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RNS Number : 2299A Ebiquity PLC 22 September 2022
Ebiquity plc
Interim Results for the six months ended 30 June 2022
Refocused strategy, targeted acquisitions and performance enhancements support
strong growth
Ebiquity plc ("Ebiquity" or the "Group"), a world leader in media investment
analysis, announces interim results for the six months ended 30 June 2022 ("H1
2022").
Financial Highlights
Group H1 2022 H1 2021 Change
£m £m £m %
Revenue 37.2 32.0 +5.2 16%
Underlying Operating Profit (1) 5.0 2.3 +2.7 117%
Underlying Operating Profit Margin (%) (1) 13.3% 7.1% - 86%
Underlying Profit before Tax (1) 4.7 2.0 +2.7 135%
Underlying Earnings per Share (1) 2.8p 1.4p +1.4p 100%
Statutory Operating Loss (1.1) (0.9) (0.2) -
Statutory Loss before Tax (1.3) (1.1) (0.2) -
Statutory Loss per Share (3.4) p (2.0)p (1.4)p -
Note 1: Throughout these interim results, management presents alternative
performance measures to explain further the movements in our business. These
are not statutory financial measures. Further information can be found below.
Underlying operating profit is defined as the operating profit excluding
highlighted items. These include share-based payments, amortisation of
purchased intangibles and non-recurring items. Underlying profit before tax
and earnings per share are calculated based on the underlying operating
profit.
· Revenue increased by £5.2m (16%) and by £2.4m (7%) organically
· Underlying Operating Profit increased by 117%; by 79% organically
· Underlying Operating Profit margin almost doubled to 13.3% (2021:
7.1%)
· Acquisitions in the period contributed revenue of £2.8m and
underlying operating profit of £0.9m
· Statutory Loss is after making accrual in period of £3.4m towards
contingent consideration for Digital Decisions B.V payable in 2023 (based on
its performance in 2021 and expected performance in 2022)
· Net bank debt of £12.9m with cash balances of £9.3m and undrawn
bank facilities of £7.5m as at 30 June 2022
Operational Performance and Highlights
· Improved profitability in H1 across all regions and business units
· Significant growth from the Media Performance service line
· Revenue growth of 90% from Digital Media Solutions
· Reduced production costs leading to strong improvement in operating
margin
· Major new assignments from Jaguar Land Rover, Pepsico, Virgin Media
O2 and BMW
Outlook
· Full year results expected to be in line with market expectations
Nick Waters, CEO, commented:
"We have delivered a strong performance in the first half of the year,
building on the momentum and progress made in 2021. Pleasingly, our operating
profit increased organically by 79%, demonstrating our ability to drive
earnings growth from within the business. In addition, the integration of the
two transformative acquisitions that we made in the USA and Europe is
progressing well and each business has made a positive contribution to these
results.
Ebiquity is now in a much stronger position across all our geographies and
services. Although we recognise that upward cost pressures in the wider
economy may impact the business, we remain cautiously optimistic that our
services will remain in demand as advertisers seek out independent scrutiny
over the cost effectiveness of their media investments which becomes more
important in difficult times.
While the extent of client demand for support in more challenging markets has
yet to be fully tested, we believe Ebiquity, with an increasingly strong offer
covering digital media together with the opportunities presented by our recent
strategic developments, is well placed for long term sustained growth. We
expect our full year results to be in line with the Board's expectations."
Details of presentations
The Executive Directors will be hosting a webcast presentation for analysts
and investors at 10:00 BST today. If you would like to register, please
contact phoebe.a. (mailto:phoebe.a.pugh@camarco.co.uk) pugh@camarco.co.uk
(mailto:phoebe.a.pugh@camarco.co.uk) .
They will also be giving a presentation for investors via the Investor Meet
Company platform on 26 September 2022. 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
(https://www.investormeetcompany.com/ebiquity-plc/register-investor) .
Investors who already follow Ebiquity plc on the Investor Meet Company
platform will automatically be invited.
Market abuse regulation
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/201 as it forms part of UK domestic law by virtue of
the European Union (Withdrawal) Act 2018 ("MAR"). Upon the publication of this
announcement via a Regulatory Information Service this inside information is
now considered to be in the public domain.
The person responsible for arranging release of this announcement on behalf of
the Company is Alan Newman, Chief Financial Officer and Chief Operating
Officer of the Company.
Enquiries:
Ebiquity
Via Camarco
Nick Waters,
CEO
Alan Newman, CFO &
COO
Camarcco
Ben Woodford
+44 (0)7990 653 341
Geoffrey Pelham-Lane
+44 (0)7733 124 226
Panmure Gordon (Financial Adviser, NOMAD & Broker)
+44 (0)20 7886 2500
Alina Vaskina / Dougie McLeod (Corporate Advisory)
Sam Elder (Corporate Broking)
Chief Executive's Review
Overview
We have delivered a strong performance in the first half of the year, building
on the momentum and progress made in 2021.
Group revenue has seen a 16% increase over the prior year with strong organic
contributions from Europe and Asia Pacific and growth across our service lines
as well as an initial contribution of £2.8 million from the businesses
acquired in the period. The revenue growth contributed to a significant
improvement in the underlying operating profit to £5.0 million which was up
117% on the previous year and in the underlying operating margin which almost
doubled to 13.3% over the same period. Our existing business increased its
revenue organically by 7% and underlying operating profit by 79% reflecting
the benefit of growth in higher margin digital media solutions and robust cost
management. Project-related costs fell by 11% and operating expenses growth
in the existing business was restricted to 4% reflecting our continuing
efficiency improvements.
What has been significant during the period is the resilience of the
advertising markets which have largely remained buoyant during the first half
of the year. Most industry sectors have been operating in line with
expectations, with the automotive sector subdued relative to the FMCG sector,
which remains strong. While there has been less agency selection activity than
in 2021, which saw an increase in pent up demand following the pandemic
affected 2020, we continued to see demand for our services as clients seek
advice and support on how best to manage their advertising mix in a
challenging environment where media price inflation is increasing.
During the period we also made two transformative acquisitions, Media
Management LLC (MMi) in the US and MediaPath Network AB (MediaPath) in Europe.
The acquisition in the US has provided us with scale in the world's largest
advertising market and significantly increased our penetration of large US
corporate advertisers. With the acquisition of MediaPath, we have a globally
distributed business operating off a high quality, globally scaled, technology
platform, providing us with a highly effective base from which to drive
greater efficiency in the delivery of our services. 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. The integration
of all these acquisitions is proceeding well and they have together
contributed £0.8 million to the underlying operating profit in the period.
As previously announced, we have been reviewing the future of our operation in
Russia and have been in negotiations to divest our majority shareholding in
it. To reflect this, an impairment provision has been made against its
assets in the Group balance sheet.
Delivering on our strategy
Ebiquity's purpose is simple; we exist to help brand owners increase returns
from their media investments and so improve business performance. To achieve
this, our strategy is driven by four key areas - to develop higher value
strategic relationships with more clients; to develop productised solutions
for the digital market; to improve operating efficiency; and to increase scale
in the US and Asia Pacific.
We are making good progress in delivering on our strategy.
Expanding our client universe
We have prioritised creating a universe of 'higher value strategic clients'
and now work with 28 of the world's 30 leading advertisers, resulting in
revenue growth for this group of 7% compared to the prior year. We have won
several new clients including Brown and Forman (Jack Daniels) in the US,
Pepsico in India and Virgin Media O2 in the UK as well as winning
multinational agency selection mandates for Jaguar Land Rover and BMW. It is
pleasing to note that the number of clients buying two or more Service Lines,
a key driver of our growth potential, is progressing well, in line with our
expectations.
Expanding our product offering
We now have seven productised Digital Media Solutions in the market, helping
to double revenue in this area compared to the prior year period to £2.9
million and maintaining its profit margin above 50%. Our targets of increasing
the number of clients buying Digital Media Solutions products and the value of
digital advertising monitored are both on plan while the metrics of increasing
the number of digital impressions analysed and the number of countries served
are both progressing ahead of plan. We are also working on two new solutions
for Advanced TV and Retail Media and intend to pilot the Advanced TV product
in the USA in Q4 2022. In addition, our Responsible Media Investment Product
is being rolled out to a further nine markets following a successful pilot in
the US and UK.
Creating a more efficient business
Creating a more efficient business is central to our strategy. Indeed, the
primary strategic rationale behind acquiring MediaPath was the operating
efficiency it would deliver. This integration is going to plan with all
functional and technical aspects completed and we are now training our teams
on the GMP365 platform which will help us achieve further cost synergies. We
are also at the early stages of client on-boarding with a new Group
proposition being developed to take to market. Our existing initiatives to
improve our productivity continued to deliver benefits including an increase
of 37% in the "productive hours" delivered by our Media Operations Centre in
Madrid as a result of further transfer of work there from market units.
Growing our regional presence
We manage the business through four regions: North America, UK & Ireland,
Continental Europe, and Asia Pacific together with a global Contract
Compliance segment. Our priority is to increase scale in the US and Asia
Pacific, while maintaining growth in Continental Europe and the UK. Both
priority regions have delivered strong performances. North America, which has
increased its scale with the acquisition of MMi, saw revenue growth of 90%.
Asia Pacific, our fastest growing region organically, delivered growth of 38%
with particularly strong performances in China and Southeast Asia and a good
start in India following our launch there in Q3 2021. Continental Europe
delivered an impressive performance, up 13% with strong contributions from
France, Spain and Italy.
Operational metrics
We introduced a set of operational metrics to guide our strategic progress in
2021 and reported the 2021 values in the annual report as listed in the table
below. The progress in this half year is also shown in the table.
Operational metric Baseline measure December 2021 Progress in the period
No of clients buying two or more service lines 76 clients On plan
No of clients buying one or more products from the new digital solutions 28 clients On plan
portfolio
Volume of digital impressions processed, analysed and reported on the platform 639 billion impressions Ahead of plan
Value of digital advertising spend processed, analysed and reported on the US$3.03 billion On plan
platform
Proportion of revenue relating to digital media (for media performance and 29% Reduced following acquisitions
media management Service Lines)
Number of countries served with new digital products 87 Ahead of plan
Outlook
Our positive momentum across the Group in the first half puts Ebiquity in a
strong position to maintain progress as laid out in our plans.
While we recognise that the more challenging economic environment may impact
our clients and their advertising spend over the next 12 months, we remain
cautiously optimistic that demand for our services will continue as our
independent scrutiny of the effectiveness of their media investments becomes
even more important in difficult times. Inflationary cost pressures in the
wider economy, especially relating to staff costs, may also affect our
business but we expect our continuing improvement in operating efficiencies to
help alleviate these.
Our increased scale in key global growth markets, higher quality revenues,
fast growing digital offer and improving operational efficiency support
continued opportunities for growth and margin enhancement.
We expect our results for the full year to be in line with market expectations
Segmental Review of Performance
Revenue Analysis
Revenue
H1 22 H1 21 Variance
£m £m £m %
Media 32.5 26.8 5.7 21%
Analytics and Tech 4.7 5.2 (0.5) (10%)
Total 37.2 32.0 5.2 16%
Operating Profit Analysis
Underlying Operating Profit Underlying Operating Profit Margin
H1 22 H1 21 Variance H1 22 H1 21
£m £m £m % % %
Media 7.7 5.3 2.4 45% 24% 20%
Analytics and Tech 0.5 0.4 0.1 26% 11% 8%
Unallocated costs (3.2) (3.4) 0.2 (6%) - -
Total 5.0 2.3 2.7 117% 13% 7%
Media
Media revenue increased by 21% from the prior year to £32.7 million,
including an initial contribution of £2.8m from the three businesses acquired
in the period, and by 11% organically. This reflected strong growth, as
expected, in digital media solutions revenue generated from new products (e.g.
Responsible Media Investment) and the core digital governance service as well
as increased revenue from other services. In service line terms, our Media
Performance services, which help clients to assess and optimise their media
buying performance and which form the bulk of Media revenue, increased by 28%
including the acquisitions. Revenue from Media Management services increased
by 8% which was a lower growth rate than the prior year as fewer advertisers
conducted large scale agency selections.
Geographically, the highest growth in Media was in Asia Pacific where media
revenue grew by 40%, driven by China and South-East Asia as we continued to
expand our base among local, as well as international clients. US revenue
increased overall by 90%, with contributions from the MMi and Forde and Semple
acquisitions doubling our scale and by 26% organically. European revenue
grew by 16%, building on multinational client wins in the previous year. In UK
and Ireland, our most mature market, revenue grew by 4%.
Contract Compliance revenue (branded as FirmDecisions) decreased by 9% due
largely to phasing of projects which this year is weighted more heavily into
the second half.
Media segment profitability improved significantly as a result of the revenue
growth, with underlying operating profit up by 45% to £7.7 million and the
operating profit margin increasing to 24% from 20% in the comparable period.
Although this result benefitted from the acquisitions, operating profit also
grew well organically by £1.5 million (28%) reflecting the impact of higher
margin digital media solutions as well as operating efficiencies.
Analytics and Tech
Overall revenue from Analytics and Tech decreased by 10% but its underlying
profit increased by 26% and the operating margin improved from 8% to 11%.
Within this, revenue from the Analytics Service Line, whose advanced
analytical techniques help brands to plan and optimise their investment in
media, reduced by 11% due in part to a more robust pricing policy which
enabled it to keep profits stable on the lower revenue. Digital Balance,
based in Australia, which optimises website performance, increased revenue by
27% and returned to profitability from being loss making in the prior year
period. Revenue from the AdTech service which is now integrated with the Media
service reduced by 20%.
Unallocated costs, which comprise corporate and support costs, reduced
slightly by £0.2 million, in part due to the benefit of foreign exchange
gains realised on debtor and creditor balances.
Financial Review
Revenue for the half year ended 30 June 2022 of £37.2 million was £5.2
million higher than the comparable period in 2021. This included an initial
contribution of £2.8 million from the acquired businesses. Organically,
revenue increased by £2.4 million and by 7%
Underlying operating profit (statutory operating profit excluding highlighted
items) of £5.0 million increased by £2.7 million - up 117% from the prior
year and by 79% excluding the acquired businesses. The underlying operating
profit margin improved to 13% compared to 7% in the prior year.
Project related costs (which comprise external partner and production costs)
decreased by 11% to £3.5 million from £4.0 million. This was due to more
projects being served directly by Ebiquity's own offices including in Canada
where Forde and Semple had previously been an external partner. Total
underlying operating expenses, including cost of sales and administrative
expenses, increased by 12% to £28.8 million from £25.8 million. This
included £2.0 million added by the acquired businesses in the period.
Within the existing business, total operating expenses increased organically
by £0.9 million (4%) assisted by staff numbers being held static compared to
the prior year.
There was an underlying profit before tax of £4.7 million compared to a
profit of £2.0 million for the six months ended 30 June 2021. Net finance
costs were £0.2 million - a reduction of £0.04 million (16%) compared to the
prior year, due mainly to realised foreign exchange gains on intercompany loan
balances, as bank interest costs remained stable.
The statutory operating loss increased to £1.1 million, from £0.9 million in
the prior year. This reflected the increase in highlighted items (before tax)
to £6.0 million from £3.2 million, of which the largest element was the
accrual for the Digital Decisions post-date remuneration. There was a
statutory loss before tax of £1.3 million, compared to £1.1 million in the
prior year.
Highlighted items
Highlighted items after tax in the period totalled a charge of £5.6 million
(2021: £3.0 million) and include the following:
· £3.4 million accrual for post-date remuneration payable relating to
the acquisition of Digital Decisions B.V. (June 2021: £2.4 million)
· £1.7 million charge for acquisition integration and strategic costs
· £0.4 million relating to impairment in Ebiquity Russia
· £0.4 million for purchased intangible assets amortisation (June
2021: £0.5 million) and
· £0.2 million charge relating to share options (June 2021: £0.2
million).
The contingent consideration relating to Digital Decisions B.V. is being
accounted for as post-date remuneration as payment is dependent upon the
principal vendor remaining in employment with the Group. This will be payable
in 2023 and the amount due will be calculated as six times the average profit
generated in the two years ended 31 December 2022 from digital media products
developed by the Digital Innovation Centre, less the initial consideration of
£0.7m paid in January 2020. The current estimate of the amount payable in
2023 is £14.0 million which is being accrued on a straight-line basis over
the two and a half years to which it relates, less the discount to fair value.
The net balance accrued as at 30 June 2022 is £11.4 million. This amount
will be revised at each half year, based on the latest projections, with any
adjustments being treated as a highlighted item. This consideration is payable
in a mixture of cash and/or Ebiquity shares which the Company will determine
at the time of payment, having regard to its overall capital structure, debt
facilities and the vendor's option to request that a certain proportion be
paid in cash.
The acquisition, integration, and strategic costs of £1.7 million (June 2021:
£0.4m) relate to professional fees incurred for the acquisitions in the
period, the associated equity capital raise in April 2022, and the revised
bank loan facility agreed in March 2022.
Taxation
The underlying tax charge for the period is £2.0 million compared to £0.8
million in the prior year. This is in line with the increase in underlying
profit before tax in the current period. The tax charge included in
highlighted items of £0.03 million (2021: charge of £0.3 million) arose due
to the deferred tax impact of share options lapsed in the period and the
reduction in intangible asset net book value.
Earnings per share
Underlying basic earnings per share increased by 100% to 2.8p compared to
1.43p in the prior period. Underlying diluted earnings per share increased by
100% to 2.8p from 1.41p. There was a statutory basic loss per share of 3.38p
(2021: loss per share of 2.04p). The diluted loss per share was the same as
the basic figure in both reporting periods.
Dividend
No dividend has been declared for the six months ended 30 June 2022 (2021:
£nil).
Equity
During the six months to 30 June 2022, the number of ordinary shares in issue
increased by 37,426,996 to 120,155,886 (31 December 2021: 82,728,890).
28,301,886 shares were issued in the share placing made in April 2022 to
provide funds for the acquisitions of MMi and MediaPath and 8,656,903 shares
were issued directly to the vendors as part of the consideration. A further
468,207 shares were issued upon the exercise of employee share options.
Cash conversion
Six months ended Six months ended
30 June 2022 30 June 2021
£'000 £'000
Statutory cash from operations (3,415) 2,886
Underlying cash from operations (1,648) 3,399
Underlying operating profit/(loss) 4,960 2,282
Underlying cash from operations represents the cash flows from operations
excluding the impact of highlighted items. There was an underlying net cash
outflow from operations of £1.6 million in the period (2021: £3.4 million
inflow). This reflected a working capital outflow of £8.8 million (2021:
inflow of £4.5 million) with trade and other receivables increasing by £5.8
million and trade and other payables reducing by £3.0 million. The increase
in receivables was due partly to an increase in accrued income arising from
the phasing of billing agreed with clients and to transitional integration
effects of re-assigning MMi's client agreements to Ebiquity Inc. In the second
half of the year, it is expected that the normal level of cash generation will
resume.
As at As at
Net debt and banking facilities 30 June 30 June
2022 2021
£'000 £'000
Cash and cash equivalents net of bank overdrafts(1) 9,273 9,268
Bank debt (22,500) (19,000)
Prepaid loan arrangement fees 344 128
Bank net debt (12,883) (9,604)
US PPP Loan (2) - (724)
Net debt (12,883) (10,328)
( )
(1) Includes restricted cash of £1,2 million held in Ebiquity Russia. (2)This
represented a loan received under the US Paycheck Protection Program. Loan
forgiveness was applied for in relation to this balance and was granted in
August 2021. Therefore, this was treated as a grant rather than a loan and
released to the income statement in H2 2021.
Statement of financial position and net assets
Net assets at 30 June 2022 were £41.9 million, an increase of £18.9 million
since 31 December 2021, due in part to the acquisitions and associated
increase in share capital.
Net current assets at 30 June 2022 totalled £7.6 million. These increased by
£1.6 million from 31 December 2021 with current assets up by £5 million
offset by an increase in current liabilities of £3.4 million.
Debtor days increased to 81 days in the period compared to 61 days as at 31
December 2021 due mainly to a higher level of billing in the latter part of H1
2022, compared to the usual pattern, as referred to above. This debtor level
is expected to reduce during the second half of the year as payments are
received from clients for invoices issued towards the end of the first half.
Alternative Performance Measures
In these results we refer to 'underlying' and 'statutory' results, as well as
other non-GAAP Alternative Performance Measures ("APMs"). Underlying results
are not intended to replace statutory results but remove the impact of
highlighted items in order to provide a better understanding of the underlying
performance of the business. The APMs are consistent with how business
performance is measured internally by the Group.
Alternative Performance Measures used by the Group as defined in the Interim
Statement are:
· Net revenue
· Organic growth
· Underlying operating profit
· Underlying operating margin
· Underlying profit before tax
· Underlying effective rate of tax
· Underlying earnings per share
· Underlying cash generated from operations, and
· Underlying operating cash flow conversion.
Net revenue is the revenue after deducting external production costs.
Organic growth is defined as growth in the existing business excluding the
contribution from acquisitions made in the period.
Underlying profit is not recognised under IFRS and may not be comparable with
underlying profit measures used by other companies. Underlying operating
profit is defined as the operating profit excluding highlighted items.
Underlying profit before tax and earnings per share are calculated based on
the underlying operating profit
Highlighted items comprise non-cash charges and non-recurring items which are
highlighted in the consolidated income statement as their separate disclosure
is considered by the Directors to be relevant in understanding the underlying
performance of the business. The non-cash charges include share option charges
and amortisation of purchased intangibles. The non-recurring items include the
costs associated with potential and completed acquisitions and disposals,
adjustments to the estimates of contingent consideration on acquired entities,
asset impairment charges, management restructuring and other significant
one-off items. Costs associated with acquisition identification and
early-stage discussions with acquisition targets are reported in underlying
administrative expenses. Further details of highlighted items are set out
within the financial statements and the notes to the financial statements.
Underlying cash generated from operations is defined as the cash generated
from operations excluding the cash movements relating to the highlighted
items. The calculation for this period is set out below:
6 months to 6 months to
30 June 2022 30 June 2021
£'000 £'000
Cash generated from operations (3,415) 2,886
Highlighted Items: cash items 1,640 512
Movement in payables relating to highlighted items 128 401
Underlying cash generated from operations (1,648) 3,399
Interim Consolidated Income Statement
for the six months ended 30 June 2022
Unaudited 6 months ended Unaudited 6 months ended
30 June 2022 30 June 2021
Before Highlighted Before Highlighted
highlighted items highlighted items
items (note 3) Total items (note 3) Total
Note £'000 £'000 £'000 £'000 £'000 £'000
Revenue 2 37,245 - 37,245 32,009 - 32,009
Project-related costs (3,520) - (3,520) (3,963) - (3,963)
Net revenue 33,725 - 33,725 28,046 - 28,046
Cost of sales (15,776) - (15,776) (13,047) - (13,047)
Gross profit 17,949 - 17,949 14,999 - 14,999
Administrative expenses 3 (12,989) (6,043) (19,032) (12,717) (3,153) (15,870)
Operating profit/(loss) 4,960 (6,043) (1,083) 2,282 (3,153) (871)
Finance income 40 - 40 10 - 10
Finance expenses (506) - (506) (448) - (448)
Foreign exchange 246 - 246 175 - 175
Net finance costs (220) - (220) (263) - (263)
Profit/(loss) before taxation 4,740 (6,043) (1,303) 2,019 (3,153) (1,134)
Taxation (charge)/credit (2,004) 28 (1,976) (761) 283 (478)
Profit/(loss) for the period 2,736 (6,015) (3,279) 1,258 (2,870) (1,612)
Attributable to:
Equity holders of the parent 2,715 (6,015) (3,300) 1,180 (2,868) (1,688)
Non-controlling interests 21 - 21 78 (2) 76
2,736 (6,015) (3,279) 1,258 (2,870) (1,612)
Earnings per share-continuing operations
Basic 4 2.78p (3.38)p 1.43p (2.04)p
Diluted 4 2.75p (3.38)p 1.41p (2.04)p
Interim Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2022
Unaudited
6months ended 30 June 2021
£'000
Unaudited
6months ended 30 June 2022
£'000
(Loss) for the period (3,279) (1,612)
Other comprehensive (expense)/income:
Items that may be reclassified subsequently to profit or loss statement:
Exchange differences on translation of overseas subsidiaries (418) (704)
Total other comprehensive (expense)/income for the period (418) (704)
Total comprehensive expense for the period (3,697) (2,316)
Attributable to:
Equity holders of the parent (3,718) (2,392)
Non-controlling interests 21 76
(3,697) (2,316)
Interim Consolidated Statement of Financial Position
as at 30 June
2022
Unaudited Audited
as at as at
30 June 31 December
2022 2021
Note £'000 £'000
Non-current assets
Goodwill 5 44,459 28,172
Other intangible assets 6 15,564 4,528
Property, plant and equipment 1,514 1,512
Right of use assets 6,007 4,542
Lease receivables 91 155
Deferred tax asset 1,290 1,388
Total non-current assets 68,925 40,297
Current assets
Trade and other receivables 30,645 21,934
Lease receivables 281 146
Cash and cash equivalents 7 9,273 13,134
Total current assets 40,199 35,214
Total assets 109,124 75,511
Current liabilities
Trade and other payables (5,142) (6,525)
Accruals and contract liabilities (24,725) (19,350)
Financial liabilities 8 96 59
Current tax liabilities (1,122) (374)
Provisions (13) -
Lease liabilities (1,294) (2,566)
Deferred tax liability (394) (390)
Total current liabilities (32,594) (29,146)
Non-current liabilities
Financial liabilities 8 (24,436) (17,960)
Provisions (470) (493)
Lease liabilities (6,109) (3,825)
Deferred tax liability (3,654) (1,083)
Total non-current liabilities (34,669) (23,361)
Total liabilities (67,263) (52,507)
Total net assets 41,861 23,004
Equity
Ordinary shares 11 30,039 20,682
Share premium 10,863 255
Other reserves 6,566 4,572
Accumulated losses (5,897) (2,774)
Equity attributable to the owners of the parent 41,571 22,735
Non-controlling interests 290 269
Total equity 41,861 23,004
Interim Consolidated Statement of Changes in Equity
for the six months ended 30 June 2022
Non-controlling interests
Ordinary shares Share premium Other reserves Accumulated Losses Total
Total equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
31 December 2020 20,646 255 5,461 3,942 30,304 442 30,746
(Loss)/profit for the period - - - (1,688) (1,688) 76 (1,612)
Other comprehensive income - - (704) - (704) - (704)
Total comprehensive income/(expense) for the period - - (704) (1,688) (2,392) 76 (2,316)
Shares issued for cash - - - - - - -
Share options credit - - - 64 64 - 64
Dividends paid to shareholders - - - - - (93) (93)
30 June 2021 (unaudited) 20,646 255 4,757 2,318 27,976 425 28,401
(Loss)/profit for the period - - - (5,345) (5,345) 39 (5,306)
Other comprehensive expense - - (186) - (186) - (186)
Total comprehensive (expense)/income for the period - - (186) (5,345) (5,530) 39 (5,492)
Shares issued for cash 36 - - (3) 34 - 34
Share options credit - - - 256 256 - 256
Dividends paid to non-controlling interests - - - - - (195) (195)
31 December 2021 20,682 255 4,572 (2,774) 22,735 269 23,004
(Loss)/profit for the period - - - (3,300) (3,300) 21 (3,279)
Other comprehensive (expense) - - 418 - 418 - 418
Total comprehensive (expense)/income for the period - - 418 (3,300) (2,882) 21 (2,861)
Shares issued for cash 9,240 10,608 - (30) 19,818 - 19,818
Share options charge 117 - - 207 324 - 324
Acquisitions - - 1,576 - 1,576 - 1,576
30 June 2022 (unaudited) 30,039 10,863 6,566 (5,897) 41,571 290 41,861
Interim Consolidated Cash Flow Statement
for the six months ended 30 June 2022
Unaudited Unaudited
6 months 6 months
ended ended
30 June 30 June
2022 2021
Note £'000s £'000s
Cash flows from operating activities
Cash generated from operations 10 (3,415) 2,886
Finance expenses paid (232) (295)
Finance income received 35 3
Income taxes paid (915) (1,071)
Net cash from operating activities (4,527) 1,523
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired (16,525) -
Payments to acquire non-controlling interests - (1,291)
Payment of contingent consideration - (123)
Purchase of property, plant and equipment (194) (50)
Purchase of intangible assets (93) (579)
Net cash flow from investing activities (16,812) (2,043)
Cash flows from financing activities
Proceeds from issue of share capital (net of issue costs) 14,360 -
Proceeds from bank borrowings 4,500 -
Bank loan fees paid (300) (36)
Proceeds from government borrowings - -
Repayments of lease liabilities (1,607) (897)
Dividends paid to non-controlling interests (138) (92)
Net cash flow from financing activities 16,815 (1,025)
Net (decrease)/increase in cash, cash equivalents and bank overdrafts (1,545)
(4,524)
Cash, cash equivalents and bank overdrafts at beginning of period (as at 30 11,121
June 2022)
13,134
(308)
Effect of exchange rate changes on cash and cash equivalents
662
Cash, cash equivalents and bank 7 9,268
overdrafts at end of period 9,273
Notes to the interim financial statements for the six months ended 30 June
2022
1. Accounting Policies
Basis of preparation
The condensed consolidated interim financial statements for the six months
ended 30 June 2022 have been prepared in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'. These
interim financial statements should be read in conjunction with the Group's
Annual Report and Accounts for the year ended 31 December 2021, which have
been prepared in accordance with International Accounting Standards in
conformity with the requirements of the Companies Act 2006 ('IFRS') and the
applicable legal requirements of the Companies Act 2006.
The condensed consolidated interim financial statements have been prepared on
a going concern basis. The Group meets its day-to-day working capital
requirements through its cash reserves and borrowings, described in notes 7
and 8. As at 30 June 2022, the Group had cash balances of £9,272,809,
(including restricted cash of £1,152,680) and undrawn bank facilities
available of £7,500,000, and was within its banking covenants.
During the period, 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 £30 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 8 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 to 31 December 2023 that includes a
base case and scenarios to form a severe but plausible downside case.
For the purposes of this model, the terms of the new facility including its
covenant tests have been applied with effect from the quarter ending 30 June
2022.
The base case assumes growth in revenue and EBITDA based on the Group's budget
for the year ended 31 December 2022 and management projections for the year
ended 31 December 2023. The severe but plausible case assumes a downside
adjustment to revenue of 6.6% 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 £30 million, to meet its
obligations during the next 12 months and hence consider it appropriate to
prepare the financial statements on a going concern basis.
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. In view
of the uncertainty regarding this operation, an impairment provision of
£365,000 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 notes 3 and 7.
New Accounting Standards issued but not yet applied
The following new standards have been published that are mandatory to the
Group's future accounting periods but have not been adopted 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 Group's operating segments are based on the
reports reviewed by the Executive Directors that are used to make strategic
decisions.
The Group reports its results in two business practices (Media and Analytics
& Tech), as this most accurately reflects the way the Group is being
managed.
The Executive Directors are the Group's chief operating decision-makers. They
assess the performance of the operating segments based on operating profit
before highlighted items. This measurement basis excludes the effects of
expenditure such as restructuring costs, purchased intangible amortisation,
and equity-settled share-based payments from the operating segments. Interest
income and expenditure are not allocated to segments, as this type of activity
is driven by the central treasury function, which manages the cash position of
the Group.
The segment information provided to the Executive Directors for the reportable
segments for the period ended 30 June 2022 is as follows:
Unaudited 6 months ended 30 June 2022
Analytics & Tech Reportable Segments
Media Unallocated Total
£'000 £'000 £'000 £'000 £'000
Revenue 32,519 4,726 37,245 - 37,245
Operating profit/(loss) before highlighted items 7,640 544 8,184 (3,224) 4,960
Unaudited 6-month period ended 30 June 2021
Analytics & Tech Reportable Segments
Media Unallocated Total
£'000 £'000 £'000 £'000 £'000
Revenue 26,810 5,199 32,009 - 32,009
Operating profit/(loss) before highlighted items 5,274 431 5,705 (3,423) 2,282
A reconciliation of segment operating profit/(loss) before highlighted items
to total (loss) before tax is provided
below:
Unaudited Unaudited
6 months 6 months
ended ended
30 June 2022 30 June 2021
£'000 £'000
Reportable segment operating profit before highlighted items 8,184 5,705
Unallocated costs:
Staff costs (2,138) (2,010)
Property costs (560) (292)
Exchange rate movements 313 (172)
Other administrative expenses (839) (949)
Operating profit before highlighted items 4,960 2,282
Highlighted items (note 3) (6,043) (3,153)
Operating (loss) (1,083) (871)
Net finance costs (220) (263)
(Loss) before tax (1,303) (1,134)
3. Highlighted items
Highlighted items comprise items that are highlighted in the income statement
because separate disclosure is considered relevant in understanding the
underlying performance of the business.
Unaudited Unaudited
6 months 6 months
ended ended
30 June 2022 30 June 2021
£'000 £'000
Share option charge 190 164
Amortisation of purchased intangibles 395 549
Impairment of Ebiquity Russia OOO 365 -
Post-acquisition remuneration charges contingent on performance
3,436 2,420
Acquisition, integration, and strategic costs 1,657 20
Total highlighted items before tax 6,043 3,153
Taxation (credit)/charge (28) (283)
Total highlighted items after tax 6,015 2,870
Share option charges include the non-cash IFRS 2 charge of £207,000 (June
2021: charge of £64,000) along with the cash element in relation to the
exercising of share options, a credit of £17,000 (June 2021: charge of
£100,000).
Impairment of Ebiquity Russia OOO comprises a provision of £287,000 against
the Group's share (75%) of the total assets excluding cash and goodwill
impairment of £78,000.
Post-acquisition remuneration charges contingent on performance of £3,436,445
(June 2021: £2,420,000) relate to the accrual in the period for post-date
remuneration for the acquisition of Digital Decisions B.V. due to be paid in
April 2023. The table below shows the movement in the post-date remuneration
accrual in the current period:
£'000
Charged to the income statement 3,474
Discounting credited to the income statement (38)
At 30 June 2022 3,436
This contingent consideration is payable based on the performance in the two
years ended 31 December 2022. This will be calculated as 6 times the average
profit generated in those two years from digital media products developed by
the Digital Innovation Centre, less the initial consideration of £700,000
paid in January 2020.
Payment of the deferred contingent consideration is dependent upon the
principal vendor remaining in employment with the Group. Therefore, as
required under IFRS 3, this payment is to be accounted for as post-date
remuneration with the total amount expected to be payable in 2023 being
accrued on a straight-line basis over the earn-out period. The current
estimate of the amount expected to be payable in 2023 is £14.0 million of
which 83%, £11.8 million has been accrued as at 30 June 2022. Discounting of
£0.5m has been applied and the resulting fair value accrual is £11.36m.
This consideration is payable in a mixture of cash and/or Ebiquity shares,
with the mix to be determined by Ebiquity, subject to the vendor's option to
request that a certain proportion be paid in cash.
This amount will be revised at each half year, based on the latest
projections, with any adjustments being treated as a highlighted item.
The acquisition, integration, and strategic costs of £1,657,000 (June 2021:
£401,000) include professional fees incurred for the acquisitions made in the
period, the associated equity capital raise in April 2022 and the revised bank
loan facility agreed in March 2022. These costs comprised:
£'000
Share capital placing 763
Acquisition of MMi 289
Acquisition of Media Path 409
Bank facility agreement 183
Other 13
Total 1,657
4. Earnings per share
The calculation of basic and diluted earnings per share is based on the
following data:
Unaudited Unaudited
6 months 6 months
ended ended
30 June 30 June
2022 2021
£'000 £'000
Earnings for the purpose of basic earnings per share being net profit
attributable to equity holders of the parent (3,300) (1,688)
Adjustments:
Impact of highlighted items (net of tax) (1) 6,015 2,868
Earnings for the purpose of underlying earnings per share
2,715 1,180
Number of shares:
The weighted average number of shares during the period
- basic 97,616,982 82,583,254
- dilutive effect of share options 1,247,599 828,817
- diluted 98,864,580 83,412,071
Basic (loss) per share (2) (3.38)p (2.04)p
Diluted (loss) per share (3) (3.38)p (2.04)p
Underlying basic earnings/(loss) per share (4) 2.78p 1.43p
Underlying diluted earnings/(loss) per share (5) 2.75p 1.41p
(1) Highlighted items (see note 3), stated net of their total tax and
non-controlling interest impact.
(2) Basic earnings per share are calculated by dividing the profit
attributable to shareholders by the basic average number of shares
(3) Diluted loss per share are calculated by dividing the profit attributable
to shareholders by the basic average number of shares excludes the dilutive
impact of share options.
(4) Underlying basic earnings per share are calculated by dividing the
underlying profit attributable to shareholders by the basic average number of
shares
(5) Underlying diluted earnings per share are calculated by dividing the
underlying profit attributable to shareholders by the basic average number of
shares and also including the dilutive impact of share options
5. Goodwill
£'000
Cost
At 1 January 2022 37,304
Acquisitions(1) 15,995
Foreign exchange differences 1,065
At 30 June 2022 54,364
Accumulated impairment
At 1 January 2022 (9,132)
Impairment (78)
Foreign exchange differences (695)
At 30 June 2022 (9,905)
Net book value
At 30 June 2022 44,459
At 31 December 2021 28,172
(1) Provisional Goodwill of £705,795 has been recognised on the acquisitions
of Forde and Semple, £8,545,000 on the acquisition of Media Path, and
£6,744,295 on the acquisition of MMi in the current year. Further details in
note 12.
6. Other intangible assets
Capitalised Computer software Purchased Total
development intangible intangible assets
costs assets (1)
£'000s £'000s £'000s £'000s
Cost
At 1 January 2022 4,899 2,521 16,263 23,683
Additions 164 26 - 190
Acquisitions ² 4,803 - 10,002 14,805
Impairment - (19) - (19)
Foreign exchange 42 27 390 459
At 30 June 2022 9,908 2,555 26,655 39,118
Amortisation
At 1 January 2022 (2,022) (2,325) (14,808) (19,155)
Charge for the period (3) (475) (96) (395) (966)
Acquisitions ² (3,063) - - (3,063)
Impairment - 15 - 15
Foreign exchange - (27) (358) (385)
At 30 June 2022 (5,560) (2,433) (15,561) (23,554)
Net book value
At 30 June 2022 4,348 122 11,094 15,564
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 10 years.
(2 ) Purchased intangibles of £1,441,701 were recognised on the acquisition
of MMi and £8,560,000 on the acquisition of Media Path. Capitalised
development includes £1,659,770 for software acquired from MMi. Further
details in note 12.
(3 ) Amortisation is charged within administrative expenses to write off the
cost of the intangible assets over their estimated useful lives. The
amortisation of purchased intangible assets is included as a highlighted
administrative expense.
7. Cash, cash equivalents, bank overdrafts and restricted cash
Cash, cash equivalents, and bank overdrafts include the following for the
purposes of the cash flow statement:
30 June 31 December
2022 2021
£'000 £'000
Cash and cash equivalents 8,120 13,134
Restricted cash(1) 1,153 -
Cash, cash equivalents and bank overdrafts 9,273 13,134
(1)Cash and cash equivalents of £1.2 million are held in Ebiquity Russia OOO
with restrictions on remittances to certain countries. These balances may
not be readily available to the wider Group but can be used to meet Ebiquity
Russia OOO's obligations within Russia as they fall due.
8. Financial liabilities
30 June 31 December
2022 2021
£'000 £'000
Current
Loan Fees(1) (160) (59)
Deferred Consideration(2) 64 -
(96) (59)
Non-Current
Bank borrowings 22,500 18,000
Loan Fees(1) (185) (40)
Deferred Contingent consideration(3) 2,121 -
24,436 17,960
Total financial liabilities 24,340 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. (2) Deferred consideration relates to
the acquisition of Forde and Semple. (3)Deferred contingent consideration
relates to the acquisition of MMi.
Bank borrowings
Deferred Consideration Total
£'000 £'000 £'000
At 1 January 2022 17,901 - 17,901
Paid (300) - (300)
Recognised on acquisition - 2,184 2,184
Charged to income statement 55 - 55
Borrowings 4,500 - 4,500
At 30 June 2022 22,156 2,184 24,340
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 £30 million. £22.5 million had been drawn
as at 30 June 2022 (2021: £19 million). Under this agreement, annual
reductions in the facility of £1.25 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 to be 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.
The previous facility which was in place up to March 2022 comprised a
revolving credit facility ('RCF') of £23 million plus £1 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 £128,000 (2021: £99,000) are
offset against the term loan and are being amortised over the period of the
loan. £59,000 of loan arrangement fees has been included within creditors due
within one year and the balancing amount of £69,000 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 is 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.
Deferred consideration represents additional amounts that are expected to be
payable for acquisitions made by the Group and are held at fair value at the
statement of financial position date. Details are given in Note 12. The total
of £2,184,000 includes £2,120,000 contingent consideration payable for MMi
acquired in April 2022 and £64,000 deferred consideration for Forde and
Semple acquired in January 2022.
9. Dividends
No dividend was paid in respect of the year ending 31 December 2021. No
dividend is being declared for the six months ended 30 June 2022. Dividends
were paid to non-controlling interests as shown in the consolidated statement
of changes in equity.
10. Cash generated from operations
Unaudited Unaudited
6 months ended 6 months
30 June ended
2022 30 June
2021
£'000 £'000
(Loss) before taxation (1,303) (1,134)
Adjustments for:
Depreciation 1,369 1,295
Amortisation (note 6) 965 1,116
Gain on disposal 4 4
Unrealised foreign exchange gain (38) 343
Impairment of goodwill & Intangibles 365 -
Share option charge (note 3) 207 64
Finance income (35) (10)
Finance expenses 506 448
Contingent consideration revaluations 3,436 2,429
5,476 4,555
(Increase)/decrease in trade and other receivables (5,835) (665)
(Decrease) in trade and other payables (including accruals and contract (3,046)
liabilities)
(1,004)
Movement in provisions (10) -
Cash generated from operations (3,415) 2,886
11. Share Capital
Nominal
Number value
of shares £'000
Allotted, called up, and fully paid
At 31 December 2020 - ordinary shares of 25p 82,583,254 20,646
Share options exercised 145,636 36
At 31 December 2021 - ordinary shares of 25p 82,728,890 20,682
Shares issued 36,958,789 9,240
Share options exercised 468,207 117
At 30 June 2022 - ordinary shares of 25p 120,155,886 30,039
Ordinary shares carry voting rights and are entitled to share in the profits
of the Company (dividends).
During the period, 8,656,903 shares were issued to the vendors for the
acquisition of MMi (1,737,261 shares) and Media Path (6,919,642 shares), and
28,301,886 were issued in the share capital placing completed on 21 April 2022
to provide funds for these acquisitions.
12. Acquisitions
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 (£0.8 million), of which CAD$1.2 million (£0.7 million) was
paid on completion and CAD$0.1 million (£0.06 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 (£0.2 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 (£6.1
million) with a deferred contingent consideration element payable in 2025.
84% of the initial consideration (US$6.7 million/£5.1 million) was paid in
cash and 16% (US$1.3 million /£1.0 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 /£3.0
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 £15.5
million. 75% (£11,625,000) was paid in cash and 25% (£3,875,000) was paid
by the issue of 6,919,642 new Ordinary Shares to the Media Path vendors.
A provisional assessment of fair value of the acquired net assets of each
company has been made as at 30 June 2022 which will be finalised in the
financial statements for the year ending 31 December 2022.
Forde and Semple Media Works
The fair value of the purchase consideration for the acquisition of Forde and
Semple is as follows:
£'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 value £'000 FV adjustment £'000 Fair value
£'000
Property, plant and equipment 3 - 3
Trade and other receivables 245 - 245
Cash and cash equivalents 59 - 59
Trade and other payables (247) - (247)
Deferred tax liabilities - - -
Net assets acquired 61 - 61
Goodwill arising from the acquisition - - 706
Total purchase consideration 767
Media Management LLC ("MMi")
The fair value of the purchase consideration for the acquisition of Media
Management LLC is as follows:
£'000
Cash 5,126
Shares 976
Deferred 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 value FV adjustment Fair value
£'000 £'000 £'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
Trade and other payables (2,130) - (2,130)
Deferred tax liabilities - (531) (531)
Net assets acquired (119) 1,598 1,479
Goodwill arising on acquisition(1) 6,744
Total purchase consideration 8,223
Cash and cash equivalents in subsidiary acquired (35) - (35)
Media Path Network AB
The fair value of the purchase consideration for the acquisition of Media Path
Network is as follows:
£'000
Cash 11,625
Shares 3,875
15,500
The carrying value and the provisional fair value of the net assets recognised
at the date of acquisition are as follows:
Carrying value £'000 FV adjustment £'000 Fair value £'000
Customer contracts and relationships - 6,107 6,107
License Agreement - 2,453 2,453
Property, plant and equipment 8 - 8
Trade and other receivables 2,068 - 2,068
Trade and other payables (1,918) - (1,918)
Deferred tax liabilities - (1,763) (1,763)
Net assets acquired 158 6,797 6,955
Goodwill arising on acquisition 8,545
Total purchase consideration 15,500
Cash and cash equivalents in subsidiary acquired 824 824
INDEPENDENT REVIEW REPORT TO EBIQUITY PLC
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
June 2022 which comprises the income statement, the balance sheet, the
statement of changes in equity, the cash flow statement and related notes 1 to
12. We have read the other information contained in the half-yearly financial
report and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set of
financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the AIM Rules of the London
Stock Exchange.
As disclosed in note 1, the annual financial statements of the group will be
prepared in accordance with United Kingdom adopted international accounting
standards. The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with United
Kingdom adopted International Accounting Standard 34, "Interim Financial
Reporting".
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Financial
Reporting Council for use in the United Kingdom. A review of interim financial
information consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and consequently does
not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2022 is not prepared, in all
material respects, in accordance with United Kingdom adopted International
Accounting Standard 34 and the AIM Rules of the London Stock Exchange.
Use of our report
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Deloitte LLP
Statutory Auditor
London, United Kingdom
21 September 2022
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