Press Release

22 September 2010

 

BrainJuicer Group PLC

("BrainJuicer" or "the Company")

 

Interim Results for the Six Months ended 30 June 2010

 

 

Innovative, international online market researcher, BrainJuicer Group PLC (AIM: BJU) today announces its Interim Results for the 6 months ended 30 June 2010.

 

Financial Highlights

é	49% revenue growth to £7,208,000 (H1 2009: £4,849,000)
é	119% growth in operating profit to £505,000 (H1 2009: £231,000)
é	108% increase in profit before tax to £506,000 (H1 2009: £243,000)
é	100% growth in fully diluted earnings per share to 2.6p (H1 2009: 1.3p)
é	Cash flow before financing activities £633,000 (H1 2009: £(442,000))
é	687,000 shares bought back for £1,131,000
é	0.6p interim dividend paid in March (H1 2009: 0.6p proposed)
é	Period end cash £1,637,000 (31 December 2009: £2,343,000) and no debt

 

Operational Highlights

é	Return to growth in the UK and continued strong growth in the US
é	Opened offices in China and Brazil
é	Clients include 11 of world's top 20 market research buyers (11 in 2009)
é	'Juicy' products grew 55% to £3,758,000 (H1 2009: £2,431,000)
é	Increased product development investment to drive innovative growth
é	New technical platform nearing completion for deployment in H2
é	Management further strengthened - Chief Operating Officer appointed

 

 

Commenting on the Company's results, John Kearon, Chief Executive of BrainJuicer, said:  "We are delighted to have achieved continued significant progress.

"Clients are increasingly looking for greater insight and accuracy from their market research.   At BrainJuicer we've had significant success at translating new ways of thinking in psychology, behavioural economics and social sciences into what we call 'Juicy' tools that help our clients better understand and predict consumer motivations and behaviour.  And our strong growth with the world's largest businesses hopefully demonstrates the significance of what we're doing.  We intend to continue to invest and build on all fronts - in our Juicy products, our talent and our strategic geographic coverage - to fulfil our long term top 10 potential, and deliver profitable growth.

"Our profits are skewed very much towards the second half-year, but our first half performance gives us confidence that we are on track to meet market expectations for the year as a whole.

 

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 Genuity Limited	Tel: +44 (0)20 7050 6500
Mark Williams mwilliams@canaccordgenuity.com

 

Media enquiries:

Lauren Tilden, Marketing Assistant lauren.tilden@brainjuicer.com

Tel: +1 (425) 830 1904

Interim Statement

 

Introduction

BrainJuicer has achieved another period of considerable organic growth.  Revenues increased 49% (49% in constant currency terms) and operating profit grew 119%.  We achieved this growth while continuing to build the business and invest for its long term potential - potential which we believe is very significant.  We continued to invest in our product development and technology.  We opened two new offices, in China and Brazil, to enhance our geographic coverage and better serve our multi-national clients in their strategically important territories.  We strengthened our management team with the recruitment of a COO, Alex Batchelor, and appointed three new country Managing Directors.  We are continuing to attract talented people.  We now have 86 full time equivalent employees, up from 77 at 31 December 2009, and two of our number were recognised at ESOMAR's annual congress this year.

 

Financial Performance

Revenue for the half-year was £7,208,000, up from £4,849,000 in the first half of 2009.  Gross margin also improved, rising to 78% of revenue (H1 2009: 75%).  Operating costs increased from £3,427,000 in the first half of 2009 to £5,131,000 this year, as the Company continued to build its teams in product development and account management.  Average full-time equivalent headcount increased to 79, up from 63 during the same period last year, but with continued operational improvements and strong revenue growth, we have increased revenue per employee to £91,000 (H1 2009: £77,000).

 

Operating profit grew 119%, from £231,000 in the first half of 2009 to £505,000 in this half-year.  Interest income was lower as a result of the declines in interest rates, resulting in growth in profit before tax of 108% to £506,000 (H1 2009: £243,000).  Our average tax rate was 32%, up from 24% last year when we had some favourable period adjustments.  We expect the tax rate for the full year to be around 32% (2009: 28.5%).  Profit after taxation grew by 88% to £345,000 from £184,000.

 

During the half year, the Company used surplus cash to purchase 687,000 BrainJuicer shares for £1,131,000.  Basic earnings per share increased by 93% from 1.4p in the first half of 2009 to 2.7p this year.  Fully diluted earnings per share rose similarly, from 1.3p to 2.6p.

 

The Company generated £957,000 of cash from operating activities, compared with £213,000 cash outflow in the first half of 2009.  We invested £324,000 in capital expenditure, up from £229,000 in the first half of 2009, predominantly in a new software technology platform, leaving £633,000 of cash flow before financing activities (H1 2009: £442,000 outflow).  The Company paid dividends of £247,000 (H1 2009: £130,000) which comprised its final 2009 dividend and also its 2010 interim dividend, and it received £39,000 from the exercise of employee stock options.  The Company generated free cash flow, before the £1,131,000 purchase of Treasury shares, of £425,000 (H1 2009: £535,000 outflow).  The Company's cash balance at 30 June 2010 was £1,637,000 (31 December 2009: 2,343,000).  BrainJuicer has no debt.

 

The Company paid a 2010 interim dividend of 0.6p per share in March in order to make the payment prior to the increase in higher rate income tax.  The 2009 interim dividend was also 0.6p and was paid in October 2009.  Future interim dividends will likely revert to the October timing, and will continue to be determined in the light of interim profits, cash flow and investment needs.

 

Operations

BrainJuicer's growth has been company-wide, as demonstrated by the increasing revenues and profits in nearly all of our global offices.  The UK business recovered strongly after a flat 2009, growing at 49% over the same period last year.  Our two newest European offices (Switzerland and Germany) also continued to perform well, growing at 19% and 68% respectively (16% and 71% respectively in constant currency terms).  Revenue in the Company's other European office, Holland, declined, however, by 9% (7% in constant currency terms), partially due to management changes within that office.  The Company's North American position continues to progress successfully; in the first half of 2010, revenue was up 129% (123% in constant currency terms) from the same period last year in this competitive and very large market.

 

All offices delivered a positive profit contribution (before allocation of shared fixed central overheads).  Operating profit contribution grew in the UK by 80%, in the US and Canada by 646%, in Germany by 64%, and declined in Holland and Switzerland, by 70% and 53% respectively.   In Holland we have had a management change, and in Switzerland profits are down while we build the team from a very small base.

 

We attribute our growth largely to our products and our innovation.  We are translating new ways of thinking in psychology, behavioural economics and social sciences into what we call 'Juicy' tools that help our clients better understand and predict consumer motivations and behaviour.  We are fulfilling a growing demand for more than dry statistical data.  Clients are increasingly looking for research that inspires creative breakthroughs, in addition to validating pre-conceived ideas.  We have four core competencies or categories into which our products fall: insights, concepts, communications, and customer satisfaction.  Across this spectrum, we are attempting to bring consumer feedback to life in ways which enable our clients to market their products better.

 

We continue to invest heavily in product development and validation, and we have a growing full time 'BrainJuicer Labs' team.  Along with a technology partner we have devised a new product, DigiViduals™, for extracting consumer insight from online social media.  In basic terms, DigiViduals™ are 'research robots' programmed to represent a particular type of person that the client is interested in: a target audience, a segmentation of their customers, a lead consumer or perhaps a trend.  The DigiViduals™ are programmed to automatically trawl Twitter and other social media looking for comments, videos, pictures, and blogs that the character could have said or uploaded themselves.  In effect the DigiViduals™ are conducting automated mass web ethnography to build up a rich, empathetic, detailed picture of their lives from which understanding, insights and new product ideas can be generated.  Early trials with key clients have proved extremely promising and we are planning to invest around £720,000 over the next two years in licence fees and to develop and hone the product further with our technology partner.  This investment would give us a licence in perpetuity with certain exclusivity rights and a fee in the event of a change of control of our partner equal to 20% of the value of that business at the time

 

We have also developed an emotional customer satisfaction measurement model, Satistraction™, which uses our award winning FaceTrace® tool to quickly and accurately reveal how customers are feeling at any given transaction moment.  It overcomes many of the disadvantages of traditional customer satisfaction research, which can paint an incomplete, misleading, over-rationalised and generic picture of the customer experience and delivers almost real-time results direct to the client so they can respond quickly and effectively.  The approach has undergone early trials with several multi-national clients in several countries and received very positive feedback.

 

We continue to focus on client service delivery, and we monitor client feedback closely.  Our clients remain enthusiastic about the services we provide and 79% 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 and other agencies.  We co-hosted 5 such conferences in the first half of this year in the UK, US, Canada, China, and Brazil which were attended by nearly 300 people, many of whom are key buyers of market research in large consumer companies.

 

We continue to develop our operational workflows and our technology.  Our centralised back-office production is now fully out-sourced, which has freed up internal software development resource to improve our technology, whilst at the same time providing a lower cost, more scalable means of delivery.  After four years in the making, we are nearing completion of our new technical platform and are in the process of beginning deployment.  The new platform is expected to ease the capacity constraints we are facing with our existing platform and provide a more reliable and faster respondent experience.

 

Outlook

We believe that we are at the forefront of a revolution brewing within the market research industry.  Clients are demanding much more than has typically been provided by traditional research techniques.  Social media, crowd sourcing, and co-creation are creating opportunities for new products and methodologies, and behavioural economics is driving new ways of thinking about research.  Technology partners are providing higher quality consumer data more efficiently and at better value than ever before.  We are attempting to find ways to offer clients research that is truly game-changing, insight-driven decision support.  We believe our products, capability and technology give us the positioning to take advantage of these market shifts, and to continue generating profitable growth in the long term.  We also believe that taken together, the attributes we bring to bear would be difficult for competitors to replicate.  To fulfil our potential, we intend to continue to strengthen our core competencies, 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.  The nature of our business is such that revenue visibility is poor, and our monthly revenue streams can be lumpy and hard to predict due to the sheer size of many of our clients.  Furthermore, our profits are skewed very much towards the second half-year.  First half-year profit growth is therefore not necessarily predictive of full year growth.  However, our first half performance gives us confidence that we are on track to meet market expectations for the year as a whole.

 

John Kearon                                                 James Geddes

Chief Executive Officer                               Chief Financial Officer

CONDENSED CONSOLIDATED INCOME STATEMENT FOR SIX MONTHS ENDED 30 JUNE 2010

 

 

	Note	Six months ended 30 June 2010 Unaudited	Six months ended 30 June 2009 Unaudited	Year ended 31 December 2009 Audited
		£'000	£'000	£'000
Revenue		7,208	4,849	11,814
Cost of sales		(1,572)	(1,191)	(2,879)
Gross profit		5,636	3,658	8,935
Administrative expenses		(5,131)	(3,427)	(7,290)
Operating profit		505	231	1,645
Investment income - bank interest		1	12	13
Profit before taxation		506	243	1,658
Income tax expense		(161)	(59)	(473)
Profit for the financial period		345	184	1,185
Attributable to equity holders of the Company		345	184	1,185
Earnings per share attributable to the equity holders of the Company
Basic earnings per share	5	2.7p	1.4p	9.2p
Diluted earnings per share	5	2.6p	1.3p	9.0p

 

 

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