30th Mar 2006 07:01
InterQuest Group PLC30 March 2006 InterQuest Group Plc 30 March 2006 Preliminary results for the year ended 31 December 2005 InterQuest, the specialist IT recruitment group, announces full year results forthe twelve months to 31 December 2005. Financial Highlights •Year on year sales up 13% to £27.60m •Gross margin up 8% to £4.89m •EBITA up 28% to £1.73m •PBT up 48% to £1.37m •Basic EPS of 7.0pence (2004: 3.5pence) •Basic adjusted EPS of 5.6pence (2004: 4.9pence) •No dividend is proposed Operating Highlights • Successful flotation on AIM in May 2005 • New client wins including Citigroup, KPMG, Prime, Play.com • Strong organic growth of 24% in operating profits excluding acquisitions • Acquisition of FJB (Contracts) Limited and Maxridge Limited in July 2005 • Improved business confidence and some shortages of qualified professionals has resulted in better recruitment market conditions • Successful integration of FJB (Contracts) and Maxridge into the Group Outlook for 2006 • Recent acquisition of PeopleCo Worldwide Limited has extended the group's reach into the high growth sectors of ERP, software development and software testing • Net fee income for the first quarter of 2006 is set to exceed that of the same period in 2005 • The group remains well placed to grow its existing specialist operations and search for complimentary acquisitions in the UK IT staffing arena Commenting on the results, Gary Ashworth, Chairman of InterQuest, said: "2005 was a landmark year for the company. We floated on AIM, made our firstacquisition as a public company and continued to grow organically. Our salesgrew by 13% to £27.60m and our EBITA rose by 28% to £1.73m. We continue to invest in the business through new hires and furtheracquisitions. I believe we start 2006 well positioned to capitalise on theimprovement in business sentiment and a stronger demand for IT services." Chairman's and Chief Executive's statement: We are pleased to report another year of growth for the InterQuest Group, ourfirst as a public company. In particular, the Board is delighted at the continued progress made by ourexisting businesses, which achieved underlying organic growth of 24% inoperating profits. During the year we bought FJB and Maxridge who specialise in the recruitment forpersonnel within the financial services sector, particularly in the City ofLondon as well as within the NHS market. We are pleased with the progress madeby the company and its growth to date. Of our other business divisions, InterQuest UK, which specialises in placing ITprofessionals for the Retail, FMCG and E-tailing sectors, has had a strong year.This has been mainly driven by the fast growth of the E-Tail sector and clientwins such as Play.com Insight, which focuses on voice and data communications and PC support, hasbenefited in 2005 from increased sales mainly from its existing client base. SBS, which provides recruitment services for both the public sector and the SAPmarket, had a steady year with strong contract revenues in the second half. Genesis, which specialises in servicing City institutions and investment banks,has benefited from a strong year for both contract and permanent IT recruitmentacross the Square Mile. We have built the foundations for continued growth by hiring additionalexperienced sales managers and several new fee earners within the group. Thishas extended the group's reach into new and fast growing niche areas. We believe this strategy of focusing on specialist sectors by acquiring andgrowing independently branded specialists is working and providing the rightimpetus for present and future success. We will continue to follow our growth strategy: 1) Identifying complimentary and specialist acquisitions2) Growing their earnings3) Developing staff at all levels4) Incentivising staff through share options5) Imposing centralised financial control6) Presenting specialist divisions within the stronger structure of a larger group After the year-end, we completed the acquisition of PeopleCo Worldwide Limitedfor a total consideration of £5.4m and appointed Martyn Barrow, its managingdirector, to the Group's operational board. We believe the acquisition, the Group's largest to date, will significantlyenhance InterQuest's niche presence in specialist IT contract and permanentrecruitment services. Based in North Yorkshire it extends our geographical reachto the North of England and provides PeopleCo's clients and candidates with aLondon office. The business operates three divisions, which are focused on ERP,software development and software testing. In the year to 31 December 2005,PeopleCo generated turnover of £11.1m and audited profit before tax of £1m. We are excited about the investments we are making and confident that we arewell positioned to achieve our future goals and we are upbeat about ourprospects. Our people are at the heart of everything that we do and it is their skill,enthusiasm and drive that are behind our ability to sustain year on year growth.We thank them for their support, their ability and above all their commitment.In particular, special thanks are given to George Sitwell who resigns as adirector today to pursue other interests. Gary Ashworth ChairmanRoss Eades Chief Executive INTERQUEST GROUP PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT For the year ended 31 December 2005 2005 2004 Note £ £ TurnoverContinuing operations 24,785,868 24,389,937Acquisitions 2,812,981 - 27,598,849 24,389,937 Cost of sales (22,704,979) (19,860,402) Gross profit 4,893,870 4,529,535 Goodwill amortisation (284,131) (261,181)Other administrative expenses (3,160,094) (3,175,212)Total administrative expenses (3,444,225) (3,436,393) Operating profitContinuing operations 1,351,713 1,093,142Acquisitions 97,932 - 1,449,645 1,093,142 Interest payable (87,324) (166,266)Interest receivable 8,206 - Profit on ordinary activities before taxation 1,370,527 926,876 Tax on profit on ordinary activities 2 281,445 (240,794) Profit retained and transferred to reserves 1,651,972 686,082 Earnings per shareBasic 3 7.0 pence 3.5 pence Diluted 3 6.6 pence 3.5 pence All transactions arise from continuing operations. There were no recognised gains or losses other than the profit for the financialyear. CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2005 2005 2004 Note £ £Fixed assetsIntangible assets 5,053,895 4,744,227Tangible assets 158,837 199,023 5,212,732 4,943,250 Current assetsDebtors 4 5,556,422 3,617,924Cash at bank and in hand 1,316,873 611,239 6,873,295 4,229,163 Creditors: amounts falling due within one year 5 (3,196,660) (4,538,454) Net current assets/(liabilities) 3,676,635 (309,291) Total assets less current liabilities and netassets 8,889,367 4,633,959 Capital and reservesCalled up share capital 257,568 198,816Share premium account 5,955,161 3,410,477Profit and loss account 2,676,638 1,024,666Shareholders' funds 8,889,367 4,633,959 CONSOLIDATED CASH FLOW STATEMENTFor the year ended 31 December 2005 2005 2004 Note £ £ Net cash inflow from operating activities 6 1,329,049 1,480,200 Returns on investments and servicing of financeInterest paid (87,324) (166,266)Interest received 8,206 - Taxation (407,303) (179,126) Capital expenditure and financial investmentPayments to acquire tangible fixed assets (26,797) (22,171)Receipts from sales of tangible fixed assets - 3,200 (26,797) (18,971) Acquisitions and disposalsPurchase of subsidiary undertaking in the period 9 (496,854) (45,743) Consideration paid in respect of the purchaseof a subsidiary undertaking in a previous period 9 (1,228,868) - Net cash acquired with subsidiary undertakings 9 (299,369) - (2,025,091) (45,743) Net cash (outflow)/inflow before management ofliquid resources (1,209,260) 1,070,094 FinancingIssue of ordinary share capital 2,603,436 241,250Repayment of shareholder loans - (262,868)Net decrease in trade debtor finance (688,542) (685,629) 1,914,894 (707,247) Increase in cash 7 705,634 362,847 NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 December 2005 1 BASIS OF PREPARATION Principal accounting policies The principal accounting policies of the Group are set out in the Group's 2005Financial Statements. These policies have remained unchanged other than for theadoption of FRS21"Events After The Balance Sheet Date" and FRS 22 "Earnings PerShare". Financial Information The financial information set out in this preliminary announcement does notconstitute Statutory Accounts as defined in Section 240 of the Companies Act1985. The summarised Balance Sheet at 31 December 2005 and the summarised Profit and Loss Account, the summarised Cash Flow Statement andassociated notes for the year then ended have been extracted from the Group'saudited Financial Statements. Those Financial Statements have not yet beendelivered to the Registrar. The financial information relating to the periodended 31 December 2004 is extracted from the statutory accounts, whichincorporated an unqualified audit report and which has been filed with theRegister of Companies. 2 TAX ON PROFIT ON ORDINARY ACTIVITIES The tax (credit)/charge is based on the profit for the year and represents: 2005 2004 £ £ United Kingdom corporation tax at 30% (2004: 30%) 325,625 263,202Adjustments in respect of prior years 17,840 (28,191)Total current tax 343,465 235,011 Deferred taxation (156,778) -Accelerated capital allowancesTax losses carried forward (464,882) -Other timing differences (3,250) 5,783 (281,445) 240,794 Profit on ordinary activities before tax 1,370,527 926,876 Profit on ordinary activities multiplied by standardrate of corporation tax in the United Kingdom of 30% (2004:30%) 411,158 278,063 Effect of: Expenses not deductible for tax purposes (includingamortisation) 73,123 76,259Capital allowances for the period in excess ofdepreciation (56,417) (71,789)Other tax adjustments - 169Marginal relief (4,115) (5,186)Tax losses utilised in year (98,124) (7,714)Under/(over) provision in prior years 17,840 (28,191)Profits charged at lower rate of tax - (6,600)Current tax charge for period 343,465 235,011 NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 December 2005 3 EARNINGS PER SHARE 12 months ended 31 12 months ended 31 December 2005 December 2004 £ £ For basic earnings per share Profit for the financial period 1,651,972 686,082 For adjusted earnings per share Profit for the financial period 1,651,972 686,082 Add back amortisation of goodwill 284,131 261,181 Less tax credit for recognition oflosses and accelerated capitalallowances (621,660) - Adjusted profit for the financialperiod 1,314,443 947,263 Weighted average number Number Numberof shares of shares of shares For basic earnings per share 23,466,432 19,456,539 For diluted earnings per share 25,026,381 19,805,321 Earnings per share Basic 7.0 pence 3.5 pence Diluted 6.6 pence 3.5 pence Adjusted earnings per share Basic 5.6 pence 4.9 pence Diluted 5.3 pence 4.8 pence NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 December 2005 4 DEBTORS 2005 2004 £ £ Trade debtors 4,207,733 3,256,368Prepayments and accrued income 614,000 350,773Other debtors 113,029 10,783Deferred tax asset 621,660 - 5,556,422 3,617,924 5 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 2005 2004 £ £ Trade debtor finance facilities - 688,542Trade creditors 1,604,951 1,249,847Corporation tax 338,189 233,950Other taxation and social security 478,458 463,830Accruals and deferred income 549,819 585,041Other creditors 225,243 212,819Deferred consideration - 1,100,000Deferred tax - 4,425 3,196,660 4,538,454 The trade debtor finance facilities are secured by fixed and floating chargesover the group's assets and had a maximum facility of £4,000,000 at theyear-end, subsequently increased to £5,000,000. Interest is charged at 1.0% overthe prevailing bank base rate. 6 NET CASH INFLOW FROM OPERATING ACTIVITIES 2005 2004 £ £ Operating profit 1,449,645 1,093,142Depreciation 70,394 58,118Amortisation of intangible assets 284,131 261,181Increase in debtors (138,948) (28,252)(Decrease)/increase in creditors (336,173) 96,011Net cash inflow from operating activities 1,329,049 1,480,200 NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 December 2005 7 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS/(DEBT) 2005 2004 £ £ Increase in cash in the year 705,634 362,847Decrease in trade debtor finance facilities 688,542 685,629Decrease in shareholder loans - 262,868Movement in net funds in the year 1,394,176 1,311,344Net debt at 1 January 2005 (77,303) (1,388,647)Net funds/(debt) at 31 December 2005 1,316,873 (77,303) 8 ANALYSIS OF CHANGES IN NET (DEBT)/FUNDS At 1 January 2005 Cash flow At 31 December 2005 £ £ £ Cash in hand 611,239 705,634 1,316,873Trade debtor financefacilities (688,542) 688,542 -Net (debt)/funds (77,303) 1,394,176 1,316,873 9 ACQUISITIONS Genesis Computer Resources Limited The Group paid the final deferred consideration of £1,100,000 in cash on 14January 2005 to the vendors of Genesis Computer Resources Limited, a businesspurchased in October 2003. FJB (Contracts) Limited and Maxridge Limited On 30 June 2005 the Group acquired FJB (Contracts) Limited and Maxridge Limitedfor initial consideration of £400,000 satisfied in cash. Deferred considerationof up to £800,000 is payable in August 2006 however the Directors believe thatthis is unlikely to be payable and hence no provision has been made in the Groupbalance sheet. The deferred consideration, if payable, is payable as tofive-sixths in cash and one-sixth in shares, issued at the market value at thedate of payment. NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 December 2005 ACQUISITIONS (CONTINUED) Analysis of the acquisition of FJB (Contracts) Limited and Maxridge Limited: Net assets at date of acquisition: FJB (Contracts) Limited Book Value Adjustments Provisional Fair Value £ £ £ Tangible fixed assets 411 - 411Debtors 1,216,548 (12,520) 1,204,028Net overdraft (305,454) - (305,454)Creditors due within one year (911,653) (9,600) (921,253)Net liabilities (148) (22,120) (22,268) Maxridge Limited Book Value Adjustments Provisional Fair Value £ £ £ Tangible fixed assets 24,968 (21,968) 3,000Debtors 192,855 - 192,855Cash in hand and at bank 6,085 - 6,085Creditors due within one year (145,570) - (145,570)Provision for liabilities and charges (2,320) - (2,320)Net assets 76,018 (21,968) 54,050 Total net assets 31,782Goodwill arising on acquisition 465,072 496,854 Discharged by:Initial consideration 400,000Costs associated with the acquisition 96,854 496,854 The fair value adjustments are provisional as the directors intend to reservetheir right to re-appraise fair values up until the first full financial yearpost acquisition. Fair value adjustments relate to timing differences andadjustments to the carrying value of the fixed assets on completion. 10 POST BALANCE SHEET EVENTS On 1 March 2006 the Group acquired the entire share capital of PeopleCoWorldwide Limited for a total consideration of £5,429,980 satisfied entirely atcompletion as to £1,056,191 in new shares (2,112,382 ordinary shares issued at50 pence per share) and £4,373,789 in cash. ENDS This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
InterQuest Group