Clemenger Group Annual Report

2014

I am pleased to report that the Clemenger Group has had another big year in 2014.

The financial result is very strong in what was a very tough economic climate on both sides of the Tasman.

A Big Result

+10%

Our profit after tax increased
by +10% to $40m

$373m

revenue* up +5%

* Normalised revenue includes Clemenger Group Limited’s share of associates’ revenue

Big wins including Myer, Telstra, Seek, Santos and William Hill in Australia, and Sky City and Pumpkin Patch in New Zealand.

Overall, we increased our profit after tax by +10% on the prior year, to $A40m. Our earnings before interest, taxes depreciation, amortization and impairment (EBITDA) was $A59.8m. This was achieved on revenue of $A373m, which was up +5 % on 2013.

As a result, the share price will increase to $2.62 and the dividend will be 11.25 cents per share, pleasing returns for shareholders including our hundreds of employee shareholders who hold over 26% of the Group.

The result was helped by outstanding performances from many companies including Clemenger BBDO Melbourne, CHE Proximity, Marketforce, Creative Activation, Touchcast, Colenso BBDO Auckland and OMD who all had big years. Increasing our equity in GRA Everingham and Marketforce also bolstered our profit.

Our result was underpinned by some big new business wins, including Myer, Telstra, Seek, Santos and William Hill in Australia, and Sky City and Pumpkin Patch in New Zealand.

Further to this, we had significant new projects from existing clients including NAB, Mars, Telstra, TAC and GE Capital in Australia and BNZ, Foodstuffs, Fonterra, Visa, Spark and Warehouse Stationery in New Zealand.

Big wins including Myer, Telstra, Seek, Santos and William Hill in Australia, and Sky City and Pumpkin Patch in New Zealand.

Big Recognition

Our companies were acknowledged for their prowess in creativity and effectiveness with recognition in the big award shows both domestically and internationally.

Clemenger / Colenso BBDO was named Network of the Year in Campaign Brief’s The Work 2014, with nearly 50 pieces of work showcased throughout the year.

Clemenger Group agencies won a collective 24 Cannes Lions, the best of any unit within the BBDO Network.

Clemenger BBDO ranked third in the world for Digital in The Gunn Report. Clemenger BBDO Melbourne tied for eighth among the top-ten individual agencies in the world. On top of this, Clemenger BBDO Wellington’s ‘Mistakes’ for NZTA was the third most awarded film commercial in the world.

WARC – the internationally recognised research company famous for measuring the benchmark of commercial creativity – named Colenso BBDO the smartest agency in the world and Proximity New Zealand the smartest digital agency in the world.

At Spikes we won 39 awards, including three of three Grand Prix Awards and six of eight Golds won by BBDO Worldwide – helping BBDO win Network of the Year for a second time in three years.

Locally, Clemenger BBDO Melbourne was named Campaign Brief’s Agency of the Year for a record sixth time in seven years and Colenso BBDO was named Campaign Brief’s NZ Agency of the Year for a third time in the last five years.

We won three of seven Golds awarded at the Australian Communications Council’s Effie Awards and Most Awarded Group in the New Zealand Effies.

We were recognised for our strong abilities in public relations, with Porter Novelli Melbourne picking up the most awards out of any consultancy in Victoria at the PRIA Golden Target Awards.

The Clemenger Group Graduate Program was also named as one of the country’s top 50 programs and the highest ranked in the communications category by The Australian newspaper.

We won 24 Cannes Lions, the best of any unit within the BBDO Network.

We Made Some Big Moves

Finally, we continued to nurture and grow our talent base, with 18 talented young people being offered full-time employment after completing the Clemenger Group Graduate Program, 11 in our Australian offices and 7 in New Zealand. We also put 20 of our best and brightest through Clemenger University, an intensive weeklong residential MBA-level course at the Melbourne University Business School.

Consulting companies, Government Relations Australia and Cosway Australia merged to form GRACosway. The combination has forged Australia’s leading integrated public affairs, corporate and financial communications consultancy with unrivalled market coverage and experience.

James Neale, Managing Director of Traffik, took on the role of Managing Director across an additional two Group businesses – Channel 5 and Test Drive. Whilst operating separately, the three companies are able to provide a completely integrated offer in shopper marketing, experiential and sampling for their clients.

After 15 years with the Clemenger Group in New Zealand and Australia, Peter Biggs decided to retire and head home to New Zealand. Peter has played a key role in the Group’s success and we are extremely grateful for his contribution.

Andrew Holt has left Wellington after a very successful four-year stint as Managing Director to take up the position of Managing Director at Clemenger BBDO Sydney.

After 40 years in Adelaide handling some wonderful clients, we decided that the market was simply not big enough to justify our continuing on our own. The business of Clemenger BBDO Adelaide was acquired by KWP, the other major advertising agency in Adelaide.

Finally, we continued to nurture and grow our talent base, with 18 talented young people being offered full-time employment after completing the Clemenger Group Graduate Program, 11 in our Australian offices and 7 in New Zealand. We also put 20 of our best and brightest through Clemenger University, an intensive weeklong residential MBA-level course at the Melbourne University Business School.

WARC named Colenso BBDO the smartest agency in the world and Proximity New Zealand the smartest digital agency in the world.

Strong Culture and a Big Vision

We have moved into 2015 with a strong momentum and look forward to another big year.

Our continued success has been driven by sticking to our three enduring principals – our philosophy of The Work, The Work, The Work, our ability to secure an ‘unfair share’ of the limited pool of exceptional talent, and the unique dedication that comes from employees owning shares in the Group.

Whilst this focus remains unchanged, in an increasingly digital, social and mobile world we are going to have to work faster, cheaper and better than ever before.

And whilst 2015 is going to be extremely tough, as a strong, creatively led company with a brilliant client list and an ‘unfair share’ of the best people in the industry, the Clemenger Group is well placed to prosper.

On behalf of the Board, I extend my gratitude to the executive team and all employees of the Clemenger Group.

We have moved into 2015 with a strong momentum and look forward to another big year.

In an increasingly digital, social and mobile world we are going to have to work faster, cheaper and better than ever before.