RNS Number:2722N
Penna Consulting PLC
08 July 2003
PENNA CONSULTING PLC ANNOUNCES
FULL YEAR RESULTS
8 July 2003
Penna Consulting Plc, (PNA), the leading international partner of
choice in human capital management, today announced preliminary
results for the year ended 31 March 2003.
Highlights
* Career Consulting remained strong
* Continued challenging markets for Change Consulting and Resourcing
* Diversification into other sectors progressing well
* Costs reduced
* Further investment in services, technology and geography
* Group turnover: #48.8m (2002: #52.3m)
* Profit before tax, goodwill and exceptional items: #4m (2002: #6.5m)
* Loss before tax: #5.5m (2002: Profit #4.4m)
* Diluted earnings per share, before goodwill and exceptional items:
12.7p (2002: 23.5p)
* Full year dividend held at 2002 level: 3.6p per share (2002: 3.6p per
share)
* #4.6m cash generated from operating activities (2002: #5.2m)
* #5.4m cash at year end (2002: #8.5m)
Commenting on the results, Michael Jolly, Chief Executive said:
"The 2002/03 year was challenging. We continued to balance cost
management with investing for the future as our performance improved
through the year. Notwithstanding our satisfactory start to this
year and the benefits to come from our restructuring, the markets
for our services remain uncertain. What is more certain is that
organisations have a growing need to improve performance through
their people, and our expertise enables us to help our clients meet
that need."
Preliminary Results - 2002/03
The year 2002/03 was challenging. We continued to balance cost
management with investing for the future as our performance improved
through the year.
We are disappointed to be reporting a fall in our diluted earnings
per share from 23.5p to 12.7p before restructuring costs, goodwill
amortisation and other exceptional costs. We are encouraged by the
way our revenues have risen as we progressed through the year.
Our total revenues were #48.8m (2001/02: #52.3m). Operating costs
fell 2.8% to #44.8m, resulting in profit before tax, restructuring
costs, goodwill amortisation and other exceptional costs of #4.0m
(2001/02: #6.5m)
Our Dividend
The Board has recommended a final dividend of 2.1p (2001/02: 2.1p),
making a total payment for the year of 3.6p (2001/02: 3.6p). The
final dividend will be payable on 3rd October 2003 to shareholders
on the register at close of business on 5th September 2003.
Career Consulting
Following a record 2001/02, widespread corporate downsizing
continued in response to economic difficulties but at slightly more
modest levels. Although our total revenues fell by #1.9m to #35.4m,
our business within the banking community grew 15% to a new record
high. Operating profits eased to #7.5m as margins softened from last
year's 25% to 21% due to some price pressure and, most notably,
additional short-term property costs incurred to meet the heavy
demand from our banking clients.
Change Consulting
Demand for our services was hampered by many clients remaining
cautious on spending in the light of ongoing uncertainty.
Revenues fell by #1.7m to #6.5m and profits slipped from #0.7m in
2002 to a loss of #0.7m. Our response was to develop and refine our
business development processes and re-focus our efforts. As a
consequence, the year saw our quarter on quarter revenues steadily
rising and we ended the year trading profitably.
Resourcing
2002/03 remained a difficult year for the recruitment market. After
last year's drop in our revenues of 47% to #7.6m, 2002/03 saw
revenues level off at #7.3m. Our 2001/02 loss of #1.9m was reduced
to a loss of #0.9m.
In managing through this difficult time we have:
i. taken great care to retain our core capability and coverage whilst
keeping our overheads to a minimum;
ii. generated improving revenues throughout each quarter of the year;
iii. won new clients and broadened our business base.
Our Interim Resourcing practice, providing experienced professional
managers across a broad range of functions, often at short notice,
has achieved 42% year on year growth in revenues and provides a
substantial platform for further expansion.
As organisations continue to seek ever more effective resourcing
strategies, Penna Consulting continues to develop and widen its
resourcing capabilities and expertise. During the year we invested a
further #1.5m with this in mind, most significantly in our ability
to offer a managed resourcing service using sophisticated
technology. This enables us to offer improved effectiveness and
efficiency in meeting our clients' recruitment needs.
The Spread of our Business across Sectors
Following our progress last year, 2002/03 saw further strides in
spreading our revenues more evenly over our industry sectors. In
particular, our business within a broad spread of public sector
bodies grew 26% to over #5.5m. Our considerable and growing
experience now means Penna Consulting is a preferred supplier to
numerous local, regional and national bodies for many of our
services.
Serving our Clients Internationally
As our clients continue to expand globally our strategy remains to
serve them wherever they have need. Last year we reported an initial
investment in a new, Canadian consultancy called Knightsbridge Human
Capital Management. This year we have made a further investment of
#1.5m to maintain our minority stake as this business has acquired
Change Consulting and Resourcing capability to complement its Career
Consulting business. Over the year it has grown to annualised
revenues of over #10m and is building business across Canada with a
similar strategy to ourselves. Penna Consulting has an option to
acquire the business from 2004.
Our People
Despite the current challenges of our market place, our performance
is a tribute to the commitment and capability of our people. We,
like many of our clients, have continued to seek improved
productivity. Lowering our cost base has required us to part company
with some of our people. Whilst never easy, this has been achieved
whilst improving our revenues through the year. A restructuring cost
of #1.5m will reduce our people related costs by approximately #3m
in 2004.
The Quality of our Service
The foundation stone of our success is the quality of our delivery
in all that we do. Our commitment is as strong as ever, evidenced by
our on-going Investors in People accreditation and our progress
towards the new Matrix standard for quality service businesses.
Goodwill
In accordance with FRS 11 we have looked carefully at the carrying
value of the goodwill attributed to acquisitions made since 1998. We
have adjusted the valuation of these businesses in line with current
market conditions and have recognised a goodwill impairment charge
of #6m.
Cash
The group continues to generate cash, with #4.6m of cash generated
from operating activities in the period. This cash has been used to
continue to invest in the future of the business, most notably our
investments in Canada and our managed recruitment capability
described above.
The effective tax charge of 40% for the group is distorted by the
impact of disallowable charges and unrecovered losses from overseas
operations. Going forward, a tax charge of approximately 32% can be
expected on operating profits before goodwill amortisation.
The Future
Notwithstanding our satisfactory start to this year and the benefits
to come from our restructuring, the markets for our services remain
uncertain. What is more certain is that organisations have growing
need to improve performance through their people, and our expertise
enables us to help our clients meet that need.
We will continue to exploit, and invest in, the opportunities
technology offers for improving the quality and value we can offer
our clients.
We are committed to returning to profitable growth, continuing to
generate cash and building shareholder value.
We know our business model, culture and Penna-branded approach makes
us an attractive employer of considerable talent. It is through just
such talent we will succeed.
Chairman Suzie Mumme
Chief Executive Michael Jolly
For further information please contact:
Suzie Mumme, Chairman Tel 020 7945 3505
Michael Jolly, Chief Executive
David Firth, Finance Director
GROUP PROFIT AND LOSS ACCOUNT
For the year ended 31 March 2003
Results before Amortisation Unaudited Audited
of
amortisation of goodwill &
goodwill & exceptional TOTAL
items
Note exceptional
items
2003 2003 2002
2003
#'000 #'000 #'000
#'000
Turnover 3 48,782 - 48,782 52,252
Operating costs before goodwill (44,737) (1,992) (46,729) (46,544)
amortisation
Amortisation & impairment of - (7,467) (7,467) (1,522)
goodwill
Operating profit/(loss) 3 4,045 (9,459) (5,414) 4,186
Share of operating profit of 6 57 (34) 23 -
associate
Net interest (payable)/ (82) - (82) 189
receivable
Profit/(loss) on ordinary 4,020 (9,493) (5,473) 4,375
activities before taxation
Taxation on profit/(loss) on (1,622) 437 (1,185) (2,012)
ordinary activities
Profit/(loss) on ordinary 2,398 (9,056) (6,658) 2,363
activities after taxation
Dividends 4 (655) - (655) (649)
Retained profit/(loss) for the 1,743 (9,056) (7,313) 1,714
year
Earnings/(loss) per share 7
Basic
After amortisation of goodwill - - (37.0)p 13.2p
Before amortisation of goodwill 13.3p - 4.7p 21.7p
Diluted
After amortisation of goodwill - - (37.0)p 12.9p
Before amortisation of goodwill 12.7p - 4.5p 21.1p
Consolidated statement of total recognised gains and losses
For the year ended 31 March 2003
2003 2002
#'000 #'000
(Loss)/profit for the year (6,658) 2,363
Gain/(loss) on foreign currency translation 38 (26)
Total recognised gains and losses for the year (6,620) 2,337
GROUP BALANCE SHEET
31 March 2003
Unaudited Audited
2003 2002
Note #'000 #'000
Fixed assets
Intangible assets - goodwill 18,353 24,805
Tangible assets 2,317 2,197
Investments 6 2,517 2,051
23,187 29,053
Current assets
Debtors 13,473 15,124
Cash at bank & in hand 8 5,407 8,543
18,880 23,667
Creditors: amounts falling due within one year (17,363) (15,970)
Net current assets 1,517 7,697
Total assets less current liabilities 24,704 36,750
Creditors: amounts falling due after (3,927) (7,213)
more than one year
Provisions for liabilities & charges 9 (457) (1,985)
Net assets 20,320 27,552
Capital & reserves
Called up share capital 901 900
Share premium account 10,234 10,192
Merger reserve 10,170 10,170
Profit and loss account (985) 6,290
Shareholders' funds
Equity interests 20,320 27,552
GROUP CASH FLOW STATEMENT
For the year ended 31 March 2003
Unaudited Audited
2003 2002
#'000 #'000
Operating (loss)/profit (5,448) 4,185
Depreciation charges 834 934
Amortisation & impairment of goodwill 7,501 1,522
(Profit)/loss on disposal of tangible (9) 62
fixed assets
Decrease/(Increase) in debtors 1,818 (624)
Decrease in creditors (73) (875)
Net cash inflow from operating activities 4,623 5,204
Returns on investments and servicing of finance (78) 189
Taxation paid (2,226) (2,629)
Capital expenditure and financial investment
Purchase of tangible fixed assets (890) (1,435)
Increase in investments (1,456) (2,051)
Sale of tangible fixed assets 13 4
Net cash outflow from capital expenditure and financial investment (2,333) (3,482)
Acquisitions & disposals
Payment of deferred acquisition (266) (487)
consideration
Purchase of subsidiary undertakings (1,583) (162)
Net cash outflow from acquisitions & disposals (1,849) (649)
Equity dividends paid (649) (645)
Cash outflow before management of liquid resources and financing (2,512) (2,012)
Management of liquid resources
Cash withdrawn from short-term deposit 2,500 9
Cash placed on restricted deposit - (500)
2,500 (491)
Financing
Issue of ordinary share capital 43 62
Repayments of convertible loan notes (667) -
(624) 62
Decrease in cash in the year (636) (2,441)
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
For the year ended 31 March 2003
2003 2002
#'000 #'000
(Loss)/profit for the year (6,658) 2,363
Dividends (655) (649)
Adjustment to goodwill previously written off to reserves - 1,169
Shares issued during the year 43 728
Gain/(loss) on foreign currency 38 (26)
translation
Net (reduction)/addition to shareholders' funds (7,232) 3,585
Opening shareholders' funds 27,552 23,967
Closing shareholder's funds 20,320 27,552
NOTES TO THE PRELIMINARY REPORT
1. ACCOUNTING POLICIES
There have been no changes to the accounting policies set out in the 2002 Report
and Accounts.
2. ACCOUNTS
The financial information set out in this document does not constitute statutory
accounts within the meaning of Section 240 of the Companies Act 1985. Statutory
accounts for the year ended 31 March 2002, on which the auditors gave an
unqualified audit report, have been delivered to the Registrar of Companies. The
Report and Accounts for 2003 will be posted to shareholders in August and copies
will be available from our Registered Office at 15 Welbeck Street, London W1G
9XT.
3. SEGMENTAL ANALYSIS
The Group's turnover and operating profits were attributable to the following
activities:
Unaudited Audited
31 March 2003 31 March 2002
Turnover Operating Turnover Operating
Profit Profit
#'000 #'000 #'000 #'000
Career Consulting 35,391 7,532 37,253 9,216
Resourcing 7,315 (947) 7,642 (1,891)
Change Consulting 6,488 (744) 8,167 725
Intercompany sales (412) - (810) -
Unallocated central overheads - (1,796) - (1,774)
48,782 4,045 52,252 6,276
Amortisation & impairment of goodwill - (7,467) - (1,522)
Restructuring costs - (1,992) - (568)
48,782 (5,414) 52,252 4,186
Unaudited Audited
31 March 2003 31 March 2002
Turnover Operating Profit Turnover Operating Profit
#'000 #'000 #'000 #'000
UK 45,638 4,220 47,075 6,079
Rest of World 3,144 (175) 5,177 197
Amortisation of goodwill & exceptional items - (9,459) - (2,090)
48,782 (5,414) 52,252 4,186
4. DIVIDENDS
A final proposed dividend of 2.1p (2002: 2.1p) per ordinary share will be
payable on 3 October 2003 to ordinary shareholders on the register at the
close of business on 5 September 2003. During the year an interim dividend
of 1.5p (2002: 1.5p) was paid.
5. EXCEPTIONAL ITEMS
The exceptional items comprise:
#'000s
Restructuring costs 1,456
Write-down of investment in own shares 300
Write-off of call option & other aborted acquisition costs 236
Goodwill impairment charge 6,000
Amortisation of goodwill 1,501
9,493
6. INVESTMENT IN ASSOCIATE
The investment at 31 March 2003 represents the Group's investment in 15% of the
ordinary equity of Knightsbridge Human Capital Management Inc. Since 1 October
2002, this has been accounted as an associate under the terms of FRS 9. Goodwill
arising on this investment is amortised in accordance with Group accounting
policy.
Goodwill Share of net assets Total
#'000 #'000 #'000
Acquired 1 October 2002 1,350 1,148 2,498
Profits retained for the year - 53 53
Amortisation for the year (34) - (34)
1,316 1,201 2,517
7. EARNINGS PER SHARE
Earnings per share have been calculated by dividing the profit attributable to
shareholders for the financial year by the
weighted average number of ordinary shares in issue during the year. The
weighted average number of shares in issue is
based on the following information:
31 March 2003 31 March 2002
Unaudited Audited
number number
Weighted average number of shares in issue per basic earnings 18,019,391 17,900,161
Dilutive effect of:
Share options 551,843 196,435
Convertible debt 249,128 454,810
Weighted average number of shares in issue per diluted earnings 18,820,362 18,551,406
The profit attributable to shareholders used in the calculation of earnings per
share for the year is based on the following
information:
31 March 2003 31 March 2002
Unaudited Audited
#'000 #'000
(Loss)/profit attributable to shareholders (6,658) 2,363
Interest on loan notes after tax - 26
Exceptional items after tax 1,555 398
Goodwill amortisation 7,501 1,522
Earnings per share before goodwill amortisation and exceptional items is
presented as an additional measure of the Group's
performance.
8. CASH AT BANK AND IN HAND
The purchase consideration for certain acquisitions included the issue of loan
notes amounting to #3.6 million. An equivalent cash
amount was transferred into a restricted deposit account to guarantee the
payment of these loan notes. This is included within
cash at bank and in hand.
9. PROVISIONS FOR LIABILITIES AND CHARGES
This item, amounting to #457,000, reflects the estimated deferred consideration
due under the acquisitions of Century Resources
Limited (#146,000), Fairchild International GmbH (#55,000) and The James Black
Partnership (#256,000).
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UBUKROWRBRAR