Annual
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2019
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Annual report and
financial statements
for the year ended
31 December 2019
Our purpose
Ebiquity is the leading global independent
media and marketing consultancy.
We exist to help brands optimise
return on investment from their
marketing spend.
In the increasingly digital, ever-more
complex media and marketing
ecosystem, we work with many of the
world’s leading advertisers to improve
marketing outcomes and enhance
business performance.
We do this by harnessing the power of
the best data, the best analytics talent
and tools, and the best marketing
technology available.
By helping to build evidence-based
marketing programmes, we enable our
clients to extract full value from their
investments, drive accountability and
transparency into their media supply
chain, and create sustainable
partnerships with the right agency
and technology partners.
By creating clarity in all aspects of
media and marketing and by aligning
their interests behind clear business
objectives, we enable advertisers to
achieve better marketing outcomes.
Ebiquity. Creating clarity in media
and marketing. Enhancing business
performance.
Visit us online at
www.ebiquity.com/en/investors
Strategic report
Corporate governance
Statement of Independence
Highlights
Chairman’s statement
Executive review
Client lifecycle
02
03
04
06
14
Practice reviews
People, community
and environment
Section 172 statement
Risks
Contents
Strategic
report
An overview of key
actions and events in
2019 and early 2020,
together with our
priorities as we
move forward.
Corporate
governance
This section provides
information on how
the Company is
governed and the
activities of
the Board.
Board of Directors
Corporate
governance report
Audit & Risk
Committee report
Financial
statements
This section includes
our financial statements,
notes and auditors’
report for the Group
and Company.
Statement of Directors’
responsibilities
Independent auditors’ report
Consolidated
income statement
Consolidated statement
of comprehensive income
Consolidated statement
of financial position
Consolidated statement
of changes in equity
Consolidated statement
of cash flows
32
Remuneration
Committee report
34
Directors’ report
40
53
54
62
63
Notes to the consolidated
financial statements
Company statement
of financial position
Company statement
of changes in equity
Notes to the Company
financial statements
64
Advisers
Shareholder information
Glossary
65
66
16
26
28
29
43
49
67
106
107
108
119
119
120
01
Annual report and financial statements for the year ended 31 December 2019Financial statements Statement of Independence
As the leading global independent media and marketing
consultancy, we believe it is vital that we are entirely independent
of the media supply chain and the provision of marketing
services whose performance we help to optimise.
It is the independence of our expert
consultants that allows us to give
genuinely impartial advice; advice
that helps our clients choose the right
partners, tools, and technologies to
achieve better marketing outcomes
and enhance business performance.
This core and defining principle of
impartiality is enshrined in this, our
Statement of Independence.
In order to provide independent,
unbiased, and trusted advice in
the marketplace, we have remained
firmly media agnostic over our
20+ year history.
These principles are designed to ensure
that we operate with our clients’ best
interests in mind. This is of growing
importance in a marketing ecosystem
that is often highly opaque and
becoming increasingly complex.
This Statement of Independence is
available on the Ebiquity website at
https://bit.ly/3bfhzpc.
By engaging with advertisers, agencies,
and the leading national and global
marketing associations, we are helping
to define industry standards.
That’s also why we have published the
Ebiquity Code of Conduct, which sets
out the standards and practices that
we adhere to and that we believe
brands should demand of their
independent consultants. It covers
independence, remuneration,
confidentiality, data processing,
and ways of working.
The Ebiquity Code of Conduct
is also available on our website,
at https://bit.ly/2Vi0fu7.
We adhere to the following key
principles of independence:
› › we do not offer media execution
and trading services;
› › we do not engage in media buying or
conduct any negotiations with media
owners or publishers on behalf of our
clients;
› › we are independent of the media
supply chain and do not pitch for
media work or compete with media
agencies in their core media trading
capabilities;
› › our focus in media is on advocating a
media supply chain that operates in
the interest of advertisers;
› › we occasionally work with clients on
‘test and learn’ projects that involve
some media buying, almost always
conducted by their media agencies,
where we focus entirely on
measurement to help independently
optimise media performance; and
› › while we work closely with our clients’
media agencies, we are not directly
associated with any media agency
or media owner in a way that
compromises our neutrality
in the marketplace.
02
Ebiquity plc Highlights
Highlights
Media:
Media Management, Media Performance
and Contract Compliance
Revenue of £68.7m (2018: £69.4m)
Revenue of £54.6m, increased by 1%
Underlying operating profit1 of £6.2m (2018: £6.3m)
Contract Compliance revenue increased by 13%
Underlying profit before tax1 increased to £5.3m
(2018: £5.2m)
Media Performance and Media Management revenue
declined by 1%
Strong balance sheet: net debt at 31 December 2019
reduced significantly to £5.6m (31 December 2018:
£27.5m) following completion of AdIntel sale in
January 2019
Shared service media delivery centre in Spain
expanding and delivering operational efficiencies
Improved operating cash flow conversion of 144%
(2018: 138%)
Analytics & Tech:
Advanced Analytics, MarTech and AdTech
Significant client wins include Amazon, Facebook, Nike,
Verizon Wireless and Volvo
Impairment charge of £5.8m taken in relation to
Stratigent, the loss-making US MarTech business,
following decision to wind down its operation
Revenue of £14.1m; excluding Stratigent, increased
by 11%
Operating profit of £1.0m
Nick Waters, former Executive Chairman, UK and
Ireland, Dentsu Aegis Network, appointed Group Chief
Executive Officer with effect from 1 July 2020
Advanced Analytics practice expanded into France
and USA
AdTech advisory practice increased revenue by 105%
1. Underlying operating profit is defined as the operating profit excluding highlighted items. These include share-based payments, amortisation
of purchased intangibles and non-recurring items. Underlying profit before tax is calculated based on the underlying operating profit.
03
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements Chairman’s statement
“Ebiquity is now a more
streamlined business
that is focused
on becoming the leading
global independent
media and marketing
consultancy.”
Rob Woodward
Chairman
COVID-19
Since the beginning of 2020, the
outbreak of the COVID-19 pandemic
has created an unprecedented and
uncertain economic environment for
all businesses.
Our global business largely switched
to remote working from March 2020
onwards and has continued to deliver
high-quality services to clients as usual
throughout the period of the COVID-19
disruption. Maintaining the health and
safety of all our staff has been a
priority and we are proud of the
admirable resilience and flexibility
they have shown in responding to
the challenges they face during these
difficult times. At the time of writing,
we are pleased that units in some
countries, such as China and Germany,
are now re-opening their offices.
Ebiquity plays a key role in providing
clarity and transparency to advertisers
on their media spend but that means
our business is influenced by the macro
trends in the advertising markets.
The unprecedented economic
disruption caused by the reaction
to COVID-19 has led to significant
reductions in current and forecast
global advertising spend which is
affecting our business in the
current year.
This impact varies considerably both
between and within sectors and
geographies. Some clients, especially
in the automotive sector, in which
Ebiquity has a strong presence, and in
travel, leisure and non-food retail, have
reduced their service requirements
although many others have remained
resilient. Clients are also adjusting their
plans frequently both upwards as well
as downwards as their business outlook
evolves.
The Group has undertaken prudent
cost reduction measures to strengthen
and protect the business in the current
environment and further to support our
liquidity position. These include
temporary salary reductions for the
Board and a number of senior
managers and staff and the use of
government job retention and support
schemes in various countries, including
Australia, France, UK and USA.
We have modified the covenants on our
banking facilities and deferred part of
the consideration payable for the
previously announced buy-out of the
Italian minority. Although the Group is
in a healthy financial position with
sufficient liquidity to manage the
COVID-19 disruption, the Board has
decided to defer the payment of
dividends until economic and business
conditions are more certain.
Business review
This annual report covers Ebiquity’s
first full year following the sale of the
Advertising Intelligence (‘AdIntel’)
business to Nielsen Media Research
(‘Nielsen’) which completed on
2 January 2019. Ebiquity is now a more
streamlined business that is focused
on becoming the leading global
independent media and marketing
consultancy, helping advertisers to
measure, evaluate, and maximise
returns from their marketing spend.
The significant reduction in net debt as
a result of the sale has strengthened
the Group’s financial position, giving it
greater flexibility to invest in developing
the business organically, and build
through selective acquisitions, such as
that of Digital Decisions announced in
January 2020.
In addition to the structural evolution
of the business during the past 15
months, there have been significant
changes in the Group’s executive
leadership. Alan Newman joined as
Chief Financial Officer at the start of
2019 and has strengthened the Group’s
financial management controls and
operational processes. Towards the end
of the year, Michael Karg stepped down
as Chief Executive Officer after nearly
four years in that role and I would like
to record the Board’s appreciation for
his contribution to Ebiquity over
that time.
04
Ebiquity plc
In April 2020, we announced the
appointment of Nick Waters as CEO
with effect from 1 July 2020.
Nick brings more than 20 years’
experience in senior executive roles at
leading international media, digital, and
advertising businesses, most recently
at Dentsu Aegis. I thank Alan for his
strong leadership and commitment to
the business in the role of Interim CEO
after Michael’s departure, particularly
throughout the challenging
environment caused by COVID-19.
Nick and Alan have highly
complementary skills and experience,
which will significantly strengthen the
executive team.
As previously highlighted, 2019 was a
year of transition. We are therefore
pleased to report that our underlying
operating profit for 2019 was in line
with expectations at £6.2 million,
largely driven by tight cost control.
Revenue performance, however, was
not as strong as anticipated earlier in
the year. Group revenue was 1% lower
than the prior year at £68.7 million,
compared to £69.4 million, although
excluding Stratigent, which was wound
down in September 2019, it grew by 2%
on a like-for-like basis. Revenue in
Media, our largest segment, was up
1% year-on-year, due to Contract
Compliance, which grew well. Although
Analytics & Tech total revenue reduced
by 7%, Advanced Analytics and AdTech
both recorded strong growth so that,
excluding Stratigent, Analytics & Tech
revenue grew by 11%.
Good progress was made during the
year towards realigning the cost
structure of the business with the
revenue base without the AdIntel
business. The Group’s total underlying
costs (excluding highlighted items)
reduced by 1% to £62.6 million, from
£63.0 million, and there was a
reduction of 3% in the total year-end
staff numbers. This was achieved
despite the Group having to bear
continuing costs of the transitional
agreement to deliver support services
to Nielsen post the AdIntel sale.
The Board and management team are
pursuing opportunities to deliver
further efficiency gains across the
business while also maintaining
investments to support growth in
high potential service areas, such as
advanced analytics.
Through this transitional period,
Ebiquity is in a strong position as
a leading independent, global
consultancy, to satisfy the growing
demand from brand owners for
specialist consulting services to enable
them to optimise their marketing
expenditure. Our advantages include
our consultancy independence,
excellent client base and access to data
that this provides, and the breadth of
our services, which range from media
performance reviews, media
management advice and contract
compliance through to advanced
analytics and advertising technology
consulting. This range is unmatched by
our competition at a global level, as is
our network of media experts located
in 15 of the main media markets in
Europe, North America, Asia and
Australasia. The US market in
particular, where Ebiquity has
traditionally underperformed as a
business, remains a key opportunity
due both to its domestic scale and its
role as the base for many global
advertisers.
Our long-held view that advertisers’
need for transparency is best met
through independent advice has been
reinforced by Accenture’s
announcement of its withdrawal
from media auditing and management
advisory services from September
2020, resulting from its expansion
into media buying and programmatic
advertising services. This is already
providing opportunities for Ebiquity
and we have won contracts with a
number of clients around the world
previously served by Accenture.
The priorities set by the Board for the
CEO and the management team are to
re-establish revenue growth and to
improve the Group’s operating margins
over the medium term. In support of
this, the Group’s strategy remains to
increase the revenue share from
‘forward-looking’ advisory services
which help brands to plan and organise
their media and marketing activities.
We expect the new CEO with his
significant media and agency expertise
to make a significant contribution to
the execution of this strategy as well
as to the Group’s business
development activities.
Ebiquity’s performance in 2020 will
depend in part on the overall health of
the global economy and advertising
markets whose outlook remains highly
uncertain. We will continue to take a
prudent approach to cost management
and incorporate lessons learned from
dealing with the COVID-19 crisis, as
well as pursuing planned measures to
streamline our processes and enhance
our service offering.
Looking ahead, the Board believes
that Ebiquity’s capabilities and leading
position in its market, together with
a strengthened management team
under the new CEO, will enable it to
meet the challenges of the COVID-19
disruption and successfully achieve its
long-term goals as we emerge from the
global crisis.
Rob Woodward
Chairman
20 May 2020
05
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements Executive review
“Ebiquity’s offer
meets advertisers’
requirements and
is matched by few
competitors operating
at a global level.”
Alan Newman
Interim Chief Executive Officer/Chief Financial Officer
Strategic direction
With the digital revolution and resulting
explosion of marketing channels, the
demand from brands for independent
media and marketing consulting
services continues to grow. Ebiquity is
in a unique position to be their leading
provider and adviser, enabling them to
monitor, evaluate, and maximise
returns from their media spend.
We have defined clearly our aim of
becoming the lead adviser to Chief
Marketing Officers (‘CMOs’) who are
increasingly called upon to justify and
explain with clarity the contribution
that marketing spend makes to the
performance of their business.
There are few unbiased, expert-led,
data-driven consultancies in our
marketplace. It is clear that
independent, conflict-free, high-quality
advice is increasingly valued by
advertisers. Ebiquity’s offer, through
our portfolio of specialised consultancy
services, meets advertisers’
requirements and is matched by few,
if any, competitors operating at a
global level.
Ebiquity’s services map into all the key
stages of our clients’ media lifecycle.
These include:
› › designing the media model, including
internal and external structures;
› › managing and selecting partners,
including media and creative
agencies and digital advertising
services;
› › defining objectives, including partner
goals and commitments;
› › evaluating outcomes;
› › optimising plans; and
› › reviewing compliance with
contractual obligations.
Our primary differentiators are:
› › our clear global leadership in
providing core media performance
services – we are acknowledged by
the World Federation of Advertisers
as the world’s largest independent
media adviser and leader in media
benchmarking, agency management,
and contract compliance;
› › our reach among top advertisers
– serving 70 of the world’s top 100
advertisers through our 18 offices in
the largest advertising markets;
› › our data – we have the largest
global pool of advertising spend
data, covering over $50 billion; and
› › our analytics – a market-leading
analytics capability and platform.
Its quality is reflected in a record
five awards at the Institute of
Practitioners in Advertising (‘IPA’)
Effectiveness Awards for our clients,
including Direct Line Group, Lidl,
Weetabix, and Taylors of Harrogate.
We recognise that in order to maintain
our leadership position and grow our
business, we need to remain ahead of
our competitors in terms of innovation,
skills and service quality. We need
in particular to reinforce our
capabilities in being able to provide
‘forward-looking’ consulting analytics
and advice as well as in reporting and
assessing historic media performance.
06
Ebiquity plc
Our acquisition of Digital Decisions complements
and enhances our digital media performance offering.
Accordingly, we are continuing to invest
in growing our analytics and advisory
businesses. We are also enhancing our
infrastructure to allow us to handle our
unique client data sets more efficiently
and help our core Media practice to
generate high-quality analysis and
insights upon which our clients can
make decisions. Our ‘MediaSuite’ of
automated applications covering data
ingestion, media agency selection, and
digital media benchmarking contribute
to this. Our Media Management service
is also innovating. For example,
it recently launched an ‘Agency
Capabilities Review’ to help advertisers
to ensure the effective management of
their agency relationships. This was
successfully piloted with a global
automotive group.
Keeping pace with developments in
digital media is clearly vital for our
business. Its greater complexity and
the growing range of channels and
intermediaries through which digital
advertising money passes require the
ability rapidly to obtain and analyse
data and report on it to advertisers.
Our acquisition of Digital Decisions
in January 2020 complements and
enhances our digital media
performance offering. It provides a
digital media monitoring service
(on an annual subscription basis),
primarily targeted at procurement
and media heads of global brands,
and provides them with regular
oversight on their digital advertising
performance. Digital Decisions’
technology applications ingest data
‘from source’ from agencies and
provide recommendations for actions
to improve digital media performance.
Their system is designed to scale as a
self-service solution and its relatively
low delivery costs should lead to high
margins over time. Integration with
Ebiquity’s platforms should also
benefit our existing media
performance services.
We recognise that achieving higher
revenue growth requires strong
relationships with current and potential
clients and a clear understanding of
their needs so as to tailor our services.
A significant challenge is that only a
small minority of the Group’s clients
buy more than one of our services.
At the beginning of 2019, we created
a team of dedicated (UK-based) client
account leaders to manage
relationships with our key global clients.
This initiative, supported by detailed
account plans, led to revenue from the
clients managed by this team growing
by 18% during the year.
5 awards
Our Analytics practice won five
awards at the IPA Effectiveness
Awards for clients including Direct
Line Group, Lidl, Weetabix and
Taylors of Harrogate.
Much of this increase was generated
by introducing Analytics, AdTech and
Media Management services into these
clients in addition to the traditional
Media Performance services. We plan
to expand this programme to cover
more clients and our non-UK offices,
as well as to improve targeting and
planning for all client accounts.
Communication and marketing of
Ebiquity’s services and thought
leadership on media developments is
essential in strengthening our market
position and supporting our business
growth. The appointment of Debbie
Morrison from ISBA, early in 2019,
as Managing Director, Global
Partnerships & Events has helped to
increase awareness of Ebiquity among
senior marketing professionals and to
enhance our programme of dedicated
marketing events. This has included
establishing a Client Council made up
of senior media executives from leading
global advertisers to provide advice on
key advertiser concerns and feedback
on how our services address these.
We have also continued to
communicate on key industry issues
and our innovations through the media,
online channels and our own
publications. Early in 2019, ‘Tipping
Point’, a joint study by our Media and
Analytics practices, was published.
This explained that TV’s ability to
provide mass audience reach is
diminishing faster than previously
thought. This attracted many
(positive and negative) reactions
in national and international media.
It was followed by ‘Mind the Gap’,
published in January 2020, which
combines Ebiquity’s data and audience
research to help identify how
advertisers can improve their use of
online channels to reach their target
audiences. One of its data-backed
conclusions on the effectiveness
(or lack of it) of Facebook
advertising also attracted
much industry comment.
07
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements Executive review continued
Performance in the year
Group revenue in the year to 31 December 2019 fell by 1% to £68.7 million although it grew by 2% on a like-for-like basis excluding
Stratigent, which was wound down in September 2019.
Our aim in 2019 was to stabilise and re-focus the business following a year (2018) in which the Group’s costs had grown ahead
of its revenue and its overall performance had been below expectations. We succeeded in delivering an overall profit result that
was in line with expectations, although our revenue base did not grow in line with our original plans and the performance of our
business segments varied significantly.
FY19
£m
54.6
14.1
68.7
Revenue
FY18
£m
54.2
15.2
69.4
Variance
£m
0.4
(1.0)
(0.6)
%
1%
(7%)
(1%)
%
(1%)
13%
1%
5%
105%
(39%)
(7%)
Our Media Performance practice,
which remains our largest single
revenue contributor, assists advertisers
to monitor and evaluate their agencies’
media buying performance.
It harnesses the expert knowledge of
our global network of media specialists,
the most extensive of its kind, and our
access to unique client media spend
data pools to assess the value for
money delivered, both in comparison to
the market and to the client’s specific
objectives. This helps brand owners to
obtain accountability and transparency
over the performance of their chosen
media supply partners, especially given
the industry’s complex purchasing
arrangements. Major clients for this
practice include General Motors,
L’Oreal and Beiersdorf.
The Media Management practice
advises clients on topics such as the
management and selection of media
agencies and setting of media buying
objectives, as well as the organisation
of media functions. It conducts close to
100 agency selections annually, both at
global level and within individual
markets for clients such as JLR,
McDonalds and Orange. This service is
now supported by our new proprietary
tool, ‘Select’, which was launched in
2018 and enables us to automate the
comparison of the rates offered by
agencies in their tenders. Media
Management revenue, however, still
depends to an extent on the level of
global media agency pitches occurring
in the market and there were fewer of
these in 2019 than in the prior year.
Media
Analytics & Tech
Group
Practice growth rates
Media
Media Performance and Management
Contract Compliance
Total Media
Analytics & Tech
Advanced Analytics
AdTech
MarTech
Total Analytics & Tech
Media
Our Media segment, which accounted
for 79% of our total revenue and
comprises Media Performance,
Media Management and Contract
Compliance services, reported a
modest increase in revenue to
£54.6 million (2018: £54.2 million).
Within this, Contract Compliance
(branded as FirmDecisions) performed
successfully with revenue growth of
13%, while revenue from Media
Performance and Management fell by
1% overall.
08
Ebiquity plc
There were significant regional
variations in business performance
across our network. UK & Ireland, our
largest Media region, grew revenue by
2%, due mainly to its specialist
international group which manages
multi-market projects for global
advertisers such as Fiat Chrysler
Automobiles and PepsiCo and which
won a number of new projects. Within
Continental Europe, Italy was the best
performer with 21% growth, supported
by the launch of an innovative social
media measurement service, and
France grew by 2%, with clients
including L’Oreal and PSA, the
automotive group. Conversely, revenue
fell in Germany (by 8%) and Russia
(by 7%). New country managers have
been appointed in both units and
their performance improved in the
second half.
The USA had a challenging year,
but still managed to remain flat on the
prior year. It won some significant new
Media Performance clients (e.g. Verizon
Wireless) but had fewer Media
Management opportunities than
expected. There were also performance
issues in the US sales team which was
previously shared with Stratigent and
which the new US MD, appointed in
May, has focused on resolving.
Asia Pacific revenue fell by 9% for
the full year, although it achieved
second-half growth following a 19%
decline in the first half which was due
to lower demand from traditional
higher-spending sectors, such as
FMCG and retail. China returned to
modest revenue growth in the year,
benefiting from a renewed focus on
serving international advertisers that
require support in this expanding but
challenging media market.
One of our key aims is to improve
quality of service and reduce cost of
delivery in Media through process
improvements and automation.
During the year, our automation
strategy focused on rolling out three
key MediaSuite tools in which we have
invested significantly over recent years:
EbiquityConnect™, EbiquitySelect™ and
EbiquitySync™. These are designed to
increase the speed and efficiency of
analysis work and improve data
security and handling.
EbiquityConnect™ streamlines data
ingestion from agencies, many of which
have given positive feedback following
the system’s introduction.
EbiquitySelectTM supports our agency
selection work. EbiquitySync™ provides
a standardised tool for benchmarking
paid digital media spend. Within digital
services, we have also been developing
specialist methods for assessing paid
search and paid social media spend.
Over the next year, we will utilise the
recently acquired Digital Decisions
technology applications further to
automate both data ingestion and
reporting of results to clients for
Media Performance work.
Our shared services media delivery
centre (‘SDC’) in Spain is enabling
media data analysis work to be
centralised and standardised.
This reduces delivery costs and frees
up the time of specialist consultants
in local markets for higher value-added
activities. It became fully operational
at the beginning of 2019 and the level
of work taken on from the network
increased steadily through the year.
The SDC is already beginning to yield
clear cost savings as well as quality
benefits for the Media practice.
Contract Compliance (branded as
‘FirmDecisions’) supports brands by
helping to ensure that agencies deliver
services as contractually agreed
through reviews conducted by a
team of specialists. FirmDecisions is
regarded as the global leader in this
market, publicly acknowledged by
industry bodies as an expert in the
field. Its strong revenue growth reflects
growing demand by advertisers for its
in-depth financial compliance services
as a means of ensuring transparency
and accountability among their media
buying partners. FirmDecisions
continued to extend its global client list,
with recent additions including Amex,
Microsoft, and Sanofi, as well as
expanding its local operations in
markets such as Dubai, Germany,
and India.
Focus on
automation
Focus on
shared
services
During the year we rolled out
three Media Suite tools – Ebiquity
ConnectTM, Ebiquity SelectTM and
Ebiquity SyncTM.
Our shared service media delivery
centre in Spain became fully
operational in 2019.
09
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements Executive review continued
Analytics & Tech
Analytics & Tech total revenue fell
by 7% in the year to £14.1 million
(2018: £15.2 million) but this decline
was entirely due to the MarTech
practice, comprising Stratigent and
Digital Balance, whose revenue fell by
39%. In contrast, Advanced Analytics,
the largest element, grew by 5% and
AdTech more than doubled its revenue
with growth of 105%.
Our Advanced Analytics practice helps
brands to plan and optimise their
investment in media. Its team, which
includes data scientists,
econometricians and statisticians,
applies advanced analytical techniques
to attribute and forecast the impact of
marketing investments on business
outcomes (e.g. sales) and to optimise
these investments. The scope of its
work covers traditional and digital
media channels as well as factors
such as pricing and promotions and,
in recent projects, factory capacity.
Its methods include market mix
modelling, brand equity modelling
and forecasting which are increasingly
supported by automated planning
tools that it delivers to clients.
During the year, Advanced Analytics
continued to expand its client base,
winning significant global projects,
including with Volkswagen and a global
telecoms group, and won its first
project in the USA for an automotive
group. This practice is managed
globally from the UK where the largest
part of its team of data scientists and
analytics specialists are located,
supported by a growing delivery
capability based in Spain.
Its operations expanded to France
during the year with the appointment
of a well-regarded senior analytics
specialist, who will contribute both
to sales and delivery of projects.
This has already led to winning a major
project for a leading European airline.
However, as previously reported,
revenue in the year was impacted in the
first half by an unexpected, substantial
reduction in demand from a UK retail
client. As anticipated, the practice
recovered well in the second half.
One challenge is that our analytics
practice is competing for data analysis
skills that are in high demand by large
companies in sectors such as digital
platforms and financial services.
To address this, we have established
a graduate trainee scheme to help
develop our own talent pool.
Our AdTech practice, which was
established two years ago, helps brand
owners to address the specific
challenges of managing digital media
and automated trading programmes
by designing the data and technology
ecosystem best suited to deliver their
marketing strategy and optimise their
digital media investments.
Their solutions include the evaluation
and planning of in-housing alternatives
and the selection of advertising
technology partners. The rapid growth
of our AdTech practice since its launch
in 2018 reflects the demand for its
specialist services as well as the
expertise of the team that we have
assembled. During the year, its major
projects included in-housing of digital
media buying for two global brands
and for a leading global energy group
based in the USA. The latter resulted
from the appointment of a US AdTech
lead in mid-2019. We anticipate further
growth in this important market.
Our MarTech practice comprised
two units at the start of 2019, Digital
Balance in Australia and Stratigent in
the USA. Both of these provided similar
website technology and data advisory
services, but their recent performance
has differed significantly.
Digital Balance helps brands to improve
the effectiveness of their digital
presence and provides a range of
consulting, analytics, and optimisation
services across a variety of website
analytics platforms, including Google
Analytics and Adobe. Until the middle
of 2019, Digital Balance had grown its
client base and revenue consistently
since its acquisition by the Group in
2017. In the first half, its revenue
increased by 36% compared to the
same period in 2018. However, in the
second half of 2019, several major
clients deferred or cancelled projects
unexpectedly, which led to full-year
revenue falling by 15% compared to
prior year. A new leadership team
has been appointed and will be
integrating Digital Balance more fully
with the Australian media practice
through joint digital products and
cross-selling to Media clients.
In the USA, Stratigent’s revenue had
been declining over several years,
mainly due to its business having
focused on a software application
whose use has been reducing in the
USA. It also faced increasing price
competition from independent and
offshore suppliers. Actions taken at
the beginning of 2019 to reposition the
business and target new clients failed
to yield sufficient new revenue. With a
loss projected for 2019 and a very
uncertain longer-term outlook, the
business was wound down with effect
from September 2019. This led to an
impairment charge of £5.8 million
being recognised as a highlighted item.
The Chicago office where Stratigent
and AdIntel USA had been based was
subsequently closed and a sub-tenant
found for the remainder of the lease.
10
Ebiquity plc Operating profit by segment
Media
Analytics & Tech
Unallocated costs
Group
Underlying operating profit
Operating profit margin
FY19
£m
11.8
1.0
(6.6)
6.2
FY18
Variance
£m
12.1
1.4
(7.1)
6.3
£m
(0.2)
(0.4)
0.5
(0.2)
%
(2%)
(31%)
7%
(3%)
FY19
%
22%
7%
—
9%
FY18
%
22%
9%
—
9%
Group operating profit of £6.2 million was slightly lower than in 2018, with a reduction of £0.6 million in the main operating
segments, offset by a £0.5 million reduction in unallocated central costs. This partly reflects more costs being borne directly
by the operating segments. The reduction in Media profits was largely due to the international media group and the USA.
Analytics & Tech’s fall in operating profit was mainly due to the losses arising in Stratigent and Digital Balance, both of which
achieved small profits in 2018.
We continue to monitor the trends in
the market closely and to maintain
careful control over costs. We have
strong liquidity resulting from the sale
of AdIntel, extension of our banking
facilities and the cost reduction
measures already implemented.
We have also agreed modifications to
our banking covenants from July 2020
to May 2021. The Board remains
confident that, building on our
strategic position in the market and
under the leadership of our new CEO,
Ebiquity is well-placed as we emerge
from the crisis to fulfil its potential as
the leading independent media and
marketing consultancy operating on
a global level.
Outlook
In 2019, the Group made significant
progress following the AdIntel disposal
that positions it well for the future.
The forthcoming closure of Accenture’s
media auditing practice highlights the
importance to clients of independence
in our business, and has led to
significant new business wins.
However, in the current year, the
COVID-19 pandemic is having an
adverse impact on our clients and
our own business although this varies
between and within sectors and
geographies. Business has continued as
usual for some clients while others have
reduced their service requirements for
varying periods. Ebiquity’s performance
is influenced by global economic and
advertising conditions, which remain
highly uncertain. Therefore the outlook
for our business in 2020 is difficult to
predict with confidence and
we continue to withhold guidance.
11
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements
Executive review continued
Financial review
Group revenues for the year ended
31 December 2019 fell by £0.6 million
or 1%, to £68.7 million.
Underlying operating profit (statutory
operating profit excluding highlighted
items) for 2019 was £6.2 million,
a decrease of £0.2 million, or 3%,
from the prior year. Project-related
costs (which comprise external partner
and production costs) increased by
0.5% from £8.8 million to £8.9million.
Operating expenses reduced by 1%
to £53.7 million from £54.2 million. As a
result, the operating margin remained
in line with the prior year at 9%.
Underlying profit before tax
increased to £5.3 million in 2019 (2018:
£5.2 million). Net finance costs were
£0.9 million in 2019 compared with
£1.2 million in 2018. The reduced cost
reflects lower average gross debt in
2019 compared with 2018.
There was a statutory operating
loss (after highlighted items) of
£4.2 million compared to a loss of
£1.4 million in 2018. Highlighted costs
increased by £2.7 million as detailed
below. This led to a reported loss before
tax of £5.1 million compared to a loss of
£2.5 million in 2018.
Cash conversion
Reported cash from operations
Underlying cash from operations
Underlying operating profit/(loss)
Cash conversion
Highlighted items
Highlighted items before taxation
for the continuing business totalled
£10.3 million in the year to
December 2019 (2018: £7.7 million).
Highlighted items during the year
included the following:
› › £1.2 million for purchased intangible
asset amortisation (2018:
£1.2 million);
› › £0.1 million for share-based payment
expenses (2018: £0.2 million);
› › £1.3 million for severance and
reorganisation costs including
Group management changes and
the winding down of Stratigent in
the USA (2018: £1.2 million);
› › £6.8 million relating to the
impairment of goodwill and
intangibles of Stratigent and
Digital Balance (2018: £2.6 million
impairment was recognised in
relation to China);
› › £0.9 million on the adoption of IFRS
16 for the first time, relating to the
capitalisation of onerous leases to
the right-of-use asset;
› › £0.5 million relating to the relocation
of the London office;
› › £0.3 million costs incurred for the
loan facility refinancing; and
› › £0.8 million credit in respect of
adjustments to contingent deferred
consideration relating to Digital
Balance.
Taxation
The underlying tax charge for the year
for the continuing operations in 2019
was £1.9 million (2018: £1.8 million).
This is due to an under-provision of
tax recognised in the current year,
but relating to a prior year.
The total tax charge including on
highlighted items was £1.5 million,
compared to £2.0 million in 2018.
Earnings per share
Underlying diluted earnings per share
for 2019 was 3.6p (2018: 3.5p). There
was a statutory diluted loss per share
of 8.8p (2018: diluted loss per share
of 6.4p).
Dividend
Our Group is in a healthy financial
position following the AdIntel sale and
extension of bank borrowing facilities to
2023. However, in view of the
uncertainty created by the COVID-19
outbreak and its impact on the global
economy, the Board considers it prudent
to conserve the Group’s cash resources
during this time. It will therefore not be
proposing the payment of a dividend in
respect of 2019 at the forthcoming
AGM, and will defer any dividend
recommendation until economic and
business conditions are more certain.
Equity
During 2019, 1,002,436 shares were
issued upon the exercise of employee
share options. As a result, the number
of shares in issue increased to 80,115,626
(31 December 2018: 79,113,190).
Year ended
Year ended
31 December 31 December
2018
£’000
2019
£’000
5,657
8,870
6,167
144%
4,435
8,777
6,342
138%
Underlying cash from operations represents the cash flows from operations excluding the impact of highlighted items.
The underlying net cash inflow from operations was £8.9 million during 2019 (2018: £8.8 million).
Cash conversion was 144% in 2019 (2018: 138%) reflecting continued improvements in the management of working capital.
12
Ebiquity plc
Net debt and banking facilities
Net cash
Bank debt1
Net debt1
31 December 31 December
2018
£’000
2019
£’000
8,236
6,414
(14,000)
(34,000)
(5,764)
(27,586)
1. Bank debt in the statement of financial position includes £0.2 million (2018: £0.1 million) of loan arrangement fees that have been paid and which
are amortised over the remaining life of the facility. The bank debt and net debt figures above exclude these costs.
At the beginning of the year, the Group repaid £20.0 million of its borrowings on receipt of the proceeds from the AdIntel sale
which completed on 2 January 2019.
In September 2019, the Group refinanced its banking facilities with Barclays and Royal Bank of Scotland. The new committed
facility comprises a revolving credit facility of £23.0 million, of which £14.0 million was drawn on refinance, and £1.0 million
available as an overdraft. The facility has a maturity date of 20 September 2023.
During the year, the Group continued to trade within the limits of its banking facilities and associated covenants. The covenants
applying on a quarterly basis until June 2020 are based on EBITDA multiples as follows: interest cover >4.0; adjusted leverage
<2.5; and adjusted deferred consideration leverage <3.0. In response to the COVID-19 disruption, modified covenants have been
agreed with the lenders which will apply from July 2020 to May 2021. These will require the Group to maintain minimum liquidity
of at least £5 million at the end of every month during that period. The covenants previously in force will apply again from June
2021 onwards.
Statement of financial position and net assets
A summary of the Group’s balance sheet as at 31 December 2019 and 31 December 2018 is set out below:
Goodwill and intangible assets
Right-of-use asset1
Other non-current assets
Net asset held for sale2
Net working capital
Other current liabilities
Lease liability1
Other non-current liabilities
Deferred consideration
Net debt
Net assets
31 December 31 December
2018
£’000
2019
£’000
35,172
8,339
3,549
—
12,927
(4,724)
(9,590)
(1,423)
(14)
43,251
—
2,149
23,418
11,258
(2,251)
—
(1,348)
(1,477)
(5,596)
(27,486)
38,640
47,514
1. A right-of-use asset and corresponding lease liability were recognised in the year on adoption of IFRS 16 for the first time.
2. The net asset held for sale in the prior year relates to net assets of the AdIntel business, the sale of which completed on 2 January 2019.
Net assets as at 31 December 2019 decreased by £8.9 million to £38.6 million (2018: £47.5 million). This principally reflects a
£5.8 million reduction in goodwill and intangible assets through the impairment of goodwill in Stratigent, annual amortisation
on the intangibles of £1.2 million and a £1.0 million reduction on adopting IFRS 16 for the first time.
Alan Newman
Interim Chief Executive Officer/Chief Financial Officer
20 May 2020
13
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements
Client lifecycle
Our business model is built around our core capability
of analysing media and marketing data to help our
clients drive better marketing outcomes and in this
way deliver greater business impact.
The client lifecycle
We help marketing leaders answer key questions across marketing activities.
1. Design
future model
2. Manage
and select
partners
3. Define
and align
objectives
4. Evaluate
outcomes
5. Optimise
performance
Review compliance
› › What are the
› › Are my
› › How do I
right incentives,
and against
which KPIs?
› › How do I align
KPIs with
marketing and
business
objectives?
partners and
my teams
delivering what
they promised?
› › Are my teams
performing to
expectation
and targets?
improve and
optimise my
media and
marketing
performance?
› › What solutions
should I put in
place to
enhance return
on investment?
Client questions:
› › How do I
organise for
success, given
new business
and marketing
requirements?
› › Which partners
should I work
with in order to
deliver on this
vision?
› › How do I best
utilise existing
partners?
Where Ebiquity helps:
Desired outcomes:
Organisational
success
A best-in-class
trusted
ecosystem
Alignment with
business
objectives
Accountability for
results
Higher
marketing ROI
14
Ebiquity plc 1. Designing a
future model
that’s fit for
purpose
We help advertisers to organise and structure their
marketing organisation – in-house and also agency
and technology partners – in a way that is most likely
to deliver success in both the medium and the long term.
The models we help to build are optimised, flexible, and
designed to deliver on our clients’ business and marketing
objectives.
The services we offer:
› › Agency capability
assessment and review
› ›
In-housing assessment
› › The Ebiquity media model
2. Managing
and selecting
agency
partners
We work with advertisers to help them identify, select,
on-board, and manage the right partners that can deliver
the required capabilities and desired outcomes. These
include the key relationship of the media agency of record,
as well as advertising and marketing technology providers
and other specialist agencies. This can also mean working
smarter with existing partners.
The services we offer:
› › Agency selection and
management
› › AdTech selection
› › Contract review and
negotiation (FirmDecisions)
3. Defining
and aligning
objectives
4. Evaluating
outcomes
We help brands to make best use of their key partners
and strategic relationships by helping them to align their
marketing objectives and activities with their overall
business objectives. This means helping CMOs to identify
and set the right incentives for their partners and
establish remuneration targets that reward
against the delivery of meaningful KPIs.
The services we offer:
› › KPI and target setting
› › Agency remuneration
› › Budget setting
By empowering our clients to compare outcomes with
objectives, we enable them to develop and drive a culture
of performance and accountability into their
organisations. This allows them to assess whether their
agency and technology partners – as well as their own
internal teams – are delivering what they promised.
Our data sets and analyses help advertisers to measure
the outcomes of their media investments against their
own targets and expectations and relevant benchmarks
based on real spend data.
The services we offer:
› › Media performance reviews
› › Digital media KPI monitoring
(Digital Decisions)
› › Contract compliance
reviews (FirmDecisions)
5. Optimising
market
performance
We partner with brands and their agency and technology
providers to identify which levers they can pull to optimise
a brand’s performance. High performance marketing
analytics is the key to unlocking increased return on
marketing investment. Our award-winning team of media
and marketing analysts and econometricians help brands
to improve performance of their media, marketing, and
promotional spend, both long term and short term.
The services we offer:
› › Econometrics and
attribution
› › Brand equity modelling
› › Test and learn
15
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements Ebiquity has two reporting segments –
Media, and Analytics & Tech.
Contract Compliance
(branded as FirmDecisions)
– supports advertisers by
helping to ensure that
agencies deliver services as
contractually agreed, through
reviews conducted by a team
of experts.
MarTech (branded Digital
Balance) – assists brands to
improve the effectiveness of
their digital presence and
provides a range of
consulting, analytics,
and optimisation services
across a variety of website
analytics platforms, including
Google Analytics and Adobe.
Media Management –
advises clients on topics
including management and
selection of media agencies,
setting media buying
objectives, and the
organisation of media
functions.
• Case study: JLR
AdTech – helps brand owners
to address the specific
challenges of managing
digital media and
programmatic media trading
by designing the data and
technology ecosystem best
suited to delivering their
marketing strategy and
optimising their digital
media investments.
• Case study: ExxonMobil
• Case study: Vodafone
Media
Media Performance
(including Digital Decisions)
– helps advertisers to monitor
and evaluate their agencies’
media buying performance.
Analytics & Tech
Advanced Analytics –
helps advertisers to
plan and optimise their
investments in media and
marketing, using analytical
techniques to attribute and
forecast the impact of
marketing investments on
business outcomes and to
optimise these investments.
Over the next few pages, the leads
of our different practices give their
report cards for 2019.
16
Practice reviewsEbiquity plc Media – Media Performance
In our Media Performance division, we help advertisers to
monitor and evaluate their agencies’ media buying performance.
What makes Ebiquity
Media Performance
different?
We have the best data – the most
extensive pool of media spend data
of any consultancy worldwide –
and we benchmark our clients’ media
performance against competitors and
peers. We also track agency
performance guarantees to determine
whether savings promised at pitch are
in fact delivered. We are uniquely well
placed to assess media and agency
performance because we are
independent of the media trading
ecosystem and combine singular global
processes with national, on-the-ground
expertise in 15 leading markets.
How are you evolving your
offer to meet client needs?
In the past couple of years, we have
started to develop and roll out a Media
Suite of tools that have standardised,
automated, and accelerated our media
performance consultancy around the
world. These include EbiquityConnectTM,
which validates and transfers data
securely from agencies, and
EbiquitySyncTM, which benchmarks
digital media data and is specifically
designed to deal with the complexities
of digital.
What have been the
business highlights
for Ebiquity Media
Performance in 2019?
Because we have now harmonised how
we deliver digital media benchmarking
across markets, we have started to
provide this service to a growing
number of global advertisers.
The decision by Accenture to exit the
media benchmarking market saw a
number of major clients move to
Ebiquity in 2019, a trend that looks
set to accelerate in 2020.
Tell me about a couple
of client highlights in
the past year
In one case, we identified more than
€7 million in media savings for a major
advertiser resulting from agency errors
in media performance calculations.
In another, we welcomed back a client
whose media performance was 17%
below benchmark in the year it chose
not to measure media performance;
in the following year, performance
improved by 9%.
Dietmar Kruse is Global Practice
Principal for Media Performance.
Based in our Hamburg office,
Dietmar is responsible for driving
revenue and profitability in the
Media practice by innovating our
service offering and driving
efficiencies and automation
in our data analysis.
How does your practice
help clients?
We help brands understand where
they stand relative to the market –
competitors and peers – and show
them how they can improve media
performance. The two most important
issues facing advertisers in media today
are transparency of media performance
and value erosion in media buying; all of
the intermediaries between brands and
publishers are taking a slice of
their budget.
17
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements Media – Digital Decisions
Digital Decisions provides a specialist digital
media monitoring and optimisation service.
Tell me about a couple
of client highlights in
the past year
Our partnership with our flagship
client, Heineken, has become
ever-more important to us in the past
year. Today, we collaborate right around
the world with Heineken’s global media
and procurement functions, local
market leads, and global and local
agency leadership. We are a true
extension of their global team.
In 2019, we also launched two initiatives
with our strategic partners at the World
Federation of Advertisers: the Digital
Media Benchmark, and Outlook 2020,
an industry-wide view on how media
prices are forecast to evolve, globally,
in the year ahead. These initiatives have
delivered both great momentum and
thought leadership in the global
media community.
What makes Digital
Decisions different?
Using a methodology known as Robotic
Process Automation, we extract the
source data that identifies how digital
media investments are performing
automatically. Agencies no longer need
to complete manual Excel templates,
greatly improving both speed and
accuracy. We deliver reporting and
recommendations using scalable
technologies such as Azure and
Microsoft Power BI – not expensive
and time-intensive PowerPoint. Both our
back-end analytics and front-end user
interface are fit for the new decade.
How are you evolving your
offer to meet client needs?
We are committed to leading by
example, deploying our methodologies
and automation infrastructure across
the Ebiquity family of companies.
Digital Decisions is actively rolling out
our service offer globally to top-tier,
multinational clients. We are working
in close partnership with Ebiquity’s
network of global client partners,
helping our clients to capitalise on the
opportunities offered by digital media
with data-driven certainty.
What have been the
business highlights for
Digital Decisions in 2019?
We are the global partner of Heineken,
providing our services in 28 markets.
We work in close partnership with
clients including PepsiCo, KLM, and
Three Mobile. We are actively and
rapidly expanding our footprint across
the Ebiquity global client network.
Ruben Schreurs is the founder
of Digital Decisions, Ebiquity’s
specialist digital media
monitoring and optimisation
service. He founded the business
in 2017, acquired by Ebiquity in
2020. Ruben is based in our
New York City office, focused on
driving growth in the US market.
How does your practice
help clients?
Digital Decisions delivers best-in-class
digital marketing consultancy advice
and structural governance to global
brands. Through our core Source Data
Monitoring service, we provide a single
global source of truth about digital
media performance for global heads
of media and marketing procurement
leadership. Digital Decisions’ live and
real-time business intelligence interface
reports data and value to advertisers in
an easy-to-manage format, enabling
better decision-making on digital media
investment strategy.
18
Ebiquity plc Media – Media Management
In our Media Management division, we advise clients on topics
including management and selection of media agencies, setting
media buying objectives, and the organisation of media functions.
What makes Ebiquity
Media Management
different?
Ebiquity has a proven media
framework created to enhance
media management, from designing
the optimal operating model to
on-boarding new agency partners.
We have a team of senior, dedicated,
expert consultants who combine global
experience with deep local knowledge.
Our independence from the media
trading ecosystem – as expressed in
our Code of Conduct and Statement
of Independence – means we can
guarantee fair, robust, and
best-practice consultancy advice
that’s right for individual clients.
What have been the
business highlights for
Ebiquity Media
Management in 2019?
We helped the leading global telecoms
business, Vodafone, to find a new global
media agency partner in more than
20 markets, and also provided them
with advisory services from our Tech
practice. We also provided our Agency
Capabilities Programme to luxury car
manufacturer JLR, as well as delivering
services from FirmDecisions, and our
Analytics & Tech practices. Major new
clients in 2019 included Beiersdorf
(global), Lindt, and Boehringer
Ingelheim in the US; and KFC,
Richemont, and Burger King in
major European markets.
How are you evolving your
offer to meet client needs?
Ebiquity is well established as
the leading global consultancy advising
clients reviewing their media agencies
of record; we advise around 100 major
global and national advertisers each
year using our market-leading Agency
Selection Framework. We have recently
extended this service to cover creative
agencies, enabling advertisers to
consolidate media and creative
requirements within a single group.
We have started to roll out globally
EbiquitySelectTM, a new tool which
analyses media offer data from
agencies provided during pitches.
New services introduced in 2019 include
an Agency Capabilities Programme
which benchmarks incumbent agencies’
provision to determine whether they are
the right partners for the long-term
future. We have also launched an
Organisation and Talent Trends report,
an overview of the changing needs of
employees globally and the what brands
need to succeed in the future. This will
be joined in 2020 by a new Operational
Readiness tool to help advertisers build
the optimal marketing strategy, and an
Organisational Design service.
Tell me about a couple
of client highlights in
the past year
Providing our innovative Agency
Capabilities Programme to JLR.
See case study on page 20.
Laetitia Zinetti is Global Media
Management Practice Lead and
MD of Continental Europe.
Laetitia leads the team that
advises clients on best practice in
topics including agency partner
selection, operating models, and
remuneration. She is based in
Ebiquity’s Paris office.
How does your practice
help clients?
We help Chief Marketing Officers
improve their media performance,
by ensuring they have the best talent
and capabilities in their organisations.
We do this by putting the right
processes and governance in place to
drive growth. And we do this by helping
them to select the right agency
partners, set up to deliver against
business and marketing objectives.
19
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements Case study
Agency Capabilities
Programme
Client objectives
Ebiquity approach
Our impact
JLR undertook a lengthy global agency
review after 17 years with its previous
incumbent agency. Given challenging
economic conditions, half-way into its
new contract, the company wanted to
assess what its agency was delivering
to the business and understand whether
they needed to review again.
We ran an in-depth review of agency
performance, analysing the operational
set-up, technical ecosystem, and
delivery against contracted obligations.
We assessed delivery against both the
client’s business and marketing
objectives.
Using both qualitative and quantitative
performance metrics, we highlighted
areas where agency delivery was
beyond expectations and identified
areas for improvement. This gave JLR
the confidence to extend the agency
contract and redirect their focus to
other, business-critical projects.
20
Ebiquity plc Contract Compliance – FirmDecisions
In our Contract Compliance division – branded as FirmDecisions –
we support advertisers by helping to ensure that agencies deliver
services as contractually agreed, through reviews conducted by a
team of specialists.
What have been the
business highlights for
FirmDecisions in 2019?
Both Amazon and Sanofi started
working with FirmDecisions in 2019.
For both businesses, we were their
first-ever contract compliance partner.
Microsoft had been a longstanding
client for many years, but they stopped
auditing five years ago. But in 2019,
we were delighted to welcome the tech
giant back on board for an extensive
programme of contract
compliance reviews.
What makes
FirmDecisions different?
We have performed more than 7,000
contract compliance reviews in more
than 75 markets. All of our team are
former agency, finance, or marketing
procurement professionals with deep,
specialist knowledge. Every day, we
audit only media and marketing
agencies. This specialism, experience,
and focus provides expertise that
generalist audit firms cannot.
How are you evolving your
offer to meet client needs?
Our innovative Digital Deep Dive
contract compliance reviews now
provide advertisers with
hitherto-unseen detail about the
management and application of
media-bought programmatically.
FirmDecisions continually evolves
its forensic approach to media
transparency as new delivery and
trading mechanisms are tested and
introduced by agencies and service
providers, including programmatic
and digital-out-of-home, as well as
influencer marketing.
The recent arrival of Digital Decisions
into the Ebiquity family of companies
and the growth of our Tech practice
provides FirmDecisions with the
opportunity and skills required to
drill deeper into the challenges that
advertisers are facing today in the
increasingly digital marketing
ecosystem.
Stephen Broderick is the Global
CEO and co-founder of
FirmDecisions. FirmDecisions
provides advertisers with
transparency into their marketing
and media investment, including
creative, media, digital, and
below-the-line. Stephen is
based in our London office.
How does your practice
help clients?
FirmDecisions provides advertisers
with financial transparency into the
marketing and media supply chain,
gives clarity on how each marketing
dollar is being spent, and verifies that
agency partners are meeting their
contractual obligations. As the
marketing ecosystem becomes
ever-more complex, advertisers are
under increased pressure to ensure
that marketing investment reaches
target consumers as efficiently and
effectively as possible.
21
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements Analytics
In our Analytics practice, we help advertisers to plan and optimise their
investments in media and marketing, using analytical techniques to
attribute and forecast the impact of marketing investments on business
outcomes and optimise these investments.
What makes Ebiquity
Analytics different?
We adopt a strong, consulting-focused
approach to put statistical disciplines to
work for our clients. A major debate in
the sector is how best to balance
long-term, brand-focused messaging
with short-term, conversion messaging.
Our Analytics practice has a unique
portfolio of modelling solutions to
address this key question, including both
Brand Equity Modelling and Attribution.
How are you evolving your
offer to meet client needs?
Ebiquity has been increasing the
penetration of market-leading
optimisation technology to support
our clients. This includes both our
proprietary TestMatchTM software
for test and learn programmes and
PlanItTM to optimise promotional
effectiveness in retail.
What have been the
business highlights
for Ebiquity Analytics
in 2019?
We have started to expand the number
of genuinely international assignments
we run for multinationals, and in 2019
we created a new team in France who
are already delivering strong work on
a number of clients including
Air France/KLM and Cofidis.
Other major client wins include
BT Group and JLR.
Tell me about a couple
of client highlights in
the past year
In 2019, the Analytics practice won
a record five awards at the biennial
Institute of Practitioners in Advertising
(‘IPA’) Effectiveness Awards for our
clients, including Direct Line Group, Lidl,
Weetabix, and Taylors of Harrogate.
Mike Campbell runs Ebiquity’s
International Effectiveness
Practice. The practice applies
advanced analytics techniques
to help brands optimise marketing
investments across key marketing
activities and markets. He is
based in our London office.
How does your practice
help clients?
We enable our clients to enhance
the efficiency of all their marketing
spend, typically improving the impact
and return on investment of their media,
promotions, and pricing strategies.
We do this through a combination of
both well-established and innovative
analytics techniques, including
econometrics, which is also known as
market mix modelling.
22
Ebiquity plc AdTech
In our AdTech division, we help brand owners to address the specific
challenges of managing digital media and programmatic media trading by
designing the data and technology ecosystem best suited to delivering their
marketing strategy and optimising their digital media investments.
2. Use and control of marketing data.
Data is the oil of the 21st century,
and marketers who can leverage it
better than their competitors can
seize long-term competitive
advantage. We help our clients in
all areas related to marketing data,
from strategic assessments of the
status quo to setting up and working
with new partners.
3. Operational readiness. Just as
FirmDecisions identifies areas for
improvement in contract compliance,
so the Tech practice helps brands
improve all aspects of digital
marketing operations.
What makes Ebiquity Tech
different?
Our independence from the media
supply chain is a critical differentiator.
So too is our senior, experienced team
who have many years’ proven
operational experience running the very
tools and technologies that our clients
are moving into and where they need
guidance. Ebiquity Tech is not a
theoretical advisory practice like the
management consultancies. We are
experienced, hands-on practitioners.
How are you evolving your
offer to meet client needs?
Throughout 2019, we continued to
focus on developing our expertise in
developing our end-to-end consultancy
offer, from paid media all the way
through to sales. A critical step forward
has been deepening our experience
across marketers’ creative agency
workflows. In 2020, we are enhancing
our offer to include implementation
services.
What have been the
business highlights for
Ebiquity Tech in 2019?
We won the ExxonMobil business in the
US in 2019, which has been renewed for
2020 and extended in scope. We won
our first piece of business for car
manufacturer SEAT, strengthening
our already-deep relationship with VW
Group Marketing. And we won a global
marketing transformation project for
Beiersdorf’s global marketing team,
who have charged us with developing
their operating structure for media for
the long-term future.
Tell me about a couple
of client highlights in
the past year
See the case study for ExxonMobil
and Vodafone on pages 24 and 25.
Tim Hussain is Managing
Principal of Ebiquity’s Tech
Practice. He leads the Company’s
global tech advisory business,
helping brands to navigate
the complexities of advertising
and marketing technology. He is
based in our London office.
How does your practice
help clients?
Ebiquity’s Tech practice advises global
brands in three principal areas relating
to advertising and marketing
technology (adtech and martech).
1. Digital marketing transformation.
We help advertisers on their own,
three-to-five-year change
management journeys of digital
marketing transformation.
This covers people, process, and
technology. We have developed a
streamlined and scalable approach
for identifying business challenges
and developing new opportunities.
23
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements Case study
Taking direct
control of adtech
Client objectives
Ebiquity approach
Our impact
ExxonMobil wanted to take direct
ownership of all its advertising
technology contracts. The company
was committed to this approach to
secure efficiencies in its global
digital marketing operation.
We supported Exxon’s senior
marketing leadership team
throughout this process.
This included strategic council and
education for Exxon executives on
the level of savings and efficiencies
that were achievable on Google and
in other online properties.
Through our honest, open, and
knowledgeable advice, we enabled
ExxonMobil to secure initial
operational efficiencies of more
than $2 million. The senior
leadership team now has the
knowledge required to run its
advertising technology contracts
itself. The level of understanding
and skill in the team – as well as
the confidence to execute –
has increased significantly.
“We thought in the pitch that you were deliberately trying to make it
sound more complicated and nuanced than it was to justify getting
more of the work. But we now know that there was a lot of
important detail and considerations which we were not aware of.”
ExxonMobil
marketing lead
24
Ebiquity plc Strategic report
Corporate governance
Financial statements
Case study
Taking digital media
buying in-house
Client objectives
Ebiquity approach
Our impact
As one of the world’s largest
telecommunications companies,
Vodafone wanted help bringing much
of its digital media buying in-house.
The company also sought guidance on
how reviewing its supplier chain could
help to deliver its in-housing ambitions.
We designed a process that allowed
Vodafone to be transparent about its
in-housing goals and ask agencies to
suggest how they would help them
achieve this. The process enabled them
to understand:
1. The role they would play in
Vodafone’s drive to in-housing.
2. The commercial impacts
Vodafone was looking to secure.
3. How they could demonstrate
their strategic and
consultancy skills.
The process secured full co-operation
for Vodafone from the agencies in the
pitch process – including Dentsu Aegis
which won the contract. It allowed
agencies to approach remuneration in
a completely new way and demonstrate
capabilities beyond simply pricing.
25
Annual report and financial statements for the year ended 31 December 2019 People, community and environment
“Our ‘Recognise’ tool
was launched globally,
enabling staff at all
levels to recognise each
other for great work.”
Emma Winterson-Hayward
Chief People Officer
People
As a consultancy business, people
are key to the success of Ebiquity.
The Group continues to put in place
good employment practices and policies
and develop a culture to attract, retain
and develop the talent required to
achieve the Company’s strategic
objectives. Some of these are
detailed below:
Learning and development
In 2019, we launched our ‘Consulting
Skills Toolkit’ offering the opportunity
to learn and develop skills in negotiation,
storytelling with data, presentation
skills, project management training, and
PowerPoint across our offices. We will
further define and develop this
curriculum during 2020. Over 850
training hours were received via this
curriculum.
We launched our micro learning site
SkillPill to all our offices, with an 80%
adoption rate globally. The online app
offers self-driven learning in
management and leadership skills,
change management, agile project
management, innovation and strategy,
amongst many others.
Wellbeing
Wellness Month continued in London
with expert talks on resilience, sleep
and managing stress, as well as
massage sessions and wellbeing
information. Germany also had their
first Wellness Day.
Diversity
We solidified our approach to diversity
with the launch of our diversity
statement on all recruitment
advertising, together with
enhancements to our selection policies
and processes to ensure we are
delivering on this promise.
This year we announced our partnership
with ‘Women in Data’. Women in Data
provides a platform for female and
gender diverse data professionals to
share their technical knowledge and
experiences, and to encourage a more
diverse representation in the industry.
A number of our staff attended their
annual conference, at which we had an
exhibitor stand, to network, share ideas
and support greater gender diversity in
the data industry.
The Company recognises the
importance of its people to the success
of the business. It also considers how it
impacts the environment and the
importance of giving back to
the community.
26
Ebiquity plc
An LGBT+ diversity group has been
established in London. Its mission
statement is to promote acceptance,
education, respect, and equality
throughout the Ebiquity Group and
provide a safe and non-judgemental
space as a support for the LGBT+
community, as well as providing
advice, support, and education to
the Ebiquity business.
As a result of the diversity groups in
2019, refinements have been made
to flexible working policies and
family leave.
Our ‘Insight On’ series in London
continues with a variety of internal and
external leaders from the most diverse
backgrounds taking to the stage to
share their career and life lessons.
People analytics
Data and insights capabilities were
added to the People team in order to
give the leadership team a deeper
understanding of our people metrics
and the impact and performance of
our people strategies.
Recognition
Our ‘Recognise’ tool was launched
globally, enabling staff at all levels to
recognise each other for great work in
the following categories: innovation,
leadership, client success, profile building
for Ebiquity, new business, and just a
general ‘thank you’ for great work done.
It also enables the most senior leaders in
the organisation to award an ‘Oscars’
badge for exceptional contributions.
In the last quarter of 2019 over 300
separate recognitions were sent, helping
to foster a culture of great appreciation
and celebration.
Community
Ebiquity recognises the importance of
giving back to the communities in which
it operates and making a positive
contribution to society. World Child
Cancer was selected as the global
company charity via a voting process.
World Child Cancer partner with
healthcare professionals from high
income countries to deliver services and
support to children and the families of
children with cancer in third world
countries. So far, employees have raised
over £11,000 through a variety of
fundraising efforts, including sponsored
spin, raffles, competitive sponsored
events, and by charging staff to throw
a cream pie in the face of a leader of
their choice!
Environment
Ebiquity recognises the need to use
resources prudently and aims to
promote the maintenance of a healthy
environment through responsible and
sustainable consumption. During 2019
the Company set up a sustainability
group which is looking at ways in which
we can act more responsibly and
carefully towards the environment.
This group has set a target of
consistently reducing the Group’s
carbon impact on an annual basis from
a base year of 2019. As an office-based
business, we look at the ways in which
we work to try and minimise the impact
we have on the environment.
As a business we are:
› › reducing air travel and making
use of video and audio conference
technology where possible;
› › globally seeking to store and
dispose of waste responsibly
and recycle where possible;
› › turning off monitors and other
electronic equipment when not
in use; and
› › using recycled paper in printers
and copiers.
Consulting
skills toolkit
launched
Over 850 training hours
were received via this tool.
Supporting
the
community
Fundraising events held which
raised over £11,000 for World
Child Cancer charity.
27
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements Section 172 statement
Under section 172 of the Companies Act 2006, there is a general duty on
every director to act in a way they consider, in good faith, would be most
likely to promote the success of the company for the benefit of its
shareholders as a whole.
In doing this, the directors must have
regard, amongst other matters,
to the following:
› › the likely consequences of
any decision in the long term;
› › the interests of the company’s
employees;
› › the need to foster the company’s
business relationships with suppliers,
customers and others;
› › the impact of the company’s
operations on the community
and the environment;
› › the desirability of the company
maintaining a reputation for high
standards of business conduct; and
› › the need to act fairly as between
members of the company.
Shareholders
The Company communicates with
shareholders in a number of different
ways. Following the publication of each
of the Group’s interim results and
preliminary results, the Chief Executive
Officer and the Chief Financial Officer
meet many of the major shareholders.
The Chairman and Company Secretary
also meet with major shareholders
when appropriate. All shareholders
are invited to the Company’s Annual
General Meeting, and the Company’s
website at www.ebiquity.com contains
corporate documents and
shareholder information.
Clients
Ebiquity strives to deliver relevant and
professional services to its clients.
We continue to evolve our services in
line with changes in the media industry.
All client-facing staff put the client at
the forefront in the delivery of services.
The Chief Client Officer ensures that
clients get the appropriate level of
customer service and regularly reports
to the Board on client relationships and
issues facing clients.
28
Ebiquity’s own client forums
This year we have developed our own
direct client forums, including a series
of dinners on topics such as The Future
of Media, Marketing in the next decade,
and on the development of an Ebiquity
Manifesto. We created an ‘Ebiquity
Client Council’ composed of 15 senior
brand owners which meets three times
a year to discuss industry-critical issues
and provide feedback and guidance on
the development of our business.
We also formed the ‘Ebiquity Media
Management Procurement Forum’ to
provide support and insight at regular
meetings for our marketing
procurement clients and contacts.
These procurement forums will be
developed in other markets going
forward, with the Middle East and
North Africa region already up
and running.
We also created a series of events
bringing the client community into
Ebiquity to highlight research we have
conducted and exchange views on key
topics such as managing brand safety
online, cross media measurement and
the future effectiveness of TV and
end-to-end management of influencer
marketing. The Ebiquity blog provides,
thought leadership pieces, research
and webinars on key industry issues
and topics.
We also partner with Mediatel on a key
visioning conference – ‘The Future of
Brands’ – which runs in London and
Sydney and which attracts over 400
high-level clients.
Employees
As set out on pages 26 and 27,
the Company recognises that
its employees are its key asset and
engages them in decision-making. It is
important that we continue to create
the right environment to encourage
and create opportunities for individuals
and teams to realise their full potential.
All offices hold regular ‘Town Hall’
meetings to ensure employees are kept
up to date on local and global financial
targets and key matters affecting
the Group.
The Chief Executive Officer holds ‘all
hands’ meetings where all employees
can connect to a meeting held by video
conference and hear an update from
the Chief Executive Officer and are
then invited to ask questions on any
topic. They are held at different times
of the day to ensure all global
employees have the chance to attend.
Community and the environment
As set out on page 27, Ebiquity
recognises it has a part to play in the
maintenance of a healthy environment
and the importance of giving back to
the community.
Suppliers
Ebiquity aims to pay its suppliers within
a reasonable period of their invoices
being received and approved. Ebiquity
Associates Limited (the Group’s UK
trading company) reports its payment
practices, policies, and performance
under section 3 of the Small Business,
Enterprise and Employment Act 2015.
Trade bodies
Ebiquity has key formal strategic
partnerships with advertiser trade
bodies globally, including the WFA for
global advertisers, ANA for US-based
advertisers, and ISBA for UK-brand
owners. We also work closely with
similar bodies in many other markets
from France to Australia.
The whole premise of these association
relationships is to share key insights
and trends and provide access for the
advertiser community to Ebiquity’s
deep sector expertise. Knowledge is
shared via webinars, senior dinners,
and association sector meetings.
We also develop thought pieces
and expert guidance, and provide
one-on-one advice for association
members on key marketing and
media-related issues.
We have published reports with the
US and Canadian Associations of
Advertisers and work closely with
similar bodies globally.
Ebiquity plc Risks
As with all businesses, Ebiquity is exposed to a variety of risks. The Board
recognises that commercial risks are an inherent part of business and that
there needs to be an effective management of these risks in order to meet
the Group’s strategic objectives and create shareholder return.
The Board has put in place an
organisational structure with defined
lines of responsibility and has adopted
an authority matrix which sets out the
delegation of authority to individual
business units and members of staff.
The internal control system is designed
to provide reasonable assurance
against material misstatement or loss.
There is an internal risk committee
which regularly meets to review
existing risks and discuss new risks.
The output of a bottom-up/top-down
assessment of risks is fed into the Audit
& Risk Committee of the Board.
This includes details of the risk,
the potential impact on the Group,
mitigating actions that are required
and progress against these actions.
The matters described below are not
intended to be an exhaustive list of all
possible risks and uncertainties,
but highlights the key risks that the
business faces and actions it takes
to mitigate such risks.
Risk
Mitigating actions
COVID-19
The COVID-19 pandemic is affecting our clients’ businesses
and may continue to do so. The extent of the disruption and
the timing remains uncertain.
Different ways of working are required to deal with the
measures imposed by COVID-19 and the safety of our staff
becomes an enhanced risk.
The Company has taken cost reduction measures to protect
the business and preserve cash. This includes a temporary 20%
salary reduction taken by the senior management team and
the Board, a deferral of annual pay reviews and a temporary
freeze on recruitment. We are also utilising the different
government schemes that are available globally.
We had invested in technology and so are able to seamlessly
work from home and planning is underway as to how the
various offices can return when it is advisable to do so.
Staff retention and recruitment
Staff remain our greatest asset and the Group relies on
skilled employees to build and maintain client relationships
and win new business. The market is competitive and there
is a risk we cannot attract and/or retain the best talent.
The Group’s People team seeks to recruit the best talent and
to offer not only exciting work but a competitive remuneration
package and to make the workplace a great place to be.
Policies and processes are put in place to allow career
progression and development.
Cyber security
The Company is aware of the increased threat of third
parties seeking to attack the Group’s IT system, causing
the loss or corruption of data.
The Remuneration Committee considers retention and
motivation when considering the remuneration framework
for executives.
During 2019, the Group created the new role of Information
Security Officer, who has been upgrading the Groups’ cyber
security capability. There has been investment in improving
endpoint security, endpoint detection and response, patch
management automation, and multi-layer authentication
for remote users.
The Group’s IT function continues to monitor and improve the
Group’s IT security in light of the continually evolving threat.
29
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements Risks continued
Risk
Mitigating actions
Client loss
There will always be a loss of some clients and new clients
won. Losses may occur due to many events beyond our
control, including the effect of other risks such as
macroeconomic uncertainty, re-directing expenditure
elsewhere, or a reduction in budget.
The loss of a major client unexpectedly, however,
could have a material impact on resourcing and revenue.
Misappropriation of assets/fraud
There is always the risk that fraudulent activity could take
place by employees of the Group.
Dependency on media agencies
Ebiquity has a unique relationship with media agencies.
In order to carry out its services for clients, it requires
co-operation from the media agencies to provide clients’
data to Ebiquity in a timely and suitable format. There is
a risk that media agencies do not co-operate with Ebiquity
and try and frustrate the relationship it has with clients.
Macroeconomic uncertainty, including Brexit
As well as the macroeconomic uncertainty from
COVID-19, there could be volatility in markets following
Brexit. This could lead to downward pressure on budgets.
Consistently providing high-quality work and getting
regular feedback from clients helps maintain strong client
relationships. The Company continues to develop its ‘Client
Partner’ group where senior consultants work alongside the
client to ensure consistency of work and to expand the types
of services the client takes from the Group.
The Group puts in place good policies and procedures to ensure
the segregation of duties and has an authority matrix setting
out levels of authority. Bribery and anti-corruption training
regularly takes place and an annual external audit provides
comfort that this sort of behaviour is not taking place.
Ebiquity continues to try and build good and transparent
working relationships with the media agencies. Standard
NDAs are now in place with many of the major media agency
groups, together with a ‘code of conduct’ or ‘ways of working’
document to ensure that both parties work in a fair and open
way. The Group’s CEO and other senior executives meet
counterparts at the media agencies to share any issues or
concerns that arise in the course of Ebiquity providing services
to mutual clients.
The impact of this is likely to vary by sector and geography.
Our client base is across different sectors and geographies
which should help limit the risk. Regular client feedback is
sought to understand any impact on our clients. We continue
to keep a tight control on our costs and have taken measures
to preserve cash.
30
Ebiquity plc Strategic report
Corporate governance
Financial statements
Corporate governance
What’s in this section
This section provides information on how
the Company is governed and the activities
of the Board.
Board of Directors
Corporate governance report
Audit & Risk Committee report
Remuneration Committee report
Directors’ report
32
34
40
43
49
strong
leadership
Annual report and financial statements for the year ended 31 December 2019
31
The Board of Directors (the ‘Board’) 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.
About
Rob joined the Board as a
Non-Executive Director on
1 March 2018 and was appointed
Chairman on 9 May 2018.
Rob currently sits on the
Remuneration Committee, the Audit
& Risk Committee, and is Chair of the
Nomination Committee.
About
Alan was appointed to the Board
as Chief Financial Officer on
7 January 2019. On 12 November 2019,
Alan was appointed Interim Chief
Executive Officer after Michael Karg
stepped down from the role.
About
Richard was appointed to the
Board on 1 November 2008,
is Chairman of Ebiquity’s Audit
& Risk Committee and also sits
on the Nomination Committee.
Experience
Prior to joining Ebiquity, Rob was CEO of STV Group
plc for nearly 11 years, where he led their successful
transformation into a pre-eminent digital media
group and oversaw a dramatic increase in
shareholder value. Prior to STV, Rob was
Commercial Director at Channel 4 Television for four
years and was previously a Managing Director with
UBS Corporate Finance and the lead partner for
Deloitte’s TMT Industry Group in Europe. He is
currently Chairman of the AIM-listed data services
provider Blancco Technology Group plc and
Chairman of the Met Office.
Experience
Alan has extensive public company experience,
having spent almost 10 years as CFO of YouGov plc,
the AIM-listed global market research and data
analytics group. He is currently a Non-Executive
Director of Future plc, Chair of Freud Museum
London and Director of the Quoted Companies
Alliance. Prior to YouGov plc, Alan was a partner
at EY and previously at KPMG, where he provided
Board-level advisory and consulting services
specialising in the media, technology and telecoms
sectors. He is a chartered accountant and has an
MA in Modern Languages (French and Spanish)
from Cambridge University.
Experience
Richard was CEO of Instinctif Partners, the
international business communications consultancy,
for 12 years from 2006 to 2018. He subsequently
held the role of Deputy Chairman of Instinctif
Partners until September 2019. He is currently
Chairman of the Harpenden Trust. 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.
Rob Woodward
Non-Executive Chairman
Alan Newman
Interim Group Chief
Executive Officer and
Chief Financial Officer
Richard Nichols
Non-Executive Director
Key
Audit & Risk Committee
Nomination Committee
Remuneration Committee
Denotes Chairperson
32
Board of DirectorsEbiquity plc About
Julie was appointed to the Board
on 21 November 2014, is Chair
of Ebiquity’s Remuneration
Committee and sits on the
Nomination Committee.
About
Tom was appointed to the Board
on 21 November 2014 and sits on
Ebiquity’s Nomination Committee,
Remuneration Committee, and Audit
& Risk Committee.
About
Mark joined Ebiquity as General
Counsel and Company Secretary
in May 2017.
Experience
Julie has served in both executive and non-executive
capacities on the boards of leading companies in the
FTSE 100 and FTSE 250, as well as a number of
major public sector organisations. She has chaired
the remuneration committees of several company
boards and served as Chair of Harvey Nash plc from
2013 to 2018. She is currently Senior Independent
Director of Marshall of Cambridge, a director of
Chrysalis VCT plc and Chair of the Steering Group
of Chapter Zero. Julie has broad experience of
businesses in professional services such as 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.
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 (‘EE’). 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.
Experience
Having qualified as a solicitor at Eversheds, Mark
worked in their Corporate team before moving to
his first in-house role at Premier Farnell plc. In 2003
Mark joined the global digital communications group
Next Fifteen Communications Group plc as General
Counsel and Company Secretary, looking after the
legal function and providing company secretarial
and corporate governance support to the Board.
In 2009 he set up his own boutique law firm, Baker
Sanford LLP, while continuing to provide an
outsourced legal and company secretarial service
to Next Fifteen, including acting for the company
on acquisitions made between 2009 and 2015.
Julie Baddeley
Non-Executive Director
Tom Alexander
Non-Executive Director
Mark Sanford
Company Secretary
33
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements Corporate governance report
“The Board recognises
that shareholders look
to the Board to promote
the long-term success of
the Company.”
Rob Woodward
Non-Executive Chairman
Chairman’s governance overview
I am pleased to introduce the corporate
governance report for the year ended
31 December 2019.
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 and for the
governance of the Group. 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.
The Board recognises that shareholders
look to the Board to promote the
long-term success of the Company and
I recognise that effective governance is
crucial to achieve this. As Chairman it is
my role to provide the leadership to the
Board to do so.
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
which are appropriate to the nature
and size of the business and the values
of our business.
In July 2018 the Board formally
adopted the Quoted Companies
Alliance Corporate Governance Code
(the ‘QCA Code’) pursuant to Rule 26 of
the AIM Rules. The Board believes that
the QCA Code is appropriate for the
Company and further details can be
found on pages 38 and 39 where
compliance with the various principles
of the QCA Code is set out. As an
AIM-listed company, the Company is
not required to comply with the UK
Corporate Governance Code (the ‘UK
Code’), however the Board does
consider the principles and provisions
of the UK Code when it considers it
appropriate and relevant.
Rob Woodward
Chairman
20 May 2020
Board attendance:
Rob Woodward
Michael Karg, PhD
(until 12 November 2019)
Alan Newman
Richard Nichols
Julie Baddeley
Tom Alexander
9/9
5/5
7/7
9/9
9/9
9/9
34
Ebiquity plc
Statement of compliance
Ebiquity has adopted the QCA Code
and is compliant with its principles.
Further details are set out on pages
38 and 39.
Board of Directors
Role of the Board
The Board is responsible to
shareholders for the strategic direction,
investment decisions and 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 regard to the
annual report and financial statements
is set out on page 53.
Composition of the Board
and roles of the Directors
The changes to the Board composition
during the year were as follows:
Kevin McNair stepped down as Interim
Chief Financial Officer on 7 January
2019 as Alan Newman was appointed
Chief Financial Officer on that date.
Following Michael Karg’s resignation as
Director and Chief Executive Officer on
12 November 2019, Alan also took on
the role of Interim Chief Executive
Officer.
Morag Blazey resigned from the Board
on 2 January 2019. Morag had been
Managing Principal of the Advertising
Intelligence Practice since 2016 and
transferred to Nielsen as part of the
sale of the business which completed
on 2 January 2019.
Gender diversity
Tenure
1
4
Women
Men
The Board of Directors now comprises
an independent Non-Executive
Chairman, three further independent
Non-Executive Directors and one
Executive Director. Nick Waters has
been appointed as Chief Executive
Officer with effect from 1 July 2020.
The Board is satisfied that it has a
suitable balance of independence,
skills and knowledge to enable it to
discharge its duties and responsibilities
effectively. The three Non-Executive
Directors are all considered to be
independent and no single director
is dominant in the decision-making
process.
The Chairman’s principal role is to lead
the Board in the determination of its
direction and strategy. The Chairman is
responsible for setting the agenda for,
and organising the business of,
the Board as well as ensuring its
effectiveness. The Chief Executive
Officer is responsible for setting
long-term strategy, developing
appropriate business plans, agreeing
management KPIs and leading the
Executive Directors and senior
executive team in the day-to-day
running of the Group’s business.
He is also responsible for shareholder
communications and ongoing
relationships with investors. The Chief
Executive Officer and the Chief
Financial Officer regularly meet with
investors and analysts to discuss the
performance of the business and its
strategy.
2
1
2
1–3 years
4–8 years
9+ years
Appointment, election and
re-election of Directors
The Company’s Articles of Association
provide that at each AGM of the
Company, one-third of the Directors
must retire by rotation. At the
forthcoming AGM, Rob Woodward and
Richard Nichols will offer themselves
for re-election by shareholders.
With regard to both Rob Woodward
and Richard Nichols, the Board is
satisfied that their contributions
continue to be effective and they
demonstrate sufficient time
commitment to their roles. The Board
also believes that each director
standing is independent in character
and judgement. The Board
acknowledges that Richard Nichols
reached 11 years’ tenure as a
Non-Executive Director in
November 2019. After evaluation,
the Board has determined that Richard
remains independent in character and
judgement in his role as Non-Executive
Director. If Richard Nichols continues on
the Board, it will be the Board’s
intention to seek re-election annually,
consistent with the QCA Code.
Biographical details regarding the
Directors, including the committees
on which they serve, are contained on
pages 32 and 33.
35
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements Corporate governance report continued
Board of Directors
Chairman
Rob Woodward
Non-Executive Chairman
Executive
Director
Non-
Executive
Directors
Alan Newman
Interim Chief Executive Officer and Chief Financial Officer
Richard Nichols
Non-Executive
Director
Julie Baddeley
Non-Executive
Director
Tom Alexander
Non-Executive
Director
Board committees
Audit & Risk
Committee
Nomination
Committee
Remuneration
Committee
2019 membership
2019 membership
2019 membership
Richard Nichols (Chair)
Rob Woodward (Chair)
Julie Baddeley (Chair)
Rob Woodward
Richard Nichols
Rob Woodward
Tom Alexander
Julie Baddeley
Tom Alexander
Tom Alexander
Board committees
The Board has constituted several
committees to support it in the
performance of its functions.
The principal committees are the
Audit & Risk Committee, the
Remuneration Committee and the
Nomination Committee. The reports
of these committees can be found on
pages 40 to 48.
The Company Secretary acts as
secretary to the committees. The terms
of reference of each committee are
available on the Group’s website and
are reviewed regularly and updated as
required.
Advisers to the Board
and its committees
All Directors have access to the advice
of the General Counsel and Company
Secretary, who attends all Board
meetings. The Board seeks advice from
external advisers, including legal, tax,
and remuneration advisers, on various
matters as and when appropriate.
The Company’s auditors,
PricewaterhouseCoopers LLP,
attend meetings of the Audit & Risk
Committee. Directors may take
independent professional advice at
the Company’s expense as and when
necessary to support the performance
of their duties as directors of the
Company.
Risk management
The Company’s approach to risk is
set out on pages 29 and 30.
The Board’s responsibilities
The principal matters considered by
the Board include:
› › approving the annual budget
and quarterly reforecasts;
› › the Company’s strategy,
performance and outlook;
› › review of the Group’s risk
management and internal controls;
› › the Group’s financial results
for the half year and full year;
› › approving the Company’s
dividend policy;
› › major capital projects; and
› › corporate governance matters
including QCA Code compliance.
As part of good governance, there
are certain matters which are not
appropriate to be delegated to
management and should be reserved
for consideration by the Board.
The Board has formally approved a
written list of such matters, which
is available on Ebiquity’s website
at www.ebiquity.com.
Board meetings
During the year the Board met formally
face-to-face on seven occasions.
In addition, there were two further
Board meetings of the Non-Executive
Directors held by telephone.
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 Board
portal. 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 a CEO
update, a CFO update and a Company
Secretary update. Monthly
management accounts are shared with
the Board. 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.
36
Ebiquity plc Shareholders
The Board recognises the importance
of effective communication with its
shareholders, to ensure that its
strategy and performance are
clearly understood. The Company
communicates with shareholders
through the annual report and
financial statements, full-year and
half-year results announcements,
trading updates, the AGM, and
face-to-face meetings.
A range of corporate information
(including copies of presentations
and announcements) is available
on the Company’s website at
www.ebiquity.com. The Chief Executive
Officer, Chief Financial Officer and the
Chairman regularly meet with
institutional shareholders and the
Board is kept informed of the views
of the major shareholders.
Whistle-blowing and
the Bribery Act 2010
The Company has established
arrangements by which individuals
may, in confidence, raise concerns
about possible improprieties in
matters of financial reporting and
other matters. The Group has an
anti-bribery code of conduct which is
intended to extend to all the Group’s
business dealings and transactions in
all countries in which it or its
subsidiaries and associates operate.
Nomination Committee
The Nomination Committee is chaired
by Rob Woodward. The Nomination
Committee currently comprises
Rob Woodward, Richard Nichols,
Julie Baddeley, and Alan Newman.
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.
Board evaluation
The Chairman, in conjunction with the
Company Secretary, takes on the role
of organising an annual Board
evaluation programme. The Company
Secretary also conducts an evaluation
of the Chairman’s performance.
Feedback is obtained and shared,
which leads to actions to be taken to
continuously improve the functioning
of the Board. All Directors complete a
questionnaire on the structure and the
performance of the Board and its
committees which is sent anonymously
to the Company Secretary who collates
the scores and comments. The Board
discusses the outcome of the
questionnaire and what actions need
to take place as a consequence.
Directors’ conflicts of interest
Directors have a statutory duty to
avoid conflicts of interest with the
Company. The Company Secretary
keeps a register of the Directors’ other
interests and potential conflicts which
is constantly kept up to date. At the
beginning of each Board meeting the
Directors confirm they have no
conflicts of interest in relation to
the matters being considered.
Audit & Risk Committee
The Audit & Risk Committee currently
comprises Richard Nichols (Chair),
Rob Woodward, and Tom Alexander.
The Board considers Richard Nichols
to have recent and relevant financial
experience to chair the Committee.
Richard is a qualified chartered
accountant and has served as the
finance director and chief executive
officer of listed and private companies.
The Chief Financial Officer also
attends most meetings at the
invitation of the Chair. 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 consider the Group’s risks; and to
provide a line of communication
between the Board and the
external auditors.
Remuneration Committee
The Remuneration Committee
currently comprises Julie Baddeley
(Chair), Rob Woodward, and
Tom Alexander. The Executive Directors
attend the meetings on the invitation
of the Chair but will not be present for
any discussions regarding their own
remuneration. The Remuneration
Committee is responsible for the
Executive Directors’ remuneration
and other benefits and terms of
employment, including
performance-related bonuses
and share options, as well as general
guidance on aspects of remuneration.
Nomination Committee
attendance:
Rob Woodward
Richard Nichols
Julie Baddeley
Tom Alexander
1/1
1/1
1/1
1/1
37
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements Corporate governance report continued
The Company formally adopted the Quoted Companies Alliance
Corporate Governance Code (the ‘Code’) on 23 July 2018,
pursuant to Rule 26 of the AIM Rules.
The main principles of the Code are set out below together with, in broad terms, how Ebiquity complies with these principles.
Principle 1
Establish a strategy and business model which promote long-term value for shareholders
Further details of the Company’s business model and strategy are set out on pages 02 to 30.
Principle 2
Seek to understand and meet shareholder needs and expectations
As set out in this corporate governance report, the Directors actively seek to build a relationship with
shareholders. The Chief Executive Officer and the Chief Financial Officer are responsible for shareholder
liaison and present to the major shareholders and analysts after the publication of both the interim
results and the full-year preliminary results. As well as a presentation of the results, the meetings give
shareholders the opportunity to ask any questions and discuss their needs and expectations. The
Chairman and the Company Secretary also meet with major shareholders as required. Ad-hoc meetings
are welcomed by the Directors as and when the need arises. The AGM is an opportunity for all
shareholders to meet the Board and ask any questions.
Principle 3
Take into account wider stakeholder and social responsibilities and their implications for
long-term success
In addition to shareholders, clients, suppliers, trade bodies and employees are the key stakeholders.
The Company recognises that employees are key to its success. Further details on the Company’s
engagement with its employees are set out on pages 26 and 27, and the section 172 statement on page
28 details engagement with other stakeholders.
Principle 4
Embed effective risk management, considering both opportunities and threats,
throughout the organisation
The Board retains ultimate control and responsibility for the risk management of the Group.
The risk management approach adopted by the Board is set out on pages 29 and 30.
Principle 5
Maintain the Board as a well-functioning, balanced team led by the Chair
The Board comprises an independent Non-Executive Chairman, three independent Non-Executive
Directors and currently one full-time Executive Director. Nick Waters has been appointed as Chief
Executive Officer with effect from 1 July 2020. All Non-Executive Directors are engaged via letters of
appointment which state their time commitment. Non-Executive Directors are required to commit an
average of 12 days per year, including attending Board and committee meetings, the AGM, meetings with
shareholders and Board evaluation. The Chairman commits to four days per month carrying out his role.
Further details about the number of Board meetings held during the year and attendance at such
meetings are set out on page 34.
Principle 6
Ensure that between them the Directors have the necessary up-to-date experience,
skills and capabilities
The Board is satisfied that it has an appropriate mix of skills and experience. The Non-Executive
Directors have worked in a variety of industries in different roles and bring valuable knowledge
and insight. The Directors have finance, consulting, media and senior management skills. Two of
the Non-Executive Directors (plus the Chairman) are male and one is female. Biographies for each
of the Directors are set out on pages 32 and 33.
All Directors receive timely information in advance of Board meetings and receive management
accounts regularly. The Directors have direct access to the services of the General Counsel and
Company Secretary and take external independent advice where required.
38
Ebiquity plc Principle 7
Evaluate Board performance based on clear and relevant objectives,
seeking continuous improvement
The Chairman, in conjunction with the Company Secretary, takes on the role of organising an annual
Board evaluation programme. The Company Secretary also conducts an evaluation of the Chairman’s
performance. Feedback is obtained and shared, which leads to actions to be taken to continuously
improve the functioning of the Board. For the year ending 31 December 2019, all Directors completed
a questionnaire on the structure and the performance of the Board and its committees. This was sent
anonymously to the Company Secretary who collated the scores and comments. The Board discussed
the outcome of the questionnaire and a set of actions has been put in place to address issues raised.
Principle 8
Promote a corporate culture that is based on ethical values and behaviours
The Company ensures that policies and procedures are in place to cover matters such as anti-bribery and
corruption, business ethics, and modern slavery. The Company commissioned a diversity report and has a
number of diversity working groups to ensure it functions as a diverse organisation. The regular ‘all hands’
web-based meetings, open to all employees, encourages open and honest discussions.
The Company’s core values of Clear, Agile, Curious, and Objective encourage a straight-forward,
adaptable, honest culture which helps promote ethical values and behaviours.
Principle 9
Maintain governance structures and processes that are fit for purpose and support good
decision-making by the Board
The Board is responsible to shareholders for the strategic direction and proper management of the
affairs of the Group. The Directors are collectively responsible for acting in a way which they consider
is most likely to promote the success of the Company for the benefit of shareholders.
The roles of the Directors are set out on page 35.
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. Full terms of reference are published on the Company’s website (www.ebiquity.com)
and the principal responsibilities are set out on page 37.
As part of good corporate governance there are certain matters which are not appropriate to be
delegated to management and should be reserved for consideration by the Board as a whole. The full
list of such matters is available on the Company’s website (www.ebiquity.com) and they include:
•• approving annual budgets and quarterly forecasts;
••
changes to the Group’s capital structure;
•• approving the dividend policy; and
••
reviewing non-routine regulatory news service announcements made by the Company.
Principle 10
Communicate how the Company is governed and is performing by maintaining a
dialogue with shareholders and other relevant stakeholders
The Company communicates with shareholders through its annual report and accounts, the Annual
General Meeting, face-to-face meetings with major shareholders and results presentations. A range
of corporate information (including all regulatory announcements and annual reports and accounts)
is available to all shareholders and stakeholders on the Company’s website at www.ebiquity.com.
The website also contains details of all votes cast by shareholders at its Annual General Meeting and this
is also set out in an announcement after the meeting.
39
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements Audit & Risk Committee report
“The Board has
delegated to the
Audit & Risk Committee
oversight of the Group’s
financial reporting
and the Group’s risk
management process.”
Richard Nichols
Audit & Risk Committee Chair
Introduction
I am pleased to present the report
of the Audit & Risk Committee
(the ‘Committee’) for the year ended
31 December 2019. This report details
the Committee’s role and
responsibilities and key activities during
the year. Although the Board has
ultimate responsibility for the Group’s
system of internal control and for
managing the Group’s risks, the Board
has delegated to the Audit & Risk
Committee oversight of the Group’s
financial reporting and the Group’s risk
management process which aims to
identify and mitigate significant risks.
Richard Nichols
Audit & Risk Committee Chair
20 May 2020
Composition of the
Audit & Risk Committee
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 32.
The Committee met on three occasions
during the year. The attendance of its
members is set out in the table on
page 40. 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 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.
Committee attendance:
Rob Woodward
Richard Nichols
Tom Alexander
3/3
3/3
3/3
40
Ebiquity plc
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 responsibilities 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;
› › considering the Group’s accounting
policies and practices and the
application of accounting standards;
› › overseeing the relationship with the
Group’s external auditors and
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. Further
information on the Group’s approach
to risk is set out on pages 29 and 30.
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;
› › revenue recognition: the Committee
reviewed the quantum of accrued/
deferred income and the judgement
applied by management in
calculating revenue recognition
cut-off. The Committee reviewed
the quality of evidence available to
support revenue recognition;
› › presentation and disclosure of
highlighted items: the Committee
reviewed the nature and quantum of
the items proposed by management
to be classified as highlighted,
to ensure they were consistent with
the Group’s accounting policies and
to ensure full disclosure had been
made in the financial statements;
› › capitalisation of intangibles:
the Committee reviewed the nature
and quantum of the system
development costs proposed by
management to be capitalised,
together with the period over which
the capitalised items will be
amortised, to ensure they are
consistent with the Group’s
accounting policies;
› ›
impact of IFRS 16: the Committee
reviewed the impact and adoption
of the new IFRS 16 accounting
standard;
› › taxation: the Committee reviewed
the significant components of the
tax charge and provision and the
overall effective tax rate of the
Group as a whole; and
› › going concern: in accordance with
the guidance issued by the Financial
Reporting Council, the Committee
reviewed the specific consideration
made by the Directors to the
potential impact of the COVID-19
pandemic on the global economy,
business environment in which the
Group operates, and its business in
particular. As at the date of this
annual report this impact remained
highly uncertain and difficult
to predict.
The Directors have accordingly
considered a range of scenarios
relating to the impact of COVID-19
which they believe are plausible in the
context of the Group’s clients,
services and operations and assessed
their impact on the Group’s cash
flows and liquidity for a period of
12 months from the date of approval
of these financial statements. In this
assessment, the Directors had
regard to the potential reduction in
receipts from clients that may arise
from the COVID-19 disruption and to
options that may be available to the
Group to mitigate any resulting
negative impact on its cash flows
and liquidity. These include: (i) draw
down of all available borrowing
facilities; (ii) reductions in its
operating and capital expenditure;
and (iii) benefit of measures taken
by governments and central banks
in the countries in which the Group
operates to assist businesses and
employees, directly or indirectly, to
meet their financial obligations and
maintain their business operations
during the period of the pandemic.
As a result of these scenarios,
the Directors consider that the
Group will have sufficient liquidity
within its existing bank facilities,
totalling £24,000,000, to meet
its obligations during the next
12 months.
41
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements Audit & Risk Committee report continued
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.
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.
There were no non-audit fees paid to
PwC during the year.
Activities during the year continued
› › going concern: continued
The Directors consulted with the
lenders, Barclays and Royal Bank
of Scotland, to negotiate covenant
waivers where required in order to
negate the risk of any future
covenant breaches. The existing
covenants remain in place for the
12 months to March 2020 and
June 2020. The March 2020
covenants have already been
achieved, and there are no
concerns over meeting the June 2020
covenants; revenue would have to
reduce by 21% between May and
June 2020 compared to the latest
prudent expectations for a breach
to result.
Agreement in principle has been
reached with the lenders to replace
the existing covenants for
September 2020, December 2020
and March 2021 with a monthly
liquidity test that will be in place
between July 2020 and May 2021.
This is subject to the agreement of
legal documentation with the lenders
which is not yet in place, but which
the Directors are confident will be
shortly. Under the Directors’ base
case scenario, there are no forecast
breaches of the new liquidity
covenant tests. The Directors’
downside scenario indicates that
the covenant test at May 2021 is the
most sensitive but is not breached.
If revised expectations for this period
were to worsen then the Directors
would take the appropriate action
ahead of time to reduce operating
costs to mitigate the likelihood of
a breach.
The covenants revert to the existing
measures as at June 2021, which
under the current base case scenario
would be breached and would need
to be waived. The Directors are
confident, based on the support of
the lenders, that waivers would be
granted, however, there is a risk that
this may not occur. This, and the risk
that legal documentation is not
agreed to replace the existing
covenants for September 2020
to May 2021, represent a material
uncertainty that casts significant
doubt on the Group’s ability to
continue to operate as a going
concern. The financial statements
do not include the adjustments that
would result if the Group and
Company were unable to continue
as a going concern.
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 was
appointed for the audit of the
Company’s financial statements for
the year commencing 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.
42
Ebiquity plc Remuneration Committee report
Committee attendance:
Rob Woodward
Julie Baddeley
Tom Alexander
8/8
8/8
8/8
“The Company will
continue to review
its remuneration
practices and policies
and will liaise with
investors where
appropriate.“
Julie Baddeley
Remuneration Committee Chair
Introduction
I am pleased to present the report
of the Remuneration Committee
(the ‘Committee’) for the year ended
31 December 2019. This report details
the Company’s overall approach to pay,
benefits and incentives for its
executives and the remuneration
arrangements that are in place for
the Directors.
During the year, the Committee
reviewed the Group’s Long-Term
Incentive Plan (‘LTIP’), in conjunction
with external advisers, to ensure that
it was in line with market practice and
suitable for the retention and
motivation of the executives.
The outcome of this review was not
to substantially change the scheme,
as the Committee concluded that the
existing structure continued to support
the delivery of the strategy. The awards
granted to Directors during the year
were nil-priced options which vest
after three years subject to continued
employment and the achievement of
both earnings per share (‘EPS’) and
total shareholder return (‘TSR’)
performance conditions.
Details of the scheme are explained
in more detail below. We will continue
to monitor and review the LTIP to
ensure it remains in line with market
practice for a company of our size and
the fact that we are a people-based
business.
Michael Karg stepped down as CEO
during the year and left the business
on 31 December 2019. Nick Waters has
been appointed as Chief Executive
Officer with effect from 1 July 2020.
The Company will continue to review
its remuneration practices and policies
and will liaise with investors where
appropriate.
Julie Baddeley
Remuneration Committee Chair
20 May 2020
43
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements
Remuneration Committee report continued
Remuneration framework
The Board recognises the need to have the right remuneration framework in place in order to attract and retain people with
industry-leading skills, knowledge and the experience needed to develop and grow the business, and to incentivise them to
deliver the strategy and promote long-term sustainable success. The Committee considers the following when setting the
remuneration framework:
› › the responsibility of the executive’s role, their experience and performance;
› › the remuneration arrangements in place for the wider workforce;
› › market practice at other companies of a similar size and complexity as well as at other companies in the sector;
› › the need to attract and retain executives of the right calibre with the required skills and the need to get the right balance of
short and long-term incentives; and
› › the need for the short and long-term incentives to be aligned with the Group’s strategy.
For all Executive Directors, the Committee may make use of some or all of the remuneration components set out below.
Executive Directors
Base salary
Key features
Reflects market practice commensurate with the role and the geography of the
executive. Reviewed annually to take account of cost of living adjustments, market
comparators and the individual’s performance in the role.
Purpose and link to strategy
To provide a core level of reward for the completion of core duties. Set at a level to
attract and retain employees of a sufficient calibre and expertise to deliver the
Group’s strategy.
Maximum opportunity
There is no prescribed maximum salary or salary increase, but the Company
regularly reviews relevant talent markets and the Committee uses its discretion to
award increases when it considers it necessary. The Committee takes account of
base salary increments in the rest of the workforce when making any adjustments
to executive salaries.
Performance measures
The Committee considers the executive’s performance during the period since
the last review.
Benefits
Key features
The Remuneration Committee ensures that arrangements for Executive Directors
are in line with general policies for the workforce, including, but not limited to,
private medical, life and critical illness insurances, and personal pension
contributions.
Purpose and link to strategy
To provide current and future heath and security for the executive and their
dependents in line with local market practice.
Maximum opportunity
The value of benefits is not capped, but the Committee will consider the aggregate
value of any benefits when determining what, if any, should be offered.
Performance measures
Not applicable.
44
Ebiquity plc Pension
Key features
Executive Directors are entitled to receive employer contributions to a personal
pension plan.
Purpose and link to strategy
To provide Executive Directors with long-term savings for the future in line
with market practice.
Maximum opportunity
Maximum contribution of 10% of base salary.
Performance measures
Not applicable.
Annual performance bonus
Key features
Discretional annual cash bonus depending on achievement of Group financial
targets and personal strategic objectives. Targets are reviewed annually by
the Committee.
Purpose and link to strategy
To incentivise the individual to achieve against a set of agreed short-term financial
objectives and personal achievements.
Maximum opportunity
A maximum of 100% of salary may be earned by any one Director in a financial year.
Performance measures
The overall bonus target is linked to budgeted operating profit as well as personal
objectives relating to the Group’s overall strategy.
Long-Term Incentive Plan (‘LTIP’)
Key features
Awards are made under the Ebiquity 2012 Executive Share Option Plan (the ‘Plan’).
The awards are subject to continued employment and the achievement of certain
financial performance conditions. The Committee may adjust and amend awards
in accordance with the LTIP rules. Awards are made according to role, performance
and perceived future value.
Purpose and link to strategy
The provision of an LTIP is intended to provide incentives for longer-term growth
and value creation through shareholder returns. It aligns the Executive Directors’
interests with those of shareholders.
Maximum opportunity
Awards typically do not exceed 100% of salary and are subject to a maximum of
200% of salary in exceptional circumstances.
Performance measures
Performance conditions are chosen by the Committee to support the delivery of
the Company’s strategy and provide alignment between Executive Directors and
shareholders. Performance conditions may vary each year depending on the
financial and strategic priorities and performance. Awards granted in 2019 are
based on the achievement of adjusted EPS and TSR performance conditions,
as further detailed below.
45
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements Remuneration Committee report continued
Non-Executive Directors
Fees
Key features
Cash fees determined by the Executive Directors reflect time commitment
and responsibility (including being a member of, or chairing, the committees).
Purpose and link to strategy
Set at a level to attract and retain Non-Executive Directors of a sufficient
calibre with relevant skills and expertise to assist in establishing and monitoring
the Group’s strategy.
Maximum opportunity
There is no prescribed maximum, but the Company regularly reviews the fees and
takes into account relevant market data.
Performance measures
Evaluation of the Board’s performance takes place annually.
Directors’ remuneration in the year ended 31 December 2019
Salary/fees
£’000
Taxable
benefits
£’000
Year ended
Year ended
31 December 31 December
2018
Total
£’000
2019
Total
£’000
Bonus
£’000
Executive
Michael Karg, PhD1
Kevin McNair2
Alan Newman3
Andrew Noble4
Morag Blazey5
Non-Executive
Michael Higgins6
Rob Woodward
Richard Nichols
Julie Baddeley
Tom Alexander
346
63
240
—
—
—
85
35
35
35
839
16
—
1
—
—
—
—
—
—
—
17
—
—
—
—
—
—
—
—
—
—
—
362
63
241
—
—
—
85
35
35
35
416
88
—
281
407
43
62
45
45
45
856
1,432
1. Michael Karg stepped down as a director on 12 November 2019 and his employment ceased on 31 December 2019. His salary during the period
was £400,000 per annum and he received £18,614 of taxable benefits. In January 2020, Michael received a payment totalling £513,017 in lieu of
base salary, pension and healthcare benefits for his notice period, his accrued but untaken holiday, and in settlement of other provisions in
connection with cessation of employment. This amount is not included in the salary/fees column above.
2. Kevin McNair resigned as Interim Chief Financial Officer on 7 January 2019. He received a payment in lieu of part of his notice period.
3. Alan Newman was appointed as Chief Financial Officer on 7 January 2019. His salary was set at £225,000. On 12 November 2019, he also took on
the role of Interim Chief Executive Officer and his salary was increased to £350,000 per annum for the period of time in this role.
4. Andrew Noble resigned as a director on 2 October 2018 and his employment ceased on 23 December 2018.
5. Morag Blazey ceased to be a director on 2 January 2019.
6. Michael Higgins retired from his role as Chairman on 9 May 2018.
Pensions
No Director was a member of a Company pension scheme (FY2018: nil). Contributions totalling £40,000 (FY2018: £32,167)
were made to Michael Karg’s private pension schemes. No other Director received any pension contributions during the year.
Annual bonus
For 2019, Executive Directors were eligible for cash bonuses as a percentage of base salary dependent on achievement of
budgeted operating profit of the Group. Financial targets were not met and therefore no bonus was paid.
46
Ebiquity plc
Long-term incentives
During the year, no share options that were previously granted to Directors under the Company’s LTIP vested (FY2018: 285,000
share options). No Director exercised share options during the year (FY2018: 40,295 share options).
Outstanding share awards
Share options were granted to the Interim Chief Executive Officer in December 2019 in respect of the financial year to
31 December 2019 as set out below:
End of
performance
period
31/12/2021
Beneficiary
Grant date
Volume
Exercise
price
Performance conditions
Alan Newman
4 December
2019
410,000
£nil
75% of vesting based on EPS growth
The EPS portion of the Award will vest in full if
the Company achieves a 15% compound annual
growth rate or higher in EPS for the financial year to
31 December 2021 compared to a reference
EPS for the financial year to 31 December 2018.
A minimum compound annual growth rate in EPS of
8% over this three‐year period will trigger vesting of
30% of the EPS portion of the Award. There will be
straight‐line vesting between these points.
25% of vesting based on TSR growth
25% of the TSR portion of the Award will vest if
the Company’s TSR is at least equal to the TSR of the
AIM Media Index over the three‐year performance period
to 31 December 2021. The TSR portion of the Award will
vest in full if the Company’s TSR is at least 8% per annum
greater than the average TSR of the companies in the
AIM Media Index. There will be straight‐line vesting
between these points. TSR will be measured based on
the three-month average TSR to 31 December 2021
compared to the three-month average TSR to
31 December 2018.
Directors’ interests in share plans
As at 31 December 2019, the following Directors held share options over ordinary shares of 25p each under the Ebiquity 2012
Executive Share Option Plan:
Share
options
lapsed
during
the year
Share
options
vested
during
the year
Share
options
granted
Number
of share
options at
during 31 December
2019
the year
End of
Grant performance
period
date
Beneficiary
Alan Newman
Michael Karg
Michael Karg
Michael Karg
Michael Karg
Michael Karg
Number
as at
31 December
2018
—
100,000
100,000
—
—
—
350,000
70,000
350,000
140,000
500,000
300,000
—
—
—
—
—
—
410,000
410,000
3/12/2019 31/12/2021
—
100,000
—
100,000
26/1/2016
Vested
30/6/2016
26/1/2016
Vested
31/12/2016
—
—
—
280,000
13/2/2018 31/12/2020
210,000
13/2/2018 31/12/2021
200,000
11/7/2018 31/12/2022
47
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements
Remuneration Committee report continued
Directors’ interests in the shares of Ebiquity plc
Michael Karg
Alan Newman
Rob Woodward
Richard Nichols
Julie Baddeley
Tom Alexander
31 December 2019
31 December 2018
Ordinary
shares
Options
Ordinary
shares
Options
41,661
890,000
18,160
1,400,000
160,000
410,000
—
39,980
100,000
15,000
—
—
—
—
—
39,980
100,000
15,000
—
—
—
—
—
—
Termination payments to Directors
One director, Michael Karg, left the Company in the year ended 31 December 2019 and received a total of £513,017 including
contributions to pension, payment in lieu of healthcare benefits, payment in lieu of his notice period, payment in lieu of his
accrued but untaken holiday, and in settlement of other provisions in connection with cessation of employment.
Gender pay reporting
The Company published and reported its UK business gender pay gap for the first time under the UK Government’s new
reporting guidelines in relation to the snapshot date of 5 April 2017 and again reported for the snapshot date of 5 April 2018.
Although not required in 2019, the Company has continued to report its findings and the most recent report is available on the
Company’s website.
48
Ebiquity plc
Directors’ report
COVID-19
The Company continues to closely
monitor the COVID-19 pandemic and
its impact on our staff, clients and
operations. Our primary focus is
ensuring the safety and wellbeing of
our employees and we have successfully
implemented a remote working policy
for all of our offices globally, although
our staff in China have now returned to
their offices.
The COVID-19 disruption is affecting
our clients’ businesses and their service
requirements, although the extent and
timing of its impact over the coming
months remains uncertain.
The Company is undertaking prudent
cost reduction measures in order to
protect the business and preserve cash
in the current environment.
This includes a 20% salary reduction
taken by the senior management team
and Board, a deferral of the annual pay
review, and temporary freeze on
recruitment. The Group is also utilising,
to the extent necessary, the different
government schemes put in place to
support businesses in many of the
countries in which it operates,
including Australia, France, UK
and USA.
Acquisitions
On 11 June 2019, the Group acquired
the outstanding 5.97% interest in its
subsidiary undertaking, Ebiquity
Germany GmbH, from the minority
shareholder for cash consideration of
€380,000 (£336,000).
Events after the reporting period
On 8 January 2020, the Group
completed the purchase of Digital
Decisions B.V (‘Digital Decisions’).
The acquisition was for an initial cash
consideration of €700,000 (£597,000)
with further consideration payable in a
mix of cash and Ebiquity plc shares.
The first deferred payment will be
based on performance for the year
ending 31 December 2020 and the
second payment will be based on the
average performance for the years
ending 31 December 2021 and
31 December 2022.
On 3 February 2020, the Company
announced that it would be acquiring
the outstanding 49% interest in its
subsidiary Ebiquity Italy Media Advisor
S.r.l (‘Ebiquity Italy’) from the founders
and minority shareholders Arcangelo
DiNieri and Maria Gabrielli.
The transaction will complete in
May 2020. The total consideration
of €3.6 million is based on an average
of Ebiquity Italy’s profit before tax and
management charges for the years
ending 31 December 2018 and 2019.
Since the announcement date the
payment terms have been amended.
The consideration will now be paid in
a mix of cash and Ebiquity plc shares.
At completion 25% of the total
consideration will be paid in Ebiquity plc
shares and 5% in cash. The remaining
cash payments will be paid over the
following 10 months.
The Directors present their annual
report and the audited consolidated
financial statements for the year
ended 31 December 2019.
Ebiquity plc is incorporated in England
and Wales under registered number
3967525. Its registered address and
principal office is at Chapter House,
16 Brunswick Place, London N1 6DZ.
The Company is the ultimate parent of
the Group. Its overseas operations are
subsidiaries (see note 14).
Future developments
The future developments of the Group
are considered in the strategic report
on pages 02 to 30.
Dividends
No dividend is being paid in respect
of the year ending 31 December 2019.
Research and development
The Group continues to invest in the
development of products. During the
period, a total of £1,203,000 was
capitalised in relation to development
projects. This has resulted in the
development of a number of new
products and services.
Political donations and
political expenditure
It is the Company’s policy not to make
political donations and, accordingly,
no political donations were made and
no political expenditure was incurred in
the period (FY2018: nil).
Modern Slavery Act 2015
Ebiquity’s statement regarding the
Modern Slavery Act 2015 can be viewed
on its website (www.ebiquity.com).
Disposal
On 2 January 2019, the Company
announced the completion of the
disposal of its Advertising Intelligence
business to Nielsen Media Research
Limited for net consideration (after
taxation and transaction costs) of
approximately £20 million. This
consideration was dependent on a
working capital target position at the
date of completion. The working
capital acquired by Nielsen was below
this target and a resulting repayment
was made to Nielsen of £1,155,000 on
31 October 2019.
49
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements 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.
Further details of engagement with
employees are set out on pages 26
and 27.
The Group seeks to recruit, develop and
employ throughout the organisation
suitably qualified, capable and
experienced people, irrespective of sex,
age, race, disability, religion or belief,
marital or civil partnership status, or
sexual orientation. The Group gives full
and fair consideration to all
applications for employment made by
people with disabilities, having regard
to 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
cash and the planned growth of
activities is cash generative. Full details
of financial instruments are included in
note 27 to the financial statements.
Substantial shareholdings
At the date of this report, the
Company’s issued share capital
consisted of 80,125,626 ordinary shares
of 25p each and a total of 75,925,626
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 on the ordinary shares held
by it. As such, 4,200,000 ordinary
shares are treated as not carrying
voting rights.
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.
Directors
Details of the Directors serving at the
end of the year and their biographies
are set out on pages 32 and 33.
Alan Newman was appointed Chief
Financial Officer and a director of the
Company on 7 January 2019. Kevin
McNair resigned from the Board as
Interim Chief Financial Officer on the
same day.
Michael Karg stepped down as a
director and Chief Executive Officer
on 12 November 2019 and left the
business on 31 December 2019. Alan
Newman took on the role of Interim
Chief Executive Officer (and Chief
Financial Officer) on 12 November 2019.
Morag Blazey resigned from the Board
on 2 January 2019. Morag had been
Managing Principal of the Advertising
Intelligence practice since 2016 and
transferred to Nielsen as part of the
sale of the business which completed
on 2 January 2019.
Mark Sanford, General Counsel, acts
as the Company Secretary to the
Board and its committees.
Further information about the
Directors’ interests is provided in the
Remuneration Committee report on
pages 43 to 48.
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 and a
deed of indemnity is in place between
the Company and each of the
Directors. There were no pension
scheme indemnity provisions in place
during the period.
50
Ebiquity plc Shareholders
Artemis Investment Management
Canaccord Genuity Wealth Management (Inst)
BGF Investment Management Limited
JO Hambro Capital Management
Legal & General Investment Management
Herald Investment Management
Fidelity International
River and Mercantile Asset Management
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. As explained in the
Audit & Risk Committee report on
pages 40 to 42, additional work was
undertaken in light of the COVID-19
pandemic. This included consulting with
its lenders and varying the financial
covenants it has with them. As a result
of this assessment, the Board
concluded that the Group will have
sufficient liquidity within its existing
bank facilities, totalling £24,000,000,
to meet its obligations during the next
12 months.
As detailed in the Audit & Risk
Committee report agreement in
principle has been reached with the
lenders to replace the existing
covenants for September 2020,
December 2020 and March 2021 with
a monthly liquidity test that will be in
place between July 2020 and May 2021.
This is subject to the agreement of
legal documentation with the lenders
which is not yet in place, but which the
Directors are confident will be shortly.
The covenants revert to the existing
measures as at June 2021, which under
the current base case scenario would
be breached and would need to be
waived. The Directors are confident,
based on the support of the lenders,
that waivers would be granted,
however, there is a risk that this may
not occur. This, and the risk that legal
documentation is not agreed to replace
the existing covenants for September
2020 to May 2021, represent a material
uncertainty that casts significant
doubt on the Group’s ability to continue
to operate as a going concern.
The financial statements do not include
the adjustments that would result if
the Group and Company were unable
to continue as a going concern.
% of issued % of voting
Shares share capital share capital
15,344,790
19.15%
20.21%
10,179,334
9,976,441
9,500,000
4,945,200
4,341,125
3,709,109
2,435,695
12.70%
12.45%
11.86%
6.17%
5.42%
4.63%
3.04%
13.41%
13.14%
12.51%
6.51%
5.72%
4.89%
3.21%
Independent auditors and
disclosure of information
to auditors
All of the current Directors have taken
all the steps that they ought to have
taken to make themselves aware of
any information needed by the Group’s
auditors for the purposes of their audit
and to establish that the auditors
are aware of that information.
The Directors are not aware of any
relevant audit information of which
the auditors are unaware.
The auditors, PricewaterhouseCoopers
LLP, have indicated their willingness to
continue in office, and a resolution that
they be reappointed will be proposed at
the Annual General Meeting.
By order of the Board
Mark Sanford
Company Secretary
20 May 2020
51
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements
Financial statements
What’s in this section
This section includes our financial statements,
notes and auditors’ report for the Group.
Statement of Directors’ responsibilities
Independent auditors’ report
Consolidated income statement
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
Company statement of financial position
Company statement of changes in equity
Notes to the Company financial statements
Advisers
Shareholder information
Glossary
53
54
62
63
64
65
66
67
106
107
108
119
119
120
52
detailed financialsEbiquity plc Statement of Directors’ responsibilities
in respect of the financial statements
The Directors are also responsible for
safeguarding the assets of the Group
and Company and hence for taking
reasonable steps for the prevention
and detection of fraud and other
irregularities.
The Directors are responsible for
keeping adequate accounting records
that are sufficient to show and explain
the Group and Company's transactions
and disclose with reasonable accuracy
at any time the financial position of the
Group and Company and enable them
to ensure that the financial statements
comply with the Companies Act 2006.
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.
Directors' confirmations
In the case of each Director in office
at the date the Directors’ report is
approved:
• so far as the Director is aware, there
is no relevant audit information of
which the Group and Company’s
auditors are unaware; and
• they have taken all the steps that
they ought to have taken as a
director in order to make themselves
aware of any relevant audit
information and to establish that
the Group and Company’s auditors
are aware of that information.
The Directors are responsible for
preparing the annual report and the
financial statements in accordance with
applicable law and regulation.
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 Company
financial statements in accordance with
United Kingdom Generally Accepted
Accounting Practice (United Kingdom
Accounting Standards, comprising FRS
101 ‘Reduced Disclosure Framework’
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 Company and of
the profit or loss of the Group and
Company for that period. In preparing
the financial statements, the Directors
are required to:
• select suitable accounting policies
and then apply them consistently;
• state whether applicable IFRSs as
adopted by the European Union have
been followed for the Group financial
statements and United Kingdom
Accounting Standards, comprising
FRS 101, have been followed for
the Company financial statements,
subject to any material departures
disclosed and explained in the
financial statements;
• make judgements and accounting
estimates that are reasonable and
prudent; and
• prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Group and Company will continue in
business.
53
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements Independent auditors’ report
to the members of Ebiquity plc
Report on the audit of the financial statements
Opinion
In our opinion:
• Ebiquity plc’s group financial statements and company financial statements (the “financial statements”) give a true and fair
view of the state of the group’s and of the company’s affairs as at 31 December 2019 and of the group’s loss and cash flows for
the year then ended;
• the group financial statements have been properly prepared in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union;
• the company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 “Reduced Disclosure Framework”, and
applicable law); and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual report (the “Annual Report”), which comprise: the
consolidated and company statements of financial position as at 31 December 2019; the consolidated income statement, the
consolidated statement of comprehensive income, the consolidated statement of cash flows, and the consolidated and company
statements of changes in equity for the year then ended; and the notes to the financial statements, which include a description of
the significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
Material uncertainty related to going concern
In forming our opinion on the group and company financial statements, which is not modified, we have considered the adequacy of
the disclosure made in note 1 to the consolidated financial statements and note 2 to the Company financial statements concerning
the group’s and company’s ability to continue as a going concern.
The Directors have given specific consideration to the potential impact of the Covid-19 pandemic on the global economy, business
environment in which the company operates and its business in particular. The Directors have considered a range of scenarios
relating to the impact of Covid-19 which they believe are plausible in the context of the group’s and company's operations and
assessed their impact on the group’s and company’s cash flows and liquidity for a period of 12 months from the date of approval
of the financial statements. As a result of these scenarios, the Directors consider that the group and company will have sufficient
liquidity within its existing bank facilities, totalling £24,000,000, to meet its obligations during the next 12 months.
Agreement in principle has been reached with the lenders to replace the existing covenants for September 2020, December
2020 and March 2021 with a monthly liquidity test that will be in place between July 2020 and May 2021. This is subject to the
agreement of legal documentation with the lenders which is not yet in place, but which the Directors are confident will be shortly.
Under the Directors’ base case scenario there are no forecast breaches of the new liquidity covenant tests. If revised expectations
for this period were to worsen then the Directors would take the appropriate actions ahead of time to reduce operating costs to
mitigate the likelihood of a breach.
The covenants revert to the existing measures as at June 2021, which under the current base case scenario would be breached
and would need to be waived. The Directors are confident, based on the support of the lenders, that waivers would be granted
however there is a risk that this may not occur.
These conditions, along with the other matters explained in note 1 to the consolidated financial statements and note 2 to the
Company financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the
group’s and company’s ability to continue as a going concern. The group and company financial statements do not include the
adjustments that would result if the group and company are unable to continue as a going concern.
54
Ebiquity plc Audit procedures performed
In concluding there is a material uncertainty, our audit procedures evaluated the Directors’ assessment of the group’s forecast
trading for at least 12 months from the date of approval of the financial statements and the downside scenarios that have been
modelled. We have understood the impact on forecast liquidity and covenant compliance.
In assessing the impact of the above scenarios, which are referred to in note 1 of the financial statements, we performed the
following procedures on the Directors’ assessment that the group and company will continue as a going concern:
• We obtained management’s paper that supports the Board’s assessments and conclusions with respect to the disclosures
provided around going concern;
• We discussed with management the impact assessments applied in the going concern reviews so we could understand and
challenge the rationale for those assumptions, including our knowledge of the business, the sector and wider commentary
available from key customers;
• We obtained the monthly trading results to April 2020, and flash trading results thereafter for 2020 year to date, and
compared to the management’s original and revised forecasts, and considered the impact of these actual results on the future
forecast period;
• We understood the mitigating actions that have and could be taken by management, including suspending dividend payments,
receipt of government support, such as grants and subsidies, and restructuring of headcount;
• We assessed management’s sensitivity scenario, which also includes further potential mitigating actions available, to confirm
they are within management’s control. We challenged management to run further downside scenarios in order to assess the
possible impact;
• We assessed the availability of liquidity resources under different scenarios modelled by management, and assessed
compliance of the associated covenants tests;
• We obtained and read the written confirmation from the lenders that agreement in principle has been reached with the lenders
to replace the existing covenants for September 2020, December 2020 and March 2021 with a monthly liquidity test that will be
in place between July 2020 and May 2021;
• We evaluated additional downside sensitivities and considered the impact on covenants and liquidity headroom; and
• We assessed the disclosures in the Annual report and financial statements relating to going concern, including the material
uncertainties, to ensure they were fair, balanced and understandable and in compliance with IAS 1.
Our audit approach
Context
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made subjective judgements, for example in respect of significant
accounting estimates that involved making assumptions and considering future events that are inherently uncertain.
As in all of our audits we also addressed the risk of management override of internal controls, including evaluating whether there
was evidence of bias by the directors that represented a risk of material misstatement due to fraud.
Overview
• Overall group materiality: £200,000 (2018: £250,000), based on 5% of profit before tax and
highlighted items from continuing operations.
Materiality
• Overall company materiality: £784,000 (2018: £988,000), based on 1% of total assets.
Audit
Scope
• Six reporting units were audited as full scope entities. These units were located in the U.K.,
Germany, France, USA and Australia.
• The USA entities in scope were visited and audited by the Group engagement team.
• The components in Australia, Germany and France were audited by local audit teams.
• Risk of impairment of goodwill and intangible assets (Group).
Key Audit
Matters
• Accounting for contract revenue recognition (Group).
• Going concern consideration for Covid-19 (Group and Company).
•
Impairment of investments (Company).
55
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements Independent auditors’ report continued
to the members of Ebiquity plc
Report on the audit of the financial statements continued
Our audit approach continued
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made subjective judgements, for example in respect of significant
accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all
of our audits we also addressed the risk of management override of internal controls, including evaluating whether there was
evidence of bias by the directors that represented a risk of material misstatement due to fraud.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement (whether
or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy;
the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we
make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to going concern,
described in the Material uncertainty related to going concern section above, we determined the matters described below to be
the key audit matters to be communicated in our report. This is not a complete list of all risks identified by our audit.
Key audit matter
How our audit addressed the key audit matter
Risk of impairment of goodwill
and intangible assets (Group)
We focused on this area because management’s assessment
of the carrying value of goodwill and intangible assets
involves subjective assumptions about the future results
of the business.
The key assumptions applied by management were future
revenue growth, cost assumptions and the discount rate used
as set out in note 10 to the Group financial statements.
We focused on those Cash Generating Units (CGUs) we
considered to carry more judgement because of current year
losses or historical underperformance against budgets, or for
which management’s impairment model gave lower headroom
relative to other CGUs.
The Value In Use (VIU) calculations in relation to the Group’s
China CGU (goodwill of £2,150k) and Media America CGU
(goodwill and intangible assets of £604k) were most sensitive
to changes in key assumptions.
We have evaluated management’s future cash flow
forecasts, which were prepared to a sufficiently detailed
level, including comparing them to the latest Board approved
budgets, testing the integrity of the underlying calculations
and assessing how both internal and external drivers of
performance were incorporated into the projections.
We also challenged the discount rates used by independently
recalculating the cost of capital.
In respect of the China and Media America CGUs, we have
assessed each of the assumptions that have been applied
to the impairment model and agree with the amount of the
impairment that has been recognised.
The Media America business under performed in 2019,
suffering a decline in revenue and a change in senior
management. A revised strategic plan has been developed
and approved by the Board which we have reviewed and
understood the impact of on the 2020 forecast.
For both CGUs, we compared the 2019 financial performance
to budget and understood the reasons for the differences
from the forecasts prepared for the impairment assessment
in the prior year. We also performed sensitivity analysis over
the key drivers of the cash flow forecasts, in particular the
revenue, growth, cost assumptions and discount rate. Having
ascertained the extent of change in those assumptions
that either individually or collectively would be required
for the goodwill and intangible assets to be impaired, we
considered the likelihood of such movement arising in those
key assumptions.
Therefore, we also examined the disclosures made in the
financial statements and concluded that they are appropriate
given the sensitivity of the China and Media America CGU to
changes in assumptions.
56
Ebiquity plc Key audit matter
How our audit addressed the key audit matter
We understood management’s policies and their controls for
recording revenue.
We performed detailed end-to-end walkthroughs of the
finance and operational processes, utilising our understanding
from prior years to reassess the design effectiveness of the key
internal controls and identify changes, if any.
We reviewed a sample of the terms and conditions attached
to revenue contracts and evaluated management’s
judgements used to determine the timing of recognition
of revenue.
We selected a number of contracts to audit, including
those with significant revenue recognised in the year or
with significant contract assets and a further sample on
a random basis.
To assess whether revenue and profit is accurately recorded,
we tested the hours completed on a sample of contracts by
obtaining an understanding from project managers as to the
budgeted hours, challenging the assumptions, evaluating the
outturn of previous estimates and agreeing the actual hours
incurred post-year end to the forecast for the period.
We also assessed how the project managers determined that
the stage of completion was correctly calculated by obtaining
their calculations and agreeing the inputs to supporting
evidence and correspondence with customers. We found
that revenue was recorded appropriately.
To test the timing of contract revenue, we challenged
management's judgements on the completeness of work
for our sample of contracts by checking original contracts,
amendments to contracts, where applicable (e.g. due to
agreed changes in scope), and checking that the contractual
milestones had been reached.
No significant issues were noted from our work.
Accounting for contract revenue recognition (Group)
Income is recognised in accordance with the stage
of completion of the contract activity for the Media,
Analytics & Tech 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 contract asset and where recorded
revenue is less than amounts invoiced to clients, the difference
is classified as contract liability.
Where services are performed by an indeterminate number of
acts over a specific period, revenue is recognised on a straight
line basis over the specific period unless there is evidence that
some other method better represents the stage of completion.
If the outcome of a contract cannot be estimated reliably,
the contract revenue is recognised to the extent of contract
costs incurred that it is probable would be recoverable. Costs
are recognised as an expense in the period in which they are
incurred.
Careful consideration needs to be given to projects open at
year end requiring significant judgement in respect of the
stage of completion and the associated revenue and profit
to be recognised.
The total amount of revenue and profit to be recognised
under a contract can be affected by changes in conditions
and circumstances over time, such as:
• variations to the original contract terms
• cost overruns
• scope changes that require further negotiation and
settlement.
Variations can arise from changing client specifications,
changes to the job based on unforeseen circumstances
(e.g. macroeconomic factors), as well as from inefficiencies
on the part of either party. There can be some uncertainties,
therefore, in determining the amounts to be recovered from
any additional work performed.
The risk is, therefore, that contract revenue is not recognised
in the correct period or that revenue and associated profit
is misstated.
57
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements Independent auditors’ report continued
to the members of Ebiquity plc
Report on the audit of the financial statements continued
Our audit approach continued
Key audit matters continued
Key audit matter
How our audit addressed the key audit matter
Going concern consideration for Covid-19
(Group and Company)
Management consider COVID-19 to be a non-adjusting event
as at the balance sheet date and have made disclosures in
note 34 to the financial statements on that basis.
The ongoing and rapid spread of the disease prompted
reactions that have had an impact on the group. As part
of the review management focussed on the timing of
government interventions, deferral of dividend payments
and the impact from the workforce working from home.
The impact if treated as a non-adjusting event is that the
annual report is prepared assuming no impact, but that the
potential future impact is considered as part of the going
concern review and disclosures only.
The main focus of our work has therefore been in respect
of the post balance sheet event disclosures as well as
management’s going concern assessment due to the
uncertainties created by the impact of Covid-19 on the
business and the group’s compliance with banking covenants.
We understand and agree with the non-adjusting conclusion
made by management.
In assessing the impact of the scenarios set out by
management in their going concern model, we performed
procedures on the Directors’ assessment that the group and
company will be able to continue as a going concern but that
a material uncertainty exists. Please refer to the section
“Material uncertainty related to going concern” above for
details.
With regards to the post balance sheet events disclosure,
we agree with the expected impact as set out by management
in note 34 and consider the disclosures to be adequate.
Key audit matter
How our audit addressed the key audit matter
Impairment of investments (Company)
The investment in subsidiary companies is a material balance
within the Company balance sheet and there is risk of
impairment if the carrying values are deemed to be in excess of
the recoverable amount.
We have reviewed investments for indicators of impairment.
Where indicators of impairment exist, for example where the
investment’s carrying value is in excess of its net assets we
have obtained management's impairment assessment.
We have audited management’s assumptions in the
impairment assessment, and we concur with the conclusion
that no impairment is required as at 31 December 2019, except
for the impairment of investments in relation to Stratigent
LLC which has been recognised in the company’s financial
statements.
58
Ebiquity plc How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the group and the company, the accounting processes and controls,
and the industry in which they operate.
The following matters are considered when determining the scope of the audit by component:
• We identify components which are financially significant to the Group;
• We identify components considered likely to include a significant risk of material misstatement to the Group financial
statements;
• We consider the findings from prior year audits and assess whether it would provide further insight to the Group to revisit
certain territories to provide an update; and
• We consider if there are any other components that contribute a significant amount to key income statement and balance
sheet measures and ensure sufficient coverage of each material line item in the financial statements is obtained through
components in scope.
We also considered locations visited and those out of scope in the prior three years. The scoping calculation is based upon
obtaining sufficient coverage of each financial statement line item, which varies depending on the risk assessment.
The Group operates through subsidiaries in the US, Australia, China, UK, France, Germany and other European countries. There are
four financially significant components being: Ebiquity plc, Ebiquity Associates Ltd, Ebiquity Germany GmbH and Ebiquity SAS; for
the purpose of obtaining required coverage over the Group balances, we have also included in our scope Ebiquity Inc. (incorporated
in USA) and Ebiquity Pty Ltd (incorporated in Australia). The specified procedures had been performed in respect of Ebiquity Italia
S.r.l. using the Group materiality.
The scoping calculation is based upon obtaining sufficient coverage of each financial statement line item, which varies depending
on the risk assessment.
We also considered locations visited and those out of scope in the prior three years. The scoping calculation is based upon
obtaining sufficient coverage of each financial statement line item, which varies depending on the risk assessment.
The Group audit is performed in the UK by the same engagement leader and team as audited components incorporated in the UK;
the German and Australian components have been audited by other network firms; the French component has been audited by
BDO France, local statutory auditor. As part of our audit procedures we have obtained access to the audit files of the components
not directly audited by PwC UK and have reviewed the work performed. In the current year we visited the component in France,
and attended the clearance meeting by conference call in Germany, Australia and France.
59
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements Independent auditors’ report continued
to the members of Ebiquity plc
Report on the audit of the financial statements continued
Our audit approach continued
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and
extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect
of misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements
Company financial statements
Overall materiality
£200,000 (2018: £250,000).
£784,000 (2018: £988,000).
How we determined it
5% of profit before tax and highlighted
items from continuing operations.
1% of total assets.
Rationale for benchmark applied
Based on the benchmarks used in the
annual report, profit before tax and
highlighted items from continuing
operations is the primary measure
used by the shareholders in assessing
the performance of the Group, and is a
generally accepted auditing benchmark.
Based on total assets as the entity holds
all of the Group’s subsidiary investments
and is not a profit generating entity.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality.
The range of materiality allocated across components was between £40,000 and £190,000. Certain components were audited
to a local statutory audit materiality that was also less than our overall group materiality.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £10,000
(Group audit) (2018: £15,000) and £10,000 (Company audit) (2018: £15,000) as well as misstatements below those amounts
that, in our view, warranted reporting for qualitative reasons.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’
report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the
other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this
report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained
in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial
statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based
on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the UK
Companies Act 2006 have been included.
Based on the responsibilities described above and our work undertaken in the course of the audit, ISAs (UK) require us also to
report certain opinions and matters as described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and
Directors’ Report for the year ended 31 December 2019 is consistent with the financial statements and has been prepared
in accordance with applicable legal requirements.
In light of the knowledge and understanding of the group and company and their environment obtained in the course of the audit,
we did not identify any material misstatements in the Strategic Report and Directors’ Report.
60
Ebiquity plc Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ responsibilities in respect of the financial statements set out on page 53,
the directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for
being satisfied that they give a true and fair view. The directors are also responsible for such internal control as they determine
is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the group or the company or to cease operations, or have no realistic alternative
but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the 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.
Other required reporting
Companies Act 2006 exception reporting
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 company, or returns adequate for our audit have not been received
from branches not visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• the company financial statements are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Richard Porter
(Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
20 May 2020
61
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements Consolidated income statement
for the year ended 31 December 2019
Revenue
Project-related costs
Net revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit/(loss)
Finance income
Finance expenses
Net finance costs
Profit/(loss) before taxation
from continuing operations
Taxation (charge)/credit
– continuing operations
Profit/(loss) for the year
– continuing operations
Net (loss)/profit from
discontinued operations
Profit/(loss) for the year
Attributable to:
Equity holders of the parent
Non-controlling interests
Year ended
31 December 2019
Year ended
31 December 2018
as restated (note 1)
Before Highlighted
items
(note 3)
£’000
highlighted
items
£’000
Before Highlighted
items
(note 3)
£’000
highlighted
items
£’000
Total
£’000
Note
2
68,733
(8,857)
59,876
(27,355)
32,521
—
—
—
—
—
68,733
69,368
(8,857)
(8,813)
59,876
60,555
(27,355)
(28,787)
32,521
31,768
4
6
6
(26,354)
(10,330)
(36,684)
(25,426)
6,167
(10,330)
(4,163)
6,342
9
(907)
(898)
—
—
—
9
(907)
(898)
25
(1,176)
(1,151)
—
—
—
—
—
(7,695)
(7,695)
—
—
—
Total
£’000
69,368
(8,813)
60,555
(28,787)
31,768
(33,121)
(1,353)
25
(1,176)
(1,151)
5,269
(10,330)
(5,061)
5,191
(7,695)
(2,504)
7
(1,931)
454
(1,477)
(1,778)
(207)
(1,985)
3,338
(9,876)
(6,538)
3,413
(7,902)
(4,489)
8
—
(1,018)
3,338
(10,894)
(1,018)
(7,556)
2,875
(10,882)
(8,007)
463
(12)
451
3,338
(10,894)
(7,556)
644
4,057
3,568
489
4,057
(1,489)
(9,391)
(845)
(5,334)
(9,374)
(5,806)
(17)
472
(9,391)
(5,334)
Earnings per share – continuing operations
Basic
Diluted
Earnings per share – discontinued operations
Basic
Diluted
9
9
9
9
The notes on pages 67 to 105 are an integral part of these financial statements.
(8.79)p
(8.79)p
(1.28)p
(1.28)p
(6.35)p
(6.35)p
(1.05)p
(1.05)p
62
Ebiquity plc
Consolidated statement of comprehensive income
for the year ended 31 December 2019
Year ended
Year ended
31 December 31 December
2018
£’000
2019
£’000
(Loss) for the year
Other comprehensive (expense)/income:
Items that will not be reclassified subsequently to profit or loss
Exchange differences on translation of overseas subsidiaries
Total other comprehensive (expense)/income for the year
Total comprehensive expense for the year
Attributable to:
Equity holders of the parent
Non-controlling interests
The notes on pages 67 to 105 are an integral part of these financial statements.
(7,556)
(5,334)
(716)
(716)
267
267
(8,272)
(5,067)
(8,723)
(5,539)
451
472
(8,272)
(5,067)
63
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements
Consolidated statement of financial position
as at 31 December 2019
31 December 31 December
2018
£’000
2019
£’000
Note
Non‑current assets
Goodwill
Other intangible assets
Property, plant and equipment
Right-of-use assets
Deferred tax asset
Total non‑current assets
Current assets
Trade and other receivables
Assets held for sale
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Liabilities held for sale
Accruals and contract liabilities
Financial liabilities
Current tax liabilities
Provisions
Lease liabilities
Deferred tax liability
Total current liabilities
Non‑current liabilities
Financial liabilities
Provisions
Lease liabilities
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
10
11
12
13
22
15
16
17
18
16
19
20
7
21
13
22
20
21
13
22
28,409
34,774
6,763
2,563
8,339
986
8,477
1,170
—
979
47,060
45,400
27,586
29,408
—
8,236
35,822
82,882
27,734
8,793
65,935
111,335
(5,575)
—
(7,510)
(4,316)
(9,084)
(10,640)
22
(4,152)
(300)
(1,834)
(272)
(2,822)
(1,358)
(570)
—
(323)
(21,195)
(27,539)
(13,868)
(34,934)
(387)
(7,756)
(1,036)
(67)
—
(1,281)
(23,047)
(36,282)
(44,242)
(63,821)
38,640
47,514
24
20,029
19,778
46
4,428
12,958
37,461
1,179
38,640
44
5,144
21,556
44,522
992
47,514
The notes on pages 67 to 105 are an integral part of these financial statements. The financial statements on pages 62 to 66 were
approved and authorised for issue by the Board of Directors on 19 May 2020 and were signed on its behalf by:
Alan Newman
Director
Ebiquity plc. Registered No. 03967525
20 May 2020
64
Ebiquity plc
Consolidated statement of changes in equity
for the year ended 31 December 2019
Note
24
3
28
31 December 2017
(Loss)/profit for the year
Other comprehensive income
Total comprehensive
income/(expense) for the year
Shares issued for cash
Share options charge
Dividends paid to shareholders
Dividends paid to
non-controlling interests
31 December 2018
(Loss)/profit for the year
Other comprehensive expense
Total comprehensive
(expense)/income for the year
Shares issued for cash
Share options charge
24
3
Acquisition of minority interest
Dividends paid to shareholders
28
Dividends paid to
non-controlling interests
31 December 2019
Ordinary
shares
£’000
19,549
—
—
—
229
—
—
—
19,778
—
—
—
251
—
—
—
—
20,029
21
—
—
—
23
—
—
—
44
—
—
—
2
—
—
—
—
46
Share
premium
£’000
Other
reserves1
£’000
Equity
attributable
Retained to owners of
the parent
earnings
£’000
£’000
Non-
controlling
interests
£’000
4,877
27,495
51,942
1,040
—
267
(5,806)
(5,806)
—
267
472
—
Total
equity
£’000
52,982
(5,334)
267
267
(5,806)
(5,539)
472
(5,067)
—
—
—
—
—
394
252
394
(527)
(527)
—
—
—
—
—
(520)
5,144
21,556
46,522
—
(8,007)
(8,007)
(716)
—
(716)
992
451
—
252
394
(527)
(520)
47,514
(7,556)
(716)
(716)
(8,007)
(8,723)
451
(8,272)
—
—
—
—
—
—
195
(252)
(534)
253
195
(252)
(534)
—
—
4,428
12,958
37,461
—
—
(83)
—
253
195
(335)
(534)
(181)
1,179
(181)
38,640
1. Includes a credit of £3,667,000 (31 December 2018: £3,667,000) in the merger reserve, a gain of £2,239,000 (31 December 2018: £2,955,000)
recognised in the translation reserve, and is partially offset by a debit balance of £1,478,000 (31 December 2018: £1,478,000) in the ESOP
reserve. Refer to note 25 for further details.
The notes on pages 67 to 105 are an integral part of these financial statements.
65
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements
Year ended
Year ended
31 December 31 December
2018
£’000
2019
£’000
Note
29
5,657
7,631
(727)
(1,093)
9
(1,345)
3,594
—
24,845
(335)
(648)
(2,024)
(1,211)
25
(1,952)
4,611
—
—
—
(858)
(643)
(1,141)
20,627
(2,642)
253
—
(20,000)
(204)
(1,192)
(534)
(518)
—
(22,195)
2,026
6,414
(204)
8,236
252
2,000
(1,250)
(70)
—
(527)
(190)
(4)
211
2,180
4,325
(91)
6,414
8
20
20
12
11
20
20
13
28
17
17
Consolidated statement of cash flows
for the year ended 31 December 2019
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
Disposal of subsidiaries
Payments to acquire non-controlling interest
Payments in respect of contingent consideration
Purchase of property, plant and equipment
Purchase of intangible assets
Net cash generated by/(used in) investing activities
Cash flows from financing activities
Proceeds from issue of share capital (net of issue costs)
Proceeds from bank borrowings
Repayment of bank borrowings
Bank loan fees paid
Repayment of lease liabilities
Dividends paid to shareholders
Dividends paid to non-controlling interests
Capital repayment of finance leases
Net cash flow (used in)/generated by financing activities
Net increase in cash, cash equivalents and bank overdrafts
Cash, cash equivalents and bank overdraft at beginning of year
Effects of exchange rate changes on cash and cash equivalents
Group cash and cash equivalents at the end of the year
The notes on pages 67 to 105 are an integral part of these financial statements.
66
Ebiquity plc
Notes to the consolidated financial statements
for the year ended 31 December 2019
1. Accounting policies
General information
Ebiquity plc (the ‘Company’) and its
subsidiaries (together, the ‘Group’)
exists to help brands optimise return
on investment from their marketing
spend, working with many of the
world’s leading advertisers to improve
marketing outcomes and enhance
business performance. The Group
has 18 offices.
The Company is a public limited
company, which is listed on the
London Stock Exchange’s AIM and is
incorporated and domiciled in the UK.
The address of its registered office is
Chapter House, 16 Brunswick Place,
London N1 6DZ.
Basis of preparation
The consolidated financial statements
have been prepared in accordance
with International Financial Reporting
Standards, International Accounting
Standards and IFRS IC Interpretations
(collectively ‘IFRSs’) issued by the
International Accounting Standards
Board (‘IASB’) as adopted by the
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 Group meets its day-to-day
working capital requirements through
its cash reserves and borrowings,
described in note 20. As at 31 December
2019, the Group had cash balances of
£8,236,000 and undrawn bank facilities
available of £10,000,000, and was
cash generative and within its banking
covenants.
In assessing the going concern of the
Group, the Directors have considered
the Group’s forecasts and projections,
taking account of reasonably possible
changes in trading performance and the
Group’s cash flows, liquidity and bank
facilities.
In accordance with the guidance issued
by the Financial Reporting Council,
the Directors have given specific
consideration to the potential impact of
the COVID-19 pandemic on the global
economy, business environment in which
the Group operates, and its business in
particular. As at the date of this annual
report this impact remained highly
uncertain and difficult to predict. The
Directors have accordingly considered
a range of scenarios relating to the
impact of COVID-19 which they believe
are plausible in the context of the
Group’s clients, services and operations
and assessed their impact on the
Group’s cash flows and liquidity for a
period of 12 months from the date of
approval of these financial statements.
In this assessment, the Directors had
regard to the potential reduction in
receipts from clients that may arise
from the COVID-19 disruption and
to options that may be available to
the Group to mitigate any resulting
negative impact on its cash flows and
liquidity. These include: (i) draw down
of all available borrowing facilities;
(ii) reductions in its operating and
capital expenditure; and (iii) benefit of
measures taken by governments and
central banks in the countries in which
the Group operates to assist businesses
and employees, directly or indirectly,
to meet their financial obligations and
maintain their business operations
during the period of the pandemic.
As a result of these scenarios,
the Directors consider that the
Group will have sufficient liquidity
within its existing bank facilities,
totalling £24,000,000, to meet its
obligations during the next 12 months.
The Directors consulted with the
lenders, Barclays and Royal Bank of
Scotland, to negotiate covenant waivers
where required in order to negate the
risk of any future covenant breaches.
The existing covenants remain in place
for the 12 months to March 2020 and
June 2020. The March 2020 covenants
have already been achieved and there
are no concerns over meeting the June
2020 covenants; revenue would have to
reduce by 21% between May and June
2020 compared to the latest prudent
expectations for a breach to result.
Agreement in principle has been
reached with the lenders to replace the
existing covenants for September 2020,
December 2020 and March 2021 with
a monthly liquidity test that will be in
place between July 2020 and May 2021.
This is subject to the agreement of legal
documentation with the lenders which is
not yet in place, but which the Directors
are confident will be shortly. Under the
Directors’ base case scenario there
are no forecast breaches of the new
liquidity covenant tests. The Directors’
downside scenario indicates that the
covenant test at May 2021 is the most
sensitive but is not breached. If revised
expectations for this period were to
worsen then the Directors would take
the appropriate actions ahead of time
to reduce operating costs to mitigate
the likelihood of a breach.
The covenants revert to the existing
measures as at June 2021, which under
the current base case scenario would be
breached and would need to be waived.
The Directors are confident, based on
the support of the lenders that waivers
would be granted, however, there is a
risk that this may not occur. This, and
the risk that the legal documentation
is not agreed to replace the existing
covenants for September 2020 to May
2021, represent a material uncertainty
that casts significant doubt on the
Group's ability to continue to operate
as a going concern. The financial
statements do not include the
adjustments that would result if the
Group were unable to continue as a
going concern.
The financial statements have
been prepared under the historical
cost convention, as modified by the
revaluation of financial assets and
financial liabilities at fair value through
profit or loss.
The consolidated financial statements
are presented in pounds sterling and
rounded to the nearest thousand.
The principal accounting policies
adopted in these consolidated financial
statements are set out below. These
policies have been consistently applied
to all periods presented, unless
otherwise stated.
67
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements Notes to the consolidated financial statements continued
for the year ended 31 December 2019
1. Accounting policies continued
Basis of preparation continued
On 13 February 2018, the Group agreed
to sell its Advertising Intelligence
(‘AdIntel’) business to Nielsen
Media Research Limited (‘Nielsen’),
a subsidiary of Nielsen Holdings plc;
the transaction was approved as at
31 December 2018 and completion
took place on 2 January 2019.
On 19 March 2018, the Group entered
into an agreement to sell the business
assets of its Reputation division;
completion took place on 31 March 2018.
Collectively, these divisions formed the
Intel segment. Accordingly, the profit
on disposal arising in the current year
and the results in the comparative year
of this segment have been presented
within discontinued operations in
the income statement. The assets
and liabilities of the AdIntel business
were reported as held for sale in the
statement of financial position in the
comparative year.
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.
68
Business combinations
and goodwill
The Group applies the acquisition
method to account for business
combinations. The cost of the
acquisition is measured as the
aggregate of the fair values, at the date
of exchange, of assets given, liabilities
assumed, and equity instruments issued
by the Group in exchange for control of
the acquiree. The acquiree’s identifiable
assets, liabilities and contingent
liabilities are recognised initially at
their fair value at the acquisition date.
Goodwill is initially measured at cost,
being the excess of the aggregate of
the consideration transferred over the
fair value of net identifiable assets
acquired and liabilities assumed.
The determination of the fair values of
acquired assets and liabilities is based
on judgement, and the Directors have
12 months from the date of the business
combination to finalise the allocation of
the purchase price.
Goodwill is allocated to each of
the Group’s cash-generating units
expected to benefit from the synergies
of the combination. Following initial
recognition, goodwill is measured at
cost less any accumulated impairment
losses. Goodwill is reviewed for
impairment at least annually or
whenever there is evidence that it
may be required. Any impairment
is recognised immediately in the
income statement and is not
subsequently reversed.
Goodwill arising on the acquisition of
the Group’s interest in an associate,
being the excess of the cost of
acquisition over the Group’s share of
the fair values of the identifiable net
assets of the associate, is included
within the carrying amount of the
investment. The non-controlling
shareholders’ interest in the acquiree is
initially measured at the non-controlling
interest’s proportion of the net fair
value of the assets, liabilities and
contingent liabilities recognised.
Where transactions with non-controlling
parties do not result in a change in
control, the difference between the
fair value of the consideration paid or
received and the amount by which the
non-controlling interest is adjusted,
is recognised in equity.
Where the consideration for the
acquisition includes a contingent
consideration arrangement, this is
measured at fair value at the acquisition
date. Any subsequent changes to
the fair value of the contingent
consideration are adjusted against
the cost of the acquisition if they occur
within the measurement period and
only if the changes relate to conditions
existing at the acquisition date.
Any subsequent changes to the fair
value of the contingent consideration
after the measurement period are
recognised in the income statement
within administrative expenses as a
highlighted item. The carrying value
of contingent consideration at the
statement of financial position date
represents management’s best
estimate of the future payment at that
date, based on historical results and
future forecasts.
All costs directly attributable to the
business combination are expensed
as incurred and recorded in the income
statement within highlighted items.
Revenue recognition
Revenue from providing services is
recognised in the accounting period
in which the services are rendered.
For fixed-price contracts, revenue is
recognised based on the actual service
provided to the end of the reporting
period as a proportion of the total
services to be provided because the
customer receives and uses the benefits
simultaneously. This is determined
based on the actual labour hours
spent relative to the total expected
labour hours.
Estimates of revenues, costs or extent
of progress toward completion are
revised if circumstances change.
Any resulting increases or decreases
in estimated revenues or costs are
reflected in profit or loss in the period
in which the circumstances that give
rise to the revision become known
by management.
In the case of fixed-price contracts,
the customer pays the fixed amount
based on a payment schedule. If the
services rendered by the Company
exceed the payment, a contract asset
is recognised. If the payments exceed
the services rendered, a contract liability
is recognised.
Ebiquity plc Finance income and expenses
Finance income and expense
represents interest receivable and
payable. Finance income and expense
is recognised on an accruals basis,
based on the interest rate applicable
to each bank or loan account.
Foreign currencies
For the purposes of the consolidated
financial statements, the results
and financial position of each Group
company are expressed in pounds
sterling, which is the functional currency
of the Company, and the presentation
currency for the consolidated
financial statements.
In preparing the financial statements of
the individual companies, transactions
in currencies other than the entity’s
functional currency (foreign currencies)
are recorded at the rates of exchange
prevailing on the dates of transactions.
At each year-end date, monetary assets
and liabilities that are denominated
in foreign currencies are retranslated
at the rates prevailing on the
year-end date.
For the purpose of presenting
consolidated financial statements,
the assets and liabilities of the Group’s
foreign operations are translated
at exchange rates prevailing on the
year-end date. Income and expense
items are translated at the average
exchange rate for the period, which
approximates to the rate applicable
at the dates of the transactions.
The exchange differences arising from
the retranslation of the year-end
amounts of foreign subsidiaries and
the difference on translation of the
results of those subsidiaries into the
presentational currency of the Group
are recognised in the translation
reserve. All other exchange differences
are dealt with through the consolidated
income statement.
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 amortisation of
purchased intangibles.
The non-recurring items include
the costs associated with potential
acquisitions (where formal discussion
is undertaken), completed acquisitions
and disposals, and their subsequent
integration into/separation from the
Group, adjustments to the estimates
of contingent consideration on
acquired entities, asset impairment
charges, management restructuring
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 recognises
liabilities for anticipated taxes based
on the best information available and
where the anticipated liability is both
probable and estimable. Where the final
outcome of such matters differs from
the amount recorded, any differences
may impact the income tax and
deferred tax provisions in the period in
which the final determination is made.
Tax is recognised in the consolidated
income statement except to the extent
that it relates to items recognised
directly in equity or other comprehensive
income, in which case it is recognised
in equity.
Using the liability method, deferred tax
is provided on all temporary differences
between the carrying amounts of
assets and liabilities for financial
reporting purposes and their tax bases,
except for differences arising on:
• the initial recognition of goodwill;
• the initial recognition of an asset
or liability in a transaction which is
not a business combination and at
the time of the transaction affects
neither accounting nor taxable profit;
and
•
investments in subsidiaries and
jointly controlled entities where the
Group is able to control the timing of
the reversal of the difference and it is
probable that the difference will not
reverse in the foreseeable future.
Recognition of deferred tax assets is
restricted to those instances where it
is probable that taxable profit will be
available against which the difference
can be utilised. The recognition of
deferred tax assets is reviewed at each
year-end date.
The amount of the asset or liability is
determined using tax rates that have
been enacted or substantively enacted
by the year-end date and are expected
to apply when the deferred tax
liabilities/assets are settled/recovered.
Deferred tax assets and liabilities are
offset when the Group has a legally
enforceable right to offset current tax
assets and liabilities and the deferred
tax assets and liabilities relate to taxes
levied by the same tax authority on
either:
• the same taxable Group company; or
• different Group entities which intend
either to settle current tax assets
and liabilities on a net basis, or to
realise the assets and settle the
liabilities simultaneously, in each
future period in which significant
amounts of deferred tax assets or
liabilities are expected to be settled
or recovered.
69
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements Notes to the consolidated financial statements continued
for the year ended 31 December 2019
1. Accounting policies continued
Taxation continued
Taxation has been allocated to the
discontinued operation by taking
each element in turn and attributing
the appropriate portion accordingly.
This includes the allocation of
adjustments to profit before tax to
determine the profits chargeable to
corporation tax and then applying the
taxation charge from each jurisdiction
respectively. For deferred taxation, each
asset and liability was reviewed and the
AdIntel related items were carved out
from the Group items.
Property, plant and equipment
Property, plant and equipment is stated
at cost less accumulated depreciation
and any recognised impairment loss.
Depreciation is charged so as to
write off the cost of assets over their
estimated useful economic lives.
The rates applied are as follows:
Motor vehicles
Fixtures, fittings,
and equipment
25% per annum
reducing balance
Five to 14 years
straight-line;
or 25% per annum
reducing balance
Computer equipment Two to four years
straight-line
Leasehold land
and buildings
improvements
Over the shorter
of the life or the
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. During the year,
the Group generated £1,203,000 of
internally generated intangible assets
(31 December 2018: £1,084,000).
An internally generated intangible asset
arising from the Group’s development
expenditure is recognised only if all of
the following conditions are met:
•
it is technically feasible to develop
the asset so that it will be available
for use or sale;
• adequate resources are available to
complete the development and to
use or sell the asset;
70
• there is an intention to complete the
asset for use or sale;
• the Group is able to use or sell the
intangible asset;
•
it is probable that the asset created
will generate future economic
benefits; and
• the development cost of the asset
can be measured reliably.
Internally generated intangible assets
are amortised on a straight-line basis
over their useful lives. Amortisation
commences when the asset is available
for use and useful lives range from one
to five years. The amortisation expense
is included within administrative
expenses. Where an internally
generated intangible asset cannot be
recognised, development expenditure is
recognised as an expense in the period
in which it is incurred.
Purchased intangible assets
Externally acquired intangible
assets are initially recognised at cost
and subsequently amortised on a
straight-line basis over their useful
economic lives, which vary from three
to 10 years. The amortisation expense
is included as a highlighted item within
the administrative expenses line in the
income statement.
Intangible assets recognised on business
combinations are recorded at fair
value at the acquisition date using
appropriate valuation techniques where
they are separable from the acquired
entity or give rise to other contractual/
legal rights. The significant intangibles
recognised by the Group are customer
relationships, which are amortised on a
straight-line basis over a typical useful
life of 10 years.
Computer software
Purchased computer software
intangible assets are amortised on a
straight-line basis over their useful lives,
which vary from two to eight years.
Impairment
Assets that have an indefinite useful life
are not subject to amortisation and are
tested annually for impairment.
For the purpose of impairment testing,
goodwill is grouped at the lowest
levels for which there are separately
identifiable cash flows, known as
cash-generating units. If the recoverable
amount of the cash-generating unit is
less than the carrying amount of the
unit, the impairment loss is allocated
first to reduce the carrying amount of
any goodwill allocated to the unit and
then to the other assets of the unit
pro-rata on the basis of the carrying
amount of each asset in the unit.
Assets that are subject to amortisation
or depreciation are reviewed for
impairment whenever events or
changes in circumstances indicate
that the carrying amount may not be
recoverable. If any such condition exists,
the recoverable amount of the asset
is estimated in order to determine the
extent, if any, of the impairment loss.
Where the asset does not generate cash
flows that are independent from other
assets, estimates are made of the cash
flows of the cash-generating unit to
which the asset belongs.
Recoverable amount is the higher of fair
value, less costs to sell, and value-in-use.
In assessing value-in-use, estimated
future cash flows are discounted to their
present value using a pre-tax discount
rate appropriate to the specific asset or
cash-generating unit.
If the recoverable amount of an asset
or cash-generating unit is estimated
to be less than its carrying amount,
the carrying value of the asset or
cash-generating unit is reduced to
its recoverable amount. Impairment
losses are recognised immediately
in highlighted items in the income
statement.
In respect of assets other than goodwill,
an impairment loss is reversed if there
has been a change in the estimates
used to determine the recoverable
amount. An impairment loss is reversed
only to the extent that the asset’s
carrying amount does not exceed the
carrying amount that would have
been determined, net of depreciation
or amortisation, if no impairment loss
had been recognised.
Ebiquity plc
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 recognised in the Group’s statement
of financial position when the Group
becomes a party to the contractual
provisions of the instrument.
Financial assets
The Group classifies its financial assets
as ‘loans and receivables’. Loans and
receivables are non-derivative financial
assets with fixed or determinable
payments that are not quoted in an
active market. They arise principally
through the provision of goods
and services to customers (trade
receivables), but also incorporate other
types of contractual monetary assets.
They are initially recognised at fair
value plus transaction costs that are
directly attributable to their acquisition
or issue, and are subsequently carried
at amortised cost using the effective
interest rate method, less provision for
impairment.
Impairment provisions are recognised
when there is objective evidence (such
as significant financial difficulties on
the part of the counterparty or default
or significant delay in payment) that
the Group will be unable to collect all
of the amounts due, the amount of
such a provision being the difference
between the net carrying amount and
the present value of the future expected
cash flows associated with the impaired
receivable. For trade receivables, which
are reported net, such provisions are
recorded in a separate allowance
account with the loss being recognised
within 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 recognised at fair value net of
directly attributable transaction costs
incurred and subsequently measured
at amortised cost using the effective
interest method. The difference
between the proceeds received net of
transaction costs and the redemption
amount is amortised over the period
of the borrowings to which they relate.
The revolving credit facility is considered
to be a long-term loan.
Trade and other payables are initially
recognised at their nominal value, which
is usually the original invoiced amount.
Leases
Prior to the adoption of IFRS 16 on
1 January 2019, the Group accounted for
leases in accordance with the principles
of IAS 17 'Leases'. Where substantially
all of the risks and rewards incidental to
ownership of a leased asset have been
transferred to the Group (a ‘finance
lease’), the asset is treated as if it had
been purchased outright. The amount
initially recognised as an asset is the
lower of the fair value of the leased
property and the present value of the
minimum lease payments payable over
the term of the lease. The corresponding
lease commitment is shown as a liability.
Lease payments are analysed between
capital and interest. The interest
element is charged to the income
statement over the period of the lease
and is calculated so that it represents a
constant proportion of the lease liability.
The capital element reduces the balance
owed to the lessor.
Where substantially all of the risks and
rewards incidental to ownership are
retained by the lessor (an ‘operating
lease’), the total rentals payable under
the lease are charged to the income
statement on a straight-line basis
over the lease term. The aggregate
benefit of lease incentives is recognised
as a reduction of the rental expense
over the lease term on a straight-line
basis. The land and buildings elements
of property leases are considered
separately for the purposes of lease
classification.
Share capital
Equity instruments issued by the
Group are recorded at the amount
of the proceeds received, net of direct
issuance costs.
Executive Share Option Plan
(‘ESOP’)
As the Company is deemed to have
control of its ESOP trust, it is treated
as a subsidiary and consolidated for
the purposes of the Group financial
statements. The ESOP’s assets (other
than investments in the Company’s
shares), liabilities, income and expenses
are included on a line-by-line basis in the
Group financial statements. The ESOP’s
investment in the Company’s shares
is deducted from shareholders’ equity
in the Group statement of financial
position as if they were treasury shares.
Share-based payments
Where equity-settled share options are
awarded to employees, the fair value
of the options at the date of grant is
charged to the income statement over
the vesting period with a corresponding
increase recognised in retained
earnings. Fair value is measured using
an appropriate valuation model.
Non-market vesting conditions are
taken into account by adjusting the
number of equity investments expected
to vest at each year-end date so that,
ultimately, the cumulative amount
recognised over the vesting period is
based on the number of options that
eventually vest. A charge is made
irrespective of whether the market
vesting conditions are satisfied.
The cumulative expense is not adjusted
for failure to achieve a market
vesting condition.
Where there are modifications to
share-based payments that are
beneficial to the employee, then as
well as continuing to recognise the
original share-based payment charge,
the incremental fair value of the
modified share options as identified
at the date of the modification is also
charged to the income statement
over the remaining vesting period.
Where the Group cancels share options
and identifies replacement options,
this arrangement is also accounted for
as a modification.
71
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements Notes to the consolidated financial statements continued
for the year ended 31 December 2019
1. Accounting policies continued
Share-based payments continued
The grant by the Company of options
over its equity instruments to the
employees of subsidiary undertakings
in the Group is treated as a capital
contribution.
The fair value of employee services
received, measured by reference to the
grant date fair value, is recognised over
the vesting period as an increase to
investment in subsidiary undertakings,
with a corresponding credit to equity in
the parent entity financial statements.
Provisions
Provisions, including provisions for
onerous lease costs, are recognised
when the Group has a present legal
or constructive obligation as a result
of past events, it is probable that an
outflow of resources will be required
to settle that obligation and the
amount can be reliably estimated.
Provisions are not recognised for future
operating losses.
Provisions are measured at the
Directors’ best estimate of the
expenditure required to settle the
obligation at the year-end date. If the
effect of the time value of money is
material, provisions are determined by
discounting the expected future cash
flows at a pre-tax rate which reflects
current market assessments of the time
value of money and, where appropriate,
the risks specific to the obligations.
Retirement benefits
For defined contribution pension
schemes, the Group pays contributions
to privately administered pension
plans on a voluntary basis. The Group
has no further payment obligations
once the contributions have been
paid. Contributions are charged to the
income statement in the year to which
they relate.
Dividend distribution
Dividend distribution to the Company’s
shareholders is recognised as a
liability in the Group’s financial
statements in the period in which
the dividends are approved by the
Company’s shareholders.
72
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.
Critical accounting estimates include
the terminal growth rate used in
impairment assessments, inputs to
share option accounting fair value
models and amounts to capitalise as
intangible assets. These estimates are
reached with reference to historical
experience, supporting detailed
analysis and, in the case of impairment
assessments and share option
accounting, external economic factors.
Critical accounting judgements
include the treatment of events after
the reporting period as adjusting or
non-adjusting and the determination
of segments for segmental reporting,
based on the reports reviewed by the
Executive Directors that are used
to make strategic decisions. These
judgements are determined at a Board
level based on the status of strategic
initiatives of the Group.
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 10
and 11 to the consolidated financial
statements.
Contingent consideration
The Group has recorded liabilities for
contingent consideration on acquisitions
made in the current and prior periods.
The calculation of the contingent
consideration liability requires
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 consideration
after the measurement period are
recognised 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.
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.
Ebiquity plc Adoption of new standards and interpretations
On 1 January 2019, the Group adopted the following amendments which are effective for accounting periods beginning on or after
1 January 2019. IFRS 16 has been applied in these financial statements using the modified retrospective method, meaning the
comparatives have not been restated to reflect the effects of IFRS 16.
On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as
‘operating leases’ under the principles of IAS 17 'Leases'. These liabilities were measured at the present value of the remaining
lease payments, discounted using the lessee’s incremental borrowing rate as of 1 January 2019. The weighted average lessee’s
incremental borrowing rate applied to the lease liabilities on 1 January 2019 was 3.17%.
IFRS 16 ‘Leases’ (effective on or after 1 January 2019). This standard replaces IAS 17 ‘Leases’ and related interpretations and
sets out the principles for the recognition, measurement, presentation and disclosure of leases for both the lessee and the lessor.
The standard addresses the definition of a lease, recognition and measurement of leases, and it establishes principles for reporting
useful information to users of financial statements about the leasing activities of both lessees and lessors. A key change arising
from IFRS 16 is that most operating leases will be accounted for on the statement of financial position for lessees. The operating
lease charge is replaced by a depreciation charge and an interest charge. 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.
Reconciliation of operating lease commitments as at 31 December 2018 to lease liabilities recognised as at 1 January 2019:
Operating lease commitments disclosed as at 31 December 2018
Discounted using the lessee’s incremental borrowing rate of 3.17% at the date of initial application
(Less): short-term leases not recognised as a liability
(Less): leases part of the AdIntel sale
Add: contracts reassessed as lease contracts
(Less): change in lease term
Lease liabilities recognised as at 1 January 2019
Of which are:
Current lease liabilities
Non-current lease liabilities
Total
£’000
8,351
8,095
(554)
(1,429)
56
(417)
5,751
969
4,782
5,751
The standard requires the Group to recognise a ‘right-of-use’ asset, representing the right to use the underlying asset, and a
corresponding lease liability, representing the obligation to make lease payments, on its statement of financial position, for almost
all lease contracts.
The impact on the income statement is that former operating lease expenses are replaced by depreciation and interest,
thereby improving EBITDA and operating profit. Total expenses (depreciation of right-of-use assets and interest on lease
liabilities) are typically higher in the earlier years of a lease and lower in the later years, in comparison with former accounting
for operating leases.
The main impact on the statement of cash flows is higher cash flows from operating activities, since cash payments for the
principal part of the lease liability are classified in the net cash flow from financing activities.
The tax effect from the adjustments from IFRS 16 have been measured and recognised accordingly.
73
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2019
1. Accounting policies continued
Adoption of new standards and interpretations continued
The change in accounting policy has impacted the primary statements as follows:
Operating lease rentals
Depreciation charge
Interest expense
Highlighted items
Right-of-use assets
Impairment of right-of-use assets
Lease liabilities
Accruals
Other debtors
Deferred tax asset
Cash flows from operating activities
Cash flows from financing activities
Total impact
Income
statement
debit/
(credit)
Statement of
financial
position
debit/
(credit)
Cash flow
statement
inflow/
(outflow)
(1,437)
1,595
253
462
—
—
—
—
—
(152)
—
—
721
—
(1,595)
(253)
—
10,576
(642)
(9,337)
952
(574)
152
—
—
(721)
—
—
—
—
—
—
—
—
—
—
1,192
(1,192)
—
Accounting policy for leases
The Group has various lease arrangements for buildings, cars, and IT equipment. Lease terms are negotiated on an individual
basis locally. This results in a wide range of different terms and conditions. At the inception of a lease contract, the Group assesses
whether the contract conveys the right to control the use of an identified asset for a certain period in exchange for a consideration,
in which case it is identified as a lease. The Group then recognises a right-of-use asset and a corresponding lease liability at the
lease commencement date. Lease-related assets and liabilities are measured on a present value basis. Lease-related assets
and liabilities are subjected to re-measurement when either terms are modified or lease assumptions have changed. Such an
event results in the lease liability being re-measured to reflect the measurement of the present value of the remaining lease
payments, discounted using the discount rate at the time of the change. The lease assets are adjusted to reflect the change in
the re-measured liabilities.
Right‑of‑use assets:
Right-of-use assets include the net present value of the following components:
• the initial measurement of the lease liability;
•
•
lease payments made before the commencement date of the lease;
initial direct costs; and
• costs to restore.
The right-of-use assets are reduced for lease incentives relating to the lease. The right-of-use assets are depreciated on a
straight-line basis over the duration of the contract. In the event that the lease contract becomes onerous, the right-of-use
asset is impaired for the part which has become onerous.
Lease liabilities:
Lease liabilities include the net present value of the following components:
• fixed payments excluding lease incentive receivables;
• future contractually agreed fixed increases; and
• payments related to renewals or early termination, in case options to renew or for early termination are reasonably certain
to be exercised.
74
Ebiquity plc
The lease payments are discounted using the interest rate implicit in the lease. If such rate cannot be determined, the lessee’s
incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain
an asset of similar value in a similar economic environment with similar terms and conditions. The discount rate that is used to
calculate the present value reflects the interest rate applicable to the lease at inception of the contract. Lease contracts entered
into in a currency different to the local functional currency are subjected to periodic foreign currency revaluations which are
recognised in the income statement in net finance costs.
The lease liabilities are subsequently increased by the interest costs on the lease liabilities and decreased by lease payments made.
Presentational change in income statement
During the year, the Group changed its accounting policy with respect to the classification of costs previously included within
cost of sales. Cost of sales historically comprised external production costs, direct salary, commission and freelancer costs. The
Group now records external production costs within a new cost line named project-related costs. On project-related costs being
deducted from revenue, the result is net revenue. Direct salary, commission and freelancer costs remain to be recorded within
costs of sales which is deducted from net revenue to get to gross profit.
The Group believes that this revised classification is more appropriate for the continuing consultancy-based business.
The impact of this voluntary change in accounting policy is purely presentational. There is no change to gross profit or operating
profit in the consolidated financial statements and there are no further impacts in the consolidated financial statements.
The comparative income statement, for the year ended 31 December 2018, has been restated to reflect the change in accounting
policy as detailed above.
The change reflects a reclassification of external production costs of £8,813,000 to project-related costs, with net revenue of
£60,555,000 resulting. Sales commission, direct salary costs and freelancer costs of £28,787,000 are then included within cost of
sales, with gross profit of £31,768,000 resulting. This is no change from the gross profit reported in the 2018 financial statements.
Administrative expenses remain unchanged and therefore the resulting underlying operating profit remains at £6,342,000.
The impact of the change in accounting policy is shown in the table below:
Revenue
Project-related costs
Net revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
Year ended 31 Dec 2018
Before
highlighted Highlighted
items
£’000
items
£’000
69,368
—
—
(37,600)
31,768
(25,426)
6,342
—
—
—
—
—
(7,695)
(7,695)
Total
£’000
69,368
—
—
69,368
(8,813)
60,555
(37,600)
(28,787)
31,768
31,768
(33,121)
(25,426)
(1,353)
6,342
—
—
—
—
—
(7,695)
(7,695)
Year ended 31 Dec 2018
(reclassified)
Before
highlighted Highlighted
items
£’000
items
£’000
Impact
of re-
classification
Total
£’000
69,368
Total
£’000
—
(8,813)
(8,813)
60,555
60,555
(28,787)
8,813
31,768
(33,121)
(1,353)
—
—
—
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, Analytics & Tech and
Discontinued operations:
• Media includes our Media Performance, Media Management and Contract Compliance services;
• Analytics & Tech consists of our Advanced Analytics, MarTech and AdTech services; and
• Discontinued operations comprise Intel, the advertising monitoring service and the Reputation management and
research services.
The Executive Directors are the Group’s chief operating decision-maker. They assess the performance of the operating segments
based on operating profit before highlighted items. This measurement basis excludes the effects of non-recurring expenditure
from the operating segments such as restructuring costs and purchased intangible amortisation. The measure also excludes the
effects of equity-settled share-based payments. Interest income and expenditure are not allocated to segments, as this type of
activity is driven by the central treasury function, which manages the cash position of the Group.
75
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2019
2. Segmental reporting continued
The segment information provided to the Executive Directors for the reportable segments for the year ended 31 December 2019
is as follows:
Year ended 31 December 2019
Analytics &
Tech
£’000
Media
£’000
Reportable
segments Unallocated
£’000
£’000
Discontinued
operations
£’000
Revenue
Operating profit/(loss) before highlighted items
Total assets
54,585
11,845
69,382
14,148
966
68,733
12,811
11,581
80,963
—
(6,644)
1,919
—
—
—
Unsatisfied long-term contracts
The following table shows unsatisfied performance obligations results from long-term contracts:
Total
£’000
68,733
6,167
82,882
Year ended
Year ended
31 December 31 December
2018
£’000
2019
£’000
Aggregate amount of the transaction price allocated to long-term
contracts that are partially or fully unsatisfied as at 31 December 2019
304
2,152
It is expected that 97% of the transaction price allocated to the unsatisfied contracts as of 31 December 2019 will be recognised
during the next reporting period (31 December 2018: 68%); the remaining 3% will be recognised in the 2021 financial year
(31 December 2018: 32% to be recognised in 2020).
Significant changes in contract assets and liabilities
Contract assets have increased from £8,003,000 to £9,366,000 and contract liabilities have increased from £3,979,000 to
£4,635,000 from 31 December 2018 to 31 December 2019.
Year ended 31 December 2018
Revenue
Operating profit/(loss) before highlighted items
Total assets
Media
£’000
54,179
12,073
60,832
Analytics &
Tech
£’000
Reportable
segments Unallocated
£’000
£’000
15,189
1,401
14,176
69,368
13,474
75,008
Discontinued
operations
£’000
—
20,260
988
(7,129)
8,593
Total
£’000
89,628
7,333
27,734
111,335
A reconciliation of segment operating profit before highlighted items to total profit before tax is provided below:
Year ended
Year ended
31 December 31 December
2018
£’000
2019
£’000
Reportable segment operating profit before highlighted items
Unallocated costs1:
Staff costs
Property costs
Exchange rate movements
Other administrative expenses
Operating profit before highlighted items
Highlighted items (note 3)
Operating loss
Net finance costs
(Loss) before tax
1. Unallocated costs comprise central costs that are not considered attributable to the segments.
12,811
13,474
(3,428)
(4,794)
(1,513)
(208)
(1,495)
6,167
(10,330)
(4,163)
(898)
(322)
121
(2,137)
6,342
(7,695)
(1,353)
(1,151)
(5,061)
(2,504)
76
Ebiquity plc
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
Total assets
The table below presents revenue and non-current assets by geographical location:
31 December 31 December
2018
£’000
2019
£’000
80,963
102,742
—
642
868
332
77
448
815
1,654
5,034
642
82,882
111,335
Year ended
31 December 2019
Year ended
31 December 2018
Revenue by
location of Non‑current
assets
customers
£’000
£’000
Revenue by
location of Non-current
assets
customers
£’000
£’000
United Kingdom
Rest of Europe
North America
Rest of world
Deferred tax assets
Total
27,802
26,009
44,078
33,176
18,783
8,951
7,823
7,402
3,416
7,454
68,733
46,074
—
986
33,113
18,345
12,161
89,628
—
9,221
6,820
12,116
72,235
1,019
73,254
68,733
47,060
89,628
No single customer (or group of related customers) contributes 10% or more of revenue.
3. Highlighted items
Highlighted items comprise items which are highlighted in the income statement because separate disclosure is considered
relevant in understanding the underlying performance of the business.
Administrative expenses
Share option (credit)/charge
Amortisation of purchased intangibles
Impairment of goodwill
Severance and reorganisation costs
Acquisition, integration and strategic costs
Total highlighted items before tax
Taxation (credit)/charge
Total highlighted items after tax
– continuing operations
Highlighted items – discontinued operations
Total highlighted items
Year ended
31 December 2019
Year ended
31 December 2018
Cash
£’000
Non‑cash
£’000
Total
£’000
Cash
£’000
Non-cash
£’000
Total
£’000
(78)
—
—
1,333
998
2,253
(536)
1,717
2,521
4,238
195
1,169
6,751
—
(38)
117
1,169
6,751
1,333
960
8,077
10,330
(127)
—
—
826
2,050
2,749
82
(454)
(242)
8,159
(1,503)
9,876
1,018
6,656
10,894
2,507
982
3,489
350
1,240
2,607
331
419
4,947
448
5,395
507
5,902
223
1,240
2,607
1,157
2,469
7,696
206
7,902
1,489
9,391
Amortisation of purchased intangibles relates to acquisitions made in the current financial year of £nil and to acquisitions made in
prior years of £1,169,000 (31 December 2018: £nil in the current financial year and £1,240,000 in prior years). Separate disclosure is
considered relevant because amortisation of purchased intangibles has no correlation to underlying profitability of the Group.
77
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2019
3. Highlighted items continued
In the current year, a non-cash IFRS 2 charge of £195,000 (31 December 2018: £350,000) was recorded. Separate disclosure is
considered relevant to isolate charges and credits which are subject to volatility as a result of non-trading factors.
Impairment of goodwill and intangibles of £6,751,000 (2018: £2,607,000) has been recognised in the year. £5,844,000 is in relation
to the impairment of goodwill, purchased intangibles and internally generated intangibles held in Stratigent LLC. The impairment
was determined with reference to the current net book value of these items, the result being that these items have been fully
written down due to the winding down of the activities of this operation. A further impairment of £907,000 was recognised
in relation to the goodwill held in Digital Balance Australia Pty Limited; the impairment was determined, and is equal to, the
downward revision of the contingent consideration payable.
Total severance and reorganisation costs of £1,333,000 (31 December 2018: £1,157,000) were recognised during the year, relating
to severances in the UK, the US and Germany as part of management restructuring in those countries. Separate disclosure is
considered relevant as these charges are non-recurring and not reflective of the underlying operating costs of the business.
Total acquisition, integration and strategic costs of £960,000 (31 December 2018: £2,469,000) were recognised during the year,
primarily consisting of £641,000 being the recognition of, and movement in the year of, impairment to the right-of-use assets
recognised in relation to the London, Chicago, Sydney, and Hamburg office leases in accordance with IFRS 16. A further £501,000
was incurred in relation to one-off costs associated with the relocation to the new London premises and £262,000 was incurred in
relation to office costs incurred on vacated office space in Hamburg, Sydney, and Chicago. £257,000 was then incurred in relation
to the refinancing of the loan facility. Costs of £78,000 were also recognised in relation to the acquisition of Digital Decisions B.V,
which completed on 8 January 2020; see note 34 for further details. Partially offsetting this is the adjustment to the fair value of
contingent consideration amounting to a credit of £779,000, predominantly arising in relation to the downward revision of the
amounts payable in relation to the Digital Balance Australia Pty Limited acquisition. Separate disclosure is considered relevant as
these charges are non-recurring and not reflective of the underlying operating costs of the business.
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.
Highlighted items on discontinued operations in the current year comprise the profits on disposal of the AdIntel and the Reputation
business respectively of £1,408,000 and £36,000 and the tax charge arising thereon of £2,462,000.
As at 31 December 2019, £1,526,000 of the £2,254,000 cash highlighted items had been settled (31 December 2018: £1,043,000
of the £2,749,000 cash highlighted items had been settled).
4. Operating profit after highlighted items
Operating profit after highlighted items is stated after charging/(crediting):
Year ended
Year ended
31 December 31 December
2018
£’000
2019
£’000
Operating lease rentals1
– other
– land and buildings
Depreciation and amortisation (notes 11, 12 and 13)2
Impairment of goodwill (note 10)
Impairment of intangibles (note 11)
Contingent consideration revaluations (note 3)
Income on transitional services agreement
Loss on disposal of fixed assets
Research costs – expensed
Foreign exchange loss/(gain)
1. Operating lease rentals have reduced by £1,437,000 on adoption of IFRS 16.
2. Depreciation in the current year includes £1,596,000 on adoption of IFRS 16.
—
670
4,205
5,989
761
(779)
(1,273)
40
93
205
134
2,328
2,785
2,607
—
95
—
17
542
(103)
78
Ebiquity plc
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:
Year ended
Year ended
31 December 31 December
2018
£’000
2019
£’000
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:
– other audit-related assurance services
– other assurance services
– tax compliance services
299
250
52
—
21
372
30
2
28
310
5. Employee information
The monthly average number of employees employed by the Group during the year, including Executive Directors, was as follows:
Year ended
Year ended
31 December 31 December
2018
Number
2019
Number
Media
Analytics & Tech
IT development and support
Administration
Directors
Number of employees employed by continuing operations
Number of employees employed by discontinued operations
341
117
22
83
7
570
—
570
335
110
31
94
8
578
348
926
At 31 December 2019, the total number of employees of the Group employed by continuing operations was 555 (31 December 2018:
574); including discontinued operations in the prior year this was 905.
Staff costs for all employees, including Executive Directors, consist of:
Year ended
Year ended
31 December 31 December
2018
£’000
2019
£’000
Wages and salaries
Social security costs
Other pension costs
Share options charge (note 26)
Total staff costs from continuing operations
Staff costs from discontinued operations
Total staff costs
35,075
4,027
815
194
40,111
—
40,111
37,135
3,632
780
394
41,941
10,160
52,101
Directors’ remuneration
Total Directors’ remuneration was £856,000, including £362,000 to the highest paid Director (31 December 2018: £1,432,000
including £416,000 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. £nil performance bonuses were paid during the
year (31 December 2018: £nil). No retention bonuses were payable to any Directors (31 December 2018: £152,000).
One Director stepped down as a director on 12 November 2019 and his employment ceased on 31 December 2019. His salary
during the period was £400,000 per annum and he received £19,000 of taxable benefits. In January 2020, he received a payment
totalling £513,000 in lieu of base salary, pension and healthcare benefits for his notice period, his accrued but untaken holiday and
in settlement of other provisions in connection with cessation of employment.
79
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2019
5. Employee information continued
Directors’ remuneration continued
No Directors were a member of a Company pension scheme as at 31 December 2019 (31 December 2018: none). Contributions
totalling £40,000 (31 December 2018: £32,000) were made to Directors’ private pension schemes during the year, including
£40,000 to the highest paid Director (31 December 2018: £25,000).
No Directors exercised share options during the year (31 December 2018: 40,295). The highest paid Director exercised no share
options (31 December 2018: nil).
During the year, 410,000 (31 December 2018: 1,650,000) share options were granted to Directors under the Group’s Executive
Incentive Plan scheme. Vesting is subject to the satisfaction of certain performance criteria (see note 25 for further details).
Further details on Directors’ remuneration can be found in the Remuneration Committee report on pages 43 to 48.
Year ended
Year ended
31 December 31 December
2018
£’000
2019
£’000
9
9
(600)
(54)
(253)
(907)
25
25
(1,116)
(60)
—
(1,176)
Year ended
31 December 2019
Year ended
31 December 2018
Before
highlighted Highlighted
items
£’000
items
£’000
Before
Total
£’000
highlighted Highlighted
items
£’000
items
£’000
298
494
792
1,404
120
1,524
2,316
(383)
—
(383)
(153)
—
(153)
(536)
(85)
494
409
1,251
120
1,371
1,780
795
148
943
806
170
976
1,919
(295)
(90)
1,931
82
—
(213)
(90)
(454)
1,477
86
(227)
1,778
(148)
—
(148)
(94)
—
(94)
(242)
449
—
207
Total
£’000
647
148
795
712
170
882
1,677
535
(227)
1,985
6. Finance income and expenses
Finance income
Bank interest
Finance income
Finance expenses
Bank loans and overdraft interest
Loan fee amortisation
Lease liabilities’ interest
Finance expenses
7. Taxation charge/(credit)
UK tax
Current year
Adjustment in respect of prior year
Foreign tax
Current year
Adjustment in respect of prior year
Total current tax
Deferred tax
Origination and reversal of
temporary differences (note 22)
Adjustment in respect of prior year
Total tax charge/(credit)
80
Ebiquity plc
The difference between tax as charged in the financial statements and tax at the nominal rate is explained below:
Year ended
Year ended
31 December 31 December
2018
£’000
2019
£’000
Loss before tax
Corporation tax at 19.00% (31 December 2018: 19.00%)
Non-deductible taxable expenses
Overseas tax rate differential
Overseas losses not recognised
Losses utilised not previously recognised
Adjustment in respect of prior years
Total tax charge
(5,061)
(2,501)
(962)
1,139
361
149
266
524
(475)
1,602
204
563
—
91
1,477
1,985
Following the Budget on 11 March 2020, the corporation tax rate effective from 1 April 2020 and 1 April 2021 will remain at 19%.
This supersedes the announcement on 6 September 2016 which detailed a reduction to 17% from 1 April 2020.
The table below shows a reconciliation of the current tax liability for each year end:
At 1 January 2018
Corporation tax payments
Corporation tax refunds
Under-provision in relation to prior years
Provision for the year ended 31 December 2018
Foreign exchange
At 31 December 2018
Corporation tax payments
Corporation tax refunds
Under-provision in relation to prior years
Provision for the year ended 31 December 20191
Foreign exchange
At 31 December 2019
1. The provision for the current year includes £2,462,000 in relation to the discontinued operation.
£’000
1,598
(2,287)
334
321
1,344
48
1,358
(1,499)
151
614
3,629
(101)
4,152
81
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2019
8. Discontinued operations
On 12 February 2018, the Group agreed to dispose of the AdIntel business to Nielsen for gross consideration of £26,000,000.
This disposal was completed on 2 January 2019. The gross consideration was dependent upon a working capital target position
at the date of completion. The working capital acquired by Nielsen was below this target and a resulting repayment was made
to Nielsen of £1,155,000 on 31 October 2019; net consideration was therefore £24,845,000. The results of this division have been
presented within discontinued operations as appropriate.
On 19 March 2018, the Group entered into an agreement to sell the business assets of its Reputation division to Echo Research
Holdings Limited. Completion took place on 31 March 2018. The consideration payable was dependent upon the revenue
performance of the business during the 12 months following completion. The consideration resulting was £36,000, half of which
was paid in the year and the balance is payable in June 2020. The results of this division have been presented within discontinued
operations as appropriate.
The financial performance and cash flow information presented below reflects the AdIntel results for the year ended
31 December 2018 and the profit on disposal recognised in 2019 on the sale completing on 2 January 2019, and the Reputation
results for the three months to 31 March 2018, the profit on disposal recognised in 2018 and the contingent consideration
recognised in 2019.
The table below summarises the income statement for the discontinued business units for both the current and the prior year:
Revenue
Cost of sales
Gross profit
Administrative expenses
Impairment of asset held for sale
Operating profit/(loss)
Highlighted items
(Loss) before tax
Tax
Net result from discontinued operations
Year ended
31 December 2019
Year ended
31 December 2018
AdIntel
£’000
Reputation
£’000
Total
£’000
—
—
—
—
—
—
(1,408)
(1,408)
2,455
1,047
—
—
—
—
—
—
(36)
(36)
7
(29)
—
—
—
—
—
—
(1,444)
(1,444)
2,462
1,018
AdIntel
£’000
20,074
(11,999)
8,075
(6,681)
(297)
1,097
(1,879)
(782)
12
(770)
Reputation
£’000
Total
£’000
186
20,260
(203)
(12,202)
(17)
(92)
—
(109)
34
(75)
—
(75)
8,058
(6,773)
(297)
988
(1,845)
(857)
12
(845)
Below is a table summarising the cash flows from discontinued operations:
Cash generated from operations – continuing operations
Cash generated from operations – discontinued operations
Total cash generated from operations
Cash used in investment activities – continuing operations
Cash generated by/(used in) investment activities – discontinued operations
Total cash generated by/(used in) investment activities
Cash (used in)/generated by financing activities – continuing operations
Cash generated by financing activities – discontinued operations
Total cash (used in)/generated by financing activities
Net decrease in cash and cash equivalents – continuing operations
Net increase in cash and cash equivalents – discontinued operations
Net increase in cash and cash equivalents
82
Year ended
Year ended
31 December 31 December
2018
£’000
2019
£’000
3,594
—
3,594
1,999
2,612
4,611
(4,218)
(2,461)
24,845
20,627
(22,195)
—
(22,195)
(22,819)
24,845
2,026
(181)
(2,642)
211
—
211
(251)
2,431
2,180
Ebiquity plc
Below is a table summarising the details of the sale of the divisions:
Cash received or receivable:
Cash
Decrease of consideration
Total disposal consideration
Carrying amount of net assets/(liabilities)
sold (note 16)
Costs to sell – current year
Reclassification of foreign
currency translation reserve
Total
Gain on sale before income tax
Income tax charge on gain
(Loss)/gain on sale after income tax
Costs to sell – prior year
(Loss)/gain on sale after income tax – total
Year ended
31 December 2019
Year ended
31 December 2018
AdIntel
£’000
Reputation
£’000
Total
£’000
AdIntel
£’000
Reputation
£’000
Total
£’000
26,000
(1,155)
24,845
23,060
95
282
23,437
1,408
(2,455)
(1,047)
(3,176)
(4,223)
36
—
36
—
—
—
—
36
(7)
29
—
29
26,036
(1,155)
24,881
23,060
95
282
23,437
1,444
(2,462)1
(1,018)
(3,176)
(4,194)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(34)
(34)
—
—
(34)
34
(11)
23
—
23
—
—
(34)
34
(11)
23
—
23
1. The income tax charge on the gain on disposal is £2,462,000 and exceeds the gain on sale of £1,444,000 due primarily to the difference between
accounting base costs and tax base costs for the assets sold. Certain goodwill and intangible balances recognised for accounting purposes do not
have base costs for corporation tax purposes, therefore these items are not able to shield the gain from a tax perspective.
9. Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
Earnings for the purpose of basic earnings
per share being net profit attributable
to equity holders of the parent
Adjustments:
Year ended
31 December 2019
Year ended
31 December 2018
Continuing Discontinued
£’000
£’000
Total
£’000
Continuing Discontinued
£’000
£’000
Total
£’000
(6,989)
(1,018)
(8,007)
(4,985)
(822)
(5,806)
Impact of highlighted items (net of tax)1
9,864
1,018
10,882
7,887
1,485
9,371
Earnings for the purpose of
underlying earnings per share
Number of shares:
Weighted average number
of shares during the year
– basic
2,875
—
2,875
2,902
663
3,565
79,490,174
79,490,174
79,490,174 78,557,977 78,557,977 78,557,977
– dilutive effect of share options
1,155,106
1,155,106
1,155,106
4,176,597
4,176,597
4,176,597
– diluted
Basic earnings per share
Diluted earnings per share
Underlying basic earnings per share
Underlying diluted earnings per share
80,645,280 80,645,280 80,645,280 82,734,574 82,734,574 82,734,574
(8.79)p
(8.79)p
3.62p
3.57p
(1.28)p
(10.07)p
(1.28)p
(10.07)p
0.00p
0.00p
3.62p
3.57p
(6.35)p
(6.35)p
3.70p
3.51p
(1.05)p
(1.05)p
0.84p
0.80p
(7.40)p
(7.40)p
4.54p
4.31p
1. Highlighted items attributable to equity holders of the parent (see note 3), stated net of their total tax impact.
83
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2019
10. Goodwill
Cost
At 1 January 2018
Additions1
Reclassification of available-for-sale asset2
Foreign exchange differences
At 31 December 2018
Disposals3
Foreign exchange differences
At 31 December 2019
Accumulated impairment
At 1 January 2018
Impairment4
At 31 December 2018
Impairment5
Disposals3
Foreign exchange differences
At 31 December 2019
Net book value
At 31 December 2019
At 31 December 2018
£’000
62,446
140
(22,299)
223
40,510
(3,129)
(632)
36,749
(3,129)
(2,607)
(5,736)
(5,989)
3,129
256
(8,340)
28,409
34,774
1. £140,000 of goodwill was recognised following the revaluation of contingent consideration payable for the acquisition of Digital Balance
Australia Pty Limited.
2. Goodwill in relation to the Intel segment of £22,299,000 was reclassified to assets held for sale in the prior year statement of financial position.
Refer to note 16 for more details.
3. The disposal in the year relates to the write off of the goodwill cost and accumulated amortisation in relation to the Reputation division which
was sold in the prior year.
4. An impairment of £2,607,000 was recognised in relation to goodwill held in China Media (Shanghai) Management Consulting Company Limited
so that the carrying value was adjusted to be in line with the value-in-use.
5. An impairment of £5,082,000 was recognised in relation to goodwill held in Stratigent LLC so that the carrying value was adjusted down to £nil
on the decision being taken to wind down this division. A further impairment of £907,000 was recognised for goodwill held in Digital Balance
which equates to the downward revision of the contingent consideration payable.
Goodwill has been allocated to the following segments:
Year ended
Year ended
31 December 31 December
2018
£’000
2019
£’000
25,905
2,504
28,409
26,294
8,480
34,774
Media
Analytics & Tech
84
Ebiquity plc
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
Media UK and International
Analytics USA
China
Media Germany
Media Value Group
FirmDecisions
Media Australia
Effectiveness
Digital Balance
Media America
Media France
Media Italy
Russia
Reporting segment
Media
Analytics & Tech
Media
Media
Media/Analytics & Tech
Media
Media
Analytics & Tech
Analytics & Tech
Media
Media
Media
Media
Year ended
Year ended
31 December 31 December
2018
£’000
2019
£’000
9,241
—
2,150
4,319
3,042
2,981
2,289
1,678
826
604
560
382
337
9,263
5,057
2,242
4,327
3,197
2,981
2,369
1,678
1,745
604
572
402
337
28,409
34,774
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.
An impairment of £5,082,000 of goodwill was recognised in the year ended 31 December 2019 in relation to the Analytics USA
CGU in order to write down the carrying value in full due to the winding down of the activities of this operation, and a further
impairment of £907,000 was recognised to write down the carrying value of the goodwill in the Digital Balance CGU in line with
the downward revision of the contingent consideration (year ended 31 December 2018: £2,607,000 determined with reference to
the calculated value-in-use of the China CGU of £3,265,000 compared to the carrying value of goodwill of £5,872,000).
85
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2019
10. Goodwill continued
Value-in-use calculations
The key assumptions used in management’s value-in-use calculations are budgeted operating profit, pre-tax discount rate and the
long-term growth rate.
Budgeted operating profit assumptions
To calculate future expected cash flows, management has taken the Board-approved budgeted operating profit (‘EBIT’) for each
of the CGUs for the 2020 financial year.
For the 2021 and 2022 financial years, the forecast EBIT is as per management and market expectations. The forecast 2022
balances are taken to perpetuity in the model. The forecast for 2021 and 2022 uses certain assumptions to forecast revenue and
operating costs within the Group’s operating segments beyond the 2020 budget.
Discount rate assumptions
The Directors estimate discount rates using rates that reflect current market assessments of the time value of money and risk
specific to the CGUs. The three-year pre-tax cash flow forecasts have been discounted at between 7.0% and 12.0% (31 December
2018: between 7.0% and 12.1%).
Growth rate assumptions
Cash flows beyond the three-year period are extrapolated at a rate of 2.25% (31 December 2018: 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 the China and Media America CGUs.
Sensitivity analysis
The Group’s calculations of value-in-use for its respective CGUs are sensitive to a number of key assumptions. Other than disclosed
below, management does not consider a reasonable possible change, in isolation, of any of the key assumptions to cause the
carrying value of any CGU to exceed its value-in-use. The considerations underpinning why management believes no impairment
is required in respect of China and Media America are as follows, specifically what change in key assumptions would result in an
impairment:
Budgeted revenue growth
Budgeted cost growth
Pre-tax discount rate
China
Media America
Current %
8%
5%
12%
% change leading
to impairment1
Current %
% change leading
to impairment1
(1)% to 7%
17%-19%
(8)% to 9%-11%
+1% to 6%
0%-3%
+2% to 14%
11%
+4% to 4%-7%
+28% to 39%
1. These changes have been applied to 2021 and 2022 projected information.
86
Ebiquity plc
11. Other intangible assets
Cost
At 31 January 2018
Additions
Reallocation
Reclassification of available-for-sale asset2
Foreign exchange differences
At 31 December 2018
Additions
Reallocation
Disposals
Foreign exchange differences
At 31 December 2019
Amortisation and impairment
At 31 January 2018
Charge for the year – continuing operations3
Charge for the year – discontinued operations3
Impairment4
Reallocation
Reclassification of available-for-sale asset2
Foreign exchange differences
At 31 December 2018
Charge for the year3
Impairment4
Reallocation
Disposals
Foreign exchange differences
At 31 December 2019
Net book value
At 31 December 20195
At 31 December 2018
Capitalised
development
costs
£’000
Computer
software
£’000
Purchased
intangible
assets1
£’000
Total
intangible
assets
£’000
5,530
1,084
29
(3,361)
(24)
3,258
1,203
10
(388)
(49)
3,472
25,333
34,335
57
17
—
—
1,141
46
(894)
(7,543)
(11,798)
23
2,675
13
—
(139)
(24)
91
90
17,881
23,814
—
—
1,216
10
(1,402)
(1,929)
(314)
(387)
4,034
2,525
16,165
22,724
(1,949)
(1,896)
(17,367)
(21,212)
(326)
(590)
(125)
—
1,726
6
(428)
(85)
—
(46)
894
(45)
(1,240)
(617)
—
—
6,801
(50)
(1,994)
(1,292)
(125)
(46)
9,421
(89)
(1,258)
(1,606)
(12,473)
(15,337)
(464)
(155)
(10)
388
28
(409)
(1,169)
(2,042)
—
—
134
28
(607)
—
1,402
210
(762)
(10)
1,924
266
(1,471)
(1,853)
(12,637)
(15,961)
2,563
2,000
672
1,069
3,528
5,408
6,763
8,477
1. Purchased intangible assets consist principally of customer relationships with a typical useful life of eight to 10 years.
2. Intangibles in relation to the Intel segment of £2,377,000 were reclassified to assets held for sale in the prior year statement of financial position.
Refer to note 16 for more details.
3. Amortisation is charged within administrative expenses so as to write off the cost of the intangible assets over their estimated useful lives.
The amortisation of purchased intangible assets is included as a highlighted administrative expense.
4. An impairment charge of £762,000 has been recognised for the year ended 31 December 2019 (year ended 31 December 2018: £125,000)
following management’s review of the carrying value of other intangible assets.
5. Of the net book value of capitalised development costs, £1,557,000 remains in development at 31 December 2019.
87
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2019
12. Property, plant and equipment
Cost
At 31 December 2017
Additions
Allocation
Reclassification of available-for-sale asset1
Disposals
Foreign exchange differences
At 31 December 2018
Allocation
Additions
Disposals
Foreign exchange differences
At 31 December 2019
Accumulated depreciation
At 31 December 2017
Charge for the year – continuing operations
Charge for the year – discontinued operations
Allocation
Reclassification of available-for-sale asset1
Disposals
Foreign exchange differences
At 31 December 2018
Allocation
Charge for the year
Disposals
Foreign exchange differences
At 31 December 2019
Net book value
At 31 December 2019
At 31 December 2018
Motor
vehicles
£’000
Fixtures,
fittings and
equipment
£’000
Leasehold land
Computer
and building
equipment improvements
£’000
£’000
Total
£’000
46
—
—
—
(27)
1
20
—
17
—
(1)
36
(21)
(2)
—
—
—
14
(1)
(10)
—
(5)
—
—
1,854
5,308
1,599
8,807
54
14
264
(184)
324
354
642
185
(249)
(2,182)
(384)
(2,815)
(66)
15
1,622
—
230
(796)
(40)
1,016
(917)
(137)
(10)
(329)
200
18
(12)
(39)
10
3,177
16
561
—
6
1,899
(45)
1,417
(132)
31
6,718
(29)
2,225
(1,834)
(1,188)
(3,818)
(86)
1,834
(36)
2,047
(163)
4,933
(4,607)
(1,433)
(6,978)
(330)
(80)
219
1,900
5
(17)
(196)
(39)
(75)
304
—
(2)
(665)
(129)
(185)
2,404
37
(32)
(1,187)
(2,910)
(1,441)
(5,548)
(30)
(125)
755
23
14
(210)
1,845
57
45
(227)
1,017
19
29
(567)
3,617
99
(15)
(564)
(1,204)
(587)
(2,370)
21
10
453
435
630
267
1,460
458
2,563
1,170
1. Property, plant and equipment in relation to the Intel segment of £411,000 was reclassified to assets held for sale in the prior year statement of
financial position. Refer to note 16 for more details.
88
Ebiquity plc
13. Right-of-use assets and lease liabilities
Right-of-use assets:
Cost
At 31 December 2018
Assets recognised on adoption of IFRS 16 on 1 January 2019
Additions
At 31 December 2019
Accumulated depreciation
At 31 December 2018
Charge for the year
Impairment for the year
At 31 December 2019
Net book value
At 31 December 2019
At 31 December 2018
Lease liabilities:
Cost
At 31 December 2018
Liabilities recognised on adoption of IFRS 16 on 1 January 2019
Additions
Cash payments in the year
Interest charge in the year
At 31 December 2019
Current
Non-current
The present value of the minimum lease payments are as follows:
Amounts due:
Within one year
Between one and two years
Between two and three years
Between three and four years
Between four and five years
Later than five years
Buildings
£’000
Equipment
£’000
Vehicles
£’000
Total
£’000
—
5,208
5,109
10,317
—
(1,568)
(641)
(2,209)
8,108
—
—
178
22
200
—
(15)
—
(15)
185
—
—
41
18
59
—
(13)
—
(13)
46
—
—
5,427
5,149
10,576
—
(1,596)
(641)
(2,237)
8,339
—
Buildings
£’000
Equipment
£’000
Vehicles
£’000
Total
£’000
—
5,533
4,739
(1,139)
247
9,380
1,771
7,609
—
178
22
(36)
5
169
46
123
—
41
18
—
5,752
4,779
(19)
(1,194)
1
41
17
24
253
9,590
1,834
7,756
Minimum lease payments
31 December 31 December
2018
£’000
2019
£’000
2,116
2,307
2,115
1,896
893
1,083
10,410
—
—
—
—
—
—
—
89
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2019
14. 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
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
China Media (Shanghai) Management Consulting Company Limited2
100%3
China
Media consultancy
100%3
100%3
100%3
100%3
100%3
100%
100%3
100%
100%3
100%3
51%3
100%3
100%3
100%3
50.1%3
50.1%3
100%3
100%
100%3
100%3
100%
100%3
100%3
100%3
Hong Kong
Holding company
UK
Non-trading
Australia Multi-channel analytics
UK
UK
UK
Non-trading
Holding company
Media consultancy
Germany
Media consultancy
US
Holding company
Spain
Media consultancy
US
Italy
Media consultancy
Media consultancy
Ireland
Media consultancy
Singapore
Media consultancy
Australia
Media consultancy
UK
Media consultancy
Russia
France
Media consultancy
Media consultancy
UK
UK
US
UK
UK
UK
Australia
Non-trading
Holding company
Holding company
Holding company
Non-trading
Non-trading
Non-trading
China Media Consulting Group Limited
Data Management Services Group Limited
Digital Balance Australia Pty Limited2
Digireels Limited
Ebiquity Asia Pacific Limited
Ebiquity Associates Limited2
Ebiquity Germany GmbH2, 4
Ebiquity Holdings Inc.
Ebiquity Iberia S.L2
Ebiquity Inc.2
Ebiquity Italy Media Advisor S.r.l.2
Ebiquity Marsh Limited2
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
Ebiquity UK Holdings Limited
Ebiquity UK Limited
Fairbrother Lenz Eley Limited
Faulkner Group Pty Limited
90
Ebiquity plc
Subsidiary undertaking
FirmDecisions ASJP Germany GmbH2
FirmDecisions China Limited2
FirmDecisions DMCC1,2
FirmDecisions Group Limited
FirmDecisions ASJP LLC2
FirmDecisions Pty Limited2
FirmDecisions Iberia S.L.2
FirmDecisions Limited2
FLE Holdings Limited
Fouberts Place Subsidiary No. 4 Limited
Freshcorp Limited
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
1. FirmDecisions DMCC was incorporated in March 2019.
2. Principal trading entity.
3. Shares held by an intermediate holding company.
Proportion of
nominal value of
issued ordinary
shares held
100%3
100%3
100%3
100%
100%3
100%3
100%3
100%3
100%
100%3
100%3
100%3
100%3
100%3
100%3
100%3
100%3
100%3
100%3
100%3
100%3
100%3
100%3
100%3
100%
100%3
100%3
Country of
incorporation
Nature
of business
Germany
Media consultancy
China
UAE
UK
US
Media consultancy
Media consultancy
Holding company
Media consultancy
Australia
Media consultancy
Spain
Media consultancy
UK
UK
UK
UK
Media consultancy
Holding company
Non-trading
Non-trading
Portugal
Media consultancy
Belgium
UK
UK
Non-trading
Non-trading
Non-trading
US Multi-channel analytics
UK
UK
UK
UK
UK
UK
UK
Australia
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
UK
Holding company
Belgium
UK
Non-trading
Non-trading
4. In June 2019, the Group acquired the outstanding 5.97% interest in Ebiquity Germany GmbH from the minority shareholder.
15. Trade and other receivables
Trade and other receivables due within one year
Net trade receivables (note 27)
Other receivables
Prepayments
Contract assets
31 December 31 December
2018
£’000
2019
£’000
16,078
18,320
882
1,260
9,366
27,586
2,325
760
8,003
29,408
The Directors consider that the carrying amounts of trade and other receivables are reasonable approximations of their fair value.
91
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2019
16. Assets and liabilities held for sale
In 2017, the Board concluded that the most probable route to realising future economic benefit through its AdIntel business was
through a sale rather than continuing to operate it as part of the larger Group. Accordingly, it commenced a sale process to see if
this business could be sold at an acceptable price.
On 12 February 2018, the Group agreed to dispose of the AdIntel business to Nielsen for gross consideration of £26,000,000.
This transaction was subject to certain conditions, including approval from the Competition and Markets Authority who
immediately commenced a Phase I examination. This led to a Phase II examination that was not concluded until November 2018.
This disposal to Nielsen was completed on 2 January 2019. The gross consideration was dependent upon a working capital target
position at the date of completion. The working capital acquired by Nielsen was below this target and a resulting repayment was
made to Nielsen of £1,155,000 on 31 October 2019; net consideration was therefore £24,845,000.
Under the terms of the disposal, the Group will provide certain services to Nielsen to facilitate the acquisition and integration of
the AdIntel business. These services include the provision of office space, financial administration and IT support for a period of up
to 18 months post completion.
In accordance with IFRS 5, the AdIntel business was treated as an asset held for sale as at 31 December 2018 since, at this date,
the sale was deemed to be probable, and the disposal of AdIntel will signal a complete exit from this service line.
The net assets of the AdIntel business, which have been presented net on the Group balance sheet, are shown below:
31 December
2019
£’000
2 January 31 December
2018
£’000
2019
£’000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
22,295
2,377
414
40
22,293
2,377
412
40
25,126
25,122
2,854
—
2,854
27,980
(1,058)
(3,283)
(86)
2,612
—
2,612
27,734
(796)
(2,940)
(86)
(4,427)
(3,822)
(413)
(80)
(493)
(413)
(81)
(494)
(4,920)
(4,316)
23,060
23,418
Non‑current assets
Goodwill
Other intangible assets
Property, plant and equipment
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 contract liabilities
Current tax liabilities
Total current liabilities
Non‑current liabilities
Deferred tax liabilities
Provisions
Total non‑current liabilities
Total liabilities
Total net assets
92
Ebiquity plc
17. Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents earn interest at between 0% and 0.5%.
Cash and cash equivalents include the following for the purposes of the cash flow statement:
Cash and cash equivalents
Bank overdrafts (note 20)
Cash, cash equivalents and bank overdrafts
18. Trade and other payables
Trade payables
Other taxation and social security
Other payables
31 December 31 December
2018
£’000
2019
£’000
8,236
8,793
31 December 31 December
2018
£’000
2019
£’000
8,236
—
8,236
8,793
(2,379)
6,414
31 December 31 December
2018
£’000
2019
£’000
2,615
2,116
844
5,575
3,385
2,837
1,288
7,510
The Directors consider that the carrying amounts of trade and other payables are reasonable approximations of their fair value.
19. Accruals and contract liabilities
Accruals
Contract liabilities
20. Financial liabilities
Current
Bank overdraft
Loan fees1
Contingent consideration
Non‑current
Bank borrowings
Loan fees1
Contingent consideration
Total financial liabilities
31 December 31 December
2018
£’000
2019
£’000
4,449
4,635
9,084
6,661
3,979
10,640
31 December 31 December
2018
£’000
2019
£’000
—
(36)
14
(22)
2,379
(65)
508
2,822
14,000
34,000
(132)
—
13,868
13,846
(35)
969
34,934
37,756
1. Loan fees were payable on amending the banking facility and are being recognised in the income statement on a straight-line basis to the
maturity date of the facility, this being August 2024.
93
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2019
20. Financial liabilities continued
At 1 January 2018
Recognised on acquisition
Paid
Charged to the income statement
Discounting charged to the income statement
Borrowings
Repayments
Foreign exchange released to the income statement
At 31 December 2018
Recognised on revaluation
Paid
Charged to the income statement
Discounting charged to the income statement
Repayments
Foreign exchange released to the income statement
At 31 December 2019
A currency analysis for the bank borrowings is shown below:
Pounds sterling
Total bank borrowings
Bank
overdrafts
£’000
Bank Finance lease Contingent
liabilities consideration
£’000
£’000
borrowings
£’000
Total
£’000
407
33,161
—
—
—
—
1,972
—
—
—
(70)
59
—
2,000
(1,250)
—
2,379
33,900
—
—
—
—
—
(180)
112
—
(2,379)
(20,000)
—
—
—
13,832
4
—
—
—
—
—
(4)
—
—
—
—
—
—
—
—
—
2,094
35,666
148
(858)
238
(78)
—
—
(67)
1,477
336
(983)
(989)
218
—
(45)
14
148
(928)
297
(78)
3,972
(1,254)
(67)
37,756
336
(1,163)
(877)
218
(22,379)
(45)
13,846
31 December 31 December
2018
£’000
2019
£’000
13,832
13,832
33,900
33,900
On 20 September 2019, the Group refinanced its banking facilities with Barclays and Royal Bank of Scotland and on
20 September 2019 drew down on these new facilities. The new committed facility, totalling £24,000,000, comprises a revolving
credit facility (‘RCF’) of £23,000,000 (of which £14,000,000 was drawn on refinance) and £1,000,000 available as an overdraft
for working capital purposes. The RCF has a maturity date of 20 September 2023. 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 £168,000 (31 December 2018: £100,000) are offset against the term loan, and are being amortised
over the period of the loan. £36,000 of loan arrangement fees have been included within creditors due within one year and the
balancing £132,000 has been included within creditors due after more than one year.
The facility bears variable interest of LIBOR plus a margin of 2.25%. 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, US, Germany and
Australia.
Contingent 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 June 2020.
94
Ebiquity plc
21. Provisions
At 1 January 2018
Recognition of onerous lease provision
Reclassification of available-for-sale liability
At 31 December 2018
Recognition of dilapidations provision
Discounting charged to the income statement
Utilisation of provision
Unused amounts released to income statement
At 31 December 2019
Current
Non-current
Onerous
lease1 Dilapidations2
£’000
£’000
Total
£’000
—
324
—
324
—
—
(57)
(267)
—
—
—
393
—
(80)
313
450
(63)
—
(13)
687
300
387
393
324
(80)
637
450
(63)
(57)
(280)
687
300
387
1. The onerous lease provisions recognised in the prior year in relation to the Hamburg and Sydney offices have been utilised in the current year, with
the excess released. The provisions were utilised until the Company was released from the lease obligation on a new tenant occupying the space.
2. The dilapidations provision relates to the expected costs of vacating various properties. The amount recognised in the year relates to the newly
occupied London office. The provision is expected to be fully utilised by June 2024.
22. Deferred tax
At 1 January 2018
(Charge)/credit to income
Reclassification of available-for-sale asset
At 31 December 2018
Credit/(charge) to income
At 31 December 2019
Tangible
assets
£’000
Intangible Share-based
payments
£’000
assets
£’000
Tax Other timing
differences
£’000
losses
£’000
267
(25)
—
242
162
404
(1,898)
213
404
(1,281)
245
(1,036)
999
(542)
(29)
428
(327)
101
220
56
—
276
171
447
(393)
106
(3)
(290)
52
(238)
Total
£’000
(805)
(192)
372
(625)
303
(322)
Certain non-current 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 – current
Deferred tax liabilities – non-current
31 December 31 December
2018
£’000
2019
£’000
986
(272)
(1,036)
(322)
979
(323)
(1,281)
(625)
At the year end, the Group had tax losses of £2,062,000 (31 December 2018: £1,190,000) available for offset against future
profits. A deferred tax asset of £447,000 (31 December 2018: £276,000) has been recognised in respect of such losses.
The Group has unrecognised tax losses of £784,000 (31 December 2018: £3,103,000) and unrecognised deferred tax assets of
£156,000 (31 December 2018: £590,000) in relation to tax losses.
Deferred tax on unremitted earnings has not been recognised 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.
95
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2019
23. 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.
From 1 January 2019, the Group has recognised right-of-use assets for these leases, except for short-term and low-value leases;
see notes 13 and 27 for further information.
The Group has future aggregate minimum lease payments under non-cancellable operating leases which fall due as follows:
No later than one year
Later than one year but no later than five years
Later than five years
31 December 2019
31 December 2018
Land and
buildings
£’000
Other
£’000
Land and
buildings
£’000
—
—
—
—
—
—
—
—
2,245
4,613
1,285
8,143
Other
£’000
150
58
—
208
Lessor
There is no minimum aggregate future rent receivable under non-cancellable operating leases as at 31 December 2018.
24. Ordinary shares
At 31 December 2017 – ordinary shares of 25p
Share options exercised
At 31 December 2018 – ordinary shares of 25p
Share options exercised
At 31 December 2019 – ordinary shares of 25p
Number
of shares
Nominal
value
£’000
78,197,461
19,549
915,729
229
79,113,190
19,778
1,002,436
251
80,115,626
20,029
Ordinary shares carry voting rights and are entitled to share in the profits of the Company (dividends). At the year end, 2,410,458
shares were held by the ESOP (31 December 2018: 3,291,569). The Company does not have a limited amount of authorised capital.
25. Reserves
Share premium
The share premium reserve of £46,000 (31 December 2018: £44,000) shows the amount subscribed for share capital in excess of
the nominal value.
Other reserves
Other reserves consists of the merger reserve, ESOP reserve and translation reserve.
Merger reserve
The merger reserve of £3,667,000 (31 December 2018: £3,667,000) arose on the issuance of shares at a premium on a Group
restructure, where the premium on issue qualified for merger relief. There has been no movement in the period.
ESOP reserve
The ESOP reserve of £1,478,000 debit (31 December 2018: £1,478,000 debit) 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.
Translation reserve
The translation reserve of £2,239,000 (31 December 2018: £2,955,000) arises on the translation into sterling of the net assets of
the Group’s foreign operations, offset by any changes in fair value of financial instruments used to hedge this exposure. At this
time there are no hedges in place.
Retained earnings
The retained earnings reserve shows the cumulative net gains and losses recognised in the consolidated income statement.
For detailed movements on each of the above reserves, refer to the consolidated statement of changes in equity.
96
Ebiquity plc
26. 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 recognise the cost of these.
Options outstanding at 31 December 2019:
Name of share option scheme
and grant date
Executive Incentive Plan
– 12 May 2010
Executive Share Option Plan
– 26 May 2010
Executive Share Option Plan
– 30 July 2010
Executive Share Option Plan
– 11 August 2011
Executive Share Option Plan
– 27 September 2012
Executive Share Option Plan
– 23 May 2013
Executive Share Option Plan
– 17 January 2014
Executive Share Option Plan
– 15 May 2014
Executive Share Option Plan
– 1 October 2015
Executive Incentive Plan
– 27 January 2016
Executive Share Option Plan
– 24 July 2017
Executive Share Option Plan
– 13 February 2018
Executive Share Option Plan
– 24 May 2018
Executive Share Option Plan
– 11 July 2018
Executive Share Option Plan
– 11 November 2019
Executive Share Option Plan
– 4 December 2019
Life of
option
10 years
10 years
10 years
Exercise
period
Exercise
price
(pence)
Weighted
average
exercise
price
(pence)
Number
May 2010-May 2020
35.0
35.0 4,200,000
May 2011-May 2020
64.5
64.5
62,015
July 2011-July 2020
61.0
61.0
34,482
10 years
August 2012-August 2021
25.0-71.5
47.2
83,785
10 years
September 2013-September 2022
97.5
97.5
135,000
10 years
April 2016-May 2023
25.0
25.0
95,239
10 years
April 2016-January 2024
25.0
25.0
109,891
10 years
April 2017-May 2024
25.0
25.0
126,551
10 years
April 2018-October 2025
25.0
25.0
590,000
10 years
June 2016-January 2026
25.0
25.0
200,000
10 years
December 2018-July 2027
nil
nil
340,000
10 years
April 2021-February 2028
25.0
25.0
1,880,000
10 years
December 2020-May 2028
nil-25.0
16.9
905,000
10 years
April 2023-July 2028
25.0
25.0
315,000
10 years
December 2021-November 2029
10 years
April 2022-December 2029
nil
nil
nil
340,000
nil
1,472,500
10,889,463
Executive Incentive Plan (‘EIP’)
This is a discretionary scheme for the Directors of the Company.
On 12 May 2010, 4,200,000 options with an exercise price of 35p each were awarded under the EIP to two Directors. 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.
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.
1,812,500 (31 December 2018: 4,495,000) share options have been granted to employees under the ESOP in the year ended
31 December 2019.
97
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2019
26. Share-based payments continued
Executive Share Option Plan (‘ESOP’) continued
Options had not been granted to the executive team between October 2015 and February 2018 due to many of them being
involved in the sale of the AdIntel business and therefore possessing price-sensitive information. In 2018, options were
granted in respect of the years ending 31 December 2016, 2017 and 2018. The options awarded in respect of the years ended
31 December 2016 and 31 December 2017 vest based on a sliding scale of compound growth of adjusted diluted EPS over a
five-year period of between 4% and 10%.
The options awarded in respect of the years ending 31 December 2018 and 31 December 2019 have the same performance
conditions other than the EPS growth rates of between 8% and 15% are required for vesting.
Enterprise Management Incentive scheme (‘EMI scheme’)
The EMI scheme is a discretionary share option scheme which provides that options with a value at the date of grant of up to
£120,000 may be granted to employees. The EMI scheme provides a lock-in incentive to key management and is also utilised
to attract key staff. Rights to EMI share options lapse if the employee leaves the Company. There are no further performance
conditions.
No 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. As at 31 December 2019, there are no options outstanding under this scheme.
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 2019.
Movements in outstanding ordinary share options:
Outstanding at beginning of year
Granted during the year
Exercised during the year
Lapsed during the year
Performance criteria not expected to be met
Outstanding at the end of the year
Exercisable at the end of the year
31 December 2019
31 December 2018
Weighted
Number
average
of share exercise price
(pence)
options
Weighted
Number
average
of share exercise price
(pence)
options
11,333,071
1,812,500
28.6 8,443,801
— 4,495,000
(1,002,437)
0.3
(915,730)
(1,253,671)
—
—
—
(389,999)
(300,000)
10,889,463
28.8
11,333,071
5,976,963
0.3
6,854,741
30.9
23.0
27.5
19.9
25.0
28.6
33.2
During the year, share options were granted with a weighted average fair value of 41.1p (31 December 2018: 64.0p). 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
2019
31 December
2018
41.1p
nil
38.80%
64.0p
nil-25.0p
15.1%
2 to 2.5 years
0.57% to 0.61%
2.5 to 5 years
1.93% to 2.12%
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 1,002,437 shares (31 December 2018: 915,730 shares) being issued at a weighted
average price of 25p each (31 December 2018: 27.5p). The weighted average share price on the dates of exercise for options
exercised during the year was 51.0p (31 December 2018: 68.0p).
The options outstanding at the end of the year have a weighted average remaining contractual life of 2.2 years
(31 December 2018: 5.4 years), with a range of exercise prices being between nil and 25p.
The total charge in respect of share option schemes recognised in the consolidated income statement during the period amounted
to £195,000 (31 December 2018: £394,000).
98
Ebiquity plc
27. 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 on pages
99 to 103.
Capital and other reserves
The Group considers its capital to comprise of its cash and cash equivalents, borrowings, ordinary share capital, share premium,
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 summarises the capital of the Group:
Financial assets:
Cash and cash equivalents
Financial liabilities held at amortised cost:
Bank overdraft
Bank borrowings
Net debt
Equity
Capital
31 December 31 December
2018
£’000
2019
£’000
8,236
8,793
—
(2,379)
(13,832)
(33,900)
(5,596)
(27,486)
(38,640)
(47,514)
(44,236)
(75,000)
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 creditworthiness of a new customer is in doubt, credit limits and payment terms are established and
authorised 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 analysed
on a regular basis. Trade receivables are analysed 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 amounts of trade and other receivables are reasonable approximations of their fair value.
99
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2019
27. 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 2019
At 31 December 2018
The following is an analysis of the Group’s provision against trade receivables:
Total
£’000
3,848
9,081
Past due
+ 30 days
£’000
Past due
+ 60 days
£’000
1,827
5,328
2,021
3,753
Trade receivables
31 December 2019
31 December 2018
Gross
value
£’000
16,153
Provision
£’000
Carrying
value
£’000
Gross
value
£’000
Provision
£’000
Carrying
value
£’000
(75)
16,078
18,393
(73)
18,320
The Group records impairment losses on its trade receivables separately from the gross amounts receivable. Impaired receivables
are provided against based on expected recoverability. The movements on this allowance during the year are summarised below:
Opening balance
Increase in provision
Written off against provision
Reclassification of available-for-sale asset
Recovered amount reversed
Closing balance
31 December 31 December
2018
£’000
2019
£’000
73
83
(41)
—
(40)
75
262
46
(95)
(39)
(101)
73
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 £67,000 (31 December 2018: £139,000).
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:
31 December 2019
31 December 2018
Increase
in profit
before tax1
£’000
99
339
10
Increase in
equity1
£’000
2,447
1,143
653
Increase
in profit
before tax1
£’000
179
314
162
Increase in
equity1
£’000
3,350
1,445
603
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.
100
Ebiquity plc
The currency profile of the financial assets at 31 December 2019 is as follows:
Cash and cash
equivalents
Gross trade
receivables
31 December 31 December 31 December 31 December
2018
£’000
2018
£’000
2019
£’000
2019
£’000
Pounds sterling
US dollar
Euro
Australian dollar
Russian rouble
Singapore dollar
Chinese renminbi
Indian rupee
New Zealand dollar
South African rand
United Arab Emirate dirham
1,731
1,588
3,227
555
243
233
555
—
—
—
104
8,236
2,659
1,789
2,576
1,106
176
121
366
—
—
—
—
4,621
3,360
6,527
683
343
(35)
423
20
117
19
—
5,458
5,056
6,162
835
292
3
414
72
71
30
—
8,793
16,078
18,393
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 maximise
the returns on deposits through economies of scale. The type of cash instrument used and its maturity date will depend on the
Group’s forecast cash requirements. Throughout the year, the Group maintained a revolving credit facility with Barclays and Royal
Bank of Scotland (see note 20) to manage any short-term cash requirements. At 31 December 2019, £9,000,000 (31 December
2018: £nil) of the revolving credit facility was undrawn and the £1,000,000 overdraft remains available. The facility expires in
September 2023, at which point drawn-down amounts will be repayable.
It is a condition of the borrowings that the Group passes 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 amortised cost.
Financial assets
Current financial assets
Loans and receivables:
Trade and other receivables1 (note 15)
Cash and cash equivalents (note 17)
Gross trade receivables
31 December 31 December
2018
£’000
2019
£’000
16,960
8,236
25,196
20,645
8,793
29,438
1. Trade and other receivables includes net trade receivables and other receivables and excludes prepayments and contract assets.
101
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2019
27. Capital and financial risk management continued
Financial liabilities
Current financial liabilities
Other financial liabilities at amortised cost:
Trade and other payables1
Accruals
Bank overdrafts
Loans and borrowings
Lease liabilities2
Liabilities at fair value through profit and loss:
Contingent consideration
Non‑current financial liabilities
Other financial liabilities at amortised cost:
Loans and borrowings
Lease liabilities2
Liabilities at fair value through profit and loss:
Contingent consideration
Total financial liabilities
31 December 31 December
2018
£’000
2019
£’000
3,459
4,449
—
(36)
1,834
14
9,720
13,868
7,756
—
21,624
31,344
4,672
6,659
2,379
(65)
—
508
14,153
33,965
—
969
34,934
49,087
1. Trade and other payables includes trade payables and other payables and excludes other taxation and social security and contract liabilities.
2. Lease liabilities were recognised on 1 January 2019 on the adoption of IFRS 16.
The following table illustrates the contractual maturity analysis of the Group’s financial liabilities:
At 31 December 2019
Trade and other payables
Accruals
Bank loans and overdrafts
Lease liabilities1
Contingent consideration
Total financial liabilities
Less: finance charges allocated to future periods
Present value
At 31 December 2018
Trade and other payables
Accruals
Bank loans and overdrafts
Contingent consideration
Total financial liabilities
Less: finance charges allocated to future periods
Present value
1. Lease liabilities were recognised in the current year on adopting IFRS 16 from 1 January 2019.
Within
one year
£’000
One to
five years
£’000
3,459
4,449
541
2,111
14
—
—
15,762
8,293
—
Total
£’000
3,459
4,449
16,303
10,404
14
10,574
24,055
34,624
(854)
(2,431)
(3,285)
9,720
21,624
31,344
4,672
6,659
4,153
508
—
—
37,035
969
15,992
38,004
4,672
6,659
41,188
1,477
53,996
(1,839)
(3,070)
(4,909)
14,153
34,934
49,087
102
Ebiquity plc
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 2019
Financial liabilities
Contingent consideration
At 31 December 2018
Financial liabilities
Contingent consideration
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
—
—
—
—
—
—
—
—
14
14
14
14
1,477
1,477
1,477
1,477
Refer to note 20 for a reconciliation of movements during the year.
The fair value of the contingent consideration of £14,000 (31 December 2018: £1,477,000) was estimated by applying the income
approach. The fair value estimates are based on a discount rate of 3.0% forecast EBIT of Ebiquity Marsh Limited. This is a Level 3
fair value measurement. The key assumptions in calculating the contingent consideration payable are the EBIT of the businesses
acquired and the discount rate.
28. Dividends
Dividend in respect of the prior year
Total dividend paid
31 December 31 December
2018
£’000
2019
£’000
534
534
527
527
A dividend of £534,000 was paid during the current financial year (31 December 2018: £527,000). Dividends were paid to
non-controlling interests as shown in the consolidated statement of changes in equity.
103
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2019
29. Cash generated from operations
(Loss) before taxation
Adjustments for:
Depreciation (notes 12 and 13)
Amortisation (note 11)
Loan fees written off
Gain on disposal
Impairment of right-of-use assets (note 13)
Impairment of goodwill (note 10)
Impairment of intangibles (note 11)
Unrealised foreign exchange loss
Share option charges (note 3)
Finance income (note 6)
Finance expenses (note 6)
Contingent consideration revaluations (note 3)
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Movement in provisions
Cash generated from operations – continuing operations
Cash generated from operations – discontinued operations
Cash generated from operations
31 December 31 December
2018
£’000
2019
£’000
(5,061)
(2,504)
2,163
2,042
58
5
641
665
1,994
—
—
—
5,989
2,732
761
47
195
(9)
907
(779)
6,959
1,536
(2,838)
—
5,657
—
5,657
—
320
350
(25)
1,176
94
4,802
(2,138)
1,447
324
4,435
3,196
7,631
30. Acquisitions
Ebiquity Germany GmbH
On 11 June 2019, the Group acquired the outstanding 5.97% interest in its subsidiary undertaking, Ebiquity Germany GmbH,
from the minority shareholder for cash consideration of €380,000 (£336,000) payable in equal instalments in June 2019 and
October 2019.
31. Disposals
On 12 February 2018, the Group agreed to dispose of the AdIntel business to Nielsen for gross consideration of £26,000,000.
This transaction was subject to certain conditions, including approval from the Competition and Markets Authority, who
immediately commenced a Phase I examination. This led to a Phase II examination that was not concluded until November 2018.
This disposal to Nielsen was completed on 2 January 2019. The gross consideration was dependent upon a working capital target
position at the date of completion. The working capital acquired by Nielsen was below this target and a resulting repayment was
made to Nielsen of £1,155,000 on 31 October 2019, resulting in net consideration of £24,845,000.
On 19 March 2018, the Group entered into an agreement to sell the business assets of its Reputation division to Echo Research
Holdings Limited; a profit of £34,000 was recognised on disposal. This is the remaining part of the Group’s Intel segment in
addition to the AdIntel business. Completion took place on 31 March 2018. The consideration payable was £36,000, which was
determined with reference to the revenue performance of the business during the 12 months following completion.
On 21 August 2019, it was decided to wind down the activities of Stratigent LLC, the Chicago-based marketing technology
business which has been trading at a loss due to significantly reduced demand in the US market for the software technology on
which its skills were focused. This was the result of a wider review of opportunities for further efficiency gains across the business
as well as examining investment areas to ensure these fit with the Group’s strategic priorities. As at 31 December 2019, the division
has one employee and is continuing to fulfil its contractual requirements with its remaining clients.
104
Ebiquity plc
32. 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.
33. Related party transactions
The Group has a related party relationship with its subsidiaries (refer to note 14) 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
Costs of £2,000 (31 December 2018: £2,000) for a membership subscription were charged to the Company by the Quoted
Companies Alliance, a company of which Alan Newman is a director.
Costs of £65,000 (31 December 2018: £83,000) for public relations consultancy were charged to the Company by Instinctif
Partners Limited, a company of which Richard Nichols was a director during the year. As at the year end, £7,000 (31 December
2018: £5,000) was owed to Instinctif Partners Limited.
34. Events after the reporting period
On 8 January 2020, the Group completed the purchase of Digital Decisions B.V (‘Digital Decisions’). The acquisition was for an
initial cash consideration of €700,000 (£597,000) with further consideration payable in a mix of cash and Ebiquity plc shares.
The first deferred payment will be based on performance for the year ending 31 December 2020 and the second payment will be
based on the average performance in the years ending 31 December 2021 and 31 December 2022.
On 3 February 2020, the Group announced that it will be acquiring the outstanding 49% interest in its subsidiary Ebiquity
Italy Media Advisor S.r.l (‘Ebiquity Italy’) from its founders and minority shareholders Arcangelo DiNieri and Maria Gabrielli.
The transaction will complete in May 2020. The total consideration of €3,600,000 is based on an average of Ebiquity Italy’s
profit before tax and management charges for the years ending 31 December 2018 and 2019. Since the announcement date,
the payment terms have been amended. The consideration will now be paid in a combination of cash and Ebiquity plc shares.
At completion 25% of the total consideration will be paid in Ebiquity plc shares and 5% in cash. The remaining cash will be paid
over the following 10 months.
The Company continues to closely monitor the COVID-19 pandemic and its impact on our staff, clients and operations.
Our primary focus is ensuring the safety and well-being of our employees and we have successfully implemented a remote
working policy for all of our offices globally, although our staff in China have now returned to their offices.
The COVID-19 disruption is affecting our clients’ businesses and their service requirements, although the extent and timing of its
impact over the coming months remains uncertain.
The Company is undertaking prudent cost reduction measures in order to protect the business and preserve cash in the current
environment. This includes a 20% salary reduction taken by the senior management team and Board, a deferral of the annual
pay review and temporary freeze on recruitment. The Group is also utilising, to the extent necessary, the different government
schemes put in place to support businesses in many of the countries in which it operates. To date, these include the selected
furloughing of staff in the UK and France, and receipt of funds from the US Payroll Protection Program and various government
subsidies and support schemes in Asia Pacific.
No adjustments have been made to the financial statements in respect of this.
105
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements Company statement of financial position
as at 31 December 2019
31 December 31 December
2018
£’000
2019
£’000
Note
Fixed assets
Intangible assets
Right-of-use assets
Investments in subsidiaries
Deferred tax asset
Total fixed assets
Current assets
Trade and other receivables
Cash at bank and in hand
Total current assets
Creditors: amounts falling due within one year
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
6
7
8
9
2,309
4,025
2,107
—
49,082
75,501
91
—
55,507
77,608
10
22,712
21,184
263
48
22,975
21,232
11
(44,856)
(42,772)
(21,881)
(21,540)
33,626
56,068
12
(18,473)
(33,965)
15,153
22,103
13
14
14
14
20,029
19,778
46
(733)
(4,189)
15,153
44
(733)
3,014
22,103
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 £6,864,000 (31 December 2018: loss for the year of
£1,873,000).
The notes on pages 108 to 118 are an integral part of the financial statements of the Company. The financial statements on
pages 106 to 107 were approved and authorised for issue by the Board of Directors on 19 May 2020 and were signed on its
behalf by:
Alan Newman
Director
Ebiquity plc. Registered No. 03967525
20 May 2020
106
Ebiquity plc
Company statement of changes in equity
for the year ended 31 December 2019
At 31 December 2017
(Loss) for the year
Other comprehensive result for the year
Total comprehensive (loss) for the year
Proceeds from shares issued
Share-based payments credit
Capital contribution relating to share-based payments
Dividends to shareholders
At 31 December 2018
(Loss) for the year
Other comprehensive result for the year
Total comprehensive (loss) for the year
Proceeds from shares issued
Share-based payments credit
Capital contribution relating to share-based payments
Dividends to shareholders
At 31 December 2019
Note
Share
capital
£’000
19,549
—
—
—
13
229
—
—
—
19,778
—
—
—
251
—
—
—
13
13
13
Share
premium
£’000
21
—
—
—
23
—
—
—
44
—
—
—
2
—
—
—
Other
reserves
£’000
(733)
—
—
—
—
—
—
—
(733)
—
—
—
—
—
—
—
Retained
earnings
£’000
4,283
(1,873)
—
Total
£’000
23,120
(1,873)
—
(1,873)
(1,873)
—
522
609
(527)
3,014
252
522
609
(527)
22,103
(6,864)
(6,864)
—
—
(6,864)
(6,864)
—
33
162
253
33
162
(534)
(534)
20,029
46
(733)
(4,189)
15,153
The notes on pages 108 to 118 are an integral part of the financial statements of the Company.
107
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements
Notes to the Company financial statements
for the year ended 31 December 2019
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 Chapter House,
16 Brunswick Place, London N1 6DZ.
The financial statements of the
Company represent the results for the
year ended 31 December 2019 whilst the
comparatives represent the results for
the year ended 31 December 2018.
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. The Company
meets its day-to-day working capital
requirements through its cash reserves
and borrowings, described in note 20 to
the consolidated financial statements.
As at 31 December 2019, the Company
has undrawn bank facilities available of
£10,000.000.
The Company’s forecasts and
projections, taking account of
reasonably possible changes in trading
performance, show that the Company
should be able to operate within the
level of its current cash reserves and
borrowings, including continuing to
meet the bank covenants therein.
In accordance with the guidance issued
by the Financial Reporting Council,
the Directors have given specific
consideration to the potential impact of
the COVID-19 pandemic on the global
economy, the business environment in
which the Company operates and its
business in particular. As at the date of
approval of these financial statements,
this impact remained highly uncertain
and difficult to predict. The Directors
have accordingly considered a range
of scenarios relating to the impact
of COVID-19 which they believe are
plausible, and assessed their impact
on the Company’s cash flows and
liquidity for a period of 12 months from
the date of approval of these financial
statements.
108
In this assessment, the Directors had
regard to the potential reduction in the
Group’s receipts from clients that may
arise from the COVID-19 disruption
and to options that may be available
to the Group to mitigate any resulting
negative impact on its cash flows and
liquidity. These include: (i) draw down
of all available borrowing facilities;
(ii) reductions in its operating and
capital expenditure; and (iii) benefit of
measures taken by the UK government
and the Bank of England to assist
businesses and employees, directly
or indirectly, to meet their financial
obligations and maintain their business
operations during the period of the
pandemic.
As a result of this assessment, the
Directors consider that the Company
will have sufficient liquidity within
its existing bank facilities, totalling
£24,000,000, to meet its obligations
during the next 12 months.
The Directors consulted with the
lenders, Barclays and Royal Bank of
Scotland, to negotiate covenant waivers
where required in order to negate the
risk of any future covenant breaches.
The existing covenants remain in place
for the 12 months to March 2020 and
June 2020. The March 2020 covenants
have already been achieved, and there
are no concerns over meeting the June
2020 covenants; the Group's revenue
would have to reduce by 21% between
May and June 2020 compared to the
latest prudent expectations for a
breach to result.
Agreement in principle has been
reached with the lenders to replace the
existing covenants for September 2020,
December 2020 and March 2021 with
a monthly liquidity test that will be in
place between July 2020 and May 2021.
This is subject to the agreement of legal
documentation with the lenders which is
not yet in place, but which the Directors
are confident will be shortly. Under the
Directors’ base case scenario there
are no forecast breaches of the new
liquidity covenant tests. The Directors’
downside scenario indicates that the
covenant test at May 2021 is the most
sensitive but is not breached. If revised
expectations for this period were to
worsen then the Directors would take
the appropriate actions ahead of time
to reduce operating costs to mitigate
the likelihood of a breach.
The covenants revert to the existing
measures as at June 2021, which under
the current base case scenario would be
breached and would need to be waived.
The Directors are confident, based on
the support of the lenders that waivers
would be granted, however, there is a
risk that this may not occur. This, and
the risk that the legal documentation
is not agreed to replace the existing
covenants for September 2020 to May
2021, represent a material uncertainty
that casts significant doubt on the
Company's ability to continue to
operate as a going concern. The
financial statements do not include the
adjustments that would result if the
Company were unable to continue as a
going concern.
The financial statements have been
prepared 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);
Ebiquity plc 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.
The grant by the Company of options
over its equity instruments to the
employees of subsidiary undertakings
in the Group is treated as a capital
contribution. The fair value of employee
services received, measured by
reference to the grant date fair value,
is recognised over the vesting period as
an increase to investment in subsidiary
undertakings, with a corresponding
credit to equity in the parent entity
financial statements.
Dividend income
Dividend income is recognised when the
right to receive payment is established.
Dividend distribution
Dividend distribution to the Company’s
shareholders is recognised as a liability
in the Company’s financial statements
in the period in which the dividends
are approved by the Company’s
shareholders.
Intangible assets
Computer software
Purchased computer software
intangible assets are amortised on a
straight-line basis over their useful lives,
which vary from four to five years.
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
recognised on an accruals basis, based
on the interest rate applicable to each
bank or loan account.
Foreign currency transactions
The results and financial position of
the Company are expressed in pounds
sterling, which is the functional currency
of the Company and the presentation
currency for the Company financial
statements.
Trading transactions denominated in
foreign currencies are translated into
sterling at the exchange rate ruling
when the transaction was entered
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.
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.
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.
109
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements Notes to the Company financial statements continued
for the year ended 31 December 2019
2. Basis of preparation continued
Intangible assets continued
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. During the year,
the Company generated £747,000 of
internally generated intangible assets
(31 December 2018: £509,000).
An internally generated intangible asset
arising from the Group’s development
expenditure is recognised only if all of
the following conditions are met:
•
it is technically feasible to develop
the asset so that it will be available
for use or sale;
• adequate resources are available to
complete the development and to
use or sell the asset;
• there is an intention to complete the
asset for use or sale;
• the Group is able to use or sell the
intangible asset;
•
it is probable that the asset created
will generate future economic
benefits; and
• the development cost of the asset
can be measured reliably.
Internally generated intangible assets
are amortised on a straight-line basis
over their useful lives. Amortisation
commences when the asset is available
for use and useful lives range from one
to five years. The amortisation expense
is included within administrative
expenses. Where an internally
generated intangible asset cannot be
recognised, development expenditure is
recognised as an expense in the period
in which it is incurred.
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 utilised. The recognition of
deferred tax assets is reviewed at each
year-end date.
The amount of the asset or liability is
determined using tax rates that have
been enacted or substantively enacted
by the year-end date and are expected
to apply when the deferred tax
liabilities/assets are settled/recovered.
Financial instruments
Financial assets and financial liabilities
are recognised in the Company’s
statement of financial position when
the Company becomes a party
to the contractual provisions of
the instrument.
Financial assets
Financial assets are classified,
at initial recognition, and subsequently
measured, at fair value through profit
or loss ('FVPL'), amortised cost, or fair
value through other comprehensive
income ('FVOCI').
The classification of financial assets
at initial recognition depends on the
financial asset’s contractual cash flow
characteristics and the Company’s
business model for managing them.
In order for a financial asset to be
classified and measured at amortised
cost or FVOCI, it needs to give rise to
cash flows that are ‘solely payments of
principal and interest’ on the principal
amount outstanding (the 'SPPI
Criterion').
Financial assets are initially measured
at their fair value plus, for those
financial assets not at fair value
through profit or loss, transaction costs.
Purchases or sales of financial assets
that require delivery of assets within a
time frame established by regulation or
convention in the marketplace (regular
way trades) are recognised on the trade
date, being the date that the Company
commits to purchase or sell the asset.
For the purposes of subsequent
measurement, all of the Company’s
financial assets are classified as
financial assets at amortised cost.
Financial assets at amortised cost
comprise of assets that are held
within a business model with the
objective to hold the financial assets
in order to collect contractual cash
flows that meet the SPPI Criterion.
This category includes the Company’s
trade and other receivables and cash
and cash equivalents. These assets are
subsequently measured at amortised
cost using the effective interest
method. The amortised cost is reduced
by impairment losses, interest income,
foreign exchange gains and losses,
and impairment losses are recognised
in profit or loss. Any gain or loss on
derecognition is recognised in profit or
loss.
The Company has not classified any
assets as being financial assets at
FVOCI or FVPL.
110
Ebiquity plc Financial liabilities
Financial liabilities are classified,
at initial recognition, as financial
liabilities at fair value through profit
or loss, loans and borrowings, or as
payables, as appropriate.
All financial liabilities are recognised
initially at fair value and, in the
case of loans and borrowings and
payables, net of directly attributable
transaction costs.
The Company’s financial liabilities
comprise of trade and other payables
and borrowings.
The Company’s payables are
subsequently measured at amortised
cost. Gains and losses are recognised
in profit or loss when the liabilities
are derecognised.
Borrowings consisting of
interest-bearing secured and
unsecured loans and overdrafts are
initially recognised at fair value net of
directly attributable transaction costs
incurred and subsequently measured
at amortised cost using the effective
interest method. The difference
between the proceeds received net of
transaction costs and the redemption
amount is amortised over the period
of the borrowings to which they relate.
The revolving credit facility is considered
to be a long-term loan.
Executive Share Option 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 financial statements,
the Directors have made certain
estimates and judgements relating
to the reporting of results of
operations and the financial position
of the Company. Actual results
may significantly differ from those
estimates, often as the 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 financial statements.
Critical accounting estimates include
the terminal growth rate used in
impairment assessments, inputs to
share option accounting fair value
models and amounts to capitalise as
intangible assets. These estimates are
reached with reference to historical
experience, supporting detailed
analysis and, in the case of impairment
assessments and share option
accounting, external economic factors.
Critical accounting judgements include
the treatment of events after the
reporting period determined to be
adjusting or non-adjusting events
and the terminal growth rate used in
impairment assessments.
Investments
The Company has recorded an asset
for investment in subsidiary companies.
The Directors believe the carrying value
of these investments is supported by
their underlying net assets. Any changes
to the carrying value of investments
after the measurement period are
recognised in the income statement.
Adoption of new standards
and interpretations
On 1 January 2019, the Company
adopted the following amendments
which are effective for accounting
periods beginning on or after
1 January 2019.
IFRS 16 ‘Leases’ (effective on or
after 1 January 2019). This standard
replaces IAS 17 ‘Leases’ and related
interpretations and sets out the
principles for the recognition,
measurement, presentation and
disclosure of leases for both the lessee
and the lessor. The standard addresses
the definition of a lease, recognition
and measurement of leases, and it
establishes principles for reporting
useful information to users of financial
statements about the leasing activities
of both lessees and lessors. A key
change arising from IFRS 16 is that most
operating leases will be accounted for
on the statement of financial position
for lessees. The operating lease charge
is replaced by a depreciation charge and
an interest charge. 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.
IFRS 16 has been applied in these
financial statements using the modified
retrospective method, meaning the
comparatives have not been restated to
reflect the effects of IFRS 16.
The standard requires the Company
to recognise a ‘right-of-use’ asset,
representing the right to use the
underlying asset, and a corresponding
lease liability, representing the
obligation to make lease payments,
on its statement of financial position,
for almost all lease contracts.
The impact on the income statement is
that former operating lease expenses
are replaced by depreciation and
interest, thereby improving EBITDA.
Total expenses (depreciation of
right-of-use assets and interest on
lease liabilities) are typically higher in the
earlier years of a lease and lower in the
later years, in comparison with former
accounting for operating leases.
The main impact on the statement
of cash flows is higher cash flows
from operating activities, since cash
payments for the principal part of the
lease liability are classified in the net
cash flow from financing activities.
The tax effect from the adjustments
from IFRS 16 have been measured and
recognised accordingly.
111
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements Notes to the Company financial statements continued
for the year ended 31 December 2019
2. Basis of preparation continued
Adoption of new standards and interpretations continued
The change in accounting policy has impacted the primary statements as follows:
Operating lease rentals
Depreciation charge
Interest expense
Right-of-use assets
Impairment of right-of-use assets
Lease liabilities
Accruals
Other debtors
Deferred tax asset
Cash flows from operating activities
Cash flows from financing activities
Total impact
Income
statement
debit/
(credit)
Statement
of financial
position
debit/
(credit)
Cash flow
statement
inflow/
(outflow)
(84)
472
90
—
—
—
—
—
(91)
—
—
—
(472)
(90)
5,001
(504)
(4,630)
588
(371)
91
—
—
387
(387)
—
—
—
—
—
—
—
—
—
—
—
—
Accounting policy for leases
The Company has a lease arrangement for buildings. At the inception of a lease contract, the Company assesses whether the
contract conveys the right to control the use of an identified asset for a certain period in exchange for a consideration, in which
case it is identified as a lease. The Company then recognises a right-of-use asset and a corresponding lease liability at the
lease commencement date. Lease-related assets and liabilities are measured on a present value basis. Lease-related assets
and liabilities are subjected to re-measurement when either terms are modified or lease assumptions have changed. Such an
event results in the lease liability being re-measured to reflect the measurement of the present value of the remaining lease
payments, discounted using the discount rate at the time of the change. The lease assets are adjusted to reflect the change
in the re-measured liabilities.
Right‑of‑use assets:
Right-of-use assets include the net present value of the following components:
• the initial measurement of the lease liability;
•
•
lease payments made before the commencement date of the lease;
initial direct costs; and
• costs to restore.
The right-of-use assets are reduced for lease incentives relating to the lease. The right-of-use assets are depreciated on a
straight-line basis over the duration of the contract. In the event that the lease contract becomes onerous, the right-of-use asset
is impaired for the part which has become onerous.
Lease liabilities:
Lease liabilities include the net present value of the following components:
• fixed payments excluding lease incentive receivables;
• future contractually agreed fixed increases; and
• payments related to renewals or early termination, in case options to renew or for early termination are reasonably certain to
be exercised.
The lease payments are discounted using the interest rate implicit in the lease. If such rate cannot be determined, the lessee’s
incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain
an asset of similar value in a similar economic environment with similar terms and conditions. The discount rate that is used to
calculate the present value reflects the interest rate applicable to the lease at inception of the contract. Lease contracts entered
into in a currency different to the local functional currency are subjected to periodic foreign currency revaluations which are
recognised in the income statement in net finance costs.
The lease liabilities are subsequently increased by the interest costs on the lease liabilities and decreased by lease payments made.
112
Ebiquity plc
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 £6,864,000 (31 December 2018: loss for the year
of £1,873,000).
4. Operating loss
Auditors’ remuneration
Fees for the audit of the Company were £3,000 (31 December 2018: £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.
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
Total tax credit
Year ended
Year ended
31 December 31 December
2018
£’000
2019
£’000
19
(91)
—
(72)
—
—
—
—
The tax assessment for the year differs to the standard rate of corporation tax in the UK of 19.00% (31 December 2018: 19.00%).
The differences are explained below:
Year ended
Year ended
31 December 31 December
2018
£’000
2019
£’000
(Loss) on ordinary activities before taxation
(Loss) on ordinary activities at the standard rate of corporation tax in the UK of 19.00%
(31 December 2018: 19.00%)
(6,936)
(1,873)
(1,318)
(356)
Effects of:
Expenses not deductible/(income) not taxable
Depreciation in excess of capital allowances
Additions to intangibles
Relieved to other Group companies
Adjustments to tax charge in respect of prior years
Withholding tax suffered
Deferred tax
Current tax credit for the year
269
—
(127)
1,176
15
4
(91)
(72)
(26)
120
110
152
—
—
—
—
Deferred tax on unremitted earnings has not been recognised as management does not intend to pay dividends from jurisdictions
where a tax charge would be incurred and dividends received are not taxed in the UK.
113
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements
Notes to the Company financial statements continued
for the year ended 31 December 2019
Research and
development
£’000
Computer
software
£’000
2,053
1,565
747
(391)
(157)
11
—
—
Total
£’000
3,618
758
(391)
(157)
2,252
1,576
3,828
(864)
(647)
(1,511)
157
388
(267)
(586)
1,666
1,189
—
—
(286)
(933)
157
388
(553)
(1,519)
643
918
2,309
2,107
Buildings
£’000
Total
£’000
—
—
5,001
5,001
—
(472)
(504)
(976)
—
—
5,001
5,001
—
(472)
(504)
(976)
4,025
4,025
—
—
6. Intangible assets
Cost
At 1 January 2019
Additions
Disposals
Transfer
At 31 December 2019
Amortisation
At 1 January 2019
Transfer
Disposals
Charge for the year
At 31 December 2019
Net book value
At 31 December 2019
At 31 December 2018
7. Right-of-use assets and lease liabilities
Right-of-use assets:
Cost
At 31 December 2018
Assets recognised on adoption of IFRS 16 on 1 January 2019
Additions
At 31 December 2019
Accumulated depreciation
At 31 December 2018
Charge for the year
Impairment for the year
At 31 December 2019
Net book value
At 31 December 2019
At 31 December 2018
114
Ebiquity plc
Lease liabilities:
Cost
At 31 December 2018
Liabilities recognised on adoption of IFRS 16 on 1 January 2019
Additions
Cash payments in the year
Interest charge in the year
At 31 December 2019
Current
Non-current
The present value of the minimum lease payments are as follows:
Amounts due:
Within one year
Between one and two years
Between two and three years
Between three and four years
Between four and five years
Later than five years
8. Investments in subsidiaries
Cost and net book value
At 31 December 2018
Additions
Impairment
Disposals
At 31 December 2019
Buildings
£’000
Total
£’000
—
—
—
—
4,630
4,630
—
90
4,720
502
4,218
—
90
4,720
502
4,218
Minimum lease payments
31 December 31 December
2018
£’000
2019
£’000
955
1,264
1,264
1,264
319
—
5,066
—
—
—
—
—
—
—
£’000
75,501
165
(7,754)
(18,830)
49,082
The Company’s principal trading subsidiaries and associated undertakings are listed in note 14 to the consolidated
financial statements.
An impairment of £7,754,000 was recognised in relation to the investment held in Ebiquity US Financing Limited and Ebiquity
Holdings Inc so that the carrying value was adjusted to be in line with the value-in-use.
The Directors believe that the carrying value of the remaining investments is supported by their underlying net assets, based on
the impairment assessment carried out, as described in note 10 to the consolidated financial statements.
The disposal in the year relates to the sale of the investment in the AdIntel business, the sale of which completed on
2 January 2019. The profit resulting on disposal was £5,920,000 and has been recognised in the income statement in the year.
115
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements
Notes to the Company financial statements continued
for the year ended 31 December 2019
9. Deferred tax asset
At 1 January 2018
Credit/(charge) to income
Reclassification of available-for-sale asset
At 31 December 2018
Credit to income
At 31 December 2019
The following is the analysis of the deferred tax balance for financial reporting purposes:
Deferred tax assets – non-current
Deferred tax liabilities – current
Deferred tax liabilities – non-current
Deferred tax has been recognised in the year on adoption of IFRS 16.
10. Trade and other receivables
Trade receivables
Amounts owed by Group undertakings
Other receivables
Other taxation and social security
Prepayments
Tangible
assets
£’000
Total
£’000
—
—
—
—
91
91
—
—
—
—
91
91
31 December 31 December
2018
£’000
2019
£’000
91
—
—
91
—
—
—
—
31 December 31 December
2018
£’000
2019
£’000
170
—
21,861
19,954
230
—
451
514
65
651
22,712
21,184
Amounts owed by Group undertakings are unsecured, non-interest bearing, have no fixed date of repayment and are repayable
on demand.
11. Creditors: amounts falling due within one year
Bank loans and overdrafts
Trade creditors
Amounts owed to Group undertakings
Corporation tax
Lease liabilities (note 7)
Other taxation and social security
Accruals
31 December 31 December
2018
£’000
2019
£’000
(36)
787
2,314
1,027
41,817
37,539
15
502
281
—
—
—
1,490
44,856
1,892
42,772
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.
116
Ebiquity plc
12. Creditors: amounts falling due after more than one year
Bank loans – between two and five years
Provisions
Lease liabilities (note 7)
31 December 31 December
2018
£’000
2019
£’000
13,868
33,965
387
4,218
—
—
18,473
33,965
On 20 September 2019, the Group refinanced its banking facilities with Barclays and Royal Bank of Scotland and on
20 September 2019 drew down on these new facilities. The new committed facility, totalling £24,000,000, comprises a revolving
credit facility (‘RCF’) of £23,000,000 (of which £14,000,000 was drawn on refinance) and £1,000,000 available as an overdraft
for working capital purposes. The RCF has a maturity date of 20 September 2023. 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 £168,000 (31 December 2018: £100,000) are offset against the term loan, and are being amortised
over the period of the loan. £36,000 of loan arrangement fees have been included within creditors due within one year and the
balancing £132,000 has been included within creditors due after more than one year.
The facility bears variable interest of LIBOR plus a margin of 2.25%. 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, US, Germany and Australia.
The provision represents the expected costs of vacating the London property. It was recognised on signing the lease agreement
during the year.
Lease liabilities were recognised on the signing of the lease agreement during the year in accordance with IFRS 16.
13. Ordinary shares
Allotted, called up and fully paid
At 31 December 2017 – ordinary shares of 25p
Share options exercised
Shares issued
At 31 December 2018 – ordinary shares of 25p
Share options exercised
Shares issued
At 31 December 2019 – ordinary shares of 25p
Number
of shares
Nominal
value
£’000
78,197,461
19,549
—
915,729
—
229
79,113,190
19,778
—
1,002,436
—
251
80,115,626
20,029
Ordinary shares carry voting rights which are entitled to share in the profits of the Company. During the year, the Company paid
a dividend of 0.71p per share, a total of £534,000 (31 December 2018: 0.71p with a total of £527,000), to shareholders.
117
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements
Notes to the Company financial statements continued
for the year ended 31 December 2019
14. Reserves
Share premium
The share premium reserve shows the amount subscribed for share capital in excess of the nominal value.
Other reserves
Other reserves consists of the merger reserve and ESOP reserve.
Merger reserve
The merger reserve arose on the issuance of shares at a premium on a Group restructure, where the premium on issue qualified
for merger relief. There has been no movement in the year.
ESOP reserve
The ESOP reserve represents the cost of own shares acquired in the Company by the Employee Benefit Trust (‘EBT’).
The purpose of the EBT is to facilitate and encourage the ownership of shares by employees, by acquiring shares in the Company
and distributing them in accordance with employee share schemes. The EBT may operate in conjunction with the Company’s
existing share option schemes and other schemes that may apply from time to time.
The ESOP trusts were created to award shares to certain employees at less than market value. The trusts in aggregate hold
unallocated shares costing £1,471,000 (31 December 2018: £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 2018: 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 2018: all had vested).
Retained earnings
The retained earnings reserve shows the cumulative net gains and losses recognised in the income statement. For detailed
movements on each of the above reserves, refer to the statement of changes in equity.
The distributable reserves of the Company total £nil (31 December 2018: £3,014,000).
A capital reduction will be completed in order to increase distributable reserves post year end to enable future dividends to
be declared.
15. Share-based payments
Full disclosure of share-based payments is included in the consolidated financial statements (see note 26 to the consolidated
financial statements).
16. Commitments
Capital commitments contracted but not provided for by the Company amount to £nil (31 December 2018: £nil).
17. 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.
18. 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 33 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.
118
Ebiquity plc 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 20 May 2020, the Company’s
issued share capital consists of
80,125,626 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 20 May 2020, the percentage of
the Company’s issued share capital that
is not in public hands is 66.49%.
Company registration
Registered office
Chapter House
16 Brunswick Place
London N1 6DZ
Company number 03967525
119
Annual report and financial statements for the year ended 31 December 2019Strategic reportCorporate governanceFinancial statements Glossary
AdIntel
Advertising Intelligence
AIM
ANA
Board
CEO
CGUs
Digital
Decisions
Alternative Investment Market
Association of National Advertisers
the Board of Directors of Ebiquity plc
Chief Executive Officer
cash-generating units
Digital Decisions B.V
Ebiquity Italy Ebiquity Italy Media Advisor S.r.l
Ebiquity or
the Company
Ebiquity plc
EBIT
earnings before interest and tax
EBITDA
earnings before interest, tax, depreciation
and amortisation
EBT
EIP
Employee Benefit Trust
Executive Incentive Plan
EMI scheme Enterprise Management Incentive scheme
EPS
ESOP
FMCG
FRS 101
earnings per share
Executive Share Option Plan
fast-moving consumer goods
Financial Reporting Standard 101 ‘Reduced
Disclosure Framework’
IASB
IFRS
IPA
ISBA
KPIs
International Accounting Standards Board
International Financial Reporting Standards
Institute of Practitioners in Advertising
Incorporated Society of British Advertisers
key performance indicators
LIBOR
London Interbank Offered Rate
Like‑for‑like
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
LTIP
Long-Term Incentive Plan
Net debt
long-term borrowings, short-term borrowings
less cash and cash equivalents
Nielsen
Nielsen Media Research Limited
PwC
PricewaterhouseCoopers LLP
QCA Code
Quoted Companies Alliance
Corporate Governance Code
RCF
ROI
TSR
revolving credit facility
return on investment
total shareholder return
UCSOP
Unapproved Company Share Option Plan
Underlying
performance
underlying performance refers to the results
of operations before highlighted items
FVOCI
fair value through other comprehensive income
WFA
World Federation of Advertisers
FVPL
fair value through profit or loss
the Group
Ebiquity plc and its subsidiaries
Highlighted highlighted items comprise non-cash
items
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
120
Ebiquity plc The paper used in this report is produced using virgin wood fibre from well-managed,
FSC®-certified forests and other controlled sources. All pulps used are elemental
chlorine free and manufactured at a mill that has been awarded the ISO 14001 and
EMAS certificates for environmental management. The use of the FSC® logo identifies
products which contain wood from well-managed forests and other controlled sources
certified in accordance with the rules of the Forest Stewardship Council®.
Designed and produced by
Printed by an FSC® and ISO 14001 certified company.
www.lyonsbennett.com
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Ebiquity plc
Chapter House
16 Brunswick Place
London N1 6DZ
www.ebiquity.com
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