RNS Number:9791W
e-quisitor PLC
10 June 2002
10th June 2002
e-quisitor plc
Preliminary Announcement of Results
Year ended 31 December 2001
Financial Highlights
Year ended Year ended
31 December 31 December
2001 2000
Total Group Operating Profit
- before goodwill and exceptional items(1) £358,000 (£94,000)
Profit on ordinary activities before taxation £63,000 (£48,000)
- before goodwill and exceptional items(1)
Basic earnings/(loss) per share
- before goodwill and exceptional items(1) 2.81p (0.98p)
- after goodwill and exceptional items(1) (177.49p) (2.56p)
(1) Exceptional items comprise non-recurring costs associated with the
re-structuring of TVI.
For further information:
e-quisitor plc Binns & Co
Bob Bond, Chief Executive Keeley Clarke
Tel: 01422 301917 Tel: 0113 242 1171
e-quisitor at a glance (as at June 2002)
e-quisitor was established in March 2000
e-quisitor has agreed bank facilities with Barclays Bank PLC
e-quisitor is quoted on London's AIM market and its principal shareholder is
Gartland, Whalley and Barker plc
REAL CUSTOMERS e-quisitor's "information-oriented" businesses provide products and services that
enable:
* J. Sainsbury to monitor and enhance the quality of its products
* Hilton Hotels to measure guest satisfaction in 17 languages, across
20 countries
* BBC Worldwide to monitor and track global brand awareness and image
* AstraZeneca to educate patients about treatment and detection of
prostate cancer
* Eli Lilly to recruit, inform and retain patients for clinical
research in the US
* Virgin Radio to air the right commercials in the right spots to the
right audience
STRONG DEALFLOW Our acquisitions are logically grouped into three areas of expertise: Understanding
& Insights, Cross-Media Communications and Software. Within these areas we are
actively targeting businesses involved in qualitative market research, market
research software, database marketing, contact management and specialist medical
communications.
LONG-TERM VALUE Our approach to both acquisitions and to the development of our businesses is
pragmatic and sensible. We are interested in building real and lasting long-term
value for our shareholders, employees and customers. This requires us to seek
acquisitions that enhance earnings and complement the existing businesses in the
group, to stretch our successful businesses and to act decisively where businesses
are experiencing difficulties.
ACTIVE MANAGEMENT Our management style is proactive but considered, which means we encourage
operational autonomy in businesses that are performing well, but get "our sleeves
rolled up" when times are tough. This support can include everything from
re-branding and re-positioning the company to fiscal control and supporting major
sales initiatives.
GOOD TIMES OR BAD e-quisitor is committed to acquiring profitable, robust businesses that are capable
of capitalising on economic upturns and weathering downturns.
Chairman's Statement
This has been a challenging year for e-quisitor. We were faced with the collapse
of the US technology market and a rapid slowdown in the domestic economy within
60 days of the beginning of the year.
Given these adverse conditions, which were prolonged by the aftermath of
September 11, we "rolled up our sleeves" and focused on three key areas during
the 12 months to 31 December 2001:
Maintaining profitability at Faced with the decline in the technology sector and the industry-wide
TVI whilst fundamentally reduction in media spending we acknowledged that TVI's business model would
changing its business model require careful but decisive re-engineering to remain profitable.
In undertaking this process, costs were reduced by more than 35%, TVI's
emphasis on the healthcare sector was increased, new products were developed
specifically for the pharmaceutical industry, the management team was
re-structured and marketing was re-organised around TVI's three key product
offerings: Health & Home oriented programming, Customised Shows and PRC
(Patient Recruitment Campaign).
PRC, TVI's new initiative, was launched in September 2001 in response to
feedback from pharmaceutical and biotech companies wanting to compress drug
development cycles by improving the recruitment and retention of patients
required for clinical research.
A specialist PRC team now works with clients to develop media campaigns to
pinpoint, educate and recruit patients to participate in clinical trials. In
the period being reported on, PRC produced revenues of $250,000 from three
trials.
Looking to the future the mapping of the human genome has increased the
number of targets (the building blocks that form the basis of most new
drugs) from 500 to as many as 10,000 which suggests there will be a
significant increase in the number of trials being undertaken and the need
for trial participants. Currently there are over 1700 drugs undergoing Phase
I, II and III clinical trials in the US. It is estimated that failure to
recruit patients accounts for 85 to 90 percent of all days lost during
clinical trials and that delays cost pharmaceutical companies between
$800,000 and $5.4 million per day in lost sales (source: McKinsey, 2002).
Given our position in this emerging market and the clear business case that
underpins PRC we feel confident about its prospects going forwards.
As a result of these actions TVI remained profitable through 2001, revenues
generated by PRC largely mitigated the impact of weak order intake for
programming in the 4 months post September 11 and programming itself is now
showing signs of a recovery which if sustained should have a positive impact
on the second half of 2002.
From an accounting perspective, although the curative action taken by your
board in the face of a unique set of circumstances has resulted in the
creation of "new" goodwill (associated with PRC) your board has no choice
but to recognise the impairment of "acquired" goodwill (principally
associated with TVI's technology show ".COM") which must be recognised as a
"one-off" cost to the consolidated profit and loss account on the basis that
the business has been radically transformed from that which was acquired in
November 2000. The cost to the P&L will be £8.01 million.
Adding value to the group by During 2001 the slowdown in the UK and US resulted in a decline in the
acquiring complementary, number of businesses being offered for sale as sellers elected to delay
earnings-enhancing transactions in anticipation of a rebound in both profitability and
businesses valuations. To mitigate this effect and to ensure that we continued to
identify high quality businesses we took a more direct approach to targeting
acquisitions. We established "no-win, no fee" partnerships with a number of
M&A advisers and provided detailed training about the sectors that we
intended to target. By operating in this way and approaching entrepreneurs
that had not considered selling their businesses we identified over 300
acquisition targets that met our stated criteria.
From these targets we completed the acquisitions of Broadnet Limited in
August and Buckingham Research Associates (BRA) in December.
The acquisition of Broadnet, a software house specialising in the
development of advertising scheduling systems for commercial radio, provided
us with a profitable, cash generative platform to address the opportunities
presented by both analogue and digital radio. In the period from 7th August
2001 to 31st December 2001 Broadnet has continued to perform well with a
number of new wins at Real Radio, Spin FM, NewsTalk 106 FM and Red FM. In
the 12 months to June 30th 2001, Broadnet generated operating profits of
£285,280. We remain confident that Broadnet will make a strong contribution
to profit and cash generation in 2002, whilst remaining conscious of the
possible implications of any significant changes to media ownership rules in
the upcoming Communications Bill.
In acquiring BRA, e-quisitor gained a world-class team of market researchers
that have established a reputation for producing high quality quantitative
market research. The outlook for BRA looks positive with a number of new
client wins, a strong flow of projects from existing customers and an
ongoing collaboration with TVI. BRA's performance will however always be
subject to the timing of such projects. In the 12 months to November 30th
2001 BRA made operating profits before interest and tax of approximately
£470,000 (adjusted to reflect the salary costs of the managing director, who
was formerly a partner in the business) derived from the unaudited
management accounts of the business.
Integrating acquired e-quisitor's strategy for delivering long-term value has and continues to be
businesses into the group focused on completing earnings enhancing acquisitions and generating organic
growth within our acquired businesses.
The implementation of our strategy during the period has been slower than we
originally envisaged because of a more cautious approach to new acquisitions
and the focus on maintaining profitability at TVI, which remained the sole
business in the group for seven months of 2001.
As new businesses have been added to the group we have worked hard to ensure
that we strike the right balance between autonomy and realising the benefits
of combining complementary businesses. To this end, we have concentrated on
the issues that matter: customers and employees. Review meetings have been
undertaken with all key customers, cross-group opportunities have been
identified between TVI and BRA, consistent systems and processes have been
implemented to allow relevant information to be shared easily and all
employees have been involved in detailed briefings about e-quisitor, its
strategy and its objectives.
Despite the adverse conditions faced during 2001 and the remedial action that
was required at TVI I am pleased to report an Operating Profit before
exceptionals and goodwill charges of £358,000 and earnings per share (eps),
before goodwill charges and exceptionals of 2.81p.
Phillip Bennett
Chairman
In the coming financial year the operational priorities of the group will be the
acquisition of additional "knowledge" businesses to complement BRA's expertise
in quantitative market research, the expansion of TVI's healthcare practice, the
acquisition of medical communications businesses to complement TVI's new
direction, the development of joint TVI/BRA services for the healthcare sector
and the re-branding of the group to more accurately reflect the nature of our
business.
Consolidated profit and loss account
for the year ended 31 December 2001
2001 2000
Pre
amortisation
Amortisation
and and
exceptional
exceptional
items items Total Total
Notes £'000 £'000 £'000 £'000
Turnover
- Continuing 4,502 - 4,502
- Acquisitions 300 - 300 947
4,802 - 4,802 947
Cost of sales (2,323) (2,323) (593)
Gross profit 2,479 - 2,479 354
Other operating expenses 2 (2,121) (8,186) (10,307) (448)
Operating profit/(loss) before
amortisation and impairment of goodwill 2 358 (178) 180 (44)
Amortisation and impairment of goodwill 2 - (8,008) (8,008) (50)
Operating profit/(loss):
- Continuing 185 (8,137) (7,952) (116)
- Acquisitions 173 (49) 124 22
358 (8,186) (7,828) (94)
Interest 2 (295) (227) (522) 46
Profit/(loss) before taxation 63 (8,413) (8,350) (48)
Taxation 69 - 69 (29)
Profit/(loss) after taxation 132 (8,413) (8,281) (77)
Minority interests 2 - (59) (59) (4)
Profit/(loss) for the year 132 (8,354) (8,340) (81)
Basic profit/(loss) per share
Loss per share 3 (177.49p) (2.56p)
Adjusted profit/(loss) per share 3 2.81p (0.98p)
Diluted profit/(loss) per share
Loss per share 3 (167.92p) (2.41p)
Adjusted profit/(loss) per share 3 2.66p (0.92p)
2001 2000
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES £'000 £'000
Loss for the year (8,340) (81)
Currency adjustments 205 (191)
Total recognised gains and losses (8,133) (272)
Balance sheet
as at 31 December 2001
2001 2000
Group Group
£'000 £'000
FIXED ASSETS
Intangible assets 5,051 7,692
Tangible assets 227 258
5,278 7,950
CURRENT ASSETS
Stock 44 190
Debtors 502 161
Cash 250 367
796 718
CREDITORS: amounts falling due within one year (3,095) (1,949)
Net current (liabilities)/assets (2,299) (1,231)
Total assets less current liabilities 2,979 6,719
CREDITORS: amounts falling due after more than one year (4,441) (2,507)
Net (liabilities)/assets (1,462) 4,212
CAPITAL AND RESERVES
Called up equity share capital 585 445
Share premium account 6,358 4,098
Profit and loss account (8,405) (272)
Equity shareholders' (deficit)/funds (1,462) 4,271
Equity minority interests - (59)
(1,462) 4,212
Consolidated cashflow statement
for the year ended 31 December 2001
2001 2000
£'000 £'000
Net cash (outflow)/inflow from operating activities (510) 163
Returns on investment and servicing finance (221) (181)
Taxation - -
Capital expenditure and financial investments 42 70
Acquisitions (415) (6,845)
Net cash outflow before financing (1,104) (6,793)
Financing 182 7,160
(Decrease)/Increase in cash in the year (922) 367
2001 2000
£'000 £'000
Reconciliation of net cashflow to movement in net debt
(Decrease)/increase in cash in the year (922) 367
Cash inflow from increase in debt (182) (2,425)
(1,104) (2,058)
Finance leases acquired with subsidiary undertakings - (173)
Other non-cash changes (1,911) -
Currency adjustments (47) 78
Movement in net debt (3,062) (2,153)
Opening net debt (2,153) -
Closing net debt (5,215) (2,153)
Notes:
1. Basis of preparation
This preliminary announcement, which has been prepared on a basis consistent
with the previous period, does not constitute statutory accounts within the
meaning of Section 240 of the Companies Act 1985. The announcement has been
agreed with the company's auditors for release.
The financial information for the period ended 31 December 2000 is an extract
from the statutory accounts to that date which have been delivered to the
Registrar of Companies. Those accounts included an audit report which was
unqualified and which did not contain a statement under section 237(2) or (3) of
the Companies Act 1985. The statutory accounts for the year ended 31 December
2001 upon which the auditors still have to report, will be delivered to the
Registrar following the company's annual general meeting.
2. Amortisation and exceptional items
£'000
Amortisation and exceptional items comprise:
Restructuring costs 178
Impairment of goodwill 7,959
Amortisation of goodwill 49
Finance costs 227
Minority interests 59
8,472
Restructuring costs represent costs incurred at TVI in restructuring the
business following the economic downturn in its markets. The impairment of
goodwill relates to the write off of the goodwill arising on the acquisition of
TVI, as discussed in the Chairman's Statement. The finance cost charge reflects
the write off of a fee paid for the group's acquisition facility agreement.
3. Earnings Per Share
The calculation of the basic loss per share is based on a loss after taxation of
£8,340,000 divided by the weighted average number of Ordinary shares in issue
during the period of 4,698,601 (basic) and 4,966,550 (diluted). An adjusted
profit per share figure before the amortisation and impairment of goodwill and
exceptional items has been presented which is based on a profit after taxation
of £132,000.
This information is provided by RNS
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