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SBS Group (SBG)

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Friday 28 February, 2003

SBS Group

Final Results

SBS Group PLC
28 February 2003



                         SBS Group plc

     Preliminary Results for the year ended 31 August 2002


SBS  Group  plc,  the specialist IT staffing  business,  today
announces its preliminary results for the year ended 31 August
2002.


                          Highlights

  -  Group turnover was £32.1m (2001: £45.4m) reflecting a
     further reduction in monthly average number of IT contractors
     on assignment.

  -  Gross margin decreased slightly from 20.1% to 19.8%
     reflecting market pressure and less permanent revenues.

  -  Loss before tax was £2.0m (2001: £3.6m)

  -  Loss per share before exceptional items and goodwill
     amortisation and impairment was 3.8p (2001: earnings 1.7p)

  -  Administrative costs were reduced from £8.2m to £6.3m
     reflecting a full year's saving on reductions in the cost base
     implemented last year.

  -  After providing for exceptional costs of £0.6m, impairment of
     £0.8m and goodwill amortisation of £0.2m, shareholder funds
     at 31 August 2002 showed a £2.7m deficit (2001: deficit £1.1m)

  -  All areas of the group delivered operating profits
     (before goodwill amortisation, impairment, central and
     exceptional costs) albeit at lower levels than last year.

  Commenting on the results, Peter Toynton, Chairman of SBS
  said:

  'We  shall continue to remain focused on costs and  maximise
  our efforts to secure increased market share through pursuit
  of  a  strategy of continuing investment in quality  people,
  business processes and customer service.'


  For further enquiries please contact:


  SBS Group plc
  Philip Holt, Chief Executive                    020 7420 6700

  Weber Shandwick Square Mile                     020 7067 0700
  Richard Hews / Christian San Jose






                         SBS GROUP PLC

Chairman's Statement

Introduction

Despite  signs of stabilisation early in 2002, the market  for
IT  contractors both in Europe and  USA continued to fall.  We
nevertheless  pursued the strategic options outlined  in  last
year's report with some success particularly in respect of the
pursuit  of  quality  staffing of the  sales  team.  This  has
enabled us to win new clients and contract extensions in  line
with  targeted  performance  and so  helped  to  mitigate  the
overall  downward  effect of the market deterioration.  Again,
all  areas  of  the group delivered operating profits  (before
goodwill  amortisation,  impairment, central  and  exceptional
costs) albeit at lower levels than last year.

The  company  continues  to trade  with  the  support  of  its
bankers.  As  previously  announced  however,  servicing   the
interest  on  the  debt  represents a significant  undertaking
given  the  weak  IT  recruitment market and  the  company  is
currently in discussions with its bank regarding the scale and
timing of a debt reduction plan.

Financial Results

Group  turnover  decreased  by 29% to  £32.1m  (2001:  £45.4m)
reflecting the further reduction in the monthly average number
of IT contractors on assignment from 488 to 353.

Gross margin decreased slightly from 20.1% to 19.8% reflecting
market  pressure  and less permanent revenues.  Administrative
costs were reduced from £8.2m to £6.3m reflecting a full years
saving  on  the  reductions in the cost base implemented  last
year.  Exceptional items of £0.6m include reorganisation costs
for redundancies and lease liabilities for closed offices.

Loss   per   share  before  exceptional  items  and   goodwill
amortisation  and impairment was 3.8p (2001:  earnings  1.7p).
The  loss before tax was £2.0m (2001: £3.6m). The Board is not
recommending the payment of a dividend.

It has been necessary to provide a further £0.8m impairment of
goodwill  associated with the acquisition of Applied  Concepts
Inc (ACI).

Share  Capital  increased as a result of  the  issue  to  Alan
Waksman  of  a  further  3,541,629  new  ordinary  shares   in
settlement of the deferred consideration for ACI.

After  providing for exceptional costs of £0.6m, impairment of
£0.8m and goodwill amortisation of £0.2m, shareholder funds at
31 August 2002 showed a £2.7m deficit (2001: deficit £1.1m).

The Board and Employees

Gary Edelman resigned from the Board on 23 May 2002 and on  16
August 2002, Steve Simmonds resigned as Finance Director.

A  special word of thanks is due to our employees who continue
to  respond positively to the increased demands made  of  them
during this continuing period of market weakness.

The  Board is both grateful and pleased at the response to new
management, the extent to which targets are being set and  met
and,  most encouragingly, the level of morale which  has  been
achieved in our organisation.

Outlook

Since  August,  there have again been signs  that  the  market
appears  to have stabilised. We have seen this before  however
and  there  is  currently  no sign of upward  improvement  and
little to be gained by speculating on the timing and scale  of
recovery. Suffice to say that we are confident that the market
remains cyclical and will recover when economic conditions and
corporate profitability improve from current levels.

Meanwhile, we shall continue to remain focused on costs and to
maximise our efforts to secure increased market share  through
pursuit  of  a  strategy of continuing investment  in  quality
people, business processes and customer service.

Peter Toynton
Chairman
28 February 2003



CONSOLIDATED PROFIT AND LOSS ACCOUNT
YEAR ENDED 31 AUGUST 2002
                                                    2002      2001
                                                    ----      ----
                                                    £000      £000
                                    Notes
                                    -----
Turnover                              2           32,089    45,402

Cost of sales                                    (25,739)  (36,278)
                                                 ________  ________
Gross profit                                        6,350     9,124

Administrative expenses:

Normal                                            (6,318)   (8,225)

Exceptional                           3             (628)     (702)

Goodwill amortisation                               (163)     (305)

Goodwill impairment                                 (849)   (2,744)
                                                 ________  ________

                                                  (7,958)  (11,976)
                                                 ________  ________

Operating loss                                    (1,608)   (2,852)

Interest receivable and similar income                15        13

Interest payable and similar charges                (455)     (782)
                                                 ________  ________

Loss on ordinary activities before taxation       (2,048)   (3,621)

Tax on loss on ordinary activities   4                16        25
                                                 ________  ________

Loss for the financial year                       (2,032)   (3,596)

Dividends                                              -         -
                                                 ________  ________

Retained loss for the financial year              (2,032)   (3,596)
                                                 ========  ========

Earnings per share before goodwill   5
amortisation and exceptional costs                 (3.8p)      1.7p

Earnings per share                   5            (19.4p)    (39.5)p

Fully diluted earnings per share     5            (19.4p)    (39.5)p


All amounts relate to continuing operations.




YEAR ENDED 31 AUGUST 2002
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES





                                          2002              2001
                                          ----              ----
                                          £000              £000

Loss for the year                       (2,032)           (3,596)

Currency translation differences on
foreign currency net investments           (50)               35
                                       ________          ________

Total recognised losses relating
to the period                           (2,082)           (3,561)
                                       ========          ========






RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS DEFICIT



                                          2002                2001
                                          ----                ----
                                          £000                £000

Loss for the year                       (2,032)             (3,596)

Other recognised gains and losses
relating to the year                       (50)                 35

New share capital subscribed               496                   -
                                       ________            ________


Net reduction in shareholders' funds    (1,586)             (3,561)

Equity shareholders' deficit at
1 September 2001                        (1,108)              2,453
                                       ________            ________

Equity shareholders' deficit at 31
August 2002                             (2,694)             (1,108)
                                       ========            ========


CONSOLIDATED BALANCE SHEET
31 AUGUST 2002

                                       Audited             Audited
                                       2002                2001
                                       ----                ----
                                   £000      £000      £000      £000

FIXED ASSETS
Intangible assets                           1,758               2,926
Tangible assets                               275                 388
Investments                                     5                   5
                                           ______              ______
                                            2,038               3,319
CURRENT ASSETS
Debtors                           6,584              9,047
Cash at bank and in hand            751                417
                                 ______              ______
                                  7,335              9,464
CREDITORS
Amounts falling due within one
year (including convertible
loans)                           (6,219)            (8,107)
                                 ______              ______

NET CURRENT ASSETS                         1,116               1,357
                                          ______              ______
TOTAL ASSETS LESS CURRENT
LIABILITIES                                3,154               4,676

CREDITORS
Amounts falling due after
more than one year                        (5,339)             (5,642)

PROVISION FOR LIABILITIES
AND CHARGES                                 (509)               (142)
                                          ______              ______

NET LIABILITIES                           (2,694)             (1,108)
                                          ======              ======

CAPITAL AND RESERVES
Called up share capital                      253                 182
Share premium account                      5,934               5,509
Profit and loss account                   (8,881)             (6,799)
                                          ______              ______
EQUITY SHAREHOLDERS' DEFICIT              (2,694)             (1,108)
                                          ======              ======





CONSOLIDATED CASH FLOW STATEMENT
YEAR ENDED 31 AUGUST 2002



                                                  Audited                Audited
                                                  2002                   2001
                                                  ----                   ----
                                             £000      £000         £000      £000

Net cash inflow from operating activities             1,558                  1,418

Return on investments and servicing
of finance
Interest received                              15                     13
Interest paid                                (455)                  (782)
                                            ______                 ______
Net cash outflow from return
on investments and servicing
of finance                                             (440)                  (769)

Taxation
UK corporation tax paid                        (9)                   (22)
Overseas tax received                          96                    431
                                            ______                 ______

Tax received                                             87                    409

Capital expenditure
Sale of tangible fixed assets                  27                    114
Purchase of tangible fixed assets             (69)                   (88)
                                            ______                 ______
Net cash (outflow) / inflow from capital
expenditure and financial investments                   (42)                    26

Equity dividends paid                                     -                   (100)
                                                      ______                 ______

Acquisitions and disposals
Purchase of subsidiary undertakings             -                   (39)
                                            ______                 ______
Net cash outflow from acquisitions and
disposals                                                 -                    (39)
                                                      ______                 ______
Net cash inflow before use of
liquid resources and financing                        1,163                    945

Financing
Capital element of finance lease payments       -                    (22)
Net repayment of short term loans               -                   (608)
                                            ______                 ______

                                                         -                    (630)
                                                     ______                  ______
Increase in cash                                     1,163                     315
                                                     ======                  ======



1  ACCOUNTING POLICIES

          Basis of Preparation

          The  financial information for the year ended  31  August
          2002  does  not constitute statutory accounts within  the
          meaning  of  section 240 of the Companies Act  1985.  The
          figures  for the year ended 31 August 2002 are  based  on
          the  audited accounts for that year, which will be  filed
          with  the  Registrar  in  due course  and  on  which  the
          auditors  have  given an unqualified audit  report.   The
          audited accounts  have been prepared under the historical
          cost   convention  and  in  accordance  with   applicable
          Accounting  Standards,  including  the  recently   issued
          Financial   Reporting   Standard  (FRS)19   -   'Deferred
          Taxation' which has been adopted in the year.

          The Group currently has net liabilities of £2,694,000 and
          the   Company   has   net  liabilities   of   £1,054,000.
          Accordingly  the  Group  is currently  dependant  on  the
          ongoing  support  of  its bank to meet  its  day  to  day
          working capital requirements.

          The   Company  has  guaranteed  the  borrowings  of   its
          subsidiaries  and  has also provided a guarantee  to  the
          landlord of a subsidiary undertaking in respect  of  that
          company's  commitments under a lease  agreement.  If  the
          guarantees  are called, the extent to which  the  Company
          ultimately  bears  the liabilities  will  depend  on  the
          extent  to which the liabilities are satisfied  by  other
          group  companies.  Given  current  discussions  with  the
          Group's  bank  and  the  stage of implementation  of  the
          revised   business  plan,  the  Directors  have  assessed
          whether it is probable that these guarantees will  become
          actual  liabilities and have decided that the  guarantees
          are  currently  not likely to crystallise.  Consequently,
          these  guarantees are not recorded in the Company balance
          sheet, but are disclosed as a contingent liability.

          As disclosed in an announcement dated 6 December 2002 the
          Group is in discussions with its bank regarding the scale
          and  timing  of  a  debt reduction plan.  The  Group  has
          developed a revised business plan to reduce its debt  and
          improve  its  profitability going forward and  it  is  in
          discussions  with its bank to secure a capital  structure
          that is appropriate to that business plan.

          The  current  bank facilities are due for renewal  on  31
          March  2003  and, in the light of the current information
          available to them, the Directors believe that the Group's
          bank  will continue to support the Group after this time,
          to enable them to implement the revised business plan and
          to  achieve  an  appropriate capital structure.  On  this
          basis,  the Directors consider it appropriate to  prepare
          the accounts on a going concern basis.

          However  the  achievement of the plan  is  subject  to  a
          number  of uncertainties that are not within the  control
          of  the  Group. Should the Group's bank not  continue  to
          support  the Group in implementing the plan and achieving
          an  appropriate capital structure, adjustments  would  be
          necessary to record additional liabilities and  to  write
          down  assets  to  their recoverable  amount.  It  is  not
          practicable to quantify these possible adjustments.

          Full  statutory  accounts  will  be  available  from  the
          Company  Secretary at SBS Group plc, 19th  Floor,  Centre
          Point, 103 New Oxford Street , London, WC1A 1DY (Tel: 020
          7420  6700) during normal business hours from 28 February
          2003.

          The  figures for the year ended 31 August 2001 are  based
          on  the  audited accounts for that year which  have  been
          delivered to the Registrar and on which the auditors gave
          an unqualified report.





2  SEGMENTAL ANALYSIS

   The Group engages in a single class of business.

   The  geographical analysis of turnover, profit  before  taxation
   and net assets is as follows:
                                                    2002      2001
                                                    ----      ----
                                                    £000      £000
   Turnover
   By origin and destination:

   United Kingdom                                 12,911    19,332
   Continental Europe                              6,256     8,521
   North America                                  12,922    17,549
                                                  ______    ______
                                                  32,089    45,402
                                                  ======    ======


   Operating profit before exceptional administrative
   expenses and goodwill amortisation
   United Kingdom                                    341     1,136
   Continental Europe                                137        62
   North America                                     462       518
   Central Overheads                                (908)     (817)
                                                   ______    ______

                                                      32       899
   Exceptional administrative expenses (note 3)     (628)     (702)
   Goodwill amortisation                            (163)     (305)
   Goodwill impairment                              (849)   (2,744)
   Net interest charges                             (440)     (769)
                                                   ______    ______

   Loss on ordinary activities before tax         (2,048)   (3,621)
                                                   ======    ======



                                                     2002     2001
                                                     ----     ----
                                                     £000     £000
   Net assets
   United Kingdom                                  (2,427)  (1,468)
   Continental Europe                                 (37)     220
   North America                                     (230)     140
                                                    ______   ______
                                                   (2,694)  (1,108)
                                                    =====    ======



3  EXCEPTIONAL ADMINISTRATIVE EXPENSES

   The  exceptional administrative expenses relate to  expenses  of
   £69,000  in  connection with the acquisition of ACI in  a  prior
   period,   reorganisation  costs  for  redundancies   and   lease
   liabilities  for  closed offices and onerous leases,  provisions
   for which total £559,000.



4  TAX ON PROFIT ON ORDINARY ACTIVITIES
                                                    2002      2001
                                                    ----      ----
                                                    £000      £000
   (a) The tax charge comprises:-

   Current tax:

   UK corporation tax on profits for the period       (1)        7
   Overseas tax                                       (6)       18

   Adjustments in respect of previous periods          2         1
                                                    ______    ______

   Total current tax                                  (5)       26

   Deferred Tax:

   Origination and reversal of timing differences    (11)      (51)
                                                    ______    ______

   Tax on profit on ordinary activities (note 4(b))  (16)      (25)
                                                    ======    ======


   (b)  Factors affecting tax charge for the year

   The  tax assessed for the year is higher than the standard  rate
   of corporation tax in the UK (30%).


   The differences are explained below:
                                                    2002      2001
                                                    ----      ----
                                                    £000      £000

   Loss on ordinary activities before tax          2,048     3,621
                                                   =====     =====

   Loss on ordinary activities multiplied by the
   Standard rate of corporation tax 32.4%
   (2001:33.7%)                                     (664)   (1,222)

   Effects of:
   Expenses not deductible for taxation purposes     346     1,234
   Depreciation in the year in excess of capital
   allowances                                          8         3
   Short Term Timing difference                        4         -
   Marginal tax relief                                 1        (3)
   Losses carried forward                            386         -
   Tax  rates effective in other jurisdictions       (88)       13
   Adjustments in respect of prior periods             2         1

                                                   ______    ______
   Tax on profit on ordinary activities (note 4(a))   (5)       26
                                                   ======    ======


   The  standard  rate is calculated based on the  locally  enacted
   statutory  rates  in  the  jurisdictions  in  which  the   Group
   operates.

   (c)  Factors that may affect future tax charges

   The  Group has UK tax losses of approximately £ 643,000 and  tax
   losses   in   the  US  of  approximately  £1,296,000   (2001   :
   £1,400,000)  that are available indefinitely for offset  against
   future  taxable profits of those companies in which  the  losses
   arose.


5  EARNINGS PER SHARE

   The  calculation of earnings per share is based on a loss of £2m
   (2001:  loss  of  £3.6m)  and a weighted average  of  10,487,517
   (2001: 9,099,975) shares in issue.

   The calculation of fully diluted earnings per share is based  on
   an  adjusted  loss of £2m (2001: loss of £3.6m). The  number  of
   shares   used   to   calculate  diluted   earnings   per   share
   incorporates  the  weighted average number of  shares  in  issue
   10,487,517  (2001:  9,099,975) plus dilutive potential  ordinary
   shares  arising  from  share options  of  Nil  (2001:  322,130),
   totalling 10,487,517 (2001 : 9,422,105).


5  EARNINGS PER SHARE (Continued)

   The  calculation of earning per share before goodwill
   amortisation  and impairment and exceptional costs is
   based on an adjusted loss of £0.4m (2001 : profit of
   £0.2m) and a weighted average of 10,487,517 (2001 :
   9,099,975) shares in issue.

                                          2002          2002      2001          2001
                                                        ----                    ----
                                               fully diluted           fully diluted
                                               -------------           -------------
                                         Pence         Pence     Pence         Pence

   Earnings per share                    (19.4)        (19.4)    (39.5)        (39.5)
   Exceptional administrative expense      6.0           6.0       7.7           7.6
   Earnings per share                      9.6           9.6      33.5          32.9

   Earnings per share before exceptional ______        ______    ______        ______
   items and goodwill amortisation        (3.8)         (3.8)      1.7           1.0
                                         ======        ======    ======        ======

   Earnings  per  share  before  exceptional  administrative
   expenses  and  goodwill amortisation and  impairment  has
   been   shown   because   it   reflects   the   underlying
   performance of the business.


6  RELATED PARTY TRANSACTION

   A  Waksman  had  a loan due to him from  the  Company  of
   £482,186  at  the time of his appointment as a  Director.
   Interest of £4,365 was subsequently paid on this loan.

   On  28 June 2002 A Waksman served notice for the loan  of
   £482,186  to  be  converted  into  3,444,185  two   pence
   ordinary shares under the terms of the loan agreement.

   Subsequent  to the year end shares have been  issued  to
   fulfil this obligation.




                      This information is provided by RNS
            The company news service from the London Stock Exchange       R NKOKPOBKDKBB                                                                                                                                                                                                                                                 

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