Ebiquity (LSE:EBQ) — Interim Results

0:01 Good afternoon, ladies and gentlemen. Welcome to the EBQITY PLC half year results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the q and a tab that's just just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today, and we'll publish those responses where it is appropriate to do so. And before we begin, we would just like to

0:33 submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from EBQITY PLC. Nick, good afternoon, sir. Great. Thank you very much, Jake, and thank you for joining us this afternoon for the call to present the half year results for EBQITY to the year ended or half year ended June 30. I am Nick Waters, the Chief Executive. I'm joined on this call by Brian Porret, who's our Interim CFO. And I will start with a very brief summary before handing the slides to Brian to go through the financial data before returning. So it's been a disappointing first half of the year. There's no getting away from that. Some of that is down to external market circumstances and some of it of our own making, and I'll kind talk about that in a little bit more detail as we go through the presentation.

1:27 Conditions were most challenging in Continental Europe. And although that was offset to a degree by growth in our Digital Media Solutions, the overall result has been a shortfall in revenue, which has impacted the bottom line and compressed margins. However, we have had a lot of new business activity from the second quarter onwards and continuing into all around the world and pleasingly with a very high degree of success. So that's given a strong tailwind and a much more improved trajectory for the second half of the year. The pipeline remains very full, which will give us a good start into 2025 as well. And despite the uphill revenue challenges, we have remained diligent executing our transformation strategy, rolling out the GMP three sixty five data management platform on which to deliver services of three core services.

2:26 We've increased our resources in sales and marketing, and we've made very significant change to the operating model to make the company much more scalable to capture the global market opportunity. And we'll come to the details of that, as we go through the presentation. But for now, I'll pass to Brian. Yeah. Thanks, Nick. So the first slide here is is obviously the summary indicators that you will have seen in the RNS. And, I just wanted to draw attention to a few things on here. Firstly, the revenue, as you can see on the top row over to the right, it was a decline in the half year over the half first half of last year of 7%, or £2,800,000.

3:12 And as you can see, just below the 2.8, really, all of that dropped through to profit. And in addition, there were some increased operating expenses. And one factor that has driven that and and that we've identified in the RNS is the fact that we have effectively been dual running, the old

3:36 staff intensive model and the new tech enabled model in those those three service lines that are moving to tech enabled. So we're in a period of transition where we're still effectively carrying the costs of the old model while beginning to incur, the licensing costs associated with the new one. And that's why, you see the operating expenses, move up slightly in the half year. The the next thing I wanted to draw attention to on here, down towards the bottom, the highlighted items for this six month period were £2,500,000, down from 3.4 in the equivalent period a year ago. And the main difference there was that there were a couple of credits in this period.

4:21 One was that we wrote down the accrual for the MMI deferred consideration that's payable in July next year. It's variable based on performance. And based on the first half year performance, we reduced the accrual, and that was about £600,000. And then we had, a write back of a dilapidations accrual. We consolidated the London office from three floors to one, and incurred some dilapidations, but, the accrual was more than we needed. So that's the reason that the highlighted items trended down in this period. But what's also happening within highlighted items, is that the transformation costs that we've been incurring over the last twelve months or so, are coming to an end.

5:13 And in the second half year, we don't expect to see those same kind of transformation costs. There will be some severance costs as the transformation activities are actioned, but what there won't be is is further temporary labor associated with the transformation work itself. If I move to the next slide, this is just a look at the regional revenue. And there's a little note at the top there, and there's a more detailed note in the r and s that explains why it's kind of difficult to look at year on year by region in this period because, the group has changed the way that it recognizes revenue by region. And so the only metric where we have twenty four and twenty three on a like for like basis is is what we call external revenue, and that's basically revenue invoiced or accrued in that region.

6:10 So these are good comparatives, but a lot of the other, segmental comparatives have been somewhat distorted by this change of basis, at the beginning of the year. And so what we see there is, obviously, UK and Ireland and Continental Europe both, going backwards in this period. And one of the big drivers of that is that there was no recurrence in this period of the very high levels of agency selection revenue that we saw in the first half of twenty twenty three. The group knew that was coming, and and that's what we see there. But it there was a particular bulge in, ASM revenue in h one of twenty twenty three that did not repeat. And that's what really lies behind The UK and Continental Europe variances there.

6:58 North America, obviously, the big growth opportunity didn't deliver growth in the half. Nick will talk to that in a moment, but there were some client specific reasons behind that. And Asia Pacific, growing slowly, low single digit, but both North America and Asia Pacific go into the second half year with a much stronger pipeline, as Nick alluded to. And, you know, I think we begin to see the growth potential of both those regions starting in h two. But in h one, it wasn't apparent. Looking at the balance sheet summary here, I mean, the main area of interest, through all of our calls, has been the net debt.

7:44 That was at 15,300,000 at June 30, which is almost the same as it was a year ago. It was 15,000,000 at June 2023, 12,000,000 last year end. And I think the reason the 15 has has got quite a lot of attention is that that was not what people were expecting. I think, the expectations from last year end were that net debt would reduce during this year, and it hasn't done. And there are two main reasons for that to the half. One is obviously the lower trading performance, the lower revenue, and therefore the cash collections associated with that. And the other one is that there have been some exceptional cash outflows in the first half year that we do not expect to recur.

8:29 So there have been some, legal and professional fees associated with, an aborted transaction. There have been the cash costs of the dilapidations in the London office, a cash cost associated with moving to a new payroll provider and having to provide a deposit, and and those kind of one off expenditures during h one that are not in h two. The only unusual expenditure in h two is the severance costs that I alluded to, and those have already been incurred now.

9:02 And they they are basically the execution of that transformation plan or the cost out element of it. So we feel that going forward, we're looking at normal trading cash flows, and, the expectation would be that the net debt, while it goes up seasonally a bit in the third quarter, comes down again by year end to about this level. And then into next year, it will drop much more sharply as we collect the fourth quarter receivables during q one. So, leverage at the midpoint this year was at just under 1.6, and we're expecting that to come down to about 1.2 by year end and then lower still during the early part of next year.

9:48 As I mentioned earlier, we have that deferred consideration, payment that you see there, towards the bottom of the 24 column, 3,400,000, that is payable in July of next year. And so that will obviously slow down, the reduction in net debt for a bit during the middle part of the year, but we still expect the net debt to start trending down for 2025. And so if I look at the cash flows, for the first half year, there, I mean, it's it's just the operating cash flows dropping through. Nothing unusual below those. The one item to call out there, if you look at the highlighted items line under the June 23 column, the 7.5 there, most of that is the final deferred consideration payment on the digital decisions acquisition that was made in the first half of last year. So that final payment in that period, I think, was about 6.5 of that number.

10:50 But everything else is really fairly routine as we go down. And then the net debt, as I've mentioned, just summarizing that there, as you can see, 15.3 compared with 15 a year ago and stabilizing during h two, trending down in 2025. And we have done the projections of liquidity and and covenants and so on and have good headroom at all the projected periods. We've just been through the h one audit review with Deloitte, and they reviewed all of our sensitivity testing around that and were satisfied. So that's the net debt summary at h one. And with that, I'll hand back to Nick, and, obviously, we'll come back for questions later.

11:39 Thank you, Brian. So let me just get my slide deck back. There we are. Thank you. Thanks very much, Brian. So we entered Q1 knowing there were going to be a couple of headwinds. Brian mentioned we had a strong amount of agency selection management work in the first half of twenty twenty three, and we knew that wasn't going to recur. We also knew from Q4 of last year that several of our large clients in Continental Europe had cut budgets and cut fees, And there was no expectation that they would bounce back. So we knew that there was a couple of areas of headwinds that we had to battle against. But we entered Q1 with a good pipeline of new business opportunities, primarily in North America, which gave us confidence that we would continue to move forward in Q1.

12:32 Unfortunately, we failed to convert those opportunities, and we lost a couple of clients as well at the same time in North America. I think there are a few different factors at play there. I think it could be the accusation could be leveled at us that we're a little bit complacent. We came off the back of a very strong 2023 with 33% organic growth out of The United States. And I think there's a possibility that we felt the proposition was a winning proposition and we could just go to market with it. Clearly, our competition had changed their tactics or their approach, and we got outplayed a little bit in the first quarter. So that was a very unpleasant wake up call, which stirred us into a very energized outbound prospect in new business strategy in Q2, which I'm very pleased to report as starting to pay real dividends. These logos here are all either new business one or relationships extended from Q2 onwards, and I'll just call out some of the highlights here.

13:39 In that top left corner, the new logos won globally, Airbnb and UBS are new to our niche, not just to BIGOITY, but new to our niche. And further to the right, so is INEOS in Europe. So it's very encouraging that we've been able to persuade those brands to come to us rather than a competitor. Halion, I'm also pleased about we had a long standing relationship with GSK and then they spun their consumer products division out and rebranded it Halion, at which point we lost that business, and that was two to three years ago. We've now brought that back. So that's very encouraging as well. And if we look to the top right box of that chart, it's been important that we convert domestic Asian brands.

14:26 A lot of our business in Asia Pacific is the Asia Pacific divisions of Western multinational companies. So important to penetrate large Asian corporates. So winning assignments from Uniqlo, Shiseido, Huawei and Centauri is important to the growth of that region. There's also a couple of other positives that I want to call out there. If we look in the bottom left corner, Disney, we had a long standing relationship with Disney in Europe, but have never worked with them in America before in their home market. So we participated in a competitive bid. We're to take all shootouts to take their global work. We were able to dislodge the incumbent of a long time in their American business and win that in their home market. So that gives me a great deal of encouragement.

15:14 But the stumble, if you like, we faced in Q1 of this year, we've addressed our challenges there and recalibrated the offering. And most of ways, we look to Europe, the growth of relationships with major brands like BMW, Beiersdorf and Henkel. As you know, important part of the strategy is cross selling and upselling to our existing blue chip client base and being able to sell more services or extend those relationships into more geographies is really important. Now we've continued to execute the growth strategy. There's a lot of positive momentum and incredible amount of activity going on out there. And we have a very full pipeline. As I mentioned earlier, we're working on 11 live multinational RFPs right now, of which we're only incumbent on two. So there's a lot of upside potential there. We expect a further three to land imminently.

16:11 Now it might be that we're unable to capture a lot of revenue from that in Q4, but a successful pitch season, if you like, will really help give a fast start to 2025. And our Asia Pacific management team is reporting unprecedented levels of activity, a huge amount of work going on there. There is definitely some money coming into the market to buy our services. I think we've done a good job stimulating demand, but I think there's also natural demand in the market. I think this is probably too early to be a result of the stimulus activity in China. I think we were seeing this unprecedented levels prior to Chinese government unleashing more stimulus.

16:56 So I think that's just really encouraging sign of the market in Asia for our services is buoyant. I'm also very encouraged by The Middle East. We've really never sourced much business from The Middle East before with very minimal presence there, just selling primarily international clients that want some of our services in The Middle East. But we saw it as an opportunity to tap into Middle East markets or other Middle Eastern brands that are going global or are already global. And that effort is already bearing fruit with one of our first clients out of Abu Dhabi. We have five live global RFPs coming out of Qatar, Dubai and Saudi Arabia, in the tourism and travel sector. So that's exciting.

17:44 We won't convert them, but it could be an exciting new source of revenue growth. And we've continued to diligently sell our digital media solutions. And by the end of this year, I think we'll have over 100 clients buying from that portfolio of solutions. Our marketing effectiveness team is reporting very high levels of demand, and I actually think there's a little bit of risk that we won't be able to deliver or manage all that business this year. But it's encouraging that their services are so demanded and successful. We've brought a new streaming TV product to market. You might remember from previous calls, we've been testing and piloting an advanced television product where we've recalibrated that to rebrand the streaming TV. We've now brought that to market, and it's throwing out really interesting value proposition for our clients there. We've already analyzed over $500,000,000 worth of streaming TV investment data. So I think we've got a real opportunity for a new product there that is showing its worth.

18:46 We have a new retail media product now in market, live with its first clients. We don't have output from that yet. So we are hopeful it will also demonstrate a clear value proposition, but we don't know that for a fact yet. We've reorganized our sales and marketing function to enable us to get more on the front foot, more aggressive with our outbound prospecting marketing. We've also, despite the revenue challenge, taken the opportunity to invest a little bit more in new product development and in some software engineers for improving machine learning and artificial intelligence. So there's been a lot of positive activity, a lot of forward momentum, which is giving us much stronger second half of the year. As we sit here now, we have secured over 88% of our full year expected revenue, which is pretty well on par with previous years. But in the last year, our Q4 fell away, softened a bit with one or two or three clients cutting budgets, whereas this year, we see an upward trajectory in Q4.

19:49 So our second half revenue is expected to grow year on year in mid single digits versus the same period in 2023, and adjusted operating profit will reach double digit growth versus the same period in 2023. Cash inflows will improve. Brian touched on that already with the seasonal receivables. And there's no material non trading cash outflows expected.

20:18 We, as you know, have four main parts to the strategy. We've talked a little bit about geography, products and clients over the previous slide. So I want to focus this section on the fourth one of operating efficiencies. I think it's fair to say that's been a major focus or consumer management time over the previous nine plus months. We've been through an enormous amount of change. And our trajectory, our journey is to become much more technology enabled to improve business efficiencies for ourselves, but also client experience as we move three core services of agency selection management, value tracking, benchmarking onto the GMP three sixty five data management platform as well as continuing to sell our digital media solutions on the media data vault.

21:14 Not only will this improve efficiency for ourselves, but it will create global consistency of all our products and services, which our major multinational clients have been asking for. And with the data on the platform, it will create much greater speed to insights for the clients instead of having to wait for us to manually analyze the data and come back with a report once the data is on the platform. And the information, the insights can be generated automatically, so much greater speed to insight for the client. And always on visibility as well. So once the data is on the platform, they can see it at any given time, and that helps with forward planning. So there's an improved client experience, improved client product, as well as creating efficiencies for ourselves.

22:04 Now part of this migration is to move the delivery elements of the work, which are geographically agnostic, move them into globally mutualized delivery teams all under one point of management. And that has largely almost completely taken place now. And that leaves the in market teams free to focus on growing, maintaining, developing client relationships and winning new business. So it's been a very, very significant shift of the operating model. We've effectively broken the old operating model, which was a series where we're a federation of small national businesses, handcrafting end to end solutions, customizing each solution for clients every time, which is a non scalable model. So we've broken that model and we've put together one that is a scalable model.

23:06 So we now have four teams that are focused on clients, say, maintaining, developing, growing client relationships, three regions, Americas, Europe, including The UK, Asia Pacific, and a team focused on managing a universe of global clients. Now they are supported by the globally mutualized, as I said, delivery team supporting all the technology enabled services that we now provide. And they in turn are supported by our global solutions team. That's effectively a new product development team and team that iterate on our existing products to create that global consistency. And they work hand in glove with the production team, essentially the software engineers, to make sure that the solutions they come up with can actually run on appropriate technology and efficiently.

23:58 So this is now a scalable model really for the first time in EBQITY's history and gives us the opportunity to capture the growth opportunity much more effectively. Central to it is rolling out the GMP three sixty five data management platform. And as I've said, the ambition or the strategic intent is to deliver three of our core services on the platform, value track, agency selection and benchmarking. Progress is good on value track. At the half year mark, we had 50 clients active, covering an aggregate of four seventy three national implementations. Now as we sit here right now that is up to 61 clients active value track and then aggregate that being clients times markets of over six sixty. So really scaling up quite nicely and generating or we're being able to identify very significant

24:58 reduction in delivery hours. Agency selection, also feel we've made good progress on at the half year mark. We've run 35 processes. As we sit here right now, that's up to 45 processes covering over 140 client times country assignments, again significantly up on prior year and with identified delivery hours savings being quite significant. Now the area where we have made less progress and we've run into some obstacles is transitioning benchmarking over onto the platform. So we've only managed to transition 10 clients at the moment covering 25 markets, and there's a lot a lot of opportunity ahead of us if we can overcome some obstacles.

25:46 Now those obstacles are readily overcome. We can readily overcome them. It's essentially a matter of needing to modify the platform a little bit to cater for more granular local market nuances. The platform does a very good job for individuals that might be sitting in an international management role or global media director, for example, now. It covers it all their needs. But when you get down into the national marketplace, there's a degree of granularity that those national clients want to see that the platform doesn't quite cater for yet. So there's some modifications required. Now the good news is two terms. One is we've identified what those modifications are. And two is it's not it's not significant IT development work. There's no coding required.

26:34 It is literally modifying the platform. So that's in process. The first releases for The US market are out now, enabling us to bring the improved solutions market in The U. S. Now, and we've got similar process underway for the other markets around the world. So what we've always envisioned as a two year rollout program for 'twenty four and 'twenty five really is now going to be two years 'twenty five and 'twenty six. And when we get to a critical mass, a tipping point of the amount of work transitioned onto the platform versus legacy processes will be when we can taper down the dual running that Brian referred to already and start to gain those headcount efficiency savings. We've also made a number of other changes as we've broken, as I said, the end to end end market operating model to a globalized delivery system, we've naturally changed the workflow processes.

27:32 The one at the start of the call I referenced some of the H1 challenges of our own making. This is a center of it really. When we broke the workflow processes, there were some areas where they fell down, and we've had to take actions to adjust them and to improve them. Those actions have been taken now to smooth out those bumps in the road, including rolling out Asana as a global software management tool and appointing operations directors in each of the regions, not new hires, but repurposing or redirecting people who are already in the business. We've also started to rebalance the profile of our teams in market, the people that are tasked with growing maintaining, growing client relationships and seeking new business.

28:26 I deliberately used the word rebalance rather than restructure. It's not been as aggressive as a restructuring. It's been adding more hunter type profiles to the workforce. I think we've had a a long tradition and track record of good client relationship management, but we're now adding more outbound sales capability into the teams in combination with testing some different sales incentive models with these hunter oriented types. And the ambition is to create a full package of sales incentives as we move into 2025. So a lot of other activity has been going on to make us a more not just scalable, but more aggressive outbound prospecting business.

29:14 So it might sound somewhat old to say this on the back of a disappointing first half, but the company has actually never been better set up for success. We have an upgraded product and service set. We have innovation for today and tomorrow's market. We have high quality technology in place and a new operating model for scalability. We've added skill sets. We have a number of unique competitive advantages, including the scale of our data sets, global reach and a fabulous client roster. I think now with the momentum gained in the second half of the year and going into 2025, we're starting to hit our stride again. This is a huge global market with excess demand for our services such as ours. And I think we're now poised to fully capitalize on that opportunity.

30:07 So that is the end of the presentation, end of the slides. I would be very happy to take any questions you might have now. Perfect. Nick, Brian, if I may just jump back in there. And thank you very much indeed for your presentation this afternoon. And gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the top right hand corner of your screen. But just while the company take a few moments to review those questions that were submitted already, I'd just like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can all be accessed via your investor dashboard. Nick, Brian, we did receive a number of presubmitted questions ahead of today's event. And as you can see there in the q and a tab, we have also received a number of questions throughout your presentation this afternoon as well. So firstly, thank you to all of those on the call for taking the time to submit their questions. And Brian, Nick, at this point, if I may just hand back to you just to read out those questions and give your responses where it's appropriate to do so. And if I pick up from you at the end, that would be great.

31:06 Thank you. Certainly. Thank you, and thank you very much for the questions that have been submitted. So the first one is what new valuable services for clients are being developed from the data lakes? A very good question, and I think it's quite early stage work in progress at the moment. But we have these extraordinary data lakes that there's no comparisons in the industry from an independent perspective. The way we're looking at the moment is to see if we can train large language models on that data to create a new value proposition for clients. So there are the example I like to use is if you're an advertiser, perhaps you've got a $100,000,000 budget to trade with Meta, for example, asymmetry of information that Meta will go into that negotiation knowing a lot more than than you do.

32:03 Well, if you have the ability to interrogate our our database and to to to gain some insights that might be beneficial and advantageous to you in terms of meta delivery by country, by season, whatever it might be, by audience, then that could equip you in a much better place to have that discussion with Meta as an example. So this is how we are thinking about it, but I have to say it's still very early days. And we are somewhat constrained by the amount of investment we can put into engineers and capabilities with that knowledge and understanding. But that's kind of the way we're looking at things at the moment. What does the evolution of digital media solutions to digital governance actually mean other than a name change? Yes, that's a good point and a good question.

32:54 Essentially, as we're building on digital media solutions, you might remember over the years, we had a cadence of bringing new solutions to market over about one hundred and six months or four to six months. And our teams were going out and selling those as individual solutions. What we've learned actually is that that became quite complicated to sell as we brought more to market and we had more in the portfolio, it became a little more complicated to sell. And what we learned was actually if we package all the solutions up into one governance program, but in a modular basis, so a client can go, these five are actually what I'm interested in, I don't need those two, then that's much easier selling it as a one governance program than seven individual modules.

33:41 So that's it's really as simple as that. We've learned how to better sell the solutions, the portfolio of solutions. Next question, what is the growth driver in Asia Pacific leading to unprecedented increases in potential business? And is that largely China driven? And I wouldn't say it is largely China driven at this stage. China, as you're very well aware, the economy has been sticky. We have been growing in China, but we've been grinding our growth. It's not been easy. It's not been falling off a lot. We've had to really go out and sell hard. We've got an excellent managing director in China. He really, really works hard at selling. So we have been grinding our growth there. The inbound traffic, if you like, has been much more to our team in Singapore. So we have a team in Singapore that is able to cover the markets across Southeast Asia and actually increasingly into North Asia as well. So we've started to do work in Japan and Korea from the team based in Singapore.

34:43 So I think the team has now gained a reputation of being able to cover more markets. I like to think the EBQITY brand is good and has a very good reputation. If clients are interested in the kind of services we have to offer, they come to us. And I think we've also been better at our outbound marketing as well. So I think there's a combination of factors. I think there's the old cliche, isn't there, that when China sneezes, rest of Asia catches a cold. Now this stimulus program is going into China. What will that mean?

35:16 I'm sure it will be good news for many companies in China, many businesses. Will that stimulate increased demand for us? Don't know. It's a bit too early to say. Our proposition as you know is that in times of difficulty there's an argument that our services are more valuable. So if your marketing media budgets are under pressure, come to us, continue to pay our fees because we can help you maximize the efficiency and effectiveness of your of your budgets. But of course, when clients have more money to spare, there's the opportunity for them to buy more services from us. So as we sit here right now, Asia is buoyant. A lot of inbound traffic, probably better external or outbound marketing from ourselves. But I think there's a good momentum, not just from Q4 but into 2025 as well.

36:09 Post rationalization and transformation with increased ability to scale, what is envisaged as the approximately stable headcount versus today? That's a good question. It's quite difficult to answer. I mean the strategic intention is to increase the amount of revenue we can serve via the same or less headcount. Our agenda is focused on improving the operating margin. We had, as you know, been moving that forward quite nicely from 7.5% in 'twenty one to 12%, I think it was in '22 to 15% last year. And this year, we have been hoping to get 17%. We've obviously stumbled. We won't get that. But the trajectory, the path is to get to that 20% operating margin.

36:59 And it's not so much based on a number of heads that we can take out, although that clearly is part of it. Can we run the business with less people? But it's about can we deliver the services more efficiently so the same number of people can handle more more business. And of course, if we have we've divided the work now. So we are we don't have people doing end to end services, meeting the client, understanding the brief, sourcing the data, organizing the data, reporting back. We've got people who focus dedicated on clients, client management relationships and people dedicated on sorting out the data. We believe that will increase the client facing people's ability to generate more revenue. And because the data management side of things will be increasingly technology enabled, speed to response enabling quicker throughput.

37:51 So the ambition, strategic intent is to grow revenue off a cost base that doesn't grow commensurately. Outside of lack of confidence in the business, is there any other reason for very poor sharing of board members on the share rates and their lack of market alignment with the balance of shareholders? Well, clearly, I can't speak for the other board directors. I can only speak for myself. I have more than 1,000,000 vested but unexercised shares, so I am vested in the long term success, short, medium, and long term success of the of the company. I clearly don't wanna talk too much about my own personal circumstances, but, you there's a limit to the capital that I have available because I feel those million shares give me sufficient motivation or give me good motivation. As I said, I can't talk to the other members of the board.

38:52 Questions in the past about AI have been fended off. I wouldn't necessarily say that. How do we presently apply AI to support clients is a so I'm struggling to read this It's a mystery to me as is also how we will do so in the future. Yeah. At the moment, we're not making any claims that we are supporting clients via AI at the moment. We are improving our machine learning capabilities behind the scenes. That's to improve efficiencies in processing of data and matching of data. So where a client's data taxonomy is not good, we need to improve the machine learning so that the systems understand when two different data sets are labeled differently, but they might actually be for the same activity. So that's that's been the focus of machine learning attention for the last well, for the course of this year, really. And we're seeing some releases now already being tested actually on particular client deliverables through the month of September.

39:56 Now when it comes to AI, as I mentioned before, we have a view on how we might be able to bring AI to bear to create interesting and valuable products to clients. We don't have a huge bandwidth to suddenly invest in a lot of AI specialists and software engineers, but that is the focus. Once we feel we've made sufficient progress or have our have good momentum on that internal machine learning element, I think we'll be able to turn more of our attention to innovating products and solutions for the clients when it comes to AI. But I think to say I've fended off questions about that in the past is simply inaccurate. And I've never made any claims that we support class with AI now. So hopefully that clears that up.

40:47 How do we actually support influencers? Yes. That's also a good question. That's very much an area I would like us to get to when it comes to more a globally distributable product. So where we currently stand with influences is some national market innovation, which actually started in China on the back of one of our global clients, their headquarters here in The UK saying, you know, our Chinese colleagues are spending tens of millions on buying influence in China influences in China. You know, what are they doing? Are they doing it well? What are they getting for it, etcetera? At that point in time, we couldn't answer the question, but we thought, well, we need to be able to try and help our clients. And that's a very big segment really of the market that flies under the radar. Has very little governments or or empirical data attached to it. So our Chinese team actually innovated there and really have fantastic amount of data now relating to influences in China, which is providing really, really robust service to clients there. On the back of that, our team in Singapore has also developed an influence product. What I would like to do, as I said, we've got a relatively small new business sorry, new product development team, that's that global solutions team. There's eight or nine people in that.

42:07 What I'd like them to do is now start to see if we can take that national market innovation and create some globally scalable product. I think that's the next cap off the ranks, because, you know, we've been focused on getting a a value proposition for streaming TV and now on retail media. We've also been putting some effort into better automating our paid search function. But I think influence marketing, would like to be the next cat off the range. It's too early to talk about that in any detail at this stage. What is it we actually do for clients in marketing effectiveness? Now how are the results quantified at improving their ROI? Yeah. We've got a really high class marketing effectiveness team. I've worked in You might know my history. I've worked for major holding companies, marketing services, holding companies groups like we had prior to this. They all have marketing effectiveness units.

43:00 But the EBQ one is by far and away the highest quality that I've come across. What do they do? They use advanced analytics, statistical techniques, regression models to really pull apart the actual levers of either brand metric movement, consideration awareness, consideration, purchase, empathy, etcetera, whatever metrics you you want and to sales. So there's a huge amount of input of which significant input is media marketing investment, but also creative saliency, residual brand awareness, distribution, pricing, seasonality, etcetera, etcetera. The marketing effectiveness team takes essentially takes as many data points as are available and builds models through regression analysis to advise clients how to optimize their expenditure under any different given circumstances.

43:57 It's very high class, very high quality. In fact, the managing director of Domino's piece here in The UK stands in front of the franchisees once every quarter, I think it is. And as as they explicitly stated, if we put it in our credentials, that she doesn't approve any planned marketing or media activity until it's been through EBQT's marketing effectiveness unit. So it's very well regarded and really, really has clear demonstrable impact on return on investment. Next question is, is our agency selection in our agency selection work, how do we do sorry. I've gotta reread this. In our agency selection work, how do we do so? Is it just a question of helping them determine what proposition to accept from third parties?

44:48 Or do we put forward ideas as to whom they should be including in the selection process and why? Yes. Clearly, it varies client by client and what the objectives those clients are. Some advertisers in the market will have a roster of preferred agencies, and they just put the business out to tender for those, and they don't need help selecting which agencies, other advertisers will say, well, we've had this roster of agencies. Do we need to refresh it? What other are other ones are out there that we should have a look at? We provide them that help based on what they're trying to achieve and their brief and what we know about the agencies. So it's quite a broad service proposition really that can go from just helping them run a process where they already know what they want to achieve all the way to helping them set out their own objectives and how they want to achieve them. So it can be very, very large in scope or can be much narrower in scope.

45:50 What exactly does benchmarking involve? What is measured against what? Yeah, good question. It is it's a relatively simple proposition in that the media markets are competitive. Brand owners spending large sums of money buying media time or space to advertise their messages, distribute their messages. Huge amounts of money gets spent. And it's spent by agencies negotiating deals with the media owners. The advertiser wants to know whether their money is being spent competitively. So where does their media price and quality point sit in the market versus the market?

46:36 So to create that benchmark, you need to work with lots of advertisers who allow you to pool their data. So here in The UK, we have over a 100 advertisers, which represent 70 plus percent of the of the media expenditure in the in the measured media expenditure in The UK market. So any one of those advertisers in return for providing us with their media expenditure data, we can tell them where they sit versus the pool. So we provide them with a benchmark of their media price and quality in the market. And if they're buying inefficiently, should we say, or uncompetitively, we can show them where we think improvements can be made and efficiencies can be gained. We'll do that in collaboration with the agencies. The agencies might well have a point of view saying, you know, well, I can't do that unless but there's something else, gives me earlier approvals, whatever it might be. So there are many levers which we pull to improve an advertiser's price, media price and quality position in the market, and we help them identify those levers and identify where they could be sitting in the market.

47:40 Interested to see the growth from the GCC region. Yeah. What is your assessment of the competitive landscape in that region, and what further progress might be possible? Yeah. It is it is interesting. I mean, I took this point. I I I visit I visit The Middle East just once a year. As I said, we've had a very small presence there, which is really to receive inbound work from multinational based out of whether it's The UK, Europe, US wanting some work done in The Middle East. We've had very small presence there and to that. So I visit The Middle East once a year. And over the last sort of twelve plus months, maybe up to twenty four months, I've been thinking, there isn't a competitive presence there. And some of these brands are now big global brands.

48:26 And perhaps we should be seeing things take them out of The Middle East, you know, take take support them outside The Middle East. And so we've been doing a bit of work to to raise awareness of our our services see if we can generate some business. And and it's actually gone really well. You know, major Middle Eastern headquartered organizations, as I said, from Dubai, Qatar, Saudi, even Abu Dhabi, we've generated business from. So I think the universe of those brands is relatively small, but at the moment, but they're quite major marketers. I mean, we don't I don't have to tell you that there's an enormous amount of money coming out of Saudi Arabia to buy buy visibility presence, you know, influence, whether it's sports washing, whatever you might want to call it. But there's a heck of a lot of outbound marketing investment coming from The Middle East, and we we do see an opportunity to capture some benefit from that.

49:24 I think that's the last question. Nick, absolutely. If I may just jump back in there. Thank you very much indeed for being so generous for your time there and addressing all of those questions that came in from investors this afternoon. And, of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended just for you to review to then add any additional responses, of course, where it's appropriate to do so. And we'll publish all those responses out on the platform. But, Nick, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments just to wrap up with, that'd be great. Yeah. I I think the key message is that fifteen plus months ago, we took a decision to embark on quite a significant transformation program.

50:12 If you go back through the last few years, we made a a strategic acquisition called MediaPath, which had an exclusive license to a data management platform. We did that because we took the view that running handcrafting solutions, mass customizing for every client in market was very inefficient and meant there was no opportunity for scalability. So we brought in that data management platform and have made, I think, good progress transitioning some of the core services onto it, albeit with a lot more progress made. But to really, really create scalability, we decided we needed to break that federation of small national businesses, break that model and create a globally scalable model.

51:02 We've done that now. It was an ambitious program. I had clearly hoped and wanted that we'd be able to continue growing revenue while we did it. I think it's fair to say, as I said right at the top of the call, there were some external market factors that we knew were going to be a little bit difficult in the first half of this year, but we created some challenges for ourselves. And a lot of that was related to this huge effort we put into changing the operating model. All that lift and shift has been done with all the disruption that causes. You know, you you change someone's role from doing an end to end job to say, well, you're gonna do this, you're gonna do that. Some people quite necessarily say, well, you know, I quite liked what I was doing. Some people say, well, I don't I don't agree with that. So there's been a lot of hard work contributed by a lot of senior managers in this team to get through that phase.

51:58 Been a lot of turbulence in the organization. That turbulence now is largely in the rearview mirror. Brian referenced in his segment. As we change the operating model, we identified a number of roles that could be eliminated. We've done those. There's no experience being served. That will be obviously the last bit of turbulence, I think. We get the processes running smoothly. As I said, there's been some a little bit of a breakdown in processes. We hand over between the part facing teams and the delivery teams. We smooth that process out. We've now put the Asana software as a project management tool. We put in operation directed into each region, not externalize, I'd quickly say that, people already in the business. So we've now got an upgraded product to service set, globally consistent, improved product for clients, improved efficiencies for ourselves.

52:54 People focus now on clients and only having to worry about clients and not worry about delivery. People focused on delivery that only worry about that, not having to worry about clients. We split that. We've got a technology platform in place. We've got globally consistent products and solutions. We now finally have the ability to scale the business. So instead of every time we win business, having to have more headcount, we can win business and maintain a stable cost base or hopefully even reduce that cost base. So I think, you know, the the closing slide in the presentation, I said the companies that have been better set up for success. And it might seem all saying that on the back of the four h model is absolutely the case. You know, we we operate in a market with excess, but in a hugely market, medium market with excess demand for services of company like ourselves. We weren't able to capture that opportunity as a federation of small businesses, small local markets, mass customization for customizing solutions to clients all the time. You know, we've now set ourselves up, broken that model, we've been through the hard work, and we're in a really good place to scale the growth now.

54:01 So that's the message to leave you with. Thank you for your time. That's great. Nick, Brian, thank you once again for updating investors this afternoon. Could I please ask investors not to close this session as you will now be automatically redirected for the opportunity to provide your feedback in order that the management team can really better understand your views and expectations? This will only take a few moments to complete, but I'm sure be greatly valued by the company. On behalf of the management team of EBQITY PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.