7 Nov 2008 07:00
7 November 2008
Highams Systems Services Group plc (HSS/L)
("Highams" or "the Group")
The AIM-quoted IT recruitment consultancy and a leading niche provider of technology talent to the financial services industry announces its interim results
for the six months ended 30 September 2008
INTERIM RESULTS
For the six months ended 30 September 2008
Highlights
Revenue of £5.66m (2007: £7.06m)
Gross margin improved by 22% from 14.5% to 17.7%
Losses before tax continued to narrow to £260,000 (2007: loss £495,000) partly reflecting some of the changes announced in the Group's year end results.
New Chairman Ken Ford in situ with effect from 24 October 2008
New Managing Director and new Chief Operating Officer both promoted from within the Group.
Renewed sales drive targeting chosen niche markets, along with rigorous cost cutting initiatives, to deliver better quality earnings
Balance sheet stabilised in October following successful placing of new shares to raise £650,000 (before associated costs).
Ken Ford, Chairman of Highams, commented:
"As announced at the time of our preliminary results, we have received an investment of £650,000 generated through the placing of new shares. The Board changes that we announced concurrently have had a significant impact on the costs of the business during this financial year and we should begin to see the positive effect of these savings in the second half of this year".
Enquiries:
| Mark de Lacy, Managing Director | Tel: 01883 341 144 |
| Highams Systems Services Group plc | |
| www.highams.com | |
| Rick Thompson / Carl Holmes | Tel: 020 7149 6000 |
| Charles Stanley Securities (Nominated Adviser) | |
| Tarquin Edwards | Tel: 020 7034 4758 |
| Adventis Financial PR |
CHAIRMAN'S STATEMENT
Interim results for the six months ended 30 September 2008
Introduction
As announced at the time of our preliminary results, we have received an investment of cash generated through the placing of new shares, raising £650,000 (before associated costs). The Board changes along with other cost savings made, have had a significant impact on the business this financial year and we should begin to see the financial benefits of these savings in the second half of this year. These savings, along with the placing of new shares, have resulted in the balance sheet being stabilised from October.
Included in our preliminary results released on 30 September 2008, we also announced a number of Board changes, details of the Placing of 37,142,857 new ordinary shares at 1.75 pence per share and a Capital Reorganisation. A copy of the Circular to shareholders can be found on our website www.highamsrecruitment.com.
Financials
With Group turnover of £5.66 million (2007: £7.06 million), and with gross profit slightly down at £1.004 million (2007: £1.025 million), we did see however a pleasing rise in our gross margin, which improved to 17.73% of turnover (2007: 14.51%). The operating loss before interest and tax narrowed to £227,000 (2007: loss £455,000) and this progress reflects some of the changes we have made, as announced in the Group's year end results. The exceptional item of £37,000 related to the cost of the Board restructuring.
The Company will not be declaring an interim dividend.
Outlook and Summary
During the period, we have executed significant cost reductions across the group and we are starting to see some of the measures we have introduced begin to bear fruit. Post period end, we are mindful that there is still much hard work needed as far as our sales performance is concerned and we fully recognise the need to focus on sales and delivery, whilst continuing to rigorously monitor all costs.
Whilst the economic climate continues to be unstable, we do remain cautiously confident in our ability to turnaround our business. We continue to focus our efforts on providing a high quality service and look forward to updating our shareholders on continued progress as we go forward.
Ken Ford
Chairman
7 November 2008
| Consolidated Income Statement | ||||||||
| for the six months ended 30 September 2008 | 6 months to | 6 months to | 12 months to | |||||
| 30 Sept 2008 | 30 Sept 2007 | 31 Mar 2008 | ||||||
| Unaudited | Unaudited | Audited | ||||||
| Notes | £'000 | £'000 | £'000 | |||||
| Continuing operations | ||||||||
| Revenue | 5,664 | 7,063 | 13,606 | |||||
| Cost of sales | (4,660) | (6,038) | (11,481) | |||||
| Gross profit | 1,004 | 1,025 | 2,125 | |||||
| Administrative expenses | (1,194) | (1,480) | (2,895) | |||||
| Exceptional Items | (37) | - | - | |||||
| Goodwill impairment | - | - | (1,071) | |||||
| Total administrative expenses | (1,231) | (1,480) | (3,966) | |||||
| Operating loss | (227) | (455) | (1,841) | |||||
| Finance income | 4 | - | 3 | |||||
| Finance costs | (38) | (40) | (84) | |||||
| (Loss)/profit on ordinary activities before taxation | (261) | (495) | (1,922) | |||||
| Tax expense | - | - | - | |||||
| (Loss)/profit for the period attributable to equity shareholders | (261) | (495) | (1,922) | |||||
| (Loss)/profit per share - basic | 2 | (0.82) | p | (1.56) | p | (6.06) | p | |
| Consolidated Statement of Recognised Income and Expense | ||||||||
| for the six months ended 30 September 2008 | ||||||||
| 6 months to | 6 months to | 12 months to | ||||||
| 30 Sept 2008 | 30 Sept 2007 | 31 Mar 2008 | ||||||
| Unaudited | Unaudited | Unaudited | ||||||
| £'000 | £'000 | £'000 | ||||||
| (Loss)/profit for the period | (261) | (495) | (1,922) | |||||
| Loss on foreign currency translation | 1 | - | 4 | |||||
| Total recognised income and expense for the period attributable to equity shareholders | (260) | (495) | (1,918) | |||||
| Consolidated Balance Sheet | |||||||
| As at 30 September 2008 | |||||||
| 30 Sept 2008 | 30 Sept 2007 | 31 Mar 2008 | |||||
| Unaudited | Unaudited | Audited | |||||
| £'000 | £'000 | £'000 | |||||
| Assets | Notes | ||||||
| Non-current assets | |||||||
| Intangible asset - Goodwill | - | 1,071 | - | ||||
| Intangible asset - Computer software | 6 | 13 | 11 | ||||
| Property, plant and equipment | 11 | 24 | 20 | ||||
| 17 | 1,108 | 31 | |||||
| Current assets | |||||||
| Trade and other receivables | 1,563 | 2,818 | 2,273 | ||||
| Cash and cash equivalents | - | 68 | - | ||||
| Total | 1,563 | 2,886 | 2,273 | ||||
| Total assets | 1,580 | 3,994 | 2,304 | ||||
| Liabilities | |||||||
| Current liabilities | |||||||
| Trade and other payables | (1,299) | (1,564) | (1,237) | ||||
| Other financial liabilities | (670) | (1,136) | (1,196) | ||||
| Total | (1,970) | (2,700) | (2,433) | ||||
| Net liabilities | (389) | 1,294 | (129) | ||||
| Equity | |||||||
| Ordinary shares | 3 | 1,594 | 1,594 | 1,594 | |||
| Share premium | 3 | 679 | 679 | 679 | |||
| Merger reserve | 3 | 90 | 90 | 90 | |||
| Employee share benefit trust reserve | 3 | (61) | (61) | (61) | |||
| Currency reserve | 3 | 5 | 0 | 4 | |||
| Retained earnings | 3 | (2,696) | (1,008) | (2,435) | |||
| Total equity | (389) | 1,294 | (129) | ||||
Note: The effect of the placing of new shares on 24 October 2008 is not reflected in the balance sheet at 30 September 2008.
| Consolidated Cash Flow Statement | |||||||
| for the six months ended 30 September 2008 | |||||||
| 6 months to | 6 months to | 12 months to | |||||
| 30 Sept 2008 | 30 Sept 2007 | 31 Mar 2008 | |||||
| Unaudited | Unaudited | Audited | |||||
| £'000 | £'000 | £'000 | |||||
| Cash flows from operating activities | |||||||
| Loss after taxation | (261) | (495) | (1,922) | ||||
| Adjustments for | |||||||
| Depreciation of tangible fixed assets | 5 | 9 | 13 | ||||
| Depreciation of intangible assets - software | 5 | 7 | 13 | ||||
| impairment of goodwill | - | - | 1,071 | ||||
| finance costs | 34 | 40 | 81 | ||||
| Change in trade and other receivables | 710 | 118 | 662 | ||||
| change in trade and other payables | 63 | (328) | (650) | ||||
| Net cash used in operating activities | 556 | (649) | (732) | ||||
| Cash flows from investing activities | |||||||
| Sale/(Purchase) of property plant and equipment | 4 | (7) | (6) | ||||
| Purchase of intangible asset - software | - | (9) | (14) | ||||
| Interest received | 4 | - | 3 | ||||
| Net cash used in investing activities | 8 | (16) | (17) | ||||
| financing activities | |||||||
| decrease/(increase)in borrowings | (526) | 545 | 605 | ||||
| Interest paid | (38) | (40) | (84) | ||||
| Net cash from financing activities | (564) | 505 | 521 | ||||
| Net changes in cash and cash equivalents | - | (160) | (228) | ||||
| Cash and cash equivalents at beginning of period | - | 228 | 228 | ||||
| Cash and cash equivalents at end of period | - | 68 | - | ||||
Notes to the Interim Report
1. Basis of Preparation
This unaudited consolidated interim financial information has been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union collectively EU IFRSs). The principal accounting policies used in preparing the interim results are those it expects to apply in its financial statement for the year ended 31 March 2009 and are unchanged from those disclosed in the group's Annual Report for the year ended 31 March 2008.
The financial information for the six months ended 30 September 2008 and 30 September 2007 is unreviewed and unaudited and does not constitute the group's statutory financial statements for those periods. The comparative financial information for the full year ended 31 March 2008 has, however, been derived from the audited statutory financial statement for that period. A copy of those statutory financial statements has been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under section 237(2)-(3) of the Companies Act 1985.
The financial information in the Interim Report is presented in Sterling and all values are rounded to the nearest thousand pounds (£'000) except when otherwise indicated.
2. Loss per share
| 6 months to 30 Sep 2008 Unaudited | 6 months to 30 Sep 2007 Unaudited | 12 months to 31 Mar 2008 Audited | |||||||
| Loss | Weighted average number of shares | Per share | Loss | Weighted average number of shares | Per share | Loss | Weighted average number of shares | Per share | |
| £'000 | 000's | p | £'000 | 000's | p | £'000 | 000's | p | |
| Basic loss per share | (260) | (0.82) | (495) | (1.56) | (1,922) | ||||
| Impairment of goodwill | 1,071 | ||||||||
| Adjusted (loss)/profit for the financial period | (260) | 31,692 | (0.82) | (495) | 31,692 | (1.56) | (851) | 31,692 | (2.69) |
3. Reconciliation of movements in equity
| Share capital | Share premium | Merger reserve | Employee share benefit reserve | Currency reserve | Retained earnings | Total equity | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||
| At 1 April 2008 | 1,594 | 679 | 90 | (61) | - | (513) | 1789 |
| Loss for the year | - | - | - | - | 4 | (1,922) | (1,918) |
| At 1 April 2008 | 1,594 | 679 | 90 | (61) | 4 | (2,435) | (129) |
| Currency adjustments | - | - | - | - | 1 | - | 1 |
| Loss to 30 September 2008 | - | - | - | - | (261) | (261) | |
| At 30 September 2008 | 1,594 | 679 | 90 | (61) | 5 | (2,696) | (389) |
Note:
The following changes in share capital took place on 24 October 2008
Each of the issued ordinary shares of 5p each in the capital of the Company were sub-divided and re-designated into one ordinary share of 0.01p each and one deferred share of 4.99p each.
Each of the authorised but unissued ordinary shares of 5p each in the capital of the Company were sub-divided into 500 New Ordinary Shares.
The company issued 37,142,857 ordinary shares of 0.01p each for cash. The premium arising on each share was 1.74p.
The Deferred Shares do not carry any voting rights and do not entitle the holders to receive any dividend or other distribution.
A copy of this announcement will be available to download from the investor relations section of the Company's website www.highamsrecruitment.com