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SBS Group (SBG)

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Friday 01 March, 2002

SBS Group

Preliminary Results

SBS Group PLC
1 March 2002



                                                  1 March 2002

                         SBS Group plc
                               
     Preliminary Results for the Year Ended 31 August 2001
                               
SBS  Group  plc,  the specialist IT staffing  business,  today
announces its preliminary results for the year ended 31 August
2001.

                          Highlights

>  Turnover was £45.4m (2000: £46.4m)
  
>  Gross margin improved to 20.1% (2000: 19.7%)

>  Underlying operating profit was £0.9m *(2000: £1.4m) *

>  Underlying earnings per share was 1.7p* (2000: 5.5p) *

>  Loss before tax was £(3.6)m (2000: £0.3m profit)

>  Net debt was reduced by £1.2m

>  Settlement of deferred consideration for ACI

>  EGM to approve ACI settlement

>  Appointment of new Finance Director

* before exceptional costs, goodwill amortisation and impairment

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

'Against a background of continued weakening of the market for
IT  recruitment,  all areas of the group. delivered  operating
profits (before goodwill amortisation, impairment, central and
exceptional costs) as anticipated following the trading update
in February 2001.

Whilst we are confident of an eventual return to growth in the
IT   recruitment   market,  the  current  year   will   remain
challenging.   We shall respond to the challenge  by  pressing
ahead with our strategy, continuing to be rigorous in our cost
control and further streamlining our structure.'



For further information please contact:

SBS Group plc                               020 7420 6700    
Philip Holt, Chief Executive    

Bridgewell Corporate Finance                020 7626 3322
Greg Aldridge/Martin Gibbs

Weber Shandwick Square Mile                 020 7950 2869
Richard Hews/Trish Featherstone


                     Chairman's Statement


Introduction

Against a background of continued weakening of the market  for
IT  recruitment,  the Group has produced an underlying  profit
before exceptional items broadly as anticipated following  the
trading update in February 2001.

Despite particular challenges in the United States as a result
of  the malaise in the telecoms sector which includes a number
of  our  larger  clients,  all areas of  the  Group  delivered
operating  profits (before goodwill amortisation,  impairment,
central   and   exceptional  costs).   At   the   same   time,
improvements to working capital controls and debtor collection
enabled us to reduce debt by £1.2m.

In  the  light  of  such  a determined  performance,  we  have
successfully  negotiated a two year deferment of capital  debt
repayment.   This represents a significant show of support  by
our bankers following the restructuring undertaken this year.


Financial Results

Group  turnover decreased by 2% to £45.4m (2000 £46.4m).  This
broadly reflected a reduction in the monthly average number of
IT contractors on assignment from 535 to 488.

Gross profit margin improved slightly from 19.7% to 20.1% as a
result of the increased proportion of business now located  in
the  US  and the increase in our permanent placement business,
both areas operating at higher margins.

Administrative costs for the year increased to  £8.2m  from  
£7.8m.   However by the end of the year, the annualised running
rate of costs had been reduced by some £1.3m compared to  the
same period in 2000.

Exceptional   items   of  £0.7m  include  reorganisation   and
redundancy costs to reduce the ongoing cost base.

Earnings  per  share  before exceptional  items  and  goodwill
amortisation and impairment was 1.7p (2000 5.5p).   The  Board
is not recommending payment of a dividend.

It has been necessary to review the carrying value of goodwill
associated with the acquisition of ACI  due to the weakness in
the  Telecom  sector as noted above. Shareholder funds  at  31
August  2001  showed  a £1.1m deficit (2000:  Positive  £2.5m)
after  providing impairment of £2.7m and goodwill amortisation
of £0.3m.


ACI

The  integration of Applied Concepts Inc. (ACI) into the Group
has now been successfully accomplished. ACI was acquired on 26
October  1999  from Alan Waksman, the founder and  its  former
Executive  President. Settlement of the deferred consideration
of  approximately  $1.4m has now been  agreed.  It  is  to  be
satisfied by the issue of 3,541,629 new ordinary shares and  a
convertible  loan  note for $0.7m bearing interest  at   LIBOR
plus 2% and convertible into 3,037,403 new ordinary shares  in
two  years  or  on default. Pursuant to this settlement,  Alan
Waksman will also be entitled to join the board.

Extraordinary General Meeting

Shareholder  approval for the settlement  described  above  is
being  sought  at an EGM on Wednesday 27 March  2002.   It  is
expected that a circular to shareholders convening the EGM and
containing  these  preliminary results will be  posted  today.
Irrevocable  undertakings to vote in favour of the resolutions
to  be  proposed  at  the EGM have already  been  received  in
respect of more than 75% of SBS issued share capital.

The Board

Several changes to the Board have been made.

Steve   Simmonds  has  today  been  appointed  Group   Finance
Director.   Since the year end Steve has filled  the  role  of
acting  Group  Finance Director. Steve  has  a  background  of
senior  positions within the sector including Hestair plc  and
Parity plc and he is warmly welcomed to the Board.

Phil  Holt  took  on  the responsibility  of  Chief  Operating
Officer in October 2000 and since October 2001, Phil has  been
appointed  Chief  Executive.  This  has  been  implemented  in
accordance  with  our plans and in the light  of  the  respect
which Phil has earned both internally and externally.

Gary Jones, the former Chief Executive, has been appointed Non-
Executive Deputy Chairman and remains a major shareholder.  We
are immensely grateful to Gary both for the part he has played
in  building  the Group and for the benefit of his  continuing
involvement in the future.

John  Davies retired as Non-Executive Chairman in  March  2001
due  to  his increasing responsibilities at BT. The  Board  is
grateful to John for his role following flotation in 1997.

I  was pleased to accept the invitation to take on the role of
Chairman on John's retirement.

Employees

In  periods  of  uncertainty in the market  place,  increasing
demands are made of employees.  The Board is grateful for  the
employees'  positive response to the restructuring  which  has
taken  place and continuing contribution to the Group  through
this prolonged period of turbulence.

Outlook

Since  August,  the  market has continued  to  deteriorate  as
clients  reduced  headcounts  and  initiated  hiring  freezes.
However,  the  restructuring and cost  reductions  implemented
anticipated this and there are signs in the New Year that  the
market may be stabilising.

Recovery  in our market place will depend upon our  blue  chip
client  base  resuming investment in IT systems which  deliver
productivity improvements to their organisations,  and  enable
differentiation in their markets. Meanwhile,  as  reported  at
the  interim,  we  have undertaken a review  of  our  business
strategy,  in  order  to  exploit our  current  strengths  and
identify and develop new business opportunities. Full  details
of  this review will be included in the full annual report and
accounts.

Our market is highly fragmented and we believe that investment
in  people,  processes and procedures will enable  us  to  add
value to customer service and set us apart in the market.

Whilst we are confident of an eventual return to growth in the
IT   recruitment   market,  the  current  year   will   remain
challenging.   We shall respond to the challenge  by  pressing
ahead with our strategy, continuing to be rigorous in our cost
control and further streamlining our structure.


Peter Toynton
Chairman
1 March 2002


SBS GROUP PLC

CONSOLIDATED PROFIT AND LOSS ACCOUNT
YEAR ENDED 31 AUGUST 2001



                                    Notes         Audited         Audited
                                                     2001            2000
                                                     £000            £000

Turnover                              2            45,402          46,444
Cost of sales                                     (36,278)        (37,279)
                                                   _______         _______

Gross profit                                        9,124           9,165
Administrative expenses:
       Normal                                      (8,225)         (7,784)
       Exceptional                    3              (702)           (216)
       Goodwill amortisation                         (305)           (242)
       Goodwill impairment                         (2,744)              -
                                                   _______         _______
 
                                                  (11,976)         (8,242)
                                                   _______         _______

Operating (loss)/profit                            (2,852)            923
Interest receivable and similar income                 13              25
Interest  payable and similar  charges               (782)           (663)
                                                   _______         _______

(Loss)/profit on ordinary activities 
before taxation                                    (3,621)            285

Tax on(loss)/profit on ordinary activities 4           25             (89)
                                                   _______         _______
            
(Loss)/profit  for the financial  year             (3,596)            196
Dividends                                  5            -            (182)
                                                   _______         _______
          
Retained (loss)/profit for the financial year      (3,596)             14
                                                   =======         =======

Earnings per share before goodwill amortisation 
impairment and exceptional costs           6          1.7p           5.5p

(Loss)/earnings per share                  6       (39.5)p           2.2p

Fully  diluted (loss)/earnings per share   6       (39.5)p           2.1p




SBS GROUP PLC

STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
YEAR ENDED 31 AUGUST 2001



                                                        2001         2000
                                                        £000         £000

(Loss)/profit for the year                            (3,596)         196
Currency translation differences on
foreign currency net investments                          35           34
                                                      _______      _______
Total recognised (losses)/gains relating 
to the  year                                          (3,561)         230
                                                      ========     ========



 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' (DEFICIT)/FUNDS


                                                        2001         2000
                                                        £000         £000

(Loss)/profit for the year                            (3,596)         196

Dividends                                                  -         (182)
                                                       _______     _______

                                                      (3,596)          14

Other recognised gains relating to the year               35           34

New share capital subscribed                               -           21
                                                       _______     _______


Net (reductions)/additions to shareholders' funds     (3,561)          69

Equity  shareholders'  funds at 1  September 2000      2,453        2,384
                                                       _______     _______
Equity shareholders'(deficit)/ funds at 
31 August 2001                                        (1,108)       2,453
                                                       =======     =======


SBS GROUP PLC

CONSOLIDATED BALANCE SHEET
 31 AUGUST 2001


                                            Audited                Audited
                                              2001                  2000
                                       £000         £000      £000       £000

FIXED ASSETS
Intangible assets                                  2,926                5,991
Tangible assets                                      388                  468
Investments                                            5                    5
------------------------------------------------------------------------------
                                                   3,319                6,464
CURRENT ASSETS
Property held for resale                   -                   128
Debtors                                9,047                10,369
Cash at bank and in hand                 417                   502
------------------------------------------------------------------------------
                                       9,464                10,999

CREDITORS
Amounts falling due within one year   (8,107)               (9,892)
------------------------------------------------------------------------------
NET CURRENT ASSETS                                  1,357               1,107
------------------------------------------------------------------------------

TOTAL ASSETS LESS CURRENT LIABILITIES               4,676               7,571

CREDITORS
Amounts  falling due after more than one  year     (5,642)             (5,067)

PROVISION FOR LIABILITIES AND CHARGES                (142)                (51)
------------------------------------------------------------------------------
NET (LIABILITIES)/ASSETS            (1,108)           2,453
==============================================================================

CAPITAL AND RESERVES
Called up share capital                                 182               182
Share premium account                                 5,509             5,509
Profit and loss account                              (6,799)           (3,238)
------------------------------------------------------------------------------
EQUITY SHAREHOLDERS' (DEFICIT)/FUNDS                 (1,108)            2,453
==============================================================================



SBS GROUP PLC

CONSOLIDATED CASH FLOW STATEMENT
YEAR ENDED 31 AUGUST 2001


                                             Audited             Audited
                                              2001                 2000
                                        £000       £000       £000      £000

Net cash inflow from operating activities          1,418                 519

Return on investments and servicing 
of finance
Interest received                         13                    25
Interest paid                           (782)                 (471)
Interest element paid on finance leases    -                    (3)
------------------------------------------------------------------------------

Net cash outflow from return on investments
and servicing of finance                             (769)               (449)

Taxation
UK corporation tax paid                   (22)                (535)
Overseas tax received/(paid)              431               (1,099)
------------------------------------------------------------------------------

Tax received/(paid)                                   409              (1,634)

Capital expenditure
Sale of property held for resale          114                    6
Purchase of tangible fixed assets         (88)                (155)
------------------------------------------------------------------------------

Net cash inflow/(outflow) from capital
expenditure and financial investments                   26               (149)

Acquisitions and disposals
Purchase of subsidiary undertakings       (39)              (4,504)
Net cash acquired with subsidiaries         -                  451
------------------------------------------------------------------------------

Net cash outflow from acquisitions and disposals       (39)            (4,053)

Equity dividends paid                                 (100)              (311)
------------------------------------------------------------------------------

Net cash inflow/(outflow) before use of
liquid resources and financing                         945             (6,077)

Financing
Net proceeds from issue of shares           -                    21
Capital element of finance lease payments (22)                  (37)
Net repayment of short term loans        (608)                 (983)
Increase in medium term loans               -                 5,510
------------------------------------------------------------------------------
                                                       (630)            4,511
------------------------------------------------------------------------------

Increase/(decrease) in cash                             315            (1,566)
==============================================================================


NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 AUGUST 2001

1  BASIS OF PREPARATION

   The financial information for the year ended 31 August 2001
   does  not constitute statutory accounts within the  meaning
   of  section 240 of the Companies Act 1985.  The figures for
   the  year  ended  31 August 2001 are based on  the  audited
   accounts  for  that  year, which will  be  filed  with  the
   registrar in due course and on which the auditors  gave  an
   unqualified report.
   
   The financial information has been extracted from statutory
   accounts for the year ended 31 August 2001.  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 during normal business hours  from
   1  March 2002.  Full statutory accounts will also be posted
   to shareholders as soon as possible.

   Accounting convention

   The  financial  statements have  been  prepared  under  the
   historical   cost   convention  and  in   accordance   with
   applicable  accounting  standards  including  the  recently
   issued   FRS   reporting  standard  FRS18   -   'Accounting
   Policies'.



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:
         
                                                   2001             2000
                                                   £000             £000
   Turnover
   By origin and destination:

   United Kingdom                                19,332           20,507
   Continental Europe                             8,521            9,883
   North America                                 17,549           16,054
                                                _______           _______
   
                                                 45,402           46,444
                                                =======           =======
         
   Operating profit before exceptional administrative
   expenses, goodwill amortisation and impairment
   
   United Kingdom                                 1,136              975
   Continental Europe                                62             (261)
   North America                                    518            1,378
   Central Overheads                               (817)            (711)
                                                 _______          _______
    
                                                    899            1,381
   
   Exceptional administrative expenses (note  3)   (702)            (216)
   Goodwill amortisation                           (305)            (242)
   Goodwill impairment                           (2,744)               -
   Net interest charges                            (769)            (638)
                                                 _______           _______
  (Loss)/profit on ordinary activities before tax(3,621)             285
                                                 =======           =======
   
   Net assets
   
   United Kingdom                                (1,468)           1,168
   Continental Europe                               220              269
   North America                                    140            1,016
                                                 _______          _______
   
                                                 (1,108)           2,453
                                                 =======          =======
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 AUGUST 2001

3  EXCEPTIONAL ADMINISTRATIVE EXPENSES

   The   exceptional   administrative   expenses   relate   to
   reorganisation   costs   for   redundancies    and    lease
   liabilities  for closed offices, provisions for  which  are
   included in the Balance Sheet.

4  TAX ON PROFIT ON ORDINARY ACTIVITIES 
                                                         2001        2000
                                                         £000        £000

   UK corporation tax:
   Current tax on income for the period                     7          59
   Adjustments in respect of prior periods                  1          10
                                                      _______     _______

                                                            8          69
   
   Overseas taxation                                        7         (15)
   Deferred taxation                                      (40)         35
                                                      _______     _______
    
   Tax on profit on ordinary activities                   (25)         89
                                                      =======     =======

5  DIVIDENDS
                                                         2001        2000
                                                         £000        £000
   
   Interim dividend proposed of NILp per share (2000: 0.9p) -          82
   Final dividend proposed of NILp per share (2000: 1.1p)   -         100
                                                      _______     _______
   
                                                            -         182
                                                      =======     =======
   
6  EARNINGS PER SHARE

   The  calculations of earnings per share and  fully  diluted
   earnings  per  share are based on a loss  of  £3.6m  (2000:
   profit of £0.2m) and a weighted average of 9,099,975 (2000:
   9,023,065) shares in issue.
   
   The  calculation  of  earnings per  share  before  goodwill
   amortisation, impairment and exceptional costs is based  on
   an  adjusted  profit of £0.2m (2000: profit  £0.5m)  and  a
   weighted  average of 9,099,975 (2000:9,023,065)  shares  in
   issue.
   
                                   2001          2001     2000           2000
                                        fully diluted           fully diluted
                                  Pence         Pence    Pence          Pence

   (Loss)/earnings per share      (39.5)        (39.5)     2.2            2.1
   Exceptional administrative 
   expenses                         7.7           7.6      1.7            1.6
   Goodwill amortisation and 
   impairment                      33.5          32.9      1.6            1.6
                                  ______        ______   ______        ______
   Earnings per share before 
   exceptional items, goodwill 
   amortisation and impairment      1.7           1.0      5.5            5.3
                                  ======        ======   ======        ======

   Earnings   per   share  before  exceptional  administrative
   expenses,   goodwill amortisation and impairment have  been
   shown  because  they reflect the underlying performance  of
   the business.

7  POST BALANCE SHEET EVENT

   ACI  was  acquired on 26 October 1999 from Alan  Waksman,  the
   founder   and  former  owner.   Settlement  of  the   deferred
   consideration  of  approximately $1.4m has  now  been  agreed,
   subject to shareholder approval.  It is to be satisfied by the
   issue of 3,541,629 new ordinary shares and a convertible  loan
   note  for  $0.7m  bearing  interest  at  LIBOR  plus  2%   and
   convertible 3,037,403 new ordinary shares in two years  or  on
   default.  Pursuant to this settlement, Alan Waksman will  also
   be entitled to join the Board.

   Shareholder approval for the settlement is being sought at  an
   EGM  on  27  March  2002, for which the company  has  obtained
   irrevocable  commitments  to  support  the  resolutions  being
   proposed  in  respect of in excess of 75% of SBS issued  share
   capital.




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