Half-yearly Report
30 September 2008 - 8:15AM
UK Regulatory
CHAIRMAN'S STATEMENT
I am pleased to announce the interim results for a period in which, despite the
adverse economic conditions, our company has continued to make a profit after
tax.
Highlights
* Gross revenues down 24% to �1,259,000
* Company continues to be profitable
* A record of 18 new clients signed up
* Third quarter trading marginally ahead of last year
* Alliance signed with Rhodes Associates, a top ten US executive search firm
As I indicated at the time of the final results in March 2008, our clients were
uncertain as to their requirements for the first six months and the result was
that turnover for the first half declined 24 per cent. to �1,259,000. Whilst
this was in line with the prevailing economic conditions and our expectations
it provided a challenge to the Company and its ability to withstand such
adverse trading. I am pleased to say that in spite of the decline in revenues,
our determined costs management has enabled us to remain profitable, with an
operating profit in the first six months of �72,000 (2007: �367,201), a pre tax
profit of �29,000 (2007: �312,744) and a post tax profit of �20,000 (2007: �
219,000).
At our AGM earlier this year we stated our objective was to diversify our
client base and not be reliant on one particular sector. This strategy has
proved to be successful. Since the beginning of 2008 we have engaged with 18
new clients, which is a record in the history of our Company. More importantly,
these new clients are from such diverse sectors that, as we stand, nearly 70%
of our revenue is generated outside financial services.
One of the key strengths of Garner has been its ability to build long term
relationships with its clients and thereby generate high levels of repeat
business. The objective for the Garner team now, is to maintain that
performance and to convert new clients into repeat business. The third quarter
of 2008 has delivered strong performance and is ahead of the same period last
year, albeit marginally. We anticipate, by nurturing our new clients, revenues
for the whole of the second half of the year will be ahead of the first, which
is the opposite of last year and hopefully returns Garner to the growth trend
achieved in recent years.
On 21 May we announced the hiring of two replacement consultants, to start in
the second half, in line with our diversification strategy. I am pleased to say
that the HR practice is now making a significant contribution to our
performance and we have also been able to expand our offering to financial
services clients to include IT and back office senior management and functional
roles, which is an area that is still in demand despite the recent market
turmoil. We also referred to the Digital Media practice, which has been
developed using existing internal resources and is proving to be a successful
addition to our portfolio.
Our balance sheet position has shown a positive movement from total liabilities
of �1,301,000 at 31 December 2007, to �1,271,000 as at 30 June 2008. However
the challenging trading conditions of the first half had an adverse effect on
our cash flow. The improvement in business towards the end of the period, as
demonstrated by the significant increase in our debtor book, helped partially
to offset this. The result of this was an increase in net debt to �1,415,000
from �1,183,000 as at 31 December 2007. Overall, our cash position is well
controlled, debtors are being well managed and we continue to trade within our
facilities.
In line with our focus on behalf of shareholders to improve our balance sheet
position I am particularly pleased to announce that an agreement has been
reached in principle, subject to shareholder approval, whereby the Preference
Shareholders should be able to convert their holdings to Ordinary Shares. This
will be put for approval by shareholders and Preference Shareholders at a
forthcoming EGM, details of which we expect to issue in the near future. This
would remove �1.213m of liabilities from the balance sheet.
We have spoken before of building an alliance with an American search firm to
extend our geographical reach. This has been accomplished and I am delighted to
announce a new relationship with Rhodes Associates based in New York and San
Francisco ("Rhodes"). Rhodes, one of the top ten US firms by revenue, is a
similar business to ours and clients have responded very favourably to the
alliance. We will now be able to offer a presence in North America and provide
a reciprocal presence for Rhodes in Europe. Revenues generated by the
arrangement will be split between the two parties and, with no additional
costs, so the benefit will flow straight through to our profits.
There are currently a number of acquisition opportunities in our sector that
would complement our growth strategy and enhance our earnings stream. The board
has been involved in several preliminary discussions to date and continues to
explore opportunities as they arise.
The executive management and team at Garner continue to be enthusiastic and
driven to succeed, which, to my mind says a great deal in today's business
environment.
J Bartle
Chairman
Contact details:
Garner plc
Andrew Garner +44 (0) 207 629 8822
www.garnerinternational.com
Dowgate Capital Advisers Limited
David Newton +44 (0) 207 492 4770
www.dowgate.co.uk
CONSOLIDATED INCOME STATEMENT
FOR THE 6 MONTHS ENDED 30 JUNE 2008
Six months Six months Year ended
ended 30 ended 30 31 December
June 2008 June 2007 2007
(unaudited) (unaudited) (audited)
�000 �000 �000
REVENUE 1,259 1,662 3,122
COST OF OPERATIONS (1,187) (1,295) (2,513)
GROUP OPERATING PROFIT 72 367 609
Net finance costs (43) (54) (115)
PROFIT ON ORDINARY ACTIVITIES 29 313 494
BEFORE TAXATION
Tax expense (9) (94) (92)
PROFIT FOR THE FINANCIAL PERIOD 20 219 402
Earnings per share - basic 0.05p 0.58p 1.06p
Earnings per share - diluted 0.05p 0.58p 1.01p
All activity arose from continuing
operations
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2008
As at 30 As at 30 As at 31
June 2008 June 2007 December
2007
(unaudited) (unaudited) (audited)
�000 �000 �000 �000 �000 �000
Goodwill 959 959 959
Property, plant and 14 22 14
equipment
TOTAL NON-CURRENT ASSETS 973 981 973
Trade and other receivables 1,069 991 812
Cash and cash equivalents - - 56
TOTAL CURRENT ASSETS 1,069 991 868
TOTAL ASSETS 2,042 1,972 1,841
TOTAL CURRENT LIABILITIES (2,990) (3,035) (2,819)
Non-current liabilities (323) (421) (323)
TOTAL LIABILITIES (3,313) (3,456) (3,142)
TOTAL ASSETS LESS TOTAL (1,271) (1,484) (1,301)
LIABILITIES
Issued share capital 4,944 4,942 4,942
Share premium account 3,853 3,845 3,845
Retained earnings (10,068) (10,271) (10,088)
TOTAL EQUITY (1,271) (1,484) (1,301)
CONSOLIDATED CASH FLOW STATEMENTS AND
NOTES
Six months Six months Year ended
ended 30 ended 30 31
June 2008 June 2007 December
2007
(unaudited) (unaudited) (audited)
Notes �000 �000 �000
Net cash from operating activities (i) (192) 12 223
Cash flows from investing
activites and servicing of finance
Interest paid (43) (54) (115)
Payments to acquire tangible (3) - (2)
assets
Net cash used in investing (46) (54) (117)
activites
Cash flows from financing
activities
Net cash inflow from equity 10 - -
placings
Repayment of secured loans - (112) (181)
Payment/(repayment) of advances 90 - (31)
from directors
Increase in invoice discounting 78 (9) 187
Net cash from financing activities 178 (121) (25)
Net increase in cash and cash (60) (163) 81
equivalents
Net cash and cash equivalents at 56 (25) (25)
beginning of period
Net cash and cash equivalents at (4) (188) 56
end of period
Analysis of net funds
Cash and cash equivalents - - 56
Bank overdraft (4) (188) (2)
(4) (188) 54
Borrowings due within one year (932) (634) (848)
Borrowings due after one year (323) (503) (323)
Directors loan account (156) (97) (66)
Net funds (1,415) (1,422) (1,183)
Note (i)
Reconciliation of operating profit
to net cash from operating
activities
Six months Six months Year ended
ended 30 ended 30 31
June 2008 June 2007 December
2007
(unaudited) (unaudited) (audited)
�000 �000 �000
Operating profit 72 367 609
Depreciation of property plant and 3 3 4
equipment
Amortisation of loan arrangements 3 - 3
fees
(Increase) in trade and other (257) (320) (144)
receivables
(Decrease) in trade and other 77 (38) (108)
payables
Taxation paid (90) - (141)
Net cash from operating activities (192) 12 223
NOTES TO THE UNAUDITED INTERIM REPORT
1. BASIS OF PREPARATION
The results for the six months ended 30 June 2008, which are unaudited, have
been prepared under the historical cost convention.
The financial information contained in this interim report has been prepared in
accordance with the accounting policies as set out in the Company's accounts
for the year ended 31 December 2007, and utilises accounting policies
consistent with International Financial Reporting Standards adopted for use in
the European Union ("IFRS").
The financial information set out in this document has not been audited or
reviewed by our auditors and neither this interim report nor the financial
information contained in it constitutes statutory accounts of the Company
within the meaning of section 240(5) of the Companies Act 1985.
2. BASIS OF CONSOLIDATION
The group financial statements consolidate those of the Company and of its
subsidiary undertaking Garner International Limited, a company incorporated in
England and Wales. Profits or losses on intra-group transactions are eliminated
in full.
3. EARNINGS PER ORDINARY SHARE
The calculation of the earnings per share is based on the profit attributable
to ordinary shareholders of �20,000 (2007: �219,000) and the weighted average
number of ordinary shares in issue during the period, being 38,061,315 (2007:
37,968,937).
4. COPIES OF THE UNAUDITED INTERIM REPORT
Copies of this report are available on request from the Company's registered
office at 6 Derby Street, London, W1J 7AD and on the web site
www.garnerinternational.com.
END
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