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EQ Group PLC (EQI)

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Friday 30 July, 2004

EQ Group PLC

Interim Results

EQ Group PLC
30 July 2004

                       eq group plc ('eq' or 'the group')

             Interim results for the six months ended 30 June 2004

           Strong first half performance and maiden interim dividend

eq group plc, the AIM listed marketing services group, announces its interim
results for the six months ended 30 June 2004.

Financial Highlights

• Revenues up by 23%

• Operating profit up by 17%
• Adjusted earnings per share before goodwill amortisation and exceptional items
  up by 16% to 5.82p (basic earnings per share up by 1.4% to 2.22p)

• Maiden interim dividend of 0.5p per share

Operational Highlights

• Strong like-for-like earnings growth within market research businesses

• Continued close collaboration between Buckingham and Quaestor

• Key customer markets were Fast Moving Consumer Goods (28%) Financial Services
(23%) and Media (15%).

• Disposal of The Lead Agency following a disappointing start to the year

• John Humpish, Head of Global Business Propositions at Vodafone has joined the
board as a non-executive director

Commenting, Bob Bond, Chief Executive said:

'We produced strong growth during the first half of the year and we are steadily
building the pipeline for the second half. Our business development activities
are bearing fruit and we continue to control costs carefully. We are paying a
maiden interim dividend and our acquisition pipeline is healthier than it has
ever been. Overall, the business is in good health, but we are far from

For further information

Bob Bond Chief Executive, eq group plc - 07747 032478
Keeley Clarke, Group PR, eq group plc - 07967 816525

Chairman & Chief Executive's Statement

Your group performed well in the first six months of 2004. We built upon the
progress achieved in 2003 and produced strong growth in revenue, operating
profits and earnings per share allowing us to pay a maiden interim dividend of
0.5p per share.

Group revenue increased by 23% to £5,429,000 (2003: £4,401,000). Revenue from
continuing operations increased by 36% to £5,332,000 as a result of strong
organic growth at Quaestor and Buckingham.

Operating profit increased by 17.2% to £592,000 (2003: £505,000). Adjusted
operating profit, before amortisation of goodwill, increased by 12.9% to
£760,000 (2003: £673,000). Amortisation of goodwill, which has no cash impact
but relates to the goodwill associated with previous acquisitions, was £168,000
(2003: £168,000). Exceptional items associated with the disposal of The Lead
Agency amounted to £87,000.

Adjusted basic earnings per share before amortisation of goodwill and
exceptional items were up 16.4%, at 5.82 pence (2003: 5.00 pence). Basic
earnings per share increased by 1.4% to 2.22 pence from 2.19 pence.

Adjusted fully diluted earnings per share before amortisation of goodwill and
exceptional items were up to 5.09 pence (2003: 5.00 pence). Fully diluted
earnings per share, which takes into account shares that may be issued as part
of future deferred consideration payments, decreased to 1.94 pence from 2.19

The reported profit before tax was £321,000 (2003: £318,000) and profit after
tax was £157,000 (2003: £153,000).

Net debt increased by £335,000 due to an increase in trade debtors, reflecting
the increased revenue in the period and due to the payment of an additional cash
consideration of £250,000 in respect of Quaestor's out-performance in 2003.

On 18 June 2004 we gained approval from the High Court to cancel the share
premium account. As a result, we are pleased to be able to declare a maiden
interim dividend of 0.5p per share. This will be paid on Friday 10 September
2004 to shareholders on the register at the close of business on Friday 13
August 2004.

Review of Activities

During the period 93% (2003: 88%) of group revenues were derived from market
research, 2% (2003: 4%) from demand generation and 5% (2003: 8%) from software

The group's market research businesses, Quaestor and Buckingham Research,
continued to perform well. We won 26 new clients during the period, including
Interbrew, Orange and Barclaycard. Revenues increased by 47.8% and operating
profits by 33.4%. By working collaboratively, the two businesses won four joint
projects generating incremental revenues of £132,000.
The Lead Agency, the group's demand generation business, fell well short of our
expectations in the first half of the year, despite having generated good
operating profits in the year to 31 December 2003. As a result, it was sold for
£20,000 to a company controlled by Mark Donkin, The Lead Agency's Commercial

On 2 May 2004. Steve Hulmes joined Broadnet, the group's software business, as
Technical Director. He has a proven track record of running major software
development projects for organisations such as RBoS and Littlewoods Leisure and
will be pivotal in providing management continuity as the business moves
forward. During his first two months in the job Steve has focused on the rollout
schedule for the next generation of Broadnet's market-leading radio scheduling
software, as well as familiarising himself with the radio industry and
Broadnet's key clients. The market continues to be challenging due to ownership
changes amongst our customer base and continued price pressure. However,
Broadnet won four new radio customers and secured a new three year contract with
The Wireless Group.

In last year's annual report we acknowledged Dylan Wilk's active involvement as
a non-executive director and explained that he was stepping down from the plc
board. We are delighted to welcome John Humpish, Director of Global Business
Propositions at Vodafone, to the plc board as a non-executive director alongside
Michael Waterhouse. John brings extensive client-side marketing experience
having held senior marketing positions in organisations such as AXA, Robert
Fleming and Deutsche Bank.


Within our research businesses the pipeline for the second half of the year is
building well, despite a slight slow down in client activity during the summer
months. All account planning activities have been completed and our efforts to
broaden our customer base continue to pay dividends, particularly at Buckingham

As part of our continual focus on costs Buckingham Research will be transferring
a significant proportion of its fieldwork to Quaestor over the next six months
resulting in annualised cost savings of up to £100,000.

Despite tough trading conditions within the radio industry we are positive about
Broadnet's prospects for the second half of the year and beyond. The latest
version of Broadnet's radio scheduling software will be unveiled at the Sound
Broadcasting Equipment Show in November and is scheduled for full release in
January 2005. Steve Hulmes will take a more central role in the running of the
business and will also be responsible for building Broadnet's marketing software
practice. We expect this initiative to begin to generate incremental revenues in

Our acquisition pipeline is very healthy at present. We are in active discussion
with a number of very interesting businesses that would materially advance the
group if they progressed through to completion. The disciplines being targeted
are consistent with our stated strategy and include market research, database
marketing and data modelling.

Finally, we would like to thank all of our employees who have worked tirelessly
during this period. With this level of commitment and the exciting opportunities
that lie ahead, we are sure that the group will make further significant
progress during the year.

Phillip Bennett                  Bob Bond
Chairman                         Chief Executive

for the six months ended 30 June 2004

                              Notes                                      Year
                                        Six months     Six months    ended 31
                                     ended 30 June  ended 30 June    December
                                              2004           2003        2003                                           
                                       (unaudited)    (unaudited)   (audited)
                                             £'000          £'000       £'000

Turnover   - continuing operations           5,332          3,913       8,425
           - discontinued operations            97            488         486 
                                             5,429          4,401       8,911
Cost of sales                              (2,599)        (1,903)     (3,844)

Gross profit                                 2,830          2,498       5,067
Administrative expenses                    (2,238)        (1,993)     (4,083)

Operating profit before
amortisation of goodwill
- continuing operations                        751            673       1,319
- discontinued operations                        9              -           -
Amortisation of goodwill                     (168)          (168)       (335)

Operating profit                               592            505         984
Exceptional items -
discontinued operations                       (87)           (28)        (30)

Profit before interest                         505            477         954
Net interest payable                         (184)          (159)       (320)

Profit before taxation                         321            318         634
Taxation                                     (164)          (165)       (295)

Profit for the period                          157            153         339
Dividends                                     (36)              -           -

Retained profit for the period                 121            153         339

Basic earnings per share
Earnings per share                2           2.22           2.19        4.87
Adjusted earnings per share*      2           5.82           5.00       10.08
Diluted earnings per share
Earnings per share                2           1.94           2.19        4.47
Adjusted earnings per share*      2           5.09           5.00        9.26

* before exceptional items and amortisation of goodwill

                                             £'000          £'000       £'000

Profit for the period                          157            153         339
Currency adjustments                            33             48         188

Total recognised gains and losses for the
period                                         190            201         527

at 30 June 2004

                                                                         At 31
                                                    At 30 June        December
                                                          2004            2003
                                                    (unaudited)      (audited)
                                                          £'000          £'000
Intangible assets                                         5,890          6,072
Tangible assets                                             698            741

                                                          6,588          6,813
Stock                                                       327            426
Debtors                                                   2,159          1,827
Cash                                                        102            535

                                                          2,588          2,788
CREDITORS: amounts falling due within one year           (4,262)        (4,188)

Net current liabilities                                  (1,674)        (1,400)

CREDITORS: amounts falling due after more than one       (4,048)        (4,932)
PROVISIONS FOR LIABILITIES AND CHARGES                        -            (18)

NET ASSETS                                                  866            463

Called up equity share capital                              725            698
Share premium account                                         -          7,335
Profit and loss account                                     143         (7,570)

EQUITY SHAREHOLDERS' FUNDS                                  866            463

for the six months ended 30 June 2004

                                               Six months          Six months 
                                                 ended 30            ended 30
                                                June 2004           June 2003
                                              (unaudited)         (unaudited)
                                                    £'000               £'000

Net cash inflow from operating activities             285                 596
Returns on investments and servicing of finance     (129)               (126)
Deferred consideration paid relating to 
acquisitions                                        (252)                  -
Taxation                                            (160)                  -
Capital expenditure and financial investments        (68)               (121)
Net cash outflow for disposals                         -                 (38)
Net cashinflow/(outflow) before financing           (324)                311

Financing                                           (899)                112
Increase/(decrease) in cash in the period         (1,223)                423

Reconciliation of net cashflow to movement in 
net debt
Increase/(decrease) in cash in the period         (1,223)                423
Cashinflow/(outflow) from increase/(decrease) 
in debtand lease financing                            855              (112)
Currency adjustments                                   33                 48

Movement in net debt                                (335)                359
Opening net debt                                  (5,399)            (6,610)

Closing net debt                                  (5,734)            (6,251)


1.             The interim financial information for the half year ended 30 June
2004 has not been audited and does not constitute statutory accounts within the
meaning of Section 240 of the Companies Act 1985. It has been prepared on the
basis of the Group's accounting policies set out in the Group's 2003 statutory

2.             The calculation of the basic earnings per share is based on the
profit after taxation of £157,000 (2003: £153,000) divided by the weighted
average number of ordinary shares in issue during the period of 7,081,697 (2003:
6,980,196) (basic) and 8,091,779 (2003: 6,985,248) (diluted). An adjusted
earnings per share figure before exceptional items of £87,000 (2003: £28,000)
and the amortisation of goodwill of £168,000 (2003: £168,000) has been presented
to show underlying earnings. This is based on the profit after taxation of
£412,000 (2003: £349,000) which represents the operating profit before goodwill
of £760,000 (2003: £673,000) less interest of £184,000 (2003: £159,000) and
taxation of £164,000 (2003: £165,000).

3.             An interim dividend of 0.5p per share (2003: £nil) will be paid
on Friday 10 September 2004 to all shareholders on the register at close of
business on Friday 13 August 2004.

4.             The profit and loss account for the year ended 31 December 2003
and the balance sheet at that date are derived from the Company's full accounts
which have been filed with the Registrar of Companies and on which the Company's
auditors gave an unqualified report.

5.             Exceptional items comprise the proceeds from the sale of the
business of The Lead Agency, less the net book value of the assets sold,
residual goodwill and other costs.

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

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