16th Dec 2015 07:00
16 December 2015
WORK GROUP PLC
(the "Company" or the "Group")
Interim Results for the six months ended 30 June 2015
Work Group plc (LSE - AIM: "WORK") announces its interim results for the six months ended 30 June 2015.
Headlines
· Group unaudited operating loss £648k (2014: loss £132k)
· Good performances from our US and Hong Kong operations supported by UK
· Tight working capital controls limit cash outflow
· Disposal of trading business as announced on 11 December 2015
· Company reclassification as Rule 15 investing company on receipt of shareholder approval as announced on 11 December 2015
· Following the publication of the Company's interim results, trading of the ordinary shares of Work Group plc is expected to recommence at 7:30 a.m. today.
Six months ended | Six months ended | Year ended | |
30-Jun-15 | 30-Jun-14 | 31-Dec-14 | |
£m | £m | £m | |
Revenue | 3.4 | 4.0 | 7.6 |
Gross profit (net fee income) | 2.0 | 2.4 | 4.3 |
Operating loss before exceptional items | (0.6) | (0.1) | (1.2) |
Operating loss after exceptional items | (0.6) | (0.1) | (3.4) |
Loss after tax | (0.7) | (0.1) | (3.6) |
Basic losses per share including EBT shares | (2.30) | (0.37) | (12.41) |
Diluted losses per share-adjusted* | (2.63) | (0.43) | (5.16) |
Further enquiries:
Work Group Simon Howard, Executive Chairman Rose Colledge, Group Managing Director | Tel: +44 (0)20 7492 0000 |
Sanlam Securities UK Limited Simon Clements James Thomas | Tel: +44 (0)20 7628 2200 |
Chairman's Statement
The first six months of 2015 continued the trend seen in 2014 with good performances from the overseas businesses, while the UK teams continued to operate in a challenging market.
We have been able to leverage the experience of our UK based strategic and creative teams to help overseas offices both win new business and deliver innovative solutions. This has vindicated the substantial investment we have made in recent years in opening and growing our overseas offices.
Our continuing losses necessitated tight working capital management with cash outflow in the period limited to £177,000.
The Circular to shareholders published on 11 December 2015 detailed the disposals of the trading operations, and the calling of a General Meeting on 29 December 2015.
On approval of the resolutions at that meeting, the Company will become an investing company in accordance with Rule 15 of AIM.
Simon Howard
16 December 2015
Consolidated income statement
for the six month period ended 30 June 2015
| Six months ended | Year ended | ||
30-Jun-15 | 30-Jun-14 | 31-Dec-14 | |
£'000 | £'000 | £'000 | |
Revenue | 3,441 | 4,016 | 7,575 |
Cost of sales | (1,412) | (1,628) | (3,278) |
Gross profit (net fee income) | 2,029 | 2,388 | 4,297 |
Net operating expenses | (2,677) | (2,520) | (7,742) |
Operating (loss) | (648) | (132) | (3,445) |
Analysed as: | |||
Operating loss before exceptional items | (648) | (396) | (1,184) |
Exceptional items | - | 264 | (2,261) |
Finance income | - | - | - |
Finance costs | (11) | - | (4) |
Loss before taxation | (659) | (132) | (3,449) |
Income tax expense | - | 26 | (103) |
Loss from the year attributable to owners of the company | (659) | (106) | (3,552) |
Basic losses per share (pence) | (2.30) | (0.37) | (12.41) |
Diluted losses per share (pence) | (2.63) | (0.43) | (5.16) |
Consolidated statement of comprehensive income
for the six month period ended 30 June 2015
30-Jun-15 | 30-Jun-14 | 31-Dec-14 | ||
£'000 | £'000 | £'000 | ||
Loss for the period | (659) | (106) | (3,552) | |
Other comprehensive income | ||||
Currency translation differences | (4) | (19) | 17 | |
Total comprehensive loss for the period | (664) | (125) | (3,535) | |
Consolidated balance sheet
as at 30 June 2015
30-Jun-15 | 30-Jun-14 | 31-Dec-14 | ||
Unaudited | Unaudited | Audited | ||
£'000 | £'000 | £'000 | ||
Assets | ||||
Non-current assets | ||||
Property, plant and equipment | 89 | 533 | 134 | |
Intangible assets | 89 | 2,145 | 100 | |
Deferred tax asset | 21 | 47 | 21 | |
199 | 2,725 | 255 | ||
Current assets | ||||
Inventories | (313) | 38 | 108 | |
Trade and other receivables | 1,485 | 1,735 | 1,640 | |
Cash and cash equivalents | (36) | 505 | 140 | |
Current tax asset | - | 103 | - | |
1,136 | 2,381 | 1,888 | ||
Liabilities | ||||
Current liabilities | ||||
Trade and other payables | (1,432) | (1,311) | (1,863) | |
Current tax liabilities | (309) | (106) | - | |
(1,741) | (1,417) | (1,863) | ||
Net current assets/(liabilities) | (605) | 964 | 25 | |
Net assets/(liabilities) | (406) | 3,689 | 280 | |
Shareholders' equity | ||||
Ordinary share capital | 572 | 572 | 572 | |
Share premium | 8,239 | 8,240 | 8,240 | |
Special reserve | 2,826 | 2,826 | 2,826 | |
Shares held by EBT | (334) | (312) | (312) | |
Foreign exchange reserves | 53 | 21 | 57 | |
Retained earnings/(losses) | (11,762) | (7,658) | (11,103) | |
Total equity | (406) | 3,689 | 280 |
Consolidated cash flow statement
for the six month period ended 30 June 2015
Six months ended | Year ended | ||
30-Jun-15 | 30-Jun-14 | 31-Dec-14 | |
Unaudited | Audited | ||
£'000 | £'000 | £'000 | |
Cash flows from operating activities | |||
Cash used in operations | (157) | (561) | (1,075) |
Interest paid | (11) | - | (4) |
Tax received/(paid) | - | - | - |
Net cash used in operating activities | (168) | (561) | (1,079) |
Cash flows from investing activities | |||
Purchase of property, plant and equipment | (9) | (212) | (59) |
Net cash generated from / (used in) investing activities | (9) | (212) | (59) |
Net increase / (decrease) in cash and cash equivalents in the period/year | (177) | (773) | (1,138) |
Cash and cash equivalents at start of period/year | 140 | 1,278 | 1,278 |
Cash and cash equivalents at end of period/year | (36) | 505 | 140 |
Notes to the interim financial information
for the six month period ended 30 June 2015
1 Financial information and presentation
The Company is a limited liability company incorporated and domiciled in the United Kingdom. The address of its registered office is Marble Arch Tower, 55 Bryanston Street, London, W1H 7AA.
The Company has its primary listing on AIM, a market operated by the London Stock Exchange.
This condensed consolidated Interim Report does not comprise statutory accounts within the meaning of section 435 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2014 were approved by the Board of Directors on 10 December 2015 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did contain an emphasis of matter paragraph as detailed below and did not contain any statement under section 498 of the Companies Act 2006.
Emphasis of matter - Going Concern
In forming their opinion on the financial statements, which was not modified, the auditors have considered the adequacy of the disclosures made in note 1 to the 2014 financial statements concerning the group's ability to continue as a going concern. As set out in Note 1 to the 2014 financials statement, contracts have been exchanged for the sale of the company's two overseas subsidiaries and of the business of its UK subsidiary to a third party. However, the contracts are conditional (inter-alia) upon the approval of the Company's shareholders in a General meeting to be held on 29 December 2015.
If this approval is not received or other conditions to completion are not fulfilled, preventing the sale contracts, then the going concern basis of preparation may not be appropriate. These conditions indicate the existence of material uncertainties which may cast significant doubt over the group's and Company's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the group and Company was unable to continue as a going concern.
2 Principal accounting policies
Basis of preparation
This condensed consolidated financial information is for the half-year ended 30 June 2015 and has been prepared in accordance with AIM Rules and accounting policies set out in the Group's 2014 Annual Report as amended for new standards effective during the period where relevant. These accounting policies are based on the EU-adopted IFRS and IFRIC interpretations that are applicable at the balance sheet date. IFRS and IFRIC interpretations that will are applicable at 31 December 2015, including those that will be applicable on an optional basis have not been applied. It is therefore possible that further changes maybe required before publication of the 2015 annual report and accounts.
Exceptional items
Exceptional items are those income or costs recognised as one-off or non-recurring in nature, and substantive in size. There are no exceptional items for the six-month period ended 30 June 2015.
Seasonality of operations
Due to the seasonal nature of the recruitment segment, higher revenues and operating profits are usually expected in the second half of the year than in the first six months.
3 Taxation
The deferred tax asset for the six month period ended 30 June 2015 is based on the estimated expected effective tax rate of 21.49 per cent. (2014 actual rate: 20 per cent.). No taxation has been provided on profits of overseas subsidiaries because of prior year losses brought forward.
4 Earnings per share
Six month period ended | Year ended | ||||||||
30-Jun-15 | 30-Jun-14 | 31-Dec-14 | |||||||
Unaudited | Unaudited | Audited | |||||||
Losses | Weighted average number | Per share amount | Losses | Weighted average number | Per share amount | Losses | Weighted average | Per share amount | |
of shares | of shares | of shares | |||||||
£'000 | '000 | pence | £'000 | '000 | pence | £'000 | '000 | pence | |
Adjusted basic losses per share including shares held by EBT | (659) | 28,622 | (2.30) | (106) | 28,622 | (0.37) | (1,291) | 28,622 | (4.51) |
Less weighted average treasury shares | - | - | - | - | (658) | (0.01) | - | - | - |
Less weighted average shares held by EBT | - | (3,595) | (0.33) | - | (3,595) | (0.05) | - | (3,594) | (0.65) |
Adjusted basic losses per share excluding treasury and shares held by EBT | (659) | 25,028 | (2.63) | (106) | 24,369 | (0.43) | (1,291) | 25,028 | (5.16) |
Effect of dilutive share options | - | - | - | - | - | - | - | - | - |
Adjusted diluted losses per share excluding shares held by EBT | (659) | 25,028 | (2.63) | (106) | 25,188 | (0.43) | (1,291) | 25,028 | (5.16) |
As there are basic losses per share the effect of share options is anti-dilutive, consequently diluted losses per share equates to the basic losses per share.
5 Reconciliation of operating loss to cash used in operations
Six month period ended | Year ended | ||
30-Jun-15 | 30-Jun-14 | 31-Dec-14 | |
Unaudited | Unaudited | Audited | |
£'000 | £'000 | £'000 | |
Loss attributable to shareholders | (659) | (106) | (3,552) |
Foreign exchange loss on Intercompany recharges | 1 | - | - |
Adjustments: | |||
Taxation | (1) | (26) | 103 |
Finance income | (0) | - | - |
Finance costs | 11 | - | 4 |
Depreciation of plant property and equipment/write off of assets | 65 | 45 | 194 |
Amortisation of intangible assets | - | - | 8 |
Proceeds from disposal of business unit | - | 174 | - |
Treasury shares movement | (21) | - | - |
(Increase)/decrease in inventories | 420 | 32 | (40) |
Decrease/(increase) in trade and other receivables | 132 | 63 | 400 |
(Decrease) in trade and other payables | (106) | (743) | (336) |
Impairment of goodwill | - | - | 2,144 |
Cash used in operations | (157) | (561) | (1,075) |
6 Post balance sheet events
As detailed above, on 10 December 2015, the Company exchanged contracts for the sale of its business in the UK and its subsidiaries in Hong Kong and USA. These disposals are conditional, inter-alia, on the approval of the Company's shareholders at the General meeting to be held on 29 December 2015.
Attention is drawn to note 1 Going Concern in the Company's 2014 annual accounts and the considerable financial uncertainty in the event such approval was not received consequently that the sales did not complete.
Statement of directors' responsibilities
The directors confirm that this Interim Report has been prepared in accordance with AIM rules and accounting policies set out in the Group's 2014 annual report as amended for new standards effective during the period.
The directors are also responsible for the maintenance and integrity of the Company website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
The directors of Work Group plc are listed in the Work Group plc Annual Report for 31 December 2014. A list of current directors is maintained on the Work Group plc website: www.workgroup.plc.uk.
7 Copies of Interim Results
The Interim Results will be posted on the Company's web site http://www.workgroup.plc.uk and copies will be made available from the Company's registered office at Marble Arch Tower, 55 Bryanston Street, London W1H 7AA.
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