TIDMEBQ
RNS Number : 6553E
Ebiquity PLC
13 February 2018
Ebiquity plc
GBP26m disposal of the Advertising Intelligence division
(>90% of Market Intelligence segment)
&
Pre-close trading statement
Ebiquity plc ("Ebiquity" or "the Company") today announces its
pre-close trading statement for the year ended 31 December 2017
("the year") and the proposed disposal of its Advertising
Intelligence division ("the AdIntel business"). The Transaction
will accelerate Ebiquity's pivot towards becoming the world's
leading tech-enabled marketing and media analytics consultancy and
assist the Company in achieving its Growth Acceleration Plan
("GAP") communicated to shareholders in September 2016.
Disposal
Ebiquity is pleased to announce it has entered into an agreement
for the disposal of its AdIntel business to Nielsen Media Research
Limited, a subsidiary of Nielsen Holdings plc, a global measurement
and data analytics company ("the Disposal"). The consideration is
GBP26 million, payable in cash on completion, and subject to
adjustments for working capital.
The benefits to Ebiquity are anticipated to be the
following:
-- Increased focus on the group's faster growing, higher margin,
tech-enabled consultancy practices: Media Value Measurement ("MVM")
and Marketing Performance Optimization ("MPO")
-- Better alignment to structural marketplace growth
opportunities in the areas of data and technology, transparency in
the marketing ecosystem, and optimising customer experiences
-- Progression towards an operationally aligned and streamlined
business portfolio focused on tech-enabled consultancy practices,
as opposed to historically operating a hybrid business model
consisting of two tech-enabled consultancy practices - MVM and MPO
- and a separate product segment based on data capture and storage
and which operates in a distinct marketplace - Market Intelligence
("MI")
-- Material reduction in net debt / EBITDA from 2.1x to 1.0x as
at 31 December 2017 on a pro forma basis
-- Flexibility to investment in significant growth areas aligned
with building tech-enabled propositions in our core consulting
offerings
The disposal of the AdIntel business (representing greater than
90% of the MI segment) will result in a more focused and less
complex business with the potential to achieve a faster rate of
growth and better returns in a market where budgets are shifting
towards analytics and technology. The growth of MVM and MPO over
the last few years is a consequence of this trend and is
anticipated to continue.
Increasingly, this technology-enabled consultancy model requires
incremental investment in proprietary technology and data analytics
capabilities across our remaining business. The transaction will
enable Ebiquity to expand the use of predictive and algorithmic
models by our data scientists, further developing our capabilities
in machine learning and the processing of large data sets, and
expanding our training in advanced analytics skills. Digital
advertising also requires that we continuously scale our ability,
efficiently and securely, to digest, cleanse and analyse
increasingly complex digital performance data.
The assets being disposed comprise the contracts, employees, IP,
fixed assets and working capital (excluding cash) used solely in
the AdIntel business in the UK, Australia, Germany and the US,
which have a total book value of GBP27.5 million. For the year
ended 31 December 2017, the AdIntel business generated unaudited
revenues of GBP21.9 million and operating profit of GBP4.4 million,
before the allocation of central overheads. Net proceeds of the
Disposal after tax and transaction costs will be used to reduce net
debt. We anticipate making central cost savings within the
remaining group of a minimum of GBP0.7 million.
The Disposal is subject to certain conditions, including
approval from the Competition and Markets Authority ("CMA").
Completion is anticipated to take place during the second quarter
of 2018, assuming the CMA provides clearance following its
high-level Phase 1 examination. In the event the CMA should instead
refer the transaction for a more detailed Phase II investigation,
then Completion is unlikely to take place before the fourth quarter
of 2018.
Quayle Munro Limited acted as Ebiquity's corporate finance
advisor in respect to this transaction.
A shareholder presentation with further details will be
available on Ebiquity's investor website.
Michael Karg, CEO Ebiquity plc, commented: "This is a
transformational moment for Ebiquity. Our Growth Acceleration Plan,
which focusses on seizing market opportunities in our faster
growing MVM and MPO segments, will be enhanced through our ability
to invest in these services to seize and establish a leadership
position. Nielsen is the logical home for our colleagues in MI and
we wish them every success for the future."
Pre-close trading statement
For the 12 months to 31 December Ebiquity continued to grow
revenues by 4.9% to GBP87.6m, and 1.5% on a constant currency
basis. Excluding the Market Intelligence ("MI") segment, revenue
grew by 7.0%, and by 3.3% on a constant currency basis. As
anticipated revenue grew faster in H2 for the remaining Group,
consisting of the Marketing Performance Optimization ("MPO") and
Media Value Measurement ("MVM") practices, with constant currency
revenue growth in the second half of the year of 7.3%.
As previously flagged, the revenue performance from its US MVM
and MPO businesses were below management expectations, and has
impacted the Group's revenue growth year on year. New leadership is
now in place for these business units in order to facilitate a
sustained turnaround with the appointment of a US-based global
Chief Operating Officer. In H2 2017 we were engaged by several
significant new clients, including McDonald's and Citibank.
Excluding US revenues, our MVM and MPO practices grew by 10.5% and
10.9% respectively on a constant currency basis.
Operating margins, excluding the weaker than expected US
performance, are anticipated to be in line with those set out in
the Growth Acceleration Plan ("GAP"). Consequently, including the
impact of the US performance, overall operating margins are
anticipated to decline 2 percentage points from 2016.
Performance Highlights:
-- MVM revenue grew mid-single digits on a constant currency
basis and in line with our expectations. This reflects an
exceptional performance from our contract compliance business
(FirmDecisions), significant wins against key competitors and being
selected to run some of this year's largest media agency
pitches.
-- Revenue from the Marketing Effectiveness business, part of
the MPO practice, accelerated in H2, with strong growth from the UK
business offsetting weaker revenue performance from continental
Europe.
-- Performance from the US-based Multi-Channel Analytics ("MCA")
practice, part of the MPO segment, was below expectations due to
organisational changes at some clients in the first half of the
year. Revenue increased in H2 over H1 as we broadened our client
base, but were below 2016 for the year as a whole.
-- Within the MI segment, as expected, revenue from the
project-based Reputation business declined and Ad Intel revenues
remained stable over 2017.
Progress against the Growth Acceleration Plan:
-- Continued roll-out of the MPO practice internationally,
including the purchase of Digital Balance in Australia, whose
integration remains on-track and who have successfully achieved
year-end growth targets.
-- Expanded international MPO footprint resulting in our first
multi-market win, adding significant divisional revenue in 2018.
Furthermore, leveraging our expertise from the US allowed Ebiquity
to win its first two six-figure contracts with European-based
clients.
-- Increased focus on key clients yielded strong revenue growth from a number of these clients
-- Launched a new technology platform, Connect, which makes data
transactions between agencies and Ebiquity significantly more
efficient and more secure. Connect has now been rolled-out in all
major markets.
The Company will release its preliminary results for the year
ended 31 December 2017 on 21 March 2018.
13 February 2018
Enquiries:
Ebiquity plc
Michael Karg (CEO)
Andrew Noble (CFO) 020 7650 9600
Instinctif Partners
Matthew Smallwood
Guy Scarborough 020 7457 2020
Numis Securities Limited
Nick Westlake (NOMAD)
Toby Adcock (Corporate
Broker) 020 7260 1000
This information is provided by RNS
The company news service from the London Stock Exchange
END
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