Ebiquity

Marketing insights specialist Ebiquity (EBQ) is firing on all cylinders thanks to strong market conditions and the recent £17.9m acquisition of rival Xtreme. The AIM quoted concern specialises in the analysis of business critical data for over 700 clients spanning advertisers through to media owners.

Last year Ebiquity doubled in size in what chief executive Michael Greenless describes as a ‘transformational deal that doubled our size’. The deal also broadened its international footprint with the enlarged business now spanning over 60 countries.

The plan is to brand all its products and services under the Ebiquity brand and split the business into six practices. This will span areas such as advertising intelligence and Return on Investment (ROI) so clients can more carefully monitise their spend. A new digital practice focused on helping advertisers embrace social media is also planned.

In the six months to October sales more than doubled to £20.5m however a raft of integration costs led to a pre-tax loss of £2.27m (2009: £202,000 profit). Annual cost savings of over £1m are expected, largely by a reduction in headcount and the elimination of duplicated costs. Debt has increased to £6.7m (£1.5m) but strong cash generation and a typically stronger second half should help pay this down.

The market is estimated to be worth £500m so there is plenty of scope to expand. Ebiquity has achieved underlying organic growth of a respectable 4% and enjoys good revenue visibility. Research house Edison predicts 2011 pre-tax profits of £4.3m and EPS of 5.4p. The rating looks fairly full but Ebiquity is a quality business with a strong management team. Buy.