RNS Number:2343I
SHL Group PLC
04 March 2003
For Immediate Release 4 March 2003
SHL GROUP PLC
PRELIMINARY RESULTS
SHL Group plc ("SHL"), a world leader in the provision of psychometric products
and related services, announces its results for the fifteen months ended 31
December 2002, together with unaudited proforma results for the year then ended.
Financial Overview: 12 months Proforma results
Proforma accounts for the 12 months to 31 December 2002 with comparatives for
the 12 months to 31 December 2001
- Turnover of continuing operations steady at #66.4m (2001: #66.6m) despite
worsening economic conditions
- Pre-tax profit of continuing operations before exceptionals of #4.9m
(2001: #7.4m)
- Exceptional restructuring costs of #5.1m to reduce cost base
- Basic EPS before exceptionals 5.5p (2001: 9.6p); loss per share after
exceptionals 2.7p (2001: EPS 7.3p)
- Final dividend of 2.2p provides a proforma dividend of 3.5p for the 12
month period (2001: 6.4p)
Financial Overview: 15 months to 31 December 2002
Statutory accounts for the 15 months to 31 December 2002 with comparatives for
the 12 months to 30 September 2001
- Turnover of continuing operations #81.8m (2001: #67.5m)
- Pre-tax profit of continuing operations before exceptionals #5.4m (2001:
#8.8m)
- Basic EPS before exceptionals 5.3p (2001: 12.0p); loss per share after
exceptionals 2.9p (2001:EPS 9.7p)
- Final dividend of 2.2p provides total dividend of 4.4p for 15 month period
(2001: 6.4p)
Operational Highlights:
- Trading in the final quarter shows increase in revenue and profit on prior
year
- Growth in web-based sales creates proforma revenue of #5.4m (2001: #3.9m)
- Exceptional performances in some countries arising from the new business
model, notably India, South Africa and United States
- Continued investment in technology and stronger central teams
- Successful disposal of recruitment advertising business, Park, in February
2003
Commenting on the results, John Bateson, Chief Executive of SHL, said:
"Economic conditions in our main markets have yet to improve, however, trading
in the last quarter of 2002 was encouraging and augurs well for the year ahead.
We have the benefits of the actions taken in 2002: a lower cost base because of
our restructuring, enhanced intellectual property in the business, new products
to sell and a web strategy showing positive results. We believe we are well
placed to make financial progress in the year ahead."
For further information, please contact:
SHL Group plc 020 8335 8184
John Bateson
Emma Lancaster
Buchanan Communications 020 7466 5000
Tim Anderson / Bobbie Swanson
CHAIRMAN'S STATEMENT
Introduction
The last 15 months have been a challenging period for SHL, with a background of
unfavourable macro economic conditions, much lower levels of recruitment in all
of our major markets, and the inevitable impact on demand for our products.
Given the change of year end, we report the 15 months to 31 December 2002, and
provide comparatives for the 12 months to 30 September 2001. We believe that a
better view of business performance is achieved by looking at proforma numbers
for the 12 month comparative periods to 31 December 2001 and 2002 and therefore
the focus of our commentary is on that basis. Proforma financial information is
prepared on the same basis as the audited accounts for the period ended 31
December 2002. We are pleased to report that we have maintained revenues from
continuing businesses at #66.4m (2001: #66.6m) and within that have grown our
web-based revenues, despite the challenges in the market.
Proforma pre-tax profit for continuing business before exceptional items was
#4.9m (2001: #7.4m). This reflects a reduction in margin due to the tough
economic environment but also an increase in costs relating to investment in
technology and stronger central teams. Proforma earnings per share before
exceptional items reflects a similar reduction from 9.6p in 2001 to 5.5p for
2002.
Dividend
The Board has carefully considered the dividend level, having regard to the
pre-tax profits before exceptionals for the period under review, and the cash
generation of the Group after paying for the exceptional restructuring. We have
concluded it is not prudent to hold the dividend at the previous year's level.
The Board is therefore recommending a final dividend of 2.2 pence for the nine
months, which gives a total dividend of 4.4 pence for the period (equivalent to
3.5p for 12 months to 31 December 2002; 2001: 6.4p). We stand by our principle
of a progressive dividend policy. Our intent is to grow profits to allow a
return to two times earnings per share dividend cover, within a reasonable time
period. Clearly this will be dependent on market conditions.
People
The past 15 months has been difficult and stressful for our employees,
particularly as in many cases the targets for individual bonus schemes were not
reached. In addition, we have undertaken a major restructuring programme and
have needed new skills to deliver our strategy in difficult economic conditions.
The Board would like to thank all our employees for their valued contribution
and support, including those from Park Human Resources Limited, which was sold
in February 2003.
Extraordinary General Meeting
As most shareholders will know, an EGM was requisitioned in November by the
Company's two founders, Peter Saville and Roger Holdsworth, supported by David
Arkless, a former director. The shareholders' meeting, held just before
Christmas, culminated in the two founders ceasing to be directors. In the lead
up to the EGM, David Arkless had been required to step down as a director.
These events constituted a regrettable episode in the recent history of the
Company and resulted in the business incurring costs to defend its position.
The public debate and distraction of management was damaging to shareholder
value, and only our competitors benefited. It is essential that these
disagreements are put behind us and that management are able to continue to
deliver the financial and strategic goals to which they, and we, are fully
committed.
The Board
As a result of the shareholder vote at the EGM the Board has now been
restructured to accord with the above-mentioned changes.
In addition, and as previously announced, Lisa Cramp stepped down on 20
September 2002. David Best joined us on 27 September 2002 and he has
considerably strengthened the Board bringing with him a wealth of experience
from Eckoh Technologies plc, Xansa Plc and Lockheed Martin Corporation.
A more compact and cohesive Board is already moving forward to work with the
executive team in delivering shareholder value. As my contract is at an end
very shortly after the AGM, it is opportune for me to step down and I will
therefore not seek re-election. The nominations committee under the leadership
of Nigel McGinley, senior non-executive director, is conducting a search for my
replacement. In the event of any short-term gap, Nigel will assume the chair.
On a personal note, I have enjoyed working with all the Board members,
employees and advisors over the past six years. The two founders, Peter Saville
and Roger Holdsworth, grew the company from early beginnings and have been
associated with it for 25 years. It was taken through flotation and developed
as an international, well-respected company with valuable intellectual property,
excellent value-adding products, and strong people with varied backgrounds. It
is now in good shape to grow from a strong base and to take real advantage from
the economic upturn when it finally arrives. Our unique science based products
and services help organisations gain real value from their talent pool, and this
is probably the most important contribution that any Human Capital sector
company can make. I wish the company everything of the best as it progresses in
the years ahead.
NEVILLE BAIN
CHAIRMAN
4 March 2003
CHIEF EXECUTIVE'S REVIEW
The foundations of SHL are in psychology and in particular psychometrics, the
branch of psychology dealing with the theory and technique of measurement. We
believe that the application of this science in the world of work to the
measurement of people, jobs and organisations can improve the performance of
businesses enabling them to be better places to live and work.
This belief goes further than developing measurement tools and applying them as
consultants. Since the very beginning of its 25 year history, SHL has had a
zeal that drives us to sell our tools as products to other professionals,
sometimes our competitors, and to clients. Our aim has always been to enable
both to be self-sufficient in using our products. It is this desire to spread
self-sufficiency that led us, four years ago, to start to develop ways to offer
our products on the web, in a user friendly way.
Operationally, 2002 has been a year of progressive loss of confidence in the
future economic upswing by our clients. January opened with the hope that the
downturn at the end of 2001 was only temporary. It became clear during the
course of 2002 that economic growth was unlikely to return in the immediate
future. As a consequence in the summer we took decisive action to reduce our
cost base, resulting in an exceptional restructuring charge of #5.1m.
Unfortunately, a further #0.4m was incurred as a result of the EGM and Board
issues.
Despite the economic environment, we have continued to invest in our strategy of
maintaining our leading edge intellectual property and making our products as
accessible to clients as possible.
Intellectual Property and Product Development
SHL has been, and always will be, at the leading edge of our field. Our aim has
always been to develop tests that were directly relevant to business
application. We believe our flagship product the OPQ (Occupational Personality
Questionnaire) leads the world in its relevancy and its approach to measurement,
which is key to determining the likelihood of a person's success in a given job.
This year alone the OPQ32 was customised to seven new languages; the largest
number of new languages for the past two years. During the year we have been
rolling out around the world the web delivery of our tests. Our clients confirm
that the ability to use OPQ on-line offers convenience and cost saving. The
measurement system makes it almost impossible to manipulate and therefore
ideally suited to online delivery.
In the past year we have made a significant investment in adapting ability tests
for use unsupervised on-line. Such ability tests offer organisations the
opportunity to increase the quality of their selection processes but normally
require the test taking to be supervised, usually on the client's site. Our new
tests allow candidates to take tests in their own time and environment but the
technology and psychometrics ensure that each candidate takes a unique test.
These tests were rolled out in a limited number of languages during the second
half of the year.
In the last quarter of 2002 we launched in the UK our new 360 degree
performance and development tool, "Performance and Development Solutions". This
allows clients to combine in one system the 360 degree evaluation against
competencies with the measurement of performance against key performance
indicators. Our intellectual property in the self-help area, including tools
bought as part of the APT acquisition, have been consolidated and built into the
product. Managers can therefore be offered self-help, advice and ideas for
those competencies in which they have development needs.
The focus in the new year will be on the roll-out of many different languages
versions of these web-based products, whilst we continue to develop new
products.
Web-based delivery
The delivery of our intellectual property via the web offers many advantages to
our clients. The economic engine of the web-delivery is the volume loading of
our "factory" together with a continuous drive to reduce costs. Our factory "
manufactures" applications, runs them for clients at our hosting centres, and
provides a full client service around it. Since January 2001 we have now
performed over 1.1 million candidate assessments on-line; 870,000 of them in the
twelve months to 31 December 2002. Our system availability during the year was
99.8%, placing us very high in service reliability for internet service
providers.
The year 2002 represents the first full year of web-delivered product. In the
accounts for the first time this year our turnover has been further analysed to
show web-based products separately. It is clear the web is not a separate
business but an alternative delivery channel.
As such, its influence is far wider than the #5.4m proforma revenue shown in the
segmental analysis (up from #3.9m in 2001). This number includes only directly
attributable revenue for usage and implementation. Most web projects include
psychometric consulting which cannot be directly identified. Web-based proforma
sales were up about 200% in Meridian, 60% in Asia Pacific (excluding Japan) and
100% in Continental Europe.
Starting in April 2002, we have progressively outsourced the development of our
systems to India. This was completed at the end of the year with the closure of
the last central development team. After the costs of the transition, this is
expected to offer cost savings starting in 2004.
Strategic Focus
I was pleased to announce the disposal of Park, our recruitment advertising
business, in February 2003. This will allow us to focus on our differentiator,
psychometrics, without the distraction of a business which had little relevance
to the rest of SHL. Park had a proforma loss of #0.4m in the twelve months to
31 December 2002. A book loss of #13.1m on the sale, after adding back goodwill
previously written off to reserves, will be recorded in the 2003 accounts.
There is a positive impact of #3.6m on our cash reserves as a result of this
transaction.
Outlook
Economic conditions in our main markets have yet to improve, however, trading in
the last quarter of 2002 was encouraging and augurs well for the year ahead. We
have the benefits of the actions taken in 2002: a lower cost base because of our
restructuring, enhanced intellectual property in the business, new products to
sell and a web strategy showing positive results. We believe we are well placed
to make financial progress in the year ahead.
JOHN BATESON
GROUP CHIEF EXECUTIVE
4 March 2003
OPERATIONAL AND FINANCIAL REVIEW
INTRODUCTION
The commentary throughout this review refers to the proforma financial
information for the twelve months to 31 December 2002, unless otherwise stated.
Financial information on the 15 months to 31 December 2002 is extracted from our
audited statutory accounts. The trends in trading for that period are broadly
consistent with those described in respect of the proforma periods.
CONTINUING BUSINESS
Meridian
Proforma
__________________________________________
#m 15 months to 12 months to 12 months to
31 Dec 2002 31 Dec 2002 31 Dec 2001 Note 1
(before exceptionals) (before (before
exceptionals) exceptionals)
Turnover 33.2 27.1 26.9
___________________________________________________________________________________________________________
Operating Profit 10.2 8.3 10.0
___________________________________________________________________________________________________________
Turnover is up in both the UK, Meridian's most significant operation, and South
Africa. Profits were pleasing for the final quarter, although Meridian ended
the year behind the equivalent period in 2001. In particular, South Africa has
maintained its strong profit growth with a 21% increase over the period.
The drop in profit margin comes from a variety of sources. The UK in particular
has suffered from a change in mix with an increase in lower margin consulting
business.
These results have been achieved despite continuing difficulties in the UK
recruitment market.
Note 1: As part of our strategy, the business has been reorganised so that
there is greater central co-ordination. This has resulted in some costs in the
Meridian region being reclassified to central costs.
Continental Europe
Proforma
___________________________________________
#m 15 months to 12 months to 12 months to
31 Dec 2002 31 Dec 2002 31 Dec 2001
(before exceptionals) (before exceptionals)
Turnover 24.2 19.6 18.8
____________________________________________________________________________________________________________
Operating Profit 2.2 1.6 3.0
____________________________________________________________________________________________________________
Continental Europe saw mixed results in the period. There was a general slow
start in the consulting market. With the consulting teams virtually a fixed
cost, this had a significant impact on profitability in the early part of the
year. This was partially offset by excellent trading in the final quarter.
In the September 2002 Interim Report, Continental Europe showed turnover 6%
below the prior year, with profits down by nearly #3m. In the last quarter,
revenues were up 4% with a corresponding increase in profit. Following the
restructuring within the last quarter, the Netherlands has seen increases in
both revenue and profit having taken out its high fixed costs of support and
administration.
Overall, most other countries in Europe have performed strongly showing sales
increases. Of particular note are Sweden, France and Italy, which have
increased profits by over 20%, and together contribute #1.4m toward operating
profit. Offsetting this is a significant increase in European central costs,
from #0.5m to #1.8m, with the introduction of regional sales, product and IT
resources designed to maximise revenue across Continental Europe. This
strategy is now beginning to work.
North America
Proforma
___________________________________________
15 months to 12 months to 12 months to
#m 31 Dec 2002 31 Dec 2002 31 Dec 2001
(before exceptionals) (before exceptionals)
Turnover 14.1 11.4 12.7
____________________________________________________________________________________________________________
Operating Profit 1.6 1.7 0.4
____________________________________________________________________________________________________________
The results for North America are influenced by the actions taken in February
2002 to reduce consulting capacity. It became clear that we had excess
capacity in view of the changing economic growth prospects and twenty per cent
of the consultants were made redundant, the costs of which are not included in
the restructuring charge. The shortfall in turnover reflects lower consulting
revenue, and masks a small growth in web-based and product sales.
The balance of the improved performance has come from much tighter management of
the business, including costs, by the new management team that started in
January 2002.
Asia Pacific
Proforma
___________________________________________
#m 15 months to 12 months to 12 months to
31 Dec 2002 31 Dec 2002 31 Dec 2001
(before exceptionals) (before exceptionals)
Turnover 10.2 8.2 8.1
____________________________________________________________________________________________________________
Operating Profit (excluding associates) 2.1 1.7 1.9
____________________________________________________________________________________________________________
Despite slow trading in the final quarter, Asia Pacific increased its annual
sales as a result of good results from Australia and India earlier in the year.
For the year, the key countries of Australia and New Zealand have shown a steady
increase in revenues of 9%, whilst India and Indonesia have shown fast growth at
57% and 67% respectively.
These performances have been offset by a sharp fall in revenues in China and
Hong Kong where markets remain depressed. These countries were previously among
the strongest in Asia Pacific and it is pleasing that this 35% fall has been
offset by the increases elsewhere.
Our associate, SHL Japan, had an impressive year, increasing profits by over
300% to #2m, of which our share is 27%.
Central Costs and Other Income
Proforma
__________________________________________
#m 15 months to 12 months to 12 months to
31 Dec 2002 31 Dec 2002 31 Dec 2001
(before exceptionals) (before Note 1
exceptionals)
Information Technology 5.2 4.2 3.0
_____________________________________________________________________________________________________________
Other 5.9 4.8 5.4
_____________________________________________________________________________________________________________
Total 11.1 9.0 8.4
_____________________________________________________________________________________________________________
Central Costs and Other Income (continued)
Approximately two-thirds of our IT costs are for the supporting and development
of customer web-based systems. This is the cost of the "web factory" which
creates and hosts applications, and provides service to the clients. The costs
represent almost a full year of operation with the restructured team. The
organisation has centralised all hosting and development, which has enabled us
to drive efficiencies in such areas as central purchasing, outsourcing, and
hosting costs.
Note 1: As part of our strategy, the business has been reorganised so that
there is greater central co-ordination. This has resulted in some costs in the
Meridian region being reclassified to central costs.
DISCONTINUED BUSINESS
Park had difficult trading conditions throughout 2002, which resulted in an
adverse variance on operating profit compared with the prior year of #0.8m in
the 12 month proforma results.
CASHFLOW
Operating cashflow, having financed capital expenditure, taxation and dividends,
for the fifteen months was #1.1m (2001: #0.3m) and #2.3m net cash was held at 31
December 2002 (30 September 2001: #3.9m). Debt has been reduced significantly
with loan notes of #2.9m being repaid during the year and net funds have
increased to #1.3m (2001: net debt #0.1m). A further loan note of #0.9m was
repaid in February 2003 and the final loan note of #0.9m issued February 2003
falls due in August 2003. We expect #2.0m of the restructuring provision to
unwind during 2003.
Working capital has decreased through the period and this is reflected by
reduced debtor days across the group. Liquidity is broadly unchanged. Net
capital expenditure in the 15 month period was #2.6m (2001: #3.0m).
Policies for managing interest rate, liquidity and foreign currency risks are
agreed by the Board. The Group finances itself through a mixture of retained
earnings and short-term borrowings. All borrowings fall between one and two
years and are at floating exchange rates. Where possible currency balances are
pooled and managed by the central Treasury function.
TAXATION
The effective tax rate on SHL businesses, excluding exceptional items, is 36.0%
representing an increase of 3% on 2001. The increase arises due to the changes
in the relative mix of profitability of the group's subsidiaries.
EXCEPTIONAL ITEMS
The exceptional item of #5.5m consists of #5.1m related to restructuring and
#0.4m relating to the EGM. It is expected that #2m of the provision as at 31
December 2002 will result in cash outflows during 2003. The remainder is lease
provision, which will unwind over the next three to five years. We still expect
to realise the #2m savings anticipated at the time of restructuring on an
ongoing basis.
CONSOLIDATED PROFORMA PROFIT AND LOSS ACCOUNT (UNAUDITED)
Twelve months ended 31 December 2002
12 months ended 12 months ended
31 December 2002 31 December 2001
Before Before
exceptional exceptional
items (#m) Exceptional Total items (#m) Exceptional Total
items (#m) items (#m)
(#m) (#m)
Notes
TURNOVER
Continuing operations 66.4 - 66.4 66.6 - 66.6
Discontinued operations 6.5 - 6.5 8.5 - 8.5
TOTAL TURNOVER B 72.9 - 72.9 75.1 - 75.1
Cost of sales (27.9) - (27.9) (27.3) - (27.3)
Gross profit 45.0 - 45.0 47.8 - 47.8
Administrative expenses (41.1) (5.5) (46.6) (40.5) (1.8) (42.3)
GROUP OPERATING PROFIT/(LOSS)
Continuing operations 4.3 (5.4) (1.1) 6.9 (1.8) 5.1
Discontinued operations (0.4) (0.1) (0.5) 0.4 - 0.4
GROUP OPERATING PROFIT/(LOSS) 3.9 (5.5) (1.6) 7.3 (1.8) 5.5
Share of operating profit in 0.6 - 0.6 0.5 - 0.5
associates
TOTAL OPERATING PROFIT/(LOSS) AND B 4.5 (5.5) (1.0) 7.8 (1.8) 6.0
PROFIT/(LOSS) ON ORDINARY
ACTIVITIES BEFORE TAXATION
Taxation on profit/(loss) on (1.6) 1.0 (0.6) (2.5) 0.5 (2.0)
ordinary activities
PROFIT/(LOSS) ON ORDINARY 2.9 (4.5) (1.6) 5.3 (1.3) 4.0
ACTIVITIES AFTER TAXATION
Minority interests in equity 0.1 - 0.1 - - -
PROFIT/(LOSS) FOR THE YEAR 3.0 (4.5) (1.5) 5.3 (1.3) 4.0
Basic earnings/(loss) per ordinary C 5.5p (2.7p) 9.6p 7.3p
share
Diluted earnings/(loss) per C 5.4p (2.7p) 9.5p 7.2p
ordinary share
NOTES TO PROFORMA RESULTS FOR 12 MONTHS TO 31 DECEMBER 2002
A. BASIS OF PREPARATION
The unaudited proforma financial information has been prepared in accordance
with applicable accounting standards under the historical cost convention. The
proforma financial information is based on the audited accounts for the 15
months ended 31 December 2002 and 12 months ended 30 September 2001 after
adjustments for the Group's results for the three months ended 31 December 2000
and 31 December 2001.
B. SEGMENTAL INFORMATION
Turnover and total operating profit before exceptional items is attributable to
the principal activity of the Group. The analysis by geographical division is:
Turnover Total Operating
Profit Before
Exceptionals
2002 2001 2002 2001
#m #m #m #m
Continuing
Meridian 27.1 26.9 8.3 10.0
Continental Europe 19.6 18.8 1.6 3.0
North America 11.4 12.7 1.7 0.4
Asia Pacific 8.2 8.1 2.3 2.4
Information Technology Costs - - (4.2) (3.0)
Other Central Costs 0.1 0.1 (4.8) (5.4)
66.4 66.6 4.9 7.4
Discontinued - Park 6.5 8.5 (0.4) 0.4
72.9 75.1 4.5 7.8
Total operating profit for 2001 has been re-analysed for consistency with the
2002 analysis. The Meridian region comprises UK, Ireland and South Africa.
Turnover by category is: 2002 2001
#m #m
Continuing
Web-based revenues 5.4 3.9
Products 20.1 20.7
Consultancy 30.8 31.5
Training 9.1 9.5
Other 1.0 1.0
66.4 66.6
Discontinued - Park
Consultancy 4.5 5.6
Other 2.0 2.9
6.5 8.5
72.9 75.1
C. EARNINGS PER ORDINARY SHARE
The calculation of the loss per ordinary share is based on the loss after tax
and minority interests of #1.5m (2001: profit #4.0m) and a weighted average of
55,035,879 (2001: 54,951,854) ordinary shares in issue during the period.
Earnings per ordinary share before exceptional charge is calculated based on
profit before exceptional charge but after tax and minority interests of #3.0m
(2001: #5.3m).
Dilution increases the weighted average number of shares to 55,435,879 (2001:
55,372,558). Diluted loss per share is the same as basic loss per share as the
issuance of 'shares to be issued' would reduce loss per share and is therefore
not dilutive under FRS14.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Fifteen months ended 31 December 2002
15 months ended 31 December 2002 12 months ended 30 September 2001
Before Before
exceptional exceptional
items (#m) Exceptional Total items (#m) Exceptional Total
items (#m) items (#m)
(#m) (#m)
Notes
TURNOVER
Continuing operations 81.8 - 81.8 67.5 - 67.5
Discontinued operations 8.0 - 8.0 9.3 - 9.3
TOTAL TURNOVER 1 89.8 - 89.8 76.8 - 76.8
Cost of sales (34.5) - (34.5) (27.3) - (27.3)
Gross profit 55.3 - 55.3 49.5 - 49.5
Administrative expenses 2 (51.3) (5.5) (56.8) (40.3) (1.8) (42.1)
GROUP OPERATING PROFIT/(LOSS)
Continuing operations
Discontinued operations 5.0 (5.4) (0.4) 8.2 (1.8) 6.4
(1.0) (0.1) (1.1) 1.0 - 1.0
GROUP OPERATING PROFIT/(LOSS) 4.0 (5.5) (1.5) 9.2 (1.8) 7.4
Share of operating profit 0.4 - 0.4 0.6 - 0.6
from associates
TOTAL OPERATING PROFIT/(LOSS) 1 4.4 (5.5) (1.1) 9.8 (1.8) 8.0
AND PROFIT/(LOSS) ON ORDINARY
ACTIVITIES BEFORE TAXATION
Taxation on profit/(loss) on (1.6) 1.0 (0.6) (3.2) 0.5 (2.7)
ordinary activities
PROFIT/(LOSS) ON ORDINARY 2.8 (4.5) (1.7) 6.6 (1.3) 5.3
ACTIVITIES AFTER TAXATION
Minority interests in equity 0.1 0.1 - - -
PROFIT/(LOSS) FOR THE 2.9 (4.5) (1.6) 6.6 (1.3) 5.3
FINANCIAL PERIOD
Equity dividends paid and 3 (2.4) - (2.4) (3.5) - (3.5)
proposed
RETAINED PROFIT/(LOSS):
Group and share of associates 0.5 (4.5) (4.0) 3.1 (1.3) 1.8
Basic earnings/(loss) per 4 5.3p (2.9p) 12.0p 9.7p
ordinary share
Diluted earnings/(loss) per 4 5.2p (2.9p) 11.8p 9.5p
ordinary share
The profit/(loss) on a historical cost basis for both periods is the same as the
reported result.
CONSOLIDATED BALANCE SHEET
As at 31 December 2002
Note 31 December 30 September
2002 2001
#m #m
FIXED ASSETS
Intangible assets 5.1 5.3
Tangible assets 10.6 11.4
Investments 2.0 1.7
17.7 18.4
CURRENT ASSETS
Stock 1.2 1.4
Debtors
Due within one year 20.7 23.8
Due after more than one year 0.7 0.5
21.4 24.3
Cash and short term deposits 5.6 3.9
28.2 29.6
CREDITORS: amounts falling due within one year 6 (25.4) (24.3)
NET CURRENT ASSETS 2.8 5.3
TOTAL ASSETS LESS CURRENT LIABILITIES 20.5 23.7
CREDITORS: amounts falling due after more than one year (0.2) (2.9)
PROVISIONS FOR LIABILITIES AND CHARGES (3.5) (0.6)
NET ASSETS 16.8 20.2
CAPITAL AND RESERVES
Called up share capital 5.5 5.5
Shares to be issued 0.2 0.3
Share premium account 11.7 11.7
Other reserves 0.1 0.1
Profit and loss account (0.6) 2.6
EQUITY SHAREHOLDERS' FUNDS 16.9 20.2
EQUITY MINORITY INTERESTS (0.1) -
16.8 20.2
CONSOLIDATED CASH FLOW STATEMENT
Fifteen months ended 31 December 2002
Note 15 months ended 31 12 months ended 30
December 2002 September 2001
#m #m
NET CASH INFLOW FROM OPERATING ACTIVITIES 7 9.1 11.9
DIVIDENDS FROM ASSOCIATES 0.2 0.1
TAXATION (2.1) (5.1)
CAPITAL EXPENDITURE
Purchase of tangible fixed assets (3.0) (3.4)
Sale of tangible fixed assets 0.4 0.4
NET CASH OUTFLOW FROM CAPITAL EXPENDITURE (2.6) (3.0)
ACQUISITIONS
Acquisitions of subsidiaries - (0.5)
Cash acquired with subsidiary - 0.4
NET CASH OUTFLOW FROM ACQUISITIONS - (0.1)
EQUITY DIVIDENDS PAID (3.5) (3.5)
NET CASH INFLOW BEFORE USE OF LIQUID RESOURCES AND FINANCING 1.1 0.3
NET CASH INFLOW FROM MANAGEMENT OF LIQUID RESOURCES 0.1 0.6
NET CASH (OUTFLOW)/INFLOW FROM FINANCING (3.0) 0.3
(DECREASE)/INCREASE IN CASH IN THE PERIOD (1.8) 1.2
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE FIFTEEN MONTHS ENDED 31 DECEMBER 2002
15 months ended 12 months ended
31 December 2002 30 September 2001
#m #m
(Loss)/profit for the financial period:
Group (1.9) 5.0
Associates 0.3 0.3
(1.6) 5.3
Gain on deemed partial disposal of interest in associate (note 5) 0.5 -
Exchange adjustments 0.2 (0.4)
Total recognised gains and losses relating to the period (0.9) 4.9
RECONCILIATIONS OF MOVEMENTS IN SHAREHOLDERS' FUNDS
FOR THE FIFTEEN MONTHS ENDED 31 DECEMBER 2002
15 months ended 12 months ended
31 December 2002 30 September 2001
#m #m
(Loss)/profit for the financial period (1.6) 5.3
Dividends (2.4) (3.5)
Retained (loss)/profit for the financial period (4.0) 1.8
New share capital issued - 0.4
Shares to be issued 0.1 (0.7)
Gain on deemed partial disposal of interest on associate (note 5) 0.5 -
Exchange adjustments 0.2 (0.4)
Goodwill adjustment arising from change in value of (0.1) 0.7
shares to be issued
Net (decrease)/increase in shareholders' funds (3.3) 1.8
Opening shareholders' funds 20.2 18.4
Closing shareholders' funds 16.9 20.2
NOTES TO PRELIMINARY RESULTS FOR 15 MONTHS TO 31 DECEMBER 2002
1. SEGMENTAL INFORMATION
Turnover and total operating profit before exceptional items is attributable to
the principal activity of the Group. The analysis by geographical division is:
Turnover Total Operating
Profit Before
Exceptionals
2002 2001 2002 2001
15 mths 12 mths 15 mths 12 mths
#m #m #m #m
Continuing
Meridian 33.2 27.1 10.2 10.3
Continental Europe 24.2 19.5 2.2 3.6
North America 14.1 12.9 1.6 0.2
Asia Pacific 10.2 7.9 2.5 2.5
Information Technology Costs - - (5.2) (2.7)
Other Central Costs 0.1 0.1 (5.9) (5.1)
81.8 67.5 5.4 8.8
Discontinued - Park 8.0 9.3 (1.0) 1.0
89.8 76.8 4.4 9.8
Total operating profit for 2001 has been re-analysed for consistency with the
2002 analysis. The Meridian region comprises UK, Ireland and South Africa.
Turnover by category is: 2002 2001
15 mths 12 mths
#m #m
Continuing
Web-based revenues 6.9 2.7
Products 24.5 21.6
Consultancy 37.8 32.5
Training 11.3 9.8
Other 1.3 0.9
81.8 67.5
Discontinued - Park
Consultancy 5.6 6.0
Other 2.4 3.3
8.0 9.3
89.8 76.8
2. EXCEPTIONAL ITEMS
2002 2001
15 mths 12 mths
#m #m
Restructuring 5.1 -
Extraordinary General Meeting 0.4 -
Impairment charge - 1.8
5.5 1.8
Restructuring
Exceptional charges have been incurred following a management review of the
Group's operations, which was carried out with the objective of aligning the
cost base with the current level of revenue.
Employee Lease Other Total
costs provisions
#m #m #m #m
Meridian 0.4 - - 0.4
North America - 0.8 0.3 1.1
Continental Europe 2.2 0.7 - 2.9
Central costs 0.7 - - 0.7
3.3 1.5 0.3 5.1
The Meridian charge arises as a result of the restructuring of some of the UK
based teams.
North America has consolidated its operations resulting in the closure of the
Cleveland office and a reduction in office space requirements in Boulder.
Restructuring within Continental Europe comprised two elements. There was
significant restructuring within the Netherlands trading subsidiary, which
resulted in a reduction in headcount of 32. At a regional level, the IT
implementation and marketing teams have been reduced with the remainder of the
team being relocated to the Netherlands.
A number of the central functions were restructured. This included a review of
IT delivery which identified that we could not match the processes and quality
control offered by specialist IT development organisations. Consequently we
have outsourced all IT development work to a service provider based in India,
with a resulting reduction in headcount of 18.
Extraordinary General Meeting
Details of the EGM have been given in the Chairman's statement. These costs
encompass fees from the group's advisors, the cost of communications to
shareholders and expenses incurred for holding and managing the meeting.
Impairment charge
The exceptional charge in 2001 relates to the capitalised costs of outside
software development support which were written off following an impairment
review.
3. DIVIDENDS PAID AND PROPOSED
2002 2001
15 mths 12 mths
#m #m
Ordinary dividend - interim (paid) 1.2 1.2
- final (proposed) 1.2 2.3
Total dividends paid and proposed (4.4p, 2001 - 6.4p) 2.4 3.5
The directors propose a final dividend on the ordinary shares of 2.2p (2001:
4.2p) per share. An interim ordinary dividend of 2.2p (2001: 2.2p) per share
was paid on 16 August 2002.
The final dividend will be paid on 23 May 2003 to shareholders on the register
at the close of business on 11 April 2003. Accordingly the shares will go
ex-dividend on 9 April 2003.
4. EARNINGS PER ORDINARY SHARE
The calculation of the earnings per ordinary share is based on the loss after
tax and minority interests of #1.6m (2001: profit #5.3m) and a weighted average
of 55,035,879 (2001: 54,871,729) ordinary shares in issue during the period.
Earnings per ordinary share before exceptional items is calculated based on
profit before exceptional items but after tax and minority interests of #2.9m
(2001: profit #6.6m).
Dilution increases the weighted average number of shares to 55,435,879 (2001:
55,615,655). Diluted loss per share is the same as basic loss per share as the
issuance of 'shares to be issued' would reduce loss per share and are therefore
not dilutive under FRS14.
5. GAIN ON DEEMED DISPOSAL
During the period an associated undertaking, SHL Japan Co Limited, issued
additional shares for cash. The Group did not take up any additional shares
and, accordingly, the interest in the associate was reduced to 27.0% from 31.7%.
An unrealised gain on the deemed disposal arose on this transaction and has
been recognised in the Statement of Total Recognised Gains and Losses.
6. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
This includes bank borrowings of #3.3m (2001: #nil) and loan notes relating to
the acquisition of Advance Personnel Technology Limited of #0.9m (2001: #3.0m).
7. RECONCILIATION OF OPERATING PROFIT/(LOSS) TO NET CASH INFLOW FROM
OPERATING ACTIVITIES
2002 2001
15 mths 12 mths
#m #m
Operating (loss)/profit (1.5) 7.4
Exceptional items 5.5 1.8
Operating profit before exceptional items 4.0 9.2
Depreciation and amortisation charges 3.7 3.0
Decrease/(increase) in working capital 4.2 (0.3)
11.9 11.9
Cash outflow from exceptional items (2.8) -
Cash inflow from operating activities 9.1 11.9
8. POST BALANCE SHEET EVENT
On 6 February 2003, The Resourceful Group Limited, the holding company of Park
Human Resources Limited, and its subsidiaries were disposed of by the group as a
result of a management decision to concentrate on core business activities. The
activities of the company and its subsidiaries are shown as discontinued in this
period's accounts. The loss on disposal will be recognised in the accounts for
the year ending 31 December 2003. Subject to the preparation of final
completion accounts, the loss on disposal is #13.1m, including goodwill write
back of #15.3m.
9. FINANCIAL INFORMATION
The financial information set out above does not constitute the Company's
statutory accounts for the fifteen months ended 31 December 2002 or the year
ended 30 September 2001. Statutory accounts for 2001 have been delivered to
the Registrar of Companies and those for 2002 will be delivered following the
Company's Annual General Meeting. The Auditors have reported on those accounts;
their reports were unqualified and did not contain statements under section 237
(2) or (3) of the Companies Act 1985.
10. ANNUAL REPORT AND FINANCIAL STATEMENTS
The Annual Report and Financial Statements will be posted to shareholders in
March 2003. The Annual General Meeting will be held on 6 May 2003. Copies of
the Annual Report and Financial Statements and of this announcement will be
available at the Company's registered address: The Pavilion, 1 Atwell Place,
Thames Ditton, Surrey KT7 0NE.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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