RNS Number:6281R
Penna Consulting PLC
04 November 2003
PENNA CONSULTING ANNOUNCES INTERIM RESULTS
Penna Consulting Plc (PNA), the human capital management consulting group, today
announces its interim results for the six months ended 30 September 2003.
Half Year Results
* Group turnover: #21.1 (2002: #22.3m)
* Profit before tax and goodwill: #0.8m (2002: #1.3m)
* Loss before tax: #2.6m (2002: #6.2m)
* Diluted earnings per share before goodwill 3.1p (5.1p)
* Interim dividend held at 2002 level: 1.5p (2002:1.5p)
* Costs lower than first half of last year
* Career Consulting revenues reduced faster than expected
* Improving Recruitment performance
* Market for Change Consulting remains uncertain
Commenting on the results, Suzie Mumme, Chairman said:
"As in previous years we expect our second half to be stronger than the first as
our clients' demands remain biased towards the latter half of our financial
year. Whilst our Career Consulting practice continues to win clients and
maintains it's strong position and market share, the rate of any further
reduction in revenues remains uncertain. We will continue to manage our cost
base in line with market demand and expect our smaller Resourcing and Change
businesses to move into profit in the second half."
Notes to Editors
Penna Consulting
Penna Consulting is among the leading providers of human capital management. It
has over 300 employees and 400 associates in 40 offices across the UK, France,
Ireland, Germany, Norway and Sweden. It has a further 115 partner offices
covering 27 countries around the world. Penna serves over 5000 clients, 75 of
which are in the FTSE 100. More information can be found on the web site at
www.e-penna.com.
Its integrated services cover the end to end employment cycle from sourcing
talent through performance enhancement to redirection.
Blue chip clients include:
* Cable & Wireless
* JP Morgan
* Astra Zeneca
* Goldman Sachs
* Barclays
* Royal Bank of Scotland
* Central Government
Chairman's Statement
The reduction in revenues in Career Consulting, the largest part of our business
has adversely impacted Penna Consulting's results in the first half.
We are pleased at the improvement in our recruitment activities and expect to
see further improvements over the next twelve months. The market for our change
activities remains difficult although our actions to reduce costs have improved
profitability in this area.
RESULTS
Turnover for the six months ended 30 September 2003 was #21.1m (2002: #22.3m).
Profit before tax and goodwill amortisation in the period was #0.8m (2002:
#1.3m). The benefit from the cost reductions we made in the year ended 31 March
2003 is reflected in a level of fixed costs which are 8% lower than in the first
half of last year.
Diluted EPS before goodwill amortisation decreased to 3.1p per share (2002:
5.1p). The Board has maintained the interim dividend of 1.5p (2002: 1.5p)
payable on 12 January 2004 to shareholders on the register at close of business
on 12 December 2003. Penna Consulting had net debt of #0.2m at 30 September
2003 (2002: net cash of #0.8m) in addition to a restricted deposit account of
#3.6m that guarantees loan liabilities of an equal amount.
In accordance with FRS 11 we have looked carefully at the carrying value of the
goodwill attributed to acquisitions made since 1998. We have reviewed the
valuation of these businesses in line with current market conditions and have
recognised a goodwill impairment charge of #2.8m.
CAREER CONSULTING
Revenues for our Career Consulting services have returned to the more normal
levels of three years ago. Turnover at #13.7m was #3.2m lower than last year.
We had anticipated a decline in revenues (but in the second half) and adjusted
our cost base. The benefit of this will have greater impact on the results over
the next six months.
Demand from our banking clients has fallen since the start of the year and we
reduced our costs by exiting our short-term additional City space in July. Since
May, demand in the City for Career Consulting services has remained flat.
Across the remainder of our regions it was in the summer that demand dropped
considerably, several months before we anticipated.
We have, however, maintained our market share, seen increased demand for our
talent management services and continue to win clients. Organisations recognise
the benefit of our Career Consulting services but are reducing the number of
people they are letting go. Having said that, we are delighted to have recently
been awarded a further five contracts with major clients. Each of these
contracts will span more than one year and each is expected to produce revenues
in excess of #1m.
We continue to invest in order to provide support for, most notably, our Career
Consulting business especially in the technology needed to deliver the services
our clients expect and which ensures that our service remains competitive. This
is a significant cost which is more than #1.5m higher than in earlier years. We
are not yet seeing all the benefits anticipated from this investment in new
services.
RESOURCING
Despite the recruitment market showing little improvement through the period our
turnover increased to #5.0m (2002: #3.0m) on which we broke even (2002: #0.6m
loss). This improvement has arisen through our strategy to expand our
capability across more sectors and by widening our resourcing services. For
example our public sector revenues have increased from #0.2m to #0.9m and our
interim management business is now 52% higher than the same time last year.
However we have not seen sufficient improvement in our resourcing solutions
activities to maintain the level of goodwill the group is carrying and
accordingly we have recognised an impairment charge of #2.8m at 30 September
2003.
CHANGE CONSULTING
The first half of the financial year is traditionally the weaker period for our
change consulting business. Turnover of #2.6m (2002: #2.8m) was at similar
levels to last year but the cost savings we made during the latter part of last
year have meant that we incurred a small loss of #0.1m compared with a loss of
#1.0m in the first half of last year.
Our Change Consulting services include HR strategy, change programme management,
employee communication, assessment and executive development and coaching. We
have recently launched several new services including talent audit, performance
coaching and employee engagement surveys and there is growing evidence that our
clients are buying more than one of these services from us.
BOARD CHANGES AND FUTURE PROSPECTS
It was announced last week that Michael Jolly had resigned from the Board and
that Suzie Mumme would be assuming the Chief Executive's responsibilities on an
interim basis. Whilst the Board is still enthusiastic about the Company's
underlying strategy to build an integrated human capital management business, we
will be reviewing the operating model over the coming months.
As in previous years we expect our second half to be stronger than the first as
our clients' demands remain biased towards the latter half of our financial
year. Whilst our Career Consulting practice continues to win clients and
maintains it's strong position and market share, the rate of any further
reduction in revenues remains uncertain. We will continue to manage our cost
base in line with market demand and expect our smaller Resourcing and Change
businesses to move into profit in the second half.
Suzie Mumme
Chairman
4 November 2003
GROUP PROFIT AND LOSS ACCOUNT
For the six months to 30 September 2003
6 months to 6 months to Year to 31
30 Sept 2003 30 Sept 2002 Mar 2003
Notes Unaudited Unaudited Audited
#'000 #'000 #'000
TURNOVER 3 21,090 22,274 48,782
Operating costs before goodwill amortisation (20,242) (27,587) (46,729)
Amortisation and impairment of goodwill (3,362) ( 793) (7,467)
OPERATING LOSS 3 (2,514) (6,106) (5,414)
Share of operating (loss)/profit of associate 4 (16) - 23
GROUP OPERATING LOSS (2,530) (6,106) (5,391)
Net interest payable (34) (99) (82)
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (2,564) (6,205) (5,473)
Taxation on profit on ordinary activities (256) (185) (1,185)
LOSS ON ORDINARY ACTIVITIES AFTER TAXATION (2,820) (6,390) (6,658)
Dividends 5 (270) (271) (655)
RETAINED LOSS FOR THE PERIOD (3,090) (6,661) (7,313)
(LOSS )/EARNINGS PER SHARE 6
Basic
After amortisation of goodwill (15.6)p (35.5)p (37.0)p
Before amortisation of goodwill 3.2p (31.1)p 4.7p
Diluted
After amortisation of goodwill (15.6)p (35.5)p (37.0)p
Before amortisation of goodwill 3.1p (31.1)p 4.5p
Consolidated statement of total recognised gains and losses
For the six months to 30 September 2003
6 months to 6 months to Year to
30 Sept 2003 30 Sept 2002 31 Mar 2003
Unaudited Unaudited Audited
#'000 #'000 #'000
Loss for the period (2,820) (6,390) (6,658)
Gain on foreign currency translation 5 19 38
Total recognised gains and losses for the period (2,815) (6,371) (6,620)
GROUP BALANCE SHEET
As at 30 September 2003
30 Sept 2003 30 Sept 2002 31 Mar 2003
Unaudited Unaudited Audited
Notes #'000 #'000 #'000
FIXED ASSETS
Intangible assets - goodwill 14,991 18,028 18,353
Tangible assets 2,211 1,989 2,317
Investments 4 2,501 4,671 2,517
19,703 24,688 23,187
CURRENT ASSETS
Debtors 10,786 11,933 13,473
Cash at bank and in hand 7 3,608 4,431 5,407
14,394 16,364 18,880
CREDITORS: amounts falling due within one year (12,553) (11,124) (17,363)
NET CURRENT ASSETS 1,841 5,240 1,517
TOTAL ASSETS LESS CURRENT LIABILITIES 21,544 29,928 24,704
Creditors: amounts falling due after more than one year
Convertible debt (160) (160) (160)
Other (3,786) (6,973) (3,767)
(3,946) (7,133) (3,927)
PROVISIONS FOR LIABILITIES AND CHARGES 8 (361) (1,842) (457)
NET ASSETS 17,237 20,953 20,320
CAPITAL AND RESERVES
Called up share capital 901 901 901
Share premium account 10,236 10,234 10,234
Merger reserve 10,170 10,170 10,170
Profit and loss account (4,070) (352) (985)
SHAREHOLDERS' FUNDS
Equity Interests 17,237 20,953 20,320
GROUP CASH FLOW STATEMENT
For the six months to 30 September 2003
6 months to 6 months to Year to
30 Sept 2003 30 Sept 2002 31 March 2003
Unaudited Unaudited Audited
#'000 #'000 #'000
OPERATING LOSS (2,514) (6,106) (5,414)
Depreciation charges 488 526 834
Amortisation of goodwill 594 793 1,467
Impairment of goodwill 2,768 6,000 6,000
Profit on disposal of tangible fixed assets - - (9)
Decrease in debtors 2,535 3,191 1,818
Decrease in creditors (5,312) (3,179) (73)
NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES (1,441) 1,225 4,623
Disbursements on investments and servicing of finance (34) (99) (78)
Equity dividends paid - (378) (649)
Taxation paid (126) (1,139) (2,226)
Capital expenditure (382) (318) (877)
Financial investments - (2,620) (1,456)
Acquisitions and disposals (12) (159) (1,849)
NET CASH FLOW BEFORE MANAGEMENT OF LIQUID RESOURCES
AND FINANCING (1,995) (3,488) (2,512)
MANAGEMENT OF LIQUID RESOURCES - 2,500 2,500
FINANCING
Issue of ordinary share capital 2 43 43
Repayments of convertible loan notes (20) (667) (667)
(18) (624) (624)
DECREASE IN CASH IN THE PERIOD (2,013) (1,612) (636)
Reconciliation of movements of shareholder's funds
For the six months to 30 September 2003
6 months to 6 months to Year to
30 Sept 2003 30 Sept 2002 31 Mar 2003
Unaudited Unaudited Audited
#'000 #'000 #'000
Loss for the period (2,820) (6,390) (6,658)
Dividends (270) (271) (655)
Shares issued during the period 2 43 43
Gain on foreign currency translation 5 19 38
Net reduction to shareholders' funds (3,083) (6,599) (7,232)
Opening shareholders' funds 20,320 27,552 27,552
Closing shareholder's funds 17,237 20,953 20,320
NOTES TO THE INTERIM REPORT
1. ACCOUNTING POLICIES
There have been no changes to the accounting policies set out in the 2003 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 2003, on which the auditors gave an
unqualified audit report, have been delivered to the Registrar of Companies and
copies of the Interim Report can be obtained from our Registered Office at 15
Welbeck Street, London W1G 9XT.
The Board of Directors approved the interim report on 4 November 2003. The
financial information in respect of the six months to 30 September 2003 is
unaudited.
3. SEGMENTAL ANALYSIS
The Group's turnover and operating losses were attributable to the following
activities:
6 months to 6 months to
30 Sept 2003 30 Sept 2002
Turnover Operating Turnover Operating
Profit Profit
#'000 #'000 #'000 #'000
Career Consulting 13,666 1,908 16,759 3,851
Resourcing 4,994 12 3,015 (587)
Change Consulting 2,587 (115) 2,766 (993)
Inter company sales (157) - (266) -
Unallocated central overheads - (923) - (890)
21,090 882 22,274 1,381
Impairment of goodwill - (2,768) - (6,000)
Restructuring costs - - - (694)
Amortisation of goodwill - (628) - (793)
21,090 (2,514) 22,274 (6,106)
6 months to 6 months to
30 Sept 2003 30 Sept 2002
Turnover Operating Turnover Operating
Profit Profit
#'000 #'000 #'000 #'000
UK 19,305 (2,574) 20,102 (6,104)
Rest of World 1,785 60 2,172 (2)
21,090 (2,514) 22,274 (6,106)
4. INVESTMENTS
The Group's investment at 30 September represents a 15% holding in the ordinary
share capital of Knightsbridge Human Capital Management Inc., a company
incorporated in Canada.
Goodwill Share of Net Total
Assets Investments
#000's #000's #000's
At 1 April 2003 1,316 1,201 2,517
Profits retained for the period - 18 18
Amortisation for the period (34) - (34)
At 30 September 2003 1,282 1,219 2,501
5. DIVIDENDS
An interim net dividend of 1.5p (2002: 1.5p) per ordinary share is payable on
12 January 2004 to ordinary shareholders on the register at the close of
business on 12 December 2003.
6. EARNINGS PER SHARE
Earnings per share have been calculated by dividing the profit attributable to
shareholders for the financial period by the weighted average number of ordinary
shares in issue during the period. The weighted average number of shares
in issue is based on the following information:
30 Sept 2003 30 Sept 2002 31 Mar 2003
Unaudited Unaudited Audited
number number number
Weighted average number of shares in issue per basic earnings 18,026,697 17,970,124 18,019,391
Dilutive effect of:
Share options 331,490 49,089 551,843
Deferred consideration 249,128 249,128 249,128
Weighted average number of shares in issue per diluted earnings 18,607,315 18,268,341 18,820,362
The profit attributable to shareholders used in the calculation of earnings per
share for the period is based on the following information:
30 Sept 2003 30 Sept 2002 31 Mar 2003
Unaudited Unaudited Audited
#'000 #'000 #'000
Loss attributable to shareholders (2,820) (6,390) (6,658)
Exceptional items - 694 1,555
Goodwill amortisation and impairment 3,396 6,793 7,501
The Directors consider that earnings per share before goodwill amortisation and
exceptional items are a more representative measure of the Group's performance.
7. 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. At 30 September 2003 the Group had
an overdraft of #214,000 (2002: #nil) excluding cash on restricted deposit. This
amount is included with creditors falling due within one year.
8. PROVISIONS FOR LIABILITES AND CHARGES
This item, amounting to #361,000 (2002: #1,842,000), reflects the estimated
deferred consideration due under the acquisitions of Fairchild International
GmbH #55,000 (2002: #nil), Century Resources Limited #50,000 (2002: #135,000),
Target Holdings AS #nil (2002: #207,000) and The James Black Partnership
#256,000 (2002: #1,500,000).
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EAPFDEFPDFFE