Ekay plc
Interim Results for the six months to 31 December 2005
Maiden Figures Since Placing and AIM Admission in Jan 2006
Ekay plc, announces its first set of results as an AIM quoted company. Ekay is
an advertising and marketing agency which specialises in advising clients on
the use of television, national and local press, magazines, the internet,
direct mail and posters, for business development purposes. Ekay has particular
expertise in direct marketing.
KEY POINTS
* Strong results:
*
+ Turnover up 158% to �16.4 million (H1 2004: �6.3m)
+ Pre-tax profit up 42% to �474,000 (H1 2004: �334,000)
* Dividend:
*
+ Interim dividend of �500,000 in the period pre-AIM admission
+ The board anticipates a final dividend for the financial year ending 30
June 2006
* Key Directorate appointments:
*
+ Tony Sullivan, Chairman
+ Julian Paul, Non-Executive Director
* 10% growth in client base with competitive position strengthened
*
+ Diversity and quality of mandates
* Possible acquisitions identified
Eddie Powell, Chief Executive, commented:
"Ekay views itself as a provider of high value, no-nonsense services which,
coupled with an aggressive approach to new business, has proven to be a winning
formula and competitive differentiator.
"In the second half we plan to increase our infrastructure through recruitment
and improved internal facilities enabling us to provide a consistently high
level of service to all our clients, both new and established.
"We have a keen eye on growth through acquisition opportunities and are
considering a number of earnings enhancing, synergistic targets and look
forward to the second half with confidence."
20 February 2006
Enquiries:
Ekay plc
Eddie Powell, Chief Executive Tel: 01474 334343
Shore Capital & Corporate Ltd
Guy Peters Tel: 0207 4084090
CHAIRMAN'S STATEMENT &
CHIEF EXECUTIVE'S REPORT
The first half has been one of intense activity; juggling the demands of the
AIM admission which completed on 5th January and growing the customer base and
business book. We have shown success in both of these activities. The move to
gain an AIM quotation provides us with greater presence in the market place
augmenting our reputation of punching above our weight in terms of client size
and quality.
In addition, as a quoted company we will proceed with acquisition plans to
expand the business through acquisitions, indeed we are in active discussions
with a range of possible acquisition candidates each of which would be earnings
enhancing and synergistic.
It would be fair to state that the past six months has been the most successful
period in Ekay's eleven year history in terms of new business development. Our
client base has increased by 10% during the period as we continue to increase
the quality and diversity of mandates being won, notably in the area of direct
response. Moreover the period has exposed a trend towards online marketing and
advertising projects which reflect greater use of the internet in business and
commerce. Indeed this has been one of the fastest growing elements of our
business during the first half, albeit from a low base.
The Company also moved to strengthen its Board through the appointment of Tony
Sullivan as Chairman. Tony brings considerable contacts and experience through
his 30 years in the media and advertising industry. In addition, on 2 February,
we announced the appointment of Julian Paul as Non-Executive Director. Julian
brings strong financial and business credentials to the Company through his
long experience with a number of publicly quoted media companies.
Financial Summary
The continued growth in business resulted in a 158% improvement in turnover to
�16.4 million (H1 2004: �6.3m) and a pre-tax profit of �474,000 (H1 2004: �
334,000). Gross profit increased by �310,000 or 42.6% to over �1.0 million,
but with a lower gross margin of 6.31% (H1 2004: 9.08%). The lower gross margin
was primarily as a result of the change in the mix of client billings over the
period, with normal margins for the business' core activity of media buying and
planning.
The business continues to operate from a low cost base, albeit costs for the
period increased slightly due to the normalisation of directors' remuneration
and additional board costs.
Business Overview
Ekay is an advertising and marketing agency which specialises in advising
clients on the use of television, national and local press, magazines, the
internet, direct mail and posters, for business development purposes. Ekay has
particular expertise in direct marketing. Direct marketing uses select media to
target a specific audience, with the aim of encouraging a response from the
consumer, typically an enquiry for a product or service. An advantage of this
type of media is that it facilitates the clients' ability to measure the level
of response generated by their advertising spend, allowing them to calculate a
more accurate return on investment, a feature which the Board believes
differentiates Ekay's product offering relative to other marketing forms.
Ekay offers a complete direct marketing solution to its clients, utilising a
range of advertising methods and direct mail solutions. In addition to advising
on strategy, the Company also offers a complete design and media buying
service. Ekay has a graphics department, in-house print consultancy and on-line
analysis and marketing consultancy enabling it to provide clients with
comprehensive solutions.
The Company's largest media activity at present is in television, where the
Board believes that the Company is a recognised expert and a market leader in
its niche direct marketing sphere. The Board believes that new media marketing
campaigns, including activities such as SMS text messaging, web advertising and
the effective use of web site design are increasingly being adopted by
corporate users. The Directors anticipate that new media will be the Company's
fastest growing area of activity over the next few years.
Dividend
It is the board's intention to pay a regular interim and final dividend to
Shareholders. Dividends are anticipated to be paid in respect of the financial
year ended 30 June 2006.
Outlook
Ekay views itself as a provider of high value, no-nonsense services which,
coupled with an aggressive approach to new business, has proved to be a winning
formula and competitive differentiator.
In the second half we plan to increase our infrastructure through recruitment
and improved internal facilities enabling us to provide a consistently high
level of service to all our clients, both new and established.
We have a keen eye on growth through acquisition opportunities and are
considering a number of earnings enhancing, synergistic targets and look
forward to the second half with confidence
Tony Sullivan
Chairman
Ekay Plc
Unaudited consolidated profit and loss account for the
6 months ended 31 December 2005
Notes 6 months to 6 months to 12 months to
31 December 31 December 30 June
2005 2004 2005
Unaudited Unaudited Audited
� � �
Turnover 16,431,383 6,345,364 20,106,815
Cost of sales (15,394,024) (5,618,113) (18,279,959)
Gross profit 1,037,359 727,251 1,826,856
Administrative expenses (615,814) (393,155) (915,022)
421,545 334,096 911,834
Other operating income 4,350 4,075 8,425
Operating profit 425,895 338,171 920,259
Interest receivable and 48,325 17,902 82,186
similar income
Profit on ordinary 474,220 356,073 1,002,445
activities before taxation
Taxation (131,000) (89,119) (250,895)
Profit on ordinary 343 ,220 266 ,954 751 ,550
activities after taxation
Dividends 2 (500,000) (50,500) (495,500)
(Deficit)/ profit (156,780) 216,454 256,050
transferred to reserve
Earnings per share - basic 3 0.97p 267p 752p
- diluted 3 0.92p 267p 752p
Unaudited statement of total recognised gains and losses
6 months to 6 months to 12 months
to
31 December 31 December 30 June
2005 2004 2005
Unaudited Unaudited Audited
� � �
Profit on ordinary activities 343,220 266,954 751,550
after taxation
Total recognised gains and 343,220 266,954 751,550
losses relating
to this year
Prior period adjustment - (139,455) (139,455)
Total gains and losses for the 343,220 127,499 612,095
period
Ekay Plc
Unaudited consolidated balance sheet as at 31 December 2005
Notes As at As at As at
31 December 31 December 30 June
2005 2004 2005
Unaudited
Unaudited Audited
�
� �
Fixed assets
Intangible assets 22,473 - -
Tangible assets 308,469 249,695 315,478
330,942 249,695 315,478
Current assets
Debtors 3,747,820 1,397,181 2,394,253
Cash at bank and in hand 862,559 827,979 1,747,511
4,610,379 2,225,160 4,141,764
Creditors:
Amounts falling due within (4,057,081) (1,515,569) (3,458,360)
one year
Net current assets 553,298 709,591 683,404
Net assets 884,240 959,286 998,882
Capital and reserves
Called up share capital 100,627 100,000 100,000
Share premium account 41,511 - -
Profit and loss account 742,102 859,286 898,882
Equity shareholders' funds 6 884,240 959,286 998,882
Ekay Plc
Unaudited consolidated cashflow statement for the 6 months
ended 31 December 2005
Notes 6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
2005 2004 2005
Unaudited Unaudited Audited
� � �
Net cash (outlow)/ inflow 4 (905,631) 610,242 2,289,831
from operating activities
Returns on investments and
servicing of finance
Interest received 48,325 17,902 82,186
Net cash inflow from 48,325 17,902 82,186
returns on investments and
servicing of finance
Taxation
UK Corporation tax payment - - (290,987)
Capital expenditure
Formation of quasi (22,473) - -
subsidiary
Purchase of tangible fixed (30,361) (208,873) (442,227)
assets
Sale of tangible fixed - 3,000 148,000
assets
Net cash outflow from (52,834) (205,873) (294,227)
capital expenditure
Equity dividend paid (250,000) (50,500) (495,500)
Net cash (outflow)/ inflow (1,160,140) 371,771 1,291,303
before financing
Financing
Loans received net of costs 233,050 - -
Shares issued 42,138 - -
Net cash inflow from 275,188 - -
financing
(Decrease)/ increase in 5 (884,952) 371,771 1,291,303
cash
Ekay Plc
Notes to the Interim Statement
For the 6 months ended 31 December 2005
1. Basis of Preparation
The consolidated interim financial statements have been prepared in accordance
with applicable accounting standards and under the historical cost convention.
The principal accounting policies of the group have remained unchanged from
those set out in the group's 2005 annual report and financial statements.
The financial information set out in this interim report does not constitute
statutory accounts as defined by section 240 of the Companies Act 1985. The
figures for the year ended 30 June 2005 have been extracted from the statutory
financial statements which have been filed with the Registrar of Companies. The
auditors' report on those financial statements was unqualified and did not
contain a statement under section 237(2) of the Companies Act 1985.
2. Dividends
An interim dividend of �5.00 in respect of the 100,000 �1 shares in issue as at
20 October 2005 was proposed on 14 November 2005.
3. Earnings Per Share
The calculation of the basic and diluted earnings per share is based on the
profit on ordinary activities after tax and on the weighted average number of
ordinary shares in issue during the period.
The profit and weighted average number of shares used in the calculations are
set out below:
Basic earnings per Profit Weighted Profit per
share average number share pence
� of shares
6 months ended 31 343,220 35,219,450 0.97
December 2005
6 months ended 31 266,954 100,000 267
December 2004
Year ended 30 June 2005 751,550 100,000 752
Diluted earnings per Profit Weighted Profit per
share average number share pence
� of shares
6 months ended 31 343,220 37,377,900 0.92
December 2005
6 months ended 31 266,954 100,000 267
December 2004
Year ended 30 June 2005 751,550 100,000 752
On 14 November 2005, special resolutions were passed to subdivide the issued
share capital of 100,627 ordinary �1 shares into 10,062,700 ordinary 1p shares
and increasing the authorised share capital to �1,000,000.
Additionally on the same date, there was a bonus issue of 2.5 ordinary shares
of �0.01 each for each ordinary share in issue resulting in the allotment and
issue of 25,156,760 additional ordinary 1p shares.
4. Reconciliation of operating profit to net cash outflow/(inflow) from
operating activities:
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
2005 2004 2005
Unaudited Unaudited Audited
� � �
Operating profit 425,895 338,171 920,259
Depreciation 37,371 22,528 48,098
Loss on disposal of fixed - 2,364 2,364
assets
(Increase)/ decrease in (1,936,365) 586,719 (411,243)
debtors
Increase/ (decrease) in 567,468 (339,540) 1,730,353
creditors
Net cash (outflow)/ inflow (905,631) 610,242 2,289,831
from operating activities
operating activities
5. Reconciliation of net cash flow to movements in net funds:
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
2005 2004 2005
Unaudited Unaudited Audited
� � �
Net funds at start of 1,747,511 456,208 456,208
period
(Decrease)/ increase in (884,952) 371,771 1,291,303
cash in the period
Cash inflow from new loan (233,050) - -
Net funds at the end of 629,509 827,979 1,747,511
period
On 25 November 2005, the company raised �233,050 after expenses by loan
instrument from The Capital Fund No.1 LP. The loan instrument converted into
ordinary shares at the placing price on the company's admission to AIM on 5
January 2006.
6. Reconciliation of movements in shareholders' funds
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
2005 2004 2005
Unaudited Unaudited Audited
� � �
Profit for the financial 343,220 266,954 751,550
period
Dividend (500,000) (50,500) (495,500)
(156,780) 216,454 256,050
Issue of ordinary share 42,138 - -
capital
(114,642) 216,454 256,050
Shareholders' funds at 998,882 742,832 742,832
beginning of period
Shareholders' funds at end 884,240 959,286 998,882
of period
Copies of these interim statements will be posted to shareholders in due course
and are available on the website at www.ekay.co.uk Copies will also be
available from The Maltings, 53/54 Bath Street, Gravesend, Kent. DA11 0DF.
END
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