Final Results for the year ended 31 December 2022

About this update from Ebiquity Plc

[{"type":"text","content":"\n \n \n 30 March 2023 \n \n \n Ebiquity plc \n \n \n Final Results for the year ended 31 December 2022 \n \n \n   \n \n \n Delivering a strong performance with continued opportunities for growth  \n \n   \n Ebiquity plc (\"Ebiquity\", the \"Company\" or the \"Group\"), a leading global player in media investment analysis, operating in the US$930 billion global advertising market 1 , announces its results for the year ended 31 December 2022. \n   \n \n \n Financial Highlights 2   \n \n \n \n \n \n \n \n \n Year ended 31 December \n \n \n \n \n \n \n 2022 \n \n \n \n \n \n \n 2021 \n \n \n \n \n \n \n Change \n \n \n \n \n \n \n \n \n £m \n \n \n \n \n \n \n £m \n \n \n \n \n \n \n £m \n \n \n \n \n \n \n % \n \n \n \n \n \n \n \n Revenue \n \n \n \n \n 76.0 \n \n \n \n \n 63.1 \n \n \n \n \n 12.9 \n \n \n \n \n 20% \n \n \n \n \n \n \n Adjusted Operating Profit 2 \n \n \n \n \n 9.3 \n \n \n \n \n 4.7 \n \n \n \n \n 4.6 \n \n \n \n \n 98% \n \n \n \n \n \n \n Adjusted Operating Profit Margin % \n \n \n \n \n 12% \n \n \n \n \n 7% \n \n \n \n \n - \n \n \n \n \n 5 pp \n \n \n \n \n \n \n Adjusted Profit before Tax 2 \n \n \n \n \n 8.0 \n \n \n \n \n 4.1 \n \n \n \n \n 3.9 \n \n \n \n \n 95% \n \n \n \n \n \n \n Adjusted Earnings per Share 2 \n \n \n \n \n 5.4p \n \n \n \n \n 2.7p \n \n \n \n \n 2.7p \n \n \n \n \n 98% \n \n \n \n \n \n \n Statutory Operating Loss \n \n \n \n \n (5.9) \n \n \n \n \n (5.1) \n \n \n \n \n (0.8) \n \n \n \n \n 16% \n \n \n \n \n \n \n Statutory Loss before Tax \n \n \n \n \n (7.2) \n \n \n \n \n (5.7) \n \n \n \n \n (1.5) \n \n \n \n \n 26% \n \n \n \n \n \n \n Statutory Loss per Share \n \n \n \n \n (6.9)p \n \n \n \n \n (8.5)p \n \n \n \n \n 1.6p \n \n \n \n \n - \n \n \n \n \n \n \n \n \n 1 \n \n \n \n Source eMarketer \n \n \n \n \n \n 2 \n \n \n \n In the reporting of financial information, the Directors have adopted various alternative performance measures ('APMs'). Details of their calculation are set out in page17 of this statement. \n \n \n \n   \n \n   \n \n · Revenue increased by £12.9 million (20%) to £76.0 million and organically by £5.7 million (9%) \n \n · Adjusted operating profit increased by 98% to £9.3 million  \n \n · Adjusted operating profit margin increased by 5 percentage points to 12% \n \n · Acquisitions in the period contributed revenue of £6.8 million \n \n · Statutory operating loss increased by £0.8 million to £5.9 million (2021: £5.1 million) as a result of the increased level of highlighted items up by £6.1 million to £15.2 million (2020: £9.3 million) \n \n · Highlighted items include accruals in the period of £7.9 million towards the contingent consideration for the acquisition of Digital Decisions B.V of £15.8 million, payable in 2023 (based on its strong performance in 2021 and 2022) \n \n · Net debt of £9.1 million: cash balances of £12.4 million and bank borrowings of £21.5 million as at 31 December 2022 with undrawn bank facilities of £8.5 million \n \n · Statutory cashflow from operations of £1.1 million (2021: £8.7 million) \n \n · Adjusted cashflow from operations of £6.2 million (2021: £13.2 million), representing cash conversion of 67% \n \n \n   \n \n \n \n \n Strong operational performance \n \n \n \n · \n Improved profitability across all regions and business units \n \n \n · \n Significant growth from the Media performance service line \n \n \n · Higher margin Digital Media Solutions revenue increased by 76% to £6.5 million \n \n · \n Major new assignments won including Shell, HSBC, Philips, Pepsico \n \n \n   \n \n \n \n   \n \n \n \n \n   \n \n \n \n \n Growth outlook \n \n \n \n · \n Trading in the current year has started in line with the Board's expectations, with continued growth momentum and opportunities for operational efficiencies \n \n \n \n \n   \n \n \n \n \n \n Retirement of \n Chief Financial Officer and Chief Operating Officer \n \n \n \n · \n Alan Newman will be retiring at the end of June.  Our search for his replacement is well advanced. He has made a significant contribution to the business and the Board wishes him all the best for the future \n \n \n \n \n   \n \n \n \n \n Nick Waters, Chief Executive Officer, said: \n \n \n   \n \n \n \n \"We have delivered a strong performance in 2022 and made significant progress against our strategic objectives and target operating metrics. This has resulted in a significant increase in revenue, which was up 20%, including organic growth of 9% and adjusted operating profit almost doubling.  It is particularly pleasing that we have also seen a strong adjusted profit margin improvement from 7% in FY21 to 12% in FY22, especially as this was achieved against a challenging economic environment. \n \n \n \n \n   \n \n \n \n \n We made three important acquisitions in 2022.  The acquisition of Media Management Inc doubled the size of our business in the USA - the world's largest advertising market - and enhanced our service offering.  Media Path Network, headquartered in Sweden, has brought a high-quality data management platform which will enhance our operating efficiency.  The acquisition of Forde and Semple gained us entry into the Canadian market. The integration of all three companies has progressed well. \n \n \n \n \n   \n \n \n \n \n Revenue from our portfolio of Digital Media Solutions continued to grow strongly and maintained a high margin.  Geographically, in addition to scaling the North America and European businesses, our Asia Pacific region continued to grow well.  \n \n \n \n \n   \n \n \n \n \n Additionally, the demand for our services was strong and we won a wide range of new mandates from major clients including Shell, HSBC, Jaguar Land Rover, Philips and Pepsico, demonstrating the competitive strength of our business. \n \n \n \n \n   \n \n \n \n \n As we look to 2023, we see continued growth opportunities.  The global media market is highly complex, creating significant challenges for our clients, brand marketers.  Ebiquity's expanding product and service offering, breadth of geographic presence, and depth of expertise makes us well placed to fulfil advertisers' needs. Trading in the current year has started in line with expectations.\" \n \n \n   \n \n \n Details of presentations \n \n \n \n \n   \n \n \n \n The Executive Directors will host a webcast presentation for analysts at 09:30 BST today. If you would like to register to attend, please contact \n [email protected] \n . \n \n \n   \n \n \n They will also give a presentation via the Investor Meet Company platform on Monday 3 April at 09:00  BST. The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via the Investor Meet Company dashboard up until 09:00 BST on the day before the meeting or at any time during the live presentation.  Investors can sign up to Investor Meet Company for free and add to meet Ebiquity plc via: \n \n https://www.investormeetcompany.com/ebiquity-plc/register-investor \n \n . \n Investors who already follow Ebiquity plc on the Investor Meet Company platform will automatically be invited. \n   \n \n \n   \n \n \n \n   \n \n \n \n \n Market abuse regulation \n \n \n \n   \n \n \n This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 (\"UK MAR\"). \n Upon the publication of this announcement via a Regulatory Information Service this inside information is now considered to be in the public domain. \n \n \n   \n \n \n The person responsible for arranging release of this announcement on behalf of the Company is Alan Newman, Chief Financial Officer and Chief Operating Officer of the Company. \n \n \n   \n \n \n   \n \n \n \n \n \n \n Ebiquity plc \n \n \n \n +44 20 7650 9600 \n \n \n \n \n Nick Waters, CEO \n \n \n   \n \n \n \n \n Alan Newman, CFO & COO \n \n \n   \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n Camarco \n \n \n \n   \n \n \n \n \n Ben Woodford \n \n \n +44 7990 653 341 \n \n \n \n \n Geoffrey Pelham-Lane \n \n \n +44 7733 124 226 \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n Panmure Gordon \n (Financial Adviser, Nomad and Broker) \n \n \n \n +44 20 7886 2500 \n \n \n \n \n Dominic Morley / Dougie McLeod (Corporate Advisory) \n \n \n   \n \n \n \n \n Mark Murphy/ Sam Elder (Corporate Broking) \n \n \n   \n \n \n \n \n \n   \n \n \n \n About Ebiquity plc \n \n \n \n   \n \n \n Ebiquity plc \n (LSE AIM: EBQ) \n is a world leader in media investment analysis. It harnesses the power of data to provide independent, fact-based advice, enabling brand owners to perfect media investment decisions and improve business outcomes. Ebiquity is able to provide independent, unbiased advice and solutions to brands because we have no commercial interest in any part of the media supply chain. \n \n \n   \n \n \n We are a data-driven solutions company helping brand owners drive efficiency and effectiveness from their media spend, eliminating wastage and creating value. We provide analysis and solutions through five Service Lines: Media management, Media performance, Marketing effectiveness, Technology advisory and Contract compliance. \n \n \n   \n \n \n Ebiquity's clients are served by more than 500 media specialists, covering 80% of the global advertising market. \n \n \n   \n \n \n The Company has the most comprehensive, independent view of today's global media market, analysing US$55bn of media spend from 75 markets annually, including trillions of digital media impressions. Our Contract compliance division, FirmDecisions, audits US$40bn of contract value annually. \n \n \n   \n \n \n As a result, over 70 of the world's top 100 advertisers today choose Ebiquity as a trusted independent media advisor. \n \n \n   \n \n \n For further information, please visit: \n \n www.ebiquity.com \n \n \n \n   \n \n \n \n \n \n \n \n \n   \n \n \n Chair's Statement \n \n \n   \n \n \n During 2022, we have seen the benefits resulting from our strategy of refocussing the business and of the transformation programme under way in our products, management, operational processes and technology platform.  As a result, the Group is reporting a strong performance with revenue, adjusted operating profit and adjusted profit margins all increasing significantly compared to 2021. This reflects good organic revenue growth of 9% as well as the contribution from the three acquisitions made in the year.  \n \n \n   \n \n \n This performance has been achieved despite evident challenges in the political and economic environment affecting our clients, many of whose businesses operate globally, including the impact of the war in Ukraine and the recent rapid increase in inflation in most economies.  \n \n \n   \n \n \n The Group's statutory operating loss increased to £5.9 million. This is impacted by highlighted items of £15.2 million, a number of which will not recur in future periods.  \n \n \n   \n \n \n We are also announcing today that Alan Newman our Chief Financial Officer and Chief Operating Officer, will be retiring at the end of June.  Our search for his replacement is well advanced and we will provide an update on this in due course.  I should like to take the opportunity, on behalf of myself and the Board, to thank Alan for his hard work and commitment to the Group over the past four years. He has made a significant contribution to the successful development and re-positioning of our business during that time.  We wish him all the best for the future. \n \n \n   \n \n \n On behalf of the Board, I would also like to thank all of our employees for their hard work, creativity and commitment this year.  In recognition of the cost-of-living challenges faced by our staff, the Group was pleased to make a one-off payment in October to support those who were more in need.  Although the impact of the Covid pandemic generally reduced this year, we note that our staff and business in China continued to experience disruptions.  \n \n \n   \n \n \n It is pleasing to report that Digital Decisions, which we acquired as an early stage start up in 2020, has more than met expectations over the last three years, both in spearheading the development of our Digital Media Solutions business line and in the revenue and profit contribution it has delivered to the Group. \n \n \n   \n \n \n During the year we made three acquisitions:  Media Path Network, a global business based in Europe; Media Management LLC (MMi) in the USA and our external partner in Canada, Forde and Semple.  The integration of these acquisitions is progressing well.  They are already helping to transform our business and have increased our global scale and client coverage in key markets, as well as enhancing our earnings.  As set out in our strategy, we will continue to explore opportunities to build further capability in key media markets.  \n \n \n   \n \n \n The divestment of our shareholding in the Russian business, as previously announced, is in process, although it remains subject to Russian government approval. \n \n \n   \n \n \n As a leading global provider of media investment analysis, Ebiquity continues to ensure that it supports the needs of advertisers in navigating the fast-changing media landscape.  Ebiquity's core strengths include our media expertise, independence and ability to develop innovative products as new media channels emerge.  We deploy these through our international network, now present in 18 countries and our team of media specialists located across it, both of which are unmatched in our sector.  We recognise that our growth also depends on our ability to deepen relationships with existing clients and to win new mandates on the strength of our offering.  Our team's focus on improving the management of key client relationships has contributed to our successful growth in the past year. \n \n \n   \n \n \n During the year, we have continued on our ESG journey.  We have measured our Scope 1-3 consumption across our top six markets (81% of our business) and from this we identified the major areas to address.  As expected for a professional services company, our consumption is dominated by Scope 3 emissions, which account for over 90% of our total emissions.  The key categories are purchased goods and services, fuel and energy related activities, waste generation and travel.  Actions being taken to reduce our consumption include having a hybrid working policy, guidance for business travel and analysis of our supply chain.  During 2023 we will begin planning our pathway to net zero and prepare to report under the new UK regulations on Climate-Related disclosure in 2024. \n \n \n   \n \n \n Ebiquity's market opportunity within the global advertising market is huge as digital advertising continues to develop fast and our clients face increasingly complex challenges in managing their advertising investments.  We have a clear strategy for capitalising on this opportunity and enhancing our leadership position.  Our results this year demonstrate our management team's ability to deliver growth and to improve profitability. They have a comprehensive plan for further improving margins over the medium term through process efficiency, use of our technology platforms and deployment of resources in line with our global scale.  While ensuring we deliver organic growth, we will also consider opportunities to make further acquisitions that benefit our business.  \n \n \n   \n \n \n The Board and I remain confident that Ebiquity is well placed to deliver growth and value to our shareholders. \n \n \n   \n \n \n   \n \n \n Rob Woodward \n \n \n Chair \n \n \n \n \n \n   \n \n Chief Executive Officer's Review \n \n \n   \n \n \n \n Unique market position \n \n \n \n \n   \n \n \n \n Ebiquity's purpose is simple. We exist to help brand owners increase returns from their media investments and so improve business performance. We do this by analysing billions of dollars of advertising spend globally, as well as trillions of advertising impressions. Using this intelligence, we provide independent, fact-based advice which enables brands to drive efficiency and increase effectiveness. Our work helps to eliminate wasteful advertising spend and to create value. \n \n \n   \n \n \n As the world leader in media investment analysis, we count over 70 of the world's top 100 advertisers as our clients. We are entirely independent of the media supply chain, which enables us to provide clients with objective, unbiased advice. We do this through our global network of over 600 media specialists based in 18 countries, which covers some 80% of the world's advertising spend.  \n \n \n   \n \n \n We operate in a very large global advertising market, which is worth \n over US$930 billion per year ( Source:- eMarketer). We analyse c. US$100 billion of global media investment and contract value annually, including more than a trillion digital media impressions. \n Some two-thirds of this is spent through digital media channels. \n \n \n \n   \n \n \n \n \n A year of delivery \n \n \n \n   \n \n \n I am very pleased with our performance during the year. We are delivering effectively against our four key strategic objectives which are to:  develop higher value strategic relationships with more clients; develop productised solutions for the digital market; improve operating efficiency; and increase scale in the US and Asia Pacific. As a result, we have delivered a strong revenue performance up 20% to £76 million, and up organically by 9%, with adjusted operating profit almost doubled to £9.3 million.  It is particularly pleasing that we have also seen a strong adjusted profit margin improvement from 7% in FY21 to 12% in FY22, especially as this was achieved within a challenging economic environment.  \n \n \n   \n \n \n Our performance reflected a good contribution from our largest service line, Media Performance, where revenue grew by 33%, benefiting from our three acquisitions during the year and the growth of Digital Media Solutions within it. Contract Compliance was the standout organic performer with 25% revenue growth. Marketing Effectiveness was flat year on year but its profitability improved reflecting strong discipline in declining several large but unprofitable renewals. Media Management had a more challenging year with revenue declining by 6%, reflecting lower agency selection activity in the market compared to the post-pandemic \"surge\" year of 2021.  During the year Tech Advisory, our smallest service line, became part of Media Management within which it is a more natural fit. \n \n \n   \n \n \n \n Acquisitions driving growth \n \n \n \n   \n \n \n We made two transformative acquisitions in 2022:  Media Management LLC (MMi) in the USA and Media Path Network AB (Media Path) in Europe. The US acquisition has enabled us to more than double our size in the world's biggest advertising market and significantly increased our penetration of large US advertisers. With the acquisition of Media Path we have a globally distributed business managed from Sweden, operating a high quality technology platform, which is providing us with an effective base from which to drive greater efficiency in the delivery of our services Group-wide. We have made good progress in integrating these businesses, having successfully started the process of transitioning client work to the GMP365 technology platform We also delivered synergy benefits in the year in line with our stated goal of achieving £5 million annualised benefits by 2025.  Importantly, both acquisitions have contributed positively to these results. In addition, we also made the small, tactical acquisition of Ford & Semple (now renamed Ebiquity Canada) to provide us with further scale in North America. As part of accelerating our growth we will continue to identify suitable acquisition opportunities. \n \n \n \n   \n \n \n \n \n Product Innovation driving growth \n \n \n \n   \n \n \n One of the key drivers of our growth has been the development of innovative Digital Media Solutions that meet client needs. We now have seven productised Digital Media Solutions in the market, with the global Digital Governance programme representing the core solution to which other products are often added. The demand for these products has enabled us to increase DMS revenue by 76% to £6.5 million (2021: £3.7 million) and to deliver a margin of over 50%. Underpinning this performance are the major strides we have made against the target operational metrics we set ourselves (see Table below). 55 clients now buy one or more Digital Media Solutions, up from 28 last year, and we are ahead of expectations in terms of the deep pool of data we are able to analyse. This now covers 1.4 trillion digital media impressions worth US$6.6bn annually. The number of markets to which our analysis extends now stands at 91, up from 87 last year, further demonstrating our ability to provide visibility and advice to the largest global advertisers across the entire geographical breadth of their operations.  Our most recent new product development is a solution for Advanced Television, which is in a pilot stage in the USA and we also have a Retail Media solution under development. \n \n \n   \n \n \n One of the main products that we developed during the year was a Responsible Media Investment solution which supports advertisers in their efforts to improve governance of their media investments.  It provides clients with visibility on whether their media spend is funding bad actors, namely publishers guilty of distributing disinformation or intellectual property theft, promoting hate speech, or aiding \"Made for Advertising\" websites that siphon off media investment without providing any value to the brand owner. This is not only an important landscape for our clients to navigate carefully but also one where we want to play an active role in providing a solution. We have therefore become a Signatory to the EU Code of Practice on Disinformation and are supporting the EU and its member states in reducing funding of disinformation. \n \n \n   \n \n \n In this spirit, we have also continued to lead our market in thought leadership, shaping industry debate on major topics and responding to market events. One of the major initiatives we undertook was to produce our first study using Scope3 data to measure the CO 2 impact of digital advertising.  In \"The Hidden Cost of Digital Advertising\" we found that a sample of 116 billion impressions from US$375m spend across 43 advertisers in 11 markets generated 77,826 metric tonnes of CO 2 - an average of 670 grammes per 1,000 impressions - the equivalent of flying c. 1.35m passengers from London to Paris. This quantum of CO 2 emissions would take 3.7m trees a year to absorb. As a result of this study, we have introduced a new metric \n CO2PM (grams of CO 2 equivalents per 1,000 impressions) which we believe \n should be adopted immediately by the industry as a core metric to influence decision making and lead technology and media partners to optimise their practices to increase sustainability. \n \n \n   \n \n \n \n Operational metrics \n \n \n \n   \n \n \n Underpinning this year's performance are the major strides we have made against the target operational metrics as shown in the table below  \n \n \n   \n \n \n \n   \n \n \n \n \n   \n \n \n \n \n   \n \n \n \n \n   \n \n \n \n \n   \n \n \n \n \n Table 1: Operational Metrics \n \n \n \n \n   \n \n \n \n \n \n \n \n \n   Key Performance Indicator \n \n \n \n \n \n \n Baseline 2020 \n \n \n \n \n \n \n 2021 actual \n \n \n \n \n \n \n 2022 \n \n \n \n \n actual \n \n \n \n \n \n \n \n No. of clients buying one or more products from the new digital portfolio \n \n \n \n \n 10 \n \n \n \n \n 28 \n \n \n \n \n 55 \n \n \n \n \n \n \n Volume of digital advertising monitored ( trillions of impressions) \n \n \n 0. 1 \n \n \n 0. 6 \n \n \n \n 1 . 4 \n \n \n \n \n \n Value of digital advertising monitored (billions of spend US$) \n \n \n \n \n 0.5 \n \n \n \n \n 3.0 \n \n \n \n \n 6.6 \n \n \n \n \n \n \n No. of countries served with new digital products \n \n \n \n \n 50 \n \n \n \n \n 87 \n \n \n \n \n 91 \n \n \n \n \n \n \n No. of clients buying two or more Services Lines \n \n \n \n \n 58 \n \n \n \n \n 76 \n \n \n \n \n 97 \n \n \n \n \n \n \n % of revenue from digital services \n \n \n \n \n 25% \n \n \n \n \n 29% \n \n \n \n 32% \n \n \n \n \n \n \n   \n \n \n \n \n Strong client relationships driving growth \n \n \n \n   \n \n \n Ebiquity's primary target market comprises the world's top 100 advertisers. Our strategy is to develop high value relationships from an increasing number of key clients. We have made good progress against this ambition with the number of clients buying two or more Service Lines rising from 76 in 2021 to 97 in 2022. The demand for our services remains strong and we have won a number of significant new clients including Philips, Upfield, Qatar Tourism and Kering. \n \n \n \n   \n \n \n \n \n Creating a more efficient business \n \n \n \n   \n \n \n An unrelenting focus on improving our operating efficiency has helped to deliver the strong improvement in adjusted operating margin in FY22. We have reduced production costs by 4% compared to the prior year and took a number of other actions to improve productivity. These included not renewing unprofitable assignments and increasing revenues from higher margin digital solutions through a better product mix. In addition, our Media Operations Centre in Madrid continues to deliver economies of scale, with 20% more productive hours delivered this year as a result of further transfer of work to it from market units. One of the primary strategic reasons for acquiring MMi was not only to increase our scale in the US, which has historically been underweight, but also for the operational efficiency it would deliver. The integration has gone well and we delivered cost synergies by the year-end in line with our plans.  We have also begun the initial migration of clients to Media Path's GMP365 platform which will realise cost efficiencies through better use of automation. It is pleasing to note that we have maintained strong cost control while also being able to make a one-off cost of living relief payment to those of our staff who were most in need. \n \n \n \n   \n \n \n \n \n Further growth potential \n \n \n \n   \n \n \n Our priority is to increase scale in the USA and Asia Pacific, while also maintaining growth in Europe. Both priority markets have delivered strong performances. In the USA, the acquisition of MMi helped  North America revenue to grow by 138%.  Asia Pacific delivered growth of 18%, all organic, despite a challenging market in China where the zero Covid policy hindered economic activity and business generation. Revenue in Europe which now includes Media Path also grew strongly overall as well as in organic terms.  \n \n \n   \n \n \n As previously reported, we are in the process of divesting the majority stake in our small Russian operation (2021 revenue of £1 million) but this transaction is subject to approval by the Russian government.  An impairment provision of £0.3 million has been made against the Russian company assets in the Group balance sheet.  \n \n \n   \n \n \n \n Growth outlook \n \n \n \n   \n \n \n The global media market is highly dynamic and changing rapidly, with the long-held hegemony of the Alphabet and Meta duopoly under pressure, alongside an explosive increase of media investment into Advanced Television and Commerce Media channels. In such a rapidly evolving and complex environment, it becomes more challenging for advertisers to understand the relative effectiveness and efficiency of channel options. As the market leader, we believe demand for our services will continue to increase as independent scrutiny of the effectiveness of these investments becomes even more important. In addition, we also expect to benefit from more assignments being put out to pitch as advertisers face continued inflationary pressures. \n \n \n   \n \n \n The dynamics of the advertising market continue to offer opportunities to Ebiquity and with our increased scale in key global markets, product innovation capability and leadership position, we remain well positioned for further growth. \n \n \n \n   \n \n \n \n   \n \n \n   \n \n \n \n   \n \n \n \n   \n \n \n \n Nick Waters \n \n \n \n \n Chief Executive Officer \n \n \n \n \n   \n \n \n \n \n   \n \n \n \n \n   \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n Performance Review \n \n \n \n \n   \n \n \n \n With a strategic focus on accelerating growth in North America and Asia Pacific we are providing segmental reporting by geography as a more appropriate reflection of the way that the Group is now managed.  \n \n \n   \n \n \n The three acquisitions have added further scale to Media Performance, our largest service line. Tech Advisory, the smallest service line, has now been incorporated into the Media Management service line.  We will therefore deliver our offering through four service lines - Media Management, Media Performance, Marketing Effectiveness, and Contract Compliance - across four geographic business units of North America, UK & Ireland, Continental Europe and Asia Pacific.  The revenue from each geographic segment and service line is shown in the tables below, as is the adjusted operating profit of each segment. \n \n \n   \n \n \n \n Revenue by Segment \n \n \n \n \n   \n \n \n \n \n   \n \n \n \n \n \n \n \n \n   \n \n \n \n \n Segment \n \n \n \n \n \n \n Revenue \n \n \n \n \n \n \n \n \n FY22 \n \n \n \n \n \n \n FY21 \n \n \n \n \n \n \n Variance \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n £m \n \n \n \n \n \n \n £m \n \n \n \n \n \n \n £m \n \n \n \n \n \n \n % \n \n \n \n \n \n \n \n \n UK & Ireland \n \n \n \n \n \n \n 31.5 \n \n \n \n \n \n \n 32.3 \n \n \n \n \n \n \n (0.8) \n \n \n \n \n \n \n (3%) \n \n \n \n \n \n \n \n \n Continental Europe \n \n \n \n \n \n \n 21.9 \n \n \n \n \n \n \n 17.4 \n \n \n \n \n \n \n 4.5 \n \n \n \n \n \n \n 26% \n \n \n \n \n \n \n \n \n North America \n \n \n \n \n \n \n 13.3 \n \n \n \n \n \n \n 5.6 \n \n \n \n \n \n \n 7.7 \n \n \n \n \n \n \n 138% \n \n \n \n \n \n \n \n \n APAC \n \n \n \n \n \n \n 9.3 \n \n \n \n \n \n \n 7.9 \n \n \n \n \n \n \n 1.4 \n \n \n \n \n \n \n 18% \n \n \n \n \n \n \n \n \n Total \n \n \n \n \n \n \n 76.0 \n \n \n \n \n \n \n 63.1 \n \n \n \n \n \n \n 12.9 \n \n \n \n \n \n \n 20% \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n Revenue in North America more than doubled in 2022. This was due to the contributions from MMi and Canada as well as organic growth of 73% delivered in line with our plans, including successful expansion of Digital Media Solutions and Contract Compliance services among US clients.  European revenue grew by 26% including Media Path, and organically by 6%. Within the region the best performers were France and Spain, which grew by 46% and 14% respectively.  APAC revenue continued to grow well at 18%, with our Singapore unit up by 80%, reflecting new business wins among regionally based clients and China up by 11%, despite the challenges posed by extended lock down periods.  In UK & Ireland, our largest and most mature region, revenue from UK domestic media work increased by 6%, although revenue from international projects fell by 13% in part due to lower global agency pitch activity among its clients.  \n \n \n   \n \n \n \n Revenue by service line \n \n \n \n \n   \n \n \n \n \n   \n \n \n \n \n \n \n \n \n   \n \n \n \n \n Service Line \n \n \n \n \n \n \n Revenue \n \n \n \n \n \n \n \n \n FY22 \n \n \n \n \n \n \n FY21 \n \n \n \n \n \n \n Variance \n \n \n \n \n \n \n \n \n £m \n \n \n \n \n \n \n £m \n \n \n \n \n \n \n £m \n \n \n \n \n \n \n % \n \n \n \n \n \n \n \n \n Media Performance \n \n \n \n \n \n \n 50.3 \n \n \n \n \n \n \n 37.9 \n \n \n \n \n \n \n 12.4 \n \n \n \n \n \n \n 33% \n \n \n \n \n \n \n \n \n Media Management \n \n \n \n \n \n \n 8.1 \n \n \n \n \n \n \n 8.6 \n \n \n \n \n \n \n (0.5) \n \n \n \n \n \n \n (6%) \n \n \n \n \n \n \n \n \n Contract Compliance \n \n \n \n \n \n \n 7.6 \n \n \n \n \n \n \n 6.1 \n \n \n \n \n \n \n 1.5 \n \n \n \n \n \n \n 25% \n \n \n \n \n \n \n \n \n Marketing Effectiveness \n \n \n \n \n \n \n 8.3 \n \n \n \n \n \n \n 8.3 \n \n \n \n \n \n \n - \n \n \n \n \n \n \n - \n \n \n \n \n \n \n \n \n Technology Advisory \n \n \n \n \n \n \n 1.7 \n \n \n \n \n \n \n 2.2 \n \n \n \n \n \n \n (0.5) \n \n \n \n \n \n \n (23%) \n \n \n \n \n \n \n \n \n Total \n \n \n \n \n \n \n 76.0 \n \n \n \n \n \n \n 63.1 \n \n \n \n \n \n \n 12.9 \n \n \n \n \n \n \n 20% \n \n \n \n \n \n \n \n \n   \n \n \n \n   \n \n \n Our Media Performance service line helps clients to assess and optimise their media buying performance through services such as savings tracking, benchmarking and Digital Media Solutions. This was already our largest service and was boosted by the three acquisitions made in 2022, most of whose revenue arises from this area.  Within this, Digital Media Solutions grew by 76%, with the core digital governance monitoring solution accounting for 60% of the total, while new solutions (such as Responsible Media Investment and Digital Value Index) launched over the past two years have also grown fast.   \n \n \n   \n \n \n Revenue from Media Management services, which includes agency selection advice, fell by 6% due largely to the reduction in agency tendering activity by advertisers compared to 2021, which had been a very active year.  We retained a high market share of global tenders run in the market. Contract Compliance service revenue increased by 25% reflecting in particular the success of initiatives to win new clients in North America (where revenue was up by 259%) with China and India also growing well. \n \n \n   \n \n \n Our Marketing Effectiveness service uses advanced analytics to help clients to optimise their media plans and improve returns on investment from their media spend.  Revenue from this was static in the year. This reflected a focus on improving margins through more robust pricing which has led to a more profitable mix of clients, including several significant wins in the year. \n \n \n   \n \n \n Within Technology Advisory, the 23% decrease in revenue was due in part to the integration of the UK AdTech service within other areas and to a 7% reduction in Digital Balance, based in Australia, which optimises website performance. From 2023 onwards, this will no longer be a separate segment. \n \n \n \n   \n \n \n \n \n Adjusted Operating Profit by Segment \n \n \n \n \n   \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n Adjusted Operating Profit \n \n \n \n \n \n \n Adjusted operating profit margin \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n FY22 \n \n \n \n \n \n \n FY21 \n \n \n \n \n \n \n Variance \n \n \n \n \n \n \n FY22 \n \n \n \n \n \n \n FY21 \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n £m \n \n \n \n \n \n \n £m \n \n \n \n \n \n \n £m \n \n \n \n \n \n \n % \n \n \n \n \n \n \n % \n \n \n \n \n \n \n % \n \n \n \n \n \n \n \n \n UK & Ireland \n \n \n \n \n \n \n 6.6 \n \n \n \n \n \n \n 7.1 \n \n \n \n \n \n \n (0.5) \n \n \n \n \n \n \n (6%) \n \n \n \n \n \n \n 21% \n \n \n \n \n \n \n 22% \n \n \n \n \n \n \n \n \n Continental Europe \n \n \n \n \n \n \n 6.4 \n \n \n \n \n \n \n 4.1 \n \n \n \n \n \n \n 2.7 \n \n \n \n \n \n \n 63% \n \n \n \n \n \n \n 30% \n \n \n \n \n \n \n 24% \n \n \n \n \n \n \n \n \n North America \n \n \n \n \n \n \n 0.9 \n \n \n \n \n \n \n (0.6) \n \n \n \n \n \n \n 1.5 \n \n \n \n \n \n \n - \n \n \n \n \n \n \n 7% \n \n \n \n \n \n \n (11)% \n \n \n \n \n \n \n \n \n APAC \n \n \n \n \n \n \n 1.9 \n \n \n \n \n \n \n 0.8 \n \n \n \n \n \n \n 1.1 \n \n \n \n \n \n \n 150% \n \n \n \n \n \n \n 21% \n \n \n \n \n \n \n 11% \n \n \n \n \n \n \n \n \n Reportable segments \n \n \n \n \n \n \n 15.9 \n \n \n \n \n \n \n 11.4 \n \n \n \n \n \n \n 4.5 \n \n \n \n \n \n \n 42% \n \n \n \n \n \n \n 21% \n \n \n \n \n \n \n 18% \n \n \n \n \n \n \n \n \n Unallocated \n \n \n \n \n \n \n (6.5) \n \n \n \n \n \n \n (6.7) \n \n \n \n \n \n \n 0.2 \n \n \n \n \n \n \n 3% \n \n \n \n \n \n \n (9)% \n \n \n \n \n \n \n (11)% \n \n \n \n \n \n \n \n \n Total \n \n \n \n \n \n \n 9.3 \n \n \n \n \n \n \n 4.7 \n \n \n \n \n \n \n 4.6 \n \n \n \n \n \n \n 98% \n \n \n \n \n \n \n 12% \n \n \n \n \n \n \n 8% \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n UK & Ireland remained our highest profit generating region, reflecting its size, although its operating profit and margin fell slightly reflecting its revenue performance.  Continental Europe increased both its operating profit (by 63%) and margin (by 6 percentage points) significantly in the year due in part to the contribution from Media Path as well as to increased profitability in France, Spain and Italy reflecting revenue gains and efficiency improvements.  As planned, North America successfully completed the turnaround into becoming a profitable region due in part to the MMi acquisition and delivery of initial synergy benefits as well as revenue growth in the existing business. APAC's 42% growth in operating profit and almost doubling of the margin reflects its revenue performance and focus on winning higher value clients.  Central (unallocated) costs reduced slightly in the year due in part to tight cost management and to the benefit of realised foreign exchange gains which are accounted for centrally. The reduction in the percentage of Group revenue that these costs represent also indicates the scale benefits resulting from the expansion of our operations in the past year. \n \n \n   \n \n \n \n Financial Review \n \n \n \n \n   \n \n \n \n The commentary in this review focusses largely on alternative performance measures ('APMs') adopted by the Group. These non-GAAP measures are considered both useful and necessary in helping to explain the performance of the Group. These APMs are consistent with how business performance is measured internally by the Group. Further details of the APMs are given on page 17.  \n \n \n \n   \n \n \n \n \n Summary Income Statement \n \n \n \n \n   \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n 2022 \n \n \n \n \n \n \n 2021 \n \n \n \n \n \n \n Change \n \n \n \n \n \n \n \n \n £m \n \n \n \n \n \n \n £m \n \n \n \n \n \n \n £m \n \n \n \n \n \n \n % \n \n \n \n \n \n \n \n \n Revenue \n \n \n \n \n \n \n 76.0 \n \n \n \n \n \n \n 63.1 \n \n \n \n \n \n \n 12.9 \n \n \n \n \n \n \n 20% \n \n \n \n \n \n \n \n \n Project Related Costs \n \n \n \n \n \n \n (7.2) \n \n \n \n \n \n \n (7.5) \n \n \n \n \n \n \n 0.3 \n \n \n \n \n \n \n (4)% \n \n \n \n \n \n \n \n \n Net Revenue \n \n \n \n \n \n \n 68.8 \n \n \n \n \n \n \n 55.6 \n \n \n \n \n \n \n 13.2 \n \n \n \n \n \n \n 24% \n \n \n \n \n \n \n \n \n Staff Costs 1 \n \n \n \n \n \n \n (48.0) \n \n \n \n \n \n \n (38.3) \n \n \n \n \n \n \n (9.7) \n \n \n \n \n \n \n 25% \n \n \n \n \n \n \n \n \n Other operating expenses 1 \n \n \n \n \n \n \n (11.5) \n \n \n \n \n \n \n (12.5) \n \n \n \n \n \n \n 1.0 \n \n \n \n \n \n \n (8)% \n \n \n \n \n \n \n \n \n Adjusted Operating Profit \n \n \n \n \n \n \n 9.3 \n \n \n \n \n \n \n 4.7 \n \n \n \n \n \n \n 4.6 \n \n \n \n \n \n \n 96% \n \n \n \n \n \n \n \n \n Highlighted Items (before tax) \n \n \n \n \n \n \n (15.2) \n \n \n \n \n \n \n (9.8) \n \n \n \n \n \n \n (5.4) \n \n \n \n \n \n \n 33% \n \n \n \n \n \n \n \n \n Statutory Operating Loss \n \n \n \n \n \n \n (5.9) \n \n \n \n \n \n \n (5.1) \n \n \n \n \n \n \n (0.8) \n \n \n \n \n \n \n 16% \n \n \n \n \n \n \n \n \n \n 1.  excluding highlighted items \n \n \n \n \n   \n \n \n Group revenues for the year ended 31 December 2022 increased by £12.9 million (20%) to £76.0 million, from £63.1 million in 2021.  This included revenue of £6.8 million from companies acquired during the year.  Excluding this, Group revenue grew organically by 10%. \n \n \n   \n \n \n Adjusted operating profit (statutory operating profit excluding highlighted items) for 2022 was £9.3 million, an increase of £4.6 million or 96% compared to 2021.  The adjusted operating margin also increased significantly to 12% from 7% in the prior year.  \n \n \n   \n \n \n Project-related costs (which comprise external partner and production costs) reduced by 4% to £7.2 million from £7.5 million, as these costs are much lower for Digital Media Solutions and the acquired businesses.  Total adjusted operating expenses increased by 17% to £59.5 million, reflecting in part the expenses of the acquired businesses. Within this, staff costs increased by 25% to £48.0 million and other operating expenses reduced by 8% to £11.5 million. \n \n \n   \n \n \n Adjusted profit before tax increased by 95% to £8.0 million in 2022 (2021: profit of £4.1 million).  Net finance costs increased to £1.3 million in 2022 from £0.6 million in 2021, due to higher interest rates and an increase in bank borrowings of £3.5 million due to the acquisitions. \n \n \n   \n \n \n Highlighted items before tax, including the post-date renumeration relating to the acquisition of Digital Decisions BV, increased to £15.2 million cost from £9.8 million in 2021, as detailed below.  As a result, there was a statutory operating loss (after highlighted items) of £5.9 million compared to a loss of £5.1m in 2021.  Reflecting this, the statutory loss before taxation increased to £7.2 million from £5.7 million. \n \n \n \n   \n \n \n \n \n   \n \n \n \n \n   \n \n \n \n \n   \n \n \n \n \n Taxation \n \n \n \n \n   \n \n \n \n There was a tax charge of £0.3 million in the year (2021: £1.2 million) of which £2.1 million related to the adjusted profit before taxation (2021: £1.7 million) and a £1.8 million credit (2021: £0.5 million credit) to the highlighted items. The effective tax rate on adjusted profit before tax was 21%, (excluding movements on prior year provisions) compared to 42% in 2021.  The reduction in this rate is largely due to the utilisation of tax losses in USA in the current year and recognition of US and UK tax losses as a deferred tax asset. The adjusted profit after taxation increased by 149% to £5.9 million (2021: £2.4 million). The statutory loss after taxation increased to £7.5 million from £6.9 million.  \n \n \n \n   \n \n \n \n \n Earnings per share \n \n \n \n \n   \n \n \n \n Adjusted basic earnings per share doubled to 5.4p from 2.7p in 2021, reflecting the increase in adjusted profit after taxation, offset by the increase in the number of shares in issue due to the equity placing in the year. The statutory basic loss per share reduced to 6.9p from 8.5p in 2021.   \n \n \n   \n \n \n \n Highlighted items \n \n \n \n   \n \n \n Highlighted items comprise charges and credits which are highlighted in the income statement because separate disclosure is considered relevant in understanding the underlying performance of the business. Highlighted items after tax in the year totalled a charge of £13.4 million (2021: £9.3 million) and include the following: \n \n \n   \n \n \n · \n £7.9 million charge to accrue for post-date remuneration payable in 2023 relating to the acquisition of Digital Decisions BV, acquired in January 2020 (2021: £7.9 million) \n \n \n · \n £2.7 million charge for amortisation of purchased intangibles (2021: £1.1 million) \n \n \n · \n £1.9 million charge for professional costs relating to acquisitions and bank facility agreements (2021: £0.3 million) \n \n \n · \n £1.2 million charge relating to onerous lease provisions \n \n \n · \n £0.6 million charge relating to severance and reorganisation costs (2021: £0.1 million) \n \n \n · \n £0.5 million charge relating to share-based payments (2021: £0.5 million) \n \n \n · \n £0.3 million charge for the impairment of the assets of the Russian subsidiary \n \n \n · \n £1.8 million tax credit on highlighted items (2021: £0.5 million credit) \n \n \n   \n \n \n The contingent consideration payable in 2023 relating to the acquisition of Digital Decisions BV has been accounted for as post-date remuneration as payment is dependent upon the principal vendor remaining in employment with the Group. The total deferred consideration payable is estimated at £15.8 million and is calculated as six times the average profit generated in the two years ended 31 December 2022 from Digital Media Solutions developed by the Digital Innovation Centre, less the initial consideration of £700,000 paid in January 2020. It is payable in a mixture of cash and/or Ebiquity shares which the Company will determine at the time of payment, having regard to its overall capital structure, debt facilities and the vendor's option to request that a certain amount be paid in cash. \n \n \n   \n \n \n Amortisation of purchased intangibles increased to £2.7 million due to the acquisitions whose intangible assets have been included at fair value.  The charge in the year relating to Media Path and MMi was £2.1 million.  \n \n \n   \n \n \n The acquisition, integration, and strategic costs of £1.9 million relate to professional fees incurred for the three acquisitions in the year, the associated equity capital raise in April 2022, and the revised bank loan facility agreed in March 2022.  \n \n \n   \n \n \n The onerous lease provision charge of £1.2 million relates to office space in three cities which is surplus to requirements. During the year, it was decided to vacate the New York office and part of the London office and to seek sub-tenants in the market. A charge in the year of £1.7 million has been made for these offices to reflect the impairment of the right-of-use asset.  This is offset by a credit of £0.5 million relating to the Chicago office which was vacated and sub-let in 2019 and for which the headlease has now been terminated with effect from September 2023.  \n \n \n   \n \n \n \n Dividend \n \n \n \n \n   \n \n \n \n No dividend has been declared or recommended for either of the twelve months ended 31 December 2022 or 2021. \n \n \n   \n \n \n \n Cash conversion \n \n \n \n \n   \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n Year ended \n \n \n \n \n 31 December \n \n \n \n \n 2022 \n \n \n \n \n \n Year ended \n \n \n 31 December \n \n \n 2021 \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n £'000 \n \n \n \n \n \n £'000 \n \n \n \n \n \n \n Reported cash from operations \n \n \n \n \n \n 3,812 \n \n \n \n \n \n 11,800 \n \n \n \n \n \n \n Adjusted cash from operations \n \n \n \n \n \n 6,188 \n \n \n \n \n \n 13,201 \n \n \n \n \n \n \n Adjusted operating profit \n \n \n \n \n \n 9,270 \n \n \n \n \n \n 4,738 \n \n \n \n \n \n \n Adjusted Cash Conversion Ratio \n \n \n \n \n \n 67% \n \n \n \n \n \n 278% \n \n \n \n \n \n \n   \n \n \n Adjusted cash from operations represents the cash flows from operations excluding the impact of highlighted items. The adjusted net cash inflow from operations during 2022 was £6.2 million (2021: £13.2 million which represents a cash conversion ratio of 67% of adjusted operating profit.  \n \n \n \n   \n \n \n \n \n Equity \n \n \n \n   \n \n \n During the year, the issued share capital increased by 14% to 120,241,181 shares (2021: 82,728,890 shares) as a result of the issue of 36,958,789 shares in connection with the acquisitions made in the year and 553,502 shares issued following the exercise of share options.  \n \n \n \n   \n \n \n \n \n Net debt and banking facilities \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 31 December \n \n \n \n \n 2022 \n \n \n \n \n \n 31 December \n \n \n 2021 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n £'000 \n \n \n \n \n \n £'000 \n \n \n \n \n \n \n Net cash \n \n 1 \n \n \n \n \n \n \n 12,360 \n \n \n \n \n \n 13,134 \n \n \n \n \n \n \n Bank debt \n \n \n \n \n \n (21,500) \n \n \n \n \n \n (18,000) \n \n \n \n \n \n \n \n Net Bank Debt \n \n \n \n \n \n \n (9,140) \n \n \n \n \n \n (4,866) \n \n \n \n \n \n \n \n 1 Includes restricted cash of £1.2 million held in Ebiquity Russia \n \n \n \n   \n \n \n All bank borrowings are held jointly with Barclays and NatWest. The current revolving credit facility (\"RCF\") facility was agreed in March 2022 and runs for a period of 3 years to March 2025, extendable for up to a further two years with a total commitment of £30 million. £21.5 million had been drawn as at 31 December 2022 (2021: £18 million).  Under this agreement, annual reductions in the facility of £1.25 million will apply from June 2023. The remainder of any drawings is repayable on the maturity of the facility.  The facility may be used for deferred consideration payments on past acquisitions, to fund future potential acquisitions, and for general working capital requirements. The quarterly covenants applied from June 2022 onwards are: interest cover > 4.0x; adjusted leverage < 2.5x and adjusted deferred consideration leverage < 3.5x. There is no longer a minimum lending covenant. \n \n \n   \n \n \n \n Statement of financial position and net assets \n \n \n \n   \n \n \n A non-statutory summary of the Group's balance sheet as at 31 December 2022 and 31 December 2021 is set out below: \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 31 December \n \n \n \n \n 2022 \n \n \n \n \n \n 31 December \n \n \n 2021 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n £'000 \n \n \n \n \n \n £'000 \n \n \n \n \n \n \n Goodwill and intangible assets \n \n \n \n \n \n 56,868 \n \n \n \n \n \n 32,700 \n \n \n \n \n \n \n Right of use asset \n \n \n \n \n \n 3,308 \n \n \n \n \n \n 4,542 \n \n \n \n \n \n \n Other non-current assets \n \n \n \n \n \n 3,488 \n \n \n \n \n \n 3,053 \n \n \n \n \n \n \n Net working capital 1 \n \n \n \n \n \n 9,350 \n \n \n \n \n \n 3,362 \n \n \n \n \n \n \n Lease liability \n \n \n \n \n \n (5,983) \n \n \n \n \n \n (6,390) \n \n \n \n \n \n \n Other non-current liabilities \n \n \n \n \n \n (2,659) \n \n \n \n \n \n (1,477) \n \n \n \n \n \n \n Digital Decisions post-date remuneration \n \n \n \n \n \n (15,787) \n \n \n \n \n \n (7,922) \n \n \n \n \n \n \n Deferred consideration (MMI and Canada) \n \n \n \n \n \n (2,183) \n \n \n \n \n \n - \n \n \n \n \n \n \n Net bank debt \n \n \n \n \n \n (9,140) \n \n \n \n \n \n (4,866) \n \n \n \n \n \n \n \n Net assets \n \n \n \n \n \n \n 36,262 \n \n \n \n \n \n 23,004 \n \n \n \n \n \n \n \n \n 1 \n \n \n \n Net working capital comprises trade and other receivables, lease receivables, trade and other payables, \n \n \n \n \n  accruals and contract liabilities (less the Digital Decisions post-date remuneration) and current tax assets and liabilities. \n \n \n \n   \n \n \n Net assets as at 31 December 2022 increased by £13.3 million due largely to the acquisitions made in the year and the related share capital increase offset by the statutory loss after taxation.  \n \n \n   \n \n \n Working capital increased to £9.4 million from £3.4 million, a net outflow of £6.0 million with trade receivables increasing by £11 million, offset by an increase in trade and other payables of £5 million. The increase in receivables was due in part to the acquisitions and to the phasing of billings to clients towards the end of the year.  Debtor days increased slightly to 67 days from 61 days.    \n \n \n   \n \n \n \n Corporate Development Activities \n \n \n \n \n   \n \n \n \n On 29 January 2022, the Group acquired Forde and Semple Media Works, the leading media performance consultancy in Canada, for a total consideration of CAD$1.3 million (£0.8 million), of which CAD$1.2 million (£0.7 million) was paid on completion and CAD$0.1 million (£0.06 million) was deferred for one year. Forde and Semple had revenues of CAD$1.1m in the financial year ended 31 January 2021 and net assets of CAD$0.4 million (£0.2 million) on completion. \n \n \n   \n \n \n On 4 April 2022, the Group acquired Media Management, LLC (\"MMi\"), a US-based media audit specialist, for an initial consideration of US$8.0 million (£6.1 million) with a deferred contingent consideration element payable in 2025.  84% of the initial consideration (US$6.7 million/£5.1 million) was paid in cash and 16% (US$1.3 million /£1.0 million), was applied by the vendors to subscribe for 1,737,261 Ebiquity ordinary shares.  The contingent consideration will be based on 1.0 times adjusted earnings before interest and tax of the combined Ebiquity US and MMi businesses reported for the year ending 31 December 2024. This has been estimated to be US4.0 million /£3.0 million. 80% of this will be payable directly in cash to the vendors and 20% will be applied by the vendors to subscribe for Ebiquity ordinary shares. \n \n \n   \n \n \n On 22 April 2022, the Group acquired Media Path Network AB (\"Media Path\"), a Swedish-based multi-national media consultancy, for a consideration of £15.5 million.  75% (£11,625,000) was paid in cash and 25% (£3,875,000) was paid by the issue of 6,919,642 new Ordinary Shares to the Media Path vendors.   An additional cash payment of £485,000 was made in June 2022 representing working capital in the completion accounts as at 31 March 2022 in excess of the contractually agreed target amount. \n \n \n \n   \n \n \n \n \n   \n \n \n \n   \n \n \n \n Alan Newman \n \n \n \n \n Chief Financial and Operating Officer \n \n \n \n \n   \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n Alternative performance measures \n \n \n \n \n   \n \n \n \n In these results we refer to 'adjusted' and 'reported' results, as well as other non-GAAP alternative performance measures. \n \n \n   \n \n \n Further details of highlighted items are set out within the financial statements and the notes to the financial statements. \n \n \n   \n \n \n In the reporting of financial information, the Directors have adopted various alternative performance measures ('APMs'). The Group includes these non-GAAP measures as they consider them to be both useful and necessary to the readers of the financial statements to help understand the performance of the Group. The Group's measures may not be calculated in the same way as similarly titled measures reported by other companies and therefore should be considered in addition to IFRS measures. The APMs are consistent with how business performance is measured internally by the Group. \n \n \n   \n \n \n Alternative Performance Measures used by the Group are: \n \n \n · \n Net revenue \n \n \n · \n Organic revenue growth \n \n \n · \n Adjusted operating profit \n \n \n · \n Adjusted operating margin \n \n \n · \n Adjusted profit before tax \n \n \n · \n Adjusted effective rate of tax \n \n \n · \n Adjusted earnings per share \n \n \n · \n Adjusted cash generated from operations, and \n \n \n · \n Adjusted operating cash flow conversion. \n \n \n   \n \n \n Net revenue is the revenue after deducting external production costs and is reconciled on the face of the income statement.  \n \n \n   \n \n \n Organic revenue growth is defined as revenue growth in the existing business excluding the revenue contribution in the year from acquisitions made during it.  \n \n \n   \n \n \n Adjusted operating profit, adjusted profit before taxation and adjusted profit after taxation are reconciled to their statutory equivalents on the face of the consolidated income statement.  Adjusted earnings per share is reconciled to statutory earnings per share in Note 9. \n \n \n   \n \n \n Adjusted effective tax rate is calculated by comparing the current and deferred tax charge for the current year, excluding prior year provision movements to the adjusted profit before taxation. The rate for the current year is calculated as follows: \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n £'000 \n \n \n \n \n £'000 \n \n \n \n \n \n \n Adjusted Profit before Taxation \n \n \n \n \n A \n \n \n \n \n \n \n \n \n \n \n \n 7,967 \n \n \n \n \n \n \n UK Tax Current Year \n \n \n \n \n \n \n \n \n \n \n \n 114 \n \n \n \n \n \n \n \n \n \n \n \n \n \n Foreign Tax Current Year Taxation \n \n \n \n \n \n \n \n \n \n \n \n   1,973 \n \n \n \n \n \n \n \n \n \n \n \n \n \n Deferred Tax \n \n \n \n \n \n \n \n \n \n \n \n (380) \n \n \n \n \n \n \n \n \n \n \n \n \n \n Adjusted Taxation \n \n \n \n \n B \n \n \n \n \n \n \n \n \n \n \n \n 1,707 \n \n \n \n \n \n \n Effective Tax Rate (A / B) \n \n \n \n \n 21% \n \n \n \n \n \n \n Taxation figures are taken from Note 7 to the financial statements \n \n \n   \n \n \n Adjusted cash generated from operations is defined as the cash generated from operations excluding the cash movements relating to the highlighted items.  The calculation for the year is set out below: \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Year ended \n \n \n  31 December 2022 \n \n \n \n \n Year ended \n \n \n  31 December 2021 \n \n \n \n \n \n \n £'000 \n \n \n \n \n £'000 \n \n \n \n \n \n \n Cash generated from operations \n \n \n \n \n 3,812 \n \n \n \n \n 11,800 \n \n \n \n \n \n \n Add: Highlighted Items: cash items \n \n \n \n \n 2,514 \n \n \n \n \n (471) \n \n \n \n \n \n \n Movement in working capital relating to highlighted items \n \n \n \n \n (138) \n \n \n \n \n 1,872 \n \n \n \n \n \n \n Adjusted cash generated from operations \n \n \n \n \n 6,188 \n \n \n \n \n 13,201 \n \n \n \n \n \n \n   \n \n \n Adjusted operating cash flow conversion is the ratio of the Adjusted cash generated from operations divided by the Adjusted operating profit, expressed as a percentage. The rate for the current year is calculated as follows: \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n £'000 \n \n \n \n \n \n \n Adjusted cash generated from operations \n \n \n \n \n 6,188 \n \n \n \n \n \n \n Adjusted operating profit \n \n \n \n \n 9,270 \n \n \n \n \n \n \n Cash Conversion Ratio \n \n \n \n \n 67% \n \n \n \n \n \n \n Consolidated income statement \n \n \n \n for the year ended 31 December 2022 \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n  31 December 2022 \n \n \n \n \n \n \n   \n \n 31 December 2021 \n \n \n \n \n \n \n \n \n \n \n \n \n \n Note \n \n \n \n \n \n Before \n \n \n \n \n highlighted \n \n \n \n \n items \n \n \n \n \n £'000 \n \n \n \n \n \n \n Highlighted \n \n \n \n \n items \n \n \n \n \n (note 3) \n \n \n \n \n £'000 \n \n \n \n \n \n \n Total \n \n \n \n \n £'000 \n \n \n \n \n \n Before \n \n \n highlighted \n \n \n items \n \n \n £'000 \n \n \n \n \n Highlighted \n \n \n items \n \n \n (note 3) \n \n \n £'000 \n \n \n \n \n Total \n \n \n £'000 \n \n \n \n \n \n \n Revenue \n \n \n \n \n 2 \n \n \n \n \n \n 75,973 \n \n \n \n \n \n \n - \n \n \n \n \n \n \n 75,973 \n \n \n \n \n \n 63,091 \n \n \n \n \n - \n \n \n \n \n 63,091 \n \n \n \n \n \n \n Project-related costs \n \n \n \n \n \n \n \n \n \n \n \n \n (7,220) \n \n \n \n \n \n \n - \n \n \n \n \n \n \n (7,220) \n \n \n \n \n \n (7,525) \n \n \n \n \n - \n \n \n \n \n (7,525) \n \n \n \n \n \n \n \n Net revenue \n \n \n \n \n \n \n \n \n \n \n \n \n \n 68,753 \n \n \n \n \n \n \n - \n \n \n \n \n \n \n 68,753 \n \n \n \n \n \n 55,566 \n \n \n \n \n - \n \n \n \n \n 55,566 \n \n \n \n \n \n \n Staff costs 1 \n \n \n \n \n \n \n \n \n \n \n \n \n (47,977) \n \n \n \n \n \n \n - \n \n \n \n \n \n \n (47,977) \n \n \n \n \n \n (38,312) \n \n \n \n \n - \n \n \n \n \n (38,312) \n \n \n \n \n \n \n Other operating expenses 1 \n \n \n \n \n \n \n \n \n \n \n \n \n (11,506) \n \n \n \n \n \n \n (15,168) \n \n \n \n \n \n \n (26,674) \n \n \n \n \n \n (12,517) \n \n \n \n \n (9,815) \n \n \n \n \n (22,331) \n \n \n \n \n \n \n \n Operating profit/(loss) \n \n \n \n \n \n \n \n \n \n \n \n \n \n 9,270 \n \n \n \n \n \n \n (15,168) \n \n \n \n \n \n \n (5,898) \n \n \n \n \n \n 4,737 \n \n \n \n \n (9,815) \n \n \n \n \n (5,078) \n \n \n \n \n \n \n Finance income \n \n \n \n \n \n \n \n \n \n \n \n \n 70 \n \n \n \n \n \n \n - \n \n \n \n \n \n \n 70 \n \n \n \n \n \n 20 \n \n \n \n \n - \n \n \n \n \n 20 \n \n \n \n \n \n \n Finance expenses \n \n \n \n \n \n \n \n \n \n \n \n \n (1,422) \n \n \n \n \n \n \n - \n \n \n \n \n \n \n (1,422) \n \n \n \n \n \n (882) \n \n \n \n \n - \n \n \n \n \n (882) \n \n \n \n \n \n \n Foreign exchange \n \n \n \n \n \n \n \n \n \n \n \n \n 49 \n \n \n \n \n \n \n - \n \n \n \n \n \n \n 49 \n \n \n \n \n \n 229 \n \n \n \n \n - \n \n \n \n \n 229 \n \n \n \n \n \n \n \n Net finance costs \n \n \n \n \n \n \n \n \n \n \n \n \n \n (1,303) \n \n \n \n \n \n \n - \n \n \n \n \n \n \n (1,303) \n \n \n \n \n \n (633) \n \n \n \n \n - \n \n \n \n \n (633) \n \n \n \n \n \n \n \n Profit/(loss) before taxation \n \n \n \n \n \n \n \n \n \n \n \n \n \n 7,967 \n \n \n \n \n \n \n (15,168) \n \n \n \n \n \n \n (7,201) \n \n \n \n \n \n 4,104 \n \n \n \n \n (9,815) \n \n \n \n \n (5,711) \n \n \n \n \n \n \n Taxation (charge)/credit \n \n \n \n \n 4 \n \n \n \n \n \n (2,060) \n \n \n \n \n \n \n 1,799 \n \n \n \n \n \n \n (261) \n \n \n \n \n \n (1,737) \n \n \n \n \n 531 \n \n \n \n \n (1,206) \n \n \n \n \n \n \n \n Profit/(loss) for the period \n \n \n \n \n \n \n \n \n \n \n \n \n \n 5,907 \n \n \n \n \n \n \n (13,369) \n \n \n \n \n \n \n (7,462) \n \n \n \n \n \n 2,367 \n \n \n \n \n (9,284) \n \n \n \n \n (6,917) \n \n \n \n \n \n \n \n Attributable to: \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n   \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Equity holders of the parent \n \n \n \n \n \n \n \n \n \n \n \n \n 5,874 \n \n \n \n \n \n \n (13,369)) \n \n \n \n \n \n \n (7,495) \n \n \n \n \n \n 2,250 \n \n \n \n \n (9,282) \n \n \n \n \n (7,032) \n \n \n \n \n \n \n Non-controlling interests \n \n \n \n \n \n \n \n \n \n \n \n \n 33 \n \n \n \n \n \n \n - \n \n \n \n \n \n \n 33 \n \n \n \n \n \n 117 \n \n \n \n \n (2) \n \n \n \n \n 115 \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n 5,907 \n \n \n \n \n \n \n (13,369) \n \n \n \n \n \n \n (7,462) \n \n \n \n \n \n 2,367 \n \n \n \n \n (9,284) \n \n \n \n \n (6,917) \n \n \n \n \n \n \n \n Earnings/(Loss) per share \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n   \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Basic  \n \n \n \n \n 5 \n \n \n \n \n \n 5.39p \n \n \n \n \n \n \n   \n \n \n \n \n \n \n (6.88)p \n \n \n \n \n \n 2.72p \n \n \n \n \n \n \n \n \n \n \n \n (8.51)p \n \n \n \n \n \n \n Diluted  \n \n \n \n \n 5 \n \n \n \n \n \n 4.46p \n \n \n \n \n \n \n   \n \n \n \n \n \n \n (6.88)p \n \n \n \n \n \n 2.67p \n \n \n \n \n \n \n \n \n \n \n \n (8.51)p \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n 1 \n \n The cost categories reported in the income statement have been changed to reflect the Group's internal reporting. The prior year comparatives have been re-classified in the same way and there is no change in the total costs reported.  Details of each cost category are set out in Note 1. \n \n \n   \n \n \n   \n \n \n The notes on pages 23 to 50 are an integral part of these financial statements. \n \n \n   \n \n \n \n   \n \n \n \n \n \n \n \n   \n \n \n Consolidated statement of comprehensive income \n \n \n \n for the year ended 31 December 2022 \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Year ended \n \n \n \n \n 31 December \n \n \n \n \n  2022 \n \n \n \n \n £'000 \n \n \n \n \n \n Year ended \n \n \n 31 December \n \n \n  2021 \n \n \n £'000 \n \n \n \n \n \n \n \n Loss for the year \n \n \n \n \n \n \n (7,462) \n \n \n \n \n \n (6,917) \n \n \n \n \n \n \n \n Other comprehensive income/(expense): \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Items that will not be reclassified subsequently to profit or loss \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Exchange differences on translation of overseas subsidiaries \n \n \n \n \n \n 252 \n \n \n \n \n \n (889) \n \n \n \n \n \n \n \n Total other comprehensive income/(expense) for the year \n \n \n \n \n \n \n 252 \n \n \n \n \n \n (889) \n \n \n \n \n \n \n \n Total comprehensive expense for the year \n \n \n \n \n \n \n (7,210) \n \n \n \n \n \n (7,806) \n \n \n \n \n \n \n \n Attributable to: \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Equity holders of the parent \n \n \n \n \n \n (7,243) \n \n \n \n \n \n (7,921) \n \n \n \n \n \n \n Non \n ‑ \n controlling interests \n \n \n \n \n \n 33 \n \n \n \n \n \n 115 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (7,210) \n \n \n \n \n \n (7,806) \n \n \n \n \n \n \n   \n \n \n The notes on pages 23 to 50 are an integral part of these financial statements. \n \n \n \n \n \n \n   \n \n \n \n Consolidated statement of financial position \n \n \n \n \n as at 31 December 2022 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Note \n \n \n \n \n \n 31 December \n \n \n \n \n 2022 \n \n \n \n \n £'000 \n \n \n \n \n \n Restated \n \n \n 31 December \n \n \n 2021 \n \n \n £'000 \n \n \n \n \n \n \n \n Non \n \n \n ‑ \n \n \n current assets \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Goodwill  \n \n \n \n \n 7 \n \n \n \n \n \n 43,091 \n \n \n \n \n \n 28,172 \n \n \n \n \n \n \n Other intangible assets \n \n \n \n \n 8 \n \n \n \n \n \n 12,776 \n \n \n \n \n \n 4,528 \n \n \n \n \n \n \n Property, plant and equipment \n \n \n \n \n \n \n \n \n \n \n \n \n 1,289 \n \n \n \n \n \n 1,512 \n \n \n \n \n \n \n Right-of-use assets \n \n \n \n \n 9 \n \n \n \n \n \n 3,308 \n \n \n \n \n \n 4,542 \n \n \n \n \n \n \n Lease receivables \n \n \n \n \n 9 \n \n \n \n \n \n - \n \n \n \n \n \n 155 \n \n \n \n \n \n \n Deferred tax asset \n \n \n \n \n \n \n \n \n \n \n \n \n 2,199 \n \n \n \n \n \n 1,388 \n \n \n \n \n \n \n \n Total non \n \n \n ‑ \n \n \n current assets \n \n \n \n \n \n \n \n \n \n \n \n \n \n 62,663 \n \n \n \n \n \n 40,297 \n \n \n \n \n \n \n \n Current assets \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Trade and other receivables \n \n \n \n \n 10 \n \n \n \n \n \n 33,163 \n \n \n \n \n \n 21,934 \n \n \n \n \n \n \n Lease receivables \n \n \n \n \n 9 \n \n \n \n \n \n 141 \n \n \n \n \n \n 146 \n \n \n \n \n \n \n Corporation tax asset \n \n \n \n \n \n \n \n \n \n \n \n \n 845 \n \n \n \n \n \n 1,268 \n \n \n \n \n \n \n Cash and cash equivalents \n \n \n \n \n \n \n \n \n \n \n \n \n 12,360 \n \n \n \n \n \n 13,134 \n \n \n \n \n \n \n \n Total current assets \n \n \n \n \n \n \n \n \n \n \n \n \n \n 46,509 \n \n \n \n \n \n 36,482 \n \n \n \n \n \n \n \n Total assets  \n \n \n \n \n \n \n \n \n \n \n \n \n \n 109,172 \n \n \n \n \n \n 76,779 \n \n \n \n \n \n \n \n Current liabilities \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Trade and other payables \n \n \n \n \n 11 \n \n \n \n \n \n (10,049) \n \n \n \n \n \n (6,915) \n \n \n \n \n \n \n Accruals and contract liabilities \n \n \n \n \n 12 \n \n \n \n \n \n (29,399) \n \n \n \n \n \n (19,350) \n \n \n \n \n \n \n Financial liabilities \n \n \n \n \n 13 \n \n \n \n \n \n (61) \n \n \n \n \n \n - \n \n \n \n \n \n \n Current tax liabilities \n \n \n \n \n \n \n \n \n \n \n \n \n (1,121) \n \n \n \n \n \n (1,642) \n \n \n \n \n \n \n Provisions  \n \n \n \n \n \n \n \n \n \n \n \n \n (17) \n \n \n \n \n \n - \n \n \n \n \n \n \n Lease liabilities \n \n \n \n \n 9 \n \n \n \n \n \n (1,328) \n \n \n \n \n \n (2,566) \n \n \n \n \n \n \n \n Total current liabilities \n \n \n \n \n \n \n \n \n \n \n \n \n \n (41,975) \n \n \n \n \n \n (30,473) \n \n \n \n \n \n \n \n Non \n \n \n ‑ \n \n \n current liabilities \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Financial liabilities \n \n \n \n \n 13 \n \n \n \n \n \n (23,357) \n \n \n \n \n \n (17,901) \n \n \n \n \n \n \n Provisions  \n \n \n \n \n \n \n \n \n \n \n \n \n (446) \n \n \n \n \n \n (493) \n \n \n \n \n \n \n Lease liabilities \n \n \n \n \n 9 \n \n \n \n \n \n (4,654) \n \n \n \n \n \n (3,825) \n \n \n \n \n \n \n Deferred tax liability \n \n \n \n \n \n \n \n \n \n \n \n \n (2,478) \n \n \n \n \n \n (1,083) \n \n \n \n \n \n \n \n Total non \n \n \n ‑ \n \n \n current liabilities \n \n \n \n \n \n \n \n \n \n \n \n \n \n (30,935) \n \n \n \n \n \n (23,302) \n \n \n \n \n \n \n \n Total liabilities  \n \n \n \n \n \n \n \n \n \n \n \n \n \n (72,910) \n \n \n \n \n \n (53,775) \n \n \n \n \n \n \n \n Total net assets \n \n \n \n \n \n \n \n \n \n \n \n \n \n 36,262 \n \n \n \n \n \n 23,004 \n \n \n \n \n \n \n \n Equity  \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Ordinary shares \n \n \n \n \n \n \n \n \n \n \n \n \n 30,060 \n \n \n \n \n \n 20,682 \n \n \n \n \n \n \n Share premium \n \n \n \n \n \n \n \n \n \n \n \n \n 10,863 \n \n \n \n \n \n 255 \n \n \n \n \n \n \n Other reserves \n \n \n \n \n \n \n \n \n \n \n \n \n 4,824 \n \n \n \n \n \n 4,572 \n \n \n \n \n \n \n Accumulated losses \n \n \n \n \n \n \n \n \n \n \n \n \n (9,787) \n \n \n \n \n \n (2,774) \n \n \n \n \n \n \n \n Equity attributable to the owners of the parent \n \n \n \n \n \n \n 33,889 \n \n \n \n \n \n 35,960 \n \n \n \n \n \n \n \n Non \n \n \n ‑ \n \n \n controlling interests \n \n \n \n \n \n \n   \n \n \n \n \n \n \n 302 \n \n \n \n \n \n 269 \n \n \n \n \n \n \n \n Total equity  \n \n \n \n \n \n \n   \n \n \n \n \n \n \n 36,262 \n \n \n \n \n \n 23,004 \n \n \n \n \n \n \n   \n \n \n The prior year balance sheet has been restated to correct the presentation of current tax asset and current tax liability. See Note 1 for details. \n \n \n The notes on pages 23 to 50 are an integral part of these financial statements. The financial statements on pages 19 to 22 were approved and authorised for issue by the Board of Directors on 30 March 2023 and were signed on its behalf by: \n \n \n   \n \n \n \n Alan Newman \n \n \n \n \n Chief Financial and Operating Officer \n \n \n \n Ebiquity plc. Registered No 03967525 \n \n \n   \n \n \n \n \n \n \n \n   \n \n \n \n Consolidated statement of changes in equity \n \n \n \n for the year ended 31 December 2022 \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Ordinary \n \n \n \n \n shares \n \n \n \n \n £'000 \n \n \n \n \n \n \n Share \n \n \n \n \n premium \n \n \n \n \n £'000 \n \n \n \n \n \n \n Other \n \n \n \n \n reserves 1 \n \n \n \n \n  '000 \n \n \n \n \n \n \n Retained \n \n \n \n \n earnings \n \n \n \n \n £'000 \n \n \n \n \n \n \n Equity \n \n \n \n \n attributable to owners of the parent \n \n \n \n \n  '000 \n \n \n \n \n \n \n Non \n \n \n ‑ \n \n \n \n \n controlling \n \n \n \n \n interests \n \n \n \n \n  '000 \n \n \n \n \n \n \n Total \n \n \n \n \n equity \n \n \n \n \n  '000 \n \n \n \n \n \n \n \n 31 December 2020 \n \n \n \n \n 20,646 \n \n \n \n \n 255 \n \n \n \n \n 5,461 \n \n \n \n \n 3,942 \n \n \n \n \n 30,304 \n \n \n \n \n 442 \n \n \n \n \n 30,746 \n \n \n \n \n \n \n (Loss)/profit for the year 2021  \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n (7,032) \n \n \n \n \n (7,032) \n \n \n \n \n 115 \n \n \n \n \n (6,917) \n \n \n \n \n \n \n Other comprehensive income \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n (889) \n \n \n \n \n - \n \n \n \n \n (889) \n \n \n \n \n - \n \n \n \n \n (889) \n \n \n \n \n \n \n \n Total comprehensive income/(expense) for the year \n \n \n \n \n \n \n - \n \n \n \n \n \n \n - \n \n \n \n \n \n \n (889) \n \n \n \n \n \n \n (7,032) \n \n \n \n \n \n \n (7,921) \n \n \n \n \n \n \n 115 \n \n \n \n \n \n \n (7,806) \n \n \n \n \n \n \n \n Shares issued for cash \n \n \n \n \n 36 \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n (3) \n \n \n \n \n 33 \n \n \n \n \n - \n \n \n \n \n 33 \n \n \n \n \n \n \n Share options charge \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n 319 \n \n \n \n \n 319 \n \n \n \n \n - \n \n \n \n \n 319 \n \n \n \n \n \n \n Dividends paid to non-controlling interests \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n (288) \n \n \n \n \n (288) \n \n \n \n \n \n \n \n 31 December 2021 \n \n \n \n \n \n \n 20,682 \n \n \n \n \n \n \n 255 \n \n \n \n \n \n \n 4,572 \n \n \n \n \n \n \n (2,774) \n \n \n \n \n \n \n 22,735 \n \n \n \n \n \n \n 269 \n \n \n \n \n \n \n 23,004 \n \n \n \n \n \n \n \n (Loss)/profit for the year 2022  \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n (7,495) \n \n \n \n \n (7,495) \n \n \n \n   \n \n \n \n \n \n 33 \n \n \n \n \n (7,462) \n \n \n \n \n \n \n Other comprehensive income \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n 252 \n \n \n \n \n - \n \n \n \n \n 252 \n \n \n \n \n - \n \n \n \n \n 252 \n \n \n \n \n \n \n \n Total comprehensive income/(expense) for the year \n \n \n \n \n \n \n - \n \n \n \n \n \n \n - \n \n \n \n \n \n 252 \n \n \n \n \n (7,495) \n \n \n \n \n (7,243) \n \n \n \n \n 33 \n \n \n \n \n (7,210) \n \n \n \n \n \n \n Shares issued for cash \n \n \n \n \n 9,240 \n \n \n \n \n 10,608 \n \n \n \n \n - \n \n \n \n \n (39) \n \n \n \n \n 19,809 \n \n \n \n \n - \n \n \n \n \n 19,809 \n \n \n \n \n \n \n Share options charge \n \n \n \n \n 138 \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n 521 \n \n \n \n \n 659 \n \n \n \n \n - \n \n \n \n \n 659 \n \n \n \n \n \n \n Acquisitions \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n Dividends paid to non-controlling interests \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n   \n \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n - \n \n \n \n \n \n \n \n 31 December 2022 \n \n \n \n \n \n \n 30,060 \n \n \n \n \n \n \n 10,863 \n \n \n \n \n \n \n 4,824 \n \n \n \n \n \n \n (9,787) \n \n \n \n \n \n \n 35,960 \n \n \n \n \n \n \n 302 \n \n \n \n \n \n \n 36,262 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n 1.  Includes a credit of £3,667,000 (31 December 2021: £3,667,000) in the merger reserve, a gain of £2,638,000 (31 December 2021: £2,383,000) recognised in the translation reserve, partially offset by a debit balance of £1,478,000 (31 December 2021: £1,478,000) in the ESOP reserve. Refer to note 23 for further details. \n \n \n   \n \n \n The notes on pages 23 to 50 are an integral part of these financial statements. \n \n \n   \n \n \n \n \n \n \n   \n \n \n Consolidated statement of cash flows \n \n \n \n for the year ended 31 December 2022 \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Note \n \n \n \n \n \n 31 December \n \n \n \n \n 2022 \n \n \n \n \n £'000 \n \n \n \n \n \n 31 December \n \n \n 2021 \n \n \n £'000 \n \n \n \n \n \n \n \n Cash flows from operating activities \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Cash generated from operations \n \n \n \n \n 15 \n \n \n \n \n \n 3,812 \n \n \n \n \n \n 11,800 \n \n \n \n \n \n \n Finance expenses paid \n \n \n \n \n \n \n \n \n \n \n \n \n (830) \n \n \n \n \n \n (626) \n \n \n \n \n \n \n Finance income received \n \n \n \n \n \n \n \n \n \n \n \n \n 62 \n \n \n \n \n \n 7 \n \n \n \n \n \n \n Income taxes paid \n \n \n \n \n \n \n \n \n \n \n \n \n (1,871) \n \n \n \n \n \n (2,492) \n \n \n \n \n \n \n \n Net cash generated by operating activities \n \n \n \n \n \n \n \n \n \n \n \n \n \n 1,173 \n \n \n \n \n \n 8,689 \n \n \n \n \n \n \n \n Cash flows from investing activities \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Acquisition of subsidiaries, net of cash acquired \n \n \n \n \n \n \n \n \n \n \n \n \n (17,020) \n \n \n \n \n \n - \n \n \n \n \n \n \n Payments to acquire non-controlling interest \n \n \n \n \n \n \n \n \n \n \n \n \n - \n \n \n \n \n \n (1,291) \n \n \n \n \n \n \n Payments in respect of contingent consideration \n \n \n \n \n \n \n \n \n \n \n \n \n - \n \n \n \n \n \n (680) \n \n \n \n \n \n \n Purchase of property, plant and equipment \n \n \n \n \n \n \n \n \n \n \n \n \n (274) \n \n \n \n \n \n (217) \n \n \n \n \n \n \n Purchase of intangible assets \n \n \n \n \n 8 \n \n \n \n \n \n (175) \n \n \n \n \n \n (849) \n \n \n \n \n \n \n \n Net cash (used in) investing activities \n \n \n \n \n \n \n \n \n \n \n \n \n \n (17,469) \n \n \n \n \n \n (3,037) \n \n \n \n \n \n \n \n Cash flows from financing activities \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Proceeds from issue of share capital (net of issue costs) \n \n \n \n \n \n \n \n \n \n \n \n \n 14,374 \n \n \n \n \n \n 34 \n \n \n \n \n \n \n Proceeds from bank borrowings \n \n \n \n \n 13 \n \n \n \n \n \n 4,500 \n \n \n \n \n \n - \n \n \n \n \n \n \n Repayment of bank borrowings \n \n \n \n \n 13 \n \n \n \n \n \n (1,000) \n \n \n \n \n \n (1,000) \n \n \n \n \n \n \n Bank loan fees paid \n \n \n \n \n 13 \n \n \n \n \n \n (300) \n \n \n \n \n \n - \n \n \n \n \n \n \n Proceeds from government borrowings \n \n \n \n \n \n \n \n \n \n \n \n \n - \n \n \n \n \n \n (36) \n \n \n \n \n \n \n Repayment of lease liabilities \n \n \n \n \n 9 \n \n \n \n \n \n (2,616) \n \n \n \n \n \n (2,108) \n \n \n \n \n \n \n Dividends paid to non \n ‑ \n controlling interests \n \n \n \n \n \n \n \n \n \n \n \n \n - \n \n \n \n \n \n (157) \n \n \n \n \n \n \n \n Net cash flow generated by/(used in) financing activities \n \n \n \n \n \n \n   \n \n \n \n \n \n \n 14,958 \n \n \n \n \n \n (3,267) \n \n \n \n \n \n \n \n Net (decrease)/increase in cash, cash equivalents and bank overdrafts \n \n \n \n \n \n \n   \n \n \n \n \n \n \n (1,338) \n \n \n \n \n \n 2,385 \n \n \n \n \n \n \n \n Cash, cash equivalents and bank overdraft at beginning of year \n \n \n \n \n \n \n \n \n \n \n \n \n \n 13,134 \n \n \n \n \n \n 11,121 \n \n \n \n \n \n \n Effects of exchange rate changes on cash and cash equivalents \n \n \n \n \n \n \n \n \n \n \n \n \n 564 \n \n \n \n \n \n (372) \n \n \n \n \n \n \n \n Group cash and cash equivalents at the end of the year \n \n \n \n \n \n \n \n \n \n \n \n \n \n 12,360 \n \n \n \n \n \n 13,134 \n \n \n \n \n \n \n \n   \n \n \n \n The notes on pages 23 to 50 are an integral part of these financial statements. \n \n \n . \n \n \n   \n \n \n Notes to the consolidated financial statements \n \n \n \n for the year ended 31 December 2022 \n \n \n \n   \n \n \n \n 1. Accounting policies \n \n \n \n \n General information \n \n \n \n Ebiquity plc (the 'Company') and its subsidiaries (together, the 'Group') exists to help brands optimise return on investment from their marketing spend, working with many of the world's leading advertisers to improve marketing outcomes and enhance business performance. The Group has 20 offices located in 18 countries across Europe, Asia and North America. \n \n \n   \n \n \n The Company is a public limited company, which is listed on the London Stock Exchange's AIM and is limited by shares. The Company is incorporated and domiciled in the UK. The address of its registered office is Chapter House, 16 Brunswick Place, London N1 6DZ. \n \n \n   \n \n \n \n Basis of preparation \n \n \n \n The consolidated financial statements have been prepared in accordance with UK-adopted international accounting standards (IFRS) in conformity with the requirements of the Companies Act 2006 ('IFRS') and the applicable legal requirements of the Companies Act 2006. \n \n \n \n   \n \n \n \n \n Prior year restatement \n \n \n \n The prior year statement of financial position has been restated to reflect the correct presentation of the company's current tax assets and current tax liabilities which relate to tax due from/to tax authorities in various jurisdictions. The restatement has the effect of reclassifying the 2021 current assets of £1,268k which were initially presented net of the company's current tax liabilities to a separate line on the statement of financial position. \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n 2021 \n \n \n Reported \n \n \n \n \n 2021 Adjustment \n \n \n \n \n \n 2021 \n \n \n \n \n Restated \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n £'000 \n \n \n \n \n £'000 \n \n \n \n \n \n £'000 \n \n \n \n \n \n \n \n \n Statement of financial position \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Current tax asset \n \n \n \n \n - \n \n \n \n \n £1,268 \n \n \n \n \n \n £1,268 \n \n \n \n \n \n \n \n Current tax liabilities \n \n \n \n \n (£374) \n \n \n \n \n (£1,268) \n \n \n \n \n \n (£1,642) \n \n \n \n \n \n \n \n   \n \n \n \n Alternative Performance Measures (\"APMs\") \n \n \n \n In the reporting of financial information, the Directors have adopted various alternative performance measures ('APMs'). The Group includes these non-GAAP measures as they consider them to be both useful and necessary to the readers of the financial statements to help understand the performance of the Group. The Group's measures may not be calculated in the same way as similarly titled measures reported by other companies and therefore should be considered in addition to IFRS measures. The APMs are consistent with how business performance is measured internally by the Group. Details of the APMs and their calculation are set out on page 17.   \n \n \n   \n \n \n \n Highlighted items \n \n \n \n Highlighted items comprise charges and credits which are highlighted in the consolidated income statement as separate disclosure is considered by the Directors to be relevant in understanding the adjusted performance of the business. These may be income or cost items. Further details are included in note 3. \n \n \n   \n \n \n Non \n ‑ \n cash highlighted items, which do not represent cash transactions in the year, include share option charges, amortisation of purchased intangibles, accruals for post-date remuneration and movements in tax and onerous lease provisions. Other items include the costs associated with potential acquisitions (where formal discussion is undertaken), completed acquisitions and disposals and their subsequent integration into the Group, adjustments to the estimates of contingent consideration on acquired entities, asset impairment charges and restructuring costs. \n \n \n \n   \n \n \n \n \n Reclassification of cost categories reported in income statement \n \n \n \n The cost categories reported in the income statement have been changed to: project-related costs, staff costs and other operating expenses to reflect the Group's internal reporting. The prior year comparatives have been re-classified in the same way and there is no change in the total costs reported.  Details of each cost category are set out later in this note. \n \n \n \n   \n \n \n \n \n Going concern \n \n \n \n The financial statements have been prepared on a going concern basis. The Group meets its day-to-day working capital requirements through its cash reserves and borrowings, described in note 19 to the financial statements. As at 31 December 2022, the Group had cash balances of £12,360,000 (including restricted cash of £1,049,000) and undrawn bank facilities available of £8,500,000 and was cash generative and within its banking covenants. \n \n \n   \n \n \n During the year, the Group continued to trade within the limits of its banking facility and associated covenants. In March 2022, this facility was increased and extended to provide a total available of £30 million, initially for a period of 3 years to March 2025 and extendable for up to a further two years. Details of the facility terms and covenants applying are set out in note 19 below. \n \n \n   \n \n \n In assessing the going concern status of the Group and Company, the Directors have considered the Group's forecasts and projections, taking account of reasonably possible changes in trading performance and the Group's cash flows, liquidity, and bank facilities. The Directors have prepared a model to forecast covenant compliance and liquidity for the next twelve months that includes a base case and scenarios to form a severe but plausible downside case. For the purposes of this model, the terms of the new facility including its covenant tests have been applied with effect from the quarter ending 30 June 2022.  \n \n \n   \n \n \n The base case assumes growth in revenue and EBITDA based on the Group's budget for the year ended 31 December 2023 and management projections for the year ended 31 December 2024.  The severe but plausible case assumes a downside adjustment to revenue of 10% throughout the period with no reductions in operating costs. Under both of these cases, there is headroom on covenant compliance throughout the going concern period. \n \n \n   \n \n \n The Directors consider that the Group and Company will have sufficient liquidity within existing bank facilities, totalling £30 million, to meet their obligations during the next 12 months and hence consider it appropriate to prepare the financial statements on a going concern basis. \n \n \n   \n \n \n \n Russian operation \n \n \n \n Following the Russian invasion of Ukraine, the Group has been reviewing the future of its subsidiary in Russia (Ebiquity Russia OOO) and has been in negotiations with a view to divesting its 75.01% shareholding in it. Although this subsidiary remains part of the Group for these financial statements, given the uncertainty regarding this operation, an impairment provision of £257,000 has been made against the value of its assets in the Group balance sheet.  Its cash balances are also deemed to be restricted cash. Details are provided in note 3. \n \n \n   \n \n \n The financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities at fair value through profit or loss. \n \n \n   \n \n \n The consolidated financial statements are presented in pounds sterling and rounded to the nearest thousand. \n \n \n   \n \n \n The principal accounting policies adopted in these consolidated financial statements are set out below. These policies have been consistently applied to all periods presented, unless otherwise stated. \n \n \n   \n \n \n \n Basis of consolidation \n \n \n \n The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. The results of each subsidiary are included from the date that control is transferred to the Group until the date that control ceases. \n \n \n   \n \n \n Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by the Group. All intra \n ‑ \n group transactions, balances, income and expenses are eliminated on consolidation. \n \n \n   \n \n \n Non \n ‑ \n controlling interests represent the portion of the results and net assets in subsidiaries that is not held by the Group. \n \n \n \n   \n \n \n \n \n Business combinations and goodwill \n \n \n \n The Group applies the acquisition method to account for business combinations. The cost of the acquisition is measured as the aggregate of the fair values, at the date of exchange, of assets given, liabilities assumed, and equity instruments issued by the Group in exchange for control of the acquiree. The acquiree's identifiable assets, liabilities and contingent liabilities are recognised initially at their fair value at the acquisition date. Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred over the fair value of net identifiable assets acquired and liabilities assumed. The determination of the fair values of acquired assets and liabilities is based on judgement, and the Directors have 12 months from the date of the business combination to finalise the allocation of the purchase price. \n \n \n   \n \n \n Goodwill is allocated to each of the Group's cash \n ‑ \n generating units expected to benefit from the synergies of the combination. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment at least annually or whenever there is evidence that it may be required. Any impairment is recognised immediately in the income statement and is not subsequently reversed. \n \n \n   \n \n \n Goodwill arising on the acquisition of the Group's interest in an associate, being the excess of the cost of acquisition over the Group's share of the fair values of the identifiable net assets of the associate, is included within the carrying amount of the investment. The non \n ‑ \n controlling shareholders' interest in the acquiree is initially measured at the non \n ‑ \n controlling interest's proportion of the net fair value of the assets, liabilities and contingent liabilities recognised. \n \n \n   \n \n \n Where transactions with non \n ‑ \n controlling parties do not result in a change in control, the difference between the fair value of the consideration paid or received and the amount by which the non \n ‑ \n controlling interest is adjusted, is recognised in equity. \n \n \n   \n \n \n Where the consideration for the acquisition includes a contingent consideration arrangement, this is measured at fair value at the acquisition date. Any subsequent changes to the fair value of the contingent consideration are adjusted against the cost of the acquisition if they occur within the measurement period and only if the changes relate to conditions existing at the acquisition date. Any subsequent changes to the fair value of the contingent consideration after the measurement period are recognised in the income statement within other operating expenses as a highlighted item. The carrying value of contingent consideration at the statement of financial position date represents management's best estimate of the future payment at that date, based on historical results and future forecasts. \n \n \n   \n \n \n All costs directly attributable to the business combination are expensed as incurred and recorded in the income statement within highlighted items. \n \n \n   \n \n \n \n Revenue recognition \n \n \n \n   \n \n \n Revenue is recognised in accordance with IFRS 15 'Revenue from Contracts with Customers'.  Net revenue is the revenue after deducting external production costs as shown in the income statement.  \n \n \n   \n \n \n Revenue from providing services is recognised in the accounting period in which the services are rendered. The revenue and profits recognised in the period are based on the delivery of performance obligations and an assessment of when control is transferred to the customer. Revenue is recognised either when the performance obligation in the contract has been performed (thus a 'point-in-time' recognition) or over the time period during which control of the performance obligation is transferred to the customer. \n \n \n   \n \n \n For fixed-price contracts, which represent the majority of cases, revenue is recognised based on the actual service provided during the reporting period, calculated as an appropriate proportion of the total services to be provided under the contract. This reflects the fact that the customer receives and uses the benefits of the service simultaneously. An input method or an output method is used to measure progress of performance obligations depending on the nature of the specific contract and project arrangements. Input methods are typically based on costs incurred to date, relative to the total expected costs for the project as substantially all work performed is primarily represented by labour.  Where appropriate, revenue may be recognised evenly in line with the value delivered to the client, based on assignment of amounts to the project milestones set out in the contract.  \n \n \n   \n \n \n Where project fees are based on the labour hours spent and other expenses incurred, revenue is recognised in line with the labour hours spent.  \n \n \n   \n \n \n Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in profit or loss in the period in which the circumstances that give rise to the revision become known by management. \n \n \n   \n \n \n In the case of fixed-price contracts, the customer is billed for the fixed amounts based on a billing schedule agreed as part of the contract. \n \n \n \n   \n \n \n \n \n Deferred and accrued income \n \n \n \n The Group's customer contracts include a diverse range of payment schedules which are often agreed at the inception of the contracts under which it receives payments throughout the term of the arrangement. Payments for goods and services transferred at a point in time may be at the delivery date, in arrears or part payment in advance. \n \n \n   \n \n \n Where payments made to date are greater than the revenue recognised up to the reporting date, the Group recognises a deferred income 'contract liability' for this difference. Where payments made are less than the revenue recognised up to the reporting date, the Group recognises an accrued income 'contract asset' for this difference. \n \n \n \n   \n \n \n \n \n Project-related costs \n \n \n \n Project-related costs comprise fees payable to external sub-contractors (\"partners\") who may undertake services in markets where the Group does not have its own operations; costs of third-party data (e.g. audience measurement data) used in projects; and, other out-of-pocket expenses (e.g. billable travel) directly incurred in performance of services.  \n \n \n   \n \n \n \n Staff costs \n \n \n \n Staff costs comprise salaries payable to staff, employer social taxes, healthcare, pension and other benefits, holiday pay, variable bonus expense and freelancer costs. \n \n \n \n   \n \n \n \n \n Other operating expenses \n \n \n \n Other operating expenses comprise all other costs incurred in operating the business including sales and marketing, property, IT, non-client travel, audit, legal and professional, staff recruitment and training, depreciation and amortisation.  \n \n \n \n   \n \n \n \n \n Finance income and expenses \n \n \n \n Finance income and expense represents interest receivable and payable. Finance income and expense is recognised on an accruals basis, based on the interest rate applicable to each bank or loan account. \n \n \n   \n \n \n \n Foreign currencies \n \n \n \n For the purposes of the consolidated financial statements, the results and financial position of each Group company are expressed in pounds sterling, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements. \n \n \n   \n \n \n In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of transactions. At each year-end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the year \n ‑ \n end date. \n \n \n   \n \n \n For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the year \n ‑ \n end date. Income and expense items are translated at the average exchange rate for the period, which approximates to the rate applicable at the dates of the transactions. \n \n \n   \n \n \n The exchange differences arising from the retranslation of the year \n ‑ \n end amounts of foreign subsidiaries and the difference on translation of the results of those subsidiaries into the presentational currency of the Group are recognised in the translation reserve. All other exchange differences are dealt with through the consolidated income statement. \n \n \n   \n \n \n \n Taxation \n \n \n \n The tax expense included in the consolidated income statement comprises current and deferred tax. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted by the year-end date. \n \n \n   \n \n \n The Group is subject to corporate taxes in a number of different jurisdictions and judgement is required in determining the appropriate provision for transactions where the ultimate tax determination is uncertain. In such circumstances, the Group recognises liabilities for anticipated taxes based on the best information available and where the anticipated liability is both probable and estimable. Where the final outcome of such matters differs from the amoun...

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