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Share Name | Share Symbol | Market | Type |
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Hochtief AG | TG:HOT | Tradegate | Ordinary Share |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.10 | 0.09% | 106.50 | 105.80 | 107.00 | 107.20 | 104.80 | 106.20 | 2,885 | 22:50:02 |
RNS Number:8527R Hot Group PLC 10 November 2003 10 November 2003 hot group plc ("hot group" or "the Company") Preliminary results for the year ended 31 August 2003 hot group plc, the AIM listed recruitment specialist, announces its results for the 12 months to 31 August 2003. At a Glance: * Online division turns profitable in fourth quarter * Strengthening cash position * Continued growth in both online and traditional recruitment divisions * Two acquisitions during the financial year and a further two acquisitions since the August year end * Acquisition announced today taking the group into the fast-growing educational recruitment sector * #10.2m raised to fund the group's acquisition programme * New institutional investors backing the group * Board strengthened with the appointment of a new non-executive director and a new managing director in the traditional recruitment division * Consolidated the group by moving into Head Offices in West London Enquiries: Tony Reeves Chairman & Chief Executive hot group plc Tel: (0870) 202 0121 Steve Wright Finance Director hot group plc Tel: (0870) 202 0121 Hugo de Salis St Brides Media & Finance Limited Tel: (020) 7242 4477 Chairman's Statement I am pleased to report a year of great change and development in the group. We have successfully implemented the second phase of our strategy and have built two profitable stand-alone businesses, in online and traditional recruitment, involving a series of strategic acquisitions. We acquired two businesses during the financial year, with two further acquisitions completed since the year-end, including today's acquisition, which takes us into one of the fastest-growing markets, educational recruitment. During the year we raised #10.2m to fund our acquisition programme and attracted a number of new institutional shareholders. We are excited about the future prospects for the business and remain alert to opportunities for significant further growth, both organic and through acquisition. Financial Results The group operates in the Human Capital Service sector, where the underlying value of businesses is based on customer service and retention, employee experience and ownership of enabling technologies. As part of our strategy to develop the group through acquisition, it follows therefore that the major asset of acquired businesses is purchased goodwill. The Board believes that in the light of this reality the most meaningful measure of performance for hot group is operating profit/loss on ordinary activities before any charges for goodwill amortisation. This measure of performance provides a good indication of the cash generative performance of the group, both in absolute terms, and also in relative terms when viewed from an adjusted EPS perspective. Consequently, results for the year ended 31 August 2003 show operating losses before goodwill amortisation of #0.438m compared with losses of #2.225m for the previous 16 month reporting period. The group's financial performance shows continuous quarter on quarter improvements, with the first recorded profit delivered in the fourth quarter. Sales from continuing operations grew 141% to #2.626m. Administrative expenses have fallen significantly from #4.357m to #2.869m, primarily due to a combination of reduced costs in 2003 and one time charges taken in the 16 months to 2002. The loss on ordinary activities after taxation reported by the group shows #4.762m, compared with the loss in the 16 month period to August 2002 of #4.710m. This loss is stated after a goodwill amortisation charge of #5.410m, which reflects the decision of the Board to accelerate the write off of goodwill over 3 years instead of the previous write off period of 20 years. The Board believes that goodwill should be written off on acquisition, but will continue to observe current accounting guidelines. I would also draw your attention to the deferred tax credit of #1.296m, which has been reflected in our results. This asset has been recognised as a result of the Board's confidence in utilising the accumulated tax losses in hotonline now that the online division has started to generate operating profits. Earnings per share for the period to 31st August 2003 before amortisation of goodwill of 1.63p have improved substantially from the loss per share before amortisation for the 16 month period to August 2002 of 29.35p. Following our successful fund raising in August, the group has a strong cash position, with #4.970m as at 31 August 2003. Operations Online Division We have successfully consolidated our online services and now offer two distinct products, one to agencies and one directly to employers. We are currently looking to expand the 'hotonline' network through the acquisition of sites that complement our current offering, thus strengthening existing products, and niche sites that penetrate sectors new to the business. This approach will ensure an increase in monthly traffic, enhanced response rates for customers and a widening of our market opportunity. Furthermore, it will increase our market share and secure our position as one of the largest suppliers of online recruitment in the UK. Traditional Division Our traditional division has developed significantly over the last year. Following three acquisitions, including today's, we now specialise in placing temporary and permanent staff in the education, financial, retail, leisure, secretarial and corporate sales sectors, and provide a fast, high quality service for both clients and candidates. We see exceptional expansion opportunities through the acquisition of businesses in niche sectors, especially those that present synergies with our online product offerings. In this way, both divisions are able to support and enhance the services offered by the other. Acquisitions During the year we strengthened our online division with the #3m acquisition of PlanetRecruit Limited, a leading supplier of online services for recruitment firms and jobseekers. We also launched our traditional recruitment division with the acquisition of Parkside Recruitment Limited ('Parkside') for #5.5m. Established in 1989, Parkside has annual turnover of #9.5m and specialises in the provision of temporary and permanent finance and office staff, mainly in the Greater London and Thames Valley region. Customers include blue chip companies such as GlaxoSmithKline, Amazon, Honda, Waitrose, Air Products & ICI Paints. Since the year end we have acquired Buzz Recruitment Consultancy Limited, specialising in permanent recruitment in the leisure, retail and corporate sales markets, and Buzz Tempz Limited, which supplies temporary staff. These two deals cost a total of #0.38m (with additional deferred consideration of up to #100,000, contingent upon the achievement of certain working capital targets) and significantly strengthen our traditional recruitment business. In addition, today we announced the acquisition of International Teachers Network Ltd (ITN) for #5.6m in a cash and shares deal, linked to an earn-out based on the results for the year to 31 December 2004. ITN supplies temporary teachers to schools and local education authorities in London and the South East. From its launch in January 2001, ITN has experienced immense growth and, in the 12 months to December 2002, generated revenues of #6.484m and profits of #0.645m. The education sector is a major growth area, which offers exciting opportunities for the group; we believe there is considerable potential, through synergies with the online division, to increase cost-effective candidate flow and speed-up response rates to customers. Funding In order to fund the next phase of development, we recently raised #10.2m through a Placing and Open Offer. Underwritten by our brokers, Numis, the fundraising generated substantial interest from a number of significant institutional investors who have all recognised the potential of the group. The Board We have strengthened our Board with the appointment of two new directors. John Sanderson joined as a Non-Executive Director in May. John is a well known figure in the business advisory industry with a focus on media and technology. He also has considerable experience in the City. I am also very pleased that Doug Woodward became Managing Director of the traditional recruitment division in September. I previously worked with Doug at Delphi Group, where he played a key role in the development of a leading European recruitment operation. The Future Our vision is to change the face of recruitment: to challenge outdated resourcing processes by combining online and traditional recruitment through a blend of technology, creative thinking and effective management. Over the long term we foresee considerable scope for developing a business model that combines the speed and cost-efficiency of online recruitment services, as well as our bespoke candidate management software, with the personal touch provided by traditional recruitment operations. Our aim is to provide clients with a higher calibre short-list of candidates quickly and more efficiently. We recently carried out a pilot scheme to explore how to operate this hybrid service most effectively, working closely with a client who required a fresh and creative approach to their recruitment strategy. In the medium term we aim to enhance our organic growth by exploring potential acquisitions to expand both the online and traditional recruitment divisions. I would like to take this opportunity to thank all those involved in the group for their hard work and enthusiasm over the last year. The first half of the new financial year is already showing healthy business volumes, and we look forward to the future with confidence. Anthony H Reeves 10 November 2003 CONSOLIDATED PROFIT AND LOSS ACCOUNT For the year ended 31 August 2003 Notes Year ended 16 months 31 August ended 31 August 2003 2002 #'000 #'000 Turnover Continuing operations 2,195 1,860 Acquisitions 431 - Discontinued operations - 971 2,626 2,831 Marketing and development costs (155) (699) Administrative expenses - (5,410) (283) amortisation of goodwill - other expenses (2,869) (4,357) Operating loss Continuing operations (3,408) (2,221) Acquisitions (2,400) - Discontinued operations - (287) 2 (5,808) (2,508) Reorganisation costs of subsidiaries (190) - acquired during the year Loss on disposal of Strategies - (2,198) Division Interest receivable 1 70 Interest payable (61) (74) Loss on ordinary activities before (6,058) (4,710) taxation Tax on loss on ordinary activities 1,296 - Loss on ordinary activities after (4,762) (4,710) taxation Minority interests - 26 Loss for the financial year (4,762) (4,684) attributable to members of hot group plc Basic and fully diluted loss per 3 (12.01p) (31.24p) share (pence) Basic earnings/(loss) per share 1.63p (29.35p) before amortisation of goodwill 3 (pence) Total recognised gains and losses There were no gains or losses during the two financial periods ended 31 August 2003 apart from the results shown above. CONSOLIDATED BALANCE SHEETS As at 31 August 2003 2003 2002 Notes #'000 #'000 Fixed assets Intangible assets 8,160 5,255 Tangible assets 260 104 8,420 5,359 Current assets Deferred tax assets - due mainly 1,296 - after more than one year Debtors - amounts falling due within 2,062 816 one year Cash at bank and in hand 4,987 100 8,345 916 Creditors: amounts falling due within (4,169) (2,368) one year Net current assets/(liabilities) 4,176 (1,452) Total assets less current liabilities 12,596 3,907 Creditors: amounts falling due after (900) (400) more than one year Provisions for liabilities and (179) (210) charges Net assets 11,517 3,297 Equity capital and reserves Called up share capital 13,332 2,547 Share premium 9,435 7,238 Other reserve 619 619 Profit and loss account (11,869) (7,107) Equity shareholders' funds 11,517 3,297 CONSOLIDATED CASH FLOW STATEMENTS For the year ended 31 August 2003 Year ended 16 months #'000 31 August #'000 ended 2003 31 August 2002 #'000 #'000 Notes Net cash outflow 5(a) (1,010) (1,246) from operating activities Returns on investments and servicing of finance Interest received 1 70 Interest paid (61) (64) Net cash (outflow)/ inflow from returns (60) 6 on investments and servicing of finance Capital expenditure Payments to acquire (6) - intangible fixed assets Payments to acquire (143) (49) tangible fixed assets Net cash outflow (149) (49) from capital expenditure Acquisitions and disposals Purchase of (5,784) (2,099) subsidiary undertakings Proceeds of - 713 disposal of Strategies Division Net cash 937 (80) (overdrafts) acquired with subsidiary undertakings Net overdrafts - disposed of with 50 Strategies Division Net cash flow from (4,847) (1,416) acquisitions and disposals Net cash outflow (6,066) (2,705) before financing Financing Issue of ordinary 11,063 2,550 share captial (net of expenses) New bank loans 512 - Repayment of (511) - loans Net cash inflow 11,064 2,550 from financing Increase/(decrease) 5(b) 4,998 (155) in cash Notes to the Financial Statements 1. Accounting policies (a) Basis of accounting The financial statements have been prepared under the historical cost convention and in accordance with applicable Accounting Standards. (b) Turnover Turnover represents the net amount of invoices, excluding VAT. Turnover from subscriptions to the group's online recruitment services is apportioned over the period to which it relates. Turnover in respect of permanent placement fees is recognised on the start date of the candidate's employment. All turnover arises in the United Kingdom. (c) Tangible fixed assets Depreciation is provided in order to write each asset down to its anticipated residual value on a straight line basis over its estimated useful life. The annual rates in use are generally as follows: Short leasehold Improvements Over the period of the lease Computer and office equipment 25% -33 1/3% on cost Fixtures and fittings 20% - 25% on cost Motor vehicles 25% on cost The depreciation charge is pro-rated in the years of acquisition and disposal of assets. (d) Development expenditure Development expenditure is charged to the profit and loss account in the period in which it is incurred. (e) Consolidation The consolidated financial statements include the results of the company and its subsidiary companies made up to 31 August 2003. The results of subsidiaries sold or acquired are included in the consolidated profit and loss account up to, or from, the date control passes. As permitted by Section 230 (3) of the Companies Act 1985, the profit and loss account of the company is not presented as part of these financial statements. (f) Deferred taxation Provision is made at current rates for taxation liabilities deferred in respect of all material timing differences. Deferred tax assets are only recognised where recovery is more likely than not. Deferred tax balances are not discounted. (g) Goodwill Purchased goodwill is amortised through the profit and loss account over the expected useful life of the goodwill. The useful life of each acquisition is determined separately. This policy was changed in 1999 in order to comply with Financial Reporting Standard No. 10. Previously, purchased goodwill was written off directly to reserves. The directors did not consider it appropriate, on the adoption of this policy, to capitalise goodwill written off directly to reserves in prior periods. A full year's amortisation charge is made in the year of acquisition and none in the year of disposal. (h) Intangible fixed assets Amortisation is provided on intangible fixed assets at rates calculated to write off the cost of the assets over their estimated useful lives. The estimated useful life of each such asset is assessed separately. The amortisation charge is pro-rated in the years of acquisition and disposal of assets. (i) Leasing Rentals payable under operating leases are charged to the profit and loss account on a straight line basis. (j) Pensions The group contributes to defined contribution pension arrangements for certain directors and employees. Contributions are charged to the profit and loss account as incurred. 2. Operating loss Year ended 16 months ended 31 August 31 August 2002 #'000 2003 #'000 The operating loss is stated after charging: Depreciation of tangible fixed assets 69 59 Loss on disposal of tangible fixed assets - 39 Impairment of internet domain names - 129 Amortisation of goodwill 5,410 283 Operating lease rentals - equipment and 5 9 vehicles - land and buildings 163 367 Auditors' remuneration - as auditors 30 34 - for other services 10 18 In addition to the auditors' remuneration shown above, during the year ended 31 August 2003 the Company's auditors charged #107,000 (16 months ended 31 August 2002: #98,000) for their services as reporting accountants in connection with the acquisition of subsidiary companies and the issue of ordinary shares. These amounts have been added to the cost of the investments in the subsidiary companies or charged against share premium account. 3. Earnings/(loss) per share Year 16 months ended ended 31 August 31 August 2003 2002 Attributable loss (#'000) (4,762) (4,684) Average number of ordinary shares in issue 39,658,584 14,994,525 Basic loss per share (pence) (12.01p) (31.24p) Fully diluted loss per share is the same as basic loss per share. Earnings/(loss) per share before amortisation of goodwill is based on earnings of #1,945,000 (16 months ended 31 August 2002: loss of #4,401,000), calculated as follows: Year 16 months ended ended 31 August 2002 31 August #'000 2003 #'000 Attributable loss (4,762) (4,684) Amortisation of goodwill 5,410 283 Earnings/(loss) before amortisation of goodwill 648 (4,401) Earnings/(loss) per share before amortisation of goodwill (pence) 1.63p (29.35p) 4. Reconciliation of movements in equity shareholders' funds Year 16 months ended ended 31 August 2002 31 August #'000 2003 #'000 Loss for the period (4,762) (4,684) New share capital subscribed (net of expenses) 12,982 7,590 Write off of irrecoverable minority interest - (4) Net increase in shareholders' funds 8,220 2,902 Opening equity shareholders' funds 3,297 395 Closing equity shareholders' funds 11,517 3,297 5. Notes to the cash flow statement Year 16 months ended 31 August 2002 ended #'000 30 April 2003 #'000 (a) Net cash outflow from operating activities Operating loss (5,808) (2,508) Reorganisation costs of subsidiaries acquired during the year (190) - Depreciation, amortisation and 5,479 471 impairment of fixed assets Loss on disposal of tangible fixed - 39 assets Expenses settled by issue of share - 10 capital (Increase)/decrease in debtors (88) 289 (Decrease)/increase in creditors (372) 243 (Decrease)/increase in provision for (31) 210 liabilities and charges Net cash outflow from operating (1,010) (1,246) activities Year 16 months ended 31 August 2002 ended #'000 31 August 2003 #'000 (b) Reconciliation of net cash flow to net funds/(debt) Increase/(decrease) in cash 4,998 (155) New bank loan (512) - Loans on acquisition of subsidiary (1,000) (537) companies Loans repaid or converted into share 578 - capital Increase/(decrease) in net funds 4,064 (692) Net (debt)/funds at beginning of year (565) 127 Net funds/(debt) at end of year 3,499 (565) (c) Analysis of changes in net funds/(debt) 1 September Acquisitions of subsidiary Cash flows Other movements 31 August 2002 undertakings #'000 #'000 2002 #'000 #'000 #'000 Cash at 100 937 3,950 - 4,987 bank and in hand Bank (128) - 111 - (17) overdrafts (28) 937 4,061 - 4,970 Debt due (137) - (501) 67 (571) within one year Debt due (400) (1,000) 500 - (900) after more than one year Net funds/ (565) (63) 4,060 67 3,499 (debt) This information is provided by RNS The company news service from the London Stock Exchange END FR NKCKPBBDBODK
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