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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| EQ Grp | LSE:EQI | London | Ordinary Share | GB0004740030 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 70.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number:3627J
EQ Group PLC
25 September 2006
eq group plc
Interim results for the six months ended 30 June 2006
eq group plc ("eq" or "the group"), the AIM listed marketing services group,
announces its interim results for the six months ended 30 June 2006.
Chairman & Chief Executive's Statement
As reported in our trading statement on 2 June, your group's performance in the
first half of 2006 was disappointing. Revenues fell by 11% to #4,974,000 (2005:
#5,589,000) as a result of an unanticipated reduction in activity by a number of
key market research clients. The clients concerned are global businesses that
undertook major organisational change in the first half of the year which led to
a temporary reduction in activity which started to reverse in June.
The trading statement issued by the company on 2 June 2006 stated that we would
maintain our project delivery ability and by implication not reduce our market
research headcount. As activity levels have increased in the early part of the
second half this has enabled us to meet a heavy workload, however it has
significantly impacted our profitability in the first half of the year.
Operating profit fell by 64% to #226,000 (2005: #620,000). Adjusted operating
profit, before amortisation of goodwill, fell by 41% to #504,000 (2005:
#853,000). Amortisation of goodwill associated with previous acquisitions
increased to #278,000, reflecting the higher deferred consideration paid to the
vendors of our market research businesses as a result of their continued
out-performance during the year ended 31 December 2005. Subsequent trading is
not subject to any further deferred payments.
Basic earnings per share fell by 122% to a loss of 0.73 pence from 3.35 pence.
Basic earnings per share before amortisation of goodwill and exceptional items
were down by 59%, at 2.63 pence (2005: 6.37 pence).
The profit before tax fell by 93% to #33,000 (2005: #442,000) and the profit
after tax fell by 123% to a loss of #60,000 (2005: profit of #258,000).
In view of the disappointing trading, the board considers it inappropriate to
pay an interim dividend.
Net debt increased by #1,284,000 principally due to the payment, in the form of
cash, of #953,000 to the vendors of Quaestor. The remaining cash outflow
resulted from a number of our major clients requiring increased payment terms.
Review of Activities
During the period, the group generated #4,702,000 (2005: #5,305,000) or 95% of
its revenue from market research and #272,000 (2005: #284,000) or 5% of its
revenue from software development.
The market research businesses (Buckingham Research and Quaestor) saw revenues
fall by 11.4% and operating profits fall by 35.3% against the same period in
2005. The disproportionate decrease in profitability occurred because we took
the view that the reduction in activity was temporary and did not reduce our fee
earning headcount accordingly. Fee earning employment costs accounted for 43% of
cost of sales in the first half.
During the period 27 (2005: 30) new clients were won, including Travis Perkins,
Wesleyan Assurance, Revlon, Sportingbet and Leaseplan.
Broadnet performed in line with expectations and completed final testing of the
new Windows-based version of its market leading advertising traffic management
software.
Outlook
After a very tough first half the initial indications for the second half are
more positive.
The market research businesses have performed well in the first few months of
the second half as a number of major clients returned to normal activity levels.
Unfortunately, the group's largest client last year has failed to return to the
levels of spend experienced in 2005 and looks unlikely to do so during the
remainder of this financial year.
To help us absorb these variations in demand more readily, we have conducted a
thorough review of our business and intend to concentrate on the following
priorities for the remainder of 2006 and into 2007: enhancing our research
thinking by investing more heavily in R&D, clearly linking our research skills
to the business problems that our clients face; raising our profile amongst
decision makers within our target markets; widening our client base; deploying
technology to decrease turnaround times and recruiting new talent into our
business.
By focusing on these areas we are confident that the group can build on its
existing strengths, increase its differentiation in the market and minimise its
exposure to a relatively small number of clients.
Finally, we would like to thank all our employees for their hard work during the
first six months of 2006. We would also like to express our gratitude to Michael
Waterhouse who stepped down as Non-Executive Director in May 2006.
Brian Heather Bob Bond
Chairman Chief Executive
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the six months ended 30 June 2006
Notes
Year
Six months ended Six months ended ended 31
30 June 2006 30 June 2005 December 2005
restated restated
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Turnover 4,974 5,589 11,391
Cost of sales 2 (3,369) (3,625) (7,366)
__________________________________________________________________________________________________________
Gross profit 1,605 1,964 4,025
Administrative expenses (1,379) (1,344) (3,028)
__________________________________________________________________________________________________________
Adjusted operating profit 504 853 1,654
Exceptional items (176)
Amortisation of goodwill (278) (233) (481)
__________________________________________________________________________________________________________
Operating profit 226 620 997
Net interest payable (193) (178) (374)
__________________________________________________________________________________________________________
Profit before taxation 33 442 623
Taxation (93) (184) (334)
__________________________________________________________________________________________________________
(Loss)/profit for the period (60) 258 289
__________________________________________________________________________________________________________
Basic earnings per share Notes
(Loss)/earnings per share 3 (0.73p) 3.35p 3.75p
Adjusted earnings per share 3 2.63p 6.37p 12.12p
Diluted earnings per share
(Loss)/earnings per share 3 (0.67p) 3.06p 3.37p
Adjusted earnings per share 3 2.42p 5.82p 10.88p
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
#'000 #'000 #'000
(Loss)/profit for the period (65) 258 289
Currency adjustments - (7) -
__________________________________________________________________________________________________________
Total recognised gains and losses for the (65) 251 289
period
__________________________________________________________________________________________________________
Prior year adjustment (Note 1) (15)
_________________________________________________________________________
Total gains and losses recognised since last (80)
annual report
_________________________________________________________________________
CONSOLIDATED BALANCE SHEET
at 30 June 2006
Notes At 31
At 30 June 2006 December 2005
(unaudited) (audited)
#'000 #'000
FIXED ASSETS
Intangible assets 8,747 9,006
Tangible assets 657 681
_________________________________________________________________________________________________________
9,404 9,687
_________________________________________________________________________________________________________
CURRENT ASSETS
Stock 208 284
Debtors 1,741 1,738
Cash - 101
_________________________________________________________________________________________________________
1,949 2,123
CREDITORS: amounts falling due within one year (3,332) (4,403)
_________________________________________________________________________________________________________
Net current liabilities (1,383) (2,280)
_________________________________________________________________________________________________________
CREDITORS: amounts falling due after more than one year (4,941) (3,262)
PROVISIONS FOR LIABILITIES - (1,915)
_________________________________________________________________________________________________________
NET ASSETS 3,080 2,230
_________________________________________________________________________________________________________
CAPITAL AND RESERVES
Called up equity share capital 887 799
Share premium account 1,704 839
Profit and loss account 4 489 592
_________________________________________________________________________________________________________
EQUITY SHAREHOLDERS' FUNDS 3,080 2,230
_________________________________________________________________________________________________________
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 June 2006
Six months ended Six months ended
30 June 2006 30 June 2005
(unaudited) (unaudited)
#'000 #'000
Net cash inflow from operating activities 179 710
Returns on investments and servicing of finance (196) (173)
Deferred consideration paid (972) -
Taxation (186) (157)
Capital expenditure and financial investments (65) (29)
Dividend paid (44) (36)
__________________________________________________________________________________________________________
Net cash (outflow)/inflow before financing (1,284) 315
Financing 655 (468)
__________________________________________________________________________________________________________
Decrease in cash in the period (629) (153)
__________________________________________________________________________________________________________
Reconciliation of net cashflow to movement in net debt
Decrease in cash in the period (629) (153)
Cash (inflow)/outflow from (increase)/decrease in debt (655) 468
__________________________________________________________________________________________________________
Movement in net debt (1,284) 315
Non-cash movements:
Loan note issue - (942)
New finance leases (net of repayments) - (29)
Opening net debt (5,097) (4,818)
__________________________________________________________________________________________________________
Closing net debt (6,381) (5,474)
__________________________________________________________________________________________________________
Notes:
1. The interim financial information for the half year ended 30 June 2006 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 2005
statutory accounts except for the adoption of FRS20 - "Accounting for Share
Based Payments " under which a charge against the profit & loss account has
been made in respect of the employee share options issued since 7 November
2002. Similarly a charge has been made against the profit & loss account in
the comparative figures. None of these charges is material.
2. In 2005 the allocation of direct salary costs at the group's market research
businesses was harmonised, with all such costs being presented within cost
of sales. This change in accounting policy does not affect the operating
profit. The cost of sales figure for the six months ended 30 June 2005 has
been increased by #1,022,000 and the administrative expenses for the same
period reduced by the same amount.
3. The calculation of the basic earnings per share is based on the loss after
taxation of #60,000 (2005: profit of #258,000) divided by the weighted
average number of ordinary shares in issue during the period of 8,267,628
(2005: 7,707,276) (basic) and 8,978,168 (2005: 8,438,513) (diluted). An
adjusted earnings per share figure has been presented to show underlying
earnings. This is based on the profit after taxation of #218,000 (2005:
#491,000) which represents the adjusted operating profit of #504,000 (2005:
#853,000) less interest of #193,000 (2005: #178,000) and taxation of #93,000
(2005: #184,000).
4. The profit and loss account for the year ended 31 December 2005 and the
balance sheet at that date are derived from the Company's full accounts
(as adjusted for the adoption of FRS20) which have been filed with the
Register 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 07747032478
This information is provided by RNS
The company news service from the London Stock Exchange
END
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