Last checked at 30 Sep 2008 07:00
CHAIRMAN'S STATEMENT
I am pleased to announce the interim results for a period in which, despite the adverse economic conditions, our company has continued to make a profit after tax.
Highlights
* Gross revenues down 24% to ‚£1,259,000 * Company continues to be profitable * A record of 18 new clients signed up * Third quarter trading marginally ahead of last year * Alliance signed with Rhodes Associates, a top ten US executive search firm
As I indicated at the time of the final results in March 2008, our clients were uncertain as to their requirements for the first six months and the result was that turnover for the first half declined 24 per cent. to ‚£1,259,000. Whilst this was in line with the prevailing economic conditions and our expectations it provided a challenge to the Company and its ability to withstand such adverse trading. I am pleased to say that in spite of the decline in revenues, our determined costs management has enabled us to remain profitable, with an operating profit in the first six months of ‚£72,000 (2007: ‚£367,201), a pre tax profit of ‚£29,000 (2007: ‚£312,744) and a post tax profit of ‚£20,000 (2007: ‚£ 219,000).
At our AGM earlier this year we stated our objective was to diversify our client base and not be reliant on one particular sector. This strategy has proved to be successful. Since the beginning of 2008 we have engaged with 18 new clients, which is a record in the history of our Company. More importantly, these new clients are from such diverse sectors that, as we stand, nearly 70% of our revenue is generated outside financial services.
One of the key strengths of Garner has been its ability to build long term relationships with its clients and thereby generate high levels of repeat business. The objective for the Garner team now, is to maintain that performance and to convert new clients into repeat business. The third quarter of 2008 has delivered strong performance and is ahead of the same period last year, albeit marginally. We anticipate, by nurturing our new clients, revenues for the whole of the second half of the year will be ahead of the first, which is the opposite of last year and hopefully returns Garner to the growth trend achieved in recent years.
On 21 May we announced the hiring of two replacement consultants, to start in the second half, in line with our diversification strategy. I am pleased to say that the HR practice is now making a significant contribution to our performance and we have also been able to expand our offering to financial services clients to include IT and back office senior management and functional roles, which is an area that is still in demand despite the recent market turmoil. We also referred to the Digital Media practice, which has been developed using existing internal resources and is proving to be a successful addition to our portfolio.
Our balance sheet position has shown a positive movement from total liabilities of ‚£1,301,000 at 31 December 2007, to ‚£1,271,000 as at 30 June 2008. However the challenging trading conditions of the first half had an adverse effect on our cash flow. The improvement in business towards the end of the period, as demonstrated by the significant increase in our debtor book, helped partially to offset this. The result of this was an increase in net debt to ‚£1,415,000 from ‚£1,183,000 as at 31 December 2007. Overall, our cash position is well controlled, debtors are being well managed and we continue to trade within our facilities.
In line with our focus on behalf of shareholders to improve our balance sheet position I am particularly pleased to announce that an agreement has been reached in principle, subject to shareholder approval, whereby the Preference Shareholders should be able to convert their holdings to Ordinary Shares. This will be put for approval by shareholders and Preference Shareholders at a forthcoming EGM, details of which we expect to issue in the near future. This would remove ‚£1.213m of liabilities from the balance sheet.
We have spoken before of building an alliance with an American search firm to extend our geographical reach. This has been accomplished and I am delighted to announce a new relationship with Rhodes Associates based in New York and San Francisco ("Rhodes"). Rhodes, one of the top ten US firms by revenue, is a similar business to ours and clients have responded very favourably to the alliance. We will now be able to offer a presence in North America and provide a reciprocal presence for Rhodes in Europe. Revenues generated by the arrangement will be split between the two parties and, with no additional costs, so the benefit will flow straight through to our profits.
There are currently a number of acquisition opportunities in our sector that would complement our growth strategy and enhance our earnings stream. The board has been involved in several preliminary discussions to date and continues to explore opportunities as they arise.
The executive management and team at Garner continue to be enthusiastic and driven to succeed, which, to my mind says a great deal in today's business environment.
J BartleChairmanContact details:Garner plc
Andrew Garner +44 (0) 207 629 8822
www.garnerinternational.com
Dowgate Capital Advisers Limited
David Newton +44 (0) 207 492 4770
www.dowgate.co.uk
CONSOLIDATED INCOME STATEMENT FOR THE 6 MONTHS ENDED 30 JUNE 2008 Six months Six months Year ended ended 30 ended 30 31 December June 2008 June 2007 2007 (unaudited) (unaudited) (audited) ‚£000 ‚£000 ‚£000 REVENUE 1,259 1,662 3,122 COST OF OPERATIONS (1,187) (1,295) (2,513) GROUP OPERATING PROFIT 72 367 609 Net finance costs (43) (54) (115) PROFIT ON ORDINARY ACTIVITIES 29 313 494BEFORE TAXATION Tax expense (9) (94) (92) PROFIT FOR THE FINANCIAL PERIOD 20 219 402 Earnings per share - basic 0.05p 0.58p 1.06p Earnings per share - diluted 0.05p 0.58p 1.01p All activity arose from continuing operations CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2008 As at 30 As at 30 As at 31 June 2008 June 2007 December 2007 (unaudited) (unaudited) (audited) ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 Goodwill 959 959 959 Property, plant and 14 22 14equipment TOTAL NON-CURRENT ASSETS 973 981 973 Trade and other receivables 1,069 991 812 Cash and cash equivalents - - 56 TOTAL CURRENT ASSETS 1,069 991 868 TOTAL ASSETS 2,042 1,972 1,841 TOTAL CURRENT LIABILITIES (2,990) (3,035) (2,819) Non-current liabilities (323) (421) (323) TOTAL LIABILITIES (3,313) (3,456) (3,142) TOTAL ASSETS LESS TOTAL (1,271) (1,484) (1,301)LIABILITIES Issued share capital 4,944 4,942 4,942 Share premium account 3,853 3,845 3,845 Retained earnings (10,068) (10,271) (10,088) TOTAL EQUITY (1,271) (1,484) (1,301)CONSOLIDATED CASH FLOW STATEMENTS AND NOTES Six months Six months Year ended ended 30 ended 30 31 June 2008 June 2007 December 2007 (unaudited) (unaudited) (audited) Notes ‚£000 ‚£000 ‚£000 Net cash from operating activities (i) (192) 12 223 Cash flows from investing activites and servicing of finance Interest paid (43) (54) (115) Payments to acquire tangible (3) - (2)assets Net cash used in investing (46) (54) (117)activites Cash flows from financing activities Net cash inflow from equity 10 - -placings Repayment of secured loans - (112) (181) Payment/(repayment) of advances 90 - (31)from directors Increase in invoice discounting 78 (9) 187 Net cash from financing activities 178 (121) (25) Net increase in cash and cash (60) (163) 81equivalents Net cash and cash equivalents at 56 (25) (25)beginning of period Net cash and cash equivalents at (4) (188) 56end of period Analysis of net funds Cash and cash equivalents - - 56 Bank overdraft (4) (188) (2) (4) (188) 54 Borrowings due within one year (932) (634) (848) Borrowings due after one year (323) (503) (323) Directors loan account (156) (97) (66) Net funds (1,415) (1,422) (1,183) Note (i) Reconciliation of operating profit to net cash from operating activities Six months Six months Year ended ended 30 ended 30 31 June 2008 June 2007 December 2007 (unaudited) (unaudited) (audited) ‚£000 ‚£000 ‚£000 Operating profit 72 367 609 Depreciation of property plant and 3 3 4equipment Amortisation of loan arrangements 3 - 3fees (Increase) in trade and other (257) (320) (144)receivables (Decrease) in trade and other 77 (38) (108)payables Taxation paid (90) - (141) Net cash from operating activities (192) 12 223 NOTES TO THE UNAUDITED INTERIM REPORT
1. BASIS OF PREPARATION
The results for the six months ended 30 June 2008, which are unaudited, have been prepared under the historical cost convention.
The financial information contained in this interim report has been prepared in accordance with the accounting policies as set out in the Company's accounts for the year ended 31 December 2007, and utilises accounting policies consistent with International Financial Reporting Standards adopted for use in the European Union ("IFRS").
The financial information set out in this document has not been audited or reviewed by our auditors and neither this interim report nor the financial information contained in it constitutes statutory accounts of the Company within the meaning of section 240(5) of the Companies Act 1985.
2. BASIS OF CONSOLIDATION
The group financial statements consolidate those of the Company and of its subsidiary undertaking Garner International Limited, a company incorporated in England and Wales. Profits or losses on intra-group transactions are eliminated in full.
3. EARNINGS PER ORDINARY SHARE
The calculation of the earnings per share is based on the profit attributable to ordinary shareholders of ‚£20,000 (2007: ‚£219,000) and the weighted average number of ordinary shares in issue during the period, being 38,061,315 (2007: 37,968,937).
4. COPIES OF THE UNAUDITED INTERIM REPORT
Copies of this report are available on request from the Company's registered office at 6 Derby Street, London, W1J 7AD and on the web site www.garnerinternational.com.
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