18th Sep 2008 07:00
InterQuest Group plc
Unaudited interim results for the six months ended 30 June 2008
The Board of InterQuest Group plc ("InterQuest" or "the Group") is pleased to announce its unaudited interim results for the six months ended 30 June 2008.
Financial highlights
Revenue up 39% to £53,445,000 (2007: £38,561,000)
Gross profit up 42% to £8,140,000 (2007: £5,717,000)
EBITA (before IFRS 2 and amortisation charges) up 52% to £2,937,000 (2007: £1,937,000)
Profit before taxation up 42% to £2,009,000 (2007: £1,419,000)
Basic adjusted earnings per share up 50% to 6.9 pence (2007: 4.6 pence)
Basic earnings per share up 43% to 5.0 pence (2007: 3.5 pence)
Organic, like for like growth of 5% in gross profit and 9% in EBITA
Net cash inflow of £2.6m reducing net debt to £6.6m
Chairman's and Chief Executive's statement:
The first half of 2008 has been yet another period of strong growth for the InterQuest Group. Our established strategy of niche specialism within IT continues to deliver excellent trading results and we have made successful investments in staff, training, brand profile and infrastructure.
Revenue for the six months ended 30 June 2008 increased by 39% to £53.4m as we benefitted from full period contributions from the two acquisitions that we made in 2007 (Intelect Recruitment plc and ecrm People Limited). Gross profit (net fee income) increased by 42% to £8.1m and EBITA increased by 52% to £2.9m.
On a like for like basis the Group has achieved organic growth of 5% in gross profit and 9% in EBITA in the first half of 2008 when compared to the first half of 2007. We are pleased to have maintained the contract bias in our business such that two-thirds of our gross margin is derived from contract assignments and one-third from permanent recruitment. Contract recruitment is a more predictable and long term income stream.
Strong profits and tight control of working capital have delivered £3.6m of operating cashflow in the first half of the year and an overall net cash inflow of £2.6m. As a result we have reduced the Group's net debt from £9.2m at the start of the year to £6.6m at 30 June.
All of our acquisitions are now firmly embedded and integrated into the Group and we have launched a new branding system linking each Group company whilst maintaining their separate identities. Our efforts in raising the profile of the Group via a specialist PR campaign and pertinent surveys have paid off with a significantly heightened media presence in our niche sectors.
Our bespoke training academy continues to develop impressive new fee earners and we have set up internal strategic action groups to focus on key issues relating to our future growth and staff retention.
Outlook
Although the current economic climate in the UK and Europe remains challenging, we are pleased that in July and August trading was ahead of the same period last year and our public sector business continues to trade at an all time high.
Our flexible cost base allows us to adapt quickly to market changes and our senior management team is experienced in dealing with all types of market conditions. Furthermore, our profits convert to cash more quickly if our business ceases to grow and we are very well placed in our various specialist markets to take advantage of any acquisition opportunities as and when they arise.
Group background
The InterQuest Group is a specialist IT recruitment business providing contract and permanent recruitment services within niche disciplines in the UK and Europe. The Group currently comprises seven separately branded specialist divisions covering a broad range of skill sets and industries including Public Sector, SAP, Oracle, CRM Testing, Banking, Insurance, Retailing, Pharmaceuticals, Media, Analytics, Infrastructure and Communications with over 1,100 IT contractors working on assignment and 170+ permanent staff in 6 offices in the UK.
Enquiries
For further information please contact:
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InterQuest Group plc |
020 7025 0100 |
|
Gary Ashworth, Executive Chairman |
|
|
Ross Eades, Chief Executive |
|
|
Michael Joyce, Finance Director |
|
|
Cenkos Securities Limited |
020 7397 8900 |
|
Ivonne Cantu |
Unaudited condensed consolidated interim income statement
|
6 months to 30 June 2008 |
6 months to 30 June 2007 |
Year to 31 December 2007 |
|
|
Note |
£'000 |
£'000 |
£'000 |
|
Revenue |
53,445 |
38,561 |
86,772 |
|
Cost of sales |
(45,305) |
(32,844) |
(73,864) |
|
------------ |
------------ |
------------ |
|
|
Gross profit |
8,140 |
5,717 |
12,908 |
|
Amortisation |
(501) |
(287) |
(741) |
|
Other administration costs |
(5,285) |
(3,819) |
(8,491) |
|
------------ |
------------ |
------------ |
|
|
Total administration expenses |
(5,786) |
(4,106) |
(9,232) |
|
Finance costs |
(345) |
(192) |
(535) |
|
------------ |
------------ |
------------ |
|
|
Profit before tax |
2,009 |
1,419 |
3,141 |
|
Income tax expense 4 |
(500) |
(426) |
(741) |
|
------------ |
------------ |
------------ |
|
|
Profit for the period |
1,509 |
993 |
2,400 |
|
============ |
============ |
============ |
|
|
Earnings per share from both total and continuing operations: |
|||
|
Pence |
Pence |
Pence |
|
|
Basic earnings per share 5 |
5.0 |
3.5 |
8.2 |
|
============ |
============ |
============ |
|
|
Diluted earnings per share 5 |
4.6 |
3.1 |
7.4 |
|
============ |
============ |
============ |
|
All results for the Group are derived from continuing operations in both the current and preceding periods.
The accompanying notes form an integral part of this condensed consolidated interim report.
Unaudited condensed consolidated interim balance sheet
|
30 June 2008 |
30 June 2007 |
31 December 2007 |
|||||
|
Note |
£'000 |
£'000 |
£'000 |
||||
|
ASSETS |
|||||||
|
Non-current assets |
|||||||
|
Property, plant and equipment |
426 |
451 |
488 |
||||
|
Goodwill 6 |
15,255 |
10,357 |
15,183 |
||||
|
Other intangible assets 6 |
3,391 |
2,185 |
3,892 |
||||
|
------------ |
------------ |
------------ |
|||||
|
Total non-current assets |
19,072 |
12,993 |
19,563 |
||||
|
------------ |
------------ |
------------ |
|||||
|
Current assets |
|||||||
|
Trade and other receivables |
19,549 |
15,273 |
18,661 |
||||
|
Cash and cash equivalents 7 |
148 |
- |
135 |
||||
|
------------ |
------------ |
------------ |
|||||
|
Total current assets |
19,697 |
15,273 |
18,796 |
||||
|
------------ |
------------ |
------------ |
|||||
|
Total assets |
38,769 |
28,266 |
38,359 |
||||
|
------------ |
------------ |
------------ |
|||||
|
LIABILITIES |
|||||||
|
Current liabilities |
|||||||
|
Trade and other payables |
(10,832) |
(8,828) |
(9,363) |
||||
|
Financial liabilities - borrowings |
(6,783) |
(4,147) |
(9,398) |
||||
|
Current tax payable |
(873) |
(278) |
(833) |
||||
|
Deferred consideration |
(625) |
(832) |
(664) |
||||
|
------------ |
------------ |
------------ |
|||||
|
Total current liabilities |
(19,113) |
(14,085) |
(20,258) |
||||
|
------------ |
------------ |
------------ |
|||||
|
Non-current liabilities |
|||||||
|
Obligations under hire purchase contracts |
- |
(39) |
- |
||||
|
Deferred consideration |
(1,495) |
(476) |
(1,495) |
||||
|
Deferred tax liability |
(784) |
(75) |
(768) |
||||
|
------------ |
------------ |
------------ |
|||||
|
Total non-current liabilities |
(2,279) |
(590) |
(2,263) |
||||
|
------------ |
------------ |
------------ |
|||||
|
Total liabilities |
(21,392) |
(14,675) |
(22,521) |
||||
|
------------ |
------------ |
------------ |
|||||
|
Net assets |
17,377 |
13,591 |
15,838 |
||||
|
============ |
============ |
============ |
|||||
|
EQUITY Capital and reserves attributable to the Company's equity holders: |
|||||||
|
Share capital |
305 |
288 |
301 |
||||
|
Share premium account |
8,479 |
7,422 |
8,344 |
||||
|
Retained earnings |
8,233 |
5,653 |
6,916 |
||||
|
Share based payment reserve |
360 |
228 |
277 |
||||
|
------------ |
------------ |
------------ |
|||||
|
Total equity |
17,377 |
13,591 |
15,838 |
||||
|
============ |
============ |
============ |
|||||
The accompanying notes form an integral part of this condensed consolidated interim report.
Unaudited condensed consolidated interim statement of changes in equity
|
Share capital |
Share premium account |
Retained earnings |
Share based payment reserve |
Total equity |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Balance at 1 January 2007 |
287 |
7,383 |
4,526 |
189 |
12,385 |
|
Deferred tax on employee share options |
- |
- |
134 |
- |
134 |
|
Profit for the 6 months to 30 June 2007 |
- |
- |
993 |
- |
993 |
|
------------ |
------------ |
------------ |
------------ |
------------ |
|
|
Total recognised income and expense for the period |
- |
- |
1,127 |
- |
1,127 |
|
Movement in share based payment reserve |
- |
- |
- |
39 |
39 |
|
Issue of share capital |
1 |
39 |
- |
- |
40 |
|
------------ |
------------ |
------------ |
------------ |
------------ |
|
|
Balance at 30 June 2007 |
288 |
7,422 |
5,653 |
228 |
13,591 |
|
============ |
============ |
============ |
============ |
============ |
|
|
Deferred tax on employee share options |
- |
- |
(144) |
- |
(144) |
|
Profit for the 6 months to 31 December 2007 |
- |
- |
1,407 |
- |
1,407 |
|
------------ |
------------ |
------------ |
------------ |
------------ |
|
|
Total recognised income and expense for the period |
- |
- |
1,263 |
- |
1,263 |
|
Movement in share based payment reserve |
- |
- |
- |
49 |
49 |
|
Issue of share capital |
13 |
922 |
- |
- |
935 |
|
------------ |
------------ |
------------ |
------------ |
------------ |
|
|
Balance at 31 December 2007 |
301 |
8,344 |
6,916 |
277 |
15,838 |
|
============ |
============ |
============ |
============ |
============ |
|
|
Deferred tax on employee share options |
- |
- |
(192) |
- |
(192) |
|
Profit for the 6 months to 30 June 2008 |
- |
- |
1,509 |
- |
1,509 |
|
------------ |
------------ |
------------ |
------------ |
------------ |
|
|
Total recognised income and expense for the period |
- |
- |
1,317 |
- |
1,317 |
|
Movement in share based payment reserve |
- |
- |
- |
83 |
83 |
|
Issue of share capital |
4 |
135 |
- |
- |
139 |
|
------------ |
------------ |
------------ |
------------ |
------------ |
|
|
Balance at 30 June 2008 |
305 |
8,479 |
8,233 |
360 |
17,377 |
|
============ |
============ |
============ |
============ |
============ |
The accompanying notes form an integral part of this condensed consolidated interim report.
Unaudited condensed consolidated interim cash flow statement
|
6 months to 30 June 2008 |
6 months to 30 June 2007 |
Year to 31 December 2007 |
|
|
Note |
£'000 |
£'000 |
£'000 |
|
Cash flows from operating activities |
|||
|
Profit after taxation |
1,509 |
993 |
2,400 |
|
Adjustments for: |
|||
|
Depreciation |
99 |
70 |
160 |
|
Share based payment charge |
83 |
39 |
88 |
|
Loss on sale of assets |
12 |
- |
- |
|
Interest charge |
345 |
192 |
535 |
|
Amortisation |
501 |
287 |
741 |
|
Income tax expense |
500 |
426 |
741 |
|
Increase in trade and other receivables |
(888) |
(2,219) |
(2,186) |
|
Increase in trade and other payables |
1,446 |
1,783 |
856 |
|
------------ |
------------ |
------------ |
|
|
Cash generated from operations |
3,607 |
1,571 |
3,335 |
|
Income taxes paid |
(690) |
(280) |
(586) |
|
------------ |
------------ |
------------ |
|
|
Net cash from operating activities |
2,917 |
1,291 |
2,749 |
|
------------ |
------------ |
------------ |
|
|
Cash flows from investing activities |
|||
|
Purchase of property, plant and equipment |
(99) |
(284) |
(356) |
|
Sale of tangible fixed assets |
44 |
- |
- |
|
Acquisition of subsidiaries net of cash acquired |
- |
(12) |
(5,773) |
|
Payment of deferred consideration |
(55) |
- |
(622) |
|
------------ |
------------ |
------------ |
|
|
Net cash used in investing activities |
(110) |
(296) |
(6,751) |
|
------------ |
------------ |
------------ |
|
|
Cash flows from financing activities |
|||
|
Proceeds from issue of share capital |
139 |
40 |
312 |
|
Net (decrease) / increase in trade receivables finance facility |
(1,593) |
(354) |
3,952 |
|
Repayment of hire purchase liabilities |
- |
- |
(22) |
|
Interest paid |
(345) |
(192) |
(535) |
|
------------ |
------------ |
------------ |
|
|
Net cash (used in) / from financing activities |
(1,799) |
(506) |
3,707 |
|
------------ |
------------ |
------------ |
|
|
Net increase / (decrease) in cash and cash equivalents |
1,008 |
489 |
(295) |
|
Cash and cash equivalents at beginning of period |
(860) |
(565) |
(565) |
|
------------ |
------------ |
------------ |
|
|
Cash and cash equivalents at end of period 7 |
148 |
(76) |
(860) |
|
============ |
============ |
============ |
|
The accompanying notes form an integral part of this condensed consolidated interim report. |
Notes to the condensed unaudited consolidated interim report
1 Nature of operations and general information
InterQuest Group plc and its subsidiaries' ("the Group") principal activity is the provision of IT recruitment solutions. The Group is one of the UK's leading staffing businesses in the information and communications technology sector. The Group comprises of seven specialist niche businesses currently operating from six UK locations, combined with a centralised finance and administration function.
The Group's condensed consolidated interim report is presented in Pounds Sterling (£).
The condensed consolidated interim report has been approved for issue by the Board of Directors on 17 September 2008.
The financial information set out in this interim report does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The Group's statutory financial statements for the year ended 31 December 2007 have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under Section 237(2) of the Companies Act 1985.
2 Basis of preparation
The condensed consolidated interim report is for the six months ended 30 June 2008 and has been prepared in accordance with the accounting policies as set out in the annual financial statements for the year ended 31 December 2007. The condensed consolidated interim report should be read in conjunction with the Group's annual financial statements for the year ended 31 December 2007, which have been prepared in accordance with IFRSs as adopted by the European Union (EU).
The accounting policies have been applied consistently throughout the Group for the purposes of preparation of the condensed consolidated interim report.
3 Summary of significant accounting policies
The same accounting policies, presentation and methods of computation are followed in this interim condensed consolidated report as were applied in the preparation of the Group's annual financial statements for the year ended 31 December 2007.
|
4 Taxation |
6 months ended 30 June 2008 |
6 months ended 30 June 2007 |
Year ended 31 December 2007 |
|
£'000 |
£'000 |
£'000 |
|
|
Current tax |
|||
|
Corporation tax on profits for the period |
675 |
459 |
847 |
|
Adjustment in respect of prior periods |
- |
- |
27 |
|
------------ |
------------ |
------------ |
|
|
Total current tax |
675 |
459 |
874 |
|
Deferred tax |
|||
|
Utilisation of tax losses |
- |
64 |
64 |
|
Accelerated capital allowance |
- |
- |
43 |
|
Charge on share based payments |
(25) |
(12) |
(21) |
|
Other temporary differences |
- |
- |
3 |
|
Intangible asset temporary differences |
(150) |
(85) |
(222) |
|
------------ |
------------ |
------------ |
|
|
Total deferred tax |
(175) |
(33) |
(133) |
|
------------ |
------------ |
------------ |
|
|
Total tax charge |
500 |
426 |
741 |
|
============ |
============ |
============ |
|
5 Earnings per share
The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year.
The calculation of diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares and the post tax effect of dividends and/or interest, on the assumed conversion of all dilutive options and other dilutive potential ordinary shares.
Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below.
|
6 months ended 30 June 2008 |
6 months ended 30 June 2007 |
Year ended 31 December 2007 |
|
|
£'000 |
£'000 |
£'000 |
|
|
Profit for the period |
|||
|
Basic earnings |
1,509 |
993 |
2,400 |
|
Adjustments to basic earnings |
|||
|
Intangible assets amortisation |
501 |
287 |
741 |
|
Share based payment charge |
83 |
39 |
88 |
|
Adjusted earnings |
2,093 |
1,319 |
3,229 |
|
============ |
============ |
============ |
|
|
Number of shares |
|||
|
Weighted average number of ordinary shares for the purposes of basic earnings per share |
30,298,818 |
28,770,449 |
29,299,010 |
|
Weighted average number of ordinary shares for the purposes of diluted earnings per share |
32,600,779 |
32,332,151 |
32,359,086 |
|
Earnings per share |
Pence |
Pence |
Pence |
|
Basic earnings per share |
5.0 |
3.5 |
8.2 |
|
Diluted earnings per share |
4.6 |
3.1 |
7.4 |
|
Adjusted earnings per share |
|||
|
Basic earnings per share |
6.9 |
4.6 |
11.0 |
|
Diluted earnings per share |
6.4 |
4.1 |
10.0 |
6 Other intangible assets
The following table show the significant movements in intangible assets.
|
Goodwill |
Customer relationships |
Total |
|
|
£'000 |
£'000 |
£'000 |
|
|
Carrying amount at 1 January 2007 |
10,193 |
2,472 |
12,665 |
|
Additions from business combinations |
4,795 |
2,161 |
6,956 |
|
Revision to deferred consideration |
195 |
- |
195 |
|
Amortisation |
- |
(741) |
(741) |
|
Net book amount at 1 January 2008 |
15,183 |
3,892 |
19,075 |
|
Revision to deferred consideration |
16 |
- |
16 |
|
Amortisation |
- |
(501) |
(501) |
|
Fair value adjustment on Intelect Recruitment plc |
56 |
- |
56 |
|
Net book amount at 30 June 2008 |
15,255 |
3,391 |
18,646 |
|
============ |
============ |
============ |
|
|
Cost at 30 June 2008 |
15,255 |
5,055 |
20,310 |
|
Accumulated amortisation |
- |
(1,664) |
(1,664) |
|
Net book amount at 30 June 2008 |
15,255 |
3,391 |
18,646 |
|
============ |
============ |
============ |
The Group has used the income approach to measure the forecasted economic benefit streams of the acquired businesses key customer relationships. These benefit streams have been discounted to a present value with an appropriate risk adjusted weighted average cost of capital. Risk adjusted includes general market rates of return at the valuation date, business risks associated with the industry and other risks specific to the assets being valued. Customer relationships are being amortised over a period of five years.
7 Cash and cash equivalents
|
30 June 2008 |
30 June 2007 |
31 December 2007 |
||
|
£'000 |
£'000 |
£'000 |
||
|
Cash and cash equivalents include the following for the purposes of the cash flow statement: |
||||
|
Cash at bank and in hand |
148 |
- |
135 |
|
|
Bank overdrafts |
- |
(76) |
(995) |
|
|
------------ |
------------ |
------------ |
||
|
Total |
148 |
(76) |
(860) |
|
|
============ |
============ |
============ |
||
Related Shares:
InterQuest Group