RNS Number:9149I
EQ Group PLC
23 February 2005
23 February 2005
eq group plc ("eq" or "the group")
Preliminary results for the year ended 31 December 2004
eq group plc, the AIM listed marketing services group, announces its preliminary
results for the year ended 31 December 2004.
Financial Highlights
*Revenues up by 17% to #10,402,000 (2003: #8,911,000)
*Operating profit up by 10% to #1,078,000 (2003: #984,000)
*Adjusted operating profit before goodwill amortisation up by 7%
*Basic earnings per share up by 10% to 5.37p
*Adjusted basic earnings per share before goodwill amortisation and
exceptional items up by 12% to 11.26p (2003: 10.08p)
*Net debt decreased by 11% to #4.8m (2003: #5.4m)
Operational Highlights
*Like-for-like operating profits within market research businesses up by
31%
*Continued collaboration between Buckingham and Quaestor resulted in 11
projects being won with a total value of #313,000
*During the period we worked with 266 companies, up from 249 in 2003
*Key wins during the period were Barclaycard, Capital AIG Europe,
Nutricia, Carlsberg, Interbrew and Scottish Courage
*Quaestor began providing fieldwork services to Buckingham Research
For further information
Bob Bond, Chief Executive, eq group plc - 07747 032478
Keeley Clarke, Group PR, eq group plc - 07967 816525
Letter to Shareholders
Your group performed steadily in 2004. Revenue, operating profits and earnings
per share increased for a fourth consecutive year, albeit at a lower rate of
growth. Net debt decreased and the group paid a maiden interim dividend of 0.5
pence per share.
Group turnover increased by 17% to #10,402,000 (2003: #8,911,000). Revenue from
continuing operations increased by 23% to #10,402,000 (2003: #8,425,000) as a
result of healthy organic growth within our market research businesses.
Operating profit increased by 10% to #1,078,000 (2003: #984,000). Adjusted
operating profit, before amortisation of goodwill, increased by 7% to #1,413,000
(2003: #1,319,000). Amortisation of goodwill was #335,000 (2003: #335,000) and
exceptional items associated with the disposal of The Lead Agency amounted to
#87,000.
Basic earnings per share increased by 10% to 5.37 pence from 4.87 pence.
Adjusted basic earnings per share before amortisation of goodwill and
exceptional items were up 12%, at 11.26 pence (2003: 10.08 pence), their highest
level since the group was formed in March 2000.
Fully diluted earnings per share increased by 3% to 4.61 pence (2003: 4.47
pence). Adjusted fully diluted earnings per share before amortisation of
goodwill and exceptional items were up 4%, to 9.67 pence (2003: 9.26 pence).
This takes into account the additional shares we expect to issue to the vendors
of Buckingham Research and Quaestor as part of their respective deferred
considerations.
The reported profit before tax was #627,000 (2003: #634,000) and profit after
tax increased by 14% to #385,000 from #339,000.
A full year dividend of 0.5 pence per share will be paid on 29 April 2005 to
shareholders on the register at the close of business on 29 March 2005, giving a
total dividend for the year of 1.0 pence per share.
The group generated a net cash inflow from operations, after interest, tax
payments and capital expenditure, of #967,000. This contributed to net debt
decreasing by 11%, to #4,818,000 (2003: #5,399,000). Interest cover before
amortisation of goodwill and exceptional items decreased to 3.9 times, from 4.1
times in 2003. This reduction in cover occurred as a result of converting dollar
denominated debt into sterling at a favourable exchange rate ($1.81/#). The
corollary of this decision was an increase in the group's interest charge due to
the difference in interest rates between the US and the UK. Your board remains
comfortable that this level of debt is appropriate for a business that has been
advancing under the combined conditions of low interest rates and historically
weak equity markets.
Review of Activities
During the period the group generated #9,720,000 (2003: #7,496,000) or 93%
(2003: 89%) of its revenue from market research and #585,000 (2003: #606,000) or
6% (2003: 7%) from software development. The balance, 1%, was contributed by The
Lead Agency which the group sold in June 2004.
The market research businesses (Buckingham Research and Quaestor) increased
operating profits by 31% and revenues by 30% against the same period in 2003.
This compares very favourably to growth in the market research industry as a
whole where revenues amongst the Top 65 UK agencies increased by 5.4% in 2003
(Source: BMRA). Operating margins were 16.3%, slightly higher than the 16.0%
achieved in 2003. 91 (2003: 103) credentials presentations were undertaken
during the period and 56 (2003: 62) new clients were won. We also invested
#40,000 in a Web-Assisted Personal Interviewing (WAPI) system to enable our
researchers to increase the efficiency of the interviewing process and reduce
project turnaround times.
Broadnet, the group's software business, performed satisfactorily in a
consolidating market. Five new radio station wins and increased revenues from a
number of clients negated the loss of five stations and a station closure. The
net effect was a 1.5% reduction in annual contracted revenues to #566,000.
During the period we made significant progress on the new Windows based version
of the Broadnet system which is expected to roll out to key clients late in the
first half of 2005.
Summary of Activities
During 2004 we worked with 266 companies, up from 249 in 2003 (on continuing
operations). Our Top 20 clients accounted for 55% of group revenues with the
largest accounting for 9.7%. Of these, 45% were FTSE-100 constituents, 5% were
FTSE-250 constituents, 20% were quoted on major overseas exchanges and the
remaining 30% were privately held businesses. By customer sector, our most
significant markets were Financial Services (28%), Fast Moving Consumer Goods
(23%) and Media (18%). Key wins during the period were Barclaycard, Capital AIG
Europe, Nutricia, Carlsberg, Interbrew and Scottish Courage.
During 2004 our team grew from 101 to 109 people as we increased headcount in
line with workload. Revenue per head (on continuing operations) during the
period was #94,600 (2003: #79,500) and operating profit per head (on continuing
operations) was #12,800 (2003: #12,400). To improve the efficacy of our business
development activities we piloted a series of training sessions focused on
account planning, consultative selling and presentation skills. This pilot
programme proved very successful and will now be rolled out across all client
facing personnel in the group.
Collaboration between the businesses in the group resulted in 11 projects being
won with a total project value of #313,000. The market research businesses
worked together on a number of international projects and Quaestor began
providing fieldwork services to Buckingham Research as we communicated in our
interim statement. In addition, Broadnet supported Buckingham Research in a
number of data analysis bids for major clients.
Outlook
The group's market research businesses are expected to deliver double digit
earnings growth in the 12 months to 31st December 2005. However, this will be
impacted by a decline in operating profit at Broadnet caused by a reduction in
annual licence fees and increased investment in software development and support
resources. As a result, we anticipate modest earnings growth in 2005.
Finally, we would like to thank all of our employees for their commitment during
2004 and in particular we would like to congratulate Margaret Drye and her team
at Buckingham Research for their excellent performance in 2004.
Phillip Bennett Bob Bond
Chairman Chief Executive
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31 December 2004
2004 2003
------------------------------------------------------------------------------
Pre Pre
amortisation Amortisation amortisation Amortisation
of goodwill of goodwill Total of goodwill of goodwill Total
#'000 #'000 #'000 #'000 #'000 #'000
Turnover
Continuing operations 10,402 - 10,402 8,425 - 8,425
Discontinued operations - - - 486 - 486
-------------------------------------------------------------------------------------------------------
10,402 - 10,402 8,911 - 8,911
-------------------------------------------------------------------------------------------------------
Cost of sales (4,929) - (4,929) (3,844) - (3,844)
-------------------------------------------------------------------------------------------------------
Gross profit 5,473 - 5,473 5,067 - 5,067
Administrative expenses (4,060) (335) (4,395) (3,748) (335) (4,083)
-------------------------------------------------------------------------------------------------------
Operating profit 1,413 (335) 1,078 1,319 (335) 984
Exceptional items (87) - (87) (30) - (30)
-------------------------------------------------------------------------------------------------------
Profit before interest 1,326 (335) 991 1,289 (335) 954
-------------------------------------------------------------------------------------------------------
Net interest payable (364) - (364) (320) - (320)
-------------------------------------------------------------------------------------------------------
Profit before taxation 962 (335) 627 969 (335) 634
Taxation (242) - (242) (295) - (295)
-------------------------------------------------------------------------------------------------------
Profit for the year 720 (335) 385 674 (335) 339
Dividends (72) - (72) - - -
-------------------------------------------------------------------------------------------------------
Retained profit 648 (335) 313 674 (335) 339
-------------------------------------------------------------------------------------------------------
Basic earnings per share
Earnings per share 5.37p 4.87p
Adjusted earnings per
share * 11.26p 10.08p
Diluted earnings
per share
Earnings per share 4.61p 4.47p
Adjusted earnings per
share * 9.67p 9.26p
* before exceptional items and goodwill amortisation
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 31 December 2004
2004 2003
#'000 #'000
Profit for the year 385 339
Currency adjustments 33 188
-------------------------------------------------------------------------------------------------------
Total recognised
gains and losses 418 527
-------------------------------------------------------------------------------------------------------
There is no difference between the profit on ordinary activities before taxation
and the retained profit for the year stated above and their historical cost
equivalents.
BALANCE SHEETS
as at 31 December 2004
2004 2003
Group Company Group Company
#'000 #'000 #'000 #'000
FIXED ASSETS
Intangible assets 7,901 - 6,072 -
Tangible assets 753 4 741 6
Investments - 10,430 - 8,266
------------------------------------------------------------------------------
8,654 10,434 6,813 8,272
------------------------------------------------------------------------------
CURRENT ASSETS
Stock 257 - 426 -
Debtors 1,823 651 1,827 783
Cash 101 101 535 -
------------------------------------------------------------------------------
2,181 752 2,788 783
CREDITORS: amounts falling due within
one year (3,687) (3,100) (4,188) (3,168)
------------------------------------------------------------------------------
Net current liabilities (1,506) (2,348) (1,400) (2,385)
------------------------------------------------------------------------------
Total assets less current liabilities 7,148 8,086 5,413 5,887
CREDITORS: amounts falling due after
more than one year (3,912) (3,796) (4,932) (3,366)
PROVISIONS FOR LIABILITIES AND CHARGES (2,179) (2,179) (18) -
------------------------------------------------------------------------------
Net assets 1,057 2,111 463 2,521
------------------------------------------------------------------------------
CAPITAL AND RESERVES
Called up equity share capital 725 725 698 698
Share premium account - - 7,335 7,335
Profit and loss account
surplus/(deficit) 332 1,386 (7,570) (5,512)
------------------------------------------------------------------------------
Equity shareholders' funds 1,057 2,111 463 2,521
------------------------------------------------------------------------------
eq group plc abridged accounts for the preliminary results for the year ended 31
December 2004 are unaudited. The announcement has been agreed with the company's
auditors for release. The financial information set out in the announcement does
not constitute the Company's statutory accounts for the years ended 31 December
2004 or 31 December 2003. The financial information for the year ended 31
December 2003 is derived from the statutory accounts for that year which have
been delivered to the Registrar of Companies. The auditors reported on those
accounts; their report was unqualified and did not contain a statement under
either Section 237(2) or Section 237(3) of the Companies Act 1985. There have
been no changes in accounting policies in regards of financial information for
the year ended 31 December 2004 . The statutory accounts for the year ended 31
December 2004 will be finalised on the basis of the financial information
presented by the directors in this preliminary announcement and will be
delivered to the Registrar of Companies following the Company's Annual General
Meeting.
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2004
2004 2003
#'000 #'000
Net cash inflow from operating activities (see below) 1,715 1,921
Returns on investment and servicing of finance (327) (351)
Deferred consideration paid relating to acquisitions (252) -
Taxation (297) (262)
Capital expenditure (124) (60)
Disposal of businesses 20 (38)
Dividends (36) -
------------------------------------------------------------------------------
Net cash inflow before financing 699 1,210
Financing (1,249) (498)
------------------------------------------------------------------------------
(Decrease)/increase in cash in the year (550) 712
------------------------------------------------------------------------------
Reconciliation of net cashflow to movement in net debt 2004 2003
#'000 #'000
(Decrease)/increase in cash in the year (550) 712
Cash outflow from decrease in debt 1,249 498
------------------------------------------------------------------------------
699 1,210
Other non-cash items (new finance leases) (151) (182)
Currency adjustments 33 183
------------------------------------------------------------------------------
Movement in net debt 581 1,211
Opening net debt (5,399) (6,610)
------------------------------------------------------------------------------
Closing net debt (4,818) (5,399)
------------------------------------------------------------------------------
Reconciliation of operating profit to net cash inflow from
operating activities 2004 2003
#'000 #'000
Operating profit 1,078 984
Depreciation 203 236
Amortisation of goodwill 335 335
Loss on sale of fixed assets 16 15
Decrease/(Increase) in stock 169 (285)
Increase in debtors (21) (176)
(Decrease)/Increase in deferred revenue (141) 525
Increase in creditors 76 287
------------------------------------------------------------------------------
Net cash inflow from operating activities 1,715 1,921
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This information is provided by RNS
The company news service from the London Stock Exchange
END
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