Pick-up in activity  

Ebiquity 27 January 2017 Update

Ebiquity

Pick-up in activity  

Trading update

Media

27 January 2017

Price

102.5p

Market cap

£79m

Net debt 30 June 2016 (£m)

28.1

Shares in issue

77.2m

Free float

99%

Code

EBQ

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

5.7

6.2

(28.1)

Rel (local)

4.3

3.2

(39.9)

52-week high/low

144.0p

88.0p

Business description

Ebiquity is an independent marketing analytics specialist providing a range of business-critical data, analysis and consultancy services to advertisers and media owners on an international basis.

Next events

Full year results

28 March 2017

Analysts

Bridie Barrett

+44 (0)20 3077 5700

Fiona Orford-Williams

+44 (0)20 3077 5739

Dan Ridsdale

+44 (0)20 3077 5729

Katherine Thompson

+44 (0)20 3077 5730

Ebiquity is a research client of Edison Investment Research

Ebiquity’s FY16 trading update points to 9% revenue growth (6% currency) and mid-single digit profit growth in operating and earnings. FY17 has started well with a noticeable pick up in new business activity and improved visibility; we leave our forecasts unchanged. We believe EBQ is in a strong position to execute to the growth acceleration plan presented in September 2016 and consider the 10x FY17 P/E rating unchallenging.

Year

end

Revenue (£m)

EBIT

(£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/14**

69.1

8.0

6.8

6.6

0.0

15.5

0.0

12/15**

76.6

12.4

11.2

10.8

0.4

9.5

0.4

12/16e

84.5

13.8

12.7

11.0

0.5

9.3

0.5

12/17e

92.0

13.3

12.3

10.0

0.6

10.3

0.6

Note: *PBT and EPS (fully diluted) are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **Unaudited pro forma figures, as year end changed to December from April in 2015.

Trading update – broadly in line

FY16 revenues increased by 9% with operating margins in line with last year (16%), converting to mid-single digit growth in operating profit and earnings. With two thirds of revenues denominated in non-sterling currencies, currency accounts for approximately £4.5m of revenue growth (of 6%), although the effect was less pronounced at the operating level. In line with management’s growth acceleration plan, the faster-growing MPO division (16% FY16e revenues) has started its expansion into new markets in Asia Pacific, with a first contract won in H216 in Australia. MVM has had a good year across all markets; however, the contract compliance division has not yet seen the expected pick-up in activity following the ANA’s summer review into media transparency. Within MI, Portfolio revenues outside the US have stabilised, although budget pressures continue to weigh on the US activities as previously indicated at the time of the interim results.

Outlook – pick up in new business activity

Management presented its growth acceleration plan in September 2016 which includes the roll-out of the MPO practice to new geographies, the development of digital services, the launch of a strategic media consultancy and the realignment of the sales function to encourage deeper service penetration into its clients. Although at the operating level FY16 headline results are slightly behind our estimates (we forecast 11% growth), we are encouraged by the announcement that to date, 2017 has seen a noticeable pick up in new business activity giving the company better visibility compared to last year; we leave our FY17 forecasts unchanged

Valuation: Unchallenging versus peers

With a strong brand, global footprint and relationships with 80% of the world’s largest 100 brands, Ebiquity stands to benefit from the increasing demand for accountability in a complex media landscape. Margins are being managed down as the company steps up investment in people and processes. Nevertheless, we consider the rating unchallenging; the 10% revenue CAGR targeted by management is at the top end of its peer group while the c 10x FY17e P/E is at the lower end (6x to 19x for the small cap agencies and market research universe).

Exhibit 1: Financial summary

£000s

2013

2014

2015

2015

2014*

2015*

2016e

2017e

Year

Year

Year

8 months

Year

Year

Year

Year

Period ending

30-Apr

30-Apr

30-Apr

31-Dec

31-Dec

31-Dec

31-Dec

31-Dec

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

64,046

68,452

73,874

43,310

 

69,106

76,584

84,500

91,953

Cost of Sales

(29,359)

(30,008)

(32,383)

(22,514)

N/A

N/A

(36,335)

(38,620)

Gross Profit

34,687

38,444

41,491

20,796

N/A

N/A

48,165

53,333

EBITDA (norm)

 

 

11,734

12,768

13,463

1,151

 

9,572

14,161

15,700

15,283

Operating Profit (before GW and except.)

 

10,441

11,339

11,729

(3)

 

7,962

12,411

13,800

13,333

Intangible Amortisation

(2,308)

(1,873)

(2,030)

(1,327)

(1,997)

(2,000)

(2,200)

(2,300)

Exceptionals (inc share-based charges)

(628)

(4,854)

(3,883)

(5,329)

(5,818)

(6,768)

(3244)

(1,000)

Other (inc share of profit of associates)

26

19

12

13

10

18

10

10

Operating Profit

7,531

4,631

5,828

(6,646)

157

3,661

10,044

9,859

Net Interest

(975)

(1,191)

(1,171)

(800)

(1,164)

(1,199)

(1,100)

(1,000)

Profit Before Tax (norm)

 

 

9,492

10,167

10,570

(790)

 

6,808

11,230

12,710

12,343

Profit Before Tax (FRS 3)

 

 

6,556

3,440

4,657

(7,446)

 

(1,007)

2,462

7,266

9,043

Tax

(1,393)

5

(538)

1,332

N/A

N/A

(2,600)

(3,000)

Profit After Tax (norm)

6,879

8,082

8,877

(214)

N/A

N/A

9,215

8,764

Profit After Tax (FRS 3)

5,163

3,445

4,119

(6,114)

N/A

N/A

4,266

6,043

Minorities

(119)

(421)

(496)

(107)

N/A

N/A

(450)

(525)

Net Income (norm)

6,760

7,661

8,346

(336)

N/A

N/A

8,764

9,930

Net Income (FRS 3)

5,044

3,024

3,623

(6,221)

N/A

N/A

3,816

5,518

Average Number of Shares Outstanding and equivalents (m)

73

74

76

77.0

N/A

N/A

77

80

EPS - normalised (p)

 

 

9.3

10.3

11.0

(0.4)

 

N/A

N/A

11.4

10.3

EPS - normalised and fully diluted (p)

 

9.0

10.1

10.7

(0.4)

 

6.6

10.8

11.0

10.0

EPS - FRS 3 (p)

 

 

7.0

4.1

4.8

(8.1)

 

N/A

N/A

4.9

6.9

Dividend per share (p)

0.0

0.0

0.4

0.4

0.0

0.4

0.5

0.6

Gross Margin (%)

54.2

56.2

56.2

48.0

N/A

N/A

56.4

57.0

EBITDA Margin (%)

18.3

18.7

18.2

2.7

13.9

18.5

18.5

18.6

Operating Margin (before GW and except.) (%)

16.3

16.6

15.9

0.0

11.5

16.2

16.3

14.5

BALANCE SHEET

Fixed Assets

 

 

64,852

74,173

77,908

73,594

 

N/A

73,594

75,994

76,744

Intangible Assets

60,506

69,547

73,274

68,354

N/A

68,354

70,654

70,954

Tangible Assets

3,061

3,162

3,194

2,928

N/A

2,928

3,028

3,478

Other

1,285

1,464

1,440

2,312

N/A

2,312

2,712

3,262

Current Assets

 

 

29,504

33,386

39,174

33,073

 

N/A

33,073

36,882

44,099

Trade Debtors

13,890

15,683

17,390

16,283

N/A

16,283

19,678

22,673

Other

8,505

11,182

12,489

8,035

N/A

8,035

8,045

8,055

Cash

7,109

6,521

9,295

8,755

N/A

8,755

9,158

13,371

Current Liabilities

 

 

(26,551)

(29,184)

(29,161)

(27,473)

 

N/A

(27,473)

(28,724)

(30,044)

Trade Creditors

(4,611)

(4,989)

(3,866)

(3,538)

N/A

(3,538)

(21,523)

(22,843)

Other

(19,761)

(21,252)

(21,473)

(19,134)

N/A

(19,134)

(2,400)

(2,400)

Short term borrowings

(2,179)

(2,943)

(3,822)

(4,801)

N/A

(4,801)

(4,801)

(4,801)

Long Term Liabilities

 

 

(25,689)

(33,858)

(39,263)

(36,785)

 

N/A

(36,785)

(36,785)

(36,785)

Long term borrowings

(20,238)

(26,235)

(31,880)

(32,615)

N/A

(32,615)

(32,615)

(32,615)

Other long term liabilities

(5,451)

(7,623)

(7,383)

(4,170)

N/A

(4,170)

(4,170)

(4,170)

Net Assets

 

 

42,116

44,517

48,658

42,409

 

N/A

42,409

47,366

54,014

CASH FLOW

Operating Cash Flow

 

 

7,526

6,799

7,927

5,028

 

N/A

11,515

10,912

13,607

Net Interest

(701)

(841)

(1,623)

(588)

N/A

(1,009)

(999)

(1,100.0)

Tax

(1,582)

(1,159)

(1,618)

(892)

N/A

(1,062)

(2,600)

(3,000)

Capex

(1,244)

(2,552)

(3,128)

(1,328)

N/A

(1,986)

(2,200)

(3,000)

Acquisitions/disposals

(7,264)

(9,308)

(5,462)

(4,107)

N/A

(4,530)

(4,300)

(2,000)

Financing

259

(94)

127

261

N/A

344

(309)

(395)

Dividends

0

0

0

(291)

N/A

(291)

(300)

(375)

Net Cash Flow

(3,006)

(7,155)

(3,777)

(1,917)

N/A

2,981

403

4,212

Opening net debt/(cash)

 

 

11,869

15,308

22,657

26,407

 

N/A

31,563

28,661

28,258

HP finance leases initiated

0

0

0

0

N/A

0

0

0

Other

(433)

(194)

27

(337)

N/A

(79)

0

0

Closing net debt/(cash)

 

 

15,308

22,657

26,407

28,661

 

31,563

28,661

28,258

24,045

Source: Ebiquity data, Edison Investment Research. Note: *Pro forma data as supplied by Ebiquity. Year end changed to December from April in 2015.

.

Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Frankfurt and Sydney. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Ebiquity and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Frankfurt and Sydney. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Ebiquity and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Share this with friends and colleagues

You may be interested in