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CREATING CLARITY
ANNUAL REPORT AND FINANCIAL STATEMENTS
for the year ended 31 December 2016
CONTENTS
Strategic report
Financial highlights
At a glance
Chairman’s statement
Market overview
Chief Executive Officer’s review
Business model
Our strategy
Case studies
Chief Financial
Officer’s review
2
4
6
7
8
16
18
20
24
Governance
Board of Directors
Corporate
governance report
Audit & Risk
Committee report
Remuneration
Committee report
Directors’ report
28
Financial statements
Statement of Directors’
responsibilities
30
Independent auditors’ report
Consolidated income statement
34
36
39
Consolidated statement
of comprehensive income
Consolidated statement
of financial position
Consolidated statement
of changes in equity
Consolidated statement
of cash flows
Notes to the consolidated
financial statements
Independent auditors’ report
Company statement
of financial position
Company statement
of changes in equity
Notes to the Company
financial statements
Advisers
Shareholder information
Glossary
41
42
44
44
45
46
47
48
80
82
83
84
91
91
92
Visit us online at
www.ebiquity.com/en/investors
Today’s marketing ecosystem
is complex, at times confusing,
and often opaque.
Being an effective marketer has
never been more challenging.
Multi-channel marketing presents
brands with a bewildering
cocktail of opportunities and
obstacles. Each new link in the
adtech supply chain commands
attention and competes for
constrained resources.
Advertisers have never needed
more help in understanding
where, why, and how
they should allocate their
marketing investments.
DIGITAL COMPLEXITY
Today’s marketing ecosystem
is complex, at times confusing,
and often opaque.
Being an effective marketer has
never been more challenging.
Multi-channel marketing presents
brands with a bewildering
cocktail of opportunities and
obstacles. Each new link in the
adtech supply chain commands
attention and competes for
constrained resources.
Advertisers have never needed
more help in understanding
where, why, and how
they should allocate their
marketing investments.
DIGITAL COMPLEXITY
STRATEGIC REPORT
At Ebiquity, we help brands to
navigate the complexity of the
evolving marketing ecosystem
to achieve their marketing and
business objectives.
We generate data‑driven insights
through our unique combination
of independent consultancy
services, multi‑channel media
analytics, and marketing
optimization tools.
This is how we empower our
clients to become more effective
and efficient marketers. It’s by
creating clarity in the ever‑more
digital, increasingly opaque media
landscape that we help them to
become better advertisers.
CREATING CLARITY
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
1
Strategic report FINANCIAL HIGHLIGHTS
Final results for the year ended 31 December 2016
Ebiquity, a leading independent marketing analytics specialist,
announces final results for the year ended 31 December 2016.
Ebiquity provides services to 80 of the top 100 global advertisers,
with data‑driven insights spanning over 90 countries.
REVENUE £m
FY20161
CY20152
FY20153
+9.1%
UNDERLYING OPERATING PROFIT £m
FY20161
CY20152
FY20153
0
+4.4%
UNDERLYING DILUTED EPS pence
FY20161
CY20152
FY20153
(0.4)
+5.0%
43.3
83.6
76.6
13.0
12.4
11.3
10.8
Michael Karg, PhD, CEO, commented:
“ We have seen continued strong performance from our consultancy businesses MVM and
MPO, which are at the core of the changing nature of the media landscape particularly
around effectiveness and efficiency of marketing investments. We have already made
good progress with our Growth Acceleration Plan which will replicate our service
offering across key territories, further strengthening our ability to service global clients.
Investments into expanding our digital services across our three practice areas coupled
with events in the media marketplace – such as the debate around the performance
of digital advertising – create significant medium‑term growth opportunities. The
implementation of our plans, the opportunities arising from the changing nature
of the industry, make us excited for the future.”
27 March 2017
2
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
STRATEGIC REPORT Continued revenue, profit and earnings growth
• Revenue up 9.1% to £83.6m (CY2015: £76.6m), with like‑for‑like4 constant currency5
revenue growth of 2.1%
• Underlying operating profit up 4.4% to £13.0m (CY2015: £12.4m)
• Underlying PBT up 5.5% to £11.8m (CY2015: £11.2m)
• Underlying diluted EPS up 5.0% to 11.3p (CY2015: 10.8p)
• Underlying net cash inflow from operations £11.3m (CY2015: £13.7m) with cash
conversion from underlying operating profit of 88%
• Net debt reduced to £28.1m (31 December 2015: £28.9m)
• Proposed dividend of 0.65p per share continuing progressive dividend policy
Growing revenue contribution from Media Value Measurement
and Marketing Performance Optimization
• Media Value Measurement (‘MVM’) achieved total revenue growth of 12.3%
over CY2015, an increase of 3.6% on a like‑for‑like constant currency basis
• Marketing Performance Optimization (‘MPO’) continued to deliver strong revenue
growth with total revenue growth of 31.2% over CY2015 and like‑for‑like constant
currency revenue growth of 21.6%
• Together MVM and MPO accounted for 72% of Group revenues (CY2015: 68%)
• Market Intelligence (‘MI’) revenues were down by 5.2% on a total basis and by 8.5%
on a like‑for‑like constant currency basis, with the decrease largely due to an expected
substantial decline in revenues from our project‑based research business
Delivered on a number of milestones set out in Growth Acceleration Plan
• Formally launched Strategic Media Consultancy service offering in Q4 2016
• Commenced rollout of marketing effectiveness practice into Germany, France and
Asia Pacific, with first local projects in Continental Europe in Q1 2017, Asia Pacific in H2 2016
• Digital product development on track with rollout of Portfolio Digital commencing in Asia Pacific
and launch of digital attribution service expected in Q2 2017
• Talent review programme undertaken in Q1 2017, kicking off first phase of the Growth
Support Programme
1. FY2016 is the year ended 31 December 2016 (audited).
2. CY2015 is the calendar year from 1 January 2015 to 31 December 2015 (unaudited).
3. FY2015 is the financial period from 1 May 2015 to 31 December 2015 (audited).
4. 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.
5. Constant currency is calculated by taking current year denominated results restated at last year’s foreign exchange rates.
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
3
Strategic report AT A GLANCE
Ebiquity, a leading, independent, technology‑enabled
marketing and media analytics consultancy.
WE GO TO MARKET WITH THREE PRACTICE AREAS
Media Value Measurement
(‘MVM’)
Helping clients to increase efficiency and transparency
in their media performance
REVENUE %
56%
Market Intelligence
(‘MI’)
Providing clients with a clear picture of their own and their
competitors’ advertising
REVENUE %
28%
Marketing Performance Optimization
(‘MPO’)
Enabling clients to decide where to allocate and how
to optimize marketing investment
REVENUE %
16%
READ MORE ABOUT THE
THREE PRACTICE AREAS ON PAGE 12.
4
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
STRATEGIC REPORT Ebiquity, a leading, independent, technology‑enabled
marketing and media analytics consultancy.
MARKET PRESENCE
Our clients
We work with 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
including data scientists,
developers, modellers,
analysts, and digital and
media experts.
FOR A FULL LIST OF LOCATIONS
PLEASE VISIT www.ebiquity.com/en/contact-us
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
5
Strategic report
CHAIRMAN’S STATEMENT
Highlights
• Revenue up 9.1% to £83.6m
• Profit up 4.4% to £13.0m
• Diluted EPS up 5% to 11.3p
• Michael Karg, PhD new Group CEO
• Leading global transparency debate
We are a leader in the debate about
media transparency. Our independence
is paramount, and we must remain at the
heart of the marketing ecosystem.
Michael Higgins
Non‑Executive Chairman
Financially, reported revenue grew 9.1%
to £83.6 million, underlying operating
profit increased 4.4% to £13.0 million and
underlying fully diluted earnings per share
were up 5% to 11.3p. I am also pleased
to report we have continued to increase
the dividend in line with our progressive
dividend policy, with a proposed payment
of 0.65p per share.
Change has been a constant during the
year, both in the marketing industry and
at Ebiquity. Technology has helped make
the broad marketing ecosystem ever‑more
complex, inevitably more confusing, and
often less transparent than one might expect.
This is particularly true when we reflect that
digital data should – if anything – enable
much more detailed and meaningful analysis.
It is a striking fact that today only about
40% of digital programmatic advertising
investment reaches the publisher, with
value being eroded by the multiple links
between advertisers and publishers, fraud,
lack of viewability and non‑human traffic.
I don’t envy any business leader who has
to tell his Board and shareholders that
they’re investing in anything that suffers up
to 60% wastage. The trouble is, that’s what
many CMOs should be saying.
Digital complexity and the increasing calls
for transparency mean that our clients
– the world’s biggest advertisers – need
more help than ever from an independent
firm with the necessary knowledge and
expertise to navigate their way through this.
Within Ebiquity itself there was significant
change in 2016. Michael Karg, PhD took
the helm as Group CEO early in the year
and undertook a complete review of the
business. There were great foundations in
place, with businesses around the world,
tremendous talent and expertise, and a
client list that includes more than three
quarters of the world’s biggest advertisers.
Michael has now set about moving these
individual businesses into a single, aligned
organization that can address the global
requirements of our international clients as
well as the local needs of domestic ones.
Meeting these challenges will be achieved
both by continuing to bring in and
develop talent, but also by increasing the
underpinning processes and technology
that enables us to handle the demands
of analyzing and drawing actionable
intelligence from the avalanche of data
that digital marketing creates.
We are, I believe, a leader in the ongoing
debate about media transparency, and that
position has only been enhanced throughout
2016. Our independence is paramount,
and we must remain at the heart of the
marketing ecosystem, enabling marketers
to seize the opportunities offered by digital.
2016 was just the beginning of the process
of evolution in the industry, but as it
gathers momentum the opportunities for
Ebiquity can only grow. There will also be
more change to come, as – for example
– in 2018 new regulations over the use of
personal data come into force in Europe.
These will add another level of complexity
and will reinforce the need for the
professional independent expert – Ebiquity.
As always, we couldn’t achieve any of this
without the people around the world who
bring their individual expertise and efforts
to the business and create the capability
that the whole Group can deploy for the
benefit of its clients.
Thank you to you all.
Michael Higgins
Non‑Executive Chairman
27 March 2017
6
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
STRATEGIC REPORT MARKET OVERVIEW
Today’s marketing ecosystem is complex,
at times confusing, and often opaque.
It has never been more challenging to
be an effective marketer or marketing
procurement professional.
Every week a new link appears in the
adtech supply chain, every month a
new social platform commands attention
and competes for finite resources.
And although programmatic platforms
are revolutionizing how all media inventory
is traded, this advance potentially comes
at the expense of both transparency
and advertisers’ access to data.
In response to this growing complexity,
the clamour for clarity and impartial
analysis of media performance is growing
in the global advertiser community.
Advertisers – whose advertising dollars
fund the entire ecosystem – have never
needed more help in understanding where
they should allocate their marketing
investments and why.
They have never needed more the services
of a partner that can give informed,
long‑term strategic, and above all
independent advice on how to help secure
optimal ROI.
This is where Ebiquity can help, as our
products and consultancy services are
designed to create clarity, efficiency, and
effectiveness for advertisers in all aspects
of their marketing investment.
The
advertising
market today
It is predicted1 that the global
advertising market will be worth almost
US$750 billion by 2020, with 38%
(US$280 billion) in both TV and digital,
18% (US$135 billion) in print, and 6%
(US$48 billion) in out of home. This will
represent a compound annual growth
rate of 6% in the five years from 2016.
Digital advertising has been around for
more than 20 years and revenues from
digital advertising are now approaching
or overtaking spend on TV in many
markets. These include the US and some
of the bigger, mature, Western European
markets. So, digital advertising can no
longer be categorized as “new” media.
The digital advertising ecosystem has
rapidly developed. Today, it is highly
concentrated, with the leading platforms
Google and Facebook accounting for
more than 70% of all global online
advertising revenue. At the same
time, it has evolved to become highly
fragmented, with a vast number of
players offering adtech and martech
solutions. One consequence of this
complexity is that – for many brand
owners – online advertising has become
increasingly opaque. What’s more,
many experts in digital attribution and
Marketing Performance Optimization
repeatedly find it difficult to detect
significant returns on investment for
digital advertising.
These factors are driving the world’s
leading advertisers to scrutinize digital
with increasing intensity, as evidenced
by Marc Pritchard, Chief Brand Officer
of the world’s biggest advertiser, Procter
& Gamble, in his January 2017 address
to the Internet Advertising Bureau. This
follows P&G scaling back on targeted
Facebook advertising in summer 20162,
and Coca Cola’s Chief Marketing Officer
advocating for TV as still delivering
“the best bang for buck” and “very, very
critical for our business” in December.
In the same speech3, he questioned his
company’s historical digital spend.
Advertisers have never needed more
help in creating clarity out of the
complexity of the ever‑more digital
marketing ecosystem. It is encouraging
that some of the world’s most
progressive marketers are now leading
from the front in looking to make digital
work harder for them. Ebiquity is proud
to be many advertisers’ partner in
these initiatives.
1. http://bit.ly/2kQ1Z8n
2. http://on.wsj.com/2maj4z2
3. http://bit.ly/2gjKdIw
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
7
Strategic report CHIEF EXECUTIVE OFFICER’S REVIEW
Highlights
• Strong growth in revenue and profit
• New practice: Strategic Media
Consultancy
• Corporate purpose launched:
“creating clarity”
• Chief Client Officer appointed
• Matrix organizational
structure introduced
• Digital investment: Portfolio, OPTIX,
Attribution, Connect
Ebiquity’s long term ambition is
to become the world’s leading,
independent, technology‑enabled
consultancies specializing in
marketing and media analytics.
Michael Karg, PhD
Group Chief Executive Officer
2016 in review
2016 represented another good year of
revenue and profit growth for Ebiquity.
Underlying operating profit growth over
the year was on track with the growth
plan we outlined in Autumn 2016.
Revenues grew 9.1% to £83.6 million
over pro‑forma revenue for the 12 months
ended 31 December (CY2015). Underlying
operating profit increased to £13.0 million.
This represents an increase of 4.4%
over CY2015, reflecting a slight drop in
underlying operating margin to 15.5%, at
the higher end of our direct peer group.
Underlying profit before tax increased
by 5.3% to £11.8 million. Reported
operating profit grew to £7.7 million, up
from £3.6 million in CY2015, and reported
profit before tax increased to £6.5 million,
up from £2.5 million in CY2015.
With approximately 68% of revenue
denominated in currencies other than
sterling, revenue was significantly boosted
by the depreciation of sterling during the
year. In total, foreign exchange benefited
revenue by 5.8%, with acquisitions further
increasing revenue by 1.2%. This resulted
in like‑for‑like constant currency revenue
growth of 2.1%.
Our Media Value Measurement (‘MVM’)
practice reported revenue increase
of 12.3%, an increase of 3.6% on a
like‑for‑like constant currency basis. ‘MVM’
now accounts for 56% of Group revenue.
Revenue grew fastest from our international
media practice and business units in
Continental Europe, and we continued to
see strong demand for both our digital and
pitch management services.
Overall ‘MVM’ revenue growth was
held back by a decline in revenue from
our contract compliance business,
FirmDecisions, due to clients reflecting
on the findings of the U.S. Association
of National Advertisers’ (‘ANA’) media
transparency report. We continue to view
the ongoing industry debate about media
transparency as a long‑term growth
driver for the ‘MVM’ practice. Underlying
operating margins dropped from those
achieved in CY2015 principally as a result
of the decline in revenue from our contract
compliance business feeding through
to profitability.
Revenue from our Marketing Performance
Optimization (‘MPO’) practice continued
to grow strongly, with reported revenue
growth of 31.2% and like‑for‑like constant
currency revenue growth of 21.6%.
Revenue grew from both our US‑based
Multi‑Channel Analytics practice (13.9%)
and our European based Marketing
Effectiveness practice (30.7%). Our
underlying operating margin rose slightly
year on year.
Together, our faster growing practices
– MVM and MPO – now represent 72%
of Group revenues.
Revenue from our Market Intelligence (‘MI’)
practice declined by 5.2% on a reported
basis, and by 8.5% on a like‑for‑like
constant currency basis. As indicated in
our half‑year report, revenue from our
project‑based research business declined
sharply following the loss of a specific
contract at the beginning of the year. The
decline in revenue was largely anticipated,
and the cost base of the business was
managed appropriately.
The market intelligence sector is highly
competitive, mature, and experiencing low
growth rates across the world. Revenue
from Portfolio, our Advertising Intelligence
(‘AI’) subscription service, grew by 1.7%
on a reported basis. Eliminating the impact
of currency, revenue from AI declined
8
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
STRATEGIC REPORT In addition to our strong financial
performance overall, 2016 was a
significant year for Ebiquity because of
our ongoing leadership role in the global
debate about media transparency.
1.7% owing to the loss of three contracts
in our US business unit at the beginning
of the year.
Renewal rates were 88% on a value basis,
and we have already seen a positive
reaction from clients to the upgrade to our
new Portfolio media platform rolled out
from September 2016 onwards. Due to
good cost control and a decline in revenue
contribution from our project‑based
research business, underlying operating
margins rose year on year.
Sector and thought leadership
In addition to our strong financial
performance overall, 2016 was a significant
year for Ebiquity due to our ongoing
leadership role in the global debate
about media transparency, the launch
of our Strategic Media Consultancy
services, and our programme of product
development and roll‑out. Here are
some highlights.
1. In June, the ANA published its
long‑awaited study into media
transparency. Written by independent
investigative services firm K2 Intelligence,
the study reported for the first time
evidence that rebates and other
non‑transparent practices may be
pervasive in the US media market.
This study was followed by the July
publication of a report which we
co‑authored with the ANA and our
specialist contract compliance business,
FirmDecisions. The report was titled
Media Transparency: Prescriptions,
Principles, and Processes for Advertisers.
Following the findings of the K2 study,
this report provided advertisers with a
practical roadmap to manage and mitigate
media agencies’ non‑transparent and
non‑disclosed practices. In this way, we
are providing guidance to help advertisers
optimize their media management.
The ANA report has put media
transparency firmly on the management
agenda of the world’s leading advertisers.
For example, speaking at the Internet
Advertising Bureau’s (‘IAB’) annual
leadership conference in January 2017,
Marc Pritchard, Chief Brand Officer at
the world’s biggest advertiser Procter &
Gamble, called time on the digital media
supply chain, dubbing it “murky at best,
and fraudulent at worst”. Transparency
now matters to advertisers, agency
groups, and media owners. This includes
online platforms such as Facebook, which
recently agreed to undergo audits of its
metrics by the Media Ratings Council,
following concerns over transparency1.
Our evolving range of products and
services are designed to create
clarity about marketing investments,
particularly in digital. Consequently we
are well positioned to grow our business
through practical, impartial media
consultancy advice.
2. For today’s progressive advertiser, the
media landscape offers unprecedented
opportunities to connect with customers –
often directly. But its complexity threatens
to overwhelm even the best‑informed
marketer. That’s why in 2016 we launched
a new, specialized, Strategic Media
Consultancy offering. Our suite of bespoke
services enables advertisers to address
their most pressing needs: from owning
and managing data and ad technology,
to choosing and managing the right agency
and technology partners; from creating
the right internal team structure to manage
marketing communications, to helping
advertisers develop the optimal media
strategies and plans.
1. http://on.wsj.com/2kzSSf8
Bob Liodice,
President & CEO at the ANA:
“ Ebiquity is an outstanding friend and
partner. Even more, they are superb
analysts and strategists. In the ANA’s
media transparency work, Ebiquity
provided the intellectual capital to
translate major industry findings
into workable business process
prescriptions. These were critical action
steps that successfully completed
many years of productive efforts.”
Laetitia Zinetti,
Global Practice Principal
of Strategic Media Consulting:
“ Our deep global media expertise
means we are best placed to help
marketers capitalize on the evolving
market. We always start with “Why?”,
encouraging clients to be clear
about the drivers of their marketing
strategies. We then collaborate with
our clients to enable them to make
better strategic decisions and build
future‑proofed media capabilities.”
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
9
Strategic report CHIEF EXECUTIVE OFFICER’S REVIEW continued
Our ability to put ourselves in our
clients’ shoes is every bit as important
as technical skills like digital attribution
and media value measurement.
3. Long recognized as one of the leading
providers of market intelligence to the
global advertising community, in 2016
we completely overhauled our advertising
intelligence service.
Our Portfolio advertising platform offers
the world’s richest and most searchable
repository of both offline and online
advertising combining creative and spend
data. This allows advertisers to research
and analyze exactly what campaigns their
competitors are running, in which media, at
what frequency, and at what cost. Portfolio
now covers advertising across 15 European
countries and approaching 90 territories
worldwide, and a database of 25 million
individual ads.
The evolving nature of online advertising
has also required us to create new ways
to identify, capture, and tag the increasing
variety of formats of digital ads. To do this,
we had to develop pioneering search and
spidering technology that experiences
the internet like people do. We are fast
approaching the roll‑out of a new digital
service, and this will be integrated into the
new platform.
Building for the future
I became Group Chief Executive Officer
in January 2016, and inherited a company
with great foundations on which to build.
A company with a global presence, a
client base including 80 of the world’s top
100 advertisers, and a strong brand with
global leadership in MVM. With advertisers
under increasing pressure to validate and
justify marketing expenditure, I also found
a powerful and thriving MPO practice:
strong talent, unique and proprietary
methodologies, and growing revenue.
Since I took the helm of Ebiquity, we’ve put
in place several important building blocks
we need to ensure that the business is
fit for the next stage of our development
and growth. These are significant steps
on the road to transforming Ebiquity
from what was effectively a collective of
independently‑run, local entities into a
global, professional services business.
What’s more, this is more straightforward
to achieve currently, with most of our
acquisitions now beyond earn‑out
and becoming fully integrated into the
Ebiquity business. Founder entrepreneurs
of these companies are therefore less
concerned about individual profitability
and more focused on our collective journey
of change.
1. To achieve this transformation, we have
developed and articulated a distinctive
statement of corporate purpose, grounded
in our clients’ needs: “we are creating
clarity for our clients”. This statement
of purpose is designed to change the
way we think and talk about why we do
what we do, and how we do it. “Creating
clarity” is not a one‑off statement. Rather,
it represents the start of a continuous
process that takes courage and conviction,
guided by our teams’ expertise. It requires
us always to deliver analysis and
recommendations that are straightforward,
transparent, and precise.
2. To achieve this transformation, we are
now taking a dedicated, client‑first
approach. We have identified and
appointed a global Chief Client Officer
– Andrew Challier – who is responsible
for several of our most important client
relationships. We are embedding our
client‑first approach across the business
through clear client partner job profiles,
training, and development by region,
by market, and by expertise.
We want to work closer still with those
clients who partner with us because they
see the greatest value in our services.
By providing them with the right level of
service, we can help them to become even
more effective and efficient advertisers.
We know that deepening and expanding
the relationships with our key clients will
be a critical lever of growth.
3. To achieve this transformation, we’ve
introduced a matrix organizational
structure, creating global practice
responsibilities. This is designed to drive
better and clearer accountability to those
responsible for markets and those running
products and services across geographies.
We have done this to ensure that we
deliver our products and services at
consistently‑high standards. And we have
done this to ensure that these products
and services reflect and accommodate
local‑market differences.
Andrew Challier,
Chief Client Officer:
“ Understanding our clients’ business
and marketing objectives is just good
business practice. But the combination
of our independence, our ability to put
ourselves in the clients’ shoes, and our
mastery of the technical tools of the
trade is business dynamite.”
10
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
STRATEGIC REPORT We are starting to benefit from a closer collaboration
between our MVM and MPO practices:
50%
€800k
$1m
In 2016, over 50% of our incremental
MPO revenues in the UK were generated
from an existing MVM relationship.
First, multi discipline, multi‑market
pitch led to €800k revenues via a
single contract.
In the US joint selling resulted in over
$1m incremental revenues this year.
4. And to achieve this transformation,
we’ve started to develop more
sophisticated approaches to talent
management. During 2016, we developed
new global processes for reviewing our
talent base to drive development and
retention programmes, and to support
succession planning. These are rolling
out into the business in 2017. We are
committed to also continue to improve our
ability to recruit the specialist talent that
our clients’ needs demand, and to further
enhance employee engagement.
Our investments in digital
Currently, less than 20% of our revenue
comes from digital. As the marketing
ecosystem becomes increasingly
dominated by digital technology and
Big Data – and as our clients allocate
an ever‑increasing proportion of their
marketing budgets in digital – we are
investing in technology‑based solutions
to deliver against their requirements.
1. For example, with Portfolio we are
modernizing and enhancing our advertising
intelligence platform. It is our ambition
that it should become one of the most
comprehensive, best‑tagged, and most
searchable real‑time archives of advertising
creative executions and spend data.
It has been designed to cover more than
40 major markets around the world with
an authoritative and intelligent, living
database of digital display and traditional
media advertising content on any system
in the world.
Our new Portfolio Digital platform
is intended to explore websites and
experiences ads like people do, recognizes
the different adtech used to serve digital
ads, and harnesses and presents a broad
array of ad data, metadata, and metrics
in a simple, clear, and unified way.
We have launched this in pilot in selected
markets and it is our ambition to roll it out
progressively across the world during 2017
and beyond.
2. For example, with OPTIX we are
developing a comprehensive data
measurement platform (‘DMP’) for
benchmarking digital advertising
performance. Online advertising is
complex, fragmented, and sprawling.
It offers millions of opportunities to reach
billions of consumers directly, across
multiple technologies and platforms.
It is also characterized by many more
links in the transactional chain between
the advertiser and the publisher than
traditional advertising.
OPTIX is a DMP designed to help
advertisers cut through the complexity of
online advertising. A combined software
and consultancy service, it brings together
all relevant data that describe both media
cost and media quality under a single,
global methodology. This will empower
advertisers to use the same benchmarking
methodology and metrics across
multiple markets, platforms, and brands.
This single standard has been designed
to be genuinely scalable across the world.
3. For example, our MPO practice is
developing a Digital Attribution service that
uses modelling to enable our consultants
to understand how different digital media
channels and activations each play a part
and interact during our clients’ customers’
path to purchase. In conjunction with our
econometrics team, this service identifies
the relative and absolute contribution
of both digital and traditional media to
business and marketing KPIs. Attribution
is a major concern for marketers using
digital media to stimulate a response, and
our attribution modelling service addresses
this concern.
4. And for example, with Connect we’ve
developed a fully‑automated DMP for
media agencies to upload raw media data
from all different media categories to our
pool, in a clear and consistent fashion.
This makes life quicker and easier for our
advertiser clients’ media agency partners
to provide the data we need to calculate
media efficiency and effectiveness.
It removes the potential for human error,
inconsistencies, and inaccuracy. And it
means that clients can be certain that
we have unfiltered access to their data.
It truly is a triple‑win for all partners in
this ecosystem – advertiser, consultant,
and agency.
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
11
Strategic report CHIEF EXECUTIVE OFFICER’S REVIEW continued
Our evolving range of products and services
are designed to create clarity about marketing
investments, particularly in digital.
Our service offering
Today, we go to market in three, core practice areas.
Media Value Measurement
(‘MVM’)
We empower clients to increase the
efficiency and transparency of their
media performance through media
auditing, benchmarking, and performance
measurement. We help them to select and
manage their media trading partners.
We enable them to make the right,
long‑term decisions through our new,
Strategic Media Consultancy service.
We also report on agencies’ compliance
with contractual terms via our specialist
contract compliance business,
FirmDecisions.
In MVM, we have one of the world’s
richest and most comprehensive pool of
benchmarking media spend data across
all media channels. This is interrogated
by our world‑leading team of 300 media
experts in 14 countries who have been
optimizing media efficiency for global
brands for decades.
Market Intelligence
(‘MI’)
We provide clients with a clear picture of
their own and their competitors’ in‑market
creative executions, ad spend, and media
strategies. Our Portfolio media platform
was thoroughly reconfigured and launched
in September 2016, and now incorporates
optimized charting and presentation
facilities, automated reporting functionality,
and an enhanced user interface.
In MI, our global team captures,
categorizes, analyzes, and delivers
advertising and communications
intelligence in more than 40 languages from
over 80 major markets. The team’s insights
are designed to enable advertisers to plan
more effectively, respond smarter, and so
enhance their marketing performance.
In 2017, we plan to start rolling out a
new Portfolio Digital service, providing
coverage of creative and spend data for
the world’s digital advertising content.
Portfolio is supported by specialist insight,
market, and earned media research
experts who enhance automated analytics
with experienced, native‑language
human analysis.
Marketing Performance Optimization
(‘MPO’)
We guide clients to decide where to
allocate and how to optimize their
marketing investments, which marketing
technologies to select, and how to
leverage data to improve digital customer
journeys. Our work in this rapidly‑growing
practice has two distinct service offerings:
econometrics and multi‑channel analytics.
In MPO, our award‑winning team of
marketing econometricians build cause and
effect models to help brands understand
and exploit consumer paths to purchase.
Our data scientists are skilled at integrating
and analyzing data sets from any source
to deliver evidence‑based insights that
optimize marketing performance.
We have particular expertise in working
with data generated by digital customer
touchpoints, including owned media
properties, online stores, social media
platforms, and digital kiosks. In these
ways, we take the guesswork out of
marketing investment.
12
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
STRATEGIC REPORT For today’s progressive advertiser, the media
landscape offers unprecedented opportunities
to connect with customers – often directly.
Dietmar Kruse,
Global Practice Principal
of Media Measurement:
“ To invest with confidence in the most
effective and efficient media channels,
advertisers need proper access to the
right data. To optimize budgets, they
need to know how effective their spend
is compared with their competitors’
and peers’ investments, and what they
need to do to improve. Advertisers need
to know whether their agencies are
delivering, how they’re performing, and
so how best they should reward them.”
Stephen Broderick, CEO of Ebiquity’s
contract compliance business,
FirmDecisions:
“ Because of the pace of change in
all media – but especially digital –
advertisers should review the contracts
they have with their media agency of
record at least annually. This will help
them be sure they have access to
the data they need to have the level
of transparency over their marketing
spend that’s right for them. Put simply,
it’s good governance.”
Morag Blazey,
Global Practice Principal
of Market Intelligence:
“ Advertisers and their agencies need
a complete picture of what their
competitors are saying, who they
are talking to, how often, and in
which media.
This information allows marketers
and their insight teams make
better‑informed decisions when setting
communications budgets, strategies,
and messaging decisions.”
Mike Campbell,
Head of Ebiquity’s International
Effectiveness Practice:
Maigiri Jinkiri,
Head of Ebiquity’s North American
Multi‑Channel Analytics Practice:
“ Given the sheer volume of media and
marketing data, it has never been more
challenging to work out what each
marketing investment contributes to
overall brand performance. At the same
time, it has never been more possible
to improve the impact investments have
on KPIs.”
“ Maximizing each customer interaction
demands a rounded understanding
of emerging technology, big data
analytics, and customer behavior.
Our consultants maintain a unique
blend of technological, analytical,
and business management skills to
ensure that clients capitalize on the
marketplace opportunity.”
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
13
Strategic report
CHIEF EXECUTIVE OFFICER’S REVIEW continued
An aspiration for the future
Ebiquity as the partner of choice for the
media, data, and adtech communities.
The purpose of our business is
creating clarity for our clients on the
return on investment that their media
investments yield for them in all channels.
By understanding simply and clearly
the effectiveness and efficiency of their
media choices, we help them to optimize
performance. This performance is mediated
through an increasingly diverse range of
partner businesses. The most significant
of these partners is usually the advertiser’s
media agency of record, although it now
also includes an array of specialist digital,
technology, and data businesses across
the adtech and martech ecosystem.
Because we evaluate the performance of
the output of our clients’ agencies, it is our
long‑term ambition and aspiration to work
in partnership with them too. It is our role to
test – independently – and demonstrate the
real value that they are delivering for our
clients, as well as to recommend strategies
for improving media performance still
further. This is why we would like – over the
coming years – to become the partner of
choice for our clients’ partner agencies too.
This is true across all our services,
from pitch management to marketing
performance optimization; from media
value measurement to market intelligence;
from strategic media consultancy to
contract compliance reviews. We recognize
that some of our services – including
agency pitch management and contract
compliance reviews – are a cost of doing
business for agencies. Nevertheless, they
are important aspects of good governance,
and we try to deliver these services in a
straightforward and professional manner
for all parties.
Our desire to become the partner of choice
for the media industry is also why – for
instance – we are developing our new
Connect data management platform to
allow seamless and automated uploads of
media data from media agencies. This will
reduce the load on agencies, improving
the accuracy of data, and save time for
agencies and advertisers.
If an advertiser decides to change its
agency of record, for instance, and we’re
appointed to manage the pitch process,
it’s important that we should have good
relationships with and deep knowledge
of the capabilities of all potential media
agency partners. We also need good
relationships with the leadership of
agencies, data partners, and adtech
providers such as ad servers and DSPs.
We are building these relationships in both
local markets and at a global level.
Part of our commitment to being the
partner of choice to the global advertiser
community extends to our close working
relationship with leading industry trade
bodies. This includes the World Federation
of Advertisers (‘WFA’), the Incorporated
Society of British Advertisers (‘ISBA’), the
U.S. Association of National Advertisers
(‘ANA’), and representative bodies in other
key global markets including Australia,
France, Germany, and Spain.
Our Growth Acceleration Plan
Across our one global Ebiquity, we are now
actively embedding our matrix structure,
our people strategy, and our narrative
purpose as fundamentals required to grow
the business. In the next stage of our
development, we are actively transforming
Ebiquity into a technology‑enabled
consultancy.
Stephan Loerke, CEO at the World
Federation of Advertisers
“ The WFA has worked with Ebiquity
for a number of years now, and we
highly value our partnership with them.
Their expertise has been very valuable
in helping us to guide our advertiser
members towards best‑practice in
marketing and media effectiveness, and
to provide real clarity into the complexity
of today’s marketing landscape.”
Our clients demand and rightly
expect quick turnaround of analysis
of large volumes of data. Over the
coming years, we can only meet these
expectations and scale our business
by making our products and services
technology‑enabled throughout.
We have identified that, compared with
similar services firms, we have been
running “too lean” – delivering 15‑16%
underlying operating profit margin
against 10‑11% for comparable firms.
By investing in technology to make our
business technology‑enabled, we should
nevertheless be able to deliver above
average margin of 12‑13%.
Enhanced technology is critical to our
future success, right across our three,
core practice areas.
14
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
STRATEGIC REPORT Our corporate purpose of
“creating clarity” shapes
everything we do.
As we start to meet these objectives,
we will increasingly be known as
one of the leading, independent,
technology‑enabled marketing and
media analytics consultancies, right
around the world. Board‑level executives
will trust us more deeply. Our services
and methodologies will help to set the
standards for the industry. And advertisers,
industry bodies, analysts, and the media
will increasingly seek out our thought
leadership.
Michael Karg, PhD
Chief Executive Officer
27 March 2017
In Marketing Performance Optimization,
we face a rapidly‑growing need to analyze
enterprise scale sets of consumer and
media, behavioural and transactional
data. Our ability to deliver here will be
underpinned by technology.
In Media Value Management, we need
to ingest and integrate large sets of media
data from multiple different sources – from
ad servers to demand side platforms – to
help our clients optimize campaigns in near
real time. Our ability to deliver here will be
underpinned by technology.
And in Market Intelligence, we bring
together the world’s display advertising –
from print, broadcast, and online services;
creative executions, media placement, and
spend data – into fully searchable, properly
tagged databases. Our ability to deliver
here will be underpinned by technology.
Our approach
Our corporate purpose of “creating clarity”
shapes everything we do. This includes
the clear and straightforward strategy
we have adopted to deliver our Growth
Acceleration Plan. We call this the 5Ps, and
it covers: People, Product, Process, Profile,
and Performance.
We believe that by having the right people
and products in place, developed and
delivered using the right processes, we will
deliver the strong performance that our
current and future stakeholders demand.
By raising the profile of our cutting‑edge
approaches to creating clarity of marketing
performance for our advertiser clients,
we will further enhance our performance.
Indeed, performance – in terms of revenue,
profit and underlying operating profit –
will be a consequence of our focus on
the first 4Ps.
This straightforward framework has allowed
us to simplify management reporting on
People, Product, Process, and Profile,
and we are driving these through the
business. This applies to both near‑term
financial management at an operational
level, as well as the longer‑term strategic
management of the business.
Just as we are straightforward in all our
client engagements designed to create
clarity about effectiveness and efficiency
of marketing investments, so we are clear
about what we want to achieve over the
next five years.
Our five-year objectives
Our 5Ps strategy provides the framework
for our five‑year objectives:
1: PEOPLE
Attract, retain and develop high calibre
talent from the media, data science and
consultancy sectors.
2: PRODUCT
Launch proprietary products and
services that harness our data and
insights and enable us to be trusted
advisers for our clients.
3: PROCESS
Shape the organization and its
processes to support broader and
deeper client relationships.
4: PROFILE
Raise our brand profile and broaden the
perception of our expertise to support
our growth plans.
5: PERFORMANCE
Delivery of our Growth Acceleration
Plan resulting in sustainable double‑digit
revenue growth at sustainable
operating margins.
READ MORE ABOUT
THE FIVE Ps ON PAGES 18 AND 19.
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
15
Strategic report BUSINESS MODEL
Applying data‑driven insights to help
advertisers achieve greater marketing
return on investment.
Our business model
Common across all our diverse products
and services, and central to our business
model, is our data‑driven approach to
creating clarity from complexity. We always
start an engagement with a strategic
review of where our clients are today,
where they want to get to, and what their
motivations are for action. This is true
for both long‑established and first‑time
clients. This process of triage enables us to
determine the most effective order in which
to address specific priority tasks.
We then capture data; we cleanse,
organize, and harmonize that data; we
apply advanced analytics to the data;
we generate actionable insights; and,
we tell our clients data‑driven stories from
which they can take tangible, practical,
and measurable action. This is how we
empower our clients to take rightful
ownership of their digital marketing
strategy, technology, data, and spend.
Inputs:
data & insights
1) Client data
(e.g. media spend, sales)
2) Consumer data
(e.g. behavioural data, web data)
3) Market data
(e.g. creative assets)
Example sources:
Clients, third‑party data/agencies,
Ebiquity automated tracking programs
We
organize
data
DATA
SCIENTISTS
We
capture
data
DEVELOPERS
IN G
T
A
E
R
C
C
L
A
R
IT
Y
STRATEGIC
CONSULTANTS
We conduct
strategic
reviews
FIND OUT MORE ABOUT OUR DIVISIONS ON PAGE 12.
16
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
STRATEGIC REPORT
We apply
advanced
analytics
MODELLERS
IN G
T
A
E
R
C
C
L
A
R
IT
Y
ANALYSTS
MEDIA
EXPERTS
We generate
actionable
insights
Outputs:
improved media &
marketing decisions
Increase sales
(e.g. optimized marketing investments,
increased marketing response)
Reduce costs
(e.g. ensure trading partners deliver
against savings claims)
DIGITAL
EXPERTS
CLIENT
PARTNERS
We tell
data-driven
stories
FIND OUT MORE IN OUR STRATEGY SECTION ON PAGES 18 AND 19.
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
17
Strategic report
OUR STRATEGY
Our long term strategic ambition is for Ebiquity to be
known as the leading, independent, technology‑enabled
marketing and media analytics consultancy globally.
GOAL
PEOPLE
PRODUCT
Attract, retain and develop high calibre
talent from the media, data science and
consultancy sectors.
Launch proprietary products and
services that harness our data and
insights and enable us to be trusted
advisers to our clients.
PROCESS
PROFILE
PERFORMANCE
Shape the organization and its
processes to support broader
and deeper client relationships.
Raise our brand profile and broaden the
Delivery of our Growth Acceleration Plan
perception of our expertise to support our
resulting in sustainable double‑digit
growth plans.
revenue growth at sustainable
operating margins.
PROGRESS
• Appointed leadership for each of our
• Launched Strategic Media
global practices.
Consultancy service offering.
• Commenced talent review process
to identify key talent within the
organization.
• Launched Portfolio Media upgrade
in September 2016 and commenced
the rollout of the first phase of our
Portfolio Digital Service in APAC.
• Hired Operations Director to develop
tools and processes to enhance our
internal operational capabilities.
• Appointed Chief Client Officer to
• Became recognized as an industry
• Introduced matrix organization
focus on growing some of our largest
leader on the topic of media
enabling clear accountability at
global clients.
transparency following the publication
practice and regional levels.
of the ANA report in July 2016.
• Set out clear goals for financial
performance over the next five years
and published specific milestones
for 2017 and 2018.
PRIORITIES
• Develop training programme for our
client‑facing employees focusing on
client development and engagement.
• Create a competency framework to
assess, maintain and monitor the skills
and attributes of our employees.
• Continue rollout of our Portfolio
Digital Service.
• Launch our digital paid media
performance measurement
platform “Optix”.
• Launch “Connect”.
• Grow our key clients by identifying and
• Publication of thought leadership
• Launch of digital services offerings
realizing cross‑selling opportunities.
articles providing insightful and
and expansion of MPO services to
• Evolve our Operations function to support
actionable points of view to our clients.
new markets.
growth and provide timely and improved
• Increased presence at relevant
• Delivery against the milestones
management data.
industry events.
published within our growth
acceleration plan.
KPIs
• Targeting a voluntary annual employee
turnover rate of less than 20%.
• Expand our Marketing Effectiveness
footprint in Europe and APAC.
• Increase the proportion of revenue
generated from new/enhanced
products and services.
• Percentage of clients taking two or more
• Increased speaking engagements
• Revenue CAGR of +10% between
products/services.
at leading industry events.
2016‑2021.
• Publication of thought
leadership pieces.
• Medium term underlying operating
profit margin target of 12‑13%.
RISKS
• Our talent continues to be highly
in demand due to the breadth of
experience that it gains through our
unique positioning. There is a risk of an
industry‑wide talent shortage for data
scientists in particular as demand by
clients, agencies, internet platforms
and publishers increases. We work
hard on a number of initiatives to make
Ebiquity a great place to work and
foster retention.
• The media landscape is constantly
changing, resulting in increasing
pressure to develop/refine products
and services faster. Through evolving
our delivery methods and creating
product owners we aim to stay highly
relevant to our clients.
• Our clients often have complex
• The recent high profile cases of
• Identifying key talent to enable
decentralized management structures
transparency and ad fraud issues may
expansion of MPO could take longer
requiring considerable investment of
have created strained relationships
than expected due to scarcity in
time to negotiate global commercial
between some clients, agencies
the market.
agreements. We ensure we devote
and publishers. We continue to
appropriate commercial and senior
educate and advise on these topics
client facing resource to expedite the
to provide objective, sound and
negotiation of commercial agreements.
independent advice.
• Clients may be slower to respond
to issues in media transparency
and data driven marketing causing
a delay in potential revenue growth.
We leverage our relationships
with clients and industry bodies
to influence change.
18
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
STRATEGIC REPORT GOAL
PEOPLE
PRODUCT
Attract, retain and develop high calibre
Launch proprietary products and
talent from the media, data science and
services that harness our data and
consultancy sectors.
insights and enable us to be trusted
advisers to our clients.
PROCESS
PROFILE
PERFORMANCE
Shape the organization and its
processes to support broader
and deeper client relationships.
Raise our brand profile and broaden the
perception of our expertise to support our
growth plans.
Delivery of our Growth Acceleration Plan
resulting in sustainable double‑digit
revenue growth at sustainable
operating margins.
PROGRESS
• Appointed leadership for each of our
• Launched Strategic Media
global practices.
Consultancy service offering.
• Commenced talent review process
• Launched Portfolio Media upgrade
to identify key talent within the
in September 2016 and commenced
organization.
the rollout of the first phase of our
Portfolio Digital Service in APAC.
PRIORITIES
• Develop training programme for our
• Continue rollout of our Portfolio
client‑facing employees focusing on
Digital Service.
client development and engagement.
• Launch our digital paid media
• Create a competency framework to
performance measurement
assess, maintain and monitor the skills
platform “Optix”.
and attributes of our employees.
• Launch “Connect”.
• Appointed Chief Client Officer to
• Became recognized as an industry
focus on growing some of our largest
global clients.
• Hired Operations Director to develop
tools and processes to enhance our
internal operational capabilities.
leader on the topic of media
transparency following the publication
of the ANA report in July 2016.
• Introduced matrix organization
enabling clear accountability at
practice and regional levels.
• Set out clear goals for financial
performance over the next five years
and published specific milestones
for 2017 and 2018.
• Grow our key clients by identifying and
realizing cross‑selling opportunities.
• Evolve our Operations function to support
growth and provide timely and improved
management data.
• Publication of thought leadership
articles providing insightful and
actionable points of view to our clients.
• Launch of digital services offerings
and expansion of MPO services to
new markets.
• Increased presence at relevant
industry events.
• Delivery against the milestones
published within our growth
acceleration plan.
KPIs
• Targeting a voluntary annual employee
• Increase the proportion of revenue
• Percentage of clients taking two or more
• Increased speaking engagements
• Revenue CAGR of +10% between
turnover rate of less than 20%.
generated from new/enhanced
products/services.
at leading industry events.
2016‑2021.
• Publication of thought
leadership pieces.
• Medium term underlying operating
profit margin target of 12‑13%.
• Expand our Marketing Effectiveness
footprint in Europe and APAC.
products and services.
RISKS
• Our talent continues to be highly
• The media landscape is constantly
• Our clients often have complex
• The recent high profile cases of
• Identifying key talent to enable
in demand due to the breadth of
changing, resulting in increasing
experience that it gains through our
pressure to develop/refine products
unique positioning. There is a risk of an
and services faster. Through evolving
industry‑wide talent shortage for data
our delivery methods and creating
scientists in particular as demand by
product owners we aim to stay highly
clients, agencies, internet platforms
relevant to our clients.
and publishers increases. We work
hard on a number of initiatives to make
Ebiquity a great place to work and
foster retention.
decentralized management structures
requiring considerable investment of
time to negotiate global commercial
agreements. We ensure we devote
appropriate commercial and senior
client facing resource to expedite the
negotiation of commercial agreements.
transparency and ad fraud issues may
have created strained relationships
between some clients, agencies
and publishers. We continue to
educate and advise on these topics
to provide objective, sound and
independent advice.
expansion of MPO could take longer
than expected due to scarcity in
the market.
• Clients may be slower to respond
to issues in media transparency
and data driven marketing causing
a delay in potential revenue growth.
We leverage our relationships
with clients and industry bodies
to influence change.
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
19
Strategic report CASE STUDY
AUTOMOTIVE CLIENT
(MVM)
Client objectives
Our client is one of the world’s biggest motor
manufacturers. They were looking to achieve
savings in their investment in paid media across
two dozen major markets.
Just because our business and digital marketing
is complex doesn’t mean it’s impossible to
understand. Ebiquity have helped us make
sense of our investment, in traditional and digital
media, and delivered substantial cost savings
and efficiencies in the process.
Automotive client
CMO
Our approach
We have a network of 300 media experts in
14 countries who have been optimizing media
efficiency for global brands for decades.
We deployed this expertise to verify cost savings
and then consolidated the results globally.
This “glocal” approach benefited our client in two
ways. Our deep market knowledge, local market
data pools, and country‑level service and delivery
enabled us to develop customized savings per
market. We then created standardized global
quality control processes, reporting procedures,
and outputs to give a truly global worldview
to central teams.
300
media experts
14
countries
Business outcomes
Our analysis generated more than £60 million
in value for our client over three years. This was
made up of more than £25 million of media
savings, promised to the client by the agency
in the spirit of their agreement, as well as in
excess of £35 million of value in cash refunds,
additional free space and/or other forms of agency
volume bonification.
£25m
£35m
of value in cash refunds,
additional free space
and/or other forms
of agency volume
bonification
of media savings
£60m
in value generated from
our analysis, for our
client, over three years
20
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
STRATEGIC REPORT CASE STUDY
UNILEVER #unstereotype
(MI)
Client objectives
At the 2016 Cannes Lions Festival, Unilever
CMO Keith Weed announced that the company
had begun to remove stereotypical portrayals
of gender from its ads around the world. It took
this decision because of global research showing
that campaigns that are more relevant for today’s
consumers are better for society and better for
brands. Progressive advertising has been found to
generate stronger engagement, more talkability,
and better branded impact.
It’s hard to understand what you need to
improve before you see what it is that you’re
doing today. I think everyone was struck when
they saw our audit. You don’t often get that
whole picture based on what is actually hitting
consumers’ TVs in the markets. Having a partner
like Ebiquity has allowed us that view, helped us
make the opportunity to improve visibility,
and provided us with a strong impetus to act.
Josh Cleveland
Global Marketing Manager at Unilever
Our approach
To know with certainty which adverts for which
products in which markets needed to change,
Unilever commissioned Ebiquity to review how
the company and its competitors portray women
and men in ads across its global portfolios of
refreshment, food, personal care, and home
care products.
We gathered hundreds of ads from our Portfolio
database. All were reviewed and coded by
analysts, and evaluated against a comprehensive
set of criteria to identify the extent to which both
women and men were presented stereotypically.
Criteria included whether (or not, as was often
the case) the ads portrayed women as funny,
in leadership roles, in multiple environments
or just in the home, and as whole people or
‘disembodied’ (e.g. just an arm, leg, or face only
for beauty products).
Business outcomes
Informed by this comprehensive, strategic review
from our Advertising Intelligence Insight team,
Unilever is now using a set of global benchmarks
to train its brand marketing teams to produce ads
that avoid stereotypical, outdated gender roles.
These guidelines are also now routinely used to
brief creative and media agencies. Weed and CEO
Paul Polman underlined Unilever’s commitment
to the #unstereotype campaign1 in a flagship
speech at the World Economic Forum in Davos
in January 2017.
1. http://bit.ly/2jZewX1
50%
12%
of FMCG ads in 2016
researched contained
stereotypical portrayals
of women
ads felt to be progressive
have 12% more impact
on consumers
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
21
Strategic report CASE STUDY
DIRECT LINE GROUP
(MPO)
Client objectives
Direct Line Group (‘DLG’) became the UK’s largest
home and motor insurance company by subverting
the industry in the 1980s through cutting out
the middle man, the insurance broker. When
online price comparison websites commoditized
the market, DLG needed to innovate again to
differentiate its offer and reassert leadership.
The starting point was a new philosophy,
embodied in the new positioning and campaign
featuring Harvey Keitel, reprising his “fixer” role
of Winston Wolf from the movie Pulp Fiction for
the company’s flagship Direct Line brand.
The Direct Line ‘Fixer’ campaign improved
brand measures like ‘Integrity’, ‘Preference’
and perceived ‘Quality’. It was also successful
in terms of the econometric ROI and topline
customer growth. It’s rare for campaigns to
demonstrate effectiveness across so many
different types of metric.
Carl Bratton
DLG
Our approach
Ebiquity’s Marketing Performance Optimization
experts worked in partnership with DLG’s
in‑house insight and effectiveness teams and
its media, creative, and research agencies to
build best‑in‑class econometric models. These
enabled Direct Line to optimize its media and
direct response activity, and deliver sustainable
improvements in return on investment. Our work
assisted DLG to validate and drive fundamental
operational changes right across the organization,
from direct mail to paid social, from enhancing the
impact of digital display to optimizing mass media
such as TV and search.
Business outcomes
The Direct Line campaign improved brand health
measures including ‘Integrity,’ ‘Preference,’ and
perceived ‘Quality.’ It was successful in terms
of the econometric ROI. And it drove topline
customer growth. DLG’s innovative use of
econometric modelling was recently awarded
a gold in the prestigious, biennial marketing
effectiveness awards from the Institute of
Practitioners in Advertising (‘IPA’).
£11m
£1.22
inefficient spend cut from
annual marketing budget
ROI for every £1 invested
in IPA paper – and still
improving
22
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
STRATEGIC REPORT CASE STUDY
TRAVEL CLIENT
(MCA)
Client objectives
We worked with a leading company in the travel
and hospitality industry, looking to move from a
decentralized to a centralized data management
structure. The business wanted to streamline
its multi‑channel data analytics technology,
personnel, and processes to create the best
possible customer experience at all touchpoints.
It was looking to harness the untapped potential
to provide highly personalized and targeted offers
to its customers based on their individual patterns,
seasonality, and frequency of travel. The company
could see the opportunity that taming its digital
data offered in terms of incremental revenue,
and it needed a partner to help it set a vision and
deliver against a clear and actionable strategy.
Our relationship with Ebiquity has enabled us
to make data work harder for the business.
We now extract meaningful insights from
customer behaviour which means we are
‘there’ in the right way to enhance the
consumer experience.
Travel client
Head of Analytics
Our approach
We built an analytics programme for the
newly‑centralized business from the ground
up. This covered everything from collecting and
analyzing data to generating the insights required
to improve the customer journey and so enhance
sales. Those insights are then used to drive the
optimization efforts across the entire business.
We started by creating a strategic roadmap to direct
future performance. This included a full vendor
evaluation – made more complicated because the
project required the integration of multiple legacy
systems and sets of vendors – and implementation
of the roadmap. This involved data integration, data
analysis and benchmarking, and finally continuous
optimization. Our consultants are unusual for this
industry in that most have a hybrid of technological
and business management skills. They can therefore
both conceptualize enhanced data management
systems and then go on to deliver a genuine
digital transformation.
Business outcomes
We have enabled the travel company to deliver
an incremental, year‑on‑year revenue lift of tens
of millions of dollars. The strategic roadmap
streamlined the personnel, processes, and
technology our client uses to optimize customer
experience, removing overlapping or conflicting
vendors, technology and services. Inside a month
of our first engagement, we operationalized
analytics data across all stakeholder groups.
Within three months, we had given multiple
functional units the confidence to answer complex
business questions with certainty. With enhanced
data collection governance and processes, the right
data now goes to the right people at the right time.
$30m
>50%
incremental
revenue annually
total ad tech vendors
better than halved
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
23
Strategic report CHIEF FINANCIAL OFFICER’S REVIEW
Delivering double digit growth
with strong cash conversion.
Highlights
• 9% revenue growth, with significant
benefit from foreign exchange, 2.1%
LFL CC revenue growth
• Underlying operating profit margin
of 15.6%
• Growth in underlying diluted EPS
to 11.3p
• Increase in proposed dividend to
0.65p per share
• Underlying cash conversion of 88%
Andrew Noble
Chief Financial Officer
Summary of results
Revenues grew to £83.6 million which
represents 9.1% total revenue growth over
£76.6 million recorded over the 12 months
ended 31 December 2015 (‘CY2015’).
Ebiquity received a very positive revenue
benefit from the depreciation of sterling
against the US dollar and euro. With 33%
of revenues denominated in euros, and
26% in US dollars the depreciation of
sterling against these currencies by 11%,
both led to a revenue boost of £4.5 million
or 5.8%.
Revenue growth was further benefited
by the impact of the acquisition of
Fairbrother Marsh Company Limited
(‘FMC’) in March 2016 and the full year
impact of our acquisition of Media Value
SL in March 2015. The impact on revenue
was to increase revenue growth by 1.2%
over CY2015. Discounting the impact
of currency movements and the impact
of current and prior year acquisitions,
like‑for‑like constant currency revenue
growth was 2.1% over CY2015.
Taken together our Media Value
Measurement and Marketing Performance
Optimization practices contributed 72%
of revenue (CY2015: 68%). Together
the two practices achieved like‑for‑like
constant currency revenue growth of 7%.
Further detail of performance by practice
is outlined on pages 25 and 26.
Underlying operating profit increased
by 4.4% from £12.4 million in CY2015
to £13.0 million and reflected a slight
decrease in underlying operating profit
margin from 16.2% to 15.6%. Reported
operating profit increased from £3.6 million
in CY2015 to £7.8 million in 2016. The
prior year included a non‑cash charge
in respect of the impairment of goodwill,
purchased intangible assets and related
capitalized development costs of the
Reputation business.
Net finance costs were £1.1 million
in the year to December 2016
(CY2015: £1.2 million), the reduction
reflects lower gross debt in 2016
compared with 2015.
Underlying profit before tax was 5.3%
higher at £11.8 million in the year to
December 2016 (CY2015: £11.2 million).
Reported profit before tax increased by
£4.1 million to £6.6 million in the year to
December 2016 (CY2015: £2.5 million),
due to the non‑cash goodwill impairment
booked in the prior period.
Earnings per share
Underlying diluted earnings per share was
11.3p in the year to 31 December 2016
(CY2015: 10.8p), being an increase of 5%
comparable with the increase in underlying
profit before tax.
Highlighted items
Highlighted items total £5.2 million
in the year to December 2016,
(CY2015: £8.8 million). Highlighted items
comprised the following:
• £1.9 million related to purchased
intangible asset amortization
(CY2015: £2.0 million);
• £0.6 million share‑based payment
expenses (CY2015: £0.8 million);
• £2.0 million of acquisition related
costs, (CY2015: credit £0.1 million)
including £0.8 million in relation to the
increase of the Stratigent earn‑out and
deferred consideration adjustments
of £0.6 million resulting from foreign
exchange differences net of the impact
of discounting to present value; and
• £0.7 million of integration costs,
(CY2015: £1.6 million) including the
cost of management restructure of
£0.5 million and a further £0.2 million
relating to fees in relation to the
appointment of the new Group CEO.
24
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
STRATEGIC REPORT Headline financials
REVENUE £m
OPERATING PROFIT £m
DILUTED EPS pence
83.6
FY20161
13.0
FY20161
76.6
CY20152
12.4
CY20152
11.3
10.8
FY20161
CY20152
FY20153
43.3
FY20153
0
+9.1%
+4.4%
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
Underlying diluted earnings per share
Performance by practice is outlined below:
MVM – Media Value Measurement (56% of total revenue)
Revenue
Underlying operating profit/(loss)
Underlying operating profit/(loss) margin %
FY20153
(0.4)
+5.0%
FY2016
Audited
for the
year ended
31 December
2016
£’000
CY2015
Unaudited
for the
year ended
31 December
2015
£’000
FY2015
Audited
eight month
period ended
31 December
2015
£’000
47,161
13,048
23,360
83,569
12,124
3,739
3,902
(6,806)
12,959
(5,202)
7,757
(1,132)
—
6,625
11,827
11.3p
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
10.8p
FY2016
Audited
£’000
47,161
12,124
25.7%
CY2015
Unaudited
£’000
41,998
12,057
28.7%
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)
(0.4)p
FY2015
Audited
£’000
20,409
(81)
(0.4)%
Our Media Value Measurement (‘MVM’) practice reported revenue increase up 12.3%, an increase of 3.6% on a like‑for‑like constant
currency basis. MVM now accounts for 56% of Group revenue. The recent acquisitions of FMC in Ireland and the full year impact of the
2015 acquisition of Media Value SL in Spain increased revenue by 2.2%. Revenue growth was held back by a decline in revenue from
our contract compliance business which itself represents less than 10% of total MVM revenue. Excluding contract compliance, the MVM
practice achieved 6.6% like‑for‑like constant currency revenue growth.
1. FY2016 is the year ended 31 December 2016 (audited).
2. CY2015 is the calendar year from 1 January 2015 to 31 December 2015 (unaudited).
3. FY2015 is the financial period from 1 May 2015 to 31 December 2015 (audited).
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
25
Strategic report
CHIEF FINANCIAL OFFICER’S REVIEW continued
MVM – Media Value Measurement continued
Operating margin reduced to 25.7% from 28.7% in FY2015 primarily as a result of the revenue decline in the contract compliance
business which directly impacted operating profit, investment in additional resources in our media business in China to enable sustainable
revenue growth in that rapidly evolving market and the shift in revenue to lower margin international benchmarking engagements.
MPO – Marketing Performance Optimization (16% of total revenue)
Revenue
Underlying operating profit
Underlying operating profit margin %
FY2016
Audited
£’000
13,037
3,739
28.7%
CY2015
Unaudited
£’000
9,936
2,802
FY2015
Audited
£’000
6,899
1,874
28.2%
27.2%
Revenue from our Marketing Performance Optimization (‘MPO’) practice continued to grow strongly, with reported revenue growth
of 31.2% and like‑for‑like constant currency revenue growth of 21.6%. MPO now accounts for 16% of total revenue (CY2015: 13%),
which we expect to continue to grow as a proportion of our total business. Operating margins were marginally ahead of CY2015 at
28.7%, with resources growing largely in line with revenue growth. As we expand our MPO practice into new markets and resource
for sustainable growth, we anticipate a reduction from current operating margin levels.
MI – Market Intelligence (28% of total revenue)
Revenue
Underlying operating profit
Underlying operating profit margin %
FY2016
Audited
£’000
23,360
3,902
16.7%
CY2015
Unaudited
£’000
24,650
3,668
14.9%
FY2015
Audited
£’000
16,002
2,070
12.9%
Revenue from Market Intelligence (‘MI’) declined by 5.2% on a reported basis, and by 8.5% on a like‑for‑like constant currency basis.
As indicated in our half‑year report and as largely anticipated, revenue from our project‑based research business declined sharply
during the year and now represents less than 10% of MI revenues. Revenue from Portfolio, our Advertising Intelligence (‘AI’) subscription
service, and related insight services grew by 1.7% on a reported basis. Eliminating the impact of currency, revenue from AI declined
1.7% owing to the loss of three contracts in our US business unit at the beginning of the year.
Despite the decline in revenue, operating margins improved by 1.8% to 16.7% in 2016 because of both cost control within the AI business
and the change in business mix, with costs being managed down with revenue in the lower margin project‑based research business.
Central costs
Central costs
FY2016
Audited
£’000
CY2015
Unaudited
£’000
(6,806)
(6,116)
FY2015
Audited
£’000
(3,866)
Central costs include central salaries (Board, Finance, IT, Marketing and HR), legal and advisory costs and property costs. Central costs
have increased by £0.7 million or in 2016 due to increased staff costs, travel costs and IT costs. The increase in travel costs, especially
in the second half of the year, reflected the need to bring management teams together more often as our matrix organization was
implemented.
Taxation
The total tax charge for the year ended December 2016 is £2.2 million (FY2015 credit: £1.3 million) representing a current tax charge of
£1.8 million (FY2015: credit of £0.1 million) and a deferred tax charge of £0.4 million (FY2015: £1.2 million).
On a calendar year comparative basis, the effective rate of tax on underlying profit before tax for the year ended 31 December 2016 is
21.7% (CY2015: 22.2%). The effective rate of tax is raised by under provision from previous periods. Excluding the release of provisions
the underlying effective tax rate is 21.0%.
Dividend
It is the Board’s intention to pay a dividend of 0.65p per share for the 12 months ended 31 December 2016, (FY15: 0.4p 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. The dividend will be recommended as a final
dividend at the Company’s AGM on 10 May 2017.
Equity
During the 12 months to December 2016, 38,063 shares were issued upon the exercise of employee share options. As a result our share
capital increased to 77,199,751 ordinary shares (31 December 2015: 77,161,688).
Acquisitions
On 11 March 2016, the Group acquired the outstanding 50% interest in its Irish media consultancy associate, FMC. The 50% interest
in FMC was acquired for an initial cash consideration of €150,000 (£118,000). €643,000 (£500,000) in deferred consideration was
recognized at acquisition, however the maximum total purchase consideration is up to €2,000,000 (£1,559,000), payable in cash,
depending on the performance of the FMC business during the period ending 31 December 2020.
26
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
STRATEGIC REPORT
Cash conversion
Reported cash from operations
Underlying cash from operations
Underlying operating profit/(loss)
Cash conversion
Year ended
Eight month
Year ended period ended
31 December 31 December 31 December
2015
Audited
£’000
2015
Unaudited
£’000
2016
Audited
£’000
10,782
11,342
12,959
87.5%
11,515
13,673
12,411
110.2%
5,028
6,889
(3)
n/a
Underlying cash from operations represents the cash flows from operations excluding the impact of highlighted items. The underlying
net cash inflow from operations was £11.3 million in the year ended 31 December 2016 (CY2015: £13.7 million).
After highlighted items are considered, reported net cash inflow from operations for 2016 was £10.8 million (CY2015: £11.5 million).
Cash conversion has improved significantly since the interim results due to the seasonality of cash flows, but is below the very strong
cash conversion in CY2015. Improvement in the processes around working capital management remains a key focus for the business
in 2017.
Net debt and banking facilities
Net cash
Bank debt1
Net debt1
31 December 31 December
2015
Audited
£’000
2016
Audited
£’000
4,600
(32,750)
(28,150)
6,364
(35,250)
(28,886)
1. Bank debt in the statement of financial position at 31 December 2016 is shown net of £0.1 million (31 December 2015: £0.2 million) of loan arrangement
fees that have been paid and which are amortized 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 £3,750,000 remains outstanding at 31 December 2016
(31 December 2015: £6,250,000)), and a revolving credit facility of £30,000,000 (of which £29,000,000 was drawn down at
31 December 2016 (31 December 2015: £29,000,000)).
During the period, the Group continued to trade within each of its banking facilities and associated covenants. Net debt to EBITDA ratio
was 1.94x at 31 December 2016 (31 December 2015: 2.04).
Statement of financial position and net assets
Net current assets as at 31 December 2016 increased by £3.6 million to £9.2 million (2015: £5.6 million) and total net assets increased
by £9.7 million to £52.1 million (2015: £42.4 million) as a result of the profit for the year of £4.7 million and foreign exchange gains on the
translation of overseas subsidiaries. Trade and other receivables increased by £4.1 million to £28.4 million reflecting an increase in trade
receivables of £3.0 million and accrued income of £1.8 million.
Goodwill as at 31 December 2016 was £58.0 million (2015: £54.8 million) with the increase due to foreign exchange gains on
retranslation of overseas subsidiaries of £2.8 million and the acquisition of FMC in Ireland adding £0.4 million to goodwill.
Deferred contingent consideration has decreased by £2.9 million since 31 December 2015 to £2.0 million, due to the settlement of
deferred consideration. Two earnouts relating to our recent acquisitions ended during 2016, and in total £5.1 million was paid to former
shareholders. At 31 December 2016 of the remaining deferred consideration of £2.0 million, which relates to the recent acquisition of
FMC and our media business in China, £1.8 million is expected to be settled in the next 12 months.
Outlook
Our delivery on the milestones set out in the Growth Acceleration Plan, coupled with events in the media marketplace – such as the
debate around the performance of digital advertising – create significant medium‑term growth opportunities. The implementation of our
plans, the opportunities arising from the changing nature of the industry, make us excited for the future.
By order of the Board
Andrew Noble
Chief Financial Officer
27 March 2017
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
27
Strategic report
BOARD OF DIRECTORS
The Board of Directors has overall responsibility for the
Group and aims to represent the interests of shareholders
and provide leadership and control in order to ensure the
growth and development of the business.
Michael Higgins
Non‑Executive Chairman
Michael, in addition to chairing
the Ebiquity Board, chairs the
Nomination Committee and sits on
the Remuneration Committee and
the Audit & Risk Committee.
Experience
Michael qualified as an accountant
at Price Waterhouse (now
PwC). He then worked at Saudi
International Bank and Charterhouse
before becoming a partner at KPMG
in 1996, from which he retired in
2006. 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, and a non‑executive
director of Progility plc. Michael is
also a non‑executive director of the
Quoted Companies Alliance and is
an alternate member of the Panel on
Takeovers and Mergers on behalf of
the Quoted Companies Alliance.
Committees
Michael Karg, PhD
Group Chief Executive Officer
Michael took up his post on
1 January 2016.
Experience
Michael 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 15‑year career.
A native of Austria, he has been
based in Boston, Paris and London.
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. Michael is a
member of the Board and Chair
of the Compensation Committee
of Travelzoo Inc.
Committees
Andrew Noble
Chief Financial Officer
Andrew joined Ebiquity early in 2015
as Group Finance Director, before
becoming Chief Financial Officer in
September 2016.
Experience
Having obtained his degree in
Politics, Philosophy and Economics
from Oxford University he joined
PwC where he spent four years
before joining market research
company Synovate where he
held a number of finance roles,
culminating in his appointment
as Director of Financial Reporting
and Control. Following the
acquisition of Synovate by Ipsos
in 2011, he became Global Chief
Financial Officer within their
marketing division, overseeing
financial performance and
developing strategy.
Nick Manning
Chief Strategy Officer
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 and subsequently Chief
Strategy Officer.
Experience
Nick has spent 37 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.
28
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
CORPORATE GOVERNANCE
Morag Blazey
Managing Principal,
Market Intelligence
In 2016 Morag took up the new role
of Managing Principal for Ebiquity’s
Market Intelligence practice. Morag
is a fellow of the IPA.
Experience
Morag 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. In 2012 Morag became
CEO of Ebiquity’s UK business and
in 2015 she was appointed as an
executive director.
Richard Nichols
Non‑Executive Director
Richard is Chairman of Ebiquity’s
Audit & Risk Committee and also
sits on the Nomination Committee.
Julie Baddeley
Non‑Executive Director
Julie is Chairman of Ebiquity’s
Remuneration Committee and sits
on the Nomination Committee.
Experience
Richard is Chief Executive of
Instinctif Partners, the international
business communications
consultancy and Non‑Executive
Chairman of the Digital Innovation
Group. 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 PwC)
in London.
Committees
Experience
Julie has 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
organizations. She has chaired
the remuneration committee of
several company boards and been
chairman of Harvey Nash plc since
June 2013. She is currently Senior
Independent Director of Marshall
of Cambridge and a director
of Chrysalis VCT plc. Julie has
broad experience of businesses in
professional services like Ebiquity,
and of those in the consumer
industry sectors Ebiquity serves,
including The Woolwich, Camelot
and Greggs. She was Associate
Fellow at Oxford University Said
Business School from 2000 to 2010,
having previously run a global team
as a partner at Accenture.
Committees
Tom Alexander
Non‑Executive Director
Tom sits on Ebiquity’s Nomination
Committee, Remuneration
Committee, and Audit & Risk
Committee.
Experience
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. Tom brings a wealth of
international business experience
and consumer instinct to Ebiquity.
Committees
Audit & Risk Committee
Nomination Committee
Remuneration Committee
Denotes Chairperson
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
29
Corporate governance
CORPORATE GOVERNANCE REPORT
We are committed to embedding
corporate governance as a discipline
across the Group to complement
our aim to deliver long‑term success
on behalf of our stakeholders.
Michael Higgins
Chairman
Chairman’s governance overview
I am pleased to present the corporate
governance report for the year ended
31 December 2016.
The corporate governance report describes
the framework for corporate governance
and internal control that the Directors
have established. Ebiquity is committed to
robust standards of corporate governance.
Corporate governance code
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
organization 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 the report.
My role as Chairman
It is my principal responsibility as Chairman
to ensure that the Board is effective in
interrogating, approving and monitoring
the Company’s direction and strategy.
As Chairman I am 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.
Board evaluation
The Board carried out a review of its
effectiveness for the first time. This review
was performed by me as Chairman.
I coordinated responses to a confidential
questionnaire to gather feedback from all
Directors. The Board will carry out further
reviews of its effectiveness on an annual
basis and will as part of such reviews
consider whether the use of an external
adviser would be advantageous.
A summary of the issues and comments
raised by the Directors in response to
the questionnaire was circulated to all
Directors. These issues and comments
were also discussed in meetings of the
Nomination Committee and the Board.
No material issues were raised by
the Directors regarding the Board’s
effectiveness. A number of matters were
identified which could make the Board’s
activities and administration more effective
and efficient, which the Board will be
seeking to implement in the coming year.
Michael Higgins
Chairman
27 March 2017
30
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
CORPORATE GOVERNANCE Andrew Noble (Chief Financial Officer)
is responsible for the Group’s worldwide
functions in finance, treasury and taxation.
He has responsibility for the Group’s
finance systems, accounting policies
and controls. Andrew also works closely
with the practice principals, regional
managing directors and finance leaders
across Ebiquity.
Nick Manning (Chief Strategy Officer)
has responsibility for developing and
implementing Ebiquity’s strategy across
its three business segments, ensuring that
Ebiquity provides the services advertisers
need. He is also responsible for the
Group’s marketing strategy.
Morag Blazey (Managing Principal,
Market Intelligence) leads the Market
Intelligence capability globally.
Her principal responsibilities are to
raise Ebiquity’s profile, drive renewals
and new business, and develop
and execute service and product
developments and growth strategies.
Richard Nichols (independent
Non‑Executive Director) is 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 discusses Instinctif’s
instruction by the Company, Richard would
recuse himself from those discussions.
Accordingly, the Board considers Richard
to be independent.
Julie Baddeley (independent
Non‑Executive Director) 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
organizations 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 (independent
Non‑Executive Director) 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 28 and 29.
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.
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
financial statements is set out on page 41.
Composition of the Board
and roles of the Directors
During the year ended 31 December 2016,
Michael Greenlees and Andrew Beach
stood down as Directors of the Company,
and Michael Karg and Andrew Noble were
appointed as Directors of the Company.
The Board of Directors now comprises an
independent Non‑Executive Chairman,
three further independent Non‑Executive
Directors and four Executive Directors.
Michael Higgins (independent
Non‑Executive Chairman) 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 a non‑executive director of the Quoted
Companies Alliance. The Directors are of
the view that Michael Higgins retains his
independence notwithstanding that he
chairs the Board.
Michael Karg, PhD (Group Chief Executive
Officer) 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 management committees
and communicating their decisions/
recommendations to the Board. He is also
responsible for shareholder communication
and ongoing relationships with investors.
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
31
Corporate governance CORPORATE GOVERNANCE REPORT continued
The Audit & Risk 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 & Risk 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.
During the year, the Audit & Risk
Committee expanded its scope of
reference to include certain matters
relating to risk and risk management,
when its name was changed from the Audit
Committee to the Audit & Risk Committee.
The Audit & Risk Committee’s report can
be found on pages 34 and 35.
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 Report can
be found on pages 36 to 38.
Nomination Committee
The Nomination Committee is chaired
by Michael Higgins. The Nomination
Committee comprises Michael Higgins,
Richard Nichols, Julie Baddeley,
Tom Alexander and Michael Karg.
The Nomination Committee meets as
necessary and has responsibility for
nominating candidates to the Board for
appointment as Directors, bearing in
mind the need for diversity and a broad
representation of skills across the Board.
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; and
• approving material contracts to be
entered into by the Group.
Board meetings
During the year the Board met formally
on 10 occasions. In addition, there were
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.
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 and financial
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 & Risk 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.
Risk management
The Board retains ultimate control and
direction over appropriate strategic,
financial, organizational and compliance
issues. The Board has put in place an
organizational structure with defined
lines of responsibility. 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.
Board committees
The Board has constituted several
committees to help it in the performance
of its functions. The principal committees
are the Audit & Risk Committee, the
Remuneration Committee and the
Nomination Committee. The roles of
these committees are set out below.
Audit & Risk Committee
The Audit & Risk Committee, which meets
at least three times a year, is chaired
by Richard Nichols. The Audit & Risk
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 & Risk 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; to assess the adequacy
and effectiveness of the Company’s risk
management systems and to provide a line
of communication between the Board and
the external auditors.
32
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
CORPORATE GOVERNANCE Attendance at meetings
Details of the Directors’ attendance at each regular Board and Committee meeting in the year 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 Karg, PhD
Andrew Noble
Nick Manning
Morag Blazey
Richard Nichols
Julie Baddeley
Tom Alexander
Michael Greenlees
Andrew Beach
Board
Audit & Risk Remuneration
Nomination
10/10
10/10
3/3
7/10
9/10
9/10
10/10
10/10
3/3
8/8
5/5
—
—
—
—
4/5
—
5/5
—
—
7/7
—
—
—
—
—
7/7
6/7
—
—
1/1
1/1
—
—
—
1/1
1/1
1/1
—
—
Management committees
Additionally, and not formal committees of
the Board, the Company’s management
has constituted a number of regional
committees which comprise the principal
vehicles 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. An important
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.
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
33
Corporate governance
AUDIT & RISK COMMITTEE REPORT
Introduction
The Audit & Risk 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. During the year, and at
the request of the Board, the Committee
expanded its scope of reference to include
oversight of the Group’s risk management
and of the procedures in place to identify
and mitigate significant risks.
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 29.
The Committee met on five occasions
during the year. The attendance of
its members is set out in the table on
page 33. Meetings of the Committee
are commonly 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 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 & Risk 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;
• reviewing progress on implementing
control improvements; and
• keeping under review the adequacy and
effectiveness of the Company’s risk
management systems.
Activities during the year
The key matters the Committee considered
during the year are listed below.
In respect of the Group’s financial
statements and interim accounts:
• 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 carrying value of any
cash‑generating unit. The Committee
reviewed the key assumptions in
the assessment of goodwill and the
sensitivity of these assumptions and
impact on the carrying value of goodwill
and intangible assets. On this basis the
Committee makes recommendations to
the Board in this regard;
• going concern: the Committee reviews,
in particular, management’s forecasts
of the Group’s performance including
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 capitalized,
together with the period over which
the capitalized items will be amortized,
to ensure they are consistent with the
Group’s accounting policies;
• revenue recognition: the Committee
reviews the quantum of accrued/
deferred income and the judgement
applied by management in calculating
revenue recognition cut off. The
Committee reviews the quality
of evidence available to support
revenue recognition; and
• taxation: The Committee reviews the
significant components of the tax charge
and provision and the overall effective
tax rate of the Group as a whole.
In respect of risk management:
• the Committee undertook significant
work reviewing the output of
management’s exercise preparing a
register of the principal risks relevant
to the Group and its business together
with the mitigation steps taken to date
by management and planned to be
undertaken in the future;
• the Committee reviewed and approved
the risk management framework
prepared by management which
outlined how risk would be identified
and managed across the business; and
• the Committee included risk as a
standing agenda item at each meeting
for management to update the
Committee on significant changes to
the risk register and mitigating actions.
34
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
CORPORATE GOVERNANCE 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. Details of fees
paid to PwC during the year are outlined
in note 4 to the financial statements.
Non‑audit fees of approximately £19,000
were paid to PwC during the year in
connection with Group restructuring
activities. The Committee does not
consider that auditor independence
has been impacted by this matter.
Richard Nichols
Chair of the Audit & Risk Committee
27 March 2017
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 original audit
partner served from PwC’s appointment
until completion of the audit for the year
ended 31 December 2016 when he
rotated off the audit. A new partner has
been appointed regarding the audit of
the Company’s financial statements for
the year commenced 1 January 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.
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
35
Corporate governance REMUNERATION COMMITTEE REPORT
Remuneration policy
The Board recognizes the role of appropriate remuneration in attracting and retaining people with the industry‑leading skills, knowledge
and experience needed to develop and grow the business, and incentivizing them to perform.
The Remuneration Committee has maintained the policy set out in the Annual Report for the year ended 31 December 2015, which
is used to determine Executive Directors’ remuneration and as a guide for the Executive Committee in setting organization‑wide
remuneration.
In summary, the policy is as follows:
Element
Base
salary
Objective and
link to strategy
Provides an appropriate level of
fixed income – commensurate
with the role – to attract and
retain the individual with the
required capability.
Militates against excessive
risk‑taking and/or focus
on short‑term metrics
by establishing sufficient
balance against variable
remuneration elements.
Operation
Paid monthly.
Used as basis for pension
contributions and
performance‑related
pay eligibility.
Reviewed annually, normally
effective 1 April.
Set at role commencement.
Updated via review against
market comparators as needed.
Benefits
(including
pension)
Provides the necessary current
and future health and security
(for the individual and their
dependents) to enable the
individual to focus maximum
attention on their role.
Private medical, life and
critical illness insurances.
Defined contributions to
personal pension.
Other benefits as considered
appropriate by the Committee.
Performance
bonus
Incentivizes achievement of
short‑term financial and strategic
performance goals.
On‑target expectations
expressed as a percentage of
salary, relative to role.
Long‑Term
Incentives
(equity)
Incentivizes longer‑term growth
and value creation through
shareholder returns
Group financial targets set
annually in relation to
management expectations.
Personal goals are set annually
for each Executive Director in
relation to strategy.
Standard LTIP, with nominal
price options subject to a
minimum three‑year vesting
period with performance
conditions.
Opportunity
The Committee has not set a
maximum salary.
The Committee ensures base
salaries are equitable across
all variables.
The Committee aims to maintain
alignment between increases
for the Directors and the wider
workforce. It retains discretion
to deviate in order to address
specific circumstances, for
example, but not limited to:
• an increase in the individual’s
scope and responsibilities;
and
•
the need to retain specialist
expertise within a competitive
talent market.
The Committee has not set
maximum levels for benefits.
It aims to ensure that individual
arrangements for Directors are
in line with policies applicable
to the wider workforce.
Individual participation is set with
respect to the role performed
Individual on‑target expectation
capped at 50% of base salary.
Maximum award of 200% of
on‑target amount in any one
year i.e. a maximum of 100% of
base salary for any one Director.
Performance
conditions and assessment
Not applicable.
Not applicable.
Measured over a one‑year period.
Minimum thresholds of the
Group’s annual financial
performance determine the
extent to which individuals may
attain on‑target expectation,
which is also judged on
individual performance against
personal goals.
Extent of individual awards
determined with reference to
role, performance and perceived
future value.
Uses appropriate targets for
growth in earnings per share
(and/or total shareholder return)
over vesting period.
Awards made in respect of each
financial year typically do not
exceed 100% of salary, subject
to a maximum of 200% of salary
inexceptional circumstances.
This policy reflects the Company’s current stage of development and anticipated growth, and balances risk and reward.
36
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
CORPORATE GOVERNANCE The Remuneration Committee has consulted with its largest institutional investors during 2016/17 regarding the introduction of a
shareholding guideline and development of its Long‑Term Incentive (‘LTI’) to better align Directors’ (and other Executives’) interests with
those of shareholders and the longer‑term strategy of the Group. The Company has not issued LTIs to executives during 2016/17; we
expect to conclude the consultation shortly and to ensure that LTIs are in place for executive management in the first half of 2017.
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 year ended 31 December 2016
Salary/fees
£’000
Taxable
benefits
£’000
CY2015
FY2016
year ended
FY2015
eight month
year ended period ended
31 December 31 December 31 December
2015
Total
£’000
2015
Total
£’000
2016
Total
£’000
Bonus
£’000
Executive
Michael Karg, PhD
Andrew Noble2
Nick Manning
Morag Blazey
Andrew Beach2
Michael Greenlees3
Non‑Executive
Michael Higgins
Richard Nichols
Julie Baddeley
Tom Alexander
400
53
300
230
171
107
68
35
35
35
9
1
—
5
1
3
—
—
—
—
1201
—
—
8
—
—
—
—
—
—
529
54
300
243
172
110
68
35
35
35
—
—
300
47
219
326
68
45
47
40
—
—
200
47
146
217
45
33
35
28
1,581
1,092
751
1. Michael Karg, CEO, received a one‑time cash sign‑on bonus of £120,000 in March 2016 in order to compensate him for the loss of certain retention
incentives from his previous employer. No performance bonuses were attained for the year ended 31 December 2016.
2. Andrew Beach left the Company on 14 October 2016, handing over the role of Chief Financial Officer to Andrew Noble on 9 September 2016.
3. Michael Greenlees retired from the post of Chief Executive Officer with effect from 17 January 2016, and ceased to be a Director on 30 April 2016.
The totals above are inclusive of annual performance bonuses (FY2015: £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 (FY2015: nil). Contributions totalling £28,127 (FY2015: £6,721) were made
to Directors’ private pension schemes (£14,000 to the highest paid Director, FY2015: £nil) during the year.
No Directors exercised share options during the year (FY2015: 150,000). The highest paid Director exercised no share options,
(FY2015: nil).
Termination payments to Directors
Two Directors left the Company in the year ended 31 December 2016. No termination payments were made to Directors (FY2015: £nil).
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
37
Corporate governance
REMUNERATION COMMITTEE REPORT continued
Long‑Term Incentives
During the year, a total of 311,355 share options that were previously granted to Directors under the Company’s Executive Incentive
Plan vested (FY2015: nil) as follows:
Beneficiary
Michael Greenlees
Morag Blazey
Nick Manning
Andrew Beach
Grant date
17 January 2014
17 January 2014
17 January 2014
17 January 2014
Volume
350,000
200,000
200,000
100,000
Exercise
price
£0.25
Performance
conditions
Growth in
adjusted
diluted EPS
vs 2012/13
Achievement
vs condition
10.8p/share
vs 9p – 7.08%
compound
growth
%
vested
36.63%
Number
vested
128,205
73,260
73,260
36,630
During the fiscal period, no options were granted to any Directors under the Group’s Executive Incentive Plan (FY2015: 400,000).
Thresholds below budgeted levels of
revenue (minimum 97.5% of budget)
and operating profit (minimum 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.
No share options have been granted to
Directors since 1 January 2017.
Julie Baddeley
Chair of the Remuneration Committee
27 March 2017
Share options totalling 500,000 were
granted to the incoming Chief Executive
Officer, Michael Karg, in order to
compensate him for the loss of certain
retention incentives. These were as follows:
• 200,000 ordinary shares of 25p each,
half vesting after six months’ service
and the remaining half vesting after
12 months’ service, subject to continued
employment; and
• 300,000 ordinary shares of 25p each,
which will vest conditional on the
satisfaction of performance criteria
relating to the growth of the Company’s
diluted adjusted earnings per share
(‘EPS’), as follows:
• 200,000 (“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; and
• 100,000 (“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%.
Implementation of remuneration
policy in 2017
The Executive Directors’ remuneration
for the year that commenced on
1 January 2017 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.
38
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
CORPORATE GOVERNANCE Political donations and
political expenditure
No political donations were made and no
political expenditure was incurred in the
period (2015: nil).
Modern Slavery Act 2015
Ebiquity’s statement regarding the Modern
Slavery Act 2015 can be viewed on
its website (ebiquity.com).
Events after the reporting period
There have been no events after the
reporting period requiring disclosure.
DIRECTORS’ REPORT
The Directors present their report and the
audited consolidated financial statements
for the year ended 31 December 2016.
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 2 to 27.
Dividends
The Board is recommending the payment
of a final dividend of 0.65p per share
for the year ended 31 December 2016.
If shareholders approve this payment at the
AGM on 10 May 2017, the dividend will be
paid on 26 May 2017 to all shareholders
who were on the Register of Members at
close of business on 5 May 2017.
Research and development
The Group continues to invest in the
development of products. During the period
a total of £1.1 million was capitalized in
relation to development projects. This has
resulted in the development of a number of
new initiatives.
Directors and Directors’ interests
The Directors in office during the period and until the date of this report were as follows:
Michael Higgins
Michael Karg, PhD1 Executive Director
Andrew Noble2
Executive Director
Executive Director
Nick Manning
Morag Blazey
Executive Director
Richard Nichols
Julie Baddeley
Tom Alexander
Non‑Executive Chairman
Chief Executive Officer
Chief Financial Officer
Chief Strategy Officer
Managing Principal, Market Intelligence
Non‑Executive Director
Non‑Executive Director
Non‑Executive Director
Michael Greenlees stood down as a Director on 30 April 2016.
Andrew Beach stood down as a Director on 14 October 2016.
Andrew Watkins, General Counsel, acts as the Company Secretary.
1. Appointed 27 January 2016.
2. Appointed 9 September 2016.
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 Karg
Andrew Noble
Nick Manning
Morag Blazey
Richard Nichols
Julie Baddeley
Tom Alexander
31 December 2016
31 December 2015
Ordinary
shares
64,500
—
—
Options
—
500,000
60,000
Ordinary
shares
64,500
—
—
Options
—
—
60,000
230,000
2,543,490
230,000
2,670,230
—
601,429
—
728,169
100,000
—
—
—
—
—
100,000
—
—
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 2016 and the date of this report.
Further information about the Directors’ interests is provided in the Remuneration Committee report on pages 36 to 38.
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.
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
—
—
—
39
Corporate governance
DIRECTORS’ REPORT continued
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 organization 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 schemes.
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
Name
Artemis Investment Management
T Rowe Price Global Investments
Kabouter Management
JO Hambro Capital Management
Invesco Perpetual
Herald Investment Management
Hargreave Hale
Legal & General
Fidelity International
AGM notice
The notice of the Company’s Annual
General Meeting accompanies this
document and is also available for
inspection on the Company’s website.
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.
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
77,199,751 ordinary shares of 25p each
and a total of 72,999,751 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.
Number of shares
% of issued
share capital
% of total
voting rights
12,052,282
8,337,921
8,142,430
7,111,150
6,452,446
5,491,125
4,330,000
3,945,200
2,439,234
15.61
10.80
10.55
9.21
8.36
7.11
5.61
5.11
3.16
16.51
11.42
11.15
9.74
8.84
6.29
5.93
5.40
3.34
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
27 March 2017
40
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
CORPORATE GOVERNANCE
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
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.
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.
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
41
Financial statements 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 2016 and of its profit and
cash flows for the year 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 statement of financial
position as at 31 December 2016;
• the consolidated income statement
and consolidated statement of
comprehensive income for the
year then ended;
• the consolidated cash flow statement for
the year then ended;
• the consolidated statement of changes
in equity for the year 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.
Opinions on other matters prescribed
by the Companies Act 2006
In our opinion, based on the work
undertaken in the course of the audit:
• the information given in the strategic
report and the Directors’ report for the
financial year for which the financial
statements are prepared is consistent
with the financial statements; and
• the strategic report and the
Directors’ report have been prepared
in accordance with applicable
legal requirements.
In addition, in light of the knowledge
and understanding of the Group and its
environment obtained in the course of the
audit, we are required to report if we have
identified any material misstatements in the
strategic report and the Directors’ report.
We have nothing to report in this respect.
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.
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 set out on
page 41, 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.
42
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
FINANCIAL STATEMENTS 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.
With respect to the strategic report and
Directors’ report, we consider whether
those reports include the disclosures
required by applicable legal requirements.
Other matter
We have reported separately on the
parent company financial statements
of Ebiquity plc for the year ended
31 December 2016.
Simon O’Brien
(Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and
Statutory Auditors
London
27 March 2017
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.
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
43
Financial statements CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2016
Year ended 31 December 2016
Eight month period ended 31 December 2015
Before
highlighted
items
£’000
Highlighted
items
(note 3)
£’000
Before
highlighted
items
£’000
Highlighted
items
(note 3)
£’000
Total
£’000
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit/(loss)
Finance income
Finance expenses
Net finance costs
Share of profit of associates
Profit/(loss) before taxation
Taxation (charge)/credit
Profit/(loss) for the year/period
Attributable to:
Equity holders of the parent
Non-controlling interests
Earnings/(loss) per share
Basic
Diluted
Note
2
4
6
6
13
7
8
8
83,569
(38,282)
45,287
(32,328)
12,959
18
(1,150)
(1,132)
—
—
—
—
(5,202)
(5,202)
—
—
—
—
11,827
(5,202)
(2,570)
9,257
340
(4,862)
8,987
270
9,257
(4,837)
(25)
(4,862)
83,569
43,310
(38,282)
(22,514)
45,287
20,796
(37,530)
(20,799)
(3)
13
(813)
(800)
13
(790)
576
(214)
(336)
122
(214)
7,757
18
(1,150)
(1,132)
—
6,625
(2,230)
4,395
4,150
245
4,395
5.38p
5.20p
Total
£’000
43,310
(22,514)
20,796
(27,455)
(6,659)
13
(813)
(800)
13
(7,446)
1,332
(6,114)
—
—
—
(6,656)
(6,656)
—
—
—
—
(6,656)
756
(5,900)
(5,885)
(6,221)
(15)
107
(5,900)
(6,114)
(8.08)p
(8.08)p
The notes on pages 48 to 79 are an integral part of these financial statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2016
Profit/(loss) for the year/period
Other comprehensive income/(expense):
Items that will not be reclassified subsequently to profit or loss
Exchange differences on translation of overseas subsidiaries
Total other comprehensive income/(expense) for the year/period
Total comprehensive income/(expense) for the year/period
Attributable to:
Equity holders of the parent
Non-controlling interests
The notes on pages 48 to 79 are an integral part of these financial statements.
Eight month
Year ended period ended
31 December 31 December
2015
£’000
2016
£’000
4,395
(6,114)
4,844
4,844
9,239
8,994
245
9,239
(116)
(116)
(6,230)
(6,337)
107
(6,230)
44
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2016
31 December 31 December
2015
£’000
2016
£’000
Note
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
9
10
11
13
20
14
15
16
17
18
7
19
18
19
20
22
23
23
23
58,045
14,034
2,438
—
1,338
75,855
28,416
6,662
35,078
54,827
13,527
2,928
45
2,267
73,594
24,318
8,755
33,073
110,933
106,667
(5,919)
(6,566)
(11,890)
(12,340)
(6,253)
(1,841)
(9)
(8,227)
(251)
(89)
(25,912)
(27,473)
(30,448)
(34,055)
(393)
(2,125)
(32,966)
(58,878)
52,055
19,300
—
6,134
25,860
51,294
761
(486)
(2,244)
(36,785)
(64,258)
42,409
19,290
11,764
656
9,891
41,601
808
52,055
42,409
The notes on pages 48 to 79 are an integral part of these financial statements. The financial statements on pages 44 to 78 were
approved and authorized for issue by the Board of Directors on 27 March 2017 and were signed on its behalf by:
Michael Karg, PhD
Director
Andrew Noble
Director
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
45
Financial statements
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2016
1 May 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
Profit for the year
Other comprehensive income
Total comprehensive
income for the year
Shares issued for cash
Share premium reduction2
Convertible loan note
Share options charge
Deferred tax on share options
Dividends paid to shareholders
Dividends paid to
non-controlling interests
31 December 2016
Note
Ordinary
shares
£’000
19,193
Share
premium
£’000
11,657
—
—
—
97
—
—
—
—
—
—
—
—
107
—
—
—
—
—
19,290
11,764
—
—
—
10
—
—
—
—
—
—
19,300
—
—
—
16
(11,780)
—
—
—
—
—
—
22
3
20
26
22
3
20
26
Other
reserves1
£’000
772
—
(116)
Retained
earnings
£’000
16,012
(6,221)
—
Equity
attributable
to owners of
the parent
£’000
47,634
(6,221)
(116)
Non-
controlling
interests
£’000
1,024
107
—
(116)
(6,221)
(6,337)
—
204
Total
equity
£’000
48,658
(6,114)
(116)
(6,230)
204
(43)
228
186
(291)
107
—
(20)
—
—
—
—
—
—
—
—
—
26
—
634
652
(321)
(292)
(292)
761
(292)
52,055
—
(303)
(303)
41,601
4,150
4,844
808
245
—
42,409
4,395
4,844
8,994
245
9,239
—
—
—
—
—
—
656
—
4,844
4,844
—
—
634
—
—
—
—
(23)
228
186
(291)
—
9,891
4,150
—
4,150
—
11,780
—
652
(321)
(292)
(23)
228
186
(291)
26
—
634
652
(321)
(292)
—
—
6,134
25,860
51,294
1. Includes £3,667,000 (31 December 2015: £3,667,000) in the merger reserve; a debit balance of £1,478,000 (31 December 2015: £1,478,000)
in the ESOP reserve; a convertible loan note reserve of £634,000 created during the year to 31 December 2016; and a gain of £3,311,000
(31 December 2015: £1,533,000 loss) recognized in the translation reserve. Refer to note 23 for further details.
2. On 8 June 2016, the Group announced the cancellation of the share premium account (the “Capital Reduction”) effective 9 June 2016
following registration of the Court order confirming the Capital Reduction by the Registrar of Companies.
The notes on pages 48 to 79 are an integral part of these financial statements.
46
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2016
Eight month
Year ended period ended
31 December 31 December
2015
£’000
2016
£’000
Note
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
Purchase of property, plant and equipment
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
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 financing activities
Net decrease in cash, cash equivalents and bank overdrafts
Cash, cash equivalents and bank overdraft at beginning of year/period
Effects of exchange rate changes on cash and cash equivalents
Cash, cash equivalents and bank overdraft at end of year/period
The notes on pages 48 to 79 form part of these financial statements.
27
28
11
10
25
25
26
15
15
10,782
(1,092)
18
(166)
5,028
(601)
13
(892)
9,542
3,548
(4,431)
(3,002)
(479)
(1,872)
(6,782)
26
3,336
(6,411)
—
(292)
(546)
(4)
(3,891)
(1,131)
6,364
(633)
4,600
(502)
(826)
(4,330)
205
2,578
(1,982)
(1,105)
(291)
(195)
(4)
(794)
(1,576)
7,884
56
6,364
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
47
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2016
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.
The address of its registered office
is CityPoint, One Ropemaker Street,
London EC2Y 9AW.
Basis of preparation
The 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 on a going concern basis.
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.
The consolidated financial statements are
presented in pounds sterling and rounded
to the nearest thousand.
The principal accounting policies adopted
in these consolidated financial statements
are set out below. These policies have
been consistently applied to all periods
presented, unless otherwise stated.
Basis of consolidation
The consolidated financial statements
incorporate the financial statements of
the Company and entities controlled by
the Company (its subsidiaries). Control
is achieved where the Company has the
power to govern the financial and operating
policies of an investee entity so as to
obtain benefits from its activities. The
results of each subsidiary are included from
the date that control is transferred to the
Group until the date that control ceases.
Where necessary, adjustments are made
to the financial statements of subsidiaries
to bring the accounting policies used
in line with those used by the Group.
All intra-group transactions, balances,
income and expenses are eliminated
on consolidation.
Non-controlling interests represent the
portion of the results and net assets in
subsidiaries that is not held by the Group.
Business combinations and goodwill
The Group applies the acquisition method
to account for business combinations. The
cost of the acquisition is measured 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
are recognized initially at their fair value
at the acquisition date. Goodwill is initially
measured at cost, being the excess of the
aggregate of the consideration transferred
over the fair value of net identifiable assets
acquired and liabilities assumed. The
determination of the fair values of acquired
assets and liabilities is based on judgement
and the Directors have 12 months from the
date of the business combination to finalize
the allocation of the purchase price.
Goodwill is allocated to each of the
Group’s cash-generating units expected
to benefit from the synergies of the
combination. Following initial recognition,
goodwill is measured at cost less any
accumulated impairment losses. Goodwill
is reviewed for impairment at least annually
or whenever there is evidence that it may
be required. Any impairment is recognized
immediately in the income statement and is
not subsequently reversed.
Goodwill arising on the acquisition of the
Group’s interest in an associate being
the excess of the cost of acquisition over
the Group’s share of the fair values of the
identifiable net assets of the associate,
is included within the carrying amount
of the investment. The non-controlling
shareholders interest in the acquiree is
initially measured at the non-controlling
interest’s proportion of the net fair value
of the assets, liabilities and contingent
liabilities recognized.
Where transactions with non-controlling
parties do not result in a change in control,
the difference between the fair value of
the consideration paid or received and
the amount by which the non-controlling
interest is adjusted, is recognized in equity.
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 recognized in the income
statement within administrative expenses
as a highlighted item. The carrying value
of contingent deferred consideration at
the statement of financial position date
represents management’s best estimate of
the future payment at that date, based on
historical results and future forecasts.
All costs directly attributable to the
business combination are expensed as
incurred and recorded in the income
statement within highlighted items.
48
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
FINANCIAL STATEMENTS Investments in associates
An associate is an entity over which the
Group is in a position to exercise significant
influence and is neither a subsidiary nor
joint venture. 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 the
consolidated 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 recognized only to the
extent that the Group has incurred legal or
constructive obligations or made payments
on behalf of the associate.
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 recognized
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.
Where services are performed by an
indeterminate number of acts over a
specific period, revenue is recognized 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 recognized to the extent of contract
costs incurred that it is probable would
be recoverable. Costs are recognized 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 recognized 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 recognized in
the translation reserve. All other exchange
differences are dealt with through the
consolidated income statement.
Highlighted items
Highlighted items comprise non-cash
charges and non-recurring items which
are highlighted in the consolidated
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
amortization 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
consolidated 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 recognizes 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 recognized in the consolidated
income statement except to the extent
that it relates to items recognized directly
in equity, in which case it is recognized
in equity.
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
49
Financial statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
Internally generated intangible assets are
amortized on a straight-line basis over
their useful lives. Amortization commences
when the asset is available for use and
useful lives range from one to five years.
The amortization expense is included
within administrative expenses. Where an
internally generated intangible asset cannot
be recognized, development expenditure is
recognized as an expense in the period in
which it is incurred.
Purchased intangible assets
Externally acquired intangible assets
are initially recognized at cost and
subsequently amortized on a straight-line
basis over their useful economic lives,
which vary from three to ten years.
The amortization expense is included as a
highlighted item within the administrative
expenses line in the income statement.
Intangible assets recognized on business
combinations are recorded at fair value
at the acquisition date using appropriate
valuation techniques where they are
separable from the acquired entity or give
rise to other contractual/legal rights. The
significant intangibles recognized by the
Group are customer relationships which
are amortized on a straight-line basis over
a typical useful life of ten years.
Computer software
Purchased computer software intangible
assets are amortized on a straight-line
basis over their useful lives which vary from
two to five years.
1. Accounting policies continued
Taxation 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 or 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 utilized. 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 realize
the assets and settle the liabilities
simultaneously, in each future period in
which significant amounts of deferred
tax assets or liabilities are expected to
be settled or recovered.
Property, plant and equipment
Property, plant and equipment is stated at
cost less accumulated depreciation and
any recognized impairment loss.
Depreciation is charged so as to write off
the cost of assets over their estimated
useful economic lives. The rates applied
are as follows:
Motor vehicles
Fixtures, fittings
and equipment
25% per annum
reducing balance
7% to 20% per annum
straight-line; or
25% per annum
reducing balance
Computer
equipment
25% to 40%
straight-line
Short leasehold Over the shorter
land and buildings of the life or the
improvements
estimated useful life
of the lease
Other intangible assets
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 recognized 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.
50
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
FINANCIAL STATEMENTS
Impairment
Assets that have an indefinite useful life are
not subject to amortization and are tested
annually for impairment.
For the purpose of impairment testing,
goodwill is grouped at the lowest levels
for which there are separately identifiable
cash flows, known as cash-generating
units. If the recoverable amount of the
cash-generating unit is less than the
carrying amount of the unit, the impairment
loss is allocated first to reduce the carrying
amount of any goodwill allocated to the
unit and then to the other assets of the
unit pro-rata on the basis of the carrying
amount of each asset in the unit.
Assets that are subject to amortization
or depreciation are reviewed for
impairment whenever events or changes
in circumstances indicate that the carrying
amount may not be recoverable. If any
such condition exists, the recoverable
amount of the asset is estimated in order
to determine the extent, if any, of the
impairment loss. Where the asset does not
generate cash flows that are independent
from other assets, estimates are made of
the cash flows of the cash-generating unit
to which the asset belongs.
Recoverable amount is the higher of fair
value, less costs to sell, and value in
use. In assessing value in use, estimated
future cash flows are discounted to their
present value using a pre-tax discount
rate appropriate to the specific asset or
cash-generating unit.
If the recoverable amount of an asset or
cash-generating unit is estimated to be
less than its carrying amount, the carrying
value of the asset or cash-generating unit
is reduced to its recoverable amount.
Impairment losses are recognized
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 amortization, if the
impairment loss had been recognized.
Cash and cash equivalents
Cash and cash equivalents comprise cash
in hand and short-term deposits. Cash and
cash equivalents and bank overdrafts are
offset when there is a legally enforceable
right to offset.
Financial instruments
Financial assets and financial liabilities are
recognized 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 assets.
They are initially recognized at fair value
plus transaction costs that are directly
attributable to their acquisition or issue,
and are subsequently carried at amortized
cost using the effective interest rate
method, less provision for impairment.
Impairment provisions are recognized
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 recognized 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.
Financial liabilities
Borrowings consisting of interest-bearing
secured and unsecured loans and
overdrafts are initially recognized at fair
value net of directly attributable transaction
costs incurred and subsequently
measured at amortized cost using the
effective interest method. The difference
between the proceeds received net of
transaction costs and the redemption
amount is amortized over the period of
the borrowings to which they relate. The
revolving credit facility is considered to be
a long term loan.
Trade and other payables are initially
recognized at their nominal value which is
usually the original invoiced amount.
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.
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 recognized 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 analyzed 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 recognized 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.
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
51
Financial statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
1. Accounting policies continued
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 recognized 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 recognized immediately in the
income statement.
Cash flow hedging is 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 recognized directly in equity
(hedging reserve) until the gain or loss on
the hedged item is realized. Any ineffective
portion is always recognized in the
income statement.
The fair value of derivatives is determined
by reference to market values for
similar instruments.
Share capital
Equity instruments issued by the Group are
recorded at the amount of the proceeds
received, net of direct issuance costs.
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 with a corresponding increase
recognized in retained earnings. Fair
value is measured using an appropriate
valuation model. Non-market vesting
conditions are taken into account by
adjusting the number of equity investments
expected to vest at each year end date
so that, ultimately, the cumulative amount
recognized 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 recognize 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 recognized over
the vesting period as an increase to
investment in subsidiary undertakings,
with a corresponding credit to equity in
the parent entity financial statements.
Provisions
Provisions, including provisions for onerous
lease costs, are recognized 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 recognized for future
operating losses.
Provisions are measured at the Directors’
best estimate of the expenditure required
to settle the obligation at the year-end date.
If the effect of the time value of money
is material, provisions are determined by
discounting the expected future cash flows
at a pre-tax rate which reflects current
market assessments of the time value of
money and, where appropriate, the risks
specific to the obligations.
Retirement benefits
For defined contribution pension schemes,
the Group pays contributions to privately
administered pension plans on a voluntary
basis. The Group has no further payment
obligations once the contributions have
been paid. Contributions are charged to
the income statement in the year to which
they relate.
Dividend distribution
Dividend distribution to the Company’s
shareholders is recognized 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
In preparing the consolidated financial
statements, the Directors have made
certain estimates and judgements relating
to the reporting of results of operations
and the financial position of the Group.
Actual results may significantly differ
from those estimates often as a result
of the need to make assumptions about
matters which are uncertain. The estimates
and judgements discussed below are
considered by the Directors to be those
that have a critical accounting impact to
the Group’s financial statements.
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.
52
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
FINANCIAL STATEMENTS 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
On 1 January 2016, the Group adopted
the following amendments to IFRS.
The accounting pronouncements, none
of which is considered by the Group as
significant on adoption, are:
• amendments to IAS 1 ‘Disclosure
Initiative’. These amendments are
as part of the IASB’s initiative to
improve presentation and disclosure
in financial reports;
• amendments to IFRS 11 ‘Accounting
for Acquisitions of Interests in Joint
Operations’. This amendment adds
new guidance on how to account for
the acquisition of an interest in a joint
operation that constitutes a business;
• amendments to IAS 16 ‘Property, Plant
and Equipment’ and IAS 38 ‘Intangible
Assets’. This amendments provide
clarification of acceptable methods of
depreciation and amortization; and
• improvements to IFRS:
2012–2014 cycle.
On 1 January 2017, the Group will adopt
the following amendments which are
effective for accounting periods on or after
1 January 2017 and which have not yet
been endorsed by the EU. Management
is currently assessing the impact of these
new pronouncements on the financial
statements, which are not expected to
be significant.
• amendments to IAS 12 ‘Recognition
of Deferred Tax Assets for Unrealized
Losses’. This amends the recognition
of deferred tax assets for unrealized
losses; and
• amendments to IAS 7 ‘Disclosure
Initiative’. These amendments are
as part of the IASB’s initiative to
improve presentation and disclosure
in financial reports.
Carrying value of goodwill and
other intangible assets
Impairment testing requires management
to estimate the value in use of the
cash-generating units to which goodwill
and other intangible assets have been
allocated. The value in use calculation
requires estimation of future cash flows
expected to arise from the cash-generating
unit and the application of a suitable
discount rate in order to calculate present
value. The sensitivity around the selection
of particular assumptions including
growth forecasts and the pre-tax discount
rate used in management’s cash flow
projections could significantly affect
the Group’s impairment evaluation and
therefore the Group’s reported assets
and results. Further details, including
a sensitivity analysis, are included in
notes 9 and 10 to the consolidated
financial statements.
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 recognized in
the income statement within administrative
expenses as a highlighted item.
Taxation
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.
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:
• 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 recognize revenue
and how much revenue to recognize.
This standard replaces the previous
revenue standards IAS 18 ‘Revenue’
and IAS 11 ‘Construction Contracts’.
The Group will apply IFRS 15 from
1January 2018;
• 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; and
• 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 9 from 1 January 2019.
Management will assess the impact on
the Group of these standards prior to
the effective date of implementation.
Although the detailed impact has not yet
been quantified, management expects
that the adoption of IFRS 15 may have an
impact on revenue recognition and related
disclosures and the adoption of IFRS 16
will impact the accounting for those leases
currently classified as operating leases.
The adoption of IFRS 9 is not expected to
have a significant impact on the Group’s
financial statements.
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
53
Financial statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
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; and
• 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 amortization. The measure also excludes the effects of
equity-settled share-based payments. Interest income and expenditure are not allocated to segments, as this type of activity is driven by
the central treasury function, which manages the cash position of the Group.
The segment information provided to the Executive Directors for the reportable segments for the year ended 31 December 2016 is
as follows:
Year ended 31 December 2016
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
47,161
12,124
56,948
46
586
464
Total
1,096
1,046
Eight month period ended 31 December 2015
Media Value
Measurement
£’000
Marketing
Market Performance
Intelligence Optimization
£’000
£’000
Reportable
segments Unallocated
£’000
£’000
23,360
3,902
13,048
3,739
83,569
19,765
—
(6,806)
32,469
11,868
101,285
9,648
110,933
Total
£’000
83,569
12,959
455
591
—
4
155
—
159
505
1,332
464
2,301
35
765
—
800
540
2,097
464
3,101
Revenue
Operating (loss)/profit before highlighted items
Total assets
Other segment information
Media Value
Measurement
£’000
Marketing
Market Performance
Intelligence Optimization
£’000
£’000
20,409
(81)
53,011
16,002
2,070
29,398
6,899
1,874
10,640
Reportable
segments
£’000
43,310
3,863
93,049
Unallocated
£’000
Total
£’000
—
43,310
(3,866)
(3)
13,618
106,667
Capital expenditure – property, plant and equipment
Capital expenditure – intangible assets
Total
26
77
103
—
—
—
12
—
12
38
77
115
512
750
550
827
1,262
1,377
54
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
FINANCIAL STATEMENTS
A reconciliation of segment operating profit before highlighted items to total profit before tax is provided below:
Reportable segment operating profit before highlighted items
Unallocated costs1:
Staff costs
Property costs
Exchange rate movements
Other administrative expenses
Operating profit/(loss) before highlighted items
Highlighted items (note 3)
Operating profit/(loss)
Net finance costs
Share of profit of associates
Profit/(loss) before tax
1. Unallocated costs comprise central costs that are not considered attributable to the segments.
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:
Eight month
Year ended period ended
31 December 31 December
2015
£’000
2016
£’000
19,765
3,863
(5,219)
(3,281)
(786)
(158)
(643)
12,959
(5,202)
7,757
(1,132)
—
(260)
31
(356)
(3)
(6,656)
(6,659)
(800)
13
6,625
(7,446)
31 December 31 December
2015
£’000
2016
£’000
101,285
93,049
1,900
1,517
1,015
3,989
1,227
—
2,278
2,853
2,892
3,478
2,113
4
110,933
106,667
United Kingdom
Rest of Europe
North America
Rest of world
Deferred tax assets
Total
Year ended
31 December 2016
Eight month period ended
31 December 2015
Revenue by
location of Non‑current
assets
customers
£’000
£’000
Revenue by
location of
customers
£’000
Non-current
assets
£’000
22,627
31,586
20,032
9,324
83,569
—
83,569
46,617
9,378
7,257
11,265
74,517
1,338
75,855
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
No single customer (or group of related customers) contributes 10% or more of revenue.
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
55
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
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 (credit)/charge
Amortization of purchased intangibles
Non‑recurring
Acquisition and integration costs
Impairment charge
Total highlighted items before tax
Taxation credit
Total highlighted items after tax
Year ended
31 December 2016
Eight month period ended
31 December 2015
Cash
£’000
Non‑cash
£’000
Total
£’000
Cash
£’000
Non-cash
£’000
Total
£’000
(92)
—
(92)
2,777
—
2,777
2,685
(252)
2,433
652
1,865
2,517
—
—
—
2,517
(88)
2,429
560
1,865
2,425
2,777
—
2,777
5,202
(340)
4,862
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
Amortization of purchased intangibles relates to acquisitions made in the current financial year of £26,000 and to acquisitions made in
prior years of £1,839,000.
The share option cash credit of £92,000 arising during the year is in relation to national insurance contributions on share options not
exercised. In addition, a non-cash IFRS 2 charge of £652,000 was also recorded.
Total acquisition and integration costs of £2,777,000 were recognized during the year.
Acquisition costs totalling £1,996,000 primarily consists of £841,000 in relation to an earn-out extension agreed in March 2016 and
associated to the Stratigent acquisition in 2013; deferred consideration adjustments of £575,000 resulting from foreign exchange
differences net of the impact of discounting to present value; £295,000 of professional fees were incurred in relation to acquisitions;
and £285,000 was recognized following the transparency work performed for the US Association of National Advertisers.
Integration costs totalling £781,000 primarily consists of severance costs of £568,000 arising from the restructure of senior management
in Spain, Ireland and France; and fees of £251,000 in relation to the appointment of the new Group CEO. Other one-off charges
recognized in highlighted items during the year include a credit of £66,000 following the write-off of certain dilapidation provisions
and £28,000 of other integration costs.
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 2016, £1,197,000 of the £2,685,000 cash highlighted items had been settled.
56
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
FINANCIAL STATEMENTS
4. Operating profit/(loss)
Operating profit/(loss) is stated after charging/(crediting):
Operating lease rentals
– other
– land and buildings
Depreciation and amortization (notes 10 and 11)
Impairment (notes 9 and 10)
Loss on disposal of fixed assets
Research costs – expensed
Foreign exchange (gain)/loss
Eight month
Year ended period ended
31 December 31 December
2015
£’000
2016
£’000
90
1,739
3,682
—
11
870
(79)
43
1,475
2,481
3,902
18
337
16
Auditors’ remuneration
During the year 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 its associates for other services:
– the audit of the Company’s subsidiaries, pursuant to legislation
– other audit-related assurance services
– other assurance services
– tax compliance services
Eight month
Year ended period ended
31 December 31 December
2015
£’000
2016
£’000
97
96
24
10
9
236
84
112
24
—
—
220
5. Employee information
The monthly average number of employees employed by the Group during the year, including Executive Directors, was as follows:
Media Value Measurement
Market Intelligence
Marketing Performance Optimization
IT development and support
Administration
Directors
At 31 December 2016, the total number of employees of the Group was 919 (31 December 2015: 926).
Eight month
Year ended period ended
31 December 31 December
2015
Number
2016
Number
305
340
88
60
107
9
909
291
373
71
56
104
7
902
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
57
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
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 (note 24)
Eight month
Year ended period ended
31 December 31 December
2015
£’000
2016
£’000
41,571
3,502
925
652
23,968
2,839
493
228
46,650
27,528
Directors’ remuneration
Total Directors’ remuneration was £1,474,000 including £426,000 to the highest paid Director (31 December 2015: £727,000 including
£218,000 to the highest paid Director). Directors are eligible for cash bonuses as a percentage of base salary, dependent on individual and
Company performance against established financial targets. No performance bonuses were paid during the year (31 December 2015: £nil).
No Directors were a member of a Company pension scheme as at 31 December 2016 (31 December 2015: none). Contributions totalling
£28,000 (31 December 2015: £7,000) were made to Directors’ private pension schemes during the year including £14,000 to the highest
paid Director (31 December 2015: £nil).
No Directors exercised share options during the year (31 December 2015: 150,000 share options were exercised with a gain of £92,000
made on exercise). In the period to 31 December 2015, the highest paid Director exercised no share options.
During the year, 500,000 (31 December 2015: nil) share options were granted to Directors comprising 500,000 to the highest paid
Director under the Group’s Executive Incentive Plan scheme. Vesting is subject to the satisfaction of certain performance criteria
(see note 24 for further details).
Further details on Directors’ remuneration can be found in the Remuneration Committee report on pages 36 to 38.
6. Finance income and expenses
Finance income
Bank interest
Other interest
Finance income
Finance expenses
Bank loans and overdraft interest
Loan fee amortization
Finance lease interest
Finance expenses
Eight month
Year ended period ended
31 December 31 December
2015
£’000
2016
£’000
18
—
18
(1,058)
(90)
(2)
(1,150)
7
6
13
(752)
(60)
(1)
(813)
58
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
FINANCIAL STATEMENTS
7. Taxation charge/(credit)
UK tax
Current year/period
Adjustment in respect of prior year/period
Foreign tax
Current year/period
Adjustment in respect of prior year/period
Total current tax
Deferred tax
Origination and reversal of temporary differences
(note 20)
Adjustment in respect of prior year/period
Total tax charge/(credit)
Year ended
31 December 2016
Eight month period ended
31 December 2015
Before
highlighted
items
£’000
Highlighted
items
£’000
912
(205)
707
1,409
(94)
1,315
2,022
160
388
2,570
(187)
—
(187)
(65)
—
(65)
(252)
(88)
—
(340)
Before
highlighted
items
£’000
Highlighted
items
£’000
194
(236)
(42)
248
(160)
88
46
(622)
—
(576)
(128)
—
(128)
—
—
—
(128)
(628)
—
(756)
Total
£’000
725
(205)
520
1,344
(94)
1,250
1,770
72
388
2,230
Total
£’000
66
(236)
(170)
248
(160)
88
(82)
(1,250)
—
(1,332)
The difference between tax as charged/(credited) in the financial statements and tax at the nominal rate is explained below:
Profit/(loss) before tax
Corporation tax at 20% (31 December 2015: 20%)
Non-deductible taxable expenses
Overseas tax rate differential
Overseas losses not recognized
Share options
Losses utilized not previously recognized
Adjustment in respect of prior years
Effect of change in statutory tax rates
Deferred tax movement
Recognition of deferred tax not previously recognized
Other
Total tax charge/(credit)
Eight month
Year ended period ended
31 December 31 December
2015
£’000
2016
£’000
6,625
1,325
(7,446)
(1,489)
265
189
66
319
(7)
89
9
224
(249)
—
943
24
832
—
(80)
(396)
(265)
(985)
—
84
2,230
(1,332)
Reductions in the UK corporation tax rate to 19% (effective from 1 April 2017) and to 18% (effective 1 April 2020) were substantively
enacted on 26 October 2015. Further reductions to 17% (effective 1 April 2020) were substantively enacted on 6 September 2016.
As these changes have been substantively enacted at the statement of financial position date, their effects are included in these
financial statements.
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
59
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
8. Earnings/(loss) 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/(loss)
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/(loss) per share
Diluted earnings/(loss) per share
Underlying basic earnings/(loss) per share
Underlying diluted earnings/(loss) per share
1. Highlighted items attributable to equity holders of the parent (see note 3), stated net of their total tax impact.
9. Goodwill
Cost
At 1 May 2015
Adjustments in respect of a pre-acquisition period
Foreign exchange differences
At 31 December 2015
Additions1
Foreign exchange differences
At 31 December 2016
Accumulated impairment
At 1 May 2015
At 31 December 2015
Impairment
At 31 December 2016
Net book value
At 31 December 2016
At 31 December 2015
Eight month
Year ended period ended
31 December 31 December
2015
£’000
2016
£’000
4,150
(6,221)
4,837
8,987
5,885
(336)
77,186,127 76,976,240
2,598,806
1,993,033
79,784,933 78,969,273
5.38p
5.20p
11.64p
11.26p
(8.08)p
(8.08)p
(0.44)p
(0.43)p
£’000
58,096
(177)
37
57,956
426
2,792
61,174
—
(3,129)
—
(3,129)
58,045
54,827
1. £426,000 of goodwill was recognized following the acquisition of the remaining 50% interest in the Group’s Irish media consultancy associate,
Fairbrother Marsh Company Limited. Refer to note 28 for further details.
60
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
FINANCIAL STATEMENTS
Goodwill has been allocated to the following segments:
Media Value Measurement
Market Intelligence
Marketing Performance Optimization
Eight month
Year ended period ended
31 December 31 December
2015
£’000
2016
£’000
28,778
22,360
6,907
58,045
26,886
21,904
6,037
54,827
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill may be potentially impaired.
Goodwill is allocated to the Group’s cash-generating units (‘CGUs’) in order to carry out impairment tests. The Group’s remaining
carrying value of goodwill by CGU at 31 December was as follows:
Cash-generating unit
Reporting segment
Advertising UK/USA/International
Market Intelligence
Media UK and International1
Media Value Measurement
Stratigent (MCA)
China
Media Germany
Media Value Group
FirmDecisions
Media Australia
Marketing Performance Optimization
Media Value Measurement
Media Value Measurement
Media Value Measurement/Marketing Performance Optimization
Media Value Measurement
Media Value Measurement
Advertising Germany
Market Intelligence
Effectiveness
Marketing Performance Optimization
Advertising Australia
Market Intelligence
Media America
Media France
Media Italy
Russia
Media Value Measurement
Media Value Measurement
Media Value Measurement
Media Value Measurement
Eight month
Year ended period ended
31 December 31 December
2015
£’000
2016
£’000
19,114
19,114
9,238
5,229
4,966
4,319
3,035
2,981
2,506
2,333
1,678
764
604
559
382
337
8,770
4,359
4,429
4,297
2,624
2,981
2,115
2,016
1,678
645
604
527
330
337
58,045
54,827
1. At 31 December 2016, the balance included £426,000 of acquired goodwill recognized following the acquisition of the remaining 50% interest in the
Group’s Irish media consultancy associate, Fairbrother Marsh Company Limited. Refer to note 28 for further details.
The impairment test involves comparing the carrying value of the CGU to which the goodwill has been allocated to the recoverable
amount. The recoverable amount of all CGUs has been determined based on value in use calculations.
Under IFRS, an impairment charge is required for goodwill when the carrying amount exceeds the recoverable amount, defined as the
higher of fair value less costs to sell and value in use. No impairment of goodwill was recognized in the year ended 31 December 2016
(eight months ended 31 December 2015: £3,129,000).
Value in use calculations
The key assumptions used in management’s value in use calculations are budgeted operating profit, pre-tax discount rate and the
long-term growth rate. 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 two 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 CGUs. The three-year pre-tax cash flow forecasts have been discounted at between 7.2% and 8.7%
(31 December 2015: between 8.2% and 9.7%).
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
61
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
9. Goodwill continued
Cash flows beyond the three-year period are extrapolated at a rate of 2.25% (31 December 2015: 2.25%), 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. The estimated
recoverable amounts of the Group’s operations in all CGUs significantly exceed their carrying values with the exception of China,
where the headroom exceeds its carrying value by £1.8 million.
Sensitivity analysis
The Group’s calculations of value in use for its respective CGUs are sensitive to a number of key assumptions. Other than disclosed
below, management does not consider a reasonably possible change in isolation, of any of the key assumptions to cause the carrying
value of any CGU to exceed its value in use.
Budgeted operating profit
Pre-tax discount rate
Long-term growth rate
10. Other intangible assets
Cost
At 1 May 2015
Additions
Disposals
Foreign exchange differences
At 31 December 2015
Additions
Acquisitions2
Disposals
Foreign exchange differences
At 31 December 2016
Amortization and impairment
At 1 May 2015
Charge for the period3
Disposals
Impairment4
Foreign exchange differences
At 31 December 2015
Charge for the year3
Disposals
Foreign exchange differences
At 31 December 2016
Net book value
At 31 December 2016
At 31 December 2015
China %
(21.7)
1.6
(1.9)
Capitalized
development
costs
£’000
Computer
software
£’000
Purchased
intangible
assets1
£’000
Total
intangible
assets
£’000
2,997
2,194
23,259
28,450
652
—
(11)
3,638
1,091
—
(453)
68
175
(13)
27
—
—
40
2,383
23,299
781
—
(260)
147
—
225
—
1,414
24,938
827
(13)
56
29,320
1,872
225
(713)
1,629
32,333
4,344
3,051
(1,136)
(1,120)
(11,016)
(13,272)
(194)
—
(214)
—
(190)
(1,327)
(1,711)
12
—
(22)
—
(559)
(27)
12
(773)
(49)
(1,544)
(1,320)
(12,929)
(15,793)
(256)
425
(1)
(330)
260
(127)
(1,865)
(2,451)
—
(612)
685
(740)
(1,376)
(1,517)
(15,406)
(18,299)
2,968
2,094
1,534
1,063
9,532
10,370
14,034
13,527
1. Purchased intangible assets consist principally of customer relationships with a typical useful life of 10 years.
2. Customer relationships of £142,000 and a brand valuation of £83,000 were recognized during the year as part of the acquisition of Fairbrother Marsh
Company Limited. Refer to note 28 for further details.
3. Amortization is charged within administrative expenses so as to write off the cost of the intangible assets over their estimated useful lives.
The amortization of purchased intangible assets is included as a highlighted administrative expense.
4. No impairment charge is required for the year to 31 December 2016 following management’s review of the carrying value of other intangible
assets. In the prior period, an impairment charge of £773,000 was recorded to fully write off the purchased intangible assets and related capitalized
development costs of the Reputation business.
62
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
FINANCIAL STATEMENTS
11. Property, plant and equipment
Motor
vehicles
£’000
Fixtures,
fittings and
equipment1
£’000
Computer
equipment
£’000
Short
leasehold land
and building
improvements
£’000
Cost
At 1 May 2015
Additions
Disposals
Foreign exchange differences
At 31 December 2015
Reclassification2
Additions
Acquisitions
Disposals
Foreign exchange differences
At 31 December 2016
Accumulated depreciation
At 1 May 2015
Charge for the period
Disposals
Foreign exchange differences
At 31 December 2015
Reclassification2
Charge for the year
Disposals
Foreign exchange differences
At 31 December 2016
Net book value
At 31 December 2016
At 31 December 2015
37
—
—
1
38
—
—
—
—
6
44
(3)
(3)
—
—
(6)
—
(5)
—
(2)
(13)
31
32
Total
£’000
8,543
550
(1,510)
37
7,620
384
530
10
(698)
638
1,584
92
(201)
15
1,490
—
104
—
(192)
102
5,873
355
(1,307)
21
4,942
—
398
10
(454)
403
1,049
103
(2)
—
1,150
384
28
—
(52)
127
1,504
5,299
1,637
8,484
(821)
(83)
161
(10)
(753)
—
(140)
192
(64)
(765)
739
737
(4,120)
(527)
1,307
(26)
(3,366)
—
(826)
454
(311)
(405)
(157)
2
(7)
(567)
(384)
(260)
52
(60)
(5,349)
(770)
1,470
(43)
(4,692)
(384)
(1,231)
698
(437)
(4,049)
(1,219)
(6,046)
1,250
1,576
418
583
2,438
2,928
1. The Group holds assets under finance leases within fixtures, fittings and equipment with cost of £21,000 (31 December 2015: £21,000) and accumulated
depreciation of £13,000 (31 December 2015: £8,000).
2. During the year, an amount of short leasehold land and buildings improvements previously included within the net book value of short leasehold land
and building improvements and netted against depreciation, has been reclassified to cost.
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
63
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
12. Subsidiaries
Details of the Company’s subsidiaries are set out below.
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
Proportion of
nominal value of
issued ordinary
shares held
Country of
incorporation
100%3
100%3
100%3
100%3
100%3
100%
100%3
100%3
100%3
100%3
100%3
100%3
100%3
100%
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
China Media (Shanghai) Management Consulting Company Limited2
100%3
China
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
Media consultancy
Holding company
Non-trading
Non-trading
Holding company
Media monitoring and consultancy
100%3 Hong Kong
100%3
100%3
100%3
100%
UK
UK
UK
UK
94.03%3 Germany
Media monitoring and consultancy
100%
100%3
USA
USA
51%3
Italy
100%3 Singapore
Holding company
Media monitoring and consultancy
and reputation management
Media consultancy
Media consultancy
100%3
Australia
Media monitoring and consultancy
50.1%3
UK
50.1%3
Russia
80%3
France
100%
100%3
100%3
100%
100%3
UK
UK
USA
UK
UK
Media consultancy
Media consultancy
Media consultancy
Non-trading
Holding company
Holding company
Holding company
Reputation management
100% Singapore
Reputation management
100%3
Spain
Marketing effectiveness
China Media Consulting Group Limited
Data Management Services Group Limited
Digireels Limited UK
Ebiquity Asia Pacific Limited
Ebiquity Associates Limited2
Ebiquity Germany GmbH2
Ebiquity Holdings Inc.
Ebiquity Inc.2
Ebiquity Italia S.r.l.2
Ebiquity Pte. Limited2
Ebiquity Pty Limited2
Ebiquity Russia Limited2
Ebiquity Russia OOO2
Ebiquity SAS2
Ebiquity US Financing Limited
Ebiquity US Holdings Limited
Ebiquity US Holdings LLC
Echo Group Limited
Echo Research Limited2
Echo Research Pte Limited
Efficiency Elements SL2
64
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
FINANCIAL STATEMENTS
Subsidiary undertaking
Fairbrother Lenz Eley Limited
Fairbrother Marsh Company Limited1
Faulkner Group Pty Limited
Firm Decisions ASJP Germany GmbH
Firm Decisions Group Limited
FirmDecisions ASJP LLC2
FirmDecisions Pty Limited2
FirmDecisions Limited2
FLE Holdings Limited
Fouberts Place Subsidiary No. 4 Limited
Freshcorp Limited
Media Value SL2
Mediaadvantage Consulting L.d.a2
Nova Vision Europe S.A.
Prominent Pages Limited
Shots Limited
Stratigent LLC2
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%3
100%3
Country of
incorporation
UK
Nature
of business
Non-trading
Ireland
Media monitoring and consultancy
100%3
Australia
100%3 Germany
100%
100%3
UK
USA
100%3
Australia
100%3
100%
100%3
100%3
100%3
UK
UK
UK
UK
Spain
100%3
Portugal
100%3
Belgium
100%3
100%3
100%3
100%3
100%3
100%3
100%3
100%3
100%3
100%3
UK
UK
USA
UK
UK
UK
UK
UK
UK
UK
100%3
Australia
100%
UK
100%3
Belgium
100%3
UK
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
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Holding company
Non-trading
Non-trading
1. On 11 March 2016, the Group acquired the outstanding 50% interest in its Irish media consultancy associate, Fairbrother Marsh Company Limited.
Refer to note 28 for further details.
2. Principal trading entity.
3. Shares held by an intermediate holding company.
13. Investment in associates
Aggregated amounts relating to associates
Total assets
Total liabilities
Revenues
Profit
Opening balance
Acquisitions (note 28)
Group’s share of profit
Net investment in associates
31 December 31 December
2015
£’000
2016
£’000
—
—
—
—
45
(45)
—
—
362
(275)
365
27
32
—
13
45
During the year, the Group acquired the outstanding 50% ordinary shares of its associate, Fairbrother Marsh Company Limited
(incorporated in Ireland). Refer to note 28 for further details.
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
65
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
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 31 December
2015
£’000
2016
£’000
19,291
16,283
845
1,207
7,073
1,104
1,678
5,253
28,416
24,318
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 31 December
2015
£’000
2016
£’000
6,662
8,755
The Group has certain legally enforceable rights of offset 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
16. Trade and other payables
Trade payables
Other taxation and social security
Other payables
31 December 31 December
2015
£’000
2016
£’000
6,662
(2,062)
4,600
8,755
(2,391)
6,364
31 December 31 December
2015
£’000
2016
£’000
3,071
2,281
567
5,919
3,538
2,302
726
6,566
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
31 December 31 December
2015
£’000
2016
£’000
4,827
7,063
4,663
7,677
11,890
12,340
66
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
FINANCIAL STATEMENTS
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
Bank
overdrafts
£’000
31 December 31 December
2015
£’000
2016
£’000
2,062
2,410
4
1,777
6,253
2,391
2,410
4
3,422
8,227
30,205
32,615
5
238
30,448
36,701
Bank Finance lease
Contingent
deferred
liabilities consideration
£’000
£’000
borrowings
£’000
9
1,431
34,055
42,282
Total
£’000
At 1 May 2015
Additions
Paid
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
Recognized on acquisition
Additions
Paid
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 2016
1,411
34,291
980
—
—
—
—
—
—
—
—
—
—
60
—
—
2,578
(1,982)
78
—
2,391
35,025
—
(329)
—
—
—
—
—
—
—
—
—
—
—
90
—
—
3,336
(6,410)
574
—
2,062
32,615
17
—
(4)
—
—
—
—
—
—
—
13
—
—
(4)
—
—
—
—
—
—
—
9
8,999
44,718
—
980
(4,063)
(4,067)
(82)
(148)
(49)
—
—
198
(2)
(22)
(148)
(49)
2,578
(1,982)
276
(2)
4,853
42,282
557
—
557
(329)
(5,110)
(5,114)
638
155
(39)
—
—
808
153
728
155
(39)
3,336
(6,410)
1,382
153
2,015
36,701
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
67
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
18. Financial liabilities continued
A currency analysis for the bank borrowings is shown below:
Pounds sterling
Euros
Total bank borrowings
31 December 31 December
2015
£’000
2016
£’000
32,615
—
32,615
32,096
2,929
35,025
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 £3,750,000 remains outstanding at 31 December 2016 (31 December 2015: £6,250,000)),
and a revolving credit facility (‘RCF’) of £30,000,000 (of which £29,000,000 was drawn down at 31 December 2016
(31 December 2015: £29,000,000)). 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 £135,000 (31 December 2015: £225,000) are offset against the term loan, and are being amortized 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 five business days’ notice.
All amounts owing to the bank are guaranteed by way of fixed and floating charges over the current and future assets of the Group.
As such, a composite guarantee has been given by all significant subsidiary companies in the UK, USA 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 31 December
2015
£’000
2016
£’000
6
6
12
(3)
9
6
12
18
(5)
13
68
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
FINANCIAL STATEMENTS
19. Provisions
At 1 May 2015
Utilisation of provision
Unused amounts released to income statement
Increase in provision
At 31 December 2015
Utilisation of provision
Unused amounts released to income statement
Arising on acquisition
Increase in provision
Foreign exchange
At 31 December 2016
Current
Non-current
Onerous property
leases1 Dilapidations2
£’000
£’000
55
(47)
(1)
—
7
(7)
—
—
—
—
—
—
—
551
—
—
17
568
—
(175)
8
—
1
402
9
393
Total
£’000
606
(47)
(1)
17
575
(7)
(175)
8
—
1
402
9
393
1. The onerous property lease obligations in the prior period related 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 utilized by January 2016.
2. The dilapidations provision relates to the expected costs of vacating various properties. The provision is expected to be fully utilized by December 2020.
20. Deferred tax
At 1 April 2015
Credit/(charge) to income
Credit to equity
At 31 December 2015
Credit/(charge) to income
Credit to equity
Acquisitions
At 31 December 2016
Tangible
assets
£’000
Intangible Share-based
payments
£’000
assets
£’000
Tax Other timing
differences
£’000
losses
£’000
—
—
—
—
225
—
—
225
(2,821)
1,337
577
—
46
186
(2,244)
1,569
146
—
(28)
(188)
(321)
—
(2,126)
1,060
—
631
—
631
(631)
—
—
—
71
(4)
—
67
(13)
—
—
54
Total
£’000
(1,413)
1,250
186
23
(461)
(321)
(28)
(787)
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 31 December
2015
£’000
2016
£’000
1,338
(2,125)
(787)
2,267
(2,244)
23
At the period end, the Group had tax losses of £nil (31 December 2015: £3,154,000) available for offset against future profits. A deferred
tax asset of £nil (31 December 2015: £631,000) has been recognized in respect of such losses.
The Group has unrecognized tax losses of £548,000 (31 December 2015: £1,060,000) and unrecognized deferred tax assets of £110,000
(31 December 2015: £212,000) in relation to tax losses.
Deferred tax on unremitted earnings has not been recognized as management do not intend to pay dividends from jurisdictions where a
tax charge would be incurred and dividends received are not taxed in the UK.
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
69
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
21. Operating leases
Lessee
The Group leases various offices under non-cancellable operating leases with the majority of these expiring within one to five years.
The leases have varying terms, break clauses and renewal rights.
The Group has future aggregate minimum lease payments under non-cancellable operating leases which fall due as follows:
Within one year
Between one and five years
After five years
31 December 2016
31 December 2015
Land and
buildings
£’000
1,410
3,055
7
4,472
Other
£’000
76
202
—
278
Land and
buildings
£’000
1,883
5,763
—
7,646
Other
£’000
80
220
—
300
Lessor
There is no minimum aggregate future rent receivable under non-cancellable operating leases as at 31 December 2016 (2015: £nil).
22. Ordinary shares
At 1 May 2015 – ordinary shares of 25p
Share options exercised
At 31 December 2015 – ordinary shares of 25p
Share options exercised
At 31 December 2016 – ordinary shares of 25p
Number
of shares
76,771,654
390,034
Nominal
value
£’000
19,193
97
77,161,688
19,290
38,063
10
77,199,751
19,300
Ordinary shares carry voting rights and are entitled to share in the profits of the Company (dividends). At the year end, 4,201,504 shares
were held by the ESOP (31 December 2015: 4,201,504). The Company does not have a limited amount of authorized capital.
23. Reserves
Share premium
The share premium reserve shows the amount subscribed for share capital in excess of the nominal value. On 8 June 2016, the Group
announced the cancellation of the share premium account (the “Capital Reduction”) effective 9 June 2016 following registration of the
Court order confirming the Capital Reduction by the Registrar of Companies.
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.
Convertible loan note reserve
On 29 March 2016, 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 $1.5 million. Stratigent’s financial performance over the first two financial years resulted
in consideration of $1.1 million being paid to Stratigent’s management. In order to ensure that management remains incentivized 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 $1.5 million, 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). A convertible loan note reserve amounting to £634,000 was created in equity in respect
of the convertible loan note representing 600,000 new shares in the Company.
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.
70
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
FINANCIAL STATEMENTS
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 recognized in the consolidated income statement.
For detailed movements on each of the above reserves, refer to the consolidated statement of changes in equity.
24. Share‑based payments
The Group operates a number of equity-settled share incentive schemes used to award employees of the Group. A charge based on
the fair value of the award on the grant date is taken to the consolidated income statement over the vesting period to recognize the
cost of these.
Options outstanding at 31 December 2016:
Life of
option
Exercise
period
Exercise
price
(pence)
Weighted
average
exercise
price
(pence)
Number
10 years
January 2016 – January 2026
25.0
25.0
500,000
10 years
May 2011 – May 2020
35.0
35.0
4,200,000
10 years
May 2018 – October 2025
25.0
25.0
1,349,111
10 years
May 2017– April 2024
25.0
25.0
1,892,500
10 years
May 2016 – January 2024
25.0
25.0
375,459
10 years
May 2016 – May 2023
25.0
25.0
148,353
Name of share option scheme
Executive Incentive Plan
– 27 January 2016
Executive Incentive Plan
– 12 May 2010
Executive Share Option Plan
– 01 October 2015
Executive Share Option Plan
– 15 May 2014
Executive Share Option Plan
– 17 January 2014
Executive Share Option Plan
– 23 May 2013
Executive Share Option Plan
– 27 September 2012
EMI and UCSOP Scheme
10 years
May 2004 – August 2021
nil – 72.0
10 years
September 2012 – September 2022 25.0 – 98.0
97.5
38.3
195,167
903,196
9,563,786
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 underlying earnings per share
over the period to 30 April 2013.
On 27 January 2016, 200,000 options with an exercise price of 25p each were awarded under the EIP 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 on 27 January 2016, an additional 300,000 options with an exercise price of 25p each were granted under the EIP to an Executive
Director. These options will vest conditionally on the satisfaction of performance criteria relating to the growth of the Company’s diluted
adjusted earnings per share (‘EPS’) as described below. 200,000 options (“tranche one”) will vest conditionally on the satisfaction of 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 conditionally on the satisfaction of 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%.
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
71
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
24. Share‑based payments continued
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 Executive Directors and key management. Vesting of these options is subject to the satisfaction of certain performance
criteria and typically around the rate of growth of diluted adjusted earnings per share over a three-year period. Rights to ESOP options
lapse if the employee leaves the Company.
Options awarded in the 2015 and May 2014 grants vest based on a sliding scale of compound growth rates of between 4% and 10%
whilst options awarded in the January 2014 and 2013 grants vest based on a sliding scale of compound growth rates of between 5%
and 15%. In May 2014, a one-off award was made to an Executive Director in recognition of his continued service through to retirement.
These options vest according to the rate of annual growth, in the range between 4% and 12%, in the total shareholder returns (‘TSR’)
over a three-year period. The remaining options issued in the 2012 grant have no performance conditions attached.
No share options have been granted to any employees under the ESOP in the year ended 31 December 2016.
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 utilized to attract key staff.
Rights to EMI share options lapse if the employee leaves the Company. There are no further performance conditions.
No share 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 were not eligible to join the EMI scheme.
The UCSOP provides a lock-in incentive to key management. Rights to UCSOP options lapse if the employee leaves the Company.
No share options have been granted to any employees under the UCSOP in the year ended 31 December 2016.
Movements in outstanding ordinary share options:
31 December 2016
31 December 2015
Weighted
average
Number
of share exercise price
(pence)
options
Weighted
Number
average
of share exercise price
(pence)
options
Outstanding at beginning of year/period
10,280,037
Granted during the year/period
Exercised during the year/period
Forfeited during the year/period
Performance criteria not expected to be met
Outstanding at the end of the year/period
Exercisable at the end of the year/period
500,000
(38,063)
(297,000)
(881,188)
31.9
25.0
69.6
29.1
25.0
9,463,919
1,519,111
(390,034)
(312,959)
—
9,563,786
32.1 10,280,037
6,236,286
35.9
5,367,537
33.7
25.0
46.4
35.3
—
31.9
38.2
During the year, share options were granted with a weighted average fair value of 119.1p (31 December 2015: 121.8p). 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 31 December
2016
2015
143.4p
146.5p
25p
25p
17.4%
18.9%
0.5 to 2 years 0 to 3 years
0.18% to 0.35% 0% to 0.52%
1. Expected volatility is based on historical volatility of the Company over the period commensurate with the expected life of the options.
Options exercised in the period resulted in 38,063 shares (31 December 2015: 390,034 shares) being issued at a weighted average price
of 69.6p each (31 December 2015: 46.4p). The weighted average share price on the dates of exercise for options exercised during the
year was 126.5p (31 December 2015: 129.7p).
The options outstanding at the end of the year have a weighted average remaining contractual life of 5.4 years
(31 December 2015: 6.4 years), with a range of exercise prices being between 25.0p and 97.5p.
The total credit in respect of share option schemes recognized in the consolidated income statement during the period amounted
to £92,000 (31 December 2015: £203,000 charge).
72
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
FINANCIAL STATEMENTS
25. Capital and financial risk management
General objectives, policies and processes
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. 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 the processes that ensure the
effective implementation of the financial risk management objectives and policies, to the Group’s finance function. The Board receives
monthly reports from the Group’s finance function through which it monitors the effectiveness of the processes put in place and the
appropriateness of the policies it sets. Further details regarding these policies are set out below.
Capital and other reserves
The Group considers its capital to comprise of its cash and cash equivalents, borrowings, 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.
The following table summarizes the capital of the Group:
Financial assets:
Cash and cash equivalents
Financial liabilities held at amortized cost:
Bank overdraft
Bank borrowings
Net debt
Equity
Capital
31 December 31 December
2015
£’000
2016
£’000
6,662
8,755
(2,062)
(32,615)
(28,015)
(52,055)
(80,070)
(2,391)
(35,025)
(28,661)
(42,409)
(71,070)
Financial risk management
The Group is exposed to risks that arise from its use of financial instruments. The Group’s objectives, policies and processes for
managing those risks and the methods used to measure them are described below. 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 a variety of financial risks: credit risk; market risk (including interest rate and currency
risk); and liquidity risk.
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 authorized
by the Territory 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.
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 credit control function of the Group monitors outstanding debts of the Group. Debtor reports are reviewed and analyzed on a
regular basis. Trade receivables are analyzed by the ageing and value of the debts. Customers with any overdue debts are contacted
for payment and progress is tracked on a credit control report. Based on these procedures, management assessed the credit quality
of those receivables that are neither past due nor impaired as low risk. There have been no significant changes to the composition of
receivables counterparties within the Group that indicate this would change in the future.
The Directors consider that the carrying amount of trade and other receivables are reasonable approximations of their fair value.
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
73
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
25. Capital and financial risk management continued
Credit risk continued
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 2016
At 31 December 2015
The following is an analysis of the Group’s provision against trade receivables:
Total
£’000
5,855
4,865
Past due
+ 30 days
£’000
Past due
+ 60 days
£’000
2,130
1,825
3,725
3,040
Trade receivables
19,491
(200)
19,291
16,472
(189)
31 December 2016
31 December 2015
Gross
value
£’000
Provision
£’000
Carrying
value
£’000
Gross
value
£’000
Provision
£’000
Carrying
value
£’000
16,283
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 summarized below:
Opening balance
Increase in provision
Written off against provision
Recovered amount reversed
Foreign exchange
Closing balance
31 December 31 December
2015
£’000
2016
£’000
189
138
(15)
(119)
7
200
118
132
(62)
—
1
189
Market risk
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 £139,000 (31 December 2015: £95,000).
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 year end can be illustrated by the following:
10% strengthening of US dollar
10% strengthening of euro
10% strengthening of Australian dollar
1. An equal weakening of any currency would broadly have the opposite effect.
31 December 2016
31 December 2015
Increase
in profit
before tax1
£’000
Increase in
equity1
£’000
Increase
in profit
before tax1
£’000
59
465
(51)
4,342
1,530
964
123
104
(10)
Increase in
equity1
£’000
4,119
1,257
469
74
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
FINANCIAL STATEMENTS
The currency profile of the financial assets at 31 December 2016 is as follows:
Cash and cash equivalents
Gross trade receivables
31 December 31 December 31 December 31 December
2015
£’000
2015
£’000
2016
£’000
2016
£’000
Pounds sterling
US dollar
Euro
Australian dollar
Russian rouble
Singapore dollar
Chinese renminbi
New Zealand dollar
1,937
1,626
1,667
438
272
75
647
—
3,267
2,014
2,218
444
201
—
611
—
5,091
6,005
7,064
749
259
10
291
22
5,229
4,605
5,663
642
83
73
134
43
6,662
8,755
19,491
16,472
Other price risks
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 maximize
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 year, 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 2016: £nil (31 December 2015: £nil) 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.
Categories of financial assets and liabilities
The following tables set out the categories of financial instruments held by the Group. All of the Group’s financial assets and liabilities
are measured at amortized 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 (note 14)
Cash and cash equivalents (note 15)
Total financial assets
31 December 31 December
2015
£’000
2016
£’000
20,136
6,662
26,798
17,387
8,755
26,142
1. Trade and other receivables includes net trade receivables and other receivables and excludes prepayments and accrued income.
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
75
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
25. Capital and financial risk management continued
Financial liabilities
Current financial liabilities
Other financial liabilities at amortized cost:
Trade and other payables1
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 amortized cost:
Loans and borrowings
Finance lease liabilities
Liabilities at fair value through profit and loss:
Contingent deferred consideration
Total financial liabilities
31 December 31 December
2015
£’000
2016
£’000
3,638
4,827
2,062
4
4,264
4,663
2,391
4
2,410
2,410
1,777
14,718
3,422
17,154
30,205
32,615
5
9
238
30,448
45,166
1,431
34,055
51,209
1. Trade and other payables includes trade payables and other payables and excludes other taxation and social security and deferred income.
The following table illustrates the contractual maturity analysis of the Group’s financial liabilities:
At 31 December 2016
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 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
Within
one year
£’000
One to
five years
£’000
3,638
4,827
6
5,484
1,777
—
—
6
33,285
238
15,732
33,529
(1,014)
(3,081)
14,718
30,448
4,264
4,663
6
6,011
3,422
18,366
(1,212)
17,154
—
—
12
34,382
1,431
35,825
(1,770)
34,055
Total
£’000
3,638
4,827
12
38,769
2,015
49,261
(4,095)
45,166
4,264
4,663
18
40,393
4,853
54,191
(2,982)
51,209
76
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
FINANCIAL STATEMENTS
Fair value measurement
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; and
• 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 2016
Financial liabilities
Contingent deferred consideration
At 31 December 2015
Financial liabilities
Contingent deferred consideration
Refer to note 18 for a reconciliation of movements during the year.
26. Dividends
Dividend in respect of the prior year
Total dividend paid
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
—
—
—
—
—
—
—
—
2,015
2,015
2,015
2,015
4,853
4,853
4,853
4,853
31 December 31 December
2015
£’000
2016
£’000
292
292
291
291
A dividend of £292,000 (0.4p per share) was paid during the current financial year (31 December 2015: £291,000). Dividends were paid
to non-controlling interests as shown in the consolidated statement of changes in equity.
27. Cash generated from operations
Profit/(loss) before taxation
Adjustments for:
Depreciation (note 11)
Amortization (note 10)
Impairment of goodwill
Impairment of intangible assets
Loss on disposal
Unrealized 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
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Movement in provisions
Cash generated from operations
31 December 31 December
2015
£’000
2016
£’000
6,625
(7,446)
1,231
2,451
—
—
33
(107)
652
(18)
1,150
—
1,599
13,616
(3,968)
1,313
(179)
770
1,711
3,129
773
18
(95)
228
(13)
813
(13)
(32)
(157)
5,549
(333)
(31)
10,782
5,028
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
77
Financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
28. Acquisitions
Fairbrother Marsh Company Limited
On 11 March 2016, the Group acquired the outstanding 50% interest in its Irish media consultancy associate, Fairbrother Marsh
Company Limited (‘FMC’). The 50% interest in FMC was acquired for an initial cash consideration of €150,000 (£118,000).
€643,000 (£500,000) in deferred consideration was recognized at acquisition however, the maximum total purchase consideration
is up to €2,000,000 (£1,559,000), payable in cash, depending on the performance of the FMC business during the period ending
31 December 2020.
The fair value of the purchase consideration for the acquisition of FMC is as follows:
Cash
Net present value of contingent deferred consideration1
Total purchase consideration
£’000
118
500
618
1. The fair value of contingent deferred consideration payable is based on EBIT for the years ending 31 December 2019 and 31 December 2020 with stage
payments each year from 2017 onwards based on two year averages. The potential range of future payments that Ebiquity plc could be required to
make under the contingent consideration arrangement is between £nil and £1,441,000 and will be paid in cash. All contingent deferred consideration
payments are expected to be paid by June 2021.
The carrying value and the provisional fair value of the net assets recognized at the date of acquisition are as follows:
Customer relationships
Brands
Property, plant and equipment
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Deferred tax liabilities
Net assets acquired
Fair value of 50% previously held equity interest2
Goodwill arising on acquisition3
Total purchase consideration
Carrying
Fair value
value adjustments1
£’000
£’000
—
—
10
140
162
(250)
—
62
142
83
—
—
—
(27)
(28)
170
Fair value
£’000
142
83
10
140
162
(277)
(28)
232
(40)
426
618
1. The fair value adjustments relate to the finalisation of the allocation of the purchase consideration accounting for intangible assets (customer
relationships and brands), trade and other payables and deferred tax liabilities. The fair value of trade and other receivables includes trade receivables
with a fair value and gross contractual value of £94,000.
2. A loss of £5,000 was recognized and charged to the income statement on the disposal of the original 50% previously held equity interest in FMC.
3. The goodwill recognized of £426,000 is attributable to the assembled workforce, expected synergies and other intangible assets, which do not qualify for
separate recognition. None of the goodwill arising from the acquisition is expected to be tax deductible.
FMC contributed £519,000 to revenue and £62,000 to profit before tax for the period between the date of acquisition and the year
ended 31 December 2016. If the above transaction had been completed on 1 January 2016, management estimates Group revenue
would have been £83,640,000 and Group operating profit before highlighted items would have been £12,922,000 during the financial
year to 31 December 2016.
Acquisition-related costs of £20,000 were charged to the Group’s financial statements as administrative expenses during the year ended
31 December 2016. Refer to note 3 “highlighted items” for further details.
Fairbrother Iberica and Partners SL
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.
78
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
FINANCIAL STATEMENTS
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 (refer to note 12), its associates (refer to note 13), and key management
personnel including Directors and Executive Committee members.
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
Revenue of £14,000 (31 December 2015: £nil) was recognized by the Group from Travelzoo Inc., who has a common director with
the Company.
Costs of £1,500 (31 December 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 £79,000 (31 December 2015: £35,000) for public relations consultancy were charged to the Company by Instinctif Partners Limited,
who has a common director with the Company.
As at the year end, £16,000 (31 December 2015: £9,000) was owed to Instinctif Partners Limited and £nil (31 December 2015: £nil) was
owed to the Quoted Companies Alliance.
Transactions with associates
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 €2 million, payable in cash, depending on the performance of the FMC business during the period ending 31 December 2020.
No revenue or costs from FMC have been treated as transactions with associates during the year as FMC is now accounted for as a
100% subsidiary undertaking.
Revenue of £nil (31 December 2015: £21,000) was earned by Ebiquity Associates Limited from FMC during the period.
Costs of £nil (31 December 2015: £24,000) were charged to Ebiquity Associates Limited by FMC during the period.
As at the year end £nil (31 December 2015: £nil) was owed to or by any associate companies.
31. Events after the reporting period
There have been no events after the reporting period requiring disclosure.
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
79
Financial statements 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 2016;
• 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 2016;
• the Company statement of changes in
equity for the year 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.
Opinions on other matters prescribed
by the Companies Act 2006
In our opinion, based on the work
undertaken in the course of the audit:
• the information given in the strategic
report and the Directors’ report for the
financial year for which the financial
statements are prepared is consistent
with the financial statements; and
• the strategic report and the
Directors’ report have been prepared
in accordance with applicable
legal requirements.
In addition, in light of the knowledge and
understanding of the parent company and
its environment obtained in the course of the
audit, we are required to report if we have
identified any material misstatements in the
strategic report and the Directors’ report.
We have nothing to report in this respect.
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.
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, set out on
page 41, 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.
80
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
FINANCIAL STATEMENTS 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.
With respect to the strategic report and
Directors’ report, we consider whether
those reports include the disclosures
required by applicable legal requirements.
Other matter
We have reported separately on the Group
financial statements of Ebiquity plc for the
year ended 31 December 2016.
Simon O’Brien
(Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and
Statutory Auditors
London
27 March 2017
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
81
Financial statements COMPANY STATEMENT OF FINANCIAL POSITION
as at 31 December 2016
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
10
Net current liabilities
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
Restated1
31 December 31 December
2015
£’000
2016
£’000
Note
6
7
8
990
21
74,890
75,901
358
32
74,288
74,678
9
15,290
12,352
—
15,290
(35,599)
(20,309)
55,592
—
12,352
(28,670)
(16,318)
58,360
11
(30,205)
(32,615)
25,387
25,745
12
13
13
13
19,300
—
(99)
6,186
25,387
19,290
11,764
(733)
(4,576)
25,745
1. As at 31 December 2015, the balance of amounts owed to Group undertakings amounting to £22,352,000 has been reclassified to ‘falling due within one
year’ from ‘falling due after more than one year’ to reflect that they were repayable on demand.
The notes on pages 84 to 90 are an integral part of the financial statements of the Company. The financial statements on pages 82 to 90
were approved and authorized for issue by the Board of Directors on 27 March 2017 and were signed on its behalf by:
Michael Karg, PhD
Director
Andrew Noble
Director
82
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
FINANCIAL STATEMENTS
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2016
At 1 May 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
Capital contribution relating to share-based payments
Dividends to shareholders
At 31 December 2015
Loss for the year
Other comprehensive (loss)/income for the year
Total comprehensive loss for the year
Proceeds from shares issued
Share premium reduction1
Convertible loan note2
Share-based payments credit
Capital contribution relating to share-based payments
Dividends to shareholders
At 31 December 2016
Note
Share
capital
£’000
Share
premium
£’000
19,193
11,657
Other
reserves
£’000
(733)
—
—
—
97
—
—
—
—
—
—
107
—
—
—
—
—
—
—
—
—
—
19,290
11,764
(733)
—
—
—
10
—
—
—
—
—
19,300
—
—
—
16
(11,780)
—
—
—
—
—
—
—
—
—
—
634
—
—
—
(99)
12
14
12
14
8
Retained
earnings
£’000
2,071
(6,584)
—
Total
£’000
32,188
(6,584)
—
(6,584)
(6,584)
—
(45)
273
(291)
(4,576)
(1,380)
—
204
(45)
273
(291)
25,745
(1,380)
—
(1,380)
(1,380)
—
11,780
—
474
180
26
—
634
474
180
(292)
6,186
(292)
25,387
1. On 8 June 2016, the Group announced the cancellation of the share premium account (the “Capital Reduction”) effective 9 June 2016 following
registration of the Court order confirming the Capital Reduction by the Registrar of Companies.
2. A convertible loan note reserve of £634,000 was created during the year to 31 December 2016. Refer to note 13 for further details.
The notes on pages 84 to 90 are an integral part of the financial statements of the Company.
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
83
Financial statements
NOTES TO THE COMPANY FINANCIAL STATEMENTS
for the year ended 31 December 2016
1. General information
Ebiquity plc (the ‘Company’) acts as a
holding company and is incorporated
and domiciled in the UK. The address
of its registered office is CityPoint,
One Ropemaker Street, London EC2Y 9AW.
The financial statements of the Company
represent the results for the year ended
31 December 2016 whilst the comparatives
represent the results for the eight months
ended 31 December 2015. The change
of year end was made to enable greater
certainty of year end out-turn earlier in
the Company’s financial year.
The financial statements present
information about the Company as an
individual undertaking and not about
its group.
2. Basis of preparation
The financial statements of the Company
have been prepared in accordance
with Financial Reporting Standard 101
‘Reduced Disclosure Framework’
(‘FRS 101’). The financial statements have
been prepared on a going concern basis
under the historical cost convention and in
accordance with the Companies Act 2006.
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. 10D (statement of cash flows);
ii. 16 (statement of compliance with
all IFRS);
iii. 38A (requirement for minimum of
two primary statements, including
cash flow statements);
iv. 38B-D (additional comparative
information);
v. 111 (cash flow statement
information); and
vi. 134–136 (capital management
disclosures).
e. IAS 7 ‘Statement of Cash Flows’;
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); and
h. the requirements in IAS 24 ‘Related
Party Disclosures’ to disclose related
party transactions entered into between
two or more members of a group.
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.
Finance income and expenses
Finance income and expenses represents
interest receivable and payable. Finance
income and expense is recognized 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 into.
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 to its employees
and employees of subsidiaries using the
Company’s equity instruments. These are
measured at fair value (excluding the effect
of non-market-based vesting conditions)
at the date of grant and expensed on a
straight-line basis over the vesting period,
based on the Group’s estimate of shares
that will eventually vest and adjusted for
the effect of non-market-based vesting
conditions. A corresponding credit is
recorded in equity.
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.
84
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
FINANCIAL STATEMENTS Investments in subsidiaries
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 statement of financial position, bank
overdrafts are shown within borrowings
in current liabilities.
Share capital
Equity instruments issued by the Company
are recorded at the amount of the proceeds
received, net of direct issuance costs.
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 utilized. 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
recognized 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 recognized at fair value
plus transaction costs that are directly
attributable to their acquisition or issue,
and are subsequently carried at amortized
cost using the effective interest rate
method, less provision for impairment.
Financial liabilities
Borrowings consisting of interest-bearing
secured and unsecured loans and
overdrafts are initially recognized at fair
value net of directly attributable transaction
costs incurred and subsequently
measured at amortized cost using the
effective interest method. The difference
between the proceeds received net of
transaction costs and the redemption
amount is amortized over the period
of the borrowings to which they relate.
The revolving credit facility is considered
to be a long-term loan.
Trade and other payables are initially
recognized at their nominal value which
is usually the original invoiced amount.
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.
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 recognized 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 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 recognized when the
right to receive payment is established.
Dividend distribution
Dividend distribution to the Company’s
shareholders is recognized 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 amortized on a straight-line
basis over their useful lives which vary
from four to five years.
Property, plant and equipment
Property, plant and equipment is stated at
cost less accumulated depreciation and
any recognized impairment loss.
Depreciation is charged so as to write off
the cost of assets over their estimated
useful lives and is recognized in the income
statement within administrative expenses.
The rates applied are as follows:
Fixtures, fittings
and equipment
20% per annum
straight-line
Computer
equipment
25% straight-line
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
85
Financial statements
NOTES TO THE COMPANY FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
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 for the year of £1,380,000
(31 December 2015: loss for the period of
£6,584,000).
4. Operating loss
Auditors’ remuneration
Fees for the audit of the Company are
£3,000 (31 December 2015: £3,000).
Fees paid to the Company’s auditors for
services other than the statutory audit of
the Company are disclosed in note 4 to the
consolidated financial statements.
Directors’ remuneration
Fees paid to the Company’s Directors are
disclosed in note 5 to the consolidated
financial statements.
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.
Employee Share Ownership Plan (‘ESOP’)
The ESOP’s investment in the Company’s
shares is deducted from shareholders’
equity in the 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.
Critical accounting
estimates and judgements
In preparing the Company financial
statements in conformity with FRS 101,
the Directors are required to make certain
estimates and judgements relating to the
reported results of revenue and expenses
during the period and the financial
position of the Company at the reporting
date. Actual results may differ from
those estimates.
Due to the nature of operations, the
key area of judgement that has the
most significant effect on the amounts
recognized in the Company financial
statements, is the review for impairment
of the carrying value of investments
in subsidiaries.
2. Basis of preparation continued
Derivative financial instruments
The Company uses derivative financial
instruments to reduce its exposure
to foreign exchange and interest rate
movements. The Company 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 recognized at fair
value at the contract date and continue
to be stated at fair value at the statement
of financial position date with gains and
losses on revaluation being recognized
immediately in the income statement.
Cash flow hedging is used to hedge
against fluctuations in future cash flows
on the Company’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 recognized directly in equity
(hedging reserve) until the gain or loss on
the hedged item is realized. Any ineffective
portion is always recognized in the
income statement.
The fair value of derivatives is determined
by reference to market values for
similar instruments.
Provisions
Provisions are recognized 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 recognized
for future operating losses.
86
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
FINANCIAL STATEMENTS 5. Tax on loss on ordinary activities
The tax charge is made up as follows:
Current tax
Deferred tax
Origination and reversal of timing differences
Taxation on ordinary activities
Eight month
Year ended period ended
31 December 31 December
2015
£’000
2016
£’000
—
—
—
—
—
—
—
—
The tax assessment for the year differs to the standard rate of corporation tax in the UK of 20% (31 December 2015: 20%).
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%
(31 December 2015: 20%)
Effects of:
Expenses not deductible for tax purposes
Capital allowances for year in excess of depreciation
Additions to intangibles
Relieved to other group companies
Losses carried forward
Current tax charge for the year
Eight month
Year ended period ended
31 December 31 December
2015
£’000
2016
£’000
(1,380)
(6,584)
(276)
(1,317)
31
(1)
41
205
—
—
868
(11)
—
308
152
—
Deferred tax on unremitted earnings has not been recognized as management do not intend to pay dividends from jurisdictions where a
tax charge would be incurred and dividends received are not taxed in the UK.
6. Intangible assets
Cost
At 1 January 2016
Additions
At 31 December 2016
Amortization
At 1 January 2016
Charge for the year
At 31 December 2016
Net book value
At 31 December 2016
At 31 December 2015
Computer
software
£’000
454
743
Total
£’000
454
743
1,197
1,197
(96)
(111)
(207)
990
358
(96)
(111)
(207)
990
358
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
87
Financial statements
NOTES TO THE COMPANY FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
7. Property, plant and equipment
Cost
At 1 January 2016
At 31 December 2016
Depreciation
At 1 January 2016
Charge for the year
At 31 December 2016
Net book value
At 31 December 2016
At 31 December 2015
8. Investments in subsidiaries
Cost and net book value
At 31 December 2015
Additions1
Capital contributions relating to share-based payments
At 31 December 2016
1. Additions of £422,000 comprises an additional capital contribution in Ebiquity Holdings Inc.
Fixtures,
fittings and
equipment
£’000
Computer
equipment
£’000
1
1
—
—
—
1
1
46
46
(15)
(11)
(26)
20
31
Total
£’000
47
47
(15)
(11)
(26)
21
32
£’000
74,288
422
180
74,890
The Company’s principal trading subsidiaries and associated undertakings are listed in note 12 to the consolidated financial statements.
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 31 December
2015
£’000
2016
£’000
14,989
12,034
6
295
8
310
15,290
12,352
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.
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.
The residual amounts owed by Group undertakings are unsecured, non-interest bearing, have no fixed date of repayment and are
repayable on demand.
88
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
FINANCIAL STATEMENTS
10. Creditors: amounts falling due within one year
Bank loans and overdrafts
Trade creditors
Other taxation and social security
Other creditors
Accruals
Amounts owed to Group undertakings2
Restated1
31 December 31 December
2015
£’000
2016
£’000
4,472
844
34
20
669
29,560
35,599
4,800
641
12
1
864
22,352
28,670
1. The balance of amounts owed to Group undertakings as at 31 December 2015 has been reclassified from amounts falling due after more than one year
to reflect that they were repayable on demand.
2. Included within amounts owed to Group undertakings is an amount which is unsecured, incurs interest at 5.5% plus Bank of England base rate, has no
fixed date of repayment and is repayable on demand. The residual amounts owed to Group undertakings are unsecured, interest free, have no fixed date
of repayment and are repayable on demand.
11. Creditors: amounts falling due after more than one year
Bank loans – between two and five years
31 December 31 December
2015
£’000
2016
£’000
30,205
30,205
32,615
32,615
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 £3,750,000 remains outstanding at 31 December 2016
(31 December 2015: £6,250,000)), and a revolving credit facility (‘RCF’) of £30,000,000, (of which £29,000,000 was drawn down
at 31 December 2016 (31 December 2015: £29,000,000)). 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 £135,000 (31 December 2015: £225,000) are offset against the term loan, and are being amortized 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 five business days’ notice.
All amounts owing to the bank are guaranteed by way of fixed and floating charges over the current and future assets of the Group.
As such, a composite guarantee has been given by all significant subsidiary companies in the UK, USA and Germany.
12. Ordinary shares
Allotted, called up and fully paid
At 30 April 2015 – ordinary shares of 25p
Share options exercised
At 31 December 2015 – ordinary shares of 25p
Share options exercised
At 31 December 2016 – ordinary shares of 25p
Number
of shares
Nominal
value
£’000
76,771,654
19,193
390,034
97
77,161,688
19,290
38,063
10
77,199,751
19,300
Ordinary shares carry voting rights which are entitled to share in the profits of the Company. During the period, the Company paid
a dividend of 0.4p per share, a total of £292,000 (31 December 2015: 0.4p with a total of £291,000) to shareholders.
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
89
Financial statements
NOTES TO THE COMPANY FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
13. Reserves
Share premium
The share premium reserve shows the amount subscribed for share capital in excess of the nominal value. On 8 June 2016, the
Company announced the cancellation of the Company’s share premium account (the “Capital Reduction”) effective 9 June 2016
following registration of the Court order confirming the Capital Reduction by the Registrar of Companies.
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.
Convertible loan note reserve
On 29 March 2016, 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 $1.5 million. Stratigent’s financial performance over the first two financial
years resulted in consideration of $1.1 million being paid to Stratigent’s management. In order to ensure that management remains
incentivized 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 $1.5 million, 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). A convertible loan note reserve amounting to £634,000
was created in equity in respect of the convertible loan note representing 600,000 new shares in the Company.
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 (31 December 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 (31 December
2015: 4,201,504), all of which are under option to the employees of the Group. As at the statement of financial position date, all of
the shares in the ESOP had vested (31 December 2015: all had vested).
Retained earnings
The retained earnings reserve shows the cumulative net gains and losses recognized 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).
15. Commitments
Capital commitments contracted but not provided for by the Company amount to £nil (31 December 2015: £nil). The Company has
no operating lease commitments (31 December 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
Under FRS 101.8(k), the Company is exempt from the requirement to disclose transactions with entities that are part of the
Ebiquity plc Group, or investees of the Group qualifying as related parties, as all of the Company’s voting rights are controlled within
the Group. The Company has no other material related parties. Related party transactions are detailed in note 30 to the consolidated
financial statements.
Transactions with key management personnel
FRS 101.8(j) exempts entities from the disclosures in respect of the compensation of key management personnel.
90
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
FINANCIAL STATEMENTS ADVISERS
Independent auditors
PricewaterhouseCoopers LLP
Chartered Accountants
and Statutory Auditors
1 Embankment Place
London WC2N 6RH
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
Bristol BS99 7NH
SHAREHOLDER INFORMATION
Country of incorporation
Ebiquity plc is registered and
incorporated in England and Wales.
Number of securities in issue
As of 27 March 2017, the Company’s
issued share capital consists of 77,199,751
ordinary shares of 25p each. The Company
has no treasury shares.
Details of any restrictions
on the transfer of securities
There are no restrictions on any of the
Company’s AIM securities.
Securities not in public hands
As of 27 March 2017, the percentage of the
Company’s issued share capital that is not
in public hands is 23.26%.
Company registration
Registered office
CityPoint
One Ropemaker Street
London EC2Y 9AW
Company number 03967525
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
91
Financial statements the Group's Advertising Intelligence business
IFRS
International Financial Reporting Standards
GLOSSARY
AI
ANA
APAC
CAGR
Association of National Advertisers
Asia Pacific
compound annual growth rate
Capital
Reduction
the cancellation of the
share premium account
CGUs
cash-generating units
the Company
Ebiquity plc
Constant
currency
(‘CC’)
DLG
DMP
DSP
EBITDA
EBT
EIP
calculated by taking current year
denominated results restated at
last year’s foreign exchange rates
Direct Line Group
data measurement platform
demand-side platform
earnings before interest, tax,
depreciation and amortization
Employee Benefit Trust
Executive Incentive Plan
IPA
ISAs
ISBA
KPIs
Institute of Practitioners in Advertising
International Standards on Auditing
Incorporated Society of British Advertisers
key performance indicators
LIBOR
London Interbank Offered Rate
Like‑for‑like
(‘LFL’)
LTI
MCA
MGM
MI
MPO
MVM
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
Long-Term Incentive
the Group’s Multi-Channel Analytics business
Manning Gottlieb Media
Market Intelligence
Marketing Performance Optimisation
Media Value Measurement
Net debt
long-term borrowings, short-term borrowings
less cash and cash equivalents
EMI scheme
enterprise management incentive scheme
PwC
PricewaterhouseCoopers LLP
earnings per share
QCA Code
EPS
ESOP
FMC
FRS 101
Executive Share Option Plan
Fairbrother Marsh Company Limited
Financial Reporting Standard 101
‘Reduced Disclosure Framework’
RBS
RCF
Royal Bank of Scotland
revolving credit facility
Stratigent
Stratigent LLC
Quoted Companies Alliance – Corporate
Governance Code for Small and Mid-Size
Quoted Companies 2013
the Group
Ebiquity plc and its subsidiaries
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
TSR
UCSOP
total shareholder returns
unapproved company share option plan
Underlying
performance
underlying performance refers to the results
of operations before highlighted items
WFA
World Federation of Advertisers
IAB
IASB
Internet Advertising Bureau
International Accounting Standards Board
92
Ebiquity plc | Annual report and financial statements for the year ended 31 December 2016
FINANCIAL STATEMENTS
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Ebiquity plc
CityPoint
One Ropemaker Street
London
EC2Y 9AW
www.ebiquity.com