TIDMEBQ
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Ebiquity PLC
30 March 2023
30 March 2023
Ebiquity plc
Final Results for the year ended 31 December 2022
Delivering a strong performance with continued opportunities for
growth
Ebiquity plc ("Ebiquity", the "Company" or the "Group"), a
leading global player in media investment analysis, operating in
the US$930 billion global advertising market (1) , announces its
results for the year ended 31 December 2022.
Financial Highlights(2)
Year ended 31 December 2022 2021 Change
GBPm GBPm GBPm %
------- ------- ------ -----
Revenue 76.0 63.1 12.9 20%
------- ------- ------ -----
Adjusted Operating Profit(2) 9.3 4.7 4.6 98%
------- ------- ------ -----
Adjusted Operating Profit
Margin % 12% 7% - 5 pp
------- ------- ------ -----
Adjusted Profit before Tax(2) 8.0 4.1 3.9 95%
------- ------- ------ -----
Adjusted Earnings per Share(2) 5.4p 2.7p 2.7p 98%
------- ------- ------ -----
Statutory Operating Loss (5.9) (5.1) (0.8) 16%
------- ------- ------ -----
Statutory Loss before Tax (7.2) (5.7) (1.5) 26%
------- ------- ------ -----
Statutory Loss per Share (6.9)p (8.5)p 1.6p -
------- ------- ------ -----
(1) Source eMarketer
(2) In the reporting of financial information, the Directors
have adopted various alternative performance measures ('APMs').
Details of their calculation are set out in page17 of this
statement.
-- Revenue increased by GBP12.9 million (20%) to GBP76.0 million
and organically by GBP5.7 million (9%)
-- Adjusted operating profit increased by 98% to GBP9.3 million
-- Adjusted operating profit margin increased by 5 percentage points to 12%
-- Acquisitions in the period contributed revenue of GBP6.8 million
-- Statutory operating loss increased by GBP0.8 million to
GBP5.9 million (2021: GBP5.1 million) as a result of the increased
level of highlighted items up by GBP6.1 million to GBP15.2 million
(2020: GBP9.3 million)
-- Highlighted items include accruals in the period of GBP7.9
million towards the contingent consideration for the acquisition of
Digital Decisions B.V of GBP15.8 million, payable in 2023 (based on
its strong performance in 2021 and 2022)
-- Net debt of GBP9.1 million: cash balances of GBP12.4 million
and bank borrowings of GBP21.5 million as at 31 December 2022 with
undrawn bank facilities of GBP8.5 million
-- Statutory cashflow from operations of GBP1.1 million (2021: GBP8.7 million)
-- Adjusted cashflow from operations of GBP6.2 million (2021:
GBP13.2 million), representing cash conversion of 67%
Strong operational performance
-- Improved profitability across all regions and business units
-- Significant growth from the Media performance service line
-- Higher margin Digital Media Solutions revenue increased by 76% to GBP6.5 million
-- Major new assignments won including Shell, HSBC, Philips, Pepsico
Growth outlook
-- Trading in the current year has started in line with the
Board's expectations, with continued growth momentum and
opportunities for operational efficiencies
Retirement of Chief Financial Officer and Chief Operating
Officer
-- Alan Newman will be retiring at the end of June. Our search
for his replacement is well advanced. He has made a significant
contribution to the business and the Board wishes him all the best
for the future
Nick Waters, Chief Executive Officer, said:
"We have delivered a strong performance in 2022 and made
significant progress against our strategic objectives and target
operating metrics. This has resulted in a significant increase in
revenue, which was up 20%, including organic growth of 9% and
adjusted operating profit almost doubling. It is particularly
pleasing that we have also seen a strong adjusted profit margin
improvement from 7% in FY21 to 12% in FY22, especially as this was
achieved against a challenging economic environment.
We made three important acquisitions in 2022. The acquisition of
Media Management Inc doubled the size of our business in the USA -
the world's largest advertising market - and enhanced our service
offering. Media Path Network, headquartered in Sweden, has brought
a high-quality data management platform which will enhance our
operating efficiency. The acquisition of Forde and Semple gained us
entry into the Canadian market. The integration of all three
companies has progressed well.
Revenue from our portfolio of Digital Media Solutions continued
to grow strongly and maintained a high margin. Geographically, in
addition to scaling the North America and European businesses, our
Asia Pacific region continued to grow well.
Additionally, the demand for our services was strong and we won
a wide range of new mandates from major clients including Shell,
HSBC, Jaguar Land Rover, Philips and Pepsico, demonstrating the
competitive strength of our business.
As we look to 2023, we see continued growth opportunities. The
global media market is highly complex, creating significant
challenges for our clients, brand marketers. Ebiquity's expanding
product and service offering, breadth of geographic presence, and
depth of expertise makes us well placed to fulfil advertisers'
needs. Trading in the current year has started in line with
expectations."
Details of presentations
The Executive Directors will host a webcast presentation for
analysts at 09:30 BST today. If you would like to register to
attend, please contact phoebe.a.pugh@camarco.co.uk .
They will also give a presentation via the Investor Meet Company
platform on Monday 3 April at 09:00 BST. The presentation is open
to all existing and potential shareholders. Questions can be
submitted pre-event via the Investor Meet Company dashboard up
until 09:00 BST on the day before the meeting or at any time during
the live presentation. Investors can sign up to Investor Meet
Company for free and add to meet Ebiquity plc via:
https://www.investormeetcompany.com/ebiquity-plc/register-investor
. Investors who already follow Ebiquity plc on the Investor Meet
Company platform will automatically be invited.
Market abuse regulation
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014 as it forms part of UK
domestic law by virtue of the European Union (Withdrawal) Act 2018
("UK MAR"). Upon the publication of this announcement via a
Regulatory Information Service this inside information is now
considered to be in the public domain.
The person responsible for arranging release of this
announcement on behalf of the Company is Alan Newman, Chief
Financial Officer and Chief Operating Officer of the Company.
Ebiquity plc +44 20 7650 9600
Nick Waters, CEO
Alan Newman, CFO & COO
Camarco
Ben Woodford +44 7990 653 341
Geoffrey Pelham-Lane +44 7733 124 226
Panmure Gordon (Financial Adviser, Nomad and
Broker) +44 20 7886 2500
Dominic Morley / Dougie McLeod (Corporate Advisory)
Mark Murphy/ Sam Elder (Corporate Broking)
About Ebiquity plc
Ebiquity plc (LSE AIM: EBQ) is a world leader in media
investment analysis. It harnesses the power of data to provide
independent, fact-based advice, enabling brand owners to perfect
media investment decisions and improve business outcomes. Ebiquity
is able to provide independent, unbiased advice and solutions to
brands because we have no commercial interest in any part of the
media supply chain.
We are a data-driven solutions company helping brand owners
drive efficiency and effectiveness from their media spend,
eliminating wastage and creating value. We provide analysis and
solutions through five Service Lines: Media management, Media
performance, Marketing effectiveness, Technology advisory and
Contract compliance.
Ebiquity's clients are served by more than 500 media
specialists, covering 80% of the global advertising market.
The Company has the most comprehensive, independent view of
today's global media market, analysing US$55bn of media spend from
75 markets annually, including trillions of digital media
impressions. Our Contract compliance division, FirmDecisions,
audits US$40bn of contract value annually.
As a result, over 70 of the world's top 100 advertisers today
choose Ebiquity as a trusted independent media advisor.
For further information, please visit: www.ebiquity.com
Chair's Statement
During 2022, we have seen the benefits resulting from our
strategy of refocussing the business and of the transformation
programme under way in our products, management, operational
processes and technology platform. As a result, the Group is
reporting a strong performance with revenue, adjusted operating
profit and adjusted profit margins all increasing significantly
compared to 2021. This reflects good organic revenue growth of 9%
as well as the contribution from the three acquisitions made in the
year.
This performance has been achieved despite evident challenges in
the political and economic environment affecting our clients, many
of whose businesses operate globally, including the impact of the
war in Ukraine and the recent rapid increase in inflation in most
economies.
The Group's statutory operating loss increased to GBP5.9
million. This is impacted by highlighted items of GBP15.2 million,
a number of which will not recur in future periods.
We are also announcing today that Alan Newman our Chief
Financial Officer and Chief Operating Officer, will be retiring at
the end of June. Our search for his replacement is well advanced
and we will provide an update on this in due course. I should like
to take the opportunity, on behalf of myself and the Board, to
thank Alan for his hard work and commitment to the Group over the
past four years. He has made a significant contribution to the
successful development and re-positioning of our business during
that time. We wish him all the best for the future.
On behalf of the Board, I would also like to thank all of our
employees for their hard work, creativity and commitment this year.
In recognition of the cost-of-living challenges faced by our staff,
the Group was pleased to make a one-off payment in October to
support those who were more in need. Although the impact of the
Covid pandemic generally reduced this year, we note that our staff
and business in China continued to experience disruptions.
It is pleasing to report that Digital Decisions, which we
acquired as an early stage start up in 2020, has more than met
expectations over the last three years, both in spearheading the
development of our Digital Media Solutions business line and in the
revenue and profit contribution it has delivered to the Group.
During the year we made three acquisitions: Media Path Network,
a global business based in Europe; Media Management LLC (MMi) in
the USA and our external partner in Canada, Forde and Semple. The
integration of these acquisitions is progressing well. They are
already helping to transform our business and have increased our
global scale and client coverage in key markets, as well as
enhancing our earnings. As set out in our strategy, we will
continue to explore opportunities to build further capability in
key media markets.
The divestment of our shareholding in the Russian business, as
previously announced, is in process, although it remains subject to
Russian government approval.
As a leading global provider of media investment analysis,
Ebiquity continues to ensure that it supports the needs of
advertisers in navigating the fast-changing media landscape.
Ebiquity's core strengths include our media expertise, independence
and ability to develop innovative products as new media channels
emerge. We deploy these through our international network, now
present in 18 countries and our team of media specialists located
across it, both of which are unmatched in our sector. We recognise
that our growth also depends on our ability to deepen relationships
with existing clients and to win new mandates on the strength of
our offering. Our team's focus on improving the management of key
client relationships has contributed to our successful growth in
the past year.
During the year, we have continued on our ESG journey. We have
measured our Scope 1-3 consumption across our top six markets (81%
of our business) and from this we identified the major areas to
address. As expected for a professional services company, our
consumption is dominated by Scope 3 emissions, which account for
over 90% of our total emissions. The key categories are purchased
goods and services, fuel and energy related activities, waste
generation and travel. Actions being taken to reduce our
consumption include having a hybrid working policy, guidance for
business travel and analysis of our supply chain. During 2023 we
will begin planning our pathway to net zero and prepare to report
under the new UK regulations on Climate-Related disclosure in
2024.
Ebiquity's market opportunity within the global advertising
market is huge as digital advertising continues to develop fast and
our clients face increasingly complex challenges in managing their
advertising investments. We have a clear strategy for capitalising
on this opportunity and enhancing our leadership position. Our
results this year demonstrate our management team's ability to
deliver growth and to improve profitability. They have a
comprehensive plan for further improving margins over the medium
term through process efficiency, use of our technology platforms
and deployment of resources in line with our global scale. While
ensuring we deliver organic growth, we will also consider
opportunities to make further acquisitions that benefit our
business.
The Board and I remain confident that Ebiquity is well placed to
deliver growth and value to our shareholders.
Rob Woodward
Chair
Chief Executive Officer's Review
Unique market position
Ebiquity's purpose is simple. We exist to help brand owners
increase returns from their media investments and so improve
business performance. We do this by analysing billions of dollars
of advertising spend globally, as well as trillions of advertising
impressions. Using this intelligence, we provide independent,
fact-based advice which enables brands to drive efficiency and
increase effectiveness. Our work helps to eliminate wasteful
advertising spend and to create value.
As the world leader in media investment analysis, we count over
70 of the world's top 100 advertisers as our clients. We are
entirely independent of the media supply chain, which enables us to
provide clients with objective, unbiased advice. We do this through
our global network of over 600 media specialists based in 18
countries, which covers some 80% of the world's advertising
spend.
We operate in a very large global advertising market, which is
worth over US$930 billion per year (Source:- eMarketer). We analyse
c. US$100 billion of global media investment and contract value
annually, including more than a trillion digital media impressions.
Some two-thirds of this is spent through digital media
channels.
A year of delivery
I am very pleased with our performance during the year. We are
delivering effectively against our four key strategic objectives
which are to: develop higher value strategic relationships with
more clients; develop productised solutions for the digital market;
improve operating efficiency; and increase scale in the US and Asia
Pacific. As a result, we have delivered a strong revenue
performance up 20% to GBP76 million, and up organically by 9%, with
adjusted operating profit almost doubled to GBP9.3 million. It is
particularly pleasing that we have also seen a strong adjusted
profit margin improvement from 7% in FY21 to 12% in FY22,
especially as this was achieved within a challenging economic
environment.
Our performance reflected a good contribution from our largest
service line, Media Performance, where revenue grew by 33%,
benefiting from our three acquisitions during the year and the
growth of Digital Media Solutions within it. Contract Compliance
was the standout organic performer with 25% revenue growth.
Marketing Effectiveness was flat year on year but its profitability
improved reflecting strong discipline in declining several large
but unprofitable renewals. Media Management had a more challenging
year with revenue declining by 6%, reflecting lower agency
selection activity in the market compared to the post-pandemic
"surge" year of 2021. During the year Tech Advisory, our smallest
service line, became part of Media Management within which it is a
more natural fit.
Acquisitions driving growth
We made two transformative acquisitions in 2022: Media
Management LLC (MMi) in the USA and Media Path Network AB (Media
Path) in Europe. The US acquisition has enabled us to more than
double our size in the world's biggest advertising market and
significantly increased our penetration of large US advertisers.
With the acquisition of Media Path we have a globally distributed
business managed from Sweden, operating a high quality technology
platform, which is providing us with an effective base from which
to drive greater efficiency in the delivery of our services
Group-wide. We have made good progress in integrating these
businesses, having successfully started the process of
transitioning client work to the GMP365 technology platform We also
delivered synergy benefits in the year in line with our stated goal
of achieving GBP5 million annualised benefits by 2025. Importantly,
both acquisitions have contributed positively to these results. In
addition, we also made the small, tactical acquisition of Ford
& Semple (now renamed Ebiquity Canada) to provide us with
further scale in North America. As part of accelerating our growth
we will continue to identify suitable acquisition
opportunities.
Product Innovation driving growth
One of the key drivers of our growth has been the development of
innovative Digital Media Solutions that meet client needs. We now
have seven productised Digital Media Solutions in the market, with
the global Digital Governance programme representing the core
solution to which other products are often added. The demand for
these products has enabled us to increase DMS revenue by 76% to
GBP6.5 million (2021: GBP3.7 million) and to deliver a margin of
over 50%. Underpinning this performance are the major strides we
have made against the target operational metrics we set ourselves
(see Table below). 55 clients now buy one or more Digital Media
Solutions, up from 28 last year, and we are ahead of expectations
in terms of the deep pool of data we are able to analyse. This now
covers 1.4 trillion digital media impressions worth US$6.6bn
annually. The number of markets to which our analysis extends now
stands at 91, up from 87 last year, further demonstrating our
ability to provide visibility and advice to the largest global
advertisers across the entire geographical breadth of their
operations. Our most recent new product development is a solution
for Advanced Television, which is in a pilot stage in the USA and
we also have a Retail Media solution under development.
One of the main products that we developed during the year was a
Responsible Media Investment solution which supports advertisers in
their efforts to improve governance of their media investments. It
provides clients with visibility on whether their media spend is
funding bad actors, namely publishers guilty of distributing
disinformation or intellectual property theft, promoting hate
speech, or aiding "Made for Advertising" websites that siphon off
media investment without providing any value to the brand owner.
This is not only an important landscape for our clients to navigate
carefully but also one where we want to play an active role in
providing a solution. We have therefore become a Signatory to the
EU Code of Practice on Disinformation and are supporting the EU and
its member states in reducing funding of disinformation.
In this spirit, we have also continued to lead our market in
thought leadership, shaping industry debate on major topics and
responding to market events. One of the major initiatives we
undertook was to produce our first study using Scope3 data to
measure the CO(2) impact of digital advertising. In "The Hidden
Cost of Digital Advertising" we found that a sample of 116 billion
impressions from US$375m spend across 43 advertisers in 11 markets
generated 77,826 metric tonnes of CO(2) - an average of 670 grammes
per 1,000 impressions - the equivalent of flying c. 1.35m
passengers from London to Paris. This quantum of CO(2) emissions
would take 3.7m trees a year to absorb. As a result of this study,
we have introduced a new metric CO2PM (grams of CO(2) equivalents
per 1,000 impressions) which we believe should be adopted
immediately by the industry as a core metric to influence decision
making and lead technology and media partners to optimise their
practices to increase sustainability.
Operational metrics
Underpinning this year's performance are the major strides we
have made against the target operational metrics as shown in the
table below
Table 1: Operational Metrics
Key Performance Indicator Baseline 2021 2022
2020 actual actual
No. of clients buying one or more products
from the new digital portfolio 10 28 55
--------- -------- -------
Volume of digital advertising monitored
(trillions of impressions) 0.1 0.6 1.4
--------- -------- -------
Value of digital advertising monitored
(billions of spend US$) 0.5 3.0 6.6
--------- -------- -------
No. of countries served with new digital
products 50 87 91
--------- -------- -------
No. of clients buying two or more Services
Lines 58 76 97
--------- -------- -------
% of revenue from digital services 25% 29% 32%
--------- -------- -------
Strong client relationships driving growth
Ebiquity's primary target market comprises the world's top 100
advertisers. Our strategy is to develop high value relationships
from an increasing number of key clients. We have made good
progress against this ambition with the number of clients buying
two or more Service Lines rising from 76 in 2021 to 97 in 2022. The
demand for our services remains strong and we have won a number of
significant new clients including Philips, Upfield, Qatar Tourism
and Kering.
Creating a more efficient business
An unrelenting focus on improving our operating efficiency has
helped to deliver the strong improvement in adjusted operating
margin in FY22. We have reduced production costs by 4% compared to
the prior year and took a number of other actions to improve
productivity. These included not renewing unprofitable assignments
and increasing revenues from higher margin digital solutions
through a better product mix. In addition, our Media Operations
Centre in Madrid continues to deliver economies of scale, with 20%
more productive hours delivered this year as a result of further
transfer of work to it from market units. One of the primary
strategic reasons for acquiring MMi was not only to increase our
scale in the US, which has historically been underweight, but also
for the operational efficiency it would deliver. The integration
has gone well and we delivered cost synergies by the year-end in
line with our plans. We have also begun the initial migration of
clients to Media Path's GMP365 platform which will realise cost
efficiencies through better use of automation. It is pleasing to
note that we have maintained strong cost control while also being
able to make a one-off cost of living relief payment to those of
our staff who were most in need.
Further growth potential
Our priority is to increase scale in the USA and Asia Pacific,
while also maintaining growth in Europe. Both priority markets have
delivered strong performances. In the USA, the acquisition of MMi
helped North America revenue to grow by 138%. Asia Pacific
delivered growth of 18%, all organic, despite a challenging market
in China where the zero Covid policy hindered economic activity and
business generation. Revenue in Europe which now includes Media
Path also grew strongly overall as well as in organic terms.
As previously reported, we are in the process of divesting the
majority stake in our small Russian operation (2021 revenue of GBP1
million) but this transaction is subject to approval by the Russian
government. An impairment provision of GBP0.3 million has been made
against the Russian company assets in the Group balance sheet.
Growth outlook
The global media market is highly dynamic and changing rapidly,
with the long-held hegemony of the Alphabet and Meta duopoly under
pressure, alongside an explosive increase of media investment into
Advanced Television and Commerce Media channels. In such a rapidly
evolving and complex environment, it becomes more challenging for
advertisers to understand the relative effectiveness and efficiency
of channel options. As the market leader, we believe demand for our
services will continue to increase as independent scrutiny of the
effectiveness of these investments becomes even more important. In
addition, we also expect to benefit from more assignments being put
out to pitch as advertisers face continued inflationary
pressures.
The dynamics of the advertising market continue to offer
opportunities to Ebiquity and with our increased scale in key
global markets, product innovation capability and leadership
position, we remain well positioned for further growth.
Nick Waters
Chief Executive Officer
Performance Review
With a strategic focus on accelerating growth in North America
and Asia Pacific we are providing segmental reporting by geography
as a more appropriate reflection of the way that the Group is now
managed.
The three acquisitions have added further scale to Media
Performance, our largest service line. Tech Advisory, the smallest
service line, has now been incorporated into the Media Management
service line. We will therefore deliver our offering through four
service lines - Media Management, Media Performance, Marketing
Effectiveness, and Contract Compliance - across four geographic
business units of North America, UK & Ireland, Continental
Europe and Asia Pacific. The revenue from each geographic segment
and service line is shown in the tables below, as is the adjusted
operating profit of each segment.
Revenue by Segment
Revenue
FY22 FY21 Variance
----- ----- --------- -----
Segment GBPm GBPm GBPm %
----- ----- --------- -----
UK & Ireland 31.5 32.3 (0.8) (3%)
----- ----- --------- -----
Continental
Europe 21.9 17.4 4.5 26%
----- ----- --------- -----
North America 13.3 5.6 7.7 138%
----- ----- --------- -----
APAC 9.3 7.9 1.4 18%
----- ----- --------- -----
Total 76.0 63.1 12.9 20%
----- ----- --------- -----
Revenue in North America more than doubled in 2022. This was due
to the contributions from MMi and Canada as well as organic growth
of 73% delivered in line with our plans, including successful
expansion of Digital Media Solutions and Contract Compliance
services among US clients. European revenue grew by 26% including
Media Path, and organically by 6%. Within the region the best
performers were France and Spain, which grew by 46% and 14%
respectively. APAC revenue continued to grow well at 18%, with our
Singapore unit up by 80%, reflecting new business wins among
regionally based clients and China up by 11%, despite the
challenges posed by extended lock down periods. In UK &
Ireland, our largest and most mature region, revenue from UK
domestic media work increased by 6%, although revenue from
international projects fell by 13% in part due to lower global
agency pitch activity among its clients.
Revenue by service line
Revenue
FY22 FY21 Variance
----- ----- --------------
Service Line GBPm GBPm GBPm %
----- ----- ------ ------
Media Performance 50.3 37.9 12.4 33%
----- ----- ------ ------
Media Management 8.1 8.6 (0.5) (6%)
----- ----- ------ ------
Contract Compliance 7.6 6.1 1.5 25%
----- ----- ------ ------
Marketing Effectiveness 8.3 8.3 - -
----- ----- ------ ------
Technology Advisory 1.7 2.2 (0.5) (23%)
----- ----- ------ ------
Total 76.0 63.1 12.9 20%
----- ----- ------ ------
Our Media Performance service line helps clients to assess and
optimise their media buying performance through services such as
savings tracking, benchmarking and Digital Media Solutions. This
was already our largest service and was boosted by the three
acquisitions made in 2022, most of whose revenue arises from this
area. Within this, Digital Media Solutions grew by 76%, with the
core digital governance monitoring solution accounting for 60% of
the total, while new solutions (such as Responsible Media
Investment and Digital Value Index) launched over the past two
years have also grown fast.
Revenue from Media Management services, which includes agency
selection advice, fell by 6% due largely to the reduction in agency
tendering activity by advertisers compared to 2021, which had been
a very active year. We retained a high market share of global
tenders run in the market. Contract Compliance service revenue
increased by 25% reflecting in particular the success of
initiatives to win new clients in North America (where revenue was
up by 259%) with China and India also growing well.
Our Marketing Effectiveness service uses advanced analytics to
help clients to optimise their media plans and improve returns on
investment from their media spend. Revenue from this was static in
the year. This reflected a focus on improving margins through more
robust pricing which has led to a more profitable mix of clients,
including several significant wins in the year.
Within Technology Advisory, the 23% decrease in revenue was due
in part to the integration of the UK AdTech service within other
areas and to a 7% reduction in Digital Balance, based in Australia,
which optimises website performance. From 2023 onwards, this will
no longer be a separate segment.
Adjusted Operating Profit by Segment
Adjusted Operating Profit Adjusted operating
profit margin
FY22 FY21 Variance FY22 FY21
------- ------- -------------- --------- ----------
GBPm GBPm GBPm % % %
------- ------- ------- ----- --------- ----------
UK & Ireland 6.6 7.1 (0.5) (6%) 21% 22%
------- ------- ------- ----- --------- ----------
Continental Europe 6.4 4.1 2.7 63% 30% 24%
------- ------- ------- ----- --------- ----------
North America 0.9 (0.6) 1.5 - 7% (11)%
------- ------- ------- ----- --------- ----------
APAC 1.9 0.8 1.1 150% 21% 11%
------- ------- ------- ----- --------- ----------
Reportable segments 15.9 11.4 4.5 42% 21% 18%
------- ------- ------- ----- --------- ----------
Unallocated (6.5) (6.7) 0.2 3% (9)% (11)%
------- ------- ------- ----- --------- ----------
Total 9.3 4.7 4.6 98% 12% 8%
------- ------- ------- ----- --------- ----------
UK & Ireland remained our highest profit generating region,
reflecting its size, although its operating profit and margin fell
slightly reflecting its revenue performance. Continental Europe
increased both its operating profit (by 63%) and margin (by 6
percentage points) significantly in the year due in part to the
contribution from Media Path as well as to increased profitability
in France, Spain and Italy reflecting revenue gains and efficiency
improvements. As planned, North America successfully completed the
turnaround into becoming a profitable region due in part to the MMi
acquisition and delivery of initial synergy benefits as well as
revenue growth in the existing business. APAC's 42% growth in
operating profit and almost doubling of the margin reflects its
revenue performance and focus on winning higher value clients.
Central (unallocated) costs reduced slightly in the year due in
part to tight cost management and to the benefit of realised
foreign exchange gains which are accounted for centrally. The
reduction in the percentage of Group revenue that these costs
represent also indicates the scale benefits resulting from the
expansion of our operations in the past year.
Financial Review
The commentary in this review focusses largely on alternative
performance measures ('APMs') adopted by the Group. These non-GAAP
measures are considered both useful and necessary in helping to
explain the performance of the Group. These APMs are consistent
with how business performance is measured internally by the Group.
Further details of the APMs are given on page 17.
Summary Income Statement
2022 2021 Change
GBPm GBPm GBPm %
------- ------- ------ -----
Revenue 76.0 63.1 12.9 20%
------- ------- ------ -----
Project Related Costs (7.2) (7.5) 0.3 (4)%
------- ------- ------ -----
Net Revenue 68.8 55.6 13.2 24%
------- ------- ------ -----
Staff Costs(1) (48.0) (38.3) (9.7) 25%
------- ------- ------ -----
Other operating expenses(1) (11.5) (12.5) 1.0 (8)%
------- ------- ------ -----
Adjusted Operating Profit 9.3 4.7 4.6 96%
------- ------- ------ -----
Highlighted Items (before
tax) (15.2) (9.8) (5.4) 33%
------- ------- ------ -----
Statutory Operating Loss (5.9) (5.1) (0.8) 16%
------- ------- ------ -----
(1. excluding highlighted items)
Group revenues for the year ended 31 December 2022 increased by
GBP12.9 million (20%) to GBP76.0 million, from GBP63.1 million in
2021. This included revenue of GBP6.8 million from companies
acquired during the year. Excluding this, Group revenue grew
organically by 10%.
Adjusted operating profit (statutory operating profit excluding
highlighted items) for 2022 was GBP9.3 million, an increase of
GBP4.6 million or 96% compared to 2021. The adjusted operating
margin also increased significantly to 12% from 7% in the prior
year.
Project-related costs (which comprise external partner and
production costs) reduced by 4% to GBP7.2 million from GBP7.5
million, as these costs are much lower for Digital Media Solutions
and the acquired businesses. Total adjusted operating expenses
increased by 17% to GBP59.5 million, reflecting in part the
expenses of the acquired businesses. Within this, staff costs
increased by 25% to GBP48.0 million and other operating expenses
reduced by 8% to GBP11.5 million.
Adjusted profit before tax increased by 95% to GBP8.0 million in
2022 (2021: profit of GBP4.1 million). Net finance costs increased
to GBP1.3 million in 2022 from GBP0.6 million in 2021, due to
higher interest rates and an increase in bank borrowings of GBP3.5
million due to the acquisitions.
Highlighted items before tax, including the post-date
renumeration relating to the acquisition of Digital Decisions BV,
increased to GBP15.2 million cost from GBP9.8 million in 2021, as
detailed below. As a result, there was a statutory operating loss
(after highlighted items) of GBP5.9 million compared to a loss of
GBP5.1m in 2021. Reflecting this, the statutory loss before
taxation increased to GBP7.2 million from GBP5.7 million.
Taxation
There was a tax charge of GBP0.3 million in the year (2021:
GBP1.2 million) of which GBP2.1 million related to the adjusted
profit before taxation (2021: GBP1.7 million) and a GBP1.8 million
credit (2021: GBP0.5 million credit) to the highlighted items. The
effective tax rate on adjusted profit before tax was 21%,
(excluding movements on prior year provisions) compared to 42% in
2021. The reduction in this rate is largely due to the utilisation
of tax losses in USA in the current year and recognition of US and
UK tax losses as a deferred tax asset. The adjusted profit after
taxation increased by 149% to GBP5.9 million (2021: GBP2.4
million). The statutory loss after taxation increased to GBP7.5
million from GBP6.9 million.
Earnings per share
Adjusted basic earnings per share doubled to 5.4p from 2.7p in
2021, reflecting the increase in adjusted profit after taxation,
offset by the increase in the number of shares in issue due to the
equity placing in the year. The statutory basic loss per share
reduced to 6.9p from 8.5p in 2021.
Highlighted items
Highlighted items comprise charges and credits which are
highlighted in the income statement because separate disclosure is
considered relevant in understanding the underlying performance of
the business. Highlighted items after tax in the year totalled a
charge of GBP13.4 million (2021: GBP9.3 million) and include the
following:
-- GBP7.9 million charge to accrue for post-date remuneration
payable in 2023 relating to the acquisition of Digital Decisions
BV, acquired in January 2020 (2021: GBP7.9 million)
-- GBP2.7 million charge for amortisation of purchased intangibles (2021: GBP1.1 million)
-- GBP1.9 million charge for professional costs relating to
acquisitions and bank facility agreements (2021: GBP0.3
million)
-- GBP1.2 million charge relating to onerous lease provisions
-- GBP0.6 million charge relating to severance and reorganisation costs (2021: GBP0.1 million)
-- GBP0.5 million charge relating to share-based payments (2021: GBP0.5 million)
-- GBP0.3 million charge for the impairment of the assets of the Russian subsidiary
-- GBP1.8 million tax credit on highlighted items (2021: GBP0.5 million credit)
The contingent consideration payable in 2023 relating to the
acquisition of Digital Decisions BV has been accounted for as
post-date remuneration as payment is dependent upon the principal
vendor remaining in employment with the Group. The total deferred
consideration payable is estimated at GBP15.8 million and is
calculated as six times the average profit generated in the two
years ended 31 December 2022 from Digital Media Solutions developed
by the Digital Innovation Centre, less the initial consideration of
GBP700,000 paid in January 2020. It 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 amount
be paid in cash.
Amortisation of purchased intangibles increased to GBP2.7
million due to the acquisitions whose intangible assets have been
included at fair value. The charge in the year relating to Media
Path and MMi was GBP2.1 million.
The acquisition, integration, and strategic costs of GBP1.9
million relate to professional fees incurred for the three
acquisitions in the year, the associated equity capital raise in
April 2022, and the revised bank loan facility agreed in March
2022.
The onerous lease provision charge of GBP1.2 million relates to
office space in three cities which is surplus to requirements.
During the year, it was decided to vacate the New York office and
part of the London office and to seek sub-tenants in the market. A
charge in the year of GBP1.7 million has been made for these
offices to reflect the impairment of the right-of-use asset. This
is offset by a credit of GBP0.5 million relating to the Chicago
office which was vacated and sub-let in 2019 and for which the
headlease has now been terminated with effect from September
2023.
Dividend
No dividend has been declared or recommended for either of the
twelve months ended 31 December 2022 or 2021.
Cash conversion
Year ended Year ended
31 December 31 December
2022 2021
GBP'000 GBP'000
------------------------------- ------------- -------------
Reported cash from operations 3,812 11,800
------------------------------- ------------- -------------
Adjusted cash from operations 6,188 13,201
------------------------------- ------------- -------------
Adjusted operating profit 9,270 4,738
------------------------------- ------------- -------------
Adjusted Cash Conversion
Ratio 67% 278%
------------------------------- ------------- -------------
Adjusted cash from operations represents the cash flows from
operations excluding the impact of highlighted items. The adjusted
net cash inflow from operations during 2022 was GBP6.2 million
(2021: GBP13.2 million which represents a cash conversion ratio of
67% of adjusted operating profit.
Equity
During the year, the issued share capital increased by 14% to
120,241,181 shares (2021: 82,728,890 shares) as a result of the
issue of 36,958,789 shares in connection with the acquisitions made
in the year and 553,502 shares issued following the exercise of
share options.
Net debt and banking facilities
31 December 31 December
2022 2021
GBP'000 GBP'000
--------------- ------------ ------------
Net cash (1) 12,360 13,134
Bank debt (21,500) (18,000)
--------------- ------------ ------------
Net Bank Debt (9,140) (4,866)
--------------- ------------ ------------
1 Includes restricted cash of GBP1.2 million held in Ebiquity
Russia
All bank borrowings are held jointly with Barclays and NatWest.
The current revolving credit facility ("RCF") facility was agreed
in March 2022 and runs for a period of 3 years to March 2025,
extendable for up to a further two years with a total commitment of
GBP30 million. GBP21.5 million had been drawn as at 31 December
2022 (2021: GBP18 million). Under this agreement, annual reductions
in the facility of GBP1.25 million will apply from June 2023. The
remainder of any drawings is repayable on the maturity of the
facility. The facility may be used for deferred consideration
payments on past acquisitions, to fund future potential
acquisitions, and for general working capital requirements. The
quarterly covenants applied from June 2022 onwards are: interest
cover > 4.0x; adjusted leverage < 2.5x and adjusted deferred
consideration leverage < 3.5x. There is no longer a minimum
lending covenant.
Statement of financial position and net assets
A non-statutory summary of the Group's balance sheet as at 31
December 2022 and 31 December 2021 is set out below:
31 December 31 December
2022 2021
GBP'000 GBP'000
Goodwill and intangible assets 56,868 32,700
Right of use asset 3,308 4,542
Other non-current assets 3,488 3,053
Net working capital(1) 9,350 3,362
Lease liability (5,983) (6,390)
Other non-current liabilities (2,659) (1,477)
Digital Decisions post-date
remuneration (15,787) (7,922)
Deferred consideration (MMI (2,183) -
and Canada)
Net bank debt (9,140) (4,866)
-------------------------------- ------------ ------------
Net assets 36,262 23,004
-------------------------------- ------------ ------------
(1) Net working capital comprises trade and other receivables,
lease receivables, trade and other payables,
accruals and contract liabilities (less the Digital Decisions
post-date remuneration) and current tax assets and liabilities.
Net assets as at 31 December 2022 increased by GBP13.3 million
due largely to the acquisitions made in the year and the related
share capital increase offset by the statutory loss after
taxation.
Working capital increased to GBP9.4 million from GBP3.4 million,
a net outflow of GBP6.0 million with trade receivables increasing
by GBP11 million, offset by an increase in trade and other payables
of GBP5 million. The increase in receivables was due in part to the
acquisitions and to the phasing of billings to clients towards the
end of the year. Debtor days increased slightly to 67 days from 61
days.
Corporate Development Activities
On 29 January 2022, the Group acquired Forde and Semple Media
Works, the leading media performance consultancy in Canada, for a
total consideration of CAD$1.3 million (GBP0.8 million), of which
CAD$1.2 million (GBP0.7 million) was paid on completion and CAD$0.1
million (GBP0.06 million) was deferred for one year. Forde and
Semple had revenues of CAD$1.1m in the financial year ended 31
January 2021 and net assets of CAD$0.4 million (GBP0.2 million) on
completion.
On 4 April 2022, the Group acquired Media Management, LLC
("MMi"), a US-based media audit specialist, for an initial
consideration of US$8.0 million (GBP6.1 million) with a deferred
contingent consideration element payable in 2025. 84% of the
initial consideration (US$6.7 million/GBP5.1 million) was paid in
cash and 16% (US$1.3 million /GBP1.0 million), was applied by the
vendors to subscribe for 1,737,261 Ebiquity ordinary shares. The
contingent consideration will be based on 1.0 times adjusted
earnings before interest and tax of the combined Ebiquity US and
MMi businesses reported for the year ending 31 December 2024. This
has been estimated to be US4.0 million /GBP3.0 million. 80% of this
will be payable directly in cash to the vendors and 20% will be
applied by the vendors to subscribe for Ebiquity ordinary
shares.
On 22 April 2022, the Group acquired Media Path Network AB
("Media Path"), a Swedish-based multi-national media consultancy,
for a consideration of GBP15.5 million. 75% (GBP11,625,000) was
paid in cash and 25% (GBP3,875,000) was paid by the issue of
6,919,642 new Ordinary Shares to the Media Path vendors. An
additional cash payment of GBP485,000 was made in June 2022
representing working capital in the completion accounts as at 31
March 2022 in excess of the contractually agreed target amount.
Alan Newman
Chief Financial and Operating Officer
Alternative performance measures
In these results we refer to 'adjusted' and 'reported' results,
as well as other non-GAAP alternative performance measures.
Further details of highlighted items are set out within the
financial statements and the notes to the financial statements.
In the reporting of financial information, the Directors have
adopted various alternative performance measures ('APMs'). The
Group includes these non-GAAP measures as they consider them to be
both useful and necessary to the readers of the financial
statements to help understand the performance of the Group. The
Group's measures may not be calculated in the same way as similarly
titled measures reported by other companies and therefore should be
considered in addition to IFRS measures. The APMs are consistent
with how business performance is measured internally by the
Group.
Alternative Performance Measures used by the Group are:
-- Net revenue
-- Organic revenue growth
-- Adjusted operating profit
-- Adjusted operating margin
-- Adjusted profit before tax
-- Adjusted effective rate of tax
-- Adjusted earnings per share
-- Adjusted cash generated from operations, and
-- Adjusted operating cash flow conversion.
Net revenue is the revenue after deducting external production
costs and is reconciled on the face of the income statement.
Organic revenue growth is defined as revenue growth in the
existing business excluding the revenue contribution in the year
from acquisitions made during it.
Adjusted operating profit, adjusted profit before taxation and
adjusted profit after taxation are reconciled to their statutory
equivalents on the face of the consolidated income statement.
Adjusted earnings per share is reconciled to statutory earnings per
share in Note 9.
Adjusted effective tax rate is calculated by comparing the
current and deferred tax charge for the current year, excluding
prior year provision movements to the adjusted profit before
taxation. The rate for the current year is calculated as
follows:
GBP'000 GBP'000
Adjusted Profit before
Taxation A 7,967
--- -------- --------
UK Tax Current Year 114
-------- --------
Foreign Tax Current
Year Taxation 1,973
-------- --------
Deferred Tax (380)
-------- --------
Adjusted Taxation B 1,707
--- -------- --------
Effective Tax Rate (A / B) 21%
--------
Taxation figures are taken from Note 7 to the financial
statements
Adjusted cash generated from operations is defined as the cash
generated from operations excluding the cash movements relating to
the highlighted items. The calculation for the year is set out
below:
Year ended Year ended
31 December 31 December
2022 2021
-----------------------------------------
GBP'000 GBP'000
----------------------------------------- ------------- -------------
Cash generated from operations 3,812 11,800
------------- -------------
Add: Highlighted Items: cash items 2,514 (471)
------------- -------------
Movement in working capital relating
to highlighted items (138) 1,872
------------- -------------
Adjusted cash generated from operations 6,188 13,201
------------- -------------
Adjusted operating cash flow conversion is the ratio of the
Adjusted cash generated from operations divided by the Adjusted
operating profit, expressed as a percentage. The rate for the
current year is calculated as follows:
GBP'000
------------------------------ --------
Adjusted cash generated from
operations 6,188
--------
Adjusted operating profit 9,270
--------
Cash Conversion Ratio 67%
--------
Consolidated income statement
for the year ended 31 December 2022
31 December 2022 31 December 2021
----------------------------------- -----------------------------------
Highlighted Highlighted
Before items Before items
highlighted (note highlighted (note
items 3) Total items 3) Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ------ ------------ ----------- -------- ------------ ----------- --------
Revenue 2 75,973 - 75,973 63,091 - 63,091
------------------------- ------------------- ----------- -------- ------------ ----------- --------
Project-related
costs (7,220) - (7,220) (7,525) - (7,525)
------------------------- ------------------- ----------- -------- ------------ ----------- --------
Net revenue 68,753 - 68,753 55,566 - 55,566
Staff costs (1) (47,977) - (47,977) (38,312) - (38,312)
Other operating
expenses(1) (11,506) (15,168) (26,674) (12,517) (9,815) (22,331)
------------------------- ------------------- ----------- -------- ------------ ----------- --------
Operating profit/(loss) 9,270 (15,168) (5,898) 4,737 (9,815) (5,078)
------------------------- ------------------- ----------- -------- ------------ ----------- --------
Finance income 70 - 70 20 - 20
Finance expenses (1,422) - (1,422) (882) - (882)
Foreign exchange 49 - 49 229 - 229
------------------------- ------------------- ----------- -------- ------------ ----------- --------
Net finance costs (1,303) - (1,303) (633) - (633)
------------------------- ------------------- ----------- -------- ------------ ----------- --------
Profit/(loss) before
taxation 7,967 (15,168) (7,201) 4,104 (9,815) (5,711)
------------------------- ------------------- ----------- -------- ------------ ----------- --------
Taxation (charge)/credit 4 (2,060) 1,799 (261) (1,737) 531 (1,206)
------------------------- ------------------- ----------- -------- ------------ ----------- --------
Profit/(loss) for
the period 5,907 (13,369) (7,462) 2,367 (9,284) (6,917)
------------------------- ------------------- ----------- -------- ------------ ----------- --------
Attributable to:
------------------------- ------------------- ----------- -------- ------------ ----------- --------
Equity holders of
the parent 5,874 (13,369)) (7,495) 2,250 (9,282) (7,032)
------------------------- ------------------- ----------- -------- ------------ ----------- --------
Non-controlling
interests 33 - 33 117 (2) 115
------------------------- ------------------- ----------- -------- ------------ ----------- --------
5,907 (13,369) (7,462) 2,367 (9,284) (6,917)
------------------------- ------------------- ----------- -------- ------------ ----------- --------
Earnings/(Loss)
per share
------------------------- ------------------- ----------- -------- ------------ ----------- --------
Basic 5 5.39p (6.88)p 2.72p (8.51)p
------------------------- ------------------- ----------- -------- ------------ ----------- --------
Diluted 5 4.46p (6.88)p 2.67p (8.51)p
------------------------- ------------------- ----------- -------- ------------ ----------- --------
(1) The cost categories reported in the income statement have
been changed to reflect the Group's internal reporting. The prior
year comparatives have been re-classified in the same way and there
is no change in the total costs reported. Details of each cost
category are set out in Note 1.
The notes on pages 23 to 50 are an integral part of these
financial statements.
Consolidated statement of comprehensive income
for the year ended 31 December 2022
Year ended Year ended
31 December 31 December
2022 2021
GBP'000 GBP'000
------------------------------------------------------------- ------------ ------------
Loss for the year (7,462) (6,917)
------------------------------------------------------------- ------------ ------------
Other comprehensive income/(expense):
------------------------------------------------------------- ------------ ------------
Items that will not be reclassified subsequently
to profit or loss
------------------------------------------------------------- ------------ ------------
Exchange differences on translation of overseas subsidiaries 252 (889)
------------------------------------------------------------- ------------ ------------
Total other comprehensive income/(expense) for the
year 252 (889)
------------------------------------------------------------- ------------ ------------
Total comprehensive expense for the year (7,210) (7,806)
------------------------------------------------------------- ------------ ------------
Attributable to:
------------------------------------------------------------- ------------ ------------
Equity holders of the parent (7,243) (7,921)
------------------------------------------------------------- ------------ ------------
Non -- controlling interests 33 115
------------------------------------------------------------- ------------ ------------
(7,210) (7,806)
------------------------------------------------------------- ------------ ------------
The notes on pages 23 to 50 are an integral part of these
financial statements.
Consolidated statement of financial position
as at 31 December 2022
Note 31 December Restated
2022 31 December
GBP'000 2021
GBP'000
------------------------------------------- ----- ----------- ------------
Non -- current assets
------------------------------------------- ----- ----------- ------------
Goodwill 7 43,091 28,172
------------------------------------------- ----- ----------- ------------
Other intangible assets 8 12,776 4,528
------------------------------------------- ----- ----------- ------------
Property, plant and equipment 1,289 1,512
------------------------------------------- ----- ----------- ------------
Right-of-use assets 9 3,308 4,542
------------------------------------------- ----- ----------- ------------
Lease receivables 9 - 155
------------------------------------------- ----- ----------- ------------
Deferred tax asset 2,199 1,388
------------------------------------------- ----- ----------- ------------
Total non -- current assets 62,663 40,297
------------------------------------------- ----- ----------- ------------
Current assets
------------------------------------------- ----- ----------- ------------
Trade and other receivables 10 33,163 21,934
------------------------------------------- ----- ----------- ------------
Lease receivables 9 141 146
------------------------------------------- ----- ----------- ------------
Corporation tax asset 845 1,268
------------------------------------------- ----- ----------- ------------
Cash and cash equivalents 12,360 13,134
------------------------------------------- ----- ----------- ------------
Total current assets 46,509 36,482
------------------------------------------- ----- ----------- ------------
Total assets 109,172 76,779
------------------------------------------- ----- ----------- ------------
Current liabilities
------------------------------------------- ----- ----------- ------------
Trade and other payables 11 (10,049) (6,915)
------------------------------------------- ----- ----------- ------------
Accruals and contract liabilities 12 (29,399) (19,350)
------------------------------------------- ----- ----------- ------------
Financial liabilities 13 (61) -
------------------------------------------- ----- ----------- ------------
Current tax liabilities (1,121) (1,642)
------------------------------------------- ----- ----------- ------------
Provisions (17) -
------------------------------------------- ----- ----------- ------------
Lease liabilities 9 (1,328) (2,566)
------------------------------------------- ----- ----------- ------------
Total current liabilities (41,975) (30,473)
------------------------------------------- ----- ----------- ------------
Non -- current liabilities
Financial liabilities 13 (23,357) (17,901)
------------------------------------------- ----- ----------- ------------
Provisions (446) (493)
------------------------------------------- ----- ----------- ------------
Lease liabilities 9 (4,654) (3,825)
------------------------------------------- ----- ----------- ------------
Deferred tax liability (2,478) (1,083)
------------------------------------------- ----- ----------- ------------
Total non -- current liabilities (30,935) (23,302)
------------------------------------------- ----- ----------- ------------
Total liabilities (72,910) (53,775)
------------------------------------------- ----- ----------- ------------
Total net assets 36,262 23,004
------------------------------------------- ----- ----------- ------------
Equity
------------------------------------------- ----- ----------- ------------
Ordinary shares 30,060 20,682
------------------------------------------- ----- ----------- ------------
Share premium 10,863 255
------------------------------------------- ----- ----------- ------------
Other reserves 4,824 4,572
------------------------------------------- ----- ----------- ------------
Accumulated losses (9,787) (2,774)
------------------------------------------- ----- ----------- ------------
Equity attributable to the owners of the parent 33,889 35,960
-------------------------------------------------- ----------- ------------
Non -- controlling interests 302 269
------------------------------------------- ----- ----------- ------------
Total equity 36,262 23,004
------------------------------------------- ----- ----------- ------------
The prior year balance sheet has been restated to correct the
presentation of current tax asset and current tax liability. See
Note 1 for details.
The notes on pages 23 to 50 are an integral part of these
financial statements. The financial statements on pages 19 to 22
were approved and authorised for issue by the Board of Directors on
30 March 2023 and were signed on its behalf by:
Alan Newman
Chief Financial and Operating Officer
Ebiquity plc. Registered No 03967525
Consolidated statement of changes in equity
for the year ended 31 December 2022
Equity
attributable Non
to owners --
Ordinary Share Other Retained of the controlling Total
shares premium reserves(1) earnings parent interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- -------- -------- ------------ --------- ------------- ------------ --------
31 December 2020 20,646 255 5,461 3,942 30,304 442 30,746
--------------------------- -------- -------- ------------ --------- ------------- ------------ --------
(Loss)/profit for
the year 2021 - - - (7,032) (7,032) 115 (6,917)
--------------------------- -------- -------- ------------ --------- ------------- ------------ --------
Other comprehensive
income - - (889) - (889) - (889)
--------------------------- -------- -------- ------------ --------- ------------- ------------ --------
Total comprehensive
income/(expense) for
the year - - (889) (7,032) (7,921) 115 (7,806)
--------------------------- -------- -------- ------------ --------- ------------- ------------ --------
Shares issued for
cash 36 - - (3) 33 - 33
--------------------------- -------- -------- ------------ --------- ------------- ------------ --------
Share options charge - - - 319 319 - 319
--------------------------- -------- -------- ------------ --------- ------------- ------------ --------
Dividends paid to
non-controlling interests - - - - - (288) (288)
--------------------------- -------- -------- ------------ --------- ------------- ------------ --------
31 December 2021 20,682 255 4,572 (2,774) 22,735 269 23,004
--------------------------- -------- -------- ------------ --------- ------------- ------------ --------
(Loss)/profit for
the year 2022 - - - (7,495) (7,495) 33 (7,462)
--------------------------- -------- -------- ------------ --------- ------------- ------------ --------
Other comprehensive
income - - 252 - 252 - 252
--------------------------- -------- -------- ------------ --------- ------------- ------------ --------
Total comprehensive
income/(expense) for
the year - - 252 (7,495) (7,243) 33 (7,210)
--------------------------- -------- -------- ------------ --------- ------------- ------------ --------
Shares issued for
cash 9,240 10,608 - (39) 19,809 - 19,809
--------------------------- -------- -------- ------------ --------- ------------- ------------ --------
Share options charge 138 - - 521 659 - 659
--------------------------- -------- -------- ------------ --------- ------------- ------------ --------
Acquisitions - - - - - - -
--------------------------- -------- -------- ------------ --------- ------------- ------------ --------
Dividends paid to - - - - - -
non-controlling interests
--------------------------- -------- -------- ------------ --------- ------------- ------------ --------
31 December 2022 30,060 10,863 4,824 (9,787) 35,960 302 36,262
--------------------------- -------- -------- ------------ --------- ------------- ------------ --------
1. Includes a credit of GBP3,667,000 (31 December 2021:
GBP3,667,000) in the merger reserve, a gain of GBP2,638,000 (31
December 2021: GBP2,383,000) recognised in the translation reserve,
partially offset by a debit balance of GBP1,478,000 (31 December
2021: GBP1,478,000) in the ESOP reserve. Refer to note 23 for
further details.
The notes on pages 23 to 50 are an integral part of these
financial statements.
Consolidated statement of cash flows
for the year ended 31 December 2022
Note 31 December 31 December
2022 2021
GBP'000 GBP'000
-------------------------------------------------- ---- ----------- -----------
Cash flows from operating activities
-------------------------------------------------- ---- ----------- -----------
Cash generated from operations 15 3,812 11,800
-------------------------------------------------- ---- ----------- -----------
Finance expenses paid (830) (626)
-------------------------------------------------- ---- ----------- -----------
Finance income received 62 7
-------------------------------------------------- ---- ----------- -----------
Income taxes paid (1,871) (2,492)
-------------------------------------------------- ---- ----------- -----------
Net cash generated by operating activities 1,173 8,689
-------------------------------------------------- ---- ----------- -----------
Cash flows from investing activities
-------------------------------------------------- ---- ----------- -----------
Acquisition of subsidiaries, net of cash
acquired (17,020) -
-------------------------------------------------- ---- ----------- -----------
Payments to acquire non-controlling interest - (1,291)
-------------------------------------------------- ---- ----------- -----------
Payments in respect of contingent consideration - (680)
-------------------------------------------------- ---- ----------- -----------
Purchase of property, plant and equipment (274) (217)
-------------------------------------------------- ---- ----------- -----------
Purchase of intangible assets 8 (175) (849)
-------------------------------------------------- ---- ----------- -----------
Net cash (used in) investing activities (17,469) (3,037)
-------------------------------------------------- ---- ----------- -----------
Cash flows from financing activities
-------------------------------------------------- ---- ----------- -----------
Proceeds from issue of share capital (net
of issue costs) 14,374 34
-------------------------------------------------- ---- ----------- -----------
Proceeds from bank borrowings 13 4,500 -
-------------------------------------------------- ---- ----------- -----------
Repayment of bank borrowings 13 (1,000) (1,000)
-------------------------------------------------- ---- ----------- -----------
Bank loan fees paid 13 (300) -
-------------------------------------------------- ---- ----------- -----------
Proceeds from government borrowings - (36)
-------------------------------------------------- ---- ----------- -----------
Repayment of lease liabilities 9 (2,616) (2,108)
-------------------------------------------------- ---- ----------- -----------
Dividends paid to non -- controlling interests - (157)
-------------------------------------------------- ---- ----------- -----------
Net cash flow generated by/(used in) financing
activities 14,958 (3,267)
-------------------------------------------------- ---- ----------- -----------
Net (decrease)/increase in cash, cash equivalents
and bank overdrafts (1,338) 2,385
Cash, cash equivalents and bank overdraft
at beginning of year 13,134 11,121
-------------------------------------------------- ---- ----------- -----------
Effects of exchange rate changes on cash
and cash equivalents 564 (372)
-------------------------------------------------- ---- ----------- -----------
Group cash and cash equivalents at the end
of the year 12,360 13,134
-------------------------------------------------- ---- ----------- -----------
The notes on pages 23 to 50 are an integral part of these
financial statements.
.
Notes to the consolidated financial statements
for the year ended 31 December 2022
1. Accounting policies
General information
Ebiquity plc (the 'Company') and its subsidiaries (together, the
'Group') exists to help brands optimise return on investment from
their marketing spend, working with many of the world's leading
advertisers to improve marketing outcomes and enhance business
performance. The Group has 20 offices located in 18 countries
across Europe, Asia and North America.
The Company is a public limited company, which is listed on the
London Stock Exchange's AIM and is limited by shares. The Company
is incorporated and domiciled in the UK. The address of its
registered office is Chapter House, 16 Brunswick Place, London N1
6DZ.
Basis of preparation
The consolidated financial statements have been prepared in
accordance with UK-adopted international accounting standards
(IFRS) in conformity with the requirements of the Companies Act
2006 ('IFRS') and the applicable legal requirements of the
Companies Act 2006.
Prior year restatement
The prior year statement of financial position has been restated
to reflect the correct presentation of the company's current tax
assets and current tax liabilities which relate to tax due from/to
tax authorities in various jurisdictions. The restatement has the
effect of reclassifying the 2021 current assets of GBP1,268k which
were initially presented net of the company's current tax
liabilities to a separate line on the statement of financial
position.
2021 2021 Adjustment 2021
Reported Restated
GBP'000 GBP'000 GBP'000
---------- ---------------- -----------
Statement of financial position
---------- ---------------- -----------
Current tax asset - GBP1,268 GBP1,268
---------- ---------------- -----------
Current tax liabilities (GBP374) (GBP1,268) (GBP1,642)
---------- ---------------- -----------
Alternative Performance Measures ("APMs")
In the reporting of financial information, the Directors have
adopted various alternative performance measures ('APMs'). The
Group includes these non-GAAP measures as they consider them to be
both useful and necessary to the readers of the financial
statements to help understand the performance of the Group. The
Group's measures may not be calculated in the same way as similarly
titled measures reported by other companies and therefore should be
considered in addition to IFRS measures. The APMs are consistent
with how business performance is measured internally by the Group.
Details of the APMs and their calculation are set out on page
17.
Highlighted items
Highlighted items comprise charges and credits which are
highlighted in the consolidated income statement as separate
disclosure is considered by the Directors to be relevant in
understanding the adjusted performance of the business. These may
be income or cost items. Further details are included in note
3.
Non -- cash highlighted items, which do not represent cash
transactions in the year, include share option charges,
amortisation of purchased intangibles, accruals for post-date
remuneration and movements in tax and onerous lease provisions.
Other items include the costs associated with potential
acquisitions (where formal discussion is undertaken), completed
acquisitions and disposals and their subsequent integration into
the Group, adjustments to the estimates of contingent consideration
on acquired entities, asset impairment charges and restructuring
costs.
Reclassification of cost categories reported in income
statement
The cost categories reported in the income statement have been
changed to: project-related costs, staff costs and other operating
expenses to reflect the Group's internal reporting. The prior year
comparatives have been re-classified in the same way and there is
no change in the total costs reported. Details of each cost
category are set out later in this note.
Going concern
The financial statements have been prepared on a going concern
basis. The Group meets its day-to-day working capital requirements
through its cash reserves and borrowings, described in note 19 to
the financial statements. As at 31 December 2022, the Group had
cash balances of GBP12,360,000 (including restricted cash of
GBP1,049,000) and undrawn bank facilities available of GBP8,500,000
and was cash generative and within its banking covenants.
During the year, the Group continued to trade within the limits
of its banking facility and associated covenants. In March 2022,
this facility was increased and extended to provide a total
available of GBP30 million, initially for a period of 3 years to
March 2025 and extendable for up to a further two years. Details of
the facility terms and covenants applying are set out in note 19
below.
In assessing the going concern status of the Group and Company,
the Directors have considered the Group's forecasts and
projections, taking account of reasonably possible changes in
trading performance and the Group's cash flows, liquidity, and bank
facilities. The Directors have prepared a model to forecast
covenant compliance and liquidity for the next twelve months that
includes a base case and scenarios to form a severe but plausible
downside case. For the purposes of this model, the terms of the new
facility including its covenant tests have been applied with effect
from the quarter ending 30 June 2022.
The base case assumes growth in revenue and EBITDA based on the
Group's budget for the year ended 31 December 2023 and management
projections for the year ended 31 December 2024. The severe but
plausible case assumes a downside adjustment to revenue of 10%
throughout the period with no reductions in operating costs. Under
both of these cases, there is headroom on covenant compliance
throughout the going concern period.
The Directors consider that the Group and Company will have
sufficient liquidity within existing bank facilities, totalling
GBP30 million, to meet their obligations during the next 12 months
and hence consider it appropriate to prepare the financial
statements on a going concern basis.
Russian operation
Following the Russian invasion of Ukraine, the Group has been
reviewing the future of its subsidiary in Russia (Ebiquity Russia
OOO) and has been in negotiations with a view to divesting its
75.01% shareholding in it. Although this subsidiary remains part of
the Group for these financial statements, given the uncertainty
regarding this operation, an impairment provision of GBP257,000 has
been made against the value of its assets in the Group balance
sheet. Its cash balances are also deemed to be restricted cash.
Details are provided in note 3.
The financial statements have been prepared under the historical
cost convention, as modified by the revaluation of financial assets
and financial liabilities at fair value through profit or loss.
The consolidated financial statements are presented in pounds
sterling and rounded to the nearest thousand.
The principal accounting policies adopted in these consolidated
financial statements are set out below. These policies have been
consistently applied to all periods presented, unless otherwise
stated.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries). Control is achieved where the Company has the
power to govern the financial and operating policies of an investee
entity so as to obtain benefits from its activities. The results of
each subsidiary are included from the date that control is
transferred to the Group until the date that control ceases.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used in
line with those used by the Group. All intra -- group transactions,
balances, income and expenses are eliminated on consolidation.
Non -- controlling interests represent the portion of the
results and net assets in subsidiaries that is not held by the
Group.
Business combinations and goodwill
The Group applies the acquisition method to account for business
combinations. The cost of the acquisition is measured as the
aggregate of the fair values, at the date of exchange, of assets
given, liabilities assumed, and equity instruments issued by the
Group in exchange for control of the acquiree. The acquiree's
identifiable assets, liabilities and contingent liabilities are
recognised initially at their fair value at the acquisition date.
Goodwill is initially measured at cost, being the excess of the
aggregate of the consideration transferred over the fair value of
net identifiable assets acquired and liabilities assumed. The
determination of the fair values of acquired assets and liabilities
is based on judgement, and the Directors have 12 months from the
date of the business combination to finalise the allocation of the
purchase price.
Goodwill is allocated to each of the Group's cash -- generating
units expected to benefit from the synergies of the combination.
Following initial recognition, goodwill is measured at cost less
any accumulated impairment losses. Goodwill is reviewed for
impairment at least annually or whenever there is evidence that it
may be required. Any impairment is recognised immediately in the
income statement and is not subsequently reversed.
Goodwill arising on the acquisition of the Group's interest in
an associate, being the excess of the cost of acquisition over the
Group's share of the fair values of the identifiable net assets of
the associate, is included within the carrying amount of the
investment. The non -- controlling shareholders' interest in the
acquiree is initially measured at the non -- controlling interest's
proportion of the net fair value of the assets, liabilities and
contingent liabilities recognised.
Where transactions with non -- controlling parties do not result
in a change in control, the difference between the fair value of
the consideration paid or received and the amount by which the non
-- controlling interest is adjusted, is recognised in equity.
Where the consideration for the acquisition includes a
contingent consideration arrangement, this is measured at fair
value at the acquisition date. Any subsequent changes to the fair
value of the contingent consideration are adjusted against the cost
of the acquisition if they occur within the measurement period and
only if the changes relate to conditions existing at the
acquisition date. Any subsequent changes to the fair value of the
contingent consideration after the measurement period are
recognised in the income statement within other operating expenses
as a highlighted item. The carrying value of contingent
consideration at the statement of financial position date
represents management's best estimate of the future payment at that
date, based on historical results and future forecasts.
All costs directly attributable to the business combination are
expensed as incurred and recorded in the income statement within
highlighted items.
Revenue recognition
Revenue is recognised in accordance with IFRS 15 'Revenue from
Contracts with Customers'. Net revenue is the revenue after
deducting external production costs as shown in the income
statement.
Revenue from providing services is recognised in the accounting
period in which the services are rendered. The revenue and profits
recognised in the period are based on the delivery of performance
obligations and an assessment of when control is transferred to the
customer. Revenue is recognised either when the performance
obligation in the contract has been performed (thus a
'point-in-time' recognition) or over the time period during which
control of the performance obligation is transferred to the
customer.
For fixed-price contracts, which represent the majority of
cases, revenue is recognised based on the actual service provided
during the reporting period, calculated as an appropriate
proportion of the total services to be provided under the contract.
This reflects the fact that the customer receives and uses the
benefits of the service simultaneously. An input method or an
output method is used to measure progress of performance
obligations depending on the nature of the specific contract and
project arrangements. Input methods are typically based on costs
incurred to date, relative to the total expected costs for the
project as substantially all work performed is primarily
represented by labour. Where appropriate, revenue may be recognised
evenly in line with the value delivered to the client, based on
assignment of amounts to the project milestones set out in the
contract.
Where project fees are based on the labour hours spent and other
expenses incurred, revenue is recognised in line with the labour
hours spent.
Estimates of revenues, costs or extent of progress toward
completion are revised if circumstances change. Any resulting
increases or decreases in estimated revenues or costs are reflected
in profit or loss in the period in which the circumstances that
give rise to the revision become known by management.
In the case of fixed-price contracts, the customer is billed for
the fixed amounts based on a billing schedule agreed as part of the
contract.
Deferred and accrued income
The Group's customer contracts include a diverse range of
payment schedules which are often agreed at the inception of the
contracts under which it receives payments throughout the term of
the arrangement. Payments for goods and services transferred at a
point in time may be at the delivery date, in arrears or part
payment in advance.
Where payments made to date are greater than the revenue
recognised up to the reporting date, the Group recognises a
deferred income 'contract liability' for this difference. Where
payments made are less than the revenue recognised up to the
reporting date, the Group recognises an accrued income 'contract
asset' for this difference.
Project-related costs
Project-related costs comprise fees payable to external
sub-contractors ("partners") who may undertake services in markets
where the Group does not have its own operations; costs of
third-party data (e.g. audience measurement data) used in projects;
and, other out-of-pocket expenses (e.g. billable travel) directly
incurred in performance of services.
Staff costs
Staff costs comprise salaries payable to staff, employer social
taxes, healthcare, pension and other benefits, holiday pay,
variable bonus expense and freelancer costs.
Other operating expenses
Other operating expenses comprise all other costs incurred in
operating the business including sales and marketing, property, IT,
non-client travel, audit, legal and professional, staff recruitment
and training, depreciation and amortisation.
Finance income and expenses
Finance income and expense represents interest receivable and
payable. Finance income and expense is recognised on an accruals
basis, based on the interest rate applicable to each bank or loan
account.
Foreign currencies
For the purposes of the consolidated financial statements, the
results and financial position of each Group company are expressed
in pounds sterling, which is the functional currency of the
Company, and the presentation currency for the consolidated
financial statements.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
functional currency (foreign currencies) are recorded at the rates
of exchange prevailing on the dates of transactions. At each
year-end date, monetary assets and liabilities that are denominated
in foreign currencies are retranslated at the rates prevailing on
the year -- end date.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's foreign operations are
translated at exchange rates prevailing on the year -- end date.
Income and expense items are translated at the average exchange
rate for the period, which approximates to the rate applicable at
the dates of the transactions.
The exchange differences arising from the retranslation of the
year -- end amounts of foreign subsidiaries and the difference on
translation of the results of those subsidiaries into the
presentational currency of the Group are recognised in the
translation reserve. All other exchange differences are dealt with
through the consolidated income statement.
Taxation
The tax expense included in the consolidated income statement
comprises current and deferred tax. Current tax is the expected tax
payable on the taxable income for the year, using tax rates enacted
or substantively enacted by the year-end date.
The Group is subject to corporate taxes in a number of different
jurisdictions and judgement is required in determining the
appropriate provision for transactions where the ultimate tax
determination is uncertain. In such circumstances, the Group
recognises liabilities for anticipated taxes based on the best
information available and where the anticipated liability is both
probable and estimable. Where the final outcome of such matters
differs from the amount recorded, any differences may impact the
income tax and deferred tax provisions in the year in which the
final determination is made.
Tax is recognised in the consolidated income statement except to
the extent that it relates to items recognised directly in equity
or other comprehensive income, in which case it is recognised in
equity.
Using the liability method, deferred tax is provided on all
temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and their tax bases,
except for differences arising on:
-- the initial recognition of goodwill;
-- the initial recognition of an asset or liability in a
transaction which is not a business combination and at the time of
the transaction affects neither accounting nor taxable profit;
and
-- investments in subsidiaries and jointly controlled entities
where the Group is able to control the timing of the reversal of
the difference and it is probable that the difference will not
reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those
instances where it is probable that taxable profit will be
available against which the difference can be utilised. The
recognition of deferred tax assets is reviewed at each year -- end
date.
The amount of the asset or liability is determined using tax
rates that have been enacted or substantively enacted by the year
-- end date and are expected to apply when the deferred tax
liabilities/assets are settled/recovered.
Deferred tax assets and liabilities are offset when the Group
has a legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to
taxes levied by the same tax authority on either:
-- the same taxable Group company; or
-- different Group entities which intend either to settle
current tax assets and liabilities on a net basis, or to realise
the assets and settle the liabilities simultaneously, in each
future period in which significant amounts of deferred tax assets
or liabilities are expected to be settled or recovered.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated
depreciation and any recognised impairment loss.
Depreciation is charged so as to write off the cost of assets
over their estimated useful economic lives. The rates applied are
as follows:
Motor vehicles Eight years straight-line
--------------------------------- ----------------------------------
Fixtures, fittings, and equipment Three to nine years straight
-- line
--------------------------------- ----------------------------------
Computer equipment Two to four years straight -- line
--------------------------------- ----------------------------------
Right-of-use assets - Period of the lease
leasehold improvements
--------------------------------- ----------------------------------
Other intangible assets
Internally generated intangible assets - capitalised development
costs
Internally generated intangible assets relate to bespoke
computer software and technology developed by the Group's internal
software development team.
An internally generated intangible asset arising from the
Group's development expenditure is recognised only if all the
following conditions are met:
-- it is technically feasible to develop the asset so that it will be available for use or sale;
-- adequate resources are available to complete the development and to use or sell the asset;
-- there is an intention to complete the asset for use or sale;
-- the Group is able to use or sell the intangible asset;
-- it is probable that the asset created will generate future economic benefits; and
-- the development cost of the asset can be measured reliably.
Internally generated intangible assets are amortised on a
straight -- line basis over their useful lives. Amortisation
commences when the asset is available for use and useful lives
range from three to five years. The amortisation expense is
included within other operating expenses. Where an internally
generated intangible asset cannot be recognised, development
expenditure is recognised as an expense in the period in which it
is incurred.
Purchased intangible assets
Externally acquired intangible assets are initially recognised
at cost and subsequently amortised on a straight -- line basis over
their useful economic lives, which vary from three to 10 years. The
amortisation expense is included as a highlighted item in the
income statement.
Intangible assets recognised on business combinations are
recorded at fair value at the acquisition date using appropriate
valuation techniques where they are separable from the acquired
entity or give rise to other contractual/legal rights. The
significant intangibles recognised by the Group include customer
relationships, intellectual property, brand names and software.
Computer software
Purchased computer software intangible assets are amortised on a
straight -- line basis over their useful lives, which vary from
three to five years.
Impairment
Assets that have an indefinite useful life are not subject to
amortisation and are tested annually for impairment.
For the purpose of impairment testing, goodwill is grouped at
the lowest levels for which there are separately identifiable cash
flows, known as cash -- generating units. If the recoverable amount
of the cash -- generating unit is less than the carrying amount of
the unit, the impairment loss is allocated first to reduce the
carrying amount of any goodwill allocated to the unit and then to
the other assets of the unit pro -- rata on the basis of the
carrying amount of each asset in the unit.
Assets that are subject to amortisation or depreciation are
reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. If any
such condition exists, the recoverable amount of the asset is
estimated in order to determine the extent, if any, of the
impairment loss. Where the asset does not generate cash flows that
are independent from other assets, estimates are made of the cash
flows of the cash -- generating unit to which the asset
belongs.
Recoverable amount is the higher of fair value, less costs to
sell, and value -- in -- use. In assessing value-in-use, estimated
future cash flows are discounted to their present value using a pre
-- tax discount rate appropriate to the specific asset or cash --
generating unit.
If the recoverable amount of an asset or cash -- generating unit
is estimated to be less than its carrying amount, the carrying
value of the asset or cash -- generating unit is reduced to its
recoverable amount. Impairment losses are recognised immediately in
highlighted items in the income statement.
In respect of assets other than goodwill, an impairment loss is
reversed if there has been a change in the estimates used to
determine the recoverable amount. An impairment loss is reversed
only to the extent that the asset's carrying amount does not exceed
the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been
recognised.
Leases
The Group has various lease arrangements for buildings, cars,
and IT equipment. Lease terms are negotiated on an individual basis
locally. This results in a wide range of different terms and
conditions. At the inception of a lease contract, the Group
assesses whether the contract conveys the right to control the use
of an identified asset for a certain period in exchange for a
consideration, in which case it is identified as a lease. The Group
then recognises a right-of-use asset and a corresponding lease
liability at the lease commencement date. Lease -- related assets
and liabilities are measured on a present value basis. Lease --
related assets and liabilities are subjected to re-measurement when
either terms are modified or lease assumptions have changed. Such
an event results in the lease liability being re-measured to
reflect the measurement of the present value of the remaining lease
payments, discounted using the discount rate at the time of the
change. The lease assets are adjusted to reflect the change in the
re -- measured liabilities.
Right-of-use assets
Right-of-use assets include the net present value of the
following components:
-- the initial measurement of the lease liability;
-- lease payments made before the commencement date of the lease;
-- initial direct costs; and
-- costs to restore.
The right-of-use assets are reduced for lease incentives
relating to the lease. The right -- of -- use assets are
depreciated on a straight -- line basis over the duration of the
contract. In the event that the lease contract becomes onerous, the
right-of-use asset is impaired for the part which has become
onerous.
Lease liabilities
Lease liabilities include the net present value of the following
components:
-- fixed payments excluding lease incentive receivables;
-- future contractually agreed fixed increases; and
-- payments related to renewals or early termination, in case
options to renew or for early termination are reasonably certain to
be exercised.
The lease payments are discounted using the interest rate
implicit in the lease. If such rate cannot be determined, the
lessee's incremental borrowing rate is used, being the rate that
the lessee would have to pay to borrow the funds necessary to
obtain an asset of similar value, in a similar economic
environment, with similar terms and conditions. The discount rate
that is used to calculate the present value reflects the interest
rate applicable to the lease at inception of the contract. Lease
contracts entered into in a currency different to the local
functional currency are subjected to periodic foreign currency
revaluations which are recognised in the income statement in net
finance costs.
The lease liabilities are subsequently increased by the interest
costs on the lease liabilities and decreased by lease payments
made.
Where a lease is not captured by IFRS 16 'Leases', the total
rentals payable under the lease are charged to the income statement
on a straight -- line basis over the lease term. The aggregate
benefit of lease incentives is recognised as a reduction of the
rental expense over the lease term on a straight -- line basis. The
land and buildings elements of property leases are considered
separately for the purposes of lease classification.
Subleases
The Group acts as a lessor where premises have been sublet to an
external third party. Accordingly, the right-of-use asset has been
derecognised and instead a lease receivable recognised determined
with reference to the net present value of the future lease
payments receivable from the tenant. Finance income is then
recognised over the lease term.
Onerous Leases
When an office space is considered surplus to requirements is
vacated and marketed, an onerous lease provision is recognised to
reflect the impairment of the right-of-use asset for the remaining
period of the lease. Charges or credits relating to the provision
are treated as highlighted items. Details of onerous lease
provisions established in the year are given in Note 3.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and short --
term deposits. Cash and cash equivalents and bank overdrafts are
offset when there is a legally enforceable right to offset.
Restricted cash is included in cash and cash equivalent but
identified separately. Where cash balances are not available for
general use by the Group, for example due to legal restrictions,
they are identified and disclosed as restricted cash.
Financial instruments
Financial assets and financial liabilities are recognised in the
Group's statement of financial position when the Group becomes a
party to the contractual provisions of the instrument.
For financial instruments measured using amortised cost
measurement (that is, financial instruments classified as amortised
cost and debt financial assets classified as FVOCI), changes to the
basis for determining the contractual cash flows required by
interest rate benchmark reform are reflected by adjusting their
effective interest rate. No immediate gain or loss is recognised. A
similar practical expedient exists for lease liabilities.
The amendments have no material impact on the Group's financial
instruments. Comparative amounts have not been restated, and there
was no impact on the current period opening reserves amounts on
adoption.
Financial assets
They arise principally through the provision of goods and
services to customers (trade receivables), but also incorporate
other types
of contractual monetary assets. They are initially recognised at
fair value plus transaction costs that are directly attributable to
their acquisition or issue and are subsequently carried at
amortised cost using the effective interest rate method, less
provision for impairment.
Impairment provisions are recognised when there is objective
evidence (such as significant financial difficulties on the part of
the counterparty or default or significant delay in payment) that
the Group will be unable to collect all of the amounts due, the
amount of such a provision being the difference between the net
carrying amount and the present value of the future expected cash
flows associated with the impaired receivable. For trade
receivables, which are reported net, such provisions are recorded
in a separate allowance account with the loss being recognised
within other operating expenses. On confirmation that the trade
receivable will not be collectable, the gross carrying value of the
asset is written off against the associated provision.
Financial liabilities
Borrowings consisting of interest -- bearing secured and
unsecured loans and overdrafts are initially recognised at fair
value net of directly attributable transaction costs incurred and
subsequently measured at amortised cost using the effective
interest method. The difference between the proceeds received net
of transaction costs and the redemption amount is amortised over
the period of the borrowings to which they relate. The revolving
credit facility is considered to be a long-term loan.
Trade and other payables are initially recognised at their
nominal value, which is usually the original invoiced amount.
Share capital
Equity instruments issued by the Group are recorded at the
amount of the proceeds received, net of direct issuance costs.
Executive Share Option Plan ('ESOP')
As the Company is deemed to have control of its ESOP trust, it
is treated as a subsidiary and consolidated for the purposes of the
Group financial statements. The ESOP's assets (other than
investments in the Company's shares), liabilities, income and
expenses are included on a line -- by -- line basis in the Group
financial statements. The ESOP's investment in the Company's shares
is deducted from shareholders' equity in the Group statement of
financial position as if they were treasury shares.
Share -- based payments
Where equity -- settled share options are awarded to employees,
the fair value of the options at the date of grant is charged to
the income statement over the vesting period with a corresponding
increase recognised in retained earnings. Fair value is measured
using an appropriate valuation model. Non -- market vesting
conditions are taken into account by adjusting the number of equity
investments expected to vest at each year-end date so that,
ultimately, the cumulative amount recognised over the vesting
period is based on the number of options that eventually vest. A
charge is made irrespective of whether the market vesting
conditions are satisfied. The cumulative expense is not adjusted
for failure to achieve a market vesting condition.
Where there are modifications to share -- based payments that
are beneficial to the employee, then as well as continuing to
recognise the original share -- based payment charge, the
incremental fair value of the modified share options as identified
at the date of the modification is also charged to the income
statement over the remaining vesting period. Where the Group
cancels share options and identifies replacement options, this
arrangement is also accounted for as a modification.
The grant by the Company of options over its equity instruments
to the employees of subsidiary undertakings in the Group is treated
as a capital contribution.
The fair value of employee services received, measured by
reference to the grant date fair value, is recognised over the
vesting period as an increase to investment in subsidiary
undertakings, with a corresponding credit to equity in the parent
entity financial statements.
Provisions
Provisions, including provisions for onerous lease costs, are
recognised when the Group has a present legal or constructive
obligation as a result of past events, it is probable that an
outflow of resources will be required to settle that obligation and
the amount can be reliably estimated. Provisions are not recognised
for future operating losses.
Provisions are measured at the Directors' best estimate of the
expenditure required to settle the obligation at the year -- end
date. If the effect of the time value of money is material,
provisions are determined by discounting the expected future cash
flows at a pre -- tax rate which reflects current market
assessments of the time value of money and, where appropriate, the
risks specific to the obligations.
Retirement benefits
For defined contribution pension schemes, the Group pays
contributions to privately administered pension plans on a
voluntary basis. The Group has no further payment obligations once
the contributions have been paid. Contributions are charged to the
income statement in the year to which they relate.
Dividend distribution
Dividend distribution to the Company's shareholders is
recognised as a liability in the Group's financial statements in
the period in which the dividends are approved by the Company's
shareholders.
Critical accounting judgements and key sources of estimation
uncertainty
In preparing the consolidated financial statements, the
Directors have made critical accounting judgements in applying the
Group's accounting policies. This year the key judgement related to
the identification of acquired intangible assets.
Identification of acquired intangible assets
As part of accounting for acquisitions under IFRS3, the Group
must identify and value the intangible assets it has acquired such
as customer relationships, intellectual property, brand names and
software. Their identification of these intangibles requires
judgement following an assessment of the acquired business. This
involves reviewing the past performance of the acquiree and future
forecasts to ascertain the intangible assets to which the purchase
price should be allocated and their fair value. See note 16 for
details.
The Directors have also made critical accounting estimates due
to the need to make assumptions about matters which are often
uncertain. Actual results may significantly differ from those
estimates. These estimates include determination of contingent
consideration, the inputs used in impairment assessments, inputs to
share option accounting fair value models and amounts to capitalise
as intangible assets. They are arrived at with reference to
historical experience, supporting detailed analysis and, in the
case of impairment assessments and share option accounting,
external economic factors.
Contingent consideration
The Group has recorded liabilities for contingent consideration
on acquisitions made in the current and prior periods. The
calculation of the contingent consideration liability requires
estimates to be made regarding the forecast future performance of
these businesses for the earn -- out period. See note 16 for
details.
Any changes to the fair value of the contingent consideration
after the measurement period are recognised in the income statement
as a highlighted item.
Carrying value of goodwill and other intangible assets
Impairment testing requires management to estimate the value --
in -- use of the cash -- generating units to which goodwill and
other intangible assets have been allocated. The value -- in-use
calculation requires estimation of future cash flows expected to
arise from the cash -- generating unit and the application of a
suitable discount rate in order to calculate present value. The
sensitivity around the selection of particular assumptions
including growth forecasts and the pre -- tax discount rate used in
management's cash flow projections could significantly affect the
Group's impairment evaluation and therefore the Group's reported
assets and results.
Further details, including a sensitivity analysis, are included
in note 7.
Adoption of new standards and interpretations
The Group has applied the following standards and amendments for
the first time for the annual reporting period commencing 1 January
2022:
-- Interest Rate Benchmark Reform - amendments to IFRS 9, IAS 9
and IFRS 7 and IFRS as issued in August 2020. In accordance with
the transition provisions, the amendments have been adopted
retrospectively to hedging relationships and financial
instruments.
The amendments listed above did not have any impact on the
amounts recognised in prior periods and are not expected to
significantly affect the current or future periods.
For financial instruments measured using amortised cost
measurement (that is, financial instruments classified as amortised
cost and debt financial assets classified as FVOCI), changes to the
basis for determining the contractual cash flows required by
interest rate benchmark reform are reflected by adjusting their
effective interest rate. No immediate gain or loss is recognised. A
similar practical expedient exists for lease liabilities.
The amendments have no material impact on the Group's financial
instruments. Comparative amounts have not been restated, and there
was no impact on the current period opening reserves amounts on
adoption.
The following new standards have been published that are
mandatory to the Group's future accounting periods but have not
been adopted early in these financial statements:
-- Property, Plant and Equipment: Proceeds before intended use - amendments to IAS 16
-- Onerous Contracts Cost of Fulfilling a Contract - amendments to IAS 37
-- Annual Improvements to IFRS Standards 2018-2020 Cycle effective on or after 1 January 2022
-- Classification of Liabilities as Current or Non-current
-Amendments to IAS 1 1 January 2023 (deferred from 1 January
2022)
-- Disclosure of Accounting Policies - Amendments to IAS 1 and
IFRS Practice Statement 2 effective on or after 1 January 2023
-- Definition of Accounting Estimates- Amendments to IAS 8 effective on or after 1 January 2023
-- Deferred Tax related to Assets and Liabilities arising from a
Single Transaction - Amendments to IAS 12 effective on or after 1
January 2023
-- Sale or contribution of assets between an investor and its
associate or joint venture -Amendments to IFRS 10 and IAS 28
effective on or after 1 January 2023
The adoption of the standards listed above is not expected to
significantly affect future periods.
2. Segmental reporting
In accordance with IFRS 8, the Executive Directors have
identified the operating segments based on the reports they review
as the chief operating decision-maker ('CODM') to make strategic
decisions, assess performance and allocate resources. The
definition of these segments has been changed this year and the
operating segments are now deemed to be the regional operations
instead of the two global practices reported on in previous years.
The comparative segmental reporting for 2021 has been re-stated to
reflect this change.
Certain operating segments have been aggregated to form four
reportable segments: UK & Ireland ("UK&I"), Continental
Europe, North America and Asia Pacific ("APAC").
The Group's chief operating decision -- makers assess the
performance of the operating segments based on revenue and
operating profit before highlighted items. This measurement basis
excludes the effects of non -- recurring expenditure from the
operating segments such as restructuring costs and purchased
intangible amortization. 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.
Year ended/as at 31 December 2022
UK & Continental North APAC Reportable Unallocated Total
Ireland Europe America segments
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 31,528 21,855 13,310 9,280 75,973 - 75,973
------------------ ------------------- ------------ --------- -------- ----------- ------------ --------
Operating profit/(loss)
before highlighted
items 6,552 6,449 913 1,943 15,857 (6,587) 9,270
------------------------------ ------- ------------ --------- -------- ----------- ------------ --------
Total
assets 32,963 43,604 17,757 11,911 106,235 2,937 109,172
------------------ ------------------- ------------ --------- -------- ----------- ------------ --------
Year ended/as at 31 December 2021 (re-stated)
UK & Continental North APAC Reportable Unallocated Total
Ireland Europe America segments
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 32,279 17,354 5,565 7,893 63,091 - 63,091
------------------------- --------- ------------ --------- -------- ----------- ------------ --------
Operating profit/(loss)
before highlighted
items 7,095 4,142 (598) 836 11,474 (6,737) 4,737
------------------------- --------- ------------ --------- -------- ----------- ------------ --------
Total assets 33,062 21,199 6,051 12,316 72,628 2,883 75,511
------------------------- --------- ------------ --------- -------- ----------- ------------ --------
A reconciliation of segment operating profit before highlighted
items to total profit before tax is provided below:
Year ended Year ended
31 December 31 December
2022 2021
GBP'000 GBP'000
------------------------------------------------------- ------------ ------------
Reportable segment operating profit before highlighted
items 15,857 11,474
------------------------------------------------------- ------------ ------------
Unallocated (costs)/income(1) :
------------------------------------------------------- ------------ ------------
Staff costs (3,816) (3,805)
------------------------------------------------------- ------------ ------------
Property costs (949) (1,457)
------------------------------------------------------- ------------ ------------
Exchange rate movements 541 (22)
------------------------------------------------------- ------------ ------------
Other operating expenses (2,363) (1,453)
------------------------------------------------------- ------------ ------------
Operating (loss)/profit before highlighted items 9,270 4,737
------------------------------------------------------- ------------ ------------
Highlighted items (note 3) (15,168) (9,815)
------------------------------------------------------- ------------ ------------
Operating loss (5,898) (5,078)
------------------------------------------------------- ------------ ------------
Net finance costs (1,303) (633)
------------------------------------------------------- ------------ ------------
Loss before tax (7,201) (5,711)
------------------------------------------------------- ------------ ------------
1. Unallocated (costs)/income comprise central costs that are
not considered attributable to the segments.
Unsatisfied long-term contracts
The following table shows unsatisfied performance obligations
results from long-term contracts:
Year
ended Year ended
31 December 31 December
2022 2021
GBP'000 GBP'000
---------------------------------------------------- ------------ ------------
Aggregate amount of the transaction price allocated
to long-term contracts that are partially or fully
unsatisfied as at 31 December 2022:
---------------------------------------------------- ------------ ------------
Within one year 21,573 21,732
---------------------------------------------------- ------------ ------------
Within more than one year 1,580 1,070
---------------------------------------------------- ------------ ------------
Prior year figures have been restated to reflect the above
categorisation
Significant changes in contract assets and liabilities
Contract assets have increased from GBP5,172,000 to GBP6,464,000
and contract liabilities have increased from GBP5,307,000 to
GBP8,083,000 from 31 December 2021 to 31 December 2022. This
increase is due in part to the addition of contract assets and
liabilities arising in the businesses acquired during the year.
A reconciliation of segment total assets to total consolidated
assets is provided below:
Year ended Year ended
31 December 31 December
2022 2021
GBP'000 GBP'000
------------------------------------- ------------ ------------
Total assets for reportable segments 106,235 72,628
------------------------------------- ------------ ------------
Unallocated amounts: -
------------------------------------- ------------ ------------
Property, plant and equipment 3 -
------------------------------------- ------------ ------------
Other intangible assets 1,593 187
------------------------------------- ------------ ------------
Other receivables 542 964
------------------------------------- ------------ ------------
Cash and cash equivalents 799 1,147
------------------------------------- ------------ ------------
Deferred tax asset - 585
------------------------------------- ------------ ------------
Total assets 109,172 75,511
------------------------------------- ------------ ------------
The table below presents non -- current assets by geographical
location:
Year ended Year ended
31 December 31 December
2022 2021
GBP'000 GBP'000
Non -- Non --
current current
assets assets
GBP'000 GBP'000
------------ ------------
UK & Ireland 16,511 19,922
------------------------------------ ------------ ------------
Continental Europe 26,709 10,797
------------------------------------ ------------ ------------
North America 11,538 2,342
------------------------------------ ------------ ------------
Asia Pacific 5,706 5,848
------------------------------------ ------------ ------------
60,464 38,909
Deferred tax assets 2,199 1,388
------------------------------------ ------------ ------------
Total 62,663 40,297
------------------------------------ ------------ ------------
No single customer (or group of related customers) contributes
10% or more of revenue.
3. Highlighted items
Highlighted items comprise charges and credits which are
highlighted in the income statement because separate disclosure is
considered relevant in understanding the underlying performance of
the business. These are used for the calculation of certain
Alternative Performance Measures. For further information and
reconciliation please see page 17.
31 December 31 December
2022 2021
Total Total
GBP'000 GBP'000
---------------------- --------- ----------- -----------
Other operating expenses
Share option charge 553 459
Amortisation of purchased
intangibles 2,739 1,065
Post-date remuneration for
Digital Decisions 7,866 7,922
Impairment of goodwill and
current assets 262 -
Severance and reorganisation
costs 584 87
Onerous Lease Provision
movement 1,272 -
Acquisition related costs 1,892 282
-------------------------------- ----------- -----------
Total highlighted items
before tax 15,168 9,815
Taxation charge/(credit) (1,799) (531)
-------------------------------- ----------- -----------
Total highlighted items 13,369 9,284
-------------------------------- ----------- -----------
The share option charge reflects the expense for the period
arising from the cost of share options granted at fair value,
recognised over the vesting period. For the period ended 31
December 2022, a charge of GBP553,000 (2021: GBP459,000) was
recorded.
The amortisation charge for purchased intangible assets
increased significantly in the year to GBP2,739,000 (2021:
GBP1,065,000) due to the addition of intangible assets through the
acquisitions of MMi and Media Path. These assets include customer
relationships of acquired entities, owned software (MMi's Circle
Audit system) and Media Path's GMP licence asset.
A final accrual of GBP7,866,000 (2021: GBP7,922,000) has been
made for post-date remuneration due to be paid in 2023 relating to
the acquisition of Digital Decisions B.V. in 2020. The total amount
to be paid is estimated at GBP15.8 million.
An impairment charge of GBP257,000 has been made to reflect the
planned divestment of the Group's majority stake in Ebiquity Russia
OOO for a nominal value. This comprises a provision of GBP179,000
against the Group's share (75%) of the total assets excluding cash
and goodwill impairment of GBP78,000 and GBP5,000 in respect of
other assets..
Total severance and reorganisation costs of GBP584,000 (31
December 2021: GBP87,000) were recognised during the year, relating
to seven senior roles across the Group which were eliminated during
the year.
The onerous lease provision charge of GBP1,225,000 relates to
office space in three cities which is surplus to requirements.
During the year, it was decided to vacate the New York office and
part of the London office and to seek sub-tenants for these. A
charge in the year of GBP1,741,000 has been made for these offices
to reflect the impairment of the right-of-use asset. This is offset
by a credit of GBP516,000, which reflects the reduction in the
lease liability relating to the Chicago office which was vacated
and sub-let in 2019 and for which the head-lease has now been
terminated with effect from September 2023.
Three acquisitions were made in 2022 and an equity fundraise was
arranged and the banking facility was increased and extended to
finance these. The charge of GBP1,892,000 (2021: GBP282,000)
relates to the professional and related costs incurred in
undertaking these transactions. The charge comprises the
following:
GBP000
-------
Acquisition of Media Path 489
Acquisition of MMi (Media Management LLC) 308
Equity placing 764
Renegotiation of Bank Facility Agreement 317
Acquisition of Forde & Semple (Canada) 14
-------
Total 1,892
-------
The total tax credit of GBP1,799,000 (2021: credit of
GBP531,000) comprises a current tax credit of GBP883,000 and a
deferred tax credit of GBP916,000. The current tax credit includes
a credit of GBP216,000 for the partial release of a provision set
up in 2018 relating to an IRS enquiry into Ebiquity Inc's tax
assessments for 2015 and 2016, which was determined during the
year. It also includes a credit of GBP487,000 for the release of a
provision made in 2013 for tax risks relating to intra-Group
management charges and royalties which is no longer considered
necessary. Details of other tax items are set out in note 4.
4. Taxation charge/(credit)
The difference between tax as charged/(credited) in the
financial statements and tax at the nominal rate is explained
below:
Year ended 31 December Year ended 31 December
2022 2021
-------------------------------------- --------------------------------------
Before Before
highlighted Highlighted highlighted Highlighted
items items Total items items Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ------------ ------------- --------- ------------ ------------- ---------
UK tax
-------------------------- ------------ ------------- --------- ------------ ------------- ---------
Current year 114 (101) 13 (30) (42) (72)
-------------------------- ------------ ------------- --------- ------------ ------------- ---------
Adjustment in respect
of prior years 386 - 386 52 - 52
-------------------------- ------------ ------------- --------- ------------ ------------- ---------
500 (101) 399 22 (42) (20)
-------------------------- ------------ ------------- --------- ------------ ------------- ---------
Foreign tax
-------------------------- ------------ ------------- --------- ------------ ------------- ---------
Current year 1,973 (295) 1,678 1,363 (22) 1,341
-------------------------- ------------ ------------- --------- ------------ ------------- ---------
Adjustment in respect
of prior years (33) (487) (520) (9) - (9)
-------------------------- ------------ ------------- --------- ------------ ------------- ---------
1,940 (782) 1,158 1,354 (22) 1,332
-------------------------- ------------ ------------- --------- ------------ ------------- ---------
Total current tax 2,440 (883) 1,557 1,376 (64) 1,312
-------------------------- ------------ ------------- --------- ------------ ------------- ---------
Deferred tax
-------------------------- ------------ ------------- --------- ------------ ------------- ---------
Origination and reversal
of temporary differences
(note 21) (380) (916) (1,296) 376 (467) (91)
-------------------------- ------------ ------------- --------- ------------ ------------- ---------
Adjustment in respect
of prior years - - - (15) - (15)
-------------------------- ------------ ------------- --------- ------------ ------------- ---------
Total tax charge/(credit) 2,060 (1,799) 261 1,737 (531) 1,206
-------------------------- ------------ ------------- --------- ------------ ------------- ---------
The difference between tax as charged/(credited) in the
financial statements and tax at the nominal rate is explained
below:
Year ended Year ended
31 December 31 December
2022 2021
GBP'000 GBP'000
------------------------------------------------ ------------ ------------
Loss before tax (7,201) (5,711)
------------------------------------------------ ------------ ------------
Corporation tax at 19% (31 December 2021: 19.%) (1,368) (1,085)
------------------------------------------------ ------------ ------------
Non -- deductible taxable expenses 1,570 3,598
------------------------------------------------ ------------ ------------
Overseas tax rate differential 549 354
------------------------------------------------ ------------ ------------
Overseas losses not recognised 97 (1,340)
------------------------------------------------ ------------ ------------
Losses utilised not previously recognised (453) (349)
------------------------------------------------ ------------ ------------
Adjustment in respect of prior years (134) 28
------------------------------------------------ ------------ ------------
Total tax charge 261 1,206
------------------------------------------------ ------------ ------------
Following the Finance Act 2021 (enacted as at 10 June 2021), the
corporation tax rate effect from 1 April 2023 will increase to 25%
from 19%. The rate change increase relates to the Finance Act 2021
not the latest Budget.
The table below shows a reconciliation of the current tax
liability for each year end:
GBP'000
---------------------------------------------- -------
At 31 December 2020 1,703
---------------------------------------------- -------
Corporation tax payments (2,616)
---------------------------------------------- -------
Corporation tax refunds 124
---------------------------------------------- -------
Withholding tax (47)
---------------------------------------------- -------
Under -- provision in relation to prior years 43
---------------------------------------------- -------
Provision for the year ended 31 December 2021 1,264
---------------------------------------------- -------
Foreign exchange (97)
---------------------------------------------- -------
At 31 December 2021 374
---------------------------------------------- -------
Corporation tax payments (2,183)
---------------------------------------------- -------
Corporation tax refunds 314
---------------------------------------------- -------
Withholding tax (39)
---------------------------------------------- -------
Under -- provision in relation to prior years (134)
---------------------------------------------- -------
Provision for the year ended 31 December 2022 1,691
---------------------------------------------- -------
Foreign exchange and other 266
---------------------------------------------- -------
At 31 December 2022(1) 290
---------------------------------------------- -------
(1) Tax liability excludes GBP14k recoverable withholding
tax.
5. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
Year ended Year ended
31 December 31 December
2022 2021
GBP'000 GBP'000
------------------------------------------- ------------ ------------
Earnings for the purpose of basic earnings
per share, being net loss attributable
to equity holders of the parent (7,495) (7,032)
------------------------------------------- ------------ ------------
Adjustments:
------------------------------------------- ------------ ------------
Impact of highlighted items (net of
tax)(1) 13,369 9,284
------------------------------------------- ------------ ------------
Earnings for the purpose of adjusted
earnings per share 5,874 2,252
------------------------------------------- ------------ ------------
Number of shares:
------------------------------------------- ------------ ------------
Weighted average number of shares during
the year
------------------------------------------- ------------ ------------
- basic 108,951,516 82,627,526
------------------------------------------- ------------ ------------
- dilutive effect of share options &
contingently issuable shares 22,771,365 2,483,339
------------------------------------------- ------------ ------------
- diluted 131,722,881 85,110,865
------------------------------------------- ------------ ------------
Basic (loss) per share (6.88)p (8.51)p
------------------------------------------- ------------ ------------
Diluted (loss) per share (6.88)p (8.51)p
------------------------------------------- ------------ ------------
Adjusted basic earnings per share 5.39p 2.72p
------------------------------------------- ------------ ------------
Adjusted diluted earnings per share 4.46p 2.67p
------------------------------------------- ------------ ------------
1. Highlighted items attributable to equity holders of the
parent (see note 3), stated net of their total tax impact.
7. Goodwill
GBP'000
----------------------------- -------
Cost
----------------------------- -------
At 1 January 2021 37,751
----------------------------- -------
Acquisitions -
----------------------------- -------
Foreign exchange differences (447)
----------------------------- -------
At 31 December 2021 37,304
----------------------------- -------
Acquisitions 14,561
----------------------------- -------
Foreign exchange differences 1,100
----------------------------- -------
At 31 December 2022 52,965
----------------------------- -------
Accumulated impairment
----------------------------- -------
At 1 January 2021 (9,188)
----------------------------- -------
Impairment -
----------------------------- -------
Foreign exchange differences 56
----------------------------- -------
At 31 December 2021 (9,132)
----------------------------- -------
Impairment (78)
----------------------------- -------
Foreign exchange differences (664)
----------------------------- -------
At 31 December 2022 (9,874)
----------------------------- -------
Net book value
----------------------------- -------
At 31 December 2022 43,091
----------------------------- -------
At 31 December 2021 28,172
----------------------------- -------
The Group tests goodwill annually for impairment or more
frequently if there are indications that goodwill may be
potentially impaired. Goodwill is allocated to the Group's cash --
generating units ( ' CGUs ' ) in order to carry out impairment
tests. The Group ' s remaining carrying value of goodwill by CGU at
31 December was as follows:
31 December 31 December
2022 2021
Cash -- generating unit Reporting segment GBP'000 GBP'000
----------------------------- ------------------ ----------- -----------
Media UK and International UK and Ireland 9,257 9,232
----------------------------- ------------------ ----------- -----------
Effectiveness UK and Ireland 1,678 1,678
----------------------------- ------------------ ----------- -----------
Digital Decisions Europe 502 477
----------------------------- ------------------ ----------- -----------
Germany Europe 4,325 4,316
----------------------------- ------------------ ----------- -----------
Media Value Group (Iberia) Europe 3,157 2,994
----------------------------- ------------------ ----------- -----------
France Europe 569 556
----------------------------- ------------------ ----------- -----------
Italy Europe 397 376
----------------------------- ------------------ ----------- -----------
Central and Eastern Europe Europe 260 337
----------------------------- ------------------ ----------- -----------
Media Path Network Europe 7,608 -
----------------------------- ------------------ ----------- -----------
North America (including MMi
and Canada) North America 7,557 604
----------------------------- ------------------ ----------- -----------
Australia APAC 2,413 2,304
----------------------------- ------------------ ----------- -----------
China APAC 2,358 2,287
----------------------------- ------------------ ----------- -----------
Digital Balance APAC 30 30
----------------------------- ------------------ ----------- -----------
Included in all
FirmDecisions segments 2,981 2,981
----------------------------- ------------------ ----------- -----------
43,091 28,172
------------------------------------------------ ----------- -----------
The impairment test involves comparing the carrying value of the
CGU to which the goodwill has been allocated to the recoverable
amount. The recoverable amount of all CGUs has been determined
based on value-in-use calculations.
Under IFRS, an impairment charge is required for goodwill when
the carrying amount exceeds the recoverable amount, defined as the
higher of fair value less costs to sell and value-in-use.
Value-in-use calculations
The key assumptions used in management's value-in-use
calculations are budgeted operating profit, pre -- tax discount
rate and the long -- term growth rate.
Budgeted operating profit assumptions
To calculate future expected cash flows, management has taken
the Board-approved budgeted operating profit ('EBIT') for each of
the CGUs for the 2023 financial year. For the 2024 and 2025
financial years, the forecast EBIT is based on management's plans
and market expectations. The forecast 2025 balances are taken to
perpetuity in the model. The forecasts for 2024 and 2025 use
certain assumptions to forecast revenue and operating costs within
the Group's operating segments.
Discount rate assumptions
The Directors estimate discount rates using rates that reflect
current market assessments of the time value of money and risk
specific to the CGUs. The factors considered in calculating the
discount rate include of the risk-free rate (based on government
bond yields), the equity risk premium, the Group's Beta and a
smaller quoted company premium. The three -- year pre-tax cash flow
forecasts have been discounted at 13% (31 December 2021: between
10% and 13%).
Growth rate assumptions
For cash flows beyond the three -- year period a growth rate of
2% ( 2021: 2%) has been assumed for all CGUs. This rate is based on
factors such as economists' estimates of long-term economic growth
in the markets in which the Group operates. In 2021 a rate of 2.6%
was applied to China
The excess of the value-in-use to the goodwill carrying values
for each CGU gives the level of headroom in each CGU. The estimated
recoverable amounts of the Group's operations in all CGUs
significantly exceed their carrying values, except for the China
and North America CGUs.
Sensitivity analysis
The Group's calculations of value-in-use for its respective CGUs
are sensitive to a number of key assumptions. Other than disclosed
below, management does not consider a reasonable possible change,
in isolation, of any of the key assumptions to cause the carrying
value of any CGU to exceed its value-in-use. For North America, the
2023 budgeted revenue and cost growth reflect the inclusion of MMi
and Media Path respectively for a full year compared to a partial
year in 2022. The considerations underpinning why management
believes no impairment is required in respect of China and North
America are set out below, showing the % points change in each key
assumption that would result in an impairment. The headroom for
North America is GBP9.2 million and for China is GBP1.4
million.
China North America
---------------------------------- -----------------------------------
% point
change % point change
leading
Current % to Current % leading to
(2023/2024/2025) impairment (2023/2024/2025) impairment
----------------- ------------------ -------------- ----------------- ----------------
Budgeted revenue
growth 1%/8%/5% (7)%/(7)%/(8)% 31%/6%/5% (9)%/(10)%/(11)%
----------------- ------------------ -------------- ----------------- ----------------
Budgeted cost
growth 1%/3%/3% 8%/9%10% 25%/3%/3% 12%/12%/14%
----------------- ------------------ -------------- ----------------- ----------------
Pre -- tax
discount rate 13%/13%/13% 6% 13%/13%/13% 9%
----------------- ------------------ -------------- ----------------- ----------------
8. Other intangible assets
Capitalised Computer Purchased Total
development software intangible intangible
costs GBP'000 Assets assets
GBP'000 GBP'000 GBP'000
------------------------------- ------------ --------- ----------- -----------
Cost
------------------------------- ------------ --------- ----------- -----------
At 1 January 2021 4,891 2,542 16,581 24,014
------------------------------- ------------ --------- ----------- -----------
Additions 970 13 - 983
------------------------------- ------------ --------- ----------- -----------
Acquisitions - - - -
------------------------------- ------------ --------- ----------- -----------
Disposals (902) - - (902)
------------------------------- ------------ --------- ----------- -----------
Foreign exchange differences (60) (34) (318) (412)
------------------------------- ------------ --------- ----------- -----------
At 31 December 2021 4,899 2,521 16,263 23,683
------------------------------- ------------ --------- ----------- -----------
Additions 276 11 - 287
------------------------------- ------------ --------- ----------- -----------
Acquisitions (see note 28) 4,260 - 10,689 14,949
------------------------------- ------------ --------- ----------- -----------
Disposals - (30) - (30)
------------------------------- ------------ --------- ----------- -----------
Foreign exchange differences 54 29 445 528
------------------------------- ------------ --------- ----------- -----------
At 31 December 2022 9,489 2,531 27,397 39,417
------------------------------- ------------ --------- ----------- -----------
Amortisation and impairment(2)
------------------------------- ------------ --------- ----------- -----------
At 1 January 2021 (1,745) (2,147) (13,987) (17,879)
------------------------------- ------------ --------- ----------- -----------
Charge for the year(3) (1,218) (211) (1,065) (2,494)
------------------------------- ------------ --------- ----------- -----------
Disposals 902 - - 902
------------------------------- ------------ --------- ----------- -----------
Foreign exchange differences 39 33 244 316
------------------------------- ------------ --------- ----------- -----------
At 31 December 2021 (2,022) (2,325) (14,808) (19,155)
------------------------------- ------------ --------- ----------- -----------
Charge for the year(3) (1,089) (195) (2,739) (4,023)
------------------------------- ------------ --------- ----------- -----------
Acquisitions (see note 28) (3,041) - - (3,041)
------------------------------- ------------ --------- ----------- -----------
Impairment - 14 - 14
------------------------------- ------------ --------- ----------- -----------
Disposals - 31 - 31
------------------------------- ------------ --------- ----------- -----------
Foreign exchange differences (35) (27) (404) (466)
------------------------------- ------------ --------- ----------- -----------
At 31 December 2022 (6,187) (2,502) (17,952) (26,640)
------------------------------- ------------ --------- ----------- -----------
Net book value
------------------------------- ------------ --------- ----------- -----------
At 31 December 2022 3,302 29 9,445 12,777
------------------------------- ------------ --------- ----------- -----------
At 31 December 2021 2,877 196 1,455 4,528
------------------------------- ------------ --------- ----------- -----------
1. Purchased intangible assets consist principally of customer
relationships with a typical useful life of three to ten years.
2. No impairment charge has been recognised in the current year
(year ended 31 December 2021: GBPnil following management's review
of the carrying value of other intangible assets).
3. Amortisation is charged within other operating 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 expense.
9. Right-of-use assets and lease liabilities
Buildings Equipment Vehicles Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ------------------ --------- -------- ------------------
Cost
------------------------- ------------------ --------- -------- ------------------
At 1 January 2021 9,789 229 153 10,171
------------------------- ------------------ --------- -------- ------------------
Additions 474 - - 474
------------------------- ------------------ --------- -------- ------------------
Disposals (210) - - (210)
------------------------- ------------------ --------- -------- ------------------
Foreign exchange (167) (33) 13 (187)
------------------------- ------------------ --------- -------- ------------------
At 31 December 2021 9,886 196 166 10,248
------------------------- ------------------ --------- -------- ------------------
Additions 2,358 - - 2,358
Impairment for the year (4,044) - - (4,044)
Foreign exchange 472 9 8 489
------------------------- ------------------ --------- -------- ------------------
At 31 December 2022 8,672 205 174 9,051
------------------------- ------------------ --------- -------- ------------------
Accumulated depreciation
------------------------- ------------------ --------- -------- ------------------
At 1 January 2021 (3,805) (99) (30) (3,934)
------------------------- ------------------ --------- -------- ------------------
Charge for the year (1,865) (42) (47) (1,954)
------------------------- ------------------ --------- -------- ------------------
Disposals 96 - - 96
------------------------- ------------------ --------- -------- ------------------
Foreign exchange 65 24 (3) 86
------------------------- ------------------ --------- -------- ------------------
At 31 December 2021 (5,509) (117) (80) (5,706)
------------------------- ------------------ --------- -------- ------------------
Charge for the year (1,998) (42) (39) (2,079)
Impairment for the year 2,303 - - 2,303
Foreign exchange (252) (5) (4) (261)
------------------------- ------------------ --------- -------- ------------------
At 31 December 2022 (5,456) (164) (123) (5,743)
------------------------- ------------------ --------- -------- ------------------
Net book value
------------------------- ------------------ --------- -------- ------------------
At 31 December 2022 3,216 41 51 3,308
------------------------- ------------------ --------- -------- ------------------
At 31 December 2021 4,377 79 86 4,542
------------------------- ------------------ --------- -------- ------------------
Lease liabilities
Buildings Equipment Vehicles Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- --------- --------- -------- --------
Cost
---------------------------- --------- --------- -------- --------
At 1 January 2021 7,858 174 126 8,158
---------------------------- --------- --------- -------- --------
Additions 412 - - 412
---------------------------- --------- --------- -------- --------
Cash payments in the year (2,180) (49) (45) (2,274)
---------------------------- --------- --------- -------- --------
Interest charge in the year 216 3 3 222
---------------------------- --------- --------- -------- --------
Foreign exchange (95) (41) 9 (127)
---------------------------- --------- --------- -------- --------
At 31 December 2021 6,211 87 93 6,391
---------------------------- --------- --------- -------- --------
Additions 1,842 - - 1,842
---------------------------- --------- --------- -------- --------
Cash payments in the year (2,717) (47) (40) (2,804)
---------------------------- --------- --------- -------- --------
Interest charge in the year 219 2 2 223
---------------------------- --------- --------- -------- --------
Foreign exchange 322 4 5 331
---------------------------- --------- --------- -------- --------
At 31 December 2022 5,877 46 60 5,983
---------------------------- --------- --------- -------- --------
Current 1,304 10 14 1,328
---------------------------- --------- --------- -------- --------
Non-current 4,573 36 46 4,655
---------------------------- --------- --------- -------- --------
The future value of the minimum lease payments are as
follows:
Minimum lease payments
-------------------------------
31 December 31 December
2022 2021
GBP'000 GBP'000
----------------------------- ------------------ -----------
Amounts due:
----------------------------- ------------------ -----------
Within one year 2,580 2,722
----------------------------- ------------------ -----------
Between one and two years 1,258 2,038
----------------------------- ------------------ -----------
Between two and three years 774 913
----------------------------- ------------------ -----------
Between three and four years 653 597
----------------------------- ------------------ -----------
Between four and five years - 446
----------------------------- ------------------ -----------
Later than five years - -
----------------------------- ------------------ -----------
5,265 6,716
----------------------------- ------------------ -----------
Lease receivables
31 December 31 December
2022 2021
GBP'000 GBP'000
------------------ ----------- -----------
Lease receivables 141 301
------------------ ----------- -----------
Current 141 146
------------------ ----------- -----------
Non-current - 155
------------------ ----------- -----------
In 2019 a sublease was entered into relating to the Chicago
office, which had been vacated. Accordingly, the right-of-use asset
was de-recognised and a lease receivable was recognised, being the
equivalent of the remaining lease receivables over the lease term.
The amount due within one year is presented within current assets
and the amount due after one year is presented within
non-current assets. The sublease expires in September 2023 at
the same time as the head lease to which it relates.
Due to the reduced occupancy of the London office following the
pandemic, one of the three floors is now considered surplus to
requirements and tenants are being sought to take a sub-lease until
July 2024 when the main lease can be terminated. It was decided in
December 2022 to vacate the fourth floor while the space is being
marketed. An onerous lease provision has therefore been established
for the remaining term of the lease from January 2023 until July
2024. This resulted in a charge of GBP384,000 in the year for the
impairment of the right-of-use asset.
Following the pandemic, the New York office, situated at William
Street, is no longer being occupied and is being marketed. An
onerous lease provision has been established for the remaining
period of the lease until June 2025. This resulted in a charge of
GBP1,357,000 in the year for the impairment of the right-of-use
asset.
10. Trade and other receivables
31 December 31 December
2022 2021
GBP'000 GBP'000
------------------------------------------------ ----------- -----------
Trade and other receivables due within one year
------------------------------------------------ ----------- -----------
Net trade receivables 23,332 14,406
------------------------------------------------ ----------- -----------
Other receivables 2,177 1,688
------------------------------------------------ ----------- -----------
Prepayments 1,190 668
------------------------------------------------ ----------- -----------
Contract assets 6,464 5,172
------------------------------------------------ ----------- -----------
33,163 21,934
------------------------------------------------ ----------- -----------
Contract assets are assets from performance obligations that
have been satisfied but not yet billed.
Trade and other receivables represent management's best estimate
of the amount expected to be recovered by the Group through the
completion accounts and expected loss model. The Group considers
there to be no material difference between the fair value of trade
and other receivables and their carrying amount in the balance
sheet.
11. Trade and other payables
31 December 31 December
2022 2021
GBP'000 GBP'000
----------------------------------- ----------- -----------
Trade payables 6,171 3,290
----------------------------------- ----------- -----------
Other taxation and social security 2,949 2,287
----------------------------------- ----------- -----------
Deferred tax - current 276 390
----------------------------------- ----------- -----------
Other payables 654 948
----------------------------------- ----------- -----------
10,049 6,915
----------------------------------- ----------- -----------
The Directors consider that the carrying amounts of trade and
other payables are reasonable approximations of their fair
value.
12. Accruals and contract liabilities
31 December 31 December
2022 2021
GBP'000 GBP'000
---------------------------------------- ----------- -----------
Accruals 5,526 6,120
---------------------------------------- ----------- -----------
Post-date remuneration(1) 15,790 7,922
---------------------------------------- ----------- -----------
Contract liabilities(2) 8,083 5,308
---------------------------------------- ----------- -----------
Total accruals and contract liabilities 29,399 19,350
---------------------------------------- ----------- -----------
(1) Post-date remuneration relates to the acquisition of Digital
Decisions BV payable in May 2023. See note 3. (2) Contract
liabilities are receipts in advance from customers prior to
satisfaction of performance obligations.
13. Financial liabilities
31 December 31 December
2022 2021
GBP'000 GBP'000
---------------------------- ----------- -----------
Current
---------------------------- ----------- -----------
Deferred consideration(2) 61 -
---------------------------- ----------- -----------
Non -- current
---------------------------- ----------- -----------
Bank borrowings 21,500 18,000
---------------------------- ----------- -----------
Government borrowings - -
---------------------------- ----------- -----------
Loan fees(1) (265) (99)
---------------------------- ----------- -----------
Contingent consideration(3) 2,122 -
---------------------------- ----------- -----------
23,357 17,901
---------------------------- ----------- -----------
Total financial liabilities 23,418 17,901
---------------------------- ----------- -----------
(1) Loan fees were payable on amending the banking facility and
are being recognised in the income statement on a straight-line
basis until the maturity date of the facility in September 2025.
Non-current loan fees includes current fees. (2) Deferred
consideration relates to the acquisition of Forde and Semple and
was payable in January 2023. (3) Contingent consideration relates
to the acquisition of MMi and is payable in 2025.
Bank Government Contingent
borrowings borrowings consideration Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----------- ----------- -------------- --------
At 1 January 2021 18,880 750 1,957 21,587
Paid (1,036) - (1,971) (3,007)
Charged to the income statement 57 (723) 41 (625)
Discounting charged to the
income statement - - 45 45
Borrowings - - - -
Foreign exchange recognised
in the translation reserve - (27) - (27)
Foreign exchange released
to the income statement - - (72) (72)
-------------------------------- ----------- ----------- -------------- --------
At 31 December 2021 17,901 - - 17,901
Paid (1,300) - - (1,300)
Recognised on acquisition - - 2,183 2,183
Charged to the income statement 134 - - 134
Borrowings 4,500 - - 4,500
At 31 December 2022 21,235 - 2,183 23,418
-------------------------------- ----------- ----------- -------------- --------
A currency analysis for the bank borrowings is shown below:
31 December 31 December
2022 2021
GBP'000 GBP'000
---------------------- ----------- -----------
Pounds sterling 21,235 17,901
---------------------- ----------- -----------
Total bank borrowings 21,235 17,901
---------------------- ----------- -----------
All bank borrowings are held jointly with Barclays and NatWest.
The current revolving credit facility ("RCF") facility was agreed
in March 2022 and runs for a period of 3 years to March 2025,
extendable for up to a further two years with a total commitment of
GBP30 million. GBP21.5 million had been drawn as at 31 December
2022 (2021: GBP18 million). Under this agreement, annual reductions
in the facility of GBP1.25 million will apply from June 2023. The
remainder of any drawings is repayable on the maturity of the
facility. The facility may be used for deferred consideration
payments on past acquisitions, to fund future potential
acquisitions, and for general working capital requirements. The
quarterly covenants applied since June 2022 are: interest cover
> 4.0x; adjusted leverage <2.5x and adjusted deferred
consideration leverage < 3.5x.
The previous facility which was in place up to March 2022
comprised a revolving credit facility ('RCF') of GBP23 million plus
GBP1 million available as an overdraft for working capital
purposes. The covenants applying to it in the three months to 31
March 2022 were interest cover > 4.0, adjusted leverage covenant
initially at < 4.0, increasing to < 4.25 and again to <
4.5 in March 2022.
Loan arrangement fees accrued in the period of GBP264,000 (2021:
GBP99,000) are offset against the term loan and are being amortised
over the period of the loan. GBP159,000 of loan arrangement fees
has been included within creditors due within one year and the
balancing amount of GBP105,000 has been included within creditors
due after more than one year.
The facility bears variable interest at Barclays Bank SONIA rate
plus a margin ranging from 2.60% to 3.00%, depending on the Group's
net debt to EBITDA ratio. During the first six months of the
facility, the margin was fixed at 3.0%
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, USA, Australia, Germany, Denmark
and Sweden.
14. Dividends
No dividends were paid or declared during the current and prior
financial years.
15. Cash generated from operations
Year ended Year ended
31 December 31 December
2022 2021
GBP'000 GBP'000
--------------------------------------------------- --------------------- ------------
(Loss) before taxation (7,201) (5,711)
--------------------------------------------------- --------------------- ------------
Adjustments for:
--------------------------------------------------- --------------------- ------------
Depreciation (notes 12 and 13) 2,772 2,609
--------------------------------------------------- --------------------- ------------
Amortisation (note 11) 4,023 2,495
--------------------------------------------------- --------------------- ------------
(Gain)/loss on disposal 5 3
--------------------------------------------------- --------------------- ------------
Impairment of goodwill and current assets 257 -
--------------------------------------------------- --------------------- ------------
Unrealised foreign exchange loss (70) 70
--------------------------------------------------- --------------------- ------------
Onerous lease provision (release)/booked 1,272 -
--------------------------------------------------- --------------------- ------------
Share option (credits)/charges 521 319
--------------------------------------------------- --------------------- ------------
Finance income (note 6) (70) (20)
--------------------------------------------------- --------------------- ------------
Finance expenses (note 6) 1,422 882
--------------------------------------------------- --------------------- ------------
US PPP release - (720)
--------------------------------------------------- --------------------- ------------
Contingent consideration revaluations (note 3) 7,866 7,397
--------------------------------------------------- --------------------- ------------
10,797 7,324
--------------------------------------------------- --------------------- ------------
(Increase)/decrease in trade and other receivables (8,772) 2,250
--------------------------------------------------- --------------------- ------------
Increase/(decrease) in trade and other payables 1,817 2,226
--------------------------------------------------- --------------------- ------------
Movement in provisions (29) -
--------------------------------------------------- --------------------- ------------
Cash generated from operations 3,812 11,800
--------------------------------------------------- --------------------- ------------
16. Acquisitions
On 29 January 2022, the Group acquired 100% shares of Forde and
Semple Media Works, the leading media performance consultancy in
Canada, for a total consideration of CAD$1.3 million (GBP0.8
million), of which CAD$1.2 million (GBP0.7 million) was paid on
completion and CAD$0.1 million (GBP0.06 million) was deferred for
one year. Forde and Semple had revenues of CAD$1.1m in the
financial year ended 31 January 2021 and net assets of CAD$0.4
million (GBP0.2 million) on completion. The company has been
renamed Ebiquity Canada Inc and contribute revenue of GBP0.3
million in the year and operating profit of GBP0.2 million.
On 4 April 2022, the Group acquired 100% shares of Media
Management, LLC ("MMi"), a US-based media audit specialist, for an
initial consideration of US $8.0 million (GBP6.1 million) with a
deferred contingent consideration element payable in 2025. 84% of
the initial consideration (US$6.7 million/GBP5.1 million) was paid
in cash and 16% (US$1.3 million /GBP1.0 million), was applied by
the vendors to subscribe for 1,737,261 Ebiquity ordinary shares.
The contingent consideration will be based on 1.0 times adjusted
earnings before interest and tax of the combined Ebiquity US and
MMi businesses reported for the year ending 31 December 2024. This
has been estimated to be US4.0 million /GBP3.0 million. 80% of this
will be payable directly in cash to the vendors and 20% will be
applied by the vendors to subscribe for Ebiquity ordinary shares.
MMi contributed revenue of GBP3.4 million to the Group since its
acquisition. Its business has been integrated fully within the
North America unit and therefore it is not possible to report a
separate profit figure for it.
On 22 April 2022, the Group acquired 100% shares of Media Path
Network AB ("Media Path"), a Swedish-based multi-national media
consultancy, for a consideration of GBP15.5 million. 75%
(GBP11,625,000) was paid in cash and 25% (GBP3,875,000) was paid by
the issue of 6,919,642 new Ordinary Shares to the Media Path
vendors. An additional cash payment of GBP485,000 was made in June
2022 representing working capital in the completion accounts as at
31 March 2022 in excess of the contractually agreed target amount.
Media Path contributed revenue of GBP3.4 million to the Group since
its acquisition and an operating profit of GBP0.8 million.
An assessment of fair value of the acquired net assets of each
company has been made as at 31 December 2022 as follows:
Forde and Semple Media Works
The fair value of the purchase consideration for the acquisition
of Forde and Semple is as follows:
GBP'000
Cash 703
Deferred Consideration 64
---------
767
---------
The carrying value and the provisional fair value of the net
assets recognised at the date of acquisition are:
Carrying FV Fair
Value adjustment value
GBP'000 GBP'000 GBP'000
Property, plant and equipment 3 - 3
Trade and other receivables 245 - 245
Cash and cash equivalents 59 - 59
Trade and other payables (246) - (246)
Deferred tax liabilities - - -
------------------------------- --------- ------------ ---------
Net assets acquired 61 - 61
Goodwill arising from the
acquisition - - 706
--------------------------------- --------- ------------ ---------
Total purchase consideration 767
--------------------------------- --------- ------------ ---------
The goodwill arising reflects Forde and Semple's market leading
position in Canada and the benefits to the Group of retaining
profits on projects previously outsourced to the company.
Media Management LLC ("MMi")
The fair value of the purchase consideration for the acquisition
of Media Management LLC is as follows:
GBP'000
Cash 5,126
Shares 976
Contingent Consideration 2,121
-------
8,223
------------
The carrying value and the provisional fair value of the net
assets recognised at the date of acquisition are as follows:
Carrying Fair
value FV adjustment value
GBP'000 GBP'000 GBP'000
Customer contracts and relationships - 1,442 1,442
Technology - acquired software 973 687 1,660
Property, plant and equipment 63 - 63
Trade and other receivables 976 - 976
Bank overdraft (35) - (35)
Trade and other payables (2,131) - (2,131)
Deferred tax liabilities - - -
-------------------------------------- --------- -------------- --------
Net assets acquired (154) 2,129 1,975
Goodwill arising on acquisition 6,248
-------------------------------------- --------- -------------- --------
Total purchase consideration 8,223
-------------------------------------- --------- -------------- --------
Goodwill reflects the benefits of MMI's customer base in USA and
its Circle Audit technology and the scale benefits expected from
combining its business with Ebiquity's 's existing US business.
Media Path Network AB
The fair value of the purchase consideration for the acquisition
of Media Path Network is as follows:
GBP'000
Cash 12,110
Shares 3,875
--------
15,985
--------
The carrying value and the provisional fair value of the net
assets recognised at the date of acquisition are as follows:
Carrying FV adjustment Fair value
value GBP'000 GBP'000 GBP'000
Customer contracts and relationships - 6,107 6,107
License Agreement - 2,453 2,453
Property, plant and equipment 8 - 8
Cash and cash equivalents 824 - 824
Trade and other receivables 2,068 - 2,068
Trade and other payables (1,320) - (1,320)
Deferred tax liabilities - (1,763) (1,763)
-------------------------------------- --------------- -------------- -----------
Net assets acquired 1,580 6,797 8,377
Goodwill arising on acquisition 7,608
-------------------------------------- --------------- -------------- -----------
Total purchase consideration 15,985
-------------------------------------- --------------- -------------- -----------
Goodwill reflects Media Path's global market position and
customer base as well as its licence over the GMP technology
platform and benefits this offers.
17. Financial Information
The financial information included in this report does not
amount to full financial statements within the meaning of Section
434 of Companies Act 2006. The financial information has been
extracted from the Group's Annual Report and financial statements
for the period ended 31 December 2022, on which an unqualified
report has been made by the Company's auditors, Deloitte LLP.
Financial statements for the period ended 31 December 2021 have
been delivered to the Registrar of Companies; the report of the
auditors on those accounts was unqualified and did not contain a
statement under Section 498 of the Companies Act 2006.
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END
FR URSVROVUOORR
(END) Dow Jones Newswires
March 30, 2023 02:00 ET (06:00 GMT)
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