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Ebiquity PLC
30 March 2022
30 March 2022
Ebiquity plc
Final Audited Results for the year ended 31 December 2021
Delivering on the strategy: improved results with strong
momentum
Ebiquity plc ("Ebiquity" or the "Group"), a leading global
player in media investment analysis serving the US$780 billion
global advertising market of which 64% is digital(1) , announces
its final audited results for the year ended 31 December 2021.
Highlights(2)
Year ended 31 December 2021 2020 Change
GBPm GBPm GBPm
------- ------- --------
Revenue 63.1 55.9 7.2/13%
------- ------- --------
Underlying Operating Profit(2) 4.7 (0.3) 5.0
------- ------- --------
Underlying Profit/(Loss)
before Tax(2) 4.1 (1.3) 5.4
------- ------- --------
Underlying Earnings/(Loss)
per Share(2) 2.7p (1.9)p 4.6p
------- ------- --------
Statutory Operating Loss (5.1) (2.9) (2.2)
------- ------- --------
Statutory Loss before Tax (5.7) (3.9) (1.8)
------- ------- --------
Statutory Profit/(Loss)
per Share (8.5)p (4.8)p (3.7)p
------- ------- --------
-- Revenue up GBP7.2 million (13%) to GBP63.1 million (2020:
GBP55.9 million) reflecting strong business momentum across all
regions and business segments
-- Significant increase in revenue from higher margin Digital
Media Solutions to GBP3.7 million (2020: GBP1.0 million)
-- Underlying operating profit up GBP5.0 million to GBP4.7
million (2020: loss of GBP0.3 million),
-- Underlying operating profit margin of 7.5%
-- Underlying operating costs of GBP50.8 million (2020: GBP49.8
million), a 2% increase reflecting disciplined cost management
-- Underlying earnings per share of 2.7p (2020: loss per share of 1.9p)
-- Statutory Loss before tax is after accruing GBP7.9 million
towards the deferred consideration for Digital Decisions BV,
payable in 2023 (based on its expected performance in 2021 and
2022)
-- Underlying operating cash inflow of GBP13.2 million (2020: GBP7.3 million)
-- Strong financial position at 31 December 2021 with net bank
debt of GBP4.8 million (2020: GBP7.8 million) comprising cash
balances of GBP13.1 million and bank debt of GBP17.9 million. The
Company had undrawn bank facilities of a further GBP5.0 million
-- Loan facility increased in March 2022 to GBP30 million for a
3-year term, extendable for 2 years
(1) Source eMarketer
(2) Underlying operating profit is defined as the operating
profit excluding highlighted items. These include share-based
payments, amortisation of purchased intangibles and non-recurring
items. Underlying profit before tax and earnings per share are
calculated based on the underlying operating profit.
Outlook and current trading
-- High single digit global advertising growth expected in 2022,
particularly in digital advertising which is expected to account
for nearly half of all advertising expenditure
-- Ebiquity's Digital Media Solutions expected to continue
strong planned growth supported by product launches in 2021 and
additional services due in 2022
-- Acquisition in January 2022 of Forde and Semple Media Works,
the leading Canadian media performance consultancy, which is being
rebranded as Ebiquity Canada, expanded reach in North America
-- Trading in the current year has started in line with the
Board's expectations, with a healthy pipeline and continued good
momentum
Nick Waters, Chief Executive Officer, said:
"I am pleased with our progress in 2021, both in terms of
revenue growth and importantly, a return to profit after a
challenging 2020. We won new mandates from major clients including
Unilever, Stellantis, Daimler and Ferrero, and managed 6 of the top
10 largest global and multi-national agency selection processes by
billings(3) . In terms of geographic performance, Asia Pacific grew
the fastest, while North America regained momentum with strong
growth. Benefiting from the ever-increasing rise in digital
advertising spend, Digital Media Solutions exceeded our
expectations, with strong revenue and margin improvements.
Looking at 2022, we expect further good revenue growth as well
as margin enhancement. Our global market is not only massive, but
also becoming increasingly complex. The accelerating consumer
adoption of digital channels and focus on better management of
consumer data in online advertising, and the challenges of media
price inflation, present advertisers with challenges that Ebiquity,
as the world leader in media investment analysis, is best placed to
solve.
This, combined with our dedicated focus on delivering our
strategy, should support further strong results in 2022."
(3) Source COMvergence
Details of presentations
The Executive Directors will be hosting a webcast presentation
for analysts and investors at 09:30 BST today. If you would like to
register, please contact phoebe.a.pugh@camarco.co.uk .
They will also be giving a presentation for investors via the
Investor Meet Company platform on 31 March 2022 at 15:00 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
. 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 Alan Newman, Chief
Financial Officer and Chief Operating Officer of the Company.
Ebiquity plc +44 20 7650 9600
Nick Waters, CEO
Alan Newman, CFO & COO
Camarco
Ben Woodford +44 7990 653 341
Geoffrey Pelham-Lane +44 7733 124 226
Panmure Gordon (Financial Adviser, Nomad and
Broker) +44 20 7886 2500
Alina Vaskina / Harriette Johnson / Dougie
McLeod (Corporate Advisory)
Charles Leigh-Pemberton / Sam Elder (Corporate
Broking)
About Ebiquity plc
Ebiquity plc (LSE AIM: EBQ) is a world leader in media
investment analysis. It harnesses the power of data to provide
independent, fact-based advice, enabling brand owners to perfect
media investment decisions and improve business outcomes. Ebiquity
is able to provide independent, unbiased advice and solutions to
brands because we have no commercial interest in any part of the
media supply chain.
We are a data-driven solutions company helping brand owners
drive efficiency and effectiveness from their media spend,
eliminating wastage and creating value. We provide analysis and
solutions through five Service Lines: Media management, Media
performance, Marketing effectiveness, Technology advisory, Contract
compliance.
Ebiquity's clients are served by more than 500 media specialists
operating from 19 offices covering 80% of the global advertising
market.
The Company has the most comprehensive, independent view of
today's global media market, analysing US$55bn of media spend from
75 markets annually, including trillions of digital media
impressions. Our Contract Compliance division, FirmDecisions,
audits US$40bn of contract value annually.
As a result, over 70 of the world's top 100 advertisers today
choose Ebiquity as their trusted independent media advisor.
For further information, please visit: www.ebiquity.com
Chair's Statement
2021 was a year of significant progress. Ebiquity has a clear
and refreshed strategy that is delivering results, including more
product solutions for the digital market and higher value,
strategic client relationships accompanied by further operating
efficiencies.
In Nick Waters' first full year as Chief Executive, a great deal
has been achieved. He has put in place a strong and cohesive
management team and developed a coherent and focused strategy,
supported by an enhanced operational structure. As a result, we
have seen a good recovery in the underlying performance of the
business with strong revenue growth and improving operating
margins. This is a noticeable achievement given the challenges
posed by the impact of Covid-19 in the previous year.
Ebiquity's central purpose is to help brand owners increase
returns from their media investments to improve business
performance. We are world leaders in what we do, counting over 70
of the world's top 100 advertisers as our clients. What is becoming
clear is that our proposition is increasingly resonating in a vast
media market that is becoming more complex and challenging for
brand managers everywhere. This is seen in two areas - our ability
to deepen relationships with existing clients through new products
and our ability to win new mandates on the strength of our
offering.
At the heart of our refreshed strategy is the drive to develop
new products that can make a meaningful difference to the
increasingly complex challenges that our clients face. It is
therefore very pleasing to see that Digital Media Solutions has
exceeded our expectations with strong revenue and margin growth as
a result of the new product suite that we have introduced. Given
the continuing growth in digital advertising which is dominated by
mega brands such as Amazon and Meta, we continue to see good growth
opportunities in this market for these solutions.
Our new geographically led organisational structure, which was
put in place in January 2021, is proving an effective platform to
provide harmonised end-to-end client solutions and increase
opportunities for cross-selling. All of our main regions - Asia
Pacific, Continental Europe, the UK and North America - performed
well and we have strengthened the management teams in the US and
China with the appointment of two new Managing Directors. We will
continue to look at opportunities to expand our international
presence to support our clients' global needs and growth
agendas.
While the group undoubtedly benefitted from the easing of
Covid-19 restrictions in some markets towards the end of the year,
it is also clear that the transformation of the business that Nick
and his team are implementing has played a major part. The group's
underperformance has been addressed and we now have a clearer and
simplified strategic focus which is helping the business to gain
momentum. Group revenue increased by 13% representing a good
recovery compared to a difficult 2020, underpinned by notable new
business wins, the appeal of our wider product offering and
improved performances from our all our geographies.
In my report to you last year I said that a key priority for the
Board was to set out our Environmental, Social and Governance
('ESG') agenda. I am pleased to report that we have made good
progress during the year. Early in 2021, two members of the
Executive Leadership team were tasked with leading our efforts and
in September 2021 we formalised and launched our ESG strategy
across all markets. Work is now underway to measure our
environmental impacts and set targets to reduce this over time.
Diversity, Equality and Inclusion continues to be a key area of
focus where employees are supported in driving change throughout
the business. Our culture roadmap has also progressed well during
2021 as new values have been adopted and have begun to be embedded
across the organisation, particularly in employee appraisal,
recognition and reward.
Throughout the year the Board has been fully engaged in the
company's response to the pandemic and our priority has been the
wellbeing of our staff, ensuring a safe working environment. On
behalf of the Board, I would like to thank all of our employees for
their dedication and resolve during what has been a very difficult
time at both a personal and professional level.
During the year we welcomed Lara Izlan to the Board. Lara brings
extensive experience from across the media industry with a
particular expertise in digital advertising and marketing services,
having held senior strategic and commercial positions at leading
media brands and we have already benefitted from her contribution
to our board discussions. After seven years on the Board, Tom
Alexander will be stepping down at the conclusion of this year's
AGM. With his international business experience and knowledge of
consumer brands, Tom has brought us valuable insights into how
advertisers think and operate, and I should like to thank him on
behalf of the Board for his input and commitment during his term of
office.
Looking ahead, the opportunity for our business is enormous. The
global market is huge, digital advertising is developing fast, and
the challenges our clients are facing are increasingly complex. In
January 2022, we announced the acquisition of Forde and Semple, the
leading Canadian media performance consultancy which will enhance
our reach in North America. The position of the business and our
strengthening balance sheet now enable the group to consider
further acquisitions while continuing to drive organic growth.
Ebiquity has a small operation in Russia, which in 2021
accounted for c.GBP1 million of revenue. Given the horrific
developments in the Ukraine, the operation is currently under
review .
I firmly believe that Ebiquity, as the global leader in media
investment analysis with its strengthened management team and
compelling offer, is very well placed to deliver significant value
for all our stakeholders.
Rob Woodward
Chair
Chief Executive Officer's Review
Purpose
Ebiquity's purpose is simple. We exist to help brand owners
increase returns from their media investments and so improve
business performance. We do this by analysing billions of dollars
of advertising spend globally, as well as trillions of advertising
impressions. Using this intelligence, we provide independent,
fact-based advice which enables brands to drive efficiency and
increase effectiveness. Our work helps to eliminate wasteful
advertising spend and to create value.
We operate in a very large global advertising market, which is
worth US$780bn(4) . Of this, 64% is invested in digital channels,
with approaching half of all advertising spend now invested via
Alphabet, Meta, and Amazon (4) . We employ over 500 specialists in
14 markets, which together represent four-fifths of global
advertising spend.
We are able to provide objective, unbiased advice to our clients
because we are entirely independent of the media supply chain. We
offer no executional or trading services, nor do we negotiate with
media owners on behalf of advertisers. As the world leader in media
investment analysis, we count over 70 of the world's top 100
advertisers as our clients.
2021 performance
Group revenue in the year to 31 December 2021 grew by 13% to
GBP63.1 million, representing a strong recovery from the
challenging prior year. This contributed to a return to
profitability for the full year, building on the half year
performance and delivery of underlying operating profit of GBP4.7
million, and an operating margin of 7.5%, as against a loss of
GBP0.3 million in 2020. This performance was also due to our tight
management of operating expenses which grew by only 2% to GBP50.8
million (2020: GBP49.8 million). Our revenue growth was delivered
with a slightly reduced staffing level, reflecting our cost control
and efficiency improvements achieved to date.
This performance reflected the rapid growth of revenue from our
new digital media solutions and the benefit of new business wins
achieved over the last 18 months as well as the return of
advertisers to more normal activity levels during 2021. Our Media
Management service in particular, benefitted from pent-up demand
from delayed agency selection processes held over from the previous
year.
Ebiquity performed exceptionally well winning major global
agency selection mandates from leading advertisers including
Unilever, Stellantis, Daimler, and Ferrero, as well as a
significant number of national tenders from global brands including
L'Oréal and Nestle.
Ebiquity managed six of the top ten largest global and
multi-national agency selection processes by billings, including
three of the top five, representing US$8.4bn out of US$11.7bn under
review(4) . Most of this work was completed in the first half of
2021.
Revenue recovered from most industry verticals, except for the
still-troubled travel and tourism sector. There was strong support
from the FMCG category, although automotive was relatively subdued,
as manufacturers struggled with supply chain issues and microchip
shortages.
(4) COMvergence
All our regions and service lines achieved revenue growth as
well as profitability improvements, with Asia Pacific and global
clients growing the fastest. We saw a strong performance from
Continental Europe, with North America gaining momentum, and more
moderate revenue growth but significant profit increase in our
large and mature UK business.
The group made good progress re-aligning itself for the
digital-first needs of clients. The new suite of productised
Digital Media Solutions performed above expectations, with its
revenue increasing by 260% to GBP3.7m and delivering an operating
profit margin of 51%.
Our media contract compliance division, FirmDecisions, increased
its revenue by 31%, although its onsite audit operating model
continued to be hindered, especially during the first half of the
year, by the ongoing closure of agency offices due to the pandemic.
We are expecting further recovery in this service line in 2022.
Outlook
Following a strong recovery in 2021, we see further momentum in
global advertising markets in 2022. High, single-digit growth is
forecast at c.9%, although the consequences of the crisis in
Ukraine may dampen this. Almost two-thirds of all global
advertising spend will be through digital channels, with Alphabet,
Meta, and Amazon expected to take more than 80% of the digital
total and approaching half of all advertising expenditure.
The pandemic changed consumer behaviour, accelerating digital
adoption. We see this as a permanent shift, and media investments
will flow to the rapidly growing Advanced TV channels and e-Retail
platforms. Advertisers will need increased support to understand
how to make cost-effective use of these channels.
We expect that the pandemic will not disrupt advertising markets
significantly in 2022 and the increasing demand for inventory will
generate media price inflation. This will vary widely, from c.2% in
China to more than 20% in both the US scatter market and for
premium digital inventory as a whole. Advertisers will seek
independent advisors both to benchmark their own performance
against price inflation and to develop strategies to mitigate
it.
The recent rulings by the Belgian and Dutch Data Protection
authorities - that the IAB Europe's "Transparency and Consent
Framework" is unlawful and breaches GDPR - raises major questions
over the whole European online advertising market. This follows
earlier announcements from Google concerning the deprecation of
third-party marketing cookies and Apple's removal of "ID for
Advertising". Regulatory dynamics and the actions of tech platforms
create greater complexity for advertisers. They will need renewed
guidance on how to develop strategies that enable them to navigate
and understand the effectiveness of different approaches.
As all corporates look to improve their ESG credentials, there
is increased scrutiny of responsible media investment. This
includes growing efforts to eliminate spend with bad actors in the
supply chain - actors who promote hate content and disinformation,
conduct fraudulent activities, or are in breach of data privacy and
consumer consent laws. Ebiquity offers products and services to
help brand owners address these challenges. We therefore see market
conditions as supportive for top-line revenue growth, digital sales
acceleration, and further margin improvement.
Delivering the growth strategy
In late 2020, we outlined a strategy to simplify, clarify and
focus the business.
We have defined ourselves as deep market specialists in the
media vertical, and as the world leader in media investment
analysis which helps brand owners eliminate waste and create value.
We provide our services through five Service Lines: Media
Management, Media Performance, Marketing Effectiveness, Technology
Advisory, and Contract Compliance.
We have focused the strategy on three central elements of
Clients, Product, and Operating Efficiency, and have reorganised
ourselves to manage the business through four geographic regions -
North America, UK & Ireland, Continental Europe and Asia
Pacific. Our objective is to increase our presence in the world's
largest and fastest-growing advertising markets of the US and Asia.
A set of operational metrics has been published, against which we
will report progress (see table on p 9 below).
Winning new client mandates
Ebiquity's primary target market comprises the world's top 100
advertisers.
Our strategy is to invest in quality client relationship
management to better develop the commercial opportunity. We aim to
increase the proportion of our clients that buy our full range of
services across all their markets. We established a Global Client
Solutions Centre to support this strategy, and identified a
universe of 21 higher-value, strategic clients for focused
relationship development. Revenue growth from this universe
significantly exceeded expectations, enabling us to invest further
in the talent capable of managing and growing our business among
more of the world's largest advertisers. Over the last 18 months,
we have added Global Client Partners in the Netherlands, France,
Germany and the US to provide dedicated relationship management to
brand owners headquartered in those markets.
We have increased the number of clients buying two or more
Service Lines from 58 at the end of 2020 to 76 by the end of 2021,
again exceeding our targets.
A client satisfaction survey conducted in September demonstrated
a strong base from which we will build. The strategy for 2022 is to
continue with this programme established over the last year.
Expanding our product offering
Ebiquity's product strategy is focused on the development and
deployment of a new suite of Digital Media Solutions. These are
data-led, productised, scalable, repeatable, and higher margin. To
facilitate this, the Digital Decisions business - originally
acquired in January 2020 - has been repurposed and now operates as
Ebiquity's Digital Innovation Centre (DIC). Building on the success
of its original Source Data Monitoring product, the DIC has now
brought to market a total of seven Digital Media Solutions.
There remains a vast amount of wastage in advertisers' digital
media investments, running to tens of billions of dollars a year.
Our product solutions identify where our clients' digital media
spend is being wasted. In so doing, they enable advertisers to
course-correct and so minimise wastage, reinvest more effectively,
and create value. We typically see 15 to 30% of digital media spend
being wasted which, when eliminated, creates millions of dollars in
value for our clients.
The rate at which we have onboarded clients and sold digital
solutions has exceeded our expectations. The number of clients
buying these services rose from 10 to 28 during 2021, accounting
for over US$3bn of digital media investment and 639 billion
impressions, across 87 markets. This success demonstrates the
scalability of our platform and has rapidly built a global data
pool unmatched by any competitor. We have the broadest and deepest
view of the digital media market of any independent company.
The product strategy for 2022 continues the programme of
bringing more solutions to market, building on the momentum of
revenue growth and margin enhancement.
Table 1: Operational Metrics
Key Performance Indicator Baseline 2020 2021 actual
# of clients buying one or more
products from the new digital portfolio 10 28
-------------- ------------
Volume of digital advertising monitored
(billions of impressions) 112 639
-------------- ------------
Value of digital advertising monitored
(billions of spend US$) 0.48 3.03
-------------- ------------
# of countries served with new
digital products 50 87
-------------- ------------
# of clients buying two or more
Services Lines 58 76
-------------- ------------
% of revenue from digital services 25 29
-------------- ------------
Creating a more efficient business
In 2021, the Group focused its efforts on transferring more work
from onshore country teams to our near-shore Media Operations
Centre. We can be satisfied with progress, with the Centre
supporting 15% more projects than the prior year, thus improving
our economies of scale.
Several projects have been initiated to further standardise and
harmonise ways of working across the group and facilitate greater
automation. This is a high priority for 2022, with the goal of
realising further efficiency gains.
Reorganised for stronger regional performance
The group has moved to a new organisational structure, with the
business managed through four regions: North America, UK &
Ireland, Continental Europe, and Asia Pacific. FirmDecisions - the
contract compliance division - is the only remaining business unit
managed vertically. All regions performed well in 2021 in revenue
and profit terms.
We recruited new Managing Directors in the US and China, the
world's two largest advertising markets where Ebiquity has
historically been underweight. With stronger leadership, we see the
opportunity to penetrate these critical markets better and so to
scale our business. Paul Williamson (US) and Stewart Li (China)
both joined the group in January 2021 and made an immediate
positive impact.
The new business performance in both markets has been strong. In
the US, Ebiquity won new clients including a market-leading
retailer and global packaged goods advertiser, as well as
additional assignments from West Coast technology companies and
automotive manufacturers. Our China business won major domestic
advertisers including Huawei and Meng Niu, as well as international
brands, LVMH and adidas(R).
During the year, we launched media performance services
organically in the Indian market to add to our local contract
compliance offering. This is under the leadership of Sandeep
Srivastava, a highly experienced specialist, formerly with
Accenture Media Management. India is one of the world's fastest
growing media markets, a strategically important one to many
advertisers, and extremely complex - all characteristics which
support demand for Ebiquity's services.
In January 2022, Ebiquity acquired Forde & Semple, Canada's
leading media investment analysis business. Forde & Semple was
a long-time outsourced partner, serving Ebiquity's international
clients in the Canadian market. This move now extends our direct
relationship with those clients, gains us access to the world's
twelfth largest advertising market, and adds a roster of blue-chip
Canadian advertisers to our client list. The business will be fully
integrated within our North America region and rebranded as
Ebiquity Canada.
Setting the agenda
Ebiquity has continued to lead our market in thought leadership,
shaping industry debate on major topics, introducing new themes,
and responding to market events.
We have published a series of white papers and held webinars on
a series of subject areas including Advanced TV, the deprecation of
third-party cookies and its impact on online targeting, responsible
media, and trust in advertising. Our joint report with
Usercentrics, titled "The Current State of 3(rd) Party Cookies",
identified the prevalence of breaches in GDPR consumer consent in
the online advertising market and the transfer of data outside the
EU. The paper added fuel to the debate around the targeting of
online advertising and the breach of regulations. Subsequently,
both the Belgian and Dutch Data Protection Authorities found IAB
Europe's "Transparency and Consent Framework" to be unlawful and in
contravention of GDPR.
Environmental, Social and Governance
At Ebiquity, we understand the importance of a clear approach to
ESG matters. We are at an early stage in developing our policies
and practices and now plan to establish appropriate baseline
metrics and objectives against which we will report in future. We
will continue to engage with investors and other stakeholders on
ESG issues and ensure that the Board and management team review
ways for Ebiquity to progress further towards becoming a more
sustainable business.
Summary
The dynamics of the global media market are supportive for
Ebiquity's business.
The Group serves a very large market, with advertisers spending
c.US$780bn to promote their products and services to consumers. It
is a highly complex market, characterised by both a fragmentation
of channel choice and an ambiguity of what constitutes
effectiveness.
Digital media, which now accounts for almost two-thirds of all
global advertising spend, is fraught with challenges. Huge amounts
of fraud, unlawful use of consumer data, and the removal of
industry-standard targeting plague the industry, resulting in tens
of billions of dollars wasted investment.
These are issues which we see as embedded for the long term.
Advertisers therefore need independent expertise and advice to
invest their budgets responsibly and to improve effectiveness.
Ebiquity is well placed to meet this need.
Outlook
We believe that our refocussed strategy and the performance
enhancements achieved in the last year will enable us to make
further progress this year in line with our plans. The momentum
achieved last year has continued across all our geographies and
services in the current financial year, supported by a healthy
sales pipeline and trading in the first quarter is in line with the
Board's expectations.
While the global economic environment and the recent outbreak of
war in the Ukraine create significant uncertainties, we believe
that the dynamics of the advertising market continue to offer
opportunities for Ebiquity to develop its business as planned.
Nick Waters
Chief Executive Officer
Performance Review
Revenue by Segment
Segment Revenue
FY21 FY20 Variance
----- ----- --------- ----
GBPm GBPm GBPm %
----- ----- --------- ----
Media 52.8 46.0 6.8 15%
----- ----- --------- ----
Analytics and Tech 10.3 9.9 0.4 4%
----- ----- --------- ----
Group 63.1 55.9 7.2 13%
----- ----- --------- ----
Media
Revenue in the Media segment which comprises Media Performance,
Media Management and Contract Compliance services increased by 15%
from the prior year to GBP52.8 million. This growth was driven by a
number of factors. Revenue from our digital media solutions
continued to increase significantly, more than trebling compared to
2020, the year in which Digital Decisions joined the Group. Their
core source data monitoring service was serving 28 clients by the
year end and the new services launched during the year (such as
Digital Value Index and Responsible Media Investment) also
generated revenue in line with our plans. Our other Media
Performance services - which help clients to assess and optimise
their media buying performance - increased revenue by 4%. Revenue
from Media Management services, which includes agency selection
advice, increased by 68% reflecting the high level of tendering
activity by advertisers in the year, some of which was deferred
from 2020 as a result of the pandemic. Contract Compliance (branded
as FirmDecisions) increased revenue by 31% reflecting in part that
agencies began to provide easier access to their offices and data
following the restrictions due to Covid-19 in 2020 and the early
part of 2021.
Geographically, all regions achieved good revenue growth. APAC
was up by 23%, including China where revenue increased by 27%,
reflecting its new management team's success in winning domestic
market share. The US increased revenue by 15% and Continental
Europe by 14%, with France growing by 25% and Italy by 20%
reflecting recent client wins in these markets (such as Stellantis
and Generali). UK and Ireland, our largest and most mature region
grew revenue by only 1% but more than doubled its profits. Our
specialist unit responsible for multi-market media projects
increased revenue by 15% reflecting our focus on increasing the
value of major global accounts.
Analytics and Tech
Total revenue from Analytics and Tech increased by 4% to GBP10.3
million. Within this, our Marketing Effectiveness service line grew
by 13%. This applies advanced analytics and data science techniques
to help brands to plan and optimise their media investment,
especially in sectors such as telecoms, automotive and financial
services. Our Australian based MarTech business, Digital Balance,
increased revenue by 20% for its web optimisation services.
However, revenue in our AdTech service which helps brand owners to
address the challenges of managing digital media and automated
trading programmes fell by 13% as a recently completed major
project was not replaced in the short term.
Operating Profit by Segment
Underlying Operating Profit Operating profit
margin
FY21 FY20 Variance FY21 FY20
-------- -------- -------------- --------- --------
GBPm GBPm GBPm % % %
-------- -------- ------- ----- --------- --------
Media 10.1 6.8 3.3 48% 19% 15%
-------- -------- ------- ----- --------- --------
Analytics and Tech 1.4 (0.7) 2.1 - 14% (7%)
-------- -------- ------- ----- --------- --------
Unallocated costs (6.7) (6.4) (0.3) 5% - -
-------- -------- ------- ----- --------- --------
Group 4.7 (0.3) (5.1) - 7% (1%)
-------- -------- ------- ----- --------- --------
Media increased underlying operating profit by 48% to GBP10.1m
and its margin to 19%, after falling to 15% in 2020. This reflected
the overall increase in revenue which was delivered while
maintaining stable operating costs and staff levels, as well as the
growth in higher margin digital media solutions. It also reflected
the continued growth in the proportion of work undertaken by our
Madrid based Media Operations Centre which increased activity by
15%.
Analytics and Tech returned to profitability after being
loss-making in 2020 with both the total profit of GBP1.4m and the
margin of 14% now exceeding the levels achieved in 2019 prior to
the pandemic. This reflects the initiatives undertaken, especially
in the Analytics area, to reduce the cost of delivering
projects.
Unallocated costs, which comprise corporate and support costs,
increased by GBP0.3 million, largely due to the re-establishment of
a bonus provision in the year, whereas none was paid in 2020.
Financial Review
Group revenues for the year ended 31 December 2021 increased by
GBP7.2 million to GBP63.1 million, from GBP55.9 million in
2020.
The underlying operating profit (statutory operating profit
excluding highlighted items) of GBP4.7 million represented an
improvement of GBP5.0 million from the prior year loss of GBP0.3
million. Project-related costs (which comprise external partner and
production costs) increased by 17% to GBP7.5 million from GBP6.4
million, due to more projects in markets not served directly by
Ebiquity's own offices. However, total operating expenses,
including cost of sales and administrative expenses, increased by
only 2% to GBP50.8 million from GBP49.8 million, largely reflecting
delivery of revenue growth with stable levels of internal staff
resources.
Net finance costs were GBP0.6 million in 2021, which was GBP21k
lower than the prior year, due mainly to a reduction of lease
liabilities in line with the expiry of lease terms.
The statutory operating loss of GBP5.1 million (2020: GBP2.9
million) is calculated after highlighted items including the
accrual for the post-date renumeration relating to the acquisition
of Digital Decisions BV, as detailed below.
Highlighted items
Highlighted items after tax in the period totalled a charge of
GBP9.3 million (2020: GBP2.4 million) and include the
following:
-- GBP7.9 million charge to accrue for post-date remuneration
payable in 2023 relating to Digital Decisions BV, acquired in
January 2020
-- GBP0.5 million charge relating to share-based payments
-- GBP1.1 million charge for amortisation of purchased intangibles (2020: GBP1.1 million)
-- GBP0.3 million charge for professional costs relating to
acquisition and bank facility agreements
-- GBP0.4 million tax credit on highlighted items.
The contingent consideration relating to Digital Decisions BV is
being accounted for as post-date remuneration as payment is
dependent upon the principal vendor remaining in employment with
the group. This will be payable in 2023 and the amount due will be
calculated as six times the average profit generated in the two
years ended 31 December 2022, from digital media solutions
developed by the Digital Innovation Centre, less the initial
consideration of GBP700,000 paid in January 2020. The current
estimate of the deferred consideration payable is GBP12.5 million.
The accrual in the 2021 accounts represents two-thirds of the total
payable (less the discount to fair value) as it is being made at
the end of the second of the three years between the acquisition
and the end of the earn-out period. The deferred consideration is
payable in a mixture of cash and/or Ebiquity shares which the
company will determine at the time of payment, having regard to its
overall capital structure, debt facilities and the vendor's option
to request that a certain proportion be paid in cash.
Taxation
There was an underlying tax charge in the year of GBP1.7 million
compared to GBP0.03 million in 2020. This increase reflects the
profit before tax in the year. There was a total tax credit
included in highlighted items of GBP0.5 million compared to a
credit of GBP0.2 million in 2020.
Earnings per share
There was an underlying basic earnings per share of 2.72p
compared to a loss per share of 1.92p in the prior year. There was
a statutory basic loss per share of 8.51p (2020: 4.81p) due in part
to the highlighted items of GBP9.8 million including post-date
remuneration for Digital Decisions BV.
Dividend
No dividend has been declared or recommended for the twelve
months ended 31 December 2021 (2020: GBPnil).
Cash conversion
Year ended Year ended
31 December 31 December
2021 2020
------------------------------- ------------- -------------
GBP'000 GBP'000
------------------------------- ------------- -------------
Reported cash from operations 11,800 5,827
------------------------------- ------------- -------------
Underlying cash from
operations 13,201 7,300
------------------------------- ------------- -------------
Underlying operating
profit/loss 4,737 (334)
------------------------------- ------------- -------------
Underlying cash from operations represents the cash flows from
operations excluding the impact of highlighted items. The
underlying net cash inflow from operations was GBP13.2 million
during 2021 (2020: GBP7.3 million). This cash inflow includes an
underlying working capital reduction of GBP4.8 million (2020:
increase of GBP8.5 million).
Equity
During the year to 31 December 2021, 145,636 shares were issued
following the exercise of share options. As a result, the total
share capital increased to 82,728,890 shares (31 December 2020:
82,583,254).
Net debt and banking facilities
31 December 31 December
2021 2020
--------------------------------------- ------------ ------------
GBP'000 GBP'000
--------------------------------------- ------------ ------------
Net cash 13,134 11,121
Bank debt (18,000) (19,000)
Loan fee prepayments 99 120
--------------------------------------- ------------ ------------
Net bank debt (4,767) (7,759)
US PPP Loan(1) - (750)
Net Debt as in Statement of Financial
Position (4,767) (8,509)
--------------------------------------- ------------ ------------
(1) This represents a loan received under the US Paycheck
Protection Program. Loan forgiveness was granted in August 2021 and
the loan was therefore credited to the income statement in
2021.
All bank borrowings are held jointly with Barclays and NatWest.
The RCF facility agreement in place during the year totalled
GBP24.0 million and had a maturity period of four years, expiring
in September 2023 with an option for the company to extend for one
further year. As at 31 December 2021, GBP18.0 million was drawn
from the facility (2020: GBP19.0 million). During the year, the
group continued to trade within the limits of its banking
facilities and associated covenants as agreed with the lenders in
May 2020. These required the group to maintain minimum liquidity of
at least GBP5.0 million, increasing to GBP7.0 million from
September 2021, at the end of every month during that period. From
September 2021, an interest cover covenant was re-introduced at
> 4.0 and in December 2021 an adjusted leverage covenant was
re-introduced, initially at < 4.0, increasing to < 4.25 and
again to < 4.5 in March 2022.
Since the year end, on 24 March 2022, a new facility has been
agreed with the lenders increasing the total available to GBP30
million, initially for a period of 3 years, extendable for up to a
further two years. Under this agreement, annual reductions in the
facility of GBP1.25 million will apply from June 2023. The
quarterly covenants to be applied from June 2022 onwards will be:
interest cover > 4.0x; adjusted leverage <2.5x and adjusted
deferred consideration leverage < 3.5x. There will be no minimum
lending covenant.
Statement of financial position and net assets
A summary of the Group's balance sheet as at 31 December 2021
and 31 December 2020 is set out below:
31 December 31 December
2021 2020
-------------------------------- ------------ ------------
GBP'000 GBP'000
-------------------------------- ------------ ------------
Goodwill and intangible assets 32,700 34,698
Right of use asset 4,542 6,237
Other non-current assets 3,055 3,387
Net working capital 4,126 8,504
Other current liabilities (764) (1,953)
Lease liability (6,390) (8,158)
Other non-current liabilities (1,576) (1,503)
Digital Decisions post-date (7,922) -
remuneration
Deferred consideration - (1,957)
Net debt (4,767) (8,509)
-------------------------------- ------------ ------------
Net assets 23,004 30,746
-------------------------------- ------------ ------------
Trade receivables fell by GBP1.2 million to GBP14.4 million
although debtor days increased to 61 days from 58 days as at 31
December 2020, largely due to high levels of invoicing in Q4
2021.
Net assets as at 31 December 2021 decreased by GBP7.7 million to
GBP23.0 million (2020: GBP30.7 million) reflecting the statutory
loss which arose largely due to the accrual made for the Digital
Decisions post-date remuneration.
Corporate Development Activities
There were no corporate development activities during the
year.
Events after the reporting period
On 29 January 2022, the Company agreed to acquire Forde and
Semple Media Works, the leading media performance consultancy in
Canada, for a total consideration of CAD$1.3 million (GBP0.8
million), of which CAD$1.2 million (GBP0.7 million) was paid on
completion and CAD$0.1 million (GBP0.06 million) was deferred for
one year. Forde and Semple had revenues of CAD$1.1m in the
financial year ended 31 January 2021 and net assets of CAD$0.4
million (GBP0.2 million) on completion.
On 29 March 2022, the Group entered into an agreement to acquire
Media Management, LLC ("MML"), a US-based media audit specialist,
for an initial consideration of US $8.0 million (GBP6.1 million)
with a deferred consideration element payable in 2025. 84% of the
initial consideration (US$6.7 million/GBP5.1 million) will be
payable in cash on completion and 16% (US$1.3 million /GBP1.0
million), will be payable in cash and applied by the vendors to
subscribe for Ebiquity ordinary shares and calculated by reference
to the middle market quotations (rounded down to the nearest whole
number) for the Ordinary Shares as shown by the AIM Appendix of the
Daily Official List of the London Stock Exchange for the five
Business Days prior to the date of this Announcement (the "MML
Shares"). The deferred consideration will be based on 1.0 times
adjusted earnings before interest and tax of the combined Ebiquity
US and MML businesses reported for 2024, which is expected to be at
least GBP3.0 million. 80% of this will be payable directly in cash
to the vendors and 20% will be applied by the vendors to subscribe
for Ebiquity ordinary shares (the "Earn-Out Shares", and together
with the MML Shares, the "New Shares"). The New Shares will be
subject to an 18-month lock-in and ongoing orderly market
restrictions pursuant to which they may not, save in limited
circumstances, deal or otherwise dispose of any such interests in
the New Shares other than through Panmure Gordon (or such other
broker appointed by the Company from time to time). Completion is
conditional upon the admission of the MML Shares to trading on
AIM.
Auditors
An audit tender was conducted during the year by the Audit and
Risk Committee. This resulted in the selection of Deloitte LLP to
become the group's auditors for the year ending 31 December 2022
onwards. Following ten years in the role, PricewaterhouseCoopers
LLP will retire at the conclusion of the forthcoming Annual General
Meeting. A resolution will be proposed at that meeting to appoint
Deloitte LLP in their place.
Alan Newman
Chief Financial and Operating Officer
Alternative Performance Measures
In these results we refer to 'underlying' and 'statutory'
results, as well as other non-GAAP Alternative Performance
Measures.
Alternative Performance Measures ('APMs') used by the Group as
defined in the Annual Report are:-
-- Net revenue
-- Like-for-like revenue growth
-- Underlying operating profit;
-- Underlying operating margin;
-- Underlying profit before tax;
-- Underlying effective rate of tax;
-- Underlying earnings per share;
-- Underlying cash from operations; and
-- Underlying operating cash flow conversion.
Net revenue is the result when project-related costs, comprising
external production costs, are deducted from revenue.
Underlying results are not intended to replace statutory results
but remove the impact of highlighted items in order to provide a
better understanding of the underlying performance of the business.
The above APMs are consistent with how business performance is
measured internally by the Group.
Underlying profit is not recognised under IFRS and may not be
comparable with underlying profit measures used by other
companies.
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 underlying performance of the
business. The non-cash charges include share option charges and
amortisation of purchased intangibles.
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,
asset impairment charges, management restructuring and other
significant one-off items. Costs associated with acquisition
identification and early stage discussions with acquisition targets
are reported in underlying administrative expenses.
Further detail of highlighted items are set out within the
financial statements and the notes to the financial statements.
Consolidated income statement
for the year ended 31 December 2021
Year ended 31 December Year ended 31 December
2021 2020
-----------------------------------
Before Highlighted Before Highlighted
highlighted items highlighted items
items (note 3) Total items (note 3) Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- ---- ------------ ----------- -------- ------------ ----------- --------
Revenue 2 63,091 - 63,091 55,907 - 55,907
Project-related costs (7,525) - (7,525) (6,436) - (6,436)
-------------------------------------- ---- ------------ ----------- -------- ------------ ----------- --------
Net revenue 55,566 - 55,566 49,471 - 49,471
Cost of sales (25,127) - (25,127) (24,784) - (24,784)
-------------------------------------- ---- ------------ ----------- -------- ------------ ----------- --------
Gross profit 30,439 - 30,439 24,687 - 24,687
Administrative expenses (25,855) (9,815) (35,670) (25,172) (2,541) (27,713)
Other operating income 153 - 153 151 - 151
-------------------------------------- ---- ------------ ----------- -------- ------------ ----------- --------
Operating (loss)/profit 4,737 (9,815) (5,078) (334) (2,541) (2,875)
Finance income 20 - 20 39 - 39
Finance expenses (882) - (882) (914) - (914)
Foreign exchange 229 - 229 (137) - (137)
-------------------------------------- ---- ------------ ----------- -------- ------------ ----------- --------
Net finance costs (633) - (633) (1,012) - (1,012)
-------------------------------------- ---- ------------ ----------- -------- ------------ ----------- --------
Profit/(loss) before taxation from
continuing operations 4,104 (9,815) (5,711) (1,346) (2,541) (3,887)
Taxation (charge)/credit - continuing
operations 4 (1,737) 531 (1,206) (26) 176 150
-------------------------------------- ---- ------------ ----------- -------- ------------ ----------- --------
Profit/(loss) for the year -
continuing operations 2,367 (9,284) (6,917) (1,372) (2,365) (3,737)
-------------------------------------- ---- ------------ ----------- -------- ------------ ----------- --------
Net profit/(loss) from discontinued
operations 5 - - - - 220 220
-------------------------------------- ---- ------------ ----------- -------- ------------ ----------- --------
Profit/(loss) for the year 2,367 (9,284) (6,917) (1,372) (2,145) (3,517)
-------------------------------------- ---- ------------ ----------- -------- ------------ ----------- --------
Attributable to:
Equity holders of the parent 2,250 (9,282) (7,032) (1,569) (2,134) (3,703)
Non -- controlling interests 117 (2) 115 197 (11) 186
-------------------------------------- ---- ------------ ----------- -------- ------------ ----------- --------
2,367 (9,284) (6,917) (1,372) (2,145) (3,517)
-------------------------------------- ---- ------------ ----------- -------- ------------ ----------- --------
Earnings per share - continuing
operations
Basic 6 (8.51)p (4.81)p
Diluted 6 (8.51)p (4.81)p
-------------------------------------- ---- ------------ ----------- -------- ------------ ----------- --------
Earnings per share - discontinued
operations
Basic 6 - 0.27p
Diluted 6 - 0.27p
-------------------------------------- ---- ------------ ----------- -------- ------------ ----------- --------
Consolidated statement of comprehensive income
for the year ended 31 December 2021
Year ended Year ended
31 December 31 December
2021 2020
GBP'000 GBP'000
------------------------------------------------------------------- ------------ ------------
Loss for the year (6,917) (3,517)
Other comprehensive income/(expense):
Items that will not be reclassified subsequently to profit or loss
Exchange differences on translation of overseas subsidiaries (889) 1,033
------------------------------------------------------------------- ------------ ------------
Total other comprehensive income/(expense) for the year (889) 1,033
------------------------------------------------------------------- ------------ ------------
Total comprehensive expense for the year (7,806) (2,484)
------------------------------------------------------------------- ------------ ------------
Attributable to:
Equity holders of the parent (7,921) (2,670)
Non -- controlling interests 115 186
------------------------------------------------------------------- ------------ ------------
(7,806) (2,484)
------------------------------------------------------------------- ------------ ------------
Consolidated statement of financial position
as at 31 December 2021
31 December 31 December
2021 2020
Note GBP'000 GBP'000
---------------------------------- ---- ----------- -----------
Non -- current assets
Goodwill 7 28,172 28,563
Other intangible assets 8 4,528 6,135
Property, plant and equipment 1,512 1,962
Right-of-use assets 9 4,542 6,237
Lease receivables 9 155 280
Deferred tax asset 1,388 1,145
---------------------------------- ---- ----------- -----------
Total non -- current assets 40,297 44,322
---------------------------------- ---- ----------- -----------
Current assets
Trade and other receivables 21,934 24,318
Lease receivables 9 146 171
Cash and cash equivalents 13,134 11,121
---------------------------------- ---- ----------- -----------
Total current assets 35,214 35,610
---------------------------------- ---- ----------- -----------
Total assets 75,511 79,932
---------------------------------- ---- ----------- -----------
Current liabilities
Trade and other payables (6,525) (6,096)
Accruals and contract liabilities (19,350) (9,890)
Financial liabilities 10 59 (1,912)
Current tax liabilities 4 (374) (1,703)
Provisions - -
Lease liabilities 9 (2,566) (2,338)
Deferred tax liability (390) (250)
---------------------------------- ---- ----------- -----------
Total current liabilities (29,146) (22,189)
-----------
Non -- current liabilities
Financial liabilities (17,960) (19,675)
Provisions (493) (412)
Lease liabilities 9 (3,825) (5,820)
Deferred tax liability (1,083) (1,090)
---------------------------------- ---- ----------- -----------
Total non -- current liabilities (23,361) (26,997)
---------------------------------- ---- ----------- -----------
Total liabilities (52,507) (49,186)
---------------------------------- ---- ----------- -----------
Total net assets 23,004 30,746
---------------------------------- ---- ----------- -----------
Equity
Ordinary shares 20,682 20,646
Share premium 255 255
Other reserves 4,572 5,461
Retained earnings (2,774) 3,942
---------------------------------- ---- ----------- -----------
Equity attributable to the owners
of the parent 22,735 30,304
Non -- controlling interests 269 442
---------------------------------- ---- ----------- -----------
Total equity 23,004 30,746
---------------------------------- ---- ----------- -----------
Consolidated statement of changes in equity
for the year ended 31 December 2021
Equity
attributable
to owners Non --
Ordinary Share Other Retained of controlling Total
shares premium reserves(2) earnings the parent interests Equity
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ---- -------- -------- ------------ --------- ------------- ------------ --------
31 December 2019
(as restated) 20,029 46 4,428 12,210 36,713 1,179 37,892
(Loss)/profit for
the year 2020 (as
reported) - - - (3,703) (3,703) 186 (3,517)
Other comprehensive
expense - - 1,033 - 1,033 - 1,033
---------------------------- ---- -------- -------- ------------ --------- ------------- ------------ --------
Total comprehensive
(expense)/income
for the year - - 1,033 (3,703) (2,670) 186 (2,484)
---------------------------- ---- -------- -------- ------------ --------- ------------- ------------ --------
Shares issued for
cash 8 - - (8) - - -
Share options credit 3 - - - (1,845) (1,845) - (1,845)
Acquisition of
non-controlling
interest 609 209 - (2,712) (1,894) (779) (2,673)
Dividends paid to
non-controlling
interests 11 - - - - - (144) (144)
---------------------------- ---- -------- -------- ------------ --------- ------------- ------------ --------
31 December 2020 20,646 255 5,461 3,942 30,304 442 30,746
---------------------------- ---- -------- -------- ------------ --------- ------------- ------------ --------
(Loss)/profit for the year
2021 - - - (7,032) (7,032) 115 (6,917)
Other comprehensive
income - - (889) - (889) - (889)
---------------------------- ---- -------- -------- ------------ --------- ------------- ------------ --------
Total comprehensive
income/(expense) for the
year - - (889) (7,032) (7,921) 115 (7,806)
---------------------------- ---- -------- -------- ------------ --------- ------------- ------------ --------
Shares issued for
cash 36 - - (3) 33 - 33
Share options charge 3 - - - 319 319 - 319
Dividends paid to
non-controlling interests - - - - - (288) (288)
---------------------------- ---- -------- -------- ------------ --------- ------------- ------------
31 December 2021 20,682 255 4,572 (2,774) 22,735 269 23,004
---------------------------- ---- -------- -------- ------------ --------- ------------- ------------ --------
(2) Includes a credit of GBP3,667,000 (31 December 2020:
GBP3,667,000) in the merger reserve, a gain of GBP2,395,000 (31
December 2020: 3,272,000) recognised in the translation reserve and
is partially offset by a debit balance of GBP1,478,000 (31 December
2020: GBP1,478,000) in the ESOP reserve..
Consolidated statement of cash flows
for the year ended 31 December 2021
Year ended Year ended
31 December 31 December
2021 2020
Note GBP'000 GBP'000
--------------------------------------------------------------- ---- ------------ ------------
Cash flows from operating activities
Cash generated from operations 12 11,800 5,827
Finance expenses paid (626) (563)
Finance income received 7 13
Income taxes paid (2,492) (2,285)
--------------------------------------------------------------- ---- ------------ ------------
Net cash generated by operating activities 8,689 2,992
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired - (597)
Disposal of subsidiaries - 18
Payments to acquire
non-controlling interest 10 (1,291) (1,539)
Payments in respect of
contingent consideration 10 (680) -
Purchase of property, plant and equipment (217) (87)
Purchase of intangible assets 8 (1,230)
--------------------------------------------------------------- ---- ------------ ------------
Net cash (used in)/generated by investing activities (3,037) (3,435)
--------------------------------------------------------------- ---- ------------ ------------
Cash flows from financing activities
Proceeds from issue of share capital (net of issue costs) 34 -
Proceeds from bank borrowings 10 - 5,000
Repayment of bank borrowings 10 (1,000) -
Proceeds from government borrowings 10 - 806
Bank loan fees paid (36) (21)
Repayment of lease liabilities 9 (2,108) (2,130)
Dilapidations payments - (300)
Dividends paid to shareholders 11 - -
Dividends paid to non -- controlling interests (157) (144)
Net cash flow generated by/(used in) financing activities (3,267) 3,211
--------------------------------------------------------------- ---- ------------ ------------
Net increase in cash, cash equivalents and bank overdrafts 2,385 2,768
Cash, cash equivalents and bank overdraft at beginning of year 11,121 8,236
Effects of exchange rate changes on cash and cash equivalents (372) 117
--------------------------------------------------------------- ---- ------------ ------------
Group cash and cash equivalents at the end of the year 13,134 11,121
--------------------------------------------------------------- ---- ------------ ------------
Notes to the consolidated financial statements
for the year ended 31 December 2021
1. Accounting policies
General information
Ebiquity plc (the 'Company') and its subsidiaries (together, the
'Group') exists to help brands optimise return on investment from
their marketing spend, working with many of the world's leading
advertisers to improve marketing outcomes and enhance business
performance. The Group has 19 offices.
The Company is a public limited company, which is listed on the
London Stock Exchange's Alternative Investment Market and is
limited by shares. The Company is incorporated and domiciled in the
UK. The address of its registered office is Chapter House, 16
Brunswick Place, London N1 6DZ.
Basis of preparation
The consolidated financial statements have been prepared in
accordance with UK-adopted international accounting standards
('IFRS') and the applicable legal requirements of the Companies Act
2006.
Going concern
The 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 note 19 to
the financial statements. As at 31 December 2021, the Group had
cash balances of GBP13,134,000 and undrawn bank facilities
available of GBP5,000,000 and was cash generative and within its
banking covenants.
The lenders, Barclays and NatWest Bank, have agreed to covenant
waivers and modifications where required in order to negate the
risk of any future covenant breaches.
During the year, the Group continued to trade within the limits
of its banking facilities and associated covenants. Modified
covenants were agreed with the lenders with effect from July 2020.
These require the Group to maintain minimum liquidity of at least
GBP5 million, increasing to GBP7 million from September 2021, at
the end of every month during that period. From September 2021, an
interest cover covenant was re-introduced at > 4.0 and an
adjusted leverage covenant also re-introduced, initially at <
4.0, increasing to < 4.25 in December 2021 and again to < 4.5
in March 2022, then reducing to < 3.5 in June 2022.
Since the year-end, this facility has been increased and
extended under an agreement dated 24 March 2022. This facility will
provide a total available of GBP30 million, initially for a period
of 3 years to March 2025 and extendable for up to a further two
years. Under this agreement, annual reductions of GBP1.25 million
will apply from June 2023. The quarterly covenants to be applied
from June 2022 onwards will be: interest cover > 4.0x; adjusted
leverage <2.5x and adjusted deferred consideration leverage <
3.5x. There will be no minimum liquidity covenant from June
2022.
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 2023 that includes
a base case and scenarios to form a severe but plausible downside
case.
For the purposes of this model, the terms of the new facility
including its covenant tests have been applied with effect from the
quarter ending 30 June 2022.
The base case projection and the sensitivity analysis shows that
the Group will remain within its covenants and that there is
adequate headroom against each covenant.
The base case assumes growth in revenue and EBITDA based on the
Group's budget for the year ending 31 December 2022 and management
projections for the year ending 31 December 2023. The severe but
plausible case assumes a downside adjustment to revenue of 6.5%
with no reductions in operating costs. Under both of these cases,
there is headroom on covenant compliance throughout the going
concern period.
The effect of the proposed acquisition of Media Management Inc,
conditionally agreed on 29 March 2022, has also been considered in
the model, based on management projections for the 18 months ending
31 December 2023 and on a severe but plausible case which assumes a
downside revenue adjustment of 5% with only a 1% reduction in
operating costs. Under both of these cases, there is headroom on
covenant compliance throughout the going concern period.
The Directors consider that the Group and Company will have
sufficient liquidity within existing bank facilities, totalling
GBP30 million, to meet its obligations during the next 12 months
and hence consider it appropriate to prepare the financial
statements on a going concern basis.
The financial statements have been prepared under the historical
cost convention, as modified by the revaluation of financial assets
and financial liabilities at fair value through profit or loss.
The consolidated financial statements are presented in pounds
sterling and rounded to the nearest thousand.
The principal accounting policies adopted in these consolidated
financial statements are set out below. These policies have been
consistently applied to all periods presented, unless otherwise
stated.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries). Control is achieved where the Company has the
power to govern the financial and operating policies of an investee
entity so as to obtain benefits from its activities. The results of
each subsidiary are included from the date that control is
transferred to the Group until the date that control ceases.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used in
line with those used by the Group. All intra--group transactions,
balances, income and expenses are eliminated on consolidation.
Non--controlling interests represent the portion of the results
and net assets in subsidiaries that is not held by the Group.
Revenue recognition
Revenue is recognised in accordance with IFRS 15 'Revenue from
Contracts with Customers'.
The revenue and profits recognised in any period are based on
the delivery of performance obligations and an assessment of when
control is transferred to the customer. Revenue is recognised
either when the performance obligation in the contract has been
performed (so 'point-in-time' recognition) or 'overtime' as control
of the performance obligation is transferred to the customer.
IFRS 15 provides a single, principles based five-step model to
be applied to all sales contracts as outlined below:
-- identify the contract(s) with a customer;
-- identify the performance obligation(s) in the contract;
-- determine the transaction price;
-- allocate the transaction price to the performance obligations in the contract; and
-- recognise revenue when (or as) the entity satisfies a performance obligation.
Revenue from providing services is recognised in the accounting
period in which the services are rendered. For fixed-price
contracts, revenue is recognised based on the actual service
provided to the end of the reporting period as a proportion of the
total services to be provided because the customer receives and
uses the benefits simultaneously. This is determined based on the
actual labour hours spent relative to the total expected labour
hours.
Estimates of revenues, costs or extent of progress toward
completion are revised if circumstances change. Any resulting
increases or decreases in estimated revenues or costs are reflected
in profit or loss in the period in which the circumstances that
give rise to the revision become known by management.
In the case of fixed-price contracts, the customer pays the
fixed amount based on a payment schedule.
Deferred and accrued income
The Group's customer contracts include a diverse range of
payment schedules which are often agreed at the inception of the
contracts
under which it receives payments throughout the term of the
arrangement. Payments for goods and services transferred at a point
in time may be at the delivery date, in arrears or part payment in
advance.
Where payments made to date are greater than the revenue
recognised up to the reporting date, the Group recognises a
deferred income "contract liability" for this difference. Where
payments made are less than the revenue recognised up to the
reporting date, the Group recognises an accrued income "contract
asset" for this difference.
Finance income and expenses
Finance income and expense represents interest receivable and
payable. Finance income and expense is recognised on an accruals
basis, based on the interest rate applicable to each bank or loan
account.
Foreign currencies
For the purposes of the consolidated financial statements, the
results and financial position of each Group company are expressed
in pounds sterling, which is the functional currency of the
Company, and the presentation currency for the consolidated
financial statements.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
functional currency (foreign currencies) are recorded at the rates
of exchange prevailing on the dates of transactions. At each
year-end date, monetary assets and liabilities that are denominated
in foreign currencies are retranslated at the rates prevailing on
the year--end date.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's foreign operations are
translated at exchange rates prevailing on the year--end date.
Income and expense items are translated at the average exchange
rate for the period, which approximates to the rate applicable at
the dates of the transactions.
The exchange differences arising from the retranslation of the
year--end amounts of foreign subsidiaries and the difference on
translation of the results of those subsidiaries into the
presentational currency of the Group are recognised in the
translation reserve. All other exchange differences are dealt with
through the consolidated income statement.
Highlighted items
Highlighted items comprise non--cash charges and non--recurring
items which are highlighted in the consolidated income statement as
separate disclosure is considered by the Directors to be relevant
in understanding the underlying performance of the business. The
non--cash charges include share option charges and amortisation of
purchased intangibles.
The non--recurring items include the costs associated with
potential acquisitions (where formal discussion is undertaken),
completed acquisitions and disposals, and their subsequent
integration into/separation from the Group, adjustments to the
estimates of contingent consideration on acquired entities, asset
impairment charges, management restructuring and other significant
one--off items. Costs associated with ongoing market landscaping,
acquisition identification and early-stage discussions with
acquisition targets are reported in underlying administrative
expenses.
Critical accounting estimates and judgements
In preparing the consolidated financial statements, the
Directors have made certain estimates and judgements relating to
the reporting of results of operations and the financial position
of the Group. Actual results may significantly differ from those
estimates, often as a result of the need to make assumptions about
matters which are uncertain. The estimates and judgements discussed
below are considered by the Directors to be those that have a
critical accounting impact to the Group's financial statements.
Critical accounting estimates include the terminal growth rate
used in impairment assessments, inputs to share option accounting
fair value models and amounts to capitalise as intangible assets.
These estimates are reached with reference to historical
experience, supporting detailed analysis and, in the case of
impairment assessments and share option accounting, external
economic factors.
Critical accounting judgements include the treatment of events
after the reporting period as adjusting or non--adjusting and the
determination of segments for segmental reporting, based on the
reports reviewed by the Executive Directors that are used to make
strategic decisions. These judgements are determined at a Board
level based on the status of strategic initiatives of the
Group.
Carrying value of goodwill and other intangible assets
Impairment testing requires management to estimate the
value--in--use of the cash--generating units to which goodwill and
other intangible assets have been allocated. The value--in-use
calculation requires estimation of future cash flows expected to
arise from the cash--generating unit and the application of a
suitable discount rate in order to calculate present value. The
sensitivity around the selection of particular assumptions
including growth forecasts and the pre--tax discount rate used in
management's cash flow projections could significantly affect the
Group's impairment evaluation and therefore the Group's reported
assets and results.
Further details, including a sensitivity analysis, are included
in notes 7 and 8 to the financial statements.
Contingent consideration
The Group has recorded liabilities for contingent consideration
on acquisitions made in the current and prior periods. The
calculation of the contingent consideration liability requires
judgements to be made regarding the forecast future performance of
these businesses for the earn--out period. Any changes to the fair
value of the contingent consideration after the measurement period
are recognised in the income statement within administrative
expenses as a highlighted item.
Taxation
The tax expense included in the consolidated income statement
comprises current and deferred tax. Current tax is the expected tax
payable on the taxable income for the period, using tax rates
enacted or substantively enacted by the year-end date.
The Group is subject to corporate taxes in a number of different
jurisdictions and judgement is required in determining the
appropriate provision for transactions where the ultimate tax
determination is uncertain. In such circumstances, the Group
recognises liabilities for anticipated taxes based on the best
information available and where the anticipated liability is both
probable and estimable. Where the final outcome of such matters
differs from the amount recorded, any differences may impact the
income tax and deferred tax provisions in the period in which the
final determination is made.
Tax is recognised in the consolidated income statement except to
the extent that it relates to items recognised directly in equity
or other comprehensive income, in which case it is recognised in
equity.
Using the liability method, deferred tax is provided on all
temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and their tax bases,
except for differences arising on:
-- the initial recognition of goodwill;
-- the initial recognition of an asset or liability in a
transaction which is not a business combination and at the time of
the transaction affects neither accounting nor taxable profit;
and
-- investments in subsidiaries and jointly controlled entities
where the Group is able to control the timing of the reversal of
the difference and it is probable that the difference will not
reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those
instances where it is probable that taxable profit will be
available against which the difference can be utilised. The
recognition of deferred tax assets is reviewed at each year--end
date.
The amount of the asset or liability is determined using tax
rates that have been enacted or substantively enacted by the
year--end date and are expected to apply when the deferred tax
liabilities/assets are settled/recovered.
Deferred tax assets and liabilities are offset when the Group
has a legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to
taxes levied by the same tax authority on either:
-- the same taxable Group company; or
-- different Group entities which intend either to settle
current tax assets and liabilities on a net basis, or to realise
the assets and settle the liabilities simultaneously, in each
future period in which significant amounts of deferred tax assets
or liabilities are expected to be settled or recovered.
Taxation has been allocated to the discontinued operation by
taking each element in turn and attributing the appropriate portion
accordingly. This includes the allocation of adjustments to profit
before tax to determine the profits chargeable to corporation tax
and then applying the taxation charge from each jurisdiction
respectively. For deferred taxation, each asset and liability was
reviewed and the AdIntel related items were carved out from the
Group items.
Provisions
The Group provides for certain costs of reorganisation that has
occurred due to the Group's acquisition and disposal activity. When
the final amount payable is uncertain, these are classified as
provisions. These provisions are based on the best estimates of
management.
Adoption of new standards and interpretations
The Group has applied the following standards and amendments for
the first time for the annual reporting period commencing 1 January
2021:
-- Interest Rate Benchmark Reform - amendments to IFRS 9, IAS 9
and IFRS 7 and IFRS as issued in August 2020. In accordance with
the transition provisions, the amendments have been adopted
retrospectively to hedging relationships and financial
instruments.
-- Covid-19-related Rent Concessions - amendments to IFRS 16
The amendments listed above did not have any impact on the
amounts recognised in prior periods and are not expected to
significantly affect the current or future periods.
For financial instruments measured using amortised cost
measurement (that is, financial instruments classified as amortised
cost and debt financial assets classified as FVOCI), changes to the
basis for determining the contractual cash flows required by
interest rate benchmark reform are reflected by adjusting their
effective interest rate. No immediate gain or loss is recognised. A
similar practical expedient exists for lease liabilities.
The amendments have no material impact on the Group's financial
instruments. Comparative amounts have not been restated, and there
was no impact on the current period opening reserves amounts on
adoption.
The following new standard has been published that is mandatory
to the Group's future accounting periods but has not been adopted
early in these financial statements:
-- Property, Plant and Equipment: Proceeds before intended use - amendments to IAS 16
-- Onerous Contracts Cost of Fulfilling a Contract - amendments to IAS 37
-- Annual Improvements to IFRS Standards 2018-2020 Cycle effective on or after 1 January 2022.
-- Classification of Liabilities as Current or Non-current
-Amendments to IAS 1 1 January 2023 (deferred from 1 January
2022)
-- Disclosure of Accounting Policies - Amendments to IAS 1 and
IFRS Practice Statement 2 effective on or after 1 January 2023
-- Definition of Accounting Estimates- Amendments to IAS 8 effective on or after 1 January 2023
-- Deferred Tax related to Assets and Liabilities arising from a
Single Transaction - Amendments to IAS 12 effective on or after 1
January 2023
-- Sale or contribution of assets between an investor and its
associate or joint venture -Amendments to IFRS 10 and IAS 28
effective on or after 1 January 2023
The adoption of the standard listing above is not expected to
significantly affect future periods.
2. Segmental Reporting
In accordance with IFRS 8, the Group's operating segments are
based on the reports reviewed by the Executive Directors that are
used to make strategic decisions.
Certain operating segments have been aggregated to form two
reportable segments: Media and Analytics & Tech:
-- Media includes our Media Performance, Media Management and Contract Compliance services; and
-- Analytics & Tech consists of our Advanced Analytics, MarTech and AdTech services.
The Executive Directors are the Group's chief operating
decision--maker. They assess the performance of the operating
segments based on operating profit before highlighted items. This
measurement basis excludes the effects of non--recurring
expenditure from the operating segments such as restructuring costs
and purchased intangible amortisation. The measure also excludes
the effects of equity--settled share--based payments. 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 year ended 31 December 2020 is as
follows:
Year ended/As at 31 December 2021
Analytics Reportable
Media &Tech segments Unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------- -------- --------- ---------- ----------- --------
Revenue 52,841 10,250 63,091 - 63,091
Operating profit/(loss) before highlighted items 10,083 1,391 11,474 (6,737) 4,737
Total assets 62,829 9,799 72,628 2,883 75,511
------------------------------------------------- -------- --------- ---------- ----------- --------
Unsatisfied long-term contracts
The following table shows unsatisfied performance obligations
results from long-term contracts:
Year ended Year ended
31 December 31 December
2021 2020
GBP'000 GBP'000
------------------------------------------------------------------------------------------ ------------ ------------
Aggregate amount of the transaction price allocated to long-term contracts that are
partially
or fully unsatisfied as at 31 December 2021 1,070 866
------------------------------------------------------------------------------------------ ------------ ------------
It is expected that 95% of the transaction price allocated to
the unsatisfied contracts as of 31 December 2021 will be recognised
during the next reporting period (31 December 2020: 94%); the
remaining 5% will be recognised in the 2022 financial year (31
December 2020: 6% to be recognised in 2021).
Significant changes in contract assets and liabilities
Contract assets have decreased from GBP6,563,000 to GBP5,172,000
and contract liabilities have increased from GBP4,498,000 to
GBP5,307,000 from 31 December 2020 to 31 December 2021. The reduced
contract assets is a result of clients paying more in advance, this
is reflected in increase in contract liabilities
Year ended/As at 31 December 2020
Analytics Reportable
Media & Tech segments Unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------- -------- --------- ---------- ----------- --------
Revenue 46,042 9,865 55,907 - 55,907
Operating profit/(loss) before highlighted items 6,770 (692) 6,078 (6,412) (334)
Total assets 67,659 9,838 77,497 2,435 79,932
------------------------------------------------- -------- --------- ---------- ----------- --------
A reconciliation of segment operating profit before highlighted
items to total profit before tax is provided below:
Year ended Year ended
31 December 31 December
2021 2020
GBP'000 GBP'000
------------------------------------------------------------- ------------ ------------
Reportable segment operating profit before highlighted items 11,474 6,078
Unallocated (costs)/income(1) :
Staff costs (3,805) (3,480)
Property costs (1,457) (1,595)
Exchange rate movements (22) 181
Other administrative expenses (1,453) (1,518)
------------------------------------------------------------- ------------ ------------
Operating (loss)/profit before highlighted items 4,737 (334)
Highlighted items (note 3) (9,815) (2,541)
------------------------------------------------------------- ------------ ------------
Operating loss (5,078) (2,875)
Net finance costs (633) (1,012)
------------------------------------------------------------- ------------ ------------
Loss before tax (5,711) (3,887)
------------------------------------------------------------- ------------ ------------
(1) Unallocated (costs)/income comprise central costs that are
not considered attributable to the segments.
A reconciliation of segment total assets to total consolidated
assets is provided below:
31 December 31 December
2021 2020
GBP'000 GBP'000
------------------------------------- ----------- -----------
Total assets for reportable segments 72,628 77,497
Unallocated amounts:
Other intangible assets 187 388
Other receivables 964 1,291
Cash and cash equivalents 1,147 420
Deferred tax asset 585 336
------------------------------------- ----------- -----------
Total assets 75,511 79,932
------------------------------------- ----------- -----------
The table below presents revenue and non--current assets by
geographical location:
No single customer (or group of related customers) contributes
10% or more of revenue.
Year ended/As at Year ended/As at
31 December 2021 31 December 2020
----------------------- -----------------------
Revenue Non -- Revenue Non --
by location current by location current
of customers assets of customers assets
GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ------------- -------- ------------- --------
United Kingdom 31,532 19,922 29,083 21,684
Rest of Europe 18,102 10,797 15,999 12,424
North America 5,565 2,342 4,671 2,721
Rest of world 7,892 5,848 6,154 6,348
-------------------- ------------- -------- ------------- --------
63,091 38,909 55,907 43,177
Deferred tax assets - 1,188 - 1,145
-------------------- ------------- -------- ------------- --------
Total 63,091 40,297 55,907 44,322
-------------------- ------------- -------- ------------- --------
3. Highlighted items
Highlighted items comprise items which are highlighted in the
income statement because separate disclosure is considered relevant
in understanding the underlying performance of the business.
Year ended 31 December Year ended 31 December
2021 2020
Cash Non -- Total Cash Non -- Total
GBP'000 cash GBP'000 GBP'000 GBP'000 cash GBP'000
GBP'000
----------------------------------------------------- -------- ------------- -------- -------- -------- --------
Administrative expenses
Share option charge/(credit) 140 319 459 (61) (1,845) (1,906)
Amortisation of purchased intangibles - 1,065 1,065 - 1,122 1,122
Impairment of goodwill - 0 - - 817 817
Severance and reorganisation costs 87 0 87 1,194 315 1,509
Acquisition, integration and strategic/(income) 308 7,896 8204 809 190 999
----------------------------------------------------- -------- ------------- -------- -------- -------- --------
Total highlighted items before tax 535 9,280 9,815 1,942 599 2,541
Taxation (credit)/charge (64) (467) (531) (289) 113 (176)
----------------------------------------------------- -------- ------------- -------- -------- -------- --------
Total highlighted items after tax - continuing
operations 471 8,813 9,284 1,653 712 2,365
----------------------------------------------------- -------- ------------- -------- -------- -------- --------
Highlighted items - discontinued operations - - - (220) - (220)
----------------------------------------------------- -------- ------------- -------- -------- -------- --------
Total highlighted items 471 8,813 9,284 1,433 712 2,145
----------------------------------------------------- -------- ------------- -------- -------- -------- --------
Share option charges include the non-cash IFRS 2 charge of
GBP319,000 (31 December 2020: credit of GBP1,845,000) along with
the cash element in relation to the exercising of share options, a
charge of GBP140,000 (31 December 2020: credit of GBP61,000). The
IFRS 2 credit arose in the prior period predominantly due to the
lapse of 4,200,000 options awarded under the Executive Incentive
Plan in 2010 as the current share price was below the exercise
price.
Amortisation of purchased intangibles relates to acquisitions
made in the current financial year of GBPnil and to acquisitions
made in prior years of GBP1,065,000 (31 December 2020: GBPnil in
the current financial year and GBP1,122,000 in prior years).
Separate disclosure is considered relevant because amortisation of
purchased intangibles has no correlation to underlying
profitability of the Group.
Impairment of goodwill and intangibles of GBPnil (31 December
2020: GBP817,000) has been recognised in the year. The impairment
in the prior year is in relation to the impairment of goodwill in
Digital Balance Australia Pty Limited. The impairment was
determined by the excess of the carrying value of goodwill and
purchased intangibles over and above the calculated
value-in-use.
Total severance and reorganisation costs of GBP87,000 (31
December 2020: GBP1,509,000) were recognised during the year,
relating to severances in the UK as part of management restructure.
Separate disclosure is considered relevant as these charges are
non-recurring and not reflective of the underlying operating costs
of the business.
Total acquisition, integration and strategic costs of
GBP8,204,000 (31 December 2020: GBP999,000) were recognised during
the year. These predominantly relate to an accrual for post-date
remuneration of GBP7,922,000 (31 December 2020: GBPnil) payable in
2023, relating to the acquisition of Digital Decisions B.V. in
2020. Costs of GBP112,000 (31 December 2020: GBP56,000) were also
recognised in relation to acquisitions. A GBP110,000 severance cost
was incurred relating to the previous directors of Ebiquity Italy
Media Advisor S.r.l.
A further GBP44,000 (31 December 2020: GBP80,000) was incurred
in relation to financing restructuring. In addition, GBP15,000 (31
December 2020: GBP791,000) was incurred relating to the upward
revision of the amounts payable on prior year acquisitions and
adjustment to the fair value of contingent consideration to the
latest prevailing exchange rates.
In the prior year, costs of GBP72,000 were recognised in
relation to the Chicago sublease arrangement. Separate disclosure
is considered relevant as these charges are non-recurring and not
reflective of the underlying operating costs of the business.
Current tax arising on the highlighted items is included as a
cash item, while deferred tax on highlighted items is included as a
non--cash item.
As at 31 December 2021, GBP397,000 of the GBP535,000 cash
highlighted items had been settled (31 December 2020: GBP1,314,000
of the GBP1,942,000 cash highlighted items had been settled).
4. Taxation charge/(credit)
Year ended 31 December Year ended 31 December
2021 2020
----------------------------------- -----------------------------------
Before Before
highlighted Highlighted highlighted Highlighted
items items Total items items Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------------- ------------ ----------- -------- ------------ ----------- --------
UK tax
Current year (30) (42) (72) (20) (82) (102)
Adjustment in respect of prior years 52 - 52 (309) - (309)
-------------------------------------------- ------------ ----------- -------- ------------ ----------- --------
22 (42) (20) (329) (82) (411)
Foreign tax
Current year 1,363 (22) 1,341 686 (207) 479
Adjustment in respect
of prior years (9) - (9) (77) - (78)
-------------------------------------------- ------------ ----------- -------- ------------ ----------- --------
1,354 (23) 1,332 609 (207) 401
-------------------------------------------- ------------ ----------- -------- ------------ ----------- --------
Total current tax 1,376 (64) 1,312 280 (289) (10)
-------------------------------------------- ------------ ----------- -------- ------------ ----------- --------
Deferred tax
Origination and reversal of temporary
differences 376 (467) (91) (186) 113 (73)
Adjustment in respect of prior years (15) - (15) (68) - (67)
-------------------------------------------- ------------ ----------- -------- ------------ ----------- --------
Total tax charge/(credit) 1,737 (531) 1,206 26 (176) (150)
-------------------------------------------- ------------ ----------- -------- ------------ ----------- --------
The difference between tax as charged in the financial
statements and tax at the nominal rate is explained below:
Year ended Year ended
31 December 31 December
2021 2020
GBP'000 GBP'000
Loss before tax (5,711) (3,887)
Corporation tax at 19.00% (31 December 2020: 19.00%) (1,085) (739)
Non -- deductible taxable expenses 3,598 1,605
Overseas tax rate differential 354 117
Overseas (gains)/losses not recognised (1,340) (460)
Losses utilised not previously recognised (349) 1
Adjustment in respect of prior years 28 (674)
Total tax (credit)/charge 1,206 (150)
----------------------------------------------------- ------------ ------------
Following the Budget on 31(st) March 2021, the corporation tax
rate effective from 1 April 2021 and 1 April 2022 will remain at
19%. This supersedes the announcement on 6 September 2016 which
detailed a reduction to 17% from 1 April 2020. The Budget 2021
detailed an increase in the corporation tax from 1 April 2023 to
25%, this was substantially enacted on 10 June 2021.
The table below shows a reconciliation of the current tax
liability for each year end:
GBP'000
At 1 January 2020 4,152
Corporation tax payments (2,476)
Corporation tax refunds 191
Withholding tax (25)
Under -- provision in relation to prior years (220)
Provision for the year ended 31 December 2020 (10)
Foreign exchange 91
At 31 December 2020 1,703
Corporation tax payments (2,616)
Corporation tax refunds 124
Withholding tax (47)
Under -- provision in relation to prior years 43
Provision for the year ended 31 December 2021 1,269
Foreign exchange (97)
At 31 December 2021 379
---------------------------------------------- --------
5. Discontinued operations
No operations were discontinued in the year to 31 December
2021
6. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
Year ended 31 December Restated Year ended 31
2021 December 2020
Continuing Discontinued Total Continuing Discontinued Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ---------- ------------ ---------- ---------- ------------ ----------
Earnings for the purpose
of basic earnings per
share, being net (loss)/profit
attributable to equity
holders of the parent (7,032) - (7,032) (3,923) 220 (3,703)
Adjustments:
Impact of highlighted
items (net of tax)(1) 9,284 - 9,284 2,354 (220) 2,134
----------------------------------- ---------- ------------ ---------- ---------- ------------ ----------
Earnings for the purpose
of underlying earnings
per share 2,252 - 2,252 (1,569) - (1,569)
----------------------------------- ---------- ------------ ---------- ---------- ------------ ----------
Number of shares:
Weighted average number
of shares during the year
- basic 82,627,526 - 82,627,526 81,571,242 81,571,242 81,571,242
- dilutive effect of share options 2,483,339 - 2,483,339 528,254 528,254 528,254
----------------------------------- ---------- ------------ ---------- ---------- ------------ ----------
- diluted 85,110,865 - 85,110,865 82,099,496 82,099,496 82,099,496
----------------------------------- ---------- ------------ ---------- ---------- ------------ ----------
Basic earnings per share (8.51)p - (8.51)p (4.81)p 0.27p (4.54)p
Diluted earnings per share (8.51)p - (8.51)p (4.81)p 0.27p (4.54)p
Underlying basic earnings
per share 2.72p - 2.72p (1.92)p - (1.92)p
Underlying diluted earnings
per share 2.67p - 2.67p (1.92)p - (1.92)p
----------------------------------- ---------- ------------ ---------- ---------- ------------ ----------
(1.) Highlighted items attributable to equity holders of the
parent (see note 3), stated net of their total tax impact.
7. Goodwill
GBP'000
----------------------------- -------
Cost
At 1 January 2020 36,749
Acquisitions 484
Foreign exchange differences 518
----------------------------- -------
At 31 December 2020 37,751
Acquisitions -
Foreign exchange differences (447)
----------------------------- -------
At 31 December 2021 37,304
----------------------------- -------
Accumulated impairment
At 1 January 2020 (8,340)
Impairment (817)
Foreign exchange differences (31)
----------------------------- -------
At 31 December 2020 (9,188)
Impairment -
Foreign exchange differences 56
----------------------------- -------
At 31 December 2021 (9,132)
----------------------------- -------
Net book value
At 31 December 2021 28,172
----------------------------- -------
At 31 December 2020 28,563
----------------------------- -------
Goodwill has been allocated to the following segments:
31 December 31 December
2021 2020
GBP'000 GBP'000
Media 26,464 26,855
Analytics & Tech 1,708 1,708
28,172 28,563
----------------- ----------- -----------
The Group tests goodwill annually for impairment or more
frequently if there are indications that goodwill may be
potentially impaired. Goodwill is allocated to the Group's
cash--generating units ('CGUs') in order to carry out impairment
tests.
The Group's remaining carrying value of goodwill by CGU at 31
December was as follows:
31 December 31 December
2021 2020
Cash -- generating unit Reporting segment GBP'000 GBP'000
Media UK and International Media 9,232 9,261
Digital Decisions Media 477 507
Media Germany Media 4,316 4,327
Media Value Group Media/Analytics & Tech 2,994 3,187
FirmDecisions Media 2,981 2,981
Media Australia Media 2,304 2,422
China Media 2,287 2,256
Effectiveness Analytics & Tech 1,678 1,678
Digital Balance1 Analytics & Tech 30 30
Media America Media 604 604
Media France Media 556 571
Media Italy Media 376 401
Russia Media 337 337
28,172 28,563
--------------------------------------------------- ----------- -----------
The impairment test involves comparing the carrying value of the
CGU to which the goodwill has been allocated to the recoverable
amount. The recoverable amount of all CGUs has been determined
based on value-in-use calculations.
Under IFRS, an impairment charge is required for goodwill when
the carrying amount exceeds the recoverable amount, defined as the
higher of fair value less costs to sell and value-in-use.
Value-in-use calculations
The key assumptions used in management's value-in-use
calculations are budgeted operating profit, pre--tax discount rate
and the long--term growth rate.
Budgeted operating profit assumptions
To calculate future expected cash flows, management has taken
the Board-approved budgeted operating profit ('EBIT') for each of
the CGUs for the 2022 financial year.
For the 2023 and 2024 financial years, the forecast EBIT is as
per management and market expectations. The forecast 2024 balances
are taken to perpetuity in the model. The forecast for 2023 and
2024 uses certain assumptions to forecast revenue and operating
costs within the Group's operating segments beyond the 2022
budget.
Discount rate assumptions
The Directors estimate discount rates using rates that reflect
current market assessments of the time value of money and risk
specific to the CGUs. The three--year pre-tax cash flow forecasts
have been discounted at between 10% and 13% (31 December 2020:
between 10.0% and 11%).
Growth rate assumptions
Cash flows beyond the three--year period are extrapolated at a
rate of 2.00% (31 December 2020: 2.00%) for all CGUs with the
exception of China where a rate of 2.60% has been applied, which
does not exceed the long--term average growth rate in any of the
markets in which the Group operates.
The excess of the value-in-use to the goodwill carrying values
for each CGU gives the level of headroom in each CGU. The estimated
recoverable amounts of the Group's operations in all CGUs
significantly exceed their carrying values, with the exception of
the China and Media America CGUs.
Sensitivity analysis
The Group's calculations of value-in-use for its respective CGUs
are sensitive to a number of key assumptions. Other than disclosed
below, management does not consider a reasonable possible change,
in isolation, of any of the key assumptions to cause the carrying
value of any CGU to exceed its value-in-use. The considerations
underpinning why management believes no impairment is required in
respect of China, Media America and FirmDecisions are as follows,
specifically what change in key assumptions would result in an
impairment:
China Media America FirmDecisions
------------------------------------ -------------------------------------- ------------------------------------
Current % change Current % change Current % change
% (2022/2023/2024) leading % (2022/2023/2024) leading to % (2022/2023/2024) leading
to impairment impairment to impairment
---------- ------------------- --------------- ------------------- ----------------- ------------------- ---------------
Budgeted
revenue
growth 17%/10%/5% (5)%/(5)%/(7)% 45%/25%/15% (9)%/(13)%/(13)% 31%/7%/5% (6)%/(7)%/(8)%
Budgeted
cost
growth 10%/5%/5% 6%/5%/7% 35%/7%/5% 11%/13%/14% 6%/5%/2% 7%/8%/8%
Pre --
tax
discount
rate 11%/11%/11% 3% 12%/12%/12% 18% 12%/12%/12% 15%
---------- ------------------- --------------- ------------------- ----------------- ------------------- ---------------
8. Other intangible assets
Purchased
Capitalised Computer intangible Total intangible
development software assets(1) assets
costs GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- -------------- --------- ----------- ----------------
Cost
At 1 January 2020 4,034 2,525 16,165 22,724
Additions 1,226 4 - 1,230
Acquisitions - - 70 70
Disposals (460) (10) - (470)
Foreign exchange differences 91 23 346 460
------------------------------- -------------- --------- ----------- ----------------
At 31 December 2020 4,891 2,542 16,581 24,014
Additions 970 13 - 983
Acquisitions - - - -
Disposals (902) - - (902)
Foreign exchange differences (60) (34) (318) (412)
------------------------------- -------------- --------- ----------- ----------------
At 31 December 2021 4,899 2,521 16,263 23,683
------------------------------- -------------- --------- ----------- ----------------
Amortisation and impairment(3)
At 1 January 2020 (1,471) (1,853) (12,637) (15,961)
Charge for the year(2) (685) (280) (1,122) (2,087)
Disposals 460 10 - 470
Foreign exchange differences (49) (24) (228) (301)
------------------------------- -------------- --------- ----------- ----------------
At 31 December 2020 (1,745) (2,147) (13,987) (17,879)
Charge for the year(2) (1,218) (211) (1,065) (2,494)
Disposals 902 - - 902
Foreign exchange differences 39 33 244 316
------------------------------- -------------- --------- ----------- ----------------
At 31 December 2021 (2,022) (2,325) (14,808) (19,155)
------------------------------- -------------- --------- ----------- ----------------
Net book value
At 31 December 2021 2,877 196 1,455 4,528
------------------------------- -------------- --------- ----------- ----------------
At 31 December 2020(4) 3,146 395 2,594 6,135
------------------------------- -------------- --------- ----------- ----------------
1. Purchased intangible assets consist principally of customer
relationships with a typical useful life of eight to 10 years.
2. Amortisation is charged within administrative expenses so as
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.
3. No impairment charge has been recognised in the current year
(year ended 31 December 2020: GBPnil following management's review
of the carrying value of other intangible assets).
4. Of the net book value of capitalised development costs,
GBP2,165,000 remains in development at 31 December 2021.
9. Right-of-use assets and lease liabilities
Buildings Equipment Vehicles Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- --------- --------- -------- --------
Cost
At 1 January 2020 10,317 200 59 10,576
Additions 568 22 115 705
Disposals (331) (10) (12) (353)
Allocations 324 - - 324
Reclassification to lease receivables (1,113) - - (1,113)
Foreign exchange 24 17 (9) 32
-------------------------------------- --------- --------- -------- --------
At 31 December 2020 9,789 229 153 10,171
-------------------------------------- --------- --------- -------- --------
Additions 474 - - 474
Disposals (210) - - (210)
Foreign exchange (167) (33) 13 (187)
-------------------------------------- --------- --------- -------- --------
At 31 December 2021 9,886 196 166 10,248
-------------------------------------- --------- --------- -------- --------
Accumulated depreciation
At 1 January 2020 (2,209) (15) (13) (2,237)
Charge for the year (1,942) (50) (34) (2,026)
Disposals 136 10 12 158
Allocations (324) - - (324)
Reclassification to lease receivables 558 - - 558
Impairment for the year (24) - - (24)
Foreign exchange - (44) 5 (39)
-------------------------------------- --------- --------- -------- --------
At 31 December 2020 (3,805) (99) (30) (3,934)
Charge for the year (1,865) (42) (47) (1,954)
Disposals 96 - - 96
Foreign exchange 65 24 (3) 86
-------------------------------------- --------- --------- -------- --------
At 31 December 2021 (5,509) (117) (80) (5,706)
-------------------------------------- --------- --------- -------- --------
Net book value
At 31 December 2021 4,377 79 86 4,542
-------------------------------------- --------- --------- -------- --------
At 31 December 2020 5,984 130 123 6,237
-------------------------------------- --------- --------- -------- --------
Lease liabilities
Buildings Equipment Vehicles Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- --------- --------- -------- --------
Cost
At 1 January 2020 9,380 169 41 9,590
Additions 568 22 115 705
Disposals (131) - - (131)
Cash payments in the year (2,192) (58) (19) (2,269)
Interest charge in the year 277 6 1 284
Foreign exchange (44) 35 (12) (21)
---------------------------- --------- --------- -------- --------
At 31 December 2020 7,858 174 126 8,158
Additions 412 - - 412
Cash payments in the year (2,180) (49) (45) (2,274)
Interest charge in the year 216 3 3 222
Foreign exchange (95) (41) 9 (127)
---------------------------- --------- --------- -------- --------
At 31 December 2021 6,211 87 93 6,391
---------------------------- --------- --------- -------- --------
Current 2,486 43 37 2,566
Non-current 3,725 44 56 3,825
---------------------------- --------- --------- -------- --------
The present value of the minimum lease payments are as
follows:
Minimum lease payments
------------------------
31 December 31 December
2021 2020
GBP'000 GBP'000
----------------------------- ----------- -----------
Amounts due:
Within one year 2,722 2,556
Between one and two years 2,038 2,219
Between two and three years 913 1,946
Between three and four years 597 917
Between four and five years 446 609
Later than five years - 454
----------------------------- ----------- -----------
6,716 8,701
----------------------------- ----------- -----------
Lease receivables
31 December 31 December
2021 2020
GBP'000 GBP'000
Lease receivables 301 451
Current 146 171
Non-current 155 280
------------------ ----------- -----------
In the prior year a sublease arrangement was entered into
relating to the Chicago office lease. Accordingly, the right-of-use
asset was derecognised and instead a lease receivable was
recognised, being the equivalent of the remaining lease receivables
over the lease term. The amount due within one year is presented
within current assets and the amount due after one year is
presented within non-current assets. The sublease arrangement
expires in September 2023.
10. Financial liabilities
31 December 31 December
2021 2020
GBP'000 GBP'000
---------------------------- ----------- -----------
Current
Loan fees(1) (59) (45)
Contingent consideration - 1,957
---------------------------- ----------- -----------
(59) 1,912
---------------------------- ----------- -----------
Non -- current
Bank borrowings 18,000 19,000
Government borrowings - 750
Loan fees(1) (40) (75)
---------------------------- ----------- -----------
17,960 19,675
---------------------------- ----------- -----------
Total financial liabilities 17,901 21,587
---------------------------- ----------- -----------
1. Loan fees were payable on amending the banking facility and
are being recognised in the income statement on a straight-line
basis to the maturity date of the facility, this being September
2023.
Government Contingent
Bank overdrafts Bank borrowings borrowings consideration Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------- --------------- --------------- ----------- -------------- --------
At 1 January 2020 - 13,832 - 14 13,846
Recognised on revaluation - - - 3,086 3,086
Paid - - - (1,934) (1,934)
Charged to the income statement - 48 - 625 673
Discounting charged to the income statement - - - (44) (44)
Borrowings - 5,000 750 - 5,750
Foreign exchange released to the income
statement - - - 210 210
--------------------------------------------- --------------- --------------- ----------- -------------- --------
At 31 December 2020 - 18,880 750 1,957 21,587
Paid - (1,036) - (1,971) (3,007)
Charged to the income statement - 57 (723) 41 (625)
Discounting charged to the income statement - - - 45 45
Borrowings - - - - -
Foreign exchange recognised in the
translation reserve - - (27) - (27)
Foreign exchange released to the income
statement - - - (72) (72)
--------------------------------------------- --------------- --------------- ----------- -------------- --------
At 31 December 2021 - 17,901 - - 17,901
--------------------------------------------- --------------- --------------- ----------- -------------- --------
A currency analysis for the bank borrowings is shown below:
31 December 31 December
2021 GBP'000 2020 GBP'000
---------------------- ------------- -------------
Pounds sterling 17,901 18,880
---------------------- ------------- -------------
Total bank borrowings 17,901 18,880
---------------------- ------------- -------------
All bank borrowings are held jointly with Barclays and NatWest.
The committed facility as at 31 December 2021, totalled
GBP24,000,000, comprises a revolving credit facility ('RCF') of
GBP23,000,000 (of which GBP18,000,000 was drawn as at 31 December
2021 (31 December 2020: GBP19,000,000)) and GBP1,000,000 available
as an overdraft for working capital purposes. The RCF had a
maturity date of 20 September 2023.
Since the year-end, the facility has been increased and extended
under an agreement dated 24 March 2022. This increased the total
available to GBP30 million, initially for a period of 3 years to
March 2025 and extendable for up to a further two years.
Early repayments will begin from June 2023 onwards at a rate of
GBP1.25 million per annum. Apart from this, the drawn RCF and any
further drawings under the RCF are repayable on 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.
Loan arrangement fees of GBP99,000 (31 December 2020:
GBP120,000) are offset against the term loan and are being
amortised over the period of the loan. GBP59,000 of loan
arrangement fees have been included within creditors due within one
year and the balancing GBP40,000 have been included within
creditors due after more than one year.
The facility bears variable interest of SONIA plus a margin of
2.5%. The margin rate is able to be lowered each quarter end
depending on the Group's net debt to EBITDA ratio.
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, Germany and Australia.
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 were fully paid in April 2021.
It has been determined that the deferred payments in relation to
the acquisition of Digital Decisions B.V. ('Digital Decisions')
should be treated as post-date remuneration. IFRS 3 (revised)
provides guidance for situations where contingent consideration may
be considered to be remuneration for post-acquisition employment.
Taken in aggregate, these guidelines indicate that the contingent
payments to the seller (who remains an employee) constitute
post-date remuneration and they are therefore being accounted for
as such.
11. Dividends
No dividends were paid during the current financial year (2020:
GBPnil). Dividends were paid to non--controlling interests as shown
in the consolidated statement of changes in equity.
12. Cash generated from operations
Year ended Year ended
31 December 31 December
2021 2020
GBP'000 GBP'000
------------------------------------------------ ------------ ------------
(Loss) before taxation (5,711) (3,887)
Adjustments for:
Depreciation 2,609 2,761
Amortisation 2,495 2,087
(Gain)/loss on disposal 3 (3)
Impairment of right-of-use assets - 24
Impairment of goodwill - 817
Unrealised foreign exchange loss 70 35
Share option (credits)/charges 319 (1,845)
Finance income (20) (39)
Finance expenses 882 915
US PPP release (720) -
Contingent consideration revaluations 7,397 791
------------------------------------------------ ------------ ------------
7,324 1,656
Decrease in trade and other receivables 2,250 2,457
Increase/(decrease) in trade and other payables 2,226 1,714
Movement in provisions - -
------------------------------------------------ ------------ ------------
Cash generated from operations 11,800 5,827
------------------------------------------------ ------------ ------------
13. Acquisitions
Digital Decisions B.V.
On 8 January 2020, the Group completed the purchase of Digital
Decisions B.V. ('Digital Decisions'). The acquisition was for an
initial cash consideration of EUR700,000 (GBP597,000) with further
consideration payable in a mix of cash and Ebiquity plc shares. The
first deferred payment was based on performance in the year to 31
December 2020, for which the threshold was not met and there was no
payment.
The second will be based on the average performance for the two
years ended 31 December 2022. Due to the integration of the Digital
Decisions service with the Group's overall digital media products,
the basis of the revenue included in the performance calculation
for the two years ended 31 December 2022 was amended to include the
contribution from all digital media solutions developed by the
Digital Innovation Centre. The multiple applied in calculating the
contingent consideration was reduced from 8 times to 6 times the
average of the relevant profits generated in 2021 and 2022.
As discussed in note 10, the deferred payments constitute
post-date remuneration and therefore will be accrued according to
the period they relate.
Digital Decisions contributed GBP3.7 million to revenue and
GBP1.9 million profit before tax for the year ended 31 December
2021. An accrual for post-date remuneration of GBP7,922,000 (31
December 2020: GBPnil) was made during the year ended 31 December
2021 and has been recognised within highlighted items. Refer to
note 3 for further details.
Ebiquity Italy Media Advisor S.r.l.
On 3 February 2020, the Group agreed to acquire the remaining
49% interest in its subsidiary, Ebiquity Italy Media Advisor S.r.l.
('Ebiquity Italy'), from the founders and minority shareholders
Arcangelo DiNieri and Maria Gabrielli. The transaction completed on
28 May 2020, following the approval of the Group's audited
financial statements. The total consideration of EUR3,648,000
(GBP3,086,000) was payable in a combination of cash and Ebiquity
plc shares. All the consideration payments were paid by 1 March
2021.
14. Disposals
There were no disposals in the year.
15. Financial Information
The financial information included in this report does not
amount to full financial statements within the meaning of Section
434 of Companies Act 2006. The financial information has been
extracted from the Group's Annual Report and financial statements
for the period ended 31 December 2021, on which an unqualified
report has been made by the Company's auditors,
PricewaterhouseCoopers LLP. Financial statements for the period
ended 31 December 2021 have been delivered to the Registrar of
Companies; the report of the auditors on those accounts was
unqualified and did not contain a statement under Section 498 of
the Companies Act 2006.
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END
FR BKKBPKBKKPNN
(END) Dow Jones Newswires
March 30, 2022 02:01 ET (06:01 GMT)
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