Fairplace Consulting PLC 03 February 2005 INTERIM RESULTS The Board of Directors of Fairplace Consulting plc today reports the Group's unaudited results for the six months to 31 December 2004 - Sales of £2.1 million (2003 : £2.35 million) reflecting difficult conditions in UK outplacement market - Costs reduced to £2.43 million (2003 : £2.65 million) with greater resourcing flexibility for 2005 - Operating loss before goodwill of £0.33 million (2003 loss : £0.3 million) in line with management expectations - Outplacement sales starting to strengthen and increasing contributions from talent management services - Second half has started positively and two major contracts won in past month - Expansion into search and interim management specialising in HR appointments Mark Allsup, Chairman, said : " 2004 proved a difficult year for providers of outplacement services, as witnessed by consolidations and trading results within the sector. Despite prevailing market conditions, Fairplace has entered 2005 with increased confidence. Over the past year we have repositioned the business : bringing in a Chief Executive and a City Managing Director from a larger competitor ; placing the marketing focus on specific sectors and geographies ; changing the resourcing model and reducing fixed delivery costs ; creating a consulting team with expertise in coaching and other talent management services ; and extending the international network through partnerships and alliances. Our growth strategy is based on capturing a greater share of the outplacement market and building broader relationships with clients through the provision of talent management services. The Board anticipates that the positive effects of this strategy will become increasingly evident during 2005." Michael Moran, Chief Executive, said : " I am delighted with the significant progress we have made in positioning Fairplace for a return to profitability. Outplacement sales have started to strengthen and our talent management services are gathering real momentum. The volume of business in the pipeline indicates that our strategy is beginning to deliver results. We are particularly pleased to have won two competitive bids in the past month which are expected to benefit the Company's second half performance." For enquiries, please contact : Mark Allsup, Chairman 020 7816 0707 Michael Moran, Chief Executive Clare Hanson, Finance Director Fairplace Consulting plc Mark Baker 020 7845 7900 The Wriglesworth Consultancy Chairman's Statement While conditions in the outplacement market continued to be difficult, significant progress has been made in positioning Fairplace for a return to profitability. With the arrivals of Michael Moran as Chief Executive and Linda Jackson as co-Managing Director of the City practice last summer, we have strengthened our position in the outplacement sector, while opening up new avenues for growth in talent management services. These include executive coaching, where the UK market is believed to be considerably larger than outplacement and highly fragmented. The effects of this strategy are already being seen : Fairplace has been successful in winning competitive bids for two major accounts in the past month ; and we are deriving an increasing proportion of our revenues from non-outplacement services. These have recently been expanded to include search and interim management, specialising in HR appointments. Trading Results Sales for the six months to 31 December 2004 declined by 10.6% to £2.1 million (2003 : £2.35 million), but costs were also lower at £2.43 million (2003 : £2.65 million) as a number of measures to reduce fixed costs took effect. The operating loss before goodwill of £(0.33 million) was therefore similar to the comparable period in 2003. This was in line with management expectations. While there is no interim dividend payment, it remains the Board's intention to resume dividend payments as soon as the Company's performance allows. City Despite the general market conditions, the City division's outplacement sales were higher than in 2003 as monthly activity levels picked up in the autumn period. Sales of HR consulting services also increased. The second half has started positively with a number of clients embarking on restructuring projects. This appears to mirror the latest quarterly financial services survey by the CBI and PwC which suggests an accelerating rate of job cuts in the banking, insurance and fund management sectors. We also believe that Fairplace is gaining market share and are pleased to have recently won a substantial new banking client for which we will provide both outplacement and coaching services. UK Sales were below target, but the division ended the half-year on a more favourable trading note. In the last month we have secured a nationwide outplacement contract with a financial services client which is expected to have a positive impact on second half performance. We have sharpened our marketing focus on specific client sectors and geographic regions in order to maximise use of resources and give us competitive advantage. In October we were pleased to receive the Association of Career Firms International's Quality of Excellence award for effectiveness in delivering on-site, distance and other services to one of the UK's largest insurance companies. Distance-Based Sales were below the 2003 level, due to the lower level of UK project activity in the first half and reduced creditor business, but profitability was satisfactory. We continue to offer a very high quality distance service from our centre in Northampton which is unmatched by our competitors. International Italy Fairplace Consulting Italy (100% subsidiary) Sales showed some improvement on the same period in 2003 and new business prospects for the second half are encouraging. Portugal Fairplace Recursos Humanos (40% shareholding) Losses for the second full year of operation were substantially reduced and further progress is looked for in 2005. Switzerland In December we were delighted to announce an alliance with Choice, an executive coaching, career transition and change management consultancy based in Zurich. Through alliances and membership of Career Partners International, our coverage now encompasses many of the world's leading financial centres. We are working closely with CPI's other member firms on a number of marketing, product development and technology initiatives which should yield benefits in 2005. Current Trading and Prospects The second half has started on an improved trading note and the Directors are encouraged by the volume of business in the pipeline. Excellent progress is also being made in the development of talent management and other services which are expected to contribute an increasing proportion of revenues. While implementation of the new strategy is at an early stage, the Board believes that the positive effects will become increasingly evident during 2005. Mark Allsup Chairman 3 February 2005 Fairplace Consulting plc Group profit and loss account For the Period 6mths to 6mths to 12mths to 31/12/04 31/12/03 30/6/04 Unaudited Unaudited Audited £ £ £ Turnover 2,097,403 2,347,762 4,758,383 Administrative expenses (2,430,877) (2,648,081) (5,398,140) Operating (loss) before exceptional items and goodwill (333,474) (300,319) (639,757) Exceptional Items - - (190,320) Operating (loss) before goodwill (333,474) (300,319) (830,077) Goodwill (66,480) (73,128) (132,088) Operating (loss) after goodwill (399,954) (373,447) (962,165) Gain on sale of investment - - 97,316 Provision against investment - - (41,335) Interest receivable 1,012 8,314 13,453 Interest payable (1,056) (343) (711) Other income/expenditure (44) 7,971 68,723 (Loss) on ordinary activities before tax (399,998) (365,476) (893,442) Corporation tax charge (50,513) (50,513) (176,439) Deferred tax provision 5,953 ---------- ---------- --------- Tax credit on ordinary activities - 93,099 119,069 ---------- ---------- --------- (Loss) for the period (399,998) (272,377) (774,373) ---------- ---------- --------- Dividend - (115,504) (115,504) ---------- ---------- --------- Retained (loss) for the period (399,998) (387,881) (889,877) ========== ========== ========= EPS (note 1) (7.27) (4.95) (14.08) EPS before goodwill (6.06) (3.62) (11.68) Fully diluted EPS (7.27) (4.95) (14.08) Fairplace Consulting plc Group balance sheet For the period ending 31/12/04 31/12/03 30/06/04 Unaudited Unaudited Audited £ £ £ Fixed assets: Intangible 2,026,012 2,336,223 2,092,492 Tangible 500,032 639,572 597,346 Investments - 171,650 - -------- -------- -------- 2,526,044 3,147,445 2,689,838 Current assets: Stock and work in progress 40,626 44,398 32,322 Debtors 1,198,666 1,185,049 1,087,664 Cash at bank and in hand 32,949 592,023 376,510 -------- -------- -------- 1,272,241 1,821,470 1,496,496 Creditors: falling due within one year (1,200,713) (1,476,247) (1,188,764) Net current assets 71,528 345,223 307,732 Total assets less current liabilities 2,597,572 3,492,668 2,997,570 Creditors: falling due after more than one year (31,410) (24,512) (31,410) -------- -------- -------- Net assets 2,566,162 3,468,156 2,966,160 ======== ======== ======== Capital and reserves: Called up share capital 825,026 825,026 825,026 Share premium account 2,079,842 2,079,842 2,079,842 Profit and loss account (338,706) 563,288 61,292 -------- -------- -------- Equity shareholders' funds 2,566,162 3,468,156 2,966,160 ======== ======== ======== Fairplace Consulting plc Group Cash Flow Statement For the Period: 6mths to 6mths to 12mths to 31/12/04 31/12/03 30/6/04 Unaudited Unaudited Audited £ £ £ Cash (out)/inflow from operating activities (461,569) 89,793 (102,431) Returns on investment and servicing of finance: Dividends Received - - - Interest received 1,012 8,314 13,453 Other interest paid (1,056) (278) (711) -------- -------- ------- (44) 8,036 12,742 Taxation: Corporation tax refunded/(paid) 111,739 (14,812) (69,843) Capital expenditure and financial investment: Purchase of tangible fixed assets (3,687) (284,891) (350,713) Proceeds from sales of tangible fixed assets 10,000 - - -------- -------- ------- 6,313 (284,891) (350,713) Acquisitions and disposals: Purchase of subsidiary undertaking - - (19,269) Proceeds from sale of investment - - 227,631 -------- -------- ------- - 208,362 Equity dividends paid - (161,290) (276,794) Cash flow before use of liquid resources and financing (343,561) (363,164) (578,677) -------- -------- ------- (Decrease) in cash in the period (343,561) (363,164) (578,677) ======== ======== ======= Reconciliation of operating profit to 6mths to 6mths to 12mths to operating cashflow 31/12/04 31/12/03 30/6/03 Unaudited Unaudited Audited £ £ £ Operating (loss)/profit before goodwill (333,474) (300,319) (830,077) Depreciation 88,392 68,908 176,922 Loss/(gain) on foreign exchange - - (227) Loss on disposal of fixed assets 2,660 - - (Increase)/decrease in stock (8,305) 16,405 28,482 (Increase)/decrease in debtors (222,739) 151,125 409,181 Increase/(decrease) in trade creditors 149,086 367,261 46,031 (Decrease)/increase in accruals and deferred income (163,267) (152,429) 93,184 Increase/(decrease) in tax and social security 26,078 (61,158) (25,927) -------- -------- ------- Net cash flow from operating activities (461,569) 89,793 (102,431) ======== ======== ======= Notes 1. The calculation of earnings per share is based on the loss after tax of £399,998 (2003: Loss £272,377) and on the number of shares in issue being the adjusted weighted average number of shares in issue during the period of 5,500,170 (2003: 5,502,275). 2. This Interim Statement for the six months ended 31 December 2004 is unaudited and was approved by the Directors on 2nd February 2005. The financial information set out above does not constitute statutory accounts within the meaning of Section 240 of Companies Act 1985. The information given as comparative figures for the financial year ended 30 June 2004 was extracted from the Group's statutory accounts for that financial year. Statutory accounts for that financial year have been reported on by the Group's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified. 3. The accounting policies remain as stated in the Annual Report for the year ended 30 June 2004. 4. This Interim Statement is being sent by post to all registered shareholders. Additional copies are available from the Company's registered office, 36-38 Cornhill, London, EC3V 3PQ. This information is provided by RNS The company news service from the London Stock Exchange