Information  X 
Enter a valid email address

System1 Group PLC (SYS1)

  Print      Mail a friend

Friday 27 October, 2017

System1 Group PLC

Interim Results

RNS Number : 7675U
System1 Group PLC
27 October 2017
 

 

 

 

Press Release

27 October 2017

 

 

System1 Group PLC (AIM: SYS1)

formerly BrainJuicer Group PLC

("System1" or "the Group" or "the Company")

 

Unaudited interim results for the six months ended 30 September 2017

 

 

System1, the pioneering marketing services group, today announces its results for the six month period ended 30 September 2017 ("H1").

 

Highlights

10% revenue decline to £13.82m (2016/2017: £15.28m), 12% in constant currency

9% gross profit decline to £11.39m (2016/2017: £12.54m), 12% in constant currency

70% profit before tax decline to £0.85m (2016/2017: £2.79m)

70% profit after tax decline to £0.54m (2016/2017: £1.79m)

69% fully diluted earnings per share decline to 4.2p (2016/2017: 13.7p)

£3.50m cash at 30 September 2017 and no debt (31 March 2017: £8.27m and no debt), after paying dividends of £4.05m during the period

Maintaining interim dividend at 1.1p

 

 

Commenting on the Company's results, John Kearon, CEO of System1, said:

 

"Life as System1 Group has not started as hoped.  However the decline in revenue has been a catalyst in accelerating the re-engineering of our product portfolio.  We are in a period of change, and with our normal limited revenue visibility we are more cautious than usual on our short-term outlook.  The encouraging signs referred to previously continue, but trading in Q3 to date has not yet resulted in a pick-up in our order book.  Were the gross profit decline seen in H1 to be repeated in H2, then our profit before tax for the full year would decline by 50% to 60% (2016/17: £6.3m).

 

Change is never easy but in a rapidly transforming market, it's the only way to get out in front and establish a new industry standard that uses our pioneering System 1, decision-science products to ensure marketing that delivers profitable growth without unnecessary waste.  Over our first 16 years, as BrainJuicer, we established a reputation as an industry innovator and built a global footprint and a hugely talented international team of nearly 200.  Over the next 16 years, System1 aims to provide the world's most progressive companies with the means of producing marketing that consistently makes a difference. We believe this will have been a pivotal year of change and investment in building a major new marketing services group of the future."

 

The Company can be found at www.system1group.com.

 

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014.  Upon the publication of this announcement, this inside information is now considered to be in the public domain.

 

 

For further information, please contact:

System1 Group PLC

+44 20 7043 1000

John Kearon, Chief Executive Officer

 

James Geddes, Chief Financial Officer

 

[email protected]

 

Canaccord Genuity Limited

+44 20 7523 8000

Simon Bridges

 

Emma Gabriel

 

 

 

INTERIM STATEMENT

 

 

After 27% revenue growth last year (year to 31 March 2017), the Company has had a very disappointing six months in financial terms.  Revenue declined by 10% (12% in constant currency), and gross profit, our main top line indicator, by 9% (12% in constant currency).  With a largely fixed operating cost base, this had a heavy impact on profit before tax, which declined to £0.85m from £2.79m in 2016/17.

 

These results were as unexpected as they were disappointing.

 

At the beginning of this financial year, we began a new era as System1 (following our rebranding from BrainJuicer) with enthusiasm: our three main product areas, Innovation, Advertising and Brand Tracking were all growing well; our  business in the US (our biggest market) had just finished an uninterrupted 4 year period of annual double digit gross profit growth; we had won the "most innovative agency" award in the annual market research GRIT awards for the 6th year in a row; we had recently launched our new Advertising Agency.

 

So what happened?  At a revenue level, three related things.  First, several significant FMCG clients have cut or deferred market research budgets, which impacted our Innovation business in particular.  Second, underlying and ongoing shifts within the industry backdrop are resulting in clients moving research spend towards automated lower cost research data.  Whilst we have seen this trend over a number of years, it has gathered pace more recently.  Third, our rebranding, coupled with some team reorganisation in pursuit of our longer-term positioning, has meant that we spent more time addressing internal issues and less time on clients, compared to normal.

 

Another over-riding comment about our business.  As we have frequently emphasised, we have little revenue visibility and significant variability in revenues from month-to-month and client-to-client.  Whilst this variability in individual clients or markets can be marked, the positives and negatives have historically tended broadly to offset each other, and our results in aggregate in any 6 month reporting period have appeared more predictable and stable than in fact they are.  Our order book and pipeline can change quickly, both for better or for worse.

 

Our gross profit comes from four main revenue streams: Innovation Testing, Ad Testing, Brand Tracking, and other ad hoc Research.  Gross profit from our Innovation services (Predictive Markets and Concept Testing) comprising 44% of our business (in the last financial year) declined 27%, and it's this that dragged our results down.  Ad Testing and Brand Tracking, collectively comprising 43% of our business last year, grew by 17% and 53% respectively, which whilst less than the growth achieved last year, was still strong.  Other ad hoc Research services declined significantly but this is now only around 10% of the business, and not of particular ongoing consequence.

 

In addition to these revenue streams, our new Advertising Agency generated a small amount of gross profit: £0.16m (up from a negligible amount last year).  Of more significance, it is building a portfolio of 4 and 5 Star Ads (the highest of our Ad Test scores), including its first Ad broadcast on TV, and is demonstrating the Group's capability to create marketing which generates profitable returns.

 

In geographic terms, gross profit was down in most of our markets, and the underlying causes were similar.  We had some bright spots: gross profit grew well in France, Singapore, China and Australia, but these are currently comparatively small businesses in the context of the Group.

 

At a profit level, the impact of these declines has been exacerbated by an increase in costs following investment in our US business and new Advertising Agency.  The Group invested in its US business on the back of its consistently strong performance, and this in part drove underlying overheads up by 23%.

 

 

6 months to

Sep 2017

6 months to

Sep 2016

Growth

 

Research overheads

£9.40m

£7.81m

20%

Advertising Agency overheads

£0.37m

£0.15m

147%

Underlying overheads

£9.77m

£7.96m

23%

Bonus ("Profit Share")

-

£1.43m

-100%

Severance costs

£0.38m

£0.13m

192%

One-off rebranding costs

£0.14m

-

 

Overheads excluding share based payments

£10.29m

£9.52m

8%

Share based payments

£0.26m

£0.21m

24%

Total overheads

£10.55m

£9.73m

8%

 

Our effective tax rate was similar to the prior year, as was our share base, and so profit after tax and earnings per share fell in line with the fall in profit before tax. 

 

We have responded promptly to the poor results and shifting industry backdrop, with fast-tracked product development.  We launched two new product iterations in September (a Next Generation Predictive Markets product and a new Digital (Advertising) Content Tracker), and are due to launch our Next Generation Ad Testing product in January 2018.

 

With each of these, there is a common aim: to automate and separate out provision of our predictive research data (what we call "Core Prediction"), which we can deliver at scale for very much lower cost per unit than historically; and to focus our less scalable account management teams more on improving the marketing content clients are asking us to test ("Marketing Consultancy").  Core Prediction enables clients to predict which ads, concepts or other marketing creative will make a difference in-market and which won't.  Marketing Consultancy helps clients improve the marketing outputs that they decide to move ahead with.  Core Prediction is low price, but relatively high margin, due to standardisation and automation.  Marketing Consultancy is high price, but lower margin, due to the bespoke nature of the work and internal time requirements.  Both feed off each other to deliver our value proposition to clients (in simple terms: help them deliver marketing which makes a difference, and reduce wasted costs - which are widely acknowledged to be significant).

 

The aim is to better position us to win more large-scale work programmes, and to turn occasional ad hoc business with our large clients into regular repeat business.  However, the sales cycle with these on-going contracts is long, and it is therefore difficult to predict the extent to which they will make an impact on our financial results this year.

 

As well as reconfiguring our products, we are also looking carefully at our cost base, and reducing recruitment that we had otherwise planned.  Underlying overhead increases in H2 are anticipated to be around 16% increase on the prior year (compared to 23% in H1).

 

Our cash position remains solid.  The business had a relatively small operating cash outflow of £0.61m over H1 and paid dividends of £4.05m during the period, yet had cash of £3.50m at 30 September (31 March 2017: £8.27m), and no debt.

 

The Company will be maintaining its interim dividend at the 1.1 pence per share level paid last year.  The dividend will be paid on 8 December 2017, to shareholders on the register as at 10 November 2017 and the shares will become ex dividend on 9 November 2017.  The total cash outflow will be £0.14m.

 

Outlook

The new Chapter in the life of the Company following its rebranding to System1 has not started as hoped.  However the decline in revenue has been a catalyst in accelerating the re-engineering of our product portfolio.  Whilst the downturn has taken us by surprise, we remain confident in the value of our proposition for clients, and continue to believe that if we offer high value, distinctive services, revenue will follow.  With our new product launches providing a more scalable configuration, we are also optimistic about the potential for profit margin uplift.

 

Having said that, we are in a period of change, and with our normal limited revenue visibility, we are more cautious than usual on our short-term outlook.  The encouraging signs we referred to previously continue, but trading in Q3 to date has not yet resulted in a pick-up in our order book.  Were the gross profit decline seen in H1 to be repeated in H2, then notwithstanding the lower rate of underlying overhead increase, our profit before tax (reported) for the full year would decline by 50% to 60% (2016/17: £6.3m).  Normalised profit before tax (i.e. profit before tax excluding share based payments) would decline by a similar percentage.

 

 

John Kearon                                                               James Geddes

Chief Executive Officer                                                 Chief Financial Officer

 

 

 

 

 

 

 

5 YEAR SUMMARY - HALF YEAR

(£000s unless specified otherwise)

 

 

 

6 months

to 30 Sep

6 months

to 30 Jun

 

2017/18

2016/17

2016

2015

2014

2013

2012

 

 

 

 

 

 

 

 

Revenue

13,822

15,281

13,043

11,610

11,197

10,765

10,379

growth

-10%

 

12%

4%

4%

4%

14%

Gross profit

11,394

12,541

10,685

9,254

8,719

8,455

7,998

growth

-9%

 

15%

6%

3%

6%

12%

Administrative costs

10,554

9,734

9,018

8,080

7,183

7,157

7,282

growth

8%

 

12%

12%

-%

-2%

12%

Bonus

-

1,431

796

-

184

559

127

 

 

 

 

 

 

 

 

Administrative costs (ex-bonus)

10,554

8,303

8,222

8,080

6,999

6,598

7,155

growth

27%

 

2%

15%

6%

-8%

11%

Operating profit

840

2,807

1,667

1,174

1,536

1,298

716

growth

-70%

 

42%

-24%

18%

81%

14%

Pre-tax profit

846

2,790

1,650

1,139

1,520

1,298

717

growth

-70%

 

45%

-25%

17%

81%

14%

Post-tax profit

542

1,786

1,054

763

1,018

870

481

growth

-70%

 

38%

-25%

17%

81%

16%

EPS - diluted

4.2p

13.7p

7.9p

5.6p

7.5p

6.7p

3.7p

growth

-69%

 

41%

-25%

12%

81%

16%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow pre-financing

(604)

3,468

810

565

(147)

1,948

(714)

 

 

 

 

 

 

 

 

Cash balance (no debt)

3,495

7,250

5,183

5,286

2,528

5,460

2,411

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend (interim)

1.1p

 

1.1p

1.0p

1.0p

0.9p

0.85p

growth

 

 

10%

-

11%

6%

13%

Special dividend

26.1p

 

-

-

12.0p

-

-

 

 

 

 

 

 

 

 

Share buy-backs*

-

2,586

1,768

-

1,531

29

276

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of clients

229

231

232

244

225

212

204

growth

-1%

 

-5%

8%

6%

4%

8%

Average headcount

172

153

155

160

145

137

134

growth

12%

 

-3%

10%

6%

2%

21%

 

 

*Share buy-backs are net of stock option proceeds.  In 2014, the amount includes £980,000 for the cash-settling of part of the Company's long-term incentive plan.

 

5 YEAR SUMMARY - ANNUAL
£000s unless specified otherwise

 

 

 

12 months

to 31 Mar

12 months

to 31 Dec

 

2016/17

2015/16

2016

2015

2014

2013

2012

 

Unaudited

Audited

 

 

 

 

 

 

 

 

Revenue

32,801

25,917

31,236

25,184

24,645

24,457

20,822

growth

27%

 

24%

2%

1%

17%

-

Gross profit

26,984

20,989

25,643

20,250

19,410

19,087

16,068

growth

29%

 

27%

4%

2%

19%

-

Administrative costs

20,676

15,937

19,414

15,704

15,109

15,537

14,555

growth

30%

 

24%

4%

-3%

7%

9%

Bonus

2,294

88

2,396

63

1,077

1,941

63

 

 

 

 

 

 

 

 

Administrative costs (ex-bonus)

18,382

15,849

17,018

15,641

14,032

13,596

14,492

growth

16%

 

9%

11%

3%

-6%

13%

Operating profit

6,308

5,052

6,229

4,546

4,301

3,550

1,513

growth

25%

 

37%

6%

21%

135%

-45%

Pre-tax profit

6,279

5,031

6,200

4,501

4,286

3,556

1,515

growth

25%

 

38%

5%

21%

135%

-45%

Post-tax profit

4,029

3,400

3,968

3,032

2,897

2,435

1,038

growth

19%

 

31%

5%

19%

135%

-44%

EPS - diluted

31.1p

25.4p

30.3p

22.7p

21.3p

18.7p

7.9p

growth

22%

 

33%

7%

14%

137%

-44%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow pre-financing

6,603

2,608

6,337

2,696

3,157

4,466

866

 

 

 

 

 

 

 

 

Cash balance (no debt)

8,266

6,555

7,754

6,365

5,347

6,188

3,755

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend (interim & final)

7.5p

4.5p

7.5p

4.5p

4.3p

3.9p

3.1p

growth

67%

 

67%

5%

10%

26%

3%

Special dividend

12.0p

-

12.0p

-

12.0p

12.0p

-

 

 

 

 

 

 

 

 

Share buy-backs*

3,141

948

3,195

948

1,938

71

408

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of clients

224

233

223

243

235

224

217

growth

-4%

 

-8%

3%

5%

3%

9%

Average headcount

161

157

157

158

152

138

148

growth

3%

 

-1%

4%

10%

-7%

19%

 

*Share buy-backs are net of stock option proceeds.  In 2014, the amount includes £1,239,000 for the cash-settling of part of the Company's long-term incentive plan.

 

 

CONDENSED CONSOLIDATED INCOME STATEMENT

for the 6 months ended 30 September 2017

 

 

 

Note

6 months to

30 Sep 2017

Unaudited

6 months to

30 Sep 2016

Unaudited

15 months to

31 Mar 2017

Audited

 

 

£000

£000

£000

 

 

 

 

 

Revenue

4

13,822

15,281

39,002

 

 

 

 

 

Cost of sales

 

(2,428)

(2,740)

(6,939)

 

 

 

 

 

Gross profit

 

11,394

12,541

32,063

 

 

 

 

 

Administrative expenses

 

(10,554)

(9,734)

(24,803)

 

 

 

 

 

Operating profit

 

840

2,807

7,260

 

 

 

 

 

Finance income/(costs)

 

6

(17)

(35)

 

 

 

 

 

Profit before taxation

 

846

2,790

7,225

 

 

 

 

 

Income tax expense

 

(304)

(1,004)

(2,538)

 

 

 

 

 

Profit for the financial period

 

542

1,786

4,687

 

 

 

 

 

Attributable to equity holders of the Company

 

542

1,786

4,687

 

 

 

Earnings per share attributable to equity

holders of the Company

 

Basic earnings per share

5

4.4p

14.4p

37.8p

 

 

 

 

 

Diluted earnings per share

5

4.2p

13.7p

35.9p

 

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

 

 

CONDENSED STATEMENT OF COMPREHENSIVE INCOME

for the 6 months ended 30 September 2017

 

 

 

6 months to

30 Sep 2017

Unaudited

6 months to

30 Sep 2016

Unaudited

15 months to

31 Mar 2017

Audited

 

£000

£000

£000

 

 

 

 

Profit for the financial period

542

1,786

4,687

 

 

 

 

Other comprehensive income:

 

 

 

Items that may be subsequently reclassified to profit or loss

 

 

 

Exchange differences on translating foreign operations

(89)

331

563

Other comprehensive income for the period, net of tax

(89)

331

563

 

 

 

 

Total comprehensive income attributable to equity holders

453

2,117

5,250

 

 

 

CONDENSED CONSOLIDATED BALANCE SHEET

as at 30 September 2017

 

 

 

Note

30 Sep 2017

Unaudited

30 Sep 2016
Unaudited

31 Mar 2017
Audited

 

 

£000

£000

£000

ASSETS

 

 

 

 

Non-current assets

 

 

 

 

Property, plant and equipment

 

327

306

360

Intangible assets

 

78

305

207

Deferred tax asset

 

546

776

984

 

 

951

1,387

1,551

Current assets

 

 

 

 

Inventories

 

147

248

95

Trade and other receivables

 

6,955

7,365

6,439

Income tax recoverable

 

420

-

-

Cash and cash equivalents

 

3,495

7,250

8,266

 

 

11,017

14,863

14,800

Total assets

 

11,968

16,250

16,351

 

 

 

 

 

EQUITY

 

 

 

 

Capital and reserves attributable to equity holders of the Company

 

 

 

 

Share capital

8

132

132

132

Share premium account

 

1,601

1,601

1,601

Merger reserve

 

477

477

477

Foreign currency translation reserve

 

322

326

411

Retained earnings

 

4,322

7,062

7,728

Total equity

 

6,854

9,598

10,349

 

 

 

 

 

LIABILITIES

 

 

 

 

Non-current liabilities

 

 

 

 

Provisions

 

544

566

505

 

 

544

566

505

Current liabilities

 

 

 

 

Provisions

 

308

329

288

Trade and other payables

 

4,262

5,639

4,715

Current income tax liabilities

 

-

118

494

 

 

4,570

6,086

5,497

Total liabilities

 

5,114

6,652

6,002

Total equity and liabilities

 

11,968

16,250

16,351

 

 

 

 

 

 

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

for the six months ended 30 September 2017

 

 

 

Note

6 months to

30 Sep 2017

Unaudited

6 months to

30 Sep 2016

Unaudited

15 months to

31 Mar 2017

Audited

 

 

£000

£000

£000

 

 

 

 

 

Net cash generated from operations

7

365

3,997

9,093

Tax paid

 

(907)

(479)

(2,055)

Net cash (used by)/generated from operating activities

 

(542)

3,518

7,038

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Purchase of property, plant and equipment

 

(62)

(50)

(258)

Purchase of intangible assets

 

-

-

(32)

Net cash used by investing activities

 

(62)

(50)

(290)

 

 

 

 

 

Net cash flow before financing activities

 

(604)

3,468

6,748

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Interest

 

6

(17)

(35)

Proceeds from issue of new shares

 

-

2

2

Proceeds from sale of treasury shares

 

-

241

395

Purchase of own shares

 

-

(2,827)

(3,536)

Dividends paid to owners

 

(4,051)

(445)

(2,052)

Net cash used by financing activities

 

(4,045)

(3,046)

(5,226)

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents 

 

(4,649)

422

1,522

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

8,266

6,555

6,365

Exchange (losses)/gains on cash and cash equivalents

 

(122)

273

379

Cash and cash equivalents at end of period

 

3,495

7,250

8,266

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the 6 months ended 30 September 2017

 

 

 

 

Share
capital

Share premium account

Merger
reserve

Foreign currency translation reserve

Retained earnings

Total

 

 

£000

£000

£000

£000

£000

£000

 

 

 

 

 

 

 

 

At 1 April 2017

 

132

1,601

477

411

7,728

10,349

 

 

 

 

 

 

 

 

Profit for the financial period

 

-

-

-

-

542

542

Other comprehensive income:

 

 

 

 

 

 

 

- currency translation differences

 

-

-

-

(89)

-

(89)

Total comprehensive income

 

-

-

-

(89)

542

453

 

 

 

 

 

 

 

 

Transactions with owners:

 

 

 

 

 

 

 

Employee share options scheme:

 

 

 

 

 

 

 

- value of employee services

 

-

-

-

-

229

229

- current tax credited to equity

 

-

-

-

-

309

309

- deferred tax debited to equity

 

-

-

-

-

(435)

(435)

Dividends paid to owners

 

-

-

-

-

(4,051)

(4,051)

 

 

-

-

-

-

(3,948)

(3,948)

 

 

 

 

 

 

 

At 30 September 2017

132

1,601

477

322

4,322

6,854

 

At 1 April 2016

132

1,599

477

(5)

7,810

10,013

 

 

 

 

 

 

 

Profit for the financial period

-

-

-

-

1,786

1,786

Other comprehensive income:

 

 

 

 

 

 

- currency translation differences

-

-

-

331

-

331

Total comprehensive income

-

-

-

331

1,786

2,117

 

 

 

 

 

 

 

Transactions with owners:

 

 

 

 

 

 

Employee share options scheme:

 

 

 

 

 

 

- new shares issued on exercise

-

2

-

-

-

2

- value of employee services

-

-

-

-

32

32

- current tax credited to equity

-

-

-

-

166

166

- deferred tax credited to equity

-

-

-

-

299

299

Dividends paid to owners

-

-

-

-

(445)

(445)

Sale of treasury shares

-

-

-

-

241

241

Purchase of treasury shares

-

-

-

-

(2,827)

(2,827)

 

-

2

-

-

(2,534)

(2,532)

 

 

 

 

 

 

 

At 30 September 2016

132

1,601

477

326

7,062

9,598

 

 

 

 

 

 

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

for the 6 months ended 30 September 2017

 

 

1.   General information

 

System1 Group PLC ("the Company") is United Kingdom resident, and its subsidiaries (together "the Group") provide marketing and 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 Russell Square House, 10-12 Russell Square, London WC1B 5EH.

 

The Board of Directors approved this condensed consolidated interim financial information for issue on 27 October 2017.

 

The financial information set out in this interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006 and is unaudited.  The Group's latest statutory financial statements were for the 15 month period ended 31 March 2017 and these have been filed with the Registrar of Companies.  The auditor's report on those financial statements was unqualified and did not contain any statement under Section 498 of the Companies Act 2006.

 

 

2.   Basis of preparation

 

This condensed consolidated interim financial information has been prepared in accordance with IAS 34, 'Interim financial reporting' as adopted by the European Union.  This financial information should be read in conjunction with the financial statements for the 15 month period ended 31 March 2017, which have been prepared in accordance with IFRSs as adopted by the European Union.

 

This is the first set of interim financial information to be published since the Company's change of year-end from 31 December to 31 March.  These include financial information for the 6 months to 30 September 2016 that has not previously been published.

 

 

3.   Principal accounting policies

 

The principal accounting policies adopted are consistent with those of the financial statements for the 15 month period ended 31 March 2017, 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.

 

 

4.   Segment information

 

The financial performance of the Group's geographic operating units ("Reportable Segments") is set out below.

 

 

6 months to 30 Sep 2017

6 months to 30 Sep 2016

 

Revenue

Gross

profit

Operating profit/(loss)

Revenue

Gross

Profit

Operating Profit/(loss)

 

£000

£000

£000

£000

£000

£000

Research

 

 

 

 

 

 

US

5,868

5,202

2,592

6,708

5,843

3,453

United Kingdom

2,886

2,404

911

3,654

2,943

1,422

Continental Europe

2,789

2,235

1,106

3,018

2,301

1,190

Asia

729

617

142

677

482

66

Brazil

324

289

(130)

777

660

328

Australia

568

486

401

319

274

168

 

13,164

11,233

5,022

15,153

12,503

6,627

 

 

 

 

 

 

 

Advertising Agency

658

161

(213)

128

38

(166)

United Kingdom

 

 

 

 

 

 

 

13,822

11,394

4,809

15,281

12,541

6,461

 

Segmental revenue is revenue generated from external customers and so excludes intercompany revenue and is attributable to geographical areas based upon the location in which the service is delivered.  Segmental operating profit excludes allocation of central overheads relating to the Group's Operations, IT, Marketing, HR, Legal and Finance teams and Board of Directors.

 

The split of business by research solution is set out below.

 

 

6 months to 30 Sep 2017

6 months to 30 Sep 2016

 

Revenue

Gross Profit

Revenue

Gross Profit

 

£000

£000

£000

£000

Research

 

 

 

 

Ad Testing

3,960

3,582

3,465

3,056

Brand Tracking

2,598

2,102

1,822

1,373

Communications and brand

6,558

5,684

5,287

4,429

 

 

 

 

 

Predictive Markets

3,436

3,061

4,944

4,353

Concept Testing

1,635

1,320

1,971

1,633

Innovation

5,071

4,381

6,915

5,986

 

 

 

 

 

Total core products

11,629

10,065

12,202

10,415

 

 

 

 

 

Other services

1,535

1,168

2,951

2,088

 

 

 

 

 

 

13,164

11,233

15,153

12,503

 

 

 

 

 

Advertising Agency

658

161

128

38

 

13,822

11,394

15,281

12,541

 

 

 

A reconciliation of total operating profit for Reportable Segments to total profit before income tax is set out below.

 

 

6 months to

30 Sep 2017

6 months to

30 Sep 2016

 

£000

£000

 

 

 

Operating profit for Reportable Segments

4,809

6,461

Central overheads

(3,969)

(3,654)

Operating profit

840

2,807

 

 

 

Finance income/(costs)

6

(17)

Profit before income tax

846

2,790

 

 

5.   Earnings per share

 

(a)  Basic earnings per share

Basic earnings per share is calculated by dividing profit attributable to equity holders of the Company by the weighted average number of Ordinary Shares in issue during the period:

 

 

Six months ended 30 Sep

 

2017

2016

 

 

 

Profit attributable to equity holders of the Company (£000)

542

1,786

 

 

 

Weighted average number of Ordinary Shares in issue

12,414,650

12,382,415

 

 

 

Basic earnings per share

4.4p

14.4p

 

(b)  Diluted earnings per share

Diluted earnings per share is calculated by adjusting the weighted average number of shares outstanding assuming conversion of all dilutive share options to Ordinary Shares:

 

 

Six months ended 30 Sep

 

2017

2016

 

 

 

Profit attributable to equity holders of the Company and profit used to determine diluted earnings per share (£000)

542

1,786

 

 

 

Weighted average number of Ordinary Shares in issue

12,414,650

12,382,415

Share options

465,980

696,625

Weighted average number of Ordinary Shares for diluted earnings per share

12,880,630

13,079,040

 

 

 

Diluted earnings per share

4.2p

13.7p

 

 

 

6.   Dividends

 

On 23rd August 2017 the Company paid a final dividend of 6.4 pence per share, amounting to £0.80m in respect of the 15 month period ended 31 March 2017 and a special dividend of 26.1 pence per share amounting to £3.25m. In December 2017, the Company will pay an interim dividend of 1.1 pence per share, amounting to £0.14m, in respect of the year ending 31 March 2018.  This interim dividend is not recorded in these interim accounts.

 

The interim dividend of 1.1 pence per share will be paid on 8 December 2017, to shareholders on the register as at 10 November 2017 and the shares will become ex dividend on 9 November 2017.

 

 

7.   Net cash generated from operations

 

 

Six months ended 30 Sep

 

2017

2016

 

£000

£000

 

 

 

Profit before taxation

846

2,790

Depreciation

89

81

Amortisation

129

142

Interest (received)/paid

(6)

17

Share-based payment expense

229

32

(Increase)/decrease in inventory

(52)

62

Increase in receivables

(516)

(1,021)

(Decrease)/increase in payables

(395)

1,844

Exchange differences on operating items

41

50

Net cash generated from operations

365

3,997

 

 

8.   Share capital

 

During the reporting period the Company transferred 199,641 Ordinary Shares ("shares") out of treasury to satisfy the exercise of employee share options at a weighted average exercise price of Nil pence per share for cash consideration of £Nil. The weighted average share price at exercise date was 776.7 pence per share.

 

Following these transactions, at 30 September 2017, the Company had 13,226,773 shares in issue (31 March 2017: 13,226,773) of which 762,348 were held in treasury (31 March 2017: 961,989), and the Company had 925,868 stock options outstanding of which 478,613 are fully vested.

  

9.   Related party transactions

 

During the period the Company paid the following dividends to directors:

 

 

Six months ended 30 Sep

 

2017

2016

 

£

£

 

 

 

John Kearon

1,079,068

135,100

James Geddes

62,506

5,541

Alex Batchelor

43,761

3,565

Ken Ford

6,500

700

Robert Brand

9,750

1,050

Graham Blashill

1,625

175

 

1,203,210

146,131

 


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

a d v e r t i s e m e n t