BrainJuicer Group PLC

("BrainJuicer" or "the Company")

Interim Results for the Six Months ended 30 June 2009

Reported under IFRS

BrainJuicer Group PLC (AIM: BJU), a leading international online market research agency, today announces its Interim Results for the six months ended 30 June 2009.

Financial Highlights

Operational Highlights

Commenting on the results, John Kearon, Chief Executive of BrainJuicer Group PLC, said:

"The global recession has had an impact on many of our clients, but BrainJuicer has still managed to deliver encouraging growth in revenue and operating profit.  We have also continued to invest, notably in product development, technology and in expanding our geographic footprint, in support of our longer term ambition to be a top ten global market research company.

"The economic backdrop, of course, remains challenging but client spend appears to be opening up as we enter our traditionally strong fourth quarter of the year, when much of our annual profit has historically been earned. Looking ahead, we believe our continued investment in new markets and developing and validating leading edge, unique "Juicy" products, will lead to strong, profitable and cash generative growth as we pursue our ambitious plans."

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  Interim Statement

Introduction

The Board is pleased to report that the Company has made further progress during the period, with continued organic growth. Revenue has grown by 22% and operating profit by 18%. The economic backdrop has been unhelpful but we have nonetheless achieved growth whilst continuing our investment in product innovation, technology development and in expanding our geographic coverage.  Innovation drives our business; credibility reinforces it. It is innovation which causes us to stand out, which excites our clients, and which attracts creative employees. It is credibility which provides the reassurance necessary for the largest and most professional market research buyers to use a company other than one of the large incumbents. Our objective is to continue to build on both fronts, and at the same time maintain profitable growth.  We are, however, not complacent about the current economic realities, and are navigating our way through the uncertainties by carefully managing our resources and discretionary expenditure. Over the first half of 2009 we remain on track.

Financial Performance

Revenue for the half-year increased to £4,849,000 (H1 2008: £3,970,000), after a slow start in the first quarter. Gross margin continued at levels of over 70%.  Operating costs increased from £2,801,000 in the first half of 2008 to £3,427,000 this year, as the Company has continued to build its team in product development and account management. Average headcount has increased to 63, up from 51 during the same period last year, but with continued operational improvements, we have maintained revenue per employee at £77,000.

Operating profit grew 18%, from £196,000 in the first half of 2008 to £231,000 this year. Interest income was lower as a result of the declines in interest rates, resulting in growth in profit before tax of 6% to £243,000.  Our average tax rate declined to 24% this year from 30% last year following some prior period adjustments, although we expect it to return to around 30% next year. Profit after taxation grew by 14% to £184,000 from £161,000.  Earnings per share increased from 1.3p in the first half of 2008 to 1.4p, having issued 318,127 new shares since 30 June 2008 following the exercise of stock options, and fully diluted earnings per share increased from 1.2p to 1.3p.

The Company had a £294,000 negative operating cash flow due to an increase in working capital, invested £241,000 on capital expenditure (predominantly in its software technology platform), and paid £130,000 in dividends. It ended the period with a cash balance of £1,192,000, down from £1,727,000 at 31 December 2008. The Company has no debt.

The Board has decided to pay an interim dividend of 0.6p per share. The payment will be made on 30 October 2009 to shareholders on the register on 2 October 2009 (the record date). The ex-dividend date will be 30 September 2009.

Operations

The UK business suffered a 5% decline in revenue over the same period last year, which was mitigated by a successful period in our two new markets (Switzerland and Germany) which our UK team is helping to establish. When Swiss and German revenues are added to those of the UK, growth is 15%. Revenue in the Company's other European office, Holland, grew by 12%, helped by the favourable currency movement (there was a small 2.5% decline in constant currency terms). The Company's US position continues to progress successfully. Revenue is up 86% (43% in constant currency terms) in this competitive but very large market. 

EBIT declined by 10% in the UK, but grew in each of our other markets: in the Netherlands by 25%, in the US from a loss of £49,000 to a profit of £85,000, in Switzerland to £151,000 and in Germany to £56,000 (neither Switzerland nor Germany were operating in the first half of 2008, so have no prior period comparable). 

Our prime focus is on our client service delivery, and we monitor client feedback closely.  Our clients are extremely positive about the services we provide and 83% of our revenue during the period was from repeat business.  Our new business development revolves around promoting our profile as a highly creative agency. We are regularly asked to speak at leading market research industry events, and we host our own innovation conferences together with key clients. We co-hosted four such conferences in the first half of this year in the UK, Holland and the US, which were attended by over 300 people, many of whom are key buyers of market research in large consumer companies.

Our research solutions are distinctive.  This is born out of our desire to enlighten and inspire our clients' creative processes, and not just evaluate the output of those processes. We categorise our products into "Juicy" and "Twist". Juicy products are entirely different from any available elsewhere and challenge traditional approaches, while Twist use standard industry quantitative techniques but add our unique qualitative diagnostics (MindReader™ and FaceTrace™). Both are valued by our clients, but we believe it is our Juicy products which will drive the long term growth of the Company. Over the first half of 2009, our Juicy products comprised 54% of revenue, up from 46% in the year to 31 December 2008, and 44% in the year to 31 December 2007.  Our newest, the JuicyBrains Community®, was used by nine multinational companies during the first half of 2009.

We have increased resources in the development and validation of new and existing Juicy products and now have the equivalent of five full-time people dedicated to our two newest product areas and our general product development (what we term BrainJuicer Labs). This time last year our efforts in this key area relied almost exclusively on part-time input from account managers, and we are pleased with the impetus that this increase in resources has given to our continuing development program.

We have also increased focus and allocated resources to the management of our operational workflows and our technology. We are in the process of re-engineering our back-office production capability, and are now out-sourcing the bulk of our survey programming.  This is freeing up internal software development resource to improve our technology, whilst at the same time providing a lower cost more scalable means of delivery.  We have also hired a Technical Director, Vin Sahdev, who has joined our senior team.

Outlook

We believe our products, capability and technology have the potential to continue generating profitable growth into the long term. We also believe that, taken together, the attributes we bring to bear represent a genuinely distinctive and attractive offer within the industry, which would be difficult for competitors to replicate.  To fulfil our potential, we need to continue to develop our innovative product set and build our credibility further with current and potential clients.  Whilst our goals are long term we remain very mindful of the importance of revenue growth and profitability in the short term. In this regard, the economic backdrop is unhelpful, but client spend appears to be opening up as we enter our traditionally strong fourth quarter of the year, when much of our annual profit has historically been earned. 

CONDENSED CONSOLIDATED INCOME STATEMENT FOR SIX MONTHS ENDED 30 JUNE 2009

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

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME STATEMENT 
FOR SIX MONTHS ENDED 30 JUNE 2009

CONDENSED CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2009

CONDENSED CONSOLIDATED CASH FLOW STATEMENT FOR SIX MONTHS ENDED 
30 JUNE 2009

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 

30 JUNE 2009

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 condensed consolidated interim financial information was approved by the board of directors for issue on 22 September 2009. 

The financial information for the year ended 31 December 2008 set out in this interim report does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The Group's statutory financial statements for the year ended 31 December 2008 have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain statements under Section 237(2) or Section 237(3) of the Companies Act 1985.

This condensed consolidated interim financial information for the six months ended 30 June 2009 has been prepared in accordance with IAS 34, 'Interim financial reporting' as adopted by the European Union. The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2008, which have been prepared in accordance with IFRSs as adopted by the European Union.

Except as described below, the principal accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 December 2008, as described in those annual financial statements.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 January 2009.

IAS 1 (revised), 'Presentation of financial statements'. The revised standard prohibits the presentation of items of income and expenses (that is 'non-owner changes in equity') in the statement of changes in equity, requiring 'non-owner changes in equity' to be presented separately from owner changes in equity. All 'non-owner changes in equity' are required to be shown in a performance statement.

Entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and statement of comprehensive income). 

The Group has elected to present two statements: an income statement and a statement of comprehensive income. The interim financial statements have been prepared under the revised disclosure requirements.

IFRS 8, 'Operating segments'. IFRS 8 replaces IAS 14, 'Segment reporting'. It requires a 'management approach' under which segment information is presented on the same basis as that used for internal reporting purposes. This has resulted in an increase in the number of reportable segments presented, as the previously reported Continental Europe segment has been split into Netherlands, Switzerland and Germany.

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker has been identified as the Chief Executive Officer ("the CEO").

The CEO reviews the group's internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based upon these reports.

The CEO considers the business from both a geographic and product perspective. From a product perspective, management assesses the performance of its 'Juicy' and 'Twist' products.

The CEO assesses the performance of the operating segments based on earnings before interest and taxation. Interest income is not included in the result for each operating segment that is reviewed by the CEO.

A reconciliation of total EBIT to total profit before income tax is provided as follows:

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

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.  

A dividend that relates to the period to 31 December 2008 and that amounts to £130,000 was paid in May 2009 (2008: £nil).

In addition, an interim dividend of 0.6 pence per share (2008: 0.5p interim, 1.7p special) was proposed by the board of directors on 22 September 2009. It is payable on 30 October 2009 to shareholders who are on the register on 2 October 2009. The interim dividend, amounting to £78,000 (2008: £63,000 interim, £214,000 special), has not been recognised as a liability in this interim financial information. It will be recognised in shareholders' equity in the year to 31 December 2009.

During the period, share options over 316,119 ordinary shares were exercised at a weighted average exercise price of 11.9 pence per share. The total proceeds were £37,625, of which £3,161 was recognised as share capital, and £34,464 as share premium.  The weighted average share price at exercise date was 94p.

On 9 January 2009, share options over 207,313 ordinary shares were granted to Directors and employees with an exercise price set at the market price on the date of grant (94 pence per share).

On 9 January 2009, the Group entered into a share purchase agreement to acquire the entire issued share capital of High Level Research Inc., an unlisted company incorporated in Canada, subject to certain performance conditions being met.

Should the performance conditions be met and the acquisition take place, the contingent consideration comprises cash of C$450,000 and a variable number of ordinary shares to the value of C$450,000. On the 15th working day in each of February, May, August and November in each of 2009, 2010, 2011, 2012, 2013 or February 2014, the Group may waive any of the performance conditions.

The derivatives in respect of the share purchase agreement for the acquisition of High Level Research Inc. have been recorded at a carrying amount of £nil. In the opinion of the directors no reliable fair value information can be disclosed for these financial instruments as the equity instruments to which they relate do not have a quoted market price in an active market nor a reliable alternative measure of fair value.

If it were possible to reliably measure these derivatives they would be categorised as financial instruments at fair value through profit or loss with any changes in their fair value being recorded in the income statement. To date, no shares in High Level Research Inc. have been acquired and therefore no asset recognised.

During the period, the Group invested £156,000 in Software development in progress. At the period-end, the carrying amount of Software development in progress, representing amounts capitalised in respect of the cost of building the Group's brand new software platform for delivering its research, amounted to £672,000 (31 Dec 2008: £516,000). The platform is not yet ready for use and so no amortisation has been charged to date.

During the period, the Group made sales to companies connected to Unilever UK Holdings Limited, a significant shareholder, totalling £693,548 (six months to 30 June 2008: £453,683). The balance outstanding at the period-end was £284,801 (31 Dec 2008: £471,145).

Services are sold to related parties on an arm's length basis at prices available to third parties.

The wife of Mark Muth, a director of the Company, provided services for the Group totalling £nil (six months to 30 June 2008: £16,098). There was no balance outstanding at the period-end (31 Dec 2008: £nil).

Based upon prior experience, Group revenues tend to be higher in the second-half of the financial year than in the first six months. 

For the year ended 31 December 2008, revenues for the first half of the year represented 43% of total revenues compared to (2007: 44%).