Marketing and media consultancy Ebiquity (EBQ:AIM) surged 24% to 32.2p as it confirmed full year guidance and revealed a drastic improvement in its balance sheet.
In reality today’s move represented a recovery from a very low base, with negative sentiment towards the company recently driving the share price to its lowest level in more than a decade.
The company said annual performance met its expectations thanks to ‘tight’ cost controls and ‘good’ revenue growth in its advanced analytics, adtech and contract compliance businesses.
Net debt as at 31 December 2019 was £5.8m, compared with £7m at 30 June 2019 and £28m at 31 December 2018. The reduction in borrowings has mainly been driven by its sale of its Advertising Intelligence (AdIntel) division to Nielsen. This transaction completed a little over 12 months ago.
‘We are pleased to have met expectations in the last year in terms of profitability and grown high potential areas of our business,’ said interim chief executive Alan Newman.
Ebiquity has taken advantage of its more comfortable financial position, agreeing to acquire media monitoring service Digital Decisions for €0.7m in January 2020.
Numis analyst Steve Liechti notes, as the company does, that the closure of its closest competitor in the media audit market, with diversified firm Accenture stepping away, could be a ‘new tailwind’ for the business.
Megabuyte comments: ‘While revenues for 2019 are in line with initial expectations, profits were unexpectedly impacted by a need to fulfil contractual support services obligations for Nielson following the sale of AdIntel.
‘Whether connected to this or not, the year also saw the surprise stepping down of CEO Michael Karg. The sale of AdIntel has, however, significantly strengthened the balance sheet, which has allowed for a recent return to M&A with Ebiquity acquiring Netherlands-based digital media monitoring firm Digital Decisions in January and the remainder of its Italian subsidiary earlier this month.’
