Press Release

13 September 2011

 

BrainJuicer Group PLC

("BrainJuicer" or "the Company")

 

Interim Results for the Six Months ended 30 June 2011

 

 

Innovative, international online market researcher, BrainJuicer Group PLC (AIM: BJU) today announces its Interim Results for the 6 months ended 30 June 2011.

 

Financial Highlights

é	26% revenue growth to £9,089,000 (H1 2010: £7,208,000)
é	24% growth in operating profit to £628,000 (H1 2010: £505,000)
é	25% increase in profit before tax to £630,000 (H1 2010: £506,000)
é	23% growth in fully diluted earnings per share to 3.2p (H1 2010: 2.6p)
é	25% growth in interim dividend to 0.75p (H1 2010: 0.60p)
é	128,241 shares bought back for £353,000 (H1 2010: 687,000 shares for £1,131,000)
é	£2,057,000 cash (31 December 2010: £2,770,000) and no debt
é	Residual Unilever Ventures stake placed with institutional investors

 

Operational Highlights

é	Strong growth in the United States, Germany and Switzerland
é	Additional office opened in Atlanta in the United States
é	Average headcount up, to 111 (H1 2010: 79)
é	Sustained investment in new products
é	New technical platform being deployed
é	Most Innovative Agency award, GreenBooks Research Industry Trends
é	Management strengthened - new head of SatisTraction® and global accounts

 

Commenting on the Company's results, John Kearon, Founder and Chief Juicer of BrainJuicer, said:

"We are delighted to have continued our significant international growth in revenue and profit, all organic, despite these challenging economic times.

Our commitment to devising better ways to understand and predict human behaviour and helping our clients achieve greater commercial success, is delivering significantly more business from many of the world's biggest companies.

Delighting our clients leads to more business and greater profitability, which means continued investment in new offices, staff, innovation, marketing and technology, while at the same time delivering consistent growth in earnings and dividends for shareholders.   Our Juicy products continue to attract industry attention and client commitment.  We punch significantly above our weight in the industry and continue to increase share among major buyers of market research in the large and strategically important markets in which our clients operate.

During the first half Unilever Ventures, which invested in the Company in 2003, sold its residual holding.  We thank them again for their steadfast support, and welcome the new institutional shareholders who have taken a stake.

As ever, revenue visibility is limited as we approach the seasonally important final quarter of the year.  Nevertheless the Board is confident that the Company will make further progress in the second half and we believe we are on track to meet market expectations for the year as a whole."

The company can be found at www.brainjuicer.com.

 

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 mwilliams@canaccordgenuity.com

Media enquiries:

Lauren Tilden, Senior Marketing Associate lauren.tilden@brainjuicer.com

Tel: +1 (425) 830 1904

Interim Statement

 

Introduction

 

In the first half of 2011, revenue increased by 26% (27% in constant currency terms) and operating profit by 24%.  This growth, all organic, was generated while we continued to invest in our people, products and systems to pave the way for future expansion.  Our revenue continues to derive primarily from very large clients, including 12 of the world's 20 largest buyers of market research, and our repeat business remains high.  81% of 2010 revenue was from clients who have already returned in the first half of this year.  We further strengthened our senior management team with the recruitment of Federico Trovato, who joined us from Philips in a new role responsible for our customer feedback business (SatisTraction^®) and our global account management.  We now have 124 full time equivalent employees, compared with 91 at the end of last year.  During the half we opened an office in Atlanta, Georgia, our fourth office in the United States, to enhance our geographic reach in this key market.  Later this year we are planning to open an office in Milan, Italy.  Our new £1.6m software platform, which significantly increases our research capacity, is gradually being phased in.  We remain excited by the potential of initiatives which are under development or have recently been introduced from our well regarded Labs team, for example DigiViduals™ and SatisTraction^®.  Our most recent award, Most Innovative Agency 2011 (GreenBooks Research Industry Trends Report, as judged by our peers, clients and competitors), further demonstrates our growing reputation within our industry.

 

Financial Performance

 

Revenue for the half year was £9,089,000, and gross profit, our main internal financial performance indicator, was £7,120,000.  Gross profit, like revenue, grew at 26%, remaining at 78% of revenue.  Operating costs increased from £5,131,000 in the first half of last year to £6,492,000 this year.  This primarily reflected a substantial increase in headcount, to an average of 111 full time equivalent people from 79 in the same period last year, as the Company ramped up its client service capacity.  Revenue per employee has declined from £91,000 to £82,000 as a result.  Non-staff costs comprising a minority of our administrative expenses (34%), have grown by 60% due to licence fees for our new DigiViduals™ product, enhanced technical support across our offices, and increased depreciation following the introduction of our new software platform ("JC2").

 

Operating profit rose by 24% to £628,000, and as interest income from our cash balances was again negligible, pre-tax profit was 25% higher at £630,000 (H1 2010: £506,000).  The tax charge was £214,000 (H1 2010: £161,000) and the effective tax rate was 34% up from 32%, as a result of the increased proportion of profits generated in the United States, where rates of corporation tax are higher.  Profit after tax increased by 21% to £416,000.  Basic earnings per share grew by 22% to 3.3p (H1 2010: 2.7p), and fully diluted earnings per share by 23% to 3.2p (H1 2010: 2.6p).

 

The Company generated £268,000 of cash from operations, compared to £1,283,000 in the first half of 2010.  This reduction was due to swings in working capital, in the main due to bonus fluctuations and a higher receivables balance. Higher growth in 2010 resulted in larger bonuses, paid in the first half of this year, than so far accrued this year, hence the negative impact on cash flow.  The higher receivables balance was due to a higher percentage of revenue in June this year than last year (June 2011 revenue comprised 26% of H1 revenue whereas in 2010 June revenue comprised only 19% of H1 revenue).  We paid tax of £420,000 (H1 2010: £326,000), incurred £242,000 in capital expenditure, down from £325,000 in the first half of 2010, received a small amount of interest, leaving a £392,000 cash outflow before financing activities (H1 2010: £633,000 inflow).  We expect to return to positive cash inflow over the second half of the year.

 

The Company paid dividends of £224,000 in the first half of the year, being the final 2010 dividend.  Dividends paid in the first half of 2010 were higher at £247,000, as this comprised both the 2009 final dividend and also the 2010 interim dividend, which was paid earlier in the year than normal in order to precede the introduction of higher rate income tax.  We repurchased 128,241 shares relating to stock options that were exercised, for £353,000 of which £161,000 was paid before half year end and £192,000 after.  In the first half of 2010, we utilised surplus cash to repurchase 687,000 shares for £1,131,000.

 

The Company's cash balance at 30 June 2011 was £2,057,000 (31 December 2010: 2,770,000).  BrainJuicer has no debt.

 

Our issued share capital remained constant over the first half of the year numbering 13,113,114 shares, and we continued to hold 660,000 of these in Treasury - the same as at 31 December 2010.  The Board is sensitive to the dilutive impact of stock options.  The Company has therefore been repurchasing option shares as they have been exercised, and plans to continue to do so for as long as the Board believes in the Company's share price growth potential, the Company has sufficient cash resources, and providing it remains in compliance with its shareholder approved authorities and with AIM and other rules.  We had 1,211,065 outstanding stock options at 30 June 2011 down from 1,368,861 as at 31 December 2010, and there has been no change in the additional long-term incentive scheme for senior executives, which was set up last year (and which is described in our 2010 annual report).

 

We are maintaining dividend growth broadly in line with earnings per share growth, and the Company will be paying an interim dividend of 0.75p, 25% higher than last year's interim payment.  This will be paid on 25 October 2011 to shareholders on the register on 23 September 2011, and the shares will become ex dividend on 21 September 2011.

 

Operations

 

Overall revenue growth of 26% was fuelled primarily by further strong progress in the United States, which generated 33% of total revenues.  Growth of 54% in what is by some margin the largest research market in the world is encouraging, and bodes well for the future, especially coming on the back of the 61% revenue increase in 2010.  Our strategically important Juicy products, as we call them, are gaining increasing acceptance in the United States, and the opening of a small office in Atlanta to complement our established presence in New York, Chicago and Los Angeles further enhances our footprint in the United States.

 

Good progress was also achieved in Germany, where revenue increased by 134%, and Switzerland (revenue up 70%).  In aggregate these offices contributed 16% of total revenue.  Germany is the third largest research market in the world, and we are confident of further long term growth both there and in Switzerland as our account teams, established only in 2008, gain increasing client endorsement.

 

Revenue in the UK, which remains BrainJuicer's largest market, generating 41% of the H1 total, increased only marginally after the high (42%) growth achieved in 2010.  Our new offices in China and Brazil are not yet generating very much revenue, but are showing encouraging early signs.

 

Our Dutch business has been declining over the last couple of years in part due to continued declines in revenue from its largest client, due to changing spending patterns within that client.  We are endeavouring to build a new client base within the Netherlands, and this is taking time.  It's a relatively small market in global terms, so whilst disappointing, it is not considered a major set-back.

 

With the exception of our start up offices in China and Brazil, all of our offices made a positive contribution to operating profit before shared central overheads.  The UK remained the largest source of profit, contributing £1,914,000, 49% of total profit before central costs of £3,908,000.  The United States generated £1,406,000 and Germany £412,000.

 

Our half year results, whilst only a short term snap shot, show that the growth we have maintained over many years is continuing.  We attribute this growth to our innovative products and talented team.  In essence, we have taken discoveries about human behaviour in psychology and neuroscience, in sociology and behavioural economics, and created unique and industry challenging market research tools.  Our suite of Juicy products gives our clients predictive, nuanced and inspiring understandings of consumer behaviours, in addition to the dry statistical data they have hitherto been used to.  It is in part due to our innovative approach to market research that we have attracted talented researchers.  In addition we are creating a culture - based on our maxim "to find your drive: know your purpose, gain mastery and seek autonomy" - to retain and inspire our people and to attract a great many more.

 

Outlook

 

Whilst we remain confident that our growth is sustainable over the long term, as ever, revenue visibility is limited as we approach the seasonally important final quarter of the year.  Nevertheless the Board is confident that the Company will make further progress in the second half and we believe 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 2011

 

 

	Note	Six months ended 30 June 2011 Unaudited	Six months ended 30 June 2010 Unaudited	Year ended 31 December 2010 Audited
		£'000	£'000	£'000
Revenue	4	9,089	7,208	16,360
Cost of sales		(1,969)	(1,572)	(3,738)
Gross profit		7,120	5,636	12,622
Administrative expenses		(6,492)	(5,131)	(10,406)
Operating profit	4	628	505	2,216
Investment income - bank interest		2	1	1
Profit before taxation	4	630	506	2,217
Income tax expense		(214)	(161)	(737)
Profit for the financial period		416	345	1,480
Attributable to equity holders of the Company		416	345	1,480
Earnings per share attributable to the equity holders of the Company
Basic earnings per share	5	3.3p	2.7p	11.7p
Diluted earnings per share	5	3.2p	2.6p	11.3p

 

 

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