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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Ekay | LSE:EKY | London | Ordinary Share | GB00B0NL6B21 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 6.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
Ekay PLC Preliminary Announcement of Annual Results for the year ended 30 June 2007 Ekay PLC ("Ekay" or the "Company") announces its results for the year ended 30 June 2007. Ekay is an advertising and marketing agency based in the UK and the Channel Islands which specialises in advising clients on the use of television, national and local press, magazines, the internet, direct mail and posters for business development purposes. Highlights * Turnover increased by 35% to £49.3m (2006: £36.4m); Loss for the year of £1.8m (2006: profit of £638,914), of which £1.7m was caused by exceptional items and discontinued activities, primarily in respect of specific bad debt provision * Profit on continuing operations, after adjusting for employee share option charge * Acquisitions of Wallace Barnaby and Campaign Management Associates + Ekay now a top ten regional advertising and marketing agency * Range of services continues to grow + With continued diversification into new industry groups to improve quality of earnings * Cash-generative in spite of loss; £1.6m of cash on balance sheet * Announced today: Appointment of Mike Lording, Finance Director, to the Board Eddie Powell, Chief Executive, commented: "The business has significantly grown over the last year through acquisition and diversification into new industry sectors. Our plan is to become the largest regional advertising agency in the UK. "We look forward to the further development of the Group in terms of its aims of growing its customer base through organic and acquisitive means." 26 November 2007 Enquiries: Ekay PLC Tel: 01474 334343 Eddie Powell, Chief Executive Daniel Stewart & Co Plc Tel: 020 7776 6550 Oliver Rigby Nexus Financial Ltd Tel: 020 7451 7050 Nicholas Nelson/Kathy Boate Ekay PLC Chief Executive's and Chairman's Statement Business Overview and Summary This financial year, whilst problematic because of a number of bad debts incurred by the Group, has been one of great change at Ekay, as we have seen it grow substantially through acquisitions whilst implementing changes at the operational level to ensure we are developing along with the changing market place. More than ever, the Company is in a position to offer a full range of advertising and marketing related services, and the growth we have seen in the last year has allowed us to continue to invest in both geographical and operational expansion. The acquisition of Guernsey based Wallace Barnaby in November 2006 represented a significant step for Ekay in terms of strengthening its regional offerings. By adding Wallace Barnaby's impressive client list and strengths in both media services and online offerings, the Group as a whole was able to realize its objective of creating an enlarged regional agency with improved service provision. We are happy to report that Wallace Barnaby has successfully been integrated with Ekay following the acquisition and has proved earnings enhancing It has created cross-marketing opportunities for both and the appointment of Bruce Wallace to the Board of Directors has allowed us to utilise his experience and in-depth knowledge of the marketplace. In June 2007 the Company acquired Campaign Management Associates Limited ("CMA") also based in Guernsey. CMA provides public relations, design and print services and event management to the public and private sectors in the Channel Islands and the UK, with the majority of business focused on the latter. We identified several synergies with Wallace Barnaby and are pleased that CMA is now fully integrated with Wallace Barnaby and has moved into their offices. This will allow an improved offering to all clients of the enlarged group, as Ekay as a whole can offer additional public relations and event management services at a more in-depth level, with a dedicated team in place to provide these services. Financial Summary Revenue for the Group increased by 35% to £49.3m (2006: £36.4m) reflecting the consolidation of the Wallace Barnaby acquisition. However, the Group incurred a number of bad debts and other exceptional costs which resulted in a loss for the year of £1.8m (2006: profit of £638,914). No dividend is proposed (2006: £ 117,393). The business has shown itself to be robust and, with the integration of both Wallace Barnaby and CMA, with the resulting synergies the Group has returned to profitability in the first quarter of the current financial year. The impact of the acquisitions has now been fully realised, as the Group was able to strengthen identified areas within the enlarged group and expand its offerings and client list. The move into online marketing and advertising, where client margins are smaller, has reduced margins as a result. However the increasing marketing spend in this area is seen as an investment for the future. Ekay is already seeing improved margins through the improved client mix, an additional benefit being the reduced reliance on the sub-prime financial sector. A number of exceptional items, most notably the potential bad debts with APS as previously announced, have had a significant bearing on this past financial year. APS Jersey is in liquidation, and the Company awaits the liquidators' report on the prospects for recovery of the £1.05m due to Ekay. APS UK has recently gone into administration owing Ekay £0.66m. Litigation against APS UK was underway before it went into administration and significant legal fees to complete this process have been provided for. The Directors hope that there will be partial recovery of the amounts owed, but that the most prudent view is to provide for the whole of the debt. The total provision in the year is £1.86m including future legal fees. Other exceptional items included a bad debt for First Class Mortgages of £ 230,000 which was disclosed at the time of the interim results. The Board has reviewed the Group's policy for recognising the carrying values of current assets, notably work-in-progress, and decided to write-off £204,000. The Directors have also fully written off their investment in Docklands Holdings Limited, based in Jersey which was the intermediary which traded with APS Jersey. The carrying value of the investment was £62,000, and the entity reported a loss in the period of £97,000 and there were a further £57,000 of write-offs. The company no longer trades, and only remains in existence while the process with the liquidator continues. Cost control measures being put in place will also have a significant positive impact on the current financial year's profit. Outlook The business has grown substantially over the last year through acquisition and diversification into new industry sectors. Our plan is to become the largest regional advertising agency in the UK. The acquisitions of Wallace Barnaby and CMA and their integration have increased our presence and improved our ability to service clients across a broader spectrum. Existing and potential clients now have a full range of services on hand as well as qualified and experienced teams to help guide them. We welcome Mike Lording to the Board and thank all staff for their valuable contribution. We look forward to the further profitable development of the Company in the current financial year and beyond. Tony Sullivan Eddie Powell Chairman Chief Executive Officer Ekay PLC Consolidated income statement for the year ended 30 June 2007 Group Year ended Year ended 30 June 30 June 2007 2006 Notes Continued Discontinued Exceptional Total Total operations operations items Revenue 2 48,624,121 691,198 49,315,319 36,388,709 Direct costs (46,439,863) (672,529) (47,112,392) (34,109,644) Gross profit 2,184,258 18,669 2,202,927 2,279,065 Other 111,841 111,841 61,239 operating income Operating (2,135,319) (216,947) (433,700) (2,785,966) (1,274,841) costs before APS Mortgages provision & Share option charge APS Mortgages (1,884,796) (1,884,796) provision Share option (151,385) (151,385) (110,000) charge Total (2,286,704) (216,947) (2,318,496) (4,822,147) (1,384,841) operating cost Depreciation (93,497) (93,497) (67,417) Total (84,102) (198,278) (2,318,496) (2,600,876) 888,046 operating profit/loss Interest 65,974 1,725 67,699 78,171 income Profit / (18,128) (196,553) (2,318,496) (2,533,177) 966,217 loss before taxation Income tax 3 5,387 58,399 688,867 752,653 (327,303) expense Profit/loss (12,741) (138,154) (1,629,629) (1,780,524) 638,914 for the year attributable to equity holders of the parent Earnings per share Basic 4 -4.64p 1.77p earnings/ loss per share Diluted 4 -4.64p 1.69p earnings/ loss per share Ekay PLC Consolidated balance sheet As at 30 June 2007 Group As at As at 30 June 2007 30 June 2006 £ £ Assets Non-current assets Property, plant and equipment 443,715 313,180 Goodwill 2,386,462 - -------------- ------------ 2,830,177 313,180 Current Assets Trade and other receivables 2,929,099 5,396,531 Corporate income tax receivable 449,823 - Cash and short term deposits 1,843,985 921,104 ------------- ------------- 5,222,907 6,317,635 ------------- ------------- Total assets 8,053,084 6,630,815 ------------- ------------- Equity and liabilities Equity attributable to equity holders of the parent Share capital 391,309 371,888 Share premium 718,579 - Retained earnings (941,807) 804,725 ------------- ------------- 168,081 1,176,613 Current liabilities Trade and other payables 7,862,990 5,123,995 Corporate income tax payable 22,013 330,207 ------------- ------------- Total liabilities 7,885,003 5,454,202 ------------- ------------- Total equity and liabilities 8,053,084 6,630,815 ------------- ------------- Ekay PLC Statement of changes in equity for the year ended 30 June 2007 Group Share Share Retained Total Capital Premium Earnings £ £ £ £ Balance as at 1 July 2006 371,888 - 804,725 1,176,613 Credit on charge for share - - 151,385 151,385 options Loss for the year - - (1,780,524) (1,780,524) ----------- ----------- ------------- --------------- Total recognised income and 371,888 - (824,414) (452,526) expense for the year Dividend paid - - (117,393) (117,393) Issue of share capital for 19,421 718,579 - 738,000 investment Issue cost - - - - ----------- ----------- -------------- --------------- 391,309 718,579 (941,807) 168,081 ----------- ----------- -------------- --------------- Ekay PLC Consolidated cash flow statements for the year ended 30 June 2007 Group Year ended Year ended 30 June 30 June 2007 2006 £ £ Cash flows from operating activities Loss from operations (2,600,876) 888,046 Share option charge for the year 151,385 110,000 Depreciation of property, plant and equipment 93,497 67,417 --------------- --------------- Operating cash flows before movement in (2,355,993) 1,065,463 working capital Decrease in receivables 1,875,551 (2,956,604) Increase in payables 2,079,897 1,985,531 --------------- --------------- Cash generated from operations 1,599,455 94,390 Income taxes paid (200) (247,991) --------------- --------------- Net cash from/(used in) operating activities 1,599,255 (153,601) Cash flows from investing activities Interest received 65,036 78,171 Investments (1,510,860) (64,675) Disposal of fixed assets - - Acquisition of fixed assets (28,770) (65,119) --------------- --------------- Net cash used in investment activities (1,474,594) (51,623) Cash flows from financing activities Proceeds from issues of shares 738,000 297,000 Cost of share issue - (368,183) Dividends paid (117,393) (550,000) --------------- --------------- Net cash from/(used in) financing activities 620,607 (621,183) Net increase/(decrease) in cash and cash 745,268 (826,407) equivalents Cash and cash equivalents at 1 July 2006 921,104 1,747,511 --------------- --------------- Cash and cash equivalents at 30 June 2007 1,666,372 921,104 --------------- --------------- Ekay PLC Notes to the consolidated financial statements 1. Basis of accounting The financial information contained in this report does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The financial information contained in this report has been extracted from the audited accounts of the Company for the year to 30 June 2007 for which the auditors have given an unqualified report. The financial statements have been prepared under the historical cost convention and in accordance with International Financial Reporting Standards incorporating International Accounting Standards as issued by the International Accounting Standards Board (IFRS) and with those parts of the Companies Act, 1985 applicable to companies reporting under IFRS. 2. Segmental reporting Turnover and profit before tax are attributable to the one principal activity of the Group, that of a full service advertising and marketing agency. Turnover from this business originated in the markets shown Group Year ended Year ended 30 June 30 June 2007 2006 £ £ United Kingdom 31,306,062 36,388,709 Channel Islands 18,009,257 - --------------- --------------- 49,315,319 36,388,709 3. Income tax expense Group Year ended Year ended 30 June 30 June 2007 2006 £ £ Current income tax Current year - 327,303 Under/(over) provision last year (327,303) ------------ ----------- Taxation attributable to the Company and its - 327,303 Subsidiaries Deferred tax asset (425,350) - ------------ ----------- (752,653) 327,303 ------------ ----------- 4. Earnings per share Group Earnings Year ended Year ended 30 June 30 June 2007 2006 Basic EPS Reported earnings (£) (1,780,524) 638,914 Reported EPS -4.64p 1.77p Diluted EPS Diluted reported earnings (£) (1,780,524) 638,914 Reported diluted EPS -4.64p 1.69p END
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