Interim Results
12 Februar 2003 - 8:00AM
UK Regulatory
RNS Number:3615H
Northern Recruitment Group PLC
12 February 2003
12 February 2003
NORTHERN RECRUITMENT GROUP PLC
INTERIM RESULTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2002
"We are pleased to report a strong recovery in performance compared with the
first half last year. Our investment in new senior teams specialising in the
finance, commercial and public sectors, backed by excellent central response
handling facilities, has driven good growth in permanent recruitment revenues
and profits."
* Turnover up 7% to #10.417 million (2001: #9.732 million)
* Pre-tax profit up 168% to #0.603 million (2001: #0.225 million)
* Earnings per share up 175% to 2.2 pence (2001: 0.8 pence)
* Interim dividend raised 4% to 0.75 pence per share (2001: 0.72 pence)
* Strong cash flow continues: net cash at 31 December #3.3 million
(2001: #2.3 million)
* Good growth in permanent recruitment : temporary recruitment
resilient in weak market
* Tangible benefits from past investment in senior personnel and
facilities
* Growing public sector expertise
* NRG City brand in professional support services achieving good
results
"We have exceptionally strong finances and an excellent and committed team of
people, supported by some of the best facilities in our industry. We have also
achieved a unique combination of national capabilities and regional expertise.
For all these reasons, even though the economic outlook appears increasingly
uncertain, we believe that we are well placed to achieve a resilient performance
in the second half in line with current expectations."
ENQUIRIES:
Northern Recruitment Group Hudson Sandler
Lorna Moran, Chief Executive Keith Hann / Lesley Allan
Telephone: 0191 260 4412 Telephone: 020 7796 4133
CHAIRMAN'S AND CHIEF EXECUTIVE'S STATEMENT
We are pleased to report a strong recovery in performance compared with the
first half last year. Our investment in new senior teams specialising in the
finance, commercial and public sectors, backed by excellent central response
handling facilities, has driven good growth in permanent recruitment revenues
and profits. While we have an increasing capability to handle major projects
nationwide, our specialist regional expertise has helped to sustain the
contribution from temporary recruitment in a weaker and more competitive market
place. Cash generation has remained very strong.
Results
Turnover for the six months to 31 December 2002 rose by 7% to #10.417 million
(2001: #9.732 million). This growth was driven by an increase in permanent
recruitment revenues, partly offset by a marginal fall in turnover from
temporary placements.
Gross profit increased by 28% to #3.428 million (2001: #2.678 million). Our
gross margin was 32.9% compared with 27.5% in the first half last year, with the
improvement driven largely by the change in our business mix in favour of
permanent recruitment. Administrative costs increased by 15.6% to #2.834
million (2001: #2.452 million), in line with our budgets and largely reflecting
our investment to ensure the efficient servicing of a major national volume
contract. There was a loss of #52,000 from our joint venture Learning Dynamix,
which represented a significant improvement on its performance in the second
half of the prior year. Including interest receivable, profit before tax
advanced by 168% to #0.603 million (2001: #0.225 million) and earnings per share
were 175% higher at 2.2 pence (2001: 0.8 pence).
Finances
Cash flow was again strongly positive, reflecting tight controls together with
the continued shift in the balance of the Group from temporary to permanent
recruitment. Net cash in the balance sheet at 31 December was #3.3 million,
compared with #2.3 million at the same point last year, and #2.7 million at the
end of our previous financial year in June 2002.
Dividend
In the light of the improved results and strong financial position of the Group,
the Board has declared an increased interim dividend of 0.75 pence per share
(2001: 0.72 pence). This is a rise of 4%.
Business development
While we have not been unaffected by reduced activity in the recruitment market,
particularly outside the North East, our overall performance has improved
significantly as a result of well-targeted past investment. In particular, we
have benefited from our timely decision to develop focused capabilities in the
public and not-for-profit sectors, where we have successfully tendered for a
number of senior permanent recruitment assignments. We have also completed the
latest phase of a major national volume contract in the public sector, which
involved the selection of some 2,500 people for positions in Wales and Scotland
as well as the North West and North East of England. This work was made
possible by the creation of a major contact centre facility at our headquarters
in Newcastle upon Tyne, where we have been pleased to create additional local
job opportunities in response handling. Overall, public sector work has grown
to account for some 30% of our revenues in this half year. In addition, we have
won increasing numbers of senior permanent assignments in the finance and
commercial sectors, as a result of our recruitment of new specialist teams
dedicated to these areas.
Temporary recruitment revenues were down by less than 2%, a resilient
performance in the current market. This was aided by the success of our NRG
City brand in professional support services, which has established a strong high
street presence and developed a flourishing business in ad hoc placements. Our
services providing flexible resourcing for industry, and interim professional
placements, have also performed well.
We have continued to achieve our strongest performance in the North East, where
we have benefited from our investment in new premises and facilities in
Newcastle, and where we are confident that we have increased our market share.
National campaigns which were centrally managed from our Newcastle Contact
Centre had a major impact in the first half. Some of our branches have suffered
lower revenues in their local markets. We continue to monitor closely and
support all our branches to ensure that they are equipped to take advantage of
any upside opportunities when their markets pick up. Further progress is still
required to attain their long term targets.
Outlook
Last year performance dipped sharply in the first half and recovered in the
second; the results we have just reported represent a recovery and the
continuation of the more positive second half trends. We have strong finances
and an excellent and committed team of people, supported by some of the best
facilities in our industry. We have also achieved a unique combination of
national capabilities and regional expertise. For all these reasons, even
though the economic outlook appears increasingly uncertain, we believe that we
are well placed to achieve a resilient performance in the second half, in line
with expectations.
Hamish Leslie Melville, Chairman
Lorna Moran, Chief Executive
PROFIT AND LOSS ACCOUNT
For the six months ended 31 December 2002 2002 2001 2002
6 months 6 months 12 months
to 31 December to 31 December to 30 June
Unaudited Unaudited Audited
#'000 #'000 #'000
Turnover 10,417 9,732 19,385
(In addition, share of joint venture turnover
#139,000, nil and #129,000 respectively)
Cost of Sales (6,989) (7,054) (13,255)
Gross Profit 3,428 2,678 6,130
Administrative Expenses (2,834) (2,452) (5,063)
Operating Profit 594 226 1,067
Share of operating (loss)
- joint venture (52) - (137)
- associate - (36) (36)
Interest receivable and similar income 61 35 73
Profit on ordinary activities before taxation 603 225 967
Tax on profit on ordinary activities (196) (75) (347)
Share of tax in:- joint venture - - 18
associate - - -
Profit on ordinary activities after taxation 407 150 638
Equity dividends paid and proposed (135) (129) (377)
Retained profit for the financial year 272 21 261
Earnings per Ordinary share (pence) (note 4) 2.2 0.8 3.5
Fully diluted earnings per
Ordinary share (pence) (note 4) 2.2 0.8 3.5
There are no recognised gains or losses other than the profits for each of the
periods shown above.
BALANCE SHEET
31 December 2002 2002 2001 2002
31 December 31 December 30 June
Unaudited Unaudited Audited
#000 #'000 #'000
Fixed assets
Tangible assets 859 960 940
Investment in joint venture:
Share of gross assets 288 - 396
Share of gross liabilities (110) - (166)
178 - 230
Investment in associate - 349 -
1,037 1,309 1,170
Current assets
Debtors 3,197 2,629 3,192
Cash at bank and in hand 3,277 2,312 2,691
6,474 4,941 5,883
Creditors: Amounts falling due within one year (2,877) (2,128) (2,691)
Net current assets 3,597 2,813 3,192
Total assets less current liabilities 4,634 4,122 4,362
Provisions for liabilities and charges (27) (27) (27)
Net assets 4,607 4,095 4,335
Capital and reserves
Called up share capital 898 898 898
Share premium account 529 529 529
Profit and loss account 3,180 2,668 2908
Equity shareholders' funds (note 6) 4,607 4,095 4335
CASH FLOW STATEMENT
For the six months ended 31 December 2002 2002 2001 2002
6 months 6 months 12 months
to 31 December to 31 December to 30 June
Unaudited Unaudited Audited
#000 #'000 #'000
Net cash inflow from operating activities (note 874 483 1329
7)
Returns on investments and servicing of finance
Interest received 61 35 73
Net cash inflow / (outflow) from returns on
investments and servicing of finance 61 35 73
Taxation
Corporation tax refunded (paid) 6 (54) (255)
Capital expenditure and financial investments
Sale of tangible fixed assets - 35 49
Payments to acquire tangible fixed assets (108) (63) (252)
Net cash outflow from capital expenditure and
financial investments (108) (28) (203)
Equity dividends paid (247) (241) (370)
Increase in cash 586 195 574
Reconciliation of net cash flow to movement
in net funds
Increase in cash 586 195 574
Net funds at start of period 2691 2,117 2117
Net funds at end of period 3277 2,312 2691
NOTES
1. The Group has prepared these interim results on the basis of the accounting
policies adopted for the year ended 30 June 2002 as set out in the Group's
annual report and accounts.
2. The unaudited financial information set out in this interim statement does
not constitute statutory accounts within the meaning of Section 240 of the
Companies Act 1985. The accounts for the year ended 30 June 2002 have been
extracted from the statutory accounts filed with the Registrar of
Companies; the report of the auditors on these accounts was unqualified.
3. The charge for taxation is based on the estimated effective rate for the
year as a whole.
4. Earnings per share are calculated on the weighted number of Ordinary shares
in issue in each period, as follows:
Basic Fully Diluted
6 months to 31 December 2001 17,952,370 17,977,519
12 months to 30 June 2002 17,952,370 17,979,401
6 months to 31 December 2002 17,952,370 17,963,175
5. An interim net dividend of 0.75p (2001: 0.72p) per Ordinary share is
payable on 7 May 2003 to Ordinary shareholders on the register at the close
of business on 4 April 2003
2002 2001 2002
6 months 6 months 12 months
to 31 December to 31 December to 30 June
Unaudited Unaudited Audited
#'000 #'000 #'000
6. Reconciliation of movements in equity
Opening equity shareholders' funds 4,335 4,074 4074
Profit for the period 407 150 638
Dividends (135) (129) (377)
Net addition to equity shareholders' 272 21 261
funds
Closing equity shareholders' funds 4,607 4,095 4,335
NOTES (CONTINUED)
2002 2001 2002
6 months 6 months 12 months
to 31 December to 31 December to 30 June
Unaudited Unaudited Audited
#000 #'000 #'000
7. Reconciliation of operating profit to net
cash inflow from operating activities
Operating profit 594 226 1067
Depreciation of tangible fixed assets 189 167 367
(Profit) on disposal of fixed assets - (25) (28)
(Increase) / Decrease in debtors (11) 544 (19)
Increase / (Decrease) / in creditors 102 (429) (58)
Net cash inflow from operating activities 874 483 1329
8. The interim report is being posted to all shareholders and is available on
request from The Company Secretary, Northern Recruitment Group PLC, Vine
House, Vine Lane, Newcastle upon Tyne, NE1 7PU.
This information is provided by RNS
The company news service from the London Stock Exchange
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