an ebiquity company interim presentation six months ended 31 october 2010 january 2011
TRANSCRIPT
an Ebiquity company
Interim PresentationSix months ended 31 October 2010
January 2011
an Ebiquity company
Progress ahead of plan
• Largely completed planned integration of Xtreme and TMC ahead of schedule
• Established a new high quality data centre in Newcastle
• Consolidated German operations in Baden Baden with Sales and Marketing in Hamburg
• Cost synergies ahead of management forecast
• New branding and marketing structure now in place
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an Ebiquity company
Revenues and operating profit ahead of forecast
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Revenues £20,513
Operating Profits £1,436
4% pro forma revenue increase
71% International Revenue
an Ebiquity company4
Globalisation
AccountabilityEffectiveness Efficiency
Procurement Transparency
Key business drivers
an Ebiquity company
New business structure to reflect new capabilities
Advertising Intelligence
Media
ROI
Digital
Editorial Intelligence
Technology
Practice
an Ebiquity company6
Greater geographic reach
Office
Partner
an Ebiquity company7
85 of top 100 in 2010
Penetration of the top 100 global advertisers
an Ebiquity company
One brand
One proposition
Delivering Our messageFollowing the Xtreme acquisition we have a confusion of brand names and services
an Ebiquity company
an Ebiquity company
Our Journey
• We began as a small advertising monitoring business
• We now stand at the centre of a growing and complex market
• There are few, if any, other companies with the skills necessary to help brand owners navigate these complexities
• We have built the skills and the international credentials
• We face significant growth opportunities in key markets and internationally
• Our journey has just begun!
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an Ebiquity company
Financial SummarySix months ended 31 October 2010
All numbers in this presentation are in £000’s unless noted otherwise
an Ebiquity company
Revenue increase of 122% ... Pro forma* YOY increase of 4%
Revenue
Six months ended 31 October 2010 Six months ended 31 October 2010
Reported % Reported %Pro
forma*%
Analytics 7,538 37% 6,660 72% 7,288 37%
Platform 12,975 63% 2,600 28% 12,460 63%
Total 20,513 9,260 19,749
* Based on management account information, taking all acquisitions as if they had been owned for whole of previous period, using Ebiquity policies
an Ebiquity company
International revenue doubled to 71% of group revenue (2009: 37%)
Revenue
International revenue: non UK sourced revenue, or UK sourced revenue where marketing activity is analysed in more than one country
US domestic 14% (2009: 12%)
Plus 39% multi territory contracts (2009: 25%)
Mainland Europe domestic
14% (2009: nil)AsiaPac domestic
4% (2009: nil)
an Ebiquity company
Strong repeat business and renewal rates
Revenue
UK Platform renewal rate (by value)6 months to 31 October 2010
92%UK Platform renewal rate (by value)
6 months to 31 October 2009
74%
Recurring revenues
8%Renewable revenues
77%
Recurring and renewable revenues
85%
an Ebiquity company
Positive impact of acquisitions on gross margins with early synergy release
Gross margins
54% 52%Total Increased largely due to recognised synergies
57% 54%Platform Increased largely due to recognised synergies (£215k)
49% 49%Analytics Margins maintained on increased revenue
Total gross profit £11,036k (2009 pro forma: £10,338k). Reported gross profit and margin in October 2009: £4,781k and 52%
Reported 31 October 2010
Pro forma31 October 2009
an Ebiquity company
Synergies implemented earlier than planned
Underlying operating profit
6 months ended 31 October 2010
6 months ended 31 October 2009
Reported Reported Pro forma
Analytics 2,533 3,057 3,034
Platform 3,667 595 3,066
Unallocated expenses (4,764) (2,892) (4,977)
Underlying operating profit 1,436 760 1,123
an Ebiquity company
Improved margin from realised synergies
Underlying operating margin
7% 6%Operating profit (EBIT)
EBITDA 10% 9%
Total (pre highlighted) operating profit £1,436k (2009: £1,123k). Reported operating profit and margin in October 2009: £760k and 8%
Reported 31 October 2010
Pro forma31 October 2009
an Ebiquity company
EPS in line with market expectation
Underlying diluted EPS
1.3p 1.3p
Our effective tax rate has been negatively impacted by a geographical shift in profits towards overseas territories where tax rates are higher. Were the geographical mix in line with the previous year, the strong underlying
performance against market expectation (operating profit of £1,154k vs £1,000k) would have resulted in a higher EPS
Reported Market expectation
an Ebiquity company
High planned non-recurring integration costs to release significant cost synergies
Highlighted items
Six months ended 31 October 2010 Six months ended 31 October 2009
Organic Current/prior year acquisition related Total Total
Recurring:
Share based expenses 640 - 640* 151
Amortisation of purchased assets 172 559 731* 181
812 558 1,371 332
Non recurring:
Integration costs - 549 549 -
Severance costs - 1,153 1,153 158
Property costs - 300 300* -
Acquisition costs - 54 54 -
- 2,056 2,056 158
Total 812 2,614 3,427 490
* Non cash £1,671k
an Ebiquity company
Impact of significant planned restructuring costs
Profit before tax
6 months ended 31 October 2010
6 months ended 31 October 2009
Reported Reported
Underlying operating profit 1,436 760
Highlighted items – recurring (1,371) (332)
Highlighted items – non recurring (2,056) (158)
Reported operating (loss)/profit (1,991) 270
Net finance costs (282) (67)
Reported (loss)/profit before tax (2,273) 202
Underlying profit before tax 1,154 692
an Ebiquity company
As at 1 May 2010
6 months to 31 October 2010
As at 31 October
2010
Total original facility
Available facility 31 October
2010Drawn Repaid
Term loan 8,000 - (1,057)* 6,943 8,000 -
Revolving Credit Facility - 1,500 - 1,500 2,500 1,000
Acquisition fund - - - - 1,500 1,500
Total 8,000 1,500 (1,057) 8,443 12,000 2,500* includes £64k forex (non cash movement) with £993k actual cash repayments
Key facility terms:
• Repayable in equal quarterly instalments until April 2014
• Term loan denominated in GBP and USD at floating to fixed hedged rates of 2.03% and 1.86% plus 3.25% margin respectively (5.28% and 5.11% effective rates respectively)
• Undrawn facility liable to fee of 46.15% of the margin (currently 1.5%)
Financing analysis£2.5m available facility
an Ebiquity company
31 October 2010 31 October 2009 30 April 2010
Cash 1,750 1,521 5,243
Loans to associates - 310 285
Debt (8,443) (3,314) (7,569)
Total (6,693) (1,483) (2,041)
Operating cash flow and net debtShort term and non recurring impact of integration costs
an Ebiquity company
Financial summary
• Company size has doubledRevenue up 122%, Gross profit up 131%, Underlying operating profit up 89%Worldwide headcount up X%
• Strong international renewable revenues71% of revenue comes from International85% of revenue is recurring
• First half recognised cost synergies ahead of target at £548k
• Increase in pro forma gross and operating profit margins
• Comfortably financedSufficient headroom on debt facilityMeeting banking covenants
• Ahead of market expectationsRevenue of £20.5m vs £20.4mUnderlying operating profit £1.4m vs £1.2mEPS of 1.3p vs 1.3p
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an Ebiquity company
Outlook
• Growth drivers continue to define our strategy – International/ROI
• International multiple geography assignments will continue to drive growth
• Germany and USA offer significant growth potential
• Continue to build organic growth via cross selling
• Seek to build our skills and international footprint where appropriate
• We are confident of another successful year
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Confident of another successful year
an Ebiquity company
Financial AppendicesSix months ended 31 October 2010
an Ebiquity company
International revenue doubled to 71% of group revenue
Appendix: International revenue
6 months ended 31 October 2010
% of total revenue
6 months ended 31 October 2009
% of total revenue
Multi territory 7,954 39% 2,291 25%
US domestic 2,944 14% 1,081 12%
Europe excl UK domestic 2,857 14% - -
AsiaPac domestic 895 4% - -
Total international revenue 14,650 71% 3,372 37%
International revenue: non UK sourced revenue, or UK sourced revenue where marketing activity is analysed in more than one country
an Ebiquity company
Appendix: Statement of financial positionOct 10 Oct 09 Apr 10
Non current assets Goodwill 30,700 8,754 30,235
Purchased intangibles 9,080 2,638 9,291
Other 3,686 1,403 3,418
46,466 12,795 42,944
Current assets Trade debtors 6,648 2,823 8,300
Accrued income 3,029 1,989 2,081
Cash 1,750 1,521 5,243
Loans to associates - 310 285
Bank security deposits 300 - 300
Prepayments 1,263 382 1,566
Other 704 359 585
13,694 7,384 18,360
Current liabilities Trade creditors 2,672 917 2,993
Loans 3,482 2,300 2,077
Deferred income 5,510 2,433 7,958
Accruals 2,826 1,616 3,248
Other 3,555 1,343 3,004
18,045 8,609 19,280
Non current liabilities Loans 4,606 1,013 5,575
Deferred tax 2,452 515 2,608
Other 340 45 907
7,398 1,573 9,090
Net assets 31,717 9,997 32,934
an Ebiquity company
Appendix: Cash flow statement
Oct 10 Oct 09 Apr 10
Cash (used in) / generated from operations (2,230) 865 3,243
Finance expense (231) (75) (271)
Income taxes (paid) / refunded (316) 105 (551)
Net cash from operating activities (2,777) 895 2,421
Investing activities
Acq’n of subsidiaries, net of cash acquired (829) - (326)
Purchase of PPE (351) (70) (164)
Capitalised development costs (46) (107) (135)
Finance income - 8 14
(1,225) (117) (545)
Financing activities
Issue of new shares 22 - 750
New borrowings 1,500 - 8,000
Loan repayments (993) (486) (5,884)
Bank loan fee/securities - - (506)
Loan note issue costs - - (217)
529 (486) 2,143
Net increase/(decrease) in cash (3,474) 292 4,019