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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 2008 Ekay PLC ("Ekay" or the "Company"), a leading regional advertising and marketing services agency, today announces its results for the year ended 30 June 2008. Highlights * Successful integration following strategic acquisition of WFCA Integrated Limited ("WFCA"), a full service marketing communications company, bringing with it a track record of growth and a client list featuring many household names. * Enlarged Group now the largest "London agency outside London". * Reorganisation of Board including appointment of Bob Morton as Chairman and Michael Richards, Chief Executive of WFCA. as Chief Executive. * Reduced turnover, but increased gross profit from £2.2 million to just under £3.5 million, moves operating pre tax result before exceptional items from a loss of £215,000 into a profit of £91,000. * Prudent provision for exceptional items to reflect current value. * Significant cost savings help protect ongoing profitability of the enlarged Group. * Court approved reduction of capital will soon allow Share Premium Account to form part of distributable reserves. Michael Richards, Chief Executive, commented:- "The financial year was one of great change for Ekay, culminating in an acquisition that has more than doubled its size, significantly enhanced its market profile and bolstered its management structure. The Board is confident that the continuing development of the enlarged team and the range of services offered by it will lead to a robust and strongly performing Group in future years" Enquiries:- Ekay PLC Tel: 01892 511085 Michael Richards, CEO Steve Latter, Finance Director Daniel Stewart & Company Plc Tel: 020 7776 6550 Simon Leathers Chairman's and Chief Executive's Statement Business Overview and Summary The financial year was one of great change for Ekay culminating in an acquisition that has more than doubled its size, significantly enhanced its market profile and bolstered its management structure, making the newly constructed Group unrecognisable to that trading prior to 4th April 2008. When reviewing the overall performance of Ekay plc over the twelve month period therefore, it is essential to separate the annual financial performance in the year from the underlying strength of the Group moving forward. In April 2008 Ekay successfully completed by far its most ambitious strategic move to date with the acquisition of WFCA Integrated Limited, a full service agency based in Tunbridge Wells, for an initial consideration of £8.5 million plus additional consideration in respect of the excess of net assets acquired over £500,000. WFCA brings with it a track record of growth in both volume and profit delivery together with a client list featuring household names including Carpetright, Bathstore, Multiyork, BUPA and Western Union. The merger was a step change for both businesses, providing a potent "brand leader" positioning as the largest "London agency outside London". The enlarged group is able to provide a full service marketing offering at competitive cost levels and the acquisition allows the Ekay Group to move outside its traditional dependence on the financial sector and into retailing, medical, food and other sectors. While Ekay has established its reputation as a media specialist and within the on-line sector, WFCA brings an expertise in creative services, account handling and design as well as its own highly regarded media division. To more appropriately reflect the relative contributions to gross profit and to continue to capitalise on the increasingly public profile of the WFCA name, the Board has decided to propose, at the next Annual General Meeting of the Company, that the name of the Company be changed from EKAY PLC to WFCA PLC. More information on this development will be sent to Shareholders at a later date. Finally and of equal importance, WFCA brought with it a new senior management team who have been incorporated into the PLC board. Bob Morton and Michael Richards the principal vendor of WFCA, have taken over the reins as non executive Chairman and Chief Executive respectively. Steve Latter joined us from Aegis Group in July 2008, as Finance Director. In addition, Rodger Braidwood, formerly the Finance Director of WFCA and John Foley joined the board as non executive directors. Eddie Powell, EKAY's founder completes the board. The reconstructed board would like to thank the retiring directors for their contribution to the earlier development of the Group and their assistance in bringing the WFCA acquisition to fruition. Financial Summary While progress from a financial perspective was unspectacular the Group did move into operational profitability during a period of difficult trading in the marketing services sector generally. The Admission Document issued in March 2008 in connection with the acquisition of WFCA also contained EKAY's interim results for the six months to December 2007. Pre tax profit before exceptional items amounted to £139,000 and the document commented that EKAY had experienced difficult trading conditions during the first quarter of 2008 but that the pipeline of work was suggesting an improved second quarter. In the event, however, this proved not to be the case and the underlying reason for the profit improvement was the incorporation of three months of WFCA trading which contributed £372,000 to Group pre tax profit. Whilst gross revenues fell £4.8 million to £44.5 million, gross profit increased from £2.2 million to just under £3.5 million and the 2007 operating loss before exceptional items of £215,000 was turned into a profit of £91,000. WFCA, through the nature of its value added activities, brings a considerably higher gross margin percentage, in excess of 20%, lifting the Group result from 4.5% to 7.8%, This will show further growth in the forthcoming financial year with a full year's consolidated contribution from WFCA. Within the expanded Group it is envisaged that WFCA will provide approximately two thirds of the gross profit and a comparable percentage of the Group's EBIT. If a full years trading for WFCA had been consolidated in the reported year a Group pre tax profit in excess of £1.3 million would have been achieved. As well as adding `top line' growth, the WFCA acquisition has provided the opportunity to rationalise the Group's operating structure. Moving forward the Group will benefit from the closure of the group's Gravesend office and the consolidation of all Ekay domestic operations into a single head office in Tunbridge Wells. The WFCA acquisition was funded by the issue of new Ekay shares to the WFCA vendors of £4.5 million, a new investor share placing of £2.5 million and the issue of £1 million loan notes to the WFCA vendors. Accordingly, the acquisition, including costs of £0.5 million, only consumed approximately £1 million of working capital. Payments of additional consideration, which have been provided for within the accounts, are to be funded by corresponding reductions in corporation tax payable. Regrettably it has again been necessary to provide for a series of exceptional items. By far the most noteworthy of these is the decision to fully impair the investment in Wallace Barnaby Associates. Since its acquisition two years ago along with the later acquisition of Campaign Management Associates, for a combined consideration of £2.3 million plus costs, our Channel Islands division has experienced a reversal in its fortunes following the loss of clients and expenditure cut backs by others. Even following a major restructuring exercise that included significant reductions in overheads the division is unlikely to reach profitability in the forthcoming financial year. The board therefore decided that the most prudent course of action was to fully write off the investment although it continues to support the division moving forward. The impairment has no effect on the Group's working capital. Other exceptional costs relate to the cost of restructuring the management and operational base of the Group following the WFCA acquisition (£349,000) and providing for further bad debts (£365,000). It is hoped that some of this additional bad debt provision will be partially recovered in the fullness of time. The Board does intend, subject to results, financial condition, cash requirements, future prospects and profits available for distribution, to recommence the payment of dividends to Shareholders in the future. In furtherance of this aim, the Company successfully achieved a Reduction of Capital in June 2008, allowing the Share Premium account to form part of distributable reserves once all creditors as at 26th June have been paid. We are happy to report that as at the date of this statement, the overwhelming proportion of such creditors have indeed been paid and so the Special Reserve, included in the Balance Sheet in the sum of £6.5 million, will shortly be regarded as distributable. Outlook Looking ahead the Group has never been better placed in strategic terms, because in a deteriorating trading environment clients inevitably look to maximise the impact of their advertising for the minimum cost. With its `out of town' cost structure the Ekay Group is able to provide a unique offering in this very sensitive area and additionally the Group is expanding the range of services offered to its clients, and by implication expanding its fee base, by cross selling the new services of the enlarged Group. The Directors continue to believe that there is scope for the Group to make further acquisitions in the future and to consolidate its position as a major competitor to London based marketing and advertising agencies. A group's strength is always dependent on the quality of staff that work for it. We would like to take this opportunity to thank all the staff of the Ekay Group for their fantastic support and commitment over the last year. The Board is confident that the continuing development of the enlarged team and the range of services offered by it will lead to a robust and strongly performing Group in future years. Consolidated income statement for the year ended 30th June 2008 Group Year ended Year ended 30th June 30th June Before 2008 2007 Exceptional Exceptional items items Total Total £ £ £ £ Revenue 44,474,052 - 44,474,052 49,315,319 Direct costs (41,022,308) - (41,022,308) (47,112,392) Gross profit 3,451,744 - 3,451,744 2,202,927 Other operating income 22,604 - 22,604 111,841 Operating costs before (3,338,285) (3,352,609) (6,690,894) (2,785,966) share option credit and release of provision Release of provision 115,000 115,000 (1,884,796) Share option credit 17,131 - 17,131 (151,385) Total operating cost (3,321,154) (3,237,609) (6,558,763) (4,822,147) Depreciation (116,858) (116,858) (93,497) Total operating profit / 36,336 (3,237,609) (3,201,273) (2,600,876) (loss) Interest income 54,670 54,670 67,699 Profit / (loss) before 91,006 (3,237,609) (3,146,603) (2,533,177) taxation Income tax (expense) / 54,456 54,456 752,653 credit Profit/ (loss) for the year attributable to equity holders of the 145,462 (3,237,609) (3,092,147) (1,780,524) parent Earnings per share Basic earnings/loss per -4.62p -4.64p share Diluted earnings/loss per -4.62p -4.64p share Consolidated balance sheet as at 30th June 2008 Group Company As at As at As at As at 30th June 30th June 30th June 30th June 2008 2007 2008 2007 £ £ £ £ Assets Non-current assets Property, plant and equipment 470,746 443,715 200,046 276,444 Goodwill 8,497,907 2,386,462 - - Investment in subsidiaries - - 10,100,509 2,051,150 8,968,653 2,830,177 10,300,555 2,327,594 Current Assets Trade and other receivables 7,636,070 3,378,422 1,854,939 2,255,043 Cash and short term deposits 757,249 1,843,985 1,304 1,085,185 8,393,319 5,222,907 1,856,243 3,340,228 Total assets 17,361,972 8,053,084 12,156,798 5,667,822 Equity and liabilities Equity attributable to equity 1,568,088 391,309 1,568,088 391,309 holders of the parent Share capital Share premium - 718,579 - 718,579 Special reserve 6,499,126 - 6,499,126 - Retained earnings (4,051,085) (941,807) (3,464,752) (1,021,401) 4,016,129 168,081 4,602,462 88,487 Non current liabilities Long term borrowings 1,030,983 - 1,000,000 - Current liabilities Trade and other payables 12,011,838 7,862,990 6,400,324 5,579,335 Provisions for other liabilities 302,202 154,012 and charges Corporate income tax payable 820 22,013 - - Total liabilities 13,345,843 7,885,003 7,554,336 5,579,335 Total equity and liabilities 17,361,972 8,053,084 12,156,798 5,667,822 Statement of changes in equity for the year ended 30th June 2008 Group Share Share Retained Special Capital Premium Earnings Reserve Total £ £ £ £ £ Balance as at 1 July 391,309 718,579 (941,807) - 168,081 2007 Credit on charge for - - (17,131) - (17,131) share options Loss for the year - - (3,092,147) - (3,092,147) Total recognised 391,309 718,579 (4,051,085) - (2,941,197) income and expense for the year Issue of share capital 1.166,667 5,833,333 - - 7,000,000 Equity share option 10,112 11,214 - - 21,326 issued Issue cost - (64,000) - - (64,000) Transfer to special - (6,499,126) - 6,499,126 - reserve 1,568,088 - (4,051,085) 6,499,126 4,016,129 Company Share Share Retained Special Capital Premium Earnings Reserve Total £ £ £ £ £ Balance as at 1 July 391,309 718,579 (1,021,401) 88,487 2007 Credit on charge for - - (17,131) 17,131 share options Loss for the year - - (2,426,220) (2,460,482) Total recognised income 391,309 718,579 (3,464,752) (2,354,864) and expense for the year Issue of share capital 1,166,667 5,833,333 - - 7,000,000 Equity share option 10,112 11,214 - - 21,236 issued Issue cost - (64,000) - - (64,000) Transfer to special - (6,499,126) - 6,499,126 - reserve 1,568,088 - (3,464,752) 6,499,126 4,602,462 Consolidated cash flow statement for the year ended 30th June 2008 Group Company 12 months 12 months 12 months 12 months ended ended ended ended 30-Jun-08 30 Jun 2007 30-Jun-08 30 Jun 2007 £ £ £ £ Cash inflow/(outflow) from operating activities Profit/(loss) from (3,201,273) (2,600,876) (2,503,405) (2,707,670) operations Share option charge / (17,131) 151,385 (17,131) 151,385 (credit) Impairment of WBA 2,386,462 - 2,051,150 Investment Impairment of property, plant 41,205 - 41,205 - & equipment Depreciation of property, 116,857 93,497 42,393 52,622 plant and equipment Operating cashflows before (673,880) (2,355,994) (385,788) (2,503,663) movement in working capital Loss on sale of property, 60,989 1,323 plant & equipment Decrease/(increase) in 772,621 1,875,551 475,103 1,725,108 receivables Increase/(decrease) in (2,554,241) 2,079,898 (628,043) 2,552,127 payables Cash generated from (2,394,511) 1,599,455 (537,404) 1,773,572 operations Income tax (paid) / 33,263 (200) - received Net cash from operating (2,361,248) 1,599,255 (537,404) 1,773,572 activities Cash inflow/(outflow) from investing activities Interest received 54,670 65,036 12,492 39,100 Acquisition of subsidiary net (2,417,593) (1,510,860) (3,505,706) (1,986,475) of cash acquired Proceeds from sale of 29,887 - 1,000 - property, plant & equipment Purchase of of property, plant (115,016) (28,770) (9,524) (15,886) & equipment Net cash used in investment (2,448,052) (1,474,594) (3,501,738) (1,963,261) activities Cash inflow/(outflow) from financing activities Net increase/(decrease) in - - borrowings Proceeds on issues of 2,521,326 738,000 2,521,326 738,000 shares Cost of share issue (64,000) - (64,000) - Dividends paid - (117,393) - (367,393) Proceeds on issue of Loan - - - - Notes Net cash from financing 2,457,326 620,607 2,457,326 370,607 activities Net increase/(decrease) in (2,351,974) 745,268 (1,581,816) 180,918 cash and cash equivalents Cash and cash equivalents at 1 1,666,372 921,104 1,085,185 904,267 July 2007 Cash and cash equivalents at (685,602) 1,666,372 (496,631) 1,085,185 30 June 2008 Cash & short term deposits 757,249 1,843,985 1,304 1,085,185 Bank overdraft (1,442,851) (177,613) (497,935) 0 Total cash and cash (685,602) 1,666,372 (496,631) 1,085,185 equivalents The financial information set out in this announcement does not constitute the Group's annual accounts (as defined by s471 of the Companies Act 2006) for the year ended 30 June 2008. The financial information for the year ended year ended 30 June 2008 has been extracted from the Annual Report of Ekay plc. The Annual Report will be posted to shareholders on or before 30 November 2008 and copies will be available from the Daniel Stewart & Company, 36 Becket House, Old Jewry, London EC2R 8DD and on the Company's website (www.ekay.co.uk). END
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