Last close As at 06/08/2026
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Market capitalisation
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Research: TMT
Ebiquity’s pre-close update indicates that trading has been in line with management and market estimates and we are making no changes to our numbers at this point. Post year-end news flow has been constructive (the Digital Decisions acquisition and the buy-in of the Italian minority). A potentially bigger opportunity comes from the news that Accenture is planning to withdraw from media measurement. Ebiquity’s share price has been trading near 10-year lows, putting the valuation at a marked discount to the smaller marcomms companies on an EV/EBITDA and on a P/E basis.
Ebiquity |
Accentuating the opportunities |
Pre-close update |
Media |
21 February 2020 |
Share price performance
Business description
Next events
Analysts
Ebiquity is a research client of Edison Investment Research Limited |
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Ebiquity’s pre-close update indicates that trading has been in line with management and market estimates and we are making no changes to our numbers at this point. Post year-end news flow has been constructive (the Digital Decisions acquisition and the buy-in of the Italian minority). A potentially bigger opportunity comes from the news that Accenture is planning to withdraw from media measurement. Ebiquity’s share price has been trading near 10-year lows, putting the valuation at a marked discount to the smaller marcomms companies on an EV/EBITDA and on a P/E basis.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/17 |
64.2 |
7.9 |
6.2 |
0.71 |
5.5 |
2.1 |
12/18 |
69.4 |
5.2 |
3.5 |
0.71 |
9.7 |
2.1 |
12/19e |
71.0 |
5.3 |
4.0 |
0.85 |
8.6 |
2.5 |
12/20e |
72.3 |
6.5 |
5.0 |
0.95 |
6.8 |
2.8 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Looking to growth
The second half of FY19 continued in the same vein as the first, with a good top line performance from Advanced Analytics, AdTech and Contract Compliance and a more difficult trading backdrop in the Media practice. Questions have been asked for some time in the industry regarding the ability of Accenture to be both pitching for marketing contracts and simultaneously auditing their efficacy. Accenture has now acknowledged this dilemma by announcing the intended closure of its media auditing practice. This will increase the potential addressable market for Ebiquity for both regional and global consultancy accounts and accentuates the advantage of its independence. There was no further news with this announcement on group management, with Alan Newman continuing in role as interim CEO, and we have made no adjustments to our financial forecasts.
Back on the financial front foot
Last year’s eventual disposal of AdIntel transformed Ebiquity’s balance sheet and has enabled the group to refocus its activities on those with the greater potential for sustainable, profitable growth. The £5.8m year-end net debt disclosed in the trading update is better than the position that we had modelled of £6.9m. As we expect free cash flow to increase again next year, against a forecast lower capex requirement, the balance sheet should strengthen again, allowing the group to take advantage of other potential expansionary opportunities.
Valuation: Still well below marcomms peers
Despite the uptick on the back of this trading update, the share price remains well below a peer set of smaller quoted marcomms companies, albeit that the business models vary considerably. These stocks are currently trading on an FY20 P/E of 12.9x and EV/EBITDA of 8.8x. We would expect this differential to start to close as the group builds a record of delivering revenues and profits at least in line with expectations.
Exhibit 1: Financial summary
£000s |
2016 |
2017 |
2018 |
2019e |
2020e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
|||||||
Revenue |
|
|
83,569 |
64,228 |
69,368 |
71,000 |
72,250 |
EBITDA |
|
|
14,574 |
10,840 |
7,761 |
7,519 |
8,304 |
Operating Profit (before amort. and except.) |
|
|
12,959 |
8,992 |
6,342 |
6,100 |
7,000 |
Amortisation of acquired intangibles |
(1,865) |
(1,231) |
(1,240) |
(1,300) |
(1,300) |
||
Exceptionals |
(2,777) |
(3,405) |
(6,233) |
(6,436) |
0 |
||
Share-based payments |
(560) |
(578) |
(223) |
(136) |
(136) |
||
Reported operating profit |
7,757 |
3,778 |
(1,354) |
(1,772) |
5,564 |
||
Net Interest |
(1,132) |
(1,044) |
(1,151) |
(764) |
(513) |
||
Joint ventures & associates (post tax) |
0 |
0 |
0 |
0 |
0 |
||
Exceptionals |
0 |
0 |
0 |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
11,827 |
7,948 |
5,191 |
5,336 |
6,487 |
Profit Before Tax (reported) |
|
|
6,625 |
2,734 |
(2,504) |
(2,536) |
5,051 |
Reported tax |
(2,230) |
(1,753) |
(1,985) |
(1,441) |
(1,687) |
||
Profit After Tax (norm) |
9,257 |
5,531 |
3,413 |
3,896 |
4,800 |
||
Profit After Tax (reported) |
4,395 |
981 |
(4,488) |
(3,976) |
3,364 |
||
Minority interests |
(245) |
(384) |
(472) |
(600) |
(625) |
||
Discontinued operations |
0 |
1,467 |
(845) |
0 |
0 |
||
Net income (normalised) |
9,012 |
4,951 |
4,057 |
3,296 |
4,176 |
||
Net income (reported) |
4,150 |
2,064 |
(5,334) |
(4,576) |
2,739 |
||
Average Number of Shares Outstanding (m) |
77.2 |
77.9 |
78.6 |
78.8 |
79.5 |
||
EPS - normalised continuing (p) |
|
|
11.3 |
6.4 |
3.7 |
4.2 |
5.3 |
EPS - normalised (p) |
|
|
11.3 |
6.2 |
3.5 |
4.0 |
5.0 |
EPS - basic reported (p) |
|
|
5.4 |
2.7 |
(7.4) |
(5.8) |
3.4 |
Dividend per share (p) |
0.65 |
0.71 |
0.71 |
0.85 |
0.95 |
||
EBITDA Margin (%) |
17.4 |
16.9 |
11.2 |
10.6 |
11.5 |
||
Normalised Operating Margin |
15.5 |
14.0 |
9.1 |
8.6 |
9.7 |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
75,855 |
75,771 |
45,400 |
49,037 |
46,434 |
Intangible Assets |
72,079 |
72,440 |
43,251 |
35,811 |
34,757 |
||
Tangible Assets |
2,438 |
1,829 |
1,170 |
12,249 |
10,700 |
||
Investments & other |
1,338 |
1,502 |
979 |
977 |
977 |
||
Current Assets |
|
|
35,078 |
37,241 |
65,935 |
35,683 |
39,100 |
Stocks |
0 |
0 |
0 |
0 |
0 |
||
Debtors |
19,291 |
32,509 |
29,408 |
30,100 |
30,630 |
||
Cash & cash equivalents |
6,662 |
4,732 |
8,793 |
5,583 |
8,471 |
||
Other |
9,125 |
0 |
27,734 |
0 |
0 |
||
Current Liabilities |
|
|
(25,912) |
(24,549) |
(27,539) |
(28,102) |
(28,244) |
Creditors |
(17,809) |
(20,066) |
(18,150) |
(18,713) |
(18,855) |
||
Tax and social security |
(1,850) |
(1,598) |
(1,681) |
(1,681) |
(1,681) |
||
Short term borrowings |
(4,476) |
(1,572) |
(2,314) |
(2,314) |
(2,314) |
||
Other |
(1,777) |
(1,313) |
(5,394) |
(5,394) |
(5,394) |
||
Long Term Liabilities |
|
|
(32,728) |
(35,481) |
(36,282) |
(17,746) |
(17,746) |
Long term borrowings |
(30,210) |
(32,000) |
(33,965) |
(16,465) |
(16,465) |
||
Other long term liabilities |
(2,518) |
(3,481) |
(2,317) |
(1,281) |
(1,281) |
||
Net Assets |
|
|
52,293 |
52,982 |
47,514 |
38,871 |
39,544 |
Minority interests |
761 |
1,040 |
992 |
1,135 |
1,135 |
||
Shareholders' equity |
|
|
51,532 |
51,942 |
46,522 |
37,736 |
38,409 |
CASH FLOW |
|||||||
Op Cash Flow before WC and tax |
14,574 |
10,840 |
7,761 |
7,519 |
8,304 |
||
Working capital |
(2,835) |
(2,002) |
(367) |
(129) |
(388) |
||
Exceptional & other |
(957) |
(890) |
(6,233) |
(104) |
0 |
||
Tax |
(166) |
(2,207) |
(1,952) |
(1,441) |
(1,687) |
||
Operating Cash Flow |
|
|
10,616 |
5,741 |
(791) |
5,846 |
6,230 |
Capex |
(2,351) |
(2,231) |
(1,784) |
(3,600) |
(1,800) |
||
Acquisitions/disposals |
(4,431) |
(3,082) |
(858) |
19,959 |
0 |
||
Net interest |
(1,074) |
(921) |
(1,068) |
(764) |
(513) |
||
Equity financing |
26 |
160 |
252 |
60 |
0 |
||
Dividends |
(838) |
(495) |
(791) |
(879) |
(1,029) |
||
Other |
(1,017) |
(46) |
0 |
0 |
0 |
||
Net Cash Flow |
931 |
(874) |
(5,040) |
20,622 |
2,888 |
||
Opening net debt/(cash) |
|
|
28,661 |
28,024 |
28,840 |
27,486 |
6,864 |
FX |
(633) |
58 |
(91) |
0 |
0 |
||
Other non-cash movements |
339 |
6,485 |
0 |
0 |
|||
Closing net debt/(cash) |
|
|
28,024 |
28,840 |
27,486 |
6,864 |
3,976 |
Source: Company accounts, Edison Investment Research
|
|
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