For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230929:nRSc0870Oa&default-theme=true
RNS Number : 0870O Ebiquity PLC 29 September 2023
Ebiquity plc
Interim Results for the six months ended 30 June 2023
Focused strategy, integrated acquisitions and performance enhancements support
strong growth
Ebiquity plc ("Ebiquity" or the "Group"), a world leader in media investment
analysis, announces interim results for the six months ended 30 June 2023 ("H1
2023").
Strong financial performance
Group H1 2023 H1 2022(2) Change
£m £m £m %
Revenue 40.6 36.7 3.9 11%
Adjusted Operating Profit (1) 6.0 4.9 1.1 23%
Adjusted Operating Profit Margin (%) (1) 14.7% 13.3% 1.4% 11%
Adjusted Profit before Tax (1) 5.0 4.7 0.4 8%
Adjusted Earnings per Share (1) 2.94p 2.72p 0.22p 8%
Statutory Operating Profit/(Loss) 2.4 (1.2) 3.5 NA
Statutory Profit/(Loss) before Tax 1.4 (1.4) 2.8 NA
Statutory Earnings/(Loss) per Share 0.44p (3.43)p 3.87p NA
Note 1: Throughout these interim results, management presents alternative
performance measures to explain further the movements in our business. These
are not statutory financial measures. Further information can be found in the
Alternative Performance Measures section below.
Note 2: The prior year results have been re-presented to eliminate the results
of Digital Balance Australia Pty Limited which was sold in April 2023 and its
results are accordingly presented within discontinued operations in both 2023
and 2022.
Current year results include six months contribution from the MMi and Media
Path acquisitions which were completed in April 2022.
· Revenue increased by £3.9 million to £40.6 million (+11%)
· Adjusted Operating Profit increased by £1.1 million to £6.0 million
(+23%)
· Adjusted Operating Profit margin increased by 1.4 percentage points
to 14.7% (2022: 13.3%)
· Statutory Operating Profit increased by £3.5m to £2.4m
· Net bank debt of £15.0 million with cash balances of £9.8 million
and undrawn bank facilities of £4.7 million as at 30 June 2023.
Operational Momentum
· Improved profitability in H1 driven from UK and North America
· Continued strong revenue and margin performance in North America
· Three-year transformation and integration programme is progressing,
with focus for 2023 on rationalising and automating products and processes
· Revenue growth of 10% from Media Performance, Ebiquity's largest
service line, within which Digital Media Solutions' revenue grew by 32% to
£3.7 million with an operating profit margin of over 50%
· APAC region profitability impacted by phasing of revenue delivery
which is expected to largely recover in the second half
Current Trading and Outlook
· A small number of large clients have recently reduced budgets,
however, the business continues to trade broadly in line with expectations for
2023.
· The pressure from macro conditions on clients' businesses is creating
some uncertainty for 2024, but we do note that our business has historically
been significantly less sensitive to weak conditions in the advertising market
as our clients often look to us to help even more with improving marketing
efficiency in such an environment.
· Strategically, the business is continuing to improve its offering and
its operating model to take advantage of the attractive opportunities for
revenue growth and margin enhancement.
Nick Waters, CEO, commented:
"We have delivered a good performance despite the more challenging market
conditions. Revenue, profit and margins all grew driven by particularly strong
momentum in the US following our successful integration of MMi and continued
growth from Digital Media Solutions.
One of the key drivers of our growth is our ability to cross-sell and up-sell
more solutions and encouragingly we have seen the scope of work expanding from
major clients including:- GM, Amgen, J&J in the US; Danone and Ferrero
with global projects; Disney and Jaguar Land Rover in Europe.
We are now six months into a three-year transformation programme which will
see the transitioning of core services onto the GMP365 data management
platform, fundamentally changing the process by which work is delivered.
This is a major undertaking for the Group and although there is much more to
do before we see the full financial benefits, we are making good progress and
remain on track to achieve our objectives.
While we are seeing some major customers cutting budgets as a result of
prevailing market conditions and trends, Ebiquity continues to trade broadly
in line with expectations. Looking further ahead, as the market leader we
remain well positioned to help our clients and see further opportunities for
revenue growth and margin enhancement."
Details of presentations
The Executive Directors will be hosting a webcast presentation for analysts
and institutional investors at 09:30 BST today. If you would like to register,
please contact alex.campbell@camarco.co.uk
(mailto:alex.campbell@camarco.co.uk) .
They will also be giving a presentation for investors via the Investor Meet
Company platform on 2 October 2023 at 11:30 BST. Investors can sign up to
Investor Meet Company for free and add to meet Ebiquity plc via:
https://www.investormeetcompany.com/ebiquity-plc/register-investor
(https://www.investormeetcompany.com/ebiquity-plc/register-investor) .
Investors who already follow Ebiquity plc on the Investor Meet Company
platform will automatically be invited.
Market abuse regulation
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/201 as it forms part of UK domestic law by virtue of
the European Union (Withdrawal) Act 2018 ("MAR"). Upon the publication of this
announcement via a Regulatory Information Service this inside information is
now considered to be in the public domain.
The person responsible for arranging release of this announcement on behalf of
the Company is Julia Hubbard, Chief Financial Officer of the Company.
Enquiries:
Ebiquity
Via Camarco
Nick Waters,
CEO
Julia Hubbard,
CFO
Camarcco
Ben
Woodford
+44 (0)7990 653 341
Geoffrey
Pelham-Lane
+44 (0)7733 124 226
Panmure Gordon (Financial Adviser, NOMAD &
Broker)
+44 (0)20 7886 2500
Dominic Morley / Dougie McLeod (Corporate Advisory)
Mark Murphy / Sam Elder (Corporate Broking)
Chief Executive's Review
Continued progress
Ebiquity has continued to make good progress during the period, building
momentum and delivering effectively against our strategic objectives.
Following last year's acquisition of Media Management Inc ("MMi") in the US,
it is particularly encouraging to see revenue growth accelerating with North
America our fastest growing region at 50%. We are also pleased to see
continued progress from our portfolio of Digital Media Solutions with 32%
revenue growth year on year. Revenue from major international clients managed
by our Global Clients Solutions Centre in the UK has also recovered well from
some setbacks last year.
In what has been a challenging market to date, we can be satisfied with our
performance during the period, having expanded relationships with clients,
progressed our three-year business transformation programme, and continued to
build scale in the US, the world's largest advertising market.
A highly dynamic market
Inflation and high interest rates have continued to dominate the market
discourse. While this has undoubtedly led to increased pressure on consumers
and brand owners becoming more cautious with their marketing budgets, the
anticipated steep downturn in advertising in the first half of 2023 did not
materialise. However, the market remains highly cautious with a prevailing
sense that 'things must get worse'.
Although Ebiquity cannot claim immunity from the pressure on marketing
budgets, such a volatile environment presents opportunities for us to help
brand owners navigate this uncertainty and ensure they are maximising returns
from their media investments.
Our role as a business intelligence company for the global advertising
industry means that we are well placed to advise on the changing industry
dynamics and trends. This includes major developments such as the shift from
linear free-to-air broadcasting to advertising funded video on demand
("AVOD"); and the implications of advertising delivered through Connected TV
("CTV"), which is forecast to be the fastest growing ad format in the US,
growing 21.2% to become a market worth US$25.1 billion in 2023 (Source:
eMarketer April 2023).
Becoming more efficient
Against this background, we are now six months into a three-year business
transformation programme (2023-2025) with a considerable focus on increasing
the use of automation to create a more efficient service and experience for
our clients. Following last year's acquisition of MediaPath, we have a high
quality data management platform which is providing us with a base from which
to drive greater efficiency in the delivery of our services Group wide.
Our priority has been to transition client work onto the GMP365 platform,
which is central to our transformation plan, enabling us over time to
fundamentally change the processes by which work is delivered. This is a
major, time intensive undertaking for the business involving training staff,
changing working practices, recalibrating some of our product and processes,
and engaging with our clients and the agencies we work with on the benefits of
the new approach.
The process requires some additional investment in people's time as we
transition each area of the business starting with agency selection processes
(Media Management) followed by ValueTrack (Media Performance) and concluding
with benchmarking (Media Performance). Although there is much more to do
before we see the financial benefits of the transformation process, I am
pleased with progress to date with c.30% of Ebiquity staff having undergone
training, 78 agency selection processes managed on the platform in the first
half of the year, and five of our ten largest ValueTrack clients transferred.
Benchmarking is currently in the testing and planning phase with the
transition to the new process and methodology expected to commence in early
2024 with a measured roll-out.
We have taken an additional step to streamline the business by folding our
small Technology Advisory offering into the Media Management Service Line.
Building client momentum
One of the key drivers of our growth is our ability to cross-sell and up-sell
more solutions to more clients in more geographies. Our universe of clients
buying two or more service lines continues to grow and pleasingly we have seen
the scope of work expanding from major clients including:- GM, Amgen and
J&J in the US; Danone and Ferrero with global projects; Disney and Jaguar
Land Rover in Europe. We have also seen new business wins from major brand
owners including:- Mercedes Benz and Lenovo in China; L'Oreal in Latin
America; Dubai Holdings in the Middle East.
Developing our global presence
The successful integration of last year's MMi acquisition in the US has
accelerated growth in North America with revenue up 50%, representing our
strongest regional performance. UK&I has experienced a good recovery from
the international clients managed from this market, with the UK domestic
business showing resilience in difficult market conditions.
Following the lifting of zero-Covid restrictions, the Chinese economy has not
recovered at the rate most commentators forecast; nonetheless, our business
continues to progress and is expected to deliver growth in China. The Asia
Pacific performance overall has been impacted by a slow first half in the
Contract Compliance service line, with revenue back-weighted to Q4.
France and Spain were our strongest performers in Continental Europe, while
conditions were more challenging in Italy and Germany. We have also
established a new operation in the Nordics following the acquisition of
MediaPath to manage a number of clients in that region.
Product Innovation underpinned by unrivalled market intelligence
Our ability to successfully integrate businesses into Ebiquity is reflected by
the deferred consideration we paid out in May of this year, concluding the
earnout period for Digital Decisions, which was twice the sum expected at the
time of acquisition, reflecting its strong performance. The business became
our Digital Innovation Centre, making a significant contribution to Group
revenue and profit growth since it was acquired in 2020. Some of its
resources are now being distributed in other areas of the business as part of
the transformation programme to distribute digital knowledge and skills more
widely.
One of our great strengths is our unrivalled independent intelligence on the
digital media market generated from data processed and stored in our Media
Data Vault. This competitive advantage underpins our strong progress in
selling the Digital Media Solutions portfolio which also provides high levels
of renewable revenue with only one client not renewing since inception.
The nature of the media market provides ample opportunity to innovate new
solutions and during the period we brought two new initiatives to market. A
partnership with Scope3 enables us to measure the quantum of CO(2) and
equivalent emissions resulting from digital media activity. We now offer our
clients a "CO2PM" metric to give them visibility of the worst polluting
elements of their activity and the opportunity to minimise these. With large
publicly listed companies required to publish plans to reduce emissions we
believe this product innovation should have a receptive market. We have also
developed an initial "pioneers programme" in the US to address the booming
Connected TV market. We see large sums of money flowing into this market
with little governance and believe our new solution represents a significant
benefit to advertisers. Both of these developments are demonstrating
interesting results and offer a real value proposition for our clients.
Artificial Intelligence
Artificial Intelligence became the new hot topic in the first half of the
year. This is being seen as both a threat and an opportunity by different
players in the media industry. While still in its early stages, advertising
agencies are expressing excitement at its potential for almost limitless low
cost content creation, while publishers see a significant threat if engaging
content can be produced by anyone, and a potential risk to their intellectual
property. It seems clear that a regulatory framework needs to be drawn up as
a matter of some urgency.
We are assessing the potential impact of AI on our business from both an
internal and external perspective. Internal applications are likely to include
enhancement to workflows of data management and analysis, and the production
of our solutions. For external use, we will explore new client interface
opportunities, productisation of first line account management, and providing
greater value to the long tail of smaller clients without the cost of
additional human input.
Generative AI needs to be trained on data. The quality of that data is a
determinant in the quality and therefore value of the output. One
competitive advantage of Ebiquity is our vast and growing lake of data from
the global media industry that can be trusted. It is actual data from
billions of pounds/Euros/dollars of bought media activity. A challenge faced
by Generative AI applications that require training on open-source data is the
quality of that information. As we know, the information available on the
internet can be flawed, misleading, or fake. Reliance on this opensource
information can undermine the accuracy and therefore value of the output.
A significant advantage for Ebiquity therefore is the trusted data we manage
in our proprietary closed environment. As such, we believe Generative AI
represents more of an opportunity than a threat for Ebiquity.
Outlook
The global advertising market remains cautious and risk averse with many
global brand owners planning for the short term rather than the long term. As
a result, we are seeing some delays to client commitments and deferred work.
In recent weeks, we have started to see business challenges impact some major
clients leading to increased pressure on projects and fees, and some budget
cuts. Although inflation statistics have started to moderate there remains
some upward pressure on staff costs. This notwithstanding, the business
overall continues to trade broadly in line with expectations for 2023.
As the market leader we remain well positioned to help our clients and firmly
believe our product and service offering has resilience as media and marketing
budgets come under more pressure and the efficiency and effectiveness of
advertising investments comes under increased scrutiny.
While the global economic environment is weighing on brand owners' businesses
and there is more uncertainty about the outlook heading into 2024, the
business is well positioned to take advantage of continued opportunities for
revenue growth and margin enhancement.
CFO's review
In April 2023, the Group disposed of Digital Balance Australia Pty Limited, a
very small, non-core Australian consultancy business. The results of this
business have been disclosed as Discontinued Operations and the 2022 results
have been re-presented accordingly.
Service Line 2023 2022 Variance v PY
£m £m £m %
Media Performance 28.1 25.6 2.5 10
Media Management 4.8 4.2 0.6 14
Technology Advisory 0.5 0.6 (0.1) (17)
Marketing Effectiveness 4.5 3.6 0.9 25
Contract Compliance 2.7 2.7 - -
Total 40.6 36.7 3.9 11
Current year results include six months contribution from the MMi and Media
Path acquisitions which were completed in April 2022. As both of these
acquisitions have been fully integrated into the enlarged business, it is not
possible to fully determine the impact from those acquisitions on the results
in the period.
Revenue for the six months ended 30 June 2023 of £40.6 million was £3.9
million or 11% higher than the comparable period in 2022, with growth driven
from the US in particular, but also across the UK and Europe.
Revenue from Media Performance services increased by £2.5 million or 10%,
which was largely derived from technology enabled products such as the
portfolio of Digital Media Solutions and services delivered utilising the more
efficient Media Performance GMP365 platform following last year's acquisition
of MediaPath. The progress of Digital Media Solutions sales to new clients
continued in H1 and is expected to continue in the second half.
Media Management services revenue grew by £0.6 million or 14% in H1 2023.
This service line delivered £1.5 million incremental revenue with the agency
selection processes increasingly using the GMP365 platform. There has been a
significant slowdown in local agency selection work which we expect to be
temporary. In 2021 and 2022, this market was extremely buoyant due to the
bounce back after covid and, as a result, the local Agency Selection market is
suffering much lower business levels in 2023. The Group has seen a
corresponding decline in demand for this product and revenue in the period is
£0.7 million lower. This market decline is expected to be temporary and is
likely to return to more normal levels in 2024.
Revenue from Marketing Effectiveness grew by £0.9 million and benefited from
a large 3-year contract which was secured in the second quarter of 2022.
Adjusted operating profit (statutory operating profit excluding highlighted
items) from continuing operations increased by 23% to £6.0 million (2022:
£4.8 million). The adjusted operating profit margin improved to 14.7%
compared to 13.3% in the prior year.
Segmental Review of Performance
Revenue Analysis
Revenue Change
H1 2023 £m H1 2022 £m £m %
UK & Ireland 14.2 13.3 0.9 7%
Continental Europe 14.4 13.4 1.0 7%
North America 7.8 5.2 2.6 50%
APAC 4.3 4.8 (0.5) (11%)
Total Revenue from Continuing Operations 40.6 36.7 3.9 11%
Adjusted Operating Profit Analysis
Adjusted Operating Profit Adjusted Operating profit margin
H1 2023 H1 2022 H1 2023 H1 2022
£m £m % %
UK & Ireland 3.7 2.9 25.9% 21.6%
Continental Europe 4.6 4.4 32.2% 32.4%
North America 1.0 0.0 12.8% 0.3%
APAC 0.4 0.8 9.1% 17.4%
Unallocated (3.7) (3.2) (9.2%) (8.8%)
Adjusted Profit - Continuing Operations 6.0 4.9 14.7% 13.3%
North America delivered the highest regional revenue growth, increasing
revenue by £2.6 million or 50% year on year to £7.8 million (2022: £5.2
million). Whilst some of this growth resulted from the full half year effect
of the MMi acquisition, completed in April 2022, the remaining growth was
largely driven by the Media Performance service line which incorporates higher
margin Digital Media Services revenue. The scaling benefits of a larger
business together with increasing volumes of higher margin Digital Media
Services revenue delivered a 13 percentage point increase in H1 adjusted
operating margin (H1 2023: 13%; H1 2022: 0%).
UK & Ireland revenue increased by 7% from the prior year to £14.2 million
(2022: £13.3 million) while margin strengthened by 4 percentage points to 26%
(2022: 22%). Revenue and margin growth in that region was driven from a
large 3-year Marketing Effectiveness contract which was secured in the second
quarter of 2022 and delivered from the existing resource base.
Continental Europe has delivered 7% revenue growth to £14.4 million (2022:
£13.4 million) at a consistently strong margin of 32%. Revenue growth
across the countries within this region has however been mixed with growth
delivered in The Nordics, France and Spain although recent market pressures
experienced by some clients in the Italian and German markets have resulted in
budget cuts and a consequent decline in revenue during the first half.
Asia Pacific is currently the Group's smallest market. Revenue in H1 2023
was 11% or £0.5 million lower than H1 2022 while operating margin reduced by
8 percentage points to 9% (H1 2022: 17%). The region has been impacted by
two main factors. Firstly, as for all regions, the results from the Contract
Compliance business are included in the appropriate regional results. This
business is traditionally weighted into the second half of the year and in
2023 this back weighting is even more pronounced. As a result, the APAC
Contract Compliance business contributed less revenue and higher losses in the
first half and impacted margin in this smaller region more significantly.
Secondly, agency selection revenue (as discussed above) was lower in H1 2023
due to the temporary slowdown in the local agency selection market.
Unallocated costs, which comprise corporate and support costs, increased by
£0.5 million largely due to the impact of foreign exchange gains realised on
debtor and creditor balances.
Project related costs (which comprise external partner and production costs)
increased by 6% to £3.7 million from £3.5 million. These costs now also
include the costs of the GMP365 platform which, over time will provide a more
efficient way of providing benchmarking services to clients. Significant
work is underway to integrate this platform into the product base and this
transformation, together with the globalisation of the delivery resource are
expected to generate efficiency savings from H2 2024. The GMP365 costs have
increased at a lower rate than revenue, demonstrating the benefits of scale.
Highlighted items
Highlighted items comprise charges and credits which are highlighted in the
income statement because separate disclosure is considered relevant in
understanding the underlying performance of the business. These are used for
the calculation of certain Alternative Performance Measures.
Highlighted items before tax in the period totalled a charge of £3.6 million
(2022: £6.0 million on a re-presented basis) and include:
· £0.7 million relating to transformation costs (2022: £- million)
· £1.0 million for acquisition integration and strategic costs (2022:
£5.1 million)
· £1.6 million for purchased intangible assets amortisation (2022:
£0.7 million)
As previously communicated, the Group is in the process of undertaking a
three-year transformation and integration programme to rationalise its product
portfolio, optimise the use of newly acquired technologies and move from a
regional to a global delivery model. The transformation programme follows
the acquisition of MMi and MediaPath in April 2022 and is scheduled to run to
the end of 2025, with the majority of costs incurred in 2023 and 2024.
Operating efficiency savings are expected to commence during the second half
of 2024 and total savings totalling £5 million (including the original
acquisition synergy benefits) on an annualised basis are expected to be
delivered by the end of 2025.
Significant workstreams are underway to support this transformation. A
core number of individuals who are fundamental in delivering specific
workstreams have largely been taken out of their regional delivery and
management roles to focus on the transformation workstreams and will return to
a newly created role within the new global specialisms that they have been
responsible for implementing. The costs highlighted are therefore not
"one-off" in nature, though the workstreams are. We have determined to
separate through highlighted items, the proportionate costs of individuals who
are spending the majority of their time on these transformation workstreams
and in H1 2023, this was nine employees with a total cost of £0.5 million.
In addition, training and events costs to brief and educate employees about
their new roles within the new global specialisms totalled £0.2
million. These transformation costs, totalling £0.7 million, have been
classified as highlighted items.
The acquisition, integration, and strategic costs of £1.0 million (2022:
£1.6 million) largely comprise £0.3 million acquisition related costs
incurred during the period and a revision to the discounting of the deferred
consideration payable for the MMi earnout of £0.2 million payable in 2025.
The final post-date remuneration for Digital Decisions B.V. was settled in May
2023 and resulted in an additional accrual of £0.3 million (2022: £3.4
million).
The amortisation charge for purchased intangible assets increased
significantly in the period to £1.7 million (2022: £0.4 million) due to the
addition of intangible assets through the acquisitions of MMi and MediaPath
which completed in Q2 2022. These assets include customer relationships of
acquired entities, owned software (MMi's Circle Audit system) and MediaPath's
GMP licence asset.
Taxation
The adjusted tax rate for the period is 28.3% (H1 2022: 42.5%) which is higher
than the full year 2022 tax rate of 25.9%, largely due to increasing tax rates
in the UK, together with a higher proportion of profits delivered in the
period in overseas jurisdictions with higher tax rates (ranging from 25% to
33%). The tax credit of £0.6 million for the loss arising on highlighted
items is restricted to a tax rate of 15.9% (2022: 11.9%) due to the
significant level of disallowable expenses such as acquisition expenses and
amortisation of purchased intangibles within highlighted items.
Earnings per share
Adjusted basic earnings per share increased by 8% to 2.94p compared to 2.72p
in the prior period. Adjusted diluted earnings per share in the current period
increased by 7% to 2.86p from 2.68p. There was a statutory basic profit per
share of 0.44p (2022: loss per share of 3.43p). The diluted earnings per
share increased to 0.43p (2022: loss per share of 3.43p).
Dividend
No dividend has been declared for the six months ended 30 June 2023 (2022:
£nil).
Equity
During the six months to 30 June 2023, the number of ordinary shares in issue
increased by 20.2 million to 140.4 million (2022: 120.2 million). 19.9
million shares were issued to the previous owners of Digital Decisions B.V. as
partial settlement of the post-date remuneration. A further 0.2 million shares
were issued upon the exercise of employee share options.
Cash conversion
Six months ended Six months ended
30 June 2023 30 June 2022
£'m £'m
Statutory cash from operations (2.8) (3.4)
Add back
Settlement of post-date Digital Decisions remuneration 6.4 -
Cash outflow from Discontinued Activities 0.5 -
Highlighted items: cash items 0.6 1.8
Adjusted cash from operations 4.7 (1.6)
Adjusted operating profit/(loss) 6.0 4.9
Cash Flow Conversion Ratio (as % of Adj OP) 78% (33%)
Adjusted cash from operations represents the cash flows from operations
excluding the impact of cash from highlighted items and discontinued
businesses. There was an adjusted net cash inflow from operations of £4.7
million in the period (2022: £1.6 million outflow) which reflects a cashflow
conversion rate of 78% (2022: (23%)).
As at As at
Net debt and banking facilities 30 June 30 June
2023 2022
£m £m
Cash and cash equivalents net of bank overdrafts(1) 9.8 12.4
Bank debt (25.0) (21.5)
Prepaid loan arrangement fees 0.2 0.3
Net bank debt (15.0) (8.9)
(1) Includes restricted cash of £0.9 million held in Ebiquity Russia.
Statement of financial position and net assets
Net assets at 30 June 2023 were £45.5 million, an increase of £9.2 million
since 31 December 2022, largely due to the settlement in May 2023 of the
post-date remuneration relating to the 2020 acquisition of Digital Decisions
B.V. which totalled £16.1 million. Of this balance, £6.4 million was
settled in cash and £9.7 million was settled by the issue of new shares.
Net current assets at 30 June 2023 totalled £18.4 million, an increase of
£13.8 million from 31 December 2022 which again is largely due to the Digital
Decisions post-date remuneration settlement noted above.
Debtor days at 30 June 2023 of 74 days has improved year on year by 7 days
(June 2022: 81 days) due to stronger collections in the UK market. Debtor
days have, however, increased by 13 days compared to the December 2022
position of 61 days due to the billing profile of customers predominantly in
Europe with extended credit terms.
Alternative Performance Measures
In these results we refer to 'adjusted' and 'statutory' results, as well as
other non-GAAP Alternative Performance Measures ("APMs"). Adjusted results are
not intended to replace statutory results but remove the impact of highlighted
items in order to provide an understanding of the underlying performance of
the business. The APMs are consistent with how business performance is
measured internally by the Group. Those Alternative Performance Measures
relating to the income statement are shown on the face of that Primary
Statement.
Alternative Performance Measures used by the Group as defined in the Interim
Statement are:
· Net revenue
· Organic growth
· Adjusted operating profit
· Adjusted operating margin
· Adjusted profit before tax
· Adjusted effective rate of tax
· Adjusted earnings per share
· Adjusted cash generated from operations
· Adjusted operating cash flow conversion, and
· Net bank Debt
Net revenue is the revenue after deducting external production costs.
Adjusted profit is not recognised under IFRS and may not be comparable with
underlying profit measures used by other companies. Adjusted operating
profit is defined as the operating profit excluding highlighted items.
Adjusted profit before tax and earnings per share are calculated based on the
adjusted operating profit. These are reconciled on the face of the Profit
and Loss Account.
Highlighted items comprise non-cash charges and non-recurring items which are
highlighted in the consolidated income statement as their separate disclosure
is considered by the directors to be relevant in understanding the performance
of the business. The non-cash charges include share option charges,
amortisation of purchased intangibles and asset impairment charges. The
non-recurring items include the costs associated with potential and completed
acquisitions and disposals, adjustments to the estimates of contingent
consideration on acquired entities, management restructuring and other
significant one-off items. Costs associated with acquisition identification
and early-stage discussions with acquisition targets are reported in
administrative expenses. Further details of highlighted items are set out
within the financial statements and the notes to the financial statements.
Adjusted cash generated from operations is defined as the cash generated from
operations excluding the cash movements relating to the highlighted items.
The calculation for this period is set out on page 10.
Interim Consolidated Income Statement
for the six months ended 30 June 2023
Unaudited 6 months ended Unaudited 6 months ended
30 June 2023 30 June 2022 (re-presented) (1)
Before Highlighted Before Highlighted
highlighted items highlighted items
items (note 3) Total items (note 3) Total
Note £'000 £'000 £'000 £'000 £'000 £'000
Revenue 2 40,631 - 40,631 36,719 - 36,719
Project-related costs (3,739) - (3,739) (3,520) - (3,520)
Net revenue 36,892 - 36,892 33,199 - 33,199
Staff costs (24,529) - (24,529) (22,891) - (22,891)
Other operating expenses (6,396) (3,589) (9,985) (5,441) (6,022) (11,463)
Operating profit/(loss) 5,967 (3,589) 2,378 4,867 (6,022) (1,155)
Finance income 36 - 36 40 - 40
Finance expenses (1,013) - (1,013) (503) - (503)
Foreign exchange 21 - 21 246 - 246
Net finance costs (956) - (956) (217) - (217)
Profit/(loss) before taxation from continuing operations
5,011 (3,589) 1,422 4,650 (6,022) (1,372)
Taxation (charge)/credit - continuing operations
(1,418) 572 (846) (1,977) 23 (1,954)
Profit/(loss) for the period - continuing operations
3,593 (3,017) 576 2,673 (5,999) (3,326)
Profit/(loss) for the period - discontinued operations 5
(81) 248 167 63 (16) 47
Profit/(loss) for the period 3,512 (2,769) 743 2,736 (6,015) (3,279)
Attributable to: - - -
Equity holders of the parent 3,470 (2,769) 701 2,715 (6,015) (3,300)
Non-controlling interests 42 - 42 21 - 21
3,512 (2,769) 743 2,736 (6,015) (3,279)
(1 ) The prior year results have been re-presented to eliminate the results
of Digital Balance Australia Pty Limited. Its results have instead been
presented within discontinued operations in both 2023 and 2022 as it was sold
in April 2023.
Earnings per share-continuing operations
Basic 4 2.94p 0.44p 2.72p (3.43)p
Diluted 4 2.86p 0.43p 2.68p (3.43)p
Earnings per share-
Discontinued operations
Basic 4 (0.07)p 0.14p 0.06p 0.05p
Diluted 4 (0.07)p 0.13p 0.06p 0.05p
Interim Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2023
Unaudited
6months ended 30 June 2022
£'000
Unaudited
6months ended 30 June 2023
£'000
Profit/(loss) for the period 743 (3,279)
Other comprehensive (expense):
Items that may be reclassified subsequently to profit or loss statement:
Exchange differences on translation of overseas subsidiaries (1,465) (418)
Total other comprehensive (expense) for the period (1,465) (418)
Total comprehensive expense for the period (722) (3,697)
Attributable to:
Equity holders of the parent (764) (3,718)
Non-controlling interests 42 21
(722) (3,697)
Interim Consolidated Statement of Financial Position
as at 30 June
2023
Unaudited Audited
as at as at
30 June 31 December
2023 2022
Note £'000 £'000
Non-current assets
Goodwill 6 42,331 43,091
Other intangible assets 7 11,024 12,776
Property, plant and equipment 1,188 1,289
Right of use assets 3,203 3,308
Deferred tax asset 2,233 2,199
Total non-current assets 59,979 62,663
Current assets
Trade and other receivables 29,595 33,163
Lease receivables 45 141
Corporation tax asset 145 845
Cash and cash equivalents 8 9,847 12,360
Total current assets 39,632 46,509
Total assets 99,611 109,172
Current liabilities
Trade and other payables (8,091) (10,049)
Accruals and contract liabilities 9 (9,993) (29,399)
Financial liabilities 10 - (61)
Current tax liabilities (949) (1,121)
Provisions - (17)
Lease liabilities (2,220) (1,328)
Total current liabilities (21,253) (41,975)
Non-current liabilities
Financial liabilities 10 (27,219) (23,357)
Provisions (502) (446)
Lease liabilities (3,039) (4,654)
Deferred tax liability (2,100) (2,478)
Total non-current liabilities (32,860) (30,935)
Total liabilities (54,113) (72,910)
Total net assets 45,498 36,262
Equity
Ordinary shares 13 35,102 30,060
Share premium 15,552 10,863
Other reserves 3,359 4,824
Accumulated losses (8,859) (9,787)
Equity attributable to the owners of the parent 45,154 35,960
Non-controlling interests 344 302
Total equity 45,498 36,262
Interim Consolidated Statement of Changes in Equity
for the six months ended 30 June 2023
Non-controlling interests
Ordinary shares Share premium Other reserves Accumulated Losses Total
Total equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
31 December 2021 20,682 255 4,572 (2,774) 22,735 269 23,004
(Loss)/profit for the period - - - (3,300) (3,300) 21 (3,279)
Other comprehensive income - - 418 - 418 - 418
Total comprehensive income/(expense) for the period - - 418 (3,300) (2,882) 21 (2,861)
Shares issued for cash 9,240 10,608 - (30) 19,818 - 19,818
Share options credit 117 - - 207 324 - 324
Acquisitions - - 1,576 - 1,576 - 1,576
30 June 2022 (unaudited) 30,039 10,863 6,566 (5,897) 41,571 290 41,861
(Loss)/profit for the period (4,195) (4,195) 12 (4,183)
Other comprehensive expense (166) (166) (166)
Total comprehensive (expense)/income for the period - - (166) (4,195) (4,362) 12 (4,350)
Shares issued for cash - - - (9) (9) - (9)
Share options credit 21 - - 314 335 - 335
Acquisitions (1,576) - (1,576) (1,576)
31 December 2022 30,060 10,863 4,824 (9,787) 35,960 302 36,262
Profit for the period - - - 701 701 42 743
Other comprehensive (expense) - - (1,465) - (1,465) - (1,465)
Total comprehensive (expense)/income for the period - - (1,465) 701 (763) 42 (721)
Shares issued for cash 4,983 4,689 - (46) 9,626 - 9,626
Share options charge 59 - - 273 332 - 332
30 June 2023 (unaudited) 35,102 15,552 3,359 (8,859) 45,154 344 45,498
Interim Consolidated Cash Flow Statement
for the six months ended 30 June 2023
Unaudited Unaudited
6 months 6 months
ended ended
30 June 30 June
2023 2022
Note £'000s £'000s
Cash flows from operating activities
Cash (used by) operations 12 (2,836) (3,415)
Finance expenses paid (741) (232)
Finance income received 36 35
Income taxes paid (536) (915)
Net cash from operating activities (4,077) (4,527)
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired 82 (16,525)
Disposals of subsidiaries 502 -
Purchase of property, plant and equipment (292) (194)
Purchase of intangible assets (437) (93)
Net cash flow from investing activities (145) (16,812)
Cash flows from financing activities
Proceeds from issue of share capital (net of issue costs) 80 14,360
Proceeds from bank borrowings 5,000 4,500
Repayment of bank borrowings (1,500) -
Bank loan fees paid - (300)
Payments of lease liabilities (1,258) (1,607)
Dividends paid to non-controlling interests - (138)
Net cash flow from financing activities 2,322 16,815
Net (decrease) in cash, cash equivalents and bank overdrafts (1,900) (4,524)
Cash, cash equivalents and bank overdrafts at beginning of period 12,360 13,134
(613) 662
Effect of exchange rate changes on cash and cash equivalents
Cash, cash equivalents and bank 8 9,847 9,273
overdrafts at end of period
Notes to the interim financial statements for the six months ended 30 June
2023
1. Accounting Policies
Basis of preparation
The condensed consolidated interim financial statements for the six months
ended 30 June 2023 have been prepared in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'. These
interim financial statements should be read in conjunction with the Group's
Annual Report and Accounts for the year ended 31 December 2022, which have
been prepared in accordance with International Accounting Standards in
conformity with the requirements of the Companies Act 2006 ('IFRS') and the
applicable legal requirements of the Companies Act 2006.
The condensed consolidated interim financial statements have been prepared on
a going concern basis. The Group meets its day-to-day working capital
requirements through its cash reserves and borrowings, described in notes 8
and 9. As at 30 June 2023, the Group had cash balances of £9,847,000,
(including restricted cash of £903,000) and undrawn bank facilities available
of £4,688,000, and was within its banking covenants.
In assessing the going concern status of the Group and Company, the Directors
have considered the Group's forecasts and projections, taking account of
reasonably possible changes in trading performance and the Group's cash flows,
liquidity, and bank facilities. The Directors have prepared a model to
forecast covenant compliance and liquidity to 31 December 2024 that includes a
base case and scenarios to form a severe but plausible downside case.
The base case assumes growth in revenue and EBITDA based on the Group's budget
for the year ended 31 December 2023 and management projections for the year
ended 31 December 2024. The severe but plausible case assumes a downside
adjustment to revenue of 12.5% throughout the period with only a 3% reduction
in operating costs. Under this scenario, management is satisfied of covenant
compliance throughout the going concern period.
The Directors consider that the Group and Company will have sufficient
liquidity within existing bank facilities, to meet its obligations during the
next 12 months and hence consider it appropriate to prepare the condensed
consolidated interim financial statements on a going concern basis.
Following the Russian invasion of Ukraine, the Group has been reviewing the
future of its subsidiary in Russia (Ebiquity Russia OOO) and has been in
negotiations with a view to divesting its 75.01% shareholding in it. In view
of the uncertainty regarding this operation, an impairment provision was made
at the year-end against the value of its assets in the Group balance sheet.
Its cash balances are also deemed to be restricted cash and totalled £0.9m at
the end of the period. Details are provided in notes 3 and 7.
In the reporting of financial information, the Directors have adopted various
alternative performance measures ('APMs'). The Group includes these non-GAAP
measures as they consider them to be both useful and necessary to the readers
of the financial statements to help understand the performance of the Group.
The Group's measures may not be calculated in the same way as similarly titled
measures reported by other companies and therefore should be considered in
addition to IFRS measures. The APMs are consistent with how business
performance is measured internally by the Group. Details of the APMs and their
calculation are set out on page 12.
2. Segmental reporting
In accordance with IFRS 8, the Executive Directors have identified the
operating segments based on the reports they review as the chief operating
decision-maker ('CODM') to make strategic decisions, assess performance and
allocate resources. The definition of these segments was changed for reporting
for 31 December 2022 and the operating segments are now deemed to be the
regional operations instead of the two global practices reported on in
previous years. The comparative segmental reporting for 30 June 2022 has been
re-presented to reflect this change.
Certain operating segments have been aggregated to form four reportable
segments: UK & Ireland ("UK&I"), Continental Europe, North America and
Asia Pacific ("APAC").
The Group's chief operating decision‑makers assess the performance of the
operating segments based on revenue and operating profit before highlighted
items. This measurement basis excludes the effects of non‑recurring
expenditure recorded to highlighted items from the operating segments such as
restructuring costs and acquisition related costs. The measure also excludes
the effects of recurring expenditure recorded to highlighted items such as
equity‑settled share‑based payments, purchased intangible amortisation and
transformation related costs. Interest income and expenditure are not
allocated to segments, as this type of activity is driven by the central
treasury function, which manages the cash position of the Group.
The segment information provided to the Executive Directors for the reportable
segments for the period ended 30 June 2023 is as follows:
Revenue
The FY22 Segmental Revenue has been re-presented to include the impact of
intercompany revenues. This is to provide a clearer understanding of the
margin performance of each segment.
--- Revenue Change Revenue
Re-presented
H1 2023 £m H1 2022 £m £m % FY 2022 £m
UK & Ireland 14.2 13.3 0.9 7% 26.3
Continental Europe 14.4 13.4 1.0 7% 26.4
North America 7.8 5.2 2.6 50% 12.7
APAC 4.3 4.8 (0.5) (11%) 9.7
Total Revenue from Continuing Operations 40.6 36.7 3.9 11% 75.1
Operating Profit and Operating Margin
Adjusted Operating Profit Adjusted Operating margin Adjusted Operating Profit Adjusted Operating margin
H1 2023 H1 2022 H1 2023 H1 2022 FY 2022 FY 2022
£m £m % % £m %
UK & Ireland 3.7 2.9 26% 22% 6.6 25%
Continental Europe 4.6 4.4 32% 32% 6.3 24%
North America 1.0 0.0 13% -% 0.9 7%
APAC 0.4 0.8 9% 17% 1.8 19%
Unallocated (3.7) (3.2) (9%) (9%) (6.5) (9%)
Adjusted Profit - Continuing Operations (1) 6.0 4.9 14.7% 13.2% 9.1 12%
Discontinued operations (0.1) 0.1 0.1
Total Group 5.9 5.0 14.6% 13.5% 9.3 12%
(1) Operating profit/(loss) before highlighted items means adjusted operating
profit/(loss)
A reconciliation of segment operating profit/(loss) before highlighted items
to total profit/(loss) before tax is provided
below:
Unaudited Unaudited
6 months 6 months
ended ended
30 June 2023 30 June 2022 (re-presented)
£'000 £'000
Reportable segment operating profit before highlighted items 9,607 8,091
Unallocated costs:
Staff costs (2,315) (2,134)
Property costs (356) (560)
Exchange rate movements (266) 309
Other administrative expenses (703) (839)
Operating profit before highlighted items 5,967 4,867
Highlighted items (note 3) (3,589) (6,022)
Operating profit/(loss) 2,378 (1,155)
Net finance costs (956) (217)
Profit/(loss) before tax - continuing operations 1,422 (1,372)
Profit before tax - discontinued operations (note 5) 175 70
Profit/(loss) before tax 1,597 (1,302)
3. Highlighted items
Highlighted items comprise items that are highlighted in the income statement
because separate disclosure is considered relevant in understanding the
performance of the business.
Unaudited Unaudited
6 months 6 months
ended ended
30 June 2023 30 June 2022 (re-presented)
£'000 £'000
Share option charge 307 190
Amortisation of purchased intangibles 1,701 373
Impairment of Ebiquity Russia OOO (53) 365
Post-acquisition remuneration charges contingent on performance
333 3,436
Acquisition, integration, and strategic costs 623 1,657
Transformation costs 678 -
Total highlighted items before tax 3,589 6,022
Taxation (credit) (572) (23)
Total highlighted items after tax - continuing operations 3,017 5,999
Highlighted items - discontinued operations (248) 16
Total highlighted items 2,769 6,015
The share option charge reflects the expense for the period arising from the
cost of share options granted at fair value, recognised over the vesting
period. For the period ended 30 June 2023, a charge of £307,000 (30 June
2022: £190,000) was recorded.
The amortisation charge for purchased intangible assets increased
significantly in the period to £1,701,000 (30 June 2022: £373,000) due to
the addition of intangible assets through the acquisitions of Media
Management, LLC (MMi) and Media-Path which completed in Q2 2022. These assets
include customer relationships of acquired entities, owned software (MMi's
Circle Audit system) and Media-Path's GMP licence asset.
An impairment credit of £53,000 (30 June 2022: charge of £365,000) has been
made to reflect the adjustment to the planned divestment of the Group's
majority stake in Ebiquity Russia OOO for a nominal value. This comprises a
credit adjustment of £96,000 against the Group's share (75%) of the total
assets excluding cash partially offset by a charge to further impair goodwill
by £43,000.
A final accrual of £333,000 (30 June 2022: £3,436,000) has been made for
post-date remuneration which was settled in May 2023 relating to the
acquisition of Digital Decisions B.V. in 2020. The total amount paid was
£16.1 million.
The acquisition, integration, and strategic costs of £623,000 (30 June 2022:
£1,657,000) comprise a revision to the discounting of the deferred contingent
consideration payable for the MMi earn out payable in 2025 of £218,000,
project costs of £335,000, and onerous lease costs of £70,000 relating to a
charge payable to terminate the Chicago lease early in September 2023.
The remaining costs of £678,000 within the continuing business are
transformation costs. As previously communicated, the Group is in the process
of undertaking a transformation and integration programme to firstly,
rationalise its product portfolio and optimise the use of newly acquired
technologies and secondly, move from a regional to a global delivery model.
In addition, the integration, alignment and streamlining of delivery and
planning methodologies throughout the organisation are in progress. This
follows the acquisition of MMi and Media-Path in April 2022.
Significant workstreams are underway to support this transformation.
Whilst these workstreams involve a large number of the employees throughout
the organisation, there are a number of core individuals who are fundamental
in delivering specific workstreams. These individuals have largely been
taken out of their regional delivery and management roles to focus on the
transformation workstreams and will return to a newly created role within the
new global specialisms that they have been responsible for implementing. The
costs highlighted are therefore not "one-off" in nature, though the
workstreams are. We have determined to separate through highlighted items the
proportionate costs of individuals who are spending the majority of their time
on these transformation workstreams and in H1 2023, this was 9 employees with
a total cost of £526,000. In addition, training and events costs to brief
and educate employees of their new roles within the new global specialisms
totalled £152,000. These transformation costs, in total £678,000, have been
classified as highlighted items.
As previously communicated this has been planned as a three year
transformation programme scheduled to run to the end of 2025, with the
majority of costs incurred in 2023 and 2024. Savings are expected to
commence during the second half of 2024 and operating efficiency savings
totalling £5 million on an annualised basis are expected to be delivered by
the end of 2025.
The costs within discontinued operations represents the highlighted items
after tax for the disposal of the Digital Balance Australia Pty Limited.
Included within this balance is the profit on disposal of £213,000,
amortisation of intangibles of £10,000 (30 June 2022: £21,000) and movement
in deferred tax on the purchased intangibles attributable to the discontinued
operation of £(45,000) (30 June 2022: £(5,000).
4. Earnings per share
The calculation of basic and diluted earnings per share is based on the
following data:
Unaudited 6 months ended Unaudited 6 months ended
30 June 2023 30 June 2022 (re-presented)
Continuing Discontinued Total Continuing Discontinued Total
£'000 £'000 £'000 £'000 £'000 £'000
Earnings for the purpose of basic earnings per share, being net profit
attributable
to equity holders of the parent 534 167 701 (3,347) 47 (3,300)
Adjustments:
Impact of highlighted items (net of tax) (1) 3,015 (248) 2,768 5,999 16 6,015
Earnings for the purpose of adjusted earnings per share (2)
3,549 (81) 3,469 2,652 63 2,715
Number of shares:
The weighted average number of shares during the period
- basic 120,801,928 120,801,928 120,801,928 97,616,982 97,616,982 97,616,982
- dilutive effect of share options 3,450,356 3,450,356 3,450,356 1,247,599 1,247,599 1,247,599
- diluted 124,252,284 124,252,284 124,252,284 98,864,580 98,864,580 98,864,580
Basic earnings/(loss) per share 0.44p 0.14p 0.58p (3.43)p 0.05p (3.38)p
Diluted earnings/(loss) per share 0.43p 0.13p 0.56p (3.43)p 0.05p (3.38)p
Adjusted basic earnings/(loss) per share (2) 2.94p (0.07)p 2.87p 2.72p 0.06p 2.78p
Adjusted diluted earnings/(loss) per share (2)
2.86p (0.07)p 2.79p 2.68p 0.06p 2.75p
(1) Highlighted items (see note 3), stated net of their total tax and
non-controlling interest impact.
(2) Adjusted means before highlighted items.
5. Discontinued Operations
During the period, the Group agreed to dispose of its subsidiary Digital
Decisions Australia Pty Limited for gross consideration of A$891,000
(£502,000). This disposal was completed on 6 April 2023. The results of
this division have been presented within discontinued operations as
appropriate.
The table below summarises the income statement for the discontinued business
unit for both the current and the prior period:
6 months ended 6 months ended
30 June 2023 30 June 2022
£'000 £'000
Revenue 113 526
Project-related costs - -
Net Revenue 113 526
Staff costs (100) (310)
Other operating expenses (37) (122)
Operating (loss)/profit (24) 94
Finance income - -
Finance expenses (4) (3)
Net finance costs (4) (3)
(Loss) profit before highlighted items (28) 91
Highlighted items 203 (21)
Profit before tax 175 70
Tax (8) (23)
Net profit from discontinued operations 167 47
Below is a table summarising the cash flows from continued and discontinued
operations:
Period ended Period ended
30 June 2023 30 June 2022
£'000 £'000
Net cash from operating activities - continuing operations (3,606) (4,556)
Net cash from operating activities - discontinued operations (471) 29
Total net cash generated from operating activities (4,077) (4,527)
Net cash used in investment activities - continuing operations (647) (16,812)
Net cash generated from investment activities - discontinued operations
502 -
Total net cash used in investment activities (145) (16,812)
Net cash generated by financing activities - continuing operations 2,322 16,815
Net cash generated by financing activities - discontinued operations - -
Total net cash generated by financing activities 2,322 16,815
Net decrease in cash and cash equivalents - continuing operations (1,931) (4,553)
Net increase in cash and cash equivalents - discontinued operations 31 29
Net decrease in cash and cash equivalents (1,900) (4,524)
Below is a table summarising the details of the sale of the subsidiary:
Period ended Period ended
30-Jun-23 30-Jun-22
Cash received or receivable:
Cash 502 -
Decease of consideration - -
Total disposal consideration 502 -
Carrying amount of net assets sold 30 -
Costs to sell - current year 259 -
Total 289 -
Gain on sale before income tax 213 -
Income tax charge on gain (8) -
Gain on sale after income tax 205 -
Costs to sell - prior year - -
Gain on sale after income tax - total 205 -
6. Goodwill
£'000
Cost
At 1 January 2023 52,965
Acquisitions (1) (143)
Disposals (1,752)
Foreign exchange differences (1,062)
At 30 June 2023 50,008
Accumulated impairment
At 1 January 2023 (9,874)
Impairment (44)
Disposals 1,722
Foreign exchange differences 519
At 30 June 2023 (7,677)
Net book value
At 30 June 2023 42,331
At 31 December 2022 43,091
(1) An adjustment of £143,000 was made to the goodwill balance on
finalisation of the acquisition accounting of MMi which was provisional at the
time of the December 2022 financial statements.
7. Other intangible assets
Capitalised Computer software Purchased Total
development intangible intangible assets
costs assets (1)
£'000s £'000s £'000s £'000s
Cost
At 1 January 2023 9,489 2,531 27,397 39,417
Additions 460 337 - 797
Impairment - 3 - 3
Disposals - - (420) (420)
Foreign exchange (273) (21) (443) (737)
At 30 June 2023 9,676 2,850 26,534 39,060
Amortisation
At 1 January 2023 (6,187) (2,502) (17,952) (26,641)
Charge for the period - continuing operations (2)
(575) (17) (1,701) (2,293)
Charge for the period - discontinued operations
- - (10) (10)
Impairment - (2) - (2)
Disposals - - 248 248
Foreign exchange 223 20 419 662
At 30 June 2023 (6,539) (2,501) (18,996) (28,036)
Net book value
At 30 June 2023 3,137 349 7,538 11,024
At 31 December 2022 3,302 29 9,445 12,777
1 Purchased intangible assets consist principally of customer relationships
with a typical useful life of three to 10 years.
(2 ) Amortisation is charged within administrative expenses to write off the
cost of the intangible assets over their estimated useful lives. The
amortisation of purchased intangible assets is included as a highlighted
administrative expense.
8. Cash, cash equivalents, bank overdrafts and restricted cash
Cash, cash equivalents, and bank overdrafts include the following for the
purposes of the cash flow statement:
30 June 31 December
2023 2022
£'000 £'000
Cash and cash equivalents 8,944 11,311
Restricted cash (1) 903 1,049
Cash, cash equivalents and bank overdrafts (2) 9,847 12,360
(1) Cash and cash equivalents of £903,000 (31 December 2022 - £1,049,000)
are held in Ebiquity Russia OOO with restrictions on remittances to certain
countries. These balances may not be readily available to the wider Group
but can be used to meet Ebiquity Russia OOO's obligations within Russia as
they fall due.
(2) The main contributors leading to the reduction in the bank balance in the
period are due to the cash element of the post-date remuneration paid in May
2023 relating to the 2020 acquisition of Digital Decisions BV and also due to
the loan repayment of £1,500,000 in June 2023.
9. Accruals and Contract liabilities
30 June 31 December
2023 2022
£'000 £'000
Accruals (1) 4,352 21,316
Contract liabilities 5,641 8,083
Accruals and Contract liabilities 9,993 29,399
(1) The significant reduction in the accruals balance in the period is chiefly
due to the settlement of the Digital Decisions BV post-date remuneration in
May 2023. The final amount settled amounted to £16.1m, being settled in a
combination of cash and shares.
10. Financial liabilities
30 June 31 December
2023 2022
£'000 £'000
Current
Loan Fees(1) - -
Deferred contingent consideration(2) - 61
- 61
Non-Current
Bank borrowings 25,000 21,500
Loan Fees(1) (185) (265)
Deferred contingent consideration(2) 2,404 2,122
27,219 23,357
Total financial liabilities 27,219 23,418
(1) Loan fees were payable on amending the banking facility and are being
recognised in the income statement on a straight-line basis until the maturity
date of the facility in March 2025.
(2) Deferred contingent consideration relates to the acquisition of MMi.
Bank
borrowings Deferred contingent Consideration Total
£'000 £'000 £'000
At 1 January 2023 21,235 2,183 23,418
Paid (1,500) (60) (1,560)
Discounting charged to the income statement - 218 218
Charged to income statement 80 - 80
Borrowings 5,000 - 5,000
Foreign exchange recognised in the translation reserve
- 63 63
At 30 June 2023 24,815 2,404 27,219
All bank borrowings are held jointly with Barclays and NatWest. The current
revolving credit facility ("RCF") facility was agreed in March 2022 and runs
for a period of three years to March 2025, extendable for up to a further two
years with a total commitment of £30 million. £25.0 million had been drawn
as at 30 June 2023 (30 June 2022: £21.5 million). Under this agreement,
annual reductions in the facility of £1.25 million will apply in quarterly
instalments from June 2023, therefore the available facility as at 30 June
2023 is reduced from £30.0 million to £29.7 million. The remainder of any
drawings is repayable on the maturity of the facility. The facility may be
used for deferred consideration payments on past acquisitions, to fund future
potential acquisitions, and for general working capital requirements. The
quarterly covenants to be applied since June 2022 are: interest cover >
4.0x; adjusted leverage <2.5x and adjusted deferred consideration leverage
< 3.5x.
Loan arrangement fees accrued in the period of £185,000 (30 June 2022:
£265,000) are offset against the term loan and are being amortised over the
period of the loan.
The facility bears variable interest at Barclays Bank SONIA rate plus a margin
ranging from 2.60% to 3.00%, depending on the Group's net debt to EBITDA
ratio. During the first six months of the facility, the margin was fixed at
3.0%, it was reduced to 2.8% effective March 2023 as a result of the covenant
assessment for December 2022.
The undrawn amount of the revolving credit facility is liable to a fee of 40%
of the prevailing margin. The Group may elect to prepay all or part of the
outstanding loan subject to a break fee, by giving five business days' notice.
All amounts owing to the bank are guaranteed by way of fixed and floating
charges over the current and future assets of the Group. As such, a composite
guarantee has been given by all significant subsidiary companies in the UK,
US, Australia, Germany, Denmark and Sweden.
Deferred contingent consideration represents additional amounts that are
expected to be payable for acquisitions made by the Group and is held at fair
value at the statement of financial position date. All amounts are expected
to be fully paid by April 2025. The consideration payable is determined with
reference to the performance of the North American business for the year ended
31 December 2024.
11. Dividends
No dividend was paid in respect of the year ending 31 December 2022. No
dividend is being declared for the six months ended 30 June 2023. Dividends
were paid to non-controlling interests as shown in the consolidated statement
of changes in equity.
12. Cash generated from operations
Unaudited Unaudited
6 months ended 6 months
30 June ended
2023 30 June
2022
(re-presented)
£'000 £'000
Profit/(loss) before taxation 1,422 (1,372)
Adjustments for:
Depreciation 1,109 1,367
Amortisation (note 6) 2,293 944
Gain on disposal - 4
Settlement of post-date remuneration (6,448) -
Unrealised foreign exchange gain 45 (37)
Impairment of goodwill & Intangibles (53) 365
Share option charge 273 207
Finance income (36) (35)
Finance expenses 1,009 503
Contingent consideration revaluations 550 3,436
164 5,382
Decrease/(increase) in trade and other receivables 2,982 (6,062)
(Decrease) in trade and other payables (including accruals and contract
liabilities)
(5,546) (2,754)
Movement in provisions 35 (10)
Cash generated from operations - continuing operations (2,365) (3,444)
Cash generated from operations - discontinued operations (471) 29
Cash generated from operations (2,836) (3,415)
13. Share Capital
Nominal
Number value
of shares £'000
Allotted, called up, and fully paid
At 31 December 2021 - ordinary shares of 25p 82,728,890 20,682
Shares issued 36,958,789 9,240
Share options exercised 553,502 138
At 31 December 2022 - ordinary shares of 25p 120,241,181 30,060
Shares issued 19,929,502 4,983
Share options exercised 236,083 59
At 30 June 2023 - ordinary shares of 25p 140,406,766 35,102
As at 30 June 2023, the Company's issued share capital consisted of
140,406,766 Ordinary Shares, carrying one vote each. The Company's Employee
Benefit Trust holds 4,200,000 issued ordinary shares to satisfy awards under
the Company's share option scheme and the trustee has agreed not to vote the
ordinary shares held by it. As such, 4,200,000 Ordinary Shares are treated as
not carrying voting rights. Therefore, the total voting rights in the Company
as at that date were 136,206,766.
During the period, 19,929,502 shares were issued to the previous owners of
Digital Decisions BV as partial settlement of the post-date remuneration.
INDEPENDENT REVIEW REPORT TO EBIQUITY PLC
Conclusion
We have been engaged by the company to review the condensed set of financial
statements in the interim results announcement for the for six months ended 30
June 2023 which comprises the income statement, the balance sheet, the
statement of changes in equity, the cash flow statement and related notes 1 to
13.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the interim results
announcement for the six months ended 30 June 2023 is not prepared, in all
material respects, in accordance with United Kingdom adopted International
Accounting Standard 34 and the AIM Rules of the London Stock Exchange.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" issued by the Financial Reporting
Council for use in the United Kingdom (ISRE (UK) 2410). A review of interim
financial information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with United Kingdom adopted international accounting
standards. The condensed set of financial statements included in this interim
results announcement has been prepared in accordance with United Kingdom
adopted International Accounting Standard 34, "Interim Financial Reporting".
Conclusion Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This Conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410; however future events or conditions may cause the entity to
cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the interim results announcement
for the six months in accordance with the AIM rules of the London Stock
Exchange.
In preparing the interim results, the directors are responsible for assessing
the group's ability to continue as a going concern, disclosing as applicable,
matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the company or to
cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the interim results announcement, we are responsible for
expressing to the company a conclusion on the condensed set of financial
statements in the interim results announcement. Our Conclusion, including our
Conclusion Relating to Going Concern, are based on procedures that are less
extensive than audit procedures, as described in the Basis for Conclusion
paragraph of this report.
Use of our report
This report is made solely to the company in accordance with ISRE (UK) 2410.
Our work has been undertaken so that we might state to the company those
matters we are required to state to it in an independent review report and for
no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company, for our review work,
for this report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
London, United Kingdom
28 September 2023
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR PPUBPBUPWPPR