7th Jun 2007 07:00
Penna Consulting PLC07 June 2007 PENNA CONSULTING PLC ANNOUNCES FULL YEAR RESULTS 7 June 2007 Penna Consulting Plc (PNA) the Human Capital Management Consultancy group todayannounces its final results for the year ended 31 March 2007. Headlines • Recovery in profit in second half • Net revenues* up 11.5% in second half • Operating costs reduced by £2.8m on annualised basis • Profit of £1.0m before redundancy costs of £0.4m • Profit before tax £0.6m • Net cash of £1.5m at year end (2006: net debt £4.4m) \* Turnover less pass through costs Commenting on the results, Stephen Rowlinson, Chairman said: "The Group has returned to profit in the second half of the year through acombination of the cost reduction programme initiated last summer and a modestincrease in revenues. The Group is well placed to take advantage of anyimprovement in the outplacement market and our other businesses are expected tocontinue their growth." For further information please contact: Stephen Rowlinson, Chairman 0771 00 23699Gary Browning, Chief Executive 020 7648 2448David Firth, Finance Director 020 7648 2423 Penna Consulting Plc Chairman's Review The Group has returned to profit in the second half of the year through acombination of the cost reduction programme initiated last summer and a modestincrease in revenues. The Group is well placed to take advantage of anyimprovement in the outplacement market and our other businesses are expected tocontinue their growth. Financial Review First Half & Second Half Analysis Six months to 30 Six months to 31 March Year to 31 March September 2006 2007 2007 £'000 £'000 £'000Net Revenues * 14,650 16,338 30,988Net costs of operations + (15,648) (14,327) (29,975)(Loss)/profit before redundancy costs (998) 2,011 1,013Redundancy costs - (441) (441)(Loss)/ profit before tax (998) 1,570 572 \* Turnover less pass through costs +Operating costs and finance costs less pass through costs and redundancy costs Turnover in the year at £43.4m was at a similar level to last year (2006 £44.6m)however underlying net revenues (turnover net of pass through costs) reduced by4.8% from £32.6m to £31.0m. Net revenues in the second half of the year grew by11.5% over the first half. The benefit of the cost reduction actions taken last summer were fully realisedin the second half of the year and consequently net costs of operations were£1.3m lower than in the first half. As a result we are pleased to report asignificantly improved second half profit of £2.0m (before redundancy costs)compared to a first half loss of £1.0m. Profit before tax for the year as a whole amounted to £1.0m before redundancyrelated costs of £0.4m. In October the Company moved from the Full List to AIM. The AIM market is moreappropriate to an organisation of Penna's size and nature and we have seen thebenefits in terms of costs and regulatory regime. At the same time the Companycompleted a placing of 5.7m ordinary shares at 70 pence and this, together withimproved working capital management meant that the Group had net cash of £1.5mat 31 March 2007. (2006 net debt of £4.4m). Net revenues by service line 2007 2006 £'000 £'000Career Transition 16,313 19,224Executive Recruitment 5,005 5,590Executive Interim 2,454 3,140Recruitment Communications 667 212Leadership Development 2,839 2,309HR Consulting 4,008 2,273Intercompany sales (298) (190)Total net revenues 30,988 32,558Total turnover 43,379 44,602 Operational review Career Transition continues to operate in a quiet market as the UK economyremains strong and net revenues were down 15.1% on the previous year. A changein the leadership of this division, refocusing of the sales teams and theintroduction of new services meant that the second half was stronger than thefirst and in particular the fourth quarter saw a series of new large contractswon from the competition. The benefits of these contracts in revenue terms willbe realised in the new financial year. We believe we are well placed to takeadvantage of any upturn in the market in the current year. Net revenue of our Executive Recruitment business was down 10.5%. Action hasbeen taken to improve the performance of this business in the UK with therecruitment of new senior consultants. Executive Interim revenues improved through the year and second half netrevenues were up by 26.8% compared to the first half. We expect this businessto grow further from this strong base. We continue to invest in our Recruitment Communications business which incurreda small operating loss of £0.4m. Recent wins in both the public and commercialsectors are bringing us closer to the point at which this new business willcontribute to group profits. The first half trend of strong revenue growth in our HR Consulting andLeadership Development businesses continued throughout the second half. Combinedrevenues of £6.8m for the year are up 49.4% compared to £4.6m in the previousyear. We completed a substantial assessment assignment in India during the yearand this has created opportunities for us there which we are currentlyevaluating. Demand for Leadership Development remains strong and during theyear we launched a new service in managed coaching to support largerorganisations seeking to maximise their return on investments in coaching. Our International businesses in Europe (with offices in Dublin, Paris, Stockholmand Madrid) performed well increasing their net revenues by 30.5% in the year. Outlook The year saw us consolidate our position and results after the significantrestructuring of the previous year. We have established an appropriate andflexible cost structure and we are now looking forward to profitable growth ineach of our core businesses. Stephen RowlinsonChairman 7 June 2007 Penna Consulting PlcConsolidated income statementfor the year ended 31 March 2007 (unaudited) Year Year Ended Ended Notes 31 March 31 March 2007 2006 £'000 £'000 Turnover 43,379 44,602 Operating costs (42,823) (43,177) Decrease in surplus property provision 176 960 Operating profit 732 2,385 Finance costs (160) (288) Profit on disposal of fixed assetinvestment - 308Share of profit from associate - 183 Profit before tax 572 2,588 Tax 2 - (442) Profit for the year 572 2,146 Attributable to: Equity holders of the parent 572 2,146 Earnings per share: 3 - basic 2.58p 11.2p- diluted 2.58p 11.1p Penna Consulting PlcConsolidated balance sheetat 31 March 2007 (unaudited) Note 31 March 2007 31 March 2006 £'000 £'000Non-current assets Property, plant and equipment 1,972 2,270 Goodwill 14,036 14,036 Other intangible assets - software 50 75 16,058 16,381 Current assets Trade receivables 9,981 11,173Other current assets 1,880 2,432Deferred tax 77 35Cash and cash equivalents 5b 3,218 2,117 15,156 15,757 Total assets 31,214 32,138 Current liabilities Trade payables 2,667 2,824Bank loans and overdrafts 1,200 4,386Loan notes 431 2,462 Obligations under finance lease 94 84Provisions 125 210Corporation tax 8 -Other creditors and accruals 7,964 7,691 12,489 17,657 Non-current liabilities Bank loan 300 -Obligations under finance leases 88 183Provisions 272 263Other creditors and accruals 116 182 776 628 Total liabilities 13,265 18,285 Net assets 17,949 13,853 Capital and reserves Called up share capital 1,264 978Share premium account 15,109 11,899Merger reserve 10,170 10,170Employee Share Option Plan reserve (397) (397)Share option reserve 276 272Foreign currency translation reserve 66 42Retained loss (8,539) (9,111) Total equity 17,949 13,853 Penna Consulting PlcConsolidated statement of changes in equityat 31 March 2007 (unaudited) Called up Share Merger ESOP Share Foreign Retained Total share premium reserve reserve option currency loss equity capital reserve translation £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 1 April 2005 961 11,701 10,170 (397) 212 40 (10,715) 11,972 Impact of IAS 39/32 - - - - - - (542) (542) adoption Share issue 17 198 - - - - - 215 Currency translation - - - - - 2 - 2 differences Profit - - - - - - 2,146 2,146 Share option charge - - - - 60 - - 60 At 31 March 2006 978 11,899 10,170 (397) 272 42 (9,111) 13,853 At 1 April 2006 978 11,899 10,170 (397) 272 42 (9,111) 13,853 Share issue 286 3,210 - - - - - 3,496 Currency translation - - - - - 24 - 24 differences Profit - - - - - - 572 572 Share option charge - - - - 4 - - 4 Equity dividends - - - - - - - - At 31 March 2007 1,264 15,109 10,170 (397) 276 66 (8,539) 17,949 Penna Consulting PlcConsolidated group cash flow statementfor the year ended 31 March 2007 (unaudited) Year Year Ended Ended 31 March 31 March 2007 2006 Note £'000 £'000 Cash flows from operating activities Cash generated/(used) by operations 5a 2,238 (2,388)Tax refunded 45 428Interest paid - bank overdraft (160) (241) Net cash generated/(used) by operating activities 2,123 (2,201) Cash flows from investing activities Net purchase of property, plant and equipment (266) (1,356)Sale of investment 750 2,250 Net cash generated by investing activities 484 894 Cash flows from financing activities Interest paid - finance leases - (35)Repayment of finance leases (85) (75)Repayment of loan notes (2,031) (342)Issue of ordinary share capital 3,496 210New bank loan received 2,250 -Bank loan repaid (750) - Net cash from/(used in) financing activities 2,880 (242) Net increase/(decrease) in cash and cash equivalents 5,487 (1,549) Cash and cash equivalents at start of period (2,269) (720) Cash and cash equivalents at end of period 5b 3,218 (2,269) Penna Consulting PlcNotes to the preliminary announcementfor the year ended 31 March 2007 (unaudited) 1. Accounting policies The unaudited preliminary consolidated financial statements are for the year ended 31 March 2007. They havebeen prepared under the historical cost convention, except for certain financial instruments, usingaccounting polices that are consistent with current International Financial Reporting Standards (IFRS). Thefinancial statements are unaudited. 2. Taxation Taxation has been provided for at 30% (2006:30%), for the UK and appropriate rates for overseas earnings. Notax charge arose during the year due to the utilisation of brought forward losses. 3. Earnings per share The calculation of basic and diluted earnings per share are based on the following amounts: Year ended Year ended 31 March 31 March 2007 2006EarningsProfit for the year (£'000) 572 2,146 Number of shares Weighted average number of 22,151,821 19,198,919 SharesDilution effect of share option 0 346,464 SchemesDiluted weighted average number 22,151,821 19,545,383 Of Shares Earnings/(loss) per share: Basic 2.58p 11.2p Diluted 2.58p 11.1p 4. Dividends No dividend was proposed (2006: nil) for the year ended 31 March 2007. Penna Consulting PlcNotes to the preliminary announcement (continued)for the year ended 31 March 2007 (unaudited) Year Year Ended Ended5a. Reconciliation of operating profit/(loss) to cash 31 March 31 March(used)/generated by operating activities 2007 2006 £'000 £'000 Operating profit 732 2,385Adjustments for:Depreciation 509 558Loss on disposal of fixed assets 80 - Share option expense 4 60 Changes in working capital:Decrease/(Increase) in trade and other receivables 995 (826)Increase/(Decrease) in trade and other payables 94 (3,605) Surplus property provision reversed (176) (960) Cash generated/(used) by operations 2,238 (2,388) At 31 March 2007 At 31 March £'000 20065b. Cash and cash equivalents £'000Cash and cash equivalents are made up as follows:Cash at bank/(Bank overdraft) 3,019 (4,386)Cash on restricted deposit 199 2,117 Cash and cash equivalents 3,218 (2,269) Penna Consulting PlcNotes to the preliminary announcement (continued)for the year ended 31 March 2007 (unaudited) 6. Nature of the financial information The Board of Directors approved the Preliminary Results on 7 June 2007. The financial information set out in this document does not constitute statutory accounts within the meaning of Section240 of the Companies Act 1985. The financial information in respect of the year to 31 March 2007 is unaudited. Statutoryaccounts for the year ended 31 March 2006, on which the auditor's report was unqualified and did not contain a statementunder s237(2) or (3) of the Companies Act 1985, have been delivered to the Registrar of Companies. Copies can beobtained from our Registered Office at 3rd Floor, St Mary's Court, 20 St Mary at Hill, London EC3R 8EE. The financial information included in this preliminary announcement has been computed in accordance with InternationalFinancial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply withIFRSs. The Company expects to publish full financial statements that comply with IFRSs in July 2007. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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