RNS Number:8671Q
Synarbor PLC
27 March 2008
27 March 2008
Synarbor PLC ("Synarbor" or the "Group")
Preliminary results for the year ended 31 December 2007
BUSINESS AND FINANCIAL HIGHLIGHTS
* Management restructured to reflect the convergence of education and social
work
* �4.9m raised through placing of 12m new ordinary shares
* Disposal of healthcare division for a consideration of �5.2m (after
adjustments)
* Net debt reduced by 49% to �12.5m (2006: �24.2m)
* Top three position in our chosen sectors of education and social work
* Normalised profit from continuing operations up 10% to �2.9m (2006: 2.6m)*
* Profit for the year from continuing operations is �1.6m (2006: 2.2m)
* Revenues remain strong despite restructuring and mixed trading environment
- �56.4m (�60.0m in 2006)
* Gross margin improved to 25.2% (2006: 24.7%)
* Normalised EBIT** is �5.1m (2006: �5.4m)
* Conversion of net fee income to normalised EBIT** of 35.6% (2006: 36.4%)
* Adjusted earnings per share of 7.2p (2006: 9.1p)
* Basic earnings per share of 2.0p (2006: 8.5p)
*Normalised profit from continuing operations is profit from continuing
operations adjusted for exceptional items
** Normalised EBIT is profit from operations before exceptional items
Contact: Dean Kelly
Chief Executive Officer, Synarbor PLC
Daniel Urmson
Group Finance Director, Synarbor PLC
Robert Kelsey
Moorgate Group
Telephone: Moorgate, +44 (0) 20 7953 7772 until 18:00
Thereafter: Synarbor PLC, +44 (0) 114 283 4925
Chairman's statement
I am pleased to be able to report a healthy performance in what has been a
crucial year of change for Synarbor PLC. Not only has the Group successfully
reduced net debt by 49%, the company's normalised profit from continuing
operations (which adds back exceptional items) have also grown by 10%.
These achievements are of particular note given the significant relaunch and
repositioning of Synarbor's market offering - led by a new management team - in
a period of challenging operating conditions. Indeed, given our internal changes
and the mixed trading environment, the Group can take some pride in the fact its
revenues have held up well, as has gross profit.
The Healthcare Division was sold in April 2007 for a consideration of �5.2
million (after adjustments) and the assumption of working capital funding. This
disposal has allowed the Group to move away from the least attractive of the
markets served by the business, towards a dual focus on the company's core
expertise in the education and social work sectors. This repositioning and
rebranding has enabled Synarbor to broaden its offering to encompass all support
services - providing an innovative holistic approach that utilises the company's
existing sector expertise and maximises the synergies between the education and
social work sectors.
The Board has similarly been realigned, with Dean Kelly promoted to Chief
Executive. Daniel Urmson was promoted to the role of Group Finance Director and
Dennis Hall has become Non-Executive Director. Joining the board more recently
has been leading educationalist, David Triggs, appointed to the role of
Non-Executive Director. Meanwhile, I have become Chairman, and (with associates)
subscribed for approximately 27% of the enlarged share capital. This investment
and the disposal of the Healthcare Division led to the impressive reduction in
debt - which has almost halved to approximately �12.5 million over the course of
2007 and is probably the company's most significant fiscal achievement this year
in terms of our long-term financial health.
With the shift in Synarbor's business model, the Group is now focused on the
education and social work markets that offer both attractive margins and future
growth potential. Moreover, Synarbor has established itself as a clear market
leader, having been the first consultancy to amalgamate Education and Social
Work divisions - ensuring the Group is ideally placed to provide fast, efficient
and effective solutions to new and existing clients. We now stand as the
leading combined provider for bespoke resource solutions and specialist support
services within these crucial sectors. Indeed, this strategic move to leverage
on Synarbor's internal synergies has since been mirrored by the U.K.
government's decision to unite the provision of education and social care by
disbanding the DfES and creating the DfCSF.
Given such continued dynamism and the drive of the new Board and Senior
Management, we remain confident that the business will continue to make progress
in what will no doubt remain a challenging public sector recruitment
environment.
Luke Johnson
Chairman
26 March 2008
Chief Executive's report
Synarbor became the successor brand to Public Recruitment Group in October 2007.
This was partly to reflect our new combined concentration on the Education and
Social Work sectors, having disposed of the Healthcare business in April 2007,
as well as our broadening product offering to encompass support services to our
chosen sectors. It was also to demonstrate the fact that, as a company, we are
undertaking a revolutionary change. As well as a new name, over the past year we
have adopted a new vision, a new business model and a new Board of Directors.
Synarbor now has a unique proposition - bringing together education social work
support services in a move that, not only exploits synergies within the company
but one that pre-empted the government's own restructuring of the DfES into the
DfCSF, confirming the direction of the group.
With respect to our financial performance, few companies could have transformed
themselves so radically in the course of a year while maintaining revenues and
gross profits at the level we managed. Meanwhile normalised profit from
continuing operations grew by 10% and our net debt halved. Such figures are an
achievement that we should be proud of. We are now set fair for a 2008 that
reflects the hard transformative work undertaken in 2007.
Nowhere is the company's sense of renewal more apparent than with the senior
management. I became Chief Executive Officer in April 2007, supported by
renowned entrepreneur Luke Johnson, who became group Chairman. In a further
strengthening, Daniel Urmson became Group Finance Director and Dennis Hall a
Non-Executive Director. More recently David Triggs, a leading and well-known
educationalist, joined the board as a Non-Executive Director, bringing with him
over 20 years of school leadership experience.
I believe that we now have the right strategy, the right products and the right
team to make continued progress in the coming year, despite the challenging
trading environment. In fact, given the efficiencies we offer to our chosen
markets, I see any deterioration in trading conditions as an opportunity for
long term provision and a catalyst for our model. We have made an adequate start
to 2008 and performance is in line with our expectations.
Dean Kelly
CEO
26 March 2008
Consolidated income statement for the year ended 31 December 2007
_____________________________________________________________________________________
Note
2007 2006
�'000 �'000
Continuing Operations
Revenue 56,383 59,999
Cost of sales (42,172) (45,166)
_______ _______
Gross profit 14,211 14,833
Administrative expenses (10,962) (9,772)
_______ _______
Profit from operations before exceptional
items 5,062 5,397
Exceptional items 2 (1,813) (336)
Profit from operations 3,249 5,061
Finance expense (1,522) (2,227)
Finance income 23 21
_______ _______
Profit before tax 1,750 2,855
Tax expense (137) (699)
_______ _______
Profit for the year from continuing operations 1,613 2,156
Discontinued Operations
(Loss)/profit for the year from discontinued
operations 3 (789) 296
_______ _______
Profit for the year attributable to the equity
holders of the parent 824 2,452
_______ _______
Basic earnings per share (pence) 5
- continuing operations 4.0 7.5
- discontinued operations (2.0) 1.0
_______ _______
- basic earnings per share 2.0 8.5
_______ _______
Diluted earnings per (pence) 5
- continuing operations 4.0 7.5
- discontinued operations (2.0) 1.0
_______ _______
- diluted earnings per share 2.0 8.5
_______ _______
Consolidated balance sheet at 31 December 2007
2007 2007 2006 2006
�'000 �'000 �'000 �'000
Assets
Non-current assets
Property, plant and equipment
(PPE)
391 501
Intangible assets 36,770 42,486
Deferred tax assets 75 96
_______ _______
Total non-current assets 37,236 43,083
Current assets
Trade and other receivables 6,976 10,476
Cash and cash equivalents 353 351
_______ _______
Total current assets 7,329 10,827
_______ _______
Total assets 44,565 53,910
_______ _______
Liabilities
Non-current liabilities
Long term borrowings (8,561) (14,457)
Trade and other payables (399) (952)
_______ _______
Total non-current liabilities (8,960) (15,409)
Current liabilities
Short term borrowings (2,428) (7,353)
Current element of long term
borrowings (1,826) (2,778)
Trade and other payables (3,444) (5,711)
Other financial liabilities (97) (91)
Current tax liabilities (12) (513)
_______ _______
Total current liabilities (7,807) (16,446)
_______ _______
Total liabilities (16,767) (31,855)
_______ _______
TOTAL NET ASSETS 27,798 22,055
_______ _______
Consolidated balance sheet at 31 December 2007 (Continued)
2007 2007 2006 2006
�'000 �'000 �'000 �'000
Capital and reserves
attributable to equity holders
of the company
Share capital 4,511 3,291
Share premium reserve 15,996 12,316
Share scheme reserve 60 41
Merger reserve - (425)
Other reserves 3,610 4,790
Retained earnings 3,621 2,042
_______ _______ _______ _______
TOTAL EQUITY 27,798 22,055
_______ _______
Consolidated statement of changes in equity for the year ended 31 December 2007
Attributable to equity holders of the parent
Share Share Share Merger Other Retained Total
capital premium scheme reserve reserve earnings equity
reserve
�'000 �'000 �'000 �'000 �'000 �'000 �'000
Balance at 1 January 2006 2,828 12,316 569 (425) 3,506 (410) 18,384
Changes in equity for 2006
Profit and total recognised income
and expense for the year - - - - - 2,452 2,452
Issue of share capital 463 - - - 1,284 - 1,747
Share scheme charge - - (528) - - - (528)
______ _______ ______ ______ _______ _______ _______
Balance at 31 December 2006 3,291 12,316 41 (425) 4,790 2,042 22,055
Changes in equity for 2007
Profit and total recognised income
and expense for the year - - - - - 824 824
Issue of share capital 1,220 3,780 - - - - 5,000
Costs of share issue - (100) - - - - (100)
Release of merger and other
reserves on disposal of
discontinued operations - - - 425 (1,180) 755 -
Share scheme charge - - 19 - - - 19
______ _______ ______ ______ _______ _______ _______
Balance at 31 December 2007 4,511 15,996 60 - 3,610 3,621 27,798
______ ______ ______ ______ ______ ______ ______
Consolidated cash flow statement for the year ended 31 December 2007
Note 2007 2007 2006 2006
�'000 �'000 �'000 �'000
Cash flows from operating activities
Profit from continuing operations 3,249 5,061
Profit from discontinued operations 3 30 624
Adjustments for:
Depreciation 250 334
Share based payments 19 (528)
Loss/ (gain) on sale of property, plant 1 9
and equipment
_______ _______
Cash flows from operating profit before 3,549 5,500
changes in working capital and provisions
(Increase)/decrease in trade and other (739) 1,210
receivables
Decrease in trade and other payables (1,275) (1,042)
_______ _______
Cash generated from operations 1,535 5,668
Income taxes paid (517) (1,288)
_______ _______
Cash flows from operating activities 1,018 4,380
Investing activities
Acquisition of subsidiary, net of cash - (2,521)
acquired
Disposal of subsidiary, net of cash 5,387 -
disposed
Purchases of property, plant and equipment (276) (564)
Sale of property, plant and equipment 30 450
Development costs (312) -
Interest received 23 21
_______ _______
Net cash from/(used in) investing
activities 4,852 (2,614)
_______ _______
Increase in cash and cash equivalents
before financing activities 5,870 1,766
_______ _______
Consolidated cash flow statement for the year ended 31 December 2007 (Continued)
Note 2007 2007 2006 2006
�'000 �'000 �'000 �'000
Increase in cash and cash equivalents
before financing activities 5,870 1,766
Financing activities
Issue of ordinary shares 5,000 -
Costs of share issue (100) (250)
Repayment of loan notes (2,553) (3,515)
Movement in short term debt (2,331) (266)
Proceeds from bank borrowings - 16,058
Repayment of bank borrowings (4,436) (13,697)
Repayment of finance lease creditors (3) (2)
Interest paid (1,445) (1,856)
_______ _______
Net cash used in financing activities (5,868) (3,528)
_______ _______
Increase/(decrease) in cash and cash
equivalents 2 (1,762)
Cash and cash equivalents at beginning of
year 351 2,113
______ ______
Cash and cash equivalents at end of year 6 353 351
______ ______
Notes to the consolidated accounts for the year ended 31 December 2007
1. Financial Information
The preliminary results for the year ended 31 December 2007 have been prepared
in accordance with International Financial Reporting Standards, International
Accounting Standards and Interpretations (collectively IFRS) issued by the
International Accounting Standards Board (IASB) and adopted by the European
Union ("adopted IFRSs") and are in accordance with IFRS as issued by the IASB.
The financial information in this preliminary statement does not constitute the
company's statutory accounts for the years ended 31 December 2007 or 2006, but
is derived from those accounts. Statutory accounts for 2006 have been delivered
to the Registrar of Companies and those for 2007 will be delivered following the
company's annual general meeting. The auditors have reported on those accounts;
their reports were unqualified, did not include references to any matters to
which the auditors drew attention by way of emphasis without qualifying their
report(s) and did not contain statements under the Companies Act 1985, s 237(2)
or (3).
This is the first time the group has prepared its financial statements in
accordance with IFRSs, having previously prepared its financial statements in
accordance with UK Generally Accepted Accounting Principles (UK GAAP). The last
set of financial statements under UK GAAP was for the year ended 31 December
2006.
2. Exceptional items
The following exceptional expenses were incurred during the year:
2007 2006
�'000 �'000
Termination and office closure costs 1,813 336
_________ _________
3. Discontinued operations
In April 2007, the Group sold Public Recruitment Group Holdings Limited. Assets
and liabilities relating to this operation are not classified as held-for-sale
at 31 December 2006 in accordance with IFRS 5 'Non-current Assets Held for Sale
and Discontinued Operations' as the sale was not highly probable.
The post-tax loss on discontinued operations was determined as follows:
�'000 �'000
Consideration received 5,500
Cash
Less: Net current assets adjustment (265)
Less: Expenses (402)
________
4,833
Net assets disposed:
Intangible assets (5,492)
Property, plant and equipment (105)
Trade and other receivables (4,239)
Bank loan and overdraft 2,934
Trade and other payables 1,324
Other financial liabilities 57
________ (5,521)
________
Pre-tax loss on disposal of discontinued
operations (688)
Related tax expense (100)
________
(788)
________
Notes to the consolidated accounts for the year ended 31 December 2007
(Continued)
3. Discontinued operations (Continued)
The net cash inflow comprises:
Cash received 5,048
Bank overdraft disposed of 339
________
5,387
________
Result of discontinued operations
2007 2006
�'000 �'000
Revenue 10,150 26,746
Cost of sales (8,946) (23,122)
_______ _______
Gross profit 1,204 3,624
Exceptional items - (26)
Other administrative expenses (1,174) (2,974)
_______ _______
Profit from operations 30 624
Finance expense (55) (299)
_______ _______
Profit before tax (25) 325
Tax expense 24 (29)
Loss on disposal of discontinued operations (788) -
_______ _______
(Loss)/profit for the year on discontinued (789) 296
operations
_______ _______
Basic (loss)/earnings per share (pence) (2.0) 1.0
Diluted (loss)/earnings per share (pence) (2.0) 1.0
The cash flow statement includes the following amounts relating to discontinued
operations:
2007 2006
�'000 �'000
Operating activities (204) (4,768)
Investing activities 3,493 3,183
Financing activities (369) (175)
_______ _______
Net cash from/(used in)
discontinued operations 2,920 (1,760)
_______ _______
Notes to the consolidated accounts for the year ended 31 December 2007
(Continued)
4. Dividends
There are no dividends declared or paid during the period.
5. Basic, diluted and adjusted earnings per share
2007 2006
Pence Pence
Basic and diluted earnings per share (pence)
Continuing operations 4.0 7.5
Discontinued operations (2.0) 1.0
_______ _______
Basic and diluted earnings per share 2.0 8.5
Exceptional items (net of tax) 3.2 1.6
Loss/(profit) from discontinued operations 2.0 (1.0)
_______ _______
Adjusted earnings per share 7.2 9.1
_______ _______
Calculation of basic and adjusted earnings
2007 2006
�'000 �'000
Profit from continuing operations 1,613 2,156
(Loss)/profit from discontinued operations (789) 296
_______ _______
Basic earnings 824 2,452
Exceptional items (net of tax) 1,269 473
Loss/(profit) from discontinued operations 789 (296)
_______ _______
Normalised earnings 2,882 2,629
_______ _______
2007 2006
Calculation of number of shares 000's 000's
Weighted average number of shares in issue
during the period 40,230 28,854
Contingent consideration - -
Potentially dilutive shares in issue - -
_______ _______
40,230 28,854
_______ _______
Certain employee options have not been included in the calculation of diluted
EPS because their exercise is contingent on the satisfaction of certain criteria
that had not been met at the end of the period. In addition, certain employee
options have also been excluded from the calculation of diluted EPS as their
exercise price is greater than the weighted average share price during the year
(i.e. they are out-of-the-money) and therefore would not be advantageous for the
holders to exercise those options.
Notes to the consolidated accounts for the year ended 31 December 2007
(Continued)
6. Analysis of net debt
At 1 At 31
January Cash December
2007 flow Disposals 2007
�'000 �'000 �'000 �'000
Cash at bank and in hand 351 (337) 339 353
_______ _______ _______ _______
Net cash 351 (337) 339 353
_______ _______ _______ _______
Invoice discounting (7,353) 2,330 2,595 (2,428)
Debt due within one year (2,778) 952 (1,826)
Debt due after one year (14,457) 5,896 - (8,561)
Finance lease (3) 3 - -
_______ _______ _______ _______
Debt (24,591) 9,181 2,595 (12,815)
_______ _______ _______ _______
Net debt (24,240) 8,844 2,934 (12,462)
_______ _______ _______ _______
At 1 At 31
January Cash December
2006 flow Non-cash 2006
�'000 �'000 �'000 �'000
Cash at bank and in hand 2,113 (1,762) - 351
_______ _______ _______ _______
Net cash 2,113 (1,762) - 351
_______ _______ _______ _______
Invoice discounting (7,619) 266 - (7,353)
Debt due within one year (1,532) 3,850 (5,096) (2,778)
Debt due after one year (11,761) (2,696) - (14,457)
Finance lease (5) 2 - (3)
_______ _______ _______ _______
Debt (20,917) 1,422 (5,096) (24,591)
_______ _______ _______ _______
Net debt (18,804) (340) (5,096) (24,240)
_______ _______ _______ _______
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR KQLFLVXBXBBZ
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