Ebiquity (LSE:EBQ) — Full Year Results

0:01 Good afternoon, and welcome to the EBQITY PLC Full Year Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted anytime by the Q and A tab situated in the top right corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. And I'd now like to hand you over to Alan Newman, CFO, and Nick Waters, CEO.

0:33 Good afternoon to you both. Good afternoon, and welcome to our annual results presentation. My name is Nick Waters. Alan's to my side. We'll share the presentation. I will pass to Alan to talk through the numbers in a moment. But first of all, for those of you that are not familiar with us or may maybe not so familiar with us, we'll just take a moment to explain who we are and what we do. So we describe ourselves as a world leader in media investment analysis. What does that mean? So advertisers spend very, very large sums of money buying media to communicate their message, and they buy that media through agencies. They come to us to help them understand whether they're buying that media effectively and efficiently in comparison to other players in the market space. So our role is to help them drive efficiency, effectiveness, eliminate waste, and create value from their very large media investments.

1:35 It's a it's a huge market. Totally, global global advertising spend is around about 750,000,000,000 US dollars. But if you look at our primary target customer, which is the world's 100 largest advertisers, they themselves spend in excess of a $100,000,000,000 a year. So we have an opportunity to create significant value for them. We offer our services through five service lines. You can see on the bottom left corner of the screen there, media management, media performance, marketing effectiveness, technology advisory, and contract compliance. And we are a a neutral party which enables us to offer impartial objective advice. And by that, I mean, our only source of revenue is from the brand owner. We don't take any revenue revenue from any other part of the media or advertising supply chain.

2:27 We have over 450 specialists operating from 24 21, sorry, offices around the world, and those offices cover 75% of the global advertising market. So we have a a very, very comprehensive and independent view of the market. We analyze around about $55,000,000,000 of media spend in over 75 markets a year, and we analyze trillions trillions of of of digital media impressions. The contract compliance division is called firm decisions, and that audits around about $40,000,000,000 of contract value annually. And over 70 of the world's top 100 advertisers are clients of ours. So that's an introduction to who we are.

3:14 A quick summary of our performance in 2021. It was a strong recovery versus 2020. Clearly, 2020 was a difficult year. Our business was notably impacted by the COVID pandemic. So we've seen a good recovery from that in '21. Both revenue and profitability were slightly ahead of management expectations, so good performance that we're satisfied with. That was supported by both healthy new business wins, but also good growth, solid growth from existing clients and we managed our cost base in a prudent manner.

3:53 Our digital revenue is ahead of plan and the contribution the profit contribution that makes is also ahead of plan. So the digital element of the strategy is performing well. And the recovery was very broad based across the business. All business units in all regions grew in terms of a very good strong recovery everywhere. Asia Pacific grew the fastest followed by North America. So we ended the year in a very strong financial position. Just yesterday, we announced two acquisitions which will accelerate our growth and the operating efficiencies in the business and our strategic journey. I'll I'll pass pass to Alan now for the financial Thanks, Nick. Good afternoon, everybody. Our results for the year which we announced on Wednesday were about very similar to the trading update we gave in February, so we're not a surprise at that point. Our revenue in 2021 was 13% up on on the prior year at 63,000,000, and that reflected a good business momentum across all our regions. So Continental Europe, Asia Pacific, America, and The UK, with Asia Pacific doing particularly well, growing by 23%, America doing very well as well. And then quite a strong profit growth in The UK, which

5:23 is our largest market. It's more mature, but where we'd really been, addressing the cost base. And all of those factors, particularly, you know, the overall revenue driver, led us to come back into profit and generate, underlying operating profit of £4,700,000, which is a margin of seven and a half percent. That was better than originally, expected this time last year when the initial analyst view was we get 3,500,000. We upgraded at the half year, and we're pleased to essentially have upgraded again at the final year, year end. We are basically a cash generative business, so we normally convert about a 100% of our profits into tax into into cash. Sorry. There or thereabouts. But, this year, we had a particularly strong cash inflow, partly really a phasing of working capital with, strong debtor collections in in towards the year end and some of our payables not being required to be paid till January.

6:22 The that led to our net debt being 4,800,000, which, again, was better than the analysts had expected and significantly better than last year, £3,000,000 improvement. And that can shows the strength improving strength of our balance sheet. In terms of operational highlights, what drove the revenue growth and profit performance, we had a number of new mandates, some of which have been identified last year when Accenture left the market. We'd won a number of new clients, including Daimler, on this list here. And And we had existing clients to view that and who gave us more work this year than they had the previous year. Within that revenue, we also have a significant in revenue about £2,700,000 increase to 3.7 from our digital media solutions.

7:18 These are the a range of solutions specifically focusing on reporting reporting the performance our advertised performance in their spend on digital media. And we bought a company called Digital Decisions in 2020, and this has an automated service, what's called, data monitoring service, which we have begun to roll out to a number of our clients with great success. It's also brought with it a number of other solutions which are being rolled out this year and the last year as well to provide an a real range of services targeting allowing advertisers to understand their digital media performance. Another highlight was that this year was a year with a number a large number of agency selections selections after 2020 when some advertiser postponed these, and we managed six of the top 10 largest global and multinational selection process.

8:14 And that's on the public record. It's it's it's identified in the trade media, which in itself is helpful to our profile. It is also helpful in securing follow on work because if we run an agency selection process and help define the agency goals, then we often will get the tracking work that follows from that to see whether or the agency is delivering. Looking into this year, we started well in the first quarter. We're very much, in line with our expectations in the first quarter with revenue growth coming through, and a healthy pipeline, and continued momentum looking ahead. We haven't we we're often asked the question about, the impact of industry economic changes, you know, recession potentially, and some inflation.

9:03 And we're seeing some cost inflation amongst, you know, in staff, although we're containing that at the moment. Well, we are managing to get some of our clients to increase their you know, increase our prices to them rather to agree that. And but the more recent developments in Ukraine have cast a a shadow, shall we say, on our operation in Russia, which which in last year accounted for a million pounds of revenue and profit. That's all business done inside Russia for Russian based clients. But given the developments in The Ukraine, we are, as a board, keeping our operation very much under review in determining its future.

9:43 But we are positive about the outlook for FY '22 this year. Excuse me. And we do see definitely opportunities for continued growth and margin enhancement, and which put us into good stead for considering the acquisitions that that we announced this week. Just quickly highlighting a few points in the balance sheet. Excuse me. Just put glove order. You'll see that I we've highlighted here as a separate item, rather strange accounting, which is that we have to treat the conferred consideration on digital decisions, which is due next year as a p and l item because it's related to the, staying in in the business of the founder and vendor, chief vendor, and, therefore, it's a p and l charge rather than just going to balance sheet. Nonetheless, we've estimated that we expect to pay about £12,500,000 in that next year, and we've accrued 7,900,000 of that in in the in the year in 2021.

10:49 And so I also discussed net debt that comprises gross cash of 13,000,000 and an £80,000,000 bank loan as at the end of drawn down as at the end of last year. As I mentioned before, have strong cash flow. Total cash flow from operations was 11,800,000, of which 13,200,000 is is is what we could underline, excludes exceptional items and highest items. And we spent a little bit of money finishing off the Italy minority buyout, 1,200,000. And and we actually had slightly lower internally generated r and d this year at 900,000 thousand compared to 1.1. It all added up to 3,000,000 investing activities, 3,300,000 financing activities, which includes reducing our loan and the IFRS 16 lease liability payments coming down.

11:43 Oh, sorry. Being spent at 2.1, and they are coming down as as the leases get towards expiry. So the net effect was an increasing bank and cash of 2,000,000, getting us to that 13,000,000 balance at the end of the year. As in preparation for the acquisitions that we announced this week, we renegotiated and extended and, in fact, our bank facilities, our RCF, which is provided by Barclays and NatWest. We've increased it to £30,000,000 from the 24,000,000 level it was at before under very similar covenants to those we had before, but with a repayment starting next year of 1,250,000 a year of the overall loan facility. So the banks are saying, you know, you gotta generate cash.

12:35 We they they expect us to pay some of it back. And, clearly, if we then take on the placing results that was announced today sorry, yesterday of £15,000,000, that puts our balance sheet, into a very, very, strong and much much stronger position than we had before.

12:56 Within the business, we we report media, which is the bulk of our business, and analytics and tech. The media business grew most strongly, particularly supported by the digital media solutions element, as I said, contributed just under half of that growth. In terms of profit, the media remains our our higher margin area. It's more mature, and we got margin back up from 15 last year to 19, which is and we want to see that going further. As important is there's a turnaround analytics analytics and tech, which had been loss making last year, have come back into profit at 14% margin, which is actually better than we'd achieved two years ago prior to COVID.

13:42 And we had a small increase in our central costs mainly because reestablishing a bonus provision, all of which contributed, to the margin I mentioned before, seven and half percent of the total profit of 4,700,000. Nick? Thank you, Alan. Yeah. I will, take you through a progress update against the strategy. But to start off with just a quick overview of the market in which we operate, which we, believe provides us with strong growth opportunities. And indeed, the global advertising markets are strong at the moment. They rebounded very, very strongly from the COVID pandemic. So we're buoyant through '21, and we see that continuing at the moment into 2022.

14:28 As you'll be well aware, digital channels dominate advertising these days. Sixty four percent of all advertising spend globally will go through digital channels. And the the dominant tech platforms will make up approximately 50% of all that spend. There are, however, new channel dynamics, which are increasing in scale and continuing to increase complexity in the advertising market. So last year, we saw very, very strong growth in the e retail platforms. Everybody for the course is very familiar with Amazon. But in The United States, the big retailers like Walmart and Kroger and Home Depot and Instacart have all started selling inventory, media inventory on their websites now, and that is turning into a multibillion dollar advertising revenue stream for them.

15:25 Similarly, Similarly, advanced TV or connected TV is reaching a critical mass in The US where all familiar with the subscription funded streaming services like Netflix and Amazon Prime. But there's a a range of advertiser funded advanced TV solutions now in The US, we're starting to see that roll into other markets here. ITV just recently launched ITVX on a similar basis. Approximately 15% of all television spend in The US is now through advanced television. So that is, as I said, increasing complexity in the market, which is supportive for our business. There were considerable inflationary pressures seen in broadcast media, towards the end of last year. I think from September onwards, the majority of my conversations with clients was about, helping them mitigate the, television inflation that was coming through. But also, we've seen a very strong inflation in premium digital inventory.

16:25 Now that's probably quite a good thing because advertisers have are starting to move away from the long tail of of cheap impressions they're buying and focusing their spend with premium publishers. But it is still pushing out the cost of their advertising. Other major topic that's been in the news in in in all of these, not just our industry news, is that around data protection and consumer consent. And just recently, in the last month or so, both the Belgium and Dutch data protection authorities have ruled that the IAB's transparency and consent framework actually breaches GDPR. And of course, that is the framework, through which the European advertising industry, online industry has worked. So that throws throws up a lot of questions about, how how online advertising is going to work and be targeted in the near future.

17:16 2021 was also a a a specific a specific feature, if you like, in the industry, and that's the amount of media business that was put up to tender by advertisers. They typically typical contract with media agency might last for three years, and then they'll put their business up for tender to be competed for. Because of the challenges of 2020 when many, many companies, most companies had higher priorities on their mind, they didn't put the business out to tender. So there was some pent up demand in 2021, which was very supportive for our business last year. So that's the context of the market in which we operate. A recap on the strategy that we set out at the end of twenty twenty to start executing from the start of '21.

18:09 So we set out four points to the strategy. Firstly, it was to increase revenue from new productized digital services or solutions to the digital market that we were developing and aiming to bring to market through 2021. Secondly, to build out higher value and strategic relationships with major customers. And thirdly, to improve the operating efficiency of the businesses. You you saw from Alan's presentation, our operating margin is 7.5%. So we need a plan to push that up into double figures and then into the mid teens. And then fourthly, to strengthen the business in North America and Asia Pacific, the origins of the business are here in The UK. So we have a a large and mature business.

18:55 But the business is also mature in Continental Europe where our segment is has been well understood and and well bought for many years. Our segment is is less mature in North America and Asia Pacific. And as a consequence, business is not so scaled in those markets, but we see very good opportunity for growth. So they're the four elements of the strategy, and I'll walk through how we're doing against each of them. So our digital product solutions are performing ahead of expectation where we can take some satisfaction from this area of the business. We brought to market seven data led product solutions, which will which enable us to analyze the digital markets and help our clients recognize where their spend is being inefficient and help them to increase value out of those investments.

19:46 So revenue growth from from those solutions was 260%, albeit off a a low base in 2020, which is when we really started to to innovate. But delivered 3,700,000, a little over 5% of total group revenues, a healthy margin of 51%. And we see us being able to maintain that margin for these services and probably keep it stabilized at around about 55%. So we'll continue to push aggressively with these productized data led solutions. Our operational KPIs that we set ourselves for this are are ahead of plan. So the two end of two thousand twenty, we had 10 clients buying these services and operating on our media data platform.

20:35 At the end of twenty one, we had 28 clients. We now have over $3,000,000,000 of digital media investment analyzed through through the the platform, platform, up from 500,000,000 a year earlier. And we've now, have 600 almost 650,000,000,000 impressions that we are, analyzing or have analyzed coming from 87 markets. So we're getting a a real great breadth and depth of data which allows us or enables us to provide more and more valuable advice to our clients. These services are proving very strong for clients. They're able to realize the tangible value from these services very quickly in here. So that's providing us with great case studies that we can go to other clients with and help market these services to them.

21:27 One of the services we brought to market was one called responsible media investment, and we piloted it because we weren't clear what we were gonna find. We piloted it with a number of our higher higher value clients in The US and UK. And, essentially, what we do there is we take care of the data relating to our clients' digital media spend and match it with third party data related to certain behaviors or characteristics of publishers or tech platforms. So we identify publishers that perhaps are promoting hate speech or disinformation like anti facts, content and material like that, all those that are known to to rip off intellectual property, and those those are are perhaps how we consume consent control. So we match match the data sets and identify where clients' investments or advertising spend are going to support bad actors in the supply chain. And And on the basis of the the findings from those pilots, are rolling that out further this year as as some of the clients have been quite alarmed to see where their investments are going.

22:45 We have several more products underdeveloped in the second half release in the second half of this year. Turning to the second part of the strategic clients. We we have made strong progress in developing high value strategic clients. We defined the universe of 21 high value clients that we wanted to build more relationships with and build greater commercial relationships with. And the revenue growth from that universe was very strong, considerably ahead of total revenue growth for the the group. That's enabled us to invest in more, what we call global client partners. They're the people that have the experience and the knowledge, the seniority, and the gravitas to build these relationships with very large multinational advertisers. So investing into that capability and broadening the geographic reach where where big advertisers are headquartered in Amsterdam, in Germany, in The United States.

23:42 We also set ourselves operational KPIs in terms of how many clients are buying tool or service lines and we performed very well against that. At the end of two thousand twenty, we had 58 clients buying tool or service lines. And during the course of the twelve months, the end of twenty one, we moved that up to 76. Alan referenced the fact that we performed very well in gaining major mandates or agency selection mandates from major international advertisers. In fact, we managed six of the top 10 largest global multinational agency processes including three of the top five. So we're highly competitive in that segment. We're highly recognized as very professional and doing a great job there.

24:27 And we've been very effective at cross selling into the new digital product solutions.

24:33 The third element of the strategy is improving our operational efficiency, and we can see progress there and continued improvement. The media operations center, which is effectively a scaled delivery center we operate in in Madrid. It's in the InShore center. That supported 15% more projects in the prior year, so we're moving moving work into the scale center really at the pace that we want to. There is now a a Guatemala extension to the media operations center, which enables us to better service work from The US time zone. We have improved our process automation in two parts of the business. First of all, in the media performance part in The US, and secondly, piloting RPA solutions in firm decisions.

25:23 Also to support firm decisions, our contract compliance division, we are developing a shared service center in India, which will further enable us to improve cost efficiencies. And we're continuing to evaluate how we streamline our operating model and how we can develop harmonized and standardized ways of working to enable further automation. And this is really where

25:48 one of the acquisitions that we announced yesterday comes in. The primary strategic rationale for acquiring the medium part business was this high quality technology platform, which will enable us to to service our clients more efficiently. And the final of the four elements of the strategy strengthening North America and Asia Pacific, again, very good progress here and very pleased to report strong progress. We recruited new managing directors at the start of the year into both The US and the China business. And that's led to very good new business performance in both of them.

26:23 I'm not able to name the the wins in The US. The clients who certainly prefer not to have their names publicized, but a very major packaged goods brand company is now which was secured in 2021. It's now one of the largest three largest clients.

26:42 A very significant well known West Coast global technology leader is buying on digital product solutions office, and a a leading global alcohol brand has also awarded us their business in The U. S. In China, the client community is less shy, should we say, about allowing us to use their names in these presentations. Huawei, you will be very familiar with, has had to retreat from Western markets really owing to geopolitical situations, but is a huge advertiser in its domestic market. So,

27:14 they're awarding us their business in China as a very, very strong endorsement. And that led to us picking up on a new, a state owned dairy company, and Kungshifu, which is a massive noodle business across the whole of China. It wasn't just Chinese domestic businesses, LBMH, and and, of course, China is a huge market for the world's luxury good brands. So LBMH is a big big client in China. And one of the most famous sports apparel brands globally has also ordered us their business there. We organically launched into the India market with EBQITY this year. The firm decisions business has been present in India for three years, but we we evaluated the opportunity to bring EBQITY to market there.

28:02 And I'm pleased to report a very good successful start to operations there. We already now count five of India's top 10 largest advertisers as our customers in the market. We extended our geographic reach with a small acquisition in Canada. For example, it was a business that we had used as an outsourced partner when our clients required service in the Canadian market. So that business is now rebranded as EBQITY Canada and enables us to serve those clients directly and capture revenue directly rather than outsourcing. As Alan mentioned, we do have a small subsidiary in Russia and clearly given the terrible situation in Ukraine, we keep that the ongoing operations of that business under review. To to supplement or really to accelerate the strategic execution of strengthening North America, we acquired and announced this yesterday, the acquisition of Media Management Inc, which significantly scales our business in the vital US market.

29:06 So reporting against our operational metrics, you can see the baseline there as 12/31/2020 and the progress we've made against that by the end of two thousand twenty one. So just some of these figures are I'll repeat, number of clients buying two plus service lines has moved from 58 to 76, and the number of clients buying one or more products from the new digital solutions portfolio has gone from, 10 to 28. And the volume of digital advertising, on analyzed on the platform, nearly 600, 50,000,000,000 impressions up from just over a 100, the value moving from 500,000,000 to over 3,000,000,000. So we're getting a real breadth and depth of data on the platform now. And we're we are able to analyze data on the platform from 87 markets up from 50.

29:57 We are tasking ourselves to derive more of the revenue, more of our media revenue from digital services. As of the end of December two thousand twenty, 25% of our revenue came from digital services. That has moved up ticked up to 29%. So as the whole business grew by 13%, so clearly revenue from digital services grew faster. But, obviously, we want to get that that figure up further than the 30% mark and gradually move it up towards representing half of our business. Just quickly, a look at the acquisitions. The first one here is MediaPath. It's referenced as a Swedish based multinational media consultancy. We say it's Swedish based simply because the founder, Susan Elias, is Swedish and lives in Stockholm, but the business was designed to service international clients right from the start. It specializes in three of our specialist areas, agency selection processes, performance measurement, and media benchmarking.

31:01 And it delivers those services through a proprietary technology platform called g m p three six five. By moving our business over time onto that platform, we believe it will significantly improve the efficiencies by which we operate. There's a 45 team member business geographically distributed across 12 countries both in in markets where they can serve large multinational advertisers and also in lower cost markets when the analysis can be done in markets like Bulgaria, Indonesia, and India. Suzanne will join my leadership team and have the responsibility alongside myself for integrating the business. She has a very, very nice roster of blue chip clients, including some of the brand names you can see there. AB InBev is a is a huge advertiser. McDonald's, obviously, very well known. Disney in The United States, and Heineken is a shared client for us. So the primary strategic rationale for acquiring MediaPath is the technology enablement that it brings with g and p sixty five.

32:04 On a stand alone basis, you can see it's a nice healthy business, £6,300,000 of revenue at an operating margin of 29%. And that margin has been stable for the last five years between 2732%. The the deal is a £15,500,000 consideration all payable on completion with 75% of the consideration paid in cash and 25% in EBQITY shares. And those shares are subject to a twenty four month lock in period and a further twelve month quarterly market agreement. So it very much aligns the interests of the MediaPath shareholders, of which Suzanne was the largest and some of our other key executives are. It's very much aligns then with our interests in ensuring the success of the deal.

32:50 Turning briefly to Media Management Inc, MMI. It is a US focused media audit specialist. In fact, it's US dedicated one. It doesn't service clients outside of The United States. It has a different approach to media audit from ourselves and also has proprietary technology called Circle Audit, which ingests vast amounts of data directly from the media buying management platforms, platforms like MediaRotion, Hub Hudson and X, and and Strata. And it aims it to forensically analyze the media buyers on a spot by spot, dollar by dollar basis, and provide clients with that unique visibility and ensure that campaigns are delivered with accuracy and where they're not delivered with accuracy and where there is financial discrepancy, clearly, that gets highlighted and then you return back to clients.

33:44 Thomas Bridge is the founder and sole shareholder of that business, and the company has a 40 person team centered in St. Louis. That's where it was originated, St. Louis, Missouri.

33:56 There's about 20 people there, the other 20 people are distributed across The US. Like Suzanne, Thomas will stay in the business, and he joins the North American management team. And, again, the business has a fantastic high quality client roster, including major American corporates like AT and T, GEICO, and General Motors. So the strategic rationale or the primary strategic rationale for acquiring MMI is the scaling of our business in The United States. In fact, it doubles the size of our business in The United States. So we'll have more than £10,000,000,000 in revenue next year. The initial consideration is £6,100,000 for this and that split. It was it was essentially an $80.20 cash shares split got got tweaked for our tax optimization purposes for the principal to be $84.16, and that share component is subject to an eighteen month lock in period again with a further twelve month order market agreement.

34:56 There is, with this deal, a second tranche, a deferred consideration, which will be payable in 2025 based on one times 2024 reported operating profit of the combined EBQITY US and MMI North American businesses, which we expect to be at least £3,000,000. Both Thomas and our North American management team feel it will be in excess of that, but but we feel

35:20 targeting a minimum of £3,000,000 is sensible. And that second tranche will also be payable 80% in cash, 20% in EBIQUITY shares and subject to the same lock in period. So again, the deal structure designed very much to align the interests of the principal with our interests, enabling us to bring both businesses, MediaPath and MMI together smoothly, integrate the businesses early to realize synergies early and to align the interests of Thomas and Suzanne with those of ourselves to make these deals a success and and, drive our share for our sum.

35:56 So if we look ahead, the outlook, is good. Trading, has started the year in line with the expectations,

36:06 and we have good forward visibility still also in line with the board's expectations. Clearly, there is a caveat to that, which is a caveat that I would think most businesses have is that the geopolitical environment could destabilize things, but it has, at this moment, not yet impacted our clients' activity and or indeed their relationships with us. So, yes, there's the caveat there, but it's not to materialize at this stage. The two acquisitions that we've talked through will accelerate the company's progress in executing our strategy by increasing our scale in The US and facilitating our ability to improve the operating efficiency of the business and getting us access to more of the world's largest advertisers, which are our primary target customer.

36:54 And the visibility for the full year is currently in line with our expectations. So to summarize, a good recovery in 2021, and that recovery is broad based across all regions and business units with the revenue and profit contribution from our new portfolio of digital media solutions performing ahead

37:14 of plan as well as the development of our high value strategic client relationships. The acquisitions we've talked through will accelerate our transformation strategy, and we believe the continued and increasing complexity in the media markets, ensure brand advertisers require help navigating them, we feel that is supported to EBQREE's purpose and to our ongoing business. So thank you very much for listening. At this point, I'll pass back to, Alessandra. Nick, Alan, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions using the q and a tab situated in the top right hand corner corner of your screen. But just while the company take a few moments to review those questions submitted today, I'd like to remind you that recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard.

38:09 Nick, Alan, as you can see, we've received a number of questions throughout today's presentation, and thank you to all the investors for submitting those. Could I just ask you to read out the questions and give responses where it's appropriate to do so, and then I'll pick up from you at the end. Certainly. The first question is from Neil b. Do you see any opportunities to provide data analytics for the programmatic trading tech platforms such as Trade Desk? Sorry. The question's just moved down. Moved down the screen. The answer to that, Neil, is is no. Our only source of revenue is from the brand owners, and it's very important we keep it that way because one of our our largest or strongest selling points and assets is our independence. So everybody is trying to sell brand over something.

38:55 Their tech solution is better than another, and and we're able to provide their independent devices for which tech solution is better than than other. No. Dion s asks, what is EBIQUITY's operating margin in the same areas that media network has one of 29.1%? Well, I I actually gonna pass to Adam for that in case I Well, as as I explained in the segmental analysis, broadly speaking, our media business, you know, which includes the two main services that MediPar offers, which are cost guarantee tracking and HD selection.

39:43 Ours overall overall margin there is 19% compared to their 29%. How you can sort of cut and dice that? Clearly, our overall group margin is is 7%, seven and half. But I think it's fair to say we're at least 10 points lower margin in the equivalent businesses than they are as a whole. Neil b asks, what quantum of cost savings are you targeting following the acquisitions? And what operating profit margin are you targeting for '22? Could you achieve 10%? The second question, could we achieve 10%? Yes. We believe so. On a pro form a basis, the business would be at 9.7% margin. We definitely '21. In in '21, that was on a pro form a basis. So, yes, we definitely believe we can achieve 10% in '22.

40:33 What quantum of cost savings are we targeting? So by '25, we believe we will achieve £5,000,000 of annualized recurring cost savings from the combined acquisition. Right. I think we've answered that one. So Neil B again, what is the pro form a net debt position following the acquisitions you're placing? There's a slight difference to tell actually because the we only just got the placing information this week. But, basically, we should actually be in net debt position, which is actually similar to where we ended up from minus 5,000,000. So paying out 23 sorry. We'll be that decision's slightly worse, bigger than the way before. We're paying out 23,000,000.

41:23 We're raising, you know, 15. Bowe are using some of our own resources. So that's the net movement will be roughly £8,000,000 to the to the worse than we were. So the net debt will be roughly 12 immediately after the acquisition, but clearly, we're gonna generate cash during the year. We'll have profits coming in from the new businesses. We said that by the end of the year, we expect to be back into net debt of around one time EBITDA, which will, you know, be a lot which which is is consistent with we are now. Sorry. One time operating profit, beg your pardon, which is where we ended up the year last year. There's a question there about capital markets. That's from Dion s. We've been promised since over four years ago, Capital Markets Day.

42:13 One was scheduled in 2019 and then canceled. I asked because the company has changed a lot, and it's difficult to understand from the outside. Yeah. Actually hold a capital markets day shortly after I joined the business. I joined in July 2020, and we held one. I think it was in September, October 2020. We did. So I think it's fair to say we we we could do another one soon. We don't have date a scheduled for one, but it's certainly something we will we will look at doing because as you said, we have changed quite a lot even since September, October 20. Mark h asks, the RNS mentioned potential synergies of £5,000,000 from the Swedish acquisition, but it it was was actually actually from from the the two two acquisitions combined.

43:04 Can you provide more color on the nature of the synergies, hard or soft cost or revenue, etcetera? Yeah. The synergy target we set of 5,000,000 is all cost synergies, and it's sort of three areas. One is within America, there are some immediate pretty immediate synergies on some external cost data, for example, contracts. So we have with people like Nielsen where we expect to save by simply only having one contract instead of two. And then secondly, there are savings from bringing together, again, in America of our two businesses where we have some duplication of of roles and people in roles. So so over time, we'll we'll be able to eliminate some of those duplications and therefore probably means reducing the the combined headcount a little bit and or avoiding having to recruit people for to support growth, which is the position we were gonna be in this year in America before the acquisition.

44:04 The other and larger proportion of the 5,000,000, which will occur over time is then bringing us onto the adopting the media path platform and getting synergies whereby we simply will be reducing the delivery cost, therefore, the labor time, particularly, that it takes to to carry out our work. That's, you know, that media path brings is is more you know, will provide greater efficiency for us. So it's, again, gonna be ultimately headcount reduction in in the current EBQTY group, not so much in the media path side. Another question from Mark H. Do you now have the business structure in place to achieve your medium term objectives, or will further high level hires be necessary?

44:52 Essentially, we've got it in place, I think, and there are no plans to make any further high high level hires. The two acquisitions actually bring some good senior bench strength with them. So, no, there's no there's no plan to add more expensive hires to the business. Asks, will you be provided a pro form a starting say from January 21 that includes the recent acquisitions? If so, when? Why not in the 2021 r and s? I think if you read the circular, Dion, you'll see we have provided exactly that as a pro form a statement of what our revenue and profits would have been in January 21 if you add all the acquisitions together. And that would tell you that we had the combined entity would have had 75,000,000 74,800,000 revenue and from 10,700,000 profit.

45:46 So we have provided that pro form a in in, I think, certainly in the circular that was just published to what we you'll be receiving. I think it's actually online now and which and the r and s, I think, also included that number. Yeah. Where's ah, here we go. Sorry. The the questions are jumping around a bit. Let me Last I do understand. Lots of questions. Last dividend. Last dividend in 2018, Edison in that paid for research suggested in February 22, there could be dividend a of point five p for '21 and then 1.3 p for this year. Why no dividend mentioned? What is the dividend policy? I don't don't even If if they did put something in '22, then I missed it because we suspended the dividend in 2020 when the COVID crisis hit to preserve cash, and we were definitely not alone in so doing. Mean, many many companies did that. Our sense was then that, you know, we were going through a period where we had a loss.

46:51 We also wanted to make sure we and therefore, we had to preserve cash, and then we also wanted to make sure we were investing our cash in the business. And taking soundings amongst, you know, a lot of us. We tend obviously to our institutional shareholders. The general view was there wasn't a strong view that we shouldn't be paying a dividend, but it was more a sense that as a growth company, we should be investing and keeping the cash in the business. And that doesn't apply to everyone, but some people felt that. So that's our current view is we don't have a plan to restore or reinstate dividend at the moment. Some questions from Neil B. Where else are you looking to make fill in acquisitions? At the moment, geographically, I don't think there are any priorities.

47:36 You can argue that we don't have businesses that we own in Japan, Korea and Brazil, all of which are very large advertising markets. All have their own challenges for a business like ourselves entering. So I I think we would have to enter carefully, and at the moment, they're they're not on the priority list. Another one from Neil. What were the dampening factors on the slow growth in UK and Ireland? Are there any signs of improvement in spending travel, tourism, and autos? Well, here in The UK and Ireland, we have we have a very mature business. We have a large market share. It's impossible to tell exactly what the market share is because there's no independently published figures, but we have a very large client base.

48:22 So it is difficult to win new new clients. Therefore, to grow the business, we have to bring more solutions to them, more products and more services. And it was really only during the course of '21 that we were bringing to the new digital product solutions to market, And we deliberately targeted the first range of solutions at international clients to to give visibility to people with regional or or global job descriptions for the first time across a multi market basis. It's only really in the back half, maybe even q q four, that we started bringing to market national solutions, which then enable countries like our UK business to sell new services into So that can explain slower growth. However, we did reorganize the business. So we wouldn't wouldn't call it a restructuring because that that would overstate it, but we did reorganize the business to significantly enhance the profit contribution coming from The UK. I should also clarify that when we talked when I talked about The UK, we talked about services delivered to UK clients covering UK media.

49:33 We have a roster of large clients such as as Jaguar Land Rover, which is a UK based business for whom actually, you know, you know, that that we do a lot. And and and I was excluding the the British based clients for whom the outbound, the international that we're doing from has grown, but I was making the point about The UK domestic market, as Nick has explained, that it has particular factors. Mark h asks, how long have you been courting these acquisitions and what brought them to ahead simultaneously? Can you talk to the process? Who runs the acquisition program? Well, both of these acquisitions came out of, really, speculative, should we say, contacts from myself in the summer of last year, the the the Northern Southern Hemisphere summer of last year, I felt we were, say, let's say, six months plus into executing against the strategy we laid out. I felt we were making progress against that, and now is the time to look at inorganic activity.

50:41 And so I just simply did a did an outreach to independent business owners operating our sector. And through that, developed good dialogue with both Thomas and Suzanne. Suzanne. It became clear that we had common values. And that as we discussed the industry and the business further, we we saw that we could we could really share a vision of what our combined business could look like. There was no we didn't set out to bring two two acquisitions to fruition at the same time. It's simply that the the conversations progressed at about the same pace in a similarly positive manner. And so that was it. Neither of these companies, I think it's worth saying, were were in a process. Neither Suzanne nor Thomas had brought their business to market.

51:29 So there was no auction process, and they've both been approached in in the past by private equity firm and and other trade bars that have not progressed those discussions. But it was really primarily about cultural alignment. They felt that they themselves have very strong cultural alignment to to our our leadership here and that we share a vision of what we can do together. So it was it was a very collaborative and constructive process. You ask who runs the acquisition program here. Well, it's myself and Alan, really. We do have a senior leadership team or an executive leadership team, all of whom are tasked with identifying potential acquisition targets and bring them to to my attention and Alan's attention.

52:20 And then and then we take it from there. I think there was a question that seems to have disappeared about pro form a media segmental analysis. Someone asked, I think, that whether or not the but, anyway, the short answer to which is all of the revenue and indeed profit of media path and MMI will would fall under media in our segmental analysis. It would add it will go in there. I think I misspoke earlier on. I said the pro form a revenue of the combined business in 2020 was 74,800,000. The pro form a operating profit was actually would have been 7,000,000, 7.3, which would have given us a margin margin of 9.7.

53:05 I think I mixed the margin in the in the figure up just to be clear, but that that will be in the circular information. Shall I pick up the preemption one as well? Yeah. This question, are there going to be a 120,000,000 shares post placing acquisitions, and what has happened to the preemption price? Yes. Roughly, there's 23,000,000, I think, the number of shares being placed. And I think slightly under the 120,000,000. I think Glenn's at a 113,000,000, if my my math is correct. A 118,000,000. And, well, I think I might say one should be asking our brokers this question. The advice we have on the funding, as you know, one can have a full rights issue. To to allow people to exercise all their preemption rights, you'd have to have a full rights issue.

53:50 And the advice from our brokers and and looking at our share register, which has a preponderance of, you know, very already had a preponderance of very, very strong institutions, The view has taken that its best interest really of the company in the process and the shareholders to undertake what's, you know, a a what's called a soft preemption to go and consult and to have a placing which did not, you know, go out to all our shareholders. And that's partly, you know, maybe because, actually, a very high proportion of our shareholders are institutional and therefore could be approached through through an institutional placing. And and that's what the GM will will approve. Dion, yes, your follow-up to the Capital Markets Day. It was a virtual one. You know December 20 there. It must have been around about that. Yeah. It was November, actually, anyway. Would be good to have a real one soon.

54:41 Yep. Noted. I think probably we should be considering that. It's not on the agenda right now, but it is definitely something for us to consider. Nick b asks about geographic regions to expand in. At the moment, no. As I mentioned before, not at this stage any further geographies to expand in. And they also asked what's the what does the pipeline of new products look like? So we as I said, we brought seven to market last year, and I think we need a a bit of time to to bend them in both in terms of getting our people up to speed with them, familiar with them, comfortable with them, and selling them in at a a staged rate to the clients. We don't want to suddenly, you know, appear with a whole range of of products and services and confuse them. So we're just taking a little bit of a pause on that. We are working on I think there's another four solutions that we're working on, I think we will bring them to market or at least at least two of them.

55:41 We'll bring at least two of them to market in the second half of this year. Dion s, why on what appears to be a strong rising recovery from 2020 was revenue in the second half of twenty one less less than in the first half. It wasn't less. It was slower rate of growth. Yeah. Correct. The revenue in the second half was was higher than the first. It's just really that the first half of twenty twenty was, you know, particularly low level. Therefore, you know, we we we had all these if you remember, we had 2021 twenty twenty second half grew, I think, memory about 9% compared to twenty twenty first half, and, therefore, it was already a higher base as we came to '21.

56:26 So it's it's a function of really the comparator, but, the second half of twenty would be stronger, and, therefore, sec second half of twenty one grew, but not by as much as we've grown over the first half, if that makes sense. Yeah. I think there's another question. Given the cash generative nature of the business also recognize that you appear to have good organic investment opportunities, is the management actually dividend? I think I've already covered that, but I'll repeat that we don't have you know, we obviously keep under review every as we should as a board, our dividend policy. Having the dividend two years ago, we don't have any immediate plans to restore it, but we will keep under review. I obviously made the point that whilst we are cash generative, we had been, you know, quite significant, it was doing quite significant net debt.

57:14 Our dividend payment capacity is limited by that and also, frankly, by an accounting issue, making sure we have sufficient reserves. But we we keep it under review is is all I can really say. That's the last question. So I'll I'll pass back to you, Alessandro. Nick, Alan, thank you very much. Thank you being for being so generous with your time there. I think you actually managed to address every question from the investors. And, of course, the company will review all questions submitted today, and we'll publish those responses on the investment company platform. But just before redirecting investors to provide you with their feedback, which I know is particularly important to the company, Nick, I was just wondering if I could ask you for a few closing comments. Yes. Thanks, Alessandra. I mean, first of all, thank you very much for your time and for listening.

58:02 I think I just want to leave you with a view that management, I. E, myself, and Alan feel we've got the business into a a good place now, very stable stable footing, stable foundations. We have a very clear and focused strategy. We're executing on that. We feel very, very, very pleased with the acquisitions that we've made, which will really accelerate our strategy to transform the business. And we will, first of all, make sure these businesses are integrated successfully, and then we will keep, keep reviewing opportunities to further inorganic growth. So thank you very much for listening. We we we think we're in a good place to move forward. Nick and Alan, thank you for updating investors today. Could I please ask investors not to close this session As you know, I'll be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations.

58:56 This will only take a few minutes to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of EBQITY PLC, we'd like to thank you for attending today's presentation. That concludes today's session, and good afternoon to you all. Good afternoon. Bye.