Press Release

16 September 2016

 

BrainJuicer Group PLC

("BrainJuicer" or "the Group" or "the Company")

 

 

Unaudited Interim Results for the Six Months ended 30 June 2016

 

BrainJuicer Group PLC (AIM: BJU), the innovative international market research agency, today announces its Interim Results for the six months ended 30 June 2016.

 

Highlights

o	12% revenue growth to £13.04m (H1 2015: £11.61m)
o	15% gross profit growth to £10.68m (H1 2015: £9.25m)
o	22% increase in normalised profit before tax to £2.00m (H1 2015: £1.64m)
o	45% increase in reported profit before tax to £1.65m (H1 2015: £1.14m)
o	38% increase in profit after tax to £1.05m (H1 2015: £0.76m)
o	41% increase in fully diluted earnings per share to 7.9p (H1 2015: 5.6p)
o	£5.18m cash at period end (31 December 2015: £6.37m) and no debt § £2.21m returned to shareholders by way of dividends and share buy-backs in H1
o	£1.62m dividends to be paid in October 2016 (13.1p per share): § Interim dividend of 1.1p per share (2015 interim dividend: 1.0p) § Special dividend of 12.0p per share

 

Commenting on the results, John Kearon, Founder and Chief Juicer, said:

"It's enormously gratifying being back to double-digit growth.  The business is now almost exclusively Juicy (our pioneering System1 research methods) and quantitative, enhancing our distinctiveness and ability to scale and grow revenues ahead of costs.  The strong growth in our System1 Brand Tracking and Ad Testing services has also increased the proportion of business which is Ongoing in nature and therefore more stable."

 

This announcement contains inside information.  The Company can be found at www.brainjuicer.com.

 

For further information, please contact:

 

BrainJuicer Group PLC +44 20 7043 1000	Canaccord Genuity Limited +44 20 7523 8000
John Kearon, Chief Executive Officer	Simon Bridges / Henry Fitzgerald-O'Connor /
James Geddes, Chief Financial Officer	Emma Gabriel
Susan Griffin, Chief Marketing Officer
investorrelations@brainjuicer.com

 

 

BrainJuicer Group PLC                                                                                                                     

Financial information for the six months ended 30 June 2016

 

 

INTERIM STATEMENT

 

During the 6 months to the end of June 2016 the Group returned to double digit revenue growth after two years of relatively pedestrian progress.  We were helped by the fall in the value of the pound, but even in constant currency terms we have had an encouraging 6 months.  Revenue grew 12% (8% in constant currency) and gross profit, our main top line indicator, by 15% (11% in constant currency).

 

Normalised profit before tax grew 22% and reported profit before tax increased by 45%.  Cash flow was again strong, and we finished the period with cash of £5.18m at 30 June 2016 and no debt (31 December 2015: £6.37m and no debt) after having returned £2.21m to shareholders by way of dividends and share buy-backs.

 

Our Ad Testing and Brand Tracking services performed particularly well, with gross profit increasing by 59%.  These products represented 36% of our business over the latest 6 months, and much of this business is Ongoing in nature (as opposed to Ad Hoc).  These services have been growing strongly over a prolonged period with compound annual growth of 38% in gross profit over the last five years (using H1 2011 as the base).  We introduced a new framework for successful brand-building last year ("Fame, Feeling & Fluency") on the back of the transition of our old Juice Generation and Behavioural Consultancy services to Brand Strategy, and this has helped propel the growth. 

 

Predictive Markets, our largest single product (32% of our business over the latest 6 month period) declined a little, with gross profit down 4%.  This is in part due to pricing pressure, which we are addressing with a lower cost and cheaper-to-deliver "express" version of the product.  We have also developed a "Fluent Innovation" framework to better express its value in guiding innovation.  Our other quantitative services, which collectively made up 30% of our gross profit, grew a healthy 29%.  Juice Generation and Behavioural Consultancy services are now an insignificant part of our business (less than 2% in the latest period).

 

In terms of geography, gross profit in the US business grew 27% (17% in constant currency), and that after several years of double digit growth.  The US is now our largest market by quite a margin, making up 41% of our total gross profit over the latest 6 months.  In Continental Europe we grew gross profit by 30% (21% in constant currency), rebounding strongly after a decline last year, and in Brazil we also grew well (by 21%, and 33% in constant currency).  In the UK, our second largest market, gross profit declined by 2% due to sharp declines in two large clients for specific reasons associated with those two clients.  In one of these, for example, a large multi-year programme of work had come to a natural end.  We do not believe that this is indicative of a wider trend, and indeed we have been growing other accounts well.  Excluding the declines in these two clients, UK gross profit increased 22%.  We experienced a small decline (5%, or 10% in constant currency) in gross profit in our Singapore and China region.

 

Earlier this year we launched our new creative Advertising Agency, System1, and have invested £0.26m to date in the form of operating losses.  Potential clients have given positive feedback, and we remain hopeful that this will generate a new business stream for us over the long term.  We envisage that the total investment (in the form of operating losses) will not exceed the planned (and communicated) £0.3m.

 

 

INTERIM STATEMENT (continued)

 

Normalised overheads (i.e. overheads before one-off costs, System1 Advertising Agency start-up costs, and share-based payments) grew 15%, and much of this growth was due to an increase in our bonus accrual from zero last year to £0.77m this year.  Normalised profit before tax (which is reported profit excluding one-off costs, System1 Advertising Agency operating loss, and share based payments) increased by 22%, and reported profit before tax by 45%.

	H1 2016	H1 2015	growth
Normalised profit before tax	£2.00m	£1.64m	22%
Share-based payments	£(0.09)m	£(0.18)m
One-off costs (due diligence and office move costs in 2015)	-	£(0.32)m
System1 Advertising Agency operating loss	£(0.26)m	-
Reported profit before tax	£1.65m	£1.14m	45%

 

Our effective tax rate increased from 33% to 36% due to the higher proportion of profit from the US and Continental Europe where corporation tax rates are higher than the UK.  This dampened growth of profit after tax to 38%.  The Company repurchased 542,439 shares during the period, and this has helped our earnings per share.  Diluted earnings per share grew 41% to 7.9p per share.

 

Cash flow continues to be strong, with 77% conversion of profit after tax to operating cash flow (before financing).  The Company paid dividends of £0.45m and repurchased £1.77m of shares from shareholders, and intends to continue to return surplus cash to shareholders via a mix of dividends and share buy backs.  In addition to over £5m of cash and no debt, the Company has a £2m unused committed bank facility.  We will be paying an interim dividend of 1.1p per share and a special dividend of 12.0p per share in October 2016, collectively totalling £1.62m.

 

As previously announced we are changing our year end from 31 December to 31 March.  During this transition year, we shall report unaudited results in this format for the 12 months to 31 December 2016 during March 2017, followed by an audited report for the 15 months to 31 March 2017 during June 2017.

 

Outlook

 

After a period of modest growth over the previous two years, while our Juice Generation qualitative business and Behavioural Consultancy services were being de-emphasised, more meaningful growth has returned.  The business is now almost exclusively quantitative making it easier to scale and grow.  Our Brand Strategy work and "Fame, Feeling, & Fluency" framework developed last year are bearing fruit, with strong growth in our Ad Testing and Branding Tracking services.  This has increased the proportion of our business which is Ongoing in nature and therefore more stable.  Nevertheless, the majority of our business is still Ad Hoc, with little revenue visibility.

 

Despite the increased macro-economic uncertainty following the UK's EU referendum, we have not so far noticed any significant change in client behaviour, and trading during July and August has been satisfactory.  As always, we are cautious in terms of the short term outlook, but we are pleased with our progress and continue to be confident in the Group's long term growth prospects.

 

John Kearon                                                                               James Geddes

Chief Juicer                                                                                Chief Financial Officer
 

BrainJuicer Group PLC                                                                                                                     

Financial information for the six months ended 30 June 2016

 

 

5 YEAR SUMMARY - HALF YEAR
 

(£000s unless specified otherwise)

 

 

 

Six months to 30 June	2016	2015	2014	2013	2012
Revenue	13,043	11,610	11,197	10,765	10,379
growth	12%	4%	4%	4%	14%
Gross profit	10,685	9,254	8,719	8,455	7,998
growth	15%	6%	3%	6%	12%
Operating profit	1,667	1,174	1,536	1,298	716
growth	42%	-24%	18%	81%	14%
Pre-tax profit	1,650	1,139	1,520	1,298	717
growth	45%	-25%	17%	81%	14%
Post-tax profit	1,054	763	1,018	870	481
growth	38%	-25%	17%	81%	16%
EPS - diluted	7.9p	5.6p	7.5p	6.7p	3.7p
growth	41%	-25%	12%	81%	16%
Cash flow pre financing	810	565	(147)	1,948	(714)
Cash balance (no debt)	5,183	5,286	2,528	5,460	2,411
Interim dividend (related to period)	1.1p	1.0p	1.0p	0.9p	0.85p
growth	10%	-	11%	6%	13%
Special dividend (paid in period)	-	-	12.0p	-	-
Share buy-backs (net of stock option proceeds)*	1,768	-	1,531	29	276

 

*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)

 

 

 

Year to 31 December	2015	2014	2013	2012	2011
Revenue	25,184	24,645	24,457	20,822	20,713
growth	2%	1%	17%	-	27%
Gross profit	20,250	19,410	19,087	16,068	16,063
growth	4%	2%	19%	-	27%
Operating profit	4,546	4,301	3,550	1,513	2,758
growth	6%	21%	135%	-45%	24%
Pre-tax profit	4,501	4,286	3,556	1,515	2,760
growth	5%	21%	135%	-45%	24%
Post-tax profit	3,032	2,897	2,435	1,038	1,850
growth	5%	19%	135%	-44%	25%
EPS - diluted	22.7p	21.3p	18.7p	7.9p	14.1p
growth	7%	14%	137%	-44%	25%
Cash flow pre financing	2,696	3,157	4,466	866	1,446
Cash balance (no debt)	6,365	5,347	6,188	3,755	3,683
Interim and final dividend (relating to period)	4.5p	4.3p	3.9p	3.1p	3.0p
growth	5%	10%	26%	3%	25%
Special dividend (paid in period)	-	12.0p	12.0p	-	-
Share buy-backs (net of stock option proceeds)*	948	1,938	71	408	217

 

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

 

 

 

BrainJuicer Group PLC  

Financial information for the six months ended 30 June 2016

 

 

CONDENSED CONSOLIDATED INCOME STATEMENT

for the six months ended 30 June 2016

 

 

 

	Note	Six months to 30 Jun 2016 Unaudited	Six months to 30 Jun 2015 Unaudited	Year to 31 Dec 2015 Audited
		£'000	£'000	£'000
Revenue	4	13,043	11,610	25,184
Cost of sales		(2,358)	(2,356)	(4,934)
Gross profit	4	10,685	9,254	20,250
Administrative expenses		(9,018)	(8,080)	(15,704)
Operating profit	4	1,667	1,174	4,546
Finance costs		(17)	(35)	(45)
Profit before taxation	4	1,650	1,139	4,501
Income tax expense		(596)	(376)	(1,469)
Profit for the financial period		1,054	763	3,032
Attributable to the equity holders of the Company		1,054	763	3,032

 

Earnings per share attributable to equity

holders of the Company

 

Basic earnings per share	5	8.2p	6.0p	23.9p
Diluted earnings per share	5	7.9p	5.6p	22.7p

 

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

 

 

 

 

CONDENSED STATEMENT OF COMPREHENSIVE INCOME

for the six months ended 30 June 2016

 

 

 

	Six months to 30 Jun 2016 Unaudited	Six months to 30 Jun 2015 Unaudited	Year to 31 Dec 2015 Audited
	£'000	£'000	£'000
Profit for the financial period	1,054	763	3,032
Other comprehensive income:
Items that may be subsequently reclassified to profit or loss
Exchange differences on translating foreign operations	407	(108)	(88)
Other comprehensive income for the period, net of tax	407	(108)	(88)
Total comprehensive income for the period attributable to equity holders	1,461	655	2,944

 

 

 

 

 

CONDENSED CONSOLIDATED BALANCE SHEET

as at 30 June 2016

 

 

	Note	30 Jun 2016 Unaudited	30 Jun 2015 Unaudited	31 Dec 2015 Audited
		£'000	£'000	£'000
ASSETS
Non-current assets
Property, plant and equipment		311	321	304
Intangible assets		374	641	519
Deferred tax asset		480	882	589
		1,165	1,844	1,412
Current assets
Inventories		266	122	90
Trade and other receivables		8,015	5,183	6,595
Income tax recoverable		325	-	-
Cash and cash equivalents		5,183	5,286	6,365
		13,789	10,591	13,050
Total assets		14,954	12,435	14,462
EQUITY
Capital and reserves attributable to equity holders of the Company
Share capital	8	132	132	132
Share premium account		1,599	1,599	1,599
Merger reserve		477	477	477
Foreign currency translation reserve		255	(172)	(152)
Retained earnings		6,074	6,107	7,184
Total equity		8,537	8,143	9,240
LIABILITIES
Non-current liabilities
Provisions		522	407	469
		522	407	469
Current liabilities
Provisions		308	291	263
Trade and other payables		5,587	3,540	4,161
Current income tax liabilities		-	54	329
		5,895	3,885	4,753
Total liabilities		6,417	4,292	5,222
Total equity and liabilities		14,954	12,435	14,462