Ebiquity Regulatory News (EBQ)

28 Jan 2009 07:00



Key points

Total revenue up 2% to £8.6m (2007: £8.4m)

Operating profit turned around to £427,000 (2007: loss £1.1m) despite increased investment as part of Company's restructuring programme

Expanded geographic base with ventures in Germany and Spain

Newslive launched in first half - significant interest in product

Robust balance sheet with unutilised banking facilities of £1.0m

Michael Greenlees, Chief Executive, said:

"It has only been one year since we started to restructure Ebiquity and we are already reaping the benefits. Our Analytics division continues to win new clients both in the UK and internationally and Newslive, which was recently launched, is already seeing significant interest from a number of companies and government bodies."

"Our international expansion has continued with offices opening in Germany and Spain and we continue to look for more opportunities to expand our global presence, in a cost effective way. We remain well placed for future growth, not withstanding the economic downturn - perhaps, in some cases because of it. Not withstanding the unpredictability of the current economic environment, we remain cautiously optimistic that our technology, analytics and insight skills will continue to serve our clients and shareholders well in the coming months."

Enquiries:

Notes to Editors

Ebiquity plc is in the business of media and marketing analytics. 

Founded in 1997, Ebiquity provides marketing professionals with a wide range of data driven systems that help to achieve their clients' business and brand objectives.

Floated on AIM in April 2000, Ebiquity is now used by 70% of the top 100 UK advertisers and has recently opened offices in Germany and Spain to add to its global presence.

For further information please visit: www.ebiquity.com 

Chairman's Statement

The six months to 31 October 2008 has been a period of significant progress in the development of the Group and has been a period of considerable transition. Despite the global economic backdrop, the financial outturn is in line with our expectations and we have met all of our strategic goals within the period:

A new name signals our commitment to data analytics

A new on-line interface that brings our technology tools and services together into one powerful program

An upgraded advertising monitoring service - Billetts Media Monitoring

A new 'state of the art' editorial monitoring service - Newslive 2.0

A unique go to market strategy 'Marketing Investment Management' that combines the strength of our analytics business with the power of our database

We have continued throughout this half year to invest in the quality of our data, the quality of our people and the geographic reach of our services. All this is being delivered from the new offices that we moved into at the very end of our last financial year. Our increasing international reach will be a key contributor to our future success. We are now in regular positive dialogue with major global corporations - both existing and potential clients who recognise the need in the current environment to focus on the return they achieve across different markets and mediums from their marketing spend. This dialogue gives us great optimism for both the short and medium term prospects for the business.

The new executive team, under the leadership of Michael Greenlees, has completed their first year and our original confidence in their experience has been well founded. The Group is now tightly focused on delivering its core services to its client base and in expanding that client base into the major international advertisers.

During the rest of this financial year, whilst continuing to lay the foundations for growth, we naturally remain alert to wider global economic events beyond our control. The current economic and financial conditions are such that the impossible has been proven to be possible. Consequently we will maintain a tight control on the costs of achieving the international expansion we need. Our deals in Germany and Spain show how we can gain territorial presence with only modest investment.

We look forward with confidence in our pursuit of helping our clients derive maximum commercial return from their marketing and media spend.

Michael Higgins

Chairman

Chief Executive's Statement 

Overview 

I am pleased to report to shareholders that at this stage in the Group's turn around plan, which I announced last year, we have met or exceeded management's strategic goals.

Total revenue for the six months to 31 October 2008 was up 2% to £8.6 million compared to £8.4 million for the same period last year. This increase was primarily driven by a strong performance from our Analytics division (formerly "Consulting Services"), where we enjoyed a 5% increase in revenues.

Whilst gross profit for the period was broadly flat, underlying operating profit (before highlighted items) was £0.9million, and allowing for one off restructuring costs was, only marginally less than last year.

Importantly the Group achieved a significant turn around in reported operating profit, achieving £427,000 compared to an operating loss of £1,090,000 for the same period last year.

The results themselves reflect both a significant seasonal bias, which favours the second half of the year, and a planned increased level of investment that took place as part of the Group's restructuring programme.

We continued our international expansion with the opening of a new office in Germany, headed by former senior management from Accenture, and by signing an agreement to purchase a stake in a media auditing and consultancy business in Spain. Both companies become part of our Billetts international network and extend our capabilities for our global clients.

Background

The Group has gone through significant change since my appointment to CEO as October 2007 and despite the weakening economy, we are now beginning to reap some of the benefits of the plans we have implemented.

Overall the period has been marked by the launch of our best practice approach to media and marketing effectiveness under the Billetts Marketing Investment Management programme, and the re-launch of our advertising and news monitoring platforms - Billetts Media Monitoring and Newslive 2.0.

1. Analytics Division

This division (formerly "Consulting Services") consists of our media auditing, optimisation, and marketing effectiveness businesses, and represents approximately 67% of our total revenue.

Whilst it is early days, we are already experiencing positive responses from clients who increasingly recognise the extent to which clear analytics driven decision-making can significantly improve the overall return on their marketing investment. This has never been more important than in the current economic down turn. Our clients need us more than ever to guide them through a series of difficult and complex trade offs as they seek to protect their brand equity, drive revenue, and at the same time reduce the overall cost of delivery, including advertising, marketing and promotional expenditure.

We have a number of unique attributes that combine to make the Group a powerful source of marketing and media insights, as our clients seek to unravel this conundrum:

1. We have possibly the largest international media database and by far the largest and most comprehensive

one in the UK.

2. We have a unique set of tools that provide near real time insight into market movements and trends.

3. As one of the largest independent marketing and media advisors our clients trust us to provide unbiased and 

quantifiable advice.

4. Everything we do is data driven - we provide our clients with analytics tools that help them understand both

market data and their own, and importantly how both can be combined to help them make better-informed

decisions.

5. Last year we estimate that we helped our clients save over £1 billion in marketing expenditure whilst at the

same time improving their performance.

As a result our Analytics Division has performed strongly, and our best practice approach to market planning - Billetts Marketing Investment Management - is helping us win a greater number of both domestic and international client assignments in Europe, North America and Asia.

2. Platform Division

We are not ourselves entirely immune from the effects of the weakening economy and this has particularly been felt within our Platform division.

This division (formerly "Technology and Data") consists of advertising monitoring, news monitoring, and publisher solutions, and represents approximately 33% of our total revenue and continues to be very much 'work in progress' following significant restructuring.

The cost of this restructuring programme, particularly our investment in Newslive 2.0, together with a lower level of renewals from our smaller advertising monitoring contracts, have combined to result in the division showing a small loss of £228,000. 

Newslive 2.0, our new editorial monitoring platform, which was not launched until September, is already experiencing a strong level of trials and a strong pipeline, but was not available in time to make a significant contribution to the first half's performance. 

As a result our Platform business underperformed in the first half, and our current renewal rate is running at approximately 85% versus 95% for last year. Having said this, a solid contribution from ePublisher in both the UK and Holland means that at the revenue level Platform sales are down only 2% year on year at £2.88m (2007: £2.94m). 

Outlook

As advertisers seek to spend less and at the same time achieve more, our benchmarking and measurement analytics continue to provide our clients with important measures of media value. At the same time our marketing effectiveness practice provides an increasing range of tools designed to help businesses get a better return on their overall marketing investment. 

The growth of our international business reflects the importance of our ability to provide these insights on a global scale, and we plan to develop these capabilities in the coming year. 

At the same time media monitoring contracts are likely to continue to be scrutinised closely - particularly amongst those clients who have either eliminated advertising spend altogether or for whom advertising is not 'mission critical'. The impact of the investment we have made in restructuring our Platform business, including that made in developing Newslive 2.0, will continue to be felt into the second half. On the other hand, I anticipate that we will see a significant pick up in the sales of Newslive 2.0 as corporations seek to manage the potential impact of the recession on their brands and corporate reputations, although the full impact of this is unlikely to be felt until the next financial year.

Overall I believe that we continue to be well placed for future growth, not withstanding the economic downturn - perhaps, in some cases because of it. Not withstanding the unpredictability of the current economic environment, we remain cautiously optimistic that our technology, analytics and insight skills will continue to serve our clients and shareholders well in the coming months.

Michael Greenlees

Chief Executive Officer

 Financial Review

Ebiquity plc is publishing its interim results for the 6 months ended 31 October 2008.

Revenue

Since the previous report, our "Consulting Services" division has been renamed "Analytics" (and consists of our marketing effectiveness and media auditing and consultancy practices) and our "Technology & Data" division as "Platform" (which consists of advertising and news monitoring and our ePublisher business). 

Total Group revenue increased by 2% to £8.6 million (2007: £8.4 million). This growth was driven by the Analytics business where revenue increased by 5% to £5.7 million. Within this segment, revenue from international audit assignments grew strongly, up by 23%.

Revenue from the Platform business was down 2% year on year due to a slow down in new sales, and a reduction in the renewal rate from 95% to 85%. 

Gross Profit

Gross profit for the period was broadly flat at £4.4m, yielding a gross margin of 51% (2007: 52%) which has been consistent throughout the period. The slight margin decrease reflects the mix of revenues between the Analytics and Platform businesses, with an increased proportion of revenue coming from the Analytics business, which has lower gross margins.

  Operating Profit

Profit before highlighted items is termed "underlying operating profit". Certain items have been highlighted because separate disclosure is considered relevant in understanding the underlying performance of the business.

Our Analytics division has continued to perform well with increased revenues from a well managed cost base, together with some benefit from exchange gains on our international business.

Our core advertising monitoring product currently accounts for most of the Platform division. There has been notable investment in the period to set the business up for future growth. The most significant of these has been salary and production costs which account for an increase of £118,000 year on year.  We have also increased our provision for doubtful debts in light of the current economic environment.

Our Platform division also includes our new product launch, Newslive 2.0. Whilst the launch of the product was delayed to late in the first half, we have put in place the infrastructure to deliver the product. This has cost an additional £109,000 in salary and production costs compared to the previous year.

Underlying operating profit was £0.9m (2007: £1.1m), representing a 13% decrease from the prior period. Following the restructure of the business towards the end of the previous financial year, notable recruitment has taken place across both divisions in the first half of the current financial year to deliver the new strategy. This has cost an additional £87,000 in recruitment costs compared to the previous year. During the period we also incurred research and PR costs totalling £85,000 linked to our strategic direction, which we have not incurred previously.

Reported operating result represents a turn around from a loss of £1.1m to a profit of £0.4m, despite the increased investment as part of the restructuring programme.

  Highlighted Items

Highlighted items comprise significant non-cash charges and non-recurring items which are highlighted in the income statement because separate disclosure is considered relevant in understanding the underlying performance of the business.

The management restructuring costs of £161,000 relate to the implementation of the final stages of the strategic review.

Profit before Tax and EPS

Reported result before tax showed good improvement, up £1.5m from a loss of £1.2m to a profit of £0.3m. Underlying profit before tax for the six months was down £0.1m to £0.8m.

Reported diluted earnings per share was 0.28p (2007: loss 3.22p). Underlying diluted earnings per share was 2.03p (2007: 2.70p).

The Board is not recommending the payment of a dividend, reflecting the opportunities for further development, particularly internationally. 

 Operating Cashflow and Net Debt

Net cash generated from operating activities for the six months was £0.1m (2007: £0.4m), the movement largely reflecting a corporation tax payment in the period (£118,000 payment) compared to a credit in the prior year (£167,000 credit). 

Cash collection over the first half of our current financial year has improved, up 5% on the same period last year. Debtor days have been reduced to 62 days, down from 65 days as at April 2008 (October 2007: 76 days), and the percentage of debt over 60 days old now represents only 10% of all trade debt, improved from 19% as at April 2008 (October 2007: 19%).

The net debt position as at 31 October remained flat at £2.7 million (31 October 2007: £2.7 million) despite positive operating cashflow, because of "one off" spends on office relocation (£254,000) and management restructuring (£369,000). During the six months, the Group also invested £454,000 in intangible assets (capitalised development work). Gross debt has increased since 30 April 2008 by £0.25m since a further £0.5m was drawn down from our revolving credit facility but scheduled payments of £0.25 million were made to the bank and loan note holders.

The Group continues to trade comfortably within all of its banking facilities and covenants. As at 31 October 2008, the Group had unutilised banking facilities of £1.0m.

Andrew Beach 

Chief Financial Officer

  Consolidated Income Statement 

for the six months ended 31 October 2008

Consolidated Balance Sheet

as at 31 October 2008

  Consolidated Cashflow Statement 

for the six months ended 31 October 2008

1. Accounting policies

Basis of preparation

The financial information presented in this documentation has been prepared using recognition and measurement principles which are consistent with International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations that are expected to be applicable for the period ending 30 April 2009. These are subject to ongoing review and endorsement by the European Commission, or possible amendment by the International Accounting Standards Board (IASB), and are therefore subject to possible change. Further standards or interpretations may also be issued that could be applicable for the year ending 30 April 2009. These potential changes could result in the need to change the basis of accounting or presentation of certain financial information from that presented in this document.

The comparatives for the period ended 30 April 2008 are not the Company's full statutory accounts for that year but are drawn up from those accounts. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under section 237(2)-(3) of the Companies Act 1985.

As permitted, the group has not applied IAS 34 'Interim Reporting' in preparing this interim report.

2. Highlighted items

Highlighted items comprise significant non-cash charges and non-recurring items which are highlighted in the income statement because separate disclosure is considered relevant in understanding the underlying performance of the business.

The management restructuring costs of £161,000 relate to restructuring following a strategic review.

3. Dividends

No interim dividend is being proposed.

4. Earnings per share

The calculation of basic and diluted earnings per share is based on the following data:

* Highlighted items (see note 2).

  ** Note that certain share options have been excluded from the calculation of diluted EPS as their exercise price is greater than the average share price during the period (i.e. they are out-of-the-money) and therefore it would not be advantages for the holders to exercise those options. 1,524,583 (October 2007: 261,233) share options have not been included within the diluted earnings per share calculations at 31 October 2008 as they are anti-dilutive for the periods presented. These shares could potentially dilute the earnings per share in the future.

5. Other intangible assets

The capitalised development costs are internally generated.

Amortisation is charged within administrative expenses so as to write off the cost of the purchased intangible assets over their estimated useful lives. The assets, initial values and periods used are as follows: