Digital Services - 2015 Market Review

Digital Services2015 Market Review

2015 STRICTLY PRIVATE AND CONFIDENTIAL

2QUARTERLY TECH REPORT – 2015 ANNUAL REVIEW: DIGITAL SERVICES

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DEEP DOMAIN EXPERTISE IN THREE INTER-RELATED SECTORS… …AND BROAD INDUSTRY NETWORKS

Marketing

Healthcare

Technology

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3

The Digital Services Spectrum

QUARTERLY TECH REPORT – 2015 ANNUAL REVIEW: DIGITAL SERVICES

The Results International Digital Services Ecosystem

The traditionally distinct sectors of IT / Consulting Services and Marketing Communications, included above, are converging at an ever increasing rate supported by transferable revenue and business models

DIGITAL SERVICES

4

80

85

90

95

100

105

110

115

120

Technology Consulting / Services Marketing Communications NASDAQ Composite IndexFTSE 100 Index


Results International Global Digital Services Indices

Dec-15Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15

Notes: Based on share prices as at 31st December 2015; indices weighted by market capitalisation Sources: Capital IQ and Results analysis

LAST

12

MON

TH S

HARE

PRI

CE P

ERFO

RMAN

CE

Q4 2015 PERFORMANCE

Technology Consulting / Services (3.7%)

Marketing Communications 9.5%

(3.2%)

5.7%

7.8%

(4.9%)

5

IT / CONSULTING SERVICES MARKETING COMMUNICATIONS0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%9.0%

10.0% 9.2%

5.7%

IT / CONSULTING SERVICES MARKETING COMMUNICATIONS0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0% 15.1% 14.8%

IT / CONSULTING SERVICES MARKETING COMMUNICATIONS0.0 x0.2 x0.4 x0.6 x0.8 x1.0 x1.2 x1.4 x1.6 x1.8 x2.0 x 1.9 x

1.4 x

IT / CONSULTING SERVICES MARKETING COMMUNICATIONS0.0 x

2.0 x

4.0 x

6.0 x

8.0 x

10.0 x

12.0 x 11.4 x10.1 x


Digital Services: Valuation Benchmarks

Notes: EV = Enterprise Value; financials calendarised to December year end; median values reported; excludes negative multiples See Selected Publicly Traded Companies (Slides 10 & 11) for details of companies included in each categorySource: Capital IQ

REVENUE GROWTH (2015-16E) EV / REVENUE 2015E

EBITDA MARGIN 2015E EV / EBITDA 2015E


Data & Analytics: Selected Deals in 2015

DATE BUYER TARGET EV ($M) EV/REVENUE EV/EBITDA COMPANY DESCRIPTION TARGETLOCATION

Dec-15 Consumer research and data analytics companies 47.0 0.6x -

Experian Simmons and Hitwise; consumer research and behaviour measurement, and behavioural analytics respectively

Dec-15 Advanced Advertising Unit - - - Data analytics for advertising optimisation

Sep-15 - - - Online data marketing solutions provider

Sep-15 682.6 6.3x n.m. Content measurement and analytics for the entertainment industry

Aug-15 - - - Adobe data analytics and conversion rate optimisation

Aug-15 - - - Web site analysis solutions for digital marketers

Aug-15 - - - Digitally driven marketing & data intelligence

Jul-15 - - - Geomarketing analytics and campaign control

Jul-15 - - - Marketing measurement and consulting services for the food services and retail industries

Jul-15 - - - Web analytics and optimisation

Jul-15 - - - Data, predictive analytics, and marketing automation services

Jul-15 60.0 1.5x - Customer counting and statistics solutions for the retail and property markets

Jun-15 41.2 - - Integrated database marketing analytics

May-15 - - - Customer experience management and feedback analytics solutions

Apr-15 - - - Tech-enabled digital analytics

Feb-15 - - - Website and call tracking analytics

Feb-15 47.0 - - Database marketing services for the insurance industry

Feb-15 Internet Audience Measurement Business58.8 - - Kantar’s Scandinavian Internet Audience Measurement

businessesNote: In certain cases EV/Revenue are publicly reported estimates; TTM financials have been used where possible; EV = transaction value scaled to 100% shareholding plus net debt (incl. minority interest)Sources: Press releases, Capital IQ, Mergermarket, 451 Research and Results analysis


Strategy, UX, Design & Build: Selected Deals in 2015


Oct-15 - - - User experience and design-focused mobile and social media application development

Oct-15 - - - UX, branded content and digital product design and development

Sep-15 - - - User and brand experience-focused mobile application development

Sep-15 - - - User interface design and software development

Aug-15 - - - User experience and digital design

Jul-15 - - - User experience strategy and design and mobile/web application development

Jul-15 - - - Digital strategy and user experience design

Jul-15 61.0(1) 3.1x 12.6x User experience strategy, interaction and design, and product innovation services

Jul-15 - - - User experience design and strategy, marketing and mobile/web application development

Jun-15 - - - User experience and interface design, and application development

Jun-15 6.1 1.0x(2) - User experience design and innovation

May-15 - - - User interface design

Apr-15 25.5 2.2x 5.4x User experience and design, and mobile / web application development

Apr-15 3.8 - - User interface and experience design, and mobile / web application design

Apr-15 - - - Creative strategy, user experience design and application development

Mar-15 - - - Mobile user experience and interface design

Feb-15 - - - User experience design and mobile / web application development

Jan-15 - - - User experience, website design and build, and digital marketing services UK

(1) Includes performance based portion payable over 3 years; (2) Based on acquirer approximation of annual revenueNote: In certain cases EV/Revenue are publicly reported estimates; TTM financials have been used where possible; EV = transaction value scaled to 100% shareholding plus net debt (incl. minority interest)Sources: Press releases, Capital IQ, Mergermarket, 451 Research and Results analysis


Bespoke Software Development and Systems Integration: Selected Deals in 2015


Dec-15 - - - Systems integration, data and cyber security solutions for the global energy and chemical industries

Dec-15 77.7 0.8x - SAP ERP and Microsoft SharePoint systems integration and software development

Dec-15 - - - Salesforce-based software development and systems integration

Sep-15 120.0 3.0x - Workday systems integration

Sep-15 - - - Epic healthcare software systems integration, training, analytics and associated services

Sep-15 410.0 - - Salesforce, Google Applications and ServiceNow SaaS consulting, systems integration and management

Sep-15 - - - Custom web application development

Aug-15 - - - ServiceNow consultancy, integration and solutions

Jul-15 - - - Software integration, custom application development, digital strategy and design

Jul-15 50.6 1.2x 16.9x SAP enterprise software systems integration

Jul-15 Human Resources Service Delivery

- - - Workday and other cloud-based HR systems integration services

Jun-15 - - - Manufacturing software systems planning, design and integration

Jun-15 24.2 - - Salesforce consultancy and cloud solution management

Jun-15 - - - SAP Governance, Risk and Compliance systems design and integration

May-15 - - - Salesforce systems integration and custom application development

Mar-15 430.7 2.2x 19.6x Custom software development, service optimisation and programme management for government

Jan-15 780.0 2.1x 13.0x Software engineering and integration services

Jan-15 - - -Business advisory, systems integration and customised software development for the energy and utilities industries

Note: In certain cases EV/Revenue are publicly reported estimates; TTM financials have been used where possible; EV = transaction value scaled to 100% shareholding plus net debt (incl. minority interest)Sources: Press releases, Capital IQ, Mergermarket, 451 Research and Results analysis


eCommerce: Selected Deals in 2015


Dec-15 - - - Omni-channel Hybris and Intershop systems integration and eCommerce consultancy

Nov-15 29.5 - - eCommerce and SCM / fulfilment systems integration

Aug-15 38.0 - - eCommerce systems integration and digital agency services

Jul-15 Open Resources - - - eCommerce web development

Jul-15 - - - eCommerce web development solutions for the automotive aftermarket industry

Jun-15 2.0 - - eCommerce platform integration, web design and application development

Jun-15 - - - Omni-channel eCommerce systems strategy and integration, and digital marketing

Jun-15 1.2 - - eCommerce systems integration, consulting and application design

Jun-15 - - - Retail strategy, eCommerce site design and systems integration

May-15 - - - eCommerce mobile site and application development

May-15 - - - Retail and eCommerce strategy, analytics and systems integration

May-15 388.7 3.1x n.m. International eCommerce services including fulfilment, marketing, and platform design and implementation

Apr-15 55.2 - - eCommerce big data analysis

Mar-15 - - - Invoicing and order management systems integration

Feb-15 - - - eCommerce and fulfilment platform integration and design

Feb-15 4.6 - - eCommerce strategy, integration, design and website optimisation

Feb-15 29.0 1.2x 11.7x eCommerce, ERP and CRM systems integration

Jan-15 - - - B2B eCommerce integration services

Note: In certain cases EV/Revenue are publicly reported estimates; TTM financials have been used where possible; EV = transaction value scaled to 100% shareholding plus net debt (incl. minority interest)Sources: Press releases, Capital IQ, Mergermarket, 451 Research and Results analysis


Enterprise Mobility & App Development: Selected Deals in 2015


Nov-15 - - - Software services business assets providing software and mobile application development services

Sep-15 - - - Mobile application development and integration

Sep-15 - - - Minority investment; IoT and mobile-focused software development and integration

Sep-15 - - - Enterprise software and application development

Aug-15 - - - Enterprise software, mobile application and eCommerce solutions

Aug-15 - - - Mobile and web application development

Aug-15 - - - Mobile cross-platform enterprise application development

Jul-15 - - - Software and mobile application development

Jul-15 - - - Mobile application development

Jul-15 - - - Mobile application and web design and development

Jul-15 4.7 Mobile, social, and web-based application development

Jun-15 - - - Mobile business application development

Jun-15 - - - Mobile application and web design and development

May-15 - - - Customer loyalty-focused mobile application development

Apr-15 6.7 Mobile business application development

Mar-15 - - - Mobile application development

Mar-15 37.0(1) 1.5x 9.1x Mobile application development and digital consulting

Feb-15 - - - Fitness mobile application development

(1) EV does not include earnout payable over three years Note: In certain cases EV/Revenue are publicly reported estimates; TTM financials have been used where possible; EV = transaction value scaled to 100% shareholding plus net debt (incl. minority interest)Sources: Press releases, Capital IQ, Mergermarket, 451 Research and Results analysis

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OPERATING METRICS VALUATION METRICSPRICE % OF 52 MARKET TOTAL NET ENTERPRISE REVENUE REV. GROWTH GROSS MARGIN REVENUE EBITDA

COMPANY (31-DEC-15) WEEK HIGH CAP CASH DEBT VALUE CY2015 CY15-16 HISTORICAL CY2015 CY2016 CY2015 CY2016 CY2015 CY2016IT / CONSULTING SERVICES

Accenture 104.50 95% 65,623 3,076 (2,543) 63,080 31,426 4.5% 32.0% 16.6% 16.8% 2.0 x 1.9 x 12.1 x 11.4 xCap Gemini 92.97 94% 16,021 6,235 (1,477) 14,544 12,927 9.5% 24.7% 11.7% 12.6% 1.1 x 1.0 x 9.7 x 8.1 xCapita 17.81 90% 11,803 721 2,882 14,685 7,139 7.5% 27.6% 15.2% 15.2% 2.1 x 1.9 x 13.5 x 12.6 xCGI Group 39.93 93% 13,139 220 1,314 14,452 7,472 3.0% 29.7% 17.5% 19.0% 1.9 x 1.9 x 11.0 x 9.9 xCognizant 60.02 86% 36,818 4,051 (3,101) 33,717 12,417 14.0% 40.2% 20.4% 20.6% 2.7 x 2.4 x 13.3 x 11.5 xCSC 32.68 45% 4,535 1,818 821 5,356 8,971 (17.0%) 24.1% 13.5% 17.9% 0.6 x 0.7 x 4.4 x 4.0 xDevoteam 36.38 97% 290 34 (17) 273 522 7.8% 7.2% 7.6% 8.2% 0.5 x 0.5 x 6.9 x 5.9 xGFI Informatique 9.04 98% 497 20 98 595 963 3.4% 9.1% 7.5% 7.7% 0.6 x 0.6 x 8.3 x 7.7 xGlobant 37.51 98% 1,330 73 (73) 1,257 251 20.5% 39.1% 14.6% 16.7% 5.0 x 4.2 x 34.4 x 24.9 xIndra Sistemas 9.42 75% 1,543 301 923 2,466 3,174 0.1% 21.8% 4.1% 8.7% 0.8 x 0.8 x 18.8 x 8.9 xInfosys 16.69 91% 38,151 4,655 (4,655) 33,496 9,150 10.5% 33.9% 27.6% 27.7% 3.7 x 3.3 x 13.3 x 11.9 xIBM 137.62 78% 133,578 9,568 30,249 163,827 81,818 (2.3%) 50.0% 26.2% 26.8% 2.0 x 2.0 x 7.6 x 7.6 xKainos 3.80 86% 449 14 (14) 435 107 9.4% 53.0% 19.2% 19.3% 4.1 x 3.7 x 21.1 x 19.3 xMindTree 21.69 89% 1,823 76 (76) 1,747 650 19.0% 35.2% 18.6% 18.7% 2.7 x 2.3 x 14.4 x 12.1 xPerficient 17.12 79% 605 9 52 657 467 6.9% 34.0% 15.1% 17.0% 1.4 x 1.3 x 9.3 x 7.7 xPFSWeb 12.87 78% 245 13 25 270 284 12.1% 20.9% 6.9% 7.7% 1.0 x 0.8 x 13.8 x 11.0 xReply 136.74 97% 1,279 85 (23) 1,256 763 9.2% 16.2% 13.8% 14.0% 1.6 x 1.5 x 11.9 x 10.8 xSopra Steria Group 117.62 95% 2,334 249 710 3,043 3,895 4.9% 14.0% 8.1% 8.9% 0.8 x 0.7 x 9.7 x 8.3 xSyntel 45.25 85% 3,796 980 (848) 2,948 969 9.3% 41.4% 30.5% 30.8% 3.0 x 2.8 x 10.0 x 9.0 xTata Consultancy Services 36.80 87% 72,505 3,200 (3,108) 69,396 15,883 13.2% 34.8% 27.8% 28.5% 4.4 x 3.9 x 15.7 x 13.5 xTech Mahindra 7.88 70% 7,834 527 (382) 7,453 3,863 13.6% 31.0% 16.9% 17.3% 1.9 x 1.7 x 11.4 x 9.8 xTieto 26.85 99% 1,982 126 73 2,055 1,585 2.3% 30.2% 13.2% 14.5% 1.3 x 1.3 x 9.8 x 8.8 xUnisys 11.05 37% 552 293 36 588 3,027 (1.6%) 23.2% 4.8% 1.7% 0.2 x 0.2 x 4.0 x 11.7 xVirtusa Corporation 41.34 70% 1,255 179 (179) 1,076 586 31.0% 36.5% 12.5% 10.8% 1.8 x 1.4 x 14.7 x 13.0 xWipro 8.45 83% 20,832 4,288 (2,759) 18,073 7,548 9.2% 30.2% 22.3% 22.4% 2.4 x 2.2 x 10.7 x 9.8 x 25th percentile 3.4% 23.2% 11.7% 10.8% 1.0 x 0.8 x 9.7 x 8.3 xMedian 9.2% 30.2% 15.1% 16.8% 1.9 x 1.7 x 11.4 x 9.9 x75th percentile 12.1% 35.2% 19.2% 19.3% 2.7 x 2.3 x 13.8 x 11.9 x

EBITDA MARGIN


IT / Consulting Services: Selected Publicly Traded Companies

Note: Calendarised to December year end; $ millions, except share price data; Net debt includes minority interest Source: Capital IQ

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OPERATING METRICS VALUATION METRICSPRICE % OF 52 MARKET TOTAL NET ENTERPRISE REVENUE REV. GROWTH GROSS MARGIN REVENUE EBITDA

COMPANY (31-DEC-15) WEEK HIGH CAP CASH DEBT VALUE CY2015 CY15-16 HISTORICAL CY2015 CY2016 CY2015 CY2016 CY2015 CY2016

MARKETING COMMUNICATIONS

BlueFocus Communication Group 2.27 58% 4,381 500 413 4,794 1,344 32.7% 31.8% 18.2% 15.9% 3.6 x 2.7 x 19.6 x 16.9 xCACI International 92.78 89% 2,251 29 982 3,233 3,385 5.8% 32.8% 9.2% 9.4% 1.0 x 0.9 x 10.4 x 9.6 xCheil Worldwide 17.60 81% 1,903 349 (311) 1,593 805 10.1% 99.6% 19.0% 19.5% 2.0 x 1.8 x 10.4 x 9.2 xCello Group Plc 1.30 82% 115 2 15 130 125 3.4% 100.0% 14.0% 14.1% 1.0 x 1.0 x 7.4 x 7.1 xCommunisis plc 0.60 65% 129 38 51 179 533 3.9% 45.2% 8.5% 8.7% 0.3 x 0.3 x 4.0 x 3.7 xCreston plc 1.84 77% 107 1 4 111 122 5.6% 34.7% 15.4% 15.9% 0.9 x 0.9 x 5.9 x 5.4 xDentsu 55.58 92% 15,847 2,110 1,236 17,084 5,467 26.3% 58.4% 21.6% 22.7% 3.1 x 2.5 x 14.5 x 10.9 xEbiquity plc 2.06 89% 165 14 40 205 117 3.4% 56.2% 18.4% 19.5% 1.8 x 1.7 x 9.6 x 8.7 xHakuhodo 10.97 90% 4,090 1,090 (858) 3,232 1,737 2.5% n.a. 19.7% 20.0% 1.9 x 1.8 x 9.4 x 9.1 xHavas 8.42 91% 3,517 203 160 3,676 2,338 6.5% 38.9% 16.6% 16.9% 1.6 x 1.5 x 9.5 x 8.7 xInnocean Worldwide 59.50 92% 1,190 255 (255) 935 810 12.5% n.a. 9.9% 10.8% 1.2 x 1.0 x 11.6 x 9.5 xM&C Saatchi plc 4.81 83% 361 38 6 367 268 5.7% 32.9% 11.8% 12.4% 1.4 x 1.3 x 11.6 x 10.5 xMDC Partners 21.72 76% 1,106 16 963 2,069 1,328 7.7% 34.7% 14.9% 15.9% 1.6 x 1.4 x 10.4 x 9.1 xNext Fifteen Communications Group plc 3.56 87% 251 16 12 264 184 9.6% 31.9% 13.9% 14.6% 1.4 x 1.3 x 10.3 x 9.0 xOmnicom Group 75.66 93% 18,408 1,430 3,805 22,213 15,167 4.3% 25.9% 14.6% 14.6% 1.5 x 1.4 x 10.0 x 9.6 xPorta Communications Plc 0.10 65% 29 3 11 40 52 4.1% 83.4% 7.7% 8.6% 0.8 x 0.7 x 10.0 x 8.7 xPublicis Groupe 66.66 77% 13,958 1,184 3,178 17,136 10,314 4.8% 38.7% 17.5% 17.8% 1.7 x 1.6 x 9.5 x 8.9 xSt Ives 3.30 98% 447 24 93 540 523 5.6% 32.6% 13.1% 12.8% 1.0 x 1.0 x 7.9 x 7.6 xThe Interpublic Group of Companies 23.28 98% 9,560 881 1,125 10,685 7,607 3.7% 36.0% 13.6% 14.0% 1.4 x 1.4 x 10.3 x 9.6 xThe Mission Marketing Group plc 0.63 86% 55 4 13 67 89 13.6% 99.9% 15.0% 14.3% 0.8 x 0.7 x 5.1 x 4.7 xValtech 12.60 99% 344 25 (23) 321 192 9.9% 33.6% 7.9% 9.4% 1.7 x 1.5 x 21.2 x 16.2 xWPP 23.05 97% 30,269 1,997 5,488 35,757 17,953 5.6% 87.3% 16.5% 16.5% 2.0 x 1.9 x 12.1 x 11.4 x 25th percentile 4.1% 32.9% 12.1% 12.5% 1.0 x 1.0 x 9.4 x 8.7 xMedian 5.7% 37.4% 14.8% 14.6% 1.4 x 1.4 x 10.1 x 9.1 x75th percentile 9.8% 64.6% 17.3% 16.8% 1.7 x 1.7 x 11.3 x 9.6 x

EBITDA MARGIN


Marketing Communications: Selected Publicly Traded Companies

Note: Calendarised to December year end; $ millions, except share price data; Net debt includes minority interest Source: Capital IQ


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