●	Secured second international mandate, as a preferred supplier, from a large global foods group, for concept screening using our award winning, 'Predictive Markets'
●	Management further strengthened - Chief Operating Officer appointed
●	Canadian licence partner becomes fully owned BrainJuicer Canada

 

Commenting on the results, John Kearon, Chief Executive of BrainJuicer, said:  "We are delighted to have achieved significant international growth in revenue and profit, all organic, in what has been the worst year for our industry in decades.

"Our commitment to reinventing the way market research is done is delivering significantly more business from a larger number of the world's biggest companies. This innovation, coupled with hiring great researchers and our expanded office network in the major research markets, has culminated in a further international mandate from one of the world's largest companies. In 2010 we intend to launch more innovation, open offices in Brazil and China and deliver further significant growth and strategic progress. Our ambitious aim over the next decade is to become a top 10 global market research group."

 

For further information, please contact:

BrainJuicer Group PLC	Tel: +44 (0)20 7043 1000
John Kearon, Chief Executive Officer john.kearon@brainjuicer.com
James Geddes, Chief Financial Officer james.geddes@brainjuicer.com

 

Canaccord Adams Limited	Tel: +44 (0)20 7050 6500
Mark Williams mark.williams@canaccord.com

 

Media enquiries:

Abchurch Communications	Tel: +44 (0)20 7398 7700
Heather Salmond / Joanne Shears joanne.shears@abchurch-group.com

CHAIRMAN'S STATEMENT

 

BrainJuicer has had another good year in financial, operational and strategic terms.  Driven entirely by continued organic growth, 2009 revenues increased by 27% to £11,814,000.  Operating profit also grew by 27% to £1,645,000.

 

These results were achieved against a difficult economic background which had an impact on many of our clients.  Overall spending on market research declined in 2009 for the first time in many years, and so to generate such strong growth was no mean achievement.

 

A look at where our revenues and profits arose in 2009 helps to illustrate the extent to which BrainJuicer is becoming a truly international business.  For the first time last year total overseas revenues exceeded those generated in the UK, reflecting in particular strong growth in our US business and encouraging progress in our new offices in Switzerland and Germany.  Non-UK operating profits also increased substantially both in absolute terms and as a proportion of the total.  We intend to extend our geographic footprint further by opening new offices in China and Brazil in 2010.

 

We are making progress by developing innovative products for our clients, which include many of the world's largest buyers of market research, and by consistently providing them with an excellent service.  Revenues from our distinctive, leading edge products, which we call "Juicy" products, rose by two thirds in 2009.  Levels of client satisfaction remain very high, as evidenced by the continued high level of repeat business (clients generating around 80% of 2008 revenue returned in 2009).

 

BrainJuicer continues to strike what we believe is an appropriate balance between delivering profit growth in the short term and at the same time laying the foundations for the substantially larger business which we intend to become over the next several years.  As well as generating good growth in profits in 2009, we continued to invest heavily for a business of our size.  We increased headcount in our client servicing, operations and product development teams.  After the year end, in February 2010, we announced the appointment of Alex Batchelor to the newly created position of Chief Operating Officer.  Alex brings a wealth of relevant experience and skills to BrainJuicer, and his appointment will enable our Chief Executive, John Kearon, to devote more of his time to driving growth.

 

Our investment in generating, testing and validating new products was stepped up again in 2009, an essential element in the process of increasing our market share with major multinational clients.  We have also once again committed significant funds to enhancing efficiency and scalability of our technology platform.  A new online survey platform is nearing completion.

 

Market conditions are likely to remain difficult in 2010.  We nonetheless intend to deliver further progress, while continuing to invest in those resources which will, we believe, enable BrainJuicer to establish itself as one of the world's leading market research firms.

 

Ken Ford

Chairman

CHIEF EXECUTIVE'S STATEMENT

 

Introduction

In 2009 we have continued to grow our revenue and profits, and we have done so while investing more than ever before in our product development and operations, and in expanding our geographic footprint.

 

While the market has been difficult we have nevertheless made further steps along the path toward our ambitious long term goals: to alter and improve the way in which major consumer companies undertake market research and eventually to become one of the world's leading research companies.

 

We recognise that we have a long way to go, but we remain confident in the building blocks we are putting in place and are encouraged by the progress we are making.  Perhaps the three most important data-points which under-pin our confidence: we are now working with 11 of the world's 20 largest buyers of market research (up from nine in 2008), our revenue from these clients in 2009 grew by over 70% year on year and since the year end we have secured an additional international research mandate as a preferred supplier from one of them.

 

If we can continue to attract and delight these highly professional buyers of market research, we believe our innovative and relatively radical client proposition is on the right track.

 

Priorities

Ultimately and simply, we are trying to help our clients, generally mass consumer companies, to create better products, packaging and advertising.  We understand the challenges they face in their creative and innovation processes, and we believe that sensitive consumer engagement, undertaken in the right way, plays a key role in inspiring and enlightening those innovation processes.  Our priority is to develop and deliver large scale, robust quantitative market research which provides that inspiration, and not just the validation for which such research is traditionally known.

 

Our focus is often on the difficult early stage of the innovation process, where creativity and consumer insight is most needed, and which we believe is the segment least well served by our competitors.  We also believe that it is this early stage which is the most critical in the innovation process.

 

We have two categories of product: "Juicy" and "Twist".  Juicy products are entirely different from those available elsewhere and challenge traditional approaches.  Twist products utilise industry standard quantitative research methods but add our unique qualitative diagnostics MindReader® and FaceTrace®.  Juicy products offer higher value to our clients, and are strategically more important to the Company.  It is these products which, if successful, will ramp up our growth.  Because they are so different from established methods, they take longer to gain client acceptance.  It is, therefore, the success of these products which gives the best indication of our longer term positioning.  In 2009, our Juicy products grew by 66%, and represented 61% of our total revenue, up from 46% in 2008 and 44% in 2007.

 

Our clients tend to be very large, and we are a small supplier to most of them.  We therefore have considerable potential from our existing client base, and our big challenge is to gain a more significant share of their market research spend.  To achieve this, we are looking to secure preferred supplier status.  Whilst we believe we have the products, we recognise that we need to establish our credentials and credibility.  Market research tends to be a risk averse and conservative industry, and it can take a number of years of demonstrating value, proving validity, and building trusted relationships before clients will nominate a particular product and a particular supplier to such preferred status.  However, it is a prize worth winning.

 

To date the Group has one established preferred supplier relationship, and the revenue from that client was around £1million in 2009.  We are beginning to be invited to tender more often for these positions, alongside the largest market research companies.  Since the year end we have secured a second international mandate and we are optimistic that in due course we will win more.

 

It is important for us to continue to expand our geographic coverage.  Whilst our online platform enables us to undertake research wherever our clients need it, we also need offices in those countries in which our multinational clients have their main buying points.  We now have offices in the three largest market research markets: US, UK and Germany, and also in Switzerland where many multinational companies have located their European headquarters.  We are also represented in Australia through a licensing agreement, and in Canada where our former licence partner has become a wholly owned subsidiary since the year end.  The next priority countries on our list are China and Brazil.

 

Profitability and growth

Our revenue growth at 27% was below our average annual growth rate over the previous four years of 37% and below our target, but nevertheless was very pleasing in a year when the economic backdrop was so difficult.  Whilst we have long term ambitions, and need to invest for the future, we also remain focussed on shorter term profitability.  In 2009, we maintained our margins, and operating profit therefore also grew by 27%.  The business remains strongly cash generative, and even after substantial investment for future growth our year end net cash balance increased significantly.

 

Prospects

In 2010 we intend to launch more innovation, open offices in Brazil and China and deliver further significant growth and strategic progress. Our ambitious aim over the next decade is to become a top 10 global market research group.

 

John Kearon

Chief Executive Officer

 

BUSINESS AND FINANCIAL REVIEW

 

Operations

The Company grew revenue by 27% in 2009 in actual terms, and 22% in constant currency terms, to £11,814,000.  This revenue increase was driven by continued strong progress in the US, growing at 60% (48% in constant currency terms) to £2,576,000, and by very encouraging contributions from our new offices in Switzerland and Germany.  The US is a very large, sophisticated and competitive research market, and it is very encouraging that our products are being so well received by our large US clients.  The Company's UK business recovered after a slow start to the year (revenue for the full year was 2% down).  Our Dutch business held its own, with revenue growing at 10% (0% in constant currency terms).  For the first time, aggregate overseas revenue, at £6,289,000, exceeded that generated in the UK (£5,525,000).

 

All of our offices were profitable, including Switzerland and Germany in only their first full year of operation.  Some 51% of total EBIT before central overheads, of £4,913,000 arose in the UK, compared with 70% in 2008.  This reflected a modest 8% decline in UK profit, strong profit growth in the US and Netherlands, and maiden full year contributions from our new offices in Switzerland and Germany.

 

Together with our licence partner in Australia and our operation in Canada, which became a wholly owned subsidiary in January 2010, our offices are located in countries which cover 60% of the global research market.  This broad geographic coverage is important as we need to align our client service teams to the regional buying points of our multinational clients.

 

The Company's client base has remained at around 140 companies, but the concentration toward our largest clients has increased.  We now serve 11 of the world's 20 largest buyers of market research (up from nine in 2008) and the year-on-year revenue growth from those clients in 2009 was 70%.  Client satisfaction and repeat business remains high with 80% of 2008 revenue from clients who have returned in 2009.  We delivered a total of 601 client projects in 2009, and the average revenue per project was £20,000 (2008: £19,000), which is indicative of continued progress in winning larger, more international projects from clients.

 

We have continued to build our teams.  Average headcount in 2009 was 70 people, up from 59 in 2008.  As well as increasing our front line client servicing teams, we have also increased significantly our operations and product development ("BrainJuicer Labs") teams.  This represents a sizeable investment for the Company, and one which while dilutive to our profits in 2009 will, we believe, position us well to achieve our growth aspirations.  Through efficiency and scale gains, we have still managed to increase our average revenue per employee to £169,000 (2008: £158,000).

 

Financial Performance

The Company grew revenue in 2009 to £11,814,000 (2008: £9,322,000).  Gross profit grew by 30% to £8,935,000 (2008: £6,864,000), representing 76% of revenue (up from 74% in 2008).  Administrative expenses grew by 31% to £7,290,000 (2008: £5,574,000) due primarily to the headcount increase.  However, within administrative expenses is a foreign exchange loss of £164,000 (2008: £158,000 gain).  Administrative expenses before these foreign exchange items rose by 24%.  Operating profit grew 27% to £1,645,000 (2008: £1,290,000) and operating margin was flat at 13.9% (2008: 13.8%).  Interest income from our cash balances was negligible at £13,000 (2008: £82,000) due to the fall off in interest rates, giving a profit before tax of £1,658,000 (2008: £1,372,000).  Our tax charge was £473,000 (2008: £408,000) and the effective tax rate was 29% (2008: 30%).   Profit after tax grew 23% to £1,185,000 (2008: £964,000).

 

Basic earnings per share grew to 9.2p (2008: 7.6p) and diluted earnings per share to 9.0p (2008: 7.4p).  Basic earnings per share is calculated as profit after tax divided by the weighted average number of shares in issue during the year (12,923,663, up from 12,610,803 in 2008).  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 13,107,085 shares (2008: 13,108,126 shares).

 

The Company generated £811,000 (2008: £43,000) of cash flow before dividends, interest and share transactions (employee stock option share issues and treasury share purchases), after investing £470,000 (2008: £550,000) in its software technology and other non-current assets.  It paid £207,000 in dividends (2008: £277,000 including a 1.7p per share special dividend), received £13,000 of interest (2008: £82,000) received £38,000 from stock option share issues (2008: £4,000) and paid £39,000 in treasury share purchases (2008: £nil).  The Company's net increase in cash was £616,000 (2008: a decline of £148,000) and its cash balance at year end was £2,343,000 (2008: £1,727,000).  The Company's trade and other receivables (its biggest asset) was £4,073,000 at year end (2008: 3,206,000), and the debtor payback period was 75 days (2008: 66 days).  Its net assets were £4,735,000 (2008: £3,627,000).

 

The Company's non-current assets include £832,000 (2008: £516,000) of software development in progress.  This represents a new online survey platform that has taken several years to build and is nearing completion.  It is anticipated that this new platform will be deployed during the second half of 2010, and will have a useful economic life of at least four years.  The Company has not started to depreciate this asset, as it is not yet ready for use, but will do so once it starts to deploy it.

 

The Company paid an interim dividend of 0.6p per share in September 2009, a 20% increase on the 2008 interim payment of 0.5p per share.  The Board now proposes a final dividend of 1.3p per share, 30% higher than the 1.0p per share 2008 final dividend (in 2008 we also paid a special one-off dividend of 1.7p per share).  The Board has also approved a first interim dividend for 2010 of 0.6p per share, for payment prior to 6 April 2010 when the income tax rate increases for higher rate tax payers.  Our financial position remains strong, with healthy cash flows and cash balances, and we expect to maintain a progressive dividend policy.

 

Summary

The Company has emerged from a year with a difficult economic backdrop in a strong position.  Growth is down on our trend rate, but we have grown significantly nevertheless.  Revenue, profit, earnings per share, cash flow and dividends are all up on 2008, and in all cases by healthy percentages.  Perhaps more importantly, we have not held back on investment in any of the areas that we feel are key to our future growth: product development, geographic expansion, operations, and our technical platform.  We continue to feel confident in our positioning, with our innovative products, multinational client base and highly regarded team.

 

James Geddes

Chief Financial Officer