Interim Results

RNS Number : 0833N
Ebiquity PLC
27 January 2016
 

Ebiquity Plc

("Ebiquity" or "the Company")

27 January 2016

 

Interim Results for the six months ended 31 October 2015

 

 

Strong profit growth, trading for the full year 2015 in line with management's expectations

 

Ebiquity plc, the independent marketing performance specialists, announces interim results for the six months ended 31 October 2015. Ebiquity provides services to more than 1,100 clients across 70 countries, including over 85%1 of the top 100 global advertisers.

 

Encouraging first half performance

 

 

Analytics and data divisions continue to drive growth

 

 

Michael Greenlees, Executive Director, commented:

 

"We have enjoyed an extremely active six months across each of our practices. In particular our Media Value Measurement practice continues to grow both revenue and, on a constant currency basis, margin. The Marketing Performance Optimization practice has once more delivered a standout performance.

 

Looking ahead, we continue to trade well and we expect to meet management's expectations for the 12 months to 31 December 2015. We believe our appointment as an advisor to the American Association of National Advertisers (ANA) on market transparency represents a clear sign of our Company's reputation, and recognition of the growing importance advertisers' place on leveraging their data assets to produce better results.

 

We will propose our final dividend for the period to 31 December 2015 when we issue our preliminary results in March 2016.

 

I am particularly delighted to welcome my successor as Group CEO, Michael Karg, who joined the Company in January. Michael has an impressive background and I am confident I hand over to a worthy successor able and committed to take the Company to the next stage of its development.

 

 

Enquiries:

 

Ebiquity

020 7650 9600

Michael Karg, CEO

Michael Greenlees, Executive Director

Andrew Beach, CFOO

 


Instinctif Partners

Matthew Smallwood

Guy Scarborough

 

020 7457 2020

Numis Securities

Nick Westlake, Oliver Hardy (NOMAD)

David Poutney, James Serjeant (Corporate Broker)

020 7260 1000

 

 

1Source: Advertising Age 2014.

2Constant currency figures present current year foreign currency denominated results at last year's foreign exchange rates.

3 Underlying results are stated before highlighted items.

 

Overview

I am pleased to announce that for the half year to 31 October 2015 we have continued to grow our business whilst also improving margins. On a constant currency basis we have delivered:

 

•             Total revenue up 5% to £36.6m (2014: £35.0m)

•             Underlying operating profit growth of 16% to £4.8m (2014: £4.1m)

•             Underlying PBT growth of 17% to £4.2m (2014: £3.6m)

•             Underlying diluted EPS growth of 23% to 3.69p (2014: 3.0p)

 

The continuing demand for data analytics and performance measurement is driving strong like for like growth in both our Media Value Measurement and Marketing Performance Optimization practices at high margins. Our Market Intelligence practice is beginning to show signs of recovery in some markets as a result of further platform investment and innovation and the Group's increasing profile and reputation supporting new business conversion.

 

Our Vision

Our vision is to be the most respected, independent marketing analytics partner for brands and businesses worldwide.  In doing so, we aim to help our clients:

 

•           Achieve greater insights into the marketing landscape

•           Make better informed decisions

•           Achieve the best return on their media and marketing investments

•           Continually improve their business performance

•           Monitor competitors' advertising strategy and investments

•           Understand the value of their business and brand reputation

 

Summary of results

 

The table below sets out a summary of our results, on a constant currency and reported basis:

 


Six months ended 31 October 2015

(constant currency) £'000s

Six months ended 31 October 2015

 (reported)

£'000

Six months ended 31 October 2014

(reported)

£'000





Revenue

36,574

35,633

34,971

Underlying operating profit

4,797

4,457

4,146

Underlying operating profit margin %

13.1%

12.5%

11.9%

 

We enjoyed particularly significant revenue growth in MPO of 38%, with like for like constant currency growth of 29%.

 

This strong performance, combined with effective cost control in our Market Intelligence practice and Central head office costs, has resulted in an improvement in operating margin performance which has increased 120bps on a constant currency basis.

 

Presentation of results

 

Like for like ("LFL") figures adjust the prior year results to include the results of acquisitions as if they had been owned for the same period in the prior year.  Constant currency figures present current year foreign currency denominated results at last year's foreign exchange rates.

 

All results are reported before taking into account highlighted items, unless otherwise stated.  These highlighted items include share-based payment expenses, amortisation of purchased intangible assets, acquisition costs, restructuring and other non-recurring items.

 

MVM - Media Value Measurement (52% of total revenue)

 

The issues of accountability and transparency in media marketing have been high profile throughout 2015. Ebiquity leads the market in helping advertisers measure their media performance and secure a high level of financial visibility and return on investment in their media transactions.

 

Two key features of the industry have played to Ebiquity's strengths. Firstly, we have been advising our clients through an unprecedented wave of media agency reviews, where they are evaluating the service offering of different agency partners.

 

Secondly, the lack of transparency in the media markets has led to Ebiquity being appointed (alongside a corporate investigation firm) by the Association of National Advertisers (ANA), the US trade association for advertisers, to conduct a study of the US media market. This reflects a growing sense of unease among the world's advertisers as to the value they are achieving from their budgets, and this is one of the core specialisms of our MVM business.

 

Consequently, we see significant opportunity to expand into this market space as the questions over accountability and transparency intensify, especially given the extreme opacity of the digital market, where we believe our clients' reporting needs are under-served by their agency partners.

 

Total MVM revenue has increased by 1%. On a LFL constant currency basis revenue has increased by 2%. The MVM practice has been extremely active during this period, which has been marked by an increase in the number of clients we have advised during their media agency reviews. In the short term this has resulted in fewer recurring benchmark assignments, however recent evidence suggests that many of these assignments are now being reconfirmed.  Revenue growth, together with the continued management of our cost base, has enabled operating profit margins to improve by 30bps on a constant currency basis.

 


Six months ended 31 October 2015 (constant currency) £'000

Six months ended 31 October 2015 (reported)

£'000

Six months ended 31 October 2014 (reported)

£'000

Revenue

19,292

18,429

18,168

Operating profit

4,132

3,801

3,837

Operating profit margin %

21.4%

20.6%

21.1%

 

MI - Market Intelligence (34% of total revenue)

 

Ebiquity's Market Intelligence (MI) platform, 'Portfolio', is generating a positive client response following the investment we announced earlier in the year and we expect this to have a positive impact on revenue in the following renewal seasons.

 

The renewal rate (by value) increased to 96% (2014: 90%), providing confidence towards the outlook for 2016. The recent improvement in our renewal rates has slowed the decline we had previously experienced in our Portfolio subscription services, but our MI project based services have faced a more challenging climate and significantly contributed to the decline in revenues.

 

We have undertaken a number of initiatives to improve the efficiency of our data capture and processing which has enabled us to increase margins on both a reported and constant currency basis.

 


Six months ended 31 October 2015 (constant currency) £'000

Six months ended 31 October 2015 (reported)

£'000

Six months ended 31 October 2014 (reported)

£'000

Revenue

12,342

12,143

13,141

Operating profit

1,773

1,762

1,816

Operating profit margin %

14.4%

14.5%

13.8%

 

MPO - Marketing Performance Optimization (14% of total revenue)

 

Our MPO practice now represents 14% of our business (2014: 10%) reflecting the continued exciting levels of growth we are experiencing within the practice.

 

Marketing in the digital age is multi-channel, with data at its heart. During 2015 Ebiquity co-produced with the CMO Council a research study into the emerging needs of today's marketing professionals, and this clearly showed that the management of data is the number one priority in the new marketing landscape. This is the core area of expertise for our MPO teams, who conduct the data analytics and technology work to improve our clients' marketing performance.

 

Consequently MPO continues to flourish with revenue increasing by 38%, with LFL constant currency growth of 29%.

 

Over the past six months we have invested in resource to ensure we have sustainable revenue growth within our MPO practice. This has resulted in an expected decline in margins from 2014, but margins continue to remain the highest of our three practices.

 


Six months ended 31 October 2015 (constant currency) £'000

Six months ended 31 October 2015 (reported)

£'000

Six months ended 31 October 2014 (reported)

£'000

Revenue

4,940

5,061

3,662

Operating profit

1,642

1,657

1,446

Operating profit margin %

33.2%

32.7%

39.5%

 

Central costs

 

Central costs include central salaries (Board, Finance, Marketing, IT and HR), legal and advisory costs and property costs.  Central costs have decreased by 6% largely due to reduced recruitment costs of £0.1m, and an increase in foreign exchange gains of £0.1m.

 


Six months ended 31 October

2015

£'000

Six months ended 31 October

2014

£'000




Central costs

2,763

2,953

 

Margins

 

The underlying operating profit margin has improved from 11.9% to 13.1% on a constant currency basis as a result of increased margins in both the MVM and MI segments combined with a reduced central cost basis. The continuing strong growth from MPO has also improved Group margins as the MPO practice represents an increasing proportion of our business. 

 

Result before tax


Six months ended 31 October

2015

£'000

Six months ended 31 October

2014

£'000




Underlying operating profit

4,457

4,146

Highlighted items

(1,369)

(3,008)

Reported operating profit

3,088

1,138

Net finance costs

(598)

(569)

Share of profit of associates

4

8

Reported profit before tax

2,494

577

Underlying profit before tax

3,863

3,585

 

Highlighted items total £1.4m, which includes £1.0m of purchased intangible asset amortisation, £0.3m of share option charges, £0.1m acquisition and integration costs. The decrease from 2014 primarily reflects a £1.0m reduction in non-recurring acquisition and integration costs, £0.3m reduction in share option charges and the non-recurrence of £0.3m of fees arising from our the refinance of our banking facilities undertaken in 2014.

 

Reported profit before tax is up to £2.5m (2014: £0.6m) as a result of the underlying performance of the Group and the reduced level of highlighted items.  Underlying profit before tax is 8% higher at £3.9m (2014: £3.6m).

 

Dividend

 

Following the payment of our maiden dividend in October 2015, it is our intention to pay a final dividend for the period to 31 December 2015. The dividend will be proposed following the results for the 8 months to 31 December 2015 and reflects the Board's continued confidence in the Group's future.

 

Earnings per share

 

Underlying diluted earnings per share was 3.39p (2014: 3.00p), a 13% increase in reported underlying diluted earnings per share. On a constant currency basis the increase is 23% reflecting the margin improvement and cost control in the period.

 

Cash conversion


Six months ended 31 October 2015

Six months ended 31 October 2014


£'000

£'000




Reported cash from operations

2,586

1,980

Underlying cash from operations

4,347

3,768

Underlying operating profit

4,457

4,146

Cash conversion

98%

91%

 

Underlying cash from operations represents the cash flows from operations excluding the impact of highlighted items. The underlying net cash inflow from operations has improved significantly to £4.3m (2014: £3.8m). 

 

After highlighted items are considered, reported net cash inflow from operations for the period was up 31% to £2.6m (2014: £2.0m).

 

Due to stronger working capital management in the period, cash conversion has improved significantly. 

 

Net debt and banking facilities

 


As at

31 October

2015

As at
31 October 2014

As at

30 April 2015


£'000

£'000

£'000





Cash and cash equivalents

4,830

5,010

7,884

Bank debt1

(35,901)

(35,419)

(34,576)

Net debt

(31,071)

(30,409)

(26,692)

 

 

1 Bank debt on the Balance Sheet at 31 October 2015 is shown net of £0.2m (2014: £0.3m) of loan arrangement fees that have been paid and which are amortised over the life of the facility. The bank debt stated above excludes these costs.

 

At 31 October 2015, our total outstanding facilities comprised £6.9m of term loan (2014: £9.4m) and a revolving credit facility (RCF) of £30.0m of which £29.0m was drawn at 31 October 2015 (2014: £26.0m). Both the term loan and the RCF have a maturity date of 2 July 2018.

 

Statement of financial position and net assets

 

Net current assets as at 31 October 2015 have increased by £1.9m since 31 October 2014, and by £0.8m since 30 April 2015. 

 

Total deferred contingent consideration has decreased by a net £4.6m since 30 April 2015, largely due to the settlement of earn out obligations in the period (£4.1m). Remaining deferred consideration is currently estimated to be £4.4m which relates to our three most recent acquisitions, £3.0m of which is forecast to be settled in the next 12 months.

 

Change of year end

 

 

As previously announced the Group has changed its financial year end from 30 April to 31 December. The Board believes that a change to a December year end will provide greater certainty of year end out-turn earlier within the Group's financial year. The Group will publish its preliminary report for the eight months ended 31 December 2015 on 30 March 2016.

 

Adoption of Financial Reporting Standard (FRS) 101- Reduced Disclosure Framework

 

Following the publication of FRS 100, 'Application of financial reporting requirements', by the Financial Reporting Council, the Parent Company Ebiquity plc is required to change its accounting framework for its individual entity financial statements, which are currently prepared under UK GAAP, for its financial period commenced 1 May 2015. The Board considers that it is in the best interests of the Group for the Company to adopt FRS 101, 'Reduced disclosure framework'. No disclosures in the current UK GAAP financial statements would be omitted on adoption of FRS 101. A shareholder or shareholders holding in aggregate 5% or more of the total allotted shares in the Company can serve objections to the use of the disclosure exemptions on Ebiquity plc, in writing, to its registered office (CityPoint, One Ropemaker Street, London, EC2Y 9AW) not later than 10 February 2016.

 

Outlook

 

Following the announcement of our change of financial year end to 31 December, these results represent the last time the Company will report on the six months to 31 October. We will report our performance for the eight months to 31 December 2015 in March 2016, and these results will also include our performance for the 12 months ended 31 December 2015 against the equivalent period in 2014, both presented on a pro forma basis.

 

We expect to meet management's expectations for the 12 months to 31 December 2015, and anticipate the positive momentum from recent client wins and product investment to continue into 2016.

 

By order of the Board

 

Michael Karg

 

Michael Greenlees

Chief Executive Officer

Executive Director

 

Andrew Beach


Chief Financial and Operating Officer

 

26 January 2016

 


Consolidated Income Statement

for the six months ended 31 October 2015

 

 

 

 

 

Unaudited

6 months ended

31 October

2015

Unaudited

 6 months ended

31 October

2014

Audited

12 months ended

30 April

 2015


Note

£'000s

£'000s

£'000s

Revenue


35,633

34,971

73,874

Cost of sales


(16,151)

(16,107)

(32,383)

Gross Profit


19,482

18,864

41,491






Administrative expenses - excluding highlighted items

(15,025)

(14,718)

(29,762)

Administrative expenses - highlighted items

3

(1,369)

(3,008)

(5,913)

Total administrative expenses


(16,394)

(17,726)

(35,675)






Operating profit before highlighted items


4,457

4,146

11,729

Administrative expenses - highlighted items

3

(1,369)

(3,008)

(5,913)

Operating profit


3,088

1,138

5,816






Finance income


10

2

8

Finance expenses


(608)

(571)

(1,179)

Net finance expense


(598)

(569)

(1,171)






Share of profits of associates


4

8

12











Profit before tax and highlighted items


3,863

3,585

10,570

Highlighted items

3

(1,369)

(3,008)

(5,913)

Profit before tax


2,494

577

4,657











Tax before highlighted tax


(1,055)

(854)

(1,693)

Highlighted tax

3

311

467

1,155

Tax expense


(744)

(387)

(538)






Profit for the period


1,750

190

4,119






Attributable to:





Equity holders of the parent


1,631

(206)

3,623

Non-controlling interests


119

396

496



1,750

190

4,119






 

Consolidated Statement of Comprehensive Income

for the six months ended 31 October 2015

 


Unaudited

6 months ended

31 October 2015

Unaudited

 6 months ended

31 October 2014

Audited

  12 months ended

30 April

 2015






£'000

£'000

£'000





Profit for the period

Items that may be subsequently reclassified to profit or loss:

1,750

190

4,119

Exchange differences on translation of overseas subsidiaries

(979)

454

350

Movement in valuation of hedging instruments

-

40

52

Total comprehensive income for the period

771

684

4,521





Attributable to:




Equity holders of the parent

652

288

4,025

Non-controlling interests

119

396

496


771

684

4,521

 

 

Consolidated Statement of Financial Position

as at 31 October 2015

 



Unaudited

as at

31 October

2015

Unaudited

as at

31 October

2014

Audited

as at

30 April

2015


Note

£'000s

£'000s

£'000s

Non-current assets





Goodwill

6

57,415

55,418

58,096

Other intangible assets

7

14,363

14,031

15,178

Property, plant and equipment


3,014

3,578

3,194

Investment in associates


36

28

32

Deferred tax asset


1,684

1,205

1,408

Total non-current assets


76,512

74,260

77,908






Current assets





Trade and other receivables


28,926

23,095

29,879

Cash and cash equivalents

8

6,808

5,010

9,295

Total current assets


35,734

28,105

39,174






Total assets


112,246

102,365

117,082






Current liabilities





Trade and other payables


(6,074)

(5,535)

(7,489)

Accruals and deferred income


(9,903)

(7,706)

(11,510)

Financial liabilities

9

(7,436)

(4,867)

(8,761)

Current tax liabilities


(1,465)

(1,114)

(1,280)

Provisions


(84)

(30)

(121)

Total current liabilities


(24,962)

(19,252)

(29,161)






Non-current liabilities





Financial liabilities

9

(34,640)

(35,870)

(35,957)

Provisions


(485)

(634)

(485)

Deferred tax liability


(2,656)

(2,730)

(2,821)

Total non-current liabilities


(37,781)

(39,234)

(39,263)






Total liabilities


(62,743)

(58,486)

(68,424)






Total net assets


49,503

43,879

48,658






Equity





Ordinary shares


19,290

18,873

19,193

Share premium


11,740

10,750

11,657

Other reserves


(207)

861

772

Retained earnings


17,732

12,659

16,012

Equity attributable to the owners of the parent


48,555

43,143

47,634

Non-controlling interests


948

736

1,024

Total equity


49,503

43,879

48,658

 

 

Consolidated Statement of Changes in Equity

for the six months ended 31 October 2015


 

Ordinary shares

 

Share premium

 

Other reserves

 

Retained earnings

 

Total

Non-controlling interests

 

Total equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000

1 May 2014

18,873

10,750

367

13,810

43,800

717

44,517

(Loss)/Profit for the period

-

-

-

(206)

(206)

396

190

Other comprehensive (loss)/income

-

-

494

-

494

-

494

Total comprehensive (loss)/income for the period

-

-

494

(206)

288

396

684

Acquisition of non-controlling interest

-

-

-

(1,345)

(1,345)

(65)

(1,410)

Share options charge

-

-

-

642

642

-

642

Deferred tax on share options

-

-

-

(242)

(242)

-

(242)

Dividends paid to non-controlling interests

-

-

-

-

-

(312)

(312)

31 October 2014

18,873

10,750

861

12,659

43,143

736

43,879

Profit for the period

-

-

-

3,829

3,829

100

3,929

Other comprehensive (loss)/income

-

-

(92)

-

(92)

-

(92)

Total comprehensive (loss)/income for the period

-

-

(92)

3,829

3,737

100

3,837

Shares issued for cash

79

110

3

(3)

189

-

189

Acquisition of non-controlling interest

241

797

-

(1,218)

(180)

178

(2)

Share options charge

-

-

-

573

573

-

573

Deferred tax on share options

-

-

-

172

172

-

172

Dividends paid to non-controlling interests

-

-

-

-

-

10

10

30 April 2015

19,193

11,657

772

16,012

47,634

1,024

48,658

Profit for the period

-

-

-

1,631

1,631

119

1,750

Other comprehensive (loss)/income

-

-

(979)

-

(979)

-

(979)

Total comprehensive (loss)/income for the period

-

-

(979)

1,631

652

119

771

Shares issued for cash

97

83

-

-

180

-

180

Share options charge

-

-

-

132

132

-

132

Deferred tax on share options

-

-

-

248

248

-

248

Dividends paid to non-controlling interests

-

-

-

-

-

(195)

(195)

Dividends paid to equity holders of the parent

-

-

-

(291)

(291)

-

(291)

31 October 2015

19,290

11,740

(207)

17,732

48,555

948

49,503

 

 

 

Consolidated Cash Flow Statement

for the six months ended 31 October 2015

 

 

 

 

 


Unaudited

6 months

ended

31 October

2015

Unaudited

6 months

ended

31 October

2014

Audited

12 months

ended

30 April

2015


Note

£'000s

£'000s

£'000s

Cashflows from operating activities





Cash generated from operations

10

2,586

1,980

7,927

Finance expense paid


(598)

(793)

(1,242)

Finance income received


10

2

8

Income taxes paid


(755)

(1,129)

(1,618)






Net cash from operating activities


1,243

60

5,075






Cashflows from investing activities





Acquisition of subsidiaries, net of cash acquired


(3,002)

(4,826)

(5,248)

Disposal of investments


-

68

68

Purchase of property, plant and equipment


(377)

(1,174)

(1,464)

Purchase of intangible assets


(651)

(734)

(1,664)






Net cash used in investing activities


(4,030)

(6,666)

(8,308)






Cashflows from financing activities





Proceeds from issue of share capital (net of issue costs)


180

-

252

Proceeds from bank borrowings


2,578

36,057

36,703

Repayment of bank borrowings


(1,250)

(29,857)

(31,107)

Bank loan arrangement fees paid


-

(360)

(360)

Interest rate swap closure


-

(29)

(29)

Acquisition of interest in a subsidiary from non-controlling interests


(1,061)

(282)

(282)

Dividends paid to equity holders of the parent


(291)

-

-

Dividends paid to non-controlling interests


(195)

(243)

(259)

Capital repayment of finance leases


(4)

(193)

(197)






Net cash flow from financing activities


(43)

5,093

4,721






Net (decrease)/increase in cash, cash equivalents and bank overdrafts


(2,830)

(1,513)

1,488

Cash, cash equivalents and bank overdrafts at beginning of period


7,884

6,521

6,521

Effect of unrealised foreign exchange (losses)/gains


(224)

2

(125)

Cash, cash equivalents and bank

overdrafts at end of period

8

4,830

5,010

7,884

 

Notes to the interim financial statements for the six months ended 31 October 2015

 

1.  Accounting policies

 

Basis of preparation

 

The financial information presented in this documentation has been prepared using recognition and measurement principles which are consistent with International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations that are endorsed for use in the European Union. Further standards or interpretations may also be issued that could be applicable for the period ended 31 December 2015.  These potential changes could result in the need to change the basis of accounting or presentation of certain financial information from that presented in this document.

 

The comparatives for the period ended 30 April 2015 are not the Company's full statutory accounts for that year but are drawn up from those accounts. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498(2)-(3) of the Companies Act 2006.

 

As permitted by AIM rules, the group has not applied IAS 34 'Interim Reporting' in preparing this interim report.

 

There are no new IFRSs or IFRIC interpretations that are effective for the first time for the financial period beginning 1 May 2015 that would be expected to have a material impact on the Group.

 

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 three business practices (Media Value Measurement, Market Intelligence and Marketing Performance Optimization), as this most accurately reflects the way the Group is being managed.

 

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 period ended 31 October 2015 is as follows:

 

Unaudited six months ended 31 October 2015


 

Media Value Measurement

 

Market Intelligence

Marketing Performance Optimization

 

Reportable Segments

 

 

Unallocated

 

 

Total


£'000

£'000

£'000

£'000

£'000

£'000








Revenue

18,429

12,143

5,061

35,633

-

35,633







Operating profit before highlighted items

3,801

1,762

1,657

7,220

(2,763)

4,457








Unaudited six months ended 31 October 2014


 

Media Value Measurement

 

Market Intelligence

Marketing Performance Optimization

 

Reportable Segments

 

 

Unallocated

 

 

Total


£'000

£'000

£'000

£'000

£'000

£'000








Revenue

18,168

13,141

3,662

34,971

-

34,971







Operating profit before highlighted items

3,837

1,816

1,446

7,099

(2,953)

4,146








Year ended 30 April 2015


 

Media Value Measurement

 

Market Intelligence

Marketing Performance Optimization

 

Reportable Segments

 

 

Unallocated

 

 

Total


£'000

£'000

£'000

£'000

£'000

£'000








Revenue

40,046

25,768

8,060

73,874

-

73,874







Operating profit before highlighted items

11,224

3,447

2,905

17,576

(5,847)

11,729








 

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

 


Unaudited

6 months ended

31 October 2015

Unaudited

6 months ended

31 October

2014

Audited

12 months ended

30 April

2015


£'000

£'000

£'000

Reportable segment operating profit before highlighted items

7,220

7,099

17,576

Unallocated costs:




  Staff costs

(2,438)

(2,604)

(4,773)

  Property costs

(220)

(221)

(404)

  Exchange rate movements

17

(78)

(179)

  Other administrative expenses

(122)

(50)

(491)

Operating profit before highlighted items

4,457

4,146

11,729

Highlighted items (note 3)

(1,369)

(3,008)

(5,913)

Operating profit

3,088

1,138

5,816

Net finance costs

(598)

(569)

(1,171)

Share of profit of associates

4

8

12

Profit before tax

2,494

577

4,657

 

Unallocated costs comprise central costs that are not considered attributable to the segments.

 

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

6 months

ended

31 October

2015

Unaudited

6 months

ended

31 October

2014

Audited

12 months

ended

30 April

2015


£'000s

£'000s

£'000s





Recurring:




Share option charge

294

642

1,355

Amortisation of purchased intangibles

1,019

999

2,030


1,313

1,641

3,385

Non-recurring:




Acquisition and integration costs

56

1,029

1,730

Refinancing costs

-

338

404

Property costs

-

-

394


56

1,367

2,528





Total highlighted items before tax

1,369

3,008

5,913





Deferred tax on tax losses

-

-

-

Taxation credit

(311)

(467)

(1,155)





Total highlighted items after tax

1,058

2,541

4,758

 

Share option charges include the non-cash IFRS 2 charge (£132,000) along with the cash element in relation to the exercising of share options (£162,000).

 

Amortisation of purchased intangibles of £1,019,000 relates to acquisitions made in prior years.

 

Acquisition costs represent professional fees incurred in relation to acquisitions (£172,000) and adjustments to the fair value of deferred consideration (a credit of £504,000; 2014: £545,000 debit) resulting primarily from a downward revision of deferred consideration in relation to one acquisition and discounting all deferred consideration balances to net present value, partially offset by the related foreign exchange impacts (£42,000). Integration costs include certain one-off costs incurred whilst integrating the acquisitions made in the prior financial years including severance costs arising from the restructure of senior management following these acquisitions (£150,000). Also included are fees in relation to the appointment and ongoing succession planning in relation to the new Group CEO (£193,000).

 

4.  Dividends

 


Unaudited

6 months

ended

31 October

2015

Unaudited

6 months

ended

31 October

2014

Audited

12 months

ended

30 April

2015


£'000s

£'000s

£'000s





Dividends to equity holders of the parent




Ordinary final dividend for the year ended 30 April 2015 of 0.4p per share

291

-

-





Total

291

-

-

 

 

No interim dividend is being proposed (2014: nil).

 

5.  Earnings per share

 

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

 


Unaudited

6 months ended

31 October 2015

Unaudited

6 months ended

31 October 2014

Audited

12 months ended

30 April  2015


£'000s

£'000s

£'000s

Earnings for the purpose of basic earnings per share being net profit attributable to equity holders of the parent

1,631

(206)

3,623





Adjustments:




Impact of highlighted items (net of tax)1

1,047

2,522

4,723

Earnings for the purpose of underlying earnings per share

2,678

2,316

8,346





Number of shares:




Weighted average number of shares during the period




-     Basic

76,914,760

75,491,111

75,820,669

-Dilutive effect of share options

2,025,736

1,750,017

2,084,430


78,940,496

77,241,128

77,905,099





Basic earnings per share

2.12p

(0.27)p

4.78p

Diluted earnings per share

2.07p

(0.27)p

4.65p

Underlying basic earnings per share

3.48p

3.07p

11.01p

Underlying diluted earnings per share

3.39p

3.00p

10.71p

 

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

 

It is assumed that all contingent deferred consideration will be settled in cash and therefore there is no dilutive effect.

 

6.  Goodwill

 



£'000

Cost and net book value



At 1 May 2014


55,121

Foreign exchange differences


297

At 31 October 2014


55,418

Adjustments in respect of a pre-acquisition period


3

Acquisitions


2,787

Foreign exchange differences


(112)

At 30 April 2015


58,096

Adjustments in respect of a pre-acquisition period


(181)

Foreign exchange differences


(500)

At 31 October 2015


57,415

 

7.  Other intangible assets

 


Capitalised

development

costs

Computer software

 

Purchased

intangible

assets

Total

intangible assets


£'000s

£'000s

£'000s

£'000s

Cost





At 1 May 2015

2,997

2,194

23,259

28,450

Additions

503

148

-

651

Foreign exchange

(27)

(1)

(232)

(260)






At 31 October 2015

3,473

2,341

23,027

28,841






Amortisation





At 1 May 2015

(1,136)

(1,120)

(11,016)

(13,272)

Charge for the period

(133)

(137)

(1,019)

(1,289)

Foreign exchange

-

1

82

83






At 31 October 2015

(1,269)

(1,256)

(11,953)

(14,478)






Net book value










At 31 October 2015

2,204

1,085

11,074

14,363






At 31 October 2014

1,245

1,030

11,756

14,031






At 30 April 2015

1,861

1,074

12,243

15,178

 

The capitalised development costs are internally generated.

 

Purchased intangible assets consist principally of customer relationships with a typical useful life of 10 years.

 

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.

 

8.  Cash, cash equivalents and bank overdrafts

 

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

 


31 October 2015

31 October

2014

30 April

2015


£'000

£'000

£'000





Cash and cash equivalents

6,808

5,010

9,295

Bank overdraft (note 9)

(1,978)

-

(1,411)





Cash, cash equivalents and bank overdrafts

4,830

5,010

7,884

 

 

9.  Financial liabilities

 


31 October 2015

31 October

2014

30 April

2015


£'000

£'000

£'000

Current




Bank overdraft

1,978

-

1,411

Bank borrowings

2,410

2,410

2,411

Finance lease liabilities

4

4

4

Derivative financial instrument - interest rate swaps

-

12

-

Contingent deferred consideration

3,044

2,441

4,935


7,436

4,867

8,761





Non-current




Bank borrowings

33,251

32,679

31,880

Finance lease liabilities

8

17

13

Contingent deferred consideration

1,381

3,174

4,064


34,640

35,870

35,957





Total financial liabilities

42,076

40,737

44,718

 

All bank borrowings are held jointly with Barclays and Royal Bank of Scotland ('RBS'). The committed facility, totalling £40,000,000, comprises a term loan of £10,000,000 (of which £6,875,000 remains outstanding at 31 October 2015 (2014: £9,375,000)), and a revolving credit facility ('RCF') of £30,000,000 (of which £29,026,000 was drawn down at 31 October 2015 (2014: £26,044,000)). Both the term loan and the RCF have a maturity date of 2 July 2018. The £10,000,000 term loan is being repaid on a quarterly basis to maturity, and 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 £240,000 (2014: £330,000) are offset against the term loan, and are being amortised over the period of the loan.

 

The facility bears variable interest of LIBOR plus a margin of 2.50%. The margin rate is able to be lowered each quarter end from April 2015 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 5 business days' notice.

 

All amounts owing to the banks 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, USA and Germany.

 

Contingent deferred consideration represents additional amounts that are expected to be payable for acquisitions made by the Group and is held at fair value at the Statement of Financial Position date. All amounts are expected to be fully paid by August 2017.

 

10.  Cash generated from operations

 


Unaudited

6 months ended

31 October 2015

Unaudited

6 months ended

31 October 2014

Audited

12 months ended

30 April  2015





£'000

£'000

£'000

Profit before taxation

2,494

577

4,657

Adjustments for:




Depreciation

561

657

1,249

Amortisation (note 7)

1,289

1,225

2,515

Profit on disposal

-

(1)

(1)

Loan fees written off

-

131

131

Interest rate swap closure

-

29

29

Unrealised foreign exchange loss/(gain)

384

(19)

208

Share option charges (note 3)

132

642

1,215

Finance income

(10)

(2)

(8)

Finance expenses

608

571

1,179

Share of profit of associates

(4)

(8)

(12)

Contingent deferred consideration revaluations

(462)

545

548


4,992

4,347

11,710

Decrease/(increase) in trade and other receivables

945

3,216

(2,270)

Decrease in trade and other payables

(3,314)

(5,168)

(1,040)

Movement in provisions

(37)

(415)

(473)

Cash generated from operations

2,586

1,980

7,927

 

 

11.  Events after the reporting period

 

Subsequent to the period end, the Group acquired the remaining 35% in its subsidiary undertaking, Fairbrother Iberica and Partners SL, from the minority shareholder for cash consideration of €60,000 (£44,000). Subsequently Fairbrother Iberica and Partners SL was liquidated and its business and assets were transferred to Media Value SL.

  

INDEPENDENT REVIEW REPORT TO EBIQUITY PLC

 

Report on the consolidated interim results

 

Our conclusion

 

We have reviewed Ebiquity plc's consolidated interim results (the "interim financial statements") in the interim results of Ebiquity plc for the 6 month period ended 31 October 2015. 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 International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the AIM Rules for Companies.

 

What we have reviewed

 

The interim financial statements comprise:

 

·      the consolidated statement of financial position as at 31 October 2015;

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

·      the consolidated statement of cash flows 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 results have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the AIM Rules for Companies.

 

As disclosed in note 1 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

 

Responsibilities for the interim financial statements and the review

 

Our responsibilities and those of the directors

 

The interim results, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim results 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 results 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 Ireland) 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 results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

 

PricewaterhouseCoopers LLP

Chartered Accountants

London

 

26 January 2016

 

a)   The maintenance and integrity of the Ebiquity plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim financial statements since they were initially presented on the website.

 

b)   Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.


This information is provided by RNS
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