BrainJuicer Group PLC

("BrainJuicer" or "the Company")

Interim Results for the Six Months ended 30 June 2015

BrainJuicer Group PLC (AIM: BJU), the innovative international market research agency, today announces its Interim Results for the six months ended 30 June 2015.

Highlights

Commenting on the Company's results, John Kearon, Founder and Chief Juicer of BrainJuicer, said:

 "We continue to accelerate profitable brand growth for an increasing number of clients who use our behavioural science based research to deliver 5-Star marketing that brings joy to their customers and fame to their brands.  We've decided to move from a predominantly qualitative brand strategy service to a more scalable and predictive quantitative service, which has had some dampening effect on H1 revenue but which should bring benefits in the future.  At the same time we're evaluating opportunities to enhance our growth, which could involve significant revenue investment.  We believe we're on track to meet market profit expectations for the full year, but have to inject our usual caveat: we have little revenue visibility and plenty of volatility within individual clients, and so cannot anticipate with any certainty how our results will unfold in the short term."

The Company can be found at www.brainjuicer.com.

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INTERIM STATEMENT

Revenue grew 4% in the first half of the year ("H1") 2015 and gross profit by 6%.  The overall impact of exchange rate movements was not material.  Overhead costs were up 12% in part due to one-off costs (further detail below), and operating profit declined by 24%.  Excluding the one-off costs underlying operating profit declined by 3%.  As is usually the case, most of our profits turned into cash flow.  We returned £0.42m to shareholders in the form of dividends, and finished the half-year with cash of £5.29m and no debt (down only marginally from the £5.35m and no debt at 31 December 2014).

Our core quantitative services, comprising our mainstream quantitative research solutions (such as Predictive Markets and our ComMotion advertising testing technique), grew in revenue terms by 7% and in gross profit terms by 11%.  This part of our business is the main source of our profits, is more scalable, and is expected to be the main driver of our future growth.  Such services contributed 85% of our revenue in H1 2015. 

The remaining 15% of our revenue came from our higher value, but less scalable, qualitative Juice Generation research and Behavioural Consultancy services and the revenue from these declined by 15%.  This follows a 19% year-on-year decline over the previous 12 months (calendar year 2014).  These declines can in part be explained by the lumpy and volatile nature of these projects, but this is not the whole story.

Historically these services covered a broad array of consumer insight projects and marketing challenges.  However, we have recently repurposed and focussed this part of our business into "Brand Strategy", where we apply our Juice Generation and Behavioural Consultancy techniques and our marketing know-how on advising clients on their marketing and brand planning exercises.  They tend to be strategically important services and lead more naturally into our mainstream quantitative products.  We hope therefore that there will be a more direct correlation between this part of our business and growth in our core quantitative services.

The revenue decline from these services over H1 was in large part due to this transition to Brand Strategy, and we believe that revenue will pick up over time.  While the revenue from these services is relevant, their importance is significantly more than the revenue they generate per se.  They play into the focus of our business - to help clients create famous brands - and lead into what we think of as marketing execution, where clients create the advertising, packaging, and new product ideas, which then require the large-scale quantitative research services we offer.  We are continuing to invest in this part of our business and in H1 hired two senior brand planners from advertising agencies.

Geographically, gross profit grew 15% in the Americas (predominantly the US), was flat in Europe and was down 1% in Asia.  Within Europe, gross profit from the UK (historically, our largest market) was down 9% but this was compensated for by growth in Germany, France and the Netherlands.  Our business is particularly uniform within our different offices.  We offer the same services, using the same operating platform, to many of the same clients, with a similar profile of employee and team structure.  Geographic differences in revenue from one period to the next can often be down to shifts in buying patterns within large global multi-nationals as much as anything else, and we are increasingly adept at shifting resources accordingly.

Moving on to costs, administrative expenses (or overheads) grew by 12%.  These costs included £0.32m of one-off costs relating to two separate initiatives.  Excluding these one-off costs, overheads grew by 8%, and reflected an increase in average headcount of 10% mainly in our account management client-facing teams.

One of the initiatives related to an acquisition opportunity which we looked closely at and in so-doing incurred fees of £0.15m.  We withdrew from the transaction as we were unable to reconcile our view of the business's financial prospects with the value aspiration of the sellers.  We are coming across an increasing number of interesting opportunities but will only proceed where there is that relatively rare combination of close cultural fit and clear economic advantage.  We are planning on continuing to grow organically in the main, and are evaluating opportunities to enhance our growth, which could involve significant revenue investment.

The other one-off cost related to the relocation of our London head office into larger premises, which gave rise to moving costs and rent duplication of £0.16m in aggregate.  We have increased our London office space as a result by 77%.  We also moved into new larger offices in several of our other locations, but the costs associated with these other moves were not so material (and so are not included within our £0.32m one-off cost amount).

The combination of modest growth in revenue and the significantly higher increase in administrative expenses caused profit before tax to decline by 25%.  Absent the one-off costs, profit before tax would have declined by 4%.  Our effective tax rate was 33% (H1 2014: 33%), and so profit after tax also declined by 25%.  Our share base remained relatively constant over the period and so earnings per share declined similarly.

There was a net cash inflow (excluding cash returned to shareholders) of £0.57m.  We distributed £0.42m to shareholders by way of a final 2014 dividend.  Our cash (over £5 million and no debt at 30 June 2015) is well in excess of anticipated working capital needs, and since 30 June 2015 we have repurchased 268,801 option and other management incentive shares for £1.10m (net of option share buy backs).  We will also be paying an interim dividend of 1.0p per share (the same as last year; see note 5 to the accompanying interim financial statements for details).

Outlook

In summary, we achieved modest revenue growth in a period during which we transitioned our important Juice Generation and Behavioural Consultancy to Brand Strategy.  Our core quantitative business grew in line with expectations and we believe we are on track to meet market profit expectations for the full year.  However, we have to inject our usual caveat: we have little revenue visibility and plenty of volatility within individual clients, and so cannot anticipate with any certainty how our results will unfold in the short term.

John Kearon                                                                               James Geddes

Chief Juicer                                                                                Chief Financial Officer

5 YEAR SUMMARY - HALF YEAR
 

(£000s unless specified otherwise)

*2014 share buy-backs includes £980,000 relating to the cash-settling of part of the Company's long term incentive plan.

5 YEAR SUMMARY - ANNUAL
 

(£000s unless specified otherwise)

*2014 share buy-backs includes £1,239,000 relating to the cash-settling of part of the Company's long term incentive plan.
 

CONDENSED CONSOLIDATED INCOME STATEMENT

for the six months ended 30 June 2015

Earnings per share attributable to equity

holders of the Company

All of the activities of the Group are classed as continuing.