Ebiquity (LSE:EBQ) — Investor Presentation

0:02 Good morning, and welcome to the EBQITY PLC investor presentation. Questions and press send. The company may not be in a position to answer every question received in the meeting itself. However, company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll.

0:29 I'd now like to hand you over to Nick Waters, CEO. Good morning to you. Great. Thank you, and good morning to everybody. I'm very pleased to introduce the half year results for EBQITY until thirtieth of June this year. Perhaps I can start by introducing myself and my co speaker, Alan, for those of you who don't know me. I've been with EBQITY for two years now, just over two years. Prior to that, I spent my career with agencies. I spent eighteen years at WPP and then ten years with Aegis, which became Dentsu Aegis Group. Alan is very capable of introducing himself. Thanks, Nick. I'm Alan Newman, and I'm the I've been the chief financial operating officer of EBQTI since January 2019, so just over three years.

1:19 And before that, I was CFO of YouGov. So I've spent quite a bit of my career working as on the board of and running media related companies. I've also was prior to that in public practice as a consultant working in the media industry as a partner at. So also, can you some experience on what it's like to actually go and sell to clients? Thank you, Alan. So

1:48 we've had a broad based positive performance in the first half of the year, both around the world and by segment of our business. It's been driven largely by the media performance service line, which includes the newly acquired companies. We made three acquisitions in the first half of the year. We'll talk a little bit more about those later in the presentation. We've also seen continued high revenue growth from our digital media solutions.

2:17 Various number of factors have contributed to a significant improvement in our operating margin. We'll talk about those a little bit later during the presentation as well. And we expect our full year results to be in line with market expectations. So I'll pass to Alan now to talk through the numbers before I come back. Thanks, Nick. So overall, our revenue in the first half of this year was 37,000,000, which was a total growth of 16%. Within that, we had the benefits of the acquisitions. We made three acquisitions in a year, two large ones completed in April. And without excluding those, we achieved organic growth of 7% from our existing business in the period.

3:07 We managed to reduce maintain the operating expense growth well below revenue growth. And you see, overall terms, 8% growth in our operating expenses. And, again, referring to the existing business, its expenses grew by 4%. So just really in line with inflation supporting a much higher revenue growth. And that's gearing effect, like, of being able to manage our costs and grow revenue faster than cost is really what's contributed to an underlying operating profit increase of a 117%, so doubling of our underlying operating profit in the period compared to the same period last year. And we've said very clearly our aim has been to improve our operating margins over the medium term, and these results really show us a really good step along the road seeing our operating margin growing from seven percent, nearly doubling to 13% in the period.

4:02 With relatively stable finance costs in the first half, this fed through to underlying profit before tax and to earnings per share, which doubled in the period compared to last year. We've put on this slide just to remind you the highlighted items partly because we have an an acquisition which will be paying contingent consideration on next year digital decisions, and we're having to account for that cost of the the contingent consideration as a p and l item because the vendors have to stay in business until until it's paid. And we had some acquisition costs. We've also ex announced that we're reviewing our Russian operation in the, given the effect of the Ukraine, invasion, and all the fact that sanctions are being imposed on some Russian entities. So our operation in Russia is self contained. It just only serves Russia, but we are reviewing it and aiming to divest it.

5:01 During the interim period, while so significant that done, we have impaired the assets. So there's a charge for impairment, for that Russian business. Looking at our balance sheet, quite a lot going on in the balance sheet. Firstly, because of the growth in the business due to the acquisitions, our net assets increased nearly doubled from 23,000,000 to 42,000,000. Within that, our goodwill in the balance sheet increased, again, directly reflecting the acquisitions. We also had an increase in working capital in the period through a combination of factors. So working capital grew from 4,000,000 to 12,000,000, so effectively an outflow. That was partly because of phasing of existing business projects was later in the period than compared to previous years. So we're accruing the income for those before we can actually build that that revenue.

5:53 And we also had an increase in debtors whilst in the process of moving our clients within our American business that we acquired called MMI onto the EBQITY terms and contracts that took some time with clients taking time to process the the the paperwork as it were for that. So our days to days increased to eighty one days compared to sixty, but we expect that to be coming down quite fast in the second half of the year and returning back to normal towards towards normal by the year end. Another aspect in the balance sheet is a deferred consideration. I've just referenced digital decisions. At the moment, we're expecting the payout for that to be about 14,000,000 in May, April, May 2023 once our 22 accounts are approved.

6:43 And we're accruing that through the period of the the post the acquisition until the end of this year. So we've accrued five six of that,

6:52 which makes 11,400,000. We've also, for the first time, started to recognize the fact we have contingent consideration for MNI. As I said, we bought in April, there is an earn out due for the vendor based on the one times the EBIT, that is the underlying operating profit for 2024 of our entire American business. So they're incentivized to help us improve profitability of our existing business as well as the MMI segment. And the two businesses, I've already said, have been have already been merged and will be operating as a single entity. And we've estimated that payment to be £2,000,000, which is due in 2025. Our net debt has increased in part because of the acquisitions and in part because of the working capital that I've already mentioned.

7:42 And that's gone up from 4,800,000 to 12.9 at the half year. Now it's normal that our half year cash is lower than our year end cash and work debt debts goes up. And as you can see in the next next slide on cash flow, at the bottom there, our cash balance of 9,200,000 actually coincidentally turns out to be exactly the same as it was in June 2021. There's a few moving parts as how we got there. Firstly, we had cash generation for operations, an outflow of 3.4, of which 1,600,000 is our operating, business, and the other is due to the highlighted items. And then we've also had significant investing activities, as I've mentioned, next mentioned. So we spent 16,500,000 on the three acquisitions of Formsample, MMI, and MediaPath.

8:36 Just breaking that down a little bit, MMI is about 8,000,000 in MediaPath in total and meter path 15, but some of that was funded through issue of shares to the vendors. And Form seven was very small acquisition, only a $1,000,000. The financing on the other hand, we received and and and net 14,400,000 proceeds from the equity issue that we undertook in May, the placing to fund the acquisitions, and we also increased our bank borrowings by 4,500,000 in parts to fund the acquisitions. And it also has a movement to IFRS 16, the lease payments that come that go out. Looking then at our debts, just really explain here the progression of our net debt and our cash balances so that people understand.

9:29 So I mentioned the movements, we tend to go up a little bit in the midyear and then come back down at the full year. So you can see that our net bank debt was 9,600,000 in June 21, went down 4.8 in December. It's come back up again in June, and it's already, by the end of August, coming down as we collect the from the invoices we've issued just before the period end. So we've already collected 2,400,000 in the two months to the end of August, bringing us net debt down and and towards the level we expect it to be by the year end until, as I already said, below at the end of June. So I hope that sorry. And then looking at our business, we, at the moment, publish a a a segmental analysis, which distinguishes in our media business, which is now by far the largest and which acquisitions all fall into that category.

10:28 And therefore, media revenue is up 21% in total, including the acquisitions. And its operating profit increased by 45%, really flowing through from the revenue, but also reflecting a higher margin, and that is the a combination of factors. One is that we have our digital media solutions are growing well, and they are inherently higher margin than our analog business. And we also the acquisitions themselves both had higher margins, underlying margins than the business our existing business, and they've already begun to contribute, to our margins. On the other hand, our analytics and tech business, which is a lot smaller, part of our business, its revenues actually fell by 10%. But as you can see, operating profit increased by 25%, reflecting really a a higher margin project mix, which in itself resulted from active management of our client accounts to make sure that we were beginning to focus on or focusing much more on on projects which make a better margin and actually being more robust in our pricing of projects. And in some cases, we actually turned down work or our clients refused to pay more, and we actually ended up with a higher margin as a result, so better quality business all around. So I hope that explains the components of financial performance in the period, and I'll hand back to Nick to talk more about our strategy and and what's driving our business.

11:56 Great. Thank you very much, Alan. I'll give you a a progress update, but just to start with a reminder of who we are, what we're in business to do. So we exist to help brand owners increase their returns from their media investments and therefore improve their business performance. We have four elements to the strategy to help us achieve those goals from business. The first is to increase revenue from digital services by developing a range of productized data solutions. The second is to build on our very strong customer base and to build higher value strategic relationships. The third is to improve our operational efficiency, which as you will have seen from the numbers Alan took you through, we're making good progress against. And the fourth is to strengthen the business in the very important geographic regions of North America and Asia Pacific.

12:51 Before I get into that, just a a brief overview of the market that we operate in. The first half of the year was buoyant to the advertising markets globally, but since then, we've seen some mixed signals emerging, and there's a few data points behind that. In The United States, the month of July saw a 12% drop in advertising expenditure, which was the biggest monthly drop since the pandemic started. But at the same time, there were some positive results reported. So Disney reported record upfront advertising sales of $9,000,000,000. NBCU also reported strong upfront sales of $7,000,000,000. Here in The UK, the IPA bellwether's report for q two, again, there were mixed signals. The majority of advertisers survey respondents were pessimistic about the near term future for the companies they work for. But at the same time, a majority of marketers were planning to increase marketing budgets rather than decrease them.

13:53 You'll also, I'm sure, be aware of fairly disappointing results from the major tech platforms at the half year mark compared to quite encouraging results from major agency holding companies. So a range of mixed signals. Clearly, there are significant storm clouds on the horizon, both in the wider economy and therefore potentially in the advertising market. But I would say they've they've yet to hit, and certainly, I would think q four is largely baked in now. We have seen some reduced agency selection activity this year. That's really because 2021 was an unusually high year, full of pent up demand from 2020 when advertisers didn't put their business up for pictures. They had other things to worry about during the pandemic. So we're probably back to more normalized levels of agency selection activity.

14:48 I referenced the disappointing half year results for major tech platforms. I think for the first time, we've seen the duopoly coming under pressure. Alphabet, I think, is in a stronger position than than Meta. Their search business remains extremely important, strong, resilient, and dominant. YouTube remains a good proposition, whereas Meta, I think we are really starting to see the impact of Apple's introduction of the app tracking transparency

15:19 solution. I think Zuckerberg said that will impact Meta's advertising revenue by about $10,000,000,000. But we're also seeing weakness in Snap and Twitter and some of the minor players. Great strength from TikTok starting to eat into the revenues there. We're also seeing very, very strong flow of advertising dollars in The US into both connected television and commerce media. Commerce media, obviously, everybody's very familiar with Amazon, but other retailers are now starting to aggressively monetize their real estate, their online real estate. Although that activity is most pronounced in The United States, we will start to see it flow towards this and other markets. Here in The UK, ITV will launch ITVX in the fourth corner, really being the first mainstream offering for advertising in the connected TV market. We see a risk of, the challenges that, have plagued the the open web programmatic market. We see a risk of those flowing into the advanced television market as well. Indeed, we see some of that activity in one or two countries already.

16:29 And the final dynamic that, is of note is the subscription funded streaming services now launching ad funded models. Quite how that impacts the market is clearly still to be seen, but we see clearly a lot of complexity in the market, which, is challenging for brand owners to navigate and therefore supportive for the EBQITY business. At the end of two thousand twenty, we introduced a range of operating metrics by which we would navigate the business. We published progress against them at the end of twenty one, and you can see those increased numbers there in this in the middle column. Here at the half year mark 2022, we won't publish the actual numbers, but we will refer to the fact that we're on plan or ahead of plan against each of the metrics.

17:22 Except for that final one percentage of revenue derived from the digital media services, we will see a dilution of that owing to the acquisitions we brought in whose businesses were both skewed to the broadcast sector. But we'll come back with the full year '22 results and provide an update on the actual figures.

17:45 The digital media solutions portfolio remains focus of our our product strategy at the moment. We now have seven productized data led solutions in market, and revenue continues to grow strongly from them. Through 2021, revenue from this business stream grew by 260%, but there was a law of small numbers at play there. Offer more robust revenue scale, we're continuing to grow that aggressively with 90% and importantly, at a at a strong operating margin over 50%. One of the products we've introduced is the responsible media investment product, which we piloted in The US and UK last year, and that provided sufficient interest to advertisers that we've now now rolled that out to a further nine markets.

18:37 We are working on solutions for the advanced television and commerce media markets,

18:43 and we aim to bring the first one regarding advanced television to pilot in The US in the fourth quarter of this year. An update on the acquisitions. We made three acquisitions in the first half of this year. We can describe two of them as strategic acquisitions and the third as as tactical. Just to recap, Media Management Inc. Was acquired in The United States, and the primary strategic rationale for that was simply to acquire scale in The US. Compared to the opportunity in the market, we felt we were somewhat underweight. So the acquisition of MMI doubles the size of our business in The US, giving us much greater presence and credibility in that critical advertising market.

19:28 MediaPath Network was also acquired in late April, and the primary strategic rationale for that was the technology platform that it brought to us, a platform called g m p three six five, which would enable us to run more of our business in a a time efficient manner, reducing human intervention and replacing that with very strong technology. And third acquisition, small tactical one in Canada to add a little bit more scale to our North American business. Those acquisitions have contributed almost £1,000,000 to underlying operating profit. In The US, we've brought those two companies together, EBQITY US and MMI. They're now operating as one large business. We've captured all the cost synergies we intended to or we aim to in 2022, and we see opportunities to realize more in 2023.

20:26 The integration of MediaPath takes a different form and that that was a globally distributed business operating off the technology platform. So our task there is to start transitioning our business and our clients onto the technology platform. That will take us a number of years. We see a three year program really to to transition the majority of our business onto the platform. But we've already started doing so, and we've won our first new client mandates with the g and p three six five platform as part of our service proposition. We've seen some of our existing clients renew, and we are starting to achieve early cost synergies there. We

21:07 have an exceptionally strong client base. We work with 28 out of the world's top 30 advertisers and more than 70 of the world's top hundreds. So the the the challenge or the task there is to increase the value of those client relationships. So we've segmented them into current high value clients, clients where we see high growth potential and new economy businesses, and are adopting key account management strategy based on, those segments. We have achieved a number of, positive wins in the first half of the year, and I call out a few of them there. Brown and Forman in The US is a brand new logo to us. We've not worked with Brown and Forman before, and that's pleasing as it shows the improving competitive nature of our US business.

21:53 PepsiCo in India, I'm particularly pleased with. We launched our business into India organically in q three of last year. India's a really vibrant advertising market, very complex for brand owners to navigate. So we felt that would be very supportive for our service proposition And to have been appointed by PepsiCo, one of India's top 10 advertisers and and quite possibly a top five advertiser, I think, is testament to the the credibility of our service offering in that market already. Virgin Media o two here in The UK, a very large merger to big businesses, a very competitive tender that we won out in. So very encouraging to see the competitive nature of our business here in The UK to secure large large client assignments.

22:40 I call out two global agency selection mandates from Jaguar Land Rover and BMW demonstrating our continued strength and competitiveness in that that segment. So our client development strategy continues to progress well. We've referenced the importance of improving our operating margin coming off single digits last year, almost doubling it to 13% this year. There's a number of drivers of that. We have reduced the production costs required to provide our service quite materially. That's a combination of reducing reliance on third party outsourced providers and also the synergies we've captured primarily in The United States in reducing acquisition costs of third party data.

23:30 Essentially, both MMI and ourselves were acquiring data from suppliers such as Nielsen. We've been able to merge those contracts and eliminate quite a bit of cost there. That's been coupled with good, cost containment on our existing or core EBIQUITY business, if you like, managing that to just 4% growth in the half year. We've also shifted the mix of our revenue towards higher margin solutions. I've referenced the digital product solutions there growing strongly with a 50% plus margin. Alan's also referenced an improved profitability in our analytics business. If you like being more discerning about revenue and servicing less nonprofitable or low profit revenue, so we've deliberately accepted revenue going backwards in return for a much higher profit contribution.

24:24 It's also worth noting that both MMI and MediaPath were higher margin businesses than EBQITY in the first place, so they were both margin accretive. And the additional scale brought in has enabled us to to leverage our off our existing overheads better. We had prior to the acquisitions of MMI and MediaPath, we had a media operations center effectively acting as a scale delivery center. We've continued to to utilize that in more instances, taking work away from higher cost centers and improving our efficiencies and economies of scale there. And we've delivered a 37% increase in productive hours served by that operations center. So a range of drivers of the improved margin performance, and we see the opportunity to continue pulling those levers.

25:20 We've referenced our ambition to scale in strategically important markets. The world's largest advertising market is The United States. Second largest is China. So we have placed a degree of emphasis on increasing the scale of our business in both The US and Asia Pacific. We've referenced already the acquisition of MMI and Ford and Semples both contributing significantly to the revenue growth in North America, up 90% in the first half of the year, helping us achieve and deliver greater economies of scale for profitable growth in North America. Particularly pleasing though is the rate of organic growth in Asia Pacific. That's our fastest growing region organically at 38% revenue growth with a strong contribution from China.

26:09 We've also seen strong performance in Continental Europe where organic revenue has grown by 13%, strong drivers from France, Italy and Spain, perhaps a market where we wouldn't necessarily have expected double digit organic growth being a mature market, highly competitive market and a relatively lower growth market. So that's very encouraging in Continental Europe. So to summarize, the outlook is positive. We expect to see our full year '22 results in line with market expectations. As the storm clouds on the horizon gather, there is the resilience built into our business in terms of the service provision. In in difficult times, advertisers would be expected to put even more scrutiny on their media investments to understand the efficiency with which they're buying them and the effectiveness of the channels that they are buying.

27:08 Now, clearly, there is there is risks to that. We are not immune to budget cuts as other line items would be, but there is resilience built into our product and service offering. We we must obviously note a degree of caution around inflationary pressures. We won't be immune from them. I think the cost of living challenges, particularly for some of our more junior members of staff or lower income members of staff, we will seek to alleviate with some relief payments there. But we do see the opportunity to balance those inflationary cost pressures with some of the operating efficiencies we've already described, and we'll continue to focus on as we go forward.

27:55 So we do see continued operating opportunity for both revenue growth and margin enhancement, and we see our business as being well placed for long term sustained growth. And that concludes the slides, and we are, of course, very happy to take any questions you may have. Nick, Alan, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just using the q and a tab situated on the right hand corner of your screen. But just while the company take a few moments to view 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. As you can see, we've received a number of questions throughout today's presentation.

28:40 If I could just ask you to read out those questions and give responses where it's appropriate to do so, I'll pick up from you at the end. Certainly. The first question from Mark a, are the acquisitions of media management and media path now fully integrated, and what steps did you take to lock in the key personnel? So I think MNI is at a more advanced stage of integration. We have brought the teams together. We have merged the management team. So members of the MMI team have now taken senior posts within the combined management structure. Clients have been novated over onto EBQITY Inc contracts. We have, I mentioned earlier, effectively eliminated one of the Nielsen or data supplier contracts. We've now merged those into one contract.

29:36 We are going to market as a single proposition and seeking to cross sell both MMI services into EBQITY clients and vice versa. So I think the integration of that business is very well advanced. The integration of the media path business, I I mentioned earlier, is different. It will take longer simply because their business model was so different from ours. Effectively, a globally distributed business operating off a uniform technology platform, fairly geographically agnostic, whereas EBQITY is aligned by geography. So the integration process over there will take a little bit longer. Some members of that media path team have joined senior positions within EBQITY, and we have embarked on the process of training up EBQITY members of staff onto the technology platform, the g m p three six five platform, creating a joint go to market and starting to transition clients onto that. But that is a slower and slightly more complex process.

30:41 That's not a surprise. That's exactly as expected, and we continue to work on that from now on, certainly through the remainder of next year as well. Another question for Mark a. Where do you see management focus geographically? Will it be The US given the addressable market? And if so, how will you look to increase your footprint organically dash m and a? Yes. The US remains a major focus for us as does Asia Pacific. I think, realistically, Asia Pacific will be more of an organic story than an acquisition story. Much as I would like to find opportunities to acquire in Asia Pacific, I think, companies that would be, relevant strategically relevant for us to acquire are are less obvious, in that market.

31:30 We do believe there'll be opportunities to acquire in The United States. Now might not be the best time to do it for for a couple of reasons. Firstly, we need to focus on integrating the business we've acquired and making those a success. And secondly, the wider macro environment is a little bit more challenging, a bit more uncertainty. And, of course, now we have to consider the very significant spread that's been achieved in the dollar sterling exchange rate. So whilst m and a will remain on the agenda, I think our our focus in the near term probably needs to be more organic. A question here from Steve Kay. Will you look to exit your Russian operations by the end of the year? Yes, in theory, and we were well advanced in progressing the divestment of our shares in that Russian business to our local managing director who is a minority shareholder in the business.

32:30 That was all agreed and ready to transact. And then a new decree came out of the Kremlin fairly recently, in the last three to four weeks, which does make it harder for that transaction to go ahead. There is apparently now some approval process to go through. We're not familiar with the details of that yet, and I think a lot of the details are still yet to emerge. So, theoretically, we would seek to exit those operations. In practice, it's difficult to know how feasible that will be by the end of the year. Question from Neil B. Could you talk about staff retention and hiring? What management gaps do you still have to fill in the scale of salary inflation you are experiencing.

33:17 I think staff retention is probably around about normal. We've not seen any particular spike in retention challenges this year. Did have a bit of a challenge last year in a specific segment. Our marketing effectiveness team came under pressure for data scientists in particular and those with advanced analytics skills. That pressure seems to have dissipated a bit this year. In our core media services business, I think there's not, at this stage, an unusual, challenge on retention. Hiring, I I think, remains again standard, albeit within some segments there are, excuse me, different challenges. We see some upward inflation in certain skill sets, which which certainly adds a little bit of upward pressure on salaries there.

34:14 Management gaps, I I don't believe we have any specific management gaps. Clearly, there's always opportunity to strengthen in some areas, but I don't see any specific gaps in the management team. Scale of salary inflation we're experiencing, as we we have one main salary review window in the year, which is in April. We take stock and have another review, a minor window, should we say, in October, which we're just having a look at now. For our April round, we budgeted around four to 5%, which seemed satisfactory, but clearly inflation has got a lot stronger since then. I think we will selectively reward people a little bit more than that in October, but it is only the minor window. We'll have to plan effectively for next April. And it's too early for us to do that yet.

35:11 We haven't approached budget season. Another question from Neil B. Why was AdTech down 20% in the first half? Was it the continuation of the cessation of a large one off project in the second half of twenty one? Well, our marketing effectiveness and analytics business, we we bracket together in revenue terms. And as Alan discussed during the presentation of the numbers, we did have several relationships or projects in 2021 that were were not profitable. So in retendering them or aiming to renegotiate the price to make them profitable for us if the client wasn't willing to take that price increase or if there was a tender retender, and we priced ourselves more expensively and didn't win that business, then we've effectively improved the quality of the revenue. So we've taken a more discerning approach, I think, you could say to the revenue secured in that business line.

36:21 So we're not concerned about the revenue going back because it's actually delivered and contributed actually a high amount of operating profit to the business. If I could just jump in, Nick. I think the question was referring to us to the comment in the r and s where you specifically talked about ad tech. I mean, obviously, all that you've just said is absolutely right, but I think that is particularly was a small low revenue service that we've actually merged into our media service now. So we're not really it was really advising people on on how to make the best use of programmatic advertising and how to manage their partners. And so that's the real reason the main reason it's down is because we're really scaling it down now and and merging and integrating it with our media services. Thanks, Alan. I'm This is very specific. So it was about a 1,000,000 Yeah. Thanks. I slightly misunderstood that question. Thanks. I I think, Alan, while you're talking, you should answer the next one from Dion.

37:16 Sure. Sure. Expectations. Yeah. So, obviously, our market expectations in in the way that the market works are based around or are, as it were, communicated by our analysts or their expectations or the consensus that that comes to the market. Broad terms, the EBIT line, the underlying operating profit, I think the market is now expecting us to be around £9,000,000 for the full year. So we're we're saying that we are in well in line to achieve that. The second question was what are the current thoughts as to returning to paying a dividend? Thoughts at the moment are are probably not in the in the short term. There's no not been a lot of pressure from shareholders and given net debt, given that we think we can make best use of our cash by investing in in in the business and continuing to improve its performance and delivering value to shareholders that way.

38:12 I think for the next year or two, that's probably where we'll be. Of course, it's not my decision. It's the board. So they they we'll we'll we obviously keep that under review every year, but that would be my current view. The next question I got also answer. Roughly, what proportion of the 14,000,000 deferred payment on digital decisions do we expect fulfilling new shares? This is just to explain it's it's pretty much our option. There is a a day minimus that that the vendor can ask us to pay, which is less than half. I think the working assumption, again, in in the in the sort of analyst view that the guidance of the market is that it'll be probably 50% equity, 50% shares.

39:04 It may be slightly higher than that in terms of equity, but it's that kind of regional is is what we're expecting at the moment. And I'll also answer the next one from Vishal. Please, can you discuss the tailwinds from FX on your top line and margins over the medium term? Should sterling continue to hover at these historic lows? Is in broad terms, The UK sort of invoice business as it were, even though that's not all in sterling, is about oh, sorry. UK local business is about 20%, and our international unit, which is also UK based, is about another 20% of our turnover. So put a different way around, more than half our turnover is actually outside The UK and predominantly in dollar dollar related currencies or in euro.

39:56 So in broad terms, you'd expect that the fall in the pound would would improve, would would give us some upside. But it's fairly well balanced because our costs are also, you know, going up at the same time. America has traditionally not had that high a bigger profit contribution effect. It was loss making last year. Now that we've got MMI and now we're improving it, we expect to see some profit benefit from the more from America. So in very broad terms, I would say that the FX will fall in the sterling is beneficial, but it's fairly marginal in our business because it sort of balances all over the place. And sorry. The other point about FX is the relationship between the pound the the dollar and euro affects things as well because euro against the pound hasn't actually been shifting very much. It's been it's a pound.

40:49 The dollar's very strong. The tax charge in h one seemed high. I'm not sure what you're referring to high because it's actually come down since last year. I think I've one of the challenges in if someone's comparing our tax charge with the analyst view is analysts have tended to put in what I call a pro form a, which is tradition tended to be underestimating our tax charge. So I'm expecting the range for the full year to be pretty similar to what what we got over age one. In fact, that's actually how we calculate it in the accounts. It's based on our forecast for the full year. Nick, so I'll put it back to you on the next question. Sure. Question from Vishal. Please, could you also discuss the ability of the new enlarged business to retrain to retain and attract new talent?

41:40 I think we we've seen an interesting dynamic in that people from both MMI and MediaPath have expressed some degree of of positivity, if you like, in that now they're part of a larger organization. There is greater potential for career development and career path. So I I think that has certainly helped retain people from those companies. I think there is a a positive dynamic about having made the acquisitions, which encourage people at EBQITY to see the positive benefits of the of the newly enlarged company. So I think retention at the moment is is fine, perhaps enhanced. That's not to say there will be there won't be some people who decide that they don't wanna be part of the new journey of the the newly acquired EBQITY, but we haven't yet seen that happen.

42:39 Similarly, with attraction of new talent, a larger organization, we have a wider range of roles to offer people, positive momentum in the company. So hopefully, we appear an attractive proposition versus other players in the market. And at the moment, we're seeing our ability to attract talent as as being quite quite positive. Another question from Vishal. Finally, please, could you also discuss any observable trends in your tender pipeline, size of deals, win rates, contract decision cycles, etcetera? That's a good question, Vishal. I don't think the size of deals particularly have changed. We are obviously seeking to to move them up, but I would say that's fairly stable at the moment, albeit we are moving the number of clients we have.

43:39 This comes back to the strategy of developing higher value strategic relationships. We are moving clients up our our total value relationship, if you like. But that's really more about selling more products and services to them rather than the individual project size or size of deal. Win rates, I think, remain stable. They're positive. We have a high high proportion of successful tenders. Our contract decision cycles, I think, also remain fairly stable. So I wouldn't I wouldn't say there's any great different dynamic in the pipeline or decision cycles. Neil b. Do you have any new product introductions planned?

44:30 Are you looking for further infill acquisitions? And if so, where? Yes. We are working on two strategic product solutions, one to address the connected TV or advanced television market, which we aim to pilot in The US in the fourth quarter of this year. We're still working on a solution for the commerce media market. We won't pilot anything in the fourth quarter of this year, but we are actively working on it. And we have some other solutions under development, which we'll aim to bring to market in q one or q two of next year. So there are still more product solutions to come to market. Are you looking for further infill acquisitions? At the moment, I think because of the market conditions that I described earlier, it's not at the top of our priority list, but we do continue to keep a view on the market. We continue to review the market. We continue to maintain or seek to maintain positive relationships with, you know, the the the the principles, should we say, of of potential acquisition targets. So there is a time, there will be a time, hopefully, when we can be active again.

45:42 Aware you know, come back to the geographic strategy, North America, Asia Pacific remain high priorities. If we can find acquisition targets there, they would be priorities, but we would also be open to discussions with companies that have data relevant data they can bring into into the organization. So it's primarily geographically and and data oriented. That's, I think, all the questions in the box that have come up now. Yeah. Yes. I think it is. And I think you've actually managed to address all all the questions from investors. And, of course, the company will review all questions submitted today, we'll and publish those responses on the investor me company platform. But just before redirecting investors to provide you with their feedback, which I know is particularly important to you both, Nick, could I just ask you for a few closing comments?

46:35 Yes. As I said in the presentation, the outlook is that we will achieve the full year results in line with market expectations. There are obviously clouds on the horizon. At the moment, we see our business as being relatively resilient to that. Not to say we'll, you know, we will be immune to all the challenges, but we do see resilience built into our service offering. As we move into next year, the focus continues to be on successfully integrating acquisitions and with a particular priority on transitioning our business over time onto the g and p three six five platform that MediaPath acquisition brought with us.

47:21 So I think the the strategy remains the same. Products, clients, operating efficiency, and geographic rebalancing. And that's that's probably the summary for now. Nick, Alan, thanks once again for updating investors today. Could I please ask investors not to close this session as As you now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, but 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, and good morning to you all.