Skillsgroup PLC - Final Results
02 Février 1999 - 8:30AM
UK Regulatory
RNS No 9829e
SKILLSGROUP PLC
2nd February 1999
Skillsgroup plc
Preliminary Results for the twelve months ended 30 November 1998
Highlights:
Skillsgroup, a leading provider of information technology
services, is pleased to announce the following:
* Operating profits for the continuing businesses before
central costs increased by 38% to #13.1 million (1997: #9.5
million)
* Operating margin (continuing businesses) increased to
8.1% (1997: 6.8%)
* Turnover for the continuing businesses rose 16.1% to
#162.3m (1997: #139.7m)
* Profit before tax #14.4m (1997: #16.3m loss)
* Earnings per share 12.5p (1997: 23.3p loss)
* Total Dividend increased by 19% to 5.0p (1997: 4.2p)
* Net cash balances as at 30 November 1998 of #34.1 million
Commenting on the results, David Southworth, Executive
Chairman said:
"Growth prospects for Skillsgroup in 1999 and beyond continue
to look bright despite the warnings of economic slowdown
coming from many areas of industry.
The next stage of our development will depend on our ability
to grow our businesses consistently and to acquire companies
that would assist Skillsgroup achieve market leadership in
skills-led IT services, primarily in the areas of enterprise
solutions, consultancy, and technical training.
The future holds exciting growth opportunities for Skillsgroup
and I believe that we shall be successful in achieving our
stated aims relating to the improvement of operating margins
and the achievement of consistent earnings growth."
For further information, please contact:
Skillsgroup plc On 2 February 1999: 0171 253 2252
David Southworth, Executive Chairman Thereafter: 01625 591 200
Ludgate Communications Ltd
Reg Hoare/Chris Lynch 0171 253 2252
CHAIRMAN'S STATEMENT
Introduction
The Board of Skillsgroup is pleased to report a year of
significant progress in its determination to become a
consistently successful provider of information technology
skills and solutions. Our businesses in resource management
(QA Group) and enterprise solutions (Acuma) have performed
extremely well and have benefited from buoyant trading
conditions throughout the year.
Highlights of the year ended 30 November 1998 include:
* Turnover for the continuing businesses #162.3 million
(1997: #139.7 million)
* Operating profits for the continuing businesses before
central costs increased by 38% to #13.1million (1997: #9.5
million)
* Operating margin for the continuing businesses before
central costs increased to 8.1% (1997: 6.8%)
* Central costs reduced to #1.2 million (1997: #2.0
million)
* Profit before tax of #14.4 million (1997: #16.3 million
loss)
* Basic earnings per share 12.5 pence (1997: 23.3p loss)
* Final Dividend increase to 3.5p per share giving a total
dividend for the year of 5.0p (1997: 4.2p)
* Net cash balances as at 30 November 1998 of #34.1 million
Reorganisation and Disposals
In line with our strategy of focusing on higher value skills-
based activities, we have completed since our last year end, a
major restructuring programme including the disposals of the
product businesses of P&P UK Desktop, P&P Sweden, P&P Rentals,
P&P Belgium and Acuma PSL for a total consideration estimated
at #41.3 million and transfer of net borrowing commitments
of #14.8 million. These disposals have transformed our
financial position and have taken us firmly out of the
commodity products marketplace. The processes of major
strategic change arising from our focus on skills-based
activities and the sale of non-core businesses are now complete.
Marketplace
Skillsgroup is focused on those segments of the information
technology marketplace which offer higher margin and growth
potential as a result of the need for skills-based services.
The Group comprises two operations, QA and Acuma, which
provide information technology expertise to meet the needs of
large commercial and public sector organisations. QA operates
within the resource management sector, providing information
technology, training, consultancy and contracting/recruitment
services, which is estimated to be growing by 15-20% per annum
and is driven by factors such as skills shortages and the
increasing reliance on computer technology by businesses.
0Acuma operates within the enterprise solutions sector which is
estimated to be growing by 15-25% per annum and is driven by a
number of factors including electronic commerce and the large
scale computerisation of business processes. Acuma is
principally concerned with the provision of systems for large
groups of users, typically based on UNIX and Windows NT
platforms along with Internet/Intranet technologies.
Business Performance
In the year ended 30 November 1998, QA increased its operating
profits by 41% from #6.4million to #9.0 million on increased
revenues of #99.7 million (up 25%). Acuma increased operating
profits by 32% from #3.1 million to #4.1 million (based on a
5% revenue increase to #62.6 million) mainly as a result of
the higher proportion of services content in Acuma's turnover
contributing to a stronger gross margin performance and
increased profitability. QA's operating margins increased
from 8.0% to 9.0% and Acuma's from 5.2% to 6.5%. This
performance was very encouraging and takes us further towards
our medium term targeted operating margin of 10%.
Financial Position
The Group's financial position has been considerably
strengthened to net cash of #34.1 million at 30 November 1998
(net borrowings #7.9 million in 1997) principally as a result
of the disposals noted above. This strengthening allows us
to take advantage of acquisition and development
opportunities. In addition, the current mix of business
ensures that the Group will be more cash generative than in
the past. Our net asset position has also improved to #52.6
million at the year end from #40.6 million in 1997.
Dividend
The Board is recommending that the final dividend for the year
ended 30 November 1998 should be increased by 21% to 3.5p per
share (1997 - 2.9p per share) making an overall increase in
the dividend payable for the year of 19% to 5.0p per share
(1997 - 4.2p per share). The final dividend will be payable
to shareholders on the register at 16 April 1999 on 8 May
1999.
Acquisition of ISL
As we announced in November 1998, Skillsgroup acquired ISL for
a maximum net consideration of #2.9million. Of the
consideration, #1.9 million was settled at completion with the
remainder being deferred. ISL is a leading provider of
business intelligence solutions to corporate customers. The
company helps clients gain greater efficiency in their
businesses by providing technology and expertise which allows
ease of access and analysis of data for improved decision
making.
Skillsgroup Board
One of the most important features of the transformation of
Skillsgroup over the last two years has been the smooth
succession of our senior management. Continuing this process,
Colin Gibson, who joined Skillsgroup in June 1998 as Group
Financial Controller having previously been Group Financial
Controller with Dawson International PLC, becomes Group
Finance Director with effect from today. John Atkin, who has
been Group Finance Director since October 1986, has resigned
his position in order to pursue other business interests.
John's contribution to the success of the Group cannot be
understated and he takes with him all our thanks and best
wishes for the future.
The changes to our Head Office structure during 1998 have
enabled us to reduce costs significantly with the result that
we expect non-allocated recurring costs will be approximately
#1.2 million per annum for the foreseeable future.
Prospects
Growth prospects for Skillsgroup in 1999 and beyond continue
to look bright despite the warnings of economic slowdown
coming from many areas of industry. The Board is satisfied
that, whilst not immune to the impact of a slowdown in areas
of the Group's business, the demand for IT skills and
solutions from the majority of its customers will continue to
grow.
The Board recognises that our next stage of development will
depend on our ability to grow our businesses consistently and
to acquire companies that would assist Skillsgroup achieve
market leadership in skills-led information technology
services. We have identified a number of suitable acquisition
targets primarily in the areas of enterprise solutions
consultancy and technical training which would if acquired,
improve the quality of our earnings, be earnings enhancing and
would improve the profile of the profitability of the group.
The future holds exciting growth opportunities for Skillsgroup
and I believe that we shall be successful in achieving our
stated aims relating to the improvement of operating margins
and the achievement of consistent earnings growth.
David R Southworth
Chairman
Skillsgroup plc
Preliminary Results for the Year Ended 30 November 1998
Consolidated Profit and Loss Account (Unaudited)
Notes 1998 1998 1997
#m #m #m
Turnover
- Continuing operations 162.3 139.7
- Discontinued operations 46.1 237.3
________ ________
1 208.4 377.0
Operating profit
- Continuing operations 12.2 9.0
- Discontinued operations 0.2 4.5
________ ________
1 12.4 13.5
Exceptional profit/(loss)
on disposal of businesses 0.3 (27.9)
Provision made in prior period 0.7
________
1.0
________ ________
Profit/(loss) on ordinary
activities before interest 13.4 (14.4)
Net interest receivable/(payable) 1.0 (1.9)
________ ________
Profit/(loss) on ordinary
activities before taxation 14.4 (16.3)
Tax on profit/(loss)
on ordinary activities (4.2) (2.6)
________ ________
Profit/(loss) on ordinary
activities after taxation 10.2 (18.9)
Dividends (4.1) (3.4)
________ ________
Transfer to/(from) reserves 6.1 (22.3)
________ ________
Basic earnings per share 12.5p (23.3)p
________ ________
Fully diluted earnings per share 12.3p (22.9)p
________ ________
Consolidated Cashflow Statement (Unaudited)
Reconciliation of operating profit to net cash flow from operating
activities
1998 1998 1998 1997
Continuing Discontinued Total Total
#m #m #m #m
Operating profit
- before exceptional charges 12.2 0.7 12.9 13.5
- exceptional operating charges - (0.5) (0.5) -
_____ _____ _____ _____
12.2 0.2 12.4 13.5
Depreciation 2.5 - 2.5 5.0
Decrease in stock 1.6 0.8 2.4 1.9
(Increase)/decrease in debtors (5.0) 0.4 (4.6) (14.1)
(Decrease)/increase in creditors (1.7) (8.0) (9.7) 8.6
Decrease in provisions - (6.6) (6.6) -
_____ _____ _____ _____
Net cash inflow/(outflow) from
operating activities 9.6 (13.2) (3.6) 14.9
_____ _____ _____ _____
Consolidated cash flow statement
1998 1997
#m #m
Cash (outflow)/inflow from operating activities (3.6) 14.9
Returns on investments and servicing of finance
Net interest received/(paid) 1.0 (1.9)
Taxation
Corporation tax paid (1.6) (2.7)
Capital expenditure and financial investment
Purchase of fixed assets (3.5) (7.0)
Fixed assets disposals 0.4 0.3
Acquisitions and disposals
Acquisition of businesses (1.4) (1.6)
Disposal of businesses 53.7 -
Equity dividends paid (3.6) (3.0)
_____ _____
Net cash inflow /(outflow) before financing 41.4 (1.0)
_____ _____
Consolidated Balance Sheet (Unaudited)
1998 1998 1997 1997
#m #m #m #m
Fixed assets
Tangible assets 17.3 24.4
Current assets
Stock 1.9 22.1
Debtors 39.0 72.0
Cash at bank and in hand 35.4 10.1
_____ _____
76.3 104.2
Creditors - amounts due
within one year
Borrowings (0.7) (17.2)
Other creditors (34.7) (67.3)
_____ _____
(35.4) (84.5)
_____ _____
Net current assets 40.9 19.7
_____ _____
Total assets less current
liabilities 58.2 44.1
Creditors - amounts due
after more than one year
Borrowings (0.6) (0.8)
Other creditors (0.5) -
_____ _____
(1.1) (0.8)
Provisions for liabilities
and charges (4.5) (2.7)
_____ _____
Net assets 52.6 40.6
_____ _____
Capital and reserves
Called up share capital 8.2 8.1
Share premium 32.2 31.1
Other reserves 1.3 (3.4)
Profit and loss reserve 10.9 4.8
_____ _____
Equity shareholders' funds 52.6 40.6
_____ _____
Notes
1. Segmental report
The analysis of turnover and operating profit by business group is
as follows:
1998 1997
Turnover Turnover
Continuing operations
- Resource management 99.7 80.0
- Enterprise solutions 62.6 59.7
_____ _____
162.3 139.7
Discontinued operations
- Before exceptional items 46.1 237.3
- Exceptional items - -
_____ _____
208.4 377.0
1998 Operating Profit 1997 Operating Profit
Before After Before After
central Central central central Central central
costs costs costs costs costs costs
Continuing operations
- Resource management 9.0 (0.6) 8.4 6.4 (0.3) 6.1
- Enterprise solutions 4.1 (0.3) 3.8 3.1 (0.2) 2.9
____ ____ ____ ____ ____ ____
13.1 (0.9) 12.2 9.5 (0.5) 9.0
Discontinued operations
- Before exceptional
items 1.0 (0.3) 0.7 6.0 (1.5) 4.5
- Exceptional items - (0.5) (0.5) - - -
____ ____ ____ ____ ____ ____
1.0 (0.8) 0.2 6.0 (1.5) 4.5
____ ____ ____ ____ ____ ____
14.1 (1.7) 12.4 15.5 (2.0) 13.5
____ ____ ____ ____
Central costs before
exceptional items (1.2) (2.0)
____ ____
Operating profit before
exceptional items 12.9 13.5
Operating exceptional
items (0.5) 0.0
____ ____
12.4 13.5
2. The 1997 accounts are abridged from the Group's full accounts
on which the auditors have given an unqualified opinion which
did not include a statement under Sections 237 or 237 (3) of
the Companies Act 1985. The 1998 statutory accounts will be
filed with the Registrar of Companies in due course.
3. The calculation of earnings per share is based upon profits on
ordinary activities after taxation and a weighted average of
81,708,644 shares and the fully diluted earnings per share is
based on a weighted average of 83,933,807 shares.
4. Copies of the Group's full Report and Accounts will be sent to
all shareholders in due course. Additional copies will be
available from the Company's registered office: Skillsgroup
plc, Bridgford House, Heyes Lane, Alderley Edge, Cheshire, SK9
7JP.
5. The AGM will be held on 7 May 1999.
6. At a meeting held on 2 February 1999, the Board of Skillsgroup
plc recommended payment of a final dividend of 3.5 pence per
share to holders of 10 pence ordinary shares on the register
at the close of business on 16 April 1999.
7. The recommended final dividend, together with the interim
dividend already paid, makes a total dividend for the year of
5.0 pence, compared with 4.2 pence for 1997.
8. This statement was approved by the directors and agreed with
the Company's auditors, PricewaterhouseCoopers, on 2 February
1999.
END
FR UBUUAPBGBGRG
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