Interim Results
May 21 2003 - 5:29AM
UK Regulatory
RNS Number:3634L
Hot Group PLC
21 May 2003
HOT GROUP PLC (or 'the Group')
Half Year Results for the period ended 28 February 2003
Hot Group plc, the online specialist recruitment company, announces its half
year results for the period ended 28 February 2003.
Key Points:
* Trading broadly in line with expectations despite tough market conditions
* Acquired PlanetRecruit in January, one of the top ten UK online
recruitment companies
* Enlarged Group now one of the top five UK online recruitment companies
* Has network of over 10 niche and generalist recruitment websites
* New product licence introduced which is accelerating transition to
profitability
* Foundation in place to become a leading on and off-line recruitment
company
* Appointment of Strand Partners as its new Nominated Adviser
* Loss before exceptional items of #543,000 on turnover of #956,000
Tony Reeves, Chairman and Chief Executive of Hot Group, said: "Our business
model of becoming a leading on and off-line recruitment company remains on
schedule. As one of the country's top five online recruitment agencies, we are
looking forward to the future and believe our business structure and product
offering will enable us to achieve our long term objectives."
Enquiries:
Hot Group plc 020 7000 9994
Tony Reeves, Chairman and Chief Executive
Steve Wright, Finance Director
St Brides Media & Finance Limited 020 7242 4477
Hugo de Salis
Chairman's Statement
Overview
Trading was broadly in line with our expectations despite continuing general
economic uncertainty and fragile business confidence. Our strategy remains to
become a leading on and off-line recruitment company and we now believe that we
have a strong foundation from which to achieve this post the acquisition of
PlanetRecruit. The enlarged Group is now one of the top five UK online
recruitment companies which provides us with a critical mass from which to
further our ambitions.
We have witnessed tough market conditions and have incurred a higher level of
contract cancellations/bad debts, particularly in our online agency division
which is partly a result of agency liquidations. However we have proactively
tried to counteract this with the launch of a new product licence, which is
having a major impact in the fortunes of the business, and is accelerating our
transition to profitability. In addition, we are realising significant cost
savings having consolidated three offices into one large office in West London,
which will also provide us with capacity for expansion.
Group Development
During the period we continued to look for acquisition opportunities. In
January, we acquired PlanetRecruit, one of the top ten UK online recruitment
companies, which consolidates our position in this market and more importantly,
provides the Group with a far stronger product offering. The integration of
PlanetRecruit has been accomplished quickly and efficiently with annualised cost
savings in excess of #400k secured within 90 days of the acquisition.
The technology platforms of the two companies have now been fully integrated and
the resultant new product, hotonline, was launched in March. This product, sold
on substantially improved licence terms, is now one of the UK's largest online
recruitment networks and comprises over 10 niche and generalist recruitment
websites, including the existing Jobtrack product. Since its launch we are able
to clearly articulate and demonstrate the underlying product value, and through
a stronger pricing policy, are experiencing increased sales productivity, which
is reflected in higher margins and profitability.
Results
In the 6 month period, which includes one month of the PlanetRecruit
acquisition, revenues achieved amount to #956k and losses before exceptional
items amount to #543k, of which #147k relates to goodwill amortisation. At 28
February the Group's net overdraft was #58k, which is within the Group's
overdraft facility. Additional funds for working capital have been secured
since 28 February. The Group continues to closely monitor cash requirements and
further funds will be required in the short term prior to the Group turning
cash-flow positive.
Change of Adviser
The Group has today appointed Strand Partners as its Nominated Adviser with
immediate effect.
The Future
Although business confidence remains weak, we have grown substantially during
the period and secured our position as a leading player in the market. As a
result, I believe the Group is ideally positioned to produce considerably better
results in the future. We are maintaining a cautious stance on the basis that
market conditions will remain challenging but stable for the remainder of this
year. At the same time as keeping careful control over costs, the
infrastructure of the business continues to be developed so that the Group is
positioned to secure the longer-term prospects as the recruitment market
undergoes technology led change.
We remain alert to acquisition opportunities, particularly those that assist our
strategic objectives for widening our product range and show potential synergy
with our existing on-line capability and offerings. We are very happy with the
direction of the Group, which we believe will ensure that the Group remains at
the cutting edge of the changes taking place within the recruitment business.
Anthony H Reeves
May 2003
Consolidated Profit and Loss Account
For the 6 months ending 28 February
2003
6 months 16 months
ended ended
28 February 31 August
2003 2002
Note (Unaudited) (Audited)
#000 #000
Turnover
Continuing operations 876 1,592
Acquisitions 80 268
Discontinued operations - 971
956 2,831
Marketing and development costs (50) (699)
Administrative expenses (1,449) (4,640)
Operating loss
Continuing operations (568) (1,805)
Acquisitions 25 (416)
Discontinued operations (287)
(543) (2,508)
Exceptional items 2 (219) 0
Loss on disposal of Strategies Division - (2,198)
Interest receivable - 70
Interest payable (14) (74)
Loss on ordinary activities before taxation (776) (4,710)
Tax on loss on ordinary activities - -
Loss on ordinary activities before taxation (776) (4,710)
Minority interests 0 26
Loss for the financial period attributable to
members of hot group plc (776) (4,684)
Loss per share (pence) 3 (2.52p) (31.24p)
Consolidated Balance Sheet
As at 28 February 2003
28 February 31 August
2003 2002
(Unaudited) (Audited)
Note #000 #000
Fixed Assets
Intangible Assets 7,468 5,255
Tangible Assets 181 104
7,649 5,359
Current Assets
Debtors: amounts falling due within one year 1,184 816
Cash at bank and in hand 65 100
1,249 916
Creditors: amounts falling due within one year (2,987) (2,368)
Net current liabilities (1,738) (1,452)
Total assets less current liabilities 5,911 3,907
Creditors: amounts falling due after more than one year (400) (400)
Provisions for liabilities and charges (210) (210)
Net assets 5,301 3,297
Equity capital and reserves
Called up share capital 4,307 2,547
Share premium 8,258 7,238
Other reserve 619 619
Profit and loss account (7,883) (7,107)
Equity shareholders' funds 4 5,301 3,297
Consolidated Cash Flow Statement
For the 6 months ended 28 February 2003
6 months 16 months
ended ended
28 February 31 August
Note (Unaudited) (Audited)
2003 2002
#000 #000 #000 #000
Net cash outflow from operating activities 5 (1,241) (1,246)
Returns on investment and servicing of finance
Interest received - 70
Interest paid (4) (64)
Net cash inflow (outflow) from returns on investments
and servicing of finance (4) 6
Capital expenditure
Payments to acquire tangible fixed assets (82) (49)
Net cash outflow from capital expenditure (82) (49)
Acquisitions and disposals
Purchase of subsidiary undertakings - (2,099)
Proceeds of disposal of Strategies Division - 713
Net cash (overdrafts) acquired with subsidiary undertakings 163 (80)
Net overdrafts disposed of with Strategies Division - 50
163 (1,416)
Net cash outflow before financing (1,164) (2,705)
Financing
Repayment of loan (10) -
Issue (net of expenses) of ordinary share capital 1,144 2,550
Net cash inflow from financing 1,134 2,550
Decrease in cash 5b (30) (155)
Notes to the unaudited financial information
1) Basis of accounting
The consolidated interim financial statements have been prepared under the
historical cost convention and in accordance with applicable United Kingdom
Accounting Standards. The accounting policies are the same as those set out in
the financial statements of the Group for the period ended 31 August 2002.
The interim financial statements are unaudited. Comparative figures for the 6
month period to 28 February 2002 have not been included because, in the opinion
of the Directors, a meaningful comparison is not possible given the change in
structure of the Group since 28 February 2002. The auditors' report on the
financial statements for the period ended 31 August 2002 was unqualified and did
not include a statement under Section 237(2) or (3) of the Companies Act 1985.
2) Exceptional item
The exceptional item represents the cost of the integration of PlanetRecruit,
which was acquired during the period.
3) Loss per share
6 months 16 months
ended ended
28 February 31 August
2003 2002
Attributable loss (#000) (776) (4,684)
Average number of ordinary shares in issue 30,777,365 14,994,525
Basic loss per share (pence) (2.52p) (31.24p)
Fully diluted loss per share is the same as basic loss per share
4) Reconciliation of movements in equity shareholders funds
6 months 16 months
ended ended
28 February 31 August
2003 2002
#000 #000
Loss for the period (776) (4,684)
New share capital subscribed (net of expenses) 2,780 7,590
Write off of irrecoverable minority interest - (4)
2,004 2,902
Opening equity shareholders' funds 3,297 395
Closing equity shareholders' funds 5,301 3,297
5) Notes to the cash flow statement
6 months 16 months
ended ended
28 February 31 August
2003 2002
(Unaudited) (Audited)
#000 #000
(a) Net cash outflow from operating activities
Operating loss (543) (2,508)
Exceptional items (219) -
Depreciation, amortisation and impairment of fixed assets 179 471
Loss on disposal of tangible fixed assets 0 39
Expense settled by issue of share capital - 10
Decrease (increase) in debtors (232) 289
Increase (decrease) in creditors (426) 243
Increase in provisions for liabilities and charges 210
Net cashflow from operating activities (1,241) (1,246)
6 months 16 months
ended ended
28 February 31 August
2003 2002
#000 #000
(b) Reconciliation of net cash flow to net (debt) funds
Decrease in cash (30) (155)
Decrease in debt financing 10
Loans acquired with subsidiary companies 0 (537)
Increase in net debt/decrease in net funds (20) (692)
Net (debt) funds at beginning of period (565) 127
Net debt at end of period (585) (565)
c) Analysis of changes in net (debt) funds
Acquisitions
1 September of subsidiary 28 February
2002 undertakings Cash flows 2003
#000 #000 #000 #000
Cash at bank and in hand 100 163 (198) 65
Bank overdrafts (128) 5 (123)
(28) 163 (193) (58)
Debt due within one year (137) 10 (127)
Debt due after more than one year (400) (400)
(565) 163 (183) (585)
(d) Major non-cash transactions
During the period the company issued 9,375,000 ordinary shares of 10p each at
16.5p per spare and #500,000 3% redeemable notes 2003 in part settlement of the
cost of acquisition of PlanetRecruit Limited. Depending upon the achievement of
a revenue performance target, the company will be required to issue up to a
further 3,125,000 ordinary shares of 10p each at 16.5p per share, which will
increase goodwill and shareholders' funds by the value of the shares issued.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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