RNS Number:6351P
EQ Group PLC
11 September 2003
For Release 7:00am 11 September 2003
eq group plc ("eq" or "the company")
Interim Results for the six months to 30 June 2003
'Strong organic growth and acquisitive expansion'
eq group plc, the AIM listed marketing services group with operations in market
research, below-the-line marketing and support services for the marketing
industry, announces Interim results for the six months ended 30 June 2003.
Among eq's clients are Boots, Quaker, Gillette, Sainsbury's, Coors, Hilton, BBC
Worldwide, GE Capital, Telewest, Scottish Media Group, Channel 4, Prudential
Assurance, HBOS, Barclays Bank, DairyCrest, Cirio Delmonte, Campbells, Freemans
and Sony.
Financial highlights
* Turnover up 69% to #4.4m (2002: #2.6m).
* Strong like-for-like growth at Quaestor and Buckingham Research
* Excellent first six months trading at The Lead Agency.
* Continuing operations revenue up 290% to #3.9m (2002: #1.0m)
* Operating Profit up 148% to #505,000 (2002: #204,000).
* Profit before interest and tax up 134% to #477,000 (2002: #204,000).
* EPS before goodwill amortisation up 96% to 5.00p (2003:2.55p)
* Net debt decreased during period by #359,000.
Operational highlights
* 40 new clients won in the Information Services division.
* 15 new clients won in the Marketing Communications division.
* Positive collaboration between Buckingham, Quaestor and The Lead Agency
subsidiaries.
* Disposal of TVI in the US.
* Healthy level of business development activity produces solid second half
pipeline.
By Sector Revenue as a % Revenue growth % Operating
of total Group 2003 against 2002 Margins
Information Services 88% 24% 21.2%
& Consulting (2002: 15.6%)
(Buckingham & Quaestor)
Marketing Communications 4% n/a 52 %
(The Lead Agency)
Support Services 8% - 4%
(Broadnet)
On current trading and future prospects, Chief Executive Bob Bond said:
"During the past six months, we have seen an increase in the number of briefs
focused on product innovation, brand extension, ad tracking and consumer rights.
Overall, we expect the positive performance in the first six months of the year
to continue into the second half. During the period being reported on, we won 55
new clients and conducted 128 credentials presentations resulting in a strong
pipeline for the remainder of 2003 and the first quarter of 2004. We are
continuing to look for appropriate acquisition targets in the fields of direct
mail, database marketing and marketing consultancy."
Enquiries:
eq group plc
Bob Bond, Chief Executive 07747 032478
Binns & Co. PR Ltd.
Sam Allen, Paul McManus, Peter Binns Tel: 020 7786 9600 Mob: 07980 541 893
Chairman's Statement
In this interim report not all the figures and ratios used are readily available
from the unaudited interim results.
SUMMARY OF RESULTS
The board of eq group is pleased to announce its unaudited interim results for
the six months ended 30 June 2003.
Revenue increased by 69% to #4.4m as a result of strong organic growth from
existing operations, the acquisition of Quaestor Research & Marketing
Strategists Limited on 18 December 2002 and a positive contribution from The
Lead Agency Limited, a recently established tele-marketing business, which was
acquired on 20 December 2003. Revenue from continuing operations, including
Quaestor increased by 290% to #3.9m from #1.0m.
Profit of continuing operations before interest, tax, exceptional items and
goodwill amortisation increased by 210% to #673,000 from #217,000.Profit before
interest and tax increased by 134% to #477,000 from #204,000.
Earnings per share before amortisation of goodwill and exceptional items
increased by 96% to 5.0p from 2.55p. The exceptional items relate to the
previously announced disposal of TVI and amount to #28,000. Basic earnings per
share increased by 476% to 2.19p from 0.38p.
Profit after tax increased by 595% to #153,000 from #22,000.
Net debt has decreased during the period by #359,000.
REVIEW OF OPERATIONS
As a result of the acquisitions of Quaestor and The Lead Agency and the disposal
of TVI, revenues by sector for the first six months of 2003 were as follows:
Revenue as a % Revenue growth %
Sector of total Group 03 vs 02
Information Services & Consulting 88% 24%
Marketing Communications 4% n/a
Support Services 8% -4%
INFORMATION SERVICES AND CONSULTING
Quaestor and Buckingham Research Associates Limited performed well, growing
like-for-like revenues by 24% against the same period in 2002. This compares
favourably to growth in the market research industry as a whole where revenues
amongst the top 80 UK agencies increased by 4.3% in 2002 (Source: Marketing 17th
July 2003- Market Research League). Operating margins were 21.2% across the two
businesses, up from 15.6% for the same period last year. 59 credentials
presentations were undertaken during the period and 40 new clients were won.
Quaestor and Buckingham won three international projects by combining their
respective skills and industry knowledge.
MARKETING COMMUNICATIONS
The Lead Agency contributed #155,000 or 4% of group revenues in the first half.
Operating margins averaged 52% during a period of very high growth. 69
credentials presentations were undertaken resulting in 15 new client wins with
organisations like Sony, Sun Microsystems, Crystal Decisions and Information
Builders. The Lead Agency conducted three joint projects with Quaestor and
undertook a business development project for Buckingham.
SUPPORT SERVICES
Like-for-like revenues at Broadnet were down by 4% during the period. As
anticipated, commercial radio stations in the UK continued to face difficult
trading conditions which resulted in station closures, the sale of stations to
non-Broadnet groups and price pressure. However, the Irish market remained
buoyant and Broadnet secured a number of new licence contracts.
FUTURE PROSPECTS
The large organisations that utilise the expertise of Buckingham and Quaestor
continue to be cost conscious. They are demanding greater returns from their
marketing spend and are conducting more analysis before, during and after
campaigns which plays to the strength of our businesses. During the past six
months, we have seen an increase in the number of briefs focused on product
innovation, brand extension, ad tracking and consumer insights and we expect
this trend to continue as organisations seek to allocate their R&D, service and
marketing budgets more accurately.
The technology sector continues to experience tough trading conditions which, in
many instances, has resulted in reduced marketing budgets and headcount. In
these circumstances, major technology companies have sought to concentrate
external marketing spend on out-sourced services that directly result in sales,
such as tele-marketing and direct mail. The Lead Agency has addressed this need
establishing a loyal client base of major technology companies and a strong
pipeline for the second half of the year. Looking to 2004 and 2005 we anticipate
an increase in IT spending as organisations seek to review and renew systems
implemented before Year 2000 and as mobile working becomes more viable.
On 17 July, the Communications Act received Royal Assent and became law. It is
unclear how the new legislation will impact the UK radio industry and the
resultant effect on Broadnet. The widely predicted de-regulation of radio has,
in fact, materialised as re-regulation with the Competition Commission taking
responsibility for decisions regarding local and national cross-media ownership.
With 55% share of the UK radio scheduling software market, Broadnet continues to
be in a strong position. However, we are mindful that further consolidation will
occur in commercial radio and that some of the key players could be non-Broadnet
clients.
Overall, we expect the positive performance in the first six months of the year
to continue into the second half. During the period being reported on, we won 55
new clients and conducted 128 credentials presentations resulting in a strong
pipeline for the remainder of 2003 and the first quarter of 2004. We are
continuing to look for appropriate acquisition targets in the fields of direct
mail, database marketing and marketing consultancy.
Phillip Bennett
Chairman
11 September 2003
Consolidated Profit and Loss Account
for the six months ended 30 June 2003
Six months Six months Year ended
Ended 30 ended 30 31 December
June 2003 June 2002 2002
(unaudited) (unaudited) (audited)
Notes #'000 #'000 #'000
Turnover - continuing operations 3,913 1,004 2,243
- discontinued operations 488 1,604 2,908
--------- -------- ---------
4,401 2,608 5,151
Cost of sales (1,903) (1,329) (2,535)
--------- --------- ---------
Gross profit 2,498 1,279 2,616
Administrative expenses (1,993) (1,705) (2,213)
--------- --------- ---------
Operating profit before amortisation of
goodwill
- continuing operations 673 217 440
- discontinued operations - 114 223
Amortisation of goodwill (168) (127) (260)
--------- --------- ---------
505 204 403
Operating profit
Exceptional items - discontinued (28) - -
operations --------- --------- ---------
Profit before interest 477 204 403
Net interest payable (159) (151) (271)
--------- --------- ---------
Profit before taxation 318 53 132
Taxation (165) (31) (73)
--------- --------- ---------
Profit for the period 153 22 59
========= ========= =========
Adjusted earnings per share
(before exceptional items and
goodwill amortisation)
Basic 2 5.00p 2.55p 5.39p
Diluted 2 5.00p 2.55p 5.38p
Earnings per share
Basic 2 2.19p 0.38p 0.99p
Diluted 2 2.19p 0.38p 0.99p
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
#'000 #'000 #'000
Profit for the period 153 22 59
Currency adjustments 48 124 249
--------- --------- ---------
Total recognised gains and losses for the
period 201 146 308
========= ========= =========
Consolidated Balance Sheet
at 30 June 2003
At 30 At 31
June 2003 December 2002
(unaudited) (audited)
#'000 #'000
Fixed Assets
Intangible assets 6,239 6,407
Tangible assets 752 849
------------ -------------
6,991 7,256
------------ -------------
Current Assets
Stock 208 145
Debtors 2,030 2,009
Cash 761 338
------------ -------------
2,999 2,492
Creditors: amounts falling due within one year (4,087) (3,747)
------------ -------------
Net current liabilities (1,088) (1,255)
------------ -------------
Creditors: amounts falling due after more than
one year (5,748) (6,047)
Provisions for liabilities and charges (18) (18)
------------ -------------
Net assets/(liabilities) 137 (64)
------------ -------------
Capital and Reserves
Called up equity share capital 698 698
Share premium account 7,335 7,335
Profit and loss account (7,896) (8,097)
------------ -------------
Equity shareholders' funds/(deficit) 137 (64)
============ =============
Consolidated Cash Flow Statement
for the six months ended 30 June 2003-09-09
Six months Six months
Ended Ended
30 June 2003 30 June 2002
(unaudited) (unaudited)
#'000 #'000
Net cash inflow/(outflow) from operating
activities 596 (450)
Returns on investments and servicing of
finance (126) (151)
Taxation - (108)
Capital expenditure and financial investments (121) (8)
Net cash outflow for disposals (38) -
----------- -------------
Net cash inflow/(outflow) before financing 311 (717)
Financing 112 -
----------- -------------
Increase/(decrease) in cash in the period 423 (717)
=========== =============
Reconciliation of net cashflow to movement in
net debt
Increase/(decrease) in cash in the period 423 (717)
Cash outflow from increase in debt and lease
financing (112) -
Currency adjustments 48 126
----------- -------------
Movement in net debt 359 (591)
Opening net debt (6,610) (5,216)
----------- -------------
Closing net debt (6,251) (5,807)
=========== =============
Notes
1. The interim financial information for the half year ended 30 June 2003
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 2002 statutory
accounts.
2. The calculation of the basic earnings per share is based on the profit after
taxation of #153,000 (2002:#22,000)divided by the weighted average number of
ordinary shares in issue during the period of 6,980,196 (2002:5,846,597)
(basic)and 6,985,248 (2002:5,846,597) (diluted). An adjusted earnings per
share figure before exceptional items of #28,000 (2002:#nil) and the
amortisation of goodwill of #168,000 (2002:#127,000) has been presented to
show underlying earnings. This is based on the profit after taxation of
#349,000 (2002:#149,000) which represents the operating profit before
goodwill of #673,000 (2002:#331,000) less interest of #159,000 (2002:
#151,000) and taxation of #165,000 (2002:#31,000).
3. No interim ordinary dividend is payable.
4. The profit and loss account for the year ended 31 December 2002 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.
This information is provided by RNS
The company news service from the London Stock Exchange
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