Last close As at 05/08/2026
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Research: TMT
Ebiquity’s pre-close trading update indicates recovery as expected in H220, from both a pick-up in demand from existing clients and a good performance in winning new business. The group therefore returned to profit in the second half, leaving it with a small adjusted operating loss for the full year, slightly below our earlier estimate of a small profit. The performance on net debt was better than our modelling, with the group ending the year with net debt of £7.7m (Edison estimate £8.8m). Ebiquity’s share price has not kept pace with those of the UK-based agencies since our November Outlook report, exaggerating the rating differential.
Ebiquity |
Activity levels recovering |
Trading update |
Media |
15 February 2021 |
Share price performance
Business description
Next events
Analyst
Ebiquity is a research client of Edison Investment Research Limited |
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Ebiquity’s pre-close trading update indicates recovery as expected in H220, from both a pick-up in demand from existing clients and a good performance in winning new business. The group therefore returned to profit in the second half, leaving it with a small adjusted operating loss for the full year, slightly below our earlier estimate of a small profit. The performance on net debt was better than our modelling, with the group ending the year with net debt of £7.7m (Edison estimate £8.8m). Ebiquity’s share price has not kept pace with those of the UK-based agencies since our November Outlook report, exaggerating the rating differential.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/18 |
69.4 |
5.2 |
3.5 |
0.7 |
5.4 |
3.7 |
12/19 |
68.7 |
5.3 |
3.6 |
0.0 |
5.3 |
N/A |
12/20e |
57.0 |
(0.5) |
(0.8) |
0.0 |
N/A |
N/A |
12/21e |
60.0 |
3.1 |
2.6 |
0.5 |
7.3 |
2.6 |
Note: *PBT and EPS (diluted) are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Market set for recovery in FY21
In FY20, the global advertising market was severely affected by the COVID-19 pandemic from Q2 on, but the recovery during H220 was stronger than had initially been expected. Key commentators now expect the global market to have declined between 4% and 9% for the year, with a steeper decline in TV and traditional media advertising spend and growth in digital spend. All the main forecasters expect a good rebound in FY21, with comparators difficult in Q1 before easing in Q2. For FY21, estimates are for global growth in a range of 6–12%, with most assuming that FY19 spending levels will not be recouped before FY22. Again, there are large variations between geographies and by media type.
The main opportunity is in digital
The growth in the digital advertising market has been boosted by the shift in consumer spending online. There is a clear need for credible products to provide accurate and actionable information to brand owners regarding the efficacy of their online advertising spend. Ebiquity's new digital reporting service, Digital Decisions, is particularly aimed at this market. The group already works with over 70 of the world’s largest advertisers, so the news that it is winning new business as well as benefiting from a resurgence in confidence bodes well. Management reports that the group has made an encouraging start to the new financial year.
Valuation: Valuation differential increased
As prospects for recovery in advertising spend have strengthened, share prices of the smaller agency groups have risen notably, with those stocks used in our peer comparison in our November note up by an average of 75% since that date, while Ebiquity’s price has dipped 9%. This has exacerbated the valuation differential. For Ebiquity to be priced at parity on FY21 P/E, EV/EBIT and EV/EBITDA multiples, the share price would need to reach 54p, from the 28p calculated then.
Exhibit 1: Financial summary
£000s |
2018 |
2019 |
2020e |
2021e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
||||||
Revenue |
|
|
69,368 |
68,733 |
57,000 |
60,000 |
EBITDA |
|
|
7,761 |
9,203 |
1,801 |
5,432 |
Operating Profit (before amort. and except.) |
|
|
6,342 |
6,167 |
375 |
4,006 |
Amortisation of acquired intangibles |
(1,240) |
(1,169) |
(1,112) |
(1,112) |
||
Exceptionals |
(6,233) |
(9,044) |
(914) |
0 |
||
Share-based payments |
(223) |
(117) |
1,651 |
(150) |
||
Reported operating profit |
(1,354) |
(4,163) |
(0) |
2,744 |
||
Net Interest |
(1,151) |
(898) |
(875) |
(925) |
||
Joint ventures & associates (post tax) |
0 |
0 |
0 |
0 |
||
Exceptionals |
0 |
0 |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
5,191 |
5,269 |
(500) |
3,081 |
Profit Before Tax (reported) |
|
|
(2,504) |
(5,061) |
(875) |
1,819 |
Reported tax |
(1,985) |
(1,931) |
130 |
(739) |
||
Profit After Tax (norm) |
3,413 |
3,338 |
(370) |
2,341 |
||
Profit After Tax (reported) |
(4,489) |
(6,538) |
(745) |
1,079 |
||
Minority interests |
(489) |
(451) |
(250) |
(250) |
||
Discontinued operations |
(845) |
(1,018) |
0 |
0 |
||
Net income (normalised) |
3,551 |
2,875 |
(619) |
2,093 |
||
Net income (reported) |
(5,334) |
(7,556) |
(995) |
829 |
||
Average Number of Shares Outstanding (m) |
78.6 |
79.5 |
79.0 |
78.5 |
||
EPS - normalised (p) |
|
|
3.7 |
3.6 |
(0.8) |
2.7 |
EPS - normalised continuing diluted (p) |
|
|
3.5 |
3.6 |
(0.8) |
2.6 |
EPS - basic reported (p) |
|
|
(7.4) |
(10.1) |
(1.3) |
1.1 |
Dividend per share (p) |
0.71 |
0.00 |
0.00 |
0.50 |
||
EBITDA Margin (%) |
11.2 |
13.4 |
3.2 |
9.1 |
||
Normalised Operating Margin (%) |
9.1 |
9.0 |
0.7 |
6.7 |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
45,400 |
47,060 |
45,743 |
43,861 |
Intangible Assets |
43,251 |
35,172 |
34,931 |
33,793 |
||
Tangible Assets |
1,170 |
10,902 |
9,458 |
8,714 |
||
Investments & other |
979 |
986 |
1,354 |
1,354 |
||
Current Assets |
|
|
65,935 |
35,822 |
35,023 |
37,010 |
Stocks |
0 |
0 |
0 |
0 |
||
Debtors |
29,408 |
27,586 |
24,205 |
25,479 |
||
Cash & cash equivalents |
8,793 |
8,236 |
10,818 |
11,530 |
||
Other |
27,734 |
0 |
0 |
0 |
||
Current Liabilities |
|
|
(27,539) |
(21,195) |
(19,044) |
(18,984) |
Creditors |
(18,150) |
(14,659) |
(12,862) |
(13,068) |
||
Tax and social security |
(1,681) |
(4,424) |
(3,812) |
(3,812) |
||
Short term borrowings |
(2,314) |
36 |
45 |
45 |
||
Other |
(5,394) |
(2,148) |
(2,415) |
(2,149) |
||
Long Term Liabilities |
|
|
(36,282) |
(23,047) |
(28,562) |
(28,119) |
Long term borrowings |
(33,965) |
(13,868) |
(19,706) |
(19,706) |
||
Other long-term liabilities |
(2,317) |
(9,179) |
(8,856) |
(8,413) |
||
Net Assets |
|
|
47,514 |
38,640 |
33,160 |
33,768 |
Minority interests |
992 |
1,179 |
1,179 |
1,179 |
||
Shareholders' equity |
|
|
46,522 |
37,461 |
31,981 |
32,589 |
CASH FLOW |
||||||
Op Cash Flow before WC and tax |
7,761 |
9,203 |
1,801 |
5,432 |
||
Working capital |
(367) |
(1,302) |
1,710 |
(1,068) |
||
Exceptional & other |
(6,233) |
(2,244) |
(914) |
0 |
||
Tax |
(1,952) |
(1,345) |
(1,870) |
(739) |
||
Operating Cash Flow |
|
|
(791) |
4,312 |
727 |
3,624 |
Capex |
(1,784) |
(3,235) |
(814) |
(1,500) |
||
Acquisitions/disposals |
(858) |
23,862 |
(3,354) |
(486) |
||
Net interest |
(1,068) |
(718) |
(875) |
(925) |
||
Equity financing |
252 |
253 |
612 |
0 |
||
Dividends |
(791) |
(1,256) |
(1,315) |
0 |
||
Other |
0 |
0 |
0 |
0 |
||
Net Cash Flow |
(5,040) |
23,218 |
(5,019) |
713 |
||
Opening net debt/(cash) |
|
|
28,840 |
27,486 |
5,596 |
8,843 |
FX |
(91) |
(204) |
380 |
0 |
||
Other non-cash movements |
6,485 |
(1,124) |
1,392 |
0 |
||
Closing net debt/(cash) |
|
|
27,486 |
5,596 |
8,843 |
8,131 |
Source: Company accounts, Edison Investment Research. Note: Estimates unchanged
|
|
Research: TMT
Claranova generated 17% constant currency organic revenue growth in H121, despite COVID-19 related supply challenges. Demand remains high in PlanetArt, which reported 23% constant currency organic growth in H121. Management expects H121 group EBITDA to nearly double y-o-y and we have upgraded our FY21 profitability forecasts to reflect this.