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Currency issues mask Ebiquity growth story

The global demand for data analytics insight outstrips a short-term hit to profits
January 28, 2015

Currency moves hurt marketing analytics group Ebiquity (EBQ) in the six months to 31 Oct. Strip these out, however, and sales rose 12 per cent, thanks both to acquisitions and to like-for-like growth of 7 per cent. That's a noticeable improvement on last year's organic growth rate of 2 per cent.

132p

Ebiquity helps companies understand and improve their marketing strategies. Customers tend to be repeat buyers of its marketing analytics services - a sector the company expects to be worth more than $100bn in sales by 2018.

Early evidence of the potential could be seen in the company's key 'media value measurement' division, which accounts for more than half of group sales. Sales were up 16 per cent at constant currencies, and 11 per cent excluding the effect of acquisitions. The small but lucrative 'marketing performance optimisation' unit also grew strongly, with constant-currency sales up nearly two-thirds. Management's confidence was underlined by the promise of a maiden dividend in the full-year results.

The reported results, however, were hit not just by forex markets but also by big costs linked to acquisitions, refinancing and the award of share options. These reduced group operating profits by almost three-quarters, from £4.1m to £1.1m.

Numis expects underlying pre-tax profits of £11.4m for the full year, giving EPS of 10p (2013-14: £10.2m and 10.1p).

EBIQUITY (EBQ)
ORD PRICE:132pMARKET VALUE:£ 95m
TOUCH:130-134p12-MONTH HIGH:135pLOW: 106p
DIVIDEND YIELD:naPE RATIO:54
NET ASSET VALUE:60.3p*NET DEBT:69%

Half-year to 31 OctTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201332.71.71.3nil
201435.00.6-0.3nil
% change+7-66-120-

Ex-div: na

Payment: na

*Includes intangible assets of £69.4m, or 97p a share