2nd Nov 2007 07:00
FAIRPLACE PLC ('Fairplace' or 'the Company') PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2007 Highlights
Turnover from continuing operations increased 4% to ‚£5.07m from ‚£4.87m driven by increasing talent management and coaching revenue.
Operating profit, before amortisation and impairment of goodwill on continuing activities was ‚£0.24m (2006: Loss ‚£0.36m) driven by improved margins and effective cost control.
Loss after tax was ‚£0.52m (2006: ‚£0.88m)
Improved operating cash inflow of ‚£0.08m (2006: outflow ‚£0.07m)
Loss per share 5.30p (2006: 13.08p).
No dividends proposedEnquiries to:Fairplace plcJonathan CohenChairmanTel: 020 7816 0707Nominated Adviser to FairplaceCity Financial Associates LimitedTony RawlinsonTel: 020 7492 4777Chairman's StatementI should like to begin my first Chairman's Statement by paying tribute to MarkAllsup, who, as the founder of the business, was your Chairman for 15 years.Mark served the company with great integrity and diligence, and we wish himwell for the future.This has been a transitional period for the group in which the Board hascontinued to review the composition of the business and to establish thefoundations for profitable growth. This has included the sale of our investmentin Fairplace Consulting Italy Srl, in May this year at a significant loss, andthe write off of the remaining goodwill in Quantum Development and OutplacementServices Limited. As a consequence, the consolidated group loss for the yearwas ‚£517,788 (2006: loss - ‚£878,614).The UK operations showed a welcome return to profit at ‚£240,513 before goodwillimpairment and amortisation (2006 - Loss ‚£360,744), with revenues at ‚£5,068,722(2006 - ‚£4,872,838).The group's strategy is to create centres of excellence across a range ofmarkets within the field of career and talent management, eliminatingloss-making operations and reducing costs. Shortly after the year-end, welaunched Cedar TM led by Helen Pitcher and staffed by the team formerly tradingas CEDAR International. This addition will add significantly to the range ofoutplacement, coaching and talent management services offered by the Group.As Fairplace and Cedar TM are associated with specific segments of the market,we believe the Group needs to adopt a new over-arching identity. The Boardproposes to rename the company Savile Holdings plc, subject to shareholders'approval.Peter Evans will become Group CEO. Fairplace and Cedar TM will become operatingdivisions with Michael Moran and Helen Pitcher as the respective CEOs. TheBoard has been further strengthened by the appointment of Peter Conroy as a nonexecutive director, replacing Graham Hall, who has stepped down. We thankGraham for his contribution over many years.
Though much remains to be done, your Board feels that the Group can face the future with confidence. We are well positioned to tackle the challenges and take advantage of the opportunities that lie ahead.
Finally, in the short time I have been associated with the Group, I have beenhugely impressed by the professionalism and dedication of our people. Inthanking them all for their continuing efforts I would also like to stress ourunwavering commitment to our clients, to provide excellent service at acompetitive price, and to our shareholders, to build a growing, sustainable
andprofitable business.Jonathan CohenChairman1 November 2007Chief Executive's StatementWe have seen real progress in this financial year with the return to profitabletrading. In establishing the Fairplace brand for providing career and talentmanagement services, we have also achieved our target of generating 30% ofsales from talent management. At the same time, we have built a significantbusiness in coaching, providing services to the investment banking, not forprofit and manufacturing sectors.We have successfully used our 360 feedback tool (Talent Tracker 360) to growsales in coaching and talent identification; talent identification and careermanagement generate predictable and repeatable revenues, and it is notable thatwe have not only retained but grown revenues with our clients who buy talentmanagement services. Our strategy of focusing on existing clients, with a viewto persuading them to buy additional services is now paying dividends. Over 20%of our clients buy 2 or more services, and within our top 20 clients, over 60%buy two or more services. This strategy is designed not only to protect thebusiness from downturns in the outplacement market, which is notoriously proneto sudden upswings of activity followed by equally sudden but prolongeddownturns, but also to build a new income stream, which should expand in linewith economic growth. We have won talent management business in the past yearwith a number of new clients.As predicted, the outplacement market in the year under review remained toughin an economy of full employment. Competition between the three largestsuppliers meant that the market remained price sensitive. Fairplace remainspre-eminent in the financial services sector. We have however deliberatelytargeted those businesses in which the knowledge worker is key to companyprofitability and shareholder value. We continue to work with market leaders inthe financial services sectors.
We remain vigilant of the need to manage expenses. We successfully reduced expenditure in the UK by ‚£409,000 (8%). As promised we have significantly reduced our expenditure on accommodation moving to a serviced office model which gives the benefits of both flexibility and reduced overhead. Employee costs in the UK decreased by ‚£168,000 (9%). We reviewed our marketing spend, and consequently made savings whilst at the same time increasing our brand awareness.
We took the decision to dispose of Fairplace Italy. The increasing strength ofthe Careers Partners International brand together with the continued lack ofprofitability of Fairplace Italy meant it made good business sense to exit thisbusiness. Overall we have seen UK sales rise by 4% whilst UK expenses havefallen by 8%; outplacement sales have remained broadly in line with 2005/2006levels, whereas talent management sales have increased by 35%.The challenge ahead is to ensure we retain our share of the outplacementmarket, increase talent management sales, and to manage our expenses. We haveenjoyed an excellent start to the new year and we are currently ahead of budgetin a quarter which has previously been unprofitable due to downturn of activityassociated with the summer months. We are confident that we can continue togrow the business and improve profitability.Michael MoranChief Executive1 November 2007
Group Profit and Loss Account
Continuing Discontinued Continuing Discontinued operations operations 2007 operations operations 2006 ‚£ ‚£ ‚£ ‚£ ‚£ ‚£ Turnover 5,068,722 225,272 5,293,994 4,872,838 415,942 5,288,780 Administrative expenses
Goodwill amortisation (80,000) (45,833) (125,833) (48,041) (50,000) (98,041)
Goodwill impairment (320,000) - (320,000) (288,068)
- (288,068)
Other administrative (4,828,209) (292,910) (5,121,119) (5,233,582) (450,762) (5,684,344)expenses Total Administrative (5,228,209) (338,743) (5,566,952) (5,569,691) (500,762) (6,070,453)expenses Operating profit/ 240,513 (67,638) 172,875 (360,744) (34,820) (395,564)(loss) before goodwill amortisation and impairment
Goodwill amortisation (80,000) (45,833) (125,833) (48,041) (50,000) (98,041)
Goodwill impairment (320,000) - (320,000) (288,068)
- (288,068)
Total Operating loss (159,487) (113,471) (272,958) (696,853) (84,820) (781,673) Loss on disposal of - (217,732) (217,732) - (79,348) (79,348)investments
Disposal of Fixed (25,624) - (25,624) -
- -Assets Interest receivable 1,024 123 1,147 528 - 528
Interest payable (2,405) (216) (2,621) (7,547)
- (7,547)
Loss on ordinary (186,492) (331,296) (517,788) (703,872) (164,168) (868,040)activities before taxation Taxation - - - - (10,574) (10,574) Loss for the (186,492) (331,296) (517,788) (703,872) (174,742) (878,614)financial year Pence Pence Pence Pence Loss per share (1.90) (5.30) (10.49) (13.08)
Loss per share before (1.09) (4.00) (9.77)
(11.62)goodwill
Fully diluted loss (1.90) (5.30) (10.49)
(13.08)per share
Group Balance Sheet as at 30 June 2007
2007 2006 ‚£ ‚£ Fixed assets Intangible assets - 600,000 Tangible assets 187,647 312,449 187,647 912,449 Current assets Stock and work in progress 15,383 19,523 Debtors 1,463,201 1,675,368 Cash at bank and in hand 271,098 240,402 1,749,682 1,935,293 Creditors: amounts falling due within (1,062,533) (1,460,311)one year Net current assets 687,149 474,982 Net assets 874,796 1,387,431 Capital and reserves Called up share capital 294,005 1,020,026 Share premium 2,381,033 2,381,033 Capital Redemption 726,021 - Profit and loss account (2,526,263) (2,013,628) Equity shareholders' funds 874,796 1,387,431
Group Statement of Cash Flow for the year to 30 June 2007
2007 2006 ‚£ ‚£ Cash flow from operating activities 77,644 (67,947) Returns on investments and servicing of finance Interest received 1,147 528 Other interest paid (2,621) (7,547) (1,474) (7,019) Corporation tax refunded - 24,260 Capital expenditure and financial investment Purchase of tangible fixed assets (17,307) (45,044) Sale of tangible fixed assets 11,153 1,923 (6,154) (43,121) Acquisitions and disposals Costs of disposal (39,320) - Proceeds from sale of investments - 82,500 (39,320) 82,500 Cash flow from Financing Activities Issue of Ordinary shares - 546,250 Issue costs - (50,059) - 496,191 Increase in cash in the year 30,696 484,864
Reconciliation of net cash flow to movement in net funds
2007 2006 ‚£ ‚£ Increase in cash in the period 30,696 484,864 Net funds brought forward 240,402 (244,462) Net funds carried forward 271,098 240,402Earnings per shareThe calculation of earnings per share is based on the loss after taxation of ‚£517,788 (2006: ‚£878,614) and on the weighted average number of shares in issueduring the year of 9,800,174 (2006: 6,712,670).
The calculation of earnings per share before goodwill is based on the loss after taxation but ignoring goodwill, giving ‚£391,955 (2006: ‚£780,578) and on the weighted average number of shares in issue during the year of 9,800,170 (2006: 6,712,670).
The fully diluted earnings per share is based on the loss after taxation of ‚£517,788 (2006: ‚£878,614) and on the weighted average number of shares, assumingthat all share options, with an exercise price of less than the market price ofthe shares, were exercised at the beginning of the year, in issue during theyear of 9,800,170 (2006: 6,712,670).
AIM Compliance Committee
The AIM Compliance Committee is chaired by Ken Brotherston, a non-executivedirector of the Company. Having reviewed relevant Board papers, and met withthe Company's Executive Board and the Nomad to ensure that such is the case,the AIM Committee is satisfied that the Company's obligations under AIM Rule 31have been satisfied during the period under review.
Financial Information
The financial information set out above does not constitute the Company's statutory accounts for the year ended 30 June 2007 or 30 June 2006 (but is derived from those accounts).
Statutory accounts for 2006 have been delivered to the Registrar of Companiesand those for 2007 will be delivered following the Company's Annual GeneralMeeting. The auditors have reported on those accounts; their reports wereunqualified and did not contain statements under section 237 (2) or (3) of
theCompanies Act 1985.Annual General Meeting
The Annual General Meeting will be held at 11.00am Thursday 6 December 2007 at the Company's offices 36 - 38 Cornhill LONDON EC3V 3PQ.
Report and Accounts
Copies of the Report and Accounts for the year ended 30 June 2007 will be sent to shareholders in due course. Further copies will be available from the Company's website at www.fairplaceplc.co.uk or at the Company's registered office at 36 - 38 Cornhill LONDON EC3V 3PQ
FAIRPLACE PLCRelated Shares:
Ls -3x Avgo