Ebiquity Plc · LSE:EBQ
Ebiquity — H1 2017 Earnings Presentation
51 slides from Ebiquity's earnings presentation, September 2017
Slide 1: Interim Results Presentation, 6 Months Ended 30 June 2017
INTERIM RESULTS PRESENTATION 6 MONTHS ENDED 30 JUNE 2017 September/October 2017
Slide 2: Agenda
RESULTS PRESENTATION Agenda I Half Year Review IV Outlook II Financial Performance V Our Business III Market Context VI Financial Appendices 2
Slide 3: I) Half Year Review
I) HALF YEAR REVIEW
Slide 4: Operational and management highlights
HALF YEAR REVIEW Operational and management highlights Continued to achieve the milestones set-out in the Growth Acceleration Plan (GAP) Focus on Media Transparency by clients has driven excellent growth of Contract Compliance business Good revenue performance from Europe and APAC offset by weaker p
Slide 5: Financial highlights
HALF YEAR REVIEW Financial highlights as follows Reported revenue up 5.6% to £44.6m Positive impact of exchange rates boosts revenue growth by 5.9% Underlying operating profit of £6.7m, reflecting more even split of H1/H2 earnings in 2017 Underlying operating cashflow conversion up significantly to
Slide 6: Key milestones as presented in September 2016
HALF YEAR REVIEW Key milestones as presented in September 2016 Milestones 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 programme Co
Slide 7: Key milestones as presented in September 2016
HALF YEAR REVIEW Key milestones as presented in September 2016 Milestones (as presented in September 2016) Q4 2016 Implement new organisational structure Completed Q4 2016 Introduce Strategic Media Consultancy service offering Launched Ebiquity Media Transparency Score Published in-depth study into
Slide 8: II) Financial Performance
II) FINANCIAL PERFORMANCE
Slide 9: Summary of financial performance
FINANCIAL PERFORMANCE Summary of financial performance 6m to 6m to Year to June 2017 June 2016 Dec 2016 Revenue £44.6m £42.3m £83.6m Op profit £6.7m £8.6m £13.0m Op mgn 15.1% 20.3% 15.6% PBT £6.2m £8.0m £11.8m EPS (u/l dil) 5.6p 6.9p 11.3p Underlying operating cash flow 89.2% 37.2% 87.5%
Slide 10: 69% of revenues denominated in non-sterling currencies
FINANCIAL PERFORMANCE 69% of revenues denominated in non-sterling currencies up from 66% in H1 2016 – £2.5m (5.9%) positive impact on revenue Euro £1.0m positive impact 34% on revenue 2017 fx rate 1.1625 2016 fx rate 1.2835 US Dollar GBP Revenue £x0.8m positive 31% by currency 24% impact on revenue
Slide 11: MVM Segmental results
FINANCIAL PERFORMANCE MVM Segmental results 6m to 6m to Year to Dec June 2017 June 2016 2016 Revenue 26,693 24,466 47,161 Op profit 7,862 8,045 12,124 Op mgn 29.5% 32.9% 25.7% - Total revenue growth of 9.1%, constant currency growth of 2.7% - Outside US, CC growth of 8%, led by FirmDecisions and Con
Slide 12: MPO Segmental results
FINANCIAL PERFORMANCE MPO Segmental results 6m to 6m to Year to Dec June 2017 June 2016 2016 Revenue 6,337 6,685 13,048 Op profit 897 2,394 3,739 Op mgn 14.2% 35.8% 28.7% - Total revenue growth decline of 5.2%, constant currency decline of 12.5% - Marketing effectiveness grew by 5.6%, despite revenu
Slide 13: MI Segmental results
FINANCIAL PERFORMANCE MI Segmental results 6m to 6m to Year to Dec June 2017 June 2016 2016 Revenue 11,595 11,107 23,360 Op profit 1,408 1,516 3,902 Op mgn 12.2% 13.6% 16.7% - Revenue up 4.4% on a reported basis, and 0.4% on a constant currency basis - Revenue from Ad Intel subscription business, gr
Slide 14: £1.8m reduction in net debt
FINANCIAL PERFORMANCE £1.8m reduction in net debt – significantly improved operating cashflow 30 £’m £1.8m 28 reduction in 28.1 net debt from Dec 26 5.0 2016 1.2 0.5 24 1.4 0.1 26.3 22 20
Slide 15: Focus on reducing trade debtors and accrued income
FINANCIAL PERFORMANCE More focus being applied to reducing trade debtors and net accrued income to further improve working capital performance Trade debtors & Accrued Net debt/EBITDA income (£’M) Jun 15 17.4 Jun 15 2.34 Dec 15 13.9 Dec 15 2.04 Jun 16 21.0 Jun 16 1.89 Dec 16 19.3 Dec 16 1.94 Jun 17 2
Slide 16: III) Market Context
III) MARKET CONTEXT
Slide 17: Four trends emerging in media and marketing
MARKET CONTEXT We see four trends emerging in media and marketing 1 Strong client desire for more Media Transparency 2 Digital advertising performance increasingly under scrutiny from advertisers 3 Clients increasingly in-sourcing marketing activities, yet confronted with elevated technology and dat
Slide 18: Media transparency remains the number 1 priority for marketers
MARKET CONTEXT – TREND 1: TRANSPARENCY AS #1 PRIORITY Media transparency remains the number 1 priority for marketers – ahead of brand safety, viewability and fraud Priority #1 Priority #2 Priority #3 Priority #4 Transparency (in relation to media agencies 47 14 17 22 e.g., ‘earned media income’) Bra
Slide 19: Marketers increasingly vocal about media transparency
MARKET CONTEXT – TREND 1: TRANSPARENCY AS #1 PRIORITY Marketers are increasingly vocal about their desire for media transparency, and more and more agency contracts are under review “We serve ads through a “ISBA has identified £6.1bn non-transparent media “We need to make More than 70% of worth of c
Slide 20: New ecosystem causing loss of quality and margin
MARKET CONTEXT – TREND 2: PERFORMANCE OF DIGITAL ADVERTISING IS UNDER SCRUTINY The new ecosystem is causing loss of quality and margin for advertisers In programmatic digital media trading, we have observed cases where only circa 15c of every 1$ reach a real audience ILLUSTRATIVE ~5% ~15% ~10% $0.40
Slide 21: Events leading to heightened concern about digital media quality
MARKET CONTEXT – TREND 2: PERFORMANCE OF DIGITAL ADVERTISING IS UNDER SCRUTINY Several recent events have led to a heightened concern for the quality of digital media; some are reviewing investments Guardian P&G Google offers P&G’s Marc Pritchard sues cuts refunds for gives agencies and digital fake
Slide 22: Technology places customers at the centre of marketing
MARKET CONTEXT – TREND 3: ELEVATED MARKETING TECHNOLOGY AND DATA COMPLEXITY Technology continues to place customers at the centre of all marketing activities …increasingly putting customers at Technology is changing …and enabling an explosion the centre of novel, personalised consumer behaviour of i
Slide 23: Brands prioritising spend outside interruption-based advertising
MARKET CONTEXT – TREND 3: ELEVANTED MARKETING TECHNOLOGY AND DATA COMPLEXITY Brands are prioritising marketing spend outside of interruption-based advertising as focus shifts to customer experience design 2017 YoY Growth in Marketing Budgets 7% 6% Interruption-based advertising Overall marketing 5%
Slide 24: Media trading model shifted from relatively simple
MARKET CONTEXT – TREND 3: ELEVANTED MARKETING TECHNOLOGY AND DATA COMPLEXITY At the same time, the media trading model itself shifted from being relatively simple… Media Advertiser Publisher Agency 24
Slide 25: ...to being highly complex
MARKET CONTEXT – TREND 3: ELEVANTED MARKETING TECHNOLOGY AND DATA COMPLEXITY …to being highly complex Investment Data Management 3rd Party Audience / Paid media Platform Data $£€ Ad Exchange Social Platforms Advertiser Agency Ad Trading DSP Ad Server SSP Server Publisher Desk Media Agency Sales Hous
Slide 26: Greater emphasis on data-driven decision making
MARKET CONTEXT – TREND 4: EVIDENCE-BASED MARKETING INCREASINGLY IN DEMAND Advertisers are planning to put greater emphasis on data-driven decision making in marketing ANALYTICS IS A GROWING % OF SPEND Likely Drivers for Increased Focus on Analytics: Analytics as % of marketing 25% spend ⎻ Greater av
Slide 27: Convincing marketers of digital effectiveness will take time
MARKET CONTEXT – TREND 4: EVIDENCE-BASED MARKETING INCREASINGLY IN DEMAND However, 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 peop
Slide 28: Four key industry trends open opportunities for Ebiquity
MARKET CONTEXT Four key industry trends open positive, structural, mid- to long-term opportunities for Ebiquity 1 Strong growth in our Contract Compliance and Strong client desire for more Media Transparency Programmatic consulting services 2 Digital advertising performance increasingly under scruti
Slide 29: IV) Outlook
IV) OUTLOOK
Slide 30: 2017 outlook
OUTLOOK 2017 outlook Continue to deliver against milestones set out in our five-year growth acceleration plan Continue to invest in opportunities to take advantage of changing market dynamics Momentum into 2017 H2 from recent client wins and growing pipeline On track to meet our expectations for the
Slide 31: V) Our Business
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Slide 32: Ebiquity is a world-leading independent consultancy
ABOUT US Ebiquity is a world-leading, technology-enabled, independent consultancy, specializing in marketing and media analytics
Slide 33: Three core practice areas
ABOUT US We support our clients by helping them drive better media and marketing investment decisions with three core practice areas Media Value Marketing Performance Market Management (MVM) Optimization (MPO) Intelligence (MI) Helping clients to increase Enabling clients to decide where Providing c
Slide 34: 900 employees across 20 offices in 14 markets
ABOUT US We have 900 employees across 20 offices in 14 markets— generating over £83M in revenues in 2016 Ebiquity market presence Affiliates
Slide 35: Focus on helping Global 500 brands
ABOUT US Our focus is on helping Global 500 brands to make better informed marketing investment decisions Our Clients Global Expertise Data & Analytics We work with 80 of 900 experts across One of the largest pools of the top 100 global 14 key markets; advertising spend data; advertisers thought lea
Slide 36: Higher returns for clients, typical ROI of five to ten times fees
ABOUT US We drive higher returns for our clients by helping them increase sales or reduce costs, 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 • Improving efficiency of marketing rate optimization) spen
Slide 37: A unique mix of skills and resources to create clarity
ABOUT US We deploy a unique mix of skills and resources to create clarity for our clients We apply We advanced organize analytics data Inputs: data & insights Data Modellers Scientists 1) Client data Analysts (e.g. optimized marketing investments, increased marketing response) 2) Consumer data We We
Slide 38: VI) Financial Appendices
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Slide 39: Segmental reporting
FINANCIAL APPENDICES Segmental reporting 6m to June 2017 MVM MI MPO Total segments Central costs Total Revenue 26,693 11,595 6,337 44,625 - 44,625 Underlying operating profit 7,862 1,408 897 10,167 (3,444) 6,723 Margin 29.5% 12.2% 14.2% 22.8% - 15.1% 6m to June 2016 MVM MI MPO Total segments Central
Slide 40: Highlighted items
FINANCIAL APPENDICES Highlighted items 6 months to 6 months to 30 June 2017 30 June 2016 Non-cash – share options 363 203 Non-cash – IFA amortisation 963 907 1,326 1,110 Cash – deferred consideration adjustments 372 1,576 Cash – integration and strategic costs 1,301 668 1,673 2,244 Total 2,999 3,354
Slide 41: Profit before tax
FINANCIAL APPENDICES Profit before tax 6 months to 6 months to 12 months to 30 June 2017 30 June 2016 31 December 2016 Underlying operating profit 6,723 8,565 12,959 Highlighted items (2,999) (3,354) (5,202) Reporting operating profit 3,724 5,211 7,757 Net finance costs/associates (509) (613) (1,132
Slide 42: Underlying effective tax rate
FINANCIAL APPENDICES Underlying effective tax rate for the 6m to June 2017 6m to Effective June 2017 tax rate Underlying operating profit 6,723 Interest (509) Underlying PBT 6,214 CY Corp tax (1,355) 21.8% 22.1 CY Def tax (17) 0.3% % Under prov’n of PY Corp (76) 1.2% tax Underlying tax charge (1,448
Slide 43: Statement of financial position
FINANCIAL APPENDICES Statement of financial position June 2017 December June 2016 2016 Total non current assets 74,975 75,855 75,616 Current assets Trade debtors 19,700 19,291 19,224 Accrued income 9,740 7,073 9,144 Trade debtors and net Cash 7,619 6,662 8,621 accrued income grew by 2.9% over June 2
Slide 44: Cash conversion
FINANCIAL APPENDICES Cash conversion 6m to 30 June 2017 6m to 30 June 2016 Year to 31 December 2016 Reported cash from operations 5,009 2,131 10,782 Underlying cash from operations 5,994 3,188 11,342 Underlying operating profit 6,723 8,565 12,959 Cash conversion 89.2% 37.2% 87.5%
Slide 45: 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 5,009 5,009 Interest and tax (1,398) (1,398) Debt repayments (1,250) 1,250 - Payments for acquisitions, net of cash acq’d (96) (96) Capex (1,175) (1,175) Divid
Slide 46: Outstanding deferred consideration
FINANCIAL APPENDICES Outstanding deferred consideration As at 30 June 2017 2013/14 2016 CMCG FMC Nature of business Media auditing in China Media auditing in Ireland Operations Shanghai and Beijing Dublin Transaction date 15 January 2014 11 March 2016 Transaction detail 100% acquisition Remaining 50
Slide 47: Cash flow statement
FINANCIAL APPENDICES Cash flow statement 6 months ending 30 June 2017 6 months ending 30 June 2016 Year ended 31 December 2016 Cash generated from operations 5,009 2,131 10,782 Net finance expense (467) (330) (1,074) Income taxes paid (931) (117) (166) Net cash from operating activities 3,611 1,684
Slide 48: Summary of banking facility
FINANCIAL APPENDICES Summary of banking facility • £40m multi-currency facility in place • £31.5m outstanding in total, comprising £2.5m term loan (matures July 2018) and £29.0m facility • Accordion option to increase by a further £20m • Interest rate of 2.25% plus LIBOR (can be lowered depending on
Slide 49: Shareholder analysis at 31 August 2017
FINANCIAL APPENDICES Shareholder analysis at 31 August 2017 Name Holding % Holding Total shares in issue at 30 June 2017 was 77,212,121 and at Artemis 12,152,282 15.7% 31 August 2017: 77,595,282. T Rowe Price 8,337,921 10.7% Market cap at 31 August 2017: £91m. Kabouter 8,214,096 10.6% Share options
Slide 50: 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 51: Thank you
THANK YOU