Slide 1: Results Presentation
Results Presentation Year ended 31 December 2017 March 2018 1
Slide 2: Agenda
2017 FULL YEAR RESULTS PRESENTATION Agenda I 2017 Review II Disposal of Advertising Intelligence III Financial Performance IV Strategic Opportunity V Our Business VI Financial Appendices 2
Slide 3: We help Fortune 500 clients drive accountability in marketing and media
BUSINESS CASE We help Fortune 500 clients drive accountability in marketing and media 3
Slide 4: With 20 offices globally, we offer full coverage of the world's largest advertising markets
BUSINESS CASE With 20 offices globally, we offer full coverage of the world’s largest advertising markets Ebiquity market presence Additional FirmDecisions Offices Ebiquity Local Affiliates 4
Slide 5: I) 2017 Review
I) 2017 Review
Slide 6: 2017 was a year of change; we reached a series of significant milestones
2017 REVIEW 2017 was a year of change; we reached a series of significant milestones on our multi-year transformational journey KEY MILESTONES: Announced the planned sale of Advertising Intelligence business to Nielsen and divestiture of project-based Reputation business (all of MI segment) Announce
Slide 7: Our revenues are up +4.6% to £87.4m, delivering £12.0m operating profit
2017 REVIEW Our revenues are up +4.6% (LFL CC +0.8%) to £87.4m, delivering £12.0m in operating profit at 13.8% margin Year ended Year ended December 2017 December 2016 Revenue £87.4m £83.6m • Excluding MI segment, revenue up +6.7% to £64.2m (2016: £60.2m), with like-for-like, constant currency reven
Slide 8: We made clear progress against our Growth Acceleration Plan
2017 REVIEW We made clear progress against our Growth Acceleration Plan Progress Against GAP Alignment with Planned disposal of Advertising Intelligence division Consultancy Model Disposed project-based Reputation business Hired new talent into multiple key roles across key geographies Rolle
Slide 9: To continue progress towards our growth plan, we will focus on five areas
2017 REVIEW To continue progress towards delivering our growth plan, we will focus on five areas in 2018 Capitalise and build on our market-leading expertise in media Expand and deepen our analytics service offering in key local markets Continue to enhance our digital services Establish and roll-out
Slide 10: II) Disposal of Advertising Intelligence
II) Disposal of Advertising Intelligence
Slide 11: We have agreed to divest our Advertising Intelligence business to Nielsen
DISPOSAL OF ADVERTISING INTELLIGENCE We have agreed to divest our Advertising Intelligence business (>90% of our Market Intelligence segment) to Nielsen › Entered into an agreement for the disposal of our Advertising Intelligence division (“AdIntel”) to Nielsen › Sale includes all core assets and li
Slide 12: Sale of AdIntel division fully aligns with our Growth Acceleration Plan
DISPOSAL OF ADVERTISING INTELLIGENCE Sale of AdIntel division fully aligns with our Growth Acceleration Plan and enables us to focus on structural market growth trends Strategically Aligns the business with market opportunities within our MVM and MPO 1 Sound segments and our Growth Acceleration Plan
Slide 13: The sale of AdIntel leaves a faster growing, lower leveraged core business
DISPOSAL OF ADVERTISING INTELLIGENCE The sale of AdIntel leaves a faster growing, lower leveraged core business RETAINED BUSINESS HAS HISTORICALLY NET DEBT RATIO OF RETAINED BUSINESS GROWN AT ~2x FASTER RATE SIGNIFICANTLY LOWER 2014 TO 2017 REVENUE GROWTH12 £87.4m Net Debt to EBITDA Ratio £77.5m Ebi
Slide 14: The disposal will provide the headroom to fund future acquisitions
DISPOSAL OF ADVERTISING INTELLIGENCE The disposal will provide the headroom to fund future acquisitions, with two focus areas PRIMARY FOCUS: SECONDARY FOCUS: Goal Achieve leading position in US market Innovate and scale our global offering Pursue smaller, opportunistic acquisitions on a Make a trans
Slide 15: III) Financial Performance
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Slide 16: Our revenues are up +4.6% to £87.4m, delivering £12.0m in operating profit
2017 REVIEW Our revenues are up +4.6% (LFL CC +0.8%) to £87.4m, delivering £12.0m in operating profit at 13.8% margin Year ended Year ended • Operating margin at 13.8% reflecting investment December 2017 December 2016 in growth acceleration plan and disappointing Revenue £87.4m £83.6m performance in
Slide 17: MVM revenue up +9.3%, performance in line with expectations outside the US
FINANCIALS – MVM SEGMENT MVM revenue up +9.3%, performance in line with expectations outside of the US, with strong growth from contract compliance Year ended Year ended MVM • In the US first half trend of clients facing cuts Dec 2017 Dec 2016 to their marketing and advertising budgets and Revenue 5
Slide 18: In MPO, our US performance impacted segment revenue and margins in 2017
FINANCIALS – MPO SEGMENT In MPO, our US performance impacted segment revenue and margins in 2017 • Performance impacted by the significant decline Year ended Year ended in revenue from the US of -19.8% (LFLCC), having MPO Dec 2017 Dec 2016 grown by more than +50% from 2014 to 2016 Revenue 12,746 13,
Slide 19: Market Intelligence revenues declined by -0.9% with lower margins
FINANCIALS – MI SEGMENT Market Intelligence revenues declined by -0.9% (LFL CC -3.1%) with lower margins reflecting investment in digital platform Year ended Year ended • Revenue from the Advertising Intelligence MI Dec 2017 Dec 2016 business were flat at +0.1% on a like-for like constant currency b
Slide 20: Operating profits were weighted fairly evenly across the year in 2017
FINANCIALS Operating profits were weighted fairly evenly across the year in 2017 with consistent split for revenue Revenue H1 v H2 (£’M) OP % H1 v H2 H1 2016 42.3 20.3% H2 2016 41.3 10.6% FY2016 83.6 15.5% 76.6 H1 2017 44.6 15.1% H2 2017 42.8 12.4% FY2017 87.4 13.8% 20
Slide 21: Net debt increased by £0.7m over the last 12 months
FINANCIALS Net debt increased by £0.7m over the last 12 months £m (11.2) 3.1 3.0 2.2 0.5 (0.2) 3.3 28.9 28.2 Net Debt Cash from Interest Acquisitions Capex Dividends Share Highlighted Net Debt @1/1/17 Operations & Tax Proceeds Items @31/12/17 21
Slide 22: Increase in trade debtors and accrued income consistent with revenue increase
FINANCIAL PERFORMANCE Increase in trade debtors and accrued income consistent with revenue increase Trade debtors & Accrued Net debt/EBITDA income (£’M) Dec 15 13.9 2.04 Jun 16 21.0 1.89 Dec 16 19.3 1.94 Jun 17 21.6 2.07 Dec 17 22.6 2.11 22
Slide 23: IV) Strategic Opportunity
IV) Strategic Opportunity
Slide 24: We see two main drivers creating mid-to-long term opportunities for us
STRATEGIC OPPORTUNITY We see two main drivers creating mid-to-long term opportunities for us I II Client-driven structural trends offering Changes to competitive dynamics driving mid-to-long term opportunities for our long-term advantages for independent consulting services advisory services in mark
Slide 25: Four key industry trends are providing positive client-driven opportunities
STRATEGIC OPPORTUNITY A Four key industry trends are providing positive client-driven opportunities for our consulting segments MVM and MPO SEGMENTS MID-LONG TERM GROWTH OPPORTUNITY PRIMARY CLIENT-DRIVEN TRENDS IMPACTED 1 Strong demand for Contract Compliance and Media Strong client desire for more
Slide 26: Four key industry trends: media transparency and digital scrutiny
STRATEGIC OPPORTUNITY A Four key industry trends are providing positive client-driven opportunities for our consulting segments MVM and MPO 1 2 Digital advertising performance increasingly under scrutiny Strong client desire for more Media Transparency from advertisers Top concerns for marketers in
Slide 27: Four key industry trends: in-sourcing and technology complexity
STRATEGIC OPPORTUNITY A Four key industry trends are providing positive client-driven opportunities for our consulting segments MVM and MPO 3 Clients increasingly in-sourcing marketing activities, yet confronted with elevated technology and data complexity ADVERTISERS CONTINUE TO IN-SOURCE CMO & CIO
Slide 28: Four key industry trends: evidence-based marketing and ROI
STRATEGIC OPPORTUNITY A Four key industry trends are providing positive client-driven opportunities for our consulting segments MVM and MPO 4 Brands increasingly focused on evidence-based marketing, leveraging data to drive performance, and marketing ROI ANALYTICS IS EXPECTED TO GROW MARKETERS’ 2nd
Slide 29: Changing competitive dynamics are creating long-term opportunities for independent advisory
STRATEGIC OPPORTUNITY B Changing competitive dynamics are creating long-term opportunities for independent advisory services CHANGES TO COMPETITIVE DYNAMICS LONG-TERM OPPORTUNITY Agencies position as Our traditional C-Suite advisors lack trusted advisors to competitors our depth of expertise CMOs er
Slide 30: In Summary...
In Summary...
Slide 31: Continuing transformation to take advantage of structural growth opportunities
Summary Continuing transformation to be able to take advantage of mid-to-long term structural growth opportunities › Significant year of change › Continued progress against and ongoing investment towards achieving our Growth Acceleration Plan › US operations strengthened through key hires › Better a
Slide 32: V) Our Business
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Slide 33: We are a leading independent data & analytics consultancy specialising in media and marketing
BUSINESS CASE We are a leading independent data & analytics consultancy specialising in media and marketing 33
Slide 34: We have recently revised our practice areas
BUSINESS CASE We have recently revised our practice areas to make our go-to- market offering better aligned with market opportunities media analytics tech intel Announced divestiture 34
Slide 35: Each practice tackles one of today's critical marketing challenges
BUSINESS CASE Each practice tackles one of today’s critical marketing challenges media analytics tech Achieve greater Build an evidence- Deploy the right transparency of based marketing technology effectively your media spend programme rooted to create a single and performance in data and analytics
Slide 36: This is delivered through a comprehensive service offering
BUSINESS CASE This is delivered through a comprehensive service offering media analytics tech Consulting Performance Effectiveness Strategy Agency Selection & Media Performance Marketing Attribution Tech & Data Strategy Management Assessments Marketing Mix Modelling Tech & Data Vendor Media Plan Rev
Slide 37: Our primary differentiators: leadership, reach among top advertisers, data, analytics
BUSINESS CASE Our primary differentiators: a clear leadership position in core services, reach among top advertisers, data, and our analytics technology We are helping the world’s leading brands build accountability into their marketing activities Scale & Reach Capabilities Market Leadership Top Glo
Slide 38: VI) Financial Appendices
VI) Financial Appendices
Slide 39: 2017 pro-forma results excluding MI segment
FINANCIAL APPENDICES 2017 pro-forma results excluding MI segment 2017 MI Reallocation of 2017 Reported Segment overheads to ex. MI Segment retained (pro-forma) business Revenue £87.4m £(23.2)m £64.2m EBIT £12.0m £(3.2)m £(1.0)m £7.8m EBIT margin 13.8% 13.7% N/A 12.2% Net Debt £28.9m - - £8.9m Net De
Slide 40: 3.4% positive foreign exchange impact on revenue
FINANCIAL APPENDICES 3.4% positive foreign exchange impact on revenue Euro £1.4m positive impact 34% on revenue 2016 fx rate 1.22 2017 fx rate 1.14 GBP US Dollar 30% Revenue by £0.6m positive impact currency 24% on revenue 2016 fx rate 1.36 2017 fx rate 1.29 AUS Dollar £0.5m positive impact 8% on re
Slide 41: Segmental reporting
FINANCIAL APPENDICES Segmental reporting 12m to December 2017 MVM MI MPO Total segments Central costs Total Revenue 51,482 23,146 12,746 87,374 - 87,374 Underlying operating profit 14,037 3,163 1,646 18,846 (6,820) 12,026 Margin 27.3% 13.7% 12.9% 21.6% 13.8% 12m to December 2016 MVM MI MPO Total seg
Slide 42: Highlighted items
FINANCIAL APPENDICES Highlighted items 12 months to 12 months to 31 December 2017 31 December 2016 Cash Non-cash Total Cash Non-cash Total Share options charge/(credit) 9 729 738 (92) 652 560 Amortization of purchased intangibles - 1,952 1,952 - 1,865 1,865 Severance and reorganisation costs 2,052 3
Slide 43: Profit before tax
FINANCIAL APPENDICES Profit before tax 12 months to 12 months to 31 December 2017 31 December 2016 Underlying operating profit/(loss) 12,026 12,959 Highlighted items (6,491) (5,202) Reporting operating profit/(loss) 5,535 7,757 Net finance costs/associates (1,044) (1,132) Reported profit/(loss) befo
Slide 44: Underlying effective tax rate for the 12m to December 2017
FINANCIAL APPENDICES Underlying effective tax rate for the 12m to December 2017 12m to Dec Effective 2017 tax rate Underlying operating 12,026 profit Interest/associates (1,044) Underlying PBT 10,982 CY Corp tax (2,613) CY Def tax (412) 26.4% PY under-prov’n 129 Underlying tax charge (2,896) Underly
Slide 45: Outstanding deferred consideration
FINANCIAL APPENDICES Outstanding deferred consideration As at 31 December 2016 2017 2016 Digital Balance Australia Ireland Nature of business Media auditing in Australia Media auditing in Ireland Operations Perth Dublin Transaction date 1 September 2017 11 March 2016 Transaction detail 100% acquisit
Slide 46: Statement of financial position
FINANCIAL APPENDICES Statement of financial position December 2017 December 2016 Non current assets Goodwill 59,317 58,045 Purchased intangibles 7,966 9,532 Other 8,488 8,278 75,771 75,855 Current assets Trade debtors 20,978 19,291 Accrued income 8,706 7,073 Cash 4,325 6,662 Prepayments 1,132 1,207
Slide 47: Cash flow statement
FINANCIAL APPENDICES Cash flow statement Year ending Year ending 31 December 2017 31 December 2016 Cash generated from operations 7,948 10,782 Net finance expense (921) (1,074) Income taxes paid (2,207) (166) Net cash from operating activities 4,820 9,542 Investing activities Net acquisition of subs
Slide 48: Cash generated from operations
FINANCIAL APPENDICES Cash generated from operations Year ending Year ending 31 December 2017 31 December 2016 Profit before tax 4,491 6,625 Adjustments 5,459 6,991 9,950 13,616 Increase in trade receivables (4,094) (3,968) Increase in trade payables 2,101 (£2,002k) 1,313 (£2,834k) Decrease in provis
Slide 49: Net debt analysis
FINANCIAL APPENDICES Net debt analysis 31-Dec-17 £35,000 £30,000 • Net debt Dec 2017 of £28.9m (Dec 2016 of £28.2m ) £25,000 • Net debt: EBITDA of 2.11x £20,000 • Interest at 2.5% above LIBOR £15,000 • £3.0m drawn in the last 12m towards £3.0m of £10,000 acquisition payments £5,000 • £2.5m debt repa
Slide 50: Cash and net debt analysis
FINANCIAL APPENDICES Cash and net debt analysis Cash Gross debt Net debt Opening at 1 January 2017 4,600 (32,750) (28,150) Trading cash flow 7,948 7,948 Interest and tax (3,128) (3,128) Debt repayments (2,500) 2,500 - Drawdown for acquisitions 3,000 (3,000) - Payments for acquisitions (3,082) (3,082
Slide 51: Summary of banking facility
FINANCIAL APPENDICES Summary of banking facility • £40m multi-currency facility in place, maturing in June 2019 • Term loan of £10m of which £1.25 was drawn, repayable by June 2018 • Includes £30m RCF of which £29m was drawn and £1.0m available • Accordion option of a further £20m, £3m drawn at 31 D
Slide 52: Cash conversion
FINANCIAL APPENDICES Cash conversion Year to Year to 31 December 2017 31 December 2016 Reported cash from operations 7,948 10,782 Underlying cash from operations 11,203 11,342 Underlying operating profit 12,026 12,959 Cash conversion 93.2% 87.5% 52
Slide 53: Shareholder analysis at 28 February 2018
FINANCIAL APPENDICES Shareholder analysis at 28 February 2018 (greater than 5% holding) Name Holding % Holding Name Holding % Holding Options Artemis 12,142,282 15.5% Michael Karg - - 1,100,000 T Rowe Price 8,557,742 10.9% Andrew Noble - - 340,295 Kabouter 8,093,228 10.3% Morag Blazey - - 483,199 JO
Slide 54: Recent performance
FINANCIAL APPENDICES Recent performance Year end April 12 April 13 April 14 April 15 Dec 15¹ Dec 16 Dec 17 Revenue 52,919 64,046 68,452 73,874 76,584 83,569 87,374 growth 20% 21% 7% 8% 4% 9% 5% Op profit 8,205 10,441 11,339 11,729 12,411 12,959 12,026 margin 15.5% 16.3% 16.6% 15.9% 16.2% 15.6% 13.8%
Slide 55: Thank You
Thank You