TIDMKLN
RNS Number : 5996H
Kellan Group (The) PLC
19 August 2016
19 August 2016
The Kellan Group PLC
("Kellan" or "the Group")
Interim results for the six months ended 30 June 2016
Kellan Group plc (the "Group" or the "Company" or "Kellan") is a
market leading recruitment business operating across a wide range
of functional disciplines and industry sectors.
Financial Summary
-- In the six months ended 30 June 2016, the Group's
year-on-year sales declined by 13% to GBP10.0 million, compared
with GBP11.5 million in H1 2015; while Net Fee Income (NFI)
declined by 10% from GBP3.7 million in H1 2015 to GBP3.3 million in
H1 2016.
-- Continuous focus on overheads with administrative expenses
reduced by 2% to GBP3.3 million over H1 2016, compared with GBP3.4
million during the comparable period in H1 2015 and GBP3.5 million
in H2 2015.
-- Adjusted EBITDA profit (Note 2) of GBP0.2 million during H1
2016 compared with GBP0.4 million during H1 2015.
-- Loss of GBP0.1 million during H1 2016, compared with a profit
of GBP0.2 million during the comparable period last year. Excluding
the effect of the GBP150,000 favourable share based payment
adjustment in H1 2015, year-on-year earnings before tax declined
from break even in H1 2015 to a loss of GBP0.1 million in H1
2016.
Operational summary
-- Berkeley Scott continues to be the leader in hospitality and
leisure recruitment markets. January saw Berkeley Scott return to
the Birmingham market, and the team have performed well.
-- The RK business has continued to grow and has seen increased
success within the construction, manufacturing and practice
markets.
ENQUIRIES:
The Kellan Group PLC Tel: 020 7268 6200
Rakesh Kirpalani,
Group Finance Director
Allenby Capital Limited Tel: 020 3328 5656
David Worlidge / James
Thomas
Executive Chairman's Statement
The results for the first six months of 2016 have been
disappointing, although the Group has had success in securing new
clients and growing some areas of the business. Group sales have
decreased by 13% from GBP11.5 million in H1 2015 to GBP10.0 million
in H1 2016, while administrative expenses have reduced by 2% from
GBP3.4 million in H1 2015 to GBP3.3 million in H1 2016. Overall
loss for H1 2016 of GBP141,000 compared with a profit of GBP187,000
in H1 2015. Excluding the effect of the GBP150,000 favourable
share-based payment adjustment in H1 2015, year-on-year earnings
before tax declined from break even in H1 2015 to a loss of GBP0.1
million in H1 2016. Adjusted EBITDA for H1 2016 of GBP211,000
compared with GBP382,000 in H1 2015.
Berkeley Scott's temporary business was flat year-on-year with
the new Living Wage impacting H1 performance. The Tourism,
Hospitality and Leisure sector has one of the highest proportion of
jobs paying the minimum wage of any sector in the UK. Berkeley
Scott saw several major clients re-evaluate their staffing levels,
pay structures and usage of temporary workers to negate the impact
of the minimum wage on their business. January saw Berkeley Scott
return to the Birmingham market to leverage many of our national
contract catering clients who have been supportive of this Midlands
opening.
Berkeley Scott's permanent business NFI declined by 10% on H1
2015 with the London market proving to be more challenging than
anticipated with NFI from London declining by 14% on H1 2015.
Following careful evaluation of our performance, the Berkeley
Scott business was restructured with Mark Darby becoming directly
responsible and managing Berkeley Scott London which, as a whole,
was one of the main contributors to the underperformance. The
Directors believe it is very important that this large part of the
business is turned around over H2.
The RK business continues to grow and has seen increased success
within property, construction and manufacturing sectors. A focus on
practice markets has delivered promising results, particularly in
Lancashire.
Quantica Technology has seen its NFI decline by GBP290,000; of
which GBP127,000 relates to the closure of the Birmingham branch in
Q2 2015. The retail division has benefited from the rise of new
hybrid roles in the market and has delivered growth on the same
period last year. Quantica Search and Selection has re-established
relationships with PSL clients and won new SME business.
Uncertainty surrounding the EU referendum has been a distraction
in H1 of 2016 with many clients taking longer to make decisions. We
have also seen some general slowness post referendum in job flow
and candidate attraction.
My sincerest thanks goes to our staff, all of our customers, and
to all our loyal shareholders for their continued support.
Richard Ward
Executive Chairman
Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2016
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Note GBP000 GBP000 GBP000
Revenue 9,985 11,492 24,864
Cost of sales (6,650) (7,788) (17,163)
-------------------------- ----- ---------- ---------- ------------
Net Fee Income 3,335 3,704 7,701
Administrative expenses (3,304) (3,363) (6,877)
-------------------------- ----- ---------- ---------- ------------
Operating profit 2 31 341 824
Financial income - 2 8
Financial expenses (172) (156) (406)
-------------------------- ----- ---------- ---------- ------------
(Loss)/Profit before
tax (141) 187 426
Tax credit - - -
------------------------- ----- ---------- ---------- ------------
(Loss)/Profit for
the period (141) 187 426
-------------------------- ----- ---------- ---------- ------------
Attributable to:
Equity holders of
the parent (141) 187 426
-------------------------- ----- ---------- ---------- ------------
(Loss)/Profit per
share in pence
Basic 3 (0.04) 0.06 0.13
Diluted 3 (0.04) 0.06 0.11
-------------------------- ----- ---------- ---------- ------------
The above results relate to continuing operations.
There are no other items of comprehensive income for the period
or for the comparative periods.
Consolidated Statement of Financial Position
as at 30 June 2016
Unaudited Unaudited Audited
30 June 30 June 31 December
2016 2015 2015
Note GBP000 GBP000 GBP000
Non-current assets
Property, plant and
equipment 338 307 382
Intangible assets 6 6,021 6,237 6,129
------------------------------------- ----- ---------- ---------- ------------
6,359 6,544 6,511
------------------------------------- ----- ---------- ---------- ------------
Current
assets
Trade and other receivables 4 3,288 3,733 4,415
Cash and cash equivalents 315 219 1,708
------------------------------------- ----- ---------- ---------- ------------
3,603 3,952 6,123
------------------------------- ----- ----- ---------- ---------- ------------
Total assets 9,962 10,496 12,634
------------------------------- ----- ----- ---------- ---------- ------------
Current liabilities
Loans and borrowings 2,118 845 2,887
Trade and other payables 5 2,639 3,289 3,056
Provisions 18 128 67
------------------------------------- ----- ---------- ---------- ------------
4,775 4,262 6,010
------------------------------ ------ ----- ---------- ---------- ------------
Non-current liabilities
Loans and borrowings 1,776 2,993 3,095
Provisions 65 2 42
1,841 2,995 3,137
------------------------------------- ----- ---------- ---------- ------------
Total liabilities 6,616 7,257 9,147
-------------------------------- ---- ----- ---------- ---------- ------------
Net assets 3,346 3,239 3,487
-------------------------------- ---- ----- ---------- ---------- ------------
Equity attributable
to equity holders of
the parent
Share capital 4,274 4,274 4,274
Share premium 14,746 14,746 14,746
Convertible debt reserve 170 170 170
Capital redemption
reserve 2 2 2
Retained earnings (15,846) (15,953) (15,705)
------------------------------------- ----- ---------- ---------- ------------
Total equity 3,346 3,239 3,487
-------------------------------- ---- ----- ---------- ---------- ------------
Consolidated Statement of Changes in Equity
for the six months ended 30 June 2016
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
Share Share Warrant Convertible Redemption Retained Total
capital premium reserve reserve reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at
31 December
2014 4,274 14,711 36 164 2 (15,981) 3,206
--------------------- ---------- ---------- ---------- ------------ ----------- ---------- ----------
Total comprehensive
profit for
the 6 month
period ended
30 June 2015 - - - - - 187 187
Issue of shares - 35 - - - - 35
Share based
payment - - - - - (150) (150)
Equity component
of convertible
loan notes - - (36) 6 - (9) (39)
Balance at
30 June
2015 4,274 14,746 - 170 2 (15,953) 3,239
--------------------- ---------- ---------- ---------- ------------ ----------- ---------- ----------
Total comprehensive
profit for
the 6 month
period ended
31 December
2015 - - - - - 239 239
Equity component
of convertible
loan notes - - - - - 9 9
Balance at
31 December
2015 4,274 14,746 - 170 2 (15,705) 3,487
--------------------- ---------- ---------- ---------- ------------ ----------- ---------- ----------
Total comprehensive
loss for the
6 month period
ended 30 June
2016 - - - - - (141) (141)
Balance at
30 June
2016 4,274 14,746 - 170 2 (15,846) (3,346)
--------------------- ---------- ---------- ---------- ------------ ----------- ---------- ----------
Consolidated Statement of Cash Flows
for the six months ended 30 June 2016
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30
June 30 June 31 December
2016 2015 2015
GBP000 GBP000 GBP000
Cash flows from operating
activities
(Loss)/Profit for the
period (141) 187 426
Adjustments for:
Depreciation and amortisation 157 171 327
Interest income - (2) -
Interest paid 138 129 370
Amortisation of loan
cost 10 19 29
Equity settled convertible
loan interest 24 7 7
Equity settled share-based
payment/(adjustment) - (150) (150)
188 361 1,009
Decrease/(Increase) in
trade and other receivables 1,127 122 (560)
(Decrease)/Increase in
trade and other payables (417) 333 108
Decrease in provisions (26) (26) (47)
------------------------------------ ---------- ---------- -------------------
Net cash inflow from
operating activities 872 790 510
------------------------------------ ---------- ---------- -------------------
Cash flows from investing
activities
Interest received - 2 -
Acquisition of property,
plant and equipment (5) (37) (161)
------------------------------------ ---------- ---------- -------------------
Net cash outflow from
investing activities (5) (35) (161)
------------------------------------ ---------- ---------- -------------------
Cash flows from financing
activities
Repayment of invoice
discounting balance (2,122) (1,584) 458
Interest paid and loan
costs (138) (129) (276)
Repayment of term loan
borrowings - (15) (15)
------------------------------------ ---------- ---------- -------------------
Net cash inflow/(outflow)
from financing activities (2,260) (1,728) 167
------------------------------------ ---------- ---------- -------------------
Net (decrease) / increase
in cash and cash equivalents (1,393) (973) 516
Cash and cash equivalents
at the beginning of the
period 1,708 1,192 1,192
------------------------------------ ---------- ---------- -------------------
Cash and cash equivalents
at the end of the period 315 219 1,708
-------------------------------------- ---------- ---------- -------------------
Notes
(forming part of the financial statements)
1 Accounting policies
Accounting periods
The accounting reference date of the Group is 31 December. The
current half year interim results are for the six months ended 30
June 2016. The comparative half year interim results are for the
six months ended 30 June 2015. The comparative year's results are
for the twelve months ended 31 December 2015.
Financial information
The financial information for the six months ended 30 June 2016
and the six months ended 30 June 2015 are unaudited and un-reviewed
and do not constitute the Group's statutory financial statements
for those periods. The comparative financial information for the
full year ended 31 December 2015 has, however, been derived from
the audited statutory financial statements for that period. A copy
of those statutory accounts for that period has been delivered to
the Registrar of Companies. The auditor's report on those accounts
was not qualified and did not contain statements under Chapter 3 of
Part 16 of the Companies Act 2006.
Basis of preparation
The half year interim financial statements have been prepared on
a going concern basis using the recognition and measurement
principles of IFRS as endorsed for use in the European Union. The
accounting policies used in the preparation of these condensed
financial statements are set out in the statutory financial
statements for the period ended 31 December 2015 which are also the
policies that are expected to be applicable at 31 December
2016.
Based on the Group's latest trading expectations and associated
cash flow forecasts, the directors have considered the cash
requirements of the Company and, subject to the refinancing or
conversion of the GBP1.35m loan notes which are repayable in
February 2017, have concluded that the Group will be able to
operate within its existing facilities for the next twelve months.
These facilities comprise an invoice discounting facility of up to
GBP4 million dependent on trading levels. The Directors also
recognise that there is a general sensitivity to the wider
macro-economic environment which may necessitate a requirement for
additional funding. However, based on the ongoing support from
major shareholders and management's trading expectations; the
Directors are confident that the Group will be able to meet its
liabilities as they fall due for the foreseeable future. It is on
this basis that the Directors consider it appropriate to prepare
the Group's financial statements on a going concern basis.
2 Reconciliation of operating loss to adjusted EBITA and
adjusted EBITDA
Unaudited Unaudited Audited
6 month 6 month 12 month
period period period
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP000 GBP000 GBP000
Operating profit as per accounts 31 341 824
Add back
Amortisation of intangible
assets 108 108 216
Share-based payments adjustment - (150) (150)
Restructuring costs 23 20 20
---------------------------------- ---------- ---------- ------------
Adjusted EBITA 162 319 910
Depreciation 49 63 111
---------------------------------- ---------- ---------- ------------
Adjusted EBITDA 211 382 1,021
---------------------------------- ---------- ---------- ------------
3 Loss per share
Basic loss per share
The calculation of basic (loss)/earnings per share is as
follows:
Unaudited Unaudited Audited
6 month 6 month 12 month
period ended period ended period ended
30 June 30 June 31 December
2016 2015 2015
Weighted average
number of shares
---------------------- ------------- ------------- -------------
Issued ordinary
shares at beginning
of period 339,645,061 337,894,529 337,894,529
Effect of shares
issued - 1,750,532 1,506,605
Weighted average
number of shares
at end of period 339,645,061 339,154,527 339,401,134
(Loss)/Profit
for the period (141,000) 187,000 426,000
---------------------- ------------- ------------- -------------
Basic (loss)/profit
per share in
pence (0.04) 0.06 0.13
---------------------- ------------- ------------- -------------
Diluted (loss)/
profit per share
in pence (0.04) 0.06 0.11
---------------------- ------------- ------------- -------------
There was no dilution in the current period due to the loss in
the period.
The effect of the conversion of the loan notes and the
outstanding Employee options has been determined as non-dilutive.
As such they have been excluded from the diluted earnings per share
calculation.
4 Trade and other receivables
Unaudited Unaudited Audited
30 June 30 June 31 December
2016 2015 2015
GBP000 GBP000 GBP000
-------------------------------- ---------- ---------- ------------
Trade receivables 2,923 3,429 4,131
Other receivables 23 23 21
Prepayments and accrued income 342 281 263
-------------------------------- ---------- ---------- ------------
3,288 3,733 4,415
-------------------------------- ---------- ---------- ------------
5 Trade and other payables
Unaudited Unaudited Audited
30 June 30 June 31 December
2016 2015 2015
GBP000 GBP000 GBP000
------------------------------ ---------- ---------- ------------
Trade payables 113 57 74
Social security and other
taxes 755 902 965
Other creditors 604 910 589
Accruals and deferred income 1,167 1,420 1,428
------------------------------ ---------- ---------- ------------
2,639 3,289 3,056
------------------------------ ---------- ---------- ------------
6 Intangible Assets
The intangible assets balance at 30 June 2016 of GBP6,021,000
includes an amount of GBP5,750,000 relating to goodwill acquired
through business combinations. Impairment of this balance has been
assessed as at 30 June 2016 and no adjustment was considered
necessary. The Directors believe the assumptions used in testing
impairment at 31 December 2015 are still valid and have not
materially changed. These assumptions will continue to be
reassessed on a six monthly basis.
7 Availability of Interim Results
The half year results for the six months to 30 June 2016 will
not be posted to shareholders but will be available on the
Company's website, www.kellangroup.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR QVLFFQVFXBBV
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