17th Jun 2005 07:00
Berkeley Scott Group Plc17 June 2005 17 June 2005 BERKELEY SCOTT GROUP PLC Interim Results for the 6 months ended 31st March 2005 Berkeley Scott Group Plc ("the Group" or "the Company" or "Berkeley Scott"), isa market-leading provider of resourcing solutions to the hospitality and leisure sector. The company joined the AIM Market in December 2004 Financial Highlights • Turnover increased by 5% to £8.3m • Net fee income rose 8% to £4.3m o permanent fee income grew 23% o temporary fee income flat • EBITDA pre non-recurring costs £0.2m • Balance sheet refinanced following admission to AIM in December • Record forward order book Operational Headlines • Leisure sector demand strong, particularly from the Hotel and Catering industries • 18% increase in the number of fee-earners to 132 to date • New business wins include Virgin Atlantic, MWB, Pret a Manger and Tragus • Expanded activities in Europe through developing partnership programmes • Established new volume recruitment, and financial management recruitment teams Jeremy Hamer, Chairman of Berkeley Scott, said: "This has been a period of greatchange for Berkeley Scott. We joined the AIM market in December enabling us tore-finance the business and establish a solid platform for future growth. Whilstthe trading environment has been positive, in particular the hotel and cateringindustries, high fee-earner turnover during the period has limited our abilityto fully benefit from these trends. However, I am pleased to report that by midJune we had not only replaced our leavers but added a further 20 fee-earnerspositioning the company to capitalise on the current record forward order book." Enquiries: Berkeley Scott Group plcJeremy Hamer, Chairman 01483 414 141Roddy Watt, Chief Executive OfficerWill Coker, Chief Financial Officer Cardew GroupTim Robertson 020 7930 0777Catherine Maitland Chairman's Statement It gives me great pleasure to announce our first set of interim results sinceour admission to AIM in December 2004. Significant progress has been made in the6 months following our IPO which enabled the restructuring of our Balance Sheet.Our investment programme into additional fee earning capacity is now progressingrapidly albeit later than originally planned due to higher than normal staffturnover combined with the positive market environment increasing competitionfor proven performers. Importantly, our core markets continue to experiencefavourable trading conditions particularly in the hotel and catering sectors. Trading Results The total revenue increased by 5.0% to £8.3m (2004: £7.9m) and, moreimportantly, the Net Fee Income rose by 8.2% to £4.3m (2004: £4.0m). Permanentnet fee income driven in part by high levels of demand, and in part byincremental fee earning headcount over the previous year made a strongcontribution increasing by 23.4%. Temporary net fee income was almost unchangeddue to a slight slow down in the market place, albeit we are now seeing tradingmoving ahead in this area once again, supported by new account managementstructures. Our cost base excluding depreciation, interest and goodwill amortisation hasrisen by 12% to £4.2m (2004: £3.8m) largely reflecting 2 new offices inSouthampton and Glasgow, investment in new fee-earners and strengthening of theHuman Resources department to support further growth. By mid June the group hadrecruited over 50 new fee earners of which 20 were additional to the existingbase and the remainder were replacement for leavers during the period. Actualfee earning headcount for the period to 31st March showed no uplift from thestart of the financial year, the increment all coming in the last two months.The recruitment programme was slower than we would have hoped for due to intensecompetition for good quality people across the industry, and higher thananticipated turnover. As a consequence, earnings were held back during theperiod resulting in EBITDA pre non-recurring costs of £0.2m (2004: £0.3m). Thenon-recurring costs of £0.1m relate largely to termination payments made tosenior management. The company recorded a loss before taxation of £0.3m (2004: loss of £0.2m) aftercharging goodwill of £0.1m (2004: £0.1m) and non-recurring items of £0.1m (2004:£0.1m). Net borrowing at the end of March was £2.1m (2004: £3.3m) being gearingof 73% (2004: 351%) As previously indicated the Board is not recommending the payment of a dividendat this stage. Operations Review Our core permanent markets remain buoyant and our primary objective in the shortterm is to continue to invest in our teams of consultants, particularlydeveloping those based in our national network of offices, thus capitalising ongrowing demand across the country. We continue to develop our branch network,with plans to open one further office this calendar year and another in 2006. During the first half, our core permanent recruitment business performed broadlyin line with expectations whilst our temporary business remained flat. Bothareas of the business suffered from a lack of fee-earning headcount due to ahigh turnover in fee earners and intense competition across the industry forproven performers. To address this issue, a major on and off-line advertising and recruitmentcampaign was launched in February, and has led to an incremental 20 newfee-earners being added to the business in the last couple of months. It takesup to 3 months for individuals to become fee generating and we therefore expectto see the impact of our higher fee-earner base coming through in the secondhalf and beyond. Demand remains strong in our main markets and I am pleased toreport that we are now recording a lower level of staff turnover than earlier inthe year.Our new offices in Glasgow and Southampton which were opened towards the end oflast year are both now moving into profit in the second half, and we anticipatesteadily improving results moving forward as the teams are developed. This is inspite of a severe fire in our Glasgow office which necessitated a move to newpremises. Our strategy is to focus on building up the number of fee-earners inall our regional offices thereby developing critical mass and increasingstability. Our small executive search business has performed in line with expectations andwe expect it too will benefit from an increase in fee-earning headcount. Anothersmaller part of the group, the advertising business was impacted by the loss ofa significant account at the end of last year. However, the team respondedpositively and are now coming back on track. We have enjoyed a number of significant new business wins across all areas ofour business including Virgin Atlantic, MWB, Pret a Manager and Tragus. Thepipeline of potential business is at a record level, and we anticipate a numberof further wins in the second half. During the second quarter, we have established a new Project Recruitment Team toprovide services to employers that have a need to recruit in volume for any typeof project. This new team has recently enjoyed its first wins. There are anumber of further interesting projects in the pipeline. We believe thisdevelopment has the potential to become a very exciting area of our business inthe future. We have also been aggressively pursuing opportunities provided by the enlargedEuropean labour market as a consequence of the accession of the Baltic States inMay 2004. We have established two partnerships, in the Czech Republic and morerecently in Poland and are already importing large numbers of skilled personnelfor a range of 'blue chip' hotel and restaurant companies includingInterContinental Hotels and Macdonald Hotels. There is on-going demand forrecruitment from Eastern Europe in particular, due to widespread skill shortagesin the UK and the calibre of people available in these countries. Hence we seemuch additional potential for the future. Finally, we have established a new management recruitment team to providequalified financial personnel to our client base. This is one area we have neverfocused on in the past, but in which there is real opportunity. It is a stepthat is in line with our desire to provide our clients in the hospitality andleisure sectors, with the ability to satisfy their recruitment needs from asingle source. People Since flotation, David Oakley, our Chief Financial Officer, has stepped downfrom the Board as planned. He has been replaced by Will Coker who joined us inApril. Rupert Bayfield also stepped down from the Board after 9 year's service.Rod Leefe has joined the Board as a Non-Executive Director. The Board joins me in thanking all our employees for their hard work over thelast six months and looks forward to working together to extend the Group'sposition as the market leading resourcing company to the hospitality and leisuresector. Outlook Our broad client base in the hospitality and leisure sectors has been enjoyingstrong demand over recent months and indications are that this will continue.Our Net Fee Income is up 4% on the previous year over the 8 weeks to the end ofMay as we now enter the most important 4 months of our year. Whilst the recruitment programme has now taken us to approximately 200 staff(including 132 fee earners), the earlier delays in recruitment mean we will bebehind our expectations for the full year. However by the fourth quarter wewould expect our momentum to be back in line with management's expectation.Prospects for next year are very exciting as the significant investment inpersonnel this year should yield real results. Jeremy HamerChairman BERKELEY SCOTT GROUP PLC GROUP PROFIT AND LOSS ACCOUNT unaudited unaudited (audited) 6 months ended 6 months ended year 31 Mar 05 31 Mar 04 ended 30 Sept 04 Notes £'000 £'000 £'000 Turnover 8,291 7,899 16,611 Cost of Sales (6,651) (6,294) (12,255) --------- -------- --------- Gross Profit 1,640 1,605 4,356 Operating expenses 4 (1,809) (1,607) (4,013) --------- -------- --------- Operating (loss) / profit (169) (2) 343 Interest receivable - 1 1 Interest payable (159) (171) (348) --------- -------- --------- Loss on ordinary activitiesbefore taxation (328) (172) (4) Tax charge/(credit) on losson ordinary activities 2 - - 68 --------- -------- --------- Loss on ordinary activitiesafter taxation (328) (172) (72) Dividends Payable (7) (25) (49) --------- -------- --------- Loss on ordinary activitiestransferred to reserves (335) (197) (121) --------- -------- --------- Loss per share in pence 3 (4.8) (5.1) (3.1)(Basic and Diluted) All recognised gains and losses are included in the profit and loss account. Allamounts for the period relate to continuing activities BERKELEY SCOTT GROUP PLC GROUP BALANCE SHEET unaudited unaudited audited 31 Mar 05 31 Mar 04 30 Sept 04 Notes £'000 £'000 £'000 FIXED ASSETSIntangible Assets 2,703 2,898 2,802Tangible Assets 755 632 775 --------- -------- --------- 3,458 3,530 3,577 CURRENT ASSETSDebtors 5 3,067 2,272 3,350Cash at bank and in hand 137 3 3 --------- -------- --------- 3,204 2,275 3,353CURRENT LIABILITIESCreditors falling due within 6 (3,435) (3,405) (4,308)one year --------- -------- --------- NET CURRENT LIABILITIES (231) (1,130) (955) --------- -------- --------- TOTAL ASSETS LESS CURRENT 3,227 2,400 2,622LIABILITIES CREDITORS : amounts falling dueafter one year 6 (412) (1,460) (1,603) --------- -------- --------- NET ASSETS 2,815 940 1,019 --------- -------- --------- CAPITAL AND RESERVESCalled up share capital 7 170 77 81Share Premium Account 7 3,526 1,484 1,484Capital redemption reserve 7 2 2 2Profit and Loss Account 7 (883) (623) (548) --------- -------- --------- EQUITY SHAREHOLDERS' FUNDS 2,815 940 1,019 --------- -------- --------- BERKELEY SCOTT GROUP PLC GROUP CASH FLOW STATEMENT unaudited unaudited audited 6 months ended 6 months ended year 31 Mar 05 31 Mar 04 ended 30 Sept 04 Notes £'000 £'000 £'000 Net cash (outflow) / inflowfrom operating activities 8 (291) 374 944 Returns on investment andservicing of finance (158) (170) (347) Equity dividends paid (110) - - Taxation - - (3) Capital expenditure andfinancial investment (149) (210) (414) --------- -------- --------- Cash (outflow) / inflowbefore management of liquidresources and financing (708) (6) 180 Cash inflow / (outflow) fromfinancing 9 759 (119) (255) --------- -------- --------- Increase / (Decrease) incash in period 51 (125) (75) --------- -------- --------- RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT unaudited unaudited audited 6 months ended 6 months ended year 31 Mar 05 31 Mar 04 ended 30 Sept 04 Notes £'000 £'000 £'000 Increase / (Decrease) incash in period 51 (125) (75) Cash inflow from change indebt, lease financing &invoice discounting 1,533 125 (197) --------- -------- --------- Change in net debt resultingfrom cashflows 1,584 - (272) New Finance Lease 4 - (102) --------- -------- --------- Movement in net debt in 1,588 - (374)period Net Debt at start of period (3,669) (3,295) (3,295) --------- -------- --------- Net Debt at end of period (2,081) (3,295) (3,669) --------- -------- --------- BERKELEY SCOTT GROUP PLC Notes to the interim reportFor the 6 months ended 31 March 2005 1. Basis of PreparationThe financial information in this report for the 6 months ended 31 March 2005represents 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 periodended 30 September 2004. The results and the balance sheet for the current half year have been reviewedby our auditors. The financial information contained in this interim report doesnot constitute statutory accounts as defined by Section 240 of the Companies Act1985. The comparative figures for the year to 30 September 2004 were extractedfrom the accounts filed with the Registrar of Companies, which carried anunqualified auditors' report. The comparative figures for the 6 months to 31March 2004 were unaudited. 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 2005 has been calculated byapplying the projected effective tax rate for the full year ended 30 September2005. 3. Basic Loss per shareLoss per ordinary share has been calculated using the weighted average number ofshares in issue during the relevant financial periods. On 6 December 2004 theauthorised share capital of 9,999,980 ordinary shares of 10p each and the 2special shares of £1 each were converted and redesignated as 2p ordinary shares.In accordance with Financial Reporting Standard 14 Earnings per share, thecomparative figures for the number of shares used in the earnings have beenadjusted retrospectively as if the shares had been denominated at 2p each. Theweighted average number of equity shares in issue was 7,023,322 (2004 interim -3,847,905: 2004 Full Year - 3,888,455) and the loss, being loss after tax andnon equity dividends, was £(335,000) (2004 interim - £(197,000): 2004 Full Year- £(121,000)) 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. 4. Operating Expenses unaudited unaudited audited 6 months 6 months year ended ended ended 31 March 05 31 March 04 31 March 04 £'000 £'000 £'000 Operating expenses include: Depreciation 165 142 304Amortisation of Goodwill 98 96 193Non-recurring costs- Termination payments 103 62 105*- Aborted acquisition costs - - 43 * Not separately disclosed in 2004 Statutory accounts 5. Debtors unaudited unaudited audited 31 March 2005 31 March 2004 30 Sep 2004 £'000 £'000 £'000 Trade debtors 2,114 1,964 2,386Other debtors 197 55 74Prepayments and accrued income 756 250 890Corporation tax - 3 - ----------- ----------- ---------- 3,067 2,272 3,350 ----------- ----------- ---------- 6. Creditors unaudited unaudited audited 31 March 2005 31 March 2004 30 Sep 2004 £'000 £'000 £'000Amounts falling due withinone year Bank Loans and overdrafts(secured) 409 765 515Bank invoice discountingfacility 1,338 1,036 1,498Trade Creditors 439 308 395Corporation tax 65 - 65Other taxation and socialsecurity 565 510 759Finance Leases and Hire Purchase 60 37 55Proposed Dividend - 25 101Other creditors 24 130 278Accruals and deferred income 535 594 642 ----------- ----------- ---------- 3,435 3,405 4,308 ----------- ----------- ---------- Amounts falling due afterone year Bank Loans 367 780 885Finance Leases and Hire Purchase 45 30 68Loan Stock - 650 650 ----------- ----------- ---------- 412 1,460 1,603 ----------- ----------- ---------- The loan stock of £650,000 was repaid in full on 6 December 2004. A new bankfacility of £500,000 was arranged on 6 December 2004. Bank loans are secured ondeeds of composite guarantees and mortgage debentures granted by the BerkeleyScott 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 81 1,484 2 (548) 1,0192004 Sharesissued 89 2,042 - - 2,131in AIMlisting Lossattributabletoshareholders - - - (335) (335) ------- -------- --------- -------- ----------At 31 March2005 170 3,526 2 (883) 2,815 ------- -------- --------- -------- ---------- 8. Net cash flow from operating activities unaudited unaudited audited 6 months ended 6 months ended year ended 31 March 2005 31 March 2004 30 Sep 2004 £'000 £'000 £'000 Operating profit / (loss) (169) (2) 343Depreciation 165 142 304Amortisation of Goodwill 98 96 193(Increase)/ Decrease in debtors 283 5 (1,074)Increase / (Decrease) increditors (668) 133 1178 ----------- ----------- ----------Net cash (outflow) / inflow fromoperating activities (291) 374 944 ----------- ----------- ---------- 9. Cash inflow / (outflow) from financing unaudited unaudited audited 6 months ended 6 months ended year ended 31 March 2005 31 March 2004 30 Sep 2004 £'000 £'000 £'000 Issue of ordinary share capital 3,071 - 4Expenses on issue of ordinaryshare capital (939) - -Repayment of loan notes (1,358) (95) (190)Capital element of finance leasepayments (15) (24) (69) ----------- ----------- ----------Cash inflow / (outflow) fromfinancing 759 (119) (255) ----------- ----------- ---------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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