11th Oct 2005 07:01
Fairplace Consulting PLC11 October 2005 The Board of Directors of Fairplace Consulting plc announces the Group's auditedresults for the twelve months to 30 June 2005. Financial summary 2005 Year ended Year ended 30 June '05 30 June '04 £000 £000Turnover 5,373 4,758Operating (loss) before goodwill (212) (830)Goodwill (245) (132)(Loss)/profit on sale of investment (779) 97(Loss) before taxation (1,238) (893)Retained (loss) (1,196) (890)Net assets 1,770 2,966 Headlines 2005 • 12.9% increase in Group turnover to £5.4 million (2004: £4.8 million) • Operating loss before goodwill reduced to £212,547 (2004: £830,077) • Growing contribution from new talent management services • Investment in business development and client service technology • Sale of Working Transitions reflecting new strategic direction • First quarter of current year in line with plan and significant opportunities identified in talent management market •Proposed issue of new ordinary shares to directors, employees and associate consultants For further information please contact: Mark Allsup, Chairman 020 7816 0707Clare Hanson, Finance DirectorFairplace Consulting plc Mark Baker 020 7845 7900The Wriglesworth Consultancy The Chairman's statement Overview 2005 has seen considerable progress in implementing our strategy of increasingrevenues and improving operating performance by developing new services in thetalent management arena which complement our career management services. Growing revenues from these newer services, combined with a pick-up inoutplacement activity despite continued pricing pressures, meant that we movedinto operating profit for the second half. This resulted in a significantlyreduced full year operating loss. Our strategic focus on talent management and career management services forcorporate clients, and the need for additional resources to develop them, led tothe disposal in June 2005 of Working Transitions, which primarily provideddistance support to personal customers of insurance companies. We continue tooffer distance support to corporate clients through Fairplace Direct. Following the appointment of Michael Moran as Chief Executive in July 2004,Fairplace has undertaken a comprehensive re-branding which has been wellreceived by clients. Marketing expenditure has been increased substantially inorder to build awareness of our wider range of services, deepening relationshipswith retained clients and attracting new ones. We have created a strong teamwith expertise in coaching and other talent management services. At the same we have continued to take action to limit fixed costs, includingstaff costs. We have recently succeeded in reducing our City office spacewithout compromising quality of client service. Our goals for 2006 are: to increase revenues substantially; to generate 25% ofour revenues from talent management services; and to achieve a furtherimprovement in operating performance. We also aim to encourage greater share ownership by the directors, employees andassociate consultants who will be central to our 2006 goals and longer termgrowth plans. As described more fully below, we will be seeking shareholders'approval at the 2005 Annual General Meeting to issue up to 550,000 new ordinaryshares to this key group for cash at the market price prevailing at the date ofissue. Results For The Twelve Months to 30 June 2005 Group turnover increased by 12.9% to £5.37 million (2004: £4.76 million). Theoperating loss before goodwill was reduced from £830,077 to £212,547. These results include Working Transitions which was sold on 30 June 2005. Thedisposal resulted in a loss on sale of investment of £799,196, which wasprincipally a non-cash charge relating to the write-off of goodwill. The Group loss before tax was £1,237,885 (2004: £893,442). No dividend isproposed for the year (2004: 2.1 pence per share). Operating Review UK The UK operating performance and prospects for development of our talentmanagement and career management services are described more fully in the ChiefExecutive's Statement. Information on these services and on current events atFairplace are available on our website which reflects the new corporate branding(www.fairplace.com). International Progress in developing Fairplace Italy has been slower than expected and theoperating performance has been below target. In order to build business levelsin 2006 we have increased marketing resources and are expanding the range ofservices to include executive coaching. In view of the rate of progress to date, we have reviewed the carrying value ofour investment in Fairplace Italy and made an impairment provision of £112,106.This amount is included in the total goodwill charge for 2005 of £245,066. Wehave also decided to accelerate the amortisation of goodwill relating toFairplace Italy in future years. Since January 2004 our international coverage has mainly been developed throughmembership of Career Partners International LLP. CPI has grown into one of theworld's four largest career transition providers (www.cpiworld.com) and now alsooffers talent management services. People The Board recognises and thanks all the members of the Fairplace team for theircommitment and contribution to the Company's improved operating performance in2005. Proposed Issue of New Ordinary Shares to Directors, Employees and AssociateConsultants We believe that it would be in the Company's best interest to encourage greatershare ownership by the people who will be fundamental to our strategy and growthplans. We therefore propose to seek shareholders' approval at the 2005 AnnualGeneral Meeting for the authority to issue up to 550,000 new ordinary shares,equivalent to approximately 10% of the Company's current issued share capital,for cash at the market price prevailing at the date of issue. In the event that such approval is given at the Annual General Meeting, certainof the directors have indicated that in principle they would wish to subscribefor new ordinary shares. Employees and associate consultants will shortly beinvited to indicate whether they would also wish to subscribe. Funds raised will be used for working capital purposes. Annual General Meeting This year's Annual General Meeting will be held at 11.00 am on 24 November 2005. Current Trading and Outlook First quarter trading has been in line with plan.While conditions in the UK outplacement market are not expected to improve thisyear, we are set on achieving a modest growth in outplacement revenues throughan increase in market share from the current level of approximately 5%. The UK market for talent management services is significant but there are fewlarge-scale providers. We believe we can build on the foundations laidsuccessfully in 2005 and exploit the opportunities available in this market. Mark AllsupChairman10 October 2005 Chief Executive's statement In my first statement last year, I announced I was addressing the challengesfaced by the business. At the end of the first twelve months I am pleased toreport that, whilst the results very much reflect the size of the task we faced,operating losses before goodwill have been reduced from £830,077 to £212,547. Clearly there is still much hard work to be done but much has already beenachieved. There has been a significant investment in building the business, asreflected by the growth in the total expense line from £5.4 million to £5.6million. We viewed this investment as critical for the long-term health of thebusiness. In line with our strategy it has been necessary to create and marketnew services in talent management. We decided to build a new technology platformfor the business, providing on-line access to corporate clients, as well ason-line access to the Client Relationship Management database for businessdevelopers. We have invested heavily in business development and in the skillsset of our associate base. This investment resulted in the business returning to profitable trading in thesecond half of 2005, with encouraging growth in sales of non-outplacementservices. We sold new services to existing outplacement clients and won newclients which had not previously bought outplacement services. At a time whenthe outplacement market remains problematic we have increased our market share,delivering sizeable outplacement projects for a number of leading financialinstitutions. For the first time we generated a substantial amount of businesswithin the public sector, working with local authorities and governmentagencies. We are increasingly selling change management services as part of ouroutplacement provision and undertook a major redeployment exercise for a leadingtelecoms client. However, we are aware that the world's largest outplacement providers aremarketing low cost global contracts. The practice of discounting prices willresult in outplacement becoming a commodity product, which we do not believe isin the client's best interests. Fairplace helps people to make a successfulcareer transition by using one-to-one coaching and has no intention of becominga low cost commodity provider. I am delighted to say that there are employerswho recognise their social obligations, seek to maintain their employee brandand look to their providers to provide professional, high quality support totheir most important asset - their people. This is not simply the rhetoric ofthe Chief Executives for their Annual Reports. Such employers understandsustained profitability and shareholder value comes from investing in theirpeople. That is the profile of the Fairplace client. The challenge now for our business is to grow revenues significantly. We believewe can continue to increase our market share in outplacement, but perhaps morevitally, we are confident that we can grow our talent management revenuesconsiderably, given the size and potential of this market. We are aiming togenerate 25% of our total revenues from talent management services in 2006,rising to 50% of total revenues within five years. These services revolve around helping organisations to define their talentmanagement strategy and to identify, attract and retain talent. Services includedesign and delivery of assessment centres and competency frameworks; engagementsurveys; career management programmes; leadership development initiatives; andteam facilitation. This balance between talent management and outplacement revenues will create amore robust business model, less susceptible to market cycles, yet exploitingthe opportunities presented by the "war for talent". In the last twelve months we have made a significant investment in our peopleand our infrastructure. Consequently we are ideally positioned to exploit theopportunities our markets now present. Michael MoranChief Executive10 October 2005 Group profit and loss accountfor the year ended 30 June 2005 2005 2004 £ £Turnover: Continuing operations 4,844,318 4,097,108 Discontinued operations 528,750 661,275 5,373,068 4,758,383 Administrative expenses: Continuing operations (5,095,923) (4,811,334) Discontinued operations (489,692) (586,806) (5,585,615) (5,398,140) Operating (loss) before exceptional items and goodwill:Continuing operations (251,605) (714,226)Discontinued operations 39,058 74,469 (212,547) (639,757) Exceptional items - continuing operations - (190,320) Operating (loss) before goodwill:Continuing operations (251,605) (904,546)Discontinued operations 39,058 74,469 (212,547) (830,077) Goodwill:Continuing operations (190,896) (67,084)Discontinued operations (54,170) (65,004) (245,066) (132,088) Operating (loss):Continuing operations (442,501) (971,630)Discontinued operations (15,112) 9,465 (457,613) (962,165) (Loss)/gain on sale of investment (779,196) 97,316Provision against investment - (41,335)Interest receivable 7,113 13,453Interest payable (8,189) (711) (Loss) on ordinary activities before taxation (1,237,885) (893,442) Taxation 41,579 119,069 (Loss) for the year (1,196,306) (774,373) Dividends - (115,504) Retained (loss) for the year (1,196,306) (889,877) Earnings per share (21.75)p (14,08)pEarnings per share before goodwill (17.29)p (11.68)pFully diluted earnings per share (21.75)p (14.08)p There 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 2005 2005 2004 £ £Fixed assets:Intangible assets 986,109 2,092,492Tangible assets 404,316 597,346 1,390,425 2,689,838 Current assets:Stock and work in progress 18,235 32,322Debtors 2,177,844 1,087,664Cash at bank and in hand - 376,510 2,196,079 1,496,496 Creditors: amounts falling due within one year (1,816,650) (1,188,764) Net current assets 379,429 307,732 Total assets less current liabilities 1,769,854 2,997,570 Provision for liabilities and charges: Deferred taxation - (31,410) Net assets 1,769,854 2,966,160 Capital and reserves: Called up share capital 825,026 825,026Share premium 2,079,842 2,079,842Profit and loss account (1,135,014) 61,292 Equity shareholders' funds 1,769,854 2,966,160 M D MoranC B HansonDirectors10 October 2005 Company balance sheetas at 30 June 2005 2005 2004 £ £Fixed assets:Tangible assets 400,899 593,859Investments 1,500,907 2,840,854 1,901,806 3,434,713 Current assets:Stock and work in progress 18,235 32,322Debtors 2,055,999 964,751Cash at bank and in hand - 383,341 2,074,234 1,380,414 Creditors: amounts falling due within one year (1,657,987) (1,016,036) Net current assets 416,247 364,378 Total assets less current liabilities 2,318,053 3,799,091 Provision for liabilities and charges: Deferred taxation - (31,410) Net assets 2,318,053 3,767,681 Capital and reserves: Called up share capital 825,026 825,026Share premium 2,079,842 2,079,842 Profit and loss account (586,815) 862,813 Equity shareholders' funds 2,318,053 3,767,681 M D MoranC B HansonDirectors10 October 2005 Group statement of cash flowfor the year ended 30 June 2005 2005 2004 £ £Cash flow from operating activities (759,422) (102,431) Returns on investments and servicing of finance: Interest received 7,113 13,453Other interest paid (8,189) (711) (1,076) 12,742 Corporation tax refunded/(paid) 46,741 (69,843) Capital expenditure and financial investment Purchase of tangible fixed assets (17,068) (350,713)Sale of tangible fixed assets 27,732 - 10,664 (350,713) Acquisitions and disposals Purchase of subsidiary undertaking - (19,269)Proceeds from sale of investment 82,121 227,631 82,121 208,362 Equity dividends paid - (276,794) (Decrease) in cash in the year (620,972) (578,677) Notes: 1. The financial information set out above does not comprise the Company's statutory accounts. Statutory accounts for the previous financialyear ended 30 June 2004 have been delivered to the Registrar of Companies. TheAuditors' report on those accounts was unqualified and did not contain anystatement under Section 237 (2) or (3) of the Companies Act 1985. The Auditorshave given an unqualified opinion on the Accounts for the year ended 30 June2005, which will be delivered to the Registrar of Companies following the AnnualGeneral Meeting. 2. The Directors do not propose a final dividend. The totalfor the year is therefore nil pence per share (2004: 2.1 pence per share). 3. Earnings per share: The calculation of earning per share is based on the loss after taxation of£1,196,306 (2004: £774,373) and on the weighted average number of shares inissue during the year of 5,500,170 (2004: 5,500,170). The calculation of earnings per share before goodwill is based on the loss aftertaxation but ignoring goodwill, giving £951,240 (2004: £642,285) and on theweighted average number of shares in issue during the year of 5,500,170 (2004:5,500,170). The fully diluted earnings per share is based on the loss after taxation of£1,196,306 (2004: loss £774,373) and on the weighted average number of shares,assuming that all share options were exercised at the beginning of the year, inissue during the year of 5,500,170 (2004: 5,500,170). 4. The Company's accounting policies remain as stated in the Annual Report for the year ended 30 June 2004. 5.On 30 June 2005 the Company sold all the business and assets of the distance-based division to Working Transitions 2005 Ltd. Loss on Sale of Investment £ Book value of investment 861,317Net proceeds from sale 82,121Loss on sale of investment 779,186 Copies of the 2005 Report and Accounts will be available from the registeredoffice of Fairplace Consulting plc, 36-38 Cornhill, London EC3V 3PQ. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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