21st Nov 2005 07:00
Highams Systems Services Group PLC21 November 2005 Date: 21 November 2005 Contacts: Ted Andrews, Group Managing Director Highams System Services Group plc Tel: 01883 341 144 Tarquin Edwards / Chris Steele 07879 458 364 / 07979 604 687 Binns & Co PR Tel: 020 7786 9600 Highams Systems Services Group plc ("Highams" or "the Group") INTERIM RESULTS Highams Systems Services Group plc, the AIM listed IT recruitment company, witha specialist focus on the provision of IT contract and permanent staff into thebanking, finance and insurance sectors, is today pleased to announce interimresults for the six months ended 30 September 2005. Alan Howarth, Chairman, commented:"The successful integration of RWP into the Group and the return to operatingprofitability are important steps in the development of a strategy that weconfidently believe will enhance our client base leading to further improvementin operating performance. We continue to remain alert for earnings enhancingacquisitions in our core areas of expertise and believe that, as we demonstratedwith RWP, the Group can derive appropriate and worthwhile benefits of scale fromcarefully selected and integrated opportunities. I look forward to the Group's continued progress in the months ahead and see arange of new sales opportunities being driven by the increasing level of M&Aactivity within our client sectors recently, the provision of new web servicesacross those sectors and the introduction of legislative changes to existingcompliance and pension arrangements, some of which are due to come into forceimminently. Whilst we face certain challenges, the fundamentals of both the Group and of itsmarkets remain sound and I look forward to the future with confidence." CHAIRMAN'S STATEMENT Interim results for the six months ended 30 September 2005 Our first full year with RWP Recruitment Services fully integrated into Highamshas started well with a return to operating profitability and turnover nearlydoubled compared to the comparable period in 2004. FinancialI am pleased to report that the turnover of the Group rose by 97 per cent. to£8.8 million (2004: £4.5 million), and that the Group witnessed a return to anoperating profit before goodwill amortisation of £92,000 (2004: loss of£189,000). Group loss after goodwill amortisation but before taxation was£29,000 (2004: loss of £195,000). The Company is not declaring an interim dividend. Trading and OutlookTrading in our specialist areas of insurance and finance has remained positive;the volume of new requirements for contract and permanent IT personnel hasincreased from the first quarter to the second, with a corresponding increase innew placements made. Since the start of the financial year, the effect of previously announced boardand management changes, together with the consolidation of our premises and thefull integration of our sales teams, has enabled us to realise the twin goals ofa significantly enhanced sales capability and a substantial rationalisation ofthe Group's cost base. We are also pleased to have experienced particular demand for business analystsand consultants during the period, which is significant for several reasons. Notonly do these individuals introduce to the Company higher revenues and grossmargins, but they are frequently associated with projects which in themselvescreate other new business opportunities. During the period, we have seen the average contract term for personnelreducing, as evidenced by a higher rate of 'churn' of contractors thanpreviously experienced. This may be a temporary situation but, as a result ofthis, although we have hit our new sales targets, our contractor numbers haveremained fairly static. Accordingly, we now expect the second half performanceto be comparable to that of the first half, with the consequence that it isunlikely we will now meet market expectations for the full year. The successful integration of RWP into the Group and the return to operatingprofitability are important steps in the development of a strategy that weconfidently believe will enhance our client base leading to further improvementin operating performance. We continue to remain alert for earnings enhancingacquisitions in our core areas of expertise and believe that, as we demonstratedwith RWP, the Group can derive appropriate and worthwhile benefits of scale fromcarefully selected and integrated opportunities. I look forward to the Group's continued progress in the months ahead and see arange of new sales opportunities being driven by the increasing level of M&Aactivity within our client sectors recently, the provision of new web servicesacross those sectors and the introduction of legislative changes to existingcompliance and pension arrangements, some of which are due to come into forceimminently. Whilst we face certain challenges, the fundamentals of both the Group and of itsmarkets remain sound and I look forward to the future with confidence. Consolidated Profit & Loss Accountfor the six months ended 30 September 2005 6 months to 6 months to 12 months to 30 Sep 2005 30 Sep 2004 31 Mar 2005 Unaudited Unaudited Audited Restated Notes £'000 £'000 £'000 Turnover 8,844 4,496 13,512Cost of sales (7,770) (3,862) (11,799) Gross profit 1,074 634 1,713Administrative expenses- before exceptional costs and goodwill (982) (823) (1,920)amortisation- exceptional items 2 - - (200)- goodwill amortisation (78) (17) (91) (1,060) (840) (2,211) Operating profit/(loss) before exceptional 92 (189) (207)items and goodwill amortisation Operating profit/(loss) 14 (206) (498) Interest receivable - 14 15Interest payable (43) (3) (40) Loss on ordinary activities before taxation (29) (195) (523)Tax on loss on ordinary activities - 9 9 Loss for the financial period (29) (186) (514)Dividends - - - Loss for the period (29) (186) (514) Loss per share - basic and diluted 3 (0.09) p (0.83) p (1.90) p Consolidated Statement of Total Recognised Gains and Lossesfor the six months ended 30 September 2005 6 months to 6 months to 12 months to 30 Sep 2005 30 Sep 2004 31 Mar 2005 Unaudited Unaudited Audited £'000 £'000 £'000Loss for the period (29) (186) (514)(Loss)/profit on foreign currency (1) 1 1translationTotal recognised gains and losses 4 (30) (185) (513)relating to the period Consolidated Balance SheetAs at 30 September 2005 30 Sep 30 Sep 31 Mar 2005 2004 2005 Unaudited Unaudited Audited Notes £'000 £'000 £'000Fixed assetsGoodwill 1,316 1,458 1,394Tangible assets 34 64 46 1,350 1,522 1,440 Current assetsDebtors 3,645 2,931 2,909Cash at bank and in hand 182 - 247 3,827 2,931 3,156 Creditors: amounts falling due within one (3,020) (1,938) (2,409)year Net current assets 807 993 747 Net assets 2,157 2,515 2,187 Capital and reservesCalled up share capital 4 1,594 1,594 1,594Share premium 4 679 679 679Merger reserve 4 297 297 297Investment in own shares 4 (59) (59) (59)Profit and loss account 4 (354) 4 (324)Equity shareholders' funds 2,157 2,515 2,187 Consolidated Cash Flow Statementfor the six months ended 30 September 2005 6 months to 6 months to 12 months to 30 Sep 2005 30 Sep 2004 31 Mar 2005 Unaudited Unaudited Audited Re-presented Notes £'000 £'000 £'000 Reconciliation of operating result to net cash flowfrom operating activitiesOperating profit/(loss) 14 (206) (498)Depreciation of tangible fixed 5 24 49assetsGoodwill amortisation 78 17 91(Increase)/decrease in debtors (736) 429 152Increase/(decrease) in creditors 360 (688) 167Loss/(profit) on disposal of 2 (2) -fixed assetsExchange difference (1) 1 1 (278) (425) (38) CASH FLOW STATEMENT Net cash outflow from operating (278) (425) (38)activities Returns on investments and servicing of finance Interest received - 14 15Interest paid (43) (3) (40) (43) 11 (25) TaxationUK corporation tax - (63) (64) Capital expenditure and financial investment Purchase of tangible fixed (5) (2) (8)assetsSale of tangible fixed assets 9 28 25 4 26 17 Acquisitions and disposals Purchase of subsidiary - (1,762) (1,771)undertakingNet cash acquired with - (102) (102)subsidiaryDeferred consideration received - - 300 - (1,864) (1,573) Equity dividends paid - - - Cash outflow before financing (317) (2,315) (1,683) FinancingNet proceeds from issue of - 412 412sharesInvoice discounting facility 252 376 778 252 788 1,190 Decrease in cash in the period 5 (65) (1,527) (493) Notes to the interim report 1. Basis of preparation The interim report includes the accounts of the Company and its subsidiaryundertakings and has been prepared on the basis of the accounting policies setout in the statutory accounts for the year ended 31 March 2005. In accordance with the presentation adopted in the financial statements for theyear ended 31 March 2005, direct overheads have been included in administrativeexpenses. Previously these costs have been included in cost of sales.Comparative figures for the six months ended 30 September 2004 have beenre-presented accordingly. The cashflow statement for the six months to 30 September 2004 has beenre-presented to reclassify amounts received through the invoice discountingfacility from operating cash flows to financing cash flows. This presentation isin accordance with that adopted in the statutory accounts for the year ended 31March 2005. The interim report is unaudited and does not constitute statutory accounts. Acopy of the statutory accounts for the year ended 31 March 2005 has been filedwith the Registrar of Companies. The auditors' opinion on those accounts wasunqualified and did not contain a statement under section 237(2) or (3) of theCompanies Act 1985. The interim report for the six months ended 30 September 2005 was approved bythe board on 18 November 2005. A copy of this report has been sent toshareholders and further copies of this report are available from the Company'sregistered office. 2. Exceptional items 6 months to 6 months to 12 months to 30 Sep 2005 30 Sep 2004 31 Mar 2005 (unaudited) (unaudited) (audited) £'000 £'000 £'000Exceptional items comprise thefollowing: Integration and restructuring costs followingthe acquisition of RWP Recruitment Services Limited - - (200) 3. Loss per share 6 months to 6 months to 12 months to 30 Sep 2005 30 Sep 2004 31 Mar 2005 (unaudited) (unaudited) (audited) Loss Per share Loss Per share Loss Per share £'000 p £'000 p £'000 pLoss for the (29) (0.09) (186) (0.83) (514) (1.90)financial period Shares 000's 000's 000'sWeighted average 31,708 22,324 27,008number of shares The exercise price of all share options is above the average market price ofordinary shares during the period and the comparative periods, and therefore theoptions are not dilutive under the terms of FRS22. An adjusted earnings/(loss) per share is shown below, calculated by reference toearnings/(losses) before goodwill amortisation and exceptional items. Thedirectors consider that this gives a useful indication of underlyingperformance. 6 months to 6 months to 12 months to 30 Sep 2005 30 Sept 2004 31 Mar 2005 (unaudited) (unaudited) (audited) Profit/ Per share Loss Per share Loss Per share (loss) £'000 p £'000 p £'000 p Profit/(loss) for the financial period before goodwill amortisation 49 0.15 (169) (0.75) (223) (0.83) Goodwill amortisation (78) (0.24) (17) (0.08) (91) (0.33) Exceptional Items - - - - (200) (0.74) Loss for the financial period (29) (0.09) (186) (0.83) (514) (1.90) 4. Movement in shareholders' funds Profit Investment and Share Share Merger in own Loss Total Capital Premium Reserve shares Account Reserves £'000 £'000 £'000 £'000 £'000 £'000 1 April 2005 1,594 679 297 (59) (324) 2,187 Total recognised gains and losses for the period - - - - (30) (30)30 September 2005 1,594 679 297 (59) (354) 2,157 TAR5. Analysis and reconciliationof net (debt)/funds Analysis of changes in net funds 1 Apr 2005 Cash Flow 30 Sep 2005 £'000 £'000 £'000Cash at bank and in hand 247 (65) 182Invoice discounting facility (778) 252 (1,030) Net (debt)/ funds (531) 187 (848) Cash at bank and in hand includes £432 (31 March 2005: £2,312) in respect of moniesheld in the Employee Share Benefit Trust. Reconciliation of net cash flow to 6 months to 6 months to 12 months tomovement in net funds 30 Sep 2005 30 Sep 2004 31 Mar 2005 (unaudited) (unaudited) (audited) £'000 £'000 £'000Cash outflow (65) (1,527) (493)Increase in invoice discount facility (252) (376) (778) (317) (1,903) (1,271)Net (debt)/funds brought forward (531) 740 740 Net debt carried forward (848) (1,163) (531) This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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