TIDMEBQ

RNS Number : 9705M

Ebiquity PLC

24 September 2021

GENERAL TEXT AMMENT

The following non material amendment has been made to the 'Interim Results' announcement released on 23 September 2021 at 07:00 under RNS No 6871M.

The Company has amended selected client detail.

All other details remain unchanged.

The full amended text is shown below.

Ebiquity plc

Interim Results for the six months ended 30 June 2021

Strong recovery, building momentum

Ebiquity plc ("Ebiquity" or the "Company"), a world leader in media investment analysis, announces interim results for the six months ended 30 June 2021.

Financial Highlights

 
 Group                                  2021     2020      Change 
                                        GBPm     GBPm       GBPm 
                                      -------  -------  ------------ 
 Revenue                                32.0     26.8    +5.2m /+20% 
                                      -------  -------  ------------ 
 Underlying Operating Profit/(Loss) 
  (1)                                   2.3     (1.4)       +3.7m 
                                      -------  -------  ------------ 
 Underlying Profit/(Loss) 
  before Tax (1)                        2.0     (1.9)       +3.9m 
                                      -------  -------  ------------ 
 Underlying Earnings/(Loss) 
  per Share (1)                         1.4p    (2.7)p      +4.1p 
                                      -------  -------  ------------ 
 Statutory Operating Loss              (0.9)    (1.2)       +0.3m 
                                      -------  -------  ------------ 
 Statutory Loss before Tax             (1.1)    (1.7)       +0.6m 
                                      -------  -------  ------------ 
 Statutory Loss per Share              (2.0)p   (2.6)p      +0.6p 
                                      -------  -------  ------------ 
 

Note 1: 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.

   --    Revenue increased by GBP5.2m (20%) as the market recovery continues 

-- Return to profitability with Underlying Operating Profit of GBP2.3m (2020: Loss of GBP1.4m) and Underlying Operating Profit margin of 7%

-- Statutory Loss after making accrual of GBP2.4m towards deferred consideration for Digital Decisions B.V, payable in 2023 (based on its expected performance in 2021 and 2022)

   --    Underlying cash inflow from operations of GBP3.4m 

-- Financial position at 30 June 2021 remains strong: net bank debt of GBP9.6m, cash balances of GBP9.3m and undrawn bank facilities of GBP5.0m

Operational Performance and Highlights

-- All regions and business segments improved revenue and profitability in H1 2021, compared to H1 2020

-- Significant new business wins including Amazon (US), MengNiu (China), BMW and Ford of Europe (global projects)

-- Digital media solutions revenue grew to GBP1.6m and new Governance and Audience Data Assessment services launched during the period

Outlook

-- Progress expected to continue in the second half of the year, although macro-environment remains uncertain

   --    Digital media solutions continuing to grow their client base and revenue 

-- Board expects full year underlying operating profit to be slightly above previous expectations

Nick Waters, CEO, commented:

"Ebiquity has made a strong and rapid recovery from the challenges of 2020 with client activity rising and a healthy new business performance. The upturn has been broad based with all regions and Service Lines improving revenue and profitability. Revenue from digital services is growing in line with expectations and the development of additional product solutions to the portfolio is on track. Two new products have been added and further launches are planned before the end of the year. We expect to continue our progress in the second half of the year although the macro-environment remains uncertain."

Enquiries:

 
 Ebiquity 
  Nick Waters, CEO 
  Alan Newman, CFO & COO                               020 7650 9600 
  Instinctif Partners 
  Matthew Smallwood                                     07831 379 122 
  Guy Scarborough                                        07917 178 920 
 Panmure Gordon (Financial Adviser, NOMAD & Broker) 
  Alina Vaskina (Corporate Advisory) 
  Charles Leigh-Pemberton (Corporate Broking)          020 7886 2500 
 

Chief Executive's Review

The first half of the year marks a rapid recovery from the challenges of 2020 and the first six months of implementing Ebiquity's new strategy. Overall, the Group can be satisfied with the pace of our performance improvement and strategic progress.

Group revenue growth has been strong with a 20% increase over prior year with all regions and Service Lines improving both revenue and profitability. This good performance builds on the trends and momentum seen in H2 2020. It reflects new business wins from Q4 of 2020, and during the first half of this year, including the full year effect of those secured following Accenture's market exit. Clients in most sectors have returned to more normalised levels of activity, with the notable exceptions of travel and entertainment, although there are signs of these now also picking up.

Our business performance has been enhanced by buoyant agency selection activity with high levels of media buying work put out for tender following a quiet 2020. With global advertising markets suffering a dislocation during the height of the pandemic, advertisers are now reviewing their agency and technology partners to support their activities in a realigned environment, and to drive improved media price commitments. This has provided good opportunities for Ebiquity which has performed well securing a wide range of global media review mandates from major brand owners including Unilever, Ferrero, BMW, and Daimler, as well as many national advertisers through our network of overseas offices.

The Group has returned to first half year profitability with costs maintained at stable levels and internal costs only increased at the rate of inflation. Staffing numbers were maintained during 2020 to enable the Company to fulfil demand when it returned. This has proved effective as Ebiquity continued to meet client requirements as they re-engaged during the first half.

Revenue from digital media solutions is growing as planned and contributing to profit in line with the higher margin opportunity of productised services. The development of an enhanced portfolio of digital product solutions is on track.

The Group continues to position itself as the global market leader publishing white papers and hosting webinars on "Surviving the Cookie Apocalypse", "A Guide to Advanced TV", and "The Challenge of Attention". These have been well received with attendance of the webinars and downloads of the white papers achieving record levels for the Group and gaining greater engagement through social media channels.

All offices closed at the height of the pandemic have re-opened around the world but changing government guidance and policy by market has meant at various times that staff have continued to work from home, with Sydney for example currently being under lockdown. In line with many companies, Ebiquity has now formally adopted hybrid working practices with a mix of working from home and in the office with a positive reaction from staff.

Progress in Delivery of the Strategy

The Company's objective is to increase revenue and improve margins. We aim to achieve this through the clear positioning and strategy that we set out in our 2020 annual report.

Ebiquity operates as an independent intermediary in the global media advertising market advising brand owners on how to improve media investment decisions in order to improve business outcomes. We have clarified our positioning as a world leader in media investment analysis operating as a deep specialist in the media vertical, and have initiated a strategy:

i) to develop a portfolio of productised digital services solving brand owners' problems of inefficiency, wastage and lack of effectiveness in digital advertising channels. As productised services they will be scalable and repeatable to deliver sustainable revenue streams at enhanced margins

ii) to build on Ebiquity's extensive client base developing higher value strategic clients by cross-selling more products and services, and extending geographical reach

iii) to improve operational efficiency through a simplified management structure, improved processes and use of technology, greater automation, and increased offshoring.

We also aim to strengthen our position and accelerate growth in the North American and Asia Pacific regions, reflecting the importance of these markets for brand owners.

Product

The development of a portfolio of digital product solutions by the Digital Innovation Centre is on track and progressing well. The initial "Sourcing and Monitoring" product is delivering to plan with strong revenue growth and improving margins as it scales. Two new solutions were launched in July 2021.

The "Governance" solution tracks and monitors a range of key principles for digital media management through an automated ingestion and reporting process on an "always on" basis.

The "Audience Data Assessment" solution addresses a critical need for clarity around targeting options when third party cookies are deprecated by Google, and with Apple's removal of identifiers for advertising.

We are also piloting a "Responsible Media Investment" product to help advertisers understand the Environmental, Social and Governance ("ESG") standards of the recipients of their media investments against a range of criteria.

There are further product launches planned for the Autumn and the first quarter of 2022.

Clients

Our focus on building higher value strategic clients is progressing well. A Chief Client Officer was appointed at the end of 2020 and a universe of high value and high potential clients identified. Specific client relationship management attention has been directed at this universe which has contributed to revenue growth ahead of expectations. We continue to invest into this potential by recruiting additional global Client Partners. One was added in the Netherlands in 2020, a second in the USA early in 2021 and a third will join the Group in October based in Paris. This improves our geographic coverage of major international brand owners and strengthens our bench of senior talent.

Operational efficiency

We have made progress improving operational efficiency through a simplified management structure. We have moved away from a "Practice Management" approach of individual vertical P&Ls and implemented horizontal P&L management by geography (country and region) to enhance client relationship management and to facilitate the cross-sell and upsell of services.

We have clarified our service offering which is now provided through five Service Lines:- Media Management, Media Performance, Marketing Effectiveness, Technology Advisory and Contract Compliance.

Strong progress has been made improving automation in the US operation and in FirmDecisions' processes. We have continued to move more work offshore from several countries with project hours served by our Madrid-based Media Operations Centre up 28% versus prior year.

As we seek to accelerate growth of our business in North America and Asia Pacific we have strengthened the management teams in both regions, recruiting new Managing Directors for the US and China. Both started in January and have made an immediate positive impact.

Our US team has won work for a global food and beverage group which now represents one of our largest clients in that market. This builds on the global win of Amazon assignments led out of the USA. In China, we have won significant business from major domestic corporates including Huawei and MengNiu, and new business from international advertisers such as LVMH and Pernod Ricard.

In the second half of this year, Ebiquity will start to offer media services in India, in addition to contract compliance which we launched in that market last year. India is a top 10 global advertising market, with a strong growth trajectory, and is highly complex. It is a challenging market for multinationals to navigate, supporting demand for our services.

Operational metrics - measuring progress

As previously flagged, we are pleased to introduce a set of operational metrics to guide our strategic progress, and now report the baseline figures as at 31 December 2020. We will report progress against these metrics on an annual basis, beginning with the 2021 annual report.

 
 Operational Metric                                    Baseline measure 
                                                        in 2020 
 No. of clients buying two or more Service Lines       59 clients 
                                                      ----------------- 
 No. of clients buying one or more products from       10 clients 
  the new digital solutions portfolio 
                                                      ----------------- 
 Volume of digital impressions processed, analysed     112 billion 
  and reported on the platform                          impressions 
                                                      ----------------- 
 Value of digital advertising spend processed,         US$ 0.46 billion 
  analysed and reported on the platform 
                                                      ----------------- 
 Proportion of revenue relating to digital media 
  (for media performance & media management service 
  lines)                                               25% 
                                                      ----------------- 
 

Following the proof of concept in 2020 of the new "Source Data Monitoring" product the Group has developed scalable infrastructure to expand the portfolio of digital product solutions and extend these to more clients. This will accelerate the Group's transition to a data led, technology enabled, digital first business.

At the half year, the number of clients buying one or more products from the new digital solutions portfolio was ahead of expectations. This is translating to significant growth in the volume of impressions analysed which increases the depth and breadth of our understanding of the digital market, enhancing the robustness of our analysis. As clients see the benefits to their business more brands and geographies are added to our assignments increasing the value of advertising investments under our review, demonstrating the trust and value advertisers see in our products. This in turn will enhance our ability to attract new clients to the service.

Both the volume of impressions analysed and the value of spend reviewed are ahead of our expectations as is the number of countries served with the new solutions. This demonstrates our ability to create value for our clients wherever they advertise, and positions Ebiquity as the preferred partner for major multinational advertisers.

The number of clients buying two or more Service Lines is in line with our plans for the first half of the year, as is the percentage of digital revenues for the Group.

Outlook

We are pleased with the progress made during the first half which capitalised on the improving trends in the marketplace and on the development of our new higher-margin digital solutions. We have built on and extended existing relationships as well as winning significant new business in this and the prior year. In the second half, we expect to see our digital media solutions continuing to grow their client base and revenue. The anticipated strong performance in 2021 and 2022 of the Digital Decisions acquisition is reflected in the provision made in these financial statements for its earn-out consideration. Following the good start to 2021, we expect an underlying full year profit slightly above the Board's previous expectations.

Review of Performance

 
                                  Revenue 
                       H1 21   H1 20   Variance 
                      ------  ------  ---------  ---- 
 
                       GBPm    GBPm      GBPm      % 
                      ------  ------  ---------  ---- 
 Media                 26.8    21.9      4.9      22% 
                      ------  ------  ---------  ---- 
 Analytics and Tech     5.2     4.9      0.3      7% 
                      ------  ------  ---------  ---- 
 Total                 32.0    26.8      5.2      20% 
                      ------  ------  ---------  ---- 
 

Media

Media revenue increased by 22% from the prior year to GBP26.8 million, reflecting the market recovery and our new business wins. Within this, the revenue from Media Performance services - which help clients to assess and optimise their media buying performance - increased by 15%. Revenue from Media Management services, and notably agency selection advice, increased by almost 90% reflecting the high level of selection exercises conducted by major advertisers in the period, although this is still a minority element of our overall Media revenue. Revenue from our digital media solutions increased significantly with 18 clients using the core Source Data Monitoring service by the end of the period. Both the growth of agency selection and digital solutions contributed to an increase of 28% in the revenue of our specialist unit focussing on global, multi-market Media projects.

Contract Compliance revenue (branded as FirmDecisions) increased by 31%, facilitated by agencies' re-opening of their offices and restarting the supply of data to its audit teams, which had been constrained during the height of the Covid-19 restrictions.

Geographically, all regions experienced good revenue growth with USA up 58% and Europe up 22%, reflecting recent wins in these territories, especially ex-Accenture clients. APAC revenue increased by 10% overall and UK revenue was static, due in part to activity in hospitality and retail sectors remaining below normal levels due to the pandemic.

Analytics and Tech

Overall revenue from Analytics and Tech increased by 7%. Within this, our Analytics service line, whose advanced analytical techniques help brands to plan and optimise their investment in media, increased revenue by 10% with the key sectors served including telecoms, automotive and retail. The AdTech practice which helps brand owners to manage their digital eco-system, increased revenue by 41% through a combination of new clients (notably Lenovo) and existing clients increasing their activity. Digital Balance, based in Australia, increased revenue by 7%.

Operating Profit Analysis

 
                          Underlying Operating Profit       Underlying Operating 
                                                                Profit Margin 
                       H1 21    H1 20       Variance         H1 21        H1 20 
                      -------  -------  ----------------  -----------  ---------- 
                        GBPm     GBPm     GBPm      %          %            % 
                      -------  -------  -------  -------  -----------  ---------- 
 
 Media                  5.3      2.4      2.9      124%       20%          11% 
                      -------  -------  -------  -------  -----------  ---------- 
 Analytics and Tech     0.4     (0.7)     1.1     (160%)       8%         (15%) 
                      -------  -------  -------  -------  -----------  ---------- 
 Unallocated costs     (3.4)    (3.0)    (0.4)     14%         -            - 
                      -------  -------  -------  -------  -----------  ---------- 
 Total                  2.3     (1.4)     3.7     (266%)       7%         (5%) 
                      -------  -------  -------  -------  -----------  ---------- 
 

The Media segment achieved an underlying operating margin of 20%, approaching the performance in pre-Covid periods, after falling to 11% in 2020. This reflected the increase in revenue which was delivered while maintaining stable operating costs and staff levels, compared to the prior year. Analytics and Tech returned to profitability after being loss-making in H1 2020 with its margin of 8% exceeding the level achieved in H1 2019.

Unallocated costs, which comprise corporate and support costs, increased by GBP0.4 million mainly due to negative foreign exchange variances on debtor balances (compared to positive variances in the prior year) and higher executive directors' costs, as the CEO role was vacant in the first half of 2020.

Financial Review

Revenue for the half year ended 30 June 2021 of GBP32.0 million was GBP5.2 million higher than the comparable period in 2020.

The underlying operating profit (statutory operating profit excluding highlighted items) of GBP2.3 million represented an improvement of GBP3.7 million from the prior year loss of GBP1.4 million. Project-related costs (which comprise external partner and production costs) increased by 31% to GBP4.0 million from GBP3.0 million, due to more projects including markets not served directly by Ebiquity's own offices. However, total operating expenses, including cost of sales and administrative expenses, increased by only 3% to GBP25.8 million from GBP25.1 million, as our internal staff resources were kept stable. This contributed to the underlying operating profit uplift and to the profit margin improving to 7% compared to a loss of 5% in the prior year.

There was an underlying profit before tax of GBP2.0 million compared to a loss of GBP1.9 million for the six months ended 30 June 2020. Net finance costs were GBP0.3 million in 2021, a reduction of GBP0.3 million (49%) compared to the prior year, due to a foreign exchange gain on intercompany loan balances.

The statutory operating loss (after highlighted items) reduced to a loss of GBP0.9 million, from a loss of GBP1.2 million in the prior year. This reflected the improved underlying performance, offset by an increase in highlighted items (before tax) of GBP3.3 million, due mainly to the accrual for the Digital Decisions post-date remuneration. There was a statutory loss before tax of GBP1.1 million in this period, compared to a loss of GBP1.7 million in the prior year.

Highlighted items

Highlighted items after tax in the period totalled a charge of GBP2.9 million (2020: profit of GBP0.1 million) and include the following:

-- GBP2.4 million charge to accrue for post-date remuneration payable relating to the acquisition of Digital Decisions B.V in January 2020 (June 2020: GBP0.1 million)

-- GBP0.5 million for purchased intangibles asset amortisation (June 2020: GBP0.6 million) and GBP0.2 million charge relating to share options (June 2020: GBP1.9 million credit)

The contingent consideration relating to Digital Decisions B.V. 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 products developed by the Digital Innovation Centre, less the initial consideration of GBP700,000 paid in January 2020. The current estimate of the amount payable is GBP10.2 million which is being accrued on a straight-line basis over the two years to which it relates, less the discount to fair value. This amount will be revised at each half year, based on the latest projections, with any adjustments being treated as a highlighted item. This 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

The underlying tax charge for the period is GBP0.5 million compared to GBP0.2 million in the prior year. This is in line with the increase in underlying profit before tax in the current period. The tax credit included in highlighted items of GBP0.3 million (2020: charge of GBP0.1 million) arose due to the deferred tax impact of share options issued in the period and on the reduction in the intangible asset net book value at the period end.

Earnings per share

There was an underlying basic earnings per share of 1.4p compared to a loss per share of 2.7p in the prior period. The diluted earnings/loss per share was the same as the basic figure in both reporting periods. There was a statutory basic loss per share of 2.0p (2020: loss per share of 2.6p).

Dividend

No dividend has been declared for the six months ended 30 June 2021 (2020: GBPnil).

Equity

During the six months to 30 June 2021, nil shares were issued upon the exercise of employee share options. As a result, the total share capital remained at 82,583,254 ordinary shares (31 December 2020: 82,583,254).

Cash conversion

 
                                       Six months ended   Six months ended 
                                           30 June 2021       30 June 2020 
                                                GBP'000            GBP'000 
 Reported cash from operations                    2,886              4,310 
 Underlying cash from operations                  3,399              5,439 
 Underlying operating profit/(loss)               2,282            (1,375) 
 

Underlying cash from operations represents the cash flows from operations excluding the impact of highlighted items. The underlying net cash inflow from operations was GBP3.4 million during 2021 (2020: GBP5.4 million). The decrease is due to the working capital outflow of GBP1.3 million compared to an inflow of GBP4.5 million, partially offset by the reduced loss in the current period.

Cash conversion in the period was 149% demonstrating strong cash management.

 
 Net debt and banking facilities        As at      As at 
                                      30 June    30 June 
                                         2021       2020 
                                      GBP'000    GBP'000 
 Cash and cash equivalents net of 
  bank overdrafts                       9,268     14,519 
 Bank debt                           (19,000)   (19,000) 
 Prepaid loan arrangement fees            128        143 
----------------------------------  ---------  --------- 
 Bank net debt                        (9,604)    (4,339) 
 US PPP Loan (1)                        (724)      (804) 
----------------------------------  ---------  --------- 
 Net debt                            (10,328)    (5,143) 
 

(1) This represents a loan received under the US Paycheck Protection Program. Loan forgiveness was applied for in relation to this balance and was granted in August 2021. Therefore, this will be treated as a grant rather than a loan and released to the income statement in H2 2021.

All bank borrowings are held jointly with Barclays and NatWest. The RCF facility agreement totals GBP24.0 million and has a maturity period of four years, expiring in September 2023 with an option for the Company to extend for one further year. The committed RCF facility at 30 June 2021 totals GBP24.0 million, of which GBP19.0 million was drawn (2020: the RCF of GBP24.0 million, of which GBP19.0 million was drawn).

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 GBP5.0 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 will be re-introduced at > 4.0 and an adjusted leverage covenant will be 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. The quarterly covenants previously in force (based on EBITDA multiples: interest cover > 4.0; adjusted leverage < 2.5; and adjusted deferred consideration leverage < 3.0) will apply again from September 2022 onwards.

Statement of financial position and net assets

Debtor days have increased to 68 days from 58 days at 31 December 2020. This is partly due to revenue phasing with high levels of invoicing in May and June 2021 and to the comparative figure having benefited from strong cash receipts in December 2020.

Net current assets at 30 June 2021 totalled GBP12.2 million. These have decreased by GBP1.2 million from 31 December 2020 due mainly to a reduction in the cash balance partially offset by reduced tax liabilities.

Net assets at 30 June 2021 are GBP28.4 million, a decrease of GBP2.3 million since 31 December 2020.

Events after the reporting period

Subsequent to the period end, on 10 August 2021, confirmation was received that the US Small Business Administration had authorised full forgiveness of GBP0.7 million (US$1.0 million) for the Paycheck Protection Program (PPP) Loan received in 2020. Therefore, in accordance with IAS 20 Accounting for Government Grants and Disclosure of Government Assistance, the PPP loan balance included as a liability in the statement of financial position as at 30 June 2021 will be released and credited to operating expenses in the income statement in the second half of 2021.

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 six months ended 30 June 2021

 
 
                                    Unaudited 6 months ended               Unaudited 6 months ended 
                                          30 June 2021                           30 June 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        32,009             -     32,009        26,757             -     26,757 
    Project-related 
     costs                        (3,963)             -    (3,963)       (3,029)             -    (3,029) 
   -----------------  -----  ------------  ------------  ---------  ------------  ------------  --------- 
    Net revenue                    28,046             -     28,046        23,728             -     23,728 
    Cost of sales                (13,047)             -   (13,047)      (12,811)             -   (12,811) 
   -----------------  -----  ------------  ------------  ---------  ------------  ------------  --------- 
    Gross profit                   14,999             -     14,999        10,917             -     10,917 
    Administrative 
     expenses             3      (12,717)       (3,153)   (15,870)      (12,292)           181   (12,111) 
   -----------------  -----  ------------  ------------  ---------  ------------  ------------  --------- 
    Operating 
     profit/(loss)                  2,282       (3,153)      (871)       (1,375)           181    (1,194) 
    Finance income                     10             -         10             6             -          6 
    Finance expenses                (448)             -      (448)         (448)             -      (448) 
    Foreign exchange                  175             -        175          (81)             -       (81) 
   -----------------  -----  ------------  ------------  ---------  ------------  ------------  --------- 
    Net finance 
     costs                          (263)             -      (263)         (523)             -      (523) 
    Profit/(loss) 
     before 
     taxation                       2,019       (3,153)    (1,134)       (1,898)           181    (1,717) 
    Taxation 
     (charge)/credit                (761)           283      (478)         (181)          (52)      (233) 
   -----------------  -----  ------------  ------------  ---------  ------------  ------------  --------- 
    Profit/(loss) 
     for 
     the period                     1,258       (2,870)    (1,612)       (2,079)           129    (1,950) 
    Attributable to: 
    Equity holders 
     of 
     the parent                     1,180       (2,868)    (1,688)       (2,201)           135    (2,066) 
    Non-controlling 
     interests                         78           (2)         76           122           (6)        116 
   -----------------  -----  ------------  ------------  ---------  ------------  ------------  --------- 
                                    1,258       (2,870)    (1,612)       (2,079)           129    (1,950) 
   -----------------  -----  ------------  ------------  ---------  ------------  ------------  --------- 
    Earnings per 
    share 
    - continuing 
    operations 
    Basic                 4         1.43p                  (2.04)p       (2.73)p                  (2.57)p 
    Diluted               4         1.41p                  (2.04)p       (2.73)p                  (2.57)p 
   -----------------  -----  ------------  ------------  ---------  ------------  ------------  --------- 
 
 
 
 Consolidated Statement of Comprehensive Income 
  for the six months ended 30 June 2021 
 
 
                                                        Unaudited 
                                                         6 months 
                                                         ended 30 
                                                        June 2021 
                                                          GBP'000 
 
                                                                     Unaudited 
                                                                      6 months 
                                                                      ended 30 
                                                                     June 2020 
                                                                       GBP'000 
                                                                   ----------- 
    (Loss) for the period                                 (1,612)      (1,950) 
    Other comprehensive (expense)/income: 
 
    Items that may be reclassified subsequently 
     to profit or loss statement: 
    Exchange differences on translation of overseas 
     subsidiaries                                           (704)        1,159 
    Total other comprehensive (expense)/income 
     for the period                                         (704)        1,159 
   -------------------------------------------------  -----------  ----------- 
    Total comprehensive expense for the period            (2,316)        (791) 
   -------------------------------------------------  -----------  ----------- 
    Attributable to: 
    Equity holders of the parent                          (2,392)        (907) 
    Non-controlling interests                                  76          116 
   -------------------------------------------------  -----------  ----------- 
                                                          (2,316)        (791) 
   -------------------------------------------------  -----------  ----------- 
 
 

Consolidated Statement of Financial Position

as at 30 June 2021

 
                                             Unaudited        Audited 
                                                 as at          as at 
                                               30 June    31 December 
                                                  2021           2020 
                                      Note    GBP'000s       GBP'000s 
 Non-current assets 
 Goodwill                              5        28,220         28,563 
 Other intangible assets               6         5,505          6,135 
 Property, plant and equipment                   1,676          1,962 
 Right of use assets                             5,197          6,237 
 Lease receivables                                 232            280 
 Deferred tax asset                              1,129          1,145 
                                            ----------  ------------- 
 Total non-current assets                       41,959         44,322 
 
 Current assets 
 Trade and other receivables                    25,083         24,318 
 Lease receivables                                 140            171 
 Cash and cash equivalents             7         9,268         11,121 
                                            ----------  ------------- 
 Total current assets                           34,491         35,610 
 
 Total assets                                   76,450         79,932 
                                            ----------  ------------- 
 
 Current liabilities 
 Trade and other payables                      (5,262)        (6,096) 
 Accruals and contract liabilities            (12,686)        (9,890) 
 Financial liabilities                 8         (492)        (1,912) 
 Current tax liabilities                       (1,074)        (1,703) 
 Lease liabilities                             (2,490)        (2,338) 
 Deferred tax liability                          (250)          (250) 
                                            ----------  ------------- 
 Total current liabilities                    (22,254)       (22,189) 
 
 Non-current liabilities 
 Financial liabilities                 8      (19,655)       (19,675) 
 Provisions                                      (406)          (412) 
 Lease liabilities                             (4,744)        (5,820) 
 Deferred tax liability                          (990)        (1,090) 
                                            ----------  ------------- 
 Total non-current liabilities                (25,795)       (26,997) 
 
 Total liabilities                            (48,049)       (49,186) 
                                            ----------  ------------- 
 
 Total net assets                               28,401         30,746 
                                            ==========  ============= 
 
 Equity 
 Ordinary shares                                20,646         20,646 
 Share premium                                     255            255 
 Other reserves                                  4,757          5,461 
 Retained earnings                               2,318          3,942 
                                            ----------  ------------- 
 Equity attributable to the owners 
  of the parent                                 27,976         30,304 
 Non-controlling interests                         425            442 
                                            ----------  ------------- 
 Total equity                                   28,401         30,746 
                                            ==========  ============= 
 

Consolidated Statement of Changes in Equity

for the six months ended 30 June 2021

 
                                                                                           Non-controlling 
                              Ordinary       Share        Other     Retained                     interests       Total 
                                shares     premium     reserves     earnings       Total                        equity 
                               GBP'000     GBP'000      GBP'000      GBP'000     GBP'000           GBP'000     GBP'000 
 31 December 2019 (as 
  reported)                     20,029          46        4,428       12,958      37,461             1,179      38,640 
 Impact of restatement 
  at 31 December 2019 
  (1)                                -           -            -        (748)       (748)                 -       (748) 
                           -----------  ----------  -----------  -----------  ----------  ----------------  ---------- 
 31 December 2019 (as 
  restated) (1)                 20,029          46        4,428       12,210      36,713             1,179      37,892 
 (Loss)/profit for the 
  period                             -           -            -      (2,066)     (2,066)               116     (1,950) 
 Other comprehensive 
  income                             -           -        1,159            -       1,159                 -       1,159 
                           -----------  ----------  -----------  -----------  ----------  ----------------  ---------- 
 Total comprehensive 
  income/(expense) for 
  the period                         -           -        1,159      (2,066)       (907)               116       (791) 
                           -----------  ----------  -----------  -----------  ----------  ----------------  ---------- 
 Shares issued for cash              3           -            -          (3)           -                 -           - 
 Share options credit                -           -            -      (1,609)     (1,609)                 -     (1,609) 
 Acquisition of 
  non-controlling 
  interests                        609         209            -      (2,739)     (1,921)             (348)     (2,269) 
 Dividends paid to 
  shareholders                       -           -            -            -           -              (90)        (90) 
 30 June 2020 (as 
  restated) 
  (1)                           20,641         255        5,587        5,793      32,276               857      33,133 
 (Loss)/profit for the 
  period                             -           -            -      (1,637)     (1,637)                70     (1,567) 
 Other comprehensive 
  expense                            -           -        (126)            -       (126)                 -       (126) 
                           -----------  ----------  -----------  -----------  ----------  ----------------  ---------- 
 Total comprehensive 
  (expense)/income for 
  the period                         -           -        (126)      (1,637)     (1,763)                70     (1,693) 
                           -----------  ----------  -----------  -----------  ----------  ----------------  ---------- 
 Shares issued for cash              5           -            -          (5)           -                 -           - 
 Share options charge                -           -            -        (236)       (236)                 -       (236) 
 Acquisition of 
  non-controlling 
  interests                          -           -            -           27          27             (431)       (404) 
 Dividends paid to 
  non-controlling 
  interests                          -           -            -            -           -              (54)        (54) 
 31 December 2020               20,646         255        5,461        3,942      30,304               442      30,746 
 (Loss)/profit for the 
  period                             -           -            -      (1,688)     (1,688)                76     (1,612) 
 Other comprehensive 
  expense                            -           -        (704)            -       (704)                 -       (704) 
                           -----------  ----------  -----------  -----------  ----------  ----------------  ---------- 
 Total comprehensive 
  (expense)/income for 
  the period                         -           -        (704)      (1,688)     (2,392)                76     (2,316) 
                           -----------  ----------  -----------  -----------  ----------  ----------------  ---------- 
 Shares issued for cash              -           -            -            -           -                 -           - 
 Share options charge                -           -            -           64          64                 -          64 
 Acquisition of 
 non-controlling                     -           -            -            -           -                 -           - 
 interests 
 Dividends paid to 
  shareholders                       -           -            -            -           -              (93)        (93) 
 30 June 2021                   20,646         255        4,757        2,318      27,976               425      28,401 
                           ===========  ==========  ===========  ===========  ==========  ================  ========== 
 

(1.) During 2020 a misstatement was discovered in the balance sheet of FirmDecisions ASJP LLC as at 31 December 2019. The error related to the misstatement of accrued income and revenue balances. In accordance with IAS 8, the financial statements for 2019 have been restated to reflect this adjustment. The impact was a reduction of GBP600,000 in Group revenue, a reduction of GBP148,000 in retained earnings brought forward as at 1 January 2019, and a reduction of GBP748,000 in accrued income as at 31 December 2019.

Consolidated Cash Flow Statement

for the six months ended 30 June 2021

 
                                                                                             Unaudited   Unaudited 
                                                                                              6 months    6 months 
                                                                                                 ended       ended 
                                                                                               30 June     30 June 
                                                                                                  2021        2020 
                                                                                      Note    GBP'000s    GBP'000s 
 Cash flows from operating activities 
 Cash generated from operations                                                        10        2,886       4,310 
 Finance expenses paid                                                                           (295)       (269) 
 Finance income received                                                                             3           6 
 Income taxes paid                                                                             (1,071)     (1,259) 
 
 Net cash from operating activities                                                              1,523       2,788 
 
 Cash flows from investing activities 
 Acquisition of subsidiaries, net of cash acquired                                                   -       (597) 
 Disposal of division                                                                                -          18 
 Payments to acquire non-controlling interests                                                 (1,291)       (155) 
 Payment of contingent consideration                                                             (123)           - 
 Purchase of property, plant and equipment                                                        (50)        (76) 
 Purchase of intangible assets                                                                   (579)         (564) 
 
 Net cash flow from investing activities                                                       (2,043)     (1,374) 
 
 
   Cash flows from financing activities 
 Proceeds from bank borrowings                                                                       -       5,000 
 Bank loan fees paid                                                                              (36)           - 
 Proceeds from government borrowings                                                                 -         803 
 Repayments of lease liabilities                                                                 (897)       (925) 
 Dilapidation payments                                                                               -       (300) 
 Dividends paid to shareholders                                                                      -           - 
 Dividends paid to non-controlling interests                                                      (92)        (90) 
 
 Net cash flow from financing activities                                                       (1,025)       4,488 
 
 Net (decrease)/increase in cash, cash equivalents and bank overdrafts                         (1,545)       5,902 
 Cash, cash equivalents and bank overdrafts at beginning of period (as at 31 
  December 2020)                                                                                11,121       8,237 
 
   Effect of exchange rate changes on cash and cash equivalents                                  (308)         380 
                                                                                            ----------  ---------- 
 Cash, cash equivalents and bank 
  overdrafts at end of period                                                          7         9,268      14,519 
                                                                                            ==========  ========== 
 
 

Notes to the interim financial statements for the six months ended 30 June 2021

1. Accounting policies

Basis of preparation

The condensed consolidated interim financial statements for the six months ended 30 June 2021 have been prepared in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting'. These interim financial statements should be read in conjunction with the Group's Annual Report and Accounts for the year ended 31 December 2020, which have been prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006 ('IFRS') and the applicable legal requirements of the Companies Act 2006.

The condensed consolidated interim financial statements have been prepared on a going concern basis. The Group meets its day-to-day working capital requirements through its cash reserves and borrowings, described in note 8. As at 30 June 2021, the Group had cash balances of GBP9,268,000 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 covenant 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 will be re-introduced at > 4.0 and an adjusted leverage covenant will also be 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. The quarterly covenants previously in force (based on EBITDA multiples: interest cover > 4.0; adjusted leverage < 2.5; and adjusted deferred consideration leverage < 3.0) will apply again from September 2022 onwards.

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. Specifically, the Directors have prepared a model to forecast covenant compliance and liquidity to 31 December 2022 that includes a base case and a severe but plausible downside case.

The base case assumes growth in revenue and EBITDA when compared to the outturn of 2020 and assumes that trading will recover to 2019 levels by 31 December 2022. The severe but plausible case assumes a downside adjustment to revenue of 7%, without the offset of any mitigating factors within the control of the Directors. Under both of these cases, there is headroom on covenant compliance and liquidity throughout the going concern period.

The Directors have also considered a scenario that leads to a breach in covenants; a form of reverse stress test. Actual trading in 2021 to date and the proportion of secured revenue at this time, is well ahead of last year and whilst there is inherent uncertainty in trading for Q4 of 2021 and into 2022, revenue in 2022 would need to show a slight contraction on revenue in 2021, without any cost mitigating factors within the control of the Directors, for there to be a breach in covenants. These scenarios are not deemed plausible by the Directors.

New Accounting Standards issued but not yet applied

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:

   --   Annual Improvements to IFRS Standards 2018-2020 Cycle effective on or after 1 January 2022. 

The adoption of the standard noted 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.

The Group reports its results in two business practices (Media and Analytics & Tech), as this most accurately reflects the way the Group is being managed.

The Executive Directors are the Group's chief operating decision-makers. They assess the performance of the operating segments based on operating profit before highlighted items. This measurement basis excludes the effects of expenditure such as restructuring costs, purchased intangible amortisation and equity-settled share-based payments from the operating segments. Interest income and expenditure are not allocated to segments, as this type of activity is driven by the central treasury function, which manages the cash position of the Group.

The segment information provided to the Executive Directors for the reportable segments for the period ended 30 June 2021 is as follows:

Unaudited 6 months ended 30 June 2021

 
 
                                        Analytics     Reportable 
                              Media        & Tech       Segments     Unallocated     Total 
                            GBP'000       GBP'000        GBP'000         GBP'000   GBP'000 
 
 Revenue                     26,810         5,199         32,009               -    32,009 
 
 Operating profit/(loss) 
  before highlighted 
  items                       5,274           431          5,705         (3,423)     2,282 
                           ========  ============  =============  ==============  ======== 
 
 

Included within operating profit before highlighted items is a credit of GBP178,000 relating to government assistance measures implemented as a result of the pandemic. These measures have been in place from April 2020 and have run until June 2021. They include job retention schemes, reduced payroll tax liabilities, waivers of payroll tax and cash flow boosts.

Unaudited 6 month period ended 30 June 2020

 
 
                                        Analytics     Reportable 
                              Media        & Tech       Segments     Unallocated     Total 
                            GBP'000       GBP'000        GBP'000         GBP'000   GBP'000 
 
 Revenue                     21,907         4,850         26,757               -    26,757 
 
 Operating profit/(loss) 
  before highlighted 
  items                       2,354         (718)          1,636         (3,011)   (1,375) 
                           ========  ============  =============  ==============  ======== 
 

Included within operating profit before highlighted items is a credit of GBP495,000 relating to government assistance measures implemented as a result of the pandemic. These measures were in place from April 2020 onwards. The measures include job retention schemes, reduced payroll tax liabilities, waivers of payroll tax and cash flow boosts.

A reconciliation of segment operating profit/(loss) before highlighted items to total (loss) before tax is provided below:

 
                                                                         Unaudited            Unaudited 
                                                                          6 months             6 months 
                                                                             ended                ended 
                                                                      30 June 2021         30 June 2020 
                                                                           GBP'000              GBP'000 
            Reportable segment operating profit 
             before highlighted items                                        5,705                1,636 
            Unallocated costs: 
            Staff costs                                                    (2,010)              (1,752) 
            Property costs                                                   (292)                (669) 
            Exchange rate movements                                          (172)                  198 
            Other administrative expenses                                    (949)                (788) 
            Operating profit/(loss) before highlighted 
             items                                                           2,282              (1,375) 
            Highlighted items (note 3)                                     (3,153)                  181 
                                                         -------------------------  ------------------- 
            Operating (loss)                                                 (871)              (1,194) 
            Net finance costs                                                (263)                (523) 
            (Loss) before tax                                              (1,134)              (1,717) 
                                                         =========================  =================== 
 

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.

 
                                               Unaudited       Unaudited 
                                                6 months        6 months 
                                                   ended           ended 
                                            30 June 2021    30 June 2020 
                                                GBP'000s        GBP'000s 
 
 
 Share option charge/(credit)                        164         (1,651) 
 Amortisation of purchased intangibles               549             556 
 Post-acquisition remuneration charges 
  contingent on performance                        2,420             146 
 Severance and reorganisation costs                    -             367 
 Acquisition, integration and strategic 
  costs                                               20             401 
 Total highlighted items before tax                3,153           (181) 
 Taxation (credit)/charge                          (283)              52 
 Total highlighted items after tax                 2,870           (129) 
 

Share option charges include the non-cash IFRS 2 charge of GBP64,000 (June 2020: credit of GBP1,609,000) along with the cash element in relation to the exercising of share options, a charge of GBP100,000 (June 2020: credit of GBP42,000). The IFRS 2 credit arose in the prior period predominantly due to the lapse of 4,200,000 options awarded under an Executive Incentive Plan in 2010.

Amortisation of purchased intangibles relates to acquisitions made in prior years of GBP549,000 (June 2020: GBP545,000) and in the current period of GBPnil (June 2020: GBP11,000).

Severance and reorganisation costs in the prior period of GBP367,000 relate to restructuring within the UK, US and France businesses.

Post-acquisition remuneration charges contingent on performance of GBP2,420,000 (June 2020: GBP146,000) relates to an accrual for post-date remuneration relating to the prior year acquisition of Digital Decisions B.V.

The table below shows the movement in the post-date remuneration accrual in the current period:

 
                                                      Total '000 
---------------------------------------------------  ----------- 
 At 1 January 2021                                             - 
 Charged to the income statement                           2,567 
 Discounting credited to the income statement              (128) 
 Foreign exchange released to the income statement          (20) 
                                                     ----------- 
 At 30 June 2021                                           2,420 
                                                     =========== 
 

This contingent consideration is payable based on the performance in the two years ended 31 December 2022. This will be calculated as 6 times the average profit generated in those two years from digital media products developed by the Digital Innovation Centre, less the initial consideration of GBP700,000 paid in January 2020.

Payment of the deferred contingent consideration is dependent upon the principal vendor remaining in employment with the Group. Therefore, as required under IFRS 3, this payment is to be accounted for as post-date remuneration with the total amount expected to be payable in 2023 being accrued on a straight-line basis over the earn-out period.

The current estimate of the amount expected to be payable in 2023 is GBP10.2m of which 25% has been accrued as at 30 June 2021. Discounting of GBP0.1m has been applied and therefore the resulting fair value accrual is GBP2.4m.

This consideration is payable in a mixture of cash and/or Ebiquity shares, with the mix to be determined by Ebiquity, subject to the vendor's option to request that a certain proportion be paid in cash.

This amount will be revised at each half year, based on the latest projections, with any adjustments being treated as a highlighted item.

The acquisition, integration and strategic costs of GBP20,000 (June 2020: GBP401,000) relates to financial restructuring of GBP12,000 (June 2020: GBP50,000) and the remaining GBP8,000 (June 2020: GBP245,000) was incurred relating to the adjustment to the fair value of contingent consideration in relation to prior year acquisitions to the latest prevailing exchange rates.

Also included in the acquisitions, integration and strategic costs in the prior year was GBP42,000 in relation to the subleasing arrangement of the Chicago office which was more than offset by the rental income from the subleasing arrangement of GBP70,000. In addition, GBP54,000 was incurred in relation to the acquisitions of Digital Decisions B.V. and the Italian minority buyout. The final portion in the prior year related to the movement in the period of the impairment to the right-of-use assets of GBP80,000 in accordance with IFRS 16.

4. Earnings per share

The calculation of basic and diluted earnings per share is based on the following data:

 
 
                                                   Unaudited   Unaudited 
                                                    6 months    6 months 
                                                       ended       ended 
                                                     30 June     30 June 
                                                        2021        2020 
                                                    GBP'000s    GBP'000s 
Earnings for the purpose of basic earnings per 
 share being net profit 
 
attributable to equity holders of the parent         (1,688)     (2,066) 
Adjustments: 
Impact of highlighted items (net of tax) (1)           2,868         135 
------------------------------------------------  ----------  ---------- 
Earnings for the purpose of underlying earnings 
 per share                                             1,180     (2,201) 
------------------------------------------------  ----------  ---------- 
Number of shares: 
Weighted average number of shares during the 
 period 
- basic                                           82,583,254  80,565,910 
- dilutive effect of share options                   828,817     573,149 
------------------------------------------------  ----------  ---------- 
- diluted                                         83,412,071  81,139,059 
------------------------------------------------  ----------  ---------- 
Basic (loss) per share (2)                           (2.04)p     (2.57)p 
Diluted (loss) per share (3)                         (2.04)p     (2.57)p 
Underlying basic earnings/(loss) per share (4)         1.43p     (2.73)p 
Underlying diluted earnings/(loss) per share 
 (5)                                                   1.41p     (2.73)p 
------------------------------------------------  ----------  ---------- 
 

(1) Highlighted items (see note 3), stated net of their total tax and non-controlling interest impact.

(2) Basic earnings per share is calculated by dividing profit attributable to shareholders by the basic average number of shares

(3) Diluted earnings per share is calculated by dividing profit attributable to shareholders by the basic average number of shares and also including the dilutive impact of share options

(4) Underlying basic earnings per share is calculated by dividing underlying profit attributable to shareholders by the basic average number of shares

(5) Underlying diluted earnings per share is calculated by dividing underlying profit attributable to shareholders by the basic average number of shares and also including the dilutive impact of share options

5. Goodwill

 
                                                       GBP'000 
           Cost 
           At 1 January 2021                            37,751 
           Foreign exchange differences                  (579) 
           At 30 June 2021                              37,172 
                                           =================== 
 
 
           Accumulated impairment 
           At 1 January 2021                           (9,188) 
           Foreign exchange differences                    236 
                                           ------------------- 
           At 30 June 2021                             (8,952) 
                                           =================== 
 
           Net book value 
           At 30 June 2021                              28,220 
                                           ------------------- 
           At 31 December 2020                          28,563 
                                           =================== 
 

6. Other intangible assets

 
                               Capitalised   Computer software     Purchased                Total 
                               development                        intangible    intangible assets 
                                     costs                        assets (1) 
                                  GBP'000s            GBP'000s      GBP'000s             GBP'000s 
 Cost 
 At 1 January 2021                   4,891               2,542        16,581               24,014 
 Additions                             568                  12             -                  580 
 Foreign exchange                     (50)                (27)         (336)                (413) 
                             -------------  ------------------  ------------  ------------------- 
 At 30 June 2021                     5,409               2,527        16,245               24,181 
                             =============  ==================  ============  =================== 
 
 
 Amortisation 
 At 1 January 2021                 (1,745)             (2,147)      (13,987)             (17,879) 
 Charge for the period (2)           (458)               (109)         (549)              (1,116) 
 Foreign exchange                       32                  26           261                  319 
                             -------------  ------------------  ------------  ------------------- 
 At 30 June 2021                   (2,171)             (2,230)      (14,275)             (18,676) 
                             =============  ==================  ============  =================== 
 
 
 Net book value 
 
 At 30 June 2021 (3)                 3,238                 297         1,970                5,505 
                             =============  ==================  ============  =================== 
 At 31 December 2020                 3,146                 395         2,593                6,064 
                             =============  ==================  ============  =================== 
 

(1) Purchased intangible assets consist principally of customer relationships with a typical useful life of three to 10 years.

(2) Amortisation is charged within administrative expenses 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) Of the net book value of capitalised development costs, GBP2,267,000 remains in development at 30 June 2021.

7. Cash, cash equivalents and bank overdrafts

Cash, cash equivalents and bank overdrafts include the following for the purposes of the cash flow statement:

 
                                    30 June   31 December 
                                       2021          2020 
                                    GBP'000       GBP'000 
 
 Cash and cash equivalents            9,268        11,121 
 Bank overdraft (note 8)                  -             - 
 Cash, cash equivalents and bank 
  overdrafts                          9,268        11,121 
                                   ========  ============ 
 

8. Financial liabilities

 
                                                                   30 June                  31 December 
                                                                      2021                         2020 
                                                                   GBP'000                      GBP'000 
 Current 
 Bank overdraft                                                          -                            - 
 Loan fees (1)                                                        (59)                         (45) 
 Contingent consideration                                              551                        1,957 
                                                               -----------  --------------------------- 
                                                                       492                        1,912 
 
 Non-current 
 Bank borrowings                                                    19,000                       19,000 
 Government borrowings                                                 724                          750 
 Loan fees (1)                                                        (69)                         (75) 
                                                                    19,655                       19,675 
 
 Total financial liabilities                                        20,147                       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. 
                                                         Bank   Government      Contingent 
                                                   borrowings   borrowings   consideration        Total 
                                                      GBP'000      GBP'000         GBP'000      GBP'000 
 ----------------------------------------------  ------------  -----------  --------------  ----------- 
 
 At 1 January 2021                                     18,880          750           1,960       21,590 
 Paid                                                    (36)            -         (1,414)      (1,450) 
 Charged to the income statement                           28            -              41           69 
 Discounting charged to the 
  income statement                                          -            -              45           45 
 Foreign exchange recognised 
  in the translation reserve                                -         (26)               -         (26) 
 Foreign exchange released 
  to the income statement                                   -            -            (81)         (81) 
 At 30 June 2021                                       18,872          724             551       20,147 
===============================================   ===========  ===========  ==============  =========== 
 
 

All bank borrowings are held jointly with Barclays and NatWest. The committed facility, totalling GBP24 million, comprises a revolving credit facility ('RCF') of GBP23 million (of which GBP19 million was drawn as at 30 June 2021 (31 December 2020: GBP19 million)) and GBP1 million available as an overdraft for working capital purposes. The RCF has a maturity date of 20 September 2023. 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 GBP128,000 (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 GBP69,000 have been included within creditors due after more than one year.

The facility bears variable interest of LIBOR plus a margin of 2.50%. 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.

Government borrowings represent an amount received as a part of the US Paycheck Protection Programme. Loan forgiveness was applied for after the period end and it was subsequently confirmed that this application was successful. Therefore, in the annual results to December 2021 this balance will be treated as a grant rather than a loan and will be released to the income statement.

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 by July 2021.

9. Dividends

No dividend was paid in respect of the year ending 31 December 2020. No dividend is being declared for the six months ended 30 June 2021. Dividends were paid to non-controlling interests as shown in the consolidated statement of changes in equity.

10. Cash generated from operations

 
                                                   Unaudited   Unaudited 
                                                    6 months    6 months 
                                                       ended       ended 
                                                     30 June     30 June 
                                                        2021        2020 
                                                     GBP'000     GBP'000 
 
 (Loss) before taxation                              (1,134)     (1,717) 
 Adjustments for: 
 Depreciation                                          1,295       1,383 
 Amortisation (note 6)                                 1,116         994 
 Gain on disposal                                          4         (1) 
 Impairment of right-of-use assets                         -          80 
 Unrealised foreign exchange gain                        343        (54) 
 Share option charge/(credit) (note 3)                    64     (1,609) 
 Finance income                                         (10)         (6) 
 Finance expenses                                        448         448 
 Contingent consideration revaluations                 2,429         245 
                                                  ----------  ---------- 
                                                       4,555       (237) 
 (Increase)/decrease in trade and other 
  receivables                                          (665)       4,837 
 (Decrease) in trade and other payables 
  (including accruals and contract liabilities)      (1,004)       (290) 
 Movement in provisions                                    -           - 
                                                  ----------  ---------- 
 Cash generated by operations                          2,886       4,310 
 

11. Events after the reporting period

Subsequent to the period end, on 10 August 2021, confirmation was received that the Small Business Administration had authorised full forgiveness of $999,707 for our Paycheck Protection Program (PPP) Loan. As a result, the PPP Loan (plus accrued interest) has been converted to a grant and will not be repayable.

The amount of GBP724,000 ($999,707) included in the statement of financial position as a liability as at 30 June 2021 will therefore be released to the income statement in H2 2021 within salary costs, in accordance with IAS 20 Accounting for Government Grants and Disclosure of Government Assistance.

INDEPENDENT REVIEW REPORT TO EBIQUITY PLC

Report on the condensed consolidated interim financial statements

Our conclusion

We have reviewed Ebiquity plc's condensed consolidated interim financial statements (the "interim financial statements") in the interim report of Ebiquity plc for the 6 month period ended 30 June 2021 (the "period").

Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the AIM Rules for Companies.

What we have reviewed

The interim financial statements comprise:

   --    the consolidated statement of financial position as at 30 June 2021; 

-- the consolidated income statement and consolidated statement of comprehensive income for the period then ended;

   --    the consolidated cash flow statement for the period then ended; 
   --    the consolidated statement of changes in equity for the period then ended; and 
   --    the explanatory notes to the interim financial statements. 

The interim financial statements included in the interim report have been prepared in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the AIM Rules for Companies.

Responsibilities for the interim financial statements and the review

Our responsibilities and those of the directors

The interim report, including the interim financial statements, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the AIM Rules for Companies which require that the financial information must be presented and prepared in a form consistent with that which will be adopted in the company's annual financial statements.

Our responsibility is to express a conclusion on the interim financial statements in the interim report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the AIM Rules for Companies and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

What a review of interim financial statements involves

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

PricewaterhouseCoopers LLP

Chartered Accountants

London

23 September 2021

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END

IR USSNRAKUKUAR

(END) Dow Jones Newswires

September 24, 2021 12:54 ET (16:54 GMT)

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