BrainJuicer Group PLC

("BrainJuicer" or "the Company")

Final Results for the 12 months ended 31 December 2008

Reported under IFRS

BrainJuicer Group PLC (AIM: BJU), a leading international online market research agency, today announces its Final Results for the 12 months ended 31 December 2008.

Highlights

Post year-end

Commenting on the results, John Kearon, Chief Executive of BrainJuicer, said:  "We are pleased to report another period of strong organic growth.  Our innovative new products continue to be well received by our blue chip client base. We have made further significant progress with our geographic expansion plans, and our financial position remains very strong.

"We have one driving ambition: to transform the way the world does market research, and we believe the Company is well positioned to become one of the top 10 global market research companies.

"The recession is causing clients to be cautious with their budgets but is also providing opportunities for innovative online agencies like ours, as clients challenge their existing suppliers. The net effect on the Company remains to be seen but we are expecting to build on last year's achievements and deliver further progress in 2009."

For further information, please contact:

  CHAIRMAN'S STATEMENT

BrainJuicer's progress during the year has been strong, and the Company has continued to grow organically with revenues up 42% to £9,322,000 (2007: £6,566,000) and operating profits up 53% to £1,290,000 (2007: £844,000). The Company did not experience softening in the market in 2008, and as we have observed in the past, research spend from our core client base, multi-national consumer goods and services companies, has tended to remain relatively stable.  The research market has continued to grow, with the global spend on market research reaching $28bn (ESOMAR Global Market Research Report 2008).  However given the current global recession, we have to be realistic and expect the market in 2009 to be flat at best. 

It is innovation that sets BrainJuicer apart.  We have continued to develop our products in pioneering directions, for the benefit of our existing blue chip customers and in order to attract new ones. Our new products, although quite different from the established offerings of our competitors, are beginning to be adopted within our large clients, and we are delighted with the progress that has been made. 

The Company has expanded its geographic footprint with the appointment of highly regarded country managers in Germany and Switzerland, and through licensing agreements in Canada and Australia.  This expansion requires little investment and is low risk, as the Company's overseas offices are supported by its UK operations technically and operationally.  The Company is deliberately and steadily increasing its geographic coverage, particularly in the largest research markets, to further align itself with its large multi-national target market. 

The Company is in the mainstream of global market research spend and in spite of its small size, is competing successfully with the major research firms.  BrainJuicer continues to receive a positive reaction to its innovative new products, and it is in this area that we continue to focus our efforts. Significant new client wins have underpinned a strong financial year, and have enabled ongoing investment in the team and BrainJuicer's technology platform.  We are pleased with the way the Company has further strengthened its market position and its reputation during 2008.

Ken Ford

Chairman

  CHIEF EXECUTIVE OFFICER'S LETTER

Introduction

The Board is pleased to report another year of strong organic growth for the Company with successful product innovation, geographic expansion, and an increasing client base of blue chip companies further strengthening our position in the market.  

Every company has a raison d'être. As befits a small company, ours is quite simple, but nevertheless ambitious: to alter and improve the way that major consumer companies undertake market research and to become one of the world's top ten research groups. To achieve this, not only do we need to be different and innovative, but we must also implement effectively. To date we have been successful in this.

We are small compared with our competitors, but now work with nine of the world's top 20 advertisers, up from seven in 2007.  We have international reach, and are growing quickly. We are profitable and have no debt.

Values and priorities

What excites us is the creative process, and designing market research tools and techniques which can transform our clients' innovation processes. Our clients are predominantly in the mass consumer market (the largest buyers of market research in the world), and our products are focussed on the difficult earlier stages of their innovation development. We believe that around half of their market research spend is applied to these stages, and this segment appears to be significantly underserved by our competitors.

To use our jargon, we have two categories of products; "Juicy" and "Twist". Juicy products are new to the world techniques which are entirely different from any available elsewhere and which challenge traditional approaches. Twist products utilise industry standard quantitative research methods but add our unique quali-quant diagnostics; MindReader™and FaceTrace™.   Both are important to the business and appreciated by our clients but we believe it is our Juicy Products which will drive the long term growth of the Company. 

The year has seen strong uptake of our Juicy Products - Predictive Markets, Creative 6ersTM, Insight ValidationTM and CommScanTM. Increasing by 49%, they now account for 46% of the Company's total revenue, contributing £4.3m in 2008 (2007: £2.9m).  Juicy Products are used by all nine of our clients in the world's top 20 advertisers and by 59 of our 140 clients.  In January 2009, BrainJuicer launched its latest Juicy Product: the JuicyBrains Innovation Community. This is another unique tool allowing clients to engage with an online community of consumers who have a shared interest in innovation, and to tap into the feedback of more creative consumers. 

BrainJuicer has conducted research in 54 countries representing 90% of the world's research spend.  At the beginning of 2008 we had offices in three countries, the US, UK and Holland; these are the first, second and 13th largest research markets and accounted for 42% of the world's research spend.  To materially increase the share of spend and number of multi-national clients, we need to expand the geographic office coverage to service the regional buying points of multi-national clients.  During 2008, we expanded into Switzerland where many multi-nationals have their European head offices and also into Australia, via a licensing agreement with a well established Australian market research firm, bringing our coverage to 45% of the world's research spend. Since the year end, BrainJuicer has expanded further, with an office in Germany and a licensing agreement in Canada, the third and sixth largest research markets, increasing our coverage to 57% of the world's research spend (ESOMAR Global Market Research Report 2008).  We are now well-represented in Europe, North America and Australasia, and will be looking at moving into Asia and South America in the coming years.

All of our research is online, conducted via our proprietary software platform, and therefore scalable.  Nevertheless, we do also require highly skilled teams of market research professionals to design each client project, to extract the key conclusions from the results, and to help our clients apply them to their product development and marketing challenges.  In 2008 we hired 15 new people (excluding replacements) of whom 80% were client facing.  The Company is an exciting and challenging place to work, and we are very pleased to have attracted a team of high calibre staff to meet these needs.

Profitability, growth and risk

We have managed to grow our business, while at the same time growing profits and remaining cash positive.  We have also been able to start paying dividends demonstrating the Company's ability to be both high growth as well as dividend yielding. Geographic expansion does dilute profit margins with the setting up of new offices and hiring of people, but the investment is small, and we look to make a profit within three years as previously achieved in Holland and the USA.  To achieve our ambition of becoming a top ten global research agency, we need to continue our international expansion. This inevitably brings risks and we will maintain a cautious approach to our financial arrangements. We intend to continue to grow organically, in the main, and we do not anticipate requiring borrowings to do so.

Ownership

Our shares are fairly tightly held, and there is currently only a small free-float:

• John Kearon: 43.8%

• Unilever Ventures: 37.8%

• Management: 4.2%

• Institutions and private investors: 14.2%

I am committed to building substantial long term value for shareholders and have every intention of retaining a major stake in the business for the foreseeable future.  I am motivated by building a business I passionately believe can be a top ten global research group and building a team capable of achieving this.

Unilever Ventures invested in 2003, and it was their support that enabled the Company to develop.  However, as a venture capital unit, they have a need to recycle their capital to support new businesses, and in due course they will sell their holding.  We hope that the new shareholders we will acquire at the time will be attracted by our long term potential and will stay with us for many years.

Prospects

The impact of the global economic recession on our clients' market research spend this year, and any consequent effect on the Company, remains to be seen.  Nevertheless, in 2008 we weathered the downturn well, and are expecting to build on last year's achievements and deliver further progress in 2009.

John Kearon

Chief Juicer and Founder

  BUSINESS AND FINANCIAL REVIEW

Operations

The Company achieved good results across all regions with revenue growing 34% in the UK, 7% in the Netherlands and 276% in the US.  The UK remains the prime business generator for the Company, with 60% of total revenue from a well established mix of large domestic and multi-national clients (including eight of the world's top 20 advertisers).  The Dutch office serves our smallest market, and its results benefited from the decline in the value of the pound. In local currency terms, its revenue declined a little (9%) due to a cyclical fall in revenue from its largest client. It has nevertheless been our beach-head into Continental Europe, and is the office through which we have moved into Switzerland and Germany.  The US is our largest and most competitive market, and we are encouraged by the way our US operation has grown so rapidly. Like our Dutch operation, its results also benefited from the decline in the value of the pound, but still grew strongly in local currency terms (222%). It has established a foothold in 12 large new US based companies, works with six of the world's top 20 advertisers, and has now moved into profit (in only its third full year of operation).

The Company's client base increased from 115 to 140, and BrainJuicer now works with nine of the world's top 20 advertisers (AdvertisingAge's 22nd Global Marketers' Study 2008).   Average project size increased to £18,644 (2007: £14,822), indicative of the Company's success in winning larger, more international projects from clients. 

The Company's expansion into Switzerland in June 2008, and to Germany in January 2009, was driven by client demand.  The pay-back period on opening new offices is relatively short, and the Company's method of entering a new territory in a low-investment manner ensures that profit margins are only diluted initially. The anticipated strategic benefits are nevertheless significant.  

The Company entered Australia in June 2008, through a licensing agreement with Slater Marketing, and Canada, where the Company signed an agreement with High Level Research Inc ('HIGHLevel') in January 2009.  Slater Marketing is generating new revenues for BrainJuicer, and has introduced new significant clients to the Company's products.  It is envisaged that these two partners will become wholly owned business units of BrainJuicer in due course, once pre-agreed financial targets have been met. 

In order to underpin the Company's organic growth, we continue to invest in the team, which has increased from, on average, 45 in 2007 to 59 in 2008.  The majority of this increase has been in client facing roles, which directly support the Company's growth.  Average revenue per headcount increased by 8% to £158,000, and average gross profit per hour of internal time taken to deliver client projects was £198 (2007: £193).  The Company has also invested in its operational capability and technology platform in order to maintain consistency, efficiency and quality of delivery of its services across its account management teams, as it grows and expands geographically.  The Company regularly elicits detailed client feedback on its services, which has continued to be extremely positive.

Financial Performance

The Board was delighted to announce a maiden interim dividend of 0.5p per share in September 2008, in addition to a special dividend of 1.7p per share, and now we propose a final dividend of 1.0p per share.  In spite of being an ambitious high growth company, we also have a solid balance sheet and healthy cash flows, and so are planning to maintain a progressive dividend policy. We see this as testimony to the Company's attractive business model.

We have shown strong top-line organic growth, with revenue up 42% to £9,322,000 (2007: £6,566,000), and gross margin remaining high at 74% (74% in 2007). Our administrative expenses increased by 40% to £5,574,000, due primarily to our increase in client facing employee numbers. Operating profit increased from £844,000 in 2007 to £1,290,000, an increase of 53%, and operating margin grew to 13.8% (12.9% in 2007).  Interest income was £82,000 (2007: £49,000) taking Profit before Tax to £1,372,000 (2007: £893,000). Our effective tax rate was 30% (2007: 26%), and our Profit after Tax was £964,000 (2007: £660,000).

Basic earnings per share was 7.6p (2007: 5.2p) and diluted earnings per share was 7.4p (2007: 5.0p). Basic earnings per share is calculated as profit after tax divided by the weighted average number of shares in issue during the year (12,610,803 shares up from 12,564,831 shares in 2007).  Diluted earnings per share accounts for shares that would be issued on exercise of employee stock options. The weighted average number of shares for our diluted earnings per share calculation was 13,108,126 shares (2007: 13,220,878 shares).

The Company generated £43,000 of cash flow before dividends, interest and employee stock option share issues after investing £304,000 in its software technology and incurring £389,000 of one-off timing differences in the payments of VAT and Corporation Tax.  It paid £277,000 in dividends (2007: £nil), received £82,000 of interest (2007: £49,000) and received £4,000 from the issue of shares on exercise of employee stock options (2007: £18,000). The Company's cash balance at year end was £1,727,000 (2007: £1,875,000), and it had no debt.  The Company's trade and other receivables balance (its biggest asset) was £2,809,000 at year end (2007: £2,630,000), and the debtor payback period was 66 days (2007: 86). Its net assets were £3,627,000 up from £2,752,000 in 2007.

Summary

Ongoing product development and geographic expansion continue to be the major areas of focus, followed closely by operations and its technology platform. The effects of the recession will have a bearing on our business, but the Board nevertheless believes that the Company is well positioned to continue to build on its innovative portfolio of products, blue chip client base, highly regarded team, and strong balance sheet.

James Geddes

Chief Financial Officer

19 March 2009

CONSOLIDATED INCOME STATEMENT FOR YEAR ENDED 31 DECEMBER 2008

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

CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2008

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 31 DECEMBER 2008

BrainJuicer Group PLC ("the Company"), a United Kingdom resident, and its subsidiaries (together "the Group") provide on-line market research services. The Company's shares are listed on the Alternative Investment Market of the London Stock Exchange ("AIM"). The address of the Company's registered office is 13-14 Margaret Street, London, W1W 8RN.

This preliminary financial information was approved by the Board of directors on 17 March 2009.

The financial information set out above in respect of 31 December 2008 does not constitute statutory accounts as defined in section 240 of the Companies Act. The financial information contained in this announcement has been extracted from the 2008 financial statements upon which the auditors' opinion is unqualified and does not include any statement under Section 237 of the Companies Act 1985.  

The preliminary announcement has been prepared under the historical cost convention.  

The principal accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 December 2007.

The following accounting policy was adopted during the year.

Available-for-sale financial assets

'Available-for-sale' financial assets include all financial assets other than derivatives, loans and receivables. They are classified as non-current unless management intend to dispose of the investment within 12 months of the balance sheet date. 

Investments are initially recorded in the balance sheet at fair value plus transaction costs, unless the asset is held for trading, in which case the transaction cost is expensed in the income statement. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets are subsequently carried at fair value.

The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (or the financial asset is an unlisted security), the Group establishes fair value by reference to other recent comparable arm's length transactions or other quoted instruments that are substantially the same, and, or, by discounted cash flow analysis.

Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to, and must be settled by delivery of such unquoted equity instruments, are measured at cost.

The group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value - is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement.

The Group operates in one business segment, that of market research. Whilst there are a number of products within the business segment, management reporting is principally based on location of service delivery. Accordingly the Group presents its primary segment analysis on this basis:

Group costs include directors' remuneration and central project costs which are not directly attributable to geographic segments.

Group assets include centrally held cash at bank, intangible assets, central computer hardware and deferred tax assets. Group liabilities include income tax liabilities.

Group costs include Directors' remuneration and central project costs which are not directly attributable to geographic segments.

Group assets include centrally held cash at bank and deferred tax assets. Group liabilities include income tax and financial liabilities.

For the year ended 31 December 2008

For the year ended 31 December 2007

The additions to software development in progress during the year relate to capitalized software development costs for the cost of building a brand new software platform for delivering our research. Additions to internally generated software represent work completed in respect of our JuicyBrains Community.

Basic earnings per share are calculated by dividing the profit attributable to equity holders of the Company by the weighted average of ordinary shares in issue during the year.

In January 2009, 316,119 employee share options were exercised and the Group entered into a share purchase agreement to acquire High Level Research Inc. subject to certain performance conditions being met. Part of the consideration for the acquisition consists of a variable number of contingently issuable ordinary shares to the value of 400,000 Canadian Dollars. 

(b) Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of shares outstanding to assume conversion of all dilutive potential ordinary shares. For share options, a calculation is made in order to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company's shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated in this way is compared with the number of shares that would have been issued assuming the exercise of the share options.

During the year 27,008 ordinary shares were issued for cash. The nominal value of these shares was £270 and the consideration received was £4,105 of which £3,835 was recognised as share premium.

On 13 March 2008, 222,635 share options were granted to Directors and employees with an exercise price set at the market price on the date of grant (147.5 pence per share).