RNS Number:8476J
BNB Resources PLC
10 April 2003
10th April 2003
BNB RESOURCES PLC - PRELIMINARY RESULTS
FOR THE YEAR ENDED 31st DECEMBER 2002
* The trading results reflect the prolonged difficult market conditions
experienced in 2002. Turnover from continuing operations was #116.9m (2001:
#132.9m), down 12.0%.
* The reduction in activity was offset in part by the benefits from the
rebasing exercise where the cost base has been reduced by over #16m on an
annualised basis. Operating losses, before exceptional items, from continuing
businesses reduced to #2.7m (2001: #7.1m). The pre-tax loss reduced to #2.9m
(2001: #9.4m) before exceptionals and #4.5m after exceptionals (2001: #18.9m).
* The National Press Recruitment Advertising index at the end of 2002 was
43% below its August 2000 peak. However, Barkers remained the second largest
recruitment communications business in the UK, was named Agency of the Year at
the Yorkshire Post Awards and its turnover amounted to #106.6m, down only 8.6%
on 2001.
* In December 2002, the Board raised net proceeds of #4.0m from a Placing
and fully underwritten Open Offer. Following this, the business has adequate
working capital in the current market for the foreseeable future.
* Further actions were taken during the fourth quarter to balance revenues
and the cost base whilst ensuring that client service and creativity are not
sacrificed. The benefits from these are expected to be realised in the current
year.
* Barkers announces a strategic relationship with ZenithOptimedia Group, a
leading UK media buying independent, to create the first media independent
specialising in recruitment advertising.
* Trading so far this year has been ahead of the same period in 2002
within the Barkers recruitment communications business. Permanent placement
activity within the Norman Broadbent recruitment consultancy business, with the
exception of the public sector, has continued at the lower levels.
* Julian Treger, Chairman, stated "We remain committed to our strategy of
restoring the Barkers and Norman Broadbent brands to pre-eminent market
positions through a combination of organic development and acquisition and
firmly believe that by taking advantage of longer term improvements in market
conditions, we will restore the shareholder value that the Board believes is
contained within the Group".
Enquiries:
BNB Resources PLC
Paul Turner (Group Finance Director) 020-7634 1165
Shore Capital & Corporate Limited
Alex Borrelli 020-7408 4090
Bankside Consultants Limited
Charles Ponsonby 020-7444 4166
CHAIRMAN'S STATEMENT
MARKET CONDITIONS
In our statement accompanying the interim announcement on 26th September 2002,
we reported that conditions in the first half year were difficult and that there
had been further deterioration in the markets within which our businesses
operate.
The National Press Recruitment Advertising Index, a key market indicator for our
Barkers recruitment communications business, was 26% down on 2001, ending the
year at a level 43% below its peak in August 2000. Within this market, private
sector recruitment advertising was 37% down in the year and 54% down over a two
year period, whilst public sector recruitment advertising held up more strongly,
with drops of only 10% and 13% respectively. Towards the end of 2002 the rate of
decline in recruitment advertising slowed down. This trend has continued into
2003.
Within the Norman Broadbent recruitment business, conditions have been similarly
difficult. Private sector businesses continued to reduce recruitment activity
during the year and employee mobility has been lower due to uncertainty and high
levels of insecurity. Again, we have seen greater activity in the public sector,
where we have built a strong practice. In both the private and public sectors,
we have seen increased competition at all levels.
RESULTS
The trading results reflect the prolonged difficult market conditions
experienced in 2002, with turnover from continuing operations of #116.9m (2001:
#132.9m), down 12.0% against a year that itself was 13.4% down on 2000. The
reduction in activity was offset in part by the benefits from the rebasing
exercise, where the cost base has been reduced by over #16m on an annualised
basis, giving reduced operating losses from continuing businesses of
#2.7m (2001: #7.1m), excluding exceptional operating charges of #1.6m (2001:
#9.5m). Profits on the disposal and closure of subsidiaries were #0.4m (2001:
loss #1.2m), resulting in a pre-tax loss, after interest charges of #0.6m (2001:
#0.5m), of #4.5m (2001: #18.9m).
BUSINESS REVIEW
Our business comprises two long-standing brands, Barkers and Norman Broadbent,
both of which have high levels of recognition in the market places within which
they operate.
Recruitment Advertising
Barkers, the second largest recruitment communications business in the UK, has a
reputation for excellence in client service and creativity. It continues to win
and to be nominated for industry awards, with recognition in 2002 at The CIPD
Recruitment Advertising Awards, The Recruitment Ad Awards, The Yorkshire Post
Awards (including Agency of the Year), The SOCPO Awards, The Scottish
Recruitment Advertising Awards and The Cream Awards.
During the year, we combined our operation in Scotland, which also operates as a
commercial advertising and public relations agency, with that in England, under
a single leadership structure to enable us to provide our clients with a
seamless service across the UK.
Difficult market conditions and a further reduction in private sector activity
impacted the business during the year and were reflected in turnover down 8.6%
at #106.6m (2001:#116.7m) and in margins down by 1.1%, resulting in an operating
loss before exceptional charges for the year of #0.4m (2001:profit #0.6m).
Further actions were taken during the fourth quarter to balance revenues and the
cost base, whilst ensuring that we do not sacrifice client service or
creativity, the benefits from which are expected to be realised this year.
More recently, our strategy has been to seek partners with whom we can work to
extend the services available to our clients and we are delighted to announce
that we have formed a strategic relationship with ZenithOptimedia Group, a
leading UK media buying independent, owned 75% by Publicis and 25% by Cordiant.
This partnership, which is announced today under the brand name "BZO - Barkers
Zenith Optimedia", creates the first media independent specialising in
recruitment advertising. BZO will deliver three key benefits to its recruitment
clients:
*smarter media planning and buying solutions
*reducing costs of recruitment
*greater media effectiveness and accountability.
Market conditions since the beginning of this year have been more stable than we
saw in the second half of last year and new business wins benefiting 2003 have
been encouraging. We anticipate that margin pressure and reduced private sector
client spending will continue. Following the rebalancing of revenues and costs
at the end of last year, the business is trading profitably, although the short
term market outlook remains uncertain and our level of forward visibility is
low.
The Board continues to believe that its market position and level of brand
recognition gives Barkers a high inherent value which is not reflected in the
Group's balance sheet.
Recruitment Consultancy
Our recruitment consultancy division contains the Norman Broadbent branded
businesses:
* Norman Broadbent International ("NBI") - our top level executive
search practice,
* Norman Broadbent Selection ("NBS") - specialising in higher volume,
mid-market search and selection work, and
* Norman Broadbent Human Capital Solutions ("NBHCS") - provider of
integrated management solutions.
Turnover for the year was 36.9% down at #10.2m (2001: #16.2m), in a very
difficult market place, where competition, particularly in the private sector,
continued to be high. The resulting loss for the year before exceptional charges
was reduced following the rebasing exercise to #0.6m (2001: #1.8m), with
exceptional operating charges during the year of
#1.0m (2001: #1.9m).
The market for permanent recruitment, within which our NBI and NBS businesses
operate, deteriorated further during 2002 and our plans for the current year do
not anticipate any underlying recovery. Despite the tough market, we have
continued to balance cost savings with investment in the business. We have
recruited new consultants, particularly in the public sector, where activity
levels have been maintained, and in the NBS business. We have also invested in
the training and development of our consultants.
Overseas our Spanish operation, based in Barcelona and Madrid, and the US
business in Atlanta and San Francisco, performed well in markets that continued
to be challenging.
NBHCS provides a seamless and integrated solution to the recruitment needs of
major blue chip clients, covering project management, recruitment advertising,
call centre response handling and candidate assessment. During the year, we
strengthened the management team in this area with the appointment of a Group
Sales and Solutions Director to focus on complex recruitment solutions and
projects.
SENIOR MANAGEMENT AND EMPLOYEES
Following the successful completion of the recent Placing and Open Offer and the
reduction in his possible beneficial interests to 0.76% of the issued share
capital of BNB, Brian Myerson has decided to relinquish his Joint Chairmanship
and Non-Executive Directorship of the Group with immediate effect. I will
continue as Chairman and, on behalf of the Board, would like to thank Brian for
his hard work and the expertise which he has brought to the business.
I should also like to pay a sincere tribute to all of our staff throughout the
Group. Businesses within the recruitment industry are only as good as the people
who contribute to all aspects of their operations and in this regard we are
fortunate to have skilled and dedicated employees who have worked diligently
through some of the toughest market conditions the industry has seen.
ACQUISITIONS AND DISPOSALS
At the beginning of 2002, we announced the sale of our non-core commercial
advertising and public relations business in Birmingham to McCann-Erickson
Central Limited.
In our interim statement, we announced that we had mandated advisors to identify
potential acquisition opportunities, being robust, profitable businesses with
good management teams that will add to our existing capabilities, enhance our
organic growth and that are capable of being at the centre of our future growth
strategy. It is the Board's view that this approach, where potential
acquisitions satisfy our rigorous requirements, will ultimately deliver the best
opportunity for increasing shareholder value.
INDEBTEDNESS
Net indebtedness at 31st December 2002 was #2.5m (2001: #6.5m). During the year,
the net cash inflow was #2.1m, including net proceeds of #7.0m from the placing
and open offers. Following this cash investment, and taking into account our
bank facilities, the business has sufficient working capital in the current
market for the foreseeable future.
DIVIDEND
The Board proposes no dividend for the year (2001: # nil).
PROSPECTS
The further deterioration in the recruitment markets during 2002 hampered our
efforts to rebuild the profitability of the Group and we continued, necessarily,
to focus on maintaining the balance between revenues and costs. We are also
planning for the low levels of demand to continue in the short to medium term
and are directing our attention to strengthening the business such that it can
take advantage of any uplift and improvement in market conditions.
Notwithstanding this, trading so far this year has been ahead of the same period
in 2002 within the Barkers recruitment communications business, although
permanent placement activity within the Norman Broadbent recruitment consultancy
business, with the exception of the public sector, has continued at the lower
levels.
We remain committed to our strategy of restoring the Barkers and Norman
Broadbent brands to pre-eminent market positions through a combination of
organic development and acquisition and firmly believe that by taking advantage
of longer term improvements in market conditions we will restore the shareholder
value that the Board believes is contained within the Group.
Julian Treger
Chairman 10th April 2003
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31st December 2002 (unaudited)
2002 2001
Notes #000 #000
TURNOVER 3
------------------------------ ------- -------- --------
Continuing operations 116,868 132,866
------------------------------ ------- -------- --------
Discontinued operations - 6,422
-------- --------
116,868 139,288
Cost of sales ( 90,256 ) (101,796 )
-------- --------
GROSS PROFIT
------------------------------ ------- -------- --------
Continuing operations 26,612 34,546
------------------------------ ------- -------- --------
Discontinued operations - 2,946
-------- --------
26,612 37,492
Administrative expenses ( 31,022 ) (54,659 )
--------- -------
OPERATING LOSS 3
------------------------------ ------- -------- --------
Continuing operations excluding exceptional ( 2,696 ) ( 7,107 )
items ------- -------- --------
------------------------------
Exceptional items 4 ( 1,609 ) ( 9,530 )
--------- ---------
Continuing operations ( 4,305 ) ( 16,637 )
Discontinued operations ( 105 ) ( 530 )
-------- --------
TOTAL OPERATING LOSS ( 4,410 ) ( 17,167 )
Profit/(loss) on disposal/closure of 452 ( 1,213 )
subsidiaries - discontinued
Net interest payable ( 558 ) ( 543 )
-------- --------
LOSS ON ORDINARY ACTIVITIES BEFORE 3 ( 4,516 ) ( 18,923 )
TAXATION
Tax on loss on ordinary activities 5 ( 9 ) 181
-------- -------
LOSS ON ORDINARY ACTIVITIES AFTER ( 4,525 ) ( 18,742 )
TAXATION
--- ---
Minority interests ( 2 ) ( 1 )
-------- --------
DEFICIT FOR THE YEAR ( 4,527 ) ( 18,743 )
===== =====
LOSS PER SHARE:
Basic and diluted 6 (12.7)p (87.0)p
Continuing excluding exceptional items 6 (9.1)p (34.6)p
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 31st December 2002 (unaudited)
2002 2001
#000 #000
LOSS FOR THE FINANCIAL YEAR ( 4,527 ) ( 18,743 )
Translation differences on foreign currency net ( 38 ) ( 35 )
investments
-------- --------
TOTAL LOSSES RECOGNISED SINCE LAST ANNUAL REPORT AND ( 4,565 ) ( 18,778 )
ACCOUNTS
===== =====
ABRIDGED CONSOLIDATED BALANCE SHEET
at 31st December 2002 (unaudited)
2002 2001
#000 #000 #000 #000
FIXED ASSETS
Goodwill 463 409
Tangible assets 3,327 5,727
Investments 46 110
-------- --------
3,836 6,246
CURRENT ASSETS
Stocks and work in 350 362
progress
Debtors 15,651 16,026
Bank balances 1,447 1,619
--------- ---------
17,448 18,007
-------- --------
CREDITORS: amounts falling
due within one year
( 26,916 ) ( 30,268 )
------- -------
NET CURRENT LIABILITIES ( 9,468 ) ( 12,261 )
-------- --------
TOTAL ASSETS LESS CURRENT
LIABILITIES
( 5,632 ) ( 6,015 )
CREDITORS: amounts falling
due after more than one
year
( 1,563 ) ( 3,324 )
PROVISION FOR LIABILITIES
AND CHARGES
( 462 ) ( 848 )
-------- --------
( 2,025 ) ( 4,172 )
-------- --------
NET LIABILITIES (7,657) ( 10,187 )
Equity minority ( 49 ) ( 42 )
interests
-------- --------
EQUITY SHAREHOLDERS' ( 7,706 ) ( 10,229 )
DEFICIT
===== =====
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31st December 2002 (unaudited)
2002 2001
#000 #000
NET CASH OUTFLOW FROM OPERATING ACTIVITIES
Operating loss ( 4,410 ) ( 17,167 )
Loss on disposal / closure of subsidiaries - ( 1,213 )
Depreciation 1,731 3,523
Amortisation of goodwill 24 24
Impairment and asset write-offs 673 6,287
Loss on sale of tangible fixed assets 155 278
Movement in working (431) 5,940
capital
-------- --------
( 2,258 ) ( 2,328 )
RETURN ON INVESTMENTS & SERVICING OF ( 592 ) ( 550 )
FINANCE
TAXATION ( 21 ) 44
CAPITAL EXPENDITURE & FINANCIAL INVESTMENT ( 106 ) ( 1,928 )
ACQUISITIONS & DISPOSALS 190 -
-------- --------
NET CASH OUTFLOW BEFORE FINANCING ( 2,787 ) ( 4,762 )
FINANCING 4,852 1,578
-------- --------
INCREASE / (DECREASE) IN CASH 2,065 ( 3,184 )
===== =====
NOTES TO THE PRELIMINARY STATEMENT
1. PRELIMINARY STATEMENT
This preliminary statement, which has been agreed with the auditors, was
approved by the Board on 9th April 2003. It is not the Company's statutory
accounts. Statutory accounts will be sent to shareholders shortly.
The statutory accounts for the year ended 31st December 2001 have been delivered
to the Registrar of Companies and received an audit report which was unqualified
and did not contain statements under s237(2) or (3) of the Companies Act 1985.
The statutory accounts for the year ended 31 December 2002 have not yet been
approved, audited or filed.
2. ACCOUNTING POLICIES
During the year the Group adopted the requirements of FRS 19 (Deferred Tax).
The other accounting policies used in the presentation of this preliminary
statement are consistent with those applied in prior years.
3. SEGMENTAL ANALYSIS
The analysis of turnover and operating loss by class of business is as follows:
Operating
loss before
exceptional
items Exceptional
Turnover items (Loss) / profit
2002 2001 2002 2002 2002 2001
#000 #000 #000 #000 #000 #000
Continuing businesses
-----------------------
Recruitment 106,643 116,661 ( 358 ) ( 286 ) ( 644 ) ( 1,957 )
communications
Recruitment consultancy 10,225 16,205 ( 606 ) ( 1,030 ) ( 1,636 ) ( 12,011 )
Central and unallocated - - ( 1,732 ) ( 293 ) ( 2,025 ) ( 2,669 )
costs
-------- -------- -------- -------- -------- --------
116,868 132,866 ( 2,696 ) ( 1,609 ) (4,305 ) (16,637 )
-------- -------- -------- -------- -------- --------
---
Discontinued businesses
-------------------------
Recruitment services - 763 ( 96 ) - ( 96 ) (631 )
overseas
Communications - - 5,659 ( 9 ) - ( 9 ) 101
Birmingham
-------- -------- -------- -------- -------- --------
- 6,422 ( 105 ) - ( 105 ) ( 530 )
-------- -------- -------- -------- -------- --------
116,868 139,288 ( 2,801 ) ( 1,609 ) (4,410 ) ( 17,167 )
===== ===== ===== =====
Profit/(loss) on disposal / closure of 452 ( 1,213 )
subsidiaries
Net interest ( 558 ) ( 543 )
payable
-------- --------
Loss on ordinary activities before taxation (4,516 ) ( 18,923 )
===== =====
NOTES TO THE PRELIMINARY STATEMENT
4. OPERATING EXCEPTIONAL ITEMS
Operating exceptional items reflect further costs of restructuring the Group
during the year, impairment of certain fixed assets and other non-recurring
costs, and are summarised below.
2002 2001
#000 #000
Impairment of technology investments - 4,781
Asset write-offs and impairment 673 1,703
Termination payments 536 1,540
Onerous property leases - 778
Restructuring costs 121 728
Other exceptional operating items 279 -
-------- --------
Operating exceptional items 1,609 9,530
===== =====
5. TAXATION
The taxation charge in the period represents taxation payable on overseas
operations of #9,000 (2001: #47,000). No charge for UK corporation tax has been
made for the period as a result of the losses incurred (2001: UK corporation tax
credit #228,000).
6. LOSS PER SHARE
The calculations of loss per share are based on the following results and
numbers of shares as at 31st December.
2002 2001
#000 #000
Loss for the period ( 4,527 ) ( 18,743 )
(Profit)/loss on disposal / closure of subsidiaries ( 452 ) 1,213
Discontinued operations 105 530
Operating exceptional items 1,609 9,530
Net interest payable and tax on discontinued - 15
operations and exceptional items
-------- --------
Continuing earnings excluding exceptional items ( 3,265 ) ( 7,455 )
===== =====
Earnings per share are calculated on 35,697,000 (2001: 21,538,000)
ordinary shares of 5p each, being the weighted average number of ordinary shares
in issue during the period
In 2002 and 2001, the diluted EPS is considered to be the same as the
basic EPS as any shares issued under the option arrangements will be
anti-dilutive due to the loss in the year.
NOTES TO THE PRELIMINARY STATEMENT
7. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
2002 2001
#000 #000
Increase / (decrease) in cash during the year 2,065 ( 3,184 )
Cash outflow from lease financing and repayment of 2,112 1,422
debt
Bank loan - ( 3,000 )
-------- --------
Change in net debt resulting from cash flows 4,177 ( 4,762 )
New finance leases ( 93 ) -
Translation difference ( 41 ) ( 31 )
-------- --------
Movement in net debt during the period 4,043 ( 4,793 )
Opening net debt ( 6,524 ) ( 1,731 )
-------- --------
Closing net debt ( 2,481 ) ( 6,524 )
===== =====
8. ANALYSIS OF NET DEBT
At At 31st
1st January Cash Non cash Exchange December
2002 movements
flow movement 2002
#000 #000 #000 #000 #000
Bank balances and 1,619 ( 131 ) - ( 41) 1,447
deposits
Overdrafts ( 2,824 ) 2,196 - - ( 628 )
-------- -------- -------- -------- --------
( 1,205 ) 2,065 - ( 41) 819
-------- -------- -------- -------- --------
Bank debt due ( 1,688 ) 750 - - ( 938 )
after one year
Bank debt due ( 750 ) - - - ( 750 )
within one year
Hire purchase and ( 2,881 ) 1,362 (93) - ( 1,612 )
finance lease
creditors
-------- -------- -------- -------- --------
( 5,319 ) 2,112 (93) - ( 3,300 )
-------- -------- -------- -------- --------
Net debt ( 6,524 ) 4,177 (93) ( 41) ( 2,481 )
===== ===== ====== ===== =====
This information is provided by RNS
The company news service from the London Stock Exchange
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