Penna Consulting Announcements

RNS Number : 8700H Penna Consulting PLC 11 November 2008  

PENNA CONSULTING PLC
("Penna" or "the Group")

Interim Results for the six months ended 30 September 2008

STRONG RESULTS
11 November 2008
Penna Consulting Plc (PNA:AIM), the international human resources consulting group, today announces its unaudited interim results for the six months ended 30 September 2008. 

FINANCIAL HIGHLIGHTS 

-
Revenue increased 29% to £28.9m (2007:£22.5m)
-
Profits before tax quadrupled to £2.1m (2007:£0.5m)
-
Fully diluted earnings per share (EPS) quadrupled to 6p (2007:1.4p)
-
Strong balance sheet with net cash of £5m and no debt
-
Interim dividend 2p per share (2007:nil)

Commenting on the results and outlook, Stephen Rowlinson, chairman, said:

"I am very pleased to report some excellent results for the first half of the year. Performance has exceeded expectations and the interim dividend, expected to be 1 pence per share will now be doubled to 2 pence per share.

We are focused on increasing shareholder value and are optimistic about the future. All indications are that our Career Transition division, which accounts for 59% of the Group's net revenues, will experience further major expansion in the demand for its services in the coming months and years and we expect this to drive continuing growth of Penna's scale and profitability."

For further information please contact:

Stephen Rowlinson, Chairman
Gary Browning, Chief Executive
David Firth, Finance Director
0771 00 23699
020 7648 2448
020 7648 2423
Hawkpoint Partners

Graham Paton/Serge Rissi
020 7665 4500
Collins Stewart

Adrian Hadden
020 7523 8353
Pelham PR

Polly Fergusson
020 7743 6362

  
About Penna (www.penna.com)

Penna Consulting plc is a one of the largest HR consulting groups in the UK, and provides a range of HR consultancy services to companies across a range of sectors: Services include Recruitment Communications, Executive Recruitment, Executive Interim, Board and Executive Coaching, Leadership and Performance Consulting and Career Transition. Penna was placed 29th in The Sunday Times 100 Best Companies to Work For in 2008.
  
Penna Consulting Plc

Chairman's Statement

I am very pleased to report some excellent results for the first half of the year. Revenue is up 29% to £28.9m (2007:£22.4m) and net revenue is up 27% to £19.1m (2007:£15.0m). Profits before tax have more than quadrupled to £2.1m (2007:£0.5m) and earnings per share are 6.0 pence compared to 1.4 pence for the first half and 5.5 pence for the full 2007/08 year.

Penna's businesses are cash generative and our balance sheet is strong. Net assets are £20.8m (2007:£18.2m). Net tangible assets are £6.7m (2007:£4.2m) and net cash at mid year was £5.0m (2007:£0.9m). Your Board believes that in the current credit environment our strong cash position and lack of any need for bank finance is a major competitive advantage.

In the Annual Report published in June 2008 I noted the Board's recommendation of a 2 pence dividend in respect of 2007/8 and our expectation that the Board would be able to recommend a 1 pence interim and 2 pence final dividend for the current year. The Group's performance has, in the event, exceeded our expectations and we are therefore pleased to declare an interim dividend of 2 pence per share which will be payable on 4 March 2009 to shareholders on the register on 6 February 2009.
Net Revenue * 

Six months to
30 Sept 2008
£'000
Six months to
30 Sept 2007
£'000
Change on
Prior period
%
Career Transition
11,301
8,111
+39%
Executive Recruitment
1,843
1,842
0%
Executive Interim
1,659
1,411
+18%
Recruitment Communications
587
384
+53%
Board & Executive Coaching
989
997
0%
Leadership & Performance Consulting
2,713
2,247
+21%
Total Net Revenue
19,092
14,992
+27%

Total Revenue 

28,894

22,419

+29%
* Revenue less pass through costs
Operational Review

Our core business - Career Transition - grew steadily through the 2007/08 financial year and the rate of growth accelerated as we entered the current year. Net revenue in the period under review grew by 39% compared to the six months to September 2007. As I noted in my statement at the AGM on 25 September 2008, these high volumes are the result of reorganisation decisions forced onto our client companies by the international financial crisis. Our Career Transition teams provide outstanding levels of service and support to our clients' ex-employees as they confront the challenge of unexpected and possibly unwelcome changes of career.
  
In parallel with the very strong performance of Career Transition our other divisions have performed well and together their net revenues are 20% ahead of last year in the UK and 13% ahead overall.

In the UK our Executive Recruitment net revenues have grown by 40% demonstrating the benefits of focusing on senior level public sector recruitment. Recruitment Communications had another period of very rapid growth and achieved a 53% advance in net revenues. Executive Interim continues to expand market share and net revenue grew by 18% to £1.7m in the period. Board and Executive Coaching maintained its revenues during the period and Leadership and Performance Consulting achieved net revenues of £2.7m, an increase of 21% on the same period last year.

Outside of the UK net revenues were 8% higher than the same period last year. Ireland saw very powerful demand for career transition and also its other services advanced by 31% resulting in overall growth of 49%. We did however experience a reduction in recruitment revenues in Paris during the period.
 
Outlook

The developed world has embarked on a period of major restructuring which will have profound effects on every branch of employment. Experience of previous periods of dislocation and recession suggest that many millions of people will be caught up in a process of change as some major sectors of employment decline and others develop and grow. This period may well last for three to four years and possibly for much longer.

Penna's mission is to facilitate fundamental changes in the world of work. Career Transition services are there to minimise the impact of events on individuals, to guide them through the process of identifying and evaluating many life and career alternatives and to assist them in finding exciting new roles capable of meeting their expectations. 

All indications are that our Career Transition division, which accounts for 59% of the Group's net revenues, will experience further major expansion in the demand for its services in the coming months and years and we expect this to drive continuing growth of Penna's scale and profitability.

Our other divisions are showing great resilience and we expect them also to play a central role in these challenging times. Executive Interim, Board and Executive Coaching, Leadership and Performance Consulting, Executive Recruitment and Recruitment Communications all provide services that are essential for our clients as they confront and overcome the challenge of recession and prepare for recovery.
Stephen Rowlinson
Chairman
11 November 2008

  Penna Consulting Plc
Consolidated income statement
for the six months ended 30 September 2008 (unaudited)
Notes
Six MonthsEnded
30 September2008£'000
Six Months Ended30 September 2007£'000
YearEnded31 March2008£'000
Continuing operations
Revenue

28,894
22,419
49,067
Operating expenses

(26,817)
(21,858)
 (47,065)

Operating profit

2,077
561
2,002

Finance net income/(costs)

62
(44)
(32)

Profit before tax

2,139
517
1,970

Tax
2
(600)
(156)
(592)
 
 

Profit for the period

1,539
361
1,378

Attributable to:

Equity holders of the parent

1,539
361
1,378

Earnings per share
3

Basic 

6.1p
1.4p
5.5p
Diluted

6.0p
1.4p
5.5p

  Penna Consulting Plc
Consolidated balance sheet
at 30 September 2008 (unaudited)
30 September2008£'000
30 September2007£'000
31 March2008£'000
Non-current assets

Goodwill
14,036
14,036
14,036
Tangibles
1,667
1,934
1,850
Intangibles - software
24
33
32
Deferred tax
24
77
24

15,751
16,080
15,942
Current assets

Trade receivables
10,748
9,601
11,271
Other current assets
2,290
1,809
1,788
Cash and short term deposits
5,149
2,156
2,961

18,187
13,566
16,020
Total assets
33,938
29,646
31,962
Current liabilities
 
Trade payables
2,303
1,295
2,368
Bank overdrafts and loans
-
900
-
Loan notes
111
343
111
Obligations under finance leases
42
96
88
Short term provisions 
129
32
153
Corporation tax
753
165
154
Other creditors and accruals
9,434 
8,232
9,406

12,772
11,063
12,280
Non-current liabilities 
 
Obligations under finance leases
-
37
-
Long term provisions
390
311
351

390
348
351
Total liabilities
13,162
11,411
12,631
Net assets
20,776
18,235
19,331
Capital and reserves

Called up share capital
1,264
1,264
1,264
Share premium account
15,109
15,109
15,109
Merger reserve
10,170
10,170
10,170
Employee share option plan reserve
(397)
(397)
(397)
Foreign currency translation reserve
(120)
(13)
3
Retained loss
(5,250)
(7,898)
(6,818)
Total equity
20,776
18,235
19,331
      Penna Consulting Plc 
Consolidated statement of changes in equity 
at 30 September 2008 (unaudited)
Called upsharecapital£'000
Sharepremium£'000
Mergerreserve£'000
ESOPreserve£'000
Foreigncurrencytranslation£'000
Retainedloss£'000
Totalequity£'000
At 1 April 2007
1,264
15,109
10,170
(397)
66
(8,263)
17,949
Share issue
-
-
-
-
-
-
-
Currency translation differences

-

-
-
-
(79)
-
(79)
Profit for the period 
-
-
-
-
-
362
362
Share option credit
-
-
-
-
-
3
3
At 30 September 2007
1,264
15,109
10,170
(397)
(13)
(7,898)
18,235
Share issue
-
-
-
-
-
-
-
Currency translation differences
-
-
-
-
16
-
16
Profit for the period
-
-
-
-
-
1,016
1,016
Share option credit
-
-
-
-
-
64
64
At 31 March 2008
1,264
15,109
10,170
(397)
3
(6,818)
19,331
Share issue
-
-
-
-
-
-
-
Currency translation differences
-
-
-
-
(123)

(123)
Profit for the period
-
-
-
-
-
1,539
1,539
Share option credit
-
-
-
-
-
29
29
At 30 September 2008
1,264
15,109
10,170
(397)
(120)
(5,250)
20,776

  Penna Consulting Plc
Consolidated group cash flow statement
for the six months ended 30 September 2008 (unaudited)
Notes
Six MonthsEnded 30September2008£'000
Six MonthsEnded 30September2007£'000
YearEnded 31March2008£'000

Cash flows from operating activities
Cash generated/(used) by operations
5a 
2,240
(73)
2,497
Tax (paid)/refunded
 
(1)
1
(393)
Interest received/(paid) - bank interest

69
(44)
(17)
Net cash generated/(used) by operating activities

2,308
(116)
2,087

Cash flows used in investing activities
 

Net purchase of property, plant and equipment

(67)
(209)
(415)

Net cash used in investing activities

(67)
(209)
(415)

Cash flows used in financing activities

Interest paid - finance leases

(7)
(9)
(15)
Repayment of finance leases

(46)
(40)
(94)
Repayment of loan notes

-
(88)
(320)
Bank loan repaid

-
(600)
(1,500)

Net cash used in financing activities

(53)
(737)
(1,929)

Net increase/(decrease) in cash and cash equivalents 

2,188
(1,062)
(257)

Cash and cash equivalents at start of period

2,961
3,218
3,218

Cash and cash equivalents at end of period
5b
5,149
2,156
2,961
  Penna Consulting Plc
Notes to the interim financial statements
for the six months ended 30 September 2008 (unaudited)
 
1. Accounting policies

The consolidated interim financial statements are for the six months ended 30 September 2008. They have been prepared under the historical cost convention using accounting polices that are consistent with current International Financial Reporting Standards (IFRS). The interim financial statements have neither been audited nor reviewed pursuant to guidance issued by the Auditing Practices Board.

2. Taxation

Taxation has been provided for at 28% (2007:30%) for the UK and at appropriate rates for overseas earnings.

3. Earnings per share
 
The calculations of basic and diluted earnings per share are based on the following amounts:
Six monthsended 30September 2008
Six monthsended 30September2007
Year ended31 March2008
Earnings

Profit from continuing operations (£'000)
1,539
361
1,378
Profit for the period (£'000)
1,539
361
1,378
Number of shares

Weighted average number of 
Shares
25,173,348
25,173,348
25,173,348
Dilution effect of share option 
Schemes *
515,572
-
14,495
Diluted weighted average number 
of Shares
25,688,920
25,173,348
25,187,843
Earnings per share:

Basic
6.1p
1.4p
5.5p
Diluted
6.0p
1.4p
5.5p
* The dilution effect of share option schemes arises from options granted under the Penna Executive Share Option Scheme, the Penna Consulting Long Term Incentive Plan 2007 (LTIP) and the Sharesave Scheme. Further details of these schemes are set out in Note 30 of the Report and Accounts 2008.

4. Dividends

An interim dividend of 2 pence per ordinary share (2007:nil) is proposed for the six months ended 30 September 2008.
  
5a. Reconciliation of operating profit to net cash flow from operating activities
Six MonthsEnded30 September2008£'000
Six MonthsEnded30 September2007£'000
YearEnded31 March2008£'000
Operating profit
2,077
561
2,002
Adjustments for:

Depreciation
258
264
532
Share option expense
29
3
67
Changes in working capital:

Decrease/(increase) in trade and other receivables
21
451
(1,187)
(Decrease)/increase in trade and other payables
Surplus property provision reversed
(145)
-
(1,352)
-
1,161
(78)
Cash generated/(used) by operations
2,240
(73)
2,497

5b. Cash and cash equivalents
At30 September2008£'000
At30 September2007£'000
At 31 March2008£'000
Cash and cash equivalents are made up as follows:

Net cash 
5,038
2,045
2,850
Cash on restricted deposit
111
111
111
Cash and cash equivalents
5,149
2,156
2,961

  
6. Nature of the financial information

The financial information set out in this document does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. Statutory accounts for the year ended 31 March 2008, on which the auditors gave an unqualified audit report, have been delivered to the Registrar of Companies and copies of the Interim Report can be obtained from our Registered Office at 3rd Floor, St Mary's Court, 20 St Mary at Hill, London EC3R 8EE.

The Board of Directors approved the Interim Report on 11 November 2008. The financial information in respect of the six months to 30 September 2008 has neither been audited nor reviewed pursuant to guidance issued by the Auditing Practices Board.
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