Preliminary Results

RNS Number : 1021P
BrainJuicer Group PLC
19 March 2009
 




PresRelease 

19 March 2009


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

49% increase in revenues from our new to the world 'Juicy' products to £4.3m: Predictive Markets, CommScanTMInsight ValidationTM Creative 6ersTM, and Quali-TaxiTM

45% office coverage of potential global research market; US, UK, Australia, Netherlands, Switzerland [90% geographic coverage having researched in 54 countries & 38 languages]

115 to 140 clients, including 9 of the world's top 20 advertisers [7 in 2007] 

42% increase in revenue to £9,322,000 (all organic) (2007: £6,566,000)

53% increase in operating profit to £1,290,000 (2007: £844,000) [PAT up 46% to £964,000 from £660,000 in 2007]

Increase in operating profit margin from 12.9% to 13.8%

48% increase in fully diluted earnings per share to 7.4p (2007: 5.0p)

£1.7m cash and no debt

1.0p per share proposed final dividend, making 1.5p for the year (2007: nil); plus special dividend of 1.7p per share paid in October 2008 (2007: nil)


Post year-end

Expanded into Germany and Canada increasing our office coverage of potential global research market from 45% to 57%

Launched the JuicyBrains online Innovation Community into the fastest growing market research category. 

Slower start to 2009 as clients show caution with budgets but also opportunity for innovative online providers, as clients challenge existing suppliers  


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:


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

www.brainjuicer.com 



Canaccord Adams Limited

www.canaccordadams.com

Mark Williams / Adria Da Breo Richards

Tel: +44 (0)20 7050 6500



Media enquiries:



Abchurch Communications


Tel: +44 (0)20 7398 7700

Heather Salmond / Joanne Shears / Jack Ballantyne

jack.ballantyne@abchurch-group.com

Tel: +44 (0)20 7398 7714

  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 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 expansionand 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 USUK 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 Australiavia 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 Kearon43.8%

  • Unilever Ventures: 37.8%

  • Management4.2%

  • 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 UK7% 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 advertisersand 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, walso 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 businessbut 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





2008

2007 


Note



£'000

£'000

Revenue

4



9,322

6,566







Cost of sales



(2,458)

(1,727)






Gross profit



6,864

4,839






Administrative expenses




(5,574)

(3,995)







Operating profit

4



1,290

844







Investment income




82

49

Finance costs




-

-






Profit before taxation



1,372

893






Income tax expense

7



(408)

(233)













Profit for the financial year




964

660







Attributable to equity holders of the Company




964


660














Earnings per share for profit attributable to the equity holders of the Company







Basic earnings per share

8



7.6p

5.2p







Diluted earnings per share

8



7.4p

5.0p


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

 

CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2008



2008 

2007 

Note

£'000 

£'000

ASSETS

Non-current assets



Property, plant and equipment

5

157

119

Intangible assets

6

625

328

Financial assets - available for sale investments


90

-

Deferred tax asset


61

222







933

669





Current assets




Inventories


14

16

Trade and other receivables


3,206

2,630

Cash and cash equivalents

1,727

1,875





4,947

4,521




Total assets

5,880

5,190










EQUITY



Capital and reserves attributable to equity holders of the Company



Share capital 


126

126

Share premium account


1,412

1,408

Merger reserve


477

477

Foreign currency translation reserve


214

51

Other reserve


290

278

Retained earnings


1,108

412





Total equity


3,627

2,752













LIABILITIES




Current liabilities




Trade and other payables


2,122

2,092

Current income tax liabilities


131

346





Total liabilities


2,253

2,438







Total equity and liabilities

5,880

5,190










CONSOLIDATED CASH FLOW STATEMENT FOR YEAR ENDED 31 DECEMBER 2008









2008 

2007 

Note

£'000 

£'000

Net cash generated from operations  

9

1,138

1,173

Tax paid


(545)

(77)





Net cash generated from operating activities


593

1,096









Cash flows from investing activities




Purchases of property, plant and equipment

(124)

(83)

Purchase of intangible assets

(336)

(330)

Purchase of available for sale financial assets

(90)

-

Interest received

82

49




Net cash used by investing activities

(468)

(364)




Cash flows from financing activities



Proceeds from other issuance of Ordinary Shares

4

18

Repayment of financial liabilities

-

(108)

Dividend paid

(277)

-




Net cash used by financing activities

(273)

(90)











Net (decrease) / increase in cash and cash equivalents  


(148)

642





Cash and cash equivalents at beginning of year


1,875

1,233





Cash and cash equivalents at end of year


1,727

1,875






CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 31 DECEMBER 2008






Share capital

Share premium account



Merger reserve

Foreign currency translation reserve



Other reserve

Retained earnings




Total


£'000

£'000

£'000

£'000

£'000

£'000

£'000









At 1 January 2007

126

1,390

477

(5)

255

(277)

1,966

















Exchange differences on consolidation

-

-

-

56

-

-

56

Profit for the financial year

-

-

-

-

-

660

660









Total income expense recognised for 2007

-

-

-

56

-

660

716

Exercise of share options

-

18

-

-

(6)

6

18

Unwinding of deferred tax on exercise of share options

-

-

-

-

2

23

25

Share-based payment charge

-

-

-

-

54

-

54

Deferred tax debited to equity

-

-

-

-

(27)

-

(27)










-

18

-

-

23

29

70









At 31 December 2007

126

1,408

477

51

278

412

2,752

















Exchange differences on consolidation

-

-

-

163

-

-

163

Profit for the financial year

-

-

-

-

-

964

964









Total income expense recognised for 2008

-

-

-

163

-

964

1,127

Exercise of share options

-

4

-

-

-

-

4

Dividend paid on ordinary shares

-

-

-

-

-

(277)

(277)

Unwinding of deferred tax on exercise of share options

-

-

-

-

-

9

9

Share-based payment charge

-

-

-

-

105

-

105

Deferred tax debited to equity

-

-

-

-

(93)

-

(93)










-

4

-

-

12

(268)

(252)









At 31 December 2008

126

1,412

477

214

290

1,108

3,627



















1.

General Information


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 StreetLondonW1W 8RN.


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


2.

Basis of Preparation


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.  


3.

Principal accounting policies


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.


  

4.

Segment information


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:



Year ended 31 December 2008












United Kingdom


Europe

United States


Group

Total


£'000s

£'000s

£'000s

£'000s

£'000s







Total segment revenue

5,613

2,097

1,612

-

9,322

Inter segment revenue

-

-

-

-

-







Segment revenue

5,613

2,097

1,612

-

9,322













Segment result

2,755

713

465

(2,643)

1,290













Investment income





82







Profit before taxation





1,372







Taxation





(408)







Profit for the financial year





964



















Segment assets

1,942

680

678

2,580

5,880







Segment liabilities

(1,372)

(313)

(437)

(131)

(2,253)







Net assets

570

367

241

2,449

3,627













Capital expenditure

25

14

8

413

460













Depreciation

30

21

7

80

138














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.




  

4.

Segment information (continued)



Year ended 31 December 2007












United Kingdom


Europe

United States


Group

Total


£'000s

£'000s

£'000s

£'000s

£'000s







Total segment revenue

4,209

1,955

429

-

6,593

Inter segment revenue

(27)

-

-

-

(27)







Segment revenue

4,182

1,955

429

-

6,566













Segment result

1,431

966

(194)

(1,359)

844













Investment income





49







Profit before taxation





893







Taxation





(233)







Profit for the financial year





660



















Segment assets

1,728

918

167

2,377

5,190







Segment liabilities

(1,471)

(498)

(122)

(347)

(2,438)







Net assets

257

420

45

2,030

2,752













Capital expenditure

86

37

10

280

413













Depreciation

39

3

3

-

45














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.




5.

Property, plant and equipment


For the year ended 31 December 2008






Furniture, fittings and equipment


Computer hardware

Total 


£'000s

£'000s

£'000s

At 1 January 2008




Cost 

80

94

174

Accumulated depreciation

(22)

(33)

(55)





Net book amount

58

61

119





Year ended 31 December 2008




Opening net book amount

58

61

119

Additions

22

102

124

Disposals

-

(4)

(4)

Depreciation charge for the year

(20)

(74)

(94)

Eliminated on disposal

-

3

3

Foreign exchange

4

5

9





Closing net book amount

64

93

157





At 31 December 2008




Cost 

107

201

308

Accumulated depreciation

(43)

(108)

(151)





Net book amount

64

93

157






For the year ended 31 December 2007



Furniture, fittings and equipment


Computer hardware

Total 


£'000s

£'000s

£'000s

At 1 January 2007




Cost 

60

32

92

Accumulated depreciation

(7)

(7)

(14)





Net book amount

53

25

78





Year ended 31 December 2007




Opening net book amount

53

25

78

Additions

19

64

83

Depreciation charge for the year

(15)

(26)

(41)

Foreign exchange

1

(2)

(1)





Closing net book amount

58

61

119





At 31 December 2007




Cost 

80

94

174

Accumulated depreciation

(22)

(33)

(55)





Net book amount

58

61

119







6.

Intangible assets



Software licenses

Internally generated software

Software development in progress

Total 


£'000

£'000

£'000

£'000

At 1 January 2008





Cost 

52

-

280

332

Accumulated amortisation

(4)

-

-

(4)






Net book amount

48

-

280

328






Year ended 31 December 2008





Opening net book amount

48

-

280

328

Additions

32

68

236

336

Amortisation charge for the year

(36)

(8)

-

(44)

Foreign exchange

5

-

-

5






Closing net book amount

49

60

516

625






At 31 December 2008





Cost 

91

68

516

675

Accumulated depreciation

(42)

(8)

-

(50)






Net book amount

49

60

516

625







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.


Software licenses

Internally generated software

Software development in progress

Total 


£'000

£'000

£'000

£'000

At 1 January 2007





Cost 

-

-

-

-

Accumulated amortisation

-

-

-

-






Net book amount

-

-

-

-






Year ended 31 December 2007





Opening net book amount

-

-

-

-

Additions

50

-

280

330

Amortisation charge for the year

(4)

-

-

(4)

Foreign exchange

2

-

-

(2)






Closing net book amount

48

-

280

328






At 31 December 2007





Cost 

52

-

280

332

Accumulated depreciation

(4)

-

-

(4)






Net book amount

48

-

280

328












2008 

2007 


£'000 

£'000 




Current tax

330

269

Deferred tax

78

(36)





408

233

Income tax expense for the year differs from the standard rate of taxation as follows:





7.

Taxation





Profit on ordinary activities before taxation

1,373

893




Profit on ordinary activities multiplied by standard rate of tax of 28% (2007: 30%)

384

268

Difference between tax rates applied to Group's subsidiaries

19

(28)

UK corporation tax at 30% for portion of year

5

-

Expenses not deductible for tax purposes

45

21

Other temporary differences

16

4

Re-measurement of deferred tax - change in UK tax rate

-

(14)

Utilisation of previously unrecognised tax losses

(41)

-

Adjustment to current tax in respect of prior years

(20)

(18)







Total tax 

408

233




    


8.

Earnings per share


(a)

Basic

    


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.



2008 

2007 


£'000 

£'000 




Profit attributable to equity holders of the Company

964

660




Weighted average number of ordinary shares in issue

12,610,803

12,564,831




Basic earnings per share

7.6p

5.2p





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. 



8.

Earnings per share (continued)


(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.


2008 

2007 


£'000 

£'000 




Profit attributable to equity holders of the Company and profit used to determine diluted earnings per share

964

660







Weighted average number of ordinary shares in issue

12,610,803

12,564,831

Share options

497,888

656,047




Weighted average number of ordinary shares for diluted earnings per share

13,108,126

13,220,878




Diluted earnings per share

7.4p

5.0p





9.

Cash used by operations



2008 

2007 


£'000 

£'000 




Profit before taxation

1,372

893

Depreciation

94

45

Amortisation

44

-

Interest received

(82)

(49)

Share-based payment expense

105

54

Decrease in inventory

2

29

Increase in receivables

(576)

(1,018)

Increase in payables

30

1,148

Exchange differences

149

71




Net cash generated from operations

1,138

1,173





10.

Share capital


During the y
ear 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).




This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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