14th Dec 2005 07:01
Berkeley Scott Group Plc14 December 2005 BERKELEY SCOTT GROUP PLC Results for the 12 months ended 30th September 2005 Berkeley Scott Group Plc ("the Group" or "the Company" or "Berkeley Scott") is amarket-leading provider of resourcing solutions to the hospitality and leisuresectors. The Company joined the AIM Market in December 2004. Financial Highlights •Turnover increased by 3% to £17.1m (2004: £16.6m) •Permanent revenue grew 15% •Temporary revenue grew 4% •Net fee income rose by 5% to £9.3m (2004: £8.8m) •EBITDA pre non-recurring costs and discontinued business losses: £0.4m (2004: £0.9m) Operational Highlights •Demand in the hospitality and leisure sector remains strong in most areas despite terrorist outrages and slowdown in consumer spending •Record forward order book •Significant operational restructuring is now almost complete, providing a much stronger platform for growth €23% increase in total fee-earners to 138 (2004: 112) •Resourcing Solutions business has built a very substantial pipeline of potential contract wins in recent months •Berkeley Scott Training Academy launched •A new internal career and performance management system, Destiny, being implemented to improve staff retention Jeremy Hamer, Chairman of Berkeley Scott said: "While this has been a difficultyear of transition for Berkeley Scott, the actions we have taken in response,particularly the increase in new fee earners to 138 consultants, have created astrong platform from which to progress. Our markets remain relatively buoyantand we have recently recorded a number of significant new business wins, all ofwhich underpins the Board's view in looking forward to a period of increasingstability and profitability." Enquiries:Berkeley Scott Group PlcJeremy Hamer, Chairman 01483 414141Roddy Watt, Chief Executive OfficerWill Coker, Chief Financial Officer Cardew GroupTim Robertson 020 7930 0777Catherine Maitland CHAIRMAN'S STATEMENT It gives me great pleasure to announce our first full set of results since ouradmission to AIM in December 2004. During the year, we have continued to invest in expanding our fee-earningcapacity, and accordingly we enter the new financial year well placed tocontinue the growth which has started to come through in the latter part of theyear. We have also continued to invest in our Human Resources, IT and Financefunctions in order to support the growth of our fee-earning teams. There has been some slow down in activity in certain areas of our market as aconsequence of the dip in consumer spending, and the direct impact of the 7thJuly bombings on the London market. However, our markets remain reasonablybuoyant. Hotels in particular have proved to be more resilient to terroristincidents than in the past, and most sectors within which we work are operatingat record levels. Trading Results The total revenue of the business increased by 3% to £17.1m (2004: £16.6m), andmore importantly, net fee income rose by 5% to £9.3m (2004: £8.8m). Permanentnet fee income, driven both by high demand and by incremental fee earningheadcount over the previous year, made a strong contribution increasing by 15%.Despite a 4% growth in temporary revenue, net fee income from this activity wasdown by 5%. Margin erosion has now been arrested and reversed. Revenue wassuppressed due to disruption caused by reorganisation, a slight slow down inconsumer spending, and the 7th July terrorist attacks. This trend has also beenreversed, and we are now seeing significant growth in this area, which isbenefiting from new management. Our cost base, excluding depreciation, interest and goodwill amortisation, rosedisproportionately last year by 15% to £9m (2004: £7.8m) as we invested in newfee-earners and strengthened our Human Resources and training function tocapitalise on this larger fee-earning resource. We also incurred a full year'scosts of two new offices in Southampton and Glasgow. During the year we also undertook a very significant re-organisation whichresulted in costs of £273k, most of which related to termination payments andrecruitment fees. We also incurred a total of £109k of operating losses relatedto Number One Bureau Limited, an unproductive business dealing with clericalstaff recruitment. This was deemed non-core to our hospitality and leisuresector activities and was closed during the second half of the year. As a consequence of the investment, the reorganisation and the disruption whichthis caused, and the closure of the business referred to above, the Companyrecorded EBITDA pre non-recurring costs, and losses in relation to thediscontinued business of £0.4m (2004: £0.9m). The Company recorded a loss before taxation of £0.9m (2004: break-even), aftercharging goodwill of £0.3m (2004: £0.2m) and the non-recurring and exceptionalitems referred to above of £0.3m (2004: Nil). Net borrowing including workingcapital facilities at the end of September was £2.7m (2004: £3.7m) being gearingof 107% (2004: 365%). The Board is not recommending the payment of a dividend at this stage. Operations Review In June of this year, we took the decision to simplify our organisationstructure in order to create a stronger platform for growth. This reorganisationhas meant that the business now has four distinct operating divisions: PermanentRecruitment, Temporary Recruitment, Executive Search and Resourcing Solutions. This exercise is now almost complete. The business is in a much strongerposition to progress, and as a result, after only a few months we are alreadybeginning to see the benefits. Permanent Recruitment Most of our core permanent recruitment markets remain relatively buoyant, withhotels, in particular, trading strongly. The restaurant sector has slowed downslightly, but the pubs, bars and other catering markets, whilst also havingslowed a little, are still generally trading well. In this environment, we havecontinued to experience record levels of demand for our permanent recruitmentservices. We added a further 26 consultants to our permanent fee-earning team over thecourse of the year. However, we also experienced considerable staff turnover,which impacted heavily upon the productivity of the division. To address thisissue, we have introduced a new management system, Destiny, which provides aclear framework for the management of career progression and performance. Wealso launched our own virtual in-house training 'Academy' in October this year.The Academy provides a range of training opportunities from 'certificate' to'diploma' to 'degree' level courses. It also provides a range of other practicalIT, sales and skills training courses. We believe both of these initiatives makeus more attractive as an employer in the highly competitive market for newconsultants and, increasingly, will enable us to attract and retain the veryhighest calibre of candidates. Our strategy of enlarging our permanent recruitment teams in our regionaloffices to achieve critical mass is proving successful, and the revenuegenerating capability of almost all regional offices has now increased. However,whilst demand remains at record levels, and our permanent revenues are generallygrowing, the productivity of our permanent business is yet to be fully realised. Temporary Recruitment Our temporary recruitment business has benefited greatly from the implementationof a formal regional management structure in August. This is now beginning toshow positive results, with both revenues and net fee income growing strongly.Our association with catering in football stadiums is expanding. We have hadrecent wins to provide much of the staffing for Manchester City, Leeds andBirmingham City Football Clubs, in addition to a number of others we alreadywork with including Fulham. Furthermore, we have also won contracts to supplystaff to Arsenal's new Emirates stadium and the new Wembley stadium. During the second half of the year, we closed down an under-performing part ofour temporary recruitment business in Manchester, Number One Bureau Limited.This provided recruitment services for clerical staff but was unproductive andnon-core to our mainstream business activities in the hospitality and leisuresectors. In our temporary business we are concentrating on increasing stability amongstour 12 temporary recruitment teams, achieving growth through aggressive salesactivity and enhancing productivity through training and the impendingimplementation of a new IT based front-office system. Executive Search Our executive search business, ISIS, continues to perform in line withexpectations and we believe there is further potential to combine its offeringwith our permanent division. Resourcing Solutions Our Resourcing Solutions business has also benefited from organisational changeand consolidation within the recent re-structuring. Under a new management team,this division is starting to develop much greater traction in the market. A keyfocus within this area is our customised electronic recruitment system,Sourcerer. There is significant interest amongst our clients to acquire thissystem. Most recently De Vere and Village Leisure Hotels have adopted it astheir primary online recruitment service, and we have a significant pipeline ofother potential contracts which we anticipate will come to fruition in the NewYear. We have strengthened our sales capability in this area to meet demand. Alongside Sourcerer, we have also strengthened our off-line advertising andcommunications business with the recent replacement of a senior manager. Weanticipate that this will also have a very positive impact on revenues, and thepipeline of opportunities in this area is also now growing, albeit that leadtimes are significant. Staff On behalf of the Board I would like to take this opportunity to thank our stafffor their efforts and support during what has been a very difficult year. Wehave a number of new staff in all areas of the business, many in seniorpositions, from whom much is expected in the coming months. I should also like to take this opportunity to welcome, specifically, Will Cokerwho joined the Board in April as Chief Financial Officer, and Rod Leefe, whojoined in May as a Non-Executive Director. These appointments followed thedepartures of David Oakley and Rupert Bayfield whom I would also like to thankfor their contributions to the Group over many years. Outlook The Board of the Company has agreed that the focus should be on the existingcore activities of the business, increasing productivity in all areasparticularly through a reduction in staff turnover. The re-structuring of the business is now all but complete and the process ofre-building profitability is the priority. We believe that the first quarter tothe end of December will deliver satisfactory growth in terms of net fee income,driven by uplift in both the temporary and permanent businesses. This is traditionally a time of year when demand for permanent recruitmentreduces significantly, while that for temporary recruitment is at peak levels.Encouragingly, our permanent recruitment order book has performed more stronglythan in previous years, while demand for temporary recruitment is at recordlevels. Provided that the economic environment remains stable, we foresee aperiod of sustained and increasingly profitable growth ahead. Jeremy HamerChairman Berkeley Scott Group Plc Consolidated profit and loss account for the year ended 30 September 2005________________________________________________________________________________ Note Continuing Discontinued Unaudited 2005 Audited 2004 operations operations £ £ £ £Turnover 16,662,277 401,514 17,063,791 16,611,136Cost of sales (12,698,187) (284,400) (12,982,587) (12,254,859) ________ ________ ________ ________ Gross profit 3,964,090 117,114 4,081,204 4,356,277 Operatingexpenses Operatingexpenditurebeforedepreciation,amortisationand exceptionalitems (3,853,017) (177,435) (4,030,452) (3,472,941) Exceptionalitem 2 - (47,386) (47,386) (43,108) Depreciation,amortisationand similarcharges (607,445) (1,339) (608,784) (496,901) (4,460,462) (226,160) (4,686,622) (4,012,950) ________ ________ ________ ________Operating(loss)/profit EBITDA* 111,073 (107,707) 3,366 840,228 Depreciation,amortisationand similarcharges (607,445) (1,339) (608,784) (496,901) (496,372) (109,046) (605,418) 343,327 Interestreceivable 513 624 Interestpayable andsimilarcharges (291,825) (347,666) _______ _______Loss onordinaryactivitiesbeforetaxation(carriedforward) (896,730) (3,715) Tax (credit)/charge on ordinary activities 3 (64,494) 68,485 ________ ________ Loss on ordinary activities after taxation (832,236) (72,200) Dividends payable (non equity) (7,551) (48,645) _________ ________ Loss on ordinary activities transferred to reserves (839,787) (120,845) _________ ________ Loss per share in pence 4 (10.8) (3.1)(Basic and diluted) * EBITDA is earnings before interest, taxation, depreciation and amortisation. All recognised gains and losses in the current and prior year are included inthe profit and loss account. Discontinued operations relates to the business and trading of Number One BureauLimited a wholly owned subsidiary of Berkeley Scott Group Plc. Berkeley Scott Group Plc Consolidated balance sheet at 30 September 2005________________________________________________________________________________ Note Unaudited Audited £ 2005 £ £ 2004 £ Fixed assets Intangible assets 2,517,781 2,802,051Tangible assets 749,749 775,311 _________ _________ 3,267,530 3,577,362 Current assets Debtors 3,624,019 3,350,647Cash at bank and in hand 3,161 2,561 _________ _________ 3,627,180 3,353,208 Creditors: amounts falling due within one year (4,194,952) (4,307,717) _________ _________ Net current liabilities (567,772) (954,509) _________ _________ Total assets less current liabilities 2,699,758 2,622,853 Creditors: amounts falling due after morethan one year (343,346) (1,603,733) _________ _________ 2,356,412 1,019,120 _________ _________ Capital and reserves Called up share capital 5 170,372 80,654Share premium account 6 3,571,738 1,484,377Capital redemption reserve 6 1,834 1,834Profit and loss account 6 (1,387,532) (547,745) _________ _________ Shareholders' funds 7 2,356,412 1,019,120 _________ _________ Included within shareholders' funds in 2004 is an amount of £2 in respect ofnon-equity interests. Berkeley Scott Group Plc Consolidated cash flow statement for the year ended 30 September 2005________________________________________________________________________________ Note Unaudited Audited £ 2005 £ £ 2004 £ Net cash inflow from operating activities 8 129,996 944,307 Returns on investments and servicing of finance Interest received 513 624 Interest paid (280,992) (338,374)Interest element of finance lease rental payments (10,833) (9,292)Special dividend - non equity (109,451) - _________ _________ Net cash outflow from returns oninvestment and servicing of finance (400,763) (347,042) TaxationUK corporation tax (41,702) (3,399) _________ _________ Tax paid (41,702) (3,399) Capital expenditure and financial investment Purchase of tangible fixed assets (300,322) (413,583) Receipts from sale of fixed assets 13,964 - _________ _________ Net cash outflow from capital expenditure and financial investment (286,358) (413,583) _________ _________ Cash (outflow)/inflow before management of liquid resources and financing (598,827) 180,283 FinancingCapital element of finance lease rental payments (55,571) (68,939)Repayment of loans (1,908,333) (190,000)Share capital issued 3,071,500 3,694Expenses paid in connection with share issue (894,421) -New loans 500,000 - _________ _________ Cash inflow/(outflow) from financing 713,175 (255,245) _________ _________ Increase/(decrease) in cash in the year 9 114,348 (74,962) _________ _________ Notes forming part of the financial statements for the year ended 30 September2005________________________________________________________________________________ 1 Accounting policies The financial statements have been prepared under the historical costconvention, and are in accordance with applicable accounting standards. The following principal accounting policies have been applied: Basis of preparation This summary financial information comprises that of Berkeley Scott Group Plcand its subsidiaries for the year ended 30th September 2005. The results havebeen prepared using accounting policies consistent with those presented in the2004 financial statements. The preliminary announcement, which does notconstitute statutory accounts within the meaning of Section 240 of the CompaniesAct 1985, is an extract from the Group statutory accounts for the year ended30th September 2005, which will be delivered to the Registrar of Companies indue course. The auditors have not yet reported on those accounts. The resultsfor the year ended 30th September 2004 have been extracted from the statutoryaccounts for that period, which have been delivered to the Registrar ofCompanies and on which the auditors gave an unqualified report. Goodwill Goodwill arising on an acquisition of a trade or a subsidiary undertaking is thedifference between the fair value of the consideration paid and the fair valueof the assets and liabilities acquired. It is capitalised and amortised throughthe profit and loss account over the directors' estimate of its useful economiclife of 20 years. Impairment tests on the carrying value of goodwill areundertaken: - at the end of the first full financial year following acquisition; and- in other periods if events or changes in circumstances indicate that the carrying value may not be recoverable. Deferred taxation Deferred tax balances are recognised in respect of all timing differences thathave originated but not reversed by the balance sheet date except that the recognition of deferred tax assets is limited to the extent that the Company anticipates making sufficient taxable profits in the future to absorb the reversal of the underlying timing differences. Deferred tax balances are not discounted. 2 Operating profit 2005 2004 £ £This is arrived at after chargingNon-recurring costs - Restructuring 273,766 -Exceptional item 47,386 43,108 _________ _________ 2005 2004Exceptional itemRedundancy costs relating to the closure of Number One Bureau Limited 47,386 -Aborted acquisition - 43,108 _________ _________ 3 Taxation on profit from ordinary activities 2005 2004 £ £Current taxUK corporation tax on results of the year (41,110) 65,086Adjustment in respect of previous periods (23,384) 3,399 _________ _________ Total current tax (64,494) 68,485 _________ _________ The tax assessed for the period is higher than the standard rate of corporationtax in the UK. The differences are explained below. 2005 2004 £ £ Loss on ordinary activities before tax (896,730) (3,715) _________ _________ Loss on ordinary activities at the standard rate of corporation Tax in the UK of 30% (2004 - 30%) (269,019) (1,115)Effect of:Expenses not deductible for tax purposes 73,410 102,293Capital allowances in advance of depreciation 51,763 (27,771)Lower rate relief 10,891 (8,321)Adjustment to tax charge of previous period (23,384) 3,399Losses carried forward 91,203 -Charges on income 642 - _________ _________ Current tax charge for period (64,494) 68,485 _________ _________ Deferred tax On 30 September 2005, there was an unprovided deferred tax asset as set outbelow. This asset has not been included in the balance sheet as itsrecoverability is uncertain. As at As at 30 September 30 September 2005 2004 £ £ Accelerated capital allowances 13,090 39,667Provisions 10,071 3,015 ________ ________ 23,161 42,682 _________ _________ 4 Basic Loss per share Loss per ordinary share has been calculated using the weighted average number ofshares in issue during the relevant financial periods. On 6 December 2004 theauthorised share capital of 9,999,980 ordinary shares of 10p each and the 2special shares of £1 each were converted and redesignated as 2p ordinary shares.In accordance with Financial Reporting Standard 14 Earnings per share, thecomparative figures for the number of shares used in the earnings have beenadjusted retrospectively as if the shares had been denominated at 2p each. Theweighted average number of equity shares in issue was 7,770,968 (2004 -4,032,645) and the loss, being loss after tax and non equity dividends, was£839,787 (2004 - £120,845). Diluted Loss per share Options held in respect of the ordinary shares of the Company do not have adilutive effect on the loss per share calculation in any of the periods coveredby these accounts. 5 Share capital 2005 2004 2005 2004 Number Number £ £ AuthorisedEquity share capitalOrdinary shares of 10p each - 9,999,980 - 999,998Ordinary shares of 2p each 50,000,000 - 1,000,000 -Non-equity share capitalSpecial shares of £1 each - 2 - 2 _________ _________ _________ _________ 50,000,000 9,999,982 1,000,000 1,000,000 _________ _________ _________ _________ 2005 2004 2005 2004 Number Number £ £ Allotted, called up and fully paid Equity share capitalOrdinary shares of 10p each 806,527 806,527 80,652 80,652Non-equity share capitalSpecial shares of £1 each - 2 - 2Converted to 10p shares 20 - 2 - _________ _________ _________ _________ Ordinary shares of 10p each 806,547 806,529 80,654 80,654Shares of 10p issued pre admission to AIM 44,500 - 4,450 - _________ _________ _________ _________ 851,047 806,529 85,104 80,654 _________ _________ _________ _________ Subdivision of 10p shares to 2p shares 4,255,235 - 85,104 -New shares issued post admission to AIM 4,263,380 - 85,268 - _________ _________ _________ _________ Ordinary shares of 2p each 8,518,615 806,529 170,372 80,654 _________ _________ _________ _________ 6 Reserves Share Capital Profit premium redemption & loss account reserve account £ £ £At 1 October 2004 1,484,377 1,834 (547,745)Share issue - consideration 2,981,782 - -Share issue - associated costs (894,421) - -Loss for the year - - (839,787) _________ _________ _________ At 30 September 2005 3,571,738 1,834 (1,387,532) _________ _________ _________ 7 Reconciliation of movements in shareholders' funds 2005 2004 £ £ (Loss)/Profit for the year (832,236) (72,200)Dividends (7,551) (48,645)New share capital subscribed 2,177,079 3,694 _________ _________Net addition to/(deduction from)to shareholders' funds 1,337,292 (117,151) Opening shareholders' funds 1,019,120 1,136,271 _________ _________ Closing shareholders' funds 2,356,412 1,019,120 _________ _________ 8 Reconciliation of operating profit to net cash inflow from operating activities 2005 2004 £ £ Operating profit/(loss) on ordinary activities (605,418) 343,327Depreciation 324,514 303,946Amortisation of goodwill 284,270 192,955(Increase) in debtors (232,262) (1,073,514)Increase in creditors 364,686 1,177,593Profit on sale of fixed assets (5,794) - _________ _________ Net cash inflow from operating activities 129,996 944,307 _________ _________ 9 Reconciliation of net cash flow to movement in net debt 2005 2004 £ £ Increase/(decrease) in cash in the year 114,348 (74,962) Cash outflow from decrease in debt and lease financing 1,465,054 258,939 _________ _________ Change in net debt resulting from cash flows 1,579,402 183,977 New finance lease (7,000) (101,512) _________ _________ Movement in net debt in the year 1,572,402 82,465Net debt at start of year (2,171,167) (2,253,632) _________ _________ Net debt at end of year (598,765) (2,171,167) _________ _________ In addition, invoice discounting at 30th September 2005 amounted to £2,071,216(2004: £1,497,681) CONTACT DETAILS Directors DRB Watt WJ Coker JJ Hamer R Leefe RW Taylor Secretary and registered office IMCO Secretary Limited Berkeley House 11-13 Ockford Road Godalming Surrey GU7 1QU Company number 2228050 Auditors BDO Stoy Hayward LLP Connaught House Alexandra Terrace Guildford Surrey GU1 3DA Nominated advisor and Broker Evolution Securities Limited 100 Wood Street London EC2V 7AN Bankers Royal Bank of Scotland Benwell House Green Street Sunbury-on-Thames Middlesex TW16 6QT Registrars Capita Registrars The Registry 34 Beckenham Road Beckenham BR3 4TU The Annual General Meeting for Berkeley Scott Group will be held on 21 February2006. The statutory accounts will be issued prior to this meeting and filed indue course with the Registrar of Companies. Copies will be available forinspection at the Company's Registered Office. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Kellan Group