nigel Fieldersen- tax rate was 27.4% that's going to come down quite a bit next year, because just the mix of where the revenues coming from. Nigel Fieldersen- We had a hard much higher tax rate from the big contract so tax next year should be down to 25.5 cents and EPS fell to 9.3 because the profit and we decided to maintain the dividend is good cover and you know good cash. Nigel Fieldersen- When capital. I think people who were here six months ago, I beat myself up quite hard on working capital. We had a much better second half performance, you know, 31.9 down to seven working capital outflow was a much better performance. And, you know, it's a real focus going forward, given the markets. Earned out commitments that dropped a lot, partly because we paid a big chunk of Mac 49 in the year, but also we reduced the estimate for Mac 49 from, I think it was 105 at the intrams down to 91 and a half. And that's payable over the next three years. So, you know, kind of a nice sort of spread of that payment. Net debt reduced 38.4 from 74.8. We typically have a better wet cap performance in the second half. And particularly in January, we have a very strong cash performance. So that was sort of pleasing. A lot of restructuring costs, over 500 rolls were Sam Theobald, our HR Director, probably hopefully won't have another year like that because it was a pretty brutal year in that regard. £16 million of that related to Mac49 obviously loss of the contract. Of the remaining £29 million, £9 million related to last year and that was the cost saving last year and so the remaining £20 million this year We are reinvesting, you know, a fair bit of that back into AI and Tim's going to talk about our AI investments later. And also SMG, you know, the jewel in the crown, they are beginning to see some really encouraging signs in the US. They won the first big client, W.A. Smith US, and, you know, they've got quite a few consultancies on the horizon. So we really want to help them grow into the US and also into Europe as well. So, you know, we are not seeing all of that 20 million cost saving from investment and investment in SMG as well. So Tim.

You just talked a lot about the sort of the hard financial data. This is sort of a look inside the beast that you like. We do still work for an awful lot of really big, important companies and play a very important role for those companies. And we carry on working for them. I think there is probably a sense of is something changing underneath the covers, if you like. And the reality is really not much has changed. This stat of 70% of our top 100 customers has been with us for five years or more. And in fact, many have been there for much longer than five years. That stat has remained constant. I went back and looked at it. previously and it matches almost exactly. So really what you're seeing is a remarkable level of consistency at a larger client level. Technology clients will now account for a third of our revenues in this year. The loss of the big contract skews back towards tech again. Staff retention remains amazing. You know, having over ten and a half years, Patrick Ruanecki- Having average tenure being over 10 and a half years that's quite a remarkable staff in our industry is typically an awful lot of turnover at that level and. Patrick Ruanecki- Operating margins, you know I know that there are a lot of people who would kill for a sort of roughly 19% operating margin in our sector, it is a difficult thing to do it requires you to be. and our businesses do an amazing job of that. We've talked about the fact that we are investing in AI and data. We've talked about that ad nauseum for the last few years. We're now moving into the next phase of that investment. We've done the phase where we've armed everybody with tools and we're really kicking them to use them, making sure that they use them every day. We're now into the phase that later. The other thing that we're doing is changing the board. You would have seen that we recently brought on Marcus Stair. We're today announcing that Sam Wren is joining the board. We do have three directors that are stepping down. This is us effectively looking at the board structure and saying, how do we have a board that is appropriate for the business going forwards? Some of it is we're recognizing that we're a slightly recognising that we need some slightly different skill sets, a more commercial board effectively. And I think Sam and Mark very much, I keep calling him Fred, by the way, and that's not a good thing. Sam and Mark are definitely good additions from that perspective. In terms of review of strategy, We talked a while ago about the fact that we were really trying to focus on how do we make the business simpler? How do we make it easier for you to understand? How do we make it easier for us to run the business? How do we make it better for our customers and better inevitably for our employees and in that process. And we have done a tremendous amount of work on that in the last year. A lot of it is stuff that you won't see. A lot of it is us working away in the background We're approaching simplification not as there's only one way to do it. It's you smash businesses together or whatever. We're approaching it as how do we deliver a better product to the customer to make our business better for them? How do we do this in a way that still keeps the integrity of customers will follow. We're looking at the operational structure of in the long term. And so what you'll see in the next section is where we want to really focus our efforts. But you can basically put it in two categories, AI and new capabilities. New capabilities really means either focuses on new geographies or focuses on new service lines that we think are going to be crucial for the future. We will do a small number of strategic acquisitions. We are not out much in the buying game. You will see us do that, but it will be very selective and very focused on my peanut butter comment. I think another piece of work that we are just starting is a real deep look at our incentive scheme. One of the things that I think has become very obvious to us in the last 12 months is that the decentralized model works brilliantly for those businesses and So sometimes we miss out on revenue and sometimes we don't do the best job we could possibly do for a customer because incentives don't drive the right behavior. And so we will have and that kind of thing. In terms of priorities, it looks like a lot here. I think what you should look at is the middle column, which is product service evolution. That's us trying to tell you And we need to really move to create a completely new solution for that market. Retail media, that's really us just saying the thing that we need to focus most on is really the US expansion. To some degree, the EMEA expansion is a function of us also driving US expansion. There are a number of European retailers that really want to do well in America. valuable and very big company on our hands. Data is an area that is really The comms collective, as I've described it, this is a new way of us thinking about the businesses that we have in the comms space. At the moment, they are run very independently. We do have a market than we currently do. We also know that that's an area where there are a couple of areas that if we could expand our capabilities, notably corporate comms and influencer, we can do extremely well. Corporate comms is just a very good door into five or six years ago into being of similar magnitude to the comms industry alone at this stage. And so it makes enormous sense for us to do that. It's a space that is growing and doing extremely well in the B2C world. It is growing rapidly, but from a very, very, very small base in the B2B world. We think in B2B we have a huge opportunity if we can get that right. That is an area that we are and still do extremely well. On consulting, that is probably going to get less focus from us this next year. It is an area where we are building AI accelerators for a lot of our clients. A lot of them are trying to figure out how do we use AI to innovate or to change our business. And they, in many cases, don't have the capability to do it themselves, so they're environment because they're very fearful that somebody will use it as a way to hack into their system. And so by doing it externally through us, they're very protected in that respect. And it's actually proving to be a pretty good place for us to operate. I've already talked through back office, so I won't labor there. I'm going to hand over at this point to JP and he can talk about the goose.