Last close As at 05/08/2026
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Market capitalisation
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Research: TMT
Ebiquity’s H118 trading update indicates a good revenue performance from both the Media and Analytics & Tech segments, together ahead 7% y-o-y on a like-for-like basis. The referral to a Phase 2 CMA investigation of the Intel disposal has led to uncertainty and a 9% fall in Intel revenues, with a consequent impact on profits. Our revised forecasts for FY18 reflect this, but the improving performance of the (larger) balance leaves FY19 estimates unchanged. The share price has drifted 15% since the CMA referral. A full rerating may have to wait for a resolution, but the current discount appears overdone.
Ebiquity |
H1 progress in continuing business |
Trading update |
Media |
24 July 2018 |
Share price performance
Business description
Next events
Analysts
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Ebiquity’s H118 trading update indicates a good revenue performance from both the Media and Analytics & Tech segments, together ahead 7% y-o-y on a like-for-like basis. The referral to a Phase 2 CMA investigation of the Intel disposal has led to uncertainty and a 9% fall in Intel revenues, with a consequent impact on profits. Our revised forecasts for FY18 reflect this, but the improving performance of the (larger) balance leaves FY19 estimates unchanged. The share price has drifted 15% since the CMA referral. A full rerating may have to wait for a resolution, but the current discount appears overdone.
Year end |
Revenue (£m) |
EBIT* |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/16 |
83.6 |
13.0 |
11.8 |
11.3 |
0.65 |
5.0 |
1.2 |
12/17 |
87.4 |
12.0 |
11.0 |
9.4 |
0.71 |
6.0 |
1.3 |
12/18e |
91.2 |
10.5 |
9.3 |
8.0 |
0.71 |
7.1 |
1.3 |
12/19e |
96.5 |
12.1 |
11.3 |
9.7 |
0.78 |
5.8 |
1.4 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Adjustments to FY18 forecasts, FY19 unchanged
The Media and Analytics & Tech segments have an encouragingly strong pipeline. This has led to some accelerated investment to take better advantage of opportunities. Profits are consequently more heavily weighted to H2 than had been anticipated. Our full-year forecast for operating profit has been trimmed 7% from £11.3m to £10.5m as the impact of the uncertainty and inertia on Intel work their way through. This is a fixed-cost business and therefore pressure on revenue will have more of an impact on profit. Our FY18 EPS estimate comes down 10% to 8.0p. For the following year, we assume continued flat revenues for Intel should the sale not proceed, while the two continuing segments perform well on the momentum of the strong pipeline. The net impact is that our FY19 estimates are unchanged.
Industry issues supportive
The marketing sector continues to undergo considerable change, driven at least in part by issues of accountability and transparency, with both marketers and agencies finding their business models challenged. Ebiquity’s positioning as a leading independent media and marketing consultancy looks increasingly compelling. The delay in the disposal is frustrating from a management time perspective but also in freeing up capital to invest further in the continuing, faster-growth business.
Valuation: Discount overdone
Having fallen 49% over the last year, the shares are now trading on a sizeable discount to the cohort of smaller marketing services stocks. These are on a current year P/E of 12.2x and EV/EBIT of 10.4x, putting Ebiquity on a discount of over 40%. Even given the delay in Intel disposal and its impact on the business, this seems overly pessimistic.
Exhibit 1: Financial summary
£000s |
2016 |
2017 |
2018e |
2019e |
||
31-December |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
31-Dec |
31-Dec |
31-Dec |
31-Dec |
||
Revenue |
|
|
83,569 |
87,374 |
91,200 |
96,464 |
EBITDA |
|
|
14,574 |
14,035 |
12,743 |
14,458 |
Operating Profit (before amort. and except.) |
|
|
12,959 |
12,026 |
10,500 |
12,058 |
Amortisation of acquired intangibles |
(1,865) |
(1,952) |
(1,950) |
(1,900) |
||
Exceptionals |
(2,777) |
(3,801) |
(1,600) |
0 |
||
Share-based payments |
(560) |
(738) |
(1,000) |
(1,000) |
||
Reported operating profit |
7,757 |
5,535 |
5,950 |
9,158 |
||
Net Interest |
(1,132) |
(1,044) |
(1,200) |
(808) |
||
Joint ventures & associates (post tax) |
0 |
0 |
0 |
0 |
||
Exceptionals |
0 |
0 |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
11,827 |
10,982 |
9,300 |
11,250 |
Profit Before Tax (reported) |
|
|
6,625 |
4,491 |
4,750 |
8,350 |
Reported tax |
(2,230) |
(2,043) |
(2,232) |
(2,700) |
||
Profit After Tax (norm) |
9,257 |
8,085 |
7,068 |
8,550 |
||
Profit After Tax (reported) |
4,395 |
2,448 |
2,518 |
5,650 |
||
Minority interests |
(245) |
(384) |
(585) |
(600) |
||
Discontinued operations |
0 |
0 |
0 |
0 |
||
Net income (normalised) |
9,012 |
7,701 |
6,483 |
7,950 |
||
Net income (reported) |
4,150 |
2,064 |
1,933 |
5,050 |
||
Average Number of Shares Outstanding (m) |
77.2 |
77.9 |
78.1 |
78.9 |
||
EPS - normalised (p) |
|
|
11.7 |
9.7 |
8.3 |
10.1 |
EPS - normalised fully diluted (p) |
|
|
11.3 |
9.4 |
8.0 |
9.7 |
EPS - basic reported (p) |
|
|
5.4 |
2.7 |
2.5 |
6.4 |
Dividend per share (p) |
0.65 |
0.71 |
0.71 |
0.78 |
||
EBITDA Margin (%) |
17.4 |
16.1 |
14.0 |
15.0 |
||
Normalised Operating Margin |
15.5 |
13.8 |
11.5 |
12.5 |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
75,855 |
75,771 |
74,978 |
73,878 |
Intangible Assets |
72,079 |
72,440 |
71,947 |
71,197 |
||
Tangible Assets |
2,438 |
1,829 |
1,529 |
1,179 |
||
Investments & other |
1,338 |
1,502 |
1,502 |
1,502 |
||
Current Assets |
|
|
35,078 |
37,241 |
39,946 |
47,338 |
Stocks |
0 |
0 |
0 |
0 |
||
Debtors |
19,291 |
20,978 |
21,607 |
22,256 |
||
Cash & cash equivalents |
6,662 |
4,732 |
6,808 |
13,552 |
||
Other |
9,125 |
11,531 |
11,531 |
11,531 |
||
Current Liabilities |
|
|
(25,912) |
(24,549) |
(24,771) |
(25,000) |
Creditors |
(17,809) |
(20,066) |
(20,288) |
(20,517) |
||
Tax and social security |
(1,850) |
(1,598) |
(1,598) |
(1,598) |
||
Short term borrowings |
(4,476) |
(1,572) |
(1,572) |
(1,572) |
||
Other |
(1,777) |
(1,313) |
(1,313) |
(1,313) |
||
Long Term Liabilities |
|
|
(32,728) |
(35,481) |
(34,231) |
(34,231) |
Long term borrowings |
(30,210) |
(32,000) |
(30,750) |
(30,750) |
||
Other long term liabilities |
(2,518) |
(3,481) |
(3,481) |
(3,481) |
||
Net Assets |
|
|
52,293 |
52,982 |
55,922 |
61,986 |
Minority interests |
761 |
1,040 |
1,040 |
1,040 |
||
Shareholders' equity |
|
|
53,054 |
54,022 |
56,962 |
63,026 |
CASH FLOW |
||||||
Op Cash Flow before WC and tax |
14,574 |
14,035 |
12,743 |
14,458 |
||
Working capital |
(2,835) |
(2,002) |
(407) |
(420) |
||
Exceptional & other |
(957) |
(4,085) |
(1,600) |
0 |
||
Tax |
(166) |
(2,207) |
(2,232) |
(2,700) |
||
Net operating cash flow |
|
|
10,616 |
5,741 |
8,504 |
11,339 |
Capex |
(2,351) |
(2,231) |
(2,500) |
(2,600) |
||
Acquisitions/disposals |
(4,431) |
(3,082) |
(900) |
(600) |
||
Net interest |
(1,074) |
(921) |
(1,200) |
(808) |
||
Equity financing |
26 |
160 |
0 |
0 |
||
Dividends |
(838) |
(495) |
(578) |
(587) |
||
Other |
(1,017) |
(46) |
0 |
0 |
||
Net Cash Flow |
931 |
(874) |
3,326 |
6,744 |
||
Opening net debt/(cash) |
|
|
28,661 |
28,024 |
28,840 |
25,514 |
FX |
(633) |
58 |
0 |
0 |
||
Other non-cash movements |
339 |
0 |
0 |
|||
Closing net debt/(cash) |
|
|
28,024 |
28,840 |
25,514 |
18,770 |
Source: Company accounts, Edison Investment Research
|
|
Research: Metals & Mining
On 16 July, Wheaton Precious Metals (WPM) announced it had entered into an agreement with Sibanye to acquire 100% of the gold production plus a percentage of the palladium production from the Stillwater and East Boulder mines for an upfront cash consideration of US$500m. On an underlying basis, we expect the transaction to add 4.0c (or c 5.0%) to WPM’s basic EPS per year over the 10 years from FY21 to FY30.