FAIRPLACE PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2006
Key Points
* Return to operating profit reflecting sales growth and cost reduction
* Operating profit before goodwill of �36,218 (2005*: loss of �490,034)
* Group sales increased by 9.1% to �2.65 million (2005*: �2.43 million)
* Talent management sales rose 46.3% to �0.60 million (2005*: �0.41 million)
* Outplacement sales increased by 1.5% to �2.05 million (2005*: �2.02
million)
* Talent management sales represented 24.2% of UK sales (2005*: 19.0%)
* Costs cut by 10.3% to �2.62 million (2005*: �2.92 million)
* Start to second half in line with plan
*six months ended 31 December 2005
Fairplace provides a range of career and talent management services.
Enquiries:
Mark Allsup, Chairman 020 7816 0707
Michael Moran, CEO
Fairplace plc
Mark Baker 020 7845 7900
The Wriglesworth Consultancy
Barry Saint 020 7090 7800
City Financial Associates Limited
Chairman's Statement
We are pleased to report a substantial improvement in the Group's first half
trading performance compared to the same period last year. The return to
operating profitability reflects both an increase in sales and a reduction in
costs. The Board's target is to sustain this improvement in the second half.
Our strategy of building a talent management business to create an even revenue
balance continues to make good progress. In the six months to 31 December 2006
revenues derived from talent management services, which we regard as relatively
predictable and recurrent in nature, increased to 24.2% of UK sales. Demand for
these services is growing and we expect a further advance in the second half.
We also achieved growth in outplacement sales despite a very buoyant
recruitment market. We believe that clients value the high quality of service
we provide, including individually tailored counselling, first class research
and on-line career support.
Our success rate in bidding for new business has been excellent in recent
months. On occasions, however, we decided not to match competitors' bid prices
where we regarded these as incompatible with the provision of a quality
service. Our products and technology, including on-line assessment tools,
engagement surveys and tracking systems, have been instrumental in winning
business.
The number of clients purchasing more than one of our services increased to 21
in the latest half year, compared to 31 in the whole of the previous financial
year. This encouraging trend demonstrates an increasing awareness of our full
range of services. In addition 21 clients purchased only talent management
services in the latest half year, compared to 38 in the whole of the last
financial year.
Trading Results
Group sales increased by 9.1% to �2.65 million in the six months ended 31
December 2006 (�2.43 million: six months ended 31 December 2005). Costs
decreased by 10.3% to �2.62 million (�2.43 million: six months ended 31
December 2005), producing an operating profit before goodwill amortisation of �
36,218.
Our focus on the main expense lines was effective with delivery and employee
costs contained within targeted levels.
Financial
While the Company maintained positive cash balances for much of the six month
period ended 31 December 2006, the overdraft facility was utilised on occasions
to meet working capital needs, with a peak daily borrowing level of �223,128.
Group cash balances as at 31 December 2006 were �91,000 (30 June 2006: �
240,402).
The overdraft facility has recently been renewed with a facility limit of �
250,000, which the Directors regard as providing acceptable cover for
anticipated needs.
Group net assets as at 31 December 2006 were �1.34million (30 June 2006: �
1.39million).
Property
We have agreed Heads of Terms for new leases on three remaining floors at
Cornhill. Final terms are being negotiated and the proposed levels of rent and
service charges could yield estimated savings in excess of �100,000 in the next
financial year.
Heads of Terms have also been agreed for the assignment of the leased offices
in Northampton. Subject to completion, this could yield estimated savings in
excess of �50,000 in 2007/08.
International
Italy
We have entered into initial discussions about the possible sale of an equity
stake in Fairplace Italy to a strategic local investment partner.
Portugal
We have terminated the 40% shareholding in Fairplace Portugal and licensed the
local partner to use the Fairplace name in relation to outplacement activities
in Portugal.
Career Partners International
Fairplace has played an active part in the continuing development of CPI's
global network and range of services. There are now over 60 partners in CPI
providing clients with coverage in the world's key business centres.
Current trading and Prospects
The second half has started in line with plan and new business prospects stand
at a higher level than in the autumn.
The Board anticipates a slight revenue weighting towards the second half,
reflecting seasonal trading patterns.
Demand for talent management services continues to grow and our objective is to
raise the proportion of revenues from these services to 30% of UK sales on a
monthly basis.
The Board considers that significant progress has been made in the first half.
We believe that the strategic direction of the business, combined with tight
cost disciplines, provide a firm foundation for further performance
improvement.
Mark Allsup
Chairman
16 February 2007
Fairplace plc
Group profit and loss account
For the period ended: 6mths to 31 6mths to 31 12mths to
/12/06 /12/05 30/06/06
Unaudited Unaudited Audited
� � �
Turnover 2,653,374 2,431,213 5,288,780
Administrative expenses (2,617,156) (2,921,247) (5,684,344)
Operating profit/(loss) before goodwill 36,218 (490,034) (395,564)
Goodwill amortisation (65,004) (49,018) (98,041)
Operating loss after goodwill (28,786) (539,052) (493,605)
Loss on sale of investment (22,044) - (79,348)
Impairment of goodwill - - (288,068)
Interest receivable 607 137 528
Interest payable (1,747) (5,143) (7,547)
Loss on ordinary activities before tax (51,970) (544,058) (868,040)
Taxation - - (10,574)
Loss for the period (51,970) (544,058) (878,614)
EPS (Note 1) (0.53) (9.89) (13.08)
EPS before goodwill 0.13 (9.00) (11.62)
Fairplace plc
Group balance sheet
As at 31/12 As at 31/12 As at 30/06
/06 /05 /06
Unaudited Unaudited Audited
� � �
Fixed assets:
Intangible 534,996 937,084 600,000
Tangible 257,724 367,565 312,449
792,720 1,304,649 912,449
Current assets:
Stock and work in progress 9,060 16,027 19,523
Debtors 1,656,741 1,449,317 1,675,368
Cash at bank and in hand 91,885 - 240,402
1,757,686 1,465,344 1,935,293
Creditors: falling due within
one year (1,214,945) (1,447,947) (1,460,311)
Net current assets 542,741 17,397 474,982
Net assets 1,335,461 1,322,046 1,387,431
Capital and reserves:
Called up share capital 1,020,026 907,526 1,020,026
Share premium account 2,381,033 2,093,592 2,381,033
Profit and loss account (2,065,598) (1,679,072) (2,013,628)
Equity shareholders' funds 1,335,461 1,322,046 1,387,431
Fairplace plc
Group Cash Flow Statement
For the period ended: 6mths to 6mths to 12mths to
31/12/06 31/12/05 30/06/06
Unaudited Unaudited Audited
� � �
Cash (out)/inflow from operating activities (138,539) 62,951 (67,947)
Returns on investment and servicing of
finance:
Interest received 607 137 528
Other interest paid (1,747) (5,143) (7,547)
(1,140) (5,006) (7,019)
Taxation:
Corporation tax refunded - - 24,260
Capital expenditure and financial
investment:
Purchase of tangible fixed assets (8,838) (28,821) (45,044)
Proceeds from sales of tangible fixed - - 1,923
assets
(8,838) (28,821) (43,121)
Acquisitions and disposals:
Proceeds from sale of investment - - 82,500
- - 82,500
Cash flow from financing activities:
Issue of ordinary shares - 96,250 546,250
Issue costs - - (50,059)
- 96,250 496,191
(Decrease)/Increase in cash in the period (148,517) 125,374 484,864
Reconciliation of operating profit to 6mths to 6mths to 12mths to
operating cashflow 31/12/06 31/12/05 30/06/06
Unaudited Unaudited Audited
� � �
Operating profit/(loss) before goodwill 36,218 (490,034) (395,564)
Depreciation 64,181 65,570 132,622
Loss on disposal of fixed assets - - 2,365
Decrease/(increase) in stock 10,463 2,208 (1,287)
Decrease in debtors 18,628 728,527 431,703
(Decrease) in trade creditors (56,076) (8,078) (131,002)
(Decrease) in accruals and deferred income (174,234) (169,487) (46,534)
(Decrease) in tax and social security (37,719) (65,755) (60,250)
Net cash flow from operating activities (138,539) 62,951 (67,947)
Notes
1. The calculation of earnings per share is based on the loss after taxation
of �51,970 (2005: �544,058) and on the weighted average number of shares in
issue during the year of 9,800,174 (2005: 5,500,170).
The calculation of earnings per share before goodwill is based on the profit
after taxation but ignoring goodwill, giving �13,034 (2005: �495,040) and on
the weighted average number of shares in issue during the year of 9,800,174
(2005: 5,500,170).
The fully diluted earnings per share is based on the loss after taxation of �
51,970 (2005: �544,058) and on the weighted average number of shares, assuming
that all share options, with an exercise price of less than the market price of
the shares, were exercised at the beginning of the year, in issue during the
year of 9,800,174 (2005: 5,500,170).
2. This Interim Statement for the six months ended 31 December 2006 is
unaudited and was approved by the Directors on 13 February 2006. The
financial information set out above does not constitute statutory accounts
within the meaning of Section 240 of Companies Act 1985. The information
given as comparative figures for the financial year ended 30 June 2006 was
extracted from the Group's statutory accounts for that financial year.
Statutory accounts for that financial year have been reported on by the
Group's auditors and delivered to the Registrar of Companies. The report of
the auditors was unqualified.
3. The accounting policies remain as stated in the Annual Report for the year
ended 30 June 2006.
4. This Interim Statement is being sent by post to all registered
shareholders. Additional copies are available from the Company's registered
office, 36-38 Cornhill, London, EC3V 3PQ.
END
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