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EBIQUITY PLC ANNUAL REPORT
AND ACCOUNTS
FOR THE PERIOD ENDED 31 DECEMBER 2015
Stock code: EBQ
24259.04 11 April 2016 12:34 PM Proof 4
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OPTIMISATIONINTELLIGENCEMARKETINGPERFORMANCEDIGITALMEDIAADVICEMEASUREMENTANALYTICSCONTRACTSEFFECTIVENESSREPUTATIONVALUEADVERTISINGDATA-DRIVENROI24259.04 11 April 2016 12:34 PM Proof 424259.04 11 April 2016 12:34 PM Proof 4Ebiquity AR2016 Front Supplied V2.indd 411/04/2016 12:58:50 www.ebiquity.com
Stock Code: EBQ
CONTENTS
p01
CONTENTS
OUR PERFORMANCE
02 Highlights
04
Ebiquity explained
12 Chairman’s Statement
14
24
36
Strategic Report
Industry Guidance in 2015
Summary of Results
OUR GOVERNANCE
42 Directors and Advisers
46 Corporate Governance Report
50 Directors’ Report
54
Remuneration Report
56 Audit Committee Report
58
Statement of Directors’ Responsibilities
OUR FINANCIALS
59
Independent Auditors’ Report on the Consolidated Financial Statements
61 Consolidated Income Statement
62 Consolidated Statement of Comprehensive Income
63 Consolidated Statement of Financial Position
64 Consolidated Statement of Changes in Equity
65 Consolidated Cash Flow Statement
66 Notes to the Consolidated Financial Statements
106
Independent Auditors’ Report on the Company Financial Statements
108 Company Statement of Financial Position
109 Company Statement of Changes in Equity
110 Notes to the Company Financial Statements
120 Notice of Meeting
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p02Ebiquity plcAnnual Report and Accounts for the 8 month period ended 31 December 201524804.04 – 11 April 2016 12:34 PM – Proof 3• Michael Greenlees, Executive Director, commented: “These results reflect a consistent and on-going demand for our services and a particularly strong performance from our MPO practice with new and larger assignments from our significant global clients.”Michael Karg, CEO, commented: “During 2015 we continued to lay the foundations upon which we will build our future growth plans. There is clear evidence of the continuing demand for our products and services, and the increased level of visibility we have over 2016 revenues provides confidence about the year ahead. The demand for MPO continues to be buoyant and we are positioning ourselves to capitalise on this opportunity.” HIGHLIGHTSEbiquity plcAnnual Report and Accounts for the 8 month period ended 31 December 201502Ebiquity AR2016 Front Supplied V2.indd 211/04/2016 12:58:51 •
www.ebiquity.com
www.ebiquity.com
Stock Code: EBQ
Stock Code: EBQ
HIGHLIGHTS
p03
HIGHLIGHTS
CONTINUED GROWTH
AND STRONG CASH CONVERSION
Ebiquity plc, the independent marketing analytics specialists, announces final results for
the 8 month period ended 31 December 2015. Ebiquity provides services to more than
1,100 clients across 85 countries, including over 80% of the top 100 global advertisers.
As previously announced, the Group has changed its financial year end to 31 December.
As a consequence, this report shows audited results for the 8 months to 31 December
2015. Given the seasonal nature of the business, with revenues and profits weighted to
the first half of the calendar year, to provide further context, we also show information on
a calendar 12 month basis (unaudited), with commentary and analysis in comparison with
the equivalent 12 months ended 31 December 2014.
FY2015 is the financial period from 1 May 2015 to 31 December 2015 (audited)
12.4
FY2014/15 is the financial year from 1 May 2014 to 30 April 2015 (audited)
CY2014 is the calendar year from 1 January 2014 to 31 December 2014 (unaudited)
CY2015 is the calendar year from 1 January 2015 to 31 December 2015 (unaudited)
Revenue
CY 2015: £76.6m
FY 2014/15: £73.9m
76.6
73.9
68.5
64.0
52.9
44.2
21.2
18.4
Underlying Operating Profit*
CY 2015: £12.4m
FY 2014/15: £11.7m
11.3
11.7
10.4
8.2
5.3
2.4
2.6
Underlying Diluted EPS*
CY 2015: 10.8p
FY 2014/15: 10.7p
10.7
10.8
10.1
9.0
7.4
5.3
5.6
6.0
* Underlying operating profit and
underlying diluted EPS are stated
before highlighted items.
Revenue growth and strong profit uplift over
2014 calendar year results
Strong demand for media and marketing
analytics drives growth
● Revenue for the 12 months to December
● Media Value Measurement (“MVM”)
2015 of £76.6m
⊲ Revenue up 7.9% from £71.0m in CY2014
on a like for like basis
revenue grew by 15.0% in CY2015 on a like
for like1 constant currency2 basis compared
to CY2014
⊲ Revenue up 3.7% from £73.9m in
● Marketing Performance Optimization
FY2014/15
⊲ Revenue of £43.3m for the 8 months
ended 31 December 2015
● Underlying operating profit for the 12
months to December 2015 of £12.4m
⊲ Underlying operating profit up 50.8%
from £8.2m in CY2014 on a like for like
basis
⊲ Underlying operating profit up 5.8%
from £11.7m in FY2014/15
⊲ Underlying operating loss of £3,000 for
the 8 months ended 31 December 2015
● Underlying PBT for the 12 months to
December 2015 of £11.2m
⊲ Underlying PBT up 64.9% from £6.8m in
CY2014
⊲ Underlying PBT up 6.2% from £10.6m in
FY2014/15
⊲ Underlying loss before tax of £0.8m for
the 8 months ended 31 December 2015
for the 12 months to December 2015
● Underlying diluted EPS for the 12 months
to December 2015 up 63.4% to 10.8p
(CY2014: 6.6p per share)
● Intended dividend of 0.4p per share in
respect of the 8 months to December
2015 (equivalent to an increase of 50%
to 0.6p per share on an annualised basis
(FY 2014/15: 0.4p per share)), to be paid
following completion of a share capital
reduction
(“MPO”) continued to deliver an
outstanding performance, with revenue up
38.4% in CY2015 on a like for like constant
currency basis, and now accounts for 13%
of Group revenue
● Together MVM and MPO accounted
for 67.8% of Group revenue in CY2015
(CY2014: 62.3%)
● Within Market Intelligence (“MI”) our
Portfolio platform is now showing signs
of improvement with revenues from our
Portfolio platform up 0.4% on a like for
like constant currency basis in CY2015,
although a decline in project work means
that the practice as a whole continues
to underperform with MI revenue down
3.6% in CY2015 on a like for like constant
currency basis.
● We have fully impaired the goodwill,
purchased intangible asset and related
capitalised development costs in relation
to the Reputation business resulting in a
non-cash impairment charge of £4.4m in
CY2015.
1 Like for like means prior year results are adjusted to
include the results of recent acquisitions as if they
had been owned for the same period in the prior
year.
2 Constant currency is calculated by taking current
year denominated results restated at last year’s
foreign exchange rates.
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p04Ebiquity plcAnnual Report and Accounts for the 8 month period ended 31 December 201524804.04 – 11 April 2016 12:34 PM – Proof 3Ebiquity is the leading provider of marketing analytics, uniquely differentiated by our independence. We provide online platforms, analysis and objective advice that help brands across the world to optimise their performance in a rapidly changing marketing landscape. Demand for help and advice from brands in this area is growing. The global market for marketing analytics is forecast to reach $100bn by 20181.We understand the value of having knowledge in key markets, and have experts around the world. Unlike agencies, we don’t make money from executing or transacting, and we are vendor-neutral. We recommend what actions are best for our clients, without any vested interest. They value this objectivity.We help our clients achieve greater brand and business performance in three key ways:Marketing Performance OptimizationMedia Value MeasurementMarket IntelligenceMarketing analytics enables brands to understand how – and why – their marketing programs are really performing, and what they can do to achieve more.EBIQUITY EXPLAINEDEBIQUITY EXPLAINEDEbiquity plcAnnual Report and Accounts for the 8 month period ended 31 December 20151 Big Data Spending to reach $114 billion in 2018 – ABI Research 2013 http://tinyurl.com/q8u3apr04Ebiquity AR2016 Front Supplied V2.indd 411/04/2016 12:58:51 www.ebiquity.com
Stock Code: EBQ
www.ebiquity.com
Stock Code: EBQ
EBIQUITY EXPLAINED
p05
“They have added real
value… to the extent that
we are seeing benefits
this year and look
forward to next.”
Entertainment client
Our Clients
We work with more than
1,100 clients worldwide
including over 80%
of the top 100 global
advertisers
Global Locations
Global expertise and
offices in 14 countries
across North America,
Europe and Asia Pacific
Our People
Employing over 900
people with agency,
client, and consultancy
backgrounds
MARKETING
PERFORMANCE
OPTIMIZATION
We help our clients decide how to allocate and
optimise their marketing budgets.
MEDIA VALUE
MEASUREMENT
We help our clients improve the efficiency of
their media spend, increasing transparency and
contractual compliance.
06
08
MARKET
INTELLIGENCE
We enable our clients to monitor competitor
advertising and conversations on social networks,
to better plan their own communications.
10
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p06Ebiquity plcAnnual Report and Accounts for the 8 month period ended 31 December 201524804.04 – 11 April 2016 12:34 PM – Proof 3Marketers today have an ever-growing number of media channels through which to reach and influence consumers. Their need has never been greater to understand which are working and which aren’t. Digital technology means they are more able to make rapid changes. A recent Forbes2 article said:“Marketing is going through its own transformation, away from traditional tactics to analytics- and data-driven strategies that deliver measurable results.”Marketers are increasingly employing our analysts to undertake marketing mix modelling to make budgets go further and optimise their ROI. We’re seeing growing demand too from brands who need help to enrich and exploit their customer data sets. Our multi-channel analytics is fuelling clients’ desires to personalise and automate their marketing communications across multiple channels.MARKETING PERFORMANCE OPTIMIZATIONWe help our clients decide how to allocate and optimise their marketing budgets.MARKETING PERFORMANCE OPTIMIZATIONEbiquity plcAnnual Report and Accounts for the 8 month period ended 31 December 2015062 Roundup Of Analytics, Big Data & Business Intelligence Forecasts And Market Estimates, 2014 – Forbes June 2014 http://tinyurl.com/m574d4rEbiquity AR2016 Front Supplied V2.indd 611/04/2016 12:58:51 www.ebiquity.com
www.ebiquity.com
Stock Code: EBQ
Stock Code: EBQ
OPTIMIZATION
MARKETING PERFORMANCE
p07
IN ACTION
Multi-channel analytics helps
InterContinental Hotels Group understand
its customers and improve ROI
A lack of management trust in their data
prompted the hotel group to overhaul their
global analytics. They invested in people
and technology in-house, but also in
external help. Ebiquity was chosen because
of the “unbiased advice about the tools
we should recruit and deploy” says Garrod
Gibb. Five years into our contract with
IHG the Director, Digital Analytics & Site
Optimization, says we have “evolved into a
strategic partner” due to our “understanding
of both technology and the digital analytics
space.”
IHG use digital analytics to gain insights
into who their customers are, what they
want, and what they prefer like never
before, significantly reducing guesswork,
reducing waste and enabling commercial
teams to focus on the things that were
working. Having seen typical returns of
600-800 percent in tests, management “are
confident in the insights and implications
we get from our data”. Consequently IHG’s
annual results reports are “full of digital
success stories about the outcomes of our
campaigns”.
Optimising budget allocation across
brands and countries saves FMCG
client €15m
When a major long-term FMCG client made
the decision to centralise their allocation
of their marketing budget, they were faced
with 96 brand/market combinations. Their
goal was to optimise its allocation, and
achieve buy-in for their conclusions from
local marketers and their agencies.
We devised a tailored approach to make
the best use of the data our client had. We
proposed a combination of econometrics
in main markets with data landscaping and
benchmarking elsewhere. We built strategic
scoring into our models that allowed the
client to allocate budget based not only on
the current performance of each brand, but
on their potential performance.
We recommended the client redistribute
their budget in a more profitabe way. This
allowed them to realise €15m in efficiency
gains; a result which changed their way
of working. Ebiquity’s involvement is now
yearly in their budget allocation process.
Rapid Growth
Fast growing multi-country
MPO business
Objective
No vested media interests –
our advice is always objective
and non-partisan
Advanced Methods
Sophisticated statistical
analysis methods and tools
Experienced
700+ effectiveness projects
evaluating $18bn of
marketing spend
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p08Ebiquity plcAnnual Report and Accounts for the 8 month period ended 31 December 201524804.04 – 11 April 2016 12:34 PM – Proof 3MEDIA VALUE MEASUREMENTWe help our clients improve the efficiency of their media spend, increasing transparency and contractual compliance.MEDIA VALUE MEASUREMENTEbiquity plcAnnual Report and Accounts for the 8 month period ended 31 December 2015Paid media is becoming increasingly complex and opaque, making it harder for brands to extract the maximum value from their investments. Media agency practices3 are increasingly under the spotlight4 as their profits continue to rise5. Brands who seek greater transparency and accountability value advice that is both informed and independent. We provide such advice to help them choose the right agency, put in place the right contract, set their agency targets, measure their performance against these targets, and to pay their agency appropriately. We benchmark their agency’s planning and buying performance using our media cost pools; the largest in most markets worldwide.Digital channels are taking a growing share of marketers’ budgets. Worldwide for example advertisers have doubled their investment in programmatic buying in the last year. However 85% of them are concerned about ads being placed against inappropriate content, according to a survey amongst members of the World Federation of Advertisers6. The survey also found that 76% of respondents think trading desks are less transparent than traditional methods of trading.“I personally believe we’re living through the least transparent time for the media industry in our careers.”Bill Duggan, Group Exec VP, Association of National Advertisers083 Former Mediacom CEO Alleges Widespread U.S. Agency ‘Kickbacks’ – Ad Age March 2015 http://tinyurl.com/kudpxou4 There Is A Bear In Madison Avenue’s Woods, And It’s Kicking Back: Analyst Says Agency Rebates Are No Bull – MediaPost April 2015 http://tinyurl.com/p2toko55 Advertising giant WPP annual profits hit record - BBC News March 2015 http://tinyurl.com/pshkwry6 Marketers Double Programmatic Spend Despite Worries About Transparency and Fraud – Ad Age Sep 2014 http://tinyurl.com/noy5plu Ebiquity AR2016 Front Supplied V2.indd 811/04/2016 12:58:52 www.ebiquity.com
www.ebiquity.com
Stock Code: EBQ
Stock Code: EBQ
MEDIA VALUE
MEASUREMENT
p09
Global Leaders
The number 1 player in media
benchmarking and auditing
worldwide, working with over
250 advertisers
Largest Database
The world’s largest media cost
database ($41bn pool)
Advanced Tools
Market-leading processes,
tools, and methodologies
Endorsed
Effectiveness partners
of World Federation of
Advertisers
Market Expertise
Experienced practitioners
with agency and advertiser
backgrounds in all major
markets
IN ACTION
Delivering continuous improvement
and support for major Hollywood
movie studio
Opening weekend ticket sales are critical to
film studios. This studio wanted to ensure
they were planning their time-sensitive
media buys across the world as efficiently
and effectively as possible. They sought
to establish whether their media agencies
were delivering competitive value, and
whether relationships with their agencies
were being managed effectively.
Ebiquity’s on-going analysis of their
agencies’ planning and buying strategies
regularly identifies areas in which
they can improve performance. Our
recommendations have generated double-
digit media value savings for the client
each year, helping cement our status as
trusted adviser across Europe, Asia, and
Latin America, with a remit that includes
advice on remuneration, contracts, and on
performance-related agency fees.
“Your team has been
a critical asset to us
during our transition of
agencies.”
Technology client
(Pitch Management)
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p10Ebiquity plcAnnual Report and Accounts for the 8 month period ended 31 December 201524804.04 – 11 April 2016 12:34 PM – Proof 3MARKET INTELLIGENCEMARKET INTELLIGENCEEbiquity plcAnnual Report and Accounts for the 8 month period ended 31 December 2015We enable our clients to monitor competitor advertising and conversations on social networks, to better plan their own communications.Marketers are finding it increasingly difficult to plan their communication strategies. The rate of change is simply increasing. It is becoming harder for marketers to know what consumers are being told by competitor brands, by the press, and by other consumers online. This can all affect sales and the reputation of their brand.Ebiquity has the world’s largest database of global advertising creatives, updated regularly. We provide our clients access so they can see what their competitors are saying, where and when, and how much they are spending. This data enables them to plan better and react quicker. Our Reputation and Research teams tell clients how their brands are portrayed in earned media and the impact this is having on stakeholders across their business like customers, employees, shareholders and supply chain partners.The importance of this intelligence is articulated by Jeff Bezos Founder & CEO, Amazon:“We watch our competitors, learn from them, see what they are doing for customers and copy those things as much as we can.”10Ebiquity AR2016 Front Supplied V2.indd 1011/04/2016 12:58:52 www.ebiquity.com
www.ebiquity.com
Stock Code: EBQ
Stock Code: EBQ
MARKET INTELLIGENCE
p11
Largest Advertising
Database
The most comprehensive
international database
containing over 25m
creatives; multimedia
coverage in 80+ countries,
updated daily since the 1950s
Expert Categorisation
Category experts viewing
over 2,000 ads each month
Delivery
Online platform, workshops,
scorecards, alerts, reports,
and presentations
Social Media
Analysing billions of social
interactions across multiple
global platforms in real time
Reputation
Our reputation and
communications effectiveness
research has helped over 500
blue-chip clients
IN ACTION
Australian drinks industry thrives on
innovative ad planning, response tool
With a large volume of retailer ads featuring
multiple brands, varying offers and different
price points, the Australian alcoholic drinks
market is intensely competitive. Competitor
monitoring was a laborious task which The
Drinks Association sought to modernise
for its members with Ebiquity’s help. Using
our Portfolio database as the engine,
we created a bespoke, timely, accurate
and well-tagged monitoring service that
provided creative and spend intelligence in
near real-time.
The service has become firmly embedded
in the industry thanks to the value it has
given to the Association’s members.
Around 70% of members use the system
daily both strategically (price planning,
positioning etc) and tactically (defensive
price promotions etc). The unique speed
of our comprehensive monitoring allows us
to deliver express alerts at the start of the
working day. Over 700 recipients across 26
members can now see competitor activity
in time to plan and react effectively.
“You act as a vital part
of our partnership
management
operations, to keep
tabs on how our brand
is being used, and
sometimes abused!”
Automotive client (Advertising
Compliance)
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p12
CHAIRMAN’S STATEMENT
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
CHAIRMAN’S
STATEMENT
Clients increasingly seek to
understand how to turn data into a
competitive advantage and Ebiquity’s
capabilities and independence put us
in a strong position
Highlights
7.9% revenue growth over calendar year 2014
Successful transition to new CEO
Ebiquity well positioned to capitalise on a rapidly
evolving market
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Stock Code: EBQ
CHAIRMAN’S STATEMENT
p13
Following our change in year end to 31
December, this report is for the 8 month
period ended 31 December 2015. The
first quarter of the calendar year is our
busiest period for contract renewals and
completing contracts reviewing media
spend. Moving our year end from 30
April to 31 December allows the business
to have earlier visibility of financial
performance and thereby plan for the year
ahead with more confidence.
The 8 month period to 31 December 2015
excludes our busiest period and this has a
significant impact on the Group’s reported
performance. To provide more comparable
information we therefore present
performance on a calendar year basis. In
the 12 months ended December 2015 we
achieved revenue of £76.6m, a like for like
increase of 7.9% over calendar year 2014,
together with excellent profit growth. I am
delighted to report this continued strong
performance.
The market in which we operate is
undergoing massive technological
change and facing an increasingly
complex relationship between advertisers
and their marketing and media service
providers. The impact of these changes
will be profound both for our clients and
our business. Clients increasingly seek
to understand how to turn data into a
competitive advantage and Ebiquity’s
capabilities and independence put us in a
strong position to be at the centre of this
change and thereby continue to grow our
business.
As previously announced, Michael Karg
succeeded Michael Greenlees as Company
CEO at the beginning of 2016. I would like
to thank Michael Greenlees on behalf of
myself and the Board for his extraordinary
leadership and for ensuring a seamless
handover to Michael Karg. Michael
Greenlees joined the Board in April 2007
as a Non-Executive Director and became
Chief Executive in October 2007. In the
eight years which followed, he has led the
transformation of Ebiquity into a leading
marketing analytics specialist providing
services to more than 1,100 clients across
85 countries and this roster includes over
80% of the top global advertisers.
We are delighted that Michael Karg has
joined us to lead the business into the next
phase of its development. Michael Karg
was previously with Razorfish, the digital
business transformation agency of Publicis
Groupe, where he was most recently Chief
Executive, International. Michael brings with
him a clear understanding of the evolving
landscape of the marketing industry, a
genuinely international perspective and
real passion for consumer analytics.
Finally I would like to thank our employees
throughout the Group who make what we
do possible by bringing their own personal
expertise and efforts every day to create
the collective capability of Ebiquity.
I look forward to 2016 with both excitement
and great confidence for the future.
Michael Higgins
Chairman
29 March 2016
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p14
STRATEGIC REPORT
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
GROWING
DEMAND FOR
OUR SERVICES
Strategic Report
BACKGROUND
With the explosion in consumer choice and
the rapid growth of the digital landscape,
the marketing industry has never been
more complex.
The era of multichannel marketing
has arrived, with its opportunities and
obstacles. Rarely has there been a
more vibrant but challenging time in the
marketing industry, with uncharted territory
for everyone involved.
For advertisers in particular there has
never been more uncertainty. Ebiquity
is well positioned to provide insightful,
independent and data-driven solutions
which help our clients manage their
marketing investments, in this dynamic and
complex market place.
DATA MANAGEMENT
Data management continues to be a major
challenge in the age of digital marketing.
Our survey of senior marketing managers
conducted in 2015 in partnership with the
CMO Council identified the management
and use of data as the number one
preoccupation of today’s Chief Marketing
Officers, and this is set to become more
pronounced in 2016.
Data provides a rich and important
understanding of both consumer behaviour
and the competitive landscape, and
increasingly influences every aspect of
a brand owner’s product and marketing
activity. Tracking customer journeys,
capturing customer profiles, and having
the right analytics tools are critical. This
continues to be one of the key drivers
of Ebiquity’s Marketing Performance
Optimization (MPO) practice and accounts
for its dramatic and continuing growth
story. Data Management Platforms will
increasingly drive multiple channels, and
brand owners will need more and better
independent advice and technology
implementation to manage complex,
multichannel ‘tech stacks’.
The increasing personalisation of
advertising that new media technology
facilitates will continue to drive the growth
in ‘programmatic’ delivery; creating new
and more complex issues for our clients as
they wrestle with issues of both targeting
and customer engagement.
The trending buzz phrase of late 2015 was
‘ad blocking’, as people aim to shut out
unwanted and intrusive messaging. Recent
studies report that 15 percent of consumers
in the US have now installed ‘ad blockers’
posing yet greater complexity for
advertisers, who need the kind of impartial
data-driven insights which are Ebiquity’s
speciality. Our investment in digital data
analytics, and especially the acquisition
of Stratigent in 2013, is proving to be a
significant growth driver for our business.
CONSUMER ENGAGEMENT
Much online advertising continues to be
wasted - poorly targeted and plagued by
inefficiencies. This growing and dynamic
market is overdue a complete reappraisal,
one which must address the much
discussed but unresolved inefficiencies
of poor viewability, mass fraud, and poor
performance.
With an estimated 15–20 cents in each
dollar spent actually reaching consumers,
2016 should see many more advertisers
drawing the line at this massive wastage
and aiming to reinvest in other more
efficient marketing channels.
Ebiquity expects to see brand owners
demanding much greater transparency
of performance in online advertising, with
systematic and continuous tracking of
audience delivery. We will launch a new
online reporting tool this year to help our
clients measure their performance in the
most under-reported of channels.
MEDIA AGENCY REVIEWS
During 2015 approximately $21 billion of
media spend was reviewed by advertisers
worldwide and Ebiquity managed
approximately one third of those reviews
on behalf of our clients. It is already clear
from this trend that advertisers are asking
ever more critical questions as it relates to
their buying strategy and performance.
Data transparency - and ultimately
ownership - forms a key component of this
Highlights
Continued strong demand
for Marketing Performance
Optimization (MPO) services
Active in a large number of
media agency pitches (MVM)
Encouraging response to first
phase of new Advertising
Intelligence product roll out
(MI)
Jointly appointed by American
Association of National
Advertisers (ANA) to conduct
media trading transparency
study
OVER
1,100
CLIENTS
WORLDWIDE
OVER
900
PEOPLE
80%
OF THE TOP GLOBAL
ADVERTISERS
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Stock Code: EBQ
analysis as advertisers demand greater
clarity of where their money is going and
greater objectivity in understanding their
advertising effectiveness.
During 2016 the US Association of National
Advertisers (‘ANA’) is due to report on the
North American media trading market with
specialist expertise being provided by
Ebiquity. We believe that out appointment
as an advisor to the ANA further
demonstrates our leading position in the
industry.
THE FUTURE
2016 will be another year of change, and
it won’t be augmented reality, artificial
intelligence, or the Internet of Things
that keep advertisers awake at night. As
ever, it will be, ‘How do I navigate my way
through this sea of uncertainty to deliver
better business results, now and into the
future?’ And they will look to a new breed
of advisors to help them answer this
evergreen question.
Marketing continues to change dramatically
as companies seek to achieve increased
competitive advantage through a deeper
understanding of their customers’
purchasing behaviour, developing better
targeted messages and by ensuring
a better return on their investment in
advertising and media.
Our financial year 2015 was one in which
our unique position as an independent
provider of critical insights, based on
independent data analytics, began to show
clear evidence of increasing client traction.
Research recently conducted by the
CMO Council on behalf of Ebiquity has
shown that seven out of ten global CMOs
plan to appoint external consultancies to
help them manage their consumer data,
with almost eight in ten planning to work
with external partners to automate and
personalise their marketing programmes. It
is this, together with the increasing drive for
greater transparency and accountability in
the media trading market that continues to
drive our business forward.
BUSINESS MODEL
ON GOING
RELATIONSHIP
(client development
and cross-selling)
STRATEGIC REPORT
p15
Ebiquity now works with over 1,100 clients worldwide in over 85 countries from
21 offices, providing independent marketing analytics and insights across the
marketing and media landscape
OUR STRATEGY
Our vision is to be the most respected, independent marketing analytics partner
for brands and businesses worldwide.
In doing so, we aim to help our clients:
•
Achieve greater insights into the marketing landscape
• Make better informed decisions
•
•
Achieve the best return on their media and marketing investments
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 the performance of their marketing
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
DEVELOP
the skills and talent of our people to enable
them to help drive our business by providing our
clients with significant added value
INCREASE
our brand profile and reputation to help achieve
a worldwide competitive advantage
PAGE 16
PAGE 18
PAGE 20
PAGE 22
ON GOING SERVICES
(recurring revenues
and scope growth)
CLIENTS’
MARKETING
NEEDS
DATA
Collection
Aggregation
Codification
Analysis
EXPERTISE
INDEPENDENCE
OBJECTIVITY
INSIGHTS
IMPROVED
MARKETING
PERFORMANCE
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p16Ebiquity plcAnnual Report and Accounts for the 8 month period ended 31 December 201524804.04 – 11 April 2016 12:34 PM – Proof 3BUILDdata, analytics and software capabilities that will enable us to provide our clients with the insights that they need to achieve their objectives and improve the performance of their marketingSTRATEGIC REPORTEbiquity plcAnnual Report and Accounts for the 8 month period ended 31 December 201516Ebiquity AR2016 Front Supplied V2.indd 1611/04/2016 12:58:53 www.ebiquity.com
www.ebiquity.com
Stock Code: EBQ
Stock Code: EBQ
STRATEGIC REPORT
p17
KPIs
Revenue from recurring / renewable sources.
2015/16 Priorities
(full financial year)
2015 Progress
(8 month period)
In CY2015 renewable revenue increased by
4.3% (vs FY2014/15).
To continue the redevelopment of our Portfolio
platform and add further digital capabilities.
Portfolio platform development continued
with updates released in 2015 and further
developments scheduled for release in 2016.
To bring our new digital media measurement
product to market.
To continue to expand our MPO capacity and
service offerings globally.
2016 Priorities
Risks
Exploit new Portfolio platform to drive organic
growth.
Continue global expansion of MPO capabilities
through organic or acquisition means as
appropriate.
We operate in a highly competitive and dynamic
market. Our investments may not result in
the anticipated returns. We manage this risk
by staying close to our clients’ needs and by
offering multiple sources of revenue.
Developments in marketing and data analytics
technology are moving fast. Our Chief Strategy
Officer is tasked to ensure that our future
service offerings are in line with market
developments.
Acquisition targets in the media and marketing
analytics space are highly valued. We may
not be able to afford to pay what sellers are
asking for.
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p18Ebiquity plcAnnual Report and Accounts for the 8 month period ended 31 December 201524804.04 – 11 April 2016 12:34 PM – Proof 3GROWour 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 serviceSTRATEGIC REPORTEbiquity plcAnnual Report and Accounts for the 8 month period ended 31 December 201518Ebiquity AR2016 Front Supplied V2.indd 1811/04/2016 12:58:53 www.ebiquity.com
www.ebiquity.com
Stock Code: EBQ
Stock Code: EBQ
STRATEGIC REPORT
p19
KPIs
Revenue from international sources (multi-
territory or non-UK domestic contracts).
In CY2015 international revenue increased
by 4.8% (vs FY2014/15).
2015/16 Priorities
(full financial year)
2015 Progress
(8 month period)
To integrate and streamline our analytics
systems throughout our network of offices
to provide greater consistency of output
and improve efficiency.
Media Platform development well-
under way as part of the Digital Media
measurement product development – first
delivery anticipated during 2016.
To establish a footprint for multi-channel
analytics in the European market.
Multi-channel analytics offering introduced
in the UK.
Double-digit growth of SE Asia in May-Dec
2015.
Iberia operations (acquired February
2015) fully integrated into the European
organisation.
2016 Priorities
Risks
Develop plans for further expansion in SE
Asia.
Drive for growth in North America, building
on our increased profile and strong
pipeline.
Data analytics is a nascent market with
individual geographies developing at different
rates and in different directions dependent
on local conditions. We prioritise market
penetration so as to exploit the greatest
opportunities in growth markets.
Most of our acquisitions require varying
degrees of integration activities which may not
proceed as planned and thus may not deliver
the levels of profitability and cash flows that
we expect. We develop detailed integration
plans where significant integration is necessary,
which include regular milestones and steering
committee meetings to ensure that our
integration plans are successful.
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p20Ebiquity plcAnnual Report and Accounts for the 8 month period ended 31 December 201524804.04 – 11 April 2016 12:34 PM – Proof 3DEVELOPthe skills and talent of our people to enable them to help drive our business by providing our clients with significant added valueSTRATEGIC REPORTEbiquity plcAnnual Report and Accounts for the 8 month period ended 31 December 201520Ebiquity AR2016 Front Supplied V2.indd 2011/04/2016 12:58:53 www.ebiquity.com
www.ebiquity.com
Stock Code: EBQ
Stock Code: EBQ
STRATEGIC REPORT
p21
KPIs
Percentage of clients taking two or more
services.
In CY2015 this was 18% (FY2014/15: 17%).
2015/16 Priorities
(full financial year)
2015 Progress
(8 month period)
To continue to establish a stratum of client
development specialists to further relationships
with our most strategic 100-150 clients globally.
To continue to supplement our leadership talent
at local level.
Our capabilities in Media Value Measurement
have been further developed through the
dedicated focus brought about by the
appointment of a Strategy Development
Director.
We have continued to see expansion in
the number of clients seeing Ebiquity as an
important strategic partner and therefore taking
a broader range of our services.
2016 Priorities
Risks
Create a global account management
infrastructure (people and processes) to
develop more strategic partnerships with a
number of our current or potential multinational
clients with complex and varied marketing
analytics needs.
Identify capability leaders for all three
segments.
Ensure that our organisational structure fosters
collaboration and releases the potential of our
people to develop world-leading capabilities
and drive organic revenue growth.
Experienced media and marketing experts are
in high demand. Acquiring and retaining top
talent is a constant challenge. We continue
to see the demand for marketing analytics
specialists increasing which puts pressure on
wages. We aim to make our offices an attractive
place to work, offer competitive salaries, and
look to grow our roster of global blue-chip
clients.
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p22Ebiquity plcAnnual Report and Accounts for the 8 month period ended 31 December 201524804.04 – 11 April 2016 12:34 PM – Proof 3INCREASEour brand profile and reputation to help achieve a worldwide competitive advantageSTRATEGIC REPORTEbiquity plcAnnual Report and Accounts for the 8 month period ended 31 December 201522Ebiquity AR2016 Front Supplied V2.indd 2211/04/2016 12:58:53 www.ebiquity.com
www.ebiquity.com
Stock Code: EBQ
Stock Code: EBQ
STRATEGIC REPORT
p23
KPIs
We continue to monitor the awareness
of Ebiquity amongst the global marketing
community.
We use a range of tools and data-points to
assess awareness and direct future initiatives in
this area.
.
2015/16 Priorities
(full financial year)
2015 Progress
(8 month period)
To build on the findings of the awareness
research and implement marketing and PR
activities with a particular focus on raising
awareness of Ebiquity’s MPO services amongst
senior marketers, especially in the UK and
the US, and to continue to provide thought
leadership on the issues of transparency in
media buying.
Appointment by the ANA as ‘expert’ advisor
to study led by K2 into issues surrounding
transparency in the US media industry.
Continued to develop partnership with the
World Federation of Advertisers, and exploit
opportunities through PR and events to raise
profile of Ebiquity globally and in key influential
markets.
2016 Priorities
Risks
Undertake further research in collaboration with
a renowned industry body as a follow-up to the
CMO Council research.
Larger and better known brands are developing
their data and analytic skills. We aim to remain
a specialist and provide our clients with unique
capabilities relative to our competition.
Increase investment in PR and marketing
activities intended to raise our profile and share
our thought leadership.
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p24
INDUSTRY GUIDANCE IN 2015
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
INDUSTRY
GUIDANCE
IN 2015
A selection of our presentations,
papers and articles from the last
12 months
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INDUSTRY GUIDANCE IN 2015
p25
PRESENTATIONS
PAPERS
Throughout the year we were invited to speak at a number of important
industry events
We published a growing number of papers and reports to guide our
clients.
Festival of Media Asia Pacific
Singapore – March 2015
FirmDecisions spoke about how
and why agency transparency is
being eroded.
Procurecon Marketing
London – June 2015
We guided delegates through a
‘path to value’ that included how to
put agency contracts up for pitch.
How to manage budgets between
markets and brands to maximize
success – Aug 2015
Mike Campbell, Ebiquity’s Head of
International Effectiveness looks
at, the world of macro budget
allocation and strategic scoring,
where econometric modelling is
applied simultaneously across
brands and markets to ensure that
the right budgets are allocated
across a portfolio of products.
The Path Forward: Marketing’s
Outlook Into The Digital Future –
Aug 2015
Senior marketers across the world
are asking more questions of their
existing agency partners, whilst
recruiting new ones with the skills
necessary to help them exploit the
digital future. This is the key theme
of a new strategic report resulting
from joint research by Ebiquity and
The CMO Council.
Ensighten Agility Conference
San Francisco – April 2015
Alongside Capital One and
Experian, Stratigent discussed tag
management innovation.
Advertising Week
New York – October 2015
We joined an industry leaders’
discussion on ad fraud, kickbacks,
opaque billing practices, false
attribution, and more.
ANA Advertising Financial
Management Conference
Phoenix – April 2015
Ebiquity and FirmDecisions
provided efficiency and effective-
ness advice to senior Finance and
Procurement delegates.
World Federation of Advertisers
Media Forum
New York – October 2015
Ebiquity and Stratigent explained
how to track consumers across
multiple channels using modelling
and multi-channel analytics.
Everything you always wanted
to know about online video
advertising, but were to afraid to
ask – Oct 2015
Simon Cross in Ebiquity’s UK
Media Value Practice, encourages
advertisers to thoroughly scrutinize
the data, rationale, cost, and
potential ROI before investing any
of their budget in online video and
VOD.
Australia’s Advertiser Report
– Mar 2015
In their analysis of the year’s
advertising activity, our Australian
team observed a gradual but
definite switch from brand building,
emotive activity into retail, price-
driven activity.
ARTICLES
➔
Getting the promotional mix
right. How to secure the optimal
promotional strategy across
products and retailers – Nov 2015
Martin Wheeler, Head of
Promotional Effectiveness at
Ebiquity, shows it is eminently
possible to ensure that promotions
deliver real benefit, despite the
complexities involved in balancing
the needs of both manufacturers
and retailers.
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p26
INDUSTRY GUIDANCE IN 2015
Ebiquity plc
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Annual Report and Accounts for the8 month period ended 31 December 2015
Simon Cross
Client Service &
Product Development
Director in Ebiquity’s
UK Team
“Brand owners
need to be
aware that media
agencies typically
make significantly
more revenue
from inducing their
clients to buy
online video.”
WHAT EVERY ADVERTISER SHOULD
KNOW ABOUT ONLINE VIDEO
Media agencies routinely recommend that advertisers invest up to
15 percent of their TV budgets in online video content. Simon Cross,
Client and Product Development Director at Ebiquity, gives the inside
track on everything advertisers should know about online video, and
urges them to ask probing and challenging questions of their media
agencies when and if they suggest using it.
The world is changing how it accesses video content,
with more and more consumers taking control of
when, where, and how they obtain films, TV programs,
and user-generated content (UGC). Drivers of this
revolution in viewing include:
• Rapid spread of cheap broadband and 4G cellular
connections
• Proliferation of always-on devices to which
consumers can download and stream content,
from laptops to smart TVs, tablets to smartphones
Explosive popularity of UGC on platforms including
YouTube, Facebook, and Vimeo
• Development and adoption of new distribution
channels, from Netflix to Amazon Prime
We have truly entered the age of online video
All major linear TV broadcasters have created online
video services (which we’ve abbreviated to B-VOD,
or Broadcaster Video On Demand for the purposes
of this article), often also known as catch-up TV.
Commercial stations offer advertisers the chance to
reach viewers who choose to stream and download
content on their platforms by advertising in B-VOD
content. Social video sharing platforms (e.g., YouTube
and Vimeo) are also offering advertising in video
content, as are publishers (e.g., Sky and The Guardian),
and we refer to this as social and publisher video (or
S&P-VOD).
Our clients tell us that agencies typically recommend
that at least 5 percent (and often 10 percent or more)
of their TV budgets should be invested in online
video. Our own data shows that 8.6 percent of UK TV
budgets went to all types of video advertising in 2014.
Broadcasters, platform owners, and media agencies
say that advertising using B-VOD delivers incremental
coverage (or reach) – to supplement linear TV
audiences – and that this is, more often than not, the
best reason to use it. In addition, it is said that B-VOD
is particularly effective in providing targeted access
to hard-to-reach, digitally savvy audiences, notably
younger men.
Latest figures from the UK’s Thinkbox Truth about
Youth study suggest that 3 percent of all viewing
in the UK is currently in the form of B-VOD. This
figure is rising rapidly – albeit from a low starting
point – particularly among harder-to-reach, younger
consumers, where 7 percent of 16–24s’ viewing is
B-VOD. Broadcasters currently provide very little
audience data about B-VOD to enable advertisers
to assess ROI. S&P-VOD platforms do provide some
viewing and impression numbers, but there are major
gaps in the data about where and to whom ads are
delivered and how viewable and viewed they really are.
Ebiquity’s position
In an increasingly fractured and fragmented,
consumer-controlled market, advertisers naturally
want effective and efficient ways to reach their
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Stock Code: EBQ
FIRST PUBLISHED OCTOBER 2015
p27
audiences with commercial messages. As online
video takes increasing audience and market
share, advertising spend will inevitably follow
consumer behavior.
(viewing, purchasing, etc.), and third- party data
is enriching the buy. But even when the brand is
buying that way, it is too often in the dark about
vital placement information.
This would allow advertisers to make properly
informed decisions about how much of their
total advertising budget they should divert into
online video as a whole.
However, we believe that there is currently little
compelling evidence that advertising using
B-VOD adds significant incremental reach above
linear TV advertising campaigns.
Recent figures from the Internet Advertising
Bureau (IAB) show that incremental reach of
online video on linear TV campaigns is typically
less than 0.5 percent. Moreover, our data shows
that TV ratings delivered by online video are
significantly more expensive than linear TV:
typically between three and eight times the cost.
How linear TV and B-VOD build coverage
Linear TV’s cover build is typically described
by a curve of diminishing returns. But the
top – or flat – part of the curve only occurs
when a significant proportion of the population
has already seen the ad. So, if your linear TV
budget hasn’t got you to that part of the curve,
then the budget you planned for online video
would be better spent on more linear TV. The
online video activity, being a multiple of linear
TV’s price per TV rating, couldn’t possibly buy
as many cover points as incremental linear TV
would.
The recent IAB report shows that between 80
and 90 percent of the online video audience
bought typically generates frequency rather
than incremental coverage, at a multiple of the
price of linear TV. The best case cited was for
an FMCG beverage alcohol brand, targeting
16–34s, where coverage added by B-VOD to
linear TV was just 1.33%. But linear TV coverage
in that instance finished at a point on the curve
where it was still building relatively quickly.
When we refer back to the data we have
about time spent on TV versus online video
by the same demographics and age-breaks,
we find that older cohorts spend least time on
online video and most time on linear TV. So for
brands targeting age-defined audiences of 45+,
there is little need currently for advertisers to
consider online video at all in cover-build terms.
Moreover, brand owners need to be aware that
media agencies typically make significantly
more revenue from inducing their clients to buy
online video – as digital inventory – than they
do from linear TV.
So the notion that online video is invaluable for
building coverage when the audience is defined
in socio-demographic or age- break terms is,
at best, spurious. Where online video has the
potential to target in a genuinely exciting way is
in behavioral terms, as ‘standard’ digital display
can. This is where the audience isn’t defined
by age or class, but their behavior online
What marketers should do
We believe that there is no justification for a
blanket allocation of a fixed percentage of TV
budgets to online video, particularly for mass-
market products with an established presence
on linear TV. The apparent accountability and
data promised by digital media advertising
has not yet been delivered for online video –
particularly B-VOD.
As a condition of spending money in online
video, advertisers should demand increased
transparency from both their media agencies
and broadcasters (see 10 questions below)
so that they have the same degree of
accountability and depth of data that they are
provided with for linear TV. Much of it could and
should be provided routinely. It just isn’t.
Moreover, both broadcasters and media
agencies should follow the lead – taken by
S&P-VOD platforms including YouTube and
independent players such as Tubemogul – and
provide advertisers with more complete data
about where, when, and to whom ads are
delivered via B-VOD.
TEN QUESTIONS EVERY ADVERTISER SHOULD ASK THEIR
MEDIA AGENCY ABOUT ONLINE VIDEO
1. Fundamentally, is online video right for my brand/ category/target audience?
2. What does the ‘online video’ (or VOD) line on my media budget represent and what’s the
detail of the plan you’re recommending to us for online video?
3. What’s the split between social and publisher online video (e.g., YouTube) and
broadcaster online video (e.g., ITV Player, catch-up TV)?
4. Where will my online video ads actually appear, in terms of TV channels, programs, and sites?
5. What audience are we really delivering with online video?
6. How does the online video plan you’re recommending deliver incremental reach?
7. Does my online video plan mirror or complement my linear TV plan?
8. Can we monitor whether our ads are good quality placements and seen by real people?
9. Is my online video creative designed to mirror TV or tell a different story? Is it intended
to deliver (additional) reach, or virality and engagement?
10. What are the completion rates for our ads served on online video? What proportion of
them are seen through to the end? What proportion are skipped as soon as they can be?
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INDUSTRY GUIDANCE IN 2015
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Vivek Radia
Vice President,
North America,
FirmDecisions
KEEP YOUR EYES ON THE SMALL PRINT
OF AGENCY CONTRACTS
Changes in the nature of client–agency relationships should be well
understood. Vivek Radia, President North America of FirmDecisions,
explains what to look out for.
Advertisers often tell us media agencies are offering
them new ways of buying media. These approaches
come with apparent advantages, such as advanced
targeting techniques and cost savings, but also
distinct disadvantages, including waived rights to
audit. As clients are being asked to trade better media
buying opportunities for transparency, the bigger shift
involves the relationship between the agency and the
advertiser. Previously a media agency acted on an
advertiser’s behalf in buying media. Now, agencies
increasingly act as principal where they act on their
own behalf in selling media to advertisers.
As new trading practices emerge, advertisers
should require clarity from their agencies as to how
these practices may change in their contractual
relationships. They should work hard to ensure they
understand the implications of their new contracts,
the true cost of the media they are buying, and the
quality of the media transacted. It’s time for clarity to
replace confusion and for what are sometimes sharp
practices to be revealed for what they really are.
Giving up audit rights is a case in point. While it’s
true that some agencies ask their clients to do
this explicitly and in a manner that requires proper
approval, others simply use passive email approval
to effect the change, and there are others yet who
simply effect it and hope they won’t get caught.
Advertisers and agencies alike are best protected
by such changes being explicit and receiving full
approval from an advertiser, not skirting a review
process.
Consider the case of an ad purchased directly from
a genuine, external vendor at the cost of $50,000.
The agency may offer the client a similar space for
$45,000, and yet that fee may exclude additional
costs that are essential to programmatic media.
Those additional charges include privacy compliance
charges, content curation charges for dynamic ad
builders (software that allows an online display ad to
instantly tailor the creative elements and message it
shows the ad’s consumer) plus data fees related to
targeting and ad serving costs.
What’s more, programmatic buying may require an
advertiser to waive audit rights related to audience
and quality metrics. So, advertisers have been
left wondering if their ads are actually seen by
real people. These additional elements can end
up making ads less effective and more expensive
than expected and promised in the headline cost.
Advertisers may conclude, after careful consideration,
that programmatic buying may still be worthwhile. Our
suggestion is simply that all relevant considerations
be weighed and properly evaluated when it comes to
the true cost of programmatic.
Advertisers should be particularly keen to protect
their rights when it comes to verification of media
audiences and quality metrics. Advertisers should
make sure – at a contractual level – that their
agencies factor in all relevant components of the
buy as the media is traded and a healthier amount of
transparency related to viewability, non- human traffic,
and other quality metrics are agreed.
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p29
“As new trading
practices emerge,
advertisers should
require clarity from
their agencies
as to how these
practices affect
contractual
relationships.”
www.ebiquity.com
Stock Code: EBQ
Although media buying companies are still referred to
as ‘agencies,’ the truth is – for many markets – they
haven’t been the advertisers’ agent for some time
now. In part due to the rise of monolithic, publicly
traded holding companies who now own a range of
firms managing media transactions, there has been a
correlated escalation in intra-company dealings which
add complexity and may result in new and sometimes
questionable remuneration tactics.
A case in point is the following illustrative
transactional sequence: Media buying groups buy
media into group company A (as principal) and then
resell it to group company B (at a mark-up). Company
B then sells it to the advertiser with the mark-up
hidden and often taxed with a supplemental buying
charge.
“As new trading practices emerge, advertisers should
require clarity from their agencies as to how these
practices affect contractual relationships.”
For advertisers who lack proper contractual audit
rights, this turbo- charging effect on holding company
profits is achieved in a non-transparent manner for the
clients they are serving. An agency – in its technical
and legal definition – is permitted to acquire property
on behalf of the client as if the client were present
and acting in person. It has become clear that – in
practice – media buying companies have evolved
and moved away from the concept of an agency
relationship so clients need to prepare themselves
with proper audit rights to understand how their
interests are being served in today’s multifaceted
media trading environment.
The complexity of today’s media trading environment
has grown exponentially, and the constant state of
flux shows no signs of slowing down. If advertisers
can work with their agencies to understand all
elements of this new trading environment, this will
help to reestablish some of the trust that has eroded
between clients and agencies in recent times.
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INDUSTRY GUIDANCE IN 2015
Ebiquity plc
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Annual Report and Accounts for the 8 month period ended 31 December 2015
THE IMPORTANCE OF A CLIENT
CONTROLLED DATA LAYER
Jeremy Banks
Senior Team Leader
at Stratigent
A data layer is a variable — or set of properties and values — that
define a piece or grouping of information to be accessed and used
for the purpose of tracking data and/or interactions. At its best, a data
layer creates a “one-stop shop” for referencing any data that needs to
be tracked.
Client controlled means that it is created and
maintained by the client, whether it is done via
the IT department, marketing department, or
within a CDN. But, what are the core reasons why
you should have a client controlled data layer?
And how can you take the steps to get there?
Read on to learn more.
The Why
Page Scraping (Client-side)
With this methodology, the only values available
to track are those that exist within the content
of the page(s). This also means that there are
certain scenarios that have inherent flaws in their
implementation of tracking. These are just a few
to consider.
Sometimes, the content of your page (headings,
titles, etc.) is in such language that only a core
group of people may understand (for example,
doctors). Medical ailments, treatments, and their
descriptions may make sense to the ones looking
at the site, but not to those doing the analysis of
the data. So, the data that is pulled directly from
the page may just be passed into the analytics
tools “as-is”, which can lead to confusion when
trying to analyze the data. If any conversion takes
place within the browser (client-side), then that
is just more setup that needs to be updated and
maintained, and can generate excess load on the
page to load the extra conversion data.
Elements and page templates change over time.
As content is added, removed, and/or updated
on pages, the following steps may need to be
taken:
•
•
•
New elements may have to be added to the
logic in order to “scrape” the content from
the page
Removed elements should be deleted from
the logic for clarity
Updated elements would need to have their
logic updated as well, even if the values did
not change
Depending on a site’s content or purpose, there
is often a need to obfuscate data to hide the
value behind codes and algorithms so as to not
let the true values be seen in the data stores. In
the client-side methodology, this process is less
secure due to the need for these algorithms to
be made available locally. This means that with
these algorithms available for anyone to access,
someone with malicious intent could reverse
engineer the obfuscation to make any future calls
visible to them.
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www.ebiquity.com
Stock Code: EBQ
Stock Code: EBQ
FIRST PUBLISHED DECEMBER 2015
p31
The Who
You! If you have a site that needs to obfuscate
data, such as healthcare, financial, or any
profile data, you need to take the right steps. In
addition, if you need to make your data human
readable in order to make sense for reporting, or
if you have a site that changes content often (but
not the needs for tracking), then this all applies
to you!
The Where
Your site is where a controlled data layer occurs.
This can be implemented across your entire
site, or set of sites, in order to create a unified
approach to data collection.
The When
There’s no better time than the present! The
sooner you implement this approach, the sooner
you can see the benefits.
Data Layer (Server-side)
Within this methodology, you have complete
control over what values are to be utilized for
tracking. The same scenarios that have flaws
in the client-side methodology are ultimately
solutions in this one.
When setting the values within the data layer,
IT has the ability to make the values human
readable, which will only aid in performing
analysis. This can allow for grouping of content
more easily, classifying pages, and more. No
longer does it mean having to decipher medical
terminology by those without medical degrees. It
also means little to no code has to be sent to the
page in order to make these conversions. In turn,
this means less load on the page.
As elements and page templates are changed
over time, no updates to the data layer may be
necessary as content changes do not necessarily
dictate value changes. This means that the same
data structure will still fire exactly the same
tracking calls regardless of the content of the
page. However, if values do need updating or
adding, IT can make the necessary changes
to the data values and/or structure, and the
tracking code would only need to be updated
to accommodate new properties within the
structure.
For data obfuscation, the algorithms can be
stored and process the values on the server
before making the data layer available on the
page for tracking. This allows for more secure
algorithms since they won’t be visible to
anyone who visits the page. A malicious visitor
would have to engineer their own methods for
reversing the obfuscation.
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p32Ebiquity plcAnnual Report and Accounts for the 8 month period ended 31 December 201524804.04 – 11 April 2016 12:34 PM – Proof 3THE KEY TO SUCCESSFUL VIDEO CONTENT MARKETING Video marketing can be a powerful way for advertisers to create a strong emotional connection with consumers, to show rather than just tell their stories, and to invite viewers to become active advocates. If done well, video marketing can drive a significant uplift in brand affinity, brand favourability, and purchase intent. However, not done the right way, it can end up being a costly trial and error exercise. Isabelle Dunn, Digital Client Service Director at Ebiquity Australia, explains.Isabelle Dunn Digital Client Service Director at Ebiquity AustraliaWhat makes great branded video content?Looking back at the top viral video success stories from recent years, the most popular branded videos all seem to share a strong common theme. For consumers to feel compelled enough to share, they need to feel a powerful emotion and score well on at least two or three of the key universal triggers and amplifiers.Key triggers and amplifiersFor instance, one of the most shared videos of all time is the Budweiser commercial ‘Puppy Love’ which tells the tale of a very special friendship between a puppy and some Clydesdale horses. It has driven over 58m views and 2m shares on YouTube since its debut during last year’s Super Bowl, simply because it makes you smile, laugh and cry all at the same time. The popular sound track ‘Let Her Go’ by Passenger is also another bonus.Why is sharing such a key success metric?A recent social ad effectiveness study by Unruly Media has established that people who watched a video following a recommendation or because a friend shared a link were far more likely to enjoy it than those who had discovered it by browsing or were forced to view it as they landed on a website. Video enjoyment is important because it has a direct impact on key brand metrics and positive uplifts. Viewers who enjoyed the video they watched demonstrated a much higher brand affinity, purchase intent, and brand favourability than their counterparts who did not enjoy the video.8 x Key TriggersFunnyTouchingIlluminatingSpectacularShockingRandomUsefulInteractive4 x AmplifiersCelebrityTopicalityControversyMusicINDUSTRY GUIDANCE IN 2015Ebiquity plcAnnual Report and Accounts for the 8 month period ended 31 December 201532Ebiquity AR2016 Front Supplied V2.indd 3211/04/2016 12:58:58 p33www.ebiquity.comStock Code: EBQ24804.04 – 11 April 2016 12:34 PM – Proof 3What is the optimum video duration?One common suggestion is that shorter videos are better because people are more likely to watch the full video if it is short in length. While it’s true that the average completion rate for video content online tends to drop past 30 seconds, the average duration of the top 10 most shared ads of all time on YouTube is 4 minutes 11 seconds. This goes to show that, as long as you make a strong emotional connection with people and tell them an engaging story, they are willing to watch as long as it takes to get there – at least as far as just over four minutes. In fact, the shorter the ad, the fewer shares it tends to attract so, while longer-form content is harder to get right, it can also be a lot more effective when it comes to driving your business goals.How do you drive scale?Viral videos don’t generally just happen to go viral. In most cases, the videos that gain most scale do so because of a robust seeding plan put in place to create early hype for the release of the video.It all starts with selecting the right platform Video Discovery Mechanic for the video concept and duration. While Facebook may be a viable and cost-effective option for shorter-form films relating to live or topical events, YouTube remains the destination of choice when it comes to longer- form video as part of an integrated content strategy. Once you’ve selected the best platform for your specific project, it’s time to think about ways to leverage your broader digital ecosystem, such as social communities, email database, and websites to kick-start your organic exposure.“As long as you make a strong emotional connection with people and tell them an engaging story, they are willing to watch as long as it takes to get there.”With regards to driving scale, the more organic and user-driven the better. This can be done in many different ways, including leveraging existing social communities,influencer outreach programs, PR and editorial coverage, content recommendation platforms, search, and SEO. However, steer clear of traditional media formats wherever possible, as these will just end up turning an authentic and considered piece of content into yet another ad, which defeats the point.FIRST PUBLISHED OCTOBER 2015Video Discovery Mechanic Video Enjoyment vs. Social Video Discovery MechanicBase: discovered video through browsing (n-284); discovered video from a recommendation (n=557)Brand Metric Percentage Uplift in Key Brand Metrics for Viewers that Enjoyed a Video vs. Viewers that Did Not:Base: enjoyed video (n=522); did not enjoy video (n=319)Average video length for top 50 ads Source: YouTube viral video chart0%10%20%30%40%50%60%70%-41%14%35%97%139%42.51.753380%Did not enjoy the videoPercentage of RespondentsPercentage of Uplift: Viewers that enjoyed the video vs. viewers that did notMinutesEnjoyed the video20%40%60%100%80%120%140%0.511.52.523.54.534Drop in non-enjoyment of the video+14%Uplift in enjoyment of the videoRecallBrand FavourabilityPurchase IntentBrand AssociationBrowsingRecommendationTop 1011-2021-3031-4041-5012%7%57%65%33Ebiquity AR2016 Front Supplied V2.indd 3311/04/2016 12:58:58 p34
INDUSTRY GUIDANCE IN 2015
Ebiquity plc
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Annual Report and Accounts for the 8 month period ended 31 December 2015
THE DIGITAL LIFE OF TEENS IN 2015
Today’s teenagers have never lived a purely analog existence.
Ebiquity’s Senior Insight Analyst Martin Broad explores the
consequences of their always-on, hyper-connected lives and how
brands should approach and interact with them.
Brands often talk about the need to target digital
natives: the generation of youngsters who
have grown up always surrounded by digital
technologies. However, the lack of common
ground between marketers and young people
makes targeting this demographic effectively
particularly difficult. So what is life like for an
adolescent today and what trends should
marketers follow and avoid?
It would be tempting when considering this issue
to romanticize the past, but in many ways the
world before the rise of digital was a ‘golden
age’ of childhood play. School days were shorter,
children had less homework, and – perhaps
critically in terms of play and early development
– the sense of innocence that comes with less
access to media still existed.
Anyone with children will tell you it’s different
today. Children are under intense pressure to
perform well at school – indeed, the stress of
government inspections and ratings has led
many teachers to train students for exams, rather
than allow them to explore the love of learning –
and this emphasis on work can stifle creativity.
Most importantly, children have a very different
understanding of ‘play’ today. The days of being
turned out to play in the streets until dinner are
over. Moreover, the figure of an adult is never
far away. Scores of parents drop their kids off
at playdates and pick them up with military
precision, with the child always under the
watchful eye of a guardian.
Generation smartphone
When they’re not busy with school or with
play, teens and tweens are busy with media.
76 percent of millennials have their own
smartphone, and US youths spend on average
7.5 hours a day consuming media. No other
generation has been exposed to information so
continuously, and it’s changing their worldview.
In 2014, Variety magazine asked 13-18-year-
olds who they rated as the most influential
contemporary celebrities. Only a few years ago,
mainstream figures such as Justin Timberlake
or Britney Spears would have headed the
charts, but the top five celebrities named were
exclusively YouTube stars like PewDiePie (an
online comedian, for those readers older than 14)
and cross-media sitcom creators, The Fine Bros.
The power of the smartphone also means how
teens actively engage with the world is different,
too. Any parent with a teenage child knows that
they are effectively addicted to their mobiles.
In fact, a recent study from CTIA Harris and
Interactive found that 47 percent of US teens say
their social lives “would end or be dramatically
worsened” without their mobile phone. For this
generation, the mobile phone goes hand-in-hand
with the selfie.
Martin Broad
Senior Analyst, UK
at Ebiquity
“76 percent
of millennials
have their own
smartphone, and
US youths spend
on average 7.5
hours a day
consuming
media.”
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Stock Code: EBQ
FIRST PUBLISHED APRIL 2015
p35
“The new wave of YouTube stars have a pre-packaged audience of engaged
young people, and although they will soon come under restrictions regarding
brand promotions... transparency partnerships will inevitably reap valuable
dividends for brands.”
under restrictions regarding brand promotions –
YouTube stars Dan Howell and Phil Lester have
already had an ad with Oreos banned under
new legislation – transparent partnerships will
inevitably reap valuable dividends for brands.
There may also be something to be said about
the nature of ‘play’ for today’s children. Brands
should take note that the notion of play has in
some ways perhaps become too structured and
authoritarian for children today. Undoubtedly
parents are a key gateway to younger children
and should certainly be included to a degree.
But brands that can offer fun, exciting, and safe
arenas for children to play and interact with each
other in meaningful ways will undoubtedly strike
a chord with the next generation.
What happens when today’s teenage consumers
become tomorrow’s marketers is another
question altogether.
Today’s children spend more time online being
rated by their peers than any other generation
in history, through likes, retweets, shares, pins,
fans, and followers. The selfie invites opinions
to be registered and for the child posting to be
positively evaluated, and therefore ‘popular.’ Yet
wherever there is a popular child, there is one
who is equally unpopular, and it is here that the
pressures of digital life for young people can
have profound consequences.
Cyberbullying is a well-publicized phenomenon,
and no demographic feels this more acutely than
teenagers. Ask.FM is a ‘Q&A’ social network with
around 150 million monthly users (particularly
young people) who are able to send questions
and answers to each other. The relatively
unfiltered nature of the site led to several
extreme cases of cyberbullying in 2013, ending
in the suicides of a number of teenagers. Despite
being under immense pressure from parents to
shut down, Ask.FM remained live and instead
focused on trying to provide a safer and more
responsible forum for people to communicate.
Laudable as that may be, the clear lesson here
is that young people are invested in their digital
lives to such a degree that criticism from their
peers can have tragic outcomes.
Finding a voice on social and digital media
So given the particular and often intense
dynamics of teenagers’ digital existence, how
should brands and marketers speak to them
in digital and social media? The starting point
must be to recognize that life for young people
is pressured and stressful. The democratization
and independence that come with the internet
and access to content are double-edged swords,
and brands that can alleviate some of the strains
of the digital life – and even tackle the issues
that lurk in the underbelly of the internet – will
prosper. Brands may also need to think about
the ambassadors they choose to speak to
young people. One of the key takeaways from
the Variety poll is that, as new technologies
emerge and youngsters continue to live in online
arenas of which adults are relatively ignorant,
newer and more influential figures will continue
to take over. The new wave of YouTube stars
have a pre-packaged audience of engaged
young people, and although they will soon come
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p36
SUMMARY OF RESULTS
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
CONTINUED
GROWTH AND
STRONG CASH
CONVERSION
Summary of results
The Group has changed its financial year
end to 31 December. As a consequence,
this report shows audited results for the 8
months to 31 December 2015. To provide
further insight, we also show information on
a calendar 12 month basis (unaudited), with
commentary and analysis in comparison
with the equivalent 12 months ended 31
December 2014.
FY2015 is the financial period from 1 May
2015 to 31 December 2015 (audited)
FY2014/15 is the financial year from 1 May
2014 to 30 April 2015 (audited)
CY2014 is the calendar year from 1 January
2014 to 31 December 2014 (unaudited)
CY2015 is the calendar year from 1 January
2015 to 31 December 2015 (unaudited)
On a statutory basis for the 8 months to
31 December 2015:
• Revenue of £43.3m (FY2014/15: £73.9m)
• Underlying operating loss of £3,000
(FY2014/15: profit of £11.7m)
• Underlying loss before tax of £0.8m
(FY2014/15: profit of £10.6m)
• Reported loss before tax of £7.4m
(FY2014/15: profit of £4.7m)
• Underlying cash from operations of
£6.9m (FY2014/15: £10.3m)
• Underlying diluted EPS of (0.43)p
(FY2014/15: 10.71p)
• Intended dividend of 0.4p per share in
respect of the 8 months to December
2015 (FY2014/15: 0.4p per share), to be
paid following completion of a share
capital reduction
Highlights
8% revenue growth
Combined revenue growth
from MVM and MPO of 16%
Improvement in underlying
operating profit margin to
16.2%
Growth in underlying diluted
EPS to 10.8p
Increase in proposed dividend
on an annualised basis
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p37www.ebiquity.comStock Code: EBQ24804.04 – 11 April 2016 12:34 PM – Proof 3On a 12 month calendar year to 31 December 2015 comparative basis:• Like for like revenue growth of 7.9%, with growth of 10.5% on a like for like1 constant currency2 basis• Like for like underlying operating profit growth of 50.8%, with growth of 64.3% on a constant currency basis• MVM like for like constant currency revenue growth of 15.0% • MPO like for like constant currency revenue growth of 38.4% • MI like for like constant currency revenue decline of 3.6% • MVM and MPO together account for 67.8% of revenue (CY2014: 62.3%)• Underlying diluted EPS of 10.8p up 63.4% (CY2014: 6.6p)• Intended dividend of 0.4p per share in respect of the 8 months to December 2015 equivalent to 0.6p per share on an annualised basis (FY2014/15: 0.4p per share), to be paid following completion of a share capital reduction.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.1 Like for like means prior year results are adjusted to include the results of recent acquisitions as if they had been owned for the same period in the prior year.2 Constant currency is calculated by taking current year denominated results restated at last year’s foreign exchange rates. REVENUE GROWTH BY SEGMENT – CY2015 vs CY2014MVMMIMPOTOTAL15.4%10.8%13.5%10.5%49.2%-5.4%-3.6%-3.6%20.1%44.4%15.0%38.4%Reported revenue growthConstant currency revenue growthLike for like revenue growth at constant currencySUMMARY OF RESULTS37Ebiquity AR2016 Front Supplied V2.indd 3711/04/2016 12:59:06 p38
SUMMARY OF RESULTS
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Revenue
Media Value Measurement
Marketing Performance Optimization
Market Intelligence
Total Revenue
Underlying operating profit/(loss)
Media Value Measurement
Marketing Performance Optimization
Market Intelligence
Central costs
Total underlying operating profit/(loss)
Highlighted items
Reported operating profit/(loss)
Net finance costs
Share of profit of associates
Reported profit/(loss) before tax
Underlying profit/(loss)
before tax
CY2015
Unaudited
£’000
CY2014
Unaudited
£’000
FY2015
Audited
£’000
FY2014/15
Audited
£’000
41,998
9,936
24,650
76,584
12,057
2,802
3,668
(6,116)
12,411
(8,768)
3,643
(1,199)
18
2,462
11,230
36,386
6,661
26,059
69,106
7,950
2,196
3,452
(5,636)
7,962
(7,815)
147
(1,164)
10
(1,007)
6,808
20,409
6,899
16,002
43,310
(81)
1,874
2,070
(3,866)
(3)
(6,656)
(6,659)
(800)
13
(7,446)
(790)
40,046
8,060
25,768
73,874
11,224
2,905
3,447
(5,847)
11,729
(5,913)
5,816
(1,171)
12
4,657
10,570
The table below sets out our results on a reported and constant currency basis on a calendar 12 month basis:
Revenue
Underlying operating profit
Underlying operating profit margin %
CY2015
Unaudited
(constant
currency)
£’000
78,424
13,079
16.7%
CY2015
Unaudited
(as reported)
£’000
CY2014
Unaudited
(as reported)
£’000
76,584
12,411
16.2%
69,106
7,962
11.5%
The strong revenue and profit growth in
CY2015 are helped by a strong first quarter
of 2015, which was noted in the Company’s
Annual Report for the year to April 2015.
For reporting purposes this quarter is not
included within the results for the 2014
calendar year and this, together with an
uncharacteristic slower start in the first
quarter of CY2014, dampened the results
for the 2014 calendar year.
In CY2015, at constant currency rates
revenue has grown by 13.5% from CY2014
and underlying operating profit by 64.3%
from CY2014 with a resulting increase in
underlying operating margin from 11.5% to
16.7% between CY2014 and CY2015.
The reported results reflect the continued
impact of foreign exchange on our recent
performance (the average rate of the
Euro moved from £1 : €1.2404 in CY2014
to £1 : €1.3771 in CY2015 which offset the
movement in the average rate of the US
Dollar from £1 : $1.6476 in CY2014 to £1 :
$1.5283 in CY2015).
We continued to enjoy strong growth
from both MPO and MVM, with like for like
constant currency growth at 38.4% and
15.0% respectively on a 12 month calendar
year basis. Within MI, revenues from our
Portfolio platform stabilised showing like for
like constant currency growth of 0.4% on
a 12 month calendar year basis. However,
a decline in project work resulted in an
overall like for like constant currency
revenue decline of 3.6% for the MI segment
as a whole on a 12 month calendar year
basis.
The underlying operating profit margin
increased significantly from CY2014 to
CY2015 from 11.5% to 16.2% and 16.7% on a
constant currency basis as costs increased
by only 5% on a reported basis and 7% on
a constant currency basis between CY2014
and CY2015.
Highlighted items total £8.8m in CY2015,
(CY2014: £7.8m) and £6.7m in the 8 months
to December 2015. Highlighted items in
CY2015 include a non-cash charge of
£4.4m in respect of the full impairment of
the goodwill, purchased intangible asset
and related capitalised development
costs of the Reputation business. This
business, formerly Echo Research Group,
was acquired in 2011. Over the last four
years we have integrated the business
fully into our Market Intelligence Practice;
the technologies and methodologies
which were represented by the goodwill,
purchased intangibles and related
capitalised development costs have been
replaced, integrated or superseded and
the client relationships have in many cases
evolved into more integrated contracts.
We are no longer able to support the
original carrying value and believe that full
impairment reflects the evolution of this
part of our business in line with our longer-
term corporate strategy. Additionally,
highlighted items comprise £2.0m of
purchased intangible asset amortisation,
£0.9m of share based payment expenses,
£0.1m credit in respect of adjustments to
the fair value of deferred consideration
as a result of revised expectations of
performance from recent acquisitions
combined with the impact of discounting
deferred consideration. Other items
included within highlighted items are office
relocation costs (£0.4m), professional fees
in relation to acquisitions (£0.5m), the costs
of management restructuring (£0.5m) and
the cost of the CEO transition (£0.2m).
Net finance costs were £1.2m in CY2015
(CY2014: £1.2m). Net finance costs
were £0.8m for the 8 months ended 31
December 2015.
Underlying profit before tax is £11.2m for
CY2015 (CY2014: £6.8m) as a result of the
stronger operating performance in 2015.
Reported profit before tax is £2.5m for
CY2015 (CY2014: loss £1.0m) as a result of
the increase in underlying operating profit
offset by higher highlighted items
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www.ebiquity.com
Stock Code: EBQ
During 2015 approximately $21 billion
of media spend was under review by
advertisers worldwide and Ebiquity
managed approximately one third of that
on behalf of its clients. This has seen an
unprecedented level of activity within this
practice during the last year with high levels
of client engagement. As a result much of
our auditing and benchmarking work was
delayed resulting in a slow final quarter in
2015.
MVM experienced a very strong first
quarter to CY2015 which more than offset
a slower final quarter. The strong start to
CY2015 enabled the practice to grow by
15% on a like for like constant currency
basis. This revenue growth combined with
close control of our costs, has led to an
increase in reported underlying operating
profit margin to 28.7% in CY2015 compared
with 21.8% in CY2014.
The growing importance of data continues
to drive MPO which again represents our
fastest growing practice with demand both
in Europe and the US. MPO now accounts
for 13% of Group revenues and provides
significant opportunity for further growth.
Revenue grew by 49.2% between CY2014
and CY2015 and by 38.4% on a like for
like constant currency basis. We continue
to invest in MPO to enable our growth to
be sustainable over the longer term. This
investment resulted in an expected decline
in operating margin from 33.0% in CY2014
to 28.2% in CY2015.
Revenues from our Portfolio platform
stabilised, showing like for like constant
currency growth of 0.4% on a 12 month
calendar year basis. However, MI’s overall
performance in CY2015 was negatively
impacted by a slowdown in project work
meaning that revenue for the MI practice
was down 3.6% on a like for like constant
currency basis in CY2015. The change in
revenue profile combined with ongoing
cost efficiencies within our data centres has
positively impacted underlying operating
profit margins which increased to 14.9% in
CY2015 (CY2014: 13.2%).
2016 will see the full launch of our new
Portfolio platform which will provide
a better user experience, integrated
spend modules and better digital media
monitoring.
Central costs include central salaries
(Board, Finance, IT, Marketing and HR),
legal and advisory costs and property costs.
Central costs have increased by £0.5m
or 8.5% between CY2014 and CY2015
due to increased staff costs and related
recruitment, training and travel costs.
SUMMARY OF RESULTS
p39
MVM - MEDIA VALUE MEASUREMENT (55% OF TOTAL REVENUE)
CY2015
Unaudited
£’000
CY2014
Unaudited
£’000
FY2015
Audited
£’000
FY2014/15
Audited
£’000
Revenue
Underlying operating profit
Underlying operating profit margin %
41,998
12,057
28.7%
36,386
7,950
21.8%
20,409
(81)
(0.4)%
40,046
11,224
28.0%
MPO - MARKETING PERFORMANCE OPTIMIZATION (13% OF TOTAL REVENUE)
CY2015
Unaudited
£’000
CY2014
Unaudited
£’000
FY2015
Audited
£’000
FY2014/15
Audited
£’000
Revenue
Underlying operating profit
Underlying operating profit margin %
9,936
2,802
28.2%
6,661
2,196
33.0%
6,899
1,874
27.2%
8,060
2,905
36.0%
MI - MARKET INTELLIGENCE (32% OF TOTAL REVENUE)
CY2015
Unaudited
£’000
CY2014
Unaudited
£’000
FY2015
Audited
£’000
FY2014/15
Audited
£’000
Revenue
Underlying operating profit
Underlying operating profit margin %
24,650
3,668
14.9%
26,059
3,452
13.2%
16,002
2,070
12.9%
25,768
3,447
13.4%
CENTRAL COSTS
CY2015
Unaudited
£’000
CY2014
Unaudited
£’000
FY2015
Audited
£’000
FY2014/15
Audited
£’000
Central costs
(6,116)
(5,636)
(3,866)
(5,847)
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p40
SUMMARY OF RESULTS
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
TAXATION
EQUITY
The total tax credit for the 8 months ended
December 2015 is £1.3m (FY2014/15 charge:
£0.5m) representing a current tax credit
of £0.1m (FY2014/15: charge of £1.1m) and
a deferred tax credit of £1.2m (FY2014/15:
£0.6m).
During the 8 months to December 2015,
390,034 shares were issued upon the
exercise of employee share options. As
a result our share capital increased to
77,161,688 ordinary shares (30 April 2015:
76,771,654).
On a statutory reported basis, the tax credit
on underlying profits for the year is £0.6m
(FY2014/15: charge of £1.7m), representing
a current tax charge of £nil (FY2014/15:
£1.5m) and a deferred tax credit of £0.6m
(FY2014/15: charge of £0.2m). This is an
effective tax rate on underlying profits of
(72.9)% (FY2014/15: 16.0%). The effective tax
rate is lowered by £0.4m of over provisions
from the prior year and the recognition
of deferred tax assets on losses carried
forward.
On a calendar year comparative basis, the
underlying effective rate of tax for CY2015
is 22.2% (CY2014: 20.0%).
DIVIDEND
It is the Board’s intention to pay a dividend
of 0.4 pence per share for the 8 months
ended 31 December 2015, (FY2014/15: 0.4
pence per share). This would represent
an increase in dividend per share on a
pro-rata basis and would also represent
the continuation of a progressive dividend
policy which commenced with our
maiden dividend paid in October 2015.
This dividend cannot be recommended
as a conventional final dividend at the
Company’s AGM on 11 May 2016 as a
result of the write down of the Company’s
investment in its Reputation business
which has resulted in the Company (at the
Ebiquity plc level, not at the Group level)
having negative distributable reserves.
The Company does have sufficient share
premium available to eliminate these
negative reserves and to enable it to
pay this dividend. Share premium is not
distributable. However, the Company
intends, conditional on the approval of
its shareholders and the confirmation of
the Court, to reduce its share premium to
create distributable reserves. Accordingly,
the Company shall propose at its AGM a
resolution to reduce its share premium in
order to create such reserves.
Assuming that shareholders pass this
resolution and that the Court subsequently
confirms the reduction of share premium
(and subject to the discharge of any
undertaking or other form of creditor
protection that the Court may require), the
Company intends to make payment of the
dividend of 0.4 pence per share described
above as an interim dividend during
2016. The Company shall make further
announcements regarding the expected
date of payment of this dividend.
40
EARNINGS PER SHARE
Underlying diluted earnings per share was
10.8p in CY2015 (CY2014: 6.6p), being an
increase of 63.4%, reflecting the increase
in operating profit between CY2015 and
CY2014. Underlying earnings per share for
FY2014/15 was 10.7p.
CASH CONVERSION
12 months to
December 2015
Unaudited
£’000s
8 months to
December 2015
Audited
£’000
12 months to
April 2015
Audited
£’000
11,515
13,673
12,411
110.2%
5,028
6,889
(3)
n/a
7,927
10,345
11,729
88.2%
Cash conversion has improved
considerably in CY2015 due to both
the continued focus on working capital
management and the change in year end
to 31 December. The strong underlying
cash from operations in the 8 months to 31
December 2015 reflects the seasonality of
revenue and billing.
Reported cash from operations
Underlying cash from operations
Underlying operating profit/(loss)
Cash conversion
Underlying cash from operations represents
the cash flows from operations excluding
the impact of highlighted items. The
underlying net cash inflow from operations
has improved significantly to £13.7m in
CY2015 (FY2014/15: £10.3m).
After highlighted items are considered,
reported net cash inflow from operations
for CY2015 was £11.5m to (FY2014/15:
£8.0m).
NET DEBT AND BANKING FACILITIES
31 December 20105
Audited
£’000s
31 December 2014
Unaudited
£’000s
30 April 2015
Audited
£’000
Net cash
Bank debt1
Net debt1
6,364
(35,250)
(28,886)
3,838
(35,401)
(31,563)
7,884
(34,576)
(26,692)
1 Bank debt in the Statement of Financial
Position at 31 December 2015 is shown
net of £0.2m (April 2015: £0.3m, December
2014: £0.3m) of loan arrangement fees that
have been paid and which are amortised
over the life of the facility. The bank debt
stated above excludes these costs.
All bank borrowings are held jointly with
Barclays and Royal Bank of Scotland
(‘RBS’). The committed facility, totalling
£40,000,000, comprises a term loan
of £10,000,000 (of which £6,250,000
remains outstanding at 31 December
2015 (30 April 2015: £8,125,000)), and a
revolving credit facility of £30,000,000,
(of which £29,000,000 was drawn down
at 31 December 2015 (30 April 2015:
£26,451,000).
During the period the Group continued
to trade within all of its banking facilities
and associated covenants. Net debt to
EBITDA was 2.04 for the 12 months ended
December 2015.
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Stock Code: EBQ
STATEMENT OF FINANCIAL POSITION
AND NET ASSETS
OUTLOOK
SUMMARY OF RESULTS
p41
During 2015 we continued to lay the
foundations upon which we will build
our future growth plans. There is clear
evidence of the continuing demand for our
products and services, and the increased
level of visibility we have over 2016
revenues provides confidence about the
year ahead. The demand for Marketing
Performance Optimization continues to be
buoyant and we are positioning ourselves
to capitalise on this opportunity.
By order of the Board
Michael Karg
Chief Executive Officer
Andrew Beach
Chief Financial and Operating Officer
29 March 2016
Net current assets as at 31 December 2015
decreased by £4.4m to £5.6m (FY2014/15:
£10.0m) and total net assets decreased
by £6.3m to £42.4m (FY2014/15: £48.7m)
primarily as a result of the impairment of
goodwill and purchased intangible assets
of the Reputation business combined with
the impact of operating performance over
the 8 months to 31 December 2015.
Goodwill as at 31 December 2015 was
£54.8m (30 April 2015: £58.1m) with the
decrease due to the impairment of the
goodwill of the Reputation business
which resulted in a decrease in goodwill
of £3.1m. Management undertakes
an annual impairment review of goodwill.
Management have performed additional
sensitivity analysis of the underlying
assumptions and believe that the results
of this analysis currently support the
remaining goodwill carrying value.
Deferred contingent consideration
has decreased by £4.1m since 30 April
2015, due to the settlement of deferred
consideration. At 31 December 2015
the remaining deferred consideration is
estimated to be £4.9m which relates to our
three most recent acquisitions, £3.4m of
which is forecast to be settled in the next
12 months.
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24804.04 – 11 April 2016 5:12 PM – Proof 2 sluglineLEADING GROWTHDirectors and AdvisersEbiquity plcAnnual Report and Accounts for the 8 month period ended 31 December 201542Directors anD aDvisersEbiquity AR2016 Middle-Back.indd 4211/04/2016 17:13:14 www.ebiquity.com
Stock Code: EBQ
Directors anD aDvisers
MICHAEL
KARG
MICHAEL
HIGGINS
Group chief executive officer
non-executive chairman
Michael Karg took up his post on 1 January 2016.
He was previously ceo international for razorfish,
the digital business transformation agency of
Publicis Groupe, and held senior international
leadership positions with both razorfish and Digitas
over a fifteen-year career. a native of austria,
he has been based in Boston, Paris and London
and was responsible for razorfish’s and Digitas’
growth and strategic development in europe (UK,
Germany, France, italy and spain), india, china,
south east asia, australia and Brazil. He advised
clients globally across industries on marketing and
digital strategies, worked closely with technology
partners, and led the integration of acquired
businesses. Michael holds a degree in Finance and
accounting and a doctorate in Management from
the University in st. Gallen, switzerland and was
a visiting Fellow at Harvard University from 1999
to 2000. He is a member of the Board and chair
of the compensation committee of travelzoo inc.
(nasDaQ: tZoo).
Having obtained his degree in economics and
politics from cambridge University, Michael
qualified as an accountant at Price Waterhouse
(now Pricewaterhousecoopers). He then gained
experience in international banking with saudi
international Bank before joining charterhouse,
the merchant bank, in 1984. He became a Partner
at KPMG in 1996, and following his retirement
from the partnership in 2006, spent five years as
a senior adviser with them. Michael is currently
senior independent director of Plant Health care
plc, a leading provider of novel patent protected
biological products to the global agricultural market,
a non-executive director of arria nLG plc, a software
development business, a non-executive director of
Progility plc, a project management services group.
Michael is also chairman of the Quoted companies
alliance and is a member of the Panel on takeovers
and Mergers as the appointee of the Quoted
companies alliance. Michael also has interests in
early stage businesses in online publishing and
medical services. in addition to chairing the ebiquity
Board, Michael chairs the nomination committee
and sits on the remuneration committee and the
audit committee.
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24804.04 – 11 April 2016 5:12 PM – Proof 2 chief Financial and operating officerchief strategy officernick has spent 35 years in the media industry, principally having co-founded Manning Gottlieb Media (MGM) in 1990. MGM became one of the most highly respected and fastest growing Media specialist agencies before becoming part of omnicom in 1997. His most recent agency position was ceo of oMD’s operations in the UK. nick also co-founded oPera, the media negotiation arm for oMD and PHD, with billings of £1 billion. nick joined ebiquity in october 2007 as chief operating officer with special responsibility for the analytics division before becoming President, international, in overall charge of ebiquity’s non-UK based operations. nick is now chief strategy officer, with responsibility for developing and implementing ebiquity’s strategy across its three business segments. andrew qualified as a chartered accountant with Pricewaterhousecoopers, working within their assurance business for nine years until 2007. For the last six years he specialised in entertainment and Media clients and headed up the firm’s Publishing knowledge network. He joined ebiquity as Financial controller in 2007 and was promoted to chief Financial officer in 2008. in 2014 andrew was promoted to chief Financial and operating officer, with a widening of his responsibilities to include it and global data centres. ANDREW BEACHNICK MANNINGMorag spent more than 20 years in ad agencies as a tv buyer, planner and account director. she became Managing Director of PHD in 1999 and served as ceo from 2006 to 2008. she assisted Pwc and Fishburn Hedges in the development of a communications strategy for the pensions reform bill, and worked with the olympic Delivery authority before joining ebiquity in 2009 as international Practice Leader for advertising intelligence. she was appointed to the newly created role of ceo UK in 2012 and as an executive Director in 2015. Morag is a fellow of the iPa.UK ceoMORAG BLAZEYMICHAEL GREENLEESexecutive DirectorMichael was one of the original founding partners of Gold Greenlees trott plc (GGt) an international advertising and marketing group. in 1998 Michael joined the Board of omnicom inc, serving as the President and chief executive of tBWa Worldwide and in 2001 was made executive vice-President of omnicom inc. Michael was special advisor to General atlantic, a Us based private equity group, and has served on the Board of a number of Us companies. Until 2010 he was a Director of Hewitt associates, a global human resources outsourcing and consulting firm, where he chaired the compensation & Leadership committee and served on the nominations & corporate Governance committee. in 2011 Michael became a Director of abercrombie & Fitch co. where he serves as chairman of the compensation committee and is a member of the audit committee. Having served as equity’s Group ceo since october 2007, Michael stepped down from this role in January 2016 and will leave the Board with effect from 30 april 2016.Ebiquity plcAnnual Report and Accounts for the 8 month period ended 31 December 201544Directors anD aDvisersEbiquity AR2016 Middle-Back.indd 4411/04/2016 17:13:23 www.ebiquity.com
Stock Code: EBQ
Directors anD aDvisers
MICHAEL
GREENLEES
RICHARD
NICHOLS
JULIE
BADDELEY
TOM
ALEXANDER
executive Director
non-executive Director
non-executive Director
non-executive Director
richard is chief executive of instinctif Partners,
the international business communications
consultancy. Prior to joining instinctif Partners,
richard was chief executive of Huntsworth
plc, following the merger with incepta
Group plc where he was the chief executive
and formerly Group Finance Director. an
economics graduate from cambridge
University, richard subsequently qualified as a
chartered accountant with Price Waterhouse
(now Pricewaterhousecoopers) in London. He
is chairman of ebiquity’s audit committee and
also sits on the nomination committee.
tom brings a wealth of international business
experience and consumer instinct to ebiquity.
Following senior sales positions with
telia and Bt cellnet, tom founded virgin
Mobile in 1999 and subsequently built the
business to revenues of £1 billion and 4.3
million customers in eight years. He led the
company’s iPo in 2004 and eventual sale
to ntl in 2006. From 2007 he was chief
executive officer of orange, leading its
turnaround and subsequent successful merger
in 2010 with t-Mobile to create everything
everywhere. after running ee for a further year
he left to pursue private equity opportunities
and non-executive roles. He sits on ebiquity’s
nomination committee, remuneration
committee and audit committee.
Julie is one of the UK’s most experienced
female company directors, having served in
both executive and non-executive capacities
on the boards of leading companies in the
Ftse100 and Ftse250 as well as a number
of major public sector organisations. she
has chaired the remuneration committee
of several boards on which she has served
and been chairman of Harvey nash plc
since June 2013. Julie has broad experience
both of businesses in professional services
like ebiquity, and of those in the consumer
industry sectors ebiquity serves, including
Boc, Yorkshire Building society, camelot
and Greggs. as associate Fellow at oxford
University said Business school, from 2000 to
2010, she coached top business teams from
around the world on the execution of business
strategy, having previously run a global team
as the partner in charge of a substantial part
of accenture’s change management practice.
she is chairman of ebiquity’s remuneration
committee and sits on the nomination
committee.
DIREcTORs
Michael Higgins
Non-Executive Chairman
Michael Karg
Group Chief Executive Officer
andrew Beach
Chief Financial and
Operating Officer
nick Manning
Chief Strategy Officer
Morag Blazey
UK CEO
Michael Greenlees1
Executive Director
richard nichols
Non-Executive Director
Julie Baddeley
Non-Executive Director
tom alexander
Non-Executive Director
cOmpANy sEcRETARy
andrew Watkins
REGIsTERED OffIcE
cityPoint
one ropemaker street
London ec2Y 9aW
REGIsTRATION
registered and incorporated
in england & Wales
registration number 03967525
INDEpENDENT AuDITORs
Pricewaterhousecoopers LLP
chartered accountants and
statutory auditors
1 embankment Place
London Wc2n 6rH
1 steps down as a director on
30 april 2016.
NOmINATED ADvIsER AND
bROkER
numis securities Limited
the London stock exchange
Building
10 Paternoster square
London ec4M 7Lt
REGIsTRARs
computershare investor services plc
Po Box 82
the Pavilions
Bridgwater road
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corPorate Governance rePort
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
corporate Governance Report
INTRODucTION
this report describes the framework for corporate governance and internal control that the Directors have established. ebiquity is
committed to robust standards of corporate Governance.
as a company listed on aiM, ebiquity is not required to comply with the UK corporate Governance code. ebiquity has adopted the
corporate Governance code for small and Mid-size Quoted companies (2013) produced by the Quoted companies alliance (the
“Qca code”). the Quoted companies alliance is the membership organisation which represents the interests of small and mid-size
quoted companies, of which ebiquity is a member.
the Qca code contains minimum disclosure requirements for a company to meet in order for that company to state that it complies
with the Qca code. the Directors are of the opinion that the company complies with these minimum disclosure obligations save to
the extent referred to in this report.
bOARD Of DIREcTORs
Role of the board
the Board is responsible to shareholders for the proper management of the affairs of the Group. the Directors are also collectively
responsible for acting in the way which they consider, in good faith, is most likely to promote the success of the company for
the benefit of ebiquity’s shareholders as a whole. in doing so, the Directors have regard (amongst other matters) to the interests
of the company’s employees and the need to foster the company’s business relationships with suppliers, customers and other
stakeholders.
a statement of the Directors’ responsibilities with regards to the annual report and accounts is set out on page 58.
composition of the board
During the eight months ended December 2015, Morag Blazey, the ceo of ebiquity’s UK business, was appointed a director of the
company. in January 2016, Michael Karg was appointed as ebiquity’s Group chief executive officer and as a director of the company.
With effect from 30 april 2016, Michael Greenlees will stand down as an executive Director.
accordingly, as of 1 May 2016, the Board of Directors will comprise an independent non-executive chairman, three further
independent non-executive Directors and four executive Directors. Michael Higgins is ebiquity’s chairman. richard nichols, Julie
Baddeley and tom alexander are ebiquity’s independent non-executive Directors.
Michael Higgins is a qualified chartered accountant. He brings to the Board significant experience of advising smaller quoted
companies and is a director of a number of such companies. Michael is also currently the chairman of the Quoted companies
alliance. the Directors are of the view that Michael Higgins retains his independence notwithstanding that he chairs the Board.
richard nichols is also a qualified chartered accountant. His previous experience includes serving as Finance Director and chief
executive officer of a number of listed and private companies. richard is currently chief executive officer of instinctif Partners, who
provide ebiquity with financial Pr advice. richard is not part of the instinctif team which advises ebiquity and in the event that the
Board formally discuss instinctif’s instruction by the company, richard would excuse himself from those discussions. accordingly the
Board considers richard to be independent.
Julie Baddeley has significant experience of serving on the boards of listed companies, both as an executive and as a non-executive
director, and of serving on and chairing board committees. Julie has experience across industry sectors, including in professional
services organisations such as accenture. she is currently chairman of Harvey nash plc, which is listed on the official List. Julie brings
valuable governance experience to ebiquity.
tom alexander has enjoyed a highly successful career in the telecoms industry. the commercialism and business instinct developed
by tom during his career is of great value to the Board. the Board also draws upon tom’s experience of an industry undergoing rapid
technological change in guiding ebiquity’s management through similar changes in the sectors in which the company operates.
Further biographical details regarding the Directors are contained on pages 43 to 45.
each of the non-executive Directors has a written letter of appointment with the company. these are available for inspection on
ebiquity’s website. each of the executive Directors has a written service agreement with the company. none of these service
agreements entitles a director to receive more than six months’ notice terminating his/her employment.
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Stock Code: EBQ
corPorate Governance rePort
chairman and Group chief Executive Officer
the Board is chaired by Michael Higgins. the chairman’s principal responsibility is to ensure that the Board is effective in
interrogating, approving and monitoring the company’s direction and strategy. the chairman is also responsible, in consultation
with the company secretary, for ensuring proper information is supplied to the Board in a timely fashion, that Board meetings are
conducted effectively and that proper debate is had at Board meetings.
Michael Karg is the Group’s chief executive officer and is responsible for setting long-term strategy, developing appropriate annual
business plans, agreeing management KPis and leading the executive Directors and the senior executive team in the day-to-day
running of the Group’s business, including chairing the executive committee and communicating its decisions/recommendations to
the Board. He is also responsible for shareholder communication and ongoing relationships with investors.
the roles of chairman and Group chief executive officer are separate with each having clearly defined duties and responsibilities.
matters reserved for the board
as part of good governance there are certain matters which are not appropriate to be delegated to management or a committee of
the Board and should be reserved for consideration by the Board as a whole. the Board has formally approved a written list of such
matters (which is available on ebiquity’s website) and which include:
• approving the annual budget and quarterly reforecasts
• changes to the Group’s capital structure
• approving the company’s dividend policy
• reviewing non-routine regulatory news service announcements made by the company
• approving material contracts to be entered into by the Group
board meetings
Between 1 May and 31 December 2015, the Board met formally on four occasions. there were in addition a small number of meetings
convened on short notice to consider ad hoc matters.
the Board receives monthly management accounts and other relevant information as appropriate in advance of each Board meeting.
this information is made available electronically via an online platform. Directors are able to access this information at any time,
including following Board meetings.
there are a number of standing agenda items reviewed by the Board at each regular Board meeting, including current trading
and outlook. other items are considered by the Board as appropriate, including as a minimum an annual review of the company’s
governance arrangements. a principal area of focus for the Board during the eight months ended December 2015 was the
appointment of a Group chief executive officer to succeed Michael Greenlees.
Detailed minutes are taken of all Board meetings. Minutes are circulated to the Board and approved at the following Board meeting.
Advisers to the board and its committees
the Board seeks advice from external advisers, including legal, tax, financial and other advisers, on various matters as and when
appropriate. the company secretary attends all Board meetings and is available to advise on any corporate governance issues which
may arise.
the company’s auditors, Pricewaterhousecoopers LLP, attend meetings of the audit committee.
the remuneration committee relies from time-to-time on advice and benchmarking data from Hewitt new Bridge street in setting
certain specific matters of the executive Directors’ remuneration.
the nomination committee took external advice during the exercise to identify and appoint the successor to Michael Greenlees as
the Group’s chief executive officer.
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corPorate Governance rePort
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
corporate Governance Report
Risk management
the Board retains ultimate control and direction over appropriate strategic, financial, organisational and compliance issues. the
Board has put in place an organisational structure with defined lines of responsibility. the executive committee, which is described
further below, has responsibility for ensuring compliance with the organisational structure. the company has adopted an authority
matrix which sets out the delegation of authority to individual business units and members of staff.
the internal control system put in place by the company is designed to provide reasonable assurance against material misstatement
or loss. commercial risks are an inherent part of business and as such the internal control system cannot provide absolute assurance
against these risks.
Director evaluation
the performance of each of the executive Directors is reviewed annually as part of the Group’s yearly appraisal process for all
employees. there has not been an annual assessment of the performance of the non-executive Directors nor of the Board as a
whole or any of its committees. it was not considered appropriate for such assessments to be introduced during the year, given the
change of Group chief executive officer which took place in January 2016.
the Board intends to commence a board evaluation exercise during the year ending December 2016. this will comprise an internal
assessment to establish a benchmark against which future exercises can be compared.
bOARD cOmmITTEEs
the Board has constituted several committees to help it in the performance of its functions. the principal committees are the audit
committee, the remuneration committee and the nomination committee. the roles of these committees are set out below.
Audit committee
the audit committee, which meets at least three times a year, is chaired by richard nichols. the audit committee comprises richard
nichols, Michael Higgins and tom alexander. the Board considers richard nichols to have recent and relevant financial experience.
richard is a qualified chartered accountant and has served as the Finance Director and chief executive officer of listed and private
companies. richard currently serves as the chief executive officer of a private-equity backed company.
the purpose of the audit committee is to ensure the preservation of good financial practices throughout the Group; to monitor that
controls are in force to ensure the integrity of financial information; to review the interim and annual financial statements; and to
provide a line of communication between the Board and the external auditors.
the audit committee is responsible for reviewing the performance of the external auditors on an annual basis, and for agreeing the
scope of their work. the audit committee also monitors the level of non-audit work conducted by the external auditors to ensure
that independence and objectivity are safeguarded. Details of non-audit fees paid to the external auditors are set out in note 4 to the
consolidated financial statements.
the audit committee’s report can be found on pages 56 to 57.
Remuneration committee
the remuneration committee, which meets at least twice a year, is chaired by Julie Baddeley. the remuneration committee
comprises Julie Baddeley, Michael Higgins and tom alexander. the remuneration committee is responsible for the executive
Directors’ remuneration and other benefits and terms of employment, including performance related bonuses and share options.
the remuneration committee’s report can be found on pages 54 to 55.
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Stock Code: EBQ
corPorate Governance rePort
Nomination committee
the nomination committee is chaired by Michael Higgins. the nomination committee comprises Michael Higgins, richard nichols,
Julie Baddeley, tom alexander and, until he steps down as a director on 30 april 2016, Michael Greenlees. the nomination
committee meets as necessary and has responsibility for nominating to the Board candidates for appointment as Directors, bearing
in mind the need for diversity and a broad representation of skills across the Board.
Attendance at meetings
Details of the Directors’ attendance at the regular Board and committee meetings in the period is as set out below (number of
meetings attended by each director/the maximum number of meetings each director was entitled to attend):
Michael Higgins
Michael Greenlees
andrew Beach
nick Manning
Morag Blazey
richard nichols
Julie Baddeley
tom alexander
ExEcuTIvE cOmmITTEE
Board
4/4
4/4
4/4
3/4
1/1
4/4
4/4
4/4
audit remuneration
2/2
—
—
—
—
—
2/2
2/2
2/2
—
—
—
—
2/2
—
1/2
nomination
3/3
3/3
—
—
—
3/3
3/3
3/3
in addition to the above, and not a formal committee of the Board, the company’s management have constituted an executive
committee.
the executive Directors, together with the Us ceo, the ceo of continental europe, ceo of FirmDecisions, the Hr/Marketing Director,
the Group it Director, the General counsel/company secretary and the Group Finance Director comprise the executive committee,
which meets on a monthly basis. the executive committee provides a principal vehicle for directing the Group’s business at an
operational level.
sHAREHOLDERs
the executive Directors meet regularly with institutional shareholders to discuss the company’s performance and future prospects.
the views of institutional shareholders as presented at these meetings are reported by the executive Directors to the Board. the
principal vehicle for communications with private shareholders is the company’s annual General Meeting. the information displayed
on the investor relations pages of the company’s website is regularly refreshed in order to provide accurate and up-to-date
information to all shareholders.
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Directors’ rePort
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Directors’ Report
the Directors present their report and the audited consolidated financial statements for the eight months ended 31 December 2015.
GENERAL INfORmATION
ebiquity plc is incorporated in england and Wales under registered number 3967525. its registered address and principal office is at
cityPoint, one ropemaker street, London ec2Y 9aW. the company is the ultimate parent of the Group. the Group has a branch in
France. its other overseas operations are subsidiaries or associates (see notes 12 and 13).
fuTuRE DEvELOpmENTs
the future developments of the Group are considered in the strategic report on pages 14 to 23.
DIvIDENDs
it is the Board’s intention to pay a dividend of 0.4 pence per share for the eight months ended 31 December 2015, (FY2014/15:
0.4 pence per share). this would represent an increase in dividend per share on a pro-rata basis and would also represent the
continuation of a progressive dividend policy which commenced with the company’s maiden dividend paid in october 2015. this
dividend cannot be recommended as a conventional final dividend at the company’s aGM on 11 May 2016 as a result of the write
down of the company’s investment in its reputation business which has resulted in the company (at the ebiquity plc level, not at the
Group level) having negative distributable reserves.
the company does have sufficient share premium available to eliminate these negative reserves and to enable it to pay this
dividend. share premium is not distributable. However, the company intends, conditional on the approval of its shareholders and the
confirmation of the court, to reduce its share premium to create distributable reserves. accordingly, the company shall propose at its
aGM a resolution to cancel its share premium in order to create such reserves.
assuming that shareholders pass this resolution and that the court subsequently confirms the cancellation of share premium (and
subject to the discharge of any undertaking or other form of creditor protection that the court may require), the company intends to
make payment of the dividend of 0.4 pence per share described above as an interim dividend during 2016. the company shall make
further announcements regarding the expected date of payment of this dividend.
REsEARcH AND DEvELOpmENT
the Group continues to invest in the development of products. During the period a total of £0.7m was capitalised in relation to
development projects. this has resulted in the development of a number of new initiatives.
pOLITIcAL DONATIONs AND pOLITIcAL ExpENDITuRE
no political donations were made and no political expenditure was incurred in the period (2014/15: nil).
pOsT bALANcE sHEET EvENTs
on 11 March 2016 the Group acquired the outstanding 50% interest in its irish media audit associate, Fairbrother Marsh company
Limited (FMc). the 50% interest in FMc was acquired for an initial cash consideration of €150,000. the maximum total consideration
is up to €2m, payable in cash, depending on the performance of the FMc business during the period ending 31 December 2020.
the Group acquired stratigent LLc (stratigent) on 19 august 2013. stratigent’s management held a 7% economic interest in stratigent
which was acquired by the Group for a total consideration to be determined by the financial performance of stratigent over the
three financial years ending 30 april 2016 and capped at $1.5m. stratigent’s financial performance over the first two financial years
resulted in consideration of $1.1m being paid to stratigent’s management. in order to ensure that management remains incentivised
to continue to drive and generate the financial performance achieved over the first two financial years, the Group agreed to increase
the total cap on consideration payable to management. accordingly, in March 2016, the cap on consideration was increased by an
amount of $1.5m, with any excess over and above the existing cap on consideration payable 25% in cash and 75% in new ordinary
shares in ebiquity plc (capped at 600,000 new shares). this has been treated as a non-adjusting event since no constructive
obligation existed at the period end.
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Stock Code: EBQ
Directors’ rePort
DIREcTORs AND DIREcTORs’ INTEREsTs
the Directors in office during the period and until the date of this report were as follows:
Michael Higgins
andrew Beach
nick Manning
Morag Blazey1
Michael Greenlees2
richard nichols
Julie Baddeley
tom alexander
non-executive chairman
executive Director
executive Director
executive Director
executive Director
non-executive Director
non-executive Director
non-executive Director
1 appointed 15 october 2015
2 stands down as director on 30 april 2016
Michael Karg was appointed a director on 27 January 2016.
andrew Watkins, General counsel, acts as the company secretary.
chief Financial and operating officer
chief strategy officer
UK ceo
the beneficial interests of Directors, who were Directors at the period end, in the ordinary shares of the company and options to
purchase such shares at the beginning and end of the financial period comprised:
Michael Higgins
Michael Greenlees
andrew Beach
nick Manning
Morag Blazey
richard nichols
Julie Baddeley
tom alexander
Number of
ordinary
shares
31 December
2015
64,500
324,267
20,000
230,000
–
100,000
–
–
Options
31 December
2015
–
3,741,368
260,000
2,670,230
728,169
–
–
–
number of
ordinary
shares
30 april 2015
64,500
324,267
20,000
230,000
–
100,000
–
–
options
30 april 2015
–
3,741,368
310,000
2,370,230
478,169
–
–
–
no Director has any direct interest in the shares of any subsidiary company. there have been no changes in the above Directors’
shareholdings or holdings of options between 31 December 2015 and the date of this report. Michael Karg, who was appointed a
director subsequent to 31 December 2015, was awarded options over a total of 500,000 ordinary shares in the company on
27 January 2016.
Further information about the Directors’ interests is provided in the remuneration report on pages 54 to 55.
DIREcTORs’ THIRD-pARTy AND pENsION scHEmE INDEmNITy pROvIsIONs
the company purchased and maintained throughout the period and up to the date of this report, directors’ and officers’ liability
insurance in respect of its directors and officers and those of its subsidiaries. there were no pension scheme indemnity provisions in
place during the period.
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Directors’ rePort
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Directors’ Report
EmpLOyEEs
ebiquity is committed to the continuous development of its employees. the Group’s employees are integral to the success of the
business and as a result the Group pursues employment practices which are designed to attract, retain and develop this talent to
ensure the Group retains its market leading position with motivated and satisfied employees. the Group has continued this year with
its employee engagement programme, initiated in 2011, measuring engagement levels and drivers through an annual survey and
taking actions to further develop the leadership and organisation on the back of these findings.
the Group has continued its practice of using formal and informal communication channels to provide employees with the
information they need to understand and achieve the objectives of the Group and to keep employees informed of matters affecting
them as employees and the financial and economic factors affecting the performance of the Group.
applications for employment by disabled persons are given full and fair consideration for all vacancies in accordance with their
particular aptitudes and abilities. Where existing employees become disabled it is the Group’s policy to provide continuing
employment wherever practicable in the same or an alternative position and to provide appropriate training. it is the policy of the
Group that training, career development and promotion opportunities should be available to all employees.
employees are encouraged to own shares in the company, and many employees are shareholders and/or hold options under the
company’s share option scheme and executive incentive plan.
fINANcIAL INsTRumENTs
the Group’s principal financial instruments comprise bank loans and cash. the main purpose of these financial instruments is to
provide finance for the Group’s operations. the Group has various other financial assets and liabilities such as trade receivables
and trade payables, which arise directly from its operations. the operations of the Group generate cash and the planned growth of
activities is cash generative. Full details of financial instruments are included in note 25 to the financial statements.
subsTANTIAL sHAREHOLDINGs
at the date of this report the company’s issued share capital consisted of 77,161,688 ordinary shares of 25p each and a total of
72,961,688 voting rights. the ebiquity plc 2010 employee Benefit trust (the “eBt”) held 4,200,000 issued ordinary shares to satisfy
awards for the company’s senior management team. at the date of this report, these awards had not been exercised. the trustee has
agreed not to vote the ordinary shares held by it. as such 4,200,000 ordinary shares are treated as not carrying voting rights for the
purposes of the city code on takeovers and Mergers.
at the date of this report the following had notified the company that they held more than 3% of the company’s ordinary share
capital, other than the shareholdings held by Directors and the eBt. no other person has reported an interest of more than 3% in the
company’s ordinary shares.
name
artemis investment Management
Kabouter Management
t rowe Price Global investments
invesco Perpetual
Jo Hambro capital Management
Herald investment Management
Hargreave Hale
Legal & General
Fidelity international
Henderson Global investors
Miton Group
no. of shares
9,945,522
7,827,917
6,776,200
6,531,663
5,933,247
5,491,125
4,330,000
3,945,200
3,443,664
3,060,000
2,521,932
% of issued
share capital
12.89
10.14
8.78
8.46
7.69
7.12
5.61
5.11
4.46
3.97
3.27
% of total
voting rights
13.63
10.73
9.29
8.95
8.13
7.53
5.93
5.41
4.72
4.19
3.46
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Stock Code: EBQ
Directors’ rePort
AGm NOTIcE
the notice of the company’s annual General Meeting is set out on pages 120 to 125.
GOING cONcERN
the Board is responsible for considering whether it is appropriate to prepare the financial statements on a going concern basis.
after making appropriate enquiries the Board concluded that the Group has adequate resources to continue in operation for the
foreseeable future and operate within banking facilities and the covenants therein. For this reason the Group continues to adopt the
going concern basis in preparing the financial statements.
INDEpENDENT AuDITORs AND DIscLOsuRE Of INfORmATION TO AuDITORs
all of the current Directors have taken all the steps that they ought to have taken to make themselves aware of any information
needed by the Group’s auditors for the purposes of their audit and to establish that the auditors are aware of that information. the
Directors are not aware of any relevant audit information of which the auditors are unaware.
the auditors, Pricewaterhousecoopers LLP, have indicated their willingness to continue in office, and a resolution that they be
reappointed will be proposed at the annual General Meeting.
By order of the Board
Andrew Watkins
company secretary
29 March 2016
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reMUneration rePort
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Remuneration Report
REmuNERATION pOLIcy
the Board recognises the role of appropriate remuneration in attracting and retaining the people needed to develop and grow the
business, and driving their and its performance.
the remuneration committee has maintained the policy set out in the annual report for the year ended 30 april 2015, which is
used to determine executive Directors’ remuneration and as a guide for the executive committee in setting organisation-wide
remuneration. in summary, the policy is as follows:
Fixed remuneration components (base salary and benefits such as holiday entitlement, pension contributions, medical and life
insurances) will be set at or around the market-median level for matched roles within comparable companies. Total Compensation
may, as required, be established at up to upper quartile levels through the provision of attractive Variable reward components, the
attainment of which is linked to individual and/or company performance. a mix of different variable remuneration components (annual
cash bonuses, long-term incentives (“Ltis”) and other equity participation) will be used to both retain and incentivise over the short,
medium and longer term.
the minimum threshold for any payment/vesting will be realistic, attainable levels of acceptable performance, with one or more levels
of enhanced performance required in order to maximise the value realised. annual bonuses will be set with reference to benchmark
levels of target and maximum bonuses in job-matched roles in comparative companies. Ltis will be set with reference to benchmark
levels of expected value of Ltis in job-matched roles in comparative companies. annual bonuses will be achieved based on personal
performance and the Group’s performance relative to budgetary metrics (revenue and operating profit). share options are tied to
shareholder metrics, primarily underlying diluted ePs and, where appropriate, total shareholder return (“tsr”).
this policy reflects the company’s current stage of development and anticipated growth, and balances risk and reward.
the remuneration committee relies from time-to-time on advice and benchmarking from third parties in setting specifics of the
executive Directors’ remuneration.
DIREcTORs’ REmuNERATION IN THE 8 mONTHs ENDED 31 DEcEmbER 2015
Executive
Michael Greenlees
nick Manning
andrew Beach
Morag Blazey*
Non-Executive
Michael Higgins
richard nichols†
Julie Baddeley†
tom alexander†
salary/
fees
£’000
Taxable
benefits
£’000
bonus
£’000
8 months
ended
31 December
2015
Total
£’000
12 months to
31 December
2015
total
£’000
Year ended
30 april 2015
total
£’000
213
200
140
45
45
33
35
28
4
–
6
2
–
–
–
–
–
–
–
–
–
–
–
–
217
200
146
47
45
33
35
28
751
326
300
219
47
68
45
47
40
1,092
326
295
219
–
68
32
15‡
15‡
970
* Morag Blazey has been employed by the company since 1 May 2010 and was appointed as a Director on 15 october 2015.
‡ Julie Baddeley and tom alexander were appointed to the Board on 21 november 2014.
† non-executive Directors’ fees for the period included one-off costs associated with the appointment of the new Group ceo, totalling £27,000.
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reMUneration rePort
the totals above are inclusive of annual performance bonuses. the company did not pay a performance bonus to Directors in
respect of the 8 months ended 31 December 2015 (FY 2014/15: £nil). Directors were eligible for cash bonuses as a percentage of base
salary, dependent on individual and company performance against established financial targets in excess of analyst expectations.
no Director was a member of a company pension scheme (FY2014/15: nil). contributions totalling £6,721 (FY2014/15: £7,980) were
made to Directors’ private pension schemes (£nil to the highest paid Director, FY2014/15: £nil) during the period.
one Director exercised a total of 150,000 share options during the period (FY2014/15: 60,280) (the highest paid Director exercised no
share options, FY2014/15: nil).
Termination payments to Directors
no Directors left the company in the period ended 31 December 2015 and no termination payments were made to Directors
(FY2014/15: £nil).
Long-Term Incentives
During the fiscal period, 400,000 (FY2014/15: 1,060,000) share options were granted to the Directors.
these were made under the Group’s executive incentive Plan, with vesting subject to the achievement of specific performance
conditions established and monitored by the remuneration committee. this total was awarded as follows:
beneficiary
No. of Options
Grant Date
vest Date
Exercise price
nick Manning
300,000
1 october 2015
30 april 2018
£0.25
andrew Beach
100,000
1 october 2015
30 april 2018
£0.25
ImpLEmENTATION Of REmuNERATION pOLIcy IN 2016
performance conditions
3-yr ePs growth across
three years starting
1 May 2015;
min. 4% to vest 20%,
10% to vest 100%,
8% to vest 60% with
straight-line vesting
between these points
the executive Directors’ remuneration for the year that commenced on 1 January 2016 includes base salary and benefits and an
annual cash bonus in line with the company’s remuneration policy.
the target bonus is 50% of base salary for the Group ceo and 30% for the other executive Directors. each individual must achieve
the personal performance targets (KPis) set for them by the Board, and the company must achieve its budgeted levels of pro-forma
(i.e. excluding that derived from in-year acquisitions) revenue and operating profit – which have been agreed by the Board and
which are in excess of analyst expectations – for full 100% achievement of the theoretical bonus. thresholds below budgeted levels
of revenue (min. 97.5% of budget) and operating profit (min. 90% of operating profit post-bonus) have been set to allow for
pro-rata payment of bonuses at a level which protects operating profit margins and overall Group performance. each Director has
the potential to achieve up to a maximum of 200% of their theoretical target bonus as a result of exceptional individual and company
performance.
500,000 share options have been granted to Directors since 1 January 2016.
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aUDit coMMittee rePort
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Audit committee Report
INTRODucTION
the audit committee is a key component of the Group’s governance framework. the Board has delegated to the committee
oversight of the Group’s financial reporting.
all of the members of the committee are independent non-executive Directors with a combination of accounting, financial and
commercial experience. the Board considers richard nichols, who chairs the committee, to have recent and relevant financial
experience. richard is a chartered accountant with significant financial and commercial experience in both listed and unquoted
companies. richard’s biography and appointments are set out on page 45.
the committee met twice during the 8 months to December 2015. the attendance of its members is set out in the table on page 49.
all meetings of the audit committee are comprised of three sections. the first section of meetings of the committee are also normally
attended by the Group chief executive officer, the chief Financial and operating officer, the company secretary and other members
of the senior management together with representatives from the external auditors, Pricewaterhousecoopers LLP (Pwc) which
ensures the committee and the external auditors have access to all financial and operational knowledge. subsequently, committee
members also meet with the external auditors without the executive Directors and other senior management in attendance, which
ensures that the committee maintains an independent view. Finally, there is a section of the meeting attended solely by the members
of the committee.
ROLE AND REspONsIbILITy Of THE AuDIT cOmmITTEE
the committee’s terms of reference can be found on the company’s website. the principal responsibilities of the committee include:
• Monitoring the integrity of the Group’s financial statements, including a review of significant financial reporting issues and
judgements;
• reviewing the external auditors’ independence and objectivity, the effectiveness of the external audit process and the
appointment, reappointment and removal of the external auditors;
• reviewing the Group’s financial controls and other internal reporting systems; and
• reviewing progress on implementing control improvements.
AcTIvITIEs DuRING THE pERIOD
the key matters the committee considered during the financial period are as follows:
• the assessment of the carrying value of goodwill and intangible assets: the committee assesses on a twice-yearly basis whether
there are any indicators of impairment to the holding value of any cash-generating unit and makes recommendations to the
Board in this regard.
• Going concern: the committee reviews in particular management’s forecasts of the Group’s performance against the covenants
contained in the credit agreement with Barclays and rBs.
• Presentation of highlighted items: the committee reviews the nature and quantum of the items proposed by management to be
classified as highlighted to ensure they are consistent with the Group’s accounting policies.
• Deferred contingent consideration: the Group has been acquisitive over recent years and the committee reviews management’s
forecasts regarding the Group’s future obligations to pay consideration for acquisitions.
• capitalisation of intangibles: the committee reviews the nature and quantum of the items proposed by management to be
capitalised, together with the period over which the capitalised items will be amortised, to ensure they are consistent with the
Group’s accounting policies.
• revenue and accrued/deferred income: the committee reviews the quantum of accrued/deferred income particularly around the
cut-off dates of half year and full year.
• taxation: management reports to the committee the overall effective tax rate of the Group as a whole.
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aUDit coMMittee rePort
With regard to ebiquity’s external auditors the committee’s principal activities were to:
• approve the terms of engagement and fees to be paid to the external auditors;
• approve the annual audit plan;
• review the findings of the auditors and management’s response; and
• evaluate the independence and objectivity of the external auditors.
ExTERNAL AuDITORs
Pwc have been the external auditors of the Group since 2012, when a full tender process was carried out. the current audit partner
has served since the firm’s appointment and is due for rotation in 2017. a review of Pwc’s independence is carried out each year
before a recommendation is made to the Board to propose Pwc for re-election at the aGM. in assessing Pwc’s independence, the
committee received confirmation that, in Pwc’s professional judgement, Pwc is independent within the meaning of relevant UK
regulatory and professional requirements.
pROvIsION Of NON-AuDIT sERvIcEs
the committee reviews with management the engagement of the external auditors for non-audit services and the level of associated
non-audit fees.
During the period, the external auditors did not supply any non-audit services to ebiquity.
Richard Nichols
chair of the audit committee
29 March 2016
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stateMent oF Directors’
resPonsiBiLities
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
statement of Directors’ Responsibilities
the Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and
regulations.
company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have
prepared the Group financial statements in accordance with international Financial reporting standards (iFrss) as adopted by the
european Union, and the parent company financial statements in accordance with United Kingdom Generally accepted accounting
Practice (United Kingdom accounting standards, comprising Financial reporting standard 101 Reduced Disclosure Framework (Frs
101), and applicable law). Under company law the Directors must not approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the Group and the company and of the profit or loss of the Group for that
period. in preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether iFrss as adopted by the european Union and applicable UK accounting standards comprising Frs 101 have been
followed, subject to any material departures disclosed and explained in the Group and parent company financial statements
respectively; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue
in business.
the Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s
transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that
the financial statements comply with the companies act 2006. they are also responsible for safeguarding the assets of the company
and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
the Directors are responsible for the maintenance and integrity of the company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
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inDePenDent aUDitors’ rePort
Independent Auditors’ Report
INDEpENDENT AuDITORs’ REpORT TO THE mEmbERs Of EbIQuITy pLc
REpORT ON THE GROup fINANcIAL sTATEmENTs
Our opinion
in our opinion, ebiquity plc’s group financial statements (the “financial statements”):
• give a true and fair view of the state of the group’s affairs as at 31 December 2015 and of its loss and cash flows for the 8 month
period (the “period”) then ended;
• have been properly prepared in accordance with international Financial reporting standards (“iFrss”) as adopted by the
european Union; and
• have been prepared in accordance with the requirements of the companies act 2006.
What we have audited
the financial statements, included within the annual report, comprise:
• the consolidated income statement and consolidated statement of comprehensive income as at 31 December 2015;
• the consolidated statement of Financial Position for the period then ended;
• the consolidated cash Flow statement for the period then ended;
• the consolidated statement of changes in equity for the period then ended; and
• the notes to the financial statements, which include a summary of significant accounting policies and other explanatory
information.
the financial reporting framework that has been applied in the preparation of the financial statements is iFrss as adopted by the
european Union, and applicable law.
in applying the financial reporting framework, the directors have made a number of subjective judgements, for example in respect of
significant accounting estimates. in making such estimates, they have made assumptions and considered future events.
OpINION ON OTHER mATTER pREscRIbED by THE cOmpANIEs AcT 2006
in our opinion, the information given in the strategic report and the Directors’ report for the financial period for which the financial
statements are prepared is consistent with the financial statements.
OTHER mATTERs ON WHIcH WE ARE REQuIRED TO REpORT by ExcEpTION
Adequacy of information and explanations received
Under the companies act 2006 we are required to report to you if, in our opinion, we have not received all the information and
explanations we require for our audit. We have no exceptions to report arising from this responsibility.
Directors’ remuneration
Under the companies act 2006 we are required to report to you if, in our opinion, certain disclosures of directors’ remuneration
specified by law are not made. We have no exceptions to report arising from this responsibility.
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inDePenDent aUDitors’ rePort
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Independent Auditors’ Report
REspONsIbILITIEs fOR THE fINANcIAL sTATEmENTs AND THE AuDIT
Our responsibilities and those of the directors
as explained more fully in the statement of Directors’ responsibilities, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view.
our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and international
standards on auditing (UK and ireland) (“isas (UK & ireland)”). those standards require us to comply with the auditing Practices
Board’s ethical standards for auditors.
this report, including the opinions, has been prepared for and only for the parent company’s members as a body in accordance with
chapter 3 of Part 16 of the companies act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
WHAT AN AuDIT Of fINANcIAL sTATEmENTs INvOLvEs
We conducted our audit in accordance with isas (UK & ireland). an audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material
misstatement, whether caused by fraud or error. this includes an assessment of:
• whether the accounting policies are appropriate to the group’s circumstances and have been consistently applied and
adequately disclosed;
• the reasonableness of significant accounting estimates made by the directors; and
• the overall presentation of the financial statements.
We primarily focus our work in these areas by assessing the directors’ judgements against available evidence, forming our own
judgements, and evaluating the disclosures in the financial statements.
We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide
a reasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantive
procedures or a combination of both.
in addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with
the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially
inconsistent with, the knowledge acquired by us in the course of performing the audit. if we become aware of any apparent material
misstatements or inconsistencies we consider the implications for our report.
OTHER mATTER
We have reported separately on the parent company financial statements of ebiquity plc for the 8 month period ended
31 December 2015.
simon O’brien (senior statutory Auditor)
for and on behalf of Pricewaterhousecoopers LLP
chartered accountants and statutory auditors
London
29 March 2016
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Stock Code: EBQ
consoLiDateD incoMe stateMent
consolidated Income statement
for the 8 month period ended 31 December 2015
revenue
cost of sales
Gross profit
administrative expenses
Operating (loss)/profit
Finance income
Finance expenses
Net finance costs
share of profit of associates
(Loss)/profit before taxation
taxation credit/(charge)
(Loss)/profit for the period/year
Attributable to:
equity holders of the parent
non-controlling interests
Earnings per share
Basic
Diluted
note
2
4
6
6
13
7
8
8
8 month period ended 31 December 2015
Highlighted
items
(note 3)
£’000
before
highlighted
items
£’000
Total
£’000
43,310
(22,514)
20,796
(20,799)
(3)
13
(813)
(800)
13
(790)
576
(214)
(336)
122
(214)
–
–
–
(6,656)
(6,656)
–
–
–
–
(6,656)
756
(5,900)
(5,885)
(15)
(5,900)
43,310
(22,514)
20,796
(27,455)
(6,659)
13
(813)
(800)
13
(7,446)
1,332
(6,114)
(6,221)
107
(6,114)
(8.08)p
(8.08)p
Year ended 30 april 2015
Highlighted
items
(note 3)
£’000
Before
highlighted
items
£’000
73,874
(32,383)
41,491
(29,762)
11,729
8
(1,179)
(1,171)
12
10,570
(1,693)
8,877
8,346
531
8,877
–
–
–
(5,913)
(5,913)
–
–
–
–
(5,913)
1,155
(4,758)
(4,723)
(35)
(4,758)
total
£’000
73,874
(32,383)
41,491
(35,675)
5,816
8
(1,179)
(1,171)
12
4,657
(538)
4,119
3,623
496
4,119
4.78p
4.65p
the notes on pages 66 to 105 form part of these financial statements.
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consoLiDateD stateMent oF
coMPreHensive incoMe
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
consolidated statement of comprehensive Income
for the 8 month period ended 31 December 2015
(Loss)/profit for the period/year
Other comprehensive (expense)/income:
Items that will not be reclassified subsequently to profit or loss
exchange differences on translation of overseas subsidiaries
Movement in valuation of hedging instruments
Total other comprehensive (expense)/income for the period/year
Total comprehensive (expense)/income for the period/year
Attributable to:
equity holders of the parent
non-controlling interests
the notes on pages 66 to 105 form part of these financial statements.
8 month
period ended
31 December
2015
£’000
Year ended
30 april
2015
£’000
(6,114)
4,119
(116)
–
(116)
(6,230)
(6,337)
107
(6,230)
350
52
402
4,521
4,025
496
4,521
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Stock Code: EBQ
consoLiDateD stateMent oF
FinanciaL Position
consolidated statement of financial position
as at 31 December 2015
company number: 03967525
Non-current assets
Goodwill
other intangible assets
Property, plant and equipment
investment in associates
Deferred tax asset
Total non-current assets
current assets
trade and other receivables
cash and cash equivalents
Total current assets
Total assets
current liabilities
trade and other payables
accruals and deferred income
Financial liabilities
current tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Financial liabilities
Provisions
Deferred tax liability
Total non-current liabilities
Total liabilities
Total net assets
Equity
ordinary shares
share premium
other reserves
retained earnings
Equity attributable to the owners of the parent
Non-controlling interests
Total equity
31 December
2015
£’000
note
9
10
11
13
20
14
15
16
17
18
19
18
19
20
22
23
23
23
54,827
13,527
2,928
45
2,267
73,594
24,318
8,755
33,073
106,667
(6,566)
(12,340)
(8,227)
(251)
(89)
(27,473)
(34,055)
(486)
(2,244)
(36,785)
(64,258)
42,409
19,290
11,764
656
9,891
41,601
808
42,409
30 april
2015
£’000
58,096
15,178
3,194
32
1,408
77,908
29,879
9,295
39,174
117,082
(7,489)
(11,510)
(8,761)
(1,280)
(121)
(29,161)
(35,957)
(485)
(2,821)
(39,263)
(68,424)
48,658
19,193
11,657
772
16,012
47,634
1,024
48,658
the financial statements on pages 61 to 105 were approved and authorised for issue by the Board of Directors on 29 March 2016 and
were signed on its behalf by:
michael karg
Director
Andrew beach
Director
the notes on pages 66 to 105 form part of these financial statements.
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consoLiDateD stateMent oF
cHanGes in eQUitY
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
consolidated statement of changes in Equity
for the 8 month period ended 31 December 2015
1 may 2014
Profit for the year
other comprehensive income
Total comprehensive income for the year
shares issued for cash
acquisition of non-controlling interest
share options charge
Deferred tax on share options
Dividends paid to non-controlling interests
30 April 2015
(Loss)/profit for the period
other comprehensive expense
Total comprehensive (expense)/income
for the period
shares issued for cash
acquisition of non-controlling interest
share options charge
Deferred tax on share options
Dividends paid to shareholders
Dividends paid to non-controlling interests
31 December 2015
note
22
22
3
20
22
3
20
26
Ordinary
shares
£’000
18,873
–
–
–
79
241
–
–
–
19,193
–
–
–
97
–
–
–
–
–
19,290
share
premium
£’000
10,750
–
–
–
110
797
–
–
–
11,657
–
–
–
107
–
–
–
–
–
11,764
Other
reserves
£’000
367
–
402
402
3
–
–
–
–
772
–
(116)
(116)
–
–
–
–
–
–
656
Retained
earnings
£’000
13,810
3,623
–
3,623
(3)
(2,563)
1,215
(70)
–
16,012
(6,221)
–
(6,221)
–
(23)
228
186
(291)
–
9,891
Non-
controlling
interests
£’000
717
496
–
496
–
113
–
–
(302)
1,024
107
–
107
–
(20)
–
–
–
(303)
808
Total
£’000
43,800
3,623
402
4,025
189
(1,525)
1,215
(70)
–
47,634
(6,221)
(116)
(6,337)
204
(23)
228
186
(291)
–
41,601
Total
equity
£’000
44,517
4,119
402
4,521
189
(1,412)
1,215
(70)
(302)
48,658
(6,114)
(116)
(6,230)
204
(43)
228
186
(291)
(303)
42,409
the notes on pages 66 to 105 form part of these financial statements.
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Stock Code: EBQ
consoLiDateD casH FLoW stateMent
consolidated cash flow statement
for the 8 month period ended 31 December 2015
cash flows from operating activities
cash generated from operations
Finance expenses paid
Finance income received
income taxes paid
Net cash generated from operating activities
cash flows from investing activities
acquisition of subsidiaries, net of cash acquired
Proceeds from disposal of investments
net purchase of property, plant and equipment
net purchase of intangible assets
Net cash used in investing activities
cash flows from financing activities
Proceeds from issue of share capital (net of issue costs)
Proceeds from bank borrowings
repayment of bank borrowings
Bank loan fees paid
interest rate swap closure
acquisition of interest in a subsidiary from non-controlling interests
Dividends paid to shareholders
Dividends paid to non-controlling interests
capital repayment of finance leases
Net cash flow (used in)/generated from financing activities
Net (decrease)/increase in cash, cash equivalents and bank overdrafts
cash, cash equivalents and bank overdraft at beginning of period/year
effect of unrealised foreign exchange losses
cash, cash equivalents and bank overdraft at end of period/year
the notes on pages 66 to 105 form part of these financial statements.
8 month
period ended
31 December
2015
£’000
Year ended
30 april
2015
£’000
5,028
(601)
13
(892)
3,548
(3,002)
–
(502)
(826)
(4,330)
205
2,578
(1,982)
–
–
(1,105)
(291)
(195)
(4)
(794)
(1,576)
7,884
56
6,364
7,927
(1,242)
8
(1,618)
5,075
(5,248)
68
(1,464)
(1,664)
(8,308)
252
36,703
(31,107)
(360)
(29)
(282)
–
(259)
(197)
4,721
1,488
6,521
(125)
7,884
note
27
10
15
15
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notes to tHe consoLiDateD
FinanciaL stateMents
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Notes to the consolidated financial statements
for the 8 month period ended 31 December 2015
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 21 offices across 14 countries.
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 iFrs ic 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 18.
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 periods/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 period beginning on or after 1 May 2015
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.
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Stock Code: EBQ
notes to tHe consoLiDateD
FinanciaL stateMents
1. AccOuNTING pOLIcIEs continUeD
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 and only if the changes relate to conditions existing at the
acquisition date. 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 recognised as an asset at cost and is subsequently measured at
cost less any accumulated impairment losses. Goodwill is reviewed for impairment at least annually. any impairment is recognised
immediately in the income statement and is not subsequently reversed.
For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the
synergies of the combination. cash-generating units to which goodwill has been allocated are tested for impairment annually, or more
frequently when there is an indication that the unit may be impaired. if the recoverable amount of the cash-generating unit is less than
the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the
unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
Revenue recognition
revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for services
provided in the normal course of business, net of discounts, vat and other sales related taxes. income is recognised evenly over the
period of the contract for our Market intelligence businesses, and in accordance with the stage of completion of the contract activity
for our Media value Measurement and Marketing Performance optimization businesses. the stage of completion is determined
relative to the total number of hours expected to complete the work or provision of services. Where recorded revenue exceeds
amounts invoiced to clients, the excess is classified as accrued income and where recorded revenue is less than amounts invoiced to
clients, the difference is classified as deferred income.
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notes to tHe consoLiDateD
FinanciaL stateMents
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Notes to the consolidated financial statements
for the 8 month period ended 31 December 2015
1. AccOuNTING pOLIcIEs continUeD
Where services are performed by an indeterminate number of acts over a specific period, revenue is recognised on a straight-line
basis over the specific period unless there is evidence that some other method better represents the stage of completion.
if the outcome of a contract cannot be estimated reliably, the contract revenue is recognised to the extent of contract costs incurred
that it is probable would be recoverable. costs are recognised as an expense in the period in which they are incurred.
finance income and expenses
Finance income and expense represents interest receivable and payable. Finance income and expense is recognised on an accruals
basis, based on the interest rate applicable to each bank or loan account.
foreign currencies
For the purposes of the consolidated financial statements, the results and financial position of each Group company are expressed
in pounds sterling, which is the functional currency of the company, and the presentation currency for the consolidated financial
statements.
in preparing the financial statements of the individual companies, transactions in currencies other than the entity’s functional currency
(foreign currencies) are recorded at the rates of exchange prevailing on the dates of transactions. at each year end date, monetary
assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the year end date.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are
translated at exchange rates prevailing on the year end date. income and expense items are translated at the average exchange rate
for the period, which approximates to the rate applicable at the dates of the transactions.
the exchange differences arising from the retranslation of the year end amounts of foreign subsidiaries and the difference on
translation of the results of those subsidiaries into the presentational currency of the Group are recognised in the translation reserve.
all other exchange differences are dealt with through the income statement.
Highlighted items
Highlighted items comprise non-cash charges and non-recurring items which are highlighted in the income statement as 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 acquisitions (where formal discussion is undertaken), completed
acquisitions and their subsequent integration into the Group, adjustments to the estimates of deferred consideration on acquired
entities, asset impairment charges and other significant one-off items. costs associated with ongoing market landscaping, acquisition
identification and early stage discussions with acquisition targets are reported in underlying administrative expenses.
Taxation
the tax expense included in the income statement comprises current and deferred tax. current tax is the expected tax payable on
the taxable income for the period, using tax rates enacted or substantively enacted by the year end date.
the Group is subject to corporate taxes in a number of different jurisdictions and judgement is required in determining the
appropriate provision for transactions where the ultimate tax determination is uncertain. in such circumstances, the Group recognises
liabilities for anticipated taxes based on the best information available and where the anticipated liability is both probable and
estimable. Where the final outcome of such matters differs from the amount recorded, any differences may impact the income tax and
deferred tax provisions in the period in which the final determination is made.
tax is recognised in the consolidated income statement except to the extent that it relates to items recognised directly in equity, in
which case it is recognised in equity.
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Stock Code: EBQ
notes to tHe consoLiDateD
FinanciaL stateMents
1. AccOuNTING pOLIcIEs continUeD
Using the liability method, deferred tax is provided on all temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and their tax bases, except for differences arising on:
• the initial recognition of goodwill;
• the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the
transaction affects neither accounting nor taxable profit; and
• investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the
difference and it is probable that the difference will not reverse in the foreseeable future.
recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against
which the difference can be utilised. the recognition of deferred tax assets is reviewed at each year end date.
the amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the year end
date and are expected to apply when the deferred tax liabilities/assets are settled/recovered.
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities
and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:
• the same taxable group company; or
• different group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and
settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are
expected to be settled or recovered.
property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss.
Depreciation is charged so as to write off the cost or valuation of assets over their estimated useful lives and is recognised in the
income statement within administrative expenses. the rates generally applicable are:
Motor vehicles
Fixtures, fittings and equipment
computer equipment
short leasehold land and buildings improvements
Other intangible assets
25% per annum reducing balance
7% to 20% per annum straight-line; or
25% per annum reducing balance
25% to 40% straight-line
over the shorter of the life or the estimated useful life of the lease
Internally generated intangible assets – development expenditure
internally generated intangible assets relate to bespoke computer software and technology developed by the Group’s internal
software development team.
an internally generated intangible asset arising from the Group’s development expenditure is recognised only if all of the following
conditions are met:
• it is technically feasible to develop the asset so that it will be available for use or sale;
• adequate resources are available to complete the development and to use or sell the asset;
• there is an intention to complete the asset for use or sale;
• the Group is able to use or sell the intangible asset;
• it is probable that the asset created will generate future economic benefits; and
• the development cost of the asset can be measured reliably.
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notes to tHe consoLiDateD
FinanciaL stateMents
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Notes to the consolidated financial statements
for the 8 month period ended 31 December 2015
1. AccOuNTING pOLIcIEs continUeD
internally generated intangible assets are amortised on a straight-line basis over their useful lives. amortisation commences when
the asset is available for use and useful lives range from 1 to 5 years. the amortisation expense is included within administrative
expenses. Where an internally generated intangible asset cannot be recognised, development expenditure is recognised as an
expense in the period in which it is incurred.
Purchased intangible assets
externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over
their useful economic lives, which vary from 3 to 10 years. the amortisation expense is included as a highlighted item within the
administrative expenses line in the income statement. intangible assets are recognised on business combinations if they are
separable from the acquired entity or give rise to other contractual/legal rights. the amounts ascribed to such intangibles are arrived
at by using appropriate valuation techniques. the significant intangibles recognised by the Group are customer relationships.
Computer software
Purchased computer software intangible assets are amortised on a straight-line basis over their useful lives which vary from
2 to 5 years.
Impairment
assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. assets that are
subject to amortisation or depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. if any such condition exists, the recoverable amount of the asset is estimated in order to
determine the extent, if any, of the impairment loss. Where the asset does not generate cash flows that are independent from other
assets, estimates are made of the cash flows of the cash-generating unit to which the asset belongs.
recoverable amount is the higher of fair value, less costs to sell, and value in use. in assessing value in use, estimated future cash
flows are discounted to their present value using a discount rate appropriate to the specific asset or cash-generating unit.
if the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying value of
the asset or cash-generating unit is reduced to its recoverable amount. impairment losses are recognised immediately in highlighted
items in the income statement.
in respect of assets other than goodwill, an impairment loss is reversed if there has been a change in the estimates used to
determine the recoverable amount. an impairment loss is reversed only to the extent that the asset’s carrying amount does not
exceed the carrying amount that would have been determined, net of depreciation or amortisation, if the impairment loss had been
recognised.
financial instruments
Financial assets and financial liabilities are recognised in the Group’s statement of Financial Position when the Group becomes a
party to the contractual provisions of the instrument.
Financial assets
the Group classifies its financial assets as ‘loans and receivables’. Loans and receivables are non-derivative financial assets with fixed
or determinable payments that are not quoted in an active market. they arise principally through the provision of goods and services
to customers (trade receivables), but also incorporate other types of contractual monetary asset. they are initially recognised at fair
value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost
using the effective interest rate method, less provision for impairment.
impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the
counterparty or default or significant delay in payment) that the Group will be unable to collect all of the amounts due, the amount
of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows
associated with the impaired receivable. For trade receivables, which are reported net, such provisions are recorded in a separate
allowance account with the loss being recognised within administrative expenses in the income statement. on confirmation that the
trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.
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Stock Code: EBQ
notes to tHe consoLiDateD
FinanciaL stateMents
1. AccOuNTING pOLIcIEs continUeD
Financial liabilities
Financial liabilities are initially recognised at fair value. interest bearing liabilities are subsequently measured at amortised cost using
the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the
balance of the liability carried in the statement of Financial Position. ‘Finance expense’ in this context includes initial transaction costs
as well as any interest or coupon payable while the liability is outstanding.
interest rate swaps are carried at fair value with changes in fair value being reflected in the statement of comprehensive income, and
are classified within other financial liabilities.
Bank borrowings
interest bearing borrowings are initially recognised at fair value net of transaction costs incurred and subsequently measured at
amortised cost. Finance charges are recognised in the income statement over the period of the borrowings using the effective
interest method.
Loan fees relating to the bank borrowings are capitalised against the loan and amortised over the period of the borrowings to which
they relate.
the revolving credit facility is considered to be a long term loan.
Derivative financial instruments
the Group uses derivative financial instruments to reduce its exposure to foreign exchange and interest rate movements. the Group
does not hold or issue derivative financial instruments for financial trading purposes but derivatives that do not qualify for hedge
accounting are accounted for at fair value through the income statement. Derivative financial instruments are initially recognised at
fair value at the contract date and continue to be stated at fair value at the balance sheet date with gains and losses on revaluation
being recognised immediately in the income statement.
cash flow hedges were used to hedge against fluctuations in future cash flows on the Group’s debt funding due to movements in
interest rates. When a cash flow hedge is employed and hedge accounting applied, the effective portion of the change in the fair
value of the hedging instrument is recognised directly in equity (hedging reserve) until the gain or loss on the hedged item is realised.
any ineffective portion is always recognised in the income statement.
the fair value of derivatives is determined by reference to market values for similar instruments.
cash and cash equivalents
cash and cash equivalents comprise cash in hand and short term deposits. Bank overdrafts are an integral part of the Group’s cash
management and are included as a component of cash and cash equivalents for the purpose of the cash Flow statement. cash and
cash equivalents and bank overdrafts are offset when there is a legally enforceable right to offset.
share capital
ordinary shares are classified as equity.
provisions
Provisions, including provisions for onerous lease costs, are recognised when the Group has a present legal or constructive
obligation as a result of past events, it is probable that an outflow of resources will be required to settle that obligation and the
amount can be reliably estimated. Provisions are not recognised for future operating losses.
Provisions are measured at the Directors’ best estimate of the expenditure required to settle the obligation at the year end date.
if the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a
pre-tax rate which reflects current market assessments of the time value of money and, where appropriate, the risks specific to the
obligations.
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FinanciaL stateMents
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Notes to the consolidated financial statements
for the 8 month period ended 31 December 2015
1. AccOuNTING pOLIcIEs continUeD
Employee share Ownership plan (EsOp)
as the company is deemed to have control of its esoP trust, it is treated as a subsidiary and consolidated for the purposes of the
Group financial statements. the esoP’s assets (other than investments in the company’s shares), liabilities, income and expenses are
included on a line-by-line basis in the Group financial statements. the esoP’s investment in the company’s shares is deducted from
shareholders’ equity in the Group statement of Financial Position as if they were treasury shares, except that profits on the sale of
esoP shares are not credited to the share premium account.
share-based payments
Where equity-settled share options are awarded to employees, the fair value of the options at the date of grant is charged to the
income statement over the vesting period. non-market vesting conditions are taken into account by adjusting the number of equity
investments expected to vest at each year end date so that, ultimately, the cumulative amount recognised over the vesting period
is based on the number of options that eventually vest. a charge is made irrespective of whether the market vesting conditions are
satisfied. the cumulative expense is not adjusted for failure to achieve a market vesting condition.
Where there are modifications to share-based payments that are beneficial to the employee then as well as continuing to recognise
the original share-based payment charge, the incremental fair value of the modified share options as identified at the date of the
modification is also charged to the income statement over the remaining vesting period. Where the Group cancels share options and
identifies replacement options this arrangement is also accounted for as a modification.
the grant by the company of options over its equity instruments to the employees of subsidiary undertakings in the Group is
treated as a capital contribution. the fair value of employee services received, measured by reference to the grant date fair value, is
recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity in
the parent entity financial statements.
Retirement benefits
For defined contribution pension schemes, the Group pays contributions to privately administered pension plans on a voluntary
basis. the Group has no further payment obligations once the contributions have been paid. contributions are charged to the income
statement in the year to which they relate.
Leases
Where substantially all of the risks and rewards incidental to ownership of a leased asset have been transferred to the Group (a
‘finance lease’), the asset is treated as if it had been purchased outright. the amount initially recognised as an asset is the lower of
the fair value of the leased property and the present value of the minimum lease payments payable over the term of the lease. the
corresponding lease commitment is shown as a liability. Lease payments are analysed between capital and interest. the interest
element is charged to the income statement over the period of the lease and is calculated so that it represents a constant proportion
of the lease liability. the capital element reduces the balance owed to the lessor.
Where substantially all of the risks and rewards incidental to ownership are retained by the lessor (an ‘operating lease’), the total
rentals payable under the lease are charged to the income statement on a straight-line basis over the lease term. the aggregate
benefit of lease incentives is recognised as a reduction of the rental expense over the lease term on a straight-line basis. the land
and buildings elements of property leases are considered separately for the purposes of lease classification.
Dividend distribution
Dividend distribution to the company’s shareholders is recognised as a liability in the Group’s financial statements in the period in
which the dividends are approved by the company’s shareholders.
cRITIcAL AccOuNTING EsTImATEs AND juDGEmENTs
the Group makes estimates and judgements concerning the future. the resulting accounting estimates will, by definition, seldom
equal the related actual results. the estimates and judgements that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year are discussed below.
72
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Stock Code: EBQ
notes to tHe consoLiDateD
FinanciaL stateMents
1. AccOuNTING pOLIcIEs continUeD
Revenue recognition
the Group is required to make an estimate of the project completion levels in respect of contracts which straddle the year end
for revenue recognition purposes. this involves a level of judgement and therefore differences may arise between the actual and
estimated result.
carrying value of goodwill and other intangible assets
Determining whether goodwill and other intangibles should be capitalised, the amortisation period appropriate to intangible assets
and whether or not these assets are impaired requires estimation of the value in use of the cash-generating units to which the
goodwill and other intangible assets has been allocated. the value in use calculation requires the entity to estimate future cash flows
expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. Details regarding
the goodwill and other intangible assets carrying value and assumptions used in carrying out the impairment reviews are provided in
notes 9 and 10.
Income taxes
the Group is subject to income taxes in all the territories in which it operates, and judgement and estimates of future profitability are
required to determine the Group’s deferred tax position. if the final tax outcome is different to that assumed, resulting changes will be
reflected in the income statement, unless the tax relates to an item charged to equity in which case the changes in the tax estimates
will also be reflected in equity. the Group believes that its accruals for tax liabilities are adequate for all open audit years based
on its assessment of many factors including past experience and interpretations of tax law. this assessment relies on estimates
and assumptions and may involve a series of complex judgements about future events. to the extent that the final tax outcome of
these matters is different than the amounts recorded, such differences will impact income tax expense in the period in which such
determination is made.
contingent deferred consideration
the Group has recorded liabilities for deferred consideration on acquisitions made in the current and prior periods. the calculation of
the deferred consideration liability requires judgements to be made regarding the forecast future performance of these businesses
for the earn-out period. any 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.
provisions
the Group provides for certain costs of reorganisation that has occurred due to the Group’s acquisition and disposal activity. When
the final amount payable is uncertain, these are classified as provisions. these provisions are based on the best estimates of
management.
ADOpTION Of NEW sTANDARDs AND INTERpRETATIONs
no new standards and changes came into effect during the period beginning 1 May 2015.
certain new standards, amendments to new standards and interpretations have been published that are mandatory to the Group’s
future accounting periods but have not been adopted early in these financial statements. these are set out below:
Amendments to IAS 16 ‘Property, plant and equipment’ and IAS 38 ‘Intangible assets’ (effective on or after 1 January 2016). this
amendment provides clarification of acceptable methods of depreciation and amortisation. the Group will apply these amendments
from 1 January 2016.
IFRS 15 ‘Revenue from Contracts with Customers’ (effective on or after 1 January 2018). this standard establishes a single
comprehensive framework for revenue recognition to determine when to recognise revenue and how much revenue to recognise.
this standard replaces the previous revenue standards ias 18 ‘revenue’ and ias 11 ‘construction contracts’. the Group will apply
iFrs 15 from 1 January 2018.
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FinanciaL stateMents
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Notes to the consolidated financial statements
for the 8 month period ended 31 December 2015
1. AccOuNTING pOLIcIEs continUeD
IFRS 9 ‘Financial Instruments’ (effective on or after 1 January 2018). this standard addresses the classification, measurement and
derecognition of financial assets and financial liabilities and introduces new rules for hedge accounting. in July 2014, the iasB made
further changes to the classification and measurement rules and also introduced a new impairment model. these latest amendments
now complete the new financial instruments standard. the Group will apply iFrs 9 from 1 January 2018.
IFRS 16 ‘Leases’ (effective on or after 1 January 2019). this standard replaces ias 17 ‘Leases’ and sets out the principles for the
recognition, measurement, presentation and disclosure of leases for both the lessee and the lessor. iFrs 16 eliminates the two lease
classifications that ias 17 has (operating and finance leases) for the lessee, and instead all leases will have the same classification.
the Group will apply iFrs 16 from 1 January 2019.
the Directors do not expect that the adoption of the standards and amendments listed above will have a material impact on the
financial statements of the Group in future periods, although the detailed impact has not yet been quantified.
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.
certain operating segments have been aggregated to form three reportable segments, Media value Measurement, Market
intelligence and Marketing Performance optimization:
• Media value Measurement includes our media benchmarking, financial compliance and associated services.
• Market intelligence includes our advertising monitoring, reputation management and research/insight services.
• Marketing Performance optimization consists of our marketing effectiveness and multi-channel analytics services.
the executive Directors are the Group’s chief operating decision-maker. they assess the performance of the operating segments
based on operating profit before highlighted items. this measurement basis excludes the effects of non-recurring expenditure from
the operating segments such as restructuring costs and purchased intangible amortisation. the measure also excludes the effects of
equity-settled share-based payments. interest income and expenditure are not allocated to segments, as this type of activity is driven
by the central treasury function, which manages the cash position of the Group.
the segment information provided to the executive Directors for the reportable segments for the 8 month period ended 31 December
2015 is as follows:
8 month period ended 31 December 2015
Revenue
Operating (loss)/profit before highlighted
items
Total assets
Other segment information
capital expenditure – property, plant and
equipment
capital expenditure – intangible assets
Total
media value
measurement
£’000
market
Intelligence
£’000
marketing
performance
Optimization
£’000
Reportable
segments
£’000
unallocated
£’000
Total
£’000
20,409
16,002
6,899
43,310
–
43,310
(81)
53,011
2,070
29,398
1,874
10,640
3,863
93,049
(3,866)
13,618
(3)
106,667
26
77
103
–
–
–
12
–
12
38
77
115
512
750
1,262
550
827
1,377
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Stock Code: EBQ
notes to tHe consoLiDateD
FinanciaL stateMents
2. sEGmENTAL REpORTING continUeD
year ended 30 April 2015
Media value
Measurement
£’000
Market
intelligence
£’000
revenue
operating profit/(loss) before highlighted items
total assets
other segment information
capital expenditure – property, plant and
equipment
capital expenditure – intangible assets
capital expenditure – goodwill
total
40,046
11,224
59,432
743
1,936
2,790
5,469
25,768
3,447
40,104
146
757
–
903
Marketing
Performance
optimization
£’000
8,060
2,905
9,580
reportable
segments
£’000
73,874
17,576
109,116
Unallocated
£’000
–
(5,847)
7,966
20
–
–
20
909
2,693
2,790
6,392
585
539
–
1,124
total
£’000
73,874
11,729
117,082
1,494
3,232
2,790
7,516
a reconciliation of segment operating (loss)/profit before highlighted items to total profit before tax is provided below:
reportable segment operating profit before highlighted items
Unallocated costs:
staff costs
Property costs
exchange rate movements
other administrative expenses
operating (loss)/profit before highlighted items
Highlighted items (note 3)
operating (loss)/profit
net finance costs
share of profit of associates
(Loss)/profit before tax
Unallocated costs comprise central costs that are not considered attributable to the segments.
8 month
period ended
31 December
2015
£’000
Year ended
30 april
2015
£’000
3,863
17,576
(3,281)
(260)
31
(356)
(3)
(6,656)
(6,659)
(800)
13
(7,446)
(4,773)
(404)
(179)
(491)
11,729
(5,913)
5,816
(1,171)
12
4,657
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notes to tHe consoLiDateD
FinanciaL stateMents
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Notes to the consolidated financial statements
for the 8 month period ended 31 December 2015
2. sEGmENTAL REpORTING continUeD
a reconciliation of segment total assets to total consolidated assets is provided below:
Total assets for reportable segments
Unallocated amounts:
Property, plant and equipment
other intangible assets
other receivables
cash and cash equivalents
Deferred tax asset
investments in associates
Total assets
the table below presents revenue and non-current assets by geographical location:
31 December
2015
£’000
93,049
2,278
2,853
2,892
3,478
2,113
4
106,667
30 april
2015
£’000
109,116
1,450
954
985
3,309
1,236
32
117,082
United Kingdom
rest of europe
north america
rest of world
Deferred tax assets
Total
8 month period ended
31 December 2015
Revenue by
location of
customers
£’000
Non-current
assets
£’000
Year ended 30 april 2015
revenue by
location of
customers
£’000
non-current
assets
£’000
13,142
14,786
10,376
5,006
43,310
–
43,310
46,955
7,957
6,297
10,118
71,327
2,267
73,594
23,864
23,726
17,227
9,057
73,874
–
73,874
51,152
8,356
6,185
10,807
76,500
1,408
77,908
no single customer (or group of related customers) contributes 10% or more of revenue.
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Stock Code: EBQ
notes to tHe consoLiDateD
FinanciaL stateMents
3. HIGHLIGHTED ITEms
Highlighted items comprise non-cash charges and non-recurring items which are highlighted in the income statement because
separate disclosure is considered relevant in understanding the underlying performance of the business.
Administrative Expenses
Recurring:
share option charge
amortisation of purchased intangibles
Non-recurring:
acquisition and integration costs
impairment costs
refinancing costs
Property costs
Total highlighted items before tax
taxation credit
Total highlighted items after tax
8 month period ended
31 December 2015
cash
£’000
Non-cash
£’000
Total
£’000
cash
£’000
Year ended
30 april 2015
non-cash
£’000
203
–
203
533
–
–
–
533
736
(128)
608
228
1,327
1,555
–
4,365
–
–
4,365
5,920
(628)
5,292
431
1,327
1,758
533
4,365
–
–
4,898
6,656
(756)
5,900
140
–
140
1,730
–
404
394
2,528
2,668
(309)
2,359
1,215
2,030
3,245
–
–
–
–
–
3,245
(846)
2,399
total
£’000
1,355
2,030
3,385
1,730
–
404
394
2,528
5,913
(1,155)
4,758
amortisation of purchased intangibles of £1,327,000 relates to acquisitions made in prior years.
share option charges include the non-cash iFrs 2 charge (£228,000), along with the cash element in relation to the exercising of
share options (£203,000).
acquisition costs represent professional fees incurred in relation to acquisitions (£167,000) and adjustments to the fair value of
deferred consideration (a credit of £230,000; april 2015: £548,000 debit) resulting primarily from a downward revision of deferred
consideration in relation to one acquisition and discounting all deferred consideration balances to net present value, partially offset
by the related foreign exchange impacts (£198,000). integration costs include certain one-off costs incurred whilst integrating the
acquisitions made in the prior financial years including severance costs arising from the restructure of senior management following
these acquisitions (£151,000). also included are fees in relation to the appointment and ongoing transition costs in relation to the new
Group ceo (£247,000).
the impairment costs include £3,129,000 goodwill impairment, £559,000 purchased intangible assets impairment, £214,000
capitalised development costs impairment and £463,000 pre-acquisition adjustments in relation to the reputation business.
We are fully impairing the goodwill, purchased intangible asset and related capitalised development costs in relation to the
reputation business. this business, formerly echo research Group, was acquired in 2011. over the last four years we have integrated
the business fully into our Market intelligence Practice; the technologies and methodologies which were represented by the goodwill
and purchased intangibles have been replaced, integrated or superseded and the client relationships have in many cases evolved
into more integrated contracts. We are no longer able to support the original carrying value and believe that full impairment reflects
the evolution of this part of our business in line with our longer-term corporate strategy.
current tax arising on the highlighted items is included as a cash item, while deferred tax on highlighted items is included as a non-
cash item. refer to note 7 for more detail.
Deferred consideration adjustments, within acquisition and integration costs, are included as a cash item.
as at 31 December 2015, £442,000 of the £736,000 cash highlighted items had been settled.
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notes to tHe consoLiDateD
FinanciaL stateMents
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Notes to the consolidated financial statements
for the 8 month period ended 31 December 2015
4. OpERATING (LOss)/pROfIT
operating (loss)/profit is stated after charging:
operating lease rentals
— other
— land and buildings
Depreciation and amortisation (notes 10 and 11)
impairment (notes 9 and 10)
Loss on disposal of fixed assets
research costs – expensed
Foreign exchange loss
Auditors’ remuneration
8 month
period ended
31 December
2015
£’000
Year ended
30 april
2015
£’000
43
1,475
2,481
3,902
18
337
16
54
1,667
3,764
–
–
454
694
During the 8 month period the Group (including its overseas subsidiaries) obtained the following services from the Group’s auditors at
costs as detailed below:
Fees payable to the company’s auditors for the audit of the parent company and
consolidated financial statements
Fees payable to the company’s auditors and their associates for other services:
— the audit of the company’s subsidiaries, pursuant to Legislation
— other audit-related assurance services
8 month
period ended
31 December
2015
£’000
Year ended
30 april
2015
£’000
84
112
24
220
73
108
22
203
5. EmpLOyEE INfORmATION
the monthly average number of employees employed by the Group during the period, including executive Directors, was as follows:
Media value Measurement
Market intelligence
Marketing Performance optimization
it development and support
administration
Directors
at 31 December 2015, the total number of employees of the Group was 926 (30 april 2015: 885).
8 month
period ended
31 December
2015
No.
Year ended
30 april
2015
no.
291
373
71
56
104
7
902
252
396
46
50
100
6
850
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Stock Code: EBQ
notes to tHe consoLiDateD
FinanciaL stateMents
5. EmpLOyEE INfORmATION continUeD
staff costs for all employees, including executive Directors, consist of:
Wages and salaries
social security costs
other pension costs
share options charge
Directors’ Remuneration
8 month
period ended
31 December
2015
£’000
23,968
2,839
493
228
27,528
Year ended
30 april
2015
£’000
32,970
3,868
924
1,392
39,154
During the period no non-executive Directors were appointed to the Board (30 april 2015: 2). one executive Director was appointed
(30 april 2015: none) and none resigned from the Board during the period (30 april 2015: none).
total Directors’ remuneration was £727,000 (£218,000 to the highest paid Director) (30 april 2015: £971,000, £326,000 to the highest
paid Director) inclusive of performance bonuses, totalling £nil (30 april 2015: £nil). Directors are eligible for cash bonuses as a
percentage of base salary, dependent on individual and company performance against established financial targets. Fees of £27,000
payable to three non-executive Directors were incurred in relation to the appointment of the new Group ceo (30 april 2015: £nil).
these costs have been recorded as highlighted items (see note 3).
no Directors were a member of a company pension scheme as at 31 December 2015 (30 april 2015: none). contributions totalling
£7,000 (30 april 2015: £8,000) were made to Directors’ private pension schemes (£nil to the highest paid Director, 30 april 2015: £nil)
during the period.
one Director exercised 150,000 share options during the period (with a gain of £92,000 made on exercise) (30 april 2015: 60,280)
(the highest paid Director exercised no share options; 30 april 2015: nil).
During the period 400,000 (30 april 2015: 1,060,000) share options were granted to Directors (nil to the highest paid Director;
30 april 2015: 800,000) under the Group’s esoP scheme, with vesting subject to the achievement of specific performance conditions
established and monitored by the remuneration committee. see note 24 for more details.
see the remuneration report on pages 54 to 55 for more details.
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FinanciaL stateMents
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Notes to the consolidated financial statements
for the 8 month period ended 31 December 2015
6. fINANcE INcOmE AND ExpENsEs
finance income
Bank interest
other interest
finance income
finance expenses
Bank loans and overdraft interest
Loan fee amortisation
Finance lease interest
finance expenses
7. TAxATION (cREDIT)/cHARGE
8 month period ended
31 December 2015
before
highlighted
items
£’000
Highlighted
items
£’000
uk tax
current period/year
adjustment in respect of prior year
foreign tax
current year
adjustment in respect of prior year
total current tax
Deferred tax
origination and reversal of temporary
differences (note 20)
Total tax (credit)/charge
194
(236)
(42)
248
(160)
88
46
(622)
(576)
(128)
–
(128)
–
–
–
(128)
8 month
period ended
31 December
2015
£’000
Year ended
30 april
2015
£’000
7
6
13
(752)
(60)
(1)
(813)
Year ended
30 april 2015
Highlighted
items
£’000
Before
highlighted
items
£’000
570
(798)
(228)
2,079
(399)
1,680
1,452
(298)
–
(298)
(11)
–
(11)
(309)
Total
£’000
66
(236)
(170)
248
(160)
88
(82)
8
–
8
(1,088)
(88)
(3)
(1,179)
total
£’000
272
(798)
(526)
2,068
(399)
1,669
1,143
(628)
(756)
(1,250)
(1,332)
241
1,693
(846)
(1,155)
(605)
538
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Stock Code: EBQ
notes to tHe consoLiDateD
FinanciaL stateMents
7. TAxATION (cREDIT)/cHARGE continUeD
the difference between tax as (credited)/charged in the financial statements and tax at the nominal rate is explained below:
(Loss)/profit before tax
corporation tax at 20.0% (30 april 2015: 20.9%)
non-deductible taxable expenses/income
overseas tax rate differential
Losses not relieved against other Group entities
Utilisation of previously unrecognised tax losses now recouped to reduce current tax expense
adjustment in respect of prior years
effect of charge in deferred tax rate
Deferred tax
other
Total tax (credit)/charge
8 month
period ended
31 December
2015
£’000
Year ended
30 april
2015
£’000
(7,446)
(1,489)
943
24
832
(80)
(396)
(265)
(985)
84
(1,332)
4,657
974
460
617
38
(115)
(1,197)
–
(605)
366
538
the applicable tax rate has decreased from 20.9% to 20.0% due to the reduction of the UK corporation tax rate to 20.0% in april 2015.
a further rate reduction to 19% effective from 1 april 2017 and then to 18% from 1 april 2020 was substantively enacted on 28 october
2015 and therefore any relevant deferred tax balances have been measured at these rates.
8. EARNINGs pER sHARE
the calculation of the basic and diluted earnings per share is based on the following data:
earnings for the purpose of basic earnings per share being net profit attributable to equity holders of
the parent
adjustments:
impact of highlighted items (net of tax) 1
earnings for the purpose of underlying earnings per share
number of shares:
Weighted average number of shares during the period
— Basic
— Dilutive effect of share options
— Diluted
Basic earnings per share
Diluted earnings per share
Underlying basic earnings per share
Underlying diluted earnings per share
1 Highlighted items attributable to equity holders of the parent (see note 3), stated net of their total tax impact.
2 it is assumed that all contingent deferred consideration will be settled in cash, therefore there is no dilutive effect.
8 month
period ended
31 December
2015
£’000
Year ended
30 april
2015
£’000
(6,221)
3,623
5,885
(336)
4,723
8,346
76,976,240
1,993,033
78,969,273
(8.08)p
(8.08)p
(0.44)p
(0.43)p
75,820,669
2,084,430
77,905,099
4.78p
4.65p
11.01p
10.71p
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notes to tHe consoLiDateD
FinanciaL stateMents
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Notes to the consolidated financial statements
for the 8 month period ended 31 December 2015
9. GOODWILL
Cost
at 1 May 2014
adjustments in respect of a pre-acquisition period
acquisitions
Foreign exchange differences
At 30 April 2015
adjustments in respect of a pre-acquisition period
Foreign exchange differences
At 31 December 2015
Accumulated impairment
at 1 May 2014
At 30 April 2015
impairment
At 31 December 2015
Net book value
At 31 December 2015
at 30 april 2015
at 1 May 2014
£’000
55,121
3
2,787
185
58,096
(177)
37
57,956
–
–
(3,129)
(3,129)
54,827
58,096
55,121
the Group tests goodwill annually for impairment or more frequently if there are indications that goodwill may be potentially impaired.
Goodwill is allocated to the Group’s cash-generating units (cGUs) in order to carry out impairment tests.
Goodwill has been allocated to the following segments:
Media value Measurement
Market intelligence
Marketing Performance optimization
8 month
period ended
31 December
2015
£’000
26,886
21,904
6,037
54,827
Year ended
30 april
2015
£’000
27,337
24,886
5,873
58,096
the impairment test involves comparing the carrying value of the cGU to which the goodwill has been allocated to the recoverable
amount. the recoverable amount of all cGUs has been determined based on value in use calculations.
the goodwill impairment charge of £3,129,000 (30 april 2015: £nil) relates to the full impairment of the goodwill in relation to the
reputation cGU, included in the Market intelligence segment. this business, formerly echo research Group, was acquired in
2011. over the last four years we have integrated the business fully into our Market intelligence Practice; the technologies and
methodologies which were represented by the goodwill have been replaced, integrated or superseded and the client relationships
have in many cases evolved into more integrated contracts. We are no longer able to support the original carrying value and believe
that full impairment reflects the evolution of this part of our business in line with our longer-term corporate strategy.
Under iFrs, an impairment charge is required for goodwill when the carrying amount exceeds the recoverable amount, defined as
the higher of fair value less costs to sell and value in use.
82
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Stock Code: EBQ
notes to tHe consoLiDateD
FinanciaL stateMents
9. GOODWILL continUeD
value in use calculations
the value in use calculations are based on assumptions regarding the discount rates, and revenue and cost growth rates. the
Directors prepare a three year pre-tax cash flow forecast based on the following financial year’s budget as approved by the Board,
with revenue and cost forecasts for the following 2 years adjusted by segment and geography. the forecast takes account of actual
results from previous years combined with management expectations of market developments.
the Directors estimate discount rates using rates that reflect current market assessments of the time value of money and risk specific
to the cash-generating units. the three-year pre-tax cash flow forecasts have been discounted at between 8.2% and 9.7% (30 april
2015: 9.5%).
cash flows beyond the three year period are extrapolated at a rate of 2.25% (30 april 2015: 2.0%), which does not exceed the long-
term average growth rate in any of the markets in which the Group operates.
the excess of the value in use to the goodwill carrying values for each cGU gives the level of headroom in each cGU.
sensitivity analysis
sensitivity analysis has been performed on the value in use calculation by changing the key assumptions applicable to each cGU.
the following sensitivities have been applied to the value in use assumptions:
• increase in pre-tax discount rates by 5%
• Decrease in future cash flows by 10%
as a result of applying these sensitivities no cGUs have a value in use below recoverable value.
a specific sensitivity analysis was applied to each of the following cGUs, which reside in the Mi segment, have a combined carrying
value of £21.1 million and are the most sensitive cGUs, to identify the size of any change in assumption required to indicate an
impairment of goodwill:
advertising UK, Us and international
advertising Germany
Adjustment
to discount
rate
+7.4pp
+8.6pp
Adjustment
to future
cash flows
–46.0pp
–59.0pp
the Directors consider that the result of the above sensitivity analysis means that there is no further impairment of goodwill.
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FinanciaL stateMents
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Notes to the consolidated financial statements
for the 8 month period ended 31 December 2015
10. OTHER INTANGIbLE AssETs
Cost
at 1 May 2014
additions
acquisitions
Disposals
Foreign exchange
at 30 april 2015
additions
Disposals
Foreign exchange
At 31 December 2015
Amortisation and impairment
at 1 May 2014
charge for the year
Disposals
Foreign exchange
at 30 april 2015
charge for the period
Disposals
impairment
Foreign exchange
At 31 December 2015
Net Book Value
At 31 December 2015
at 30 april 2015
at 1 May 2014
capitalised
development
costs
£’000
computer
software
£’000
purchased
intangible
assets
£’000
Total
intangible
assets
£’000
1,948
1,057
–
–
(8)
2,997
652
–
(11)
3,638
(855)
(281)
–
–
(1,136)
(194)
–
(214)
–
(1,544)
2,094
1,861
1,093
1,696
615
1
(21)
(97)
2,194
175
(13)
27
2,383
(1,022)
(204)
21
85
(1,120)
(190)
12
–
(22)
(1,320)
1,063
1,074
674
21,856
–
1,559
–
(156)
23,259
–
–
40
23,299
(9,197)
(2,030)
–
211
(11,016)
(1,327)
–
(559)
(27)
(12,929)
10,370
12,243
12,659
25,500
1,672
1,560
(21)
(261)
28,450
827
(13)
56
29,320
(11,074)
(2,515)
21
296
(13,272)
(1,711)
12
(773)
(49)
(15,793)
13,527
15,178
14,426
amortisation is charged within administrative expenses so as to write off the cost of the intangible assets over their estimated useful
lives. the amortisation of purchased intangible assets is included as a highlighted administrative expense.
Purchased intangible assets consist principally of customer relationships with a typical useful life of 10 years.
the capitalised development costs impairment charge of £214,000 and the purchased intangible assets impairment charge of
£559,000 (30 april 2015: £nil), which relates to the full impairment of the purchased intangibles, is in relation to the reputation cGU
which is included in the Market intelligence segment. this business, formerly echo research Group, was acquired in 2011. over
the last four years we have integrated the business fully into our Market intelligence Practice; the technologies and methodologies
which were represented by the purchased intangibles and related capitalised development costs have been replaced, integrated or
superseded and the client relationships have in many cases evolved into more integrated contracts. We are no longer able to support
the original carrying value and believe that full impairment reflects the evolution of this part of our business in line with our longer-
term corporate strategy.
Under iFrs, an impairment charge is required for indefinite-lived assets when the carrying amount exceeds the recoverable amount,
defined as the higher of fair value less costs to sell and value in use.
84
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Stock Code: EBQ
notes to tHe consoLiDateD
FinanciaL stateMents
11. pROpERTy, pLANT AND EQuIpmENT
Cost
at 1 May 2014
additions
acquisitions
Disposals
Foreign exchange
at 30 april 2015
additions
Disposals
Foreign exchange
At 31 December 2015
Depreciation
at 1 May 2014
charge for the year
acquisitions
Disposals
Foreign exchange
at 30 april 2015
charge for the period
Disposals
Foreign exchange
At 31 December 2015
Net Book Value
At 31 December 2015
at 30 april 2015
at 1 May 2014
motor
vehicles
£’000
fixtures,
fittings and
equipment
£’000
computer
equipment
£’000
short leasehold
land and buildings
improvements
£’000
39
17
–
(14)
(5)
37
–
–
1
38
(9)
(5)
–
10
1
(3)
(3)
–
–
(6)
32
34
30
1,815
112
11
(298)
(56)
1,584
92
(201)
15
1,490
(994)
(135)
(3)
269
42
(821)
(83)
161
(10)
(753)
737
763
821
5,389
953
24
(351)
(142)
5,873
355
(1,307)
21
4,942
(3,717)
(830)
(13)
322
118
(4,120)
(527)
1,307
(26)
(3,366)
1,576
1,753
1,672
1,613
377
–
(914)
(27)
1,049
103
(2)
–
1,150
(974)
(279)
–
836
12
(405)
(157)
2
(7)
(567)
583
644
639
Total
£’000
8,856
1,459
35
(1,577)
(230)
8,543
550
(1,510)
37
7,620
(5,694)
(1,249)
(16)
1,437
173
(5,349)
(770)
1,470
(43)
(4,692)
2,928
3,194
3,162
the Group holds assets under finance leases within fixtures and fittings, with cost of £21,000 (30 april 2015: £21,000) and
accumulated depreciation of £8,000 (30 april 2015: £5,000).
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FinanciaL stateMents
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Notes to the consolidated financial statements
for the 8 month period ended 31 December 2015
12. subsIDIARIEs
Details of the company’s subsidiaries are set out below.
* Principal trading entity
† shares held by an intermediate holding company
subsidiary undertaking
adtrack Limited
aMMo Limited
axiology Limited
Barsby rowe Limited
BcMG acquisitions Limited
BcMG Limited
Billetts consulting Limited
Billetts international Limited
Billetts Limited
Billetts Marketing investment Management Limited
Billetts Marketing sciences Limited
Billetts Media consulting Limited
Brief information Limited
checking advertising services Limited
china Media (shanghai) Management consulting
company Limited*
china Media consulting Group Limited
Data Management services Group Limited
Digireels Limited UK
ebiquity asia Pacific Limited
ebiquity associates Limited*
ebiquity Germany GmbH*
ebiquity Holdings inc.
ebiquity inc.*
ebiquity italia s.r.l.*
ebiquity Pte. Limited*
ebiquity Pty Limited*
ebiquity russia Limited*
ebiquity russia ooo*
ebiquity sas*
ebiquity Us Financing Limited
ebiquity Us Holdings Limited
ebiquity Us Holdings LLc
echo Group Limited
echo research Limited*
echo research Pte Limited
efficiency elements sL*
Fairbrother Lenz eley Limited
86
proportion of
nominal value of
issued ordinary
shares held
100%†
100%†
100%†
100%†
100%†
100%
100%†
100%†
100%†
100%†
100%†
100%†
100%†
100%
country of
incorporation
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
Nature of business
non-trading
non-trading
non-trading
non-trading
non-trading
Holding company
non-trading
non-trading
non-trading
non-trading
non-trading
non-trading
non-trading
non-trading
italy
singapore
Media consultancy
100%†
china
Holding company
100%† Hong Kong
non-trading
UK
100%†
non-trading
UK
100%†
UK
100%†
Holding company
UK Media monitoring and consultancy
100%
Germany Media monitoring and consultancy
94.03%†
Usa
100%
Holding company
Usa Media monitoring and consultancy
100%†
and reputation management
Media consultancy
Media consultancy
australia Media monitoring and consultancy
Media consultancy
Media consultancy
Media consultancy
non-trading
Holding company
Holding company
Holding company
reputation management
reputation management
Marketing effectiveness
non-trading
UK
russia
France
UK
UK
Usa
UK
UK
singapore
spain
UK
51%†
100%†
100%†
50.1%†
50.1%†
80%†
100%
100%†
100%†
100%
100%†
100%
100%†
100%†
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Stock Code: EBQ
notes to tHe consoLiDateD
FinanciaL stateMents
12. subsIDIARIEs continUeD
subsidiary undertaking
Faulkner Group Pty Limited
Firm Decisions asJP Germany GmbH
Firm Decisions Group Limited
FirmDecisions asJP LLc*
FirmDecisions Pty Limited*
FirmDecisions Limited*
FLe Holdings Limited
Fouberts Place subsidiary no. 4 Limited
Freshcorp Limited
Media value sL*
Mediaadvantage consulting L.d.a*
nova vision europe s.a.
Prominent Pages Limited
shots Limited
stratigent LLc*
telefoto Monitoring services Limited
the Billett consultancy Limited
the communication trading company Limited
the Press advertising register Limited
the register Group Limited
Worldwide Media Management Limited
Xtreme information Limited
Xtreme information services (australia) Pty Limited
Xtreme information services Limited
Xtreme information services sPrL
Xtreme information (Usa) Limited
proportion of
nominal value of
issued ordinary
shares held
100%†
100%†
100%
100%†
100%†
100%†
100%
100%†
100%†
100%†
100%†
100%†
100%†
100%†
100%†
country of
incorporation
australia
Germany
UK
Usa
australia
UK
UK
UK
UK
spain
Portugal
Belgium
UK
UK
Usa
100%†
100%†
100%†
100%†
100%†
100%†
100%†
100%†
100%
100%†
100%†
UK
UK
UK
UK
UK
UK
UK
australia
UK
Belgium
UK
Nature of business
non-trading
Media consultancy
Holding company
Media consultancy
Media consultancy
Media consultancy
Holding company
non-trading
non-trading
Media consultancy
Media consultancy
non-trading
non-trading
non-trading
Multi-channel analytics
consultancy
non-trading
non-trading
non-trading
non-trading
non-trading
non-trading
non-trading
non-trading
Holding company
non-trading
non-trading
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notes to tHe consoLiDateD
FinanciaL stateMents
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Notes to the consolidated financial statements
for the 8 month period ended 31 December 2015
13. INvEsTmENT IN AssOcIATEs
Aggregated amounts relating to associates
total assets
total liabilities
revenues
Profit
opening balance
Disposals
Group’s share of profit
Net investment in associates
31 December
2015
£’000
30 april
2015
£’000
362
(275)
365
27
32
–
13
45
200
(142)
526
24
87
(67)
12
32
as at the period end, the Group held 50% of the ordinary shares of Fairbrother Marsh company Limited (incorporated in ireland). in
the prior year the Group sold its entire holding of 25% in sLiK Media Limited (incorporated in the United Kingdom).
14. TRADE AND OTHER REcEIvAbLEs
Trade and other receivables due within one year
net trade receivables (note 25)
other receivables
Prepayments
accrued income
31 December
2015
£’000
16,283
1,104
1,678
5,253
24,318
30 april
2015
£’000
17,390
921
1,716
9,852
29,879
the Directors consider that the carrying amount of trade and other receivables are reasonable approximations of their fair value.
15. cAsH AND cAsH EQuIvALENTs
cash and cash equivalents
31 December
2015
£’000
8,755
30 april
2015
£’000
9,295
the Group has certain legally enforceable rights of set off for cash and cash equivalents and bank overdrafts.
cash and cash equivalents earn interest at between 0% and 1.5%.
cash and cash equivalents include the following for the purposes of the cash flow statement:
cash and cash equivalents
Bank overdrafts (note 18)
cash, cash equivalents and bank overdrafts
31 December
2015
£’000
8,755
(2,391)
6,364
30 april
2015
£’000
9,295
(1,411)
7,884
88
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Stock Code: EBQ
notes to tHe consoLiDateD
FinanciaL stateMents
16. TRADE AND OTHER pAyAbLEs
trade payables
other taxation and social security
other payables
31 December
2015
£’000
3,538
2,302
726
6,566
30 april
2015
£’000
3,866
2,660
963
7,489
the Directors consider that the carrying amount of trade and other payables are reasonable approximations of their fair value.
17. AccRuALs AND DEfERRED INcOmE
accruals
Deferred income
18. fINANcIAL LIAbILITIEs
current
Bank overdraft
Bank borrowings
Finance lease liabilities
contingent deferred consideration
Non-current
Bank borrowings
Finance lease liabilities
contingent deferred consideration
Total financial liabilities
31 December
2015
£’000
4,663
7,677
12,340
31 December
2015
£’000
2,391
2,410
4
3,422
8,227
32,615
9
1,431
34,055
42,282
30 april
2015
£’000
4,577
6,933
11,510
30 april
2015
£’000
1,411
2,411
4
4,935
8,761
31,880
13
4,064
35,957
44,718
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notes to tHe consoLiDateD
FinanciaL stateMents
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Notes to the consolidated financial statements
for the 8 month period ended 31 December 2015
18. fINANcIAL LIAbILITIEs continUeD
at 1 May 2014
recognised on acquisition
additions
Utilised
charged to the income statement
charged to reserves
Borrowings
repayments
Foreign exchange released to the
income statement
Foreign exchange released to reserves
at 30 april 2015
additions
Utilised
charged to the income statement
Discounting charged to the
income statement
Discounting charged to the statement
of Financial Position
Borrowings
repayments
Foreign exchange released to the
income statement
Foreign exchange released to reserves
At 31 December 2015
a currency analysis for the bank borrowings is shown below:
Pound sterling
euros
total bank borrowings
bank
overdrafts
£’000
–
–
1,411
–
–
–
–
–
bank
borrowings
£’000
29,178
–
(360)
–
219
–
36,703
(31,107)
finance lease
liabilities
£’000
214
–
–
(197)
–
–
–
–
Interest
rate swaps
£’000
52
–
–
–
–
(52)
–
–
contingent
deferred
consideration
£’000
8,663
4,773
–
(5,156)
279
–
–
–
–
–
1,411
980
–
–
–
–
–
–
(342)
–
34,291
–
–
60
–
–
2,578
(1,982)
–
–
2,391
78
–
35,025
–
–
17
–
(4)
–
–
–
–
–
–
–
13
Total
£’000
38,107
4,773
1,051
(5,353)
498
(52)
36,703
(31,107)
(73)
171
44,718
980
(4,067)
(22)
(148)
(49)
2,578
(1,982)
276
(2)
42,282
30 april
2015
£’000
31,440
2,851
34,291
–
–
–
–
–
–
–
–
–
–
–
–
–
269
171
8,999
–
(4,063)
(82)
(148)
(49)
–
198
(2)
4,853
31 December
2015
£’000
32,096
2,929
35,025
90
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Stock Code: EBQ
notes to tHe consoLiDateD
FinanciaL stateMents
18. fINANcIAL LIAbILITIEs continUeD
all bank borrowings are held jointly with Barclays and royal Bank of scotland (‘rBs’). the committed facility, totalling £40,000,000,
comprises a term loan of £10,000,000 (of which £6,250,000 remains outstanding at 31 December 2015 (april 2015: £8,125,000)),
and a revolving credit facility (‘rcF’) of £30,000,000 (of which £29,000,000 was drawn down at 31 December 2015 (april 2015:
£26,451,000)). Both the term loan and the rcF have a maturity date of 2 July 2018. the £10,000,000 term loan is being repaid on a
quarterly basis to maturity, and the drawn rcF and any further drawings under the rcF are repayable on maturity of the facility. the
facility may be used for deferred consideration payments on past acquisitions, to fund future potential acquisitions, and for general
working capital requirements.
Loan arrangement fees of £225,000 (april 2015: £285,000) are offset against the term loan, and are being amortised over the period
of the loan.
the facility bears variable interest of LiBor plus a margin of 2.50%. the margin rate is able to be lowered each quarter end
depending on the Group’s net debt to eBitDa ratio.
the undrawn amount of the revolving credit facility is liable to a fee of 40% of the prevailing margin. the Group may elect to prepay
all or part of the outstanding loan subject to a break fee, by giving 5 business days’ notice.
all amounts owing to the 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 and Germany.
contingent deferred consideration represents additional amounts that are expected to be payable for acquisitions made by the
Group and is held at fair value at the statement of Financial Position date. all amounts are expected to be fully paid by august 2017.
all finance lease liabilities fall due within five years. the minimum lease payments and present value of the finance leases are as
follows:
amounts due:
Within one year
Between one and five years
Less: finance charges allocated to future periods
present value of lease obligations
the minimum lease payments approximate the present value of minimum lease payments.
minimum lease payments
31 December
2015
£’000
30 april
2015
£’000
6
12
18
(5)
13
6
18
24
(7)
17
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FinanciaL stateMents
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Notes to the consolidated financial statements
for the 8 month period ended 31 December 2015
19. pROvIsIONs
at 1 May 2014
Utilisation of provision
Unused amounts released to income statement
increase in provision
Foreign exchange
at 30 april 2015
Utilisation of provision
Unused amounts released to income statement
increase in provision
At 31 December 2015
current
non-current
Onerous
property
leases
£’000
191
(141)
–
1
4
55
(47)
(1)
–
7
7
–
Dilapidations
£’000
884
(308)
(37)
12
–
551
–
–
17
568
82
486
Total
£’000
1,075
(449)
(37)
13
4
606
(47)
(1)
17
575
89
486
the onerous property lease obligations relate to properties that the Group has vacated where there is a shortfall between the head
lease costs and sub-lease income, properties with excess vacant space and certain property leases held in acquired companies upon
acquisition, where lease payments are payable above a fair market rate. the provision was fully utilised in January 2016.
the dilapidations provision relates to the expected costs of vacating various properties. the provision is expected to be fully utilised
by December 2020.
20. DEfERRED TAx
at 1 May 2014
arising on acquisition
credit/(charge) to income
charge to equity
at 30 april 2015
credit/(charge) to income
credit to equity
At 31 December 2015
Intangible
assets
£’000
(2,888)
(437)
504
–
(2,821)
577
–
(2,244)
share-based
payment
£’000
1,208
–
199
(70)
1,337
46
186
1,569
Tax
losses
£’000
80
–
(80)
–
–
631
–
631
Other timing
differences
£’000
89
–
(18)
–
71
(4)
–
67
Total
£’000
(1,511)
(437)
605
(70)
(1,413)
1,250
186
23
certain deferred tax assets and liabilities have been offset. the following is the analysis of the deferred tax balance (after offset) for
financial reporting purposes:
Deferred tax assets – non-current
Deferred tax liabilities – non-current
31 December
2015
£’000
2,267
(2,244)
23
30 april
2015
£’000
1,408
(2,821)
(1,413)
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Stock Code: EBQ
notes to tHe consoLiDateD
FinanciaL stateMents
20. DEfERRED TAx continUeD
at the period end, the Group had tax losses of £3,154,000 (30 april 2015: £nil) available for offset against future profits. a deferred tax
asset of £631,000 (30 april 2015: £nil) has been recognised in respect of such losses.
the Group has unrecognised tax losses of £1,060,000 (30 april 2015: £nil) and unrecognised deferred tax assets of £212,000
(30 april 2015: £nil) in relation to tax losses.
21. OpERATING LEAsEs
Operating leases - lessee
the Group leases various offices under non-cancellable operating leases expiring within one to five years. the leases have varying
terms, break clauses and renewal rights.
the Group had future aggregate minimum lease payments under non-cancellable operating leases at 31 December 2015 and 30 april
2015 which fall due as follows:
Within one year
Between one and five years
after five years
Operating leases - lessor
31 December 2015
30 april 2015
Land and
buildings
£’000
1,883
5,763
–
7,646
Other
£’000
80
220
–
300
Land and
buildings
£’000
1,784
6,011
89
7,884
other
£’000
61
176
5
242
the Group sub-lets properties or parts of properties that have been vacated prior to the end of the lease term. since the rents
receivable over the lease terms are contracted to be less than the obligation to the head lessor, onerous lease provisions have been
recognised (note 19). the sub-lease rental income for the 8 month period to 31 December 2015 was £nil (30 april 2015: £2,000).
there is no minimum aggregate future rent receivable under non-cancellable operating leases as at the period end.
22. ORDINARy sHAREs
Allotted, called up and fully paid
at 1 May 2014 – ordinary shares of 25p
issued to acquire share of minority in ebiquity Germany GmbH
share options exercised
at 30 april 2015 – ordinary shares of 25p
share options exercised
At 31 December 2015 – ordinary shares of 25p
Number
of shares
75,491,111
966,413
314,130
76,771,654
390,034
77,161,688
Nominal
value
£’000
18,873
241
79
19,193
97
19,290
ordinary shares carry voting rights and are entitled to share in the profits of the company (dividends). at the period end 4,201,504
shares were held by the esoP (30 april 2015: 4,201,504). the company does not have a limited amount of authorised capital.
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FinanciaL stateMents
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Notes to the consolidated financial statements
for the 8 month period ended 31 December 2015
23. REsERvEs
share premium
the share premium reserve shows the amount subscribed for share capital in excess of the nominal value.
Other reserves
other reserves consists of the merger reserve, esoP reserve, hedging reserve and translation reserve.
Merger reserve
the merger reserve arose on the issuance of shares at a premium on a group restructure, where the premium on issue qualified for
merger relief. there has been no movement in the period.
ESOP reserve
the esoP reserve represents the cost of own shares acquired in the company by the employee Benefit trust (‘eBt’). the purpose
of the eBt is to facilitate and encourage the ownership of shares by employees, by acquiring shares in the company and distributing
them in accordance with employee share schemes. the eBt may operate in conjunction with the company’s existing share option
schemes and other schemes that may apply from time to time.
Hedging reserve
the hedging reserve is used to record the effective portion of the movements in fair value of the Group’s financial instruments that
qualify for hedge accounting and are deemed to be effective hedges.
Translation reserve
the translation reserve arises on the translation into sterling of the net assets of the Group’s foreign operations, offset by any
changes in fair value of financial instruments used to hedge this exposure. at this time there are no hedges in place.
Retained earnings
the retained earnings reserve shows the cumulative net gains and losses recognised in the consolidated income statement.
For detailed movements on each of the above reserves, refer to the consolidated statement of changes in equity.
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notes to tHe consoLiDateD
FinanciaL stateMents
24. sHARE bAsED pAymENTs
options outstanding at 31 December 2015:
Name of share option scheme
eMi and UcsoP scheme
executive incentive Plan – 12 May 2010
executive share option Plan – 27 september
2012
executive share option Plan – 23 May 2013
executive share option Plan – 17 January
2014
executive share option Plan – 15 May 2014
executive share option Plan – 01 october
2015
Life of option
10 years
10 years
10 years
10 years
10 years
Exercise period
May 2004 – august 2021
May 2011 – May 2020
september 2012 –
september 2022
May 2016 – May 2023
May 2016 – January 2024
10 years
May 2017 – april 2024
10 years
May 2018 – october 2025
Exercise
price
(pence)
nil – 72p
35p
25 – 98p
Weighted
average
exercise
price
38.3p
35.0p
97.5p
Number
924,593
4,200,000
228,833
25p
25p
25p
25p
25p
25p
390,000
1,025,000
25p
1,992,500
25p
1,519,111
10,280,037
Enterprise management incentive scheme (EmI scheme)
the eMi scheme is a discretionary share option scheme, which provides that options with a value at the date of grant of up to
£120,000 may be granted to employees. the eMi scheme provides a lock in incentive to key management and is also utilised to
attract key staff. rights to eMi share options lapse if the employee leaves the company. there are no further performance conditions.
no options have been granted under this scheme since 13 april 2010 as the Group was, from that date, too large to qualify under the
HMrc eMi scheme rules.
unapproved company share option plan (ucsOp)
this is a discretionary scheme, which provides that options may be granted where employees are not eligible to the eMi scheme. the
UcsoP provides a lock in incentive to key management. rights to UcsoP options lapse if the employee leaves the company.
Executive Incentive plan (EIp)
this is a discretionary scheme for the Directors of the company. vesting of the options was subject to the satisfaction of performance
criteria designed to achieve growth of the business while at the same time maintaining and enhancing the underlying earnings per
share over the period to 30 april 2013. the options would also vest immediately if the Group’s share price averages £1.50 or greater
for any 14 days during a six month period.
1,050,000 of the options granted on 12 May 2010 vested immediately and a further 875,000 had revenue based performance targets
that have now been met in full. the remaining options granted under the eiP scheme had earnings per share targets that have also
now been met in full. all exercised shares must be retained for a minimum of 12 months after vesting before they can be sold.
Executive share option plan (EsOp)
this is a discretionary scheme, comprised of an HMrc approved schedule and an unapproved schedule. the esoP provides a lock
in incentive to key management. rights to esoP options lapse if the employee leaves the company.
on 27 september 2012, 878,443 options were awarded under the esoP scheme. 150,000 of these options were issued to an
executive Director and have an exercise price of 25p. vesting of these 150,000 options was subject to the satisfaction of performance
criteria around the rate of growth of the diluted adjusted earnings per share over the three years ending 30 april 2015. these
performance criteria were met in full and all of these options were exercised during the 8 month period.
the remaining 728,443 options that were issued on 27 september 2012 have a weighted exercise price of 97.5p and have no
performance conditions attached.
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FinanciaL stateMents
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Notes to the consolidated financial statements
for the 8 month period ended 31 December 2015
24. sHARE bAsED pAymENTs continUeD
on 23 May 2013, 780,000 options with an exercise price of 25p were awarded under the esoP scheme. vesting of these options
will be subject to the satisfaction of performance criteria around the rate of growth of the diluted adjusted earnings per share over
the three years ending 30 april 2016. on the basis of a reference ePs for the year ended 30 april 2013, options will vest based on a
sliding scale of compound growth rates of between 5% and 15%.
on 17 January 2014, 1,025,000 options with an exercise price of 25p were awarded under the esoP scheme. 650,000 of these
options were issued to executive Directors. vesting of these options will be subject to the satisfaction of performance criteria around
the rate of growth of the diluted adjusted earnings per share over the three years ending 30 april 2016. on the basis of a reference
ePs for the year ended 30 april 2013, options will vest based on a sliding scale of compound growth rates of between 5% and 15%.
on 15 May 2014, 1,725,000 options with an exercise price of 25p were awarded under the esoP scheme. 560,000 of these options
were issued to executive Directors. vesting of these options will be subject to the satisfaction of performance criteria around the rate
of growth of the diluted adjusted earnings per share over the three years ending 30 april 2017. on the basis of a reference ePs for
the year ended 30 april 2014, options will vest based on a sliding scale of compound growth rates of between 4% and 10%.
also on 15 May 2014, a one-off award of 500,000 options was made to an executive Director in recognition of his continued service
through to retirement. these options will vest according to the rate of annual growth, in the range between 4% and 12%, in the total
shareholder returns (“tsr”) in each of the three years ending 30 april 2017. Following the 30 april 2015 year end 108,640 of these
options vested.
on 1 october 2015, 1,519,111 options with an exercise price of 25p were awarded under the esoP scheme. 400,000 of these options
were issued to executive Directors. vesting of these options will be subject to the satisfaction of performance criteria around the rate
of growth of the diluted adjusted earnings per share over the three years ending 31 December 2017. on the basis of a reference ePs
for the year ended 31 December 2014, options will vest based on a sliding scale of compound growth rates of between 4% and 10%.
the following share options were outstanding at 31 December 2015 and 30 april 2015:
outstanding at beginning of period/year
Granted during the period/year
exercised during the period/year
Forfeited during the period/year
outstanding at the end of the period/year
exercisable at the end of the period/year
31 December 2015
30 april 2015
Weighted
average
exercise price
(pence)
33.7
25.0
46.4
35.3
31.9
38.2
Weighted
average
exercise price
(pence)
37.5
25.0
57.4
42.5
33.7
37.8
number of
share options
7,905,210
2,225,000
(327,678)
(338,613)
9,463,919
5,658,089
Number of
share options
9,463,919
1,519,111
(390,034)
(312,959)
10,280,037
5,367,537
the weighted average share price on the dates of exercise for options exercised during the period was 130p (30 april 2015: 110p).
the options outstanding at the end of the period have a weighted average remaining contractual life of 6.4 years (30 april 2015: 6.6
years), with a range of exercise prices being between 25p and 97.5p. options exercised in the period resulted in 390,034 shares
(30 april 2015: 327,678 shares) being issued at a weighted average price of 46p each (30 april 2015: 57p).
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notes to tHe consoLiDateD
FinanciaL stateMents
24. sHARE bAsED pAymENTs continUeD
During the period, share options were granted with a weighted average fair value of 122p (30 april 2015: 104p). these fair values
were calculated using the Black–scholes model with the following inputs:
Weighted average share price
exercise price
expected volatility1
vesting period
risk-free interest rates
31 December
2015
146.5p
25p
18.9%
0 to 3 years
0% to 0.52%
30 april
2015
128.5p
25p
20%
3 years
1.16%
1 expected volatility is based on historical volatility of the company over the period commensurate with the expected life of the options.
a dividend of £291,000 was paid during the current financial period (30 april 2015: £nil). a dividend in respect of the period ended
31 December 2015 is intended to be paid following completion of a share capital reduction.
subsequent to the period end, 200,000 options with an exercise price of 25p each were awarded under the esoP scheme to an
executive Director. 100,000 of these options will vest after six months’ service and the remaining 100,000 options will vest after 12
months’ service, in each case subject to the executive Director remaining in the employment of the company.
also subsequent to the period end, an additional 300,000 options with an exercise price of 25p each were granted to an executive
Director. these options will vest conditional on the satisfaction of performance criteria relating to the growth of the company’s diluted
adjusted earnings per share (‘ePs’) as described in the paragraph below. 200,000 options (“tranche one”) will vest conditional on the
ePs growth for the financial year ending 31 December 2016 over the previous 12 month period ended 31 December 2015. 100,000
options (“tranche two”) will vest conditional on the ePs growth for the financial year ending 31 December 2017 over the prior financial
year. any options from tranche one which do not vest will be rolled over into tranche two and will be capable of vesting along with the
options granted as part of tranche two.
ePs growth, over the relevant performance period for each tranche, of 10% or more will result in all of the options in that tranche
vesting. ePs growth of 4% over the relevant performance period will vest one fifth of the options in that tranche. none of the options
in a tranche will vest if ePs growth over the relevant performance period is less than 4%. three-fifths of the options in a tranche will
vest if ePs growth over the relevant performance period is 8%. the options in a tranche will vest on a straight-line basis where ePs
growth over the relevant performance period is between 4% and 8% or between 8% and 10%.
25. fINANcIAL INsTRumENT RIsk ExpOsuRE AND mANAGEmENT
in common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. this note describes
the Group’s objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative
information in respect of these risks is presented throughout these financial statements.
there have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives, policies and processes
for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note.
the Group is exposed through its operations to the following financial risks:
• credit risk
• Market risk
— interest rate risk
— currency risk
• Liquidity risk
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FinanciaL stateMents
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Notes to the consolidated financial statements
for the 8 month period ended 31 December 2015
25. fINANcIAL INsTRumENT RIsk ExpOsuRE AND mANAGEmENT continUeD
cATEGORIEs Of fINANcIAL AssETs AND LIAbILITIEs
the following table sets out the categories of financial instruments held by the Group. all of the Group’s financial assets and liabilities
are measured at amortised cost, except forward currency contracts and interest rate swaps, which are held as hedging derivatives.
FinanciaL assets
current financial assets
Loans and receivables:
trade and other receivables1
cash and cash equivalents
Total financial assets
1 trade and other receivables includes net trade receivables and other receivables and excludes prepayments and accrued income
FinanciaL LiaBiLities
current financial liabilities
Other financial liabilities at amortised cost:
trade and other payables2
accruals
Bank overdrafts
Finance lease liabilities
Loans and borrowings
Liabilities at fair value through profit and loss:
contingent deferred consideration
Non-current financial liabilities
Other financial liabilities at amortised cost:
Loans and borrowings
Finance lease liabilities
Liabilities at fair value through profit and loss:
contingent deferred consideration
Total financial liabilities
2 trade and other payables includes trade payables and other payables and excludes other taxation and social security
31 December
2015
30 april
2015
17,387
8,755
26,142
18,324
9,295
27,619
31 December
2015
30 april
2015
4,264
4,663
2,391
4
2,410
3,422
17,154
4,829
4,577
1,411
4
2,411
4,935
18,167
32,615
9
31,880
13
1,431
34,055
51,209
4,064
35,957
54,124
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notes to tHe consoLiDateD
FinanciaL stateMents
25. fINANcIAL INsTRumENT RIsk ExpOsuRE AND mANAGEmENT continUeD
General objectives, policies and processes
the Board has overall responsibility for the determination of the Group’s risk management policies and, whilst retaining ultimate
responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation
of the objectives and policies to the Group’s finance function. the Board receives monthly reports from the Group’s finance function
through which it reviews the effectiveness of the processes put in place and the appropriateness of the policies it sets.
the overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group’s
competitiveness and flexibility. Further details regarding these policies are set out below:
credit risk
credit risk is the risk of financial loss to the Group if a customer or a counterparty to a financial instrument fails to meet its contractual
obligations.
Trade receivables
the Group operates in an industry where most of its customers are reputable and well-established multinational or large national
businesses. When the credit worthiness of a new customer is in doubt, credit limits and payment terms are established and
authorised by the Group Finance Director. the Group will suspend the services provided to customers who fail to meet the terms and
conditions specified in their contract where it is deemed necessary.
the credit control function of the Group monitors outstanding debts of the Group. Debtor reports are reviewed and analysed on a
regular basis. trade receivables are analysed by the aging and value of the debts. customers with any overdue debts are contacted
for payment and progress is tracked on a credit control report.
there is no concentration of credit risk within the Group. the maximum credit risk exposure relating to financial assets is represented
by the carrying values as at the year end.
the Directors consider that the carrying amount of trade and other receivables are reasonable approximations of their fair value.
Financial assets past due but not impaired
the following is an analysis of the Group’s trade receivables identifying the totals of trade receivables which are past due but not
impaired:
At 31 December 2015
at 30 april 2015
the following is an analysis of the Group’s provision against trade receivables:
Total
£’000
4,865
6,144
past due
+ 30 days
£’000
1,825
2,804
past due
+ 60 days
£’000
3,040
3,340
trade receivables
31 December 2015
30 april 2015
Gross
value
£’000
16,472
provision
£’000
(189)
carrying
value
£’000
16,283
Gross
value
£’000
17,508
Provision
£’000
(118)
carrying
value
£’000
17,390
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FinanciaL stateMents
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Notes to the consolidated financial statements
for the 8 month period ended 31 December 2015
25. fINANcIAL INsTRumENT RIsk ExpOsuRE AND mANAGEmENT continUeD
the Group records impairment losses on its trade receivables separately from the gross amounts receivable. impaired receivables
are provided against based on expected recoverability. the movements on this allowance during the year are summarised below:
opening balance
increase in provision
Written off against provision
recovered amount reversed
Foreign exchange
closing balance
market risk
31 December
2015
£’000
30 april
2015
£’000
118
132
(62)
–
1
189
177
159
(207)
(7)
(4)
118
Market risk arises from the Group’s use of interest bearing, tradable and foreign currency financial instruments. there is a risk that the
fair value of future cash flows of a financial instrument will fluctuate because of changes in interest rates (interest rate risk), foreign
exchange rates (currency risk) or other market factors (other price risk).
Interest rate risk
the Group is exposed to interest rate risk from bank loans and a revolving credit facility.
to illustrate the Group’s exposure to interest rate risk, a 0.5% increase/decrease in the rate applied to the Group’s borrowings would
have resulted in a post-tax movement of £95,000 (30 april 2015: £128,000).
Currency risk
the Group is exposed to currency risk on foreign currency trading and intercompany balances, and also on the foreign currency
bank accounts which it holds. these risks are offset by the holding of certain foreign currency bank borrowings. the translation of the
assets and liabilities of the Group’s overseas subsidiaries represents a risk to the Group’s equity balances.
the Group’s exposure to currency risk at the period end can be illustrated by the following:
10% strengthening of UsD
10% strengthening of eUr
10% strengthening of aUD
an equal weakening of any currency would broadly have the opposite effect.
31 December 2015
Increase
in profit
before tax
£’000
Increase in
equity
£’000
123
104
(10)
4,119
1,257
469
30 april 2015
increase
in profit
before tax
£’000
197
(7)
(23)
increase in
equity
£’000
4,328
1,131
502
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notes to tHe consoLiDateD
FinanciaL stateMents
25. fINANcIAL INsTRumENT RIsk ExpOsuRE AND mANAGEmENT continUeD
the currency profile of the financial assets at 31 December 2015 is as follows:
Pounds sterling
Us Dollar
euros
australian Dollar
russian rouble
singapore Dollar
chinese renminbi
new Zealand Dollar
Other price risks
cash and cash equivalents
30 april
2015
£’000
31 December
2015
£’000
3,267
2,014
2,218
444
201
–
611
–
8,755
4,916
1,873
1,647
169
148
–
542
–
9,295
Gross trade receivables
31 December
2015
£’000
5,229
4,605
5,663
642
83
73
134
43
16,472
30 april
2015
£’000
5,647
4,679
5,686
944
145
50
341
16
17,508
the Group does not have any material exposure to other price risks.
Liquidity risk
Liquidity risk arises from the Group’s management of working capital and the finance charges and principal repayments on its debt
instruments, the risk being that the Group may not meet its financial obligations as they fall due.
the liquidity risk of each group company is managed centrally by the Group. all surplus cash in the UK is held centrally to maximise
the returns on deposits through economies of scale. the type of cash instrument used and its maturity date will depend on the
Group’s forecast cash requirements. throughout the 8 month period the Group maintained a draw down facility with Barclays and
royal Bank of scotland (‘rBs’) (see note 18) to manage any short-term cash requirements. at 31 December 2015 £nil (30 april 2015:
£2,549,000) was undrawn. the facility expires in July 2018 at which point drawn down amounts will be repayable.
it is a condition of the borrowings that the Group pass various covenant tests on a quarterly basis and the Group Finance team
regularly monitors the Group forecasts to ensure they are not breached.
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notes to tHe consoLiDateD
FinanciaL stateMents
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Notes to the consolidated financial statements
for the 8 month period ended 31 December 2015
25. fINANcIAL INsTRumENT RIsk ExpOsuRE AND mANAGEmENT continUeD
the following table illustrates the contractual maturity analysis of the Group’s financial liabilities.
At 31 December 2015
trade and other payables
accruals
Finance lease liabilities
Bank loans and overdrafts
contingent deferred consideration
Total financial liabilities
Less: finance charges allocated to future periods
present value
at 30 april 2015
trade and other payables
accruals
Finance lease liabilities
Bank loans and overdrafts
contingent deferred consideration
Total financial liabilities
Less: finance charges allocated to future periods
present value
fAIR vALuE mEAsuREmENT
Within
one year
£’000
One to
five years
£’000
4,264
4,663
6
6,011
3,422
18,366
(1,212)
17,154
4,830
4,577
6
5,101
4,722
19,236
(1,282)
17,954
–
–
12
34,382
1,431
35,825
(1,770)
34,055
–
–
18
33,742
4,021
37,781
(1,866)
35,915
Total
£’000
4,264
4,663
18
40,393
4,853
54,191
(2,982)
51,209
4,830
4,577
24
38,843
8,743
57,017
(3,148)
53,869
the following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value,
grouped into Levels 1 to 3 based on the degree to which the fair value is observable.
• Level 1 fair value measurements are those derived from quoted prices in active markets for identical assets or liabilities.
• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly.
• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are
not based on observable market data.
At 31 December 2015
Financial liabilities
contingent deferred consideration
at 30 april 2015
Financial liabilities
contingent deferred consideration
refer to note 18 for a reconciliation of movements during the year.
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
–
–
–
–
–
–
–
–
4,853
4,853
4,853
4,853
8,743
8,743
8,743
8,743
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notes to tHe consoLiDateD
FinanciaL stateMents
25. fINANcIAL INsTRumENT RIsk ExpOsuRE AND mANAGEmENT continUeD
capital disclosures
the Group considers its capital to comprise of its ordinary share capital, share premium, convertible loan notes, non-controlling
interests, reserves and accumulated retained earnings.
the Group’s objective when maintaining capital is to safeguard the entity’s ability to continue as a going concern so that it can
continue to invest in the growth of the business and ultimately to provide an adequate return to its shareholders. the Directors
believe the Group has sufficient capital to continue trading in the foreseeable future. refer to note 22 and note 23 for a breakdown of
the Group’s capital.
26. DIvIDENDs
a dividend of £291,000 (0.4p per share) was paid during the current financial period (30 april 2015: £nil). a dividend of 0.4p per share
in respect of the period ended 31 December 2015 is intended to be paid following completion of a share capital reduction. these
financial statements do not reflect this intended dividend payable.
Dividends were paid to non-controlling interests as shown in the consolidated statement of changes in equity.
27. cAsH GENERATED fROm OpERATIONs
(Loss)/profit before taxation
adjustments for:
Depreciation (note 11)
amortisation (note 10)
impairment of goodwill
impairment of intangible assets
Finance costs – loan fees written off
interest rate swap closure
Loss/(profit) on disposal
Unrealised foreign exchange loss
share option charges (note 3)
Finance income (note 6)
Finance expenses (note 6)
share of profit of associates (note 13)
contingent deferred consideration revaluations
Decrease/(increase) in trade and other receivables
Decrease in trade and other payables
Movement in provisions
cash generated from operations
8 month
period ended
31 December
2015
£’000
Year ended
30 april
2015
£’000
(7,446)
4,657
770
1,711
3,129
773
–
–
18
(95)
228
(13)
813
(13)
(32)
(157)
5,549
(333)
(31)
5,028
1,249
2,515
–
–
131
29
(1)
208
1,215
(8)
1,179
(12)
548
11,710
(2,270)
(1,040)
(473)
7,927
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notes to tHe consoLiDateD
FinanciaL stateMents
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Notes to the consolidated financial statements
for the 8 month period ended 31 December 2015
28. AcQuIsITIONs
Transactions with non-controlling interests
on 15 December 2015, the Group acquired the remaining 35% in its subsidiary undertaking, Fairbrother iberica and Partners sL,
from the minority shareholder for cash consideration of €60,000 (£43,000). subsequently Fairbrother iberica and Partners sL was
liquidated and its business and assets were transferred to Media value sL.
29. cONTINGENT LIAbILITIEs
the Group is subject to claims and litigation arising in the ordinary course of business and provision is made where liabilities are
considered likely to arise on the basis of current information and legal advice.
30. RELATED pARTy TRANsAcTIONs
the Group has a related party relationship with its subsidiaries (note 12), its associates (note 13), key management personnel, and with
close family members of these individuals.
transactions between the company and its subsidiaries, or between subsidiaries, have been eliminated on consolidation and are not
disclosed in this note. Details of transactions between the Group and other related parties are disclosed below.
compensation of key management personnel
the remuneration of the Directors, who are considered to be the key management personnel of the Group, is set out in note 5.
there were no post-employment or other long-term benefits other than contributions to private pension schemes.
Transactions with companies related to key management personnel
costs of £1,000 (30 april 2015: £1,000) for a membership subscription were charged to the company by the Quoted companies
alliance, who has a common director with the company.
costs of £35,000 (30 april 2015: £40,000) for public relations consultancy were charged to the company by instinctif Partners
Limited, who has a common director with the company.
as at the period end, £9,000 (30 april 2015: £10,000) was owed to instinctif Partners Limited and £nil (30 april 2015: £nil) was owed to
the Quoted companies alliance.
on 15 December 2015, the Group acquired the remaining 35% in its subsidiary undertaking, Fairbrother iberica and Partners sL,
from the minority shareholder for cash consideration of €60,000 (£43,000). subsequently Fairbrother iberica and Partners sL was
liquidated and its business and assets were transferred to Media value sL. this minority shareholding was acquired from Juan Luis
Gil, the director of Fairbrother iberica and Partners sL at that time and now an employee of Media value sL.
Transactions with associates
revenue of £21,000 (30 april 2015: £36,000) was earned by ebiquity associates Limited from Fairbrother Marsh company Limited
during the period.
costs of £24,000 (30 april 2015: £48,000) were charged to ebiquity associates Limited by Fairbrother Marsh company Limited during
the period.
as at the period end £nil (30 april 2015: £nil) was owed to or by any associate companies.
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notes to tHe consoLiDateD
FinanciaL stateMents
31. EvENTs AfTER THE REpORTING pERIOD
on 11 March 2016 the Group acquired the outstanding 50% interest in its irish media audit associate, Fairbrother Marsh company
Limited (FMc). the 50% interest in FMc was acquired for an initial cash consideration of €150,000. the maximum total consideration
is up to €2m, payable in cash, depending on the performance of the FMc business during the period ending 31 December 2020.
subsequent to the period end, the Group agreed to increase the total cap on consideration payable on the stratigent LLc (‘stratigent’)
acquisition. the Group acquired stratigent on 19 august 2013. stratigent’s management held a 7% economic interest in stratigent
which was acquired by the Group for a total consideration to be determined by the financial performance of stratigent over the
three financial years ending 30 april 2016 and capped at $1.5m. stratigent’s financial performance over the first two financial years
resulted in consideration of $1.1m being paid to stratigent’s management. in order to ensure that management remains incentivised
to continue to drive and generate the financial performance achieved over the first two financial years, the Group agreed to increase
the total cap on consideration payable to management. accordingly, in March 2016, the cap on consideration was increased by an
amount of $1.5m, with any excess over and above the existing cap on consideration payable 25% in cash and 75% in new ordinary
shares in ebiquity plc (capped at 600,000 new shares). this has been treated as a non-adjusting event since no constructive
obligation existed at the period end.
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inDePenDent aUDitors’ rePort
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Independent Auditors’ Report
INDEpENDENT AuDITORs’ REpORT TO THE mEmbERs Of EbIQuITy pLc
REpORT ON THE pARENT cOmpANy fINANcIAL sTATEmENTs
Our opinion
in our opinion, ebiquity plc’s parent company financial statements (the “financial statements”):
• give a true and fair view of the state of the parent company’s affairs as at 31 December 2015;
• have been properly prepared in accordance with United Kingdom Generally accepted accounting Practice; and
• have been prepared in accordance with the requirements of the companies act 2006.
What we have audited
the financial statements, included within the annual report, comprise:
• the company statement of Financial Position as at 31 December 2015;
• the company statement of changes in equity for the period then ended; and
• the notes to the financial statements, which include a summary of significant accounting policies and other explanatory
information.
certain required disclosures have been presented elsewhere in the annual report, rather than in the notes to the financial
statements. these are cross-referenced from the financial statements and are identified as audited.
the financial reporting framework that has been applied in the preparation of the financial statements is United Kingdom accounting
standards, comprising Frs 101 “reduced Disclosure Framework”, and applicable law (United Kingdom Generally accepted
accounting Practice).
in applying the financial reporting framework, the directors have made a number of subjective judgements, for example in respect of
significant accounting estimates. in making such estimates, they have made assumptions and considered future events.
OpINION ON OTHER mATTER pREscRIbED by THE cOmpANIEs AcT 2006
in our opinion, the information given in the strategic report and the Directors’ report for the financial period for which the financial
statements are prepared is consistent with the financial statements.
OTHER mATTERs ON WHIcH WE ARE REQuIRED TO REpORT by ExcEpTION
Adequacy of accounting records and information and explanations received
Under the companies act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been
received from branches not visited by us; or
• the financial statements are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Directors’ remuneration
Under the companies act 2006 we are required to report to you if, in our opinion, certain disclosures of directors’ remuneration
specified by law are not made. We have no exceptions to report arising from this responsibility.
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inDePenDent aUDitors’ rePort
REspONsIbILITIEs fOR THE fINANcIAL sTATEmENTs AND THE AuDIT
Our responsibilities and those of the directors
as explained more fully in the statement of Directors’ responsibilities, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view.
our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and international
standards on auditing (UK and ireland) (“isas (UK & ireland)”). those standards require us to comply with the auditing Practices
Board’s ethical standards for auditors.
this report, including the opinions, has been prepared for and only for the parent company’s members as a body in accordance with
chapter 3 of Part 16 of the companies act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
What an audit of financial statements involves
We conducted our audit in accordance with isas (UK & ireland). an audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material
misstatement, whether caused by fraud or error. this includes an assessment of:
• whether the accounting policies are appropriate to the parent company’s circumstances and have been consistently applied and
adequately disclosed;
• the reasonableness of significant accounting estimates made by the directors; and
• the overall presentation of the financial statements.
We primarily focus our work in these areas by assessing the directors’ judgements against available evidence, forming our own
judgements, and evaluating the disclosures in the financial statements.
We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide
a reasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantive
procedures or a combination of both.
in addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with
the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially
inconsistent with, the knowledge acquired by us in the course of performing the audit. if we become aware of any apparent material
misstatements or inconsistencies we consider the implications for our report.
OTHER mATTER
We have reported separately on the group financial statements of ebiquity plc for the 8 month period ended 31 December 2015.
simon O’brien (senior statutory Auditor)
for and on behalf of Pricewaterhousecoopers LLP
chartered accountants and statutory auditors
London
29 March 2016
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coMPanY stateMent oF
FinanciaL Position
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
company statement of financial position
as at 31 December 2015
company number: 03967525
fixed assets
intangible assets
Property, plant and equipment
investments in subsidiaries
current assets
trade and other receivables
cash at bank and in hand
creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
creditors: amounts falling due after more than one year
Net assets
Equity
ordinary shares
share premium
other reserves
retained earnings
Total shareholders’ funds
31 December
2015
£’000
note
6
7
8
9
10
11
12
13
13
13
358
32
74,288
74,678
12,352
–
12,352
(6,318)
6,034
80,712
(54,967)
25,745
19,290
11,764
(733)
(4,576)
25,745
30 april
2015
£’000
269
40
78,298
78,607
11,131
–
11,131
(5,110)
6,021
84,628
(52,440)
32,188
19,193
11,657
(733)
2,071
32,188
the financial statements on pages 108 to 119 were approved and authorised for issue by the Board of Directors on 29 March 2016
and were signed on its behalf by:
michael karg
Director
Andrew beach
Director
the notes on pages 110 to 119 form part of these financial statements.
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Stock Code: EBQ
coMPanY stateMent oF
cHanGes in eQUitY
company statement of changes in Equity
for the 8 month period ended 31 December 2015
At 1 may 2014
Loss for the year
other comprehensive (loss)/income
for the year
Total comprehensive loss for the year
Proceeds from shares issued
share-based payments charge
UitF 44 adjustment
acquisition of non-controlling interest
At 30 April 2015
Loss for the period
other comprehensive (loss)/income
for the period
Total comprehensive loss for the period
Proceeds from shares issued
share-based payments charge
UitF 44 adjustment
Dividends to shareholders
At 31 December 2015
note
called up
share capital
£’000
18,873
–
share
premium
£’000
10,750
–
Other
reserves
£’000
(788)
–
Retained
earnings
£’000
5,426
(4,603)
12
14
12
14
8
–
–
79
–
–
241
19,193
–
–
–
97
–
–
–
19,290
–
–
110
–
–
797
11,657
–
–
–
107
–
–
–
11,764
52
52
3
–
–
–
(733)
–
–
–
–
–
–
–
(733)
–
(4,603)
(3)
953
298
–
2,071
(6,584)
–
(6,584)
–
(45)
273
(291)
(4,576)
Total
£’000
34,261
(4,603)
52
(4,551)
189
953
298
1,038
32,188
(6,584)
–
(6,584)
204
(45)
273
(291)
25,745
the notes on pages 110 to 119 form part of these financial statements.
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notes to tHe coMPanY
FinanciaL stateMents
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Notes to the company financial statements
for the 8 month period ended 31 December 2015
1. GENERAL INfORmATION
ebiquity plc (the company) acts as a holding company. the company is aiM listed and is incorporated and domiciled in the UK. the
address of its registered office is cityPoint, one ropemaker street, London, ec2Y 9aW.
2. summARy Of sIGNIfIcANT AccOuNTING pOLIcIEs
the principal accounting policies adopted are set out below. these policies have been consistently applied to all periods presented,
unless otherwise stated.
bAsIs Of pREpARATION
the separate financial statements of the company are presented as required by Financial reporting standard 101 ‘reduced
Disclosure Framework’ (Frs 101). they have been prepared on a going concern basis under the historical cost convention. these are
the first financial statements of the company prepared in accordance with Frs 101.
the company has transitioned to Frs 101 from previously extant UK Generally accepted accounting Practice for all periods
presented.
the company has taken advantage of the following disclosure exemptions under Frs 101:
a. the requirements of paragraphs 45(b) and 46-52 of iFrs 2 share-based payment (details of the number of weighted-average
exercise prices of share options, and how the fair value of goods and services received was determined)
b. the requirements of iFrs 7 Financial instruments: Disclosures
c. the requirements of paragraphs 91 to 99 of iFrs 13 Fair value measurement (disclosure of valuation techniques and inputs used
for fair value measurement of assets and liabilities)
d. the requirement in paragraph 38 of ias 1 Presentation of financial statements to present comparative information in respect of
i.
paragraph 79(a)(iv) of ias 1;
ii. paragraph 73(e) of ias 16 Property, plant and equipment;
iii.
paragraph 118(e) of ias 38 intangible assets (reconciliations between the carrying amount at the beginning and end of
the period);
— the following paragraphs of ias 1 Presentation of financial statements
i.
10(d) (statement of cashflows);
ii.
10(f) (a statement of financial position as at the beginning of the preceding period when an entity applies an accounting
policy retrospectively or makes a retrospective restatement of items in its financial statements, or when it reclassifies
items in its financial statements);
iii.
16 (statement of compliance with all iFrs);
iv. 38a (requirement for minimum of two primary statements, including cash flow statements);
v. 38B-D (additional comparative information);
vi. 40a-D (requirements for a third statement of financial position);
vii. 111 (cash flow statement information); and
viii. 134–136 (capital management disclosures)
e. ias 7 statement of cash flows
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notes to tHe coMPanY
FinanciaL stateMents
2. summARy Of sIGNIfIcANT AccOuNTING pOLIcIEs continUeD
f. Paragraphs 30 and 31 of ias 8 accounting policies, changes in accounting estimates and errors (requirement for the disclosure
of information when an entity has not applied a new iFrs that has been issued but is not yet effective)
g. Paragraph 17 of ias 24 related party disclosures (key management compensation)
h. the requirements in ias 24 related party disclosures to disclose related party transactions entered into between two or more
members of a group.
these financial statements represent the results for the 8 month period ended 31 December 2015 whilst the comparatives represent
the results for the year ended 30 april 2015. the change of year end is to enable greater certainty of year end out-turn earlier in the
company’s financial year.
finance income and expenses
Finance income and expense represents interest receivable and payable. Finance income and expense is recognised on an accruals
basis, based on the interest rate applicable to each bank or loan account.
foreign currency transactions
the results and financial position of the company are expressed in pounds sterling, which is the functional currency of the company
and the presentation currency for the company financial statements.
trading transactions denominated in foreign currencies are translated into sterling at the exchange rate ruling when the transaction
was entered in to. assets and liabilities expressed in foreign currencies are translated into sterling at rates of exchange ruling at the
end of the financial period.
all transactions involving foreign exchange gains and losses are dealt with through the income statement as and when they arise.
share-based payments
the company issues equity-settled share-based payments only. these are measured at fair value (excluding the effect of non market-
based vesting conditions) at the date of grant. the fair value determined at the grant date of the equity-settled share-based payments
is expensed on a straight-line basis over the vesting period, with a corresponding credit to equity, based on the Group’s estimate of
shares that will eventually vest and adjusted for the effect of non market-based vesting conditions.
For share options without performance conditions, fair value is measured by use of the Black–scholes Model. the expected life used
in the model has been adjusted, based on management’s best estimates, for the effects of non-transferability, exercise restrictions,
and behavioural considerations.
Where share options granted to employees are subject to market and non-market based performance conditions, the fair value for
these options is determined by an independent financial adviser using an approved pricing model.
the grant by the company of options over its equity instruments to the employees of subsidiary undertakings in the Group is
treated as a capital contribution. the fair value of employee services received, measured by reference to the grant date fair value, is
recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity in
the parent entity financial statements. this is referred to as the UitF 44 Group and treasury share transactions adjustment.
Retirement benefits
For defined contribution pension schemes, the company pays contributions to privately administered pension plans on a voluntary
basis. the company has no further payment obligations once the contributions have been paid. contributions are charged to the
income statement in the period to which they relate.
Dividend income
Dividend income is recognised when the right to receive payment is established.
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notes to tHe coMPanY
FinanciaL stateMents
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Notes to the company financial statements
for the 8 month period ended 31 December 2015
2. summARy Of sIGNIfIcANT AccOuNTING pOLIcIEs continUeD
Dividend distribution
Dividend distribution to the company’s shareholders is recognised as a liability in the company’s financial statements in the period in
which the dividends are approved by the company’s shareholders.
Intangible assets
Computer software
Purchased computer software intangible assets are amortised on a straight-line basis over their useful lives which vary from
4 to 5 years.
property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss.
Depreciation is charged so as to write off the cost or valuation of assets over their estimated useful lives and is recognised in the
income statement within administrative expenses. the rates generally applicable are:
Fixtures, fittings and equipment
computer equipment
Investments in subsidiaries
20% per annum straight-line
25% straight-line
investments in subsidiaries are held at cost less accumulated impairment losses.
Where the purchase consideration for the acquisition of an interest in a subsidiary is contingent on one or more future events, the
cost of investment includes a reasonable estimate of the fair value of the amounts of consideration that are expected to be payable in
the future. the cost of investment and the contingent consideration liability is adjusted until the ultimate payable is known.
cash and cash equivalents
cash and cash equivalents comprise cash in hand and short term deposits. in the balance sheet, bank overdrafts are shown within
borrowings in current liabilities.
share capital
ordinary shares are classified as equity.
Deferred taxation
recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against
which the difference can be utilised. the recognition of deferred tax assets is reviewed at each year end date.
the amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the year end
date and are expected to apply when the deferred tax liabilities/assets are settled/recovered.
financial instruments
Financial assets and financial liabilities are recognised in the company’s statement of Financial Position when the company becomes
a party to the contractual provisions of the instrument.
Financial assets
the company classifies its financial assets as ‘loans and receivables’. Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active market. they arise principally through the provision of goods and
services to customers (trade receivables), but also incorporate other types of contractual monetary asset. they are initially recognised
at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised
cost using the effective interest rate method, less provision for impairment.
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notes to tHe coMPanY
FinanciaL stateMents
2. summARy Of sIGNIfIcANT AccOuNTING pOLIcIEs continUeD
Financial liabilities
Financial liabilities are initially recognised at fair value. interest bearing liabilities are subsequently measured at amortised cost using
the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the
balance of the liability carried in the statement of financial position. ‘Finance expense’ in this context includes initial transaction costs
as well as any interest or coupon payable while the liability is outstanding.
Forward currency contracts and interest rate swaps are carried at fair value with changes in fair value being reflected in
comprehensive income, and are classified within other financial assets and liabilities as appropriate.
Bank borrowings
interest bearing borrowings are initially recognised at fair value net of transaction costs incurred and subsequently measured at
amortised cost. Finance charges are recognised in the income statement over the period of the borrowings using the effective
interest method.
Loan fees relating to the bank borrowings are capitalised against the loan and amortised over the period of the borrowings to which
they relate.
the revolving credit facility is considered to be a long term loan.
Derivative financial instruments
the company uses derivative financial instruments to reduce its exposure to foreign exchange and interest rate movements.
the Group does not hold or issue derivative financial instruments for financial trading purposes but derivatives that do not qualify
for hedge accounting are accounted for at fair value through the income statement. Derivative financial instruments are initially
recognised at fair value at the contract date and continue to be stated at fair value at the balance sheet date with gains and losses on
revaluation being recognised immediately in the income statement.
cash flow hedges were used to hedge against fluctuations in future cash flows on the Group’s debt funding due to movements in
interest rates. When a cash flow hedge is employed and hedge accounting applied, the effective portion of the change in the fair
value of the hedging instrument is recognised directly in equity (hedging reserve) until the gain or loss on the hedged item is realised.
any ineffective portion is always recognised in the income statement.
the fair value of derivatives is determined by reference to market values for similar instruments.
provisions
Provisions are recognised when the company has a present legal or constructive obligation as a result of past events, it is probable
that an outflow of resources will be required to settle that obligation and the amount can be reliably estimated. Provisions are not
recognised for future operating losses.
Provisions are measured at the Directors’ best estimate of the expenditure required to settle the obligation at the year end date.
if the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a
pre-tax rate which reflects current market assessments of the time value of money and, where appropriate, the risks specific to the
obligations.
Related party transactions
in accordance with Frs 101 the company is exempt from disclosing transactions with wholly owned entities that are part of the
ebiquity plc Group, or investees of the Group, or investees of the Group qualifying as related parties, as it is a parent company
publishing consolidated financial statements.
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notes to tHe coMPanY
FinanciaL stateMents
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Notes to the company financial statements
for the 8 month period ended 31 December 2015
2. summARy Of sIGNIfIcANT AccOuNTING pOLIcIEs continUeD
Employee share Ownership plan (EsOp)
as the company is deemed to have control of its esoP trust, it is treated as a subsidiary and consolidated for the purposes of the
Group financial statements. the esoP’s assets (other than investments in the company’s shares), liabilities, income and expenses are
included on a line-by-line basis in the Group financial statements. the esoP’s investment in the company’s shares is deducted from
shareholders’ equity in the Group statement of Financial Position as if they were treasury shares, except that profits on the sale of
esoP shares are not credited to the share premium account.
3. cOmpANy REsuLTs fOR THE yEAR
the company has taken advantage of the exemption allowed under section 408 of the companies act 2006 not to present its own
income statement in these financial statements.
the movement in reserves of the company includes a loss of £6,584,000 (30 april 2015: loss of £4,603,000).
4. OpERATING pROfIT
Auditors’ remuneration
Fees for the audit of the company are £3,000 (30 april 2015: £3,000). Fees paid to the company’s auditors for services other than
the statutory audit of the company are disclosed in the consolidated financial statements.
Directors’ remuneration
Fees paid to the company’s Directors are disclosed in the consolidated financial statements.
5. TAx ON LOss ON ORDINARy AcTIvITIEs
the tax charge is made up as follows:
current year corporation tax
Deferred tax
origination and reversal of timing differences
taxation on ordinary activities
8 months
ended
31 December
2015
£’000
Year
ended
30 april
2015
£’000
–
–
–
–
–
–
–
–
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notes to tHe coMPanY
FinanciaL stateMents
5. TAx ON LOss ON ORDINARy AcTIvITIEs continUeD
the tax assessment for the year differs to the standard rate of corporation tax in the UK of 20.0% (april 2015: 20.9%). the differences
are explained below:
Loss on ordinary activities before taxation
Loss on ordinary activities at the standard rate of corporation tax in the UK of 20.0% (april 2015: 20.9%)
effects of:
expenses not deductible for tax purposes
capital allowances for year in excess of depreciation
relieved to other group companies
Losses carried forward
current tax charge for the year
8 months
ended
31 December
2015
£’000
Year ended
30 april
2015
£’000
(6,584)
(4,603)
(1,317)
(963)
868
(11)
308
152
–
217
–
746
–
–
the company has approximately £1,356,000 (april 2015: £593,000) of management expenses to carry forward against future trading
profits. a deferred tax asset has not been recognised in relation to these given the uncertainty surrounding the future profitability of
the company.
6. INTANGIbLE AssETs
Cost
at 1 May 2015
additions
At 31 December 2015
Depreciation
at 1 May 2015
charge for the year
At 31 December 2015
Net Book Value
At 31 December 2015
at 30 april 2015
computer
software
£’000
312
142
454
(43)
(53)
(96)
358
269
Total
£’000
312
142
454
(43)
(53)
(96)
358
269
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notes to tHe coMPanY
FinanciaL stateMents
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Notes to the company financial statements
for the 8 month period ended 31 December 2015
7. pROpERTy, pLANT AND EQuIpmENT
Cost
at 1 May 2015
additions
At 31 December 2015
Depreciation
at 1 May 2015
charge for the year
At 31 December 2015
Net Book Value
At 31 December 2015
at 30 april 2015
8. INvEsTmENTs IN subsIDIARIEs
Cost and Net Book Value
at 1 May 2015
additions
impairment
At 31 December 2015
fixtures,
fittings and
equipment
£’000
computer
equipment
£’000
1
–
1
–
–
–
1
1
46
–
46
(7)
(8)
(15)
31
39
Total
£’000
47
–
47
(7)
(8)
(15)
32
40
£’000
78,298
273
(4,283)
74,288
the additions relate to the UitF 44 ‘Group and treasury share transactions’ adjustment (£273,000).
the company’s principal trading subsidiaries and associated undertakings are listed in note 12 of the consolidated financial
statements.
the impairment charge of £4,283,000 (30 april 2015: £nil) relates to the full impairment of the investment in echo Group Limited.
echo Group Limited was acquired in 2011 and over the last four years we have integrated the business fully into our Market
intelligence Practice; the technologies and methodologies which were represented by the investment amount have been replaced,
integrated or superseded and the client relationships have in many cases evolved into more integrated contracts. We are no longer
able to support the original carrying value and believe that full impairment reflects the evolution of this part of our business in line
with our longer-term corporate strategy.
the Directors believe that the carrying value of the remaining investments is supported by their underlying net assets.
9. TRADE AND OTHER REcEIvAbLEs
amounts owed by group undertakings
other receivables
Prepayments
31 December
2015
£’000
12,034
8
310
12,352
30 april
2015
£’000
10,905
9
217
11,131
included within the amounts owed by group undertakings above is an amount which is unsecured, earns interest at 3% above
eUriBor, has no fixed date of repayment and is repayable on demand.
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notes to tHe coMPanY
FinanciaL stateMents
9. TRADE AND OTHER REcEIvAbLEs continUeD
also included within the amounts owed by group undertakings above is an amount which is unsecured, earns interest at 2.65% above
LiBor, has no fixed date of repayment and is repayable on demand.
also included within the amounts owed by group undertakings above is a further amount which is unsecured, earns interest at 2.65%
above LiBor, has no fixed date of repayment and is repayable on demand.
the residual amounts due by group undertakings are unsecured, non-interest bearing, have no fixed date of repayment and are
repayable on demand.
10. cREDITORs: AmOuNTs fALLING DuE WITHIN ONE yEAR
Bank loans and overdrafts
trade creditors
other taxation and social security
other creditors
accruals
11. cREDITORs: AmOuNTs fALLING DuE AfTER mORE THAN ONE yEAR
Bank loans and overdrafts – between 2 and 5 years
amounts owed to group undertakings
31 December
2015
£’000
4,800
641
12
1
864
6,318
31 December
2015
£’000
32,615
22,352
54,967
30 april
2015
£’000
3,819
662
30
–
599
5,110
30 april
2015
£’000
31,881
20,559
52,440
all bank borrowings are held jointly with Barclays and royal Bank of scotland (‘rBs’). the committed facility, totalling £40,000,000,
comprises a term loan of £10,000,000 (of which £6,250,000 remains outstanding at 31 December 2015 (april 2015: £8,125,000)),
and a revolving credit facility (‘rcF’) of £30,000,000 (of which £29,000,000 was drawn down at 31 December 2015 (april 2015:
£26,451,000)). Both the term loan and the rcF have a maturity date of 2 July 2018. the £10,000,000 term loan is being repaid on a
quarterly basis to maturity, and the drawn rcF and any further drawings under the rcF are repayable on maturity of the facility. the
facility may be used for deferred consideration payments on past acquisitions, to fund future potential acquisitions, and for general
working capital requirements.
Loan arrangement fees of £225,000 (april 2015: £285,000) are offset against the term loan, and are being amortised over the period
of the loan.
the facility bears variable interest of LiBor plus a margin of 2.50%. the margin rate is able to be lowered each quarter end
depending on the Group’s net debt to eBitDa ratio.
the undrawn amount of the revolving credit facility is liable to a fee of 40% of the prevailing margin. the Group may elect to prepay
all or part of the outstanding loan subject to a break fee, by giving 5 business days’ notice.
all amounts owing to the 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 and Germany.
included within amounts subsidiaries above is an amount which is unsecured, incurs interest at 6%, has no fixed date of repayment
and is repayable on demand.
the residual amounts owed to subsidiaries are unsecured, interest free, have no fixed date of repayment and are repayable on
demand. no repayments are expected to be made in the next 12 months therefore the balance is considered to be due after
1 year.
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notes to tHe coMPanY
FinanciaL stateMents
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Notes to the company financial statements
for the 8 month period ended 31 December 2015
12. ORDINARy sHAREs
Allotted, called up and fully paid
at 30 april 2014 – ordinary shares of 25p
share options exercised
issued to acquire share of minority in ebiquity Germany GmbH
at 30 april 2015 – ordinary shares of 25p
share options exercised
At 31 December 2015 – ordinary shares of 25p
Number of
shares
75,491,111
314,130
966,413
76,771,654
390,034
77,161,688
Nominal
value
£’000
18,873
79
241
19,193
97
19,290
ordinary shares carry voting rights and are entitled to share in the profits of the company (dividends).
During the period the company paid a dividend of 0.4p per share, a total of £291,000 (april 2015: £nil) to shareholders.
13. REsERvEs
share premium
the share premium reserve shows the amount subscribed for share capital in excess of the nominal value.
Other reserves
other reserves consists of the merger reserve and esoP reserve.
Merger reserve
the merger reserve arose on the issuance of shares at a premium on a group restructure, where the premium on issue qualified for
merger relief. there has been no movement in the year.
ESOP reserve
the esoP reserve represents the cost of own shares acquired in the company by the employee Benefit trust (‘eBt’). the purpose
of the eBt is to facilitate and encourage the ownership of shares by employees, by acquiring shares in the company and distributing
them in accordance with employee share schemes. the eBt may operate in conjunction with the company’s existing share option
schemes and other schemes that may apply from time to time.
the esoP trusts were created to award shares to certain employees at less than market value. the trusts in aggregate hold
unallocated shares costing £1,471,000 (30 april 2015: £1,471,000) funded by the company. the sponsoring company is responsible for
the administration and maintenance of the trust. the number of shares held by the trust is 4,201,504 (30 april 2015: 4,201,504), all of
which are under option to the employees of the Group. as at the balance sheet date, all of the shares in the esoP had vested
(30 april 2015: all had vested).
Retained earnings
the retained earnings reserve shows the cumulative net gains and losses recognised in the income statement.
For detailed movements on each of the above reserves, refer to the statement of changes in equity.
14. sHARE-bAsED pAymENTs
Full disclosure of share-based payments is included in the consolidated financial statements (see note 24 to the consolidated
financial statements).
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notes to tHe coMPanY
FinanciaL stateMents
15. cOmmITmENTs
capital commitments contracted but not provided for by the company amount to £nil (30 april 2015: £nil).
the company has no operating lease commitments (30 april 2015: none).
16. cONTINGENT LIAbILITIEs
the company is subject to claims and litigation arising in the ordinary course of business and provision is made where liabilities are
considered likely to arise on the basis of current information and legal advice.
17. RELATED pARTy TRANsAcTIONs
the ultimate controlling party of the Group are the shareholders of the company (incorporated in the United Kingdom). the company
is exempt from disclosing related party transactions (see note 2).
18. TRANsITION TO fRs 101
For all periods up to and including the year ended 30 april 2015, the company prepared its financial statements in accordance with
United Kingdom Generally accepted accounting Practice. these financial statements, for the period ended 31 December 2015, are
the first the company has prepared in accordance with Frs 101.
accordingly, the company has prepared individual financial statements which comply with Frs 101 applicable for periods beginning
on or after 1 January 2015 and the significant accounting policies meeting those requirements are described in the relevant notes.
in preparing these financial statements, the company has started from an opening balance sheet as at 1 May 2014, the company’s
date of transition to Frs 101, with assessments made as to adjustments required for the first-time adoption of Frs 101. in doing so it
transpired that no adjustments were required.
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notice oF MeetinG
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Notice of meeting
ebiquity plc
(registered in england no. 3967525)
NOTIcE Of ANNuAL GENERAL mEETING
notice is hereby given that the annual General Meeting of ebiquity plc (the “company”) will be held at cityPoint, one ropemaker
street, London, ec2Y 9aW, at 10 am on 11 May 2016 to consider and, if thought fit, pass resolutions 1 to 10 as ordinary resolutions and
resolutions 11 to 14 as special resolutions:
ORDINARy REsOLuTIONs
1. to receive and adopt the audited annual report and accounts for the period ended 31 December 2015 together with the
Directors’ report and the auditors’ reports on these.
2. to re-elect nick Manning, who retires at the meeting, as a director of the company.
3. to re-elect Michael Higgins, who retires at the meeting, as a director of the company.
4. to re-elect richard nichols, who retires at the meeting, as a director of the company.
5. to re-elect Michael Karg, who retires at the meeting, as a director of the company.
6. to re-elect Morag Blazey, who retires at the meeting, as a director of the company.
7. that Pricewaterhousecoopers LLP be reappointed as auditors of the company to hold office from the conclusion of the meeting
until the conclusion of the next General Meeting at which accounts are laid before the company.
8. to authorise the Directors to determine the remuneration of the auditors.
9. that in accordance with section 366 of the companies act 2006, the company and all companies which are subsidiaries of the
company at any time during the period for which this resolution has effect be and are hereby authorised: (a) to make political
donations to political parties; (b) to make political donations to political organisations other than political parties;
and/or (c) incur political expenditure in a total aggregate amount not exceeding £10,000, provided that this authority shall expire
at the conclusion of the annual General Meeting of the company in 2017 or 15 months following the passing of this resolution,
whichever is the earlier. For the purposes of this resolution, the terms ‘political donation’, ‘political parties’, ‘political organisation’
and ‘political expenditure’ have the meanings given by sections 363 to 365 of the companies act 2006.
10. that in accordance with section 551 of the companies act 2006, the Directors of the company be generally and unconditionally
authorised to exercise all powers of the company to allot shares in the company and to grant rights to subscribe for or to convert
any security into shares in the company, up to an aggregate nominal amount of £6,365,839.
Provided that this authority shall, unless renewed, varied or revoked by the company, expire at the conclusion of the annual
General Meeting of the company in 2017 or 15 months following the passing of this resolution, whichever is the earlier, save
that the company may, before such expiry, make offers or agreements which would or might require shares to be allotted, or
any such rights to be granted, after such expiry, and the Directors of the company may allot shares or grant any such rights in
pursuance of such offer or agreement notwithstanding that the authority conferred by this resolution has expired.
the authority granted to the company shall replace all unexercised authorities previously granted to the Directors of the
company to allot shares or grant rights to subscribe for or to convert any security into shares but without prejudice to any
allotment of shares or grant of rights already made, offered or agreed to be made pursuant to such authorities.
spEcIAL REsOLuTIONs
11. that subject to the passing of resolution 10 set out in the notice of the meeting at which this resolution is considered, and
pursuant to sections 570 and 573 of the companies act 2006, the Directors of the company be given the general power to
allot equity securities (as defined by section 560 of the companies act 2006) for cash pursuant to the authority conferred by
resolution 10 or by way of a sale of treasury shares, as if section 561(1) of that act did not apply to any such allotment, provided
that this power shall be limited to:
i.
the allotment of equity securities in connection with an offer by way of a rights issue or open offer:
(i)
to the holders of ordinary shares in proportion (as nearly as may be practicable to their respective holdings); and
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(ii)
to holders of other equity securities as required by the rights of those securities or as the Directors of the company
otherwise consider necessary,
but subject to such exclusions or other arrangements as the Directors of the company may deem necessary or expedient in
relation to treasury shares, fractional entitlements, record dates, legal or practical problems in or under the laws of any territory or
the requirements of any regulatory body or stock exchange; and
ii.
the allotment (otherwise than pursuant to paragraph i above) of equity securities of up to an aggregate nominal amount of
£1,929,042.
the power granted by this resolution 11 shall, unless renewed, varied or revoked by the company, expire at the conclusion of the
annual General Meeting of the company in 2017 or 15 months following the passing of this resolution, whichever is the earlier,
save that the company may, before such expiry, make an offer or agreement which would or might require equity securities
to be allotted after such expiry, and the Directors of the company may allot equity securities in pursuance of any such offer or
agreement notwithstanding that the power conferred by this resolution has expired.
in respect of this resolution 11, the authority granted to the company shall replace all unexercised powers previously granted to
the Directors of the company to allot equity securities as if either section 89(1) of the companies act 1985 or section 561(1) of
the companies act 2006 did not apply, but without prejudice to any allotment of equity securities already made or agreed to be
made pursuant to such authorities.
12. that the share premium account of the company be and is cancelled.
13. that the company be generally and unconditionally authorised to make market purchases (within the meaning of section 693(4)
of the companies act 2006) of ordinary shares of £0.25 each provided that:
i.
i.
the maximum aggregate number of shares that may be purchased is 3,858,084;
the minimum price (excluding expenses) which may be paid for each share is £0.25;
ii. the maximum price (excluding expenses) which may be paid for each share is 105 per cent. of the average market value of a
share in the company for the five business days prior to the day the purchase is made; and
iii. the authority conferred by this resolution shall expire at the conclusion of the company’s annual General Meeting in 2017
or 15 months following the passing of this resolution, whichever is the earlier, save that the company may, before the expiry
of the authority granted by this resolution, enter into a contract to purchase shares which will or may be executed wholly or
partly after the expiry of such authority.
14. that the terms of an agreement proposed to be made between (1) rBc cees trustee Limited (as trustee of the ebiquity plc 2010
employee Benefit trust) and (2) the company for the purchase by the company of an aggregate maximum number of 4,200,000
ordinary shares of £0.25 each at a purchase price of £0.35 per ordinary share, as set out in the draft agreement produced to
the meeting and initialled by the chairman for the purposes of identification, be and they are approved and any director of the
company be and is authorised to enter into the agreement on behalf of the company. the authority conferred by this resolution
shall expire at the conclusion of the company’s annual General Meeting in 2017 or 15 months following the passing of this
resolution, whichever is the earlier.
By order of the Board
Andrew Watkins
company secretary
8 april 2016
registered office
cityPoint
one ropemaker street
London
ec2Y 9aW
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notice oF MeetinG
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Notice of meeting
ebiquity plc
(registered in england no. 3967525)
NOTEs:
shareholders are entitled to appoint a proxy to exercise all or any of their rights to attend and to speak and vote on their behalf at
the meeting. a shareholder may appoint more than one proxy in relation to the annual General Meeting provided that each proxy is
appointed to exercise the rights attached to a different share or shares held by that shareholder. a proxy need not be a shareholder
of the company. a member may appoint two or more persons as proxies to exercise the rights attached to the same shares in the
alternative, but if he/she shall do so, only one such proxy may attend and vote in respect of the shares. a proxy form which may be
used to make such appointment and give proxy instructions accompanies this notice.
to be valid for the meeting or adjourned meeting (as the case may be), a proxy form, duly completed, and any power of attorney or
other authority, if any, under which it is signed, or a notarially certified copy or office copy of such prior authority, or a copy of such
power certified in accordance with the Powers of attorney act 1971, must be deposited with the company’s registrars, computershare
investor services PLc, the Pavilions, Bridgwater road, Bristol, Bs99 6ZY no later than 10 am on 9 May 2016.
the return of a completed proxy form, or other such instrument, will not prevent a shareholder attending the annual General Meeting
and voting in person if he/she wishes to do so.
in the case of joint members, the signature of the first named in the register of members in respect of the holding will be accepted to
the exclusion of the votes of the other joint holders.
in accordance with section 360B of the companies act 2006 and regulation 41 of the Uncertificated securities regulations 2001,
only those shareholders entered on the company’s register of members as at 6 pm on 9 May 2016 (or 6 pm on the date two days
before any adjourned meeting) shall be entitled to attend and vote at the meeting in respect of the number of ordinary shares
registered in their name at that time. changes to entries on the register after 6 pm on 9 May 2016 (or 6 pm on the date two days
before any adjourned meeting) shall be disregarded in determining the rights of any persons to attend or vote at the meeting.
as at the date of this notice of annual General Meeting the company’s issued share capital consists of 77,161,688 ordinary shares,
carrying one vote each. the ebiquity plc 2010 employee Benefit trust holds 4,200,000 issued ordinary shares to satisfy awards for
the company’s senior management team. to date these awards have not been exercised and the trustee has agreed not to vote the
ordinary shares held by it. as such, 4,200,000 ordinary shares are treated as not carrying voting rights for the purposes of the city
code on takeovers and Mergers. therefore, the total voting rights in the company as at this date are 72,961,688.
ExpLANATORy NOTEs TO THE NOTIcE Of ANNuAL GENERAL mEETING
the notes on the following pages give an explanation of the proposed resolutions.
resolutions 1 to 10 are proposed as ordinary resolutions. this means that for each of those resolutions to be passed, more than half of
the votes cast must be in favour of the resolution. resolutions 11 to 14 are proposed as special resolutions. this means that for these
resolutions to be passed, at least three-quarters of the votes cast must be in favour of the resolution.
Resolution 1: Annual Report and Accounts for the period
the Directors will present to shareholders at the annual General Meeting the annual report and accounts for the period ended
31 December 2015 together with the independent auditors’ report on those accounts.
Resolutions 2 to 6: Re-election of Directors
the company’s articles of association require that one-third of Directors must retire by rotation at each annual General Meeting.
nick Manning, Michael Higgins and richard nichols are required to retire this year. in addition, Morag Blazey and Michael Karg are
required to retire this year, it being the first annual General Meeting since their appointments by the Directors. Being eligible they
offer themselves for re-election.
Biographical details of each of the Directors are contained on pages 43 to 45 of the company’s annual report and accounts for the
period ended 31 December 2015.
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Resolution 7: Reappointment of the Auditors
the company is required to reappoint the auditors at each annual General Meeting at which accounts are presented. resolution 7
proposes the reappointment of Pricewaterhousecoopers LLP as auditors to the company to hold office until the conclusion of the
next annual General Meeting at which accounts are laid.
Resolution 8: Auditors’ Remuneration
it is normal practice for a company’s Directors to be authorised to fix the auditors’ remuneration and shareholders’ approval to do so
is sought in this resolution.
Resolution 9: Political Donations
neither the company nor any of its subsidiaries made any donations to political parties in the european Union (“eU”) in 2015 and it is
the company’s current policy not to do so. However, the Political Parties, elections and referendums act 2000 (the “act”) defines eU
political organisations very widely and, as a result, in certain circumstances donations intended for charitable or similar purposes may
now be regarded as political in nature.
in order to comply with these obligations and to avoid any inadvertent infringement of the act, the Directors of the company consider
it prudent to seek shareholders’ approval for a general level of donation. resolution 9 seeks authority for the company to make
donations to eU political organisations or to incur eU political expenditure not exceeding £10,000 in total during the period from the
date of the annual General Meeting, until the conclusion of the annual General Meeting held in 2017, or, if earlier, 15 months after the
date of the passing of this resolution.
Resolution 10: Authority to Allot Shares
this resolution is to renew the general authority to allot shares in the company and to grant rights to subscribe for or to convert any
security into shares in the company, up to an aggregate nominal amount of £6,365,839 representing approximately one-third of
the nominal value of the issued ordinary share capital of the company as at the date of this notice. the Directors have no present
intention to use this authority which will expire 15 months after the passing of this resolution or, if earlier, at the end of the annual
General Meeting to be held in 2017. it is the Directors’ intention to seek renewal of this authority annually.
Resolution 11: Allotment of shares for cash
if equity securities (as defined by section 560 of the companies act 2006) are to be allotted and are to be paid for in cash, section
561(1) of that act requires that those new equity securities are offered in the first instance to existing shareholders in proportion to the
number of ordinary shares they each hold at that time. the entitlement to be offered the new shares first is known as ‘pre-emption
rights’.
there may be circumstances, however, when it is in the interests of the company for the Directors to be able to allot some new
shares for cash other than by way of a pre-emptive offer to existing shareholders. this cannot be done under the companies
act 2006 unless the shareholders have first waived their pre-emption rights. this also applies to the sale of any shares held by
the company in treasury for cash. resolution 11 asks shareholders to do this, but only for equity securities having a maximum
aggregate nominal value of £1,929,042 (which includes the sale of any treasury shares) which is equivalent to approximately 10% of
the company’s issued ordinary share capital as at the date of this notice. if the Directors wish, other than by a pre-emptive offer to
existing shareholders, to allot for cash new shares which would exceed this limit they would first have to request the shareholders to
waive their pre-emption rights in respect of the new shares which exceed it.
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notice oF MeetinG
Ebiquity plc
Annual Report and Accounts for the 8 month period ended 31 December 2015
Notice of meeting
ebiquity plc
(registered in england no. 3967525)
there are legal, regulatory and practical reasons why it may not always be possible to issue new shares under a pre-emptive issue
to some shareholders, particularly those resident overseas. to cater for this, resolution 11, authorising the Directors to allot the new
shares by way of pre-emptive issue, also permits the Directors to make appropriate exclusions or arrangements to deal with such
difficulties.
the authority conferred by this resolution will expire 15 months after the passing of this resolution or, if earlier, at the conclusion of the
company’s annual General Meeting to be held in 2017. it is the Directors’ intention to seek the renewal of this authority annually.
Resolution 12: Cancellation of share premium account
as announced on 29 March 2016, in order to support the company’s ability to pay future dividends, the company is proposing
to increase its distributable reserves by the cancellation of the company’s share premium account. the company’s distributable
reserves were impacted in the 8 months ended 31 December 2015 by the impairment charges incurred in relation to the write down
of its investment in the reputation business, resulting in a negative distributable reserves position as at 31 December 2015.
as at 31 December 2015, the company had retained losses of approximately £4.6 million (compared with retained profits of
approximately £2.1 million as at 30 april 2015) and the balance standing to the credit of the company’s share premium account was
approximately £11.7 million. the company is therefore seeking the approval of shareholders to cancel its share premium account,
which will enable the company to eliminate the retained losses and create distributable reserves equal to the balance (approximately
£7.1 million), subject to any required creditor protection, as described below. if approved by shareholders, the cancellation will require
subsequent confirmation by the court.
in seeking this confirmation, the company will be required to give such undertakings or other form of creditor protection as the court
may require for the benefit of the company’s creditors at the date on which the cancellation of the share premium account becomes
effective. these may include seeking the consent of the creditors to the cancellation or the provision by the company to the court of
an undertaking to deposit a sum of money into a blocked account created for the purpose of discharging creditors of the company.
it is anticipated that the initial directions hearing in relation to the cancellation will take place shortly following the date of the annual
General Meeting, with the final hearing taking place several weeks later and the cancellation becoming effective shortly thereafter,
following the necessary registration of the court order at companies House.
assuming that shareholders pass this resolution and that the court subsequently confirms the cancellation of share premium (and
subject to the discharge of any undertaking or other form of creditor protection that the court may require and compliance with the
requirements of the companies act 2006), the company intends to make payment of the dividend of 0.4 pence per share for the
8 months ended 31 December 2015 as an interim dividend during 2016. this would represent an increase in dividend per share on
a pro-rata basis and would also represent the continuation of a progressive dividend policy which commenced with the company’s
maiden dividend paid in october 2015. if the resolution is passed, the company shall make further announcements regarding the
capital reduction process and the expected date of payment of this dividend in due course.
Resolution 13: Market purchase of own shares
this resolution seeks authority for the company to make market purchases of its own ordinary shares and is proposed as a special
resolution. if passed, the resolution gives authority for the company to purchase up to 3,858,084 of its ordinary shares, representing
5 per cent. of the company’s issued ordinary share capital.
the resolution specifies the minimum and maximum prices which may be paid for any ordinary shares purchased under this authority.
the authority will expire 15 months after the passing of this resolution or, if earlier, at the conclusion of the company’s annual General
Meeting to be held in 2017.
the Directors do not currently have any intention of exercising the authority granted by this resolution. the Directors will only
exercise the authority to purchase ordinary shares where they consider that such purchases will be in the best interests of
shareholders generally and will result in an increase in earnings per ordinary share.
the company may either cancel any shares it purchases under this authority or transfer them into treasury (and subsequently sell or
transfer them out of treasury or cancel them).
at the date of the notice, the total number of options to subscribe for ordinary shares in the company amounted to 6,080,037. this
represented 7.87 per cent. of the company’s issued ordinary share capital on that date. if this authority to purchase shares was
exercised in full the options would represent 8.29 per cent. of the issued ordinary share capital as at the date of this notice. these
calculations exclude the 4,200,000 options in respect of which the ebiquity plc 2010 employee Benefit trust holds an equal number
of issued ordinary shares.
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www.ebiquity.com
Stock Code: EBQ
notice oF MeetinG
Resolution 14: Off-market purchase of own shares
in april 2010 two directors of the company, Michael Greenlees and nick Manning, were awarded interests and options over, in
aggregate, up to 4,200,000 ordinary shares under the ebiquity plc Joint share Plan (the “JsP”) and the ebiquity plc executive
incentive Plan (the “eiP”). contemporaneous with the award of these interests and options, the company issued 4,200,000 ordinary
shares to rBc cees trustee Limited (the “trustee”) as trustee of the ebiquity plc 2010 employee Benefit trust (the “trust”). the
trustee agreed with the company to transfer shares to nick Manning under either the JsP or the eiP, and to transfer shares to
Michael Greenlees under the JsP, upon the vesting and unwind and exercise of these awards and options. Due to tax considerations,
the company will issue any shares to Michael Greenlees on exercise by him of his options under the eiP.
Following the vesting and unwind and exercise of all awards and options under the JsP and the eiP there may be a balance of issued
ordinary shares remaining in the trust. the purpose of the trust in respect of these awards and options is solely to transfer shares
upon the vesting and unwind and exercise of such awards and options. as such, in the event that any ordinary shares remain in the
trust in these circumstances, the company wishes to retain the flexibility to purchase those shares from the trust.
Under the companies act 2006 a company may only make a purchase of its own shares off-market where the form of contract
pursuant to which those shares will be purchased has been approved in advance by shareholders. this resolution seeks approval
of the buy-back of shares and the form of contract for the company to make an off-market purchase of its own ordinary shares from
the trustee. any ordinary shares purchased pursuant to this contract will be acquired from the trustee at a price of 35 pence per
ordinary share. the resolution is proposed as a special resolution and it is the Directors’ intention to seek the renewal of this authority
annually.
the resolution approves the purchase of up to a maximum of 4,200,000 ordinary shares (which is equivalent to approximately
5.44 per cent. of the company’s issued ordinary share capital as at the date of this notice) as it is not possible at this time to state the
exact number of shares which may remain in the trust following the vesting and unwind and exercise of all awards and options under
the JsP and eiP. the buy-back contract therefore includes a formula to calculate the number of shares to be purchased, which will be
the number of shares remaining in the trust following the vesting and unwind and exercise of all awards and options made to nick
Manning and Michael Greenlees under the JsP and eiP. the company may either cancel any shares it purchases under this authority
or transfer them into treasury (and subsequently sell or transfer them out of treasury or cancel them).
DOcumENTs AvAILAbLE fOR INspEcTION
the following documents, which are available for inspection during normal business hours at the registered office of the company on
any business day until the date of the meeting, will also be available for inspection at the place of the annual General Meeting during
the meeting and for at least fifteen minutes prior to the meeting:
• copies of the executive directors’ service contracts
• copies of letters of appointment of the non-executive directors
• a copy of the company’s articles of association
• a copy of the proposed agreement for the own-purchase of shares by the company pursuant to resolution 14
REcOmmENDATION
the Directors consider that all the resolutions set out in the notice of annual General Meeting are in the best interests of the
company and its shareholders as a whole and recommend that you vote in favour of each of these resolutions, as each of the
Directors intends to do in respect of his own beneficial holding of shares in the company.
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