Good morning, everybody. I'm delighted that you were able to join us. I'm joined by a number of colleagues. We have a presentation, I think you have copies of. I'm going to kick off and introduce everybody. We have several sections to the presentation. I think there are nine sections. Peter Rademaker, our CFO, who's in Amsterdam, will kick off with the results section. Victor Knaap, one of the two founders of Media.Monks, who's in Amsterdam with Peter, will talk about the developments of our content practice.
Peter Kim is in Scottsdale, Arizona, at some unearthly time in the morning. I think it's about coming up to about 1:00 A.M. Amsterdam will kick off with the results section. Victor Knaap, one of the two founders of Media.Monks, who's in Amsterdam with Peter, will talk about the developments of our content practice.
Peter Kim is in Scottsdale, Arizona, at some unearthly time in the morning. I think it's about coming up to about 1:00 A.M. in the morning. Thank you, Pete, for doing this. He'll talk about our data and digital media practice. Then he'll hand over to Scott Spirit, who's in Singapore, to talk about our clients and the mergers and combinations that we've embarked upon in the first half of this year.
I'm delighted that Simona, who's CFO of Media.Monks, also based in Amsterdam, will be talking about our sustainability policy. Imma Trillo , who is also on the same time zone as Peter Kim at 1:00 A.M. in the morning. Apologies to Pete and Imma Trillo for dragging them out of bed or from whatever else they might be doing at 1:00 A.M. in the morning.
Imma Trillo runs our human resources and talent operations across the globe. Imma Trillo will talk about talent, diversity, and inclusion. Finally, Imma Trillo will hand back to me to talk about summary and outlook, and we'll hold the Q&A session with you all. I hope you have a lot of questions for us. First, over to you, Peter Rademaker, in Amsterdam.
Thank you, Sir Martin Sorrell. Good morning from Amsterdam to everybody. I would like to start with a short summary, that's a one-liner on our first half-year, that's industry-leading progress despite COVID-19, we're well on track to deliver our full-year expectation. That's substantiated, we believe, with our numbers.
I'll run through the first slide, which is the financial performance. Went up to GBP 64.9 million, and billings is our revenue, including our pass-through, especially in the data and digital media practice. There's a lot of pass-through on media, and that's our billings number. Our revenue, so our real revenue to our clients was GBP 140.3 million.
It sounds like his local audio is I think his local connection is frozen. Yeah, Peter's dropped. I know he's going to join back in. If he can join back in, I can bring him.
We've got a slight local difficulty.
With Peter's connection.
Can't get Peter back in. He's dropped off.
Shall I sub for him?
Yeah. Would you be able to?
Well, let's try. Peter was talking about our billings and our revenues. Our gross profits were GBP 124 million, up 77% from GBP 72.2 million. Like-for-like up 12% and pro forma up 13%. Our operational EBITDA, that's excluding adjusted items, was GBP 18 million. It was up 87%. The like-for-like was down 6% and the pro forma down 5%.
Our operational EBITDA margin at 14.5% was up 0.8% margin points on 2019, and pro forma was 14.6%. The operating profit was GBP 2.5 million, which includes the adjusting items of GBP 13.8 million, which are basically acquisition expenses, amortization, and share-based compensation. That's versus an operating loss of GBP 6.2 million in 2019 and pro forma operating profit of GBP 3 million. Back to you, Peter.
Yeah, sorry, there was something with the connection, so hopefully it's loud and clear again. Apologies for that. Our results, picking up where Sir Martin Sorrell just stopped, result before income tax was GBP 0.1 million, which includes, again, the adjusting items versus a loss of GBP 8.5 million in 2019 and a pro forma result before income tax of GBP 0.7 million.
The result for the period was a GBP 0.5 million, that's the net result after tax, was GBP 0.5 million loss, which again includes the adjusting items after taxation, versus a GBP 8.8 million loss in 2019 and a pro forma result for the period of GBP 0.1 million loss. Our adjusted basic net result per share was GBP 0.023 versus last year on GBP 0.009, that's the adjusted basic result, a 155% increase. The basic net result was GBP 0.001 loss, versus GBP 0.025 loss in 2019. On a pro forma basis, it's zero rounded.
Our mid-year cash, that's the net cash after deduction of the term loans and the working capital or the revolvers, was GBP 7.2 million at balance sheet date. That includes the GBP 45.8 million term loan and the revolving facilities.
The good thing is that basically ever since the start of 2020, we've been operating except for two or three weeks on a net cash position, and that doesn't take into account the share placing in July, because if you include that, we're even operating on a higher number of net cash. We had a good start to Q3. An 18% gross profit growth on a like-for-like basis, which means, like I said at the start of this sheet, that we maintain we're on track to deliver our full year expectation, which is double-digit growth and reasonable EBITDA margins.
If I move to the next slide, we have a graph which shows our gross profit performance on a like-for-like basis. We started the year, of course, with the budget in doubling in size, which is approximately 26%-30% compound growth. When we started January, we were right on track or even exceeding that percentage of growth on 33%.
In February, in Asia Pacific, we saw already that COVID-19 kicked in. We were at a 21%. In March at 6% when it really started to hit hard, on April with a trough of 3%. May, another 5% growth, in June it was an 11% growth. Like I just said in the previous slide, on July, we were already again back on sort of February growth numbers at an 18%.
If you look at the quarters, there was a 19% growth in Q1, a 7% growth in Q2, and delivering that 12% growth on a like-for-like basis in our gross profit for the first half year. Some numbers which I just talked to in the first slide or when I dropped off, Sir Martin was elaborating on that, are unaudited, condensed, consolidated income statement.
I'm not going to repeat all the numbers I just said, just maybe a couple of highlights. The first two columns are the reported numbers. There's the like-for-like, then the pro forma numbers on the right-hand side. It's like-for-like pro forma and statutory. What you can here see is that our operating profit was at GBP 6.2 million, sorry, of a loss to GBP 2.5 million profit.
Our adjusted operating profit grew with 86% compared to last year. We have this positive PBT profit before tax, as I just elaborated. You see still relative a substantial tax charge of GBP 641 delivering the GBP 0.5 million reported loss. That's sort of out of line if you look at percentages. There are, of course, we are confronted with some non-deductible costs like the acquisition-related expenses, and that increases our tax base in our numbers.
If I move to the next slide, this is our reconciliation from operating profit with the adjusting items on the left-hand side at the top of the sheet. We included the depreciation, which is the normal depreciation. We here ignore the right of use, the depreciation of the right of use of assets. We consider this to be, let's say, the old definition of EBITDA.
Our EBITDA was GBP 17.9 million after central cost and GBP 20.5 million before central cost. If you look at the operational EBITDA after central cost, that was 14.5%, which was 0.8% margin points higher than our reported numbers from last year. Furthermore, you see the other reconciliations from result before income tax with the adjusting items, and then the adjusted result before income tax.
On the next slide, the reconciliation towards adjusted results from profit. We start with the GBP 500,000 loss on the statutory position. The adjusting items, as Martin Sorrell referred to, GBP 13.8 million, and of course, our tax position on that, delivering an adjusted net result, so after tax of GBP 10.8 million as an adjusted number.
If you then compare that to our average outstanding number of shares, which was 465 million for the first half year, that delivers an adjusted basic net result per share of GBP 0.023, which is again, like I mentioned earlier, 155% growth compared to our statutory numbers from last year or our adjusted basic results from last year per share.
On the next slide, I just want to highlight a couple of the positions in our balance sheet. We consider our balance sheet as a strong balance sheet. Like I said, we have maintained in the first half year or even up to including now, been operating on a net cash position, which is strong, and we have put quite some effort in that, of course, in order to maintain our liquidity or our liquid needs in the company and our cash positions.
We have had a strong emphasis since Q1, I would say, when COVID-19 started with the practice CFOs to really push hard to follow all the receivables and get in as much as possible. Of course, we were confronted with some delays. Some clients have asked us if they could delay because of their liquidity needs.
Basically, overall, and that's what you also can see, because in absolute terms, if you compare our receivable position, that declined compared to last year, to the end of last year. At the same time, we were able to increase our liability position. As a result thereof, our cash flow from operation was good, which I come to in the next slide in a minute.
Another maybe one or two points to highlight, GBP 857 million total assets, approximately 70% relate to our intangibles, which is, of course, the result of our merger activities in the past two years. With an amortization rate, approximately at this current acquisitions or mergers of GBP 20 million-GBP 25 million on an annual basis.
That line will decrease, of course, over time, but it's a substantial number. Notable to say is that most contingent considerations that occurred in our books as a result of 2019 merger activities have been settled in the first half of 2020. If you flip to the next slide, in order that consolidated statement of cash flows.
Here, a couple of things to highlight, and maybe the most important for us, and that underpins our focus on cash and liquidity is that we've been able to realize a GBP 37.6 million cash flow from operations, whilst at the same time we had that GBP 18 million, approximately rounded GBP 18 million of EBITDA in the first half year.
In other words, strong cash conversion, that's one, and the ability to increase or decrease our working capital, and as a result, have more cash in. On the cash flow from investing activities, almost GBP 45 million. This is in relation to what I just mentioned, the deferred consideration from prior years, acquisitions or mergers, that's one thing. Of course, as we concluded the deal with Circus in March 2020, that payment also ran through our cash.
Of course, this is the cash component because as you know, in our transactions, we typically do a 50% cash and a 50% share. This is of course then the cash component of the consideration. We're very proud of this cash flow and especially how we've maintained to operate in the first half of 2020. I then flip to the next slide, our pro forma gross profit and operational EBITDA by practice.
Our Content practice gross profit was 77% of the total, against 75% in 2019. Programmatic practice, or I must say, sorry, this is the Data & Digital Media practice profit 23% of total against 25% in 2019. Content practice operational EBITDA on a pro forma basis, so before Central was GBP 16 million and a 16.5% operational EBITDA margin measured against our gross profit.
Our data and digital media practice operational EBITDA was in the first half year on a pro forma basis, GBP 5 million, delivering a 16.9% operational EBITDA. My final sheet is the pro forma gross profit by geography. The Americas, our most important territory, 72% of the total, delivering GBP 92 million gross profit, and that's plus a 14% on a pro forma basis compared to last year.
EMEA, 19%, delivering GBP 24.2 million gross profit, up 7% compared to last year. Asia Pacific, 9%, delivering GBP 11.2 million gross profit in sterling, 18% up compared to last year. Sorry for the fallout of the video, but this summarizes our half year 2020 performance. Over to Victor Knaap to talk you through what has happened so far in the content practice. Victor Knaap?
Thank you all. I hope you can hear me well. Many thanks, Peter Rademaker, for your clear explanation. Thank you all for listening in. It's our second trading update of the year. I'm happy to spend the majority of it looking forward. Next sheet, please. Let me start off by saying what a year it has been so far.
The pandemic has seriously shaken up the industry and significantly changed how brands need to connect with consumers. The pandemic changed the way how brands need to communicate in tone of voice and message, how they need to produce content, and how it needs to be delivered. We have a creative and a tech disruption going on at the same time, which means that digital transformation needs to be done at light speed. Next one, please.
At the 15th of March, we lost a big chunk of our business in films for four to six weeks because we couldn't use our studios, and it was not allowed to film. We lost a bit of our events business and a few brands, especially in the travel industry, stopped advertising temporarily. Obviously, we saw that impact in our April and March numbers, in contrary to the traditional advertising world, we were able to bounce back fast.
With new solutions like virtual events, it's a GBP 10 million-plus business that we were able to build up from scratch in the last three months. We set up safe and remote film production. We moved into the entertainment world and helped our clients to speed up the e-commerce project. I will explain a little bit more in detail and with some client examples in the next slides.
Next to that, we're working on our long-term vision and positioning in market. I will give you a first look of the Media.Monks research conducted by Forrester about transformation and virtualization initiatives for brands. If we go to the next slide, let's look at the now. Brands need to change their advertising very suddenly when COVID-19 started.
Normally, they would ask their agencies to tell them how to deal with it. The result was surprising. Every single COVID-19 ad looked the same. COVID-19 wasn't going to be solved by changing your 30-second ad, but by identifying where the gaps were in the ecosystem and solving that by fixing the digital customer journey. If we go to the next slide, we can see how Media.Monks helped event businesses to take their real-life events virtually, and how trade shows became virtually.
We built a cloud-based live streaming tool called LiveXP that powered all of our virtual events. It's a two-way interaction between audience and presenters. The entities become participants. Please see some great examples of the virtual development event of ASML, and the Brooklyn Breaks event that helped bring the sound of Brooklyn to the world stage, which you can see on the next page.
Next to a lot of work that we've done in virtual events, we're proud to work with the NBA to offer fans, ESPN viewers, a VR experience at our Oculus, and therefore get the best seats in the house to watch the games from their sofa. Live events and sports in particular, will have to be watched differently, at least for one year, in our opinion. Teams, leagues, players are looking anxiously for new possibilities to connect with their fans. Next one, please.
Although COVID-19 might have made more difficult to create content, it doesn't mean that there's no need for content. People are watching more content than ever. Media.Monks is proud to be signed a partnership with CAA this year, to create digital-first original content pieces. One of the most interesting project we have worked on so far this year is a four-part series on NASA's toughest challenges, and it details the work of the Frontier Development Lab and is sponsored by Google Cloud.
When you have time, please have a look at it later. It's a beautiful piece of content as well as interaction, as well as storytelling. Something we hope to work on more in our partnership with CAA. Last but not least, on the next slide, it's an example of the work that we've done in e-commerce.
It's not enough to build your own website or place your products on Amazon. Your product needs to be available anywhere, and every single interaction with your audience need to lead to a place of purchase. We call this commerce everywhere. We are working on many commerce projects at this moment, and we're proud of the release of the Dole website/e-commerce experience you can see on the right-hand side. This is what we have done now, but what's next?
We asked our friends at Forrester to look at some trends. Where I already addressed that the big idea is increasingly become less important and agencies need to reinvent ourselves and our solutions, the promised digital transformations of the consultancies seem to be struggling as well. It's not enough to write transformation plans. It's time to act upon it.
When we go to the next sheet, we believe, and also based on the numbers that come out of the report, that the transformation strategy needs to be transformed. Digital transformation has always been important, but it's never been urgent. It's been focused on the pipes, the digital infrastructure. Forrester Research report clearly says that user experience, transformation efforts in the past, and virtualization of experiences got brands through COVID-19.
If we look at the next sheet, Forrester Research predicts that brand virtualization is the next step in digital transformation, and we should be focusing on our efforts to design and build differentiated digital environments. To make sure your brand is where your customers are at the moment that they need you and how they preferred to be talked to.
To end with that, first of all, it's a project we're super proud of that we're part of it. Also, it's a good example, that L.A. 2028 Olympic portal. You might have seen the different logos that are popping up, where multiple artists and creative companies have worked on. More importantly, Media.Monks built the destination website where L.A. and the Olympics can build a deep relationship with Millennials and Gen Z viewers over a period of eight years.
I will promise you, not to update you on this project for the next eight years every three months. I'm extremely proud that, in this COVID-19 year, our numbers are strong. We were able to pivot the business of a few of our clients and build some great projects. We're very much looking forward to the second half of the year, where I hope to announce a few big wins and show growth in numbers of people and projects we work on. Over to you, Peter Kim.
Thank you very much, Victor Knaap. I'd like to thank everyone else for joining today, and it's been a challenging year so far, but I'm glad to report that things are looking very good indeed in the data and digital media practice. First and foremost, our number one priority throughout these challenging past few months has been our employees, and I'm happy to report that we have zero confirmed cases and zero suspected cases, and it has been that way for a while now.
Thank goodness that our employees are safe and well. Today, I'll have a few words for you regarding our data and digital media practice, and some of the recent updates that have been happening and some of the exciting things that are going on. Next slide, please.
First and foremost, during changing times, I think it's more important than ever to emphasize the thought leadership that S4 Capital and MightyHive and Media.Monks have all been bringing to the markets. I think it's very apparent to everybody how quickly things are changing at the moment, and it's fair to say that our clients are looking to us for answers, and we are happy to help provide them.
We have seen record attendance with our Live with MightyHive or En Vivo con MightyHive webinars for global audiences, where we bring our MightyHive experts in data and digital media to keep marketers abreast of the latest developments in supply chain transparency, data and analytics, and data clean rooms. It's been going very, very well.
Martin Sorrell and I were lucky enough to partner with Google to deliver an industry outlook and really to emphasize once again why first-party data is so important for brands and marketers. It went very well and has been very well-received online. Finally, we recently released a case study with the Harvard Business School.
This is not a blog post on the Harvard Business Review, but instead is textbook materials that outline and recount the business transformation that MightyHive and Sprint undertook together to in-house their media practice, showing industry-leading results and really pioneering new ways to think about how to operate advertising. We're very proud that these were immortalized inside of this case study and will be used as a textbook for burgeoning marketing leaders around the globe. Next slide.
As you know, we have been very, very much focused on first-party data and spent the last few months bolstering an already best-in-class data practice. A couple of things that have happened include some notable hires, including Sayf Sharif, joining MightyHive as the senior director of data for our North American practice, and Tony Macari joining MightyHive as the head of enterprise data solutions in EMEA, coming from places like Google Analytics, Omniture, and Adobe, et cetera.
We continue to rack up numerous certifications and partnerships, including a marketing analytics specialization with Google, where we continue to do groundbreaking and innovative work, as well as partnering with new and emerging software platforms like Treasure Data and Snowflake. Next slide. Of course, organic growth is not the only way that we have grown.
We have made multiple acquisitions and mergers, excuse me, in the last few months, including things like Digodat, Latin America's largest independent analytics firm, expanding our footprint into Buenos Aires, Mexico City, Bogotá, Santiago, and doubled down on our APAC presence as well, by merging with the Australian analytics leading leader, Lens10.
Most recently, we added, just in the last few weeks, predictive analytics specialists based in London, a firm called BrightBlue, which is a specialist in marketing mix modeling and predictive analytics of the most modern sort, really combining these methods with the latest technologies. We think that this is going to be particularly important in trying to answer that age-old question, which is, how well did my media and my advertising actually work?
With the multiple changes happening in the industry at the moment, including the so-called death of a cookie, we believe that technologies and firms like BrightBlue will be increasingly important in terms of answering those important questions. Next slide. In terms of in-housing, and once again, I will emphasize that MightyHive and S4 Capital does not believe that in-housing is for everybody, but it's certainly a very interesting option that should be examined closely.
We do see that the interest in media in-housing remains very high. Demand for these services are very robust, and we are very happy to point out and celebrate a couple of recent wins from our clients, including Sprint, who we just highlighted for the publishing of the Harvard Business School case study, as well as to our client, Bayer, which was just recognized as the best in-house media operation in the world.
We are adding several more large-scale in-housing initiatives even as we speak. Nothing that I can report right now, we're very excited indeed that the transformations that we've seen out prior to the pandemic seem to be accelerating in certain ways during these challenging times. Next slide. One of the most exciting mergers that MightyHive completed in the last few months was to merge with Orca Pacific, the leading full-service Amazon agency and consultancy based near Amazon headquarters in Seattle, Washington.
This adds differentiating e-commerce expertise to our own advisory, media, and data capabilities during a time when obviously e-commerce has never been more important. We are very pleased and excited to work with John Ghiorso, the CEO of Orca Pacific, and his team. With that, I will turn it over to Scott Spirit to take us through clients. Scott?
Great. Thanks, Peter Kim. H1 was a very strong quarter for us from a new business perspective, and that drove a lot of our growth and resilience in the first half. We've discussed our land and expand strategy in detail, and H1 saw us land new engagements with new clients such as Twitch, Bumble, PayPal, Shopify, Verizon, Dole, the Los Angeles 2028 Olympics, and some other clients who are under NDA, including a global automotive company in Asia, a global FMCG, and a global consumer electronics company.
At the same time, we saw significant expansion in clients like Google, Facebook, LinkedIn, HP, Amazon, Netflix, Uber, P&G, Mondelez, Sprint, and others. Next slide. Far this year then, 54% of our revenues have come from the technology sector. With clients in this sector, then obviously we have a great opportunity to grow with them as their budgets increase.
Clearly our ambition is not to stand still, but to grow our share within them, too. Now, this exposure to tech is something we want to maintain, and we're consistently expanding our tech client portfolio. It's a natural fit and a natural understanding as we, like them, are digital natives. There are significant opportunities for us in other client sectors who want to tap into our expertise and leverage our skill set for their own transformations.
Hopefully in the next few weeks, you'll hear more about that. We define Whoppers as clients delivering over GBP 20 million of net revenue annually, and we currently have two. Our 20 Squared target is a plan to have 20 clients at this level in the medium term, and there are several clients already in our portfolio on the organic track to become Whoppers shortly.
Plus, we're involved in pitch opportunities with major potential Whoppers, too. Next slide. From an M&A perspective, we started off the year with the merger of Circus in Latin America. When COVID-19 started to have an effect in Q1, we decided to balance protecting our balance sheet and liquidity with a desire to continue expanding our capabilities and geographical coverage. Our roadmap has primarily focused on building out our data practice, as Peter Kim has already explained, with Digodat in Latin America and Lens10 here in Asia Pacific. They give us global coverage on Google and Adobe Analytics.
More recently, after the H1, we've continued with Orca Pacific, the full-service Amazon agency, and BrightBlue Consulting, the predictive modeling and measurement specialist, as Peter Kim already described. Obviously, with our July raise of GBP 112 million, we continue to be active and have a strong pipeline, particularly around further data analytics expansion, specific geographies, and e-commerce and digital transformation. With that, I'll hand you over to Simona Frew, who's going to update us on sustainability.
Hello, everybody, and thank you, Scott Spirit. Next slide, please, on sustainability, where you all see the statement of Sir Martin Sorrell. This statement really emphasizes the importance of sustainability throughout the whole S4 Capital . We take leadership in sustainability by integrating this into our operations and productions, and we also invest in our sustainability knowledge. Our sustainability strategy is based on the Sustainable Development Goals set for 2030 by the United Nations.
We want to reduce the negative environmental impact of our own operations, increase the positive impact of our productions, and take care of an inclusive and diverse workforce. Next slide, please. In our strategy, we therefore focus on three SDGs, gender equality, responsible production and consumption, and climate action. Our three strategic pillars where we build upon are sustainable production.
This is about neutral projects and supporting clients to make an impact via projects for good. The second pillar, zero impact workspaces, where we, for example, review the sustainability efforts of our main suppliers. The last pillar, and not the least, diversity and inclusion, where my fellow colleague, Imma Trillo , will dive into after this.
Next slide, please. We are taking the next steps in sustainability by embedding our focus areas in the organization through global and local employee resource groups. Furthermore, in the coming months, we will set mid- and long-term targets to give visibility on progress. Last but not least, it will be part of our strategic sessions and our three years planning. Now it's time for Imma Trillo to dive into diversity and inclusion. Thank you.
Thank you, Simona Frew. Good morning, everyone. Lots of good things to report on this point. S4 Capital has made a very public commitment to diversity, which we posted on our website with the publication of our diversity numbers in the U.S. and in the U.K. This included, among other things, a pledge of accountability. We continue to track our progress in the U.S. We are launching a worldwide survey very soon.
We are conducting a few cultural assessments and will do more in an effort to understand what we're doing well and what we can do better. We are already participating in a number of public initiatives. We signed up with the 600 & Rising and support their declaration of principles. We just participated in the 3% Conference. We support and are participating as we speak in ADCOLOR, a conference that celebrates diversity in creative and tech.
We also support the One School, an initiative started to teach advertising to Black students. We will continue to support other worthy initiatives wherever in the world we find them. In hiring, we are rethinking our process in order to attract more Black and underrepresented minority applicants, and also more women and LGBTQ+ applicants.
In addition, we are educating our hiring manager. The goal is not just to hire for culture fit, but also for culture add. We are already working on the fellowship program. Recruitment launches in one to two weeks, and the program will start in earnest in February. Now we go to the next slide. We are also planning to educate ourselves with trainings on allyship and anti-racism and many more that we either have launched or will launch in the immediate future. We are specifically looking into diversity training for managers.
In regards to our business products and practices, we have produced beautiful and inclusive style guides and will ensure that our creative and deliverables reflect our beliefs. Our clients also expect diverse teams from us. We have seen the growth also of a number of employee resource groups all over the S4 Capital geography.
As a few examples, we have in the U.S., a cultural collective, a Black employee ERG, an anti-racist ERG. There is Women in Tech across Media.Monks worldwide. Argentina has a particularly varied number of ERGs, with a number of tribus at MightyHive and at Media.Monks Buenos Aires with a cultural club, an LGBTQ+ club, MM Cares, MMBA Ladies, et cetera. This is just to mention a few instances.
There are probably more that I have yet to hear about. Lastly, we have also set specific goals for the board, and we're looking to increase, to start, the number of women represented in it. That's pretty much it for me. Now back to Sir Martin Sorrell for the final summary. Thank you.
It's actually back to me. Martin Sorrell had to step out to speak to a client. Either that or he's had a preview of some of the questions that are coming up and has thrown them to me. I'm going to do the summary, and then we will take your questions. I think you've heard from quite a few people from across the business. As Peter Kim stressed in his part of the presentation, I think the most important thing for us in H1 was that our people are safe.
Still mostly working from home, although we are starting to see people come back to the office, and I think Victor Knaap and Peter Kim are in the office today. I'm certainly in the office here in Singapore, which is great. Nice to be back. S4 Capital, from a growth perspective, continues to lead the industry in both growth and margin.
I think we're particularly proud of all the efforts of all of our colleagues in this first half to manage to keep growing the company, and to be really powering through the past few months, and delivering a really strong recovery. We have strong balance sheet, strong liquidity, very stress tested, obviously we raised that money just after the H1 in July.
Early cost action was taken, we still retain some flexibility there. We're starting to see that flow through to our profit levels as well. We have a very favorable client portfolio for growth with 54% in technology. As I mentioned, strong demand from other sectors too, who are really starting to see the benefit of the service offer that we have.
We have a very healthy new business record and a very healthy pipeline, I'm sure Martin Sorrell is dealing with that right now. The trends are towards increased digital transformation. I think COVID-19, although it's hard to pick any silver linings from COVID-19, certainly speeds the adoption of that digital transformation, and it speeds up the adoption of S4 Capital model and our integration.
Essentially, we're ready for the recovery, whatever the shape, Martin Sorrell has his views on that. I think whatever it is, we've invested and protected the fabric of our company during COVID-19, have come out in the past few months, really ready to grow again. Priority going forward is very much conversion at scale, converting more of those Whoppers, starting to make significant progress on that 20 Squared initiative of having 20 clients at that level of $ 20 million+ . With that, we will go back to you, operator, and take your questions.
Sorry, I had to break off.
Thank you.
Timing. It's a phone call to try and achieve our 20 Squared clients.
Great. Hopefully 19 today.
A very positive phone call, Victor Knaap. Very positive. Good. Okay. Questions, operator, please.
Certainly. Ladies and gentlemen, if you wish to ask a question at this time, please signal by pressing star one on your telephone keypad. Please make sure the mute function on your phone is switched off to allow your signal to reach our equipment. Again, please press star one to ask a question. We will now take our first question from Matthew Walker from Credit Suisse. Please go ahead.
Thanks a lot. Can you hear me okay?
Yeah. Fine.
Thanks. It was just on the sort of land and expand strategy and the 20 by 20. Could you tell us, first of all, what's happening to the Whoppers, and when you expect those sort of pitch process to be concluded? Can you give us how many clients are already over GBP 10 million and how many clients are already over GBP 15 million, so we can see how close you are to that target? If you can give us some guidance, please, for amortization, acquisition costs, and interest charges. Thanks.
Okay. Maybe Peter Rademaker can deal with the one that Matthew Walker slipped in there about amortization and interest costs. I'll just lead off maybe a little bit on the Whoppers. We have two Whoppers. Google is one. That is defined, Matthew Walker, so we're all clear, as annual revenues of over $20 million. Our revenue base is about $400 million.
We have two, Google and then one NDA'd tech company, that we refer to as a tech company or telecommunication company. It's well-known. You can probably guess who that might be. We will have one, I think, a further Whopper imminently. That will be in very short order. Then we have another, I think, which I would define probably in the next couple of months.
That we think by the end of the year, we will have at least four, maybe a fifth through further land and expand organic both. Maybe I could ask Scott Spirit, do you want to comment a bit on Matthew's question about 15+ and 10-15? There are a significant number of clients. I think probably it would be best not to name them specifically.
Yeah
for the obvious reasons, for competitive reasons. I think we should say the categories in which they're in, Scott Spirit. See if you could just.
Sure
Fill that out a bit.
Sure. Martin Sorrell, when he's been talking previously just now, he was really talking about pitching clients and winning Whoppers from day one, essentially. As I mentioned in the presentation, we have a number of clients who are coming up through our sort of land and expand strategy and growing strongly. We have, I'm just looking at a list in front of me, probably four or five clients in the technology sector that are already around the 10, couple of them over GBP 10 million, who we're seeing significant growth from.
Those are making their way up there. We have one in pharmaceutical, and two in fast-moving consumer goods, who are currently below the GBP 10 million, but again, growing rapidly and we're winning additional brands and additional assignments globally on all of those clients at the moment. I think, the 20 Squared is an ambitious target. We're not putting a specific time on it. When I say medium term, I think we'll certainly look to take some of those organic ones into that level, next year and hopefully, convert a couple of pitches as well.
Victor Knaap, do you want to comment, as the Whoppers are coming really more on the content side, there's data and analytics as well and media in one particular case. Do you want to comment a little bit on Whoppers?
Well, there's two ways how we can look at it. There's the land and expand Whoppers. We see that the brand names you've seen before are growing exponentially, and especially because we're offering more services to that client and help them to become more effective. Secondly is, that's new since 6-12 months, is that we're invited for pitches that lead to an instant Whopper. You will hear more news about that. We believe that it is at the end of this week. In a few months' time, another one. Our Whopper view is based on those two strategies.
Okay. Peter Kim, do you want to just comment as well? Data and analytics is one of the areas where, I'm thinking of another situation without naming names, where we started off with data analytics, and they expanded. Do you want to talk a little bit about that?
Sure. I think it's just a very obvious example of both the land and expand model as well as the unitary structure. How the data and the content and the media are always going to be de-siloed and related to one another, inevitably a foothold in one area leads to progress not only in that area but in other areas as well. We can't name that particular client right now. This client did start off as a data client inside of MightyHive and then has been very much moving into the content space as Martin Sorrell has already referenced. We're very excited about this one, and really, I think it gives me another opportunity to just emphasize the importance of data.
As we move through the customer journey that Victor Knaap described in his remarks, it's very obvious to me that data is the underpinning for all of those areas and segments of the journey, whether that is the initial awareness advertising or the consideration into the purchase experience, into the experience of the product itself, and all the way into loyalty and customer retention. That is because in many ways, the data itself is the representation of the customer, and so therefore is always at the center of all of our efforts.
Okay. Peter Rademaker, do you want to deal with the second question from Matthew Walker?
Yeah, sure. Matthew Walker, to your question, in the first half, amortization charges were approximately GBP 9.5 million. Basically, if you just look at how we do it, of course, we have an excess purchase price once we acquire a company or merge into a company. We typically, the most important positions that we separate are the client database and the order backlog.
The latter, the order backlog is typically amortized on a short period of time, six months to a year. Client database, longer, approximately, in general terms speaking, around 10 years. If we have had GBP 9.5 million, approximately in the first half, then based on that portfolio of companies, if I might put it like that, I would expect our amortization charge to be around GBP 20 million-GBP 25 million for this year.
Of course, inclusion of new mergers in the course of next year, this year or second half of this year, that may increase that base, GBP 20 million-GBP 25 million is a broad range. I think, if you would include the others or at least what we currently have completed or are about to complete, that would be probably around the GBP 25 million mark. That's one thing. To your question on interest, our financing costs are GBP 2.3 million in the first half.
Although we have been operating at a net cash position, we have drawn down our revolvers. We have our GBP 45 million approximately term loan, on which we pay our interest, and of course, on surplus cash, you hardly get anything or nothing at all. Luckily, not negative yet. That's one. Some sort of amortization charges are included in finance expenses on upfront fees or fees that we paid to the banks. That comprises the GBP 2.3 million, which is in our half year. I hope that clarifies.
Okay. Is that all right, Matthew Walker?
On the acquisition costs, the acquisition and setup costs?
The acquisition and setup costs were approximately GBP 6.5 million. That's one thing. The other thing, there is also a release in the revaluation of the contingent consideration, which happened in this year. Ultimately, when we do our mergers, then we don't do earn-outs. The thing what we do is that typically we would like to have these merged companies, let's say, tick their boxes on result for the running year, which we typically do in a transaction.
In some cases, it's higher than expected. In this particular case, there were also some lower deliveries. Then basically the contingent consideration is adjusted. If you would look at acquisition-related expenses, then we have expensed approximately GBP 5 million. The revaluation, which is then a positive in our numbers, was around GBP 8 million.
Okay, Matthew Walker.
Okay, thank you.
Thank you.
Thank you.
Next question, please.
Next question comes from Caspar Erskine from N+1 Singer. Please go ahead.
Hi there. Thanks for the call. I just had a couple of quick questions. The first was a bit of a more trusted question, just looking at the 20 Squared clients figure. Just wondering how this figure was decided upon. It seems to me that the pipeline contains a significant number of globals, so you could easily step up spend on S4 Capital services materially beyond this.
Just wondering if you'd give me some color as to why that figure was decided on. The second was just around M&A. It seems to me that S4 Capital resounding success has got traditional agencies and absolutely on the back foot at the moment. How are these logos responding at the moment? Are you seeing increased competition for merger bids, a step up multiples at all?
Also, I imagine as part of the M&A process, the opportunity to join S4 Capital is a significant part of the attraction to the proposition to some of these challenges that you're taking on. What else do you see as the key advantages of you going with yourselves rather than someone else?
Okay. Maybe Scott Spirit, you can deal with the second question. I'll try and respond on the 20 Squared. Unashamedly, I stole the concept from Globant, who you may recall is a company that when I was at WPP, we took a stake in. Sadly, well, in my view, sadly, the powers that be or that now be at WPP sold that interest. Globant have always expressed their objectives in that sort of squared function.
Now, we historically have always alighted on clients that were over GBP 20 million, with revenue about 5%. That's been a target to build about 5% of our revenue base. That was the logic behind it. 2020 had a nice ring to it, to be frank. We will shortly be up around the 5% or 6% level. I think the really important thing is that it signifies conversion at scale.
We've gone 2018, which was a partial year for us, half a year, really. We haven't really celebrated our second anniversary on the London Stock Exchange. That will be September the 13th. Our first partial year was about brand awareness. 2019 was about sort of brand trial, and 2020 is about conversion at scale. I think we'll have, as we've already indicated on this call, significant developments in terms of conversion at scale. 20 Squared to us is a good bellwether.
It's an ambitious target, by the way, because if you think about it means that we're doubling the size of our revenue base. If we were to have 20 clients with $20 million each, it's $400 million. It is a very ambitious target and not to be underestimated. That's the origination of it. If you're going to blame anybody, blame Globant. On the second thing, Scott Spirit, do you want to talk about competition on deals and what we see?
Yeah, sure. Thanks for the question. Actually, I'll use the question to plug our capital markets event because we have that coming up starting this afternoon, but on Friday at 2:00 P.M., I'm actually hosting a panel with five of the founders who sold their businesses and merged them into S4 Capital. They will be answering many of those questions themselves, and it's always better to hear from them than me on the buyer side, I guess.
Just going through your questions, from a competition perspective, we certainly don't see competition from the traditional holding companies. Where we are buying companies now, doing mergers, it tends to be consultants and private equity tend to be the two areas that we're competing against. I think as you outlined in the question, it's not always about the valuation.
It's also about other considerations, and I think what we've now built at S4 Capital, and you'll hear this hopefully on Friday from my entrepreneurial friends, there were many other kind of rationale for choosing the S4 Capital direction around what we're trying to build, around disrupting the industry, around a unique service model, around growth, around the client portfolio, around the talent that we already have in the group and becoming part of that.
I think there are many other reasons beyond the pure monetary side. On valuation from our perspective, we've done deals during COVID-19 and we continue to have a strong pipeline and we're actively out there looking for new opportunities. We're not seeing any real significant changes in valuation.
We're not looking to buy distressed companies and sort of rescue companies, where all the companies we've bought, and that we continue to look at, are strong growth companies. Many of them actually kind of benefiting from these digital trends that have happened in the past few months. If you take Orca, for example, they're having a great year, very focused on Amazon and e-commerce. Likewise with some of the data and analytics companies we bought. Valuations haven't really changed. They're still within the kind of metrics that we talk about. It's 5 to 10 times EBITDA, one to two times revenue. That continues to be the case.
Yeah, just to add to that.
Brilliant. Thank you very much
I think that we are going to see when the furloughs come off here in the U.K. and when the subsidies in America come off as well, which they will do at some stage. We'll have to see what Congress does in terms of another infusion. There will be more opportunities. The other final thing is we have seen the holding companies make black and white decisions, tarring everybody with the same brush, and that has created some inconsistencies at the holding companies.
I would describe the talent market as highly fluid. More fluid. Maybe Victor Knaap, you can comment a little bit on what we see in terms of talent opportunities. I know, and the same thing for Peter Kim, you can comment as well, because you can attract people now who we really never thought we would be able to attract. Victor Knaap?
Thanks. I have least tougher questions from journalists than from you. Thank you for trying to pull that information out of me. It's not just that there's a lot of talent available, so from consultancies, from the traditional holdings or other digital firms. It's also that groups of people that are not happy with their current job or position are applying to come over.
It is something that we really look carefully at. The DNA of a person is the most important thing we look at when people apply for a job. Indeed, the influx of people applying for a job is insane. We had a business manager position open in Amsterdam, and we received 400 people applying for a job. It's definitely a buyer's market, and we will be very careful in getting the right talent into our mix that fits our profile and culture and way of thinking. Peter Kim, do you want to add something to it?
I think it's just the exact same thing for us as well. I won't belabor the answer by repeating all the points that you just made. Maybe just add in a couple of points about diversity and inclusion and that the growth that we're seeing here really is an opportunity to advance that agenda as well. It's just a really great time to be hiring. The talent market is very strong for both sides of the company. It's a great position to be in.
Yeah, thanks for that addition, Peter Kim. Yeah, it's a very important point that we take very seriously that our future hires, and we've already focused on that in the past, will be diverse and will help into everything that Imma Trillo said in her presentation before.
Okay, next question operator.
Next question comes from Alex de Groot from Redburn Atlantic. Please go ahead.
Yes. Thank you. Good morning, guys. Congratulations on some great numbers. Question relates to full year expectations around working capital. I can see that you managed receivables very effectively in H1 with a net cash inflow. Going forward, should this line item be positive or negative? In other words, should working capital be a draw on the cash flow, or should you be generating an inflow? Usually with high growth businesses, we would expect an outflow. I just want to be clear in terms of your own internal expectations. Thank you.
Okay, Peter Rademaker?
Yeah, sure. There is the internal expectation, and there might be, let's say, the more CFO prudent expectation. In a way, what you're saying absolutely makes sense in a way that in our modeling, we also calculate, especially also with, let's say, a busy second half, and typically our Q3, Q4 intense production capacities, and as a result of revenues and gross profit delivery, that we would be, let's say, in a negative position.
In other words, that we have to increase our receivable position again towards the end of the year. If you would have asked me the same question three months ago, what I would have predicted at half year end, I probably would have said the same.
In other words, we maintain to keep that focus specifically on contractual terms and as a result of our follow-up thereon on actively sort of chasing that receivables and having our payment plans in line and our clients pay. Hopefully it can be a positive surprise at year-end. For now, for modeling, I would say estimate with an investment in working capital.
Yeah, Peter Rademaker is too polite, Alex de Groot, to say this, but one of the things that does trouble me is there has been some pressure from big clients on the payables front for agencies and indeed from some of the tech platforms, despite the fact that those tech platforms are cash rich, and there's been commentary publicly about that.
I think it is an area of concern and something I think that regulators will look at. Big companies that have substantial cash balances, whether they have, or ungeared balance sheets, whether they are clients or tech platforms, are putting pressure on, not because interest rates are high, obviously, and that there's a economic reason, but for sort of balance sheet security and for parity, because analysts like yourself raise the questions at meetings like this about what's happening on working capital.
I think it is an issue that will get some regulatory focus in due course, because for small and medium-sized businesses, it's an important area, particularly when you go through a COVID-19 or a Brexit. Just credit where credit's due, Peter and his colleagues and Simona and Jordi, who's not on this call, so the CFO at MightyHive, have done a very good job in maintaining our working capital position. Okay, Alex de Groot?
Great. Thank you very much, guys. Thank you very much. Thank you.
Okay, next question, operator.
Yeah. The next question comes from Steve Liechti from Numis. Please go ahead.
Hi there. Morning, everyone. I've got three, please. One for, well, Martin Sorrell and Scott Spirit, I guess, which is visibility of revenues. July, like up 18%, which is a great number. If you were betting then, do you think that number gets better, stays the same, or reduces slightly in the rest of the third and fourth quarter? Obviously bearing in mind what you said about the Whoppers as well. That's the first question.
Second question to Peter Rademaker. Can you just go through the moving parts on margin in the second half? I think that certainly from my perspective, margin was a wee bit lower than I thought, in the first half because you've continued to invest in the business during the COVID-19 issues. Third for Peter Kim, just on the media business, in terms of taking market share from the big boys.
I know WPP in the second quarter, their media business did come under a bit more pressure. They said that was more about media ad spend being cut as opposed to anything structural. Peter Kim, do you think that COVID-19 has accelerated potential trends against the big players? You referenced in-housing a bit. Any more color you can give there would be useful. Thank you.
Okay, thank you. Maybe Peter Kim, do you want to respond to that question first, and then Peter Rademaker can talk about margin, and then Scott and I can talk about visibility?
Sure. It's a great question. I don't think there's any doubt that COVID-19 has accelerated trends that we were already seeing in the market. We are seeing lots of folks that are spending even more time online, and that gives even more emphasis around the digital media that we have chosen to focus upon exclusively.
From that perspective, I think that yes, there's no doubt that those trends that were already present are now starting to accelerate. On the in-housing front, yeah, as I mentioned in my remarks, that is starting to accelerate. I can't give you specific numbers right now, but just anecdotally, the number of conversations has ticked up markedly just even in the last few months.
I think that really my kind of interpretation on what's going on is that the first few months of COVID-19 was really about trying to get settled into what was unfortunately the new normal and trying to figure out how things were going to operate and things like that. Then it was time to start asking the big questions like, what are we going to do. I'll mention a quote from a CMO that Sir Martin Sorrell and I had a virtual meeting with several months ago, and it was this We have ripped up our 2020 plans and our 2021 plans and our 2022 plans, and we're starting with our 2023 and our 2024 and accelerating greatly. I think that is all part of what you're seeing here.
Okay. Margin, Peter Rademaker?
Steve, on the margin front, to your question, like I mentioned in one of the slides, compared to last year, on the reported number, it was slightly up. I can imagine, I understand the question, you must reckon that basically there were a couple of things. First of all, of course, we had a substantial decline in revenues and gross profit as a result of COVID-19, where we took our measures, I would say, at the end of Q1, early Q2, with cost-saving measures, executive salaries, 50% housing, travel, these kind of things. Basically, in the first half, you see a sort of half of the first half is then already impacted or affected by some cost-saving measures, not to the full extent. That will go into the second half. That's one thing.
The second thing is that, as we have indicated, we have maintained the fabric in practices. In a way to sort of be prepared for a very busy half year. That busy half year is really expected to come, and it's also covered by secured revenues or the portfolios and pipelines that we see. In other words, my expectation is that the second half also sort of in line with seasonalities and in line with what we did last year, that you would see in the second half that we would say at more normal levels or high levels overall delivering a higher EBITDA margin. That's my expectation currently, in the relative EBITDA margin in the second half, in a sort of rhythm as we had in last year.
Yeah, I just think to emphasize, Steve Liechti, headcount was up about 22% in the first half. We've deliberately taken the view that as the holding companies are not that we see that necessarily as the most important or the only source of talent, but the holding companies, if they're jettisoning 50,000 people, as Forrester and others talk about this year, we thought we should go counter to that and continue to invest in our people.
I mean, we did take down freelance. We obviously reduced travel costs, et cetera. The other thing is that there are levers pulling both ways. I mean, we've dropped leases. Our operating efficiency has improved, particularly in May and June and into July. As Peter Rademaker said, it's geared more to the second half. On visibility, I probably just point you to the release.
What we've said is Q3 is better than Q2, and July is a good indicator of that, and we'll have our August results shortly. We think Q4 will be better than Q3. Just like last year, the second half of the year is much stronger than the first half. Despite COVID-19, we think that's going to be, or maybe as a result of COVID-19 hitting Q2 hard, whether you were in China or India or Western Europe or the U.S.
I think the pattern is going to be Q3 better than Q2, Q4 better than Q3. Then the blowout, and I do think it's probably a strange word to use, but the blowout comes next year. I was looking at some of the GDP forecasts for the U.S. next year, which is 70% of our business, the Americas are. You're talking about 6% growth.
Goldman are projecting 6% GDP growth for the U.S. The post-COVID-19 recovery, it mirrors what happened in 2010 as opposed to 2009, which was the bucket year or the trough year for the great financial crisis. I think that's the pattern. Now, the other thing is, if we're successful on the conversion at scale front, the Whopper front, as we call it, which we will be, I can say definitely we will be, then I think we will have a stronger Q3 and four, and we're set up very well for next year. Very well indeed.
We're getting into our planning season. Peter Rademaker is starting our three-year plans and budgets now as we go into September and October, and we're looking closely at next year. If things go according to plan, that will be very strong. Scott Spirit, do you want to add anything on visibility?
I think you've given everything there.
All right. Okay. Okay, Steve Liechti, anything else or you're okay?
No, that's fine. Thank you very much. Thanks a lot.
Okay. More questions?
Paul Richards from Berenberg, please go ahead.
Hello. Yeah, Paul Richards from Berenberg. A couple of questions on the data and digital side. The recent mergers in predictive and e-commerce are new areas. I'd just be interested in a bit more color on how they fit with MightyHive and the rest of the group. Looking forwards with the changes to iOS 14 and the death of the cookie, whether this represents a further step change in potential for MightyHive. Thank you.
Okay, Peter Kim?
Sure. I'm sorry. Unfortunately, the call, your question was a bit garbled. Could you please just summarize the two again?
Yeah. Okay. The question was, a lot of what we've been doing during COVID-19 around MightyHive is data and analytics. I guess, Paul Richards, your question was, what does that say about the development of MightyHive? How's MightyHive developing its data and analytics? The second question is about the death of the cookie. Google and Apple, and what impact that's having on MightyHive and future developments.
Sure. Thank you for that recap, Martin Sorrell. On the data and analytics fronts, look, I think it's trite to reemphasize over and over again how important the data is. We take the view that, if you're not looking at your data, then you're really wandering around blind. That's a reality that I think is true, of advertising for decades. The effort that we're putting into building out that data practice is actually part of MightyHive's core DNA from its very founding.
Not many people know this, but we were actually founded as a data software company back in the day and have never lost that passion and that understanding that the data is central and crucial, for the very reasons that we've already said on this call, which is that the data, in many ways, is the digital representation of the consumer that advertising is all about trying to attract.
In a world where the consumers are constantly looking for their media and their advertising to be more and more relevant and more and more personalized, how can you do that without understanding who the customer is? That is why we're taking a look at the data itself. It not only sort of gives you more information about the customer, it also gives you more information about whether the advertisements are working at all.
It is key to have these types of data so that you can answer fundamental questions like, "Did I earn more money from my advertising than I spent?" It's a fundamental question, and we are now really making huge strides towards being able to answer that in a statistically rigorous, scientifically valid way. All of these things are sort of driving our appetite and frankly our clients' appetites for advanced data services and for advanced data thought leadership, all of which not only is coming organically from inside of MightyHive, but also from the companies that we have chosen to merge with.
On the question of the third-party cookie, look, there has been so many headlines that have been colliding over in inside of our industry over the past year, and then with all the upheaval in 2020 on top of that, it's often easy to forget. Thank you for bringing that question up again. The death of the cookie still is a question mark for many people that are out there.
Ultimately, we've said this in past earnings calls, the net equation is going to be what is the death of the cookie, less the offsetting measures that are going to be proposed and implemented by the industry up to and including the Chrome Privacy Sandbox, et cetera. We simply don't know exactly where that's going to land at the moment.
What we're doing is we are trying to be very proactive in taking a look to see where all of this will land, watching with a hawk all of those developments, and at the same time, taking a look at alternative ways. For example, the attribution question that I posed earlier, is right down the center, right down the fairway for BrightBlue, who takes a media mix modeling and kind of an alternative route that doesn't have to necessarily rely upon the third-party cookies. For all of those reasons, we're very excited indeed about the future of data at S4 Capital.
Okay. Paul Richards, does that answer what you wanted?
Yes. That's right. I just wondered if anything further to add on iOS 14 specifically.
Yeah. Talk about lots of things that are happening in real time. You've seen the IDFA and Apple talking about the redaction of the critical data signatures that are available inside of their devices. There's been motion even in the last few days as sort of the industry goes back and forth to try and understand exactly when this is going to happen. We're studying it now, and we'll be happy to share additional thoughts with that in the future once we actually, and everybody, decides together what's going to happen and when.
Okay.
That's great. Thank you.
Next question, please, operator.
Ian Whittaker from Liberty Sky Advisors, please go ahead.
Hi there. Thanks so much. Actually, sort of, I'm going to ask four questions, if that's okay. The first one is just around e-commerce and what's happening there. It looks as though from your statement, and in terms of the focus you've got on e-commerce, it's more really based around the FMCG companies rather than necessarily the retailer's ability to get to market, and you've seen some very strong e-commerce numbers come out from the likes of Target and Walmart.
Just wondering if you could talk about sort of whether that's the case or not. The second question is just there's a lot in the call about ESG, and sort of both Victor Knaap and Imma Trillo spoke about that. Just to clarify, are you really seeing that sort of more in terms of your own internal processes, or do you think there's potentially a big client opportunity there for work?
Given the increasing focus on ESG. The third question is just around the accelerating trends that are coming through within the advertising spend. Would you expect there to be a sort of shift upwards in terms of those trends? Do you think it'd be more like a hockey stick effect, year- on- year, those trends in terms of changes of advertising accelerate moving forward? The final question is, obviously your focus is on digital.
If you look at sort of increasingly what the traditional media players, if you want to call them, are talking about, it's more about the sort of omni-channel strategy and also as well bundling their offers to have both the old products such as linear TV and also as well new services such as AVOD. You've seen Comcast, Disney talk about this, and also as well JCDecaux in online, in outdoor. I'm wondering how you're positioned to sort of focus on those clients.
Okay, Ian, well, that's a stiff test. Well, maybe we start with the e-commerce and retailer question. Scott Spirit, do you want to talk a little bit about whether we're too focused on FMCG and maybe Victor Knaap can chime in on that as well?
Yeah. No, I think we've done some M&A in that area. Obviously the deal we did with Orca Pacific specifically focused on the Amazon platform or marketplace platforms, and they have a very diverse client base, it goes across all sectors, not just FMCG.
There will be more M&A activity in that area, there are other areas we're looking at more on the kind of systems integration side around technology like Magento or Salesforce Commerce or Shopify, et cetera. Building out capabilities in those areas, for clients. Again, that goes across all categories. In terms of working with retailers, that's a key part of what we do as well. We work for several retailers.
We have an excellent case study, which actually is a really nice case that goes across the Content, Data and Media practice. It's one of the ones where a client hired us across all three, in the U.S., it's Ace Hardware, which is the big hardware store in the U.S. We built out their e-commerce capability. Fortunately, we were hired to do that at the end of last year and launched it just before COVID, which was more luck than judgment. It's obviously, as you can imagine, performed very well, and they continue to reinvest in that. We have other retail clients too. I think we see that e-commerce opportunity across a very broad spectrum.
Okay. I have another call that I've just been asked to take. Maybe I hand over to you, Scott Spirit. Maybe Victor Knaap, do you want to talk a little bit about e-commerce? Then Imma Trillo, respond maybe. Simona, if you want to chip in on the ESG thing, emphasizing, I think, Imma Trillo, what we're seeing on the procurement side. I think Peter Kim and Victor Knaap have got some input on that we're seeing that definitely as a criterion.
It's not just internal, it's external as well. On the shift, and Scott Spirit can deal with that, I think just before I go, it's an acceleration of the trends that we've seen, Ian. It's not a blip that's gonna affect 2021. Digital acceleration is happening. Then maybe Scott Spirit and Victor Knaap and Peter Kim can respond on that.
Lastly, on digital versus traditional, I think we're seeing a sea change. Clients are trying to take back control. They were trying to take back control, and as a result, they're willing to do the marrying of digital and traditional, and that plays to our strength. I think what we're seeing is change agents are becoming really, really important inside companies, as a result of COVID-19. The digital acceleration is huge. Scott Spirit, That's just a few thoughts on that, but just turning it over to you. I think Patrick Wellington, I will miss Patrick Wellington's question, but he's the last question. Usually he causes trouble, so maybe it's good if I leave. Okay, over to you, Scott Spirit.
Well, on that second question around ESG, I think we certainly see that, and I'll hand that over to Imma Trillo around how we see it internally and how important it is from a procurement perspective. We do see it. There's a lot more purpose, brand purpose work out there. After Imma Trillo's spoken, maybe Victor maybe can give a bit of comment about the kind of work we're doing creatively, which builds around ESG diversity and some of these other purpose-driven campaigns. Imma Trillo, do you want to talk a bit about what you're seeing, from a sustainability and diversity perspective, when clients are procuring services from us?
More specifically, I can speak to the diversity portion. Simona Frew may probably speak to the sustainability, but it has become a factor. Same as we are very interested in hiring for diversity, et cetera. Everybody, all clients are also on the same boat, and they demand of us that the teams that we give them to work on their projects need to be diverse, need to reflect the commitments that we have made to the point that if you present a team to a client that ends up being basically all white, you're gonna lose the project.
It has become a business need, a business reality. We're doing it for a series of reasons, for our principles and our values and our commitments to our employees. When it comes to the business end, it's a new, very clear reality of the market that our clients demand that of us and that we're gonna deliver.
Thanks, Imma Trillo. Simona Frew, are you seeing similar stuff more from the other areas of sustainability that we're working on in terms of the environmental side?
Yes. We do see it from all the angles, on the client perspective, but also from a procurement perspective. We are actively reviewing our main suppliers on their sustainability efforts. That's also coming from the other side. Clients look at us, we look at our own suppliers. In that perspective, we take responsibility of the whole chain. Within our organization, on the people, obviously, on the diversity and inclusion. I think it's inside out and inside out and inside. Coming in, going out, and inside, where it all comes together. Yes.
Thanks, Simona. Victor Knaap, do you want to talk a bit about how brand purpose has become so important from a creative direction?
Yeah, maybe I can speak about a couple of the points that were raised, and thanks for your question. When we look at e-commerce, indeed, we are very focused on brands, because especially during COVID-19, when a lot of retail spaces were closed, brands need to get content across the whole customer decision journey and make sure that the products are available everywhere.
That's why we call it commerce everywhere. It's not just a single channel, although Orca Pacific with Amazon is a great help, of course, because it's a big force. Secondly, if we look at diversity is good for many things. It's good for our hiring reputation, it's good for the work that we create, and it's good for business.
Our main goal is that every single city that we're in need to have exactly the same makeup of the diversity in that city if you see in our office. That's what we're aiming for. We're very close already by accomplishing that, where we're not far off what we built in the last 20 years. We will make our next 300, 2,000 people hire count in that part. It's good for creativity.
To give you one example, is every single film job that we pitch, we will have a 50/50 male/female split when it comes to film directors, which is a big topic currently at major sports brands, and FMCGs like Unilever, Procter, where the majority of all of their content is currently shot by men. That's what we're looking at.
If we come to our part of the omni-channel strategy, there needs to be more content produced for more screens. What the big shift is currently, and that's why Sir Martin Sorrell pointed out that the change maker, is how it's been tackled before is to cut down the biggest version of that screen. The TV commercial that goes into Facebook or the TV broadcast that is being ported into digital channels.
The change makers, what they do differently is they have a digital-first approach. That doesn't mean that TV is not in that mix. It's just a bigger screen that needs content that's fit for purpose. This ties in exactly into our all-screen content omni-channel approach that we have been talking about for the last few years. Scott?
Great. Thanks, Victor Knaap. I think Martin Sorrell pretty much answered the other two. Do we have any more questions, operator?
We have a question from Patrick Wellington from Morgan Stanley. Please go ahead.
Great. Hi, Patrick Wellington.
Yeah. Morning, everybody. Morning, all. I've got three questions. The first one is specifically on cost savings. Peter Rademaker, I think you identified GBP 18 million of COVID-related cost savings. Can we say how much of that, or how far you're into that progress? What did that contribute in the first half? Secondly, we just heard Martin Sorrell being, I thought, incrementally optimistic about 2021.
Let's talk about him while he's not here. Is he just basing that on looking at a Goldman Sachs GDP number, or is he basing that on the internal momentum you can see within the businesses or a bit of both? Feel free to talk around that and feel free to talk around August as well, because it's already September 9th.
When would you normally get the August number and would you be confident I mean, it sounds that you're confident that August would be stronger than July? Last one is just a bit of a touchy-feely one, which is, in the first half, 14% growth in Content, 7% growth in Data and Digital Practice. Has that leadership changed in recent months? If you were to sort of look at your services at the moment and try and describe in a nutshell what is seeing the greatest demand at the moment as a sort of single discipline, if you like, what is growing fastest in your portfolio of services right now?
Great. Thanks, Patrick Wellington. Quite a diverse group of questions there. I will take that last question, and then Peter Kim and Victor Knaap can help me out from their side of the business. On the second question about GDP growth. Martin Sorrell feeling incrementally optimistic. I think, in the statement, we were incrementally optimistic.
I think last time we had our results was really, COVID-19 was quite intense and there was maybe a bit of panic around in some of our clients, and it really wasn't clear where the bottom of the market was going to be for us. As you saw from Peter's chart, it's very clear now that that bottom was April, and we've come back strongly from there. I think, yeah, we do feel good about the rest of the year. In terms of next year, I think the optimism is based, as you said, around both. It's around GDP forecasts, which evidently are going to be strong because this year's going to be a pretty easy comparable, as you say.
I think there is some internal momentum as well. I think we've had some really good new business wins. Hopefully, we'll have some more very shortly. Some of the mergers that we've done are outperforming. I think there is a general sense, I think maybe we just have a bit more visibility.
It was hard back in March and April to really understand where the year was going, and now we're a bit closer to the end, we feel better. August is part of H2, so we'll comment on that when we get to that, Patrick Wellington. I'll pass you over to Peter Rademaker for the cost savings, and then we'll go with your final question on the content. Peter, do you want to talk about the cost-saving targets and what we've seen?
Sure. Cost saving, Patrick Wellington, to your question. In planning update, we indicated approximately GBP 18 million, around 10% of our total cost base that we identified as saving. The good news is that we're sort of 10%, 15% higher than that what we have been able to achieve so far. Still some measures may kick in because it's also from our prediction for the remainder of the year also on cost base.
There are, of course, a lot of assumptions. Ultimately, I would expect to sort of slight additional increase in cost saving measures so that probably will end up somewhere around the GBP 20, maybe GBP 22, GBP 21 mark for this year. Indeed, those are the positions like the travel, the non-business critical.
A lot of lease contracts, housing, offices were terminated, or where we had the ability of being flexible because flexible housing or some, also luckily in a way, some contracts expiring shortly after this whole thing happened. All in all, it's sort of 15% higher than we anticipated earlier. To your question on August, I think Scott Spirit answered it.
We don't know yet, because it's early and typically our numbers come in mid-month, and then they're also analyzed. It's a little bit early, but signals look positive. I can't say anything relevant at this very moment on percentages, but all signaling, because it's not only waiting for the numbers to see how it turns out to be. There is, of course, earlier signaling within our information flow. Sorry, it's a little bit too early to say something relevant or about August.
Thanks.
Can I tap into the business side, Patrick Wellington? Thanks for explaining, Scott Spirit. Let me be very clear from the business side. There's three major things driving our confidence for the end of this year and next. It is, we're helping to save our clients money by offering smarter solutions, fit for format content, and moving away from the big idea into the always-on content production. Secondly, because of data creativity, integrated production, and digital media, we're more effective. We help our clients to be more effective and help them through this time where maybe traditional retail is more difficult.
The third point is we have new budgets and new solutions that we look at that I presented before, like virtual events that normally go into event companies, that sit in trade budgets and not the traditional media or advertising budgets that we help our clients to get in contact with all of their business to business needs or their needs to connect with their employees, for example, by helping them with crafting digital events. Our main focus is the business is going well because we have more than offering, and we see that helping in our numbers, in our people, and in the work that we create.
Thanks, Victor Knaap. Yeah, that very much speaks to your final question around where we see the optimism in content and data and digital marketing. I think Vic's pretty much covered off the whole group plus, particularly the content side. I think on the data and digital marketing, I guess, media was hit harder and quicker from COVID-19, hence the slower growth there during Q2. Maybe, Peter Kim, you want to talk a little bit about how you see things coming back in both of those segments. Data is growing very quickly.
Data is growing very, very quickly for us, and we are seeing strong results there, buoyed not only by the accelerating trends that we've seen and discussed at length in this call already, and also by the new technologies and the new possibilities that are out there right now. The media and the data sides continue, and the content sides continue all to be sort of interwoven with each other, as per the unitary structure.
I believe that in true land and expand mode, we will see the momentum in one quickly spread to the others. In terms of where I would say right now, yeah, the content side is seeing very strong growth. We're seeing very strong growth inside of data as well, with media, hoping for a catch-up in the back half of the year.
Thanks, Peter Kim. Any other questions, operator?
No, there are currently no further questions in the queue.
Thank you everyone for dialing in. For those of you still there, I'd encourage you to join our capital markets event, which starts later this afternoon and goes on till Friday. Thank you very much and we'll speak to you all again soon.
Thank you.
Goodbye