Slide 1: Results Presentation Year ended 31 December 2016
Results Presentation Year ended 31 December 2016 March 2017 1
Slide 2: Agenda
RESULTS PRESENTATION Agenda I 2016 review IV Financials & Outlook II How we drive value V Appendices III Market Context 2
Slide 3: I) 2016 Review
I) 2016 REVIEW 3
Slide 4: A year of progress and change
2016 REVIEW A year of progress and change Growing revenue contribution from MVM and MPO – which now account for 72% versus 68% in 2015 Within AI, launched new Portfolio Media platform globally and Portfolio Digital in Australia ANA1 report firmly established us as a global thought leader in Media Tr
Slide 5: Continued revenue, profit and earnings growth
2016 REVIEW Continued revenue, profit and earnings growth 9% revenue growth, with significant benefit from f/x , 2.1% LFL CC revenue growth Underlying operating profit margin to 15.6% Growth in underlying diluted EPS to 11.3p Increase in proposed dividend to 0.65p per share Underlying cash conversio
Slide 6: Progress against key milestones
2016 REVIEW Progress against key milestones Milestone (as presented in September 2016) Q4 2016 Implement new organisational structure Introduce Strategic Media Consultancy service offering Launch Digital Attribution Model Kick-off phase 1 of Growth Support Programme (GSP) Release of 2-year marketing
Slide 7: Progress against key milestones – further detail
2016 REVIEW Progress against key milestones – further detail: Milestone (as presented in September 2016) Q4 2016 Implemented new organisational structure Introduced Strategic Media Consultancy service offering Launch Digital Attribution Model Product launch planned for Q2 2017 Kick-off phase 1 of Gr
Slide 8: Continued growth since last reported results
2016 REVIEW Continued growth since last reported results Year ended Year ended December 2016 December 2015 Revenue £83.6m £76.6m Op Profit £13.0m £12.4m Op Mgn 15.6% 16.2% PBT £11.8m £11.2m EPS (u/l dil) 11.3p 10.8p 8
Slide 9: 5.8% positive foreign exchange impact on revenue
2016 REVIEW 5.8% positive foreign exchange impact on revenue Euro 33% £2.1m positive impact on revenue 2015 fx rate 1.377 2016 fx rate 1.225 GBP US Dollar Revenue by 32% currency 25% £1.7m positive impact on revenue 2015 fx rate 1.528 2016 fx rate 1.356 AUS Dollar 6% £0.5m positive impact on revenue
Slide 10: MVM and MPO represent 72% of total revenue, up from 68% in 2015
2016 REVIEW MVM and MPO represent 72% of total revenue, up from 68% in 2015 MVM £47.2m 56% LFL CC growth vs 2015 +3.6% Total growth vs 2015 +12.3% MI £23.4m 28% LFL CC growth vs £83.6m 2015 -8.5% Total growth vs 2015 -5.2% MPO £13.0m 16% LFL CC growth vs 2015 +21.6% Total growth vs 2015 +31.2% 10
Slide 11: Group operating margin of 15.6%
2016 REVIEW Group operating margin of 15.6% MVM £12.1m 61% 25.7% margin (2015: 28.7%) MI £3.9m £19.8m¹ 20% 16.7% margin (2015: 14.9%) MPO £3.7m 19% 28.7% margin (2015: 28.2%) Trading op profit¹ £19.8m Central costs (£6.8m) Total op profit £13.0m 15.6% 11
Slide 12: II) How we drive value
II) HOW WE DRIVE VALUE 12
Slide 13: Ebiquity is a world-leading, technology-enabled, independent consultancy
HOW WE DRIVE VALUE Ebiquity is a world-leading, technology-enabled, independent consultancy, specializing in marketing and media analytics 13
Slide 14: We go to market via a highly specialised service offering
HOW WE DRIVE VALUE We go to market via a highly specialised service offering Media Value Marketing Performance Market Management (MVM) Optimization (MPO) Intelligence (MI) Helping clients to increase Enabling clients to decide where Providing clients with a clear efficiency and transparency in to al
Slide 15: Our key differentiators are
HOW WE DRIVE VALUE Our key differentiators are Deep subject-matter Entry into 80 of the Truly expertise in Marketing world’s top 100 Global scale, local independent and Media global advertisers expertise 15
Slide 16: We help clients improve the return on marketing investments
HOW WE DRIVE VALUE We help clients improve the return on marketing investments— with a typical ROI of five to ten times our fees • Buying the same quality media for less • Optimizing consumer money journeys (e.g. conversion rate optimization) • Improving efficiency of marketing spend • Driving effec
Slide 17: III) Market Context
III) MARKET CONTEXT 17
Slide 18: Media transparency issues are starting to get primetime coverage and attention
MARKET CONTEXT Media transparency issues are starting to get primetime coverage and attention “Only 40 per cent of a “We serve ads through a marketer’s digital dollar “2016 has been a non-transparent media reaches the consumer.” challenging year for the supply chain, poor industry across the standar
Slide 19: But there is lots of work left to do…
MARKET CONTEXT But there is lots of work left to do… In programmatic digital media trading, we have observed cases where only circa 15c of every 1$ reach a real audience ~5% ~15% ~10% ~25% $1.00 ~5% 10-20% ~45-55% $0.40 reaches a publisher $0.15-0.20 reaches a consumer Client Agency of Agency Demand
Slide 20: Convincing marketers to understand true effectiveness of digital spend will take time
MARKET CONTEXT Convincing marketers to understand the true effectiveness of their digital spend will take time INDUSTRY FORCES AT PLAY Shiny object syndrome The industry is easily drawn to hype around new digital offerings Many people in the industry don’t come from a digital background; Staring up
Slide 21: Even measurement standards will take time to catch up
MARKET CONTEXT Even measurement standards will take time to catch up SAMPLE INDUSTRY-STANDARD METRICS EBQ RECOMMENDED METRICS >50% of video in view for 2+ seconds >75% in view for 5+ seconds >50% of display ads in view for 1+ second >70% in view for 3+ seconds Impressions to measure reach Unique vie
Slide 22: Partnering with advertiser associations globally
MARKET CONTEXT For many years, we have been successfully partnering with advertiser associations globally 22
Slide 23: Ebiquity is influencing the dialogue around media transparency
MARKET CONTEXT Ebiquity is influencing the dialogue around media transparency issues, helping create industry-wide momentum P&G’s Marc Pritchard gives agencies and tech suppliers a year Oct to become 2015 transparent Mar July Jan Feb 2016 Sept 2017 Major global 250+ brands EBQ appointed by ANA to co
Slide 24: IV) Financials & Outlook
IV) FINANCIALS & OUTLOOK 24
Slide 25: Continued strong growth from core MVM offering across 14 markets
FINANCIALS Continued strong growth from core MVM offering across 14 markets worldwide 12m to 12m to MVM Dec 2016 Dec 2015 Revenue 47,161 41,998 Operating profit 12,124 12,057 Margin 25.7% 28.7% 25
Slide 26: Continued strong growth from core MVM offering
FINANCIALS Continued strong growth from core MVM offering— 12.3% year-over-year Strong demand for International, Digital and Pitch Management services Revenue growth held back by contract compliance business, (LFL CC growth of 3.6%, excluding contract compliance LFL CC growth of 6.6%) Significant cu
Slide 27: Within MI, revenues generated out of 5 countries
FINANCIALS Within MI, revenues generated out of 5 countries with coverage of over 90 markets worldwide 12m to 12m to MI Dec 2016 Dec 2015 Revenue 23,360 24,650 Operating profit 3,902 3,668 Margin 16.7% 14.9% 27
Slide 28: Within MI, Ad Intel total revenue grew +1.7% globally
FINANCIALS Within MI, Ad Intel total revenue grew +1.7% globally; as expected project revenues in Reputation declined Ad Intel (Portfolio) subscription revenue, more than 90% of MI revenue, LFL CC revenue down 1.7% Ad Intel renewal rate of 88% by monetary value Portfolio Media launched September 201
Slide 29: Continued standout revenue growth in MPO
FINANCIALS Continued standout revenue growth in MPO, served from three markets in 2016 12m to 12m to MPO Dec 2016 Dec 2015 Revenue 13,037 9,936 Operating profit 3,739 2,802 Margin 28.7% 28.2% 29
Slide 30: Continued standout revenue growth in MPO, up 31.2%
FINANCIALS Continued standout revenue growth in MPO, up 31.2% Continued rapid growth in demand for services. Revenue growth of 21.6% LFL CC Now accounts for 16% of the group (PY 13%) Geographical expansion commenced with first Marketing effectiveness win in Asia Pacific in H2 2016, and roll out unde
Slide 31: Cross-selling analysis – clients taking more than 1 service
FINANCIALS Cross-selling analysis – increasing number of clients taking more than 1 service. All clients 2012/13 2013/14 2014/15 2015 2016 2 services 11% 11% 13% 13% 15% 2+ services 14% 15% 17% 18% 21% 3+ services 3% 4% 4% 5% 6% 31
Slide 32: Revenues and operating margins first half weighted
FINANCIALS Revenues and operating margins first half weighted Revenue H1 v H2 (£’M) OP % H1 v H2 H1 2015 39.6 H1 2015 20.0% H2 2015 37.0 H2 2015 12.1% FY 2015 76.6 FY 2015 16.2% 76.6 H1 2016 42.3 H1 2016 20.3% H2 2016 41.3 H2 2016 10.6% FY2016 83.6 FY 2016 15.6% 32
Slide 33: Net debt reduced by £0.7m over the last 12 months
FINANCIALS Net debt reduced by £0.7m over the last 12 months with £4.4m of acquisition payments £m 30 £0.7m reduction 28.9 10.8 28.2 1.2 25 2.4 0.8 4.4 20 1.2 15 33
Slide 34: Working capital decrease; Net debt/EBITDA reduced
FINANCIALS Working capital decrease from June 2016 Net debt/EBITDA reduced from 31 December 2015 Net Working capital (£’M) Net debt/EBITDA Jun 15 10.4 Jun 15 2.34 Dec 15 5.4 Dec 15 2.04 Jun 16 12.5 Jun 16 1.89 Dec-16 10.6 Dec-16 1.94 34
Slide 35: Improvement in key metrics
FINANCIALS Improvement in key metrics Revenue Diluted EPS £83.6m +9% 11.3p +5% Profit before tax Net Debt/EBITDA £11.8m +5% 1.94x (2015: 2.04x) 35
Slide 36: 2017 Outlook
FINANCIALS 2017 Outlook Continued delivery on our growth acceleration plan Ongoing investment into expanding our digital services across our three practice areas Well positioned to shape global media discussions and influence industry-wide debate Our plans for the business and current industry dynam
Slide 37: V) Appendices
V) APPENDICES 37
Slide 38: Segmental reporting
FINANCIAL APPENDICES Segmental reporting 12m to December 2016 MVM MI MPO Total segments Central costs Total Revenue 47,161 23,360 13,048 83,569 - 83,569 Underlying operating profit 12,124 3,902 3,739 19,765 (6,806) 12,959 Margin 25.7% 16.7% 28.7% 23.7% 15.5% 12m to December 2015 MVM MI MPO Total seg
Slide 39: Highlighted items
FINANCIAL APPENDICES Highlighted items 12 months to 12 months to 31 December 2016 31 December 2015 Recurring (cash) – share options (92) - Recurring (non-cash) – share options and IFA amortisation 2,517 2,931 Non recurring (cash) – acquisitions and restructuring 2,777 1,471 Non recurring (non cash)
Slide 40: Profit before tax
FINANCIAL APPENDICES Profit before tax 12 months to 12 months to 8 months to 31 December 2016 31 December 31 December 2015 2015 Underlying operating profit/(loss) 12,959 12,411 (3) Highlighted items (5,202) (8,768) (6,656) Reporting operating profit/(loss) 7,757 3,643 (6,659) Net finance costs/assoc
Slide 41: Underlying effective tax rate
FINANCIAL APPENDICES Underlying effective tax rate for the 12m to December 2016 12m to Dec Effective 2016 tax rate Underlying operating 12,959 profit Interest/associates (1,132) Underlying PBT 11,827 CY Corp tax (2,322) 20.9% CY Def tax (159) PY under-prov’n (89) Underlying tax charge (2,570) Underl
Slide 42: Outstanding deferred consideration
FINANCIAL APPENDICES Outstanding deferred consideration As at 31 December 2016 2013/14 2014/15 2016 CMCG Media Value Ireland Nature of business Media auditing in China Media auditing in Spain/Portugal Media auditing in Ireland Operations Shanghai and Beijing Madrid/Barcelona/Lisbon Dublin Transactio
Slide 43: Statement of financial position
FINANCIAL APPENDICES Statement of financial position December 2016 December 2015 Non current assets Goodwill 58,045 54,827 Purchased intangibles 9,532 10,370 Other 8,278 8,397 75,855 73,594 Current assets Trade debtors 19,291 16,283 Accrued income 7,073 5,253 Cash 6,662 8,755 Prepayments 1,207 1,678
Slide 44: Cash flow statement
FINANCIAL APPENDICES Cash flow statement Year ending Year ending 31 December 2016 31 December 2015 Cash generated from operations 10,782 11,515 Net finance expense (1,074) (1,009) Income taxes paid (166) (1,062) Net cash from operating activities 9,542 9,444 Investing activities Net acquisition of s
Slide 45: Cash generated from operations
FINANCIAL APPENDICES Cash generated from operations Year ending Year ending 31 December 2016 31 December 2015 Profit before tax 6,625 2,462 Adjustments 6,992 9,924 13,617 12,386 Increase in trade receivables (3,968) (5,434) Increase in trade payables 1,312 (£2,835k) 4,650 (£871k) Decrease in provisi
Slide 46: Net debt analysis
FINANCIAL APPENDICES Net debt analysis 31-Dec-16 £35,000 • Net debt Dec 2016 of £28.2m (Dec 2015 £30,000 of £28.9m ) £25,000 • Net debt:EBITDA of 1.91x • Interest at 2.5% above LIBOR £20,000 • £3.3m drawn in the last 12m towards £15,000 £4.4m of acquisition payments £10,000 • £6.4m debt repayments m
Slide 47: Cash and net debt analysis
FINANCIAL APPENDICES Cash and net debt analysis Cash Gross debt Net debt Opening at 1 January 2016 6,364 (35,250) (28,886) Trading cash flow 10,782 10,782 Interest and tax (1,240) (1,240) Debt repayments (6,411) 6,411 - Drawdown for acquisitions 3,336 (3,336) - Payments for acquisitions (4,431) (4,4
Slide 48: Summary of banking facility
FINANCIAL APPENDICES Summary of banking facility • £40m multi-currency facility in place, maturing in July 2018 • Includes £30m RCF of which £29m was drawn and £1.0m available • Term loan of £10m of which £3.8 was drawn • Accordion option to increase by a further £20m • Interest rate of 2.5% plus LI
Slide 49: Cash conversion
FINANCIAL APPENDICES Cash conversion Year to Year to 31 December 2016 31 December 2015 Reported cash from operations 10,782 11,515 Underlying cash from operations 11,342 13,673 Underlying operating profit 12,959 12,411 Cash conversion 87.5% 110.2% 49
Slide 50: Shareholder analysis at 28 February 2017
FINANCIAL APPENDICES Shareholder analysis at 28 February 2017 Name Holding % Holding Name Holding % Holding Options Artemis 12,052,282 15.6% Michael Karg - - 500,000 T Rowe Price 8,337,921 10.8% Andrew Noble - - 60,000 Kabouter 8,142,430 10.6% Nick Manning 230,000 0.30% 2,543,490 JO Hambro 7,111,150
Slide 51: Recent performance
FINANCIAL APPENDICES Recent performance Year end April 11 April 12 April 13 April 14 April 15 Dec 15¹ Dec 16 Revenue 44,165 52,919 64,046 68,452 73,874 76,584 83,569 growth 108% 20% 21% 7% 8% 4% 9% Op profit 5,298 8,205 10,441 11,339 11,729 12,411 12,959 margin 12.0% 15.5% 16.3% 16.6% 15.9% 16.2% 15
Slide 52: Thank You
Thank You 52