Ekay PLC
Preliminary Announcement of Annual Results
for the year ended 30 June 2007
Ekay PLC ("Ekay" or the "Company") announces its results for the year ended 30
June 2007. Ekay is an advertising and marketing agency based in the UK and the
Channel Islands 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.
Highlights
* Turnover increased by 35% to �49.3m (2006: �36.4m); Loss for the year of
�1.8m (2006: profit of �638,914), of which �1.7m was caused by exceptional
items and discontinued activities, primarily in respect of specific bad
debt provision
* Profit on continuing operations, after adjusting for employee share option
charge
* Acquisitions of Wallace Barnaby and Campaign Management Associates
+ Ekay now a top ten regional advertising and marketing agency
* Range of services continues to grow
+ With continued diversification into new industry groups to improve
quality of earnings
* Cash-generative in spite of loss; �1.6m of cash on balance sheet
* Announced today: Appointment of Mike Lording, Finance Director, to the
Board
Eddie Powell, Chief Executive, commented:
"The business has significantly grown over the last year through acquisition
and diversification into new industry sectors. Our plan is to become the
largest regional advertising agency in the UK.
"We look forward to the further development of the Group in terms of its aims
of growing its customer base through organic and acquisitive means."
26 November 2007
Enquiries:
Ekay PLC Tel: 01474 334343
Eddie Powell, Chief Executive
Daniel Stewart & Co Plc Tel: 020 7776 6550
Oliver Rigby
Nexus Financial Ltd Tel: 020 7451 7050
Nicholas Nelson/Kathy Boate
Ekay PLC
Chief Executive's and Chairman's Statement
Business Overview and Summary
This financial year, whilst problematic because of a number of bad debts
incurred by the Group, has been one of great change at Ekay, as we have seen it
grow substantially through acquisitions whilst implementing changes at the
operational level to ensure we are developing along with the changing market
place.
More than ever, the Company is in a position to offer a full range of
advertising and marketing related services, and the growth we have seen in the
last year has allowed us to continue to invest in both geographical and
operational expansion.
The acquisition of Guernsey based Wallace Barnaby in November 2006 represented
a significant step for Ekay in terms of strengthening its regional offerings.
By adding Wallace Barnaby's impressive client list and strengths in both media
services and online offerings, the Group as a whole was able to realize its
objective of creating an enlarged regional agency with improved service
provision.
We are happy to report that Wallace Barnaby has successfully been integrated
with Ekay following the acquisition and has proved earnings enhancing It has
created cross-marketing opportunities for both and the appointment of Bruce
Wallace to the Board of Directors has allowed us to utilise his experience and
in-depth knowledge of the marketplace.
In June 2007 the Company acquired Campaign Management Associates Limited
("CMA") also based in Guernsey. CMA provides public relations, design and print
services and event management to the public and private sectors in the Channel
Islands and the UK, with the majority of business focused on the latter.
We identified several synergies with Wallace Barnaby and are pleased that CMA
is now fully integrated with Wallace Barnaby and has moved into their offices.
This will allow an improved offering to all clients of the enlarged group, as
Ekay as a whole can offer additional public relations and event management
services at a more in-depth level, with a dedicated team in place to provide
these services.
Financial Summary
Revenue for the Group increased by 35% to �49.3m (2006: �36.4m) reflecting the
consolidation of the Wallace Barnaby acquisition. However, the Group incurred a
number of bad debts and other exceptional costs which resulted in a loss for
the year of �1.8m (2006: profit of �638,914). No dividend is proposed (2006: �
117,393).
The business has shown itself to be robust and, with the integration of both
Wallace Barnaby and CMA, with the resulting synergies the Group has returned to
profitability in the first quarter of the current financial year. The impact of
the acquisitions has now been fully realised, as the Group was able to
strengthen identified areas within the enlarged group and expand its offerings
and client list.
The move into online marketing and advertising, where client margins are
smaller, has reduced margins as a result. However the increasing marketing
spend in this area is seen as an investment for the future. Ekay is already
seeing improved margins through the improved client mix, an additional benefit
being the reduced reliance on the sub-prime financial sector.
A number of exceptional items, most notably the potential bad debts with APS as
previously announced, have had a significant bearing on this past financial
year. APS Jersey is in liquidation, and the Company awaits the liquidators'
report on the prospects for recovery of the �1.05m due to Ekay. APS UK has
recently gone into administration owing Ekay �0.66m. Litigation against APS UK
was underway before it went into administration and significant legal fees to
complete this process have been provided for.
The Directors hope that there will be partial recovery of the amounts owed, but
that the most prudent view is to provide for the whole of the debt. The total
provision in the year is �1.86m including future legal fees.
Other exceptional items included a bad debt for First Class Mortgages of �
230,000 which was disclosed at the time of the interim results.
The Board has reviewed the Group's policy for recognising the carrying values
of current assets, notably work-in-progress, and decided to write-off �204,000.
The Directors have also fully written off their investment in Docklands
Holdings Limited, based in Jersey which was the intermediary which traded with
APS Jersey. The carrying value of the investment was �62,000, and the entity
reported a loss in the period of �97,000 and there were a further �57,000 of
write-offs. The company no longer trades, and only remains in existence while
the process with the liquidator continues.
Cost control measures being put in place will also have a significant positive
impact on the current financial year's profit.
Outlook
The business has grown substantially over the last year through acquisition and
diversification into new industry sectors. Our plan is to become the largest
regional advertising agency in the UK.
The acquisitions of Wallace Barnaby and CMA and their integration have
increased our presence and improved our ability to service clients across a
broader spectrum. Existing and potential clients now have a full range of
services on hand as well as qualified and experienced teams to help guide them.
We welcome Mike Lording to the Board and thank all staff for their valuable
contribution. We look forward to the further profitable development of the
Company in the current financial year and beyond.
Tony Sullivan Eddie Powell
Chairman Chief Executive Officer
Ekay PLC
Consolidated income statement
for the year ended 30 June 2007
Group
Year ended Year ended
30 June 30 June
2007 2006
Notes Continued Discontinued Exceptional Total Total
operations operations items
Revenue 2 48,624,121 691,198 49,315,319 36,388,709
Direct costs (46,439,863) (672,529) (47,112,392) (34,109,644)
Gross profit 2,184,258 18,669 2,202,927 2,279,065
Other 111,841 111,841 61,239
operating
income
Operating (2,135,319) (216,947) (433,700) (2,785,966) (1,274,841)
costs before
APS
Mortgages
provision &
Share option
charge
APS Mortgages (1,884,796) (1,884,796)
provision
Share option (151,385) (151,385) (110,000)
charge
Total (2,286,704) (216,947) (2,318,496) (4,822,147) (1,384,841)
operating
cost
Depreciation (93,497) (93,497) (67,417)
Total (84,102) (198,278) (2,318,496) (2,600,876) 888,046
operating
profit/loss
Interest 65,974 1,725 67,699 78,171
income
Profit / (18,128) (196,553) (2,318,496) (2,533,177) 966,217
loss before
taxation
Income tax 3 5,387 58,399 688,867 752,653 (327,303)
expense
Profit/loss (12,741) (138,154) (1,629,629) (1,780,524) 638,914
for the year
attributable
to equity
holders of
the parent
Earnings per
share
Basic 4 -4.64p 1.77p
earnings/
loss per
share
Diluted 4 -4.64p 1.69p
earnings/
loss per
share
Ekay PLC
Consolidated balance sheet
As at 30 June 2007
Group
As at As at
30 June 2007 30 June 2006
� �
Assets
Non-current assets
Property, plant and equipment 443,715 313,180
Goodwill 2,386,462 -
-------------- ------------
2,830,177 313,180
Current Assets
Trade and other receivables 2,929,099 5,396,531
Corporate income tax receivable 449,823 -
Cash and short term deposits 1,843,985 921,104
------------- -------------
5,222,907 6,317,635
------------- -------------
Total assets 8,053,084 6,630,815
------------- -------------
Equity and liabilities
Equity attributable to equity
holders of the parent
Share capital 391,309 371,888
Share premium 718,579 -
Retained earnings (941,807) 804,725
------------- -------------
168,081 1,176,613
Current liabilities
Trade and other payables 7,862,990 5,123,995
Corporate income tax payable 22,013 330,207
------------- -------------
Total liabilities 7,885,003 5,454,202
------------- -------------
Total equity and liabilities 8,053,084 6,630,815
------------- -------------
Ekay PLC
Statement of changes in equity
for the year ended 30 June 2007
Group Share Share Retained Total
Capital Premium Earnings
� � � �
Balance as at 1 July 2006 371,888 - 804,725 1,176,613
Credit on charge for share - - 151,385 151,385
options
Loss for the year - - (1,780,524) (1,780,524)
----------- ----------- ------------- ---------------
Total recognised income and 371,888 - (824,414) (452,526)
expense for the year
Dividend paid - - (117,393) (117,393)
Issue of share capital for 19,421 718,579 - 738,000
investment
Issue cost - - - -
----------- ----------- -------------- ---------------
391,309 718,579 (941,807) 168,081
----------- ----------- -------------- ---------------
Ekay PLC
Consolidated cash flow statements
for the year ended 30 June 2007
Group
Year ended Year ended
30 June 30 June
2007 2006
� �
Cash flows from operating activities
Loss from operations (2,600,876) 888,046
Share option charge for the year 151,385 110,000
Depreciation of property, plant and equipment 93,497 67,417
--------------- ---------------
Operating cash flows before movement in (2,355,993) 1,065,463
working capital
Decrease in receivables 1,875,551 (2,956,604)
Increase in payables 2,079,897 1,985,531
--------------- ---------------
Cash generated from operations 1,599,455 94,390
Income taxes paid (200) (247,991)
--------------- ---------------
Net cash from/(used in) operating activities 1,599,255 (153,601)
Cash flows from investing activities
Interest received 65,036 78,171
Investments (1,510,860) (64,675)
Disposal of fixed assets - -
Acquisition of fixed assets (28,770) (65,119)
--------------- ---------------
Net cash used in investment activities (1,474,594) (51,623)
Cash flows from financing activities
Proceeds from issues of shares 738,000 297,000
Cost of share issue - (368,183)
Dividends paid (117,393) (550,000)
--------------- ---------------
Net cash from/(used in) financing activities 620,607 (621,183)
Net increase/(decrease) in cash and cash 745,268 (826,407)
equivalents
Cash and cash equivalents at 1 July 2006 921,104 1,747,511
--------------- ---------------
Cash and cash equivalents at 30 June 2007 1,666,372 921,104
--------------- ---------------
Ekay PLC
Notes to the consolidated financial statements
1. Basis of accounting
The financial information contained in this report does not constitute
statutory accounts within the meaning of Section 240 of the Companies Act 1985.
The financial information contained in this report has been extracted from the
audited accounts of the Company for the year to 30 June 2007 for which the
auditors have given an unqualified report.
The financial statements have been prepared under the historical cost
convention and in accordance with International Financial Reporting Standards
incorporating International Accounting Standards as issued by the International
Accounting Standards Board (IFRS) and with those parts of the Companies Act,
1985 applicable to companies reporting under IFRS.
2. Segmental reporting
Turnover and profit before tax are attributable to the one principal activity
of the Group, that of a full service advertising and marketing agency. Turnover
from this business originated in the markets shown
Group
Year ended Year ended
30 June 30 June
2007 2006
� �
United Kingdom 31,306,062 36,388,709
Channel Islands 18,009,257 -
--------------- ---------------
49,315,319 36,388,709
3. Income tax expense
Group
Year ended Year ended
30 June 30 June
2007 2006
� �
Current income tax
Current year - 327,303
Under/(over) provision last year (327,303)
------------ -----------
Taxation attributable to the Company and its - 327,303
Subsidiaries
Deferred tax asset (425,350) -
------------ -----------
(752,653) 327,303
------------ -----------
4. Earnings per share
Group
Earnings Year ended Year ended
30 June 30 June
2007 2006
Basic EPS
Reported earnings (�) (1,780,524) 638,914
Reported EPS -4.64p 1.77p
Diluted EPS
Diluted reported earnings (�) (1,780,524) 638,914
Reported diluted EPS -4.64p 1.69p
END
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