Beautiful sunny day. It feels somewhat slightly representative of the macroeconomic environment right now. It could be something that turns in. We have quite a bit to get through today. We've got a run-through of last year, which interestingly, in some ways, sort of feels such distant history to us. I think we sort of normally, at this point, would use last year as a good predictor of the year that we're in. Unfortunately, partly because of the loss of the large Mach49 contract and partly because somebody put it to me recently, there is this large orange man that is changing the world. Partly because of that, it does create an environment where we just feel the right thing for us to do is be incredibly prudent. It doesn't mean that we're not doing anything.
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. We're going to counter through those at a very high level. If people want to delve into a lot of the detail on that, there's a whole bunch of data in the appendix, 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? What you should expect from us.
Obviously, some commentary on capital allocation and how we see the world, 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, just a few comments from 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 Mach49 contract in January, so it would have been 2.5% down without that. We had a negative impact on currency. Last year was just over GBP 1.25. Previous year, I think it was near GBP 1.23. We did have some acquisitions in the year, two for MHP, one content business, one tech business. Transform, our government agency, did quite a big acquisition of a company called Cadence, which got them into more sort of strategic consultancy for government. Overall, a reasonable year, but obviously, 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 B2C agencies. SMG had a fantastic year. They continue to be our sort of drawing the ground. And the three Ms, as I describe it, as described them, M Booth, M Booth Health, and MHP all did pretty well. And Brandwidth had a good year. Overall, some good performance from B2C. B2B tech continues to be slightly more challenging for us. One of the reasons the margin was down is because the tech tends to have more operational gearing, sort of more use of tech and data, less use of people, and obviously more B2C agencies and more sort of people dependent. The mix of revenue, I think, was not helpful in terms of the margin. Tax rate was 27.4%.
That's going to come down quite a bit next year because just the mix of where the revenue is coming from. We had a much higher tax rate from the big contract. Tax next year should be down to 25.5%. EPS fell to 9.3% because of the profit. We've decided to maintain the dividend because good cover and good cash position. Working 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. 31.9 down to 7 working capital outflow was a much better performance. It's a real focus going forward, given the markets.
Earn-out commitments, that dropped a lot, partly because we paid a big chunk of Mach49 in the year, but also we reduced the estimate for Mach49 from, I think it was $105 at the interims, down to $91.5. And that's payable over the, and sorry, that's dollars, that's payable over the next three years. Kind of a nice sort of spread of that payment. Net debt reduced $38.4 from $74.8. We typically have a better working capital performance in the second half. Particularly in January, we have a very strong cash performance. That was sort of pleasing. A lot of restructuring costs, over 500 roles were reduced last year. 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 Mach49, obviously the loss of the contract. Of the remaining $29 million, $9 million related to last year. That was the cost saving last year. The remaining $20 million this year, we are reinvesting a fair bit of that back into AI. Tim's going to talk about our AI investments later. Also, SMG, the jewel in the crown, they are beginning to see some really encouraging signs in the US. They won the first big client, WH Smith U.S., and they have quite a few consultancies on the horizon. We really want to help them grow into the U.S. and also into Europe as well. We are not seeing all of that $20 million cost saving from a downward dropping to the bottom line. AI investment and investment in SMG as well. Tim.
He just talked a lot about the sort of the hard financial data. This is sort of a look inside the beast, if you like. We do still work for an awful lot of really big, important companies and play a very important role for those companies. We carry on working for them. I think there is probably a sense of, is something changing underneath the covers, if you like. 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. In fact, many have been there for much longer than five years. That stat has remained constant. I went back and looked at it. Jenny Rawlings over there did a lot of good work on quite a bit of time trying to figure this one out.
I went back and looked at the data that we reported previously, and it matches almost exactly. Really what you're seeing is a remarkable level of consistency at our 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. Having over 10 and a half years, I'd probably skew that number, but having average tenure being over 10 and a half years, that's quite a remarkable stat in our industry. There's typically an awful lot of turnover at that level. Operating margins, 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 incredibly close to the customer.
It requires your leadership team to be very good about how they staff their businesses. It requires them to really focus on things like traffic management, making sure the right people are in the right place at the right time. That is hard to do and do it again and again and again. 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 nauseam 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 where we're starting to deploy products with customers. A good example of that is the Delve product.
I can talk a little bit more about that later. The other thing that we're doing is changing the board. You would have seen that we recently brought on Marcus Stuttard, with today announcing that Sam Ramsey 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 different scale. Some of it is us recognizing that we need some slightly different skill sets, a more commercial board, effectively. I think Sam and Marcus very much, I keep calling him Fred, by the way, and that's not a good thing. Sam and Marcus are definitely good additions from that perspective.
In terms of review of strategy, I actually wrote it as strategic review, and I got told I was not allowed to use that expression. 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 in that process? We have done a tremendous amount of work on that in the last year. A lot of it is stuff that you will not see. A lot of it is us working away in the background of the business and trying to simplify a lot of the back-end processes that enable us to deliver the kinds of margins that we deliver.
A lot of it is also us trying to make sure that our people get better information so that they can run the businesses more efficiently. There are also efforts. Jonathan Peachey, or JP, as he is affectionately known, will talk you through what we call Project Goose, which is a fairly big initiative to bring a group of our businesses together. We are approaching simplification not as there's only one way to do it. It is not you smash businesses together or whatever. We are 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 our model, which is still a very decentralized model compared to a lot of other people? How do you do it in a way where we keep our best people?
We do not want our best people to disappear because if they disappear, the customers will follow. We are looking at the operational structure of the company. It has evolved over the years in all sorts of different ways. Some of it is because of how we have acquired different businesses, and they have brought with them infrastructure that, in some cases, we have just sort of bolted together. Some parts of our infrastructure, we have had to do quite a lot of work in the last 12 months to really clean that up. We are going to do a lot more in the next year to continue that process. I have used this expression and have got a lot of amusement out of it. We will not peanut butter our investment. In other words, we will not spread it thinly.
It's a case of saying we recognize that we know that businesses do well when they do a few things really well. From our perspective, that's crucial to how the company will succeed in the long term. What you'll see in the next section is where we want to really focus our efforts. You can basically put it in two categories: AI and new capabilities. The 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 of the buying game. We are very much in the buying game. You will see us do that, but it will be very selective and very focused for 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 the decentralized model works brilliantly for those businesses and for the customers attached to those businesses. What it does not do a brilliant job is driving those customers to work together or those businesses to work together on behalf of those customers. Sometimes we miss out on revenue, and sometimes we do not do the best job we could possibly do for a customer because incentives do not drive the right behavior. We will have to try and fix that.
That will require us to really kind of scrape back a lot of the way that we look at incentives and realign incentives so that the customers are not sort of finding it weird. You have that capability. Why are you not even talking to me about it? 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 is us trying to tell you where we think our business is going in each of these areas. The first one, B2B RevGen, that is really Project Goose, and JP will talk you through that. That is us recognizing that the way that technology is now sold has become very, very different from the way it used to be sold.
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 their U.S. expansion. To some degree, the EMEA expansion is a function of us also driving U.S. expansion. There are a number of European retailers that really want to do well in America, and our work is therefore in service really of the U.S. If we can build a successful U.S. retail media business, we will have a very valuable and very big company on our hands. Data is an area that is really being transformed because of AI. You have heard us talk before about things like synthetic personas and synthetic data. That is really changing the way that companies get data in order to help them drive better decisions.
That's really why they use the data, is they want to make better decisions more frequently. They don't want to use data after the event to prove that they did something right. They want to use it before so that they know they're making the right decision. AI creates a completely new way of tackling that problem, but it also turns the business into a subscription business rather than a services business. You'll see a lot more coming out of us in the next 12 months on that. 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 collective, but it is very separated from our M Booth business, our MHP business, and so on.
We're starting to look at how do we bring those businesses together in such a way, not that we lose their brand names, not that we run them as just one big agency in the way that WPP has approached the creation of BCW. It's really us saying we want to keep the front doors to those businesses, but we want to share a lot of the capabilities that we have in a much more meaningful way 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 influence, we can do extremely well. Corporate comms is just a very good door into the C-suite of the company. It keeps you in constant dialogue. That's never a bad thing.
Influencer is just a category of marketing services that has grown out of nothing five or six years ago into being of similar magnitude to the comms industry alone at this stage. 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 likely to do a mixture of organic and acquisition because it's a market that we cannot wait forever to get into. We already have a good capability in North America through M Booth and have proven how that model really works. It's very profitable. It's growing.
It's grown to a very decent size within our M Booth business. But we could be multiples of its current size and still do extremely well. On consulting, that is probably going to get less focused 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 coming to us to say, "Help us figure that out.
Let us create little labs that we can play in, that we can sandbox ideas, run them outside of our IT environment," because that's a really scary thing for them to do to run it in their own IT environment because they're very fearful that somebody will use it as a way to hack into their system. By doing it externally through us, they're very protected in that respect. 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 in the back.
Tim, we wanted to give you a bit of a case study of how we're thinking both about simplification, but also evolving the services that the group offers.
We have four U.K. B2B marketing agencies in the group. The first three there together, Velocity and Agent 3, are all focused on enterprise tech, the software that large companies tend to buy for their own use. Historically, those have shared a lot of services. They have overlapped in terms of their client base, and they tended to compete with each other. The fourth, Publitek , is more focused on deep tech. The thing that has united them is that they have had quite a challenging trading environment over the last couple of years. We sat down with the Chief Executives of those businesses last summer to dig into that a little bit and find out why, and more importantly, what we could do about that. A number of things emerged from that.
First was that in a more profit-focused environment, the clients of those businesses were much more focused on the return on investment. How much were they getting in terms of sales from their marketing spend? That was forcing them to be more choosy about who they work with and which tactics they picked. The second was that actually the way that B2B marketing functions is breaking down a bit. The old ways of doing it do not work. We dug a bit more into that. That is because the traditional way of marketing stuff is what is called the funnel, which involves putting out a lot of activity at the top of the funnel. You might send out 10,000 emails to potential customers for your CRM system and hope that some of those might be in the market and interested right now.
You would hope that they might fill in a form and ask for a demo or ask for a white paper. Most of those people don't. We're all familiar with marketing that we completely ignore. Through a process of sort of refinement and engaging with those people, you hope that a small number of people will engage, take a demo, maybe ultimately buy from you. It doesn't work like that anymore for a couple of reasons. Firstly, if you are thinking of buying a piece of software for your company, you will look on the web. You'll research that. You'll research that decision. You'll go and look at what Gartner's saying about that thing. You'll probably ask ChatGPT these days what it thinks. You'll talk to some colleagues.
You will do a lot of your own research before you ever turn up to the CRM company that you might have decided to talk to. Actually, a lot of the research now shows that 80% of those buying decisions have been made before anyone actually talks to the potential vendor. That creates a space called the dark tunnel. That's an area that if you're Salesforce or Workday, you don't control what's going on in that 80% because it's going on without you ever interacting with your potential customers. Because you don't control it, you're not sure what of your marketing activity is having an influence in that space. The other problem is that unlike personal buying decisions, when you're buying software in an organization, it's not just one person or two people, three people making that decision.
There are now up to 15 people involved in a decision. It might be the CFO, the CTO, but you might have your DPO, your head of legal involved as well. To sell a piece of software, you've got to get all of those people pointing in the right direction and say, "Super time." What's the answer? A technique called journey mapping has been around for a few years. What that involves is working through who are the people in an organization that are likely to be part of that decision, working out what matters to them.
It might be getting the job done for the person who first thought of it, but it might be, "Is this going to comply with my regulatory requirements for the DPO?" When you've worked that out and what are the things that accelerate and hold back those people, you can then work out what are the marketing interventions that are going to work for them. It might be for the CFO, it might be a peer-to-peer event where they can discuss with like-minded people how they solve the same problem. For the DPO, it might be a white paper about regulatory compliance and how their needs are solved. That is a technique that we have been using. That journey mapping technique is a technique we've been using in our businesses, but it's very manual and time-intensive. It is expensive for clients. It generates much better results.
Back to the four chief execs of those businesses. The decisions we quickly came to last summer or that they came to was that, firstly, journey mapping has to be a way forward. The funnel no longer works and is increasingly a bad approximation for how things go. Journey mapping is the way forward. To make that work, we need to automate it, and we need to apply AI and a lot of data to that process to make it work. Also, scale matters. If we want this business to be a key player, particularly in the US market, there is no point competing with each other, competing for funding, for investment, competing for clients, that doing it as one makes more sense. What have we been doing about that?
Since last October, when Project Goose, as Tim was calling it, came to life, we've done two things. We have merged those businesses. As of today, they are operationally merged. Clients are still trading with those different brand names, but under the bonnet, it's a single organization under the leadership of Clive Armitage, who was formerly Chief Exec of Agent 3. That's already led to significant increases in profitability for the combined business. They've started winning new work that they couldn't have won on their own because they have a broader range of services to offer. That's fantastic, but it is not our goal to build a better classic agency.
The other thing that we've been doing is we've been working on a platform called Journey Labs, which takes the journey mapping technique, and it applies AI and automation and some of the technology that we've been working on in the Next 15 AI labs, like synthetic personas that Tim was talking about, and brings that together into a platform that makes journey mapping affordable and achievable for our clients. We've been testing that with clients over the last few months. We've got prototypes of parts of the process already out in the market. What comes next after this is that by the end of the summer, we will have a first version that we can use end-to-end internally. We will relaunch that business under a new brand, and those existing brands will get retired later this year. What's in it for our customers?
Our customers are going to get better return on investment because we can use this new technique to achieve that, and we've proven we can do that. Also, we can show them which bits of their marketing are actually working. They don't see that. What do we get out of it? We get a competitive advantage, particularly in the U.S. market, where the dominant players are funnel fillers, effectively. They're tied very much into the old way of doing things. It also moves us away from sort of project-time-based approaches, much more into a subscription-based model because Journey Labs is an always-on process that's always learning from the data that it's generating to improve and optimize marketing performance. That means that we can benefit from subscription revenues and stickier relationships because it will be always optimizing for our clients once we're in.
That takes us more towards or gives us a path towards a higher margin product in the future. There is a lot more to come about Project Goose, especially when we launch it formally in September. As you can probably tell, we are very excited about how that both simplifies and evolves the Next 15 stories.
I got the demo of one of the key bits of the product about a week ago. The bit that I got really excited about was, at the moment, if people look at all of the content that they are producing for a client, they might look at it and say, "Well, this bit of content would work for the CTO, and this bit of content would work for the CEO, and this would work for the CFO," and so on.
You'd sort of go, "Okay, we can tick all these boxes." What you can't see is that actually, through the buying process, we might have content at the beginning of the process. We start to run out of content at the end. The example that they used for me was they basically put in Cisco as a customer and said, "Right, okay, Cisco is selling this product to this organization. Let's look at that journey as a buying journey, and let's look at the content that currently exists from Cisco that would meet that customer through that journey." What you see is Cisco does an amazing job at the beginning of the journey and then just hopes, basically. At the end of the journey, they're like on ether. There is nothing there.
The person who's trying to make the buying decision at the end of it has literally, they're looking for stuff, and there's nothing to find. They're just wanting to push over the line and say, "Yes, I should buy this product." It's kind of like, "I'm sorry, you've got to go right to the stuff I sent you at the beginning," which is like, "Yeah, but that was really general, and that just really told me broadly why I should be doing this." There's not the specific answers to the questions that they have at this stage in the journey. It's a much more sophisticated way of looking at the buying journey and the problem.
What it does is it not only can reflect that for Cisco and say, "Right, we're weak here," what it can also say is, "Cisco, you're competing with Huawei or whoever it is you're competing with. Let's look at how they do in this buying journey and see where you're weak versus them." That, again, is just something that at the moment, all they can do is look at very basic data and compare and contrast and look like, "We look like we're good," but they have no idea where they're weak versus those other people. I think that's a pretty exciting place to be. I don't get out much. Capital allocation. I think the thing that you probably noticed if you're an eagle eye on here is the net debt level. We're targeting that below 1.5. That is a peak. It's not a constant.
It's not a case of us saying that we want to be heavily leveraged. I think it's just a recognition of we are going to be a very slightly smaller group this year. Still a $500 million revenue business. It's not tiny. We do recognize that we do still want to do some things, and we don't want to be brutal about the balance sheet in the process. You can bet your bottom dollar that we will manage our cash flow incredibly tightly this year and make sure that we hopefully do not linger anywhere close to that. All the other things are very much unchanged. We basically want to be a business that prioritizes investment for internal capabilities. Where we have cash that we don't need, we will give it back to shareholders. There are lots of things that we are looking at.
There is nothing within the organization that we're saying, "That's just sacrosanct. We just leave it as it is." People have said, "Would you sell some parts of the business? Would you consider taking the whole company private?" All sorts of things. There is nothing that we are not looking at. I'm not trying to say we're going to take the company private, by the way, just to be completely clear. We are going to do what is right for the business and for the shareholders in that process. We know that there are parts of our business that over time will become less core. It will make sense for us to say maybe those parts of the business should move on to a better owner. For a long time, we have been like a private equity company. We buy things. We turn them into better businesses.
What we don't do is sell them. I think that's the one question that has sort of been raised in our minds is, "Is that something that we should do? Is there a point where something is reaching its peak value with us and would be better owned by somebody else?" I'm not indicating anything by that. I'm just simply saying that is a new question that we're asking ourselves as we move forward. Outlook. As you'd expect, this got crafted and recrafted and recrafted. I think more time went into 100 words or whatever this is on this than did into the rest of the document. Essentially, what I'm trying to say here is our business is fundamentally in a good place. We think long-term, we have a great group of businesses with a really good outlook. There is nothing that really scares us from that perspective.
We have a really great customer base. We have a really good group of employees. We are modernizing the product in all of the right ways. From that perspective, I feel fantastic. I just have a headache, which is the American government and what it is doing. That is creating pause for a lot of people. It feels stupid of us to say, "Everything is fine. The sun is out. It is all fabulous." It feels like the smart thing to do right now is to say, "Let's just be cautious because anybody who can tell me what Apple's results are going to be, what Nvidia's results are going to be, what even Procter & Gamble and so on, I think is, well, they are either a genius or a fool." Therefore, it feels to us like we should just be prudent.
It feels a lot like going into COVID, if I'm completely honest. When we stepped into COVID, we felt like we have no idea what's going to come here. We don't know what our customers are going to do. We do not know how they're going to react to change and so on. A lot of them are, to put it mildly, freaking out. You saw the Nintendo Switch piece. They basically are having a real headache because they don't know how much that product is actually going to cost. Is it going to be $400? At one level, it could be as high as $1,250. How do you launch a product not knowing what it's going to cost, not knowing how many people therefore might be able to buy it, therefore not knowing how many to manufacture? It has all sorts of ramifications, right?
Until that world starts to become more normal, and it will at some point in the next few months, it just has to. The market will break otherwise. When it does, we can go back to being a place where we can give you more comfort and guidance. At this point, it just feels like we've pulled our numbers back because we know our currency at the moment. He seems to want to destroy the US dollar. I certainly do not know if it is deliberate, but he is doing a very good job of it if it is not. That is a headwind for us. There is this other macro headwind, which we just have to deal with. Does it mean that I have fears about the long term of the business? No.
I think the business has got, as I said, good products, good people, good end markets, good customers. It's just going to be bouncy for the next few months while we deal with this rather unusual self-inflicted situation.