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Share Name | Share Symbol | Market | Type |
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Lateegra Gold Corp Com | TSXV:LRG | TSX Venture | Common Stock |
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RNS Number:7989N Lorien PLC 22 July 2003 22 July 2003 Lorien plc Interim announcement for the six months to 31 May 2003 Chairman's statement Overview At the time we announced our results for the year ended 30 November 2002, I stated that the slowdown in the technology sector and the increasing level of political and economic uncertainty had combined to create the most challenging business environment for over a decade. Although the political position has improved somewhat in the intervening period, the economic environment both globally and in Europe remains uncertain. These conditions have undoubtedly had an impact on most businesses particularly in the IT sector which is witnessing a recession within a recession. Inevitably, the performance of our IT Resourcing business has not been immune to these conditions. Our Specialist Services businesses have, however, delivered a very robust performance supporting the Board's view that we have a balanced portfolio of businesses which spreads the risk and should improve returns over time. For the six months to 31 May 2003, turnover and profit before taxation on continuing operations decreased to #44.5m (2002: #58.5m) and #0.2m (2002: #1.3m) respectively. Profit before taxation for the current period comprised a loss before taxation of #0.1m in the first quarter and a profit before taxation of #0.3m in the second quarter. Underlying earnings per share fell to 0.4p in 2003 compared to 5.0p in 2002. Net assets at 31 May 2003 stood at #9.5m compared with #10.0m at 30 November 2002. Cash inflow for the six months was #0.2m (2002: cash outflow #0.5m) after repaying invoice discounting borrowings of #2.9m (2002: #5.2m). Trading Summary Resourcing In our Resourcing business the results reflect the reduction in activity levels, contractor pay rates and margins seen throughout last year. Despite the year-on-year decline, I am pleased to report that the stability we had seen in the first two months of 2003 has continued with activity levels constant for the period. The Board recognises we are much more likely to see the challenging business environment for Resourcing continue than to see an imminent recovery. The combination of a reduction in demand and excess in the supply side continues to exert significant pressure on rates and margins. To combat these trends the Board has launched a series of initiatives aimed at remaining competitive on cost whilst differentiating ourselves on quality and service in higher-value offerings. We have invested #0.3m in the development of such services in the past six months. Overall performance for Resourcing shows revenues and gross margin down to #37.0m (2002: #51.2m) and #4.1m (2002: #5.9m). Contribution to Central costs fell from #2.6m in 2002 to #1.3m in 2003 (including investment costs). Specialist Services Our Specialist Services division operates in different markets and with a different business profile to the Resourcing business. Although neither market research nor engineering design have seen increased demand in the period, strong partnership relationships with our customers have enabled the businesses to improve performance relative to 2002. As I mentioned in February, a material investment has been made aiming at widening the division's customer base. This has resulted in the development of a strong pipeline of new prospects. The management team are working to convert these prospects into new business and the Board considers it should not be long before we see the benefits of this investment. Overall performance for Specialist Services was positive showing revenues and gross margin both increasing to #7.5m (#7.3m) and #2.4m (#2.2m) respectively. Contribution to central costs increased to #1.6m from #1.5m in 2002. Administrative expenses We continue to differentiate between direct administrative costs (those which are wholly attributable to specific business units) and indirect (Central) administrative costs (property, depreciation, IT infrastructure, finance, human resources, legal and professional services and administration). Administrative expenses have decreased in the six months to 31 May 2003 to #6.4m (direct: #3.8m; central: #2.6m) from #7.2m (direct: #4.2m; central #3.0m) in 2002. As a proportion of revenues this represents an increase to 14.4% from 11.9 % in 2002. The ratio increased as a result of reducing revenues with limited opportunity to further eliminate costs. Balance Sheet The Group's net asset base at 31 May 2003 decreased to #9.5m. The decrease comprises the profit for the period of #0.1m, offset by charges to reserves of #0.2m in respect of the purchase of own shares for cancellation and #0.3m in respect of shares to be issued under the Long-Term Incentive Plan. Cash Flow In the six months to 31 May 2003 cash inflow was #0.2m (2002: cash outflow of #0.5m) after reducing invoice discounting borrowings by #2.9m (2002: #5.2m) and repurchasing shares for cancellation for #0.2m (2002: #nil). Total bank and invoice discounting borrowings at 31 May 2003 were significantly reduced to #1.4m compared to #4.3m at 30 November 2002. This reduction is in part the result of reduced activity levels and in part the result of the receipt of #2.5m of deferred consideration from the sale of our consulting operations. Personnel 2003 has seen the continuation of a very difficult market for the Company. Our employees have responded admirably to this challenge and I would like to express my sincere appreciation to them. Dividend The Board is not recommending an interim dividend for the six months to 31 May 2003 (2002: Nil). Conclusion and Outlook In February, I concluded that there is a point where cost control can no longer deliver enhanced returns year-on-year and that it would remain a challenge to maintain 2003 performance at the levels achieved in 2002. The views we expressed have proved to be accurate. The immediate challenge for us is to enhance our market share in the sectors in which we operate. The actions we have taken to re-focus our Resourcing business and widen the customer base in Specialist Services are aimed to achieve this. These initiatives are taking longer as a consequence of the challenging conditions in which we operate. However, we have prospects in both divisions which I view as encouraging. Bert Morris Executive Chairman 22 July 2003 For further information, please contact: Lorien plc Bert Morris, Executive Chairman 020 7282 2000 (until 10.30am today) Christopher Hinton, Group Finance Director 0161 888 2503 (thereafter) Citigate Dewe Rogerson 020 7638 9571 Patrick Toyne Sewell Lorien plc Consolidated profit and loss account for the 6 months ended 31 May 2003 Note 6 months 6 months Year ended ended ended 31 May 31 May 30 November 2003 2002 2002 Unaudited Unaudited Audited #'000 #'000 #'000 Turnover Continuing operations 44,503 58,545 111,684 Discontinued operations - 1,904 1,904 2 44,503 60,449 113,588 Cost of sales (37,999) (51,835) (97,076) Gross profit 6,504 8,614 16,512 Administrative expenses (6,372) (7,247) (13,875) Operating profit/(loss) Continuing operations 132 1,475 2,714 Discontinued operations - (108) (77) 132 1,367 2,637 Loss on disposal of discontinued operations 3 - (7,500) (7,500) Profit/(loss) on ordinary activities before interest 132 (6,133) (4,863) and taxation Net interest receivable/(payable) and similar 72 (213) (315) income/(charges) Profit/(loss) on ordinary activities before 2 204 (6,346) (5,178) taxation Taxation 4 (138) (346) (701) Profit/(loss) on ordinary activities after 66 (6,692) (5,879) taxation Dividends 5 - - - Retained profit/(deficit) for the period 66 (6,692) (5,879) Earnings/(loss) per ordinary share 6 0.4 p (36.8) p (32.5) p ===== ====== ====== Diluted earnings/(loss) per ordinary share 6 0.4 p (36.8) p (32.5) p ===== ====== ====== Lorien plc Consolidated balance sheet as at 31 May 2003 Note 31 May 31 May 30 November 2003 2002 2002 Unaudited Unaudited Audited #'000 #'000 #'000 Fixed assets Tangible assets 1,534 1,076 1,051 Investment in own shares 407 431 416 Investments in associates 301 305 301 2,242 1,812 1,768 Current assets Debtors 19,984 25,585 25,304 Creditors: amounts falling due within one year (12,415) (18,298) (17,093) Net current assets 7,569 7,287 8,211 Creditors: amounts falling after one year (276) - - Net assets 9,535 9,099 9,979 ===== ===== ===== Capital and reserves Called up share capital 4,656 4,906 4,756 Share premium account 29,300 29,300 29,300 Capital redemption reserve 250 - 150 Profit and loss account 7 (24,671) (25,107) (24,227) 9,535 9,099 9,979 ===== ===== ===== Lorien plc Consolidated cash flow statement for the 6 months ended 31 May 2003 Note 6 months 6 months Year ended ended ended 31 May 31 May 30 November 2003 2002 2002 Unaudited Unaudited Audited #'000 #'000 #'000 Net cash inflow from operating activities 8 1,541 4,029 5,693 Dividends received from associates and joint - - 4 ventures Returns on investments and servicing of finance 72 (211) (315) Taxation (482) - (801) Capital expenditure (84) (62) (345) Acquisitions and disposals 2,236 997 612 Cash inflow before financing 3,283 4,753 4,848 Financing Repurchase of shares (200) - (453) Decrease in debt (2,851) (5,221) (4,555) Increase/(decrease) in cash in the period 232 (468) (160) ===== ==== ==== Lorien plc Notes 1. Basis of preparation The interim financial statements have been prepared on the basis of accounting policies set out in the Group's Annual Report and Financial Statements for the year to 30 November 2002. The interim financial statements have not been audited and the financial statements do not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The comparative figures for the year to 30 November 2002 are not the company's statutory accounts for that financial period, but have been extracted from the statutory accounts. The statutory accounts have been reported on by the company's auditors and delivered to the registrar of companies. The report of the auditors was unqualified and did not contain a Statement under section 237 (2) or (3) of the Companies Act 1985. 2. Segmental analysis 6 months ended 6 months ended Year ended 31 May 2003 31 May 2002 30 November 2002 #000 #000 #000 Turnover Resourcing 37,031 51,236 96,802 Specialist Services 7,472 7,309 14,882 Consulting - discontinued operations - 1,904 1,904 44,503 60,449 113,588 Contribution to Central costs Resourcing 1,246 2,569 4,876 Specialist Services 1,517 1,500 3,202 Consulting - discontinued operations - 256 288 2,763 4,325 8,366 Central costs (2,631) (2,958) (5,729) Operating profit 132 1,367 2,637 Exceptional items - (7,500) (7,500) Net interest receivable/(payable) and similar income/(charges) 72 (213) (315) Profit/(loss) on ordinary activities before taxation 204 (6,346) (5,178) ====== ====== ====== Central costs represent property charges, depreciation, IT infrastructure costs, finance function costs, human resources costs, legal and professional service fees and indirect staff costs. 3. Loss on disposal of discontinued operations On 12 February 2002 the Group completed the disposal of its Consulting division. The disposal provided for the receipt of proceeds of #4.5m in consideration for the trade and certain assets of the Consulting division. The loss of #7.5m in previous periods has been recognised after advisors' costs and the write back of goodwill of #6.9m previously written off to reserves. #2.0m of the consideration was received in cash on completion and #2.5m was received on 12 February 2003. 4. Taxation 6 months 6 months Year ended ended ended 31 May 2003 31 May 2002 30 November 2002 #000 #000 #000 UK corporation tax at 30% (2002: 30%) - 346 815 Prior year adjustment - - 131 Deferred tax 138 - (245) 138 346 701 ====== ====== ====== 5. Dividends No interim dividend is proposed for the period (30 November 2002 and 31 May 2002: #nil). 6. Earnings/(loss) per ordinary share The earnings/(loss) per share calculation is based on the profit on ordinary activities after taxation of #66,000 (30 November 2002: loss of #5,879,000; 31 May 2002: loss of #6,692,000) and on the weighted average number of shares in issue, and ranking for dividend, during the final period of 17,228,350 (30 November 2002: 18,086,539; 31 May 2002: 18,182,004). The 1,791,130 shares held by the Employee Benefits Trusts at 31 May 2003 (30 November 2002: 1,381,238 and 31 May 2002: 1,442,000) do not rank for dividend payments and have therefore been excluded from the calculations. The diluted earnings/(loss) per share calculations take into account the dilutive effect of share options. The calculations of diluted earnings/(loss) per share are also based on 17,228,350 shares. 7. Profit and loss account #000 At beginning of financial period (24,227) Profit for the financial period 66 Purchase and cancellation of ordinary shares (200) Long-term incentive plan (310) At end of financial period (24,671) ===== During the current period the Employee Benefit Trust purchased 445,000 ordinary shares from the market place at a cost of #223,000. These shares are to be used to meet awards which have already vested in employees and directors of the group under the Long-term Incentive Plan ("L-TIP"). On the basis that the directors believe the shares will be issued under the L-TIP, their value has been written down to #nil and a charge has been reflected in the profit and loss account. An adjustment to the profit and loss account has been made to the extent a charge had been made in the previous period for the related awards in line with UITF 17. 8. Reconciliation of operating profit to operating cash flows 6 months ended 6 months ended Year ended 31 May 31 May 30 November 2003 2002 2002 #000 #000 #000 Group operating profit 132 1,367 2,637 Long term incentive plan charge (310) - 519 Depreciation charge 252 323 557 Decrease in debtors 2,680 5,485 5,970 Decrease in creditors (1,213) (3,146) (3,990) Net cash inflow from operating activities 1,541 4,029 5,693 ==== ==== ==== == == == 9. Analysis of net debt At 30 November Cash flow Other non cash At 31 May 2002 changes 2003 #000 #000 #000 #000 Overdrafts (258) 232 - (26) Debt due within one year - invoice discounting advances (4,003) 2,664 - (1,339) - finance leases - 187 (372) (185) Debt due after one year - finance leases - - (276) (276) Total (4,261) 3,083 (648) (1,826) ====== ====== ====== ====== 10. Interim statement Copies of the interim statement have been sent to Shareholders and further copies are available from the Company Secretary, Lorien plc, Oak House, Park Lane, Leeds, LS3 1EL. Independent Review Report by KPMG Audit Plc to Lorien plc Introduction We have been engaged by the company to review the financial information set out on pages 3 to 8 and we have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Listing Rules of the Financial Services Authority. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where they are to be changed in the next annual accounts in which case any changes, and the reasons for them, are to be disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/ 4: "Review of interim financial information" issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the 6 months ended 31 May 2003. KPMG Audit Plc Chartered Accountants Leeds This information is provided by RNS The company news service from the London Stock Exchange END IR DFLFLXDBEBBV
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