NAK.L Regulatory News (NAK)

19 Dec 2006 07:01

Highams Systems Services Group PLC19 December 2006 For release 7.00am 19 December 2006 Ted Andrews, Group Managing DirectorHighams Systems Services Group plc Tel: 01883 341 144www.highams.co.uk Tarquin Edwards / Chris Steele Tel: 020 7034 4758 / 020 7034 4759Adventis Financial PR 07879 458 364 / 07979 604 687 Highams Systems Services Group plc (HSS.L) ("Highams" or "the Group") INTERIM RESULTS For the six months ended 30 September 2006 Highams Systems Services Group plc, the AIM listed IT recruitment company, witha specialist focus on the provision of IT contract and permanent staff into theinsurance, investment management and financial services sectors, is todaypleased to announce interim results for the six months ended 30 September 2006. Highlights •Turnover at £8.13m (2005: £8.84m) - Loss before tax of £39,000 (2005: loss £15,000) •Operating profit before goodwill amortisation of £57,000 (2005: £92,000) •Refocusing strategy on growing higher value business from SMEs has seen permanent business increase by 80 per cent. in period •Expanding client base reduces dependency on larger clients •New sales-oriented CEO appointed to drive organic growth •Current trading is in line with expectations Alan Howarth, Chairman, commented: "We announced a return to operating profitability in June 2006. This was one ofseveral important steps in the implementation of a strategy that we believe willenhance our client base and lead to further improvement in operatingperformance. The interim results point to our continuing progress. In a further exciting step, the appointment of Dave Pye as CEO ushers in thenext important stage in the evolution of Highams and we look to benefit from hisimpressive track record, his wealth of contacts and his proven ability to substantially drive sales growth. I look forward to the future with considerable excitement and confidence." CHAIRMAN'S STATEMENT Interim results for the six months ended 30 September 2006 As we have previously stated, whilst continuing to engage with FTSEorganisations, our emphasis is now on finding higher value business throughfurther enhancing our capabilities to provide a specialised range of services tosmaller and medium sized organisations. We continue to seek and win new clientsthat meet these criteria in our niche market sectors. This process of refocusing our strategy has been achieved with only a smalldetriment to our half year results. Compared to the same period last year, ourvolume of low-margin business has reduced substantially, while higher-margincontract business has increased by around 5% and permanent business hasincreased by 80%. Financials Group Turnover was £8.13 million (2005: £8.84 million) reflecting the Group'smove towards higher margin business. Gross profit, though broadly flat at £1.068million (2005: £1.074 million) represents 13.14% of turnover (2005: 12.14%).Operating profit before goodwill amortisation was £57,000 (2005: £92,000) with aloss on ordinary activities before taxation of £39,000 (2005: loss £15,000). The Company is not declaring an interim dividend. Current Trading We are experiencing a continuing heavy demand for permanent staff from ourfinancial sector clients. This stronger demand for permanent staff compared tocontract personnel has traditionally been a sign of a confident market.Supporting this view of a confident market, our long-standing and our morerecently acquired software house clients are all finding business in thefinancial sector is developing well - giving Highams the opportunity to supply abroad range of staff to these organisations. Demand is particularly strong, across the board, for individuals with webservices skills, whilst we are additionally helping to find business developmentpersonnel for our software house clients. New Appointment & Directorate Change When we reviewed our strategy earlier in 2006, we concluded that, as well asseeking business from SMEs rather than very large businesses, we needed tosignificantly increase our growth by organic means. To best achieve this we haveundertaken a careful search to identify a new sales-orientated CEO to lead thecompany. I'm delighted to advise you that our search has been successful andthat Dave Pye will join the company in that capacity with effect from 3 January2007. Dave, aged 42, has extensive experience as a recruitment professional within thetechnology services industry over a 20 year period. He was previously ManagingDirector of the Technology division within Spring Group plc, the UK's largesttechnology staffing organisation and was a member of the Spring Group ManagementBoard. Dave and his division twice won IT Recruitment Company of the year, in2004 and 2005, delivering strong organic growth in the business in addition togrowth from acquisition. He worked jointly with Spring's M&A Director inoutlining suitable professional services organisations as potential acquisitiontargets. On Dave Pye's appointment, Ted Andrews, currently Group Managing Director, willbecome COO. The provision of our services to a greater number and wider range ofclients will demand more operational and professional support. I am delightedthat Ted has agreed to take on this new challenge and raise the standards of ourcommitments to our clients. Outlook We announced a return to operating profitability in June 2006. This was one ofseveral important steps in the development of a strategy that we believe willenhance our client base and lead to further improvement in operatingperformance. The interim results point to our continuing progress to that end. The appointment of Dave Pye as CEO ushers in the next important stage in theevolution of Highams and we look to benefit from his impressive track record,his wealth of contacts and his proven ability to substantially drive salesgrowth. I look forward to the future with considerable excitement and confidence." Alan HowarthChairman19 December 2006 Consolidated Profit & Loss Accountfor the six months ended 30 September 2006 6 months to 6 months to 12 months to 30 Sep 2006 30 Sep 2005 31 Mar 2006 Unaudited Unaudited Audited Restated Notes £'000 £'000 £'000 Turnover 8,130 8,844 17,997Cost of sales (7,062) (7,770) (15,885) --------- --------- ---------- Gross profit 1,068 1,074 2,112Administrative expenses --------- --------- ---------- - before goodwill amortisation (1,011) (982) (1,920) - goodwill amortisation (64) (64) (128) --------- --------- ---------- (1,075) (1,046) (2,048)------------------------- --------- --------- ----------Operating profit beforegoodwill amortisation 57 92 192------------------------- --------- --------- ---------- Operating (loss)/profit (7) 28 64 Interest receivable - - 2Interest payable (32) (43) (79) --------- --------- ---------- Loss on ordinary activities before taxation (39) (15) (13)Tax on loss on ordinary activities - - (2) --------- --------- ---------- Loss for the period (39) (15) (15) --------- --------- ---------- Loss per share - basic and diluted 2 (0.12) p (0.05) p (0.05) p Consolidated Statement of Total Recognised Gains and Lossesfor the six months ended 30 September 2006 6 months to 6 months to 12 months to 30 Sep 2006 30 Sep 2005 31 Mar 2006 Unaudited Unaudited Audited Restated £'000 £'000 £'000Loss for the period (39) (15) (15)Loss on foreign currency translation (1) (1) (1) --------- --------- ----------Total recognised gains andlosses relating to the period 3 (40) (16) (16) --------- --------- ---------- Consolidated Balance SheetAs at 30 September 2006 30 Sep 2006 30 Sep 2005 31 Mar 2006 Unaudited Unaudited Audited Restated Notes £'000 £'000 £'000Fixed assetsGoodwill 1,007 1,135 1,071Tangible assets 48 34 55 --------- --------- ---------- 1,055 1,169 1,126 --------- --------- ---------- Current assetsDebtors 3,303 3,645 3,170Cash at bank and in hand 124 182 73 --------- --------- ---------- 3,427 3,827 3,243 Creditors: amounts falling duewithin one year (2,548) (3,020) (2,395) --------- --------- ----------Net current assets 879 807 848 --------- --------- ----------Net assets 1,934 1,976 1,974 --------- --------- ---------- Capital and reservesCalled up share capital 3 1,594 1,594 1,594Share premium 3 679 679 679Merger reserve 3 90 90 90Investment in own shares 3 (61) (59) (61)Profit and loss account 3 (368) (328) (328) --------- --------- ----------Equity shareholders' funds 1,934 1,976 1,974 --------- --------- ---------- Consolidated Cash Flow Statementfor the six months ended 30 September 2006 6 months to 6 months to 12 months to 30 Sep 2006 30 Sep 2005 31 Mar 2006 Unaudited Unaudited Audited Restated Notes £'000 £'000 £'000Reconciliation of operating result to net cash flowfrom operating activitiesOperating (loss)/profit (7) 28 64Depreciation of tangible fixed assets 13 5 17Goodwill amortisation 64 64 128Increase in debtors (133) (736) (261)(Decrease)/increase in creditors (279) 360 508Loss on disposal of fixed assets - 2 3Exchange difference (1) (1) (1) --------- --------- ---------- (343) (278) 458 --------- --------- ---------- CASH FLOW STATEMENT Net cash (outflow)/inflow fromoperating activities (343) (278) 458 Returns on investments and servicing of financeInterest received - - 2Interest paid (32) (43) (79) --------- --------- ---------- (32) (43) (77) --------- --------- ---------- TaxationUK corporation tax - - (46) Capital expenditure and financial investmentPurchase of tangible fixed assets (6) (5) (38)Sale of tangible fixed assets - 9 9 --------- --------- ---------- (6) 4 (29) --------- --------- ---------- Equity dividends paid - - - --------- --------- ----------Cash (outflow)/inflow before financing (381) (317) 306 FinancingPurchase of own shares byEmployee Share Benefit Trust - - (2)Invoice discounting facility 432 252 (478) --------- --------- ---------- 432 252 (480) --------- --------- ----------Increase/(decrease) in cash in the period 4 51 (65) (174) --------- --------- ---------- Notes to the Interim Report 1. Basis of Preparation The accounts for the year ended 31 March 2006 included a prior year adjustmentin respect of the fair value of the consideration paid on the acquisition of RWPRecruitment Services Limited in the year ended 31 March 2005. The effect of thisprior year adjustment on the comparative figures for the six months ended 30September 2005 has been to reduce net assets by £181,000 and to reduce the lossfor the period by £14,000. The interim report is unaudited and does not constitute statutory accounts. Acopy of the statutory accounts for the year ended 31 March 2006 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 2006 was approved bythe Board on 18 December 2006. A copy of this report has been sent toshareholders and further copies of this report are available from the Company'sregistered office: Quadrant House, 33-45 Croydon Road, Caterham, Surrey, CR36PB. 2. Loss per share 6 months to 6 months to 12 months to 30 Sep 2006 30 Sep 2005 31 Mar 2006 (unaudited) (unaudited) (audited) Loss Per share Loss Per share Loss Per share Restated Restated £'000 p £'000 p £'000 pLoss for thefinancial period (39) (0.12) (15) (0.05) (15) (0.05) -------- -------- -------- --------- ------- ---------- Shares 000's 000's 000'sWeighted averagenumber of shares 31,708 31,708 31,708 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 FRS 22 but may become so in thefuture. An adjusted earnings/ (loss) per share is shown below, calculated by referenceto earnings/(losses) before goodwill amortisation. The Directors consider thatthis gives a useful indication of underlying performance. 6 months to 6 months to 12 months to 30 Sep 2006 30 Sep 2005 31 Mar 2006 (unaudited) (unaudited) (audited) Profit/(loss) Per share Profit/(loss) Per share Profit/(loss) Per share Restated Restated £'000 p £'000 p £'000 pProfit forthe financialperiod beforegoodwill amortisation 25 0.08 49 0.15 113 0.35Goodwillamortisation (64) (0.20) (64) (0.20) (128) (0.40) -------- --------- ---------- --------- -------- --------Loss for thefinancialperiod (39) (0.12) (15) (0.05) (15) (0.05) -------- --------- ---------- --------- -------- -------- 3. Movement in shareholders' funds Share Share Merger Investment Profit and Total Capital Premium Reserve in own shares Loss Account Reserves £'000 £'000 £'000 £'000 £'000 £'000 1 April 2006 1,594 679 90 (61) (328) 1,974Total recognised gains andlosses for the period - - - - (40) (40) ------- -------- -------- ---------- --------- -------30 September 2006 1,594 679 90 (61) (368) 1,934 ------- -------- -------- ---------- --------- ------- 4. Analysis and reconciliation of net funds Analysis of changes in net funds 1 Apr 2006 Cash Flow 30 Sep 2006 £'000 £'000 £'000Cash at bank and in hand 73 51 124Invoice discounting facility (300) (432) (732) --------- -------- --------- Net funds (227) (381) (608) --------- -------- --------- Cash at bank and in hand includes £2,368 (31 March 2006: £2,368) in respect ofmonies held in the Employee Share Benefit Trust. Reconciliation of net cash flow to movement in net funds 6 months to 6 months to 12 months to 30 Sep 2006 30 Sep 2005 31 Mar 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000Cash inflow/(outflow) 51 (65) (174)(Increase)/decrease in invoice discount facility (432) (252) 478 --------- --------- --------- (381) (317) 304Net funds brought forward (227) (531) (531) --------- --------- --------- Net funds carried forward (608) (848) (227) --------- --------- --------- This information is provided by RNS The company news service from the London Stock Exchange