29th Jun 2007 07:02
Berkeley Scott Group Plc29 June 2007 BERKELEY SCOTT GROUP PLC INTERIM RESULTS FOR THE 6 MONTHS ENDED 31 MARCH 2007 NEW BEGINNING AT BERKELEY SCOTT UNDERWAY Berkeley Scott Group Plc ("the Group" or "the Company" or "Berkeley Scott"), amarket-leading provider of human resource services to the hospitality andleisure sectors, announces its interim results for the six months ended 31 March2007. Financial Highlights • Revenue unchanged at £8.780m (2006: £8.765m)• Net fee income marginally lower at £4.347m (2006: £4.464m)• Exceptional restructuring charges of £0.659m• Loss before taxation £1.508m (2006: £0.626m loss)• Basic loss per share 11.3p (2006: 7.4p loss)• Basic loss per share (adjusted for exceptional items and amortisation of goodwill) improved slightly to 5.6p (2006: 5.8p loss)• Net borrowing down substantially to £0.973m (2006: £2.971m) Operational Highlights • Investment of £2.5m in the business by Tony Reeves and John Bowmer through the subscription of new shares to become the two largest shareholders in the Group• John Rose appointed CEO in May, joined from Hudson UK / Ireland where he was CEO• Period of significant and continuing restructuring of the management organisation and property assets including announcement of a move from the expensive Head Office in Godalming• Business now focussed on; permanent recruitment, temporary recruitment and executive search and selection. Solutions business sold• Ongoing far reaching review of costs identifying savings and priorities for future investment Commenting on the results Tony Reeves and John Bowmer, Co-Chairmen of BerkeleyScott said: "Berkeley Scott is a market leading brand name in the recruitment sector with aloyal customer base on which we are building the future of the company. Thenumbers we are reporting today reflect a troubled period in the history of theCompany that we believe is now at an end. There is some excellent talent withinthe firm whose potential can now be fully utilised as the company moves throughits restructuring and into a new chapter of development and growth. Since wecame on board five months ago we have made significant progress in implementingpositive changes that are beginning to unlock the potential of the firm that weenvisioned when we made our investment. We have secured an outstanding CEO in John Rose, who joined in May from HudsonUK and Ireland. Together we have begun taking out costs, completed some internalrestructuring and clarified Berkeley Scott's service divisions and managementstructure. We have identified a strategy to attack our most attractive markets,our priorities for investment in the business, and our consolidation strategy.There is a long way to go but we now have a company rapidly moving towards whatwe believe the market and our employees want and need. We remain committed toour plans to use Berkeley Scott as a vehicle for acquiring other premiumrecruitment brands in this fragmented sector as well as driving profitabilityand excellence through Berkeley Scott itself. This is an extremely exciting timefor us and everyone involved in the Company". Enquiries:Berkeley Scott Group PlcAnthony Reeves, Co Chairman 01483 414141John Rose, Chief Executive OfficerWill Coker, Chief Financial Officer Brunswick Group LLPJames Hogan / Helen Barnes / Charlotte Kenyon 020 7404 5959 CO CHAIRMAN'S STATEMENT Today we are reporting the interim results of the Berkeley Scott Group plc forthe 6 months ended 31st March 2007. The most significant event to report during the period was the subscription fornew shares in January which led to us investing £2.5m in the Company andbecoming the largest shareholders. Since then we have begun a review of thebusiness and its operations and with a new CEO in place, John Rose, we havealready made significant progress in implementing positive change for theCompany. John Rose joined from Hudson UK / Ireland where he was CEO and offersthe company an exceptional depth of expertise. Berkeley Scott is a market leading brand name in the recruitment sector andthere is some excellent talent within the firm whose potential can now be fullyutilised as the company moves through its restructuring and into a new chapterof development and growth. We are beginning to unlock the potential of the firmthat we envisioned when we made our investment. The recruitment sector is in astrong growth phase in the UK and it is a good time to be repositioning theCompany to benefit from this. The numbers we are reporting today reflect a troubled period in the history ofthe Company that we believe is now at an end. There is a similarity between theresults for the period this year as the same period the previous year, wheretemporary & ISIS have maintained their growth but permanent recruitment hasshown a small decline. Trading Results The total revenue of the business remained static at £8,780,000 (2006:£8,765,000), whilst net fee income fell by 2.6% to £4,347,000 (2006:£4,464,000). Administrative costs, excluding exceptional costs were similar at£5,078,000 (2006: £4,910,000). Exceptional costs of £659,000 arose due to termination costs and associatedrestructuring provisions following the equity subscription. The Company recorded a loss before taxation of £1,508,000 (2006: £626,000 loss),after charging goodwill amortisation of £93,000 (2006: £95,000) and exceptionalitems referred to above of £659,000. (2006: £40,000). Net borrowing (includinginvoice discounting) at the end of March was £973,000 (2006: £2,970,000) beinggearing of 35% (2006: 172%) The Board is not recommending the payment of a dividend. (2006: £Nil) Operations Review The Group operated four divisions: Permanent Recruitment, Temporary Recruitment,Executive Search and Solutions during the period. The service divisions are nowrefocused covering; permanent recruitment, and temporary recruitment andexecutive search and selection. The Solutions business has been sold althoughits results have been included as ongoing operations within this interimstatement. Permanent Recruitment - Net Fee Income £2,242,000 (2006: £2,521,000)The market in general remained buoyant, particularly in the Hotels sector butnevertheless the six months represented a disappointing half year for thePermanent division. Our strategy to boost the Permanent Recruitment business includes implementing asales culture with an associated remuneration structure that rewards highperformance. Reducing staff turnover is critical and boosting productivityoverall as well as focussing on developing a premium client base for ourbusiness. This is a priority area for development and investment for the Companyin the coming period. Temporary Recruitment - Net Fee Income £1,465,000 (2006: £1,371,000)The Temporary Division maintained a top line growth of 7% over the prior yearthrough improved productivity, maintaining its cost base in line with 2006.Installation of the new IT platform was substantially completed and has alreadyresulted in further efficiencies. Executive Search (branded ISIS) - Net Fee Income £310,000 (2006: £231,000)The Division built on the solid platform it generated in 2006. The teamsupplemented its existing Hospitality and Leisure sector offering with astrengthening presence in gaming and casinos. A specialist travel sectorconsultant was recruited towards the end of the half year, further expandingdelivery capability. Solutions - Net Fee Income £316,000 (2006:£332,000)This division has now been exited although its results have been included asongoing operations within this interim statement. Whilst it delivered a net feeincome for the period, it is not a core business for the future of BerkeleyScott. In addition to the above, the Company had other income of £14,000 (2006: £9,000) Staff We would like to thank our employees for their hard work and commitment inhelping to deliver these results. In recognising the importance of the team wehave prioritized the reorganisation of the remuneration structure and operatingenvironment to allow the Company to attract new talent and retain and sustainexisting employees. We are continuing to review our operations towards thisgoal. There is a lot of work to be done, however this is a very exciting timefor everyone involved with the Company. Outlook We are pleased to report that good progress is being made in reorganisingBerkeley Scott, towards setting new priorities for investment and marketing, andcreating an environment to attract and retain good quality talent. John Rose isnow on board as CEO and has the expertise to work with us to achieve our goalsfor the business and above all shares our passion for this industry which hewill instil throughout the Company. We are working hard to position BerkeleyScott for profitable growth in what is a very exciting time for the recruitmentindustry. At the same time we are pursuing our stated acquisition strategy of targetingniche, premium recruitment brands for acquisition. The UK recruitment marketremains extremely fragmented and we will be targeting the niche high valuesectors IT, finance and accounting and other professional disciplines, whichoffer the Berkeley Scott brand huge scope for growth and profitability in theshort term. We will look to raise as little equity as possible to fund ouracquisitions to sustain an efficient, manageable capital structure. There is alot of work underway in the near term but we look forward to reporting thepositive effects of the restructuring in the longer term. We're confident andambitious about the future of Berkeley Scott. Anthony Reeves John BowmerCo Chairman Co Chairman BERKELEY SCOTT GROUP PLCGROUP PROFIT AND LOSS ACCOUNT Unaudited Unaudited Audited 6 months 6 months year ended ended ended 31 Mar 07 31 Mar 06 30 Sept 06 (Restated) (Restated) Notes £'000 £'000 £'000 Turnover 8,780 8,765 17,977 Cost of Sales (4,433) (4,301) (8,390) --------- -------- --------- Gross Profit / Net Fee Income 4,347 4,464 9,587 Administrative expenses 4 (5,737) (4,950) (9,667) --------- -------- --------- Operating loss (1,390) (486) (80) Interest receivable 2 - 3 Interest payable (120) (140) (311) --------- -------- --------- Loss on ordinary activities beforetaxation (1,508) (626) (388) Tax credit on loss on ordinaryactivities 2 - - 1 --------- -------- --------- Loss on ordinary activities aftertaxation (1,508) (626) (387) Dividends Payable - - - --------- -------- --------- Loss on ordinary activitiestransferred to reserves (1,508) (626) (387) --------- -------- --------- --------- -------- --------- Loss per share in pence 3 (11.3) (7.4) (4.5)(Basic and Diluted) Adjusted loss per share 3 (5.6) (5.8) (1.5)(Basic and Diluted) All recognised gains and losses are included in the profit and loss account. Allamounts for the period ended 31 March 2007 relate to continuing activities BERKELEY SCOTT GROUP PLCGROUP BALANCE SHEET Unaudited Unaudited Audited 6 months 6 months year ended ended ended 31 Mar 07 31 Mar 06 30 Sept 06 Notes £'000 £'000 £'000 FIXED ASSETSIntangible Assets 2,240 2,423 2,332Tangible Assets 709 700 808 --------- -------- --------- 2,949 3,123 3,140 CURRENT ASSETSDebtors 5 3,070 3,070 3,343Cash at bank and in hand 3 3 3 --------- -------- --------- 3,073 3,073 3,346CURRENT LIABILITIESCreditors falling due within one year 6 (3,062) (4,191) (4,300) --------- -------- --------- NET CURRENT ASSETS/ (LIABILITIES) 11 (1,118) (954) --------- -------- --------- TOTAL ASSETS LESS CURRENT LIABILITIES 2,960 2,005 2,186 CREDITORS : amounts falling due afterone year 6 (167) (275) (217) --------- -------- --------- NET ASSETS 2,793 1,730 1,969 --------- -------- --------- CAPITAL AND RESERVESCalled up share capital 7 456 170 170Share Premium Account 7 5,549 3,572 3,572Capital redemption reserve 7 2 2 2Share Based Payment Reserve 7 69 - -Profit and Loss Account 7 (3,283) (2,014) (1,775) --------- -------- --------- EQUITY SHAREHOLDERS' FUNDS 2,793 1,730 1,969 --------- -------- --------- BERKELEY SCOTT GROUP PLCGROUP CASH FLOW STATEMENT Unaudited Unaudited Audited 6 months 6 months year ended ended ended 31 Mar 07 31 Mar 06 30 Sept 06 Notes £'000 £'000 £'000 Net cash (outflow) / inflow fromoperating activities 8 (1,420) (371) 330 Returns on investment andservicing of finance (119) (139) (308) Taxation - 42 1 Capital expenditure and financialinvestment (117) (97) (356) --------- -------- --------- Cash outflow before management ofliquid resources and financing (1,656) (565) (333) Cash inflow / (outflow) from 9 2,195 (79) (148)financing --------- -------- --------- Increase / (Decrease) in cash inperiod 539 (644) (481) --------- -------- --------- RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT Unaudited Unaudited Audited 6 months 6 months year ended ended ended 31 Mar 07 31 Mar 06 30 Sept 06 Notes £'000 £'000 £'000 Increase / (Decrease) in cash inperiod 539 (644) (481) Cash outflow from decrease in debtand lease financing 68 79 148 --------- -------- --------- Change in net debt resulting fromcash flows 607 (565) (333) --------- -------- --------- Movement in net debt in period 607 (565) (333) Net Debt at start of period (932) (599) (599) --------- -------- --------- Net Debt at end of period (325) (1,164) (932) --------- -------- --------- In addition, invoice discounting at 31 March 2007 amounted to £648k (31 March2006: £1,806k) BERKELEY SCOTT GROUP PLC Notes to the interim reportFor the 6 months ended 31 March 2007 1. Basis of PreparationThe financial information in this report for the 6 months ended 31 March 2007 isunaudited and represents the consolidated results of Berkeley Scott Group plcand its subsidiary undertakings. It has been prepared in a form consistent withthat which will be adopted in the financial statement company's annual accountshaving regard to the accounting standards applicable to those accounts. The financial information contained in this interim report does not constitutestatutory accounts as defined by Section 240 of the Companies Act 1985. Thecomparative figures for the year to 30 September 2006 were extracted from theaccounts filed with the Registrar of Companies, which carry an unqualifiedauditors' report. The comparative figures for the 6 months to 31 March 2006 wereunaudited. In prior years, Gross Profit was stated after attributing the remuneration costsof certain consultants and operating staff. The interim accounts above have beenrestated to include these costs within administrative expenses in accordancewith industry practice. All shareholders will receive a copy of this report, which is also availablefrom the company's registered office at Berkeley House, 11-13 Ockford Road,Godalming, Surrey, GU7 1QU. 2. TaxationThe taxation charge for the 6 months ended 31 March 2007 has been calculated byapplying the projected effective tax rate for the full year ended 30 September2007. 3. Basic Loss per shareLoss per ordinary share has been calculated using the weighted average number ofshares in issue during the relevant financial periods. The weighted averagenumber of equity shares in issue was 13,385,177 (2006 interim - 8,518,615: 2006Full Year - 8,518,615) and the loss after tax and non equity dividends, was £(1,508,000) (2006 interim - £(626,000): 2006 Full Year - £(387,000)) Diluted Loss per shareOptions 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. Adjusted Loss per shareThe Adjusted loss per share has been calculated using the loss for the periodafter adding back Exceptional costs of £659,000 (2006 interim - £40,000: FullYear - £73,000) and Goodwill Amortisation £93,000 (2006 interim - £95,000 : FullYear - £186,000). The adjusted loss was £(756,000) (2006 interim - £(491,000):Full Year - £(129,000)) 4. Operating (loss) Unaudited Unaudited Audited 6 months 6 months year ended ended ended 31 March 31 March 30 September 2007 2006 2006 £'000 £'000 £'000Operating (loss) includes Depreciation 158 147 294Amortisation 93 95 186Share Based Payments 69 - -Exceptional Items 659 40 73 Exceptional items related to termination payments in respect of the previousChief Executive Officer (£194,000) in addition to restructuring costsconsequential to the subscription (£465,000) 5. Debtors Unaudited Unaudited Audited 6 months 6 months year ended ended ended 31 March 2007 31 March 2006 30 Sep 2006 £'000 £'000 £'000 Trade debtors 2,388 2,321 2,489Other debtors 65 119 98Prepayments and accrued income 617 630 756 ----------- ----------- ---------- 3,070 3,070 3,343 ----------- ----------- ---------- 6. Creditors Unaudited Unaudited Audited 6 months 6 months year ended ended ended 31 March 2007 31 March 2006 30 Sep 2006 £'000 £'000 £'000Amounts falling due withinone year Bank Loans and overdrafts(secured) 152 856 692Bank invoice discountingfacility 648 1,806 1,838Trade Creditors 601 280 298Other taxation and socialsecurity 596 627 658Finance Leases and Hire Purchase 8 37 26Other creditors 155 134 162Accruals and deferred income 902 451 626 ----------- ----------- ---------- 3,062 4,191 4,300 ----------- ----------- ---------- Amounts falling due after one year Bank Loans 167 267 217Finance Leases and Hire Purchase - 8 - ----------- ----------- ---------- 167 275 217 ----------- ----------- ---------- The loan falling due after one year of £166,667 is part of the loan arranged on6 December 2004 of £500,000. The amount of this loan due for repayment in lessthan one year is £100,000, the remaining £233,333 having already been repaid.Bank loans are secured on deeds of composite guarantees and mortgage debenturesgranted by the Berkeley Scott Group plc group companies.Obligations under finance leases and hire purchase contracts are secured on theassets concerned. 7. Reserves and reconciliation of movements in shareholders' funds Share Share Capital Profit & Share Total Capital Premium Redemption Loss Based Shareholder Payment Funds £'000 £'000 £'000 £'000 £'000 £'000 At 30 Sep 2006 170 3,572 2 (1,775) - 1,969 Shares issued -consideration 286 2,214 - - - 2,500Shares issued -associated costs - (237) - - - (237) Share basedpayment - - - - 69 69 Lossattributable toshareholders - - - (1,508) - (1,508) ------- -------- --------- ------- -------- ---------At 31 March 2007 456 5,549 2 (3,283) 69 2,793 ------- -------- --------- ------- -------- --------- 8. Net cash flow from operating activities Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 31 March 2007 31 March 2006 30 Sep 2006 £'000 £'000 £'000 Operating (loss) (1,390) (486) (80)Share based payment charge 69 - -Depreciation 158 147 294Amortisation of Goodwill 93 95 186(Increase)/ Decrease in debtors 273 577 281 ----------- ----------- ----------Increase / (Decrease) increditors (681) (704) (354)Loss on sale of fixed assets 58 - 3 ----------- ----------- ---------- Net cash (outflow) / inflow fromoperating activities (1,420) (371) 330 ----------- ----------- ---------- 9. Cash inflow / (outflow) from financing Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 31 March 2007 31 March 2006 30 Sep 2006 £'000 £'000 £'000 Issue of ordinary share capital 2,500 - -Repayment of loan notes (50) (50) (100) ----------- ----------- ----------Capital element of finance leasepayments (18) (29) (48)Expenses paid in connection withshare issue (237) - - ----------- ----------- ----------Cash inflow / (outflow) fromfinancing 2,195 (79) (148) ----------- ----------- ---------- DIRECTORS AND KEY CONTACTS Directors A Reeves - Co Chairman J Bowmer - Co Chairman J Rose - Chief Executive W Coker - Chief Financial Officer M Jackson - Non-executive Director Company Secretary / Solicitors IMCO Secretary Limited / Irwin Mitchell 21 Queen Street Leeds LS1 2TW Registered and Head Office Berkeley House 11 - 13 Ockford Road Godalming Surrey GU7 1QU Nominated Advisor and Broker Daniel Stewart & Company Becket House 36 Old Jewry London EC2R 8DD Auditors BDO Stoy Hayward LLP Connaught House Alexandra Terrace Guildford Surrey GU1 3DA Bankers Royal Bank of Scotland 2nd Floor Turnpike House 123 High Street Crawley West Sussex RH10 1DQ Registrars Capita Registrars The Registry 34 Beckenham Road Beckenham BR3 4TU TIMETABLE FOR COMMUNICATION TO SHAREHOLDERS Announcement of interim results: 29 June 2007 Interim report posted to shareholders: Week commencing 2 July 2007 Financial Year End: 30 September 2007 Announcement of final results and annual report posted to shareholders: expected during December 2007 Annual General Meeting: expected in February 2008 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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