30th Sep 2008 07:00
For release at 0700 on 30 September 2008
Highams Systems Services Group plc
("Highams" or "the Group")
The AIM-quoted IT recruitment consultancy and a leading niche provider of technology
talent in the financial services industry
Preliminary Results
for the year ended 31 March 2008
Enquiries:
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Dave Pye, Chief Executive |
Tel: 01883 341 144 |
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Highams Systems Services Group plc |
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www.highams.com |
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|
Rick Thompson / Carl Holmes |
Tel: 020 7149 6000 |
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Charles Stanley Securities (Nominated Adviser) |
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|
Tarquin Edwards |
Tel: 020 7034 4758 |
|
Adventis Financial PR |
Chairman and Chief Executive's Statement
Introduction
This has been a demanding year and Highams has not been immune from the various challenges faced by others in our sector, which has had a negative impact on our financial performance. In the financial year, Highams embarked on an extensive revitalising of the brand with a view to seeking new clients and winning higher margin business in its chosen market sector. The Group also realised that it needed to engage on a turnaround programme to effect significant cost reduction.
The revitalising of the Highams brand and our business operations through a range of initiatives,which include, among other things, the opening of a London office at the iconic 'Gherkin' and close to our core insurance customer base; the establishment and growing influence of bluefuse, our online business network created to promote and support IT professionals in the Insurance sector and a range of other initiatives, have helped to secure the winning of a substantial number of new and higher margin clients.
As the Group advised on 8 July 2008, we expected to see our major investments of the first half of the financial year start to make an impact in the second half, but with the benefit of the investment becoming more clearly evident in the current financial year. While there is some solid improvement seen in the Group's performance in the second half of the financial year as evidenced by the improvement in the gross margin percentage achieved, the Board recognised that it must continue to 'attack' costs, drive sales and deliver better quality earnings as a result of the focus on higher margin business. Losses have been reducing substantially quarter by quarter and that progress has continued into the new financial year with a first quarter loss of £42,000 in comparison to a loss of £160,000 in the first quarter of 2007.
Financial Results
Group revenue fell by 16.6 per cent. to £13.6m (2007: £16.3m) as the Group undertook a reduced volume of low-margin contract business.
Gross profit was virtually unchanged at £2.1m (2007: £2.2m). This represents 15.6% of revenue, which is a significant improvement when compared to 13.3% in 2007.
Group loss before taxation and impairment was £851,000 (2007: loss of £185,000).
The loss before tax but after impairment was £1,922,000 (2007: loss of £185,000)
The Directors are not recommending the payment of a final dividend for the year to 31 March 2008 (2007: nil).
Executives and Staff
We remain unusual amongst recruitment companies in having a high number of very knowledgeable and long-serving staff. We are extremely grateful to them for their loyalty and their eagerness to support the business at a time of significant change. We extend a warm welcome to our newer staff and hope that many of them will develop along similar lines as their experienced colleagues.
Post Year-end
Since the year-end, the Board also announced that it was undertaking a further review of all aspects of the Company's operations to see how best it could improve performance. This review is now complete and the culmination of that process lies in the fund raising and board changes that we are announcing and are detailed in the circular, which is being posted to shareholders along with copies of the Group's Report & Accounts for the year ended 31 March 2008.
We are delighted to report that after considerable effort and the Board's consideration of a wide range of options, a successful outcome has been achieved. We believe that the placing and changes to the Board offer Highams an excellent platform upon which to further develop its business and we look forward to the Company's future with confidence.
|
Alan Howarth Chairman 29 September 2008 |
Dave Pye Chief Executive 29 September 2008 |
Consolidated Profit & Loss Account
For the year ended 31 March 2008
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2008
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2007
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Note
|
£'000
|
£'000
|
|
|
Revenue
|
|
13,606
|
16,286
|
|
Cost of sales
|
|
(11,481)
|
(14,121)
|
|
|
---------------------
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----------------------
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|
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Gross profit
|
2,125
|
2,165
|
|
|
Other administrative costs
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|
(2,895)
|
(2,285)
|
||
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Goodwill impairment
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|
(1,071)
|
-
|
||
|
|
|
|
|
||
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Total
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(3,966)
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(2,285)
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||
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|
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---------------------
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----------------------
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||
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Operating loss
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(1,841)
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(120)
|
||
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Finance income
|
|
3
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-
|
||
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Finance costs
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|
(84)
|
(65)
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||
|
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---------------------
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----------------------
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|||
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Loss before tax
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(1,922)
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(185)
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|||
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Tax expense
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|
-
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-
|
|
|
|
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---------------------
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----------------------
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|||
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Loss for the period attributable to equity shareholders
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(1,922)
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(185)
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|||
|
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==============
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==============
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|||
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Basic and diluted earnings per share from continuing operations
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(6.06)p
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(0.58)p
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|
|
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==============
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==============
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All of the above relate to continuing operations.
Consolidated statement of recognised income and expense
For the year ended 31 March 2008
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2008
|
2007
|
|
|
|
£'000
|
£'000
|
|
|
Loss for the period
|
|
(1,922)
|
(185)
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|
Foreign currency translation difference
|
|
4
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-
|
|
|
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---------------------
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----------------------
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Total recognised income and expense for the period
attributable to equity shareholders
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(1,918)
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(185)
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|
|
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==============
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==============
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Consolidated Balance Sheet
For the year ended 31 March 2008
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Note |
2008 |
2007 |
|||
|
£'000 |
£'000 |
||||
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Assets |
|||||
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Non-current assets |
|||||
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Goodwill |
- |
1,071 |
|||
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Other intangible assets |
11 |
10 |
|||
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Property, plant and equipment |
20 |
27 |
|||
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Total |
31 |
1,108 |
|||
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Current assets |
|||||
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Trade and other receivables |
2,273 |
2,936 |
|||
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Cash and cash equivalents |
- |
228 |
|||
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Total |
2,273 |
3,164 |
|||
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Total assets |
2,304 |
4,272 |
|||
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Current Liabilities |
|||||
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Trade and other payables |
(1,237) |
(1,892) |
|||
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Borrowings |
(1,196) |
(591) |
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Total |
(2,433) |
(2,483) |
|||
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Net (Liabilities) / Assets |
(129) |
1,789 |
|||
|
Equity |
|||||
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Share capital |
1,594 |
1,594 |
|||
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Share premium account |
3 |
679 |
679 |
||
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Merger reserve |
3 |
90 |
90 |
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Employee share benefit trust reserve |
3 |
(61) |
(61) |
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Currency reserve |
3 |
4 |
- |
||
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Retained earnings |
3 |
(2,435) |
(513) |
||
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Total Equity |
(129) |
1,789 |
|||
Consolidated Cash Flow Statement
For the year ended 31 March 2008
|
Note |
2008 |
2007 |
||
|
£'000 |
£'000 |
|||
|
Operating activities |
||||
|
Loss for the year after tax |
3 |
(1,922) |
(185) |
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|
Depreciation of property, plant and equipment |
14 |
17 |
||
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Amortisation of intangible assets |
13 |
11 |
||
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Impairment of goodwill |
1,071 |
- |
||
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Finance costs |
81 |
65 |
||
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Changes in trade and other receivables |
662 |
234 |
||
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Change in trade and other payables |
(651) |
(203) |
||
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Net cash used in operating activities |
(732) |
(61) |
||
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Cash flows from investing activities |
||||
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Purchase of property, plant and equipment |
(6) |
(4) |
||
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Purchase of intangible assets |
(14) |
(6) |
||
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Interest received |
3 |
- |
||
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Net cash used in investing activities |
(17) |
(10) |
||
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Financing activities |
||||
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Increase in borrowings |
605 |
291 |
||
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Interest paid |
(84) |
(65) |
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Net cash from financing activities |
521 |
226 |
||
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Net changes in cash and cash equivalents |
(228) |
155 |
||
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Cash and cash equivalents, beginning of year |
228 |
73 |
||
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Cash and cash equivalents, end of year |
- |
228 |
||
1. TRANSITION TO IFRS
Overall considerations
IFRS 1 First-time Adoption of International Financial Reporting Standards sets out the procedures that the Group must follow when it adopts IFRS for the first time as the basis for preparing its financial statements. The Group established its IFRS accounting policies on its transition date, 1 April 2006, and applied these to the IFRS opening balance sheet at its date of transition, 1 April 2007. The principal changes to UK GAAP accounting policies are:
IFRS 3 Business Combinations requires that goodwill be subject to annual impairment reviews rather than amortisation. IFRS 3 also prohibited the amortisation of goodwill, resulting in a reversal of 2007 amortisation previously recognised under UK GAAP. Amortisation pre-transition is not reversed, in line with the IFRS 1 exemption applied to pre-transition business combinations.
The net effect in the Consolidated Income Statement for the comparative year may be summarised as follows:
|
2007 |
|
|
£'000 |
|
|
Net loss for the year: |
|
|
Under UK GAAP |
(313) |
|
Elimination of amortisation of goodwill |
128 |
|
Restated under IFRS |
(185) |
The net effect on the Consolidated Balance Sheet may be summarised as follows:
|
Under UK GAAP |
Amortisation of goodwill |
Restated under IFRS |
|
|
£'000 |
£'000 |
£'000 |
|
|
Equity |
|||
|
1 April 2006 |
1,974 |
- |
1,974 |
|
31 March 2007 |
1,661 |
128 |
1,789 |
2. LOSS PER SHARE
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2008 |
2007 |
|||||
|
|
Loss |
Weighted average number of shares |
Loss per share |
Profit/ (loss) |
Weighted average number of shares |
Loss per share |
|
£'000 |
£'000 |
p |
£'000 |
£'000 |
p |
|
|
Basic loss per share |
(1,922) |
31,692 |
(6.06) |
(185) |
31,692 |
(0.58) |
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Impairment of goodwill |
1,071 |
- |
||||
|
Adjusted loss per share |
(851) |
31,692 |
(2.69) |
(185) |
31,692 |
(0.58) |
The weighted average number of shares excludes 183,953 (2007 183,953) shares held by the Employee Share Benefit Trust.
There is no difference in either 2008 or 2007 between the basic and diluted loss per share.
3. RECONCILIATION OF MOVEMENTS IN EQUITY
|
Share capital |
Share premium |
Merger reserve |
Employee share benefit reserve |
Currency reserve |
Retained earnings |
Total equity |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
||
|
At 1 April 2006 |
1,594 |
679 |
90 |
(61) |
- |
(328) |
1,974 |
|
Loss for the year |
- |
- |
- |
- |
- |
(185) |
(185) |
|
At 1 April 2007 |
1,594 |
679 |
90 |
(61) |
- |
(513) |
1,789 |
|
Currency adjustments |
- |
- |
- |
- |
4 |
- |
4 |
|
Loss for the year |
- |
- |
- |
- |
(1,922) |
(1,922) |
|
|
At 31 March 2008 |
1,594 |
679 |
90 |
(61) |
4 |
(2,435) |
(129) |
4. The financial information in this preliminary announcement does not constitute the company's statutory accounts for the years ended 31st March 2008 or 31st March 2007 but is derived from those accounts. The statutory accounts for 2007, which were prepared under UK GAAP, have been delivered to the Registrar of Companies and those for 2008 prepared in accordance with IFRSs as adopted by the EU, will be delivered following the Company's annual general meeting. The auditors' reports on the accounts for both years were unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and did not contain statements under the Companies Act 1985 s237(2) or (3).
5. Copies of the statutory accounts for the year ended 31 March 2008 are being posted to all shareholders today. Additional copies will be available from the Company Secretary, Highams Systems Services Group plc, Quadrant House, 33/45 Croydon Road, Caterham, Surrey, CR3 6PB and will be available to download from the investor relations section on the Company's website www.highamsrecruitment.com
Related Shares:
NAK.L