TIDMKLN
RNS Number : 0373B
Kellan Group (The) PLC
18 September 2018
The information contained within this announcement is deemed by
the Group to constitute inside information as stipulated under the
Market Abuse Regulations (EU) No. 596/2014 ("MAR").
18 September 2018
The Kellan Group PLC
("Kellan", the "Company" or "Group")
Interim results for the six months ended 30 June 2018
The Company announces its unaudited interim results for the six
months ended 30 June 2018. Kellan is a market leading recruitment
business operating across a wide range of functional disciplines
and industry sectors.
The interim results will be available shortly on the Company's
website at www.kellangroup.co.uk.
Financial Summary
-- In the six months ended 30 June 2018, the Group's
year-on-year sales increased by 5% to GBP10.8 million, compared
with GBP10.3 million in the same period in 2017; while Net Fee
Income (NFI) remained flat at GBP3.2 million.
-- Continuous focus on overheads with administrative expenses
reduced by 2% to GBP3.0 million in H1 2018, compared with GBP3.1
million during the comparable period in H1 2017.
-- Adjusted EBITDA profit (Note 2) of GBP0.2 million during H1
2018 compared with GBP0.3 million profit during H1 2017.
-- Profit after tax of GBP42,000 during H1 2018, compared with a
loss after tax of GBP21,000 during the comparable period last
year.
Operational summary
-- Berkeley Scott continues to be a leader in hospitality and
leisure recruitment markets. The temporary business grew
year-on-year, driven by an increase in our client base and a new
approach to NFI delivery; the permanent business however declined
by a similar amount, resulting in overall NFI being flat
year-on-year. Client demand remains stable, and the business has
seen a strong increase in a number of our national accounts, as
well as several significant new account wins.
-- The RK business NFI was flat year on year. The change in
focus in order to create a specialist temporary team in 2017 is
delivering results. This has helped to offset underperformance from
the permanent operation.
-- The Quantica business has seen its NFI decline, primarily due
to a reduction in headcount and underperformance from the
Manufacturing operation. Although NFI has declined, the overall
profitability has improved.
Delisting from AIM
The Directors have conducted a review of the benefits and
drawbacks to the Company and its stakeholders of continuing the
Company's admission to trading on AIM. The Board is considering
whether retaining the Company's admission to trading on AIM is in
the best interests of the Company and its shareholders as a whole.
The process for the cancellation of Company's admission to trading
on AIM ("Cancellation"), if proposed, would require approval of not
less than 75 per cent of shareholders voting at a general meeting.
The Company will engage with shareholders to discuss the possible
Cancellation and seek irrevocable undertakings to this effect, if
applicable.
The Board is aware that the proposed Cancellation, should it be
approved, will make it more difficult for shareholders to buy and
sell the Company's ordinary shares should they wish to do so.
Further updates will be provided in due course.
ENQUIRIES:
The Kellan Group PLC Tel: 020 7268 6200
Rakesh Kirpalani, Group Finance
Director
Allenby Capital Limited Tel: 020 3328 5656
David Worlidge / Asha Chotai
Executive Chairman's Statement
The results for the first six months of 2018 saw Group sales
increase by 5% from GBP10.3 million in H1 2017 to GBP10.8 million
in H1 2018, with NFI remaining flat at GBP3.2 million, while
administrative expenses have reduced by 2% from GBP3.1 million in
H1 2017 to GBP3.0 million in H1 2018. Overall profit after tax for
H1 2018 of GBP42,000 compared with a loss after tax of GBP21,000 in
H1 2017. Adjusted EBITDA for H1 2018 of GBP226,000 compared with
GBP321,000 in H1 2017. H1 2017 adjusted EBITDA benefited from
GBP148,000 in add-backs which did not arise in H1 2018 (as per Note
2).
Based on the interim results and trading since, the Board is
confident 2018 performance will be in line with management's
expectation.
Berkeley Scott's temporary business has seen good growth in H1
2018 with NFI increasing 8% compared to H1 2017. With the exception
of a decline in London, all offices have delivered double digit
growth in H1 2018 compared to H1 2017, with the strongest
performances coming from Birmingham and Leeds. The London Team has
returned to growth in Q3 2018, and the current outlook is for the
team to deliver overall growth on 2017. The temporary business has
started to transition to a more collaborative approach to NFI
delivery, which is helping drive growth and increase headcount. The
business also successfully executed a change to its invoicing
platform in Q2 2018 which will deliver operational efficiencies
from H2 2018.
Berkeley Scott's permanent business underperformed compared to
H1 2017, with NFI declining 13% year-on-year. The Leeds permanent
NFI has increased 43% year-on-year, but all other locations have
declined, despite an increase in headcount.
The RK business NFI was flat year-on-year at GBP0.4 million. The
changes made in 2017 to create a specialist temporary team is
delivering results, with temp NFI increasing 40% year-on-year. The
temp/perm NFI mix has also improved from approximately 20:80 in H1
2017 to 30:70 in H1 2018. The Preston team moved to a new office in
July 2018, and now have better facilities and an improved working
environment.
The Quantica business has seen its NFI decline by GBP0.1
million; a third of which relates to the closure of the Quantica
Retail operation in early 2018, while the remaining decline came
from the Manufacturing operation.
On 2 July 2018, the Company announced that it had agreed terms
to purchase loan notes with a nominal value of GBP360,000 which
were due for repayment on 20 September 2022, for the purchase price
of GBP300,000. This was funded by drawdown on the existing
confidential invoice discounting facility provided by Barclays. The
Barclays drawdown is at a substantially lower rate of 1.5% over
base (2.0%) than the interest on the Loan Notes (5%) and ensures
the Company uses its cheapest means of funding first.
Following the purchase of the GBP360,000 nominal of Loan Notes,
the Group has loan notes outstanding to BMN Commercial amounting to
GBP1,500,000 and due for repayment on 20 September 2022. In
summary, in October 2016 the Group had loan notes amounting to
GBP3,206,000, and our improving trading coupled with strong cost
controls has enabled us to reduce this to GBP1,500,000.
The Board has conducted a review of the benefits and drawbacks
to the Company and its stakeholders of continuing the Company's
admission to trading on AIM. The Board is considering whether
retaining the Company's admission to trading on AIM is in the best
interests of the Company and its shareholders as a whole. Further
updates will be provided in due course.
My sincerest thanks goes to our staff, all of our customers, and
to all our loyal shareholders for their continued support.
Richard Ward
Executive Chairman
17 September 2018
Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2018
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2018 2017 2017
Note GBP000 GBP000 GBP000
Revenue 10,830 10,310 22,037
Cost of sales (7,653) (7,119) (15,401)
------------------------------- ----- ---------- ---------- ------------
Net Fee Income 3,177 3,191 6,636
Administrative expenses (3,007) (3,080) (5,944)
------------------------------- ----- ---------- ---------- ------------
Operating profit 2 170 111 692
Financial expenses (105) (132) (235)
------------------------------- ----- ---------- ---------- ------------
Profit/(loss) before tax 65 (21) 457
Taxation (23) - (70)
------------------------------- ----- ---------- ---------- ------------
Profit/(loss) for the period 42 (21) 387
------------------------------- ----- ---------- ---------- ------------
Attributable to:
Equity holders of the parent 42 (21) 387
------------------------------- ----- ---------- ---------- ------------
Profit/(loss) per share
in pence
Basic 3 0.01 (0.01) 0.13
Diluted 3 0.01 (0.01) 0.13
------------------------------- ----- ---------- ---------- ------------
The above results relate to continuing operations.
There are no other items of comprehensive income for the period
or for the comparative periods.
Consolidated Statement of Financial Position
As at 30 June 2018
Unaudited Unaudited Audited
30 June 30 June 31 December
2018 2017 2017
Note GBP000 GBP000 GBP000
Non-current assets
Intangible assets 6 3,172 3,226 3,172
Property, plant and equipment 153 244 199
3,325 3,470 3,371
------------------------------------------- ----- ---------- ---------- ------------
Current assets
Trade and other receivables 4 4,640 3,863 4,362
Cash and cash equivalents 341 147 1,982
------------------------------------------- ----- ---------- ---------- ------------
4,981 4,010 6,344
------------------------------ ---------------- ----- ---------- ---------- ------------
Total assets 8,306 7,480 9,715
------------------------------ ---------------- ----- ---------- ---------- ------------
Current liabilities
Loans and borrowings 1,867 919 3,230
Trade and other payables 5 2,697 2,978 2,829
Provisions 52 16 15
------------------------------------------- ----- ---------- ---------- ------------
4,616 3,913 6,074
------------------- --------------------------- ----- ---------- ---------- ------------
Net current
assets 365 97 270
------------------- --------------------------- ----- ---------- ---------- ------------
Non-current liabilities
Loans and borrowings 1,577 1,921 1,543
Provisions 43 68 70
1,620 1,989 1,613
------------------------------------------- ----- ---------- ---------- ------------
Total liabilities 6,236 5,902 7,687
------------------------------------ ---------- ----- ---------- ---------- ------------
Net assets 2,070 1,578 2,028
------------------------------------ ---------- ----- ---------- ---------- ------------
Equity attributable to equity
holders of the parent
Share capital 4,274 4,274 4,274
Share premium 14,746 14,746 14,746
Capital contribution reserve 810 768 810
Capital redemption reserve 2 2 2
Retained earnings (17,762) (18,212) (17,804)
------------------------------------------- ----- ---------- ---------- ------------
Total equity 2,070 1,578 2,028
------------------------------------ ---------- ----- ---------- ---------- ------------
Consolidated Statement of Changes in Equity
For the six months ended 30 June 2018
Unaudited
Unaudited Unaudited Capital Unaudited Unaudited Unaudited
Share Share Convertible Redemption Retained Total
capital premium Reserve Reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 31 December
2016 4,274 14,746 768 2 (18,191) 1,599
--------------------------- ---------- ---------- ------------ ----------- ---------- ----------
Total comprehensive
loss for the 6 month
period ended 30 June
2017 - - - - (21) (21)
Balance at 30 June
2017 4,274 14,746 768 2 (18,212) 1,578
--------------------------- ---------- ---------- ------------ ----------- ---------- ----------
Total comprehensive
profit for the 6 month
period ended 31 December
2017 - - - - 408 408
Capital contribution - - 42 - - 42
Balance at 31 December
2017 4,274 14,746 810 2 (17,804) 2,028
--------------------------- ---------- ---------- ------------ ----------- ---------- ----------
Total comprehensive
profit for the 6 month
period ended 30 June
2018 - - - - 42 42
Balance at 30 June
2018 4,274 14,746 810 2 (17,762) 2,070
--------------------------- ---------- ---------- ------------ ----------- ---------- ----------
Consolidated Statement of Cash Flows
For the six months ended 30 June 2018
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2018 2017 2017
GBP000 GBP000 GBP000
Cash flows from operating activities
Profit/(loss) for the period 42 (21) 387
Adjustments for:
Depreciation and amortisation 56 170 283
Interest paid 105 132 235
203 281 905
(Increase)/decrease in trade and
other receivables (278) 496 (3)
(Decrease)/increase in trade and
other payables (132) 22 (127)
Increase in provisions 10 1 2
----------------------------------------------- --------- ---------- ------------------ -------------------
Net cash (outflow)/inflow from
operating activities (197) 800 777
--------------------------------------------- ----------- ---------- ------------------ -------------------
Cash flows from investing activities
Acquisition of property, plant
and equipment (9) (15) (29)
----------------------------------------------- --------- ---------- ------------------ -------------------
Net cash outflow from investing
activities (9) (15) (29)
--------------------------------------------- ----------- ---------- ------------------ -------------------
Cash flows from financing activities
(Decrease)/Increase of invoice
discounting facility balances (1,363) (2,156) 155
Interest paid and loan costs (72) (92) (165)
Repayment of loan borrowings - (300) (666)
----------------------------------------------- --------- ---------- ------------------ -------------------
Net cash outflow from financing activities (1,435) (2,548) (676)
----------------------------------------------------- ---- ---------- ------------------ -------------------
Net (decrease)/increase in cash
and cash equivalents (1,641) (1,763) 72
Cash and cash equivalents at the
beginning of the period 1,982 1,910 1,910
----------------------------------------------- --------- ---------- ------------------ -------------------
Cash and cash equivalents at the end
of the period 341 147 1,982
----------------------------------------------------------- ---------- ------------------ -------------------
Notes forming part of the financial statements
1 Accounting policies
Accounting periods
The accounting reference date of the Group is 31 December. The
current half year interim results are for the six months ended 30
June 2018. The comparative half year interim results are for the
six months ended 30 June 2017. The comparative year's results are
for the twelve months ended 31 December 2017.
The interim financial statements do not include all disclosures
that would otherwise be required in a complete set of financial
statements and should be read in conjunction with the 2017 annual
report.
Adoption of new and revised standards
New standards, interpretations and amendments, effective from 1
January 2018, have not had a material effect on the financial
statements.
The amendments and interpretations to published standards that
have an effective date on or after 1 July 2018 or later periods
have not been adopted early by the Group and assessment of the
impact of these standards is currently under review.
Effective
International Accounting Standards (IAS/IFRS) date
IFRS 9 Financial Instruments 01/01/2018
IFRS 15 Revenue from Contracts with Customers 01/01/2018
-------- -------------------------------------- -----------
IFRS 16 Leases 01/01/2019
-------- -------------------------------------- -----------
Financial information
The financial information for the six months ended 30 June 2018
and the six months ended 30 June 2017 are unaudited and un-reviewed
and do not constitute the Group's statutory financial statements
for those periods. The comparative financial information for the
full year ended 31 December 2017 has, however, been derived from
the audited statutory financial statements for that period. A copy
of those statutory accounts for that period has been delivered to
the Registrar of Companies. The auditor's report on those accounts
was not qualified and did not contain statements under Chapter 3 of
Part 16 of the Companies Act 2006.
Basis of preparation
The half year interim financial statements have been prepared on
a going concern basis using the recognition and measurement
principles of IFRS as endorsed for use in the European Union. The
accounting policies used in the preparation of these condensed
financial statements are set out in the statutory financial
statements for the period ended 31 December 2017 which are also the
policies that are expected to be applicable at 31 December
2018.
Based on the Group's latest trading expectations and associated
cash flow forecasts, the directors have considered the cash
requirements of the Company and have concluded that the Group will
be able to operate within its existing facilities for the next
twelve months. These facilities comprise an invoice discounting
facility of up to GBP4 million dependent on trading levels. The
Directors also recognise that there is a general sensitivity to the
wider macro-economic environment, however, based on the ongoing
support from major shareholders and management's trading
expectations; the Directors are confident that the Group will be
able to meet its liabilities as they fall due for the foreseeable
future. It is on this basis that the Directors consider it
appropriate to prepare the Group's financial statements on a going
concern basis.
2 Reconciliation of operating loss to adjusted EBITA and
adjusted EBITDA
Adjusted EBITDA is earnings before interest, taxes, depreciation
and amortisation adjusted for any one off or non-cash
administrative expenses.
Unaudited Unaudited Audited
6 month 6 month 12 month
period period
ended ended period ended
30 June 30 June 31 December
2018 2017 2017
GBP000 GBP000 GBP000
Operating profit as per accounts 170 111 692
Add back
Amortisation of intangible assets - 108 163
Restructuring costs - 40 40
----------------------------------- ---------- ---------- -------------
Adjusted EBITA 170 259 895
Depreciation 56 62 120
----------------------------------- ---------- ---------- -------------
Adjusted EBITDA 226 321 1,015
----------------------------------- ---------- ---------- -------------
3 Profit/(loss) per share
Basic profit/(loss) per share
The calculation of basic loss per share is as follows:
Unaudited Unaudited Audited
6 month 6 month 12 month
period
period ended period ended ended
30 June 30 June 31 December
2018 2017 2017
Weighted average number of shares
------------------------------------- ------------- ------------- ------------
Issued ordinary shares at beginning
of period 339,645,061 339,645,061 339,645,061
Effect of shares issued - - -
Weighted average number of shares
at end of period 339,645,061 339,645,061 339,645,061
Profit/(loss) for the period 42,000 (21,000) 387,000
------------------------------------- ------------- ------------- ------------
Basic loss per share in pence 0.01 (0.01) 0.13
------------------------------------- ------------- ------------- ------------
Diluted loss per share in pence 0.01 (0.01) 0.13
------------------------------------- ------------- ------------- ------------
There was no dilution in the current period due to the loss in
the period.
The effect of the outstanding Employee options has been
determined as non-dilutive. As such they have been excluded from
the diluted earnings per share calculation.
4 Trade and other receivables
Unaudited Unaudited Audited
30 June 30 June 31 December
2018 2017 2017
GBP000 GBP000 GBP000
-------------------------------- ---------- ---------- ------------
Trade receivables 4,407 3,385 4,056
Other receivables 6 215 69
Prepayments and accrued income 227 263 237
-------------------------------- ---------- ---------- ------------
4,640 3,863 4,362
-------------------------------- ---------- ---------- ------------
5 Trade and other payables
Unaudited Unaudited Audited
30 June 30 June 31 December
2018 2017 2017
GBP000 GBP000 GBP000
--------------------------------- ---------- ---------- ------------
Trade payables 66 71 58
Other creditors 702 505 666
Social security and other taxes 972 1,030 1,081
Accruals and deferred income 957 1,372 1,024
--------------------------------- ---------- ---------- ------------
2,697 2,978 2,829
--------------------------------- ---------- ---------- ------------
6 Intangible Assets
The intangible assets balance at 30 June 2018 of GBP3,172,000
includes an amount of GBP3,172,000 relating to goodwill acquired
through business combinations. The carrying value of goodwill was
reviewed for impairment as at 31 December 2017 and will continue to
be reassessed on an annual basis.
7 Post balance sheet events
On 2 July 2018, the Company announced that it had agreed terms
to purchase loan notes with a nominal value of GBP360,000 that were
issued to BMN Commercial Limited and were due for repayment on 20
September 2022, for the purchase price of GBP300,000. This was
funded by drawdown on the existing confidential invoice discounting
facility provided by Barclays. The Barclays drawdown is at a
substantially lower rate of 1.5% over base (2.0%) than the interest
on the Loan Notes (5%) and ensures the Company uses its cheapest
means of funding first.
Following the purchase of the GBP360,000 nominal of Loan Notes,
the Group has loan notes outstanding to BMN Commercial amounting to
GBP1,500,000 and due for repayment on 20 September 2022. In
summary, in October 2016 the Group had loan notes amounting to
GBP3,206,000, and our improving trading coupled with strong cost
controls has enabled us to reduce this to GBP1,500,000.
8 Availability of Interim Results
The half year results for the six months to 30 June 2018 will
not be posted to shareholders but will be available on the
Company's website, www.kellangroup.co.uk.
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
IR SFWFWWFASEEU
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September 18, 2018 02:00 ET (06:00 GMT)
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