Ebiquity PLC Final Results (6811A)

Share Name	Share Symbol	Market	Type	Share ISIN	Share Description
Ebiquity Plc	LSE:EBQ	London	Ordinary Share	GB0004126057	ORD 25P

	Price Change	% Change	Share Price	Bid Price	Offer Price	High Price	Low Price	Open Price	Shares Traded	Last Trade
	0.00	0.00%	39.00	38.00	40.00	39.00	39.00	39.00	25,128	08:00:00

Industry Sector	Turnover	Profit	EPS - Basic	PE Ratio	Market Cap
Management Consulting Svcs	75.97M	-7.5M	-0.0534	-7.30	54.76M

Ebiquity (LSE:EBQ)
Historical Stock Chart

From Apr 2019 to Apr 2024

TIDMEBQ

RNS Number : 6811A

Ebiquity PLC

28 March 2017

Ebiquity plc

Final results for the year ended 31 December 2016

Ebiquity, a leading independent marketing analytics specialist, announces final results for the year ended 31 December 2016. Ebiquity provides services to 80% of the top 100 global advertisers, with data-driven insights spanning over 90 countries.

Continued revenue, profit and earnings growth

-- Revenue up 9.1% to GBP83.6m (CY2015: GBP76.6m), with like for like constant currency revenue growth of 2.1%

   --      Underlying operating profit up 4.4% to GBP13.0m (CY2015:GBP12.4m) 
   --      Underlying PBT up 5.5% to GBP11.8m (CY2015:GBP11.2m) 
   --      Underlying diluted EPS up 5.0% to 11.3p (CY2015: 10.8p)

-- Underlying net cash inflow from operations GBP11.3m (CY2015: GBP13.7m) with cash conversion from underlying profit of 88%

   --      Net debt reduced to GBP28.1m (31 December 2015: GBP28.9m) 
   --      Proposed dividend of 0.65p per share continuing progressive dividend policy

Growing revenue contribution from Media Value Measurement and Marketing Performance Optimization

-- Media Value Measurement ("MVM") achieved total revenue growth of 12.3% over CY2015, an increase of 3.6% on a like-for-like, constant currency basis

-- Marketing Performance Optimization ("MPO") continued to deliver strong revenue growth with total revenue growth of 31.2% over CY2015 and like for like constant currency revenue growth of 21.6%

   --      Together MVM and MPO accounted for 72% of Group revenues (CY2015: 68%)

-- Market Intelligence ("MI") revenues were down by 5.2% on a total basis and by 8.5% on a like for like constant currency basis, with the decrease largely due to an expected substantial decline in revenues from our project based research business

Delivered on a number of milestones set out in Growth Acceleration Plan

   --      Formally launched Strategic Media Consultancy service offering in Q4 2016

-- Commenced rollout of marketing effectiveness practice into Germany, France and Asia Pacific, with first local projects in Continental Europe in Q1 2017, Asia Pacific in H2 2016

-- Digital product development on track with rollout of Portfolio Digital commencing in Asia Pacific and launch of digital attribution service expected in Q2 2017

-- Talent review programme undertaken in Q1 2017, kicking off first phase of the Growth Support Programme

Michael Karg, CEO, commented:

"We have seen continued strong performance from our consultancy businesses MVM and MPO, which are at the core of the changing nature of the media landscape particularly around effectiveness and efficiency of marketing investments. We have already made good progress with our growth acceleration plan, which will replicate our service offering across key territories, further strengthening our ability to service global clients.

Investments into expanding our digital services across our three practice areas coupled with events in the media marketplace - such as the debate around the performance of digital advertising - create significant medium-term growth opportunities. The implementation of our plans, the opportunities arising from the changing nature of the industry, make us excited for the future."

27 March 2017

FY2016 is the year ended 31 December 2016 (audited)

FY2015 is the financial period from 1 May 2015 to 31 December 2015 (audited)

CY2015 is the calendar year from 1 January 2015 to 31 December 2015 (unaudited)

(1) Like for like means prior year results are adjusted to include the results of recent acquisitions as if they had been owned for the same period in the prior year.

(2) Constant currency is calculated by taking current year denominated results restated at last year's foreign exchange rates.

Enquiries:

 
 Ebiquity 
  Michael Karg, CEO 
  Andrew Noble, CFO              020 7650 9600 
 Instinctif Partners 
  Matthew Smallwood 
  Guy Scarborough                020 7457 2020 
 Numis Securities 
  Nick Westlake, Oliver Hardy 
  (NOMAD) 
  Toby Adcock (Corporate 
  Broker)                        020 7260 1000

Chairman's statement

For Ebiquity, 2016 was a year of both progress and change.

Financially, reported revenue grew 9.1% to GBP83.6m, underlying operating profit increased 4.4% to GBP13.0m, and underlying fully diluted earnings per share were up 5% to 11.3p. I am also pleased to report we have continued to increase the dividend in line with our progressive dividend policy, with a proposed payment of 0.65p per share.

Change has been a constant during the year, both in the marketing industry and at Ebiquity. Technology has helped make the broad marketing ecosystem ever-more complex, inevitably more confusing, and often less transparent than one might expect. This is particularly true when we reflect that digital data should - if anything - enable much more detailed and meaningful analysis.

It is a striking fact that today only about 40% of digital programmatic advertising investment reaches the consumer, with value being eroded by the multiple links between advertisers and publishers, fraud, lack of viewability and non-human traffic. I don't envy any business leader who has to tell his board and shareholders that they're investing in anything that suffers up to 60% wastage. The trouble is, that's what many CMOs should be saying.

Digital complexity and the increasing calls for transparency mean that our clients - the world's biggest advertisers - need more help than ever from an independent firm with the necessary knowledge and expertise to navigate their way through this.

Within Ebiquity itself there was significant change in 2016. Michael Karg took the helm as Group CEO early in the year and undertook a complete review of the business. There were great foundations in place, with businesses around the world, tremendous talent and expertise, and a client list that includes more than three quarters of the world's biggest advertisers. Michael has now set about moving these individual businesses into a single, aligned organization that can address the global requirements of our international clients as well as the local needs of domestic ones.

Meeting these challenges will be achieved both by continuing to bring in and develop talent, but also by increasing the underpinning processes and technology that enables us to handle the demands of analysing and drawing actionable intelligence from the avalanche of data that digital marketing creates.

We are, I believe, a leader in the ongoing debate about media transparency, and that position has only been enhanced throughout 2016. Our independence is paramount, and we must remain at the heart of the marketing ecosystem, enabling marketers to seize the opportunities offered by digital.

2016 was just the beginning of the process of evolution in the industry, but as it gathers momentum the opportunities for Ebiquity can only grow. There will also be more change to come, as - for example - in 2018 new regulations over the use of personal data come into force in Europe. These will add another level of complexity and will reinforce the need for the professional independent expert - Ebiquity.

As always, we couldn't achieve any of this without the people around the world who bring their individual expertise and efforts to the business and create the capability that the whole group can deploy for the benefit of its clients.

Thank you to you all.

Michael Higgins

Chairman

27 March 2017

Strategic Report

2016 in review

2016 represented another good year of revenue and profit growth for Ebiquity. Operating profit growth over the year was on track with the growth plan we outlined in Autumn 2016.

Revenues grew 9.1% to GBP83.6m over pro-forma revenue for the 12 months ended 31 December (CY2015). Underlying operating profit increased to GBP13.0m. This represents an increase of 4.4% over CY2015, reflecting a slight drop in operating margin to 15.5%, at the higher end of our direct peer group.

Underlying profit before tax increased by 5.3% to GBP11.8m. Reported operating profit grew to GBP7.7m, up from GBP3.6m in CY2015, and reported profit before tax increased to GBP6.5m, up from GBP2.5m in CY2015.

With approximately 68% of revenue denominated in currencies other than sterling, revenue was significantly boosted by the depreciation of Sterling during the year. In total, foreign exchange benefitted revenue by 5.8%, with acquisitions further increasing revenue by 1.2%. This resulted in like-for-like, constant currency revenue growth of 2.1%.

Our Media Value Measurement (MVM) practice reported revenue increase of 12.3%, an increase of 3.6% on a like-for-like, constant currency basis. MVM now accounts for 56% of group revenue. Revenue grew fastest from our international media practice and business units in Continental Europe, and we continued to see strong demand for both our digital and pitch management services.

Overall MVM revenue growth was held back by a decline in revenue from our contract compliance business, FirmDecisions, due to clients reflecting on the findings of the U.S. Association of National Advertisers' (ANA) media transparency report. We continue to view the ongoing industry debate about media transparency as a long-term growth driver for the MVM practice. Underlying Operating margins dropped from those achieved in CY2015 principally as a result in the decline in revenue from our contract compliance business feeding through to profitability.

Revenue from our Marketing Performance Optimization (MPO) practice continued to grow strongly, with reported revenue growth of 31.2% and like-for-like, constant currency revenue growth of 21.6%. Revenue grew from both our US based Multi-Channel Analytics practice (13.9%) and our European based Marketing Effectiveness practice (24.8%). Our underlying operating margin rose slightly year on year.

Together, our faster growing practices - MVM and MPO - now represent 72% of Group revenues.

Revenue from our Market Intelligence (MI) practice declined by 5.2% on a reported basis, and by 8.5% on a like-like, constant currency basis. As indicated in our half-year report, revenue from our project-based research business declined sharply following the loss of a specific contract at the beginning of the year. The decline in revenue was largely anticipated, and the cost base of the business was managed appropriately.

The market intelligence sector is highly competitive, mature, and experiencing low growth rates across the world. Revenue from Portfolio, our Advertising Intelligence (AI) subscription service, grew by 1.7% on a reported basis. Eliminating the impact of currency, revenue from AI declined 1.7% owing to the loss of three contracts in our U.S. business unit at the beginning of the year. Renewal rates were 88% on a value basis, and we have already seen a positive reaction from clients to the upgrade to our new Portfolio media platform rolled out from September 2016 onwards. Due to good cost control and a decline in revenue contribution from our project-based research business, underlying operating margins rose year on year.

Building for the future

I became Group Chief Executive in January 2016, and inherited a company with great foundations on which to build. A company with a global presence, a client base including 80% of the world's top 100 advertisers, and a strong brand with global leadership in MVM. With advertisers under increasing pressure to validate and justify marketing expenditure, I also found a powerful and thriving MPO practice: strong talent, unique and proprietary methodologies, and growing revenue.

Since I took the helm of Ebiquity, we've put in place several important building blocks we need to ensure that the business is fit for the next stage of our development and growth. These are significant steps on the road to transforming Ebiquity from what was effectively a collective of independently-run, local entities into a global, professional services business. What's more, this is more straightforward to achieve currently, with most of our acquisitions now beyond earn-out and becoming fully integrated the into the Ebiquity business. Founder entrepreneurs of these companies are therefore less concerned about individual profitability and more focused on our collective journey of change.

1. To achieve this transformation, we have developed and articulated a distinctive statement of corporate purpose, grounded in our clients' needs: "we are creating clarity for our clients". This statement of purpose is designed to change the way we think and talk about why we do what we do, and how we do it. "Creating clarity" is not a one-off statement. Rather, it represents the start of a continuous process that takes courage and conviction, guided by our teams' expertise. It requires us always to deliver analysis and recommendations that are straightforward, transparent, and precise.

2. To achieve this transformation, we are now taking a dedicated, client-first approach. We have identified and appointed a global Chief Client Officer - Andrew Challier - who is responsible for several of our most important client relationships. We are embedding our client-first approach across the business through clear client partner job profiles, training, and development by region, by market, and by expertise.

We want to work closer still with those clients who partner with us because they see the greatest value in our services. By providing them with the right level of service, we can help them to become even more effective and efficient advertisers. We know that deepening and expanding the relationships with our key clients will be a critical lever of growth.

3. To achieve this transformation, we've introduced a matrix organizational structure, creating global practice responsibilities. This is designed to drive better and clearer accountability to those responsible for markets and those running products and services across geographies. We have done this to ensure that we deliver our products and services at consistently-high standards. And we have done this to ensure that these products and services reflect and accommodate local-market differences.

4. And to achieve this transformation, we've started to develop more sophisticated approaches to talent management. During 2016, we developed new global processes for reviewing our talent base to drive development and retention programs, and to support succession planning. These are rolling out into the business in 2017. We are committed to also continue to improve our ability to recruit the specialist talent that our clients' needs demand, and to further enhance employee engagement.

An aspiration for the future

Ebiquity as the partner of choice for the media, data, and adtech communities

The purpose of our business is creating clarity for our clients on the return on investment that their media investments yield for them in all channels. By understanding simply and clearly the effectiveness and efficiency of their media choices, we help them to optimize performance. This performance is mediated through an increasingly diverse range of partner businesses. The most significant of these partners is usually the advertiser's media agency of record, although it now also includes an array of specialist digital, technology, and data businesses across the adtech and martech ecosystem.

Because we evaluate the performance of the output of our clients' agencies, it is our long-term ambition and aspiration to work in partnership with them too. It is our role to test - independently - and demonstrate the real value that they are delivering for our clients, as well as to recommend strategies for improving media performance still further. This is why we would like - over the coming years - to become the partner of choice of our clients' partner agencies, too.

This is true across all our services, from pitch management to marketing performance optimization; from media value measurement to market intelligence; from strategic media consultancy to contract compliance reviews. We recognize that some of our services - including agency pitch management and contract compliance reviews - are a cost of doing business for agencies. Nevertheless, they are important aspects of good governance, and we try to deliver these services in a straightforward and professional manner for all parties.

Our desire to become the partner of choice for the media industry is also why - for instance - we are developing our new Connect data management platform to allow seamless and automated uploads of media data from media agencies. This will reduce the load on agencies, improving the accuracy of data, and save time for agencies and advertisers.

If an advertiser decides to change its agency of record, for instance, and we're appointed to manage the pitch process, it's important that we should have good relationships with and deep knowledge of the capabilities of all potential media agency partners. We also need good relationships with the leadership of agencies, data partners, and adtech providers such as ad servers and DSPs. We are building these relationships in both local markets and at a global level.

Part of our commitment to being the partner of choice to the global advertiser community extends to our close working relationship with leading industry trade bodies. This includes the World Federation of Advertisers (WFA), the Incorporated Society of British Advertisers (ISBA), the U.S. Association of National Advertisers (ANA), and representative bodies in other key global markets including Australia, France, Germany, and Spain.

Our Growth Acceleration Plan

Across our one global Ebiquity, we are now actively embedding our matrix structure, our people strategy, and our narrative purpose as fundamentals required to grow the business. In the next stage of our development, we are actively transforming Ebiquity into a technology-enabled consultancy.

Our clients demand and rightly expect quick turnaround of analysis of large volumes of data. Over the coming years, we can only meet these expectations and scale our business by making our products and services technology-enabled throughout.

We have identified that, compared with similar services firms, we have been running "too lean" - delivering 16% underlying operating profit margin against 10-11% for comparable firms. By investing in technology to make our business technology-enabled, we should nevertheless be able to deliver above average margin of 12-13%.

Enhanced technology is critical to our future success, right across our three, core practice areas.

In Marketing Performance Optimization, we face a rapidly-growing need to analyse enterprise scale sets of consumer and media, behavioural and transactional data. Our ability to deliver here will be underpinned by technology.

In Media Value Management, we need to ingest and integrate large sets of media data from multiple different sources - from ad servers to Demand Side Platforms - to help our clients optimize campaigns in near real time. Our ability to deliver here will be underpinned by technology.

And in Market Intelligence, we bring together the world's display advertising - from print, broadcast, and online services; creative executions, media placement, and spend data - into fully searchable, properly tagged databases. Our ability to deliver here will be underpinned by technology.

Our five-year objectives

Our 5Ps strategy provides the framework for our five-year objectives:

-- People: Attract, retain and develop high calibre talent from the media, data science and consultancy sectors.

-- Product: Launch proprietary products and services that harness our data and insights and enable us to be trusted advisors for our clients.

-- Process: Shape the organization and its processes to support broader and deeper client relationships.

-- Profile: Raise our brand profile and broaden the perception of our expertise to support our growth plans.

-- Performance: Delivery of our Growth Acceleration Plan resulting in sustainable double-digit revenue growth at sustainable operating margins.

As we start to meet these objectives, we will increasingly be known as one of the leading, independent, technology-enabled marketing and media analytics consultancies, right around the world. Board-level executives will trust us more deeply. Our services and methodologies will help to set the standards for the industry. And advertisers, industry bodies, analysts, and the media will increasingly seek out our thought leadership.

Summary of results

 
                                            FY2016        CY2015       FY2015 
                                           Audited     Unaudited      Audited 
                                           For the       For the      For the 
                                         12 months     12 months     8 months 
                                             ended         ended        ended 
                                            31 Dec        31 Dec       31 Dec 
                                              2016          2015         2015 
 Revenue                                   GBP'000       GBP'000      GBP'000 
------------------------------------  ------------  ------------  ----------- 
 Media Value Measurement                    47,161        41,998       20,409 
 Marketing Performance Optimization         13,048         9,936        6,899 
 Market Intelligence                        23,360        24,650       16,002 
------------------------------------  ------------  ------------  ----------- 
 Total revenue                              83,569        76,584       43,310 
 
 Underlying operating profit/(loss) 
 Media Value Measurement                    12,124        12,057         (81) 
 Marketing Performance Optimization          3,739         2,802        1,874 
 Market Intelligence                         3,902         3,668        2,070 
 Central costs                             (6,806)       (6,116)      (3,866) 
------------------------------------  ------------  ------------  ----------- 
 Total underlying operating 
  profit/(loss)                             12,959        12,411          (3) 
 Highlighted items                         (5,202)       (8,768)      (6,656) 
 Reported operating profit/(loss)            7,757         3,643      (6,659) 
 Net finance costs                         (1,132)       (1,199)        (800) 
 Share of profit of associates                   -            18           13 
 Reported profit/(loss) before 
  tax                                        6,625         2,462      (7,446) 
 Underlying profit/(loss) 
  before tax                                11,827        11,230        (790) 
 Underlying diluted earnings 
  per share                                  11.3p         10.8p       (0.4)p 
------------------------------------  ------------  ------------  -----------

Revenues grew to GBP83.6m which represents 9.1% total revenue growth over GBP76.6m recorded over the 12 months ended 31 December 2015 (CY2015). Ebiquity received a very positive revenue benefit from the depreciation of Sterling against the US$ and Euro. With 24% of revenues denominated in Euros, and 19% in US Dollars the depreciation of Sterling against these currencies by 11% and 11% respectively led to a revenue boost of GBP4.5m or 5.8%.

Revenue growth was further benefitted by the impact of the acquisition of Fairbrother Marsh Company Limited in March 2016 and the full year impact of our acquisition of Media Value SL in March 2015. The impact on revenue was to increase revenue growth by 1.2% over CY2015. Discounting the impact of currency movements and the impact of current and prior year acquisitions, like for like constant currency revenue growth was 2.1% over CY2015.

Taken together our Media Value Measurement and Marketing Performance Optimization practices contributed 72% of revenue (CY2015: 68%). Together the two practices achieved like for like constant currency revenue growth of 7%. Further detail of performance by practice is outlined on pages 29 and 30.

Underlying operating profit increased by 4.4% from GBP12.4m in CY2015 to GBP13.0m and reflected a slight decrease in underlying operating profit margin from 16.2% from 15.6%. Reported operating profit increased from GBP3.6m in CY2015 to GBP7.8m in 2016. The prior year included a non-cash charge in respect of the impairment of goodwill, purchased intangible asset and related capitalised development costs of the Reputation business.

Net finance costs were GBP1.1m in the year to December 2016 (CY2015: GBP1.2m), the reduction reflects lower gross debt in 2016 compared with 2015.

Underlying profit before tax was 5.3% higher at GBP11.8m in the year to December 2016 (CY2015: GBP11.2m). Reported profit before tax increased by GBP4.1m to GBP6.6m in the year to December 2016 (CY2015: GBP2.5m), due to the non-cash goodwill impairment booked in the prior period.

Earnings per share

Underlying diluted earnings per share was 11.3p in the year to December 2016 (CY2015: 10.8p), being an increase of 5% comparable with the increase in underlying profit before tax.

Highlighted items

Highlighted items total GBP5.2m in the year to December 2016, (CY2015: GBP8.8m). Highlighted items comprised the following:

   --      GBP1.9m related to purchased intangible asset amortisation (CY2015: GBP2.0m); 
   --      GBP0.6m share based payment expenses (CY2015: GBP0.8m);

-- GBP2.0m of acquisition related costs, (CY2015: credit GBP0.1m) including GBP0.8m in relation to the increase of the Stratigent earn-out and deferred consideration adjustments of GBP0.6m resulting from foreign exchange differences net of the impact of discounting to present value; and

-- GBP0.7m of integration costs, (CY2015: GBP1.6m) including the cost of management restructure of GBP0.5m and a further GBP0.2m relating to fees in relation to the appointment of the new Group CEO.

Performance by practice is outlined below:

MVM - Media Value Measurement (56% of total revenue)

 
                                         FY2016      CY2015    FY2015 
                                        Audited   Unaudited   Audited 
                                        GBP'000     GBP'000   GBP'000 
------------------------------------  ---------  ----------  -------- 
 Revenue                                 47,161      41,998    20,409 
 Underlying operating profit/(loss)      12,124      12,057      (81) 
 Underlying operating profit/(loss) 
  margin %                                25.7%       28.7%    (0.4)% 
------------------------------------  ---------  ----------  --------

Our Media Value Measurement (MVM) practice reported revenue increase up 12.3%, an increase of 3.6% on a like-for-like, constant currency basis. MVM now accounts for 56% of group revenue. The recent acquisitions of Fairbrother Marsh Company in Ireland and the full year impact of the 2015 acquisition of Media Value SL in Spain increased revenue by 2.2%. Revenue growth was held back by a decline in revenue from our contract compliance business which itself represents less than 10% of total MVM revenue. Excluding contract compliance, the MVM practice achieved 6.6% like for like constant currency revenue growth.

Operating margin reduced to 25.7% from 28.7% in FY2015 primarily as a result of the revenue decline in the contract compliance business which directly impacted operating profit, investment in additional resources in our Media business in China to enable sustainable revenue growth in that rapidly evolving market and the shift in revenue to lower margin international benchmarking engagements.

MPO - Marketing Performance Optimization (16% of total revenue)

 
                                         FY2016      CY2015    FY2015 
                                        Audited   Unaudited   Audited 
                                        GBP'000     GBP'000   GBP'000 
------------------------------------  ---------  ----------  -------- 
 Revenue                                 13,037       9,936     6,899 
 Underlying operating profit              3,739       2,802     1,874 
 Underlying operating profit margin 
  %                                       28.7%       28.2%     27.2% 
------------------------------------  ---------  ----------  --------

Revenue from our Marketing Performance Optimization (MPO) practice continued to grow strongly, with reported revenue growth of 31.2% and like-for-like, constant currency revenue growth of 21.6%. MPO now accounts for 16% of total revenue (CY2015: 13%), which we expect to continue to grow as a proportion of our total business. Operating margins were marginally ahead of CY2015 at 28.7%, with resources growing largely in line with revenue growth. As we expand our MPO practice into new markets and resource for sustainable growth, we anticipate a reduction from current operating margin levels.

MI - Market Intelligence (28% of total revenue)

 
                                         FY2016      CY2015    FY2015 
                                        Audited   Unaudited   Audited 
                                        GBP'000     GBP'000   GBP'000 
------------------------------------  ---------  ----------  -------- 
 Revenue                                 23,360      24,650    16,002 
 Underlying operating profit              3,902       3,668     2,070 
 Underlying operating profit margin 
  %                                       16.7%       14.9%     12.9% 
------------------------------------  ---------  ----------  --------

Revenue from Market Intelligence (MI) declined by 5.2% on a reported basis, and by 8.5% on a like-like, constant currency basis. As indicated in our half-year report and as largely anticipated, revenue from our project-based research business declined sharply during the year and now represents less than 10% of MI revenues. Revenue from Portfolio, our Advertising Intelligence (AI) subscription service, and related insight services grew by 1.7% on a reported basis. Eliminating the impact of currency, revenue from AI declined 1.7% owing to the loss of three contracts in our U.S. business unit at the beginning of the year.

Despite the decline in revenue, operating margins improved by 1.8% to 16.7% in 2016 because of both cost control within the AI business and the change in business mix, with costs being managed down with revenue in the lower margin project-based research business.

Central costs

 
                    FY2016      CY2015    FY2015 
                   Audited   Unaudited   Audited 
                   GBP'000     GBP'000   GBP'000 
---------------  ---------  ----------  -------- 
 Central costs     (6,806)     (6,116)   (3,866) 
---------------  ---------  ----------  --------

Central costs include central salaries (Board, Finance, IT, Marketing and HR), legal and advisory costs and property costs. Central costs have increased by GBP0.7m or in 2016 due to increased staff costs, travel costs and IT costs. The increase in travel costs, especially in the second half of the year, reflected the need to bring management teams together more often as our matrix organisation was implemented.

Taxation

The total tax charge for the year ended December 2016 is GBP2.2m (FY2015 credit: GBP1.3m) representing a current tax charge of GBP1.8m (FY2015: credit of GBP0.1m) and a deferred tax charge of GBP0.4m (FY2015: GBP1.2m).

On a calendar year comparative basis, the effective rate of tax on underlying profit before tax for the year ended 31 December 2016 is 21.7% (CY2015: 22.2%). The effective rate of tax is raised by under provision from previous periods. Excluding the release of under provisions the underlying effective tax rate is 21.0%.

Dividend

It is the Board's intention to pay a dividend of 0.65 pence per share for the 12 months ended 31 December 2016, (FY15: 0.4 pence per share). This would represent an increase in dividend per share on a pro-rata basis and would also represent the continuation of a progressive dividend policy which commenced with our maiden dividend paid in October 2015. The dividend will be recommended as a final dividend at the Company's AGM on 10 May 2017.

Equity

During the 12 months to December 2016, 38,063 shares were issued upon the exercise of employee share options. As a result our share capital increased to 77,199,751 ordinary shares (31 December 2015: 77,161,688).

Acquisitions

On 11 March 2016, the Group acquired the outstanding 50% interest in its Irish media consultancy associate, Fairbrother Marsh Company Limited ('FMC'). The 50% interest in FMC was acquired for an initial cash consideration of EUR150,000 (GBP118,000). EUR643,000 (GBP500,000) in deferred consideration was recognised at acquisition, however the maximum total purchase consideration is up to EUR2,000,000 (GBP1,559,000), payable in cash, depending on the performance of the FMC business during the period ending 31 December 2020.

Cash conversion

 
                                           Year                8 months 
                                          ended   Year ended         to 
                                       December     December   December 
                                           2016         2015       2015 
                                        Audited    Unaudited    Audited 
                                        GBP'000      GBP'000    GBP'000 
------------------------------------  ---------  -----------  --------- 
 Reported cash from operations           10,782       11,515      5,028 
 Underlying cash from operations         11,342       13,673      6,889 
 Underlying operating profit/(loss)      12,959       12,411        (3) 
 Cash conversion                          87.5%       110.2%        n/a 
------------------------------------  ---------  -----------  ---------

Underlying cash from operations represents the cash flows from operations excluding the impact of highlighted items. The underlying net cash inflow from operations was GBP11.3m in the year ended 31 December 2016 (CY2015: GBP13.7m).

After highlighted items are considered, reported net cash inflow from operations for 2016 was GBP10.8m to (CY2015: GBP11.5m).

Cash conversion has improved significantly since the interim results due to the seasonality of cash flows, but is below the very strong cash conversion in CY2015. Improvement in the processes around working capital management remains a key focus for the business in 2017.

Net debt and banking facilities

 
                 31 December   31 December 
                        2016          2015 
                     Audited       Audited 
                     GBP'000       GBP'000 
--------------  ------------  ------------ 
 Net cash              4,600         6,364 
 Bank debt(1)       (32,750)      (35,250) 
 Net debt(1)        (28,150)      (28,886) 
--------------  ------------  ------------

(1) Bank debt in the Statement of Financial Position at 31 December 2016 is shown net of GBP0.1m (December 2015: GBP0.2m,) of loan arrangement fees that have been paid and which are amortised over the life of the facility. The bank debt stated above excludes these costs.

During the period the Group continued to trade within each of its banking facilities and associated covenants. Net debt to EBITDA ratio was 1.94x at the 31 December 2016 (31 December 2015: 2.04).

Statement of financial position and net assets

Net current assets as at 31 December 2016 increased by GBP3.6m to GBP9.2m (2015: GBP5.6m) and total net assets increased by GBP9.7m to GBP52.1m (2015: GBP42.4m) as a result of the profit for the year of GBP4.7m and foreign exchange gains on the translation of overseas subsidiaries. Trade and other receivables increased by GBP4.1m to GBP28.4m reflecting an increase in trade receivables of GBP3.0m and accrued income of GBP1.8m.

Goodwill as at 31 December 2016 was GBP58.0m (2015: GBP54.8m) with the increase due to foreign exchange gains on retranslation of overseas subsidiaries of GBP2.8m and the acquisition of FMC in Ireland adding GBP0.4m to goodwill.

Deferred contingent consideration has decreased by GBP2.9m since 31 December 2015 to GBP2.0m, due to the settlement of deferred consideration. Two earnouts relating to our recent acquisitions ended during 2016, and in total GBP5.1m was paid to former shareholders. At 31 December 2016 of the remaining deferred consideration of GBP2.0m, which relates to the recent acquisition of FMC and our media business in China, GBP1.8m is expected to be settled in the next 12 months.

Outlook

Our delivery on the milestones set out in the Growth Acceleration Plan, coupled with events in the media marketplace - such as the debate around the performance of digital advertising - create significant medium-term growth opportunities. The implementation of our plans, the opportunities arising from the changing nature of the industry, make us excited for the future.

Consolidated income statement