System1 Group Regulatory News (SYS1)

13 Sep 2007 07:01

BrainJuicer Group PLC13 September 2007 Press release 13 September 2007 BrainJuicer Group PLC ("BrainJuicer" or "the Company") AIM: BJU Interim Results for the Six Months ended 30 June 2007 Reported under IFRS BrainJuicer Group PLC (AIM: BJU), a leading international online market researchagency, today announces its Interim Results for the six months ended 30 June2007. Highlights• Significant top-line organic growth with revenue up by 57% to £2,901,000 (2006: £1,849,000)• Operating profit increased by 13% to £147,000 (2006: £130,000), after investing heavily in client facing staff• Profit after tax increased by 77% to £113,000 (2006: £64,000)• Strong performance across all business units: UK revenues up 31%, Holland 177% and US 22%• Increased major client base from 10 to 12 of the world's top 50 companies• 84% of revenue from repeat business• Strong uptake of its new product, Predictive Markets, up from 3.6% for the first 6 months of 2006 to 9.5% for the same period in 2007• Appointment of Ken Ford as non-executive Chairman, formerly Deputy Chairman of Teather & Greenwood Commenting on the results, John Kearon, Chief Executive of BrainJuicer GroupPLC, said: "Throughout 2007 we have built on the strong foundations weestablished in 2006, focusing on our clients, our innovation, and ourtechnology; the Board has been delighted with the Company's progress so far thisyear. We are pleased to report continued strong organic growth, an increasedlist of very large satisfied clients, and strong performance across the businessunits. To support BrainJuicer's underlying growth, we are continuing to invest. Ourclient facing team has increased from 21 at the end of 2006, to 27, and oursoftware development programme is on target in terms of both timing and budget.The Company's innovative new products, Predictive Markets and Creative Sixershave been well received in the market, and our new FaceTrace(TM) technique hasrecently been short listed for best methodology paper by the foremost industryevent, ESOMAR. We are pleased with BrainJuicer's progress for the first half of2007, and are excited about the Company's developments for the remainder of theyear." For further information, please contact: BrainJuicer Group PLC Tel: +44 (0)20 7043 1000John Kearon, Chief Executive Officerjohn.kearon@brainjuicer.com James Geddes, Chief Financial Officerjames.geddes@brainjuicer.com Landsbanki Securities (UK) Limited Tel: +44 (0)20 7426 9000Fred Walsh / Simon Brown Media enquiries:Abchurch Communications Tel: +44 (0)20 7398 7700Heather Salmond / Joanne Shearsheather.salmond@abchurch-group.com Chief Executive Officer's Statement Introduction The Board is pleased to report that the Company's progress during the period hascontinued as planned, with strong growth which is entirely organic. Marketconditions are buoyant, and the Company's emphasis on client relationships,product innovation, and technology development continues unabated; and each ofthe global offices has performed well. Financial Performance Revenue for the half-year increased by 57% to £2,901,000 (2006: £1,849,000),with gross margin continuing at levels of over 70%. Operating costs increased from £1,313,000 in the first half of 2006 to£2,021,000 this year as the Company continued to build its team; headcountincreased from 38 at the end of 2006 to 44 at the end of June 2007. Thisincrease is in client facing roles, and positions the business for furthersignificant top-line growth. Operating profit rose from £130,000 in the first half of 2006 to £147,000 thisyear (an increase of 13%), and profit after taxation rose from £64,000 to£113,000 (up 77%). Earnings per share declined from 1.0p in 2006 to 0.9p, as a result of the 201%increase in the weighted average number of the Company's ordinary sharesfollowing the conversion of Unilever's convertible preference shares to ordinaryshares, prior to the Company's listing last December. Fully diluted earningsper share increased from 0.7p in the first half of 2006 to 0.9p. The Company generated £208,000 cash from its operations and invested £148,000 onIT equipment and its software technology platform. It ended the period with acash balance of £1,319,000, up from £1,233,000 at 31 December 2006. The Companyhas no debt. The Company paid an accrued preference dividend owed to Unilever of £106,000 on29 August 2007. This dividend stream stopped accruing on conversion of theconvertible preference shares to ordinary shares prior to the Company's listing.The Company has no plans to pay further dividends this year. Operations The Company's UK and Dutch businesses continue to grow profitably, and the Boardanticipates that the new US business should be close to break-even this year,which will be its second full year of operations. Revenue in the UK grew by31%, in Holland by 177% and in the US by 22%. Each business unit is staffedonly by account management, and served centrally for all technical support,financial and administrative needs. The Board believes that the Company has asimple, proven, model that can be rolled out geographically in an efficient,revenue led, low investment manner, and this will facilitate the strategy tocontinue to expand the Company's geographic footprint. Clients BrainJuicer's clients are some of the largest and most professional researchbuyers in the world, and the Company's account teams are continually striving todeepen their relationships with them. By encouraging participation inexperimental projects, the Company invites key players to join the innovationprocess. BrainJuicer is continuing to recruit high level and experienced marketresearch professionals, and above all else is endeavouring to continually exceedexpectations on each and every project. The focus on these areas continues toprove productive, as the Company increased its major client base from 10 to 12of the world's top 50 companies over the first six months of the year.BrainJuicer's top 20 clients delivered 81% of the Company's total revenue; 55%of these accounts grew substantially, 30% were new during the period and only15% declined. 84% of the total revenue was from repeat business, and 16% fromnew clients, which demonstrates the strength of the Company's existingrelationships, as well as a healthy rate of securing new business. The Company is continuing to increase the size of the projects it isundertaking, and therefore the average profitability per project. The averagerevenue per project increased to £14,442 from £11,786 in the same period lastyear. The Board believes that this is a reflection of BrainJuicer's growingcredibility, as clients utilise the Company's products for higher valueresearch. Innovation The Company continues to place considerable emphasis on innovation, particularlyin developing research techniques which address the difficult early phases ofclients' product development cycle, the 'Fuzzy Front End'. Fuzzy Front Endresearch is where clients currently have few if any global mandate arrangementswith their existing research agencies and where the company has seen clientinterest in adopting BrainJuicer's innovative techniques on a global basis. Atthis early stage in the product development process, clients are trying toidentify the most promising concepts, insights and ideas, and it is at thisphase when BrainJuicer's fast, accurate and highly diagnostic services offerparticularly high value. The Company launched its pioneering technique, Predictive Markets, last year,and this product has grown from 3.6% of revenue in the first six months lastyear, to 9.5% this year. Another new product launched in 2007, Creative Sixers (naturally gifted creativeconsumers identified using the BrainJuicer Creativity test), has seen strongclient uptake with projects completed for 4 multi-national clients. There hasbeen strong demand from clients to replicate the product internationally; thishas led to the Company recruiting panels of Creative Sixers in USA and Germany,to add to the Company's UK panel of 300 Creative Sixers. A significant initiative launched over the last six months has been thedevelopment of a new way of measuring emotional engagement, 'FaceTrace(TM)'. As well as being the key tool in our new advertising screening product, it can also be used across all BrainJuicer products. The Board was delighted when FaceTrace(TM) was recently short-listed for Best Methodology Paper by ESOMAR, the global market research body. Technology The Company is currently building a new version of its proprietary softwareplatform for the delivery of research. This will provide the business withfurther scalability and increased production efficiencies, and will positionBrainJuicer for significant profitable growth over the coming years. The totalcost of the new system will be £300,000, and to date the process is withinbudget and its timescale of one year. Board of Directors The Board had previously announced its intention to split the roles of Chairmanand CEO in order to strengthen its governance and further comply with bestpractice. It is therefore with great delight that the Company welcomes Ken Fordonto the Board as non-executive Chairman, a position which he took up witheffect from 1 September 2007. Ken has 36 years of corporate finance experience,latterly as Deputy Chairman of Teather & Greenwood, and brings a strongunderstanding of shareholder value, strategic planning and corporatetransactions. Outlook Market conditions, and the Company's positioning within the market, continue togive the Board confidence in BrainJuicer's ability to deliver sustainable andprofitable growth. John KearonChief Executive Officer CONDENSED CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2007 30 June 2007 30 June 2006 31 December 2006 Unaudited Unaudited Audited Note £'000 £'000 £'000ASSETSNon-current assetsProperty, plant and equipment 89 71 77Intangible assets 4 119 1 1Deferred tax asset 322 - 213 530 72 291Current assetsInventories 27 1 45Trade and other receivables 1,677 1,092 1,612Cash and cash equivalents 1,319 61 1,233 3,023 1,154 2,890Total assets 3,553 1,226 3,181 EQUITYCapital and reserves attributable to equityholders of the CompanyShare capital 9 126 111 126Share premium account 1,399 - 1,390Merger reserve 477 458 477Foreign currency translation reserve 1 3 (5)Other reserve 336 43 255Retained earnings (145) (150) (277)Total equity 2,194 465 1,966 LIABILITIESCurrent liabilitiesTrade and other payables 1,001 607 944Current income tax liabilities 250 50 163Financial liabilities 108 - 108 1,359 657 1,215Non-current liabilitiesFinancial liabilities - 104 -Total liabilities 1,359 761 1,215Total equity and liabilities 3,553 1,226 3,181 CONDENSED CONSOLIDATED INCOME STATEMENT FOR SIX MONTHS ENDED 30 JUNE 2007 Six months ended Six months ended Year ended 30 June 2007 30 June 2006 31 December 2006 Unaudited Unaudited Audited Note £'000 £'000 £'000 Revenue 2,901 1,849 4,608Cost of sales (733) (406) (1,189) Gross profit 2,168 1,443 3,419Administrative expenses (2,021) (1,313) (3,296) Operating profit 147 130 123Investment income 17 1 3Finance costs - (17) (32) Profit before taxation 164 114 94Income tax expense 6 (51) (50) (157) Profit/(loss) for the financial year 113 64 (63) Attributable to equity holders of the Company 113 64 (63) Earnings/(losses) per share attributableto the equity holders of the CompanyBasic earnings/(losses) per share 7 0.9p 1.0p (0.9)p Diluted earnings/(losses) per share 7 0.9p 0.7p 2.8p All of the activities of the group are classed as continuing. CONDENSED CONSOLIDATED CASH FLOW STATEMENT FOR SIX MONTHS ENDED 30 JUNE 2007 30 June 2007 30 June 2006 31 December 2006 Unaudited Unaudited Audited Note £'000 £'000 £'000 Net cash generated from/(used by) operations 8 208 58 (167)Interest paid - - (1)Net cash generated from/(used by) operating activities 208 58 (168) Cash flows used by investing activitiesPurchases of property, plant and equipment (29) (74) (91)Purchases of intangible assets (119) (1) (1)Interest received 17 1 3Net cash used by investing activities (131) (74) (89) Cash flows generated from financing activitiesProceeds from initial public offering net of share issue - - 1,399expensesProceeds from other issue of ordinary shares 9 13 27Net cash generated from financing activities 9 13 1,426 Net increase/(decrease) in cash and cash equivalents 86 (3) 1,169 Cash and cash equivalents at beginning of period 1,233 64 64 Cash and cash equivalents at end of period 1,319 61 1,233 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 30 JUNE 2007 Foreign currency Share Share premium Merger translation Other Retained capital account reserve reserve reserve earnings Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 1 January 2006 111 - 445 1 26 (214) 369 Exchange differences on consolidation - - - 2 - - 2 Profit for the period - - - - - 64 64 Total income / (expense) recognised for the period - - - 2 - 64 66 Shares issued in subsidiary - - 13 - - - 13 Share-based payment charge - - - - 17 - 17 - - 13 2 17 64 96 At 30 June 2006 111 - 458 3 43 (150) 465 Exchange differences onconsolidation - - - (8) - - (8) Deferred tax credited to equity - - - - 207 - 207Loss for the period - - - - - (127) (127) Total income / (expense) recognised for the period - - - (8) 207 (127) 72 Shares issued prior to Groupreconstruction - - 8 - - - 8Transfer of liability elementof preferred shares to equity - - 11 - - - 11Shares issued on IPO 14 1,486 - - - - 1,500Share issue costs deductedfrom equity - (101) - - - - (101)Share options exercisedsubsequent to Groupreconstruction 1 5 - - - - 6Share-based payment charge - - - - 5 - 5 15 1,390 19 (8) 212 (127) 1,501 At 31 December 2006 126 1,390 477 (5) 255 (277) 1,966 Exchange differences onconsolidation - - - 6 - - 6 Deferred tax credited to equity - - - - 55 - 55Profit for the period - - - - - 113 113 Total income / (expense)recognised for the period - - - 6 55 113 174Shares issued on exercise ofshare options - 9 - - - - 9Exercise of share options - - - - (1) 19 18Share-based payment charge - - - - 27 - 27 - 9 - 6 81 132 228 At 30 June 2007 126 1,399 477 1 336 (145) 2,194 1. General information BrainJuicer Group plc (formerly BrainJuicer Group Limited) ("the Company"), aUnited Kingdom resident, and its subsidiaries (together "the Group") provideon-line market research services. The Company's shares are listed on theAlternative Investment Market of the London Stock Exchange ("AiM"). The addressof the Company's registered office is 13-14 Margaret Street, London, W1W 8RN. The condensed consolidated interim financial information was approved by theboard of directors on 12 September 2007. 2. Basis of preparation The condensed interim financial information for the half year ended 30 June 2007has been prepared in accordance with IAS 34 'Interim financial reporting'. Theinterim condensed financial report should be read in conjunction with the annualfinancial statements for the year ended 31 December 2006. The condensed consolidated financial information has been prepared under thehistorical cost convention. 3. Principal accounting policies The principal accounting policies adopted are consistent with those of theannual financial statements for the year ended 31 December 2006. In addition,the following new accounting policy has also been adopted: Intangible assets Expenditure on research activities is recognized as an expense in the period inwhich it is incurred. An internally-generated intangible asset arising from theGroup's development activities is recognized only if all of the followingconditions are met: • An asset is created that can be identified (such as software and new processes).• It is probable that the asset created will generate future economic benefits.• The development cost of the asset can be measured reliably. Internally-generated intangible assets are amortized on a straight-line basisover their useful economic lives. Where no internally-generated intangible assetcan be recognized, development expenditure is recognized as an expense in theperiod in which it is incurred. Once completed and in use in the business, costs are amortised on a straightline basis at an annual rate of 25%. 4. Intangible assets The additions to Intangible Assets during the six month period ended June 30,2007 relate to capitalized software development costs for the cost of building abrand new software platform for delivering our research. 5. Segment information The Group operates in one business segment, that of market research. Whilstthere are a number of products within the business segment, management reportingis principally based on location of service delivery. Accordingly the Grouppresents its primary segment analysis on this basis: Six months ended 30 June 2007 Rest of the United Kingdom Europe World Group Total £'000 £'000 £'000 £'000 £'000 Total segment revenue 1,837 934 146 - 2,917Inter segment revenue (16) - - - (16)Segment revenue 1,821 934 146 - 2,901 Segment result 576 309 (155) (583) 147 Six months ended 30 June 2006 Rest of the United Kingdom Europe World Group Total £'000 £'000 £'000 £'000 £'000 Total segment revenue 1,406 338 120 - 1,864Inter segment revenue (15) - - - (15)Segment revenue 1,391 338 120 - 1,849 Segment result 440 128 (55) (383) 130 Year ended 31 December 2006 Rest of the United Kingdom Europe World Group Total £'000 £'000 £'000 £'000 £'000 Total segment revenue 3,065 1,198 375 - 4,638Inter segment revenue (30) - - - (30)Segment revenue 3,035 1,198 375 - 4,608 Segment result 860 529 (66) (1,200) 123 Group costs include directors' remuneration and central costs which are notdirectly attributable to geographic segments. 6. Income tax expense Six months ended Six months ended Year ended 30 June 2007 30 June 2006 31 December 2006 Unaudited Unaudited Audited £'000 £'000 £'000 Current tax 106 50 163Deferred tax (55) - (6) 51 50 157 Income tax expense for the period differs from thestandard rate of taxation as follows: Profit on ordinary activities before taxation 164 114 94Profit on ordinary activities multiplied by standard 49 34 28rate of taxation of 30% (2006: 30%) Difference between tax rates applied to Group's (1) (4) (8)subsidiariesExpenses not deductible for tax purposes 8 25 130(Capital allowances for period in excess of - (5) (4)depreciation) / depreciation in excess of capitalallowancesRecognition / (utilisation) of tax losses 3 - 17Deferred tax in respect of share option expense (8) - (6)Total tax 51 50 157 7. Earnings per share (a) Basic Basic earnings per share is calculated by dividing the profit attributable toequity holders of the Company by the weighted average of ordinary shares inissue during the period. Six months ended Six months ended Year ended 30 June 2007 30 June 2006 31 December 2006 Unaudited Unaudited Audited £'000 £'000 £'000 Profit/(loss) attributable to equity holders of the 113 64 (63)CompanyListing expenses - - 354Adjusted profit/(loss) before listing expenses 113 64 291attributable to equity holders of the Company Weighted average number of ordinary shares in issue 12,560,516 6,242,496 7,196,792 Basic earnings/(loss) per share 0.9p 1.0p (0.9)pAdjusted basic earnings/(loss) per share before listing 0.9p 1.0p 4.0pexpenses (b) Diluted Diluted earnings per share is calculated by adjusting the weighted averagenumber of shares outstanding to assume conversion of all dilutive potentialordinary shares. For share options, a calculation is made in order to determinethe number of shares that could have been acquired at fair value (determined asthe average annual market share price of the Company's shares) based on themonetary value of the subscription rights attached to outstanding share options.The number of shares calculated in this way is compared with the number ofshares that would have been issued assuming the exercise of the share options. Six months ended Six months ended Year ended 30 June 2007 30 June 2006 31 December 2006 Unaudited Unaudited Audited £'000 £'000 £'000 Profit/(loss) attributable to equity holders of the 113 64 (63)CompanyInterest expense on convertible preference shares - 17 31Profit/(loss) used to determine diluted earnings per 113 81 (32)shareListing expenses - - 354Adjusted profit/(loss) before listing expenses 113 81 322attributable to equity holders of the Company Weighted average number of ordinary shares in issue 12,560,516 6,242,496 7,196,792Assumed conversion of convertible preference shares - 4,817,041 4,014,201Share options 689,320 478,856 364,377Weighted average number of ordinary shares for diluted 13,249,836 11,538,393 11,575,370earnings per share Diluted earnings/(loss) per share 0.9p 0.7p (0.9)pAdjusted diluted earnings/(loss) per share before 0.9p 0.7p 2.8plisting expenses 8. Cash generated from/(used by) by operations Six months ended Six months ended Year ended 30 June 2007 30 June 2006 31 December 2006 Unaudited Unaudited Audited £'000 £'000 £'000 Profit before taxation 164 114 94Depreciation 17 2 14Net finance costs (17) 16 29Share-based payment expense 27 17 22Decrease/(increase) in inventory 18 12 (32)Increase in receivables (65) (304) (824)Increase in payables 58 199 536Exchange differences 6 2 (6)Net cash generated from/(used by) by operations 208 58 (167) 9. Share capital During the period, 14,853 share options were exercised at an exercise price of62.3 pence for 14,853 shares with a par value of 1 penny. The total proceedswere £9,251, of which £149 was recognized as share capital, and £9,102 as sharepremium. In January 2007, 290,529 share options were granted to Directors and employeeswith an exercise price set at the market price on the date of grant (162.5 penceper share). This information is provided by RNS The company news service from the London Stock Exchange