CEO's Report
We are growing strongly due to market share gains, new product offerings and the fact we deliver a diverse range of marketing services.
This year, more so than any before it, we seem to have reached a "tipping point" in the marketing process. No longer will repeating the same message via a one-way medium allow us to effectively reach the consumer. The consumer is now in control. While this presents us all with a challenge to engage with consumers in the most meaningful way they want to communicate with us – this is what Photon companies do best!
Photon had a very strong year with exceptional growth in the Internet, Strategic Intelligence and Specialised Communications divisions. We have very diverse, visible income streams across our five divisions. We also now have approximately 40% of our earnings off-shore.
We made a number of acquisitions throughout the year. Each of these has been integrated into our group and are performing above expectations. We also started 11 new businesses and a number of off-shore offices which are adding to our organic growth. Even though we are operating in challenging times on the whole we are growing strongly due to market share gains, new product offerings and the fact we deliver a diverse range of marketing services.
We have in place a solid platform and a very experienced management team and we will continue to review acquisitions and start-up opportunities as they arise within the context of a prudent capital structure.
The divisional structure we have established is accountable and focused and gives each area of our business autonomy to grow its particular expertise. It also allows Photon to add significant value through integration and cross-referrals.
Strategic Intelligence
Driven by a reputation for excellence in media-neutral advice and research, this division had a very strong year with net revenue up 108% to $53 million and EBITDA up 96% to $10.6 million. During the year, there was one significant acquisition: Naked Communications, with offices in eight countries including the UK, France, the Nordics, Japan, the US and Australia. Further international expansion and growing demand for independent advice, accountability and analysis is expected to drive strong organic growth for this division in the coming year.
Integrated Communications and Digital
Our agencies have the ability to deliver clients an integrated marketing solution which encompasses the full spectrum of marketing platforms. A number of our key agencies are increasing market share as clients trend towards strong local independent suppliers in touch with the consumer. In 2008, net revenue was up 62% to $85.6 million and EBITDA was up 35% to $13.5 million. ISS Marketing, Corporate Edge, MessageNet and BMF Advertising joined the division during the year.
Experiential and Field Marketing
This division had a very strong year with net revenue up 86% to $128.1 million and EBITDA up 37% to $23.1 million. The result was driven by solid organic growth and the contribution of four acquisitions and four start-up businesses. During the year the division expanded its presence into the UK with the acquisition of REL Field Marketing, Sledge and Retail Insight, as well as consolidating its presence in Australia with the acquisition of Club Sales & Marketing. Since joining the group REL Field Marketing and Retail Insight have opened offices in Australia and The Bailey Group has established a presence in the UK.
The continued macrotrend towards outsourcing field execution and an extension of the companies' expertise to ever expanding market sectors - hardware, liquor, telecoms and retailers - is expected to drive strong organic growth for this division in the coming year.
Internet Marketing and Communications
What a year "The Geeks" had! Net revenue was up 132% to $37.8 million and EBITDA was up 117% to $21.9 million. Findology joined the division in late 2007 and Local iQ and Geekdom were started in early 2008. A culture of innovation is key to the continued success of this division and we now have over 60 "Geeks" in Australia and the US who spend part of their day developing new products to drive earnings. "Internet in a Box" and Local iQ are just two great examples of this innovation at work. We expect the Internet division alone to be the largest contributor to next year's earnings and to account for almost one third of total EBITDA.
Specialised Communications
Specialised Communications had an exceptional year with net revenue up 134% to $72.4 million and EBITDA up 141% to $17.1 million. The results were driven by strong organic growth and four acquisitions during the year; Mark Communications in Australia and Likemind, Frank PR and Hotwire/Skywrite in the UK. In addition there were a number of bolt-on acquisitions and three start-up businesses; ABT opened an office in Beijing, Precinct opened an office in New York and Public Insight began operations in Australia.
The growth outlook for the division looks very strong as the companies successfully grow their share of marketing budgets and as deep specialist expertise continue to attract a premium.
Photon is now made up of over 2,150 full time staff and 3,800 casual staff. This is truly a unique business with people passionate about consumer engagement and innovation. I thank everyone for their efforts, initiative and commitment throughout the year.
Matt Bailey
Chief Executive Officer
