FCO Fairplace

RNS Number:3184O
Fairplace Consulting PLC
01 July 2005


                            Fairplace Consulting plc

                       Disposal of distance-based division

Further to the announcement made on 6 May 2005, Fairplace Consulting plc
("Fairplace" or "the Company") announces the disposal of the business and assets
of its distance-based division in Northampton ("the Transaction") to Working
Transitions 2005 Limited ("WT 2005"), a new company formed and owned by Jim
Horsted and Neil Lewis, former directors of the Company.

Principal terms of the Transaction

- the business and assets will be sold for #225,000 in cash, payable on
completion;

- a further cash payment ("the Deferred Consideration") will be payable
calculated by reference to WT 2005's average annual post tax profit for the two
years from completion. The Deferred Consideration is subject to a minimum cash
payment of #50,000 and a maximum cash payment of #125,000;

- the service contracts of Jim Horsted and Neil Lewis with Fairplace will be
automatically transferred to WT 2005 upon completion without Fairplace incurring
any additional liability;

- WT 2005 will continue to provide the existing Fairplace Direct distance-based
service on behalf of Fairplace and to Fairplace corporate outplacement clients
under a licence with a minimum term of 24 months and a maximum term of 30
months, extendible by mutual agreement;

- during the term of the licence WT 2005 will be permitted to offer outplacement
services to private clients and to organizations which : are not clients of
Fairplace on completion ; are not financial institutions ; have less than 500
employees. WT 2005 and its directors will also be subject to a number of other
competitive restrictions;

- for a period of 3 years from completion WT 2005 will pay Fairplace a fee of
2.5% of WT 2005's annual sales, such fee to be capped at #15,000 pa in Years 1
and 2 and #20,000 in Year 3;

- Michael Moran, Fairplace Chief Executive, will be appointed to WT 2005's Board
of Directors on completion;

- Fairplace will seek to assign or sublet the lease on its offices in
Northampton and intends to relocate its UK division from those offices in due
course.

Proceeds from the sale will be used to reduce the Company's overdraft borrowings
which currently amount to #331,767.

Business and assets being disposed of

The distance-based business currently provides career transition services under
the following brands:

- to the insurance creditor market under the Working Transitions brand name;

- to retail / private clients under the Working Careers brand name;

- to Fairplace corporate outplacement clients under the Fairplace Direct brand
name.

WT 2005 will purchase the Working Transitions and Working Careers brand names,
together with certain other brand names owned by Fairplace that are currently
non trading. Fairplace will retain ownership of the Fairplace Direct brand name,
which WT 2005 will be permitted to operate under licence as indicated above.
The sales and profits for the distance-based business, after elimination of
interdivisional sales and pre-allocation of central overheads, were as follows :

#                     12 months to 30 June 2004       11 months to 31 May 2005

Sales                                   642,468                        476,479
Profit before tax                       128,920                         40,010

Extracted from Fairplace management accounts

The principal assets to be disposed of comprise approximately #17,000 of fixed
assets and #29,000 of stock.

After a non cash write-off of goodwill relating to Working Transitions, sale of
the above assets and professional expenses of the Transaction, Fairplace will
recognize an estimated loss on disposal in its group profit and loss account for
the twelve months to 30 June 2005 of approximately #592,000.

Fairplace will also provide in its 2005 accounts for anticipated costs relating
to the Northampton lease cost.

Fairplace will pay WT 2005 #30,000 in respect of continuing distance-based
support to be provided after completion to current Fairplace clients. This
amount will be payable in two equal tranches in July and August 2005.

Rationale for the disposal and future strategy

The distance-based business forms a limited part of the Fairplace Group's
overall business. Working Transitions has already built a leading position in
the provision of distance-based career transition services to creditor clients
of insurance companies in the UK market. As this market is estimated** at a
maximum of #1.5 million per annum, the Board believes that prospects for further
growth in this market are limited. Fairplace has also decided to discontinue its
distance-based private client services, which operate in what is a relatively
small market compared with the corporate sponsor outplacement market.

The Board anticipates that distance-based sales and profits for the twelve
months to 30 June 2005 will be lower than for the comparable period in 2004.

These prospects contrast with the significant talent management and outplacement
markets now being targeted by Fairplace. The UK coaching market is estimated**
at over #400 million per annum, while the UK outplacement market is estimated**
at #80-#100 million per annum. Fairplace aims to increase its share of both
these markets, with the objective of generating revenues derived equally from
talent management and outplacement services.

(** Fairplace estimates)

Related Party Transaction

Jim Horsted and Neil Lewis have been directors of the Company within the last 12
months. The Transaction is therefore classified as a related party transaction
for the purposes of AIM Rule 13. Having consulted with the Company's nominated
adviser, Williams de Broe Plc, the Directors of Fairplace consider that the
terms of the Transaction are fair and reasonable insofar as the Company's
shareholders are concerned.

Mark Allsup, Fairplace Chairman, commented :

"The decision to sell the distance-based business, which is primarily related to
the insurance creditor market, reflects our change of strategy over the past
twelve months and our clear focus on the very significant talent management and
outplacement markets. We are making excellent progress with the new strategy and
talent management services are accounting for an increasing proportion of our
revenues.

While the disposal will result in a substantial goodwill write-off in our 2005
accounts, this will be of a non cash nature, while cash proceeds from the sale
will reduce current borrowings. We are now in a position to direct all our
management resources on the development of our core businesses.

At the same time, the arrangements we have put in place will ensure that we
continue to offer a seamless distance-based service to our corporate
outplacement clients under the Fairplace Direct brand name. Working in
partnership with Jim Horsted and Neil Lewis Fairplace will continue to lead the
UK market in the provision of high quality distance-based career transition
services."

For further information contact:

Mark Allsup, Chairman                                        020 7816 0707
Fairplace Consulting plc

Mark Baker / Brian Thorn                                     020 7845 7900
The Wriglesworth Consultancy

Jonathan Gray / Michael Shaw                                 020 7588 7511
Williams de Broe Plc, Nominated Adviser/Broker




                      This information is provided by RNS
            The company news service from the London Stock Exchange

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