7th Nov 2006 07:02
Penna Consulting PLC07 November 2006 PENNA CONSULTING PLC ANNOUNCES INTERIM RESULTS 7 November 2006 Penna Consulting Plc (PNA), the Human Capital Management Consultancy group,today announces its interim results for the six month period ended 30 September2006. Headlines • Net Revenue £14.7m (down 8%) • Operating Loss £0.9m (2005: profit £1.3m) • Actions taken to reduce costs by £2.6m through the first half • Net debt reduced to c.£1.0m following recent share placing Commenting on the results, Stephen Rowlinson, Chairman said: "We have taken steps to ensure that we will return to profit in the second halfof the year and expect that profits in the period will more than offset the lossof the first half and produce a positive result for the year as a whole. Howeverearlier forecasts for the current year will not be achieved. The medium termoutlook for the business remains good and our finances are now robust." For further information please contact: Stephen Rowlinson, Chairman 0771 00 23699Gary Browning, Chief Executive 020 7648 2448David Firth, Finance Director 020 7648 2448 Penna Consulting Plc Interim Report 2006 Chairman's Review Our smaller, developing businesses performed well in the period under review butas we foreshadowed in our announcement on 4th July 2006 and in our circular toshareholders dated 18th August 2006, trading in our largest division, CareerTransition, suffered from subdued demand. Consequently, net revenues in thefirst half of the year were 8% down on the same period of the previous year andthe Group made a loss at the operating level. During the period, management tookdecisive and rapid action to adjust the Company's cost base and, by the end ofthe first half, annualised costs were £2.6m lower than at the beginning of theyear. Revenue trends have improved in recent months and this, together with thebenefit of the cost reductions, will ensure a significantly better performancein the second half. Financial Review Turnover in the period was 10% lower at £19.8m (2005: £22.0m). Net revenue(i.e. excluding recharges to clients) was 8% lower at £14.7m (2005: £15.9m) andthe Operating loss was £0.9m (2005: Profit £1.3m). Shortly after the end of the half-year, on 10th October 2006, the Companycompleted a placing of 5.7m ordinary shares at 70p. Following the placing theCompany's net debt was reduced to c. £1.0m The Board does not recommend the payment of an interim dividend but will keepdividend policy under review. Net Revenue by service line Six months to Six months to Change on 30 Sept 2006 30 Sept 2005 Prior period £'000 £'000 %Career Transition 7,840 9,574 -18%Resourcing 2,301 2,972 -23%Interim 1,085 1,651 -34%Recruitment Communications 310 21 +1376%Leadership Services 1,135 1,073 +6%HR Consulting 2,141 785 +273%Intercompany sales (162) (131)Total Net revenues 14,650 15,945 -8%Total Turnover 19,797 21,968 -10% Operational review Career Transition remains a vital core activity of the Group and we are proudthat Penna is regarded as a market leader and the provider of the highestquality service to organisations and their employees as they themselves gothrough the difficult process of restructuring. Our competitors within CareerTransition are currently reducing capacity and at the same time we are seeing amore positive trend in demand. We are therefore confident that in the mediumterm we will see a marked improvement in the performance of this division. First half figures for Resourcing suffer from comparison with those of theprevious year that included revenue from a high volume contract. Howeverperformance of this division has been disappointing. Resourcing has considerablepotential for Penna and senior management is developing action plans to fulfilthat potential. Much of our future growth will come from the newer businesses and we aredelighted that we are increasingly recognised as being among the industryleaders in Interim Management, Leadership Services and Human ResourceConsulting. The near trebling of revenue achieved by our HR Consulting team inthe period under review is an excellent performance and illustrates thepotential for these Penna services. Our newest division - RecruitmentCommunications - is growing rapidly, continues to win long-term contracts withmajor organisations and is expected to be contributing to Group profits beforethe end of this Company year. Our International business, which has offices in Dublin, Paris, Stockholm andMadrid is progressing well and now represents 13% of the Group's net revenues(2005: 8%). In particular our Continental offices are producing some excitingresults under dynamic leadership. Outlook Given the combination of improving revenue and achieved cost reductions, weexpect a strong return to profit in the second half of the year. However, giventhe disappointing result in the first half, the profit outcome for the year as awhole is likely to be positive but materially lower than current marketexpectations. Stephen RowlinsonChairman7 November 2006 Penna Consulting Plc Consolidated income statement for the six months ended 30 September 2006 (unaudited) Six Months Ended Six Months Ended Year 30 September 2006 30 September 2005 Ended 31 March Notes 2006 £'000 £'000 £'000Continuing operationsTurnover 19,797 21,968 44,602Operating costs (20,677) (20,700) (42,217) Operating (loss)/profit (880) 1,268 2,385 Profit on disposal of fixed assetinvestment - - 308Finance costs (118) (141) (288)Share of results of associate - 48 183(Loss)/profit before tax (998) 1,175 2,588 Tax 2 300 (376) (442) (Loss)/profit for the period (698) 799 2,146 Attributable to:Equity holders of the parent (698) 799 2,146(Loss)/earnings per share: 3- basic (3.6)p 4.2p 11.2p- diluted (3.6)p 4.1p 11.1p Penna Consulting Plc Consolidated balance sheet at 30 September 2006 (unaudited) 30 September 2006 30 September 2005 31 March £'000 £'000 2006 £'000Non-current assetsTangibles 2,112 1,991 2,270Intangibles - software 80 100 75Goodwill 14,036 14,036 14,036Investments - 2,558 - 16,228 18,685 16,381 Current assetsTrade debtors 9,320 10,982 11,173Corporation tax 352 480 35Cash and short term deposits 381 2,117 2,117Other prepayments 1,705 1,517 2,432 11,758 15,096 15,757 Total assets 27,986 33,781 32,138 Current liabilitiesTrade creditors 2,690 2,811 2,824Bank loans 2,256 5,307 4,386Other loans 1,925 - -Loan notes 451 2,462 2,462Finance leases 89 80 84Provision for liabilities and charges 221 444 210Other creditors and accruals 6,605 8,106 7,691 14,237 19,210 17,657Non-current liabilitiesFinance leases 137 226 183Provision for liabilities and charges 240 660 263Other creditors and accruals 143 864 182 520 1,750 628Total liabilities 14,757 20,960 18,285 Net assets 13,229 12,821 13,853 Capital and reservesCalled up share capital 978 961 978Share premium account 11,899 11,706 11,899Merger reserve 10,170 10,170 10,170Employee Share Option Plan reserve (397) (397) (397)Share option reserve 325 264 272Foreign currency translation reserve 63 33 42Retained loss (9,809) (9,916) (9,111) Total equity 13,229 12,821 13,853 Penna Consulting Plc Consolidated statement of changes in equity at 30 September 2006 (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 Share issue 5 - - - - - 5 Currency translation differences - - - - - (7) - (7) Profit - - - - - - 799 799 Share option charge - - - - 52 - - 52 Impact of IAS 39/32 adoption - - - - - - - - At 30 September 2005 961 11,706 10,170 (397) 264 33 (9,916) 12,821 Share issue 17 193 - - - - - 210 Currency translation - differences - - - - - 9 - 9 Profit - - - - - - 1,347 1,347 Share option charge - - - - 8 - - 8 Impact of IAS 39/32 adoption - - - - - - (542) (542) At 31 March 2006 978 11,899 10,170 (397) 272 42 (9,111) 13,853 Share issue - - - - - - - - Currency translation differences - - - - - 21 - 21 Profit - - - - - - (698) (698) Share option charge - - - - 53 - - 53 At 30 September 2006 978 11,899 10,170 (397) 325 63 (9,809) 13,229 Penna Consulting Plc Consolidated group cash flow statement for the six months ended 30 September 2006 (unaudited) Six Months Six Months Year Ended Ended Ended 30 September 30 September 31 March 2006 2005 2006 Note £'000 £'000 £'000Cash flows from operating activitiesCash generated/(used) by operations 5a 102 (1,226) (2,388)Tax (paid)/refunded (17) 48 428Interest paid - bank interest (104) (113) (241)Net cash used by operating activities (19) (1,291) (2,201)Cash flows from investing activitiesNet purchase of property, plant and equipment (196) (783) (1,356)Sale of investment 750 - 2,250 Net cash generated/(used) by investing activities 554 (783) 894 Cash flows from financing activities Interest paid - finance leases (14) (18) (35)Bank loan received 2,000 - -Repayment of finance leases (41) (36) (75)Repayment of loan notes (2,011) (342) (342)Issue of ordinary share capital - - 210Loan from Director 1,925 - - Net cash generated/(used) by financing activities 1,859 (396) (242) Net increase/(decrease) in cash and cash 2,394 (2,470) (1,549)equivalents Cash and cash equivalents at start of period (2,269) (720) (720) Cash and cash equivalents at end of period 5b 125 (3,190) (2,269) Penna Consulting Plc Notes to the interim financial statements for the six months ended 30 September 2006 (unaudited) 1. Accounting policies The consolidated interim financial statements are for the six months ended 30September 2006. They have been prepared under the historical cost conventionusing accounting polices that are consistent with current InternationalFinancial Reporting Standards (IFRS). The interim financial statements areunaudited. 2. Taxation Taxation has been provided for at 30% (2005:30%), for the UK and appropriate rates for overseas earnings. 3. (Loss)/earnings per share The calculation of basic and diluted earnings per share are based on the following amounts: Six months ended Six months Year 30 September 2006 ended ended 30 September 2005 31 March 2006EarningsProfit/(loss) from continuing operations (698) 799 2,146(£'000)Profit/(loss) for the period (£'000) (698) 799 2,146 Number of sharesWeighted average number of shares 19,459,062 19,215,987 19,248,782Dilution effect of share option schemes 27,013 292,984 172,103Diluted weighted average number of Shares 19,486,075 19,508,971 19,420,885(Loss)/earnings per share: Basic (3.6)p 4.2p 11.2p Diluted (3.6)p 4.1p 11.1p 4. Dividends No interim dividend was proposed (2005: nil) for the six months ended 30 September 2006. Penna Consulting Plc Notes to the interim financial statements (continued) for the six months ended 30 September 2006 (unaudited) Six Months Six Months Year Ended Ended Ended5a. Reconciliation of operating profit to net cash 30 September 2006 30 September 2005 31 Marchoutflow from operating activities £'000 £'000 2006Operating (loss)/profit (880) 1,268 2,385Adjustments for:Depreciation 255 276 558Loss on disposal of fixed assets 94 - -Share option expense 53 52 60 Changes in working capital:Decrease/(increase) in trade and other receivables 1,831 (468) (826)Decrease in trade and other payables (1,251) (2,354) (3,605)Surplus property provision reversed - - (960)Cash generated/(used) by operations 102 (1,226) (2,388) At 30 September At 30 September At 31 March 2006 2005 2006 £'000 £'000 £'0005b. Cash and cash equivalents Cash and cash equivalents are made up as follows:Net bank overdraft (74) (5,307) (4,386)Cash on restricted deposit 199 2,117 2,117Cash and cash equivalents 125 (3,190) (2,269) 6. Post Balance Sheet Event On 10 October 2006, trading in the Company's shares moved from the Official Listto AIM and a placing of 5,714,286 at 70p was completed. The Company received£1.9m in cash (net of expenses) from the placing and converted an existing£1.925m loan into ordinary shares. The proforma net debt position (includingloan notes) following the receipt of the placing proceeds is £1.0m. 7. Nature of the financial information The financial information set out in this document does not constitute statutoryaccounts within the meaning of Section 240 of the Companies Act 1985. Statutoryaccounts for the year ended 31 March 2006, on which the auditors gave anunqualified audit report, have been delivered to the Registrar of Companies andcopies of the Interim Report can be obtained from our Registered Office at 3rdFloor, St Mary's Court, 20 St Mary at Hill, London EC3R 8EE. The Board of Directors approved the Interim Report on 7 November 2006. Thefinancial information in respect of the six months to 30 September 2006 isunaudited. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
PNA.L