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SG Recruitment Limited NEX:SGRL NEX Ordinary Share SG9999015259
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SG Recruitment Limited Interim Results

31/12/2019 1:24pm

UK Regulatory (RNS & others)


SG Recruitment (NEX:SGRL)
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RNS Number : 4531Y

SG Recruitment Limited

31 December 2019

SG RECRUITMENT LIMITED

Interim Results for the six months ended 30 September 2019

Chairman's Statement

I am delighted to report the consolidated interim results of SG Recruitment Limited ("SGR", the "Company") and its subsidiary undertakings (together the "Group") for the six months ended 30 September 2019.

Basis of presentation of financial information

This consolidated financial information has been published to enable the Company to comply with its financial reporting obligations under the rules of the NEX Exchange Growth Market.

Background

According to the World Health Organisation's statistics, there are five million vacancies for healthcare professionals in the global market. The United Kingdom ("UK") and the Middle East ("ME") are showing strong signs of growth and there is a clear demand for healthcare professionals that is not being met locally.

SGR was founded with the objective of addressing the acknowledged shortage of permanent nurses in the healthcare systems of the UK and the ME through the recruitment of experienced healthcare professionals.

Key Operational Highlights

   --   13% growth in revenue to GBP386,000 in the 6 months ended 30 September 2019 (2018: GBP343,000) 

-- 51% decrease in operating costs to GBP689,000 in the 6 months ended 30 September 2019 (2018: GBP1,410,000)

   --   72% decrease in losses after tax to GBP379,000 in the 6 months ended 30 September 2019 (2018: GBP1,362,000) 

-- 34% growth in UK placements to 71 candidates in the 6 months ended 30 September 2019 (2018: 53)

-- 29% growth in ME placements to 129 candidates in the 6 months ended 30 September 2019 (2018: 100)

-- 43% growth in enrollees at our ME language training centre to 171 students in the 6 months ended 30 September 2019 (2018: 120). In July 2019 we expanded our offering to include online training in order to provide additional flexibility to students.

-- 3 new recruitment contracts signed in the UK with Health Education England, Royal Berkshire NHS Foundation Trust and Ashford St Peter's Hospitals NHS Foundation Trust, and a contract extension signed with one of our largest customers in the UK, Nottingham University Hospitals NHS Trust.

   --   2 new recruitment contracts signed in the ME with Thumbay Hospital and Medcare Hospital. 

Recent News

SGR continued to grow during Q4 2019, arranging numerous interview sessions with candidates sourced from the Philippines, India, the ME and the Caribbean, as well as holding business development meetings with NHS trusts in the UK and healthcare providers in the ME.

The Group recently secured a new contract with the Leeds Teaching Hospitals NHS Trust to service 7 hospitals in the north of England, including St James' University Hospital - one of the largest teaching hospitals in Europe. Earlier this month a successful recruitment event was held with this trust at the Group's Dubai offices, resulting in over 50 nurses being offered employment to commence during 2020. The Group has also recently signed a further contract with Hillingdon Hospitals NHS Foundation Trust to service 2 hospitals in North West London.

SGR recently launched its new Domestic Help division, which is an important step for the Group to diversify revenue streams and secure future revenue growth in line with the Board's expectations. The Group has already won accounts in Bahrain, Malaysia and Saudi Arabia, each for an initial 100 placements. The first deployments to Bahrain have already taken place, evidencing a short lead time from interview to deployment.

The Board anticipates further mandates will be signed with NHS hospitals in the UK, healthcare providers in the ME and domestic help providers in the ME and Asia throughout 2020 and beyond.

The Group places considerable value on the involvement of its employees and has continued its practice of keeping them informed about matters affecting them and the performance of the Group. The Board would again like to thank all of our staff for their efforts, and we look forward to your continued support.

Alan Kitchin

Chairman

Enquiries:

 
 SG Recruitment Limited                         www.sgr-global.com 
 David Sumner, Chief Executive Officer   Tel: +971 (0) 55 592 3198 
 WH Ireland Ltd (Corporate Adviser) 
 Chris Hardie, James Sinclair-Ford       Tel: +44 (0) 207 220 1666 
 

Condensed consolidated statement of comprehensive income

for the six months ended 30 September 2019

 
                                            6 months ended   6 months ended 
                                              30 September     30 September 
                                                      2019             2018 
                                               (unaudited)      (unaudited) 
                                     Note           GBP000           GBP000 
 
 Revenue                                               386              343 
 Cost of sales                                        (98)             (47) 
                                           ---------------  --------------- 
 Gross profit                                          288              296 
 
 Other income                                           39                - 
 Operating costs                                     (689)          (1,410) 
                                           ---------------  --------------- 
 Operating loss                                      (362)          (1,114) 
 
 Finance costs                                        (21)            (174) 
                                           ---------------  --------------- 
 Loss before taxation                                (383)          (1,288) 
 
 Income tax (charge) / credit        4                   4             (74) 
                                           ---------------  --------------- 
 Loss after tax                                      (379)          (1,362) 
 
 Other comprehensive loss 
 Items that may be reclassified subsequently to profit or loss: 
 Exchange difference on translation 
  of foreign operations                               (80)             (23) 
                                           ---------------  --------------- 
 Total comprehensive loss for the year 
  attributable to equity holders                     (459)          (1,385) 
                                           ---------------  --------------- 
 
 Basic and diluted loss per share 
  (pence)                            8               (3.2)           (15.7) 
 

The notes to the financial statements form an integral part of these interim financial statements.

All amounts are derived from continuing operations.

Condensed consolidated statement of financial position

as at 30 September 2019

 
                                             As at            As at 
                                      30 September    31 March 2019 
                                              2019 
                                       (unaudited)        (audited) 
                              Note          GBP000           GBP000 
 Non-current assets 
 Property, plant and equipment                  24               38 
 Intangible assets            5                 78              113 
                                    --------------  --------------- 
                                               102              151 
 Current assets 
 Trade and other receivables                   251              213 
 Cash                                           13               33 
                                    --------------  --------------- 
                                               264              246 
 
 Current liabilities 
 Trade and other payables                  (1,414)          (1,332) 
 Debt                          7             (475)            (124) 
 
 Net current liabilities                   (1,625)          (1,210) 
                                    --------------  --------------- 
 
 Non-current liabilities 
 Deferred tax liabilities       4             (13)             (18) 
 
 Net liabilities                           (1,536)          (1,077) 
                                    --------------  --------------- 
 
 Equity attributable to owners 
 Share capital                  6           19,000           19,000 
 Share-based payment reserves 6                 88               88 
 Translation reserves                           36              116 
 Capital restructuring reserve            (11,746)         (11,746) 
 Merger reserve                                 54               54 
 Accumulated loss                          (8,968)          (8,589) 
 
 Total equity                              (1,536)          (1,077) 
                                    --------------  --------------- 
 
 

The notes to the financial statements form an integral part of these interim financial statements.

This report was approved by the board and authorised for issue on 31 December 2019 and signed on its behalf by:

Jonathan Sumner

Condensed consolidated statement of changes in equity

for the six months ended 30 September 2019

 
                            Share   Translation          Capital     Merger   Share based   Accumulated     Total 
                          capital      reserves    restructuring    reserve       payment          loss 
                                                         reserve                  reserve 
                           GBP000        GBP000           GBP000     GBP000        GBP000        GBP000    GBP000 
 
 At 1 January 
  2018                     14,840           159         (11,746)         54             -       (5,969)   (2,662) 
 
 Loss for the 
  period                        -             -                -          -             -       (2,620)   (2,620) 
 Exchange differences           -          (43)                -          -             -             -      (43) 
----------------------  ---------  ------------  ---------------  ---------  ------------  ------------  -------- 
 Total comprehensive 
  loss for the 
  period                        -          (43)                -          -             -       (2,620)   (2,663) 
 Transactions 
  with owners 
 Issuance of shares         4,160             -                -          -             -             -     4,160 
 Share based payments           -             -                -          -            88             -        88 
 At 31 March 2019          19,000           116         (11,746)         54            88       (8,589)   (1,077) 
 
 Loss for the 
  period                        -             -                -          -             -         (379)     (379) 
 Exchange differences           -          (80)                -          -             -             -      (80) 
----------------------  ---------  ------------  ---------------  ---------  ------------  ------------  -------- 
 Total comprehensive 
  loss for the 
  period                        -          (80)                -          -             -         (379)     (459) 
 
 At 30 September 
  2019                     19,000            36         (11,746)         54            88       (8,968)   (1,536) 
----------------------  ---------  ------------  ---------------  ---------  ------------  ------------  -------- 
 

The notes to the financial statements form an integral part of these interim financial statements.

Condensed consolidated statement of cash flows

for the six months ended 30 September 2019

 
                                              6 months ended   6 months ended 
                                                30 September     30 September 
                                                        2019             2018 
                                                      GBP000           GBP000 
 
 Cash flows from operating activities 
 Loss before taxation                                  (383)          (1,288) 
 Adjustments for: 
 Depreciation and amortisation                            37               41 
 Loss on disposal of property, plant                      12                - 
  and equipment 
 Share-based payments                                      -              120 
 Interest expenditure                                     21              173 
                                             ---------------  --------------- 
 Operating cash flow before changes 
  in working capital                                   (313)            (954) 
 
 Movement in trade and other receivables                (38)             (44) 
 Movement in trade and other payables                      2              430 
                                             ---------------  --------------- 
 Net cash flow from operating activities               (349)            (568) 
 
 Cash flows from investing activities 
 Purchase of property, plant and equipment                 -             (31) 
                                             ---------------  --------------- 
 Net cash flow from investing activities                   -             (31) 
 
 Cash flows from financing activities 
 Debt financing                                          330              616 
                                             ---------------  --------------- 
 Net cash flow from financing activities                 330              616 
 
 Net increase in cash and cash equivalents              (20)               17 
 Cash and cash equivalent at the beginning 
  of the period                                           33               40 
 Effect of exchange rate fluctuations 
  on cash held                                             -              (1) 
                                             ---------------  --------------- 
 Cash and cash equivalents at the end 
  of the period                                           13               56 
                                             ---------------  --------------- 
 

The notes to the financial statements form an integral part of these interim financial statements.

Notes to the interim financial statements

for the six months ended 30 September 2019

   1.    General information 

SG Recruitment Limited is a company which was incorporated in Singapore on 12 November 2004. The address of the Company's registered office is 8 Marina Boulevard #05-02, Marina Bay Financial Center, Singapore 018981.

The comparative financial information for the six months ended 30 September 2018 has been derived from the non-statutory audited financial statements for the fifteen months ended 31 March 2019. The auditors' report on those financial statements was unqualified but did contain an emphasis of matter paragraph in respect of going concern.

The principal activity of the Group is the recruitment of nurses, doctors and allied healthcare professionals into the United Kingdom and the Middle East healthcare systems.

The consolidated financial statements are presented in Pounds Sterling ("GBP") and rounded to the nearest thousand ("GBP'000"). Pounds Sterling is the currency of the primary economic environment in which the Group operates. The Directors have chosen to present financial information in Pounds Sterling due to the international exposure and shareholders of the entity.

   2.    Summary of significant accounting policies 

(a) Basis of preparation

The unaudited interim financial statements for the six months ended 30 September 2019 have been prepared in accordance with International Accounting Standard ("IAS") No. 34 "Interim Financial Reporting". These interim financial statements do not include all the notes of the type normally included in an annual report. These interim financial statements should be read in conjunction with the Company's non-statutory audited financial statements for the fifteen months ended 31 March 2019, and any public announcements made by the Company during the interim reporting period. The non-statutory audited financial statements for the fifteen months ended 31 March 2019 were prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union and the accounting policies applied in these interim financial statements are consistent with the polices applied in the non-statutory audited financial statements for the fifteen months ended 31 March 2019 unless otherwise noted.

In preparing these unaudited interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the sources of estimates of uncertainty were consistent as those applied to the non-statutory audited financial statements for the fifteen months ended 31 March 2019.

These unaudited interim financial statements were authorised for issue by the Company's Board of Directors on 31 December 2019.

(b) Going concern

The interim financial statements have been prepared on a going concern basis, notwithstanding the loss for the 6 months ended 30 September 2019. The Directors have taken steps to ensure that they believe the going concern basis of preparation remains appropriate. The key conclusions are summarised below.

The Group's ability to continue as a going concern is reliant upon continuing shareholder loan finance or successfully obtaining alternative means of funding as it moves towards self-sustainability and to finance its on-going expansion. In considering the appropriateness of this basis of preparation, the Directors have reviewed the Group's working capital forecasts for a minimum of 12 months from the date of the approval of these interim financial statements.

On 5 March 2018, David Sumner increased the amount that he had irrevocably agreed to subscribe to a 100% owned subsidiary of the Company, SG Recruitment UK Limited ("SGR.UK") under a loan note facility to GBP5.0 million, with such funding to be available in maximum tranches of GBP0.2 million per month, subject to the working capital requirements of the Group.

On 2 October 2018, David Sumner transferred all of the loan notes registered in his name and his outstanding commitment to subscribe for additional loan notes to Gulf Healthcare Holdings Limited ("GHHL").

On 31 December 2018, GHHL converted all of the amounts outstanding under the loan notes into ordinary shares in the Company (see Note 6) and the loan note facility between GHHL and SGR.UK was terminated.

On 31 December 2018, GHHL entered into a new convertible loan note facility with the Company on the following key terms:

   -      Facility size of GBP1.3 million 
   -      Repayment date of 31 December 2019 
   -      Interest charged of 10% per annum 
   -      Conversion price of GBP1.305 per share 

GHHL's commitment to subscribe for loan notes is guaranteed by Sumner Group Holdings Limited ("SGHL"), the ultimate parent company incorporated in Jersey.

At 30 September 2019, a total of GBP475,000 was due under the convertible loan notes, which comprised of GBP431,000 of principal and GBP44,000 of accrued interest.

On 31 December 2019, and in accordance with the terms of the convertible loan note facility between GHHL and the Company, the convertible loan notes ceased to be interest bearing, lost the right to conversion (other than with the consent of the Company) and the repayment date was extended to 31 December 2020.

Following this assessment, the Directors have reasonable expectation that the Group has adequate resources to continue for the foreseeable future and that carrying values of intangible assets are supported. Thus, they continue to adopt the going concern basis of accounting in preparing the interim financial statements.

   3.    Segment Reporting 

The Group applies IFRS 8 Operating Segments, such that operating segments are based on internal reports about components of the Group, which are regularly reviewed and used by the Board of Directors being the Chief Operating Decision Maker ("CODM") for strategic decision making and resource allocation, in order to allocate resources to the segment and to assess its performance. The Directors consider there to be only one operating segment, the recruitment of healthcare professionals and only three geographical segments being the United Kingdom, the United Arab Emirates and the Republic of the Philippines.

 
                         6 months ended 30 September 2019 
--------------------------------------------------------------------------------- 
 Segment                 United Kingdom   United Arab        Republic of    Total 
                                             Emirates    the Philippines 
                                 GBP000        GBP000             GBP000   GBP000 
 
 Revenue for the 
  6 months ended 30 
  September 2019                    258            37                 91      386 
 
 Non-current assets 
  as at 30 September 
  2019                               81             9                 12      102 
 
                         6 months ended 30 September 2018 
--------------------------------------------------------------------------------- 
 Segment                 United Kingdom   United Arab        Republic of    Total 
                                             Emirates    the Philippines 
                                 GBP000        GBP000             GBP000   GBP000 
 
 Revenue for the 
  6 months ended 30 
  September 2018                    274            28                 41      343 
 
 Non-current assets 
  as at 31 March 2019               117            16                 18      151 
 
 
   4.    Taxation and deferred tax 

Recognised in the income statement

 
                                                     30 September  30 September 
                                                             2019          2018 
                                                           GBP000        GBP000 
 
 Corporation tax                                                -             - 
 Deferred tax 
                                                                -             - 
    *    Movement in deferred tax assets 
 
     *    Movement in deferred tax liabilities                  4          (74) 
                                                 ----------------  ------------ 
                                                                4          (74) 
                                                 ----------------  ------------ 
 

The activities of Green Sky Innovations DMCC ("GSI") and Healthperm Training Centre FZ LLC ("HTC") in the UAE are subject to zero corporation tax rate for at least 50 years on the grounds that GSI was incorporated in the DMCC (the Dubai Multi Commodities Centre free zone) on 23 February 2010 and HTC was incorporated in the DHCA (the Dubai Healthcare City Authority free zone) on 30 April 2017. On this basis, no deferred tax asset has been recognised in respect of the tax losses incurred by the Group in the UAE during the 6 months ended 30 September 2019.

Deferred tax liability

The Group recognised a deferred tax liability on the recognition of the Customer Relationships intangible asset arising on the acquisition of Healthperm Limited in 2015 as follows:

 
                               30 September   31 March 
                                       2019       2019 
                                     GBP000     GBP000 
 Opening balance                       (18)       (31) 
 Movement during the period               5         13 
                              -------------  --------- 
 Closing balance                       (13)       (18) 
                              -------------  --------- 
 
   5.    Intangible assets 

Intangible assets comprise of customer relationships and computer software. The amortisation charge for the period was GBP35,000 (2018: GBP35,000).

   6.    Share capital and share options 
 
                                                  Number of      Share 
                                                     shares    capital 
                                                                GBP000 
 Issued and fully paid: 
 At 1 January 2018                                8,658,180     14,840 
 Issued during the period ended 31 March 2019     3,188,137      4,160 
                                                -----------  --------- 
 At 31 March and 30 September 2019               11,846,317     19,000 
                                                -----------  --------- 
 

On 31 December 2018 the Company issued 3,188,137 ordinary shares to Gulf Healthcare Holdings Limited ("GHHL") as part of the corporate restructuring exercise announced in October 2018.

On 29 March 2018 the Company issued 432,909 share options to Steve Howson, a former director of the Company (the "2018 Options"). The 2018 Options are exercisable at a price of GBP1.90 per ordinary share in 3 equal tranches of 144,303 options each on the first, second and third anniversaries of the date of grant. The 2018 Options have an expiry date of 29 March 2023.

On 19 March 2019 the Company signed a settlement agreement with Steve Howson which terminated the 2018 Options on 31 March 2019 and on the same date issued 144,303 share options to Steve Howson, a former director of the Company (the "2019 Options"). The 2019 Options are exercisable at a price of GBP1.90 per ordinary share from the date of grant until their expiry on 29 March 2023.

The fair values were calculated using the Black Scholes option pricing model. The inputs into the model were as follows:

 
                     2018 Options   2019 Options 
 Share price              GBP1.90        GBP1.28 
 Exercise price           GBP1.90        GBP1.90 
 Interest rate               0.5%           0.5% 
 Volatility                10.32%         13.92% 
 Time to maturity         5 years        4 years 
 

144,303 share options were outstanding at 30 September 2019 with a weighted average exercise price of GBP1.90 each. The weighted average remaining contractual life of the share options outstanding at the end of the period was 3.5 years.

   7.    Debt 

The Group has the following interest bearing loans:

 
                             30 September  31 March 
                                     2019      2019 
                                   GBP000    GBP000 
 
Convertible Loan Notes                475       124 
                         ----------------  -------- 
 

On 31 December 2018, GHHL entered into a new convertible loan note facility with the Company on the following key terms:

   -      Facility size of GBP1.3 million 
   -      Repayment date of 31 December 2019 
   -      Interest charged of 10% per annum 
   -      Conversion price of GBP1.305 per share 

GHHL's commitment to subscribe for convertible loan notes is guaranteed by Sumner Group Holdings Limited ("SGHL"), the ultimate parent company incorporated in Jersey.

At 31 March 2019, a total of GBP124,000 was due under the convertible loan notes, which comprised of GBP109,000 of principal and GBP15,000 of accrued interest.

At 30 September 2019, a total of GBP475,000 was due under the convertible loan notes, which comprised of GBP431,000 of principal and GBP44,000 of accrued interest.

On 31 December 2019, in accordance with the terms of the convertible loan note facility between GHHL and the Company, the convertible loan notes ceased to be interest bearing, lost the right to conversion (other than with the consent of the Company) and the repayment date was extended to 31 December 2020.

   8.    Loss per share 
 
                                         6 months ended      6 months ended 
                                           30 September   30 September 2018 
                                                   2019 
 
 Profit (loss) for the period (GBP000)            (379)             (1,362) 
 Weighted average number of ordinary 
  shares                                     11,846,317           8,658,180 
 Basic and diluted loss per ordinary          3.2 pence          15.7 pence 
  share 
 

Basic loss per share is based on the weighted average number of ordinary shares in issue during the period. Diluted loss per share would assume conversion of all potentially dilutive ordinary shares. The potential ordinary shares are anti-dilutive and therefore the diluted loss per share has not been calculated.

   9.    Subsequent events 

The Directors have evaluated subsequent events through 31 December 2019, which is the date the interim financial statements were available to be issued. There were no subsequent events that required adjustment to or disclosure in the consolidated financial statements except as described above.

10. Copies of the interim report

Copies of this interim report are available on the Company's website at www.sgr-global.com and from the Company's registered office, 8 Marina Boulevard #05-02, Marina Bay Financial Center, Singapore 018981.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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