KELLAN GROUP LTD ("Kellan", the "Company" or "Group")
The Company is pleased to announce its annual results for the year ended 31 December 2015. Kellan is a market leading recruitment business operating across a wide range of functional disciplines and industry sectors.
Full year revenue of £24.9 million representing an increase of 8.3% (2014: £23 million).
H2 2015 revenue of £13.4 million grew by 16.4% compared with H1 2015 (£11.5 million); while H2 net fee income (NFI) of £4 million grew by 7.9% compared to H1 2015 (£3.7 million).
Full year adjusted EBITDA profit of £1.02 million compared to a profit of £0.73 million in 2014.
Total net profit for 2015 of £0.43 million compared with a net loss of £0.06 million in 2014.
Operating profit of £0.82 million compared with an operating profit of £0.26 million in 2014.
Continued streamlining with administrative expenses reduced by 11.1% year-on-year from £7.7 million in 2014 to £6.9 million. Excluding the effect of share based payments (2015; £150,000 favourable adjustment; 2014; £78,000 charge), the like-for-like administrative expenses have reduced 8.2% from £7.7 million to £7 million.
Profit of 0.13p per basic share and 0.11p per diluted share (2014: loss 0.02p for both basic and diluted).
The Kellan Group PLC | |
Rakesh Kirpalani, Group Finance Director | Tel: 020 7268 6200 |
Allenby Capital Limited | |
David Worlidge / James Thomas | Tel: 020 3328 5656 |
I am pleased to announce that the Group has continued to build on progress made in previous years; especially in relation to overall profitability. Group sales have increased 8.3% from £23 million in 2014 to £24.9 million in 2015, whilst administrative expenses have reduced by 11.1% from £7.7 million in 2014 to £6.9 million in 2015. Overall profit for 2015 was £0.43 million compared to a loss of £0.06 million in 2014.
From a trending perspective, adjusted EBITDA has moved from a loss of £0.35 million in 2013 to earnings of £0.73 million in 2014 and earnings of £1.02 million in 2015.
A new CRM system went live in Q4 2015 for Berkeley Scott and RK Group, with Quantica completed in Q1 2016. The new system is already helping deliver better results with much improved search functionality and reduced administrative burden enabling staff to focus on increasing sales. We have continued investment in IT systems with a new fleet of front end hardware installed for every member of staff during 2015. Our back-end IT infrastructure project completed during the year to further strengthen our working environment.
I attended my first Group annual conference in January 2016 and was very pleased to see the enthusiasm, high spirit and camaraderie engrained with all our staff which will drive us to achieve continued success during 2016.
My sincerest thanks go to all our customers, staff and all our loyal shareholders for their long standing support.
Kellan Group plc (the "Group" or the "Company" or "Kellan"), is a market leading recruitment business operating across a wide range of functional disciplines and industry sectors. The Company joined the AIM market in December 2004.
A review of the business and a detailed explanation of performance and key performance indicators is set out below.
With the UK recruitment market providing good opportunities with some specialist sectors doing significantly better than others, the Group has proactively taken the opportunity to ensure it is in the strongest position possible. Business operations are focussed in our core markets being Hospitality & Leisure, Technology and Accounting & Finance. While we also operate in certain other niche areas, our aim is to continue to develop our core businesses in major city centres. The diverse brands within the Group de-risk the overall impact of a potentially inconsistent market, and we saw some strong performances within various parts of our business during 2015. The consolidation of offices into multi sector operations continues to benefit the business in effective management and control along with developing critical mass creating a much improved and vibrant business environment.
£3.08 million in 2015, with all temporary locations delivering year-on-year growth. The investment in headcount across all four temp locations allowed our temporary recruiters the opportunity to spend more time client facing and driving sales growth.
Several new national accounts were won in 2015 predominantly in the contract and facilities management sector.
Continued investment and expansion has seen Berkeley Scott return to the Birmingham market in Q1 2016.
NFI from Berkeley Scott's permanent recruitment operation declined by 7.5% from £2.03 million in 2014 to £1.88 million in 2015. The teams were successfully re-established in both Leeds and Manchester to service the Northern Hospitality market delivering NFI growth of £0.17 million (39.6%) on 2014. All sectors of the perm business achieved good results but the chef market was particularly buoyant largely due to the widely publicised chef shortage. The perm businesses also benefited from increased demand from the hotel sector, particularly through new openings in the north of England.
Berkeley Scott's London perm business underperformed during H1 2015, but following a management restructure is showing signs of progress. The London team secured client contracts with new start up restaurants in the fine dining space along with branded, smaller independents, brassiere style establishment and late night bars and also made significant progress into the senior levels placements especially within the executive chef market.
The RK Group's NFI was flat year-on-year at £1.4 million with the RK Accountancy business delivering good growth in 2015, with annual NFI increasing by 14.3% from £1.1 million in 2014 to £1.3 million in 2015. The Manchester team has also secured recruitment partner of choice status for some of the region's largest organisations including Co-operative Group, Hilti, Northern Rail, LF, Steria and Sodexo.
Investment was made to revise the training and development programmes which contributed to staff retention levels being high and the graduate training programme delivering strong results. Throughout
2016, the business will continue to invest in an expansion plan that includes increasing headcount in all existing branches. The business also re-entered the Midlands market with a central Birmingham operation in Q1 2016.
The RK Search and HR businesses declined year-on-year by £0.2 million due to the loss of residual NFI from a client whose hiring requirements reduced substantially. As this is not a core operation, the Group divested from this to focus on the accountancy business which is more profitable and delivering good results.
£1.36 million in 2015. NFI from continuing operations delivered strong results, with NFI increasing by 31.9% from £0.91 million in 2014 to £1.2 million in 2015. Quantica Technology was able to take advantage of demand and increase growth in contract business in the UK, particularly from within the telecoms sector. Quantica Technology made good progress expanding into Europe with client wins in Spain, Portugal and Germany.
With a new CRM system implemented in Q1 2016 and continuing investment in our people, we are in an excellent position to take advantage of this buoyant market.
The Group's revenue for the year ended 31 December 2015 was £24.9 million representing an increase of 8.3% (2014: £23 million). This produced NFI of £7.7 million for the year ended 31 December 2015, a decrease of 3.7% (2014: £8 million). 2015 full year adjusted EBITDA profit of £1.02 million compared to a profit of £0.73 million in 2014.
Temporary NFI growth was offset by Permanent NFI decline with Temporary NFI increasing by 12.2% from £3.69 million in 2014 to £4.14 million in 2015; whilst Permanent NFI declined by 17% from £4.3 million in 2014 to £3.57 million in 2015. The Perm NFI shortfall was primarily made up of our loss making Quantica Technology Midlands operation and underperformance across London Perm Hospitality during H1 2015. The London Perm team has improved significantly during H2 and is well positioned to deliver good results in 2016.
Administrative expenses have decreased to £6.9 million in the year ended 31 December 2015, from
£7.7 million in 2014, which represents a reduction of 11.1% year-on-year. During the year, the Group carried out a review of the outstanding options. After considering the number of options that are expected to vest, a favourable share based payment adjustment of £150,000 has been included in administrative expenses in the 2015 accounts. Excluding the effect of share based payments (2015;
£150,000 favourable adjustment; 2014; £78,000 charge), the like-for-like administrative expenses have reduced 8.2% from £7.7 million to £7 million.
Net cash inflow at an operating level was £0.53 million for the year ended 31 December 2015 (2014: inflow of £0.91 million). Investing activities comprised of capital expenditure of £161,000 (2014:
£231,000). Net cash inflow from financing activities amounted to £146,000 (2014: outflow of £305,000) comprising movement on the invoice discounting facility balances, the servicing of loan interest and repayment of £15,000 to one loan note holder. The net increase in cash and cash equivalents in the period was £516,000 (2014: £374,000).
Risk management is an important part of the management process throughout the Group. The composition of the Board is structured to give balance and expertise when considering governance, financial and operational recruitment issues. Meetings incorporate, amongst other agenda items, a review of monthly management accounts, operational and financial KPIs and major issues and risks facing the business.
The most important KPIs used in monitoring the business are as follows:
Year ended 31 December 2015 | Year ended 31 December 2014 | |
Revenue | £24,864,000 | £22,963,000 |
Net Fee Income | £7,701,000 | £7,994,000 |
Adjusted EBITDA | £1,021,000 | £727,000 |
Adjusted EBITDA as a % of Net Fee Income | 13.26% | 9.09% |
Days sales outstanding (DSO) | 39 | 42 |
Headroom on Confidential Invoice Discounting "CID" facility | £1,634,000 | £1,993,000 |
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Financial - The main financial risks arising from the Group's activities are liquidity risk and credit risk. These are monitored by the Board and are disclosed further in notes 1 and 16 of the financial statements.
Based on the Group's latest cash flow forecasts and current trading performance, it is not expected that any further funding will be required for the foreseeable future. The directors' consideration of the appropriateness of the going concern basis in preparing the financial statements is set out in note 1 to the financial statements.
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Market - the Group operates in a dynamic market place and constantly seeks to ensure the solutions it offers to customers are competitive. By operating in diverse sectors, the Group is, to some degree, protected from a deteriorating market. The Group is operating at a near 50/50 mix of temporary and permanent recruitment fees, which de-risks the overall impact of a potentially inconsistent market.
- People - In a people intensive business, the resignation of key individuals (both billing consultants and influential management) and the potential for them to exit the business taking clients, candidates and other employees to their new employers is a risk. Kellan mitigates this risk through a number of methods including the application of competitive pay structures and share plans to incentivise retention. In addition, the Group's employment contracts contain restrictive covenants that reduce a leaver's ability to approach Kellan clients, candidates and employees for certain periods following the end of their employment with the Group.
The Strategic Report was approved by order of the Board on 11 March 2016
11 March 2016
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2015
Year ended | Year ended | ||
31 December 2015 | 31 December 2014 | ||
Note | £000 | £000 | |
Revenue | 24,864 | 22,963 | |
Cost of sales | (17,163) | (14,969) | |
Gross profit/net fee income | 7,701 | 7,994 | |
Administrative expenses | (6,877) | (7,735) | |
Operating profit | 2 | 824 | 259 |
Finance income | 8 | 5 | |
Finance expenses | 5 | (406) | (319) |
Profit/(loss) before tax | 3 | 426 | (55) |
Tax credit | 6 | - | - |
Profit/(loss) for the period | 426 | (55) | |
Attributable to: | |||
Equity holders of the parent | 426 | (55) | |
Profit/(Loss) per share in pence | |||
Kellan Group plc issued this content on 14 March 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 14 March 2016 08:30:25 UTC
Original Document: http://www.kellangroup.co.uk/news-item/1163886265.pdf
