REG - Ebiquity PLC - Final Results <Origin Href="QuoteRef">EBQ.L</Origin> - Part 1
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Ebiquity PLC
16 July 2014
Ebiquity plc
Final Results for the year ended 30 April 2014
Ebiquity plc, a leading international provider of independent, data-driven
media and marketing insights, announces final results for the year ended 30
April 2014. Ebiquity provides services to over 1,100 clients across 40
countries, including over 90%¹ of the top 100 global advertisers.
Continued growth boosted by strong performance from key business segments
· 8th successive year of growth delivering £69.0m revenue at constant
currency and £68.5m on a reported basis (2013: £64.0m)
· Underlying2operating profit growth of 10% to £11.5m at constant
currencyand £11.3m on a reported basis (2013: £10.4m)
· Underlying2 diluted EPS of 10.1p, up 12% (2013: 9.00p)
· Future-focused segments of business delivering strong organic growth
· Underlying2 PBT growth of 8% to £10.3m at constant currency and £10.2m
on a reported basis (2013: £9.5m), with reported PBT of £3.4m (2013: £6.6m)
New company structure positions company to benefit from continually evolving
global marketing industry
· Business restructured into three focussed business segments:
o Media Value Measurement (MVM)
o Market Intelligence (MI)
o Marketing Performance Optimization (MPO)
· Key appointments made across business to support international growth
· Acquired the leading independent media auditing and benchmarking
company in China
· Broadened shareholder base following placing of VSS and founder
directors' shares
· Increasing complexity of advertising industry driving worldwide demand
for independent marketing and media performance measurement and optimization
Strategy remains unchanged: to become the leading and most respected provider
of data-driven actionable insights to the global marketing community
Michael Greenlees, CEO, commented:
"This has been a year of considerable change and momentum as we continue our
journey to becoming a global leader in data analytics.
"We have restructured our business so it is best placed to take advantage of
the ever changing marketing industry and we have put the necessary building
blocks in place to accelerate our international business, especially in the US
and Asia. We begin the new year with a high level of visibility on revenue
potential which gives us confidence about the year ahead."
16 July 2014
Enquiries:
Ebiquity 020 7650 9600
Michael Greenlees, CEO
Andrew Beach, CFOO
Instinctif Partners 020 7457 2020
Matthew Smallwood
Jamie Ramsay
Numis Securities 020 7260 1000
Nick Westlake (NOMAD)
David Poutney, James Serjeant
(Corporate Broker)
¹Source: Advertising Age 2013
2Underlying results are stated before highlighted items (see note 3)
Chairman's Statement
This has been Ebiquity's eighth successive year of growth across all
significant metrics. We have delivered strong organic growth in both our Media
Value Measurement ("MVM") and Marketing Performance Optimization ("MPO")
segments helped by a growing awareness of the importance of data analytics
amongst the media and marketing community who we serve. Whilst the last year
has not been without its challenges in the Market Intelligence ("MI") segment,
we are encouraged by the high level of revenue visibility for the year ahead
across the Group.
In the year ended 30 April 2014, I am pleased to announce that we delivered
total revenue growth of 8%, operating profit before highlighted items up 10%,
improved margins, and our underlying diluted EPS has increased by 12% (all on
a constant currency basis).
This has been a year of strategic importance for Ebiquity during which we have
concluded an extensive strategic review of the business, extended our
geographic footprint, most notably into China, restructured our business into
three clearly defined segments and strengthened our MPO offering with the key
acquisition of Stratigent in the US.
In Februaryand March, following the completion of our strategic review, a
successful placing was undertaken of the entire shareholdings ofVeronis Suhler
Stevenson ("VSS"), the founding Directors - Sarah Jane and Stephen Thomson -
and the Group's Chief Operations Officer, Paul Adams representing over 45% of
the Company's total share capital. Following the placings, the three founding
Directors and the two VSS representatives retired from the Board.
I would like to take this opportunity to thank our retiring Directors for
their help and insight; their contribution has been invaluable and we wish
them well in the future. We are already taking steps to strengthen our Board
with the addition of at least one new independent Non-Executive Director and I
look forward to making an announcement regarding this shortly.
Ebiquity has evolved greatly over the last year, both as a company and as a
business. From an ownership viewpoint we now benefit from a new diverse
institutional shareholder base. From a business perspective our capabilities
and geographic reach have been extended and our role as a leading
international independent data analytics partner to our clients is
increasingly recognised and valued.
Finally I would like to recognise the commitment and skills of our employees.
They are the Group's most valuable asset and the Board extends its thanks to
them for their continuedcommitment and enthusiasm.
We have a clear strategy, a motivated team and with the new financial year
starting with a high level of revenue visibility, we look forward to the
future with confidence.
Michael Higgins
Chairman
15 July 2014
Chief Executive's and Financial Review
Background
2013/14 represented yet another year in our journey from being a predominantly
UK based advertising monitoring company to becoming a global leader in data
analytics for the media and marketing community.
We have come a long way from our early years, with over fifteen offices
worldwide, an extensive partner network and over 800 employees. We proudly
work with over 1,100 clients across our Group including over 90 of the top 100
advertisers worldwide.
We have been able to deliver growth in a rapidly changing and dynamic market:
· The advertising and marketing industry is becoming increasingly
consolidated and globalised
· Advertisers are under increased pressure to demonstrate marketing spend
ROI
· Marketing and media channels continue to proliferate
· Digital channels offer the promise of greater customer engagement
· Consumer data available to brands is turning marketing into a science
· Multi-channel marketing is driving the need for data-driven measurement
and advice
This increasing complexity is driving a worldwide demand for independent
marketing and media performance measurement and optimization. Importantly,
our clients are increasingly seeking advice that is independent of the
transaction market, dominated as it is by the big media buying groups, in
order to validate their choices.
Our Business Model
During the year we revised the way in which we report our results. We now
report across three segments:
• MVM - Media Value Measurement (which includes our media benchmarking,
financial compliance and associated services)
• MI - Market Intelligence (which includes our advertising monitoring,
reputation management and research/insight services)
• MPO - Marketing Performance Optimization (consisting of our marketing
effectiveness services and the recently acquired Stratigent business)
Across these three segments Ebiquity has over 1,100 clients ranging in
contract size from tens of thousands to several millions of pounds. We work
both locally and globally across a network of offices in Europe, Asia Pacific
and the Americas.
Our business model is to leverage our media technology, data sources and
marketing knowledge to build long term client relationships with our key
clients and to provide them with a growing range of services across our three
segments.
We do this by ensuring that we are the trusted independent adviser on data and
technology solutions in the media and marketing sector, and thus achieve:
· High recurring revenues
· Growing scope of services both by product and geography
· Scalable, technology-enabled services
· Strong margins
Our Strategy
Ebiquity's objective is to become the leading and most respected independent
provider of data-driven actionable insights to the global marketing community,
and in so doing to help our clients:
· Achieve greater insights into the marketing landscape
· Make better informed decisions
· Achieve the best return on their media and marketing investments
· Continuously improve their business performance
· Monitor competitors' advertising strategy and investments
· Understand the value of their business and brand reputation
We achieve this as follows:
BUILD- data, analytics and software capabilities that will enable us to
provide our clients with the insights that they need to achieve their
objectives and improve their performance whilst at the same time creating
tools that will become part of our clients' work flow and thus encourage
recurring revenue streams.
GROW - our international footprint to ensure that we can serve the needs of
our global clients in geographies that are important to them and in the
process to provide a seamless global service.
INCREASE - our brand profile and reputation to help achieve a worldwide
competitive advantage.
DEVELOP - the skills and talent of our people to enable them to help drive our
business by providing our clients with significant added value.
Summary of results
We have once again delivered a strong set of results:
· Revenue growth of 7%
· Underlying operating profit growth of 9%
· Margin improvement at gross profit, EBITDA and operating profit levels
· Underlying diluted EPS growth of 12%
· MVM organic revenue growth of 8%, led to operating profit up 30%
· MPO organic revenue growth of 32% and combined with Stratigent
acquisition led to operating profit almost doubling
The table below sets out our results on a constant currency basis:
2014(constant currency) 2014 (as reported)£'000 2013(as reported)£'000
£'000s
Revenue 68,980 68,452 64,046
Underlying operating profit 11,456 11,339 10,441
Underlying operating profit margin % 16.6% 16.6% 16.3%
At constant currency rates (using the same foreign exchange rates as were
applicable in the year to 30 April 2013), revenue has grown by 8%, operating
profit by 10% and margin has increased.
We enjoyed particularly strong growth in both MVM and MPO - which together
account for 60% of our Group - with organic growth rates of 8% and 32%
respectively. Overall growth for the year was held back as a result of revenue
erosion in the Market Intelligence segment where advertisers' needs are
changing and we are in the process of adapting to these needs.
All results are reported before taking into account highlighted items, unless
otherwise stated. These highlighted items include share based payment
expenses, amortisation of purchased intangible assets, acquisition costs,
restructuring and other non-recurring items.
MVM - Media Value Measurement(53% of total revenue)
2014£'000 2013£'000
Revenue 36,477 32,364
Operating profit 10,289 8,003
Operating profit margin % 28.2% 24.7%
We continue to see a strong performance from our MVM business with revenue up
9% on a like-for-like basis. On an organic basis, the segment has seen growth
of 8% with strong performances in particular from our European offices. In
addition, the prior year acquisition of Firm Decisions and the current year
acquisition of CMCG have both helped drive the segment performance.
A 30% improvement in operating profit has resulted from a 9% increase in
revenue on a well-controlled organic cost base and a strong margin from the
Firm Decisions and CMCG acquisitions and demonstrates the strong operational
leverage.
Recent research conducted by the World Federation of Advertisers (WFA) clearly
indicates that brand owners are increasingly concerned with the growing
complexity of the media buying market.
The growing strength of the media buying groups, increasing lack of
transparency in the transaction chain and the development of real time buying
have all contributed to a growing trend for advertisers to seek independent
advice and verification of both the value and efficacy of their media buying
programs.
WFA's research showed that there has been a significant increase in the
proportion of its members permanently using a media benchmarking company (+19
percentage points versus 2011). The same research shows that Ebiquity's share
of this market in Europe has grown by over 30 percentage points since 2011
with the majority (59%) believing that independent companies like Ebiquity
will play an increasingly important role in helping advertisers assess
programmatic media buying and digital media effectiveness.
MI - Market Intelligence (40% of total revenue)
2014£'000 2013£'000 Revenue 27,162 29,639 Operating profit 4,801 5,936 Operating profit margin % 17.7% 20.0%
2014£'000
2013£'000
Revenue
27,162
29,639
Operating profit
4,801
5,936
Operating profit margin %
17.7%
20.0%
Our Portfolio products, which make up the majority of our MI segment, have
under-performed this year. Advertising monitoring remains a highly competitive
market, and advertisers' needs are changing. As a result we have seen price
pressure on new contract opportunities during the year which has challenged
top line growth and held back our overall margin performance. Retention of
existing clients continues to be strong - despite being lower than the record
high recorded in the prior year - with a renewal rate (by value) of 87% (2013:
93%).
MI accounts for 40% of our total business and our performance in this segment
in 2013/14 has masked what has otherwise been a strong year, with strong
growth in both MVM and MPO. We are already taking action to ensure that we
remain competitive in our MI segment and anticipate a return to growth.
For the year reported, revenue from our MI business was down 7% on a
like-for-like basis. This revenue decline has, however, been partially offset
by a 6% reduction in our cost base following a successful efficiency
improvement programme.
MPO - Marketing Performance Optimization (7% of total revenue)
2014£'000 2013£'000
Revenue 4,813 2,043
Operating profit 1,523 774
Operating profit margin % 31.6% 37.9%
The growth of online channels, coupled with the abundance of available data
which can track the minutiae of customer behaviour and media habits at an
individual person level, has transformed the discipline of marketing into a
sophisticated science based on data analytics. Targeting and personalisation
are now complementing the broadcast model to improve advertisers'
effectiveness and efficiency.
Brand owners increasingly recognise the need to apply this discipline to
better optimise their channel choices in order to build more effective
communications programs, while minimising wastage and costs.
This is the main driver of our segment success and is a trend that is likely
to grow in importance in the future. It is also the thinking behind our recent
acquisition of US-based Stratigent, which combined with our existing skills in
modelling, should enable us to develop a new source of revenue and is a
natural extension of Ebiquity's services. In the coming year we will look at
plans to extend Stratigent's capabilities into Europe.
It is against this backdrop that we continue to see a strong performance from
our MPO business with revenue up 32% on a like-for-like basis. Both our
organic business and that of the acquired Stratigent business have grown at
similar levels.
We have invested in our MPO segment to allow acceleration in revenue growth
and whilst this - together with a lower margin from the acquired Stratigent
business - has resulted in a reduction in margin as anticipated, the organic
operating profit has grown by 15% and total operating profit has nearly
doubled.
Central costs
2014£'000 2013£'000
Central costs 5,274 4,272
Central costs include central salaries (Board, Finance, IT and HR), legal and
advisory costs and property costs. Central costs have increased by £1.0m
largely due to an increased investment in centrally managed IT developers
(representing approximately £0.3m of the increase) to enhance our Market
Intelligence offerings, increased investment in Central support functions to
support the larger group (£0.3m) and increases in the allocation of UK
property costs to Central (£0.2m).
Margins
The underlying operating profit margin has improved from 16.3% to 16.6%
largely due to the revenue growth and a well-managed cost base. The
underlying EBITDA and gross margins have also improved, increasing from 18.3%
to 18.6% and from 54.2% to 56.2% respectively.
Result before tax
2014£'000 2013£'000
Underlying operating profit 11,339 10,441
Highlighted items (6,727) (2,936)
Reported operating profit 4,612 7,505
Net finance costs (1,191) (975)
Share of profit of associates 19 26
Reported profit before tax 3,440 6,556
Underlying profit before tax 10,167 9,492
Highlighted items total £6.7m, which includes £1.9m of purchased intangible
asset amortization, £1.5m adjustments to fair value of deferred consideration
as a result of strong performance from our recent acquisitions and £1.1m in
relation to significant office moves. Other items included within highlighted
items are share options charges, professional fees in relation to acquisitions
and the costs of a significant strategic review.
Net finance costs were £1.2m (2013: £1.0m) and the year on year increase
reflects the higher level of debt following the acquisitions made during the
current and previous financial years.
Reported profit before tax is down to £3.4m (2013: £6.6m) as a direct result
of the increased level of highlighted items relating to acquisitions and
integrations. Underlying profit before tax was up 7% to £10.2m (2013:
£9.5m).
Taxation
Tax for the year is £nil (2013: charge of £1.4m) representing a current tax
charge of £0.9m (2013: £2.0m) at an effective tax rate of 26% (2013: 31%) and
a deferred tax credit of £0.9m (£0.6m).
Acquisitions in the year
On 19 August 2013, we acquired 100% of Stratigent, LLC ("Stratigent") for
total expected consideration of £5.1m (sterling equivalent) consisting of
upfront consideration of £2.7m and estimated earn out payments of £2.4m. Total
consideration is capped at approximately £5.6m ($8.8m). Stratigent operates
from offices in Chicago and employs 22 people.
On 15 January 2014, we acquired 100% of China Media Consulting Group Limited
("CMCG") for total expected consideration of £6.2m (sterling equivalent)
consisting of upfront consideration of £1.6m and estimated earn out payments
of £4.7m. Total consideration is capped at approximately £6.6m (HK$85m). CMCG
operates from offices in Shanghai and Beijing and employs 21 people.
The results of Stratigent have been consolidated into our MPO segment from the
date of acquisition. The results of CMCG have been consolidated into our MVM
segment from the date of acquisition.
Equity
At the time of the acquisition of Xtreme in April 2010, convertible loan notes
were issued that were convertible into 13,802,861 ordinary shares. During the
year, the entirety of the loan notes were converted into ordinary shares.
Since their issue - and until conversion - they were included within equity as
they demonstrated the characteristics of ordinary share capital, and for the
same reason they were also included within the number of shares for the
purposes of both the basic and diluted earnings per share calculations.
In addition, 1,226,421 shares were issued upon the exercise of employee share
options and 102,981 new shares were issued to acquire an increased share of a
subsidiary from a minority holder.
These events resulted in an increase in our share capital to 75,491,111
ordinary shares (30 April 2013: 60,358,849).
Earnings per share
Underlying diluted earnings per share was 10.11p (2013: 9.00p). This is an
increase of 12% over the prior year, reflecting the positive impact of the
improved profitability of the majority of the segments and the recent
acquisitions along with the utilisation of brought forward tax losses, offset
by an increase in central costs.
The Group reports diluted earnings per share of 3.4p (2013: 6.7p), reduced
from the prior year due to the increase in highlighted items, despite the
improved underlying profitability.
Net debt and banking facilities
2014£'000 2013£'000
Cash 6,521 7,109
Bank debt1 (29,321) (22,636)
Net debt (22,800) (15,527)
1Bank debt on the Balance Sheet at 30 April 2014 is shown net of £0.1m (2013:
£0.2m) of loan arrangement fees that have been paid and which are amortised
over the life of the facility. The bank debt stated above excludes these
costs.
During the year, the term loan facility was increased by £6.0m, all of which
was drawn by the end of the year in relation to the acquisition of Stratigent
and CMCG.
At 30 April 2014, our total drawn facilities comprised £15.0m of term loan and
£14.0m of revolving credit facility ("RCF"). Both the term loan and the RCF
had a maturity date of 9 March 2016. £3.9m of the term loan was being repaid
on a quarterly basis to maturity, and the balance of the term loan and any
drawings under the RCF were repayable on maturity of the facility.
On 2 July 2014, we refinanced our banking facilities with Barclays and Royal
Bank of Scotland ("RBS") and on 7 July 2014 we drew down on these new
facilities. The new committed facility, totalling £40.0m, comprises a term
loan of £10.0m (of which all was drawn on refinance) and an RCF of £30.0m (of
which £20.8m was drawn on refinance). Both the term loan and the RCF have a
maturity date of 2 July 2018. The £10.0m term loan is being repaid on a
quarterly basis to maturity, and the drawn RCF and any further drawings under
the RCF are repayable on maturity of the facility. The facility may be used
for deferred consideration payments on past acquisitions, to fund future
potential acquisitions, and for general working capital requirements.
During the year the Group continued to trade within all of its banking
facilities and associated covenants.
Statement of financial position and net assets
Net current assets as at 30 April 2014 increased by 42% to £4.2m and total net
assets increased by 6% compared to 30 April 2013 primarily as a result of the
improved performance of the Group including the impact of the recent
acquisitions. Goodwill has increased by £7.3m from 30 April 2013, largely
reflecting the Stratigent and CMCG acquisitions.
Deferred contingent consideration has increased by a net £3.0m since 30 April
2013, due to the acquisition of Stratigent and CMCG, and performance beyond
expectations from other recent acquisitions. During the year, earn out
payments totaling £5.4m were made. Remaining deferred consideration is
currently estimated to be £8.7m which relates to our three most recent
acquisitions, £4.6m of which is forecast to be settled in the next 12 months.
Outlook
The final months of 2013/14 were extremely active with a significant volume of
new business which is only now reaching closure. We therefore begin 2014/15
with a high level of visibility on our revenue potential for the year. This,
together with the fact that our acquisitions continue to perform well, gives
us confidence about the year ahead.
By order of the Board
Michael Greenlees Andrew Beach
Chief Executive Officer Chief Financial and Operating Officer
15 July 2014
Consolidated Income Statement
for the year ended 30 April 2014
Year ended 30 April 2014 Year ended 30 April 2013
Before Highlighted Before Highlighted
highlighted items highlighted items
items (note 3) Total items (note 3) Total
Note £'000 £'000 £'000 £'000 £'000 £'000
Revenue 68,452 - 68,452 64,046 - 64,046
Cost of sales (30,008) - (30,008) (29,359) - (29,359)
Gross profit 38,444 - 38,444 34,687 - 34,687
Administrative expenses (27,105) (6,727) (33,832) (24,246) (2,936) (27,182)
Operating profit 11,339 (6,727) 4,612 10,441 (2,936) 7,505
Finance income 15 - 15 13 - 13
Finance expenses (1,206) - (1,206) (988) - (988)
Net finance costs (1,191) - (1,191) (975) - (975)
Share of profit of associates 19 - 19 26 - 26
Profit before taxation 10,167 (6,727) 3,440 9,492 (2,936) 6,556
Taxation credit/(charge) 4 (2,041) 2,046 5 (2,396) 1,003 (1,393)
Profit for the year 8,126 (4,681) 3,445 7,096 (1,933) 5,163
Attributable to:
Equity holders of the parent 7,661 (4,637) 3,024 6,760 (1,716) 5,044
Non-controlling interests 465 (44) 421 336 (217) 119
8,126 (4,681) 3,445 7,096 (1,933) 5,163
Earnings per share
Basic 5 4.06p 6.95p
Diluted 5 3.99p 6.71p
Underlying basic1 5 10.29p 9.32p
Underlying diluted1 5 10.11p 9.00p
1 Underlying basic and diluted earnings per share are calculated based on profit for the year adjusted for highlighted items and the tax impact of these highlighted items (Note 3).
Consolidated Statement of Comprehensive Income
for the year ended 30 April 2014
Year ended 30 April 2014 Year ended 30 April 2013
£'000 £'000
Profit for the year 3,445 5,163
Other comprehensive income:
Items that will not be reclassified subsequently to profit or loss
Exchange differences on translation of overseas subsidiaries (1,929) 302
Movement in valuation of hedging instruments 93 (105)
Total comprehensive income for the year 1,609 5,360
Attributable to:
Equity holders of the parent 1,146 5,364
Non-controlling interests 463 (4)
1,609 5,360
Consolidated Statement of Financial Positionas at 30 April 2014
Company number: 03967525 30 April2014 30 April2013
Note £'000 £'000
Non-current assets
Goodwill 6 55,121 47,864
Other intangible assets 7 14,426 13,159
Property, plant and equipment 3,162 2,544
Investment in associates 87 68
Deferred tax asset 1,377 1,217
Total non-current assets 74,173 64,852
Current assets
Trade and other receivables 26,865 22,395
Cash and cash equivalents 6,521 7,109
Total current assets 33,386 29,504
Total assets 107,559 94,356
Current liabilities
Trade and other payables (8,370) (7,231)
Accruals and deferred income (10,838) (10,871)
Financial liabilities 8 (7,747) (5,948)
Current tax liabilities (1,764) (2,003)
Provisions (465) (498)
Total current liabilities (29,184) (26,551)
Non-current liabilities
Financial liabilities 8 (30,360) (22,554)
Provisions (610) (227)
Deferred tax liability (2,888) (2,908)
Total non-current liabilities (33,858) (25,689)
Total liabilities (63,042) (52,240)
Total net assets 44,517 42,116
Equity
Ordinary shares 18,873 15,090
Share premium 10,750 4,588
Convertible loan note reserve - 9,445
Other reserves 367 2,136
Retained earnings 13,810 10,496
Equity attributable to the owners of the parent 43,800 41,755
Non-controlling interests 717 361
Total equity 44,517 42,116
Consolidated Statement of Changes in Equity
For the year ended 30 April 2014
Ordinary shares Share premium Convertible loan note reserve Other reserves Retained earnings Total Non-controlling interests Total equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
1 May 2012 14,729 4,233 9,445 1,816 5,132 35,355 407 35,762
Profit/(loss) for the year - - - - 5,044 5,044 119 5,163
Other comprehensive income/(loss) - - - 320 - 320 (123) 197
Total comprehensive income/(loss) for the year - - - 320 5,044 5,364 (4) 5,360
Shares issued for cash 274 107 - - - 381 - 381
Acquisition of subsidiaries 87 248 - - - 335 23 358
Share options charge - - - - 267 267 - 267
Deferred tax on share options - - - - 53 53 - 53
Dividends paid to non-controlling interests - - - - - - (65) (65)
30 April 2013 15,090 4,588 9,445 2,136 10,496 41,755 361 42,116
Profit for the year 3,024 3,024 421 3,445
Other comprehensive (loss)/income - - - (1,878) - (1,878) 42 (1,836)
Total comprehensive (loss)/income for the year - - - (1,878) 3,024 1,146 463 1,609
Shares issued for cash 307 67 - 109 (93) 390 - 390
Acquisition of non-controlling interest 25 101 - - (157) (31) (47) (78)
Conversion of loan note 3,451 5,994 (9,445) - - - - -
Share options charge - - - - 337 337 - 337
Deferred tax on share options - - - - 203 203 - 203
Dividends paid to non-controlling interests - - - - - - (60) (60)
30 April 2014 18,873 10,750 - 367 13,810 43,800 717 44,517
Consolidated Cash Flow Statement for the year ended 30 April 2014
Year ended Year ended
Note 30 April 2014 30 April 2013
£'000 £'000
Cash flows from operating activities
Cash generated from operations 9 6,799 7,526
Finance expenses paid (856) (714)
Finance income received 15 13
Income taxes paid (1,159) (1,582)
Net cash from operating activities 4,799 5,243
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired (9,230) (7,264)
Disposal of investments - 62
Purchase of property, plant and equipment (1,756) (892)
Purchase of intangible assets 7 (796) (414)
Net cash used in investing activities (11,782) (8,508)
Cash flows from financing activities
Proceeds from issue of share capital (net of issue costs) 326 381
Proceeds from bank borrowings 10,766 6,456
Repayment of bank borrowings (3,937) (2,309)
Acquisition of interest in a subsidiary from non-controlling interests (78) -
Dividends paid to non-controlling interests (60) (65)
Capital repayment of finance leases (202) (157)
Net cash flow from financing activities 6,815 4,306
Net (decrease)/increase in cash, cash equivalents and bank overdrafts (168) 1,041
Cash, cash equivalents and bank overdraft at beginning of year
7,109 6,190
Effect of unrealised foreign exchange losses (420) (122)
Cash, cash equivalents and bank overdraft at
end of year 6,521 7,109
Notes to the Consolidated Financial Statements
For the year ended 30 April 2014
1. Accounting policies
General information
Ebiquity Plc ('the Company') and its subsidiaries (together, 'the Group')
provide independent data-driven insights to the global media and marketing
community. The Group has 18 offices across 11 countries. During the year, the
Group acquired Stratigent, a multi-channel analytics business based in
Chicago; and China Media Consulting Group (CMCG), a media auditing business
with offices in Shanghai and Beijing.
The company is a public limited company, which is listed on the London Stock
Exchange's AIM Market and is incorporated and domiciled in the UK.
Basis of preparation
These consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards, International Accounting
Standards and Interpretations (collectively IFRSs) issued by the International
Accounting Standards Board (IASB) as adopted by European Union (Adopted IFRSs)
and with those parts of the Companies Act 2006 applicable to companies
preparing their financial statements under Adopted IFRSs.
The consolidated financial statements have been prepared under the historical
cost convention, as modified by the revaluation of financial assets and
financial liabilities (including derivative instruments) at fair value through
profit or loss.
Going concern
The directors, after making appropriate enquiries, have a reasonable
expectation that the Group has adequate resources to continue in operational
existence for the foreseeable future. The Group therefore continues to adopt
the going concern basis in preparing its consolidated financial statements.
The Group holds bank borrowings which are subject to quarterly covenant tests.
The directors have a reasonable expectation that the covenants will be met for
the foreseeable future. Further information on the Group's borrowings is given
in Note 8.
Significant accounting policies
The principal accounting policies adopted in these consolidated financial
statements are set out below. These policies have been consistently applied to
all years presented, unless otherwise stated.
Changes in accounting policies
There are no IFRSs or IFRIC interpretations that are effective for the first
time for the financial year beginning on or after 1 May 2013 that have had a
material impact on the group.
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
Acquisition method of accounting
The cost of the acquisition is measured at 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 that
meet the conditions for recognition under IFRS 3 are recognised at their fair
value at the acquisition date. All costs directly attributable to the business
combination are recorded as incurred in the Income Statement within
highlighted items.
Where the consideration for the acquisition includes a contingent deferred
consideration arrangement, this is measured at fair value at the acquisition
date. Any subsequent changes to the fair value of the contingent deferred
consideration are adjusted against the cost of the acquisition if they occur
within the measurement period. Any subsequent changes to the fair value of the
contingent deferred consideration after the measurement period are recognised
in the Income Statement within administrative expenses as a highlighted item.
The carrying value of contingent deferred consideration at the Balance Sheet
date represents management's best estimate of the future payment at that date,
based on historical results and future forecasts.
The interest of non-controlling shareholders 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.
Investments in associates
An associate is an entity over which the Group is in a position to exercise
significant influence, but not control or joint control, through participation
in the financial and operating policy decisions of the investee generally
accompanying a shareholding of between 25% and 50% of the voting rights.
Significant influence is the power to participate in the financial and
operating policy decisions of the investee but is not control or joint control
over those policies.
The results and assets and liabilities of associates are incorporated in these
financial statements using the equity method of accounting. Investments in
associates are carried in the statement of financial position at cost as
adjusted by post-acquisition changes in the Group's share of the net assets of
the associate, less any impairment in the value of individual investments.
Losses of an associate in excess of the Group's interest in that associate
(which includes any long-term interests that, in substance, form part of the
Group's net investment in the associate) are recognised only to the extent
that the Group has incurred legal or constructive obligations or made payments
on behalf of the associate.
Any excess of the cost of acquisition over the Group's share of the fair
values of the identifiable net assets of the associate at the date of
acquisition is recognised as goodwill. The goodwill is included within the
carrying amount of the investment and is assessed for impairment annually.
Where a group company transacts with an associate of the Group, profits and
losses are eliminated to the extent of the Group's interest in the relevant
associate. Losses may provide evidence of an impairment of the asset
transferred in which case appropriate provision is made for impairment.
Goodwill
Goodwill arising on consolidation represents the excess of the cost of
acquisition over the Group's interest in the fair value of the identifiable
assets and liabilities of a subsidiary. Goodwill is initially
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