RNS Number:9342I
Greatfleet PLC
14 September 2006
14 September 2006
Greatfleet plc
Results for the six months to 30 June 2006 (unaudited)
Greatfleet plc ("the Company"; AIM: GFG), the specialist recruitment company,
announces its unaudited results for the six months to 30 June 2006. Comparative
figures in the financial highlights are for the six months to 30 June 2005 from
continuing activities.
Business and Financial Highlights
* Turnover increased 334% to #5.4m (#1.2m)
* Gross profit increased 325% to #3.1m (#0.7m)
* Adjusted operating profit of #0.3 million (#1.3 million loss)*
* Stuart Blake appointed Chief Executive Officer
* Launch of Longbridge Selection to provide a research-led service within
the private practice and in-house markets for candidates below partner level
* Launch of Enterprise Management Incentive option scheme for all employees
* Acquired joint venture partners interest in International Doctors on
Contract Ltd (now 100% owned)
* Disposed of 75% shareholding in Parallax Consultancy Solutions Limited
* Revenue recognition policy brought in line with various competitors to a
deals done basis
*Adjusted operating profit is before amortisation of goodwill of #0.2m (#nil)
Post period end events
* Acquired Johnstones Recruitment Solutions Ltd, a specialist recruiter in
East Anglia
Commenting on the results, Jonathan Hill, Chairman, said: "Greatfleet has been
transformed over the past 6 months and is now in the position of generating
increased gross margins from its Search, Contingency and Contract operations.
I am confident that in due course we will be able to announce an attractive
opportunity to add very significant scale to our business. However, the mistakes
of the past will not be repeated and acquisitions will only be considered where
they can add value to our already strong core business and be demonstrated to be
in the short, medium and long term interests of our shareholders."
For further information please contact:
Greatfleet plc Jonathan Hill, Chairman 020 7194 7700
Stuart Blake, Chief Executive Officer 0845 881 0700
Noble & Company Limited Nick Naylor 020 7763 2200
Parkgreen Communications Limited Justine Howarth / Victoria Thomas 020 7493 3713
Financial Highlights - 6 months ended 30 June 2006
6 months ended 6 months ended 6 months ended
30 June 2006 31 December 2005 30 June 2005
Unaudited Restated Restated
# # #
Turnover 5,395,155 1,696,328 1,243,293
Operating profit / (loss) before amortisation (note 2) 331,608 (1,426,492) (1,268,485)
Operating profit / (loss) 88,928 (1,426,492) (1,268,485)
Profit / (loss) before and after taxation 26,051 (1,641,763) (1,278,796)
Basic and diluted profit / (loss) per share (pence) 0.05 (16.8) (16.3)
Chairman's Statement
Overview
Following completion of the capital re-construction and reverse acquisition last
year, I am delighted to announce a return to profitability. The re-branded Group
has already seen the benefits of the merger with significant revenues coming
from cross selling opportunities.
The Group now generates income from Audit, Compliance, Risk, Accountancy, IT and
Capital Markets within financial services. The core Legal Search practice has
expanded, and we have opened Longbridge Selection to supply associate lawyers to
law firms, banks and firms within the commercial sectors so as to offer our
clients a complete recruitment service.
The sectors in which we specialise remain robust and we are enjoying increased
activity in all of our core business areas. Demand for high quality financial
and legal professionals continues to increase, and our chosen candidate
attraction methodology differentiates us from the competition and enables the
business to offer a most efficient recruitment service.
Business Overview
The business has increased turnover by 334% from #1.2 million to #5.4 million
(comparative for the 6 months to 30 June 2005) and gross profit by 325% from
#0.7 million to #3.1 million yielding an adjusted operating profit of
#0.3million (#1.3 million loss) before amortisation of goodwill. This is an
outstanding performance and I want to record my appreciation to the management
and employees responsible for this. This turnaround would not have not been
possible without the tenacious contribution of everyone involved with this
Group.
Greatfleet has been transformed over the past 6 months and is now in the
position of generating increased gross margins from its Search, Contingency and
Contract operations.
In addition to resolving many of the previous legacy issues, the business has
acquired the joint venture partners remaining interest in iDoC and the entire
issued share capital of Johnstones Recruitment Solutions in Norwich. We view the
acquisition of Johnstones as the springboard to further develop our regional
network of UK offices. This development will run in tandem with building on our
international operations.
Furthermore the recruitment methodology employed has enabled the Group to
achieve net fee income per consultant of approximately #160K which I suspect
many of our competitors will regard as an industry leading figure.
Greatfleet continues to trade in line with the Board's expectations and I look
forward to the future with confidence.
Future Prospects
The next 6 months will see the business continue to expand organically in core
financial service and legal marketplaces, capitalising upon the strength of our
recruitment brands. Expansion by acquisition will not be ruled out and having
evaluated a number of opportunities recently, I am confident that in due course
we will be able to announce an attractive opportunity to add very significant
scale to our business. However, the mistakes of the past will not be repeated
and acquisitions will only be considered where they can add value to our already
strong core business and be demonstrated to be in the short, medium and long
term interests of our shareholders.
Jonathan Hill 14 September 2006
Chairman
Group profit and loss account for the six months ended 30 June 2006
Notes 6 months ended 6 months ended 6 months ended
30 June 2006 31 December 2005 30 June 2005
Unaudited Restated Restated
# # #
Turnover 5,395,155 1,696,328 1,243,293
Cost of Sales 1 (2,286,123) (227,524) (511,908)
Gross profit 3,109,032 1,468,804 731,385
Administrative expenses (3,020,104) (2,895,296) (1,999,870)
____________________________________________________________________________________________________________
Operating profit / (loss) before amortisation 331,608 (1,426,492) (1,268,485)
Goodwill amortisation 2 (242,680) 0 0
____________________________________________________________________________________________________________
Operating profit / (loss) 88,928 (1,426,492) (1,268,485)
Profit on disposal of subsidiary 4,345 0 0
Interest payable and similar charges (69,665) (216,472) (11,195)
Interest receivable and similar income 2,443 1,201 884
Profit / (loss) on ordinary activities before 26,051 (1,641,763) (1,278,796)
taxation
Taxation on profit / (loss) on ordinary 0 0 0
activities
Profit / (loss) on ordinary activities after 26,051 (1,641,763) (1,278,796)
taxation and retained profit / (loss) for the
period
Basic and diluted profit / (loss) per share 3 0.05 (16.8) (16.3)
(pence)
The results for 2006 relate to continuing activities. An analysis of the results
for the periods ended 31 December 2005 and 30 June 2005 between continuing and
discontinued activities is given in note 3.
Statement of Total Recognised Gains and Losses
# # #
Profit / (loss) for the period 26,051 (1,641,763) (1,278,796)
Prior year adjustment 165,000
Total gains and losses recognised
since last financial statements 191,051
Group balance sheet at 30 June 2006
30 June 2006 31 December 2005 30 June 2005
Unaudited Restated Audited
# # #
Fixed assets
Intangible assets 4,610,915 4,799,677 1
Tangible assets 154,820 205,724 185,875
4,765,735 5,005,401 185,876
Current assets
Debtors 2,865,784 3,185,658 859,318
Cash at bank and in hand 18,955 14,194 9,510
2,884,739 3,199,852 868,828
Creditors: amounts falling due within one year 4,812,292 5,294,121 1,867,665
Net current liabilities (1,927,553) (2,094,269) (998,837)
Total assets less current liabilities 2,838,182 2,911,132 (812,961)
Creditors: amounts falling due after more than one
year
Convertible debt 236,550 223,352 185,506
Other 13,889 48,612 17,165
250,439 271,964 202,671
Provisions
Onerous lease provision 82,600 130,000 0
Investments in subsidiaries - not consolidated 186,882 186,882 0
Investments in joint venture
______________________________________________________________________________________________________________
Share of gross assets 0 (104,738) 0
Share of gross liabilities 0 134,814 0
______________________________________________________________________________________________________________
0 30,076 0
269,482 346,958 0
2,318,261 2,292,210 (1,015,632)
Capital and reserves
Called up share capital 1,120,094 1,120,094 174,532
Share premium account 2,699,345 2,699,345 1,919,489
Merger reserve 1,994,287 1,994,287 (1,229,900)
ESOP share reserve (74,754) (74,754) (74,754)
UITF 17 reserve 7,945 7,945 7,945
Equity reserve 52,631 52,631 52,631
Profit and loss account (3,481,287) (3,507,338) (1,865,575)
Shareholders' funds/(deficit) 2,318,261 2,292,210 (1,015,632)
Group cash flow statement for the six months ended 30 June 2006
6 months ended 6 months ended 6 months ended
30 June 2006 31 December 2005 30 June 2005
Unaudited Audited Audited
# # #
Net cash inflow/(outflow) from operating activities 221,966 (1,520,418) (158,310)
Returns on investments and servicing of finance
Interest received 2,443 1,201 884
Interest paid (47,231) (33,626) (11,195)
(44,788) (32,425) (10,311)
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (14,501) 0 (7,747)
(14,501) 0 (7,747)
Investing activities
Purchase of subsidiary 2 5,078 0
Cash inflow/(outflow) before use of liquid resources 162,679 (1,547,765) (176,368)
and financing
Financing
Issue of shares (net of issue costs) 0 529,603 186,500
Other loans (33,518) 1,050,000 0
Net cash inflow from financing (33,518) 1,579,603 186,500
Increase in cash 129,161 31,838 10,132
Notes forming part of the financial statements
1. Accounting policies
The results for the six months ended 30 June 2006 include those for the holding
company and all of its subsidiary undertakings. The results are prepared on the
basis of the accounting policies set out in the 31 December 2005 financial
statements apart from the change in policy on revenue recognition referred to
below.
Revenue recognition: Following the completion of the takeover of Greatfleet
Limited in December 2005, the Directors have reassessed the accounting policies
adopted by the Group. To bring the Group's revenue recognition policy in line
with numerous significant competitors and to present a more meaningful
reflection of activity in any period, the Directors have decided to recognise
revenue on non-retained assignments at the time an offer is accepted by a
candidate and a start date is known, rather than on the actual start date as was
the previous policy. In the opinion of the Board, the Group has fulfilled its
contractual obligations by the date of acceptance, which can be reliably
determined by the Group's accounting systems, and has earned the right to
consideration. Suitable provision is made for potential drop-outs and associated
commission costs. The impact of this policy change is summarised below:
Notes 6 months ended 6 months ended 6 months ended
30 June 2006 31 December 2005 30 June 2005
Unaudited Restated Restated
# # #
Turnover
Previous policy 4,668,155 1,489,328 1,572,293
New policy 5,395,155 1,696,328 1,243,293
Operating profit / (loss) before amortisation
Previous policy (250,392) (1,591,492) (1,005,485)
New policy 331,608 (1,426,492) (1,268,485)
Retained profit / (loss)
Previous policy (555,949) (1,806,763) (1,015,796)
New policy 26,051 (1,641,763) (1,278,796)
There is no impact on cash flow. The overall effect is therefore to increase
turnover in 2006 by #727,000 (December 2005: increase #207,000; June 2005:
decrease #329,000) and increase profits in 2006 by #582,000 (December 2005:
increase #165,000; June 2005: decrease #263,000).
2. Amortisation
In accordance with FRS10 - Goodwill and Intangible Assets, the Group's policy,
to amortise goodwill over 10 years, has been applied. In 2007 under IFRS it is
expected that the amortisation expensed in 2006 will be reversed and impairment
reviews carried out on an annual basis.
3. Profit / (loss) per share
Basic profit / (loss) per ordinary share has been computed on the basis of a
profit / (loss) after taxation of #26,051 (December 2005: #(1,641,763); June
2005: #(1,278,796)) and the weighted average number of ordinary shares in issue
during the period of 56,004,721 (December 2005: 9,754,400; June 2005:
7,827,888).
The diluted profit / (loss) per share has been calculated including the dilutive
effect of options awarded. As a result the diluted weighted average number of
ordinary shares during the period is 56,373,490 (December 2005: 9,754,400; June
2005: 7,827,888).
4. Corresponding figures
The analysis between continuing and discontinued operations in the 6 month
period to 30 June 2005 is shown below.
Continuing Discontinued Total
# # #
Turnover 1,352,154 220,139 1,572,293
Cost of sales (344,578) (167,330) (511,908)
Gross profit 1,007,576 52,809 1,060,385
Administrative expenses (1,772,118) (293,752) (2,065,870)
Operating loss (764,542) (240,943) (1,005,485)
Discontinued activities related to P S Publications Limited whose activities
were discontinued on 30 June 2005.
The results for the 6 month periods to 31 December 2005 and 30 June 2006 all
relate to continuing activities.
5. Acquisition of Subsidiary
On 31 May 2006 the Group acquired 49% of the issued share capital of
International Doctors on Contract Limited for #2 thereby increasing its holding
to 100%. The previous holding had been treated as a joint venture.
Book and fair value
#
The summary balance sheet acquired comprised:
Debtors and Prepayments 84,498
Creditors and Accruals (194,530)
Net liabilities acquired (110,032)
Share of losses previously recognised in consolidation 61,216
Aggregate Consideration 5,102
Goodwill arising on acquisition 53,918
6. Dividends
No dividends were paid or proposed for the period to 30 June 2006 (31 December
2005: #nil; 30 June 2005: #nil).
7. Post Balance Sheet events
Acquisition of subsidiary
With effect from 1 July 2006 the Company acquired 100% of the issued share
capital of Johnstones Recruitment Solutions Limited, a specialist recruiter
based in East Anglia. The purchase price was #44,250 comprising the issue of
300,000 ordinary 2p shares in the Company at 8.75p and #18,000 cash. Tax losses
acquired are valued at about #25,000 and will be paid for as and when utilised.
8. Announcement
The announcement set out above does not constitute the Company's statutory
accounts within the meaning of section 240 of the Companies Act 1985 for the
periods ended 31 December 2005 or 30 June 2005, but the information for the
periods ended 31 December 2005 and 30 June 2005 is derived from those accounts.
Statutory accounts for the period to 31 December 2005 and 30 June 2005 have been
delivered to the Registrar of Companies. The auditors have reported on those
accounts; their reports were unqualified and did not contain statements under
the Companies Act 1985, s.237(2) or (3).
9. Statutory accounts
The statutory accounts for the six months ended 31 December 2005 are available,
free of charge, from the registered office of the Company or the Company's
nominated adviser and broker, Noble & Company Limited, 120 Old Broad Street,
London EC2N 1AR.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EANNDFANKEFE
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