30th Jun 2006 07:01
Berkeley Scott Group Plc30 June 2006 BERKELEY SCOTT GROUP PLC Half Year Results for the 6 months ended 31st March 2006 Berkeley Scott Group Plc ("the Group" or "the Company" or "Berkeley Scott") is amarket-leading provider of resourcing solutions to the hospitality and leisuresectors. Financial Highlights • Revenue increased by 6% to £8.77m (2005: £8.29m) o Permanent Recruitment revenue flat at £2.6m o Temporary Recruitment revenue (excluding discontinued businesses) grew by 16% • Net fee income rose by 4% to £4.48m (2005: £4.31m) • EBITDA loss of £0.2m (2005: £0.1m profit) • Loss before taxation £0.63m (2005: £0.34m loss) Operational Highlights • Demand in the hospitality and leisure sector remains robust in most areas • Significant operational restructuring now complete • Permanent team productivity beginning to rise following new divisional head appointment in February • £500k annualised cost reduction exercise completed in March • All divisions performing ahead of last year in terms of Net Fee Income Jeremy Hamer, Chairman of Berkeley Scott said: "Despite reporting a loss for theperiod, the first half has seen significant progress. In particular, theappointment of a new Operations Director of our Permanent Recruitment divisioncompletes the new strengthened senior management team. This together with theimplementation of a £500K annualised cost reduction programme towards the end ofthis period gives us confidence that the required turnaround is well under way". Enquiries: Berkeley Scott Group PlcJeremy Hamer, Chairman 01483 414141Roddy Watt, Chief Executive OfficerWill Coker, Chief Financial Officer Cardew GroupTim Robertson 020 7930 0777Catherine Maitland CHAIRMAN'S STATEMENT During the half year, we have concluded the operational re-structuring commencedin the last financial year, and in particular, have finalised the structure ofthe senior management team. We have also slimmed down the overall organisationfrom 200 people to 167. Much of this occurred towards the end of the period whenwe implemented a significant cost reduction programme. Both our Temporary Recruitment and Search divisions have performed consistentlyahead of last year. The appointment of a new Operations Director for our Permanent division hasalready contributed to an improvement in fee earner productivity and, althoughthis improvement came too late to recover shortfalls that arose in the earlymonths of the year, we believe this should continue through the second half. Trading Results The total revenue of the business increased by 6% to £8,765,000 (2005:£8,291,000), whilst net fee income rose by 4% to £4,476,000 (2005: £4,307,000).Overhead costs were 12% higher at £4,722,000 (2005: £4,219,000) reflecting thehigher staff numbers that we began the year with, but have recently reduced. Before non-recurring costs of £40,000 (2005: £103,000) our EBITDA loss was£204,000 (2005: £197,000 profit). The Company recorded a loss before taxation of £626,000 (2005: £335,000 loss),after charging goodwill amortisation of £95,000 (2005: £98,000) andnon-recurring and exceptional items referred to above of £40,000. (2005:£103,000). Net borrowing (including invoice discounting) at the end of March was£3.0m (2005: £2.1m) being gearing of 172% (2005: 73%) Following my statement on 21 February 2006, whilst it is obviously disappointingto be reporting a trading loss, I am nonetheless pleased to be able to tellshareholders that the actions taken since then have produced a tangibleimprovement and, indeed, that the trading in the ensuing period has bettered ourexpectations. The Board is not recommending the payment of a dividend. Operations Review The Group has four operating divisions:- Permanent Recruitment, TemporaryRecruitment, Executive Search and Resourcing Solutions. Permanent Recruitment - Net Fee Income £2,521,000 (2005: £2,516,000) Most of our core permanent recruitment markets remain relatively buoyant, withhotels in particular trading well. The restaurant sector has slowed downslightly, but the pubs, bars and other catering markets, whilst also havingslowed a little, are still generally trading well. In this market, we continueto experience record levels of demand for our permanent recruitment services. The half began with disappointing fee earner productivity due to continuing highturnover of consultants. However, we have now seen sustained consultantproductivity improvements over recent months since the appointment of SimoneMakepeace as Operations Director of this division. Whilst staff turnover remainshigh, this is in part as a result of planned changes in headcount. Ourinvestment in training is now contributing to rising skill levels across theconsulting teams, and will also help to reduce staff turnover. Temporary Recruitment - Net Fee Income £1,371,000 (2005: £1,248,000) The temporary business has performed strongly during the first half, with NFI up10% (16% after excluding discontinued operations). There has been no erosion inmargin, and the (continuing) cost base has only increased by 9% so thecontribution from the division is well ahead of last year. This growth isparticularly encouraging as we have also consolidated the business in thisperiod, terminating operations in both Leeds and Southampton, which wereunder-performing. Executive Search - Net Fee Income £231,000 (2005: £127,000) Our executive search business, ISIS, has had an excellent start to the yearwhich is continuing in the second half. We have not expanded our team asoriginally planned and so the contribution from this division has movedconsiderably ahead of last year. Resourcing Solutions - Net Fee Income £332,000 (2005:£329,000) Although net fee income is marginally ahead of 2005 this has been a frustratinghalf for our Solutions division. Despite a strong pipeline of prospects, manydecisions have been delayed, or at least have taken considerably longer toconclude than predicted. This is true of Sourcerer, our ASP e-recruitmentsoftware tool, which whilst gaining acclaim, is taking longer to sell thanenvisaged. However, we have a strong qualified prospect list and hope,therefore, that the second half will see a greater conversion rate. Staff On behalf of the Board I would like to take this opportunity to thank our stafffor their efforts and support during what has been a difficult period. We have anumber of new staff from whom much is expected in the coming months. I should also like to take this opportunity to thank Roger Taylor for his valuedcontribution to the Group over a number of years. Roger stepped down as aNon-Executive Director from the Board in May 2006. We are seeking a suitablereplacement. Outlook Over the six months under review, we have taken decisive action to address theissues facing the Company. As a result, we have significantly reduced theGroup's cost base, strengthened the senior management team and overseenimprovement in trading in key areas. We have started the second half positivelyand enter the critical summer trading months with evidence that the continuingproductivity gains required to deliver the revised market expectations areachievable. Jeremy HamerChairman BERKELEY SCOTT GROUP PLC GROUP PROFIT AND LOSS ACCOUNT Unaudited Unaudited (Audited) 6 months 6 months year ended ended ended 31 Mar 06 31 Mar 05 30 Sept 05 Notes £'000 £'000 £'000 Turnover 8,765 8,291 17,064 Cost of Sales (6,966) (6,527) (12,983) _________________________________ Gross Profit 1,799 1,764 4,081 Operating expenses 4 (2,285) (1,933) (4,686) _________________________________ Operating (loss) / profit (486) (169) (605) Interest receivable - - 1 Interest payable (140) (166) (300) _________________________________ Loss on ordinary activitiesbefore taxation (626) (335) (904) Tax charge/(credit) on loss on ordinary activities 2 - - (64) _________________________________ Loss on ordinary activitiesafter taxation (626) (335) (840) Dividends Payable - - - _________________________________ Loss on ordinary activitiestransferred to reserves (626) (335) (840) _________________________________ Loss per share in pence(Basic and Diluted) 3 (7.4) (4.8) (10.8) All recognised gains and losses are included in the profit and loss account. Allamounts for the period ending 31March 2006 relate to continuing activities BERKELEY SCOTT GROUP PLC GROUP BALANCE SHEET Unaudited Unaudited (Audited) 6 months 6 months year ended ended ended 31 Mar 06 31 Mar 05 30 Sept 05 Notes £'000 £'000 £'000 FIXED ASSETSIntangible Assets 2,423 2,703 2,517Tangible Assets 700 755 750 ___________________________________ 3,123 3,458 3,267 CURRENT ASSETSDebtors 5 3,070 3,067 3,624Cash at bank and in hand 3 137 3 ___________________________________ 3,073 3,204 3,627 CURRENT LIABILITIESCreditors falling due withinone year 6 (4,191) (3,435) (4,195) ___________________________________ NET CURRENT LIABILITIES (1,118) (231) (568) ___________________________________ TOTAL ASSETS LESS CURRENTLIABILITIES 2,005 3,227 2,699 CREDITORS : amounts fallingdue after one year 6 (275) (412) (343) ___________________________________ NET ASSETS 1,730 2,815 2,356 ___________________________________ CAPITAL AND RESERVESCalled up share capital 7 170 170 170Share Premium Account 7 3,572 3,526 3,572Capital redemption reserve 7 2 2 2Profit and Loss Account 7 (2,014) (883) (1,388) ___________________________________ EQUITY SHAREHOLDERS' FUNDS 1,730 2,815 2,356 ___________________________________ BERKELEY SCOTT GROUP PLC GROUP CASH FLOW STATEMENT Unaudited Unaudited Audited 6 months 6 months year ended ended ended 31 Mar 06 31 Mar 05 30 Sept 05 Notes £'000 £'000 £'000 Net cash (outflow) / inflowfrom operating activities 8 (371) (291) 130 Returns on investment andservicing of finance (125) (158) (401) Equity dividends paid - (110) - Taxation 42 - (42) Capital expenditure andfinancial investment (97) (149) (286) ___________________________________ Cash (outflow) / inflow beforemanagement of liquid resourcesand financing (551) (708) (599) Cash inflow / (outflow) fromfinancing 9 (93) 759 713 ___________________________________ Increase / (Decrease) in cashin period (644) 51 114 ___________________________________ RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT Unaudited Unaudited Audited 6 months 6 months year ended ended ended 31 Mar 06 31 Mar 05 30 Sept 05 Notes £'000 £'000 £'000 Increase / (Decrease) in cashin period (644) 51 114 Cash outflow from decrease indebt and lease financing 79 1,373 1,465 ___________________________________ Change in net debt resultingfrom cash flows (565) 1,424 1,579 New Finance Lease - 4 (7) ___________________________________ Movement in net debt in period (565) 1,428 1,572 Net Debt at start of period (599) (2,171) (2,171) ___________________________________ Net Debt at end of period (1,164) (743) (599) ___________________________________ In addition, invoice discounting at 31 March 2006 amounted to £1,806k (31 March2005: £1,338k) BERKELEY SCOTT GROUP PLC Notes to the interim reportFor the 6 months ended 31 March 2006 1. Basis of Preparation The financial information in this report for the 6 months ended 31 March 2006represents the consolidated results of Berkeley Scott Group plc and itssubsidiary undertakings. It has been prepared on a consistent basis using thesame accounting policies as the audited financial statements for the year ended30 September 2005. 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 2005 were extracted from theaccounts filed with the Registrar of Companies, which carried an unqualifiedauditors' report. The comparative figures for the 6 months to 31 March 2005 were unaudited.Dividends in that period paid re non-equity interests have been reclassifiedwithin interest payable as an expense. In addition, £124K of cost of sales hasbeen reclassified as operating expenses to comply with treatment applied in theyear end audited accounts. 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. Taxation The taxation charge for the 6 months ended 31 March 2006 has been calculated byapplying the projected effective tax rate for the full year ended 30 September2006. 3. Basic Loss per share Loss 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 8,518,615 (2005 interim - 7,023,322: 2005Full Year - 7,770,968) and the loss, being loss after tax and non equitydividends, was £(626,000) (2005 interim - £(335,000): 2005 Full Year - £(840,000)) Diluted Loss per share Options 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. 4. Operating Expenses Unaudited Unaudited Audited 6 months 6 months year ended ended ended 31 March 31 March 30 September 2006 2005 2005 £'000 £'000 £'000 Operating Profit includes: (486) (169) (605)Depreciation 147 165 324Amortisation of Goodwill 95 98 284 ________________________________________ EBITDA (244) 94 3 Non-recurring costs- Termination payments 40 103 274- Exceptional item - - 47 ________________________________________ Adjusted EBITDA (204) 197 324 ________________________________________ 5. Debtors Unaudited Unaudited Audited 6 months 6 months year ended ended ended 31 March 31 March 30 September 2006 2005 2005 £'000 £'000 £'000 Trade debtors 2,321 2,114 2,717Other debtors 119 197 160Prepayments and accrued income 630 756 747Corporation tax - - - ________________________________________ 3,070 3,067 3,624 ________________________________________ 6. Creditors Unaudited Unaudited Audited 6 months 6 months year ended ended ended 31 March 31 March 30 September 2006 2005 2005 £'000 £'000 £'000Amounts falling due withinone year Bank Loans and overdrafts (secured) 856 409 211Bank invoice discounting facility 1,806 1,338 2,071Trade Creditors 280 439 494Corporation tax - 65 -Other taxation and social security 627 565 748Finance Leases and Hire Purchase 37 60 48Proposed Dividend - - -Other creditors 134 24 165Accruals and deferred income 451 535 458 ________________________________________ 4,191 3,435 4,195 ________________________________________ Amounts falling due afterone year Bank Loans 267 367 317Finance Leases and Hire Purchase 8 45 26Loan Stock - - - ________________________________________ 275 412 343 ________________________________________ The loan falling due after one year of £266,667 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 £133,333 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 & Total Capital Premium Redemption Loss Shareholders Funds £'000 £'000 £'000 £'000 £'000 At 30 Sep 2005 170 3,572 2 (1,388) 2,356 Shares issued inAIM listing - - - - - Loss attributable toshareholders - - - (626) (626) _________________________________________________________ At 31 March 2006 170 3,572 2 (2,014) 1,730 _________________________________________________________ 8. Net cash flow from operating activities Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 31 March 2006 31 March 2005 30 Sep 2005 £'000 £'000 £'000 Operating profit / (loss) (486) (169) (605)Depreciation 147 165 324Amortisation of Goodwill 95 98 284(Increase)/ Decrease in debtors 577 283 (232)Increase / (Decrease) in creditors (704) (668) 365Profit on sale of fixed assets - - (6) _____________________________________________Net cash (outflow) / inflowfrom operating activities (371) (291) 130 _____________________________________________ 9. Cash inflow / (outflow) from financing Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 31 March 2006 31 March 2005 30 Sep 2005 £'000 £'000 £'000 Issue of ordinary share capital - 3,071 3,071Repayment of loan notes (50) (1,858) (1,908)Capital element of financelease payments (29) (15) (56) Expenses paid in connectionwith share issue (14) (939) (894) New Loans - 500 500 _____________________________________________Cash inflow / (outflow)from financing (93) 759 713 _____________________________________________ DIRECTORS AND KEY CONTACTS Directors JJ Hamer - Non-executive Chairman DRB Watt - Chief Executive WJ Coker - Chief Financial Officer R Leefe - 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 Evolution Securities Limited 100 Wood Street London EC2V 7AN Auditors BDO Stoy Hayward LLP Connaught House Alexandra Terrace Guildford Surrey GU1 3DA Bankers Royal Bank of Scotland Benwell House Green Street Sunbury-on-Thames Middlesex TW16 6QT Registrars Capita Registrars The Registry 34 Beckenham Road Beckenham BR3 4TU TIMETABLE FOR COMMUNICATION TO SHAREHOLDERS Announcement of interim results: 30 June 2006 Interim report posted to shareholders: Week commencing 3 July 2006 Financial Year End: 30 September 2006 Announcement of final results andannual report posted to shareholders: expected during December 2006 Annual General Meeting: expected in February 2007 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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