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Currency in GBP
Last close As at 25/03/2023
GBP0.52
▲ −0.50 (−0.95%)
Market capitalisation
GBP61m
Research: TMT
Ebiquity’s FY21 results showed good growth in revenue, up 13%, and a strong recovery in operating margin to 7.5% (operating loss in FY20). The figures were accompanied by two acquisitions, Media Management (MMi) in the US and MediaPath, a Sweden-based global media consultancy. Ebiquity is paying initial consideration of £6.1m for MMi and £15.5m for MediaPath, funded from cash and proceeds of an intended £15.0m placing at 53p. Management anticipates the acquisitions will be earnings enhancing in FY22, with group prospects boosted by the scaling up in the US and the wider use across the group of MediaPath’s proprietary technology platform. Our forecasts are under review.
Ebiquity |
FY21 results, acquisitions and placing |
Results, acquisitions and placing |
Media |
1 April 2022 |
Share price performance
Business description
Analyst
Ebiquity is a research client of Edison Investment Research Limited |
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Ebiquity’s FY21 results showed good growth in revenue, up 13%, and a strong recovery in operating margin to 7.5% (operating loss in FY20). The figures were accompanied by two acquisitions, Media Management (MMi) in the US and MediaPath, a Sweden-based global media consultancy. Ebiquity is paying initial consideration of £6.1m for MMi and £15.5m for MediaPath, funded from cash and proceeds of an intended £15.0m placing at 53p. Management anticipates the acquisitions will be earnings enhancing in FY22, with group prospects boosted by the scaling up in the US and the wider use across the group of MediaPath’s proprietary technology platform. Our forecasts are under review.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/19 |
68.1 |
4.7 |
2.9 |
0.0 |
22.8 |
0.0 |
12/20 |
55.9 |
(1.3) |
(1.9) |
0.0 |
N/A |
0.0 |
12/21 |
63.1 |
4.1 |
2.7 |
0.0 |
24.4 |
0.0 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
The recovery was across all geographies, with particularly strong progress in Asia Pacific (+23%) and an acceleration in the US. The group had a notably strong new business performance, both from clients new to the group and additional business won with existing clients. The Media practice grew revenues by 15% and increased operating margins from 15% to 19%, while the (smaller) Analytics & Tech practice moved revenues ahead by 4% and moved firmly back into profit, delivering an operating margin of 14%. The group’s Digital Solutions segment is delivering ahead of plan and had 28 clients at the year-end, up from 10 at the end of FY20.
The two acquisitions should accelerate the delivery of two of management’s key objectives: growing the US revenue base and increasing automation, thereby improving scalability. MMi is being bought at 1.1x FY21 revenue and 8.7x operating profit, while MediaPath’s purchase price is equivalent to 2.5x FY21 revenue and 8.6x operating profit. The total cost is £23.6m, including £2.0m of deal costs and vendor management are staying with the enlarged group and taking part of their consideration in shares (subject to lock-in arrangements). In total, £5.0m of synergy benefits by end FY25 have been identified, and management expects the deals to be earnings enhancing this year.
The associated placing is of 28.3m shares, which is 34% of the existing share capital, at a price of 53p, subject to a general meeting on 19 April.
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Research: Investment Companies
Murray International Trust (MYI) is managed by Bruce Stout, who is supported by Martin Connaghan and Samantha Fitzpatrick; they are part of abrdn’s global equity team. The fund provides a differentiated offering for investors as emerging markets make up close to 50% of the portfolio as the managers favour these regions in terms of their higher growth potential and reasonably attractive valuations. A higher focus on real assets in recent years should stand the trust in good stead in the current inflationary environment. MYI’s board has committed to continuing the trust’s progressive dividend strategy, using revenue reserves when required. The trust has now achieved a consecutive 17-year stretch of higher annual dividends and offers a 4.3% yield.
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