RNS Number:2728X
Research Now plc
23 January 2006
Date: Embargoed until 07.00 hrs, Monday 23 January 2006
Contact: Chris Havemann (Chief Executive)
Andrew Cooper (Managing Director)
Research Now
Tel: +44 (0)20 7091 7800
Corporate Website: www.researchnow.co.uk
Alistair Mackinnon-Musson
Philip Dennis
Hudson Sandler
Tel: +44 (0)20 7796 4133
Email: rn@hspr.com
Photographs: Available from Hudson Sandler, as above
Research Now plc
Maiden Preliminary Results and Opening of German Business
The Board of Research Now, a leading European online fieldwork provider to the
market research industry, is pleased to announce its maiden Preliminary results
for the year to 31 October 2005 and the opening of a new office in Germany.
"Fieldwork" is the collection of survey data via personal interviews - a process
that Research Now undertakes online from its panel of over 700,000 potential
respondents - making Research Now the owner of one of the largest online
research panels in Europe.
Highlights:
o Results higher than City expectations at IPO
o Successful IPO on AIM (August 2005)
o Turnover more than five times last year
o Profit before tax nearly 10 times last year
o Basic earnings per share increased to 5.5p (2004: 0.7p)
o At year end, Group's 'Valued Opinions' consumer panels consisted over
700,000 members across eight countries, with 300,000 members in the UK
o Sales offices now established in Australia and the US
o New German office (Hamburg) announced today
Commenting, Chris Havemann, Chief Executive, said:
"I am delighted by the way last year progressed and also with our successful IPO
- attracting such solid and prestigious investors".
"I believe the market for online fieldwork in Europe will continue to expand
rapidly, given the 'cheaper, faster, better' nature of obtaining consumer data
this way. Being one of Europe's leading players in online fieldwork, we are
extremely well positioned to take advantage of the industry's continued
structural shift away from traditional face to face and telephone survey
methods. Trading so far in the new financial year has continued to be excellent
and we look forward to the future with great confidence and excitement."
Notes to Editors:
ABOUT Research Now
* Research Now is a leading European online fieldwork and panel
specialist in the market research industry
* Research Now owns the "Valued Opinions" (www.valuedopinions.co.uk)
family of research panels across Europe (UK, Germany, France, Spain, Italy,
Republic of Ireland and Austria) and Australia, comprising over 700,000
panellists, including the flagship UK panel of over 300,000 consumers (at 31
October 2005)
* Research Now has a broad base of research agency clients, with blue
chip 'end user' corporate clients
* Traditionally, market research fieldwork surveys have been
undertaken on either a 'face to face' basis or via the telephone. There is,
however, a structural shift underway in the research industry, towards
performing fieldwork online - largely a result of it often being cheaper, faster
and better than traditional survey methods
* In the US, online survey research has grown from constituting only
approximately 9% of the total US survey research market in 2000 to being an
estimated 29% of the market in 2005, representing a growth rate of circa 30% per
annum over the past five years. The European online market lags the US at only
circa 4% market share in 2005 - but it is rapidly increasing and is showing a
similar growth rate to that experienced in the US
* The worldwide market research industry is worth an estimated total
US $21.5 billion. Of this total, fieldwork is a significant component, with
online research being the fastest growing segment of it.
CHAIRMAN'S STATEMENT
I am proud to report Research Now's maiden results as a public company,
following our Admission to AIM in August 2005. Sales and profits for the year
ended 31 October 2005 both exceeded expectations at the time of our flotation.
Sales of #3.6m were more than 500% of the prior year and profit before tax of
#0.5m was ten times the equivalent performance in the 2004 financial year.
During the year, the Company established itself as one of the leading players in
the online fieldwork and panel market in Europe and expanded into new markets in
Australia and America as a result of client demand. The Company also
significantly broadened its client base during the period and I am extremely
pleased to note that our sales were derived from a diversified range of more
than 100 different clients in many industry sectors and that much of the Group's
revenue came from repeat business.
The Group's flotation on the AIM market in August last year proved to be very
successful. The float was more than twice subscribed, attracting an impressive
register of institutional investors and successfully raising #9.2m,
substantially more than had initially been sought, of which #2.5m (gross of
expenses) was raised for the Company and the balance used to provide an exit for
our angel investors.
I am delighted that Richard Dale agreed to join the board on the Group's
admission to AIM as a non-executive director. Richard has a vast amount of
experience in both the City and in the media industry, which will prove
invaluable in the future development of the business.
The market for the online collection of survey data or fieldwork is growing
rapidly. To a large extent this growth is as a result of an ongoing shift away
from traditional 'face to face' or telephone interviews, to the use of online
panels of respondents. The collection of survey data online is not only faster
and provides more accurate results but is also far cheaper. In the US, the
market for online fieldwork has grown by 30% p.a. over the last five years and
now accounts for 29% of the total fieldwork market (2000: 9%). In Europe, the
online market lags that of the US at only 4% of the total market but is showing
similarly rapid growth patterns to that seen in the US over the last five years.
I would like to take this opportunity of thanking all those who have contributed
to the success of the Company. Our clients, suppliers, advisors and investors
have all been key to getting us to where we are today but I must single out for
special mention our people. It is tempting to portray an online business as
being about efficiency and seamless processes and, whilst this is true, quality
and client service is at the heart of our business model. I would therefore like
to thank all our employees for their outstanding efforts during the last year.
Trading in the new financial year to date has continued to be excellent and we
look forward to the future with great confidence and excitement. We believe the
market for online fieldwork in Europe is only just emerging and we see many
opportunities to continue our successful growth story.
Geoff Westmore
Chairman
23 January 2006
CHIEF EXECUTIVE'S REVIEW
Overview
The year was one of great achievement as well as rapid and profitable growth for
Research Now and I am pleased to say our results are considerably above what was
expected at the time of the Group's IPO in August.
The float successfully raised #2.5m for the Company providing additional funding
to exploit the growth opportunities in the market for online fieldwork. During
the period, Research Now saw rapid growth on many fronts, not least in terms of
delivering many more projects to support five-fold revenue growth, but also in
terms of expanding our online panels, enhancing our IT systems and growing our
team further.
The market for online fieldwork and panel services in Europe continues to
expand, with the trend away from traditional telephone and 'face to face'
fieldwork continuing in favour of online alternatives. The collection of survey
data online is typically faster, more accurate and also more cost-effective than
traditional techniques.
Results
Group turnover for the year to 31 October 2005 increased five fold to #3.6m
(2004: #0.7m) and profit before tax increased to #0.52m (2004: #0.05m).
The Group's strong performance was due to a combination of adding new clients
and also increasing sales to existing clients. Around 86% of Group revenue in
the year was derived from custom ad-hoc projects, while the remainder was from
ongoing tracking studies.
The number of full time employees in the business increased from 11 at the start
of the year to 46 by the year end. Recruitment is a key area for the business;
it is our firm belief that good people are at the heart of good delivery and as
such we have recruited excellent staff from both within the market research
industry and beyond. This has allowed us to grow rapidly while continuing to
deliver high quality work to all our clients.
At the time of the float we stated that one of the areas we would focus on is
developing our online consumer panels, both in the UK and internationally, and
as such we made an investment of #0.54m in this area during the year.
Client Service
Research Now provides online fieldwork and panel services to a broad range of
over 100 clients. The majority of these are market research agencies, although
the Group also provides fieldwork to an array of well known blue chip and other
corporate clients directly, along with a number of media and advertising
agencies and consultancies. Our largest client in the year accounted for only
10% of turnover and our breadth of clients is further illustrated by the fact
that the percentage of our turnover from large international market research
agencies reduced from 43% in the first half of the financial year to 34% in the
second half, while rising in absolute terms.
It is crucial to clients in the research industry that online survey data from
fieldwork studies is of high quality and delivered on time - accordingly we seek
to differentiate ourselves through our quality of delivery and our online
research panels, with client retention a key indicator of our success.
During the year we continued to expand both the size and number of our branded '
Valued Opinions' panels and also continued to introduce additional panel
profiling, spanning specialist areas such as healthcare, in order to increase
the value and appeal of our panels to clients.
Reflecting client demand to deliver research projects across multiple countries,
we launched new panels at the beginning of the year in Germany, France, Spain
and Italy, enabling us to provide a one stop shop solution for the 'Big 5'
European economies. Later in the year, new panels were also recruited and
launched to cover Austria, Australia and the Republic of Ireland.
Our total number of panellists reached 707,000 by year end.
Although localised, each of the new panels follows the successful 'Valued
Opinions' template, which the Group originally pioneered in the UK. Cared for
by our native language panel support teams based in London, our panels are used
solely for research purposes, with panel members earning a range of incentives
designed to maintain high response rates. Panellists are highly profiled and
regularly screened in order to enable us to provide clients with fast
turnaround, accurate and dependable fieldwork.
At the beginning of the year, Research Now served UK clients from a single
office in London. In line with our stated strategy at IPO to increase returns
from our existing panels by selling access to them to new clients in different
geographies, we have since opened a number of new international sales offices.
New Office
In September the Group opened a sales office in Australia, providing access to
our Australian and European consumer panels to clients based in the Asia Pacific
region. In November, just after our year end, we announced the opening of our
office in New York and the appointment of a new team to drive sales of European
interview data to the sizeable and relatively developed market in the USA and
Canada. Today we are announcing the opening of a new office in Hamburg to build
sales in the developing German market, capitalising on our 118,000 strong German
panel and our ability to deliver one-stop-shop international projects to German
clients.
Outlook
We believe the market for online fieldwork in Europe will continue to expand
rapidly, with the cost-effectiveness, speed and quality of online data
collection continuing to drive substitution of traditional fieldwork methods.
During 2005, Research Now established itself as one of the leading players in
this attractive market. In 2006 we will maintain our focus on quality of
delivery, continue investing in our online panels and continue to establish
sales channels in selected overseas markets where we are not currently active
and where we believe returns will be highest. The new financial year has begun
well and we are well positioned to continue to take advantage of the rapid
growth in the online fieldwork market in 2006.
Chris Havemann
Chief Executive
23 January 2006
FINANCIAL REVIEW
Admission to AIM
The Company placed 1,925,000 new ordinary shares at a price of 130 pence per
share and was admitted to trading on AIM on 4 August 2005. The company raised
#1,746,000 net of costs from this issue of ordinary shares.
Results for operations
The Group achieved sales of #3,639,000 (2004 #701,000) and operating profits of
#510,000 (2004 #51,000).
Sales growth in successive half years is as follows:
Half Year Ending Unaudited #000
April 2004 241
October 2004 460
April 2005 1,259
October 2005 2,380
Gross margins improved to 80.3% (2004 72.2%) due to the reduction in work
commissioned from other panel providers and efficiency gains. This increase in
margin represented more than half of our expenditure on panels of #543,000.
The main elements of administration expenses are as follows:
2005 2004
#000 #000
Staff costs (excluding non-executive directors) 1,430 295
Depreciation and panel amortisation 319 3
Other overheads 664 157
Staff numbers have risen during the year but staff costs as a percentage of
turnover have fallen to 39.3% (2004 42.1%). We were pleased to introduce a share
incentive plan to all staff as part of the flotation process.
During the year the company invested #543,000 (2004 #nil) in new panellists.
Such amounts are written off over the first twelve months and the asset at year
end of #258,000 (2004 #nil) is treated as a current asset.
Other overheads as a percentage of turnover have fallen to 18.2% (2004 22.4%).
During the year there was an increase in trade marketing and costs associated
with becoming and being a public company. The Group opened offices in London,
Athens and Brisbane during the period. The board constantly seeks internal
efficiencies consistent with the growth of the business.
Earnings before interest, tax, depreciation and amortisation (EBITDA)
The company calculates EBITDA as follows:
2005 2004
#000 #000
Operating profit 510 51
Add back:
Depreciation and panel amortisation 319 3
EBITDA 829 54
The Company achieved an operating margin of 14.0% (2004 7.3%) and an EBITDA
margin of 22.8% (2004 7.7%). Such margins reflect the higher margins being
achieved by the UK business being offset by the costs of operations and panels
in the start-up territories in which we operate.
Taxation
No tax charge arises on the profit for the financial year. At 31 October 2005
the Company has approximately #3,520,000 of losses available to carry forward to
set against future taxable profits, subject to agreement with the Inland
Revenue.
Working Capital
The Company's operational cash position has been strengthened by the placing in
August 2005. At 31 October 2005, the Company had cash of #1,428,000 (2004
#62,000). The Company has no debt. At the end of the financial year the
Company had net current assets of #2,260,000 (2004 #93,000).
During the year the Company had cash outflows from operating activities of
#249,000 (2004 #75,000). This outflow reflects the investment in new panellists.
In addition there were capital expenditures principally on computer equipment
and new office space of #196,000.
Pensions
The Company does not operate a defined benefit pension scheme and therefore at
present there are no circumstances in which the Company will face a future
pension liability.
Financial Instruments
During the period, the Company's financial instruments, comprised cash and
various items such as trade creditors that arise directly from operations. The
main purpose of these financial instruments is to finance the Group's
operations. The Company's policy is, and was throughout the period under
review, not to trade in financial instruments.
Dividend
As indicated at the IPO the directors currently propose continued investment in
growing the business and are not proposing to recommend a dividend at present.
Chris Havemann
Chief Executive
23 January 2006
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 OCTOBER 2005
Notes 2005 2004
#000 #000
Turnover 3 3,639 701
Cost of sales (716) (195)
Gross Profit 2,923 506
Administration expenses (2,413) (455)
Operating Profit 510 51
Interest receivable 15 2
Interest payable (1) -
Profit on ordinary activities before taxation 524 53
Taxation - -
Retained profit for the year 524 53
Basic earnings per share 4 5.5p 0.7p
Diluted earnings per share 4 5.2p 0.7p
The operating profit for the year arises from the Group's continuing operations.
No separate Statement of Total Recognised Gains and Losses has been presented as
all such gains and losses have been dealt with in the profit and loss account.
CONSOLIDATED BALANCE SHEET AS AT 31 OCTOBER 2005
2005 2004
Notes #000 #000
Fixed Assets
Tangible assets 178 16
178 16
Current Assets
Stocks 37 3
Debtors 1,663 255
Cash at bank and in hand 7 1,428 62
3,128 320
Creditors: Amounts falling due (868) (227)
within one year
Net current assets 2,260 93
Total assets less current 2,438 109
liabilities
Capital and reserves
Called up share capital 258 168
Share premium 1,772 810
Special Reserve - -
Profit and loss account 465 (869)
Other reserve (57) -
Shareholders' funds 2,438 109
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 OCTOBER 2005
Notes 2005 2004
#000 #000
Cash flow from operating activities 5 (249) (75)
Returns on investments and servicing of finance 6 14 2
Taxation - -
Capital expenditure and financial investment 6 (196) (18)
(431) (91)
Cash outflow before financing (431) (91)
Financing 6 1,797 122
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN FUNDS
2005 2004
#000 #000
Increase in cash in the period 1,366 31
Movement in net funds in period 1,366 31
Net funds at 1 November 2004 62 31
Net funds at 31 October 2005 1,428 62
NOTES TO THE ACCOUNTS
1. Publication of non-statutory accounts and basis for preparation
The financial information contained in this preliminary announcement does not
constitute statutory accounts for the year ended 31 October 2005. The financial
information for the year ended 31 October 2004 is derived from the statutory
accounts for that period which have been delivered to the Registrar and include
an audit report which was unqualified and did not contain a statement under
either Section 237(2) or Sections 237(3) of the Companies Act 1985. The
statutory accounts for the year ended 31 October 2005 will be finalised on the
basis of the financial information presented by the directors in the preliminary
announcement and will be delivered to the Registrar of Companies following the
Company's Annual General Meeting.
2. Availability of accounts
Once finalised, a copy of the report and accounts will be circulated to all
shareholders and copies of this report made available from the Company's head
office, 66 South Lambeth Road, London SW8 1RL.
3. Segmental analysis
The Company's turnover and profit before taxation were all derived from its
principal activity in the United Kingdom.
4. Earnings per share
Profit for Weighted average Pence per
the year number of shares share
#000
Basic earnings per share 524 9,481,584 5.5p
Earnings attributable to ordinary shareholders
Dilutive effect of securities:
Share options 560,705
Diluted earnings per share 10,042,289 5.2p
Basic earnings per share is calculated by dividing the earnings attributable to
ordinary shareholders by the weighted average number of ordinary shares in issue
during the period, determined in accordance with the provisions of FRS 14: '
Earnings per share'.
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares in issue on the assumption of conversion of all the
potentially dilutive ordinary shares, these being share options granted where
the exercise price is less than the average price of the Company's ordinary
shares during the year.
The 2004 basic and diluted earnings per share of 0.7p have been calculated as
#53,000 of profit divided by the 7,845,679 weighted average shares in issue.
5. Reconciliation of operating profit to net cash inflow from operating
activities
2005 2004
#000 #000
Operating profit 510 51
Depreciation 34 4
Amortisation of panel expenditure 285 -
Amortisation of share options 8 -
(Increase) in stocks (34) (3)
(Increase) in debtors (1,150) (231)
(Increase) in panel expenditure (543) -
Increase in creditors 641 104
Net cash flow from operating activities (249) (75)
6. Reconciliation of cash flows for headings netted in the cash flow
2005 2004
#000 #000
Returns on investments and servicing of finance
Interest received 15 1,361
Interest paid (1) -
Net cash inflow from returns on investments and servicing of finance 14 1,361
Capital expenditure and financial investment
Purchase of tangible fixed assets (196) (18)
Net cash outflow from capital expenditure and financial investment (196) (18)
Financing
Receipts from issue of equity shares 2,618 122
Equity share issue expenses (756) -
Purchase of own shares (65) -
Net cash inflow from financing 1,797 122
7. Analysis of net funds
At Cash flow Other non cash At
1 November #000 changes 31 October
2004 #000 2005
#000 #000
Cash in hand, at bank 62 1,366 - 1,428
Total 62 1,366 - 1,428
- ENDS -
This information is provided by RNS
The company news service from the London Stock Exchange
END
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