Ebiquity plc (EBQ) Earnings Call Transcript & Summary

Good morning, and welcome to the Ebiquity plc Investor Presentation throughout this recorded presentation. [Operator Instructions] I would now like to hand you over to CEO, Nick Waters. Good morning to you.

Good morning, Alex, and thank you, and good morning to everybody who's joining this call. This is the Annual Results Presentation for the year ended December 22 for Ebiquity plc. My name is Nick Waters. I'm joined today by our CFO, Alan Newman. We have approximately 40 minutes worth of content, and then we'll obviously be happy to take any questions afterwards. Just to start, you may have seen the announcement that Alan will be retiring at the end of June. So I just want to put on record my thanks to Alan for everything he's done for the company over the last 4 years since he joined, and the fantastic contribution he has made and the support to myself from the rest of the wider Ebiquity leadership team. So thank you very much, Alan. I will start with a quick summary executive summary, which I'm pleased to say, I'm pleased to report we can talk about positive results and positive momentum through the year. You'll have seen we delivered very strong revenue growth of 20%, including 9% organic revenue growth and a significant improvement in the operating margin and total operating profit. We made three acquisitions during the course of '22. One that I would describe as a relatively small tactical one and two strategic acquisitions, and I'm pleased to be able to tell you that all three of them have been integrated well and contributing well to our results in our business. Also pleasing was a strong geographically distributed performance, all regions growing strongly, all regions performing well. We've also, [as we now made quite] a concerted effort over the last couple of years to develop our digital media solutions. They continue to deliver high revenue growth and at a high margin. Our largest service line is media performance, and that has been our strongest growing service line. It has been boosted significantly by the acquisitions that were primarily focused in that media performance service line and by our digital media solutions. Our Contract Compliance service line has had a particularly good year being our fastest-growing service line organically. Now that is coming off a couple of years where store a little bit. It was the one most badly hit by the COVID pandemic because of the nature of the work, where the teams actually go and sit in agency's offices to conduct their audits. And of course, offices were closed in 2020. It was a very, very difficult year for that particular service line started to recover in '21, but it's really found its feet and gained momentum in '22. As we sit here now, I'm pleased to be able to tell you that I feel the outlook looks encouraging. I will now pass to Alan to go through the numbers, and I'll come back and give you an update on the strategic progress.

Thank you, Nick. We'll start with the summary of the income statement. I'm going just to give you the highlights. As Nick mentioned, we had 20% revenue growth, including the benefit of the acquisitions in '22, a 9% organic growth. So you see the acquisitions contributed 11% in the 7 to 8 months they were in. If you take the 9% organic growth can also be divided roughly equally between the digital Media Solutions growth and the rest of the business. And one of the points to make, which people have asked us already is quite deliberately, Digital Media Solutions is one of that higher-margin solutions and serving a particular need in the growth area. And we have, in some cases, really been promoting it. My sense was ahead of our other products, so it is partly -- it is substituted in some cases. On the operating expenses from the growth there is 17% overall reflects, again, the acquisitions. If you strip those out, the operating expenses grew essentially in line with inflation, and we had a relatively low organic growth in head count. The combination of strong revenue growth and lower operating expense growth contributed to almost a doubling of our adjusted operating profit, which is regards is a very important achievement in this year to get back to GBP 9 million to be really beginning to exceed now that performance is back in 2019, pre-COVID. And as importantly, the operating margin has now gone into double digits, 12% as we had already achieved at the half year. And this is really, again, a hitting a milestone on a journey to being a much more profitable company, which we set out as our medium-term goal. On the other hand, we have had to cope with higher interest rates, we have net debt and therefore, our [FX] costs also went up in the combination by GBP 700,000 to GBP 1.3 million. And that's a combination of higher debt to finance the acquisitions and also of mostly higher interest rates that we're having to cope with. And notwithstanding out our adjusted profit before tax still went up 95%, and we achieved almost a doubling of our adjusted earnings per share from 2.7p to 5.4p. We have in the statutory accounts, a number of highlighted items, in particular, the largest of which is a result way that you have to account for the addition of digital decisions as a profit loss charge because the owners had to stay employed all the way through the end of that period. And that is that GBP 8 million accrual, reflecting the success of that company since we bought it. We've also got amortization charges for purchased assets, which we in core of our law account practice and some one-off items such as acquisition costs and also owners leases the due to having closed down parts of our office in London and also looking to separate our office in New York. Moving on the balance sheet and the broad picture there is growth of the whole balance sheet, thanks to the acquisition of the equity that we raised to finance them. Within the balance sheet, we've got actually goodwill has increased and also net working capital. And that's partly again factor of the acquisitions themselves, bringing in higher -- in total, more debt than liabilities, but also a phasing issue as some of those, particularly in America, the companies we acquired have customers with quite long payment peers that are imposed on us. So that has somewhat increased our debtor day numbers from 61 to 67 days as well as that in towards the end of the year. Digital decisions is now fully -- sorry, the owner digital decisions has now fully provided in the balance sheet. We estimate that will be GBP 15.8 million and we paid some time towards the end of May. And as I said already, Nick will talk further about digital decisions and how it's contributed to our business, but it reflects the great success of that business. We also have some deferred consideration now the balance sheet for MMi, which will be payable in 2025, and we pay a small amount, a final part of the deferred consideration paid at [indiscernible] we paid in January. Our net debt is as a result of all that gone up by maybe just over GBP 4 million to GBP 9.1 million, that comprises GBP 12.4 million in cash and GBP 21.5 million bank loan. We have net cash dotted around our business as a company we have operations in many parts of the world, and they need to keep cash for operations. And how we get to that cash is that we had a cash inflow from operations, including highlighted items of GBP 3.8 million, so that's after paying out a number of the charges I mentioned earlier, is partly the acquisition costs. And that also includes the net working capital outflow of GBP 6 million. And as I mentioned, some of that phasing issue, some of that the make up of the assets and liabilities that we acquired from the -- in the companies we bought. And on the -- so the net cash generated from operating expenses is GBP 1.2 million. We had then something half invested in 3 companies that was funded largely funded by the proceeds of the share issue and the drawdown of bank borrowings to GBP [2.5] million. And that resulted in a net decrease in our net banking cash of GBP 1.3 million. We -- excuse me. A key measure for us, though, having got cash, including the highest items is actually to strip those out as we look at our -- what we call adjusted cash generated from operations. So that's matching our cash flow against the adjusted operating profit, which is in fact, the underlying day-to-day performance of the business. That ratio is still healthy at 67%. So we're converting 2/3 of our operating profit into cash, lower than last year, which was abnormal, where we've had a very substantial working capital inflow for one-off reasons, but it's a little below where we'd probably like to target the 80%, 90% in most years, but we will expect that to improve next year as we get through some of the working capital reverses. And just to give you a background on the net debt situation, we have a facility which we extended or increased and extended to cover the acquisitions last March, which we have maybe until March 2025, potentially for a further 2 years. The total facility is GBP 30 million, we have drawn down at the year at GBP 21.5 million, leaving undrawn facilities at GBP 8.5 million. And we are applying well within the covenants that have implied since that facility was put in place, which are on interest cover, adjusted leverage and adjusted deferred consideration level, and we're treating well within those comps, and we expect to remain so. So one of the things that we've done this year differently from previously is to change our segmental analysis really to reflect better effect the group management structure, and that is to change it from what had previously been a service line approach of media and analytics and tech, and we now are showing how our group operates from a geographical perspective. I think that helps us to explain the performance much better as well. So in terms of those geographies, we have U.K. and Ireland, which includes our international unit specializing, international media and also our market [Indiscernible] teams. Continental Europe, North America and APAC. And in Continental Europe, we now include MMi. And that's sorry, I think media part in the business it was [indiscernible] Sweden. And in North America includes MMi business we bought in America and Canada. Continental Europe -- sorry, the fastest growing or I was going to say North America, more than doubled, including the acquisition. We also had very strong organic growth of 73%, really reflecting the plans you always had in place, and that's been delivered to improve our sales in that market. So Continental Europe respect to organic growth, 6% or 26%, including the unit part. And the U.K., which is our largest still remains our largest unit, mixed in the sense that domestic business was up 6%, but was offset by a reduction in the international project business, which went down 30%, largely reflecting, as I'll explain further drop in media agency selection activity overall 3% reduction. But it's still -- we're still going to the market leader in the U.K. So it's not the area as much growth from. Finally, APAC still relatively small, but doing very well, grow 18% organic and that's particularly in China and Southeast Asia. If we look at our business and we're going to see in the segmental analysis, now we're pushing profit by geography. We're also providing a secondary analysis continuing to explain our services in a currently five service lines, and those are the largest of which is needed performance. So that's the core business of when we benchmarking same I can explain to clients how [indiscernible] has been performing. And that includes most of the MMi media partners, including that, and that grew by 33%, including those 2 and also includes Digital Media Solutions, which grew by 76%. And media management, as I've just mentioned, saw some more reduction in activity mainly because there are fewer agency [indiscernible] in the marketplace for us to be advising on in 2022. Contract compliance, as Nick has already mentioned, grew very strongly about 25% and marketing effectiveness, which is the business that helps we need to model [cars] to decide how they should allocate their media spend, modeling it against things like their sales potential and delivery static probably because we've deliberately been trying to focus on the improvement on margins and only really doing work and priority to pay the kind of the fees that we believe reflect the value of that activity. Take advisories by small and will be folded next year into media management. Looking at how our profitability changed in the year. As you know, overall, I just mentioned, we doubled our adjusted operating profit and the contributions from the whole world outside of the U.K. and Ireland [indiscernible] can be static. Whereas in Europe, again, we saw operating profit up 63%, reflecting MediaPath acquisition, but also importantly, the margin going up, affecting the fact the MediaPath is a higher-margin business and also that we have increased profitability in a number of European markets, reflecting strong sales in those markets, strong revenue growth in those markets. And in particular, France did very well and that takes a margin income of Europe to 30%, which is what we know the highest in the business. In North America, really important this year was a turnaround, which we were planning to achieve in any case organically but the acquisition line can really boosted that and switches from having been loss-making historically having had problems in North America to a business which is now profitable and which is well placed with -- to achieve further scale benefits and further growth in our operating profit margin. APAC continued to be a good performer is an uptick of 3%, reflecting revenue growth and a shift to [e-retail] to drive again towards higher-value clients. So that's given a picture of our financial performance and going back to Nick to take you through our strategy and more details of how we did in the year.

Integration progress and the contribution of the acquisitions that we made during the course of last year. And as I mentioned, we made two strategic acquisitions. We'll start with the first one on Media Management Inc. in the United States of America. We also made that small tactical acquisition of Forde & Semple in Canada, but we'll focus on the U.S. one. And as Alan mentioned, it's really, really boosted our business there with revenue growth of over 138% but also worth noting a strong organic performance from the business. Now bringing MMi into the organization has almost doubled our client roster with now over 100 clients that gives us, I would say, great stability, great platform from which to build our business further. And importantly, it's helped us penetrate some of the largest advertisers more effectively. So we now work with 19 of the top 25 advertisers and have a really good strong roster of those advertisers spending $100 million or more. We've been able to cross-sell successfully MMi's service offering was highly complementary to Ebiquity's, and they have a product, a highly automated product through proprietary technology called Circle Audit to service the regional television market, which is huge, $40 billion, and it's the only product in the market that addresses that. So that's enabled us to cross-sell existing Ebiquity [plants] into the MMi service offering and cross-sell back the other way. One of the areas we've made success in cross-selling as the digital media solutions with very, very strong revenue growth there. And we're also happy to be able to tell you that we've made good progress capturing the revenue synergies and those which we had targeted during the course of 2022 have been exceeded. That's been primarily, I would say, driven by eliminating third-party data acquisition costs being able to eliminate 1 of 2 contracts and renegotiate. We've also eliminated 1 or 2 duplicate roles, not significant number of redundancies, but 1 or 2 duplicate roles that aren't needed and through better resource utilization have avoided hiring some roles that we might otherwise have had to have done as Ebiquity. So good progress there. And referring back to the cross-selling from clients across our service proposition, and we've made very good progress there with the number of clients buying 2 or more products, up 85% year-on-year. And that broader service offering that I referenced there has enabled us to develop more of a competitive advantage, I would say, really contributing well to new business successes and the expansion of existing client relationships. So we're very happy with the acquisition of MMi and comfortable with the progress that we have made. MediaPath network, Alan referenced headquartered out of Sweden, really a globally distributed business that used to compete directly with Ebiquity. So the service offering was very, very similar to ubiquities that delivered in a very different way, who's delivered through the unique technology platform for GMP365. And that was a strategic rationale for acquiring MediaPath, this high-quality, high-functional data management platform that will allow us to analyze all this clients' advertising data in a much more automated fashion. So Susanne Elias, who founded the business and led MediaPath. She's joined our executive leadership team as the Chief Delivery Officer really to drive the change of the delivery of our service onto that technology platform. Now it's a major program that we feel will take 3 years to roll out. The reason being GMP365 has a high level of functionality. It takes time for people to be trained on it and to learn it. It also we need to recognize means we will be, as I said, delivering our services in a different way from that which clients have been used to, so we need to engage with our clients and explain to them the changes that we're making. And of course, the media agencies are important, stakeholder in our business, and we need to engage with them and explain what we're doing and help them use the platform as well. We have made good progress on boarding major international clients, some of which are listed there. And it's also contributed very significantly to some new business wins. Pleasingly, those new business wins are geographically distributed. So a couple of major plants in the United States, Santorini and Asia Pacific and Carraro 11 markets in Europe in addition to a range of national advertisers. So I think we're making good progress in transitioning our business to GMP365, but it is a long program which we think will take 3 years to complete. We are noticing on certain projects, significant time savings, which, as I said, was really the rationale for bringing this business in and transferring our business on to GMP365. So up to 60% time saving has been identified on some projects. To update you on our progress against strategy. Just a very quick reminder of what we're in business to do. We have brand owners increased returns from the media investments and so improve business performance. And we have four central strategic objectives to achieve, and the first of which is to increase revenue from digital services through the development of productized data solutions. And we wish to develop high-value strategic relationships with more major customers. We're in this fantastic position of having a wonderful roster of blue chip clients. We talked about working with over 70 of the world's top 100 advertisers, and we're currently generating revenue from 75 of those, but there's a lot of growth opportunity with Many of them. So we want to strategically develop those. Big focus on improving operational efficiency, as Alan talked us through the numbers. We've almost doubled the margin. So we're making progress there, but there's more that we can do, and we're heavily focused on that. And then we are, as you've seen, our revenues skewed geographically to the U.K. and Continental Europe. So we have quite a focus on strengthening our business and growing our business in North America and Asia Pacific. The context of the market we operate in is highly dynamic and increases in complexity. I think the starting point is to say that perhaps the advertising market remains more resilient around the world than had been anticipated as macroeconomic challenges started really to be felt probably from about the half year mark onwards. But the global advertising market in totality held up well, albeit some pockets of it were very, very significantly challenged. Geographically, the nice challenging market was China, that was really down to the 0 COVID policy, which you'll all be aware, stayed in place for much longer, which definitely dampened down economic activity and frankly, made it much harder for our people to run the business and generate business whilst there effectively trapped in their apartments during periods of time. We also saw a reduced amount of activity in agency selection work which Alan referenced, explaining the media management service line performance. If we think back chronologically, that segment was hit most hard or very heavily, I should say, during 2020 In COVID years, advertisers had other things to worry about them putting their business up the pitch. That then release pent-up demand in '21. So I would say that was a surge year and '22 probably returned to much more normalized levels of activity. We have seen, I think, the most significant shifts in the digital market for quite some time without that matter coming under pressure for the first time that I can recall. Twitter, obviously, there are people there and resulted in a lot of self-inflicted wounds, but we've seen significant gains from TikTok, Amazon building a $10 billion plus advertising business apple on the route to building a $10 billion plus advertising business as well. So very, very significant changes in the digital market. Now 2 really interesting trends that I wouldn't say they've come out of nowhere, but they really exploded in 2022 was the boom in Commerce media. Retailers have looked to Amazon and understood the value to their businesses by monetizing their digital real estate and the audiences that come on to their website. So there's a very concerted effort to develop advertising businesses in the retail media space. There's quite a lot of commentary around it, suggesting this is the third wave of digital advertising has the potential to be the biggest of them all, we're seeing open web programmatic budgets flow into retail into retail media, and we're seeing search budgets flow into there and trade budgets that historically been going to buy shelf space. So a very exciting space there. The most -- the quickest growing segment, those is advanced television, albeit small commerce media is around about $45 billion market in the U.S. now. Advanced television of about $25 billion, but is growing the quickest. I think there are challenges there for advertising, audience for advertisers rather audience measurement is poor and campaign controls per week. So all of this creates a lot of complexity for advertisers and therefore, demand for victory services that we are able to help advertisers navigate these challenges. At the end of 2020, or rather at our 2020 results in March, we presented a set of operating metrics with the baseline as of the end of 2020, and I'm pleased to show you that we're making very good progress against each of these operating metrics. So in our bid to cross-sell more services and develop higher strategic relationships with clients. We are now selling 2 or more service lines to 97 clients is the end of 2022. And the development of the Digital Media Solutions is progressing well with a number of clients buying those almost doubled year-on-year to 55 now. Now we talk here about the volume of digital advertising and the value of digital advertising analyzed within our media data or now about 1.4 trillion impressions and over $6.5 billion, $6.6 billion of advertising in the media data which we have analyzed. Now that provides us with an incredibly rich and deep data set from which we are able to provide an incredibly robust analysis, the most robust analysis of independent player of digital marketing activities. And I also feel this represents quite an increasingly deep moat now. If another player wanted to take the same approach. They've got a long way to catch up, it will be difficult for them to compete head-on credibly against us when we've got this particular depth of data in this specific area, I think. Now the number of countries served digital solutions or the new portfolio, this was important as the premise was that we would be able to service clients or analyze clients' data wherever they operated in the world. So if we look at those top 100 advertisers of which we're now serving 75, they advertise in a huge number of markets. And whilst 80% of that spend may go in the major economies of the major amortizing markets, 20% of their spend in the long tailored market still represents a large amount of money. So we're demonstrating our ability to service the world's large advertisers wherever they may operate now analyzing data for the mid 91 countries around the world. Now it's probably reaching a saturation point, and there may not be much great benefit in tracking this metric going forward. So that might be a metric that we retire, I don't think there's a great difference between servicing clients and 91 markets versus 105 , for example. The final metric we look at there is the percentage of revenue we derive from digital services. which has now moved up to 32% off a base of 25% when we started reporting these metrics. Now it might seem that moving up three percentage points year-on-year to 32% isn't particularly dramatic. But the context of that is that the two major acquisitions we brought in of MMi and MediaPath, their business models are quite heavily skewed towards the broadcast market as well. So the fact that we're continuing to progress the ratio of revenue delivered from digital services in the context of those 2 acquisitions, I think, is a positive, and we can be satisfied with that. Turning to those digital media solutions now then it is fair to say that has transformed our digital capabilities. I think a couple of years ago, we didn't have a confident digital product in market. But you can see the rate of growth that this is moving out and being taken up by clients. So has delivered 76% organic growth we continue to run that with a very strong profit margin somewhat over 50%. We have 7 of these productised digital solutions in market. Increasingly, we're centering them on what we call the digital governance program, and selling the other solutions more on a modular basis. So rather than selling it on a stand-alone basis, they're increasingly sold as add-ons, if you like, to the digital governance program. One of these new solutions, we call Responsible Media Investment. There's an enormous focus, as you're all aware, on big corporates and social responsibility and their ESG strategies. And we're now able to advise these big advertisers where their media dollars are going in terms of whether they are inadvertently funding bad actors such as websites that promote hate speech or disinformation, conspiracy theories, anti-vax theories and various other dynamics like that. We've now expanded up to 13 markets. It is different in each market because the context of each market is slightly different, but the principle remains the same. We help advertisers identify they are inadvertently funding bad actors. A new element of that is Scope3 data. We have partnered with an organization called Scope3, which launched, I believe, it was in January of 2022. They are the measurement provider for the carbon footprint or carbon emissions of every aspect of the digital supply chain. So they have a CO2 equivalent emissions data point for every impression in the advertising, digital advertising supply chain. And we match our clients' digital activity to Scope3's data to quantify the carbon -- carbon CO2 emissions equivalent for our advertisers digital supply chain. Now I think that's hopefully don't be seen as a valuable service to big corporates as they are increasingly required to report their Scope3 emissions. I referenced earlier the growth -- the speed of growth in the advanced television market in the United States. We have a pilot product in market there and we'll be able to look at our first analysis of that in April of this year. So it would be interesting to see how that goes. In terms of new product development, we are focused on getting a retail media solution in market to capture that particularly large segment. We're seeking to evolve our paid search product through enhanced automation and we're looking to influence marketing. Our national teams in China and Singapore and Italy have develop their own approach to influence the marketing. So we're having a look at that and seeing the relevance, if you like, the validity of rolling that out on a wider geographic basis. So plenty of activity of new product development. If we look to the second element of the strategy, developing high-value strategic clients, I've referenced already what we were 70 to 75 of the wells took 100 advertisers. And we also mustn't forget, we have an extremely strong breadth of national advertisers working with around about a total of 600 clients around the world. 97 of our total clients are buying 2 or more service lines, which is progressed up 28% year-on-year. We remain very competitive with the world's largest brand owners, winning important global agency selection mandates. Now this is important not just for the work that provides but for the downstream work that follows in terms of performance tracking, performance benchmarking, marketing effectiveness opportunities and contract compliance opportunities. And although we were at such a high number of the world's leading advertisers, we're still able to penetrate new logos, new advertisers with some promising new business wins. So I believe we are competitive in the market. And the third focus is of the strategy is creating a more efficient business. Margin has improved significantly. And that's been delivered by a contribution of factors, one of which is a reduction of production costs. I referenced the elimination of third-party data contracts that's contributed to that as has started to do a little bit more work on the GMP365 platform and reduce outsourcing in markets where we don't have our own on-the-ground expertise. So that's been very helpful. The Digital Media Solutions, which is growing strongly, operates at a very high margin. So we have an improving revenue mix there as well. You saw from Alan's geographic segmentation analysis that historically, we were losing them in the United States. So the acquisition of MMi has enabled us to scale the business and gain economies of scale turning to profit. We are capturing these cost synergies. That's on track. And we have operated for a number of years now, media operation center primarily located in Madrid but now developing in Guatemala to better service the United States time zone with some resources in India and Indonesia and through the acquisition of MediaPath, a center in Sofia, Bulgaria as well. So we're able to transfer more repetitive work from the higher cost centers into the media operations center. We're taking that concept and utilizing the GMP365 platform as our service delivery model to effectively globalize the nature of the media operation center. So a focus on utilizing technology to improve efficiencies. The fourth element of the strategic focus is geography. We've referenced the growth in North America. That acquisition of MMi has not only increased the penetration of large U.S. corporates, but it's improved our visibility within the market as well. Asia Pacific is our fastest-growing region organically, up 18%. And despite the challenges of the 0 COVID policy in China, that's a good performance of 11% organic growth. I referenced extremely strong performance in Southeast Asia. Now our Singapore business unit revenue is up 80% that has been driven by a combination of things, regional new business wins headquartered out of Singapore, a lot of Asia Pacific regional clients are headquartered in Singapore. So winning those mandates has boosted the Singapore margin or simple revenue, I should say. But also we're starting now to gain a few more clients from some of the larger growth markets in Southeast Asia, such as Indonesia, the Philippines and Vietnam. Continental European growth has been boosted by MediaPath, but there is also very strong organic growth in a number of our markets with a particular standout performance from France with revenue up 46%, but it's also worth referencing good performances in Spain and Italy. Media performance is our largest service line and contributed very strong revenue growth, largely reflecting the acquisitions and the trust to grow digital services. I've referenced already the contract compliance service line being our largest or fastest organic line. And Alan mentioned tech advisory services being folded into media management. You'll have seen on the segmentation analysis that tech advisory is a small portion of our revenue -- and I don't feel it really makes sense to have that as a stand-alone service line. We will continue to offer those services, and it's important for us to have that capability. Clients do look for us to provide that. But we'll follow that into media management and I think that will give us a little bit more of a streamlined approach. That will be coupled, if you like, with the disposal of a small business unit in Australia, digital balance, which the service office is really to help advertisers optimize the customer journey on their website. So it doesn't really fit and with the rest of the Ebiquity business. So there's a little bit of tidying up of our service proposition and that disposal will be announced shortly or the completion of that. As we sit here now at the start of April, I think we can be comfortable that 2023 has started on track. We're satisfied where we are in terms of the first quarter. And as we look forward, the pipeline visibility is good. Our strategy is on plan, and we continue to progress. We are delivering the synergy benefits to our 3-year targets. We do need to be cognizant of inflationary pressures in the macro environment. In October of last year, we made one-off cost of living relief payments to a range of our lower paid members of staff, there is upward pressure on salaries, and we will see how that progresses through the year, but we do remain confident in delivering our medium-term margin growth. We also feel that the complexity and dynamism of the global media market continues to offer Ebiquity and continuous tough opportunities for Ebiquity. So we feel we are well placed to meet advertiser needs. Now that concludes the presentation. That's the slides that we have. So we'll take any questions now and Alex, perhaps you would take the slide deck down from screen.

Great. That's great, Nick, Alan. Thank you very much indeed for the presentation this morning. And if I may, I will now bring your cameras back up. Nick, do you want me to take on the slide?

Yes, I think so. And we'll read questions but -- some are posted already. So I'll read out and moderate the questions. I'll take some of myself, and I'll ask Alan to take some as well. So the first one given more than a $1.4 trillion digital media impressions available, does Ebiquity offer or envisage offering any AI enhanced services to the customer base to enhance margin and differentiate the offering to further. Is this possible? That's a very, very good question. It is something we have been considering for a little while now the application of either AI or machine learning [warranty] both, I would say we're still at the very early stages of figuring that out. But yes, that is very much our view that we would like to find ways of enhancing AI and/or machine learning to, as you say, enhance the service offering and improve our business. so that's something that's very early stage though, and I could commit to when we might be able to bring something to market in that respect. If Ebiquity claim, we are a world leader in media investment analysis amongst our 500 media specialists, how many chartered financial analysts do we employ? I'm going to have to pass that question to Alan.

I think that question -- or the answer is none, but I think that question is probably a slight misunderstanding of what we mean by investment analysis. We are not investment analysts in the sense of a financial house would be or would need to have CFAs. We are our specialist in media investment analysis, you then have to analyze and understand what is actually happening in terms of purchasing of media. So we don't -- you wouldn't need to have any space.

Thanks, Alan. Historically, Ebiquity has purchased companies have made deferred payments to sellers remaining with the business. Our record, particularly in the U.S.A. has been bad with some sellers walking away when the payments have been paid and the business profitability is plunging. What are we doing to prevent this happening again. That's a very good question. I can't reference historical acquisitions. I joined the company 2.5 years ago, so I'm not familiar with the details of those. But clearly, I can talk to the steps we've taken with the acquisitions we have made in the last couple of years. Let's start with digital decisions where the deferred consideration will be paid out during the course of the next few months. I think the first point to note there is a considerable portion of the deferred consideration is paid in Ebiquity shares. So it remains in the interests of the parts of that business to ensure the ongoing strength of the organization. But I'd also point to the fact that the free partners, the largest of which was Ruben Schreurs, he's the Chief Product Officer of our organization and part of the Ebiquity Leadership Team. He has a central role in the company. And I think he recognizes the value that he brings to the organization and that we regarded. One of the other partners, Lars Noordewier has taken on a newly created role as of the start of this year, he becomes our Chief Data and Technology Officer, and he joins the leadership team as well. And the third partner, [Charles] Peter Hanford, has taken another senior and central role in the group as our Group Director of growth and revenue. So I think those guys are in a reasonably good place there. They're notably didn't they're happy and they know they've got a central part in the company. If we look to the U.S. the acquisition of MMi. Those businesses or Ebiquity and MMi have been well integrated. We now have merged the management teams operating under one structure, the principle of that business, Thomas Bridge is deferred consideration is [41x] the combined operating profit of the group. In 2024. So he'll be with us or he has interest in the business. through to the end of 2024. But as I said, we've now merged and integrated the management teams there. So I feel confident we have stability with that business. Looking at MediaPath, Susanne, as I referenced earlier, earlier, the principal and large shareholder in that business has joined the leadership team as well. She doesn't have any deferred consideration. She received all her consideration upfront, but a significant proportion of that from memory, 20% is consideration is in Ebiquity stock locked in through to the end of 2024 and then with orderly market requirements placed on or after that. But Susanne has joined the executive leadership team. She has a newly created post Chief Delivery Officer. And I've got to say she couldn't be working any harder and more enthusiastically to make that a success. She's really, really committed to the joint vision that we shared through that particular acquisition. So clearly, you can never guarantee what's going to happen, but I think we're in a good place with all of those. And certainly, we feel we have the ability to manage any situation with these regards. Next question, I skimmed up a little bit to you.

I will deal with this one. I mean actual answer is and is Edison make a mistake last year, probably something which it's flipped out. It shouldn't have been there saying that there's going to be a dividend. So yes, no comment that they shouldn't have been said. Going to the principal of dividends. I mean clearly we've been through a period of rebuilding business in 2020 or 2019, '20, and we have also undertaken a number of recent acquisitions. So our current view is it would not be in the business of sales to be paying cash out there dividends, we are investing that money that we're generating in the business. And we think that is what's generating good returns or better returns for our shareholders. But we review and keep every year look at whether or not we should reinstate dividends, but there isn't a current plan at this moment.

Alan, I think the next one is probably for you as well. Just saying that the guys on the call, the investors on the call can't see these questions, so you might need to just read them out.

Sorry, sorry, at which case they are the question before was a question about why Edison had said there was going to be a dividend payment for 2022 and definitely that was -- that was a mistake on that part or joined mistake. And the question is also that dividend policy, which I've answered. This question someone has asked whether they worked backwards to work out with the contribution of digital decisions was to our business in terms of profit in '22 -- '21 and what was it in '22. So the GBP 6.5 million of revenue, which we've declared for -- it's not actually directly digital decision for the Digital Media Solutions business within the group. And we were asked what was the profit on that, and that was in '22 is GBP 3.6 million. And you can write that out backwards by knowing that the 15.8% is basically 6x the average profit for the 2 years, that's what we paid originally for the business. So hopefully, that's answer to that question. The other question is, would all these contributions be under media services, not actually media services it's under media performance, which, as I mentioned earlier, is the largest component and is the core cause and is the part of the business that services which track if like, the performance of agencies. There was then a question about why did the Printed text of the management presentation not appear on our website. Well, it just didn't. It should have been up. I think it appeared on our website momentarily after the presentation analysts, that was the process point. So I'm not quite sure what the point was it some under obligation to at the same time. Next question.

How well have you media content MMi acquisitions before have they exceeded your expectations. Well, hopefully, the presentation has given you a reasonably good flavor of how they performed. We're very happy with the way they've performed. They've certainly performed to expectations. I didn't particularly have in mind a view as to whether they exceed expectations. I think they're spot on with where we wanted them to be and where we expected them to be. Can you expand on your responsible media solution and the opportunity for the company? Yes, so the responsible media solution takes third-party data, I reference one, Scope3 data, but we take data from the Global Disinformation Index. Here in the U.K., we take data from the City of London Police, which publishes list of websites guilty of intellectual property theft. In the U.K. and the U.S., we take data from a Database Reflecting Minority on Media, that's been a big thing, particularly in the U.S. where minority owners of media should we say African-Americans or Hispanic media owners have felt they're not taking a fair share of advertisers budgets, advertisers aren't funding them in the same way as they are other media owners. So we've been able to match those third-party data sources to our clients, digital advertising spend and match impressions to those third-party data sources and identify if they do have any problems in this area, I think just a couple of things worth seeing. We identified that one of our global pharmaceutical companies was inadvertently funding an antitax website. And we also identified for some of our customers, this concern they might not be satisfactory at supporting minority media in the United States could rather be borne out. And we are quantifying very interestingly, the carbon footprint or carbon equivalent CO2 equipment footprint of our advertisers, appliance digital advertising. We are now able to create it and we have created what you could call a CO2 p.m. We are calling it that actually on the sample we helped. So we're able to advise clients where their worst impressions -- sorry, where they were CO2 emissions are and help advise them how to cut that. One of the factors we found, and I think everybody has understood for quite some time that our websites out there that are built purely to attract advertising dollars. They have very limited consumer interest perhaps what we might call clickbaits and look at what these 10 celebrities look like now kind of thing. Where those pages get loaded with an awful lot of ads. Now we say they have very limited consumer value, we've also identified the fact that they are the worst offenders for learning carbon because they load up so many ads. We have identified that around about 15% of our clients advertising spend goes to these major advertising websites. So if we can help them eliminate about 15% of spend, which we would deem as waste completely wasted. Not only can we help redirect that back to media, which they can get a bit of return on their investment, but it also can help them fund quality journalism. And of course, quality journalism, as we know, has suffered from limitation, should we say, on funding. Better journalism attracts more audiences in which is better for advertisers, but also there's a further benefit. And that as these are the worst, these major advertising websites are the worst carbon emitting offends we can help our clients do a lot of positive things. What is the timing of the GBP 15.8 million to date and how much do you expect to be fulfilled in shares?

I'll take several actual financial questions here to take I think actually was the interest rate debt, is it floating was the question. Yes, it is quoting. Our debt is based on what is now called SONIA, the success of LIBOR plus a margin. The margin itself varies slightly depending on where we are against the covenant at the moment, roughly 3% above SONIA, which is rough in total is around 7%. And obviously, SONIA goes down, which people think might happen later this year than our interest rates would go down. The timing of paying the obligation decisions, the obligation is to pay within or to agree formally the amount and to pay within a certain period after our AGM, to some extent in our control that, therefore, will be sometime in May, subject to the vendor's right to challenge any numbers. And the percentage that the vendor has the right to ask us to pay up to a certain amount. I think it's actually EUR 5 million in cash and we can determine the balance. So we will determine that balance in due course once we have in regard to our debt capacity and also having to the price of shares to whether or not it's the extent of dilution that would be implied by seeing more shares. So I can't really give a specific number at this point. I think having said that, I think the analysts will be giving an estimate when they publish their papers this week. During working capital question is, would there be some improvement in working capital expected in '23 through a reduction in debtor days. So answer is yes. Although not as I was alluding to earlier, one of the challenges we have is the businesses we bought, which have both MediaPath and MMi, do a lot of work for very large American companies and actually a problem naming a people like Procter & Gamble are saying that they expect us to operate a 120-day terms and some of the other American companies another part was asked us to be 150 days. So these big American groups and is particularly Americans do try and impose very frankly, onerous in my view, credit wise honest. We try our best to they know to try and get to reduce them, but we have inherited quite a of that. So it's been quite hard to have a big shift although we do expect we will continue to keep collecting and working hard to collect. So I'd expect some small improvements on capital. Clearly, once you establish even if you got loan credit terms that you are effectively obliged to accept from your customers. once you're on a year-on-year basis of the same credit terms if you like for the year to year, include the working capital, which there won't be an outflow. What happened last year was when we were acquiring this business with long credit terms and that is it. So I expect it to -- the short answer is yes, I do expect it to get a bit better in the next year. And then exceptional costs the question was, are we expecting any further exceptional costs in 2023. Now by their nature, exceptional costs are not things you should plan for. But clearly, we do certain things we regard as being appropriate to treat as exceptional highlighted, which I mentioned earlier that the amortization of post intangibles will continue to go through a highest item. And the other thing we just highlighted is our share-based payment, which can fluctuate. We're not expecting really -- or there may be some restructuring costs this year as a result of our pushing hard to integrate the businesses move and automate. No, we're not expecting margin as things stand right now on that.

Could you talk about the retail media product introduction? Well, I can't tell you very much at the moment because it's still very much in the new product development phase. We have an idea. We're working that up. That's not yet in beta testing, so it's quite early days yet. In an ideal world, we would seek to bring that to market probably sometime in the summer. But it is our focus. That's our priority in our NPD at the moment, but there's not much more I can update you on that. As the company grows in scale, would it make sense to split the roles of CFO and COO upon Alan's retirement. Yes, that's absolutely what we are doing. We're at the very advanced stage of recruiting CFO replacement to Alan were pick to be able to announce that imminently. And that individual will just take on the CFO role. The COO responsibilities for Alan will be allocated to other members of the management group. As we move more of our business on to the GMP365 technology platform, the nature of our operations will change a little bit, and there are different members of the group management team responsible for that. So that will indeed happen. It sounds like you might be looking at further acquisitions in the U.S. and Asia Pacific, what might we expect in the coming year. That's a good question. And we do look at M&A opportunities through the lens of those 4 central elements of the strategy. which is identified is accelerating growth in U.S. and Asia Pacific. So if we find appropriate opportunities to seek to acquire, I think we're -- we are minded to try and bring in the right the relevant strategic opportunities, and I would like to identify them that can strengthen our business further in the U.S. and Asia. That's very, very true.

That's Great. Nick and Alan. And I think you have addressed all the questions from investors today. And of course, the company will review all questions submitted today and will publish those responses on the investor company platform. But perhaps before we direct the investors to provide you with their feedback, which as particularly important to you and the company. Nick , please ask for a few closing comments.

Sure. Thank you, Alex, and thank you all of you for watching today. Thank you very much for your questions. I hope that's been illuminating and it has given you as much information as you would like at this time and good background, a good update on the company and the progress we're making against our strategy. So thank you very much for listening, and thank you for your support.

Nick and Alan, Thank you once again for updating our investors today. [Operator Instructions] On behalf of the management team of Ebiquity PLC, we would like to thank you for attending today's presentation. That concludes today's meeting. Good morning to you all.

Thank you.