Interim Results
July 25 2005 - 2:59AM
UK Regulatory
RNS Number:2262P
EQ Group PLC
25 July 2005
eq group plc ("eq" or "the group")
Interim results for the six months ended 30 June 2005
First half performance puts group on track to deliver double digit earnings
growth for a fourth consecutive year
eq group plc, the AIM listed marketing services group, announces its interim
results for the six months ended 30 June 2005.
Financial Highlights
* Profit before tax up by 39.3%
* Operating margins increased to 15.4% from 14%
* Net cash inflow from operating activities up 149%
* Fully diluted earnings per share up by 60.8%
* Fully diluted adjusted earnings per share up by 15.5% to 5.88p
* Interim dividend increased by 10% to 0.55p per share
Operational Highlights
* Significantly improved operating margins within market research businesses
* Strong like-for-like earnings growth within market research
* Increased collaboration between all businesses
* Further improved working capital management
* Principal client markets were Financial Services 25%, Fast Moving
Consumer Goods 18% and Media 16%
* Key services provided to clients were new product development (30%),
customer satisfaction studies (23%) and branding (16%)
* Largest single client accounted for only 10.3% of group revenue
Chairman & Chief Executive's Statement
Your group performed well in the first half of 2005. We focused on improving
margins, increasing the efficiency of our business development activities and on
combining the skills we have across the group. As a result, we produced a
healthy increase in both operating profit and earnings per share.
Revenue increased by 2.9% to #5,589,000 (2004: #5,429,000).
Operating profit increased by 5.6% to #625,000 (2004: #592,000). Adjusted
operating profit, before amortisation of goodwill, increased by 12.9% to
#858,000 (2004: #760,000). Amortisation of goodwill associated with previous
acquisitions increased to #233,000, reflecting the higher deferred consideration
paid and payable to the vendors of our market research businesses as a result of
their continued out-performance.
Basic earnings per share increased by 53.7% to 3.41 pence from 2.22 pence. Basic
earnings per share before amortisation of goodwill and exceptional items were up
10.6%, at 6.44 pence (2004: 5.82 pence).
Fully diluted earnings per share, which takes into account shares that may be
issued as part of future deferred consideration payments, increased by 60.8% to
3.12 pence (2004: 1.94 pence). Fully diluted earnings per share before
amortisation of goodwill and exceptional items increased by 15.5% to 5.88 pence
(2004: 5.09 pence).
The reported profit before tax increased by 39.3% to #447,000 (2004: #321,000)
and the profit after tax increased by 67.5% to #263,000 (2004: #157,000).
Net debt increased by #656,000 due to the payment, in the form of loan notes, of
#942,000 to the vendors of Buckingham Research.
We are pleased to declare an increased interim dividend of 0.55 pence per share.
This will be paid on Friday 26 August 2005 to shareholders on the register at
the close of business on Friday 5 August 2005.
Review of Activities
During the period the group generated #5,305,000 (2004: #5,037,000) or 95% of
its revenue from market research and #284,000 (2004: #295,000) or 5% of its
revenue from software development.
The market research businesses (Buckingham Research and Quaestor) increased
operating profits by 21.9% and revenues by 5.3% against the same period in 2004.
Operating margins were 19.2%, up from 16.5% in 2004. During the period 30 (2004:
25) new clients were won, including Abbey plc, News International, Ginsters and
Taylor Woodrow.
Broadnet continued to perform in line with expectations despite increased
consolidation in the radio industry and continued pressure on radio advertising
revenues. After a hiatus on radio licence grants, a number of new opportunities
are being discussed with stations in the UK and mainland Europe. In addition,
#25,000 of non radio-related revenue was secured as Broadnet expanded into
providing data analysis and software development services in support of the
group's core activities.
Increasing collaboration between the businesses in the group resulted in 12
projects being won (2004: 4) with a total project value of #339,000 (2004:
#132,000).
Outlook
We exceeded our expectations in the first six months of the year and are working
hard to maintain the momentum as we move into the second half. Senior management
is focusing directly on business development, collaboration and the inclusion of
data-related services to complement the group's market research activities.
By concentrating on these areas and maintaining a close watch on margins, we
expect the group to meet market expectations and deliver double digit operating
profit growth for a fourth consecutive year.
Phillip Bennett stepped down as Chairman in May 2005 and we would like to thank
him for his support and assistance over the last five years.
From a management perspective, Tony Isaacs has been appointed as Managing
Director at Buckingham Research after Margaret Drye retired from the business at
the end of June. Tony has worked for Buckingham for four years and has strong
relationships with all key clients and exceptional technical ability. We would
like to take this opportunity to wish Margaret every success in the future and
congratulate Tony on his promotion.
Finally, we would like to thank all our employees for their hard work during the
first six months of 2005.
Brian Heather Bob Bond
Chairman Chief Executive
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the six months ended 30 June 2005
Notes
Six months Six months Year
ended 30 June ended 30 June ended 31
2005 2004 December 2004
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Turnover 5,589 5,429 10,402
Cost of sales (2,603) (2,599) (4,929)
------------------------ ------ --------- --------- --------
Gross profit 2,986 2,830 5,473
Administrative expenses (2,361) (2,238) (4,395)
------------------------ ------ --------- --------- --------
Operating profit before
amortisation of goodwill 858 760 1,413
Amortisation of goodwill (233) (168) (335)
------------------------ ------ --------- --------- --------
Operating profit 625 592 1,078
Exceptional items -
discontinued operations - (87) (87)
------------------------ ------ --------- --------- --------
Profit before interest 625 505 991
Net interest payable (178) (184) (364)
------------------------ ------ --------- --------- --------
Profit before taxation 447 321 627
Taxation (184) (164) (242)
------------------------ ------ --------- --------- --------
Profit for the period 263 157 385
Dividends (44) (36) (72)
------------------------ ------ --------- --------- --------
Retained profit for the
period 219 121 313
------------------------ ------ --------- --------- --------
Basic earnings per share Notes
Earnings per share 2 3.41 2.22 5.37
Adjusted earnings per share 2 6.44 5.82 11.26
Diluted earnings per share
Earnings per share 2 3.12 1.94 4.61
Adjusted earnings per share 2 5.88 5.09 9.67
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
#'000 #'000 #'000
Profit for the period 263 157 385
Currency adjustments (7) 33 33
------------------------ ------ --------- --------- --------
Total recognised gains and
losses for the period 256 190 418
------------------------ ------ --------- --------- --------
CONSOLIDATED BALANCE SHEET
at 30 June 2005
At 30 June 2005 At 31
December 2004
(unaudited) (audited)
#'000 #'000
FIXED ASSETS
Intangible assets 8,260 7,901
Tangible assets 705 753
------------------------------ --------- --------
8,965 8,654
------------------------------ --------- --------
CURRENT ASSETS
Stock 226 257
Debtors 1,652 1,823
Cash 101 101
------------------------------ --------- --------
1,979 2,181
CREDITORS: amounts falling due within one year (4,215) (3,687)
------------------------------ --------- --------
Net current liabilities (2,236) (1,506)
------------------------------ --------- --------
CREDITORS: amounts falling due after more than
one year (3,634) (3,912)
PROVISIONS FOR LIABILITIES AND CHARGES (913) (2,179)
------------------------------ --------- --------
NET ASSETS 2,182 1,057
------------------------------ --------- --------
CAPITAL AND RESERVES
Called up equity share capital 799 725
Share premium account 839 -
Profit and loss account 544 332
------------------------------ --------- --------
EQUITY SHAREHOLDERS' FUNDS 2,182 1,057
------------------------------ --------- --------
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 June 2005
Six months Six months
ended 30 June ended 30 June
2005 2004
(unaudited) (unaudited)
#'000 #'000
Net cash inflow from operating activities 710 285
Returns on investments and servicing of finance (173) (129)
Deferred consideration paid - (252)
Taxation (157) (160)
Capital expenditure and financial investments (29) (68)
Dividend paid (36) -
-------------------------------- --- --------- ---------
Net cash inflow/(outflow) before financing 315 (324)
Financing (468) (899)
-------------------------------- --- --------- ---------
Decrease in cash in the period (153) (1,223)
-------------------------------- --- --------- ---------
Reconciliation of net cashflow to movement in
net debt
Increase/(decrease) in cash in the period (153) (1,223)
Cash outflow from decrease in debt 468 899
-------------------------------- --- --------- ---------
Movement in net debt 315 (324)
Non-cash movements:
Loan note issue (942) -
New finance leases (29) (44)
Currency adjustments - 33
Opening net debt (4,818) (5,399)
-------------------------------- --- --------- ---------
Closing net debt (5,474) (5,734)
-------------------------------- --- --------- ---------
Notes:
1. The interim financial information for the half year ended 30 June
2005 has not been audited and does not constitute statutory accounts within the
meaning of Section 240 of the Companies Act 1985. It has been prepared on the
basis of the Group's accounting policies set out in the Group's 2004 statutory
accounts.
2. The calculation of the basic earnings per share is based on the
profit after taxation of #263,000 (2004: #157,000) divided by the weighted
average number of ordinary shares in issue during the period of 7,707,276 (2004:
7,081,697) (basic) and 8,438,513 (2004: 8,091,779) (diluted). An adjusted
earnings per share figure before exceptional items of #Nil (2004: #87,000) and
the amortisation of goodwill of #233,000 (2004: #168,000) has been presented to
show underlying earnings. This is based on the profit after taxation of #496,000
(2004: #412,000) which represents the operating profit before goodwill of
#858,000 (2004: #760,000) less interest of #178,000 (2004: #184,000) and
taxation of #184,000 (2004: #164,000).
3. An interim dividend of 0.55p per share (2004: 0.5p) will be paid
on 26 August 2005 to all shareholders on the register at close of business on 5
August 2005.
4. The profit and loss account for the year ended 31 December 2004
and the balance sheet at that date are derived from the Company's full accounts
which have been filed with the Registrar of Companies and on which the Company's
auditors gave an unqualified report.
For further information, please contact:
Bob Bond, Chief Executive, eq group plc 07747 032478
Keeley Clarke, Group PR, eq group plc 07967 816525
This information is provided by RNS
The company news service from the London Stock Exchange
END
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