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SBS Group (SBG)

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Friday 28 April, 2000

SBS Group

Interim Results - 6 Months to 29 February 2000

SBS Group PLC
28 April 2000


                      SBS Group plc
                            
  SBS Group plc, the AIM-listed specialist IT staffing
     business, today announces its unaudited interim
    results for the six months ended 29 February 2000
                            
                  Chairman's Statement

Introduction

As anticipated in the 1999 Annual Report and explained in
more  detail  in the trading update issued  on  31  March
2000,  the Group's overall performance for the six months
ended  29  February  2000 was severely  affected  by  the
downturn  in  the IT sector caused by the so-called  'Y2K
microclimate'.

Although  the  North American operations,  including  the
recently  acquired  Applied Concepts Inc.,  performed  in
line  with expectations, the UK and Continental  European
businesses  experienced a dramatic slow-down  in  demand.
Most  major  clients delayed investment  in  IT  projects
until  after the 1999 year-end, due to concerns that  the
date change could cause problems with legacy systems.  In
the event, these concerns proved to be largely unfounded,
although   the   effect  on  the  Group's   trading   was
considerable.

This  challenging  trading  climate  was  exacerbated  by
further  weakness  in the Euro during the  period,  which
resulted  in  an exchange loss against a profit  for  the
comparable  period last year.  In addition,  the  results
take  into account a significant bad debt arising from  a
client going into receivership.

Notwithstanding this one-off period of poor  performance,
SBS  remains  in fundamentally good shape.  It  is  well-
established in a spread of geographic markets, has a blue-
chip  client  base  and  a track  record  of  making  and
successfully integrating  acquisitions.  Applied Concepts
Inc  (ACI), acquired in October of last year, is  proving
to  be no exception, returning a satisfactory performance
during the period.

Indeed,  since the year-end, there has been a significant
improvement  in  the Group's market conditions.   To  put
this  improvement and the effects of the Y2K microclimate
on  1999 into perspective, the number of contracts signed
in January, February and March of this year in the UK and
Continental  Europe showed an increase of  75%  over  the
corresponding  period  last year and  by  350%  over  the
depressed final quarter of 1999.

Financial results

Group  turnover for the period declined by 19% to  £22.9m
(1999:  £28.3m)  and  operating  profit  before  goodwill
amortisation  by  69% to £0.5m (1999: £1.6m).   Excluding
the acquisition in the period, turnover declined by 28%.

Gross  margin  as a percentage increased  to  18.5%  from
17.6%  as  a higher proportion of business was transacted
in  North  America.   Operating margins  before  goodwill
amortisation  reduced  from 5.5% to  2.0%  as  contractor
numbers declined.

Earnings   per   share  before  exceptional   items   and
amortisation  declined  by 78%  to  2.3p  (1999:  10.3p).
Given  the  Board's expectation of a return to growth  in
the  second half, it is recommending a dividend  of  0.9p
per  share (1999: 1.5p per share).  The dividend will  be
paid  on 23 July 2000 to shareholders on the register  at
12 May 2000.

Shareholders'  funds stood at £2.5m on 29  February  2000
(31  August  1999: £2.4m) after writing-off  goodwill  of
£7.4m in earlier years.

As  a  result of the acquisition of ACI during the period
the  Group's gearing has increased from 112% at 31 August
1999 to 338% at 29 February 2000.

 Operational review

SBS   Group   continues  to  operate   in   three   major
geographical  markets:  the United  Kingdom,  Continental
Europe  (primarily Germany, Belgium and the  Netherlands)
and  North America.  Group turnover and operating profits
(before  central  overheads) for the six  months  can  be
analysed geographically as follows:

                                                           
                                             £m            
                      £m       % of   Operating  % of Group
             Turnover to      Group     Profits   Operating
             29 Feb 2000   Turnover   To 29 Feb      Profit
                                          2000*
                                               
UK                  11.5       50.2        0.57        61.3
Continental          5.1       22.3      (0.19)      (20.4)
Europe
North                6.3       27.5        0.55        59.1
America

*    before goodwill amortisation and exceptional costs.
  
The   monthly   average  number  of  IT  contractors   on
assignment during the period was 546 compared with 627 in
the  first half of last year.  Daily rates of pay  to  IT
contractors  remained  static with  no  increase  in  the
average daily rates paid to IT contractors between August
1999 and February 2000.

Headline, the Group's school teacher supply business, had
a  successful  six  months, increasing  its  turnover  to
£0.61m  (1999:£0.54m)  and  operating  profit  to  £0.03m
(1999:£0.02m).

Continental Europe

The    Group's   Continental   European   business    was
particularly hard hit during the period.  In  Germany  in
particular,   SBS's  investment  banking   business   was
severely  affected  by  sharply  reduced  demand  as  new
development programmes were postponed until the new year.
It  is  therefore pleasing to be able to report that  the
Group  is now seeing signs of renewed investment in major
IT  projects.  In addition, the results for the  European
business   reflect  the  side-effects   of   the   strong
Pound/Euro  exchange  rate.  This is  estimated  to  have
adversely affected European operating profits by £0.13m.

Internet

The  explosive growth of the internet is facilitating the
evolution of the Group in several ways.  First, there  is
increasing  demand from clients for IT  contractors  with
specific   web-related  skills.   This   area   currently
accounts for 30% of the Group's contract vacancies.

Second,  SBS  started  using  internet  job  boards   for
advertising  vacancies  three  years  ago.   It  has  now
reached   the   stage  where  all  of  the  Group's   job
advertisements  and 98% of responses are carried  by  the
internet.

Finally, SBS continues to develop into an 'e-business': a
new  internet-friendly database system has been installed
in  the  UK and European offices and all staff have  been
trained  in  its  use and in use of the internet  itself.
The  Group continues to invest in the development of  its
own website and as it seeks to increase the proportion of
its  business  transacted over the  internet,  will  make
further investment in automation of business processes to
improve efficiency, cut costs and to make SBS more 'user-
friendly' to contractors.

Board and employees

This has been one of the most challenging periods in  the
Group's  history,  but  one that  has  been  successfully
weathered.  On behalf of the Board, I would like to thank
all   employees  for  their  continuing  enthusiasm   and
dedication.

Outlook

The  IT  staffing market endured very unusual  conditions
during  the  period  leading up to the millennium,  which
translated into a severe short-term down-turn  in  demand
for the Group's services.

It  is pleasing to note, therefore, that recovery in most
areas  of  the  business is increasingly evident.   This,
together  with  the  contribution of the  Group's  recent
acquisition   leads  us  to  expect   a   much   improved
performance in the second half of the year.

John M. Davies
Chairman
27 April 2000


For further information, please contact:

SBS Group plc                         (On 28 April only) 020  7253 2252
Gary Jones, Chief Executive                  (Thereafter) 020 7420 6700
Philip Holt, Group Finance Director

Ludgate Communications                                    020 7253 2252
Tim Davis



Consolidated Profit and Loss Account
For the six months ended 29 February 2000

                               6 months to  6 months to  12 months to
                               29 February  28 February     31 August
                                      2000         1999          1999
                               (Unaudited)  (Unaudited)     (Audited)
                        Notes        £'000        £'000         £'000
Turnover                2                                            
Existing operations                 20,513       28,318        53,305
Acquisitions                         2,353            -             -
---------------------------------------------------------------------         
                                    22,866       28,318        53,305
                                   (18,627)     (23,347)      (43,975)
---------------------------------------------------------------------      
Gross profit                         4,239        4,971         9,330
Administrative expenses            (3,686)      (3,417)       (6,794)
Exceptional                                                          
administrative expense  3             (85)            -             -
---------------------------------------------------------------------  
Operating profit before                                              
goodwill amortisation                  468        1,554         2,536
Goodwill amortised      7            (101)            -             -
--------------------------------------------------------------------- 
Operating profit                                               
Existing operations                    128        1,554         2,536
Acquisitions                           239            -             -
---------------------------------------------------------------------
                                       367        1,554         2,536
Net interest payable                 (243)        (187)         (317)
---------------------------------------------------------------------
                                                                     
Profit on ordinary                                                   
activities before
taxation                2              124        1,367         2,219
Tax on profit on                                                     
ordinary activities     4             (41)        (458)         (723)
---------------------------------------------------------------------

Profit for the                                                       
financial period                        83          909         1,496
Dividends               6             (82)        (133)         (363)
---------------------------------------------------------------------         
---------------------------------------------------------------------         
Retained Profit                          1          776         1,133
---------------------------------------------------------------------         

Earnings per share                                                   
before goodwill
amortisation and                                                     
exceptional costs (p)   5              2.3         10.3          16.9
                                                                     
Earnings per share (p)  5              0.9         10.3          16.9
                                                                     
Fully diluted earnings                                               
per share (p)           5              0.9          9.6          16.1
                                                                     


Statement of Total Recognised Gains and Losses
For the six months ended 29 February 2000

                           6 months to   6 months to  12 months to
                           29 February   28 February     31 August
                                  2000          1999          1999
                           (Unaudited)   (Unaudited)     (Audited)
                                 £'000         £'000         £'000
                                                                  
Profit for the financial                                          
period                              83           909         1,496
Currency translation                                              
differences on
foreign currency net                                              
investments                         47            20            22
------------------------------------------------------------------            
------------------------------------------------------------------            
Total recognised gains and                                        
losses
relating to the period             130           929         1,518
------------------------------------------------------------------            
 

Reconciliation of Movements in Shareholders' Funds
For the six months ended 29 February 2000


                           6 months to   6 months to  12 months to
                           29 February   28 February     31 August
                                  2000          1999          1999
                           (Unaudited)   (Unaudited)     (Audited)
                                 £'000         £'000         £'000
                                                                  
Profit for the financial                                          
period                              83           909         1,496
Dividends                         (82)         (133)         (363)
------------------------------------------------------------------
                                     1           776         1,133
Other recognised gains and                                        
losses
relating to the period              47            20            22
Goodwill on acquisitions             -           (8)           (8)
New share capital                                                 
subscribed                          20             -             -
------------------------------------------------------------------            
                                                     
Net addition to                                                   
shareholders' funds                 68           788         1,147
                                                                  
Equity shareholders' funds       2,384         1,237         1,237
at start of period
------------------------------------------------------------------            
                                                     
Equity shareholder's funds                                        
at end of period                 2,452         2,025         2,384
------------------------------------------------------------------            
                                                     

Consolidated Balance Sheet
29 February 2000

                               29 February  28 February  31 August
                                      2000         1999       1999
                               (Unaudited)  (Unaudited)  (Audited)
                        Notes        £'000        £'000      £'000
FIXED ASSETS                                                      
Tangible assets                        498          462        395
Investments                              5            -          5
Goodwill                7            6,102            -          -
------------------------------------------------------------------            
                                     6,605          462        400
CURRENT ASSETS                                                    
Property held for                                                 
resale                                 116            -        116
Debtors                             13,347       10,780      9,839
Cash at bank and in                                               
hand                                   162        1,147        993
------------------------------------------------------------------
                                    13,625       11,927     10,948
                                                                  
CREDITORS:                                                        
Amounts falling due                                               
within one year                   (12,696)      (8,905)    (7,822)
------------------------------------------------------------------
NET CURRENT ASSETS                     929        3,022      3,126
------------------------------------------------------------------

TOTAL ASSETS LESS                                                 
CURRENT
LIABILITIES                          7,534        3,484      3,526
                                                                  
CREDITORS                                                         
Amounts falling due                                               
after more than
one year                           (5,066)      (1,434)    (1,126)
                                                                  
                                                                  
PROVISION FOR LIABILITIES
AND CHARGES                           (16)         (25)       (16)
------------------------------------------------------------------
                                     2,452        2,025      2,384
==================================================================            
                                                                    
CAPITAL AND RESERVES                                              
Called up share capital                182          177        177
Share premium account                5,508        5,493      5,493
Profit and loss account            (3,238)      (3,645)    (3,286)
------------------------------------------------------------------            
EQUITY SHAREHOLDERS' FUNDS           2,452        2,025      2,384
==================================================================
                                                                  

Consolidated Cash Flow Statement
For the six months ended 29 February 2000


                         6 months to  6 months to  12 months to
                         29 February  28 February     31 August
                                2000         1999          1999
                         (Unaudited)  (Unaudited)     (Audited)
                  Notes        £'000        £'000         £'000
                                                               
Net cash                                                       
(outflow)/inflow
from operating                                                 
activities        9            (969)          605         1,949
                                                               
Return on                                                      
investments
and servicing of                                               
finance                        (243)        (187)         (317)
                                                               
Taxation                        (71)        (169)         (694)
                                                               
Capital                                                        
expenditure and
financial                                                      
investment                     (171)         (38)         (125)
                                                               
Acquisitions and                                               
disposals         8          (3,818)            -           (8)
                                                               
Equity dividends                                               
paid                           (229)        (195)         (328)
---------------------------------------------------------------               
                                                            
Net cash                                                       
(outflow)/inflow
before financing             (5,501)           16           477
                                                               
Financing                      4,399        (549)         (840)
---------------------------------------------------------------               
                        
Decrease in cash  10         (1,102)        (533)         (363)
===============================================================  

                            
NOTES TO THE INTERIM STATEMENTS


1.   Basis of preparation

     The interim report has been prepared on the basis of
     the  accounting policies set out in the Group's 1999
     statutory  accounts.  The interim report is  neither
     audited   nor  reviewed  and  does  not   constitute
     statutory accounts within the meaning of section 240
     of the Companies Act 1985.
     
     A  copy  of the Group's 1999 statutory accounts  has
     been  filed  with the Registrar of  Companies.   The
     auditors opinion on those accounts was unqualified.

     The  interim  report  for the six  months  ended  29
     February  2000  was approved by the  Board  on  27th
     April  2000. A copy of this report has been sent  to
     shareholders  and further copies are available  from
     the Company's registered office at Centre Point, 103
     New Oxford Street, London WC1A 1DY.

2.   Segmental analysis


                        6 months to  6 months to   12 months to
                        29 February  28 February      31 August
                               2000         1999           1999
                        (Unaudited)  (Unaudited)      (Audited)
                              £'000        £'000          £'000
     Turnover                                                  
     United Kingdom          11,475       15,027         28,564
     Europe                   5,116        9,806         17,230
     North America            6,275        3,485          7,511
                            _______      _______        _______
                             22,866       28,318         53,305
                             ======       ======         ======
     Profit before                                             
     taxation
     United Kingdom             404          848          1,619
     Europe                   (207)          724            875
     North America              358          269            433
     Central                  (431)        (474)          (708)
     Overheads
                            _______      _______        _______
                                124        1,367          2,219
                             ======       ======         ======


3.   Exceptional administrative expenses

     The exceptional administrative expense relates to  a
     bad  debt  for  a  customer placed  in  receivership
     during the period.

4.   Taxation

     Taxation has been provided at an average UK and US
     rate of 32.9% (1999: 33.5%).


5.   Earnings per share

     The calculation of earnings per share is based on  a
     profit   of  £83,000  and  a  weighted  average   of
     8,942,898 shares in issue.

     The calculation of fully diluted earnings per share
     is based on a profit of £83,000 and an adjusted
     weighted average of 9,163,500 shares in issue.

     The calculation of earnings per share before
     goodwill amortisation and exceptional costs is based
     on an adjusted profit of £203,000 and a weighted
     average of 8,942,898 shares in issue.


6.   Dividend per share

     The interim dividend will be paid on 23rd July 2000
     to all shareholders on the register at close of
     business on 12th May 2000.  The shares go ex-
     dividend on 8th May, 2000.


7.   Intangible Assets


                                                Goodwill
                                                    £000
     Cost                                               
     At 31 August 1999                                 -
     Additions (note 8)                            5,970
     Exchange Movements                              233
                                                 _______
     At 29 February 2000                           6,203
                                                 _______
                                                        
     Amortisation                                       
     At 31 August 1999                                 -
     Charge for the period                           101
                                                 _______
     At 29 February 2000                             101
                                                 _______
                                                        
     Net Book Amount at 29 February 2000           6,102
                                                  ======


8    Acquisitions

                                                    £000
     Net assets acquired                           (364)
     Goodwill                                      5,970
                                                 _______
     Total Consideration                           5,606
                                                  ======
                                                        
     Satisfied by:                                      
     Cash (including acquisition costs)            4,269
     Deferred consideration                        1,337
                                                 _______
                                                   5,606
                                                  ======

     Net Assets acquired include £451,000 of cash

     On  28th October 1999 the Group acquired 100% of the
     share capital of Applied Concepts Inc. (ACI) for  an
     initial consideration of $6.8m (£4.3m) and a maximum
     total   additional  consideration  of  up  to  $3.5m
     (£2.1m)  dependent on gross profit targets  for  the
     years  ended 31st October 1999 and 2000.  ACI  is  a
     New York based IT staffing business specialising  in
     the   telecommunications  industry.    The   initial
     consideration was satisfied by the payment of  $6.8m
     (£4.3m) in cash to the vendor.  It is expected  that
     deferred  consideration of $2.0m  (£1.3m)  including
     further acquisition costs will be payable in cash by
     31st January 2001.


9.   Net Cash Flow From Operating Activities

                          6 months to   6 months to  12 months to
                          29 February   28 February     31 August
                                 2000          1999          1999
                          (Unaudited)   (Unaudited)     (Audited)
                                 £000          £000          £000
                                                                 
   Operating profit               367         1,554         2,536
   Depreciation of                                               
   tangible fixed assets           69            63           105
   Amortisation of                                               
   intangible fixed                                              
   assets                         101             -             -
   Increase in debtors        (1,133)       (1,295)         (434)
   Increase/(Decrease)                                           
   in creditors                 (373)           283         (258)
                              _______       _______       _______
   Net cash                                                      
   (outflow)/inflow from                                         
   operating activities         (969)           605         1,949
                               ======        ======        ======

10.  Reconciliation of Net Cashflow to Movement in Net
     Debt

                          6 months to   6 months to  12 months to
                          29 February   28 February     31 August
                                 2000          1999          1999
                          (Unaudited)   (Unaudited)     (Audited)
                                 £000          £000          £000
                                                                 
  Decrease in cash in                                            
  the period                  (1,102)         (533)         (363)
  (Increase)/Decrease in                                         
  debt and lease finance      (4,378)           549           840
                              _______       _______       _______
  Change in net debt                                             
  resulting from cash                                            
  flows                       (5,480)            16           477
                                                                 
  Loans and finance                                              
  leases acquired with                                           
  subsidiary                                                     
  undertakings                   (34)             -             -
  Currency translation                                           
  movement                      (118)           (5)             7
                              _______       _______       _______
  Movement in net debt                                           
  in the period               (5,632)            11           484
  Net debt at start of                                           
  period                      (2,662)       (3,146)       (3,146)
                              _______       _______       _______
  Net debt at end of                                             
  period                      (8,294)       (3,135)       (2,662)
                               ======        ======        ======

               

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