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KELLAN GROUP PLC HALF YEAR INTERIM RESULTS

KELLAN GROUP PLC HALF YEAR INTERIM RESULTS
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2009

Kellan Group PLC a leading IT, accountancy, hospitality, leisure and professional services recruitment group, announces its half year interim results for the Group for the six month period ended 30 June 2009.

Financial summary

Revenue of 15.2m to 30 June 2009 (June 2008: 25.4m) and a loss for the period of 3.2m (June 2008: profit 1.3m) reflecting the general decline in the recruitment sector in the first half of 2009 and the Group's historical dependence on permanent recruitment revenue.

Net fee income ("NFI" Revenue less the cost of wages and fees paid to temporary workers and contractors) of 6.6m, representing a decrease of 49% on the first six months of 2008

Adjusted EBITA (Note 3) Loss of 1.6m (June 2008: Profit 2.0m)

Significant cost cutting measures undertaken to reflect the drop in demand for services. Exceptional costs booked in respect of staff redundancies of 0.6m and onerous leases of 0.7m.

Cautiously confident about Group prospects for the second half of the year with EBITDA anticipated to move towards a monthly breakeven position during the period.

Operational highlights

Half year with continued focus on consolidation and cost base rationalisation to reflect the effect of the general decline in the UK recruitment market on the Group.
Continued reduction in staff numbers - from 320 to 220 during the period to reflect the reduction in net fee income being generated by the Group.
New CEO appointed at the end of April and a further industry-experienced Non Executive Director joined in July.
New Group head office - 3 offices consolidated into a new single head office in the West End of London in March.
Centralisation of the head office enabled the remaining staffing synergies from the Quantica plc acquisition to be realised.
Property consolidation resulting in significant reduction in our office portfolio.
Re-launches of the RK Accountancy and RK Supply Chain brands

John Bowmer and Tony Reeves, Co-Chairmen of Kellan, commenting on these results said,

Despite the ongoing challenging trading conditions, which are reflected in the results for the first half announced today, we are confident that the cost-cutting and management streamlining measures implemented during the period are now beginning to have a positive impact on the Group's results and should result in an improved performance in the second half of the year.

We are extremely pleased with the way in which Ross Eades has settled in and we are confident that his extensive industry experience, particularly in steering companies through difficult trading conditions, will serve the Group well and enable us to emerge in a stronger position to benefit from an improvement in market conditions.

Our previously stated strategy of building a portfolio of niche branded recruitment businesses remains unchanged over the longer term, but understandably the short term focus remains centred on returning the Group to profitability

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