eq Blames Budget Cuts for Poor First Half

Britain's eq group plc, owners of MR businesses Buckingham Research and Quaestor, has confirmed disappointing results for the six months ended 30 June with revenue down 11% to £4.97m and operating profit down 64% to £226,000.

The AIM-listed marketing services group said in a trading statement in early June that figures would be below par, but committed itself to maintaining its market research headcount in anticipation of increased activity second half. This week's statement confirms that 'activity levels have increased in the early part of the second half' but says the decision has significantly impacted its first half profitability.

The group blames the fall in revenue on an 'unanticipated' reduction in activity by a number of key MR clients, global businesses undertaking major organisational change. It notes a reversal in the phenomenon now.

Adjusted operating profit, before amortisation of goodwill, fell by 41% to £504,000, while good growth in 2005 meant that £953,000 went to the vendors of Quaestor in performance-related payments – these are the last such payments due. Basic earnings per share fell to a loss of 0.73p from 3.35p, while profit before tax fell by 93% to £33,000, and profit after tax fell to a loss of £60,000 from £258,000 profit in 2005. No dividend is due.

During the period, the group generated 95% of its revenue from market research and 5% from software development. Within the MR businesses, fee earning employment costs accounted for 43% of cost of sales in the first half.

On the positive side, the group reported new clients in the first half including Travis Perkins, Wesleyan Assurance, Revlon, Sportingbet and Leaseplan. The group says the market research businesses have performed well in the first few months of the second half, but notes that the group's largest client is not among those currently returning to normal activity levels. Among the priorities identified for 2006-7 are more investment in R&D, clear linking of research skills with clients' business problems, widening the client base, deploying technology to decrease turnaround times and recruiting new talent.

The two research firms are online at www.buckingham-research.com and www.quaestor.co.uk .

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.

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