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The Kellan Group report NFI growth of 6%

Kellan is a market leading recruitment business operating across a wide range of functional disciplines and industry sectors.

The Group aims to develop, through acquisition and organic growth, a portfolio of premium brands within the currently fragmented recruitment sector in the UK. Currently, through its three recruitment brands, Berkeley Scott, Quantica and RK, the Group has the capability and resource to recruit professionals into finance & accounting, information technology, engineering, contract management, retail, manufacturing, catering, hospitality & leisure and human resources sectors

 

Financial summary

&middot    In the six months ended 30 June 2014, the Group achieved year on year net fee income ("NFI") growth of 6% with &pound3.9 million compared with &pound3.7 million in H1 2013

&middot    Operating profit for H1 2014 of &pound0.1 million compared with a loss of &pound1.0 million in H1 2013

&middot    Increased savings made by streamlining administrative expenses (exclusive of impairment), resulting in an 18.6% reduction against the comparable period in the prior year and an 8.2% reduction against second half of 2013

&middot    Adjusted EBITDA profit of &pound0.3 million (six months ended June 2013: loss of &pound0.5 million) - see note 2

&middot    Cash inflow from operating activities of &pound1.1 million (six months ended June 2013:   &pound0.3 million)

 

Operational summary

&middot    Ongoing investment in I.T systems and processes to improve efficiency and increase
 performance

&middot    19% year on year improvement in NFI per fee earner

&middot    Strategic closure/consolidation of five branches into two new offices

RK

&middot    Improved performance across H1 with 8.2% uplift in NFI compared with H2 2013

Berkeley Scott

&middot    H1 2014 NFI of &pound2.2million compared with &pound2.1million in H1 2013

&middot    Significant market engagement with a number of large PSL wins as well as new business from
 previously dormant accounts

Quantica

&middot    Quantica Technology saw new strategic appointments in two new business operations
 managers to drive the London business forward

&middot    Headcount also rose in the already established Birmingham and Elland offices with key new
 hires whilst also monopolising other areas of growth

&middot    Significant client win in Search and Selection KP Snacks

&middot    Business well positioned for further growth in H2 2014 

Executive Chairman's Statement

2014 was predicted to be a year of opportunity for the UK recruitment industry. Each brand within the Kellan Group has taken full advantage of this in H1, by engaging and retaining new clients, developing candidate relationships and appointing new, experienced managers to drive the businesses forward and ensure maximum efficiency and profitability. I am pleased to report year on year NFI growth of 6% for H1 2014 with &pound3.9 million in H1 2014 compared with &pound3.7 million in H1 2013.

The restructure of our property portfolio with the strategic closure/consolidation of five offices during 2014 and investment in new premises has also enabled a realigned focus on core growing markets in key locations.

As a result of the above, and a continued focus on cost control, administrative expenses reduced by 18.6% compared to H1 last year, the group achieved an operating profit of &pound0.1 million in H1 2014 compared with a loss of &pound1.0 million during H1 2013. Adjusted EBITDA has improved from a loss of &pound0.5 million in H1 2013 to a profit of &pound0.3 million in H1 2014.

This is a significant achievement for the Group and evidence of the commitment of a dedicated and committed workforce, with NFI per fee earner increasing by 19% compared to H1 last year and 7% compared to H2 2013.

We are determined to build on the success achieved during the first half of 2014, with continual investment in our people and our I.T. infrastructure in order to ensure that we are best equipped to take advantage of the opportunities expected to arise from the improving recruitment industry and UK economy as a whole. 

I am delighted with the H1 results and look forward to the future accomplishments of each of the brands within the Group.

My thanks go to all the Kellan Group staff for their dedication and commitment and also to our investors for their continued support and belief in our business.

Tony Reeves

Executive Chairman

 

Consolidated Statement of Comprehensive Income

For the 6 months ended 30 June 2014

Unaudited

Unaudited

Audited

6 months

6 months

12 months

ended

ended

ended

30 June

30 June

31 December

2014

2013

2013

Note

&pound000

&pound000

&pound000

Revenue

10,669

11,085

23,383

Cost of sales

(6,723)

(7,348)

(15,722)

Net Fee Income

3,946

3,737

7,661

Administrative expenses

(3,847)

(4,726)

(8,918)

Operating profit/(loss) before impairment charge

99

(989)

(1,155)

Impairment of goodwill and intangibles

-

-

(102)

Operating profit/(loss)

2

99

(989)

(1,257)

Financial income

3

12

19

Financial expenses

(176)

(222)

(480)

Loss before tax

(74)

(1,199)

(1,718)

Tax credit

-

-

-

Loss for the period

(74)

(1,199)

(1,718)

Attributable to:

Equity holders of the parent

(74)

(1,199)

(1,718)

Basic loss per share in pence

3

(0.02)

(0.56)

(0.66)

Diluted loss per share in pence

3

(0.02)

(0.56)

(0.66)

The above results relate to continuing operations.

There are no adjustments between the loss for the period and the total comprehensive expense for the period or the comparative periods.

 

Consolidated Statement of Financial Position

as at 30 June 2014

Unaudited

Unaudited

Audited

30 June

30 June

31 December

2014

2013

2013

Note

&pound000

&pound000

&pound000

Non-current assets

Property, plant and equipment

324

259

249

Intangible assets

6

6,440

6,733

6,536

6,764

6,992

6,785

Current assets

Trade and other receivables

4

3,318

3,698

3,932

Cash and cash equivalents

190

216

818

3,508

3,914

4,750

Total assets

10,272

10,906

11,535

Current liabilities

Loans and borrowings

1,043

3,072

2,510

Trade and other payables

5

2,929

3,032

2,749

Other financial liabilities

-

4

-

Provisions

161

134

189

4,133

6,242

5,448

Non-current liabilities

Loans and borrowings

2,978

2,084

2,957

Provisions

2

41

4

2,980

2,125

2,961

Total liabilities

7,113

8,367

8,409

Net assets

3,159

2,539

3,126

Equity attributable to equity holders of the parent

Share capital

4,273

4,261

4,273

Share premium

14,680

13,772

14,647

Warrant reserve

36

36

36

Convertible debt reserve

168

31

172

Capital redemption reserve

2

2

2

Retained earnings

(16,000)

(15,563)

(16,004)

Total equity

3,159

2,539

3,126

 

 

 

 

 

Consolidated Statement of changes in equity

for the 6 months ended 30 June 2014

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Share

Share

Warrant

Convertible

Redemption

Retained

Total

capital

premium

reserve

reserve

reserve

earnings

equity

&pound000

&pound000

&pound000

&pound000

&pound000

&pound000

&pound000

Balance at 31 December 2012

4,224

13,772

36

26

2

(14,436)

3,624

Total comprehensive loss for the 6 month period ended 30 June 2013

-

-

-

-

-

(1,199)

(1,199)

Issue of shares

37

-

-

-

-

-

37

Share based payment

-

-

-

-

-

72

72

Equity component of convertible loan notes

-

-

-

5

-

-

5

Balance at 30 June 2013

4,261

13,772

36

31

2

(15,563)

2,539

Total comprehensive loss for the 6 month period ended 31 December  2013

-

-

-

-

-

(519)

(519)

Issue of shares

12

875

-

-

-

-

887

Share-based payment adjustment

-

-

-

-

-

78

78

Equity component of convertible loan notes

-

-

-

141

-

-

141

Balance at 31 December 2013

4,273

14,647

36

172

2

(16,004)

3,126

Total comprehensive loss for the 6 month period ended 30 June 2014

-

-

-

-

-

(74)

(74)

Issue of shares

-

33

-

-

-

-

33

Share based payment

-

-

-

-

-

78

78

Equity component of convertible loan notes

-

-

-

(4)

-

-

(4)

Balance at 30 June 2014

4,273

14,680

36

168

2

(16,000)

3,159

Consolidated Statement of Cash Flows

for the 6 months ended 30 June 2014

Unaudited

Unaudited

Audited

6 months

6 months

12 months

ended

ended

ended

30 June

30 June

31 December

2014

2013

2013

&pound000

&pound000

&pound000

Cash flows from operating activities

Loss for the period

(74)

(1,199)

(1,718)

Adjustments for:

Depreciation and amortisation

167

188

376

Interest income

(3)

(3)

-

Interest paid

126

189

340

Amortisation of loan cost

21

45

72

Net gain on measurement of interest rate swap to fair value

-

(9)

(13)

Impairment of goodwill

-

-

102

Equity settled convertible loan interest

29

33

62

Equity settled share-based payment

78

72

150

344

(684)

(629)

Decrease in trade and other receivables

614

659

425

Increase in trade and other payables

180

350

67

(Decrease)/Increase in provisions

(29)

(5)

14

Net cash inflow/(outflow)  from operating activities

1,109

320

(123)

Cash flows from investing activities

Interest received

3

3

-

Acquisition of property, plant and equipment

(147)

(26)

(110)

Net cash outflow from investing activities

(144)

(23)

(110)

Cash flows from financing activities

Repayment of invoice discounting balance

(1,467)

(723)

(275)

Interest paid and loan costs

(126)

(189)

(340)

Repayment of term loan borrowings

-

(420)

(840)

Proceeds from other loans

-

1,180

1,000

Net proceeds of convertible loan notes

-

-

600

Proceeds from the issue of share capital

-

-

900

Debt and equity issue cost

-

-

(65)

Net cash (outflow)/inflow  from financing activities

 

(1,593)

(152)

980

Net increase/(decrease) in cash and cash equivalents

(628)

145

747

Cash and cash equivalents at the beginning of the period

818

71

71

Cash and cash equivalents at the end of the period

190

216

818

 

 

 

 

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