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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 | |
---|---|---|---|---|---|---|---|---|---|---|
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 Interim Results for the six months to 31 December 2006 Ekay plc ("Ekay" or the "Company") announces its interim results for the six months ended 31 December 2006. 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. Ekay has particular expertise in direct marketing. KEY POINTS * Revenue up 8.5% to £17.8 million (H1 2005: £16.4m) * Gross profit up 1.5% to £1.052m (H1 2004: £1.037m) * Profit before tax of £332k (H1 2005: £474k) before exceptional items of £ 233,000 * Increasing investment in infrastructure and staff to support new client wins in H2 * Acquisition + Wallace Barnaby & Associates Ltd acquisition completed in November 2006 for consideration of £1.75m + Impact of Wallace Barnaby acquisition has little impact on trading results for the period following acquisition on 24 November 2006 * Significant growth in client base with competitive position strengthened + Diversity and quality of mandates Eddie Powell, Chief Executive, commented: "Ekay prides itself on being a provider of high value, no-nonsense services which, coupled with an aggressive approach to new business, has proven to be a winning formula and competitive differentiator. "We anticipate the complete integration of Wallace Barnaby during the remainder of this year, leveraging the skills and knowledge base across the combined group." "We have a keen eye on growth organically and through additional acquisitions and have identified a number of suitable targets which would yield synergies and build earnings. We hope to announce further news in the coming months as matters conclude." 30 March 2007 Enquiries: Ekay plc Eddie Powell, Chief Executive Tel: 01474 334343 Shore Capital & Corporate Ltd Guy Peters/Dru Danford Tel: 020 7408 4090 Nexus Financial Tel: 020 7451 7050 Nicholas Nelson/Kathy Boate CHAIRMAN'S STATEMENT The results for the last year were extremely pleasing and the progress of the Group has continued into the first half of the current year, albeit in difficult circumstances relating to the UK sub-prime mortgage broking market place. Over the past two years the Group's strategy has been to diversify successfully the client base, moving into new industry sectors such as debt management, travel, holiday destinations, telecommunications and motor dealerships to name a few. This is now starting to show through in the current trading performance of the Group. Additionally, following the successful completion of the purchase of Wallace Barnaby & Associates Ltd ("Wallace Barnaby"), the leading Channel Islands advertising agency, the Group continues to diversify its client base into new industries, geographic locations and market sectors. The recent acquisition of Wallace Barnaby highlights the Group's strategy of diversification and its ability to leverage core skills and services across an enlarged client base. It is anticipated that the strategy we have adopted of making more acquisitions will further strengthen the commercial and financial prospects of the Group. Following this acquisition, the Company is delighted to welcome Bruce Wallace to the Board, who brings a wealth of experience in advertising and marketing. Additionally, the Group is now elevated into the top 20 advertising agencies within the UK, a major achievement and milestone for the Company. The recent solvency issue with one of our long standing client mortgage brokers has resulted in a potential bad debt of up to £1.65m. No provision has been made in these interim results as it is extremely difficult to determine at this early stage in proceedings the likely level of recovery. However, it is expected that a provision will be made in the full year's financial statements. The board has indicated that it will pursue vigorously the outstanding amounts owed to the Company using all available means and has already begun to do so. The board will keep shareholders apprised of all developments as they occur. I should like to thank all our staff for their committed drive over the past six months in reinforcing Ekay's position of strength in the advertising and marketing industry. Tony Sullivan Chairman 30 March 2007 CHIEF EXECUTIVE'S REPORT The first half of the year has been one of further activity and development for the Group, culminating in the acquisition for a consideration of £1.75m of Wallace Barnaby & Associates Limited, the leading Channel Islands advertising and marketing agency. Following the acquisition, the Group has further strengthened the Board through the appointment of Bruce Wallace, who is responsible for developing the Channel Islands business. The core client base has increased considerably during the period as the Company continues to increase the quality and diversity of mandates being won, notably in the area of direct response. Moreover the trend towards online marketing and advertising projects, which reflect greater use of the internet in business and commerce, continues at an increasing rate and remains the fastest growing part of the Group. Financial Summary The revenue for the first half of the year for the Group has grown by 8.5% to £ 17.8m (H1 2005: £16.4m) which produced an adjusted pre-tax profit of £406,000 (H1 2005: £474,000). Gross profit increased only slightly to £1,053,000 and with a maintained gross margin of 6%. The second half of the year should see an improvement of gross margin percentage due to the higher margin work undertaken by Wallace Barnaby. The business continues to operate from a low cost base, although costs for the period increased slightly before taking into account the charge for bad debts of £233,000, relating to First Class Mortgages and First Class Debt Solutions which went into liquidation in January 2007, and the charge for share based payments of £74,000. The full impact of the acquisition of Wallace Barnaby will not be seen until the second half of the year, which will significantly increase the trading levels of the Group for the full year. As announced on 5th March, the Company was made aware of a solvency issue in respect of a client which owes approximately £1.65m inclusive of interest charges for late payment. The potential bad debt arose when the client was unable to pay third party advertising expenses incurred by Ekay on the client's behalf. The directors of Ekay intend that they should pursue vigorously the outstanding amounts due to the Company using all available means. A provision with regard to the outstanding amounts may be required in the financial results for Ekay for the 12 months ended 30 June 2007 and the Company will keep shareholders notified of developments as they arise. Since July 2005 procedures have been implemented to ensure that credit is only extended to clients where the sums due are adequately covered by credit insurance except with a small number of historic customer accounts. Ekay does not currently trade with any other account on credit terms not adequately covered by insurance. Dividend The Company maintains a policy of dividend payments and paid an interim dividend of 0.3p on 16 February 2007. The events outlined above however, and announced on the 5 March concerning a potential bad debt, prevent the Company from making further dividend payments for the time being. The Directors will keep the matter under review. Outlook Ekay prides itself on being a provider of high value, no-nonsense services which, coupled with an aggressive approach to new business, has proven to be a winning formula and competitive differentiator. We anticipate the complete integration of Wallace Barnaby during the remainder of this year, leveraging the skills and knowledge base across the combined group We have a keen eye on growth organically and through additional acquisitions and have identified a number of suitable targets which would yield synergies and build earnings. We hope to announce further news in the coming months as matters conclude. Eddie Powell Chief Executive Officer 30 March 2007 Ekay plc Unaudited consolidated income statement for the 6 months ended 31 December 2006 6 months to Exceptional 6 months to 6 months to 12 months to 31 Dec 2006 Items 31 Dec 2006 31 Dec 2005 30 June Unaudited £ Unaudited Unaudited 2006 Before After £ Audited Exceptional Exceptional £ Items Items £ £ Revenue 17,751,312 17,751,312 16,431,383 36,388,709 Direct costs (16,698,431) (16,698,431) (15,394,024) (34,109,644) Gross profit 1,052,881 1,052,881 1,037,359 2,279,065 Operating (898,300) (233,000) (1,131,300) (615,814) (1,452,258) costs 154,581 (233,000) (78,419) 421,545 826,807 Other 4,350 4,350 4,350 61,239 operating income Total (233,000) operating 158,931 (74,069) 425,895 888,046 profit - continuing operations Interest 173,292 173,292 48,325 78,171 income Profit on (233,000) ordinary 332,223 99,223 474,220 966,217 activities before taxation (327,303) Income tax (29,457) (29,457) (131,000) expense Profit for the (233,000) 638,914 year 302,766 69,766 343 ,220 attributable to equity holders of the parent Earnings per 3 0.19p 0.97p 1.77p share - basic diluted 3 0.18p 0.92p 1.69p Ekay plc Unaudited consolidated balance sheet as at 31 December 2006 Notes As at As at As at 31 December 31 December 30 June 2006 2005 2006 Unaudited Unaudited Audited £ £ £ Fixed assets Goodwill 2,249,692 - - Property, plant and 465,321 308,469 313,180 equipment 2,715,013 308,469 313,180 Current assets Trade and other 4,311,429 3,747,820 5,396,531 receivables Cash at bank and short term deposits 1,393,781 862,559 921,104 5,705,210 4,610,379 6,317,635 Total assets 8,420,223 4,918,848 6,630,815 Equity and liabilities Equity attributable to equity holders of the parent Share capital 391,309 100,627 371,888 Share premium 718,579 41,511 - Retained earnings 874,491 719,628 804,725 6 1,984,379 861,766 1,176,613 Current liabilities: Trade creditors and other 6,024,067 3,675,187 5,123,995 payables 330,207 388,407 381,895 Corporate income tax payable Total current liabilities 6,412,474 4,057,082 5,454,202 Other payables over one 23,370 - - year Total equity and 8,420,223 4,918,848 6,630,815 liabilities There were no changes in equity other than the profit for the period attributable to equity holders of the parent as shown in the above Income Statement. Ekay plc Unaudited consolidated cash flow statement for the 6 months ended 31 December 2006 Notes 6 months 6 months 12 months ended ended ended 31 December 31 December 30 June 2006 2005 2006 Unaudited Unaudited Audited £ £ £ (Loss)/ profit from (74,069) 425,895 888,046 operations 74,000 - 110,000 Share option charge for the year 42,056 37,371 67,417 Depreciation of property, plant and equipment Operating cash flows before 41,987 463,266 1,065,463 movement in working capital Decrease/ (increase) in 2,046,256 - - receivables (905,050) (1,936,365) (2,956,604) (Decrease)/ Increase in payables 567,468 1,985,531 Cash generated from (used 1,183,193 (905,631) 94,390 in) operations Income taxes paid - - (247,991) Net cash from/ (used in) 1,183,193 (905,631) (153,601) operating activities Cash flows from investing activities Interest received 73,857 48,325 78,171 Investment in - (22,473) (64,675) quasi-subsidiary (1,522,181) - - Acquisition of subsidiary undertaking (net of cash (192) (30,361) (65,119) acquired) Acquisition of property, plant and equipment Net cash used in investing (1,448,516) (4,509) (51,623) activities Cash flows from financing activities Proceeds on issue of shares 738,000 42,138 297,000 Cost of share issue - - (368,183) Dividend paid - (250,000) (550,000) Net cash from/ (used in) 738,000 (207,862) (621,183) financing activities Net increase/ (decrease) in 472,677 (1,118,002) (826,407) cash and cash equivalents Cash and cash equivalents 921,104 1,747,511 1,747,511 at the beginning of the period Cash and cash equivalents 1,393,781 629,509 921,104 at the end of the period Ekay plc Notes to the Interim Statement For the six months ended 31 December 2006 1. Basis of Preparation This interim report is unaudited and does not constitute statutory financial statements within the meaning of Section 240 of the Companies Act 1985. The financial statements for the year to 30 June 2006, which were prepared in accordance with International Financial Reporting Standards (`IFRS') and upon which the auditors have issued an unqualified report, have been delivered to the Registrar of Companies. The financial statements for the half year to 31 December 2006 have been prepared in accordance with IAS 34 `Interim Financial Reporting'. The accounting policies applied in these interim financial statements are consistent with those set out and applied in the Group's Annual Report for the year to 30 June 2006. 2. Earnings Per Share The calculation of the basic and diluted earnings per share is based on the profit on ordinary activities after tax and on the weighted average number of ordinary shares in issue during the period. The profit and weighted average number of shares used in the calculations are set out below: Basic earnings per Profit Weighted Profit per share average share pence £ number of shares 6 months ended 31 69,765 37,385,674 0.19p December 2006 6 months ended 31 343,220 35,219,450 0.97p December 2005 Year ended 30 June 2006 638,914 36,028,888 1.77p Diluted earnings per Profit Weighted Profit per share average share pence £ number of shares 6 months ended 31 69,765 39,629,088 0.18p December 2006 6 months ended 31 343,220 37,377,900 0.92p December 2005 Year ended 30 June 2006 638,914 37,700,030 1.69p 3. Acquisition of Wallace Barnaby & Associates Limited On 24 November 2006, Ekay completed the acquisition of the Guernsey based Wallace Barnaby & Associates Limited and its subsidiaries ("Wallace Barnaby"), one of Britain's largest offshore marketing and advertising agencies, from Wallace Barnaby Holdings Limited (the "Vendor"). The consideration of £1.75 million has been satisfied by the issue at completion of 1,942,105 new ordinary shares in Ekay (the "Consideration Shares") and a payment at completion of £1,012,000 in cash ("Cash Portion"). At completion £350,505 was paid to Wallace Barnaby out of the Cash Portion by way of settlement of a debt owed by the Vendor to Wallace Barnaby. In addition, at completion £95,000 was repaid to Wallace Barnaby by a senior employee. 4. Related Party Transactions 54 Bath Street, which is also occupied by the Company, is owned by Mr Edward Powell's Self Invested Pension Plan. The total rent paid during the period ended 31 December 2006 was £7,000. During the period the Company engaged Olivine Capital Partners Limited, of which Stuart Cumberland is a Director, to undertake corporate finance and tax advisory work. Fees payable totalled £12,900 from 1 July 2006 to 31 December 2006. The amounting owing to Olivine Capital Partners Limited at the end of the period was £40,411. During the period the company provided services to AIM quoted Debts.co.uk plc, of which Stuart Cumberland is a Director. The total amount of services provided in the period was £186,189. The amount due from Debts.co.uk plc at the end of the period was £64,514. Stuart Cumberland does not have an interest in Debts.co.uk plc. Copies of this interim statement are available on request from Ekay plc, The Maltings, 53/54 Bath Street, Gravesend, Kent. DA11 0DF and can be viewed on the Company's website at www.ekay.co.uk. END
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