31st Oct 2006 07:00
Fairplace Consulting plc31 October 2006The Board of Directors of Fairplace Consulting plc announces the Group'saudited results for the twelve months to 30 June 2006.Financial summary 2006 Year ended Year ended 30 June `06 30 June `05 ‚£000 ‚£000* Turnover 5,289 4,844 Operating loss before goodwill amortisation (396) (252) Goodwill amortisation (98) (191) Loss on sale of investment (79) (779) Impairment of goodwill (288) - Loss before taxation (868) (1,223) Net assets 1,387 1,770Headlines 2006 * Group sales increase by 9.2% to ‚£5.29m (2005: ‚£4.84m) * Sales of talent management services increase to 20.8% of UK sales (2005: 10.1%) * Outplacement sales broadly maintained at ‚£4.28m (2005: ‚£4.39m) * Operating loss before goodwill of ‚£0.40m for full year (2005: loss of ‚£ 0.25m) * Improved second half performance producing small operating profit before goodwill for six months to 30 June 2006 * Two equity placings raising ‚£0.50m net of fees * Trading for first quarter 2007 in line with Board targets and ahead of first quarter 2006 *Excluding discontinued businessFor further information please contact:Mark Allsup, ChairmanFairplace Consulting plc020 7816 0707Brian ThornThe Wriglesworth Consultancy020 7845 7900Chairman's StatementOverviewWhile the full year operating loss is unsatisfactory, I am pleased to reportthat the Company's trading performance showed improvement in the second half,producing a small operating profit before goodwill for the six months to 30June 2006.The increase in annual sales in 2006 reflected continuing growth in talentmanagement revenues and greater regional outplacement activity which helped tooffset lower demand for City outplacement services.Our medium term strategy is to create a diversified income stream from a moreeven mix of career management and talent management services, a wider range ofclient sectors and broader relationships with existing clients.We made further progress with this plan in 2006: talent management revenuesgrew to 20.8% of UK sales (2005: 10.1%); revenues from non financial sectorclients increased to 42.0% of UK sales (2005: 37.4%); and the number of clientsbuying more than one service from Fairplace rose to 31 (2005: 22).Despite the competitive market conditions, outplacement sales were broadlymaintained at ‚£4.28million (2005: ‚£4.39million).In the current financial year, the Board's objective is to restore theCompany's profitability through growth in talent management revenues, controlof delivery costs and reduction of fixed costs, especially those related toproperty.Trading for the first quarter of the new financial year has been in line withthe Board's targets and ahead of the 2006 comparative quarter.Results for the twelve months to 30 June 2006Group sales for 2006 increased by 9.2% to ‚£5.29million (2005: ‚£4.84millionexcluding discontinued business).UK sales amounted to ‚£4.86million (2005: ‚£4.48million excluding discontinuedbusiness), representing 92% of total Group sales.The operating loss before goodwill for 2006 was ‚£395,564 (2005: ‚£251,605excluding discontinued business). The higher operating loss for 2006 was partlyattributable to employee severance payments and related legal fees of ‚£68,500(2005: ‚£nil). Professional costs relating to property and the establishment ofa new EMI plan were also a contributory factor.The Board reviewed the carrying values of the Group's goodwill investments andmade a non-cash impairment provision in the Group accounts of ‚£288,068. Thisrelated to the carrying value of the Quantum acquisition made in June 2000.The Group has incurred a further ‚£79,348 of net costs in relation to the 2005disposal of its distance-based division. These related primarily to additionalprovisions required in respect of the disposal of the division's leaseholdcommitments.FinancialFairplace carried out two placings of new shares during the twelve months to 30June 2006.The first placing in December 2005 raised ‚£96,250 from directors, employees andassociates.The second placing in March 2006 raised approximately ‚£400,000 net of fees fromexternal investors and followed the appointments of CFA and Seymour PierceEllis as NOMAD and Broker to the Company respectively.Agreement was reached in April 2006 to accelerate the receipt of deferredconsideration relating to the disposal of the distance-based division amountingto ‚£82,500. We are seeking to dispose of surplus office space in Northamptonwhich related to this business.At the financial year end the Group's cash balances amounted to ‚£240,402 (2005financial year end: overdraft borrowings of ‚£244,462).During the financial year, Fairplace assigned one of the floors at its mainoffices in Cornhill, reducing floor space by 25%.After a review of the alternatives available elsewhere, agreement has beenreached in principle to renew the leases on three remaining floors at Cornhillfor a further term from March 2007 at a lower annual rental. This would avoidthe costs associated with a major office move and reduce the Company's fixedcosts by approximately ‚£100,000 pa in future.Other measures have been taken to restrict operating costs, including limitingmarketing promotional expenditure and revising IT support arrangements.The average number of full time employees was reduced to 34 (2005: 45)reflecting the policy to utilise associate consultants for delivery of careerand talent management services.InternationalFairplace Italy's sales increased by 12.5% to ‚£415,942 for the twelve months to30 June 2006.While recent client acquisitions have been encouraging, in view of FairplaceItaly's limited size the Board's aim is to find a strategic local investmentpartner, as this should enable opportunities in the expanding Italianoutplacement market to be more quickly realised.The Company is in discussions to reduce its 40% shareholding in FairplacePortugal and to license our partners to use the Fairplace name in the localmarket.We will continue to service global client needs through the Career PartnersInternational network and affiliate relationships.ManagementThere were a number of Board changes during the 2006 financial year.Christopher Hoysted decided not to seek re-election as a non-executive directorat the 2005 Annual General Meeting.Ken Brotherston joined the Board as a non-executive director with additionalstrategic consulting responsibilities.Clare Hanson stepped down from the Board after seven years as the Company'sFinance Director.Board responsibility for finance is now shared by the Chairman and the CEO,supported by the Finance Department. Alison Clifford, Financial Controller, hasalso assumed the role of Company Secretary.In February 2006, the Company granted a total of 480,000 share options at 15.5pence to executive directors and staff under the new EMI plan. Share optionsgranted to executive directors may only be exercised if specific profit-relatedperformance criteria are achieved.Annual General MeetingThis year's Annual General Meeting will be held at 11.00 am on 7 December 2006.Current Trading and OutlookTrading for the first quarter of the new financial year 2007 has been in linewith the Board's targets and ahead of the 2006 comparative quarter. However itis too early to predict whether this trend will be maintained.The Board anticipates that, pending a change in City outplacement marketconditions, the main drivers for growth will be sales of talent management andregional outplacement services.The Board will continue to focus on costs in order to meet its financialobjective for 2007.Mark AllsupChairman30 October 2006Chief Executive's statementThe operating results for 2006 are clearly disappointing. Our dependence onoutplacement revenues and the financial services sector in particular, thecontinuing shrinkage of the overall outplacement market and the marginalpricing of volume providers all proved very challenging.However, we did make worthwhile progress towards the objectives in our businessplan: * We continued to grow our sales : in the last two financial years sales from continuing operations have increased by a total of ‚£1.2 million or 29%. * While we incurred expenditure in building additional sales, we have created important new revenue streams for the future. These are gaining momentum. * In 2006 we generated sales of almost ‚£1 million from talent management services. * We added 98 new clients. Of these 38 purchased non outplacement services. * Over a third of our significant corporate clients bought two or more services. * We recently launched Talent Tracker, a 360 benchmarking product, which has already had a positive impact on identification and coaching sales, bringing scaleability to our talent management services. * We built a technology platform providing clients with real time feedback on our service delivery. This puts Fairplace on the client's desktop and will facilitate increased sales. * We invested in the training and accreditation of our employees and associates, particularly related to coaching and psychometric assessment. * We were proud to work with leading employers such as Nationwide Building Society, Cooperative Financial Services, Outokumpu, Deloitte, MFI and Littlewoods. * Despite depressed conditions in the outplacement market, we secured a greater market share in our prime market of one-to-one career coaching and our overall UK market share for calendar year 2005 rose from 5.4% to 6.1% ( source: ACF ) * We increased the unit value of our programmes despite intense price competition. Our strategy going forward remains unchanged : * We will continue to build our talent management business, targeting 30% of UK sales this financial year. Talent management revenues have a greater predictability than outplacement as assessment, coaching and leadership development are services which organisations repeat purchase each year. * We will maintain our geographic diversification, with business developers now based in London, the Thames Valley, the Midlands and the NorthWest. * We will balance our presence in the financial services sector with other sectors, building upon our successes in professional services, TMT, retail, manufacturing and the public sector. * We will continue to sell new services to existing clients. * We will increase our focus on high value one-to-one outplacement and career coaching programmes, supported by our highly respected research capability. * We will build new client relationships through our personal networks and through continuing to develop our reputation as experts in career and talent management. * We will seek to partner employers of choice. We are particularly pleased to be shortlisted for an award by Personnel Today for the career management programmes we have delivered for Deloitte. From a shareholder's perspective the last three years have not been easy orrewarding. I am frustrated that the results have been slow in coming, but amconfident that we have now put in place the necessary foundations for success.We have an excellent team and I pay tribute to their tenacity and dedication.Michael MoranChief Executive30 October 2006Group profit and loss account for the year ended 30 June 2006 2006 2005 ‚£ ‚£ Turnover: 5,288,780 4,844,318 Continuing Operations - 528,750 Discontinued Operations 5,288,780 5,373,068 Administrative expenses: (5,684,344) (5,095,923) Continuing Operations - (489,692) Discontinued Operations (5,684,344) (5,585,615) Operating loss before goodwill amortisation: (395,564) (251,605) Continuing Operations - 39,058 Discontinued Operations (395,564) (212,547) Goodwill amortisation: (98,041) (190,896) Continuing Operations - (54,170) Discontinued Operations (98,041) (245,066) Operating loss: (493,605) (442,501) Continuing Operations - (15,112) Discontinued Operations (493,605) (457,613) Loss on sale of investment (79,348) (779,196) Impairment of goodwill (288,068) - Interest receivable 528 7,113 Interest payable (7,547) (8,189) Loss on ordinary activities before taxation (868,040) (1,237,885) Taxation (10,574) 41,579 Loss for the financial year (878,614) (1,196,306) Loss per share (13.08)p (21.75)pLoss per share before goodwill amortisation Fully diluted loss per share (11.62)p (17.29)p (13.08)p (21.75)pThere are no other recognised gains or losses for the Group other than theresults for the year set out above.Group balance sheet at 30 June 2006 2006 2005 ‚£ ‚£ Fixed assets: 600,000 986,109 Intangible assets 312,449 404,316 Tangible assets 912,449 1,390,425 Current assets: 19,523 18,235 Stock and work in progress 1,675,368 2,177,844 Debtors 240,402 - Cash at bank and in hand 1,935,293 2,196,079 Creditors: amounts falling due within one year (1,460,311) (1,816,650) Net current assets 474,982 379,429 Net assets 1,387,431 1,769,854 Capital and reserves: 1,020,026 825,026 Called up share capital 2,381,033 2,079,842 Share premium (2,013,628) (1,135,014) Profit and loss account 1,387,431 1,769,854 Equity shareholders' funds The financial statements and the related notes were approved by the Board on 30October 2006 and were signed on its behalf by:M W AllsupM D MoranDirectors30 October 2006Group statement of cash flow for the year ended 30 June 2006 2006 2005 ‚£ ‚£ Cash flow from operating activities (67,947) (759,422) Returns on investments and servicing of finance 528 7,113 Interest received (7,547) (8,189) Other interest paid (7,019) (1,076) Corporation tax refunded 24,260 46,741 Capital expenditure and financial investment (45,044) (17,068) Purchase of tangible fixed assets 1,923 27,732 Sale of tangible fixed assets (43,121) 10,664 Acquisitions and disposals 82,500 82,121 Proceeds from sale of investment 82,500 82,121 Cash flow from Financing Activities 546,250 - Issue of ordinary shares (50,059) - Issue costs 496,191 - Increase/(Decrease) in cash in the year 484,864 (620,972)Notes 1. The financial information set out above does not comprise the Company's statutory accounts. Statutory accounts for the previous financial year ended 30 June 2005 have been delivered to the Registrar of Companies. The Auditors' report on those accounts was unqualified and did not contain any statement under Section 247 (2) or (3) of the Companies Act 1985. The Auditors have given an unqualified opinion on the Accounts for the year ended 30 June 2006, which will be delivered to the Registrar of Companies following the Annual General Meeting. 2. The Directors do not propose a final dividend. The total for the year is therefore nil pence per share (2005: nil pence per share). 3. Loss per share The calculation of earnings per share is based on the loss after taxation of ‚£878,614 (2005: ‚£1,196,306) and on the weighted average number of shares inissue during the year of 6,712,670 (2005: 5,500,170).The calculation of earnings per share before goodwill is based on the lossafter taxation but ignoring goodwill, giving ‚£780,578 (2005: ‚£951,240) and onthe weighted average number of shares in issue during the year of 6,712,670(2005: 5,500,170).The fully diluted earnings per share is based on the loss after taxation of ‚£878,614 (2005: ‚£1,196,306) and on the weighted average number of shares,assuming that all share options, with an exercise price of less than the marketprice of the shares, were exercised at the beginning of the year, in issueduring the year of 6,712,670 (2005: 5,500,170). 4. The Company's accounting policies remain as stated in the Annual Report for the year ended 30 June 2005. 5. Loss on disposal of investment On 30 June 2005 the Company sold the business and assets of its distance-baseddivision to Working Transitions 2005 Ltd. The terms of disposal were an initialpayment of ‚£225,000 plus deferred consideration of between ‚£50,000 and ‚£125,000dependent upon the performance of Working Transitions 2005 Limited in the twoyears following the disposal.On 7 April 2006 the Company reached agreement to receive an accelerated paymentof deferred consideration of ‚£82,500 of which ‚£50,000 had been recognised inprior years. The Company also provided for continuing lease costs relating tothe property previously occupied by the distance-based division resulting in acharge of ‚£111,848. Consequently, the net loss on the disposal of theinvestment for the year was ‚£79,348. This resulted in a loss on sale of theinvestment in the year ending 30 June 2006.Copies of the 2006 Report and Accounts will be available from the registeredoffice of Fairplace Consulting plc, 36-38 Cornhill, London EC3V 3PQ.ENDFAIRPLACE CONSULTING PLCRelated Shares:
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