Interim Results

RNS Number : 0789T

BrainJuicer Group PLC

22 September 2010

 



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: [phone]
John Kearon, Chief Executive Officer [e-mail]
James Geddes, Chief Financial Officer [e-mail]

Canaccord Genuity Limited	Tel: [phone]
Mark Williams [e-mail]

Media enquiries:

Lauren Tilden, Marketing Assistant [e-mail]

Tel: [phone]

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.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR SIX MONTHS ENDED 30 JUNE 2010

		Six months ended 30 June 2010 Unaudited	Six months ended 30 June 2009 Unaudited	Year ended 31 December 2009 Audited
		£'000	£'000	£'000
Profit for the financial period		345	184	1,185
Other comprehensive income:
Exchange differences on translating foreign operations		(4)	(92)	(65)
Other comprehensive income for the period, net of tax		(4)	(92)	(65)
Total comprehensive income for the period and amounts attributable to equity holders		341	92	1,120

CONDENSED CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2010

	Note	30 June 2010 Unaudited	30 June 2009 Unaudited	31 December 2009 Audited
		£'000	£'000	£'000
ASSETS
Non-current assets
Property, plant and equipment		107	146	112
Intangible assets	10	1,342	772	862
Financial assets - available-for-sale investments		133	90	133
Deferred tax asset		46	82	41
Total non-current assets		1,628	1,090	1,148
Current assets
Inventories		66	11	12
Trade and other receivables		3,329	2,749	4,073
Cash and cash equivalents		1,637	1,192	2,343
Total current assets		5,032	3,952	6,428
Total assets		6,660	5,042	7,576
EQUITY
Capital and reserves attributable to equity holders of the Company
Share capital	8	131	129	129
Share premium account		1,549	1,446	1,447
Merger reserve		477	477	477
Foreign currency translation reserve		145	122	149
Other reserve		515	292	449
Retained earnings		1,051	1,162	2,084
Total equity		3,868	3,628	4,735
LIABILITIES
Non-current liabilities
Provisions		28	42	28
Total non-current liabilities		28	42	28
Current liabilities
Provisions		25	-	25
Trade and other payables		2,664	1,014	2,593
Current income tax liabilities		75	358	195
Total non-current liabilities		2,764	1,372	2,813
Total liabilities		2,792	1,414	2,841
Total equity and liabilities		6,660	5,042	7,576

CONDENSED CONSOLIDATED CASH FLOW STATEMENT FOR SIX MONTHS ENDED
30 JUNE 2010

	Note	30 June 2010 Unaudited	30 June 2009 Unaudited	31 December 2009 Audited
		£'000	£'000	£'000
Net cash generated from / (used by) operations	7	1,283	(294)	1,645
Tax (paid)/ received		(326)	81	(364)
Net cash generated from / (used by) operating activities		957	(213)	1,281
Cash flows used by investing activities
Acquisition of subsidiary, net of cash received		(43)	-	-
Purchases of property, plant and equipment		(40)	(50)	(70)
Purchases of intangible assets		(242)	(191)	(357)
Purchase of available for sale financial assets		-	-	(43)
Interest received		1	12	13
Net cash used by investing activities		(324)	(229)	(457)
Cash flows used by financing activities
Proceeds from other issue of ordinary shares		39	37	38
Dividends payable to owners		(247)	(130)	(207)
Purchase of own shares		(1,131)	-	(39)
Net cash used by financing activities		(1,339)	(93)	(208)
Net (decrease) / increase in cash and cash equivalents		(706)	(535)	616
Cash and cash equivalents at beginning of period		2,343	1,727	1,727
Cash and cash equivalents at end of period		1,637	1,192	2,343

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT

30 JUNE 2010

	Share capital	Share premium account	Merger reserve	Foreign currency translation reserve	Other reserve	Retained earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2009	126	1,412	477	214	290	1,108	3,627
Profit for the financial period	-	-	-	-	-	184	184
Other comprehensive income:
Currency translation differences	-	-	-	(92)	-	-	(92)
Total comprehensive income for the period ended 30 June 2009	-	-	-	(92)	-	184	92
Transactions with owners:
Employee share options scheme:
- value of employee services	-	-	-	-	66	-	66
- proceeds from shares issued	3	34	-	-	-	-	37
- Deferred tax debited to equity	-	-	-	-	(64)	-	(64)
Dividends paid to owners	-	-	-	-	-	(130)	(130)
	3	34	-	-	2	(130)	(91)
Balance at 30 June 2009	129	1,446	477	122	292	1,162	3,628
Balance at 1 January 2009	126	1,412	477	214	290	1,108	3,627
Profit for the financial year	-	-	-	-	-	1,185	1,185
Other comprehensive income:
Currency translation differences	-	-	-	(65)	-	-	(65)
Total comprehensive income for the year ended 31 December 2009	-	-	-	(65)	-	1,185	1,120
Transactions with owners:
Employee share options scheme:
- value of employee services	-	-	-	-	133	-	133
- proceeds from shares issued	3	35	-	-	-	-	38
- Deferred tax debited to equity	-	-	-	-	(43)	(2)	(45)
- Current tax credited to equity	-	-	-	-	69	-	69
Dividends paid to owners						(207)	(207)
Purchase of own shares						(39)	(39)
Share incentive award	-	-	-	-	-	39	39
	3	35	-	-	159	(209)	(12)
Balance at 31 December 2009	129	1,447	477	149	449	2,084	4,735
Profit for the financial period	-	-	-	-	-	345	345
Other comprehensive income:
Currency translation differences	-	-	-	(4)	-	-	(4)
Total comprehensive income for the period ended 30 June 2010	-	-	-	(4)	-	345	341
Transactions with owners:
Employee share options scheme:
- value of employee services	-	-	-	-	106	-	106
- proceeds from shares issued	1	37	-	-	-	-	38
- Deferred tax debited to equity	-	-	-	-	(40)	-	(40)
Dividends paid to owners	-	-	-	-	-	(247)	(247)
Purchase of own shares	-	-	-	-	-	(1,131)	(1,131)
Share incentive award	1	65	-	-	-	-	66
	2	102	-	-	66	(1,378)	(1,208)
Balance at 30 June 2010	131	1,549	477	145	515	1,051	3,868

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 1 Cavendish Place, London, W1G 0QF.

This condensed consolidated interim financial information was approved by the board of directors for issue on 22 September 2010.

The financial information for the year ended 31 December 2009 set out in this interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006 and are unaudited.The Group's statutory financial statements for the year ended 31 December 2009 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 for the six months ended 30 June 2010 has been prepared in accordance with IAS 34, 'Interim financial reporting' as adopted by the European Union. The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2009, which have been prepared in accordance with IFRSs as adopted by the European Union.

3.	Principal accounting policies

Except as described below, the principal accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 December 2009, 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.

The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 January 2010.

IFRS 3 (revised) 'Business combinations' and consequential amendments to IAS 17, 'Consolidated and separate financial statements', IAS 28 'Investments in associates', and IAS 31, 'Interests in joint ventures', are effective prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009.

The revised standard continues to apply the acquisition method to business combinations but with some significant changes compared with IFRS 3. For example, all payments to purchase a business are recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the income statement. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest's proportionate share of the acquiree's net assets. All acquisition costs are expensed.

As the Group has adopted IFRS 3 (revised), it is required to adopt IAS 27 (revised), 'consolidated and separate financial statements', at the same time. IAS 27 (revised) requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill gains or losses. The standard also specifies the accounting when control is lost. Any remaining interest in the entity is re-measured to fair value and a gain or loss is recognised in profit or loss. There has been no impact of IAS 27 (revised) on the current period. There have been no transactions whereby an interest in an entity is retained after the loss of control of that entity, there have been no transactions with non-controlling interests.

4.	Segment information

The CEO reviews the Group's internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based upon these reports.

The CEO considers the business from both a geographic and product perspective. From a product perspective, management assesses the performance of its 'Juicy' and 'Twist' products.

The CEO assesses the performance of the operating segments based on earnings before interest and taxation.  Interest income is not included in the result for each operating segment that is reviewed by the CEO.

Six months ended:	30 June 2010		30 June 2009
	Revenue from external customers	EBIT	Revenue from external customers	EBIT
	£'000	£'000	£'000	£'000
United Kingdom	3,600	1,854	2,422	1,031
Netherlands	984	131	1,078	442
United States and Canada	1,916	634	837	85
Switzerland	374	71	313	151
Germany	334	92	199	56
	7,208	2,782	4,849	1,765
Juicy*	3,758	52%	2,431	50%
Twist	3,450	48%	2,418	50%
	7,208		4,849

*One of our products was reclassified from Juicy to Twist at the beginning of the reporting period.  Revenue from this product amounted to £316,000 (2009: £165,000) for six months to 30 June 2010.  The comparatives have been restated to take account of this reclassification.

A reconciliation of total EBIT to total profit before income tax is provided as follows:

	30 June 2010		30 June 2009
	£'000		£'000
EBIT for reportable segments	2,782		1,765
Central overheads	(2,277)		(1,534)
Operating profit	505		231
Finance income	1		12
Profit before income tax	506		243

5.	Earnings per share

(a)

Basic

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average of ordinary shares in issue during the period.

	Six months ended
	30 June 2010	30 June 2009
	£'000	£'000
Profit attributable to equity holders of the Company	345	184
Weighted average number of ordinary shares in issue	12,757,819	12,914,531
Basic earnings per share	2.7p	1.4p

(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. 

	Six months ended
	30 June 2010	30 June 2009
	£'000	£'000
Profit attributable to equity holders of the Company used to determine diluted earnings per share	345	184
Weighted average number of ordinary shares in issue	12,757,819	12,914,531
Share options	412,032	1,083,083
Weighted average number of ordinary shares for diluted earnings per share	13,169,851	13,997,614
Diluted earnings per share	2.6p	1.3p

6.

Dividends

A dividend relating to the year ended 31 December 2009 amounting to £169,000 was paid in June 2010 (2009: £130,000).  An interim dividend relating to the year ending 31 December 2010 amounting to £78,000 (2009:  £78,000) was paid in March 2010 (October 2009).

7.	Cash generated from / (used by) operations

	Six months ended
	30 June 2010	30 June 2009
	£'000	£'000
Profit before taxation	505	243
Depreciation and amortisation	66	100
Investment income	(1)	(12)
Share-based payment expense	171	66
(Increase) / decrease in inventory	(54)	3
Decrease in receivables	823	457
Decrease in payables	(217)	(1,066)
Exchange differences	(10)	(85)
Net cash generated from / (used by) operations	1,283	(294)

8.	Share capital

During the period, share options over 143,709 ordinary shares were exercised at a weighted average exercise price of 27 pence per share.  The total proceeds were £38,675 of which £1,437 was recognised as share capital, and £37,238 as share premium.  The weighted average share price at exercise date was 163 pence per share.

During the period, 36,760 shares were issued for services to the Company amounting to £64,800.  £64,433 was recognised as share premium and £367 as share capital.

On 4 January 2010, the Company purchased 37,000 ordinary shares of 1 pence each in the Company into treasury at a price of 131.5 pence per share in accordance with the authority granted to it by shareholders at the Annual General Meeting held on 13 May 2009.  10,000 of the shares were transferred out of treasury to enable the exercise of options and 17,000 to award shares under the Company's Employee Share Incentive Plan.

On 22 April 2010, the Company purchased a further 650,000 ordinary shares into treasury at a price of 165 pence per share.

Following these transactions, at the end of the reporting period the number of ordinary shares amounted to 13,113,114 (31 Dec: 12,932,645) of which shares held in treasury amounted to 660,000 (31 Dec: Nil).

During the period, 485,425 share options over ordinary shares with a weighted average exercise price of 94 pence per share were granted to Directors and employees.

9.	Business combinations

On 7 January 2010 the Group entered into a share purchase agreement to acquire the entire issued share capital of HighLevel Research Inc., a company incorporated in Canada.

Details of the purchase consideration, the net assets acquired and goodwill are as follows:

		£'000
Cash consideration		47
Cash and cash equivalents		4
Property, plant and equipment		1
Trade receivables (fair value and gross contractual amount)		79
Payables		(7)
Accruals		(36)
Net identifiable assets acquired		41
Goodwill		6
		47

The acquired business contributed revenues of £168,000 and net profit of £39,000 to the Group for the period from 7 January 2010 to 30 June 2010.  Had the company been acquired on 1 January 2010 its contribution to revenues and profit would have been the same. Acquisition costs of £6,000 are included in the income statement.

10.	Intangible assets

During the period, the Group invested £483,000 in Software development in progress. At the period-end, the carrying amount of Software development in progress, representing amounts capitalised in respect of the cost of building the Group's software platform for delivering its research, amounted to £1,315,000 (31 Dec 2009: £832,000). The platform is not yet ready for use and so no amortisation has been charged to date.

11.	Related party transactions

During the period, the Group made sales to companies connected to Unilever UK Holdings Limited, a significant shareholder, totalling £895,458 (six months to 30 June 2009: £693,548). The balance outstanding at the period-end was £242,245 (31 Dec 2009: £805,545).

Services are sold to related parties on an arm's length basis at prices available to third parties.

The wife of Mark Muth, a director of the Company, provided services for the Group totalling £8,000 (six months to 30 June 2009: £Nil).  There was no balance outstanding at the period-end (31 Dec 2009: £Nil).

12.	Seasonality

Based upon prior experience, Group revenues tend to be higher in the second half of the  year than in the first half.

For the year ended 31 December 2009, revenues for the second half of the year represented 59% of total revenues compared to 57% for the year ended 31 December 2008.

 

END

 

 

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