(GAR.L) Garner PLC Buy/Sell

30 September 2009

CHAIRMAN'S STATEMENT

The interim results to 30th June 2009 are that we made a Group loss after tax of £672,000 (2008: profit of £20,000) based on an increased turnover of £ 3,431,000 (2008: £1,259,000). This has resulted in a Group loss per share of 0.95p (2008: earnings per share 0.05p).

The increase in revenues compared to the same period in 2008 was driven by the recent combination of the Garner and Norman Broadbent businesses. Comparing like with like, turnover from continuing operations was down 22% to £984,000 (2008: £1,259,000).

As stressed in my Chairman's statement accompanying the 2008 year end results, trading conditions in the second half of 2008 and the beginning of 2009 have been very tough. Although management have identified and executed a number of cost saving initiatives to streamline the business, the impact of which will not be fully realised until the last quarter, we have had to incur additional restructuring expenses that have added to the pressure on the bottom line. Once this program is complete, these one-off costs will total £200,000, however, on a more positive note, they are expected to result in annualised cost savings of approximately £1,500,000 across the Group.

Clearly the losses incurred over the last six months have had a negative impact on working capital, which, coupled with the necessary capital investment in our IT systems, has resulted in a net cash outflow of £592,000. Net debt (excluding the long term deferred consideration on the Norman Broadbent acquisition) has increased from £334,000 at 31st December 2008 to £1,230,000 at 30th June 2009. However, trading since the end of the period has stabilised which, coupled with the action taken in the first half to reduce our overheads, has stemmed the cash outflow.

The last six months has also seen the net asset position of our balance sheet decrease from £1,044,000 at 31st December 2008 to £372,000 at 30th June 2009. Working capital remains tight and the Board is reviewing a number of opportunities to strengthen the balance sheet and increase the working capital headroom as a matter of priority. A further announcement will be made to shareholders in due course.

Whilst trading has stabilised in the third quarter, economic conditions remain challenging and our first year as the enlarged group will be worse than we could have anticipated. Despite this, we continue to be positive about the acquisition of Norman Broadbent and we believe that we will be well placed to grow once trading conditions improve.

A Garner

Chairman

For further information, please contact:

Andrew Garner, Chairman Garner Plc 020 7629 8822

Lindsay Mair, Antony Legge Dowgate Capital Advisers 020 7492 4777

CONSOLIDATED INCOME STATEMENT

FOR THE 6 MONTHS ENDED 30 JUNE 2009

Year
Six months Six months ended 31
ended 30 ended 30 December
June 2009 June 2008 2008

(unaudited) (unaudited) (audited)

£000 £000 £000

Revenue 3,431 1,259 3,274

Cost of operations (4,074) (1,187) (3,031)

GROUP OPERATING (LOSS)//PROFIT (643) 72 243

Net finance costs (17) (43) 107

(LOSS)/PROFIT ON ORDINARY ACTIVITIES

BEFORE TAXATION

Tax expense (12) (9) 7

(LOSS)/PROFIT FOR THE FINANCIAL PERIOD (672) 20 357

(Loss)/Earnings per share - basic (0.95)p 0.05p 0.88p

(Loss)/Earnings per share - diluted (0.91)p 0.05p 0.81p

There are no recognised gains and losses other than as stated above. Accordingly, no Statement of Total Recognised Income & Expense is given.

CONSOLIDATED BALANCE SHEET

AS AT 30 JUNE 2009

As at 30 June 2009 As at 30 June 2008 As at 31
December 2008

(unaudited) (unaudited) (audited)

£000 £000 £000 £000 £000 £000

Goodwill 7,049 959 7,049

Property, plant and equipment 223 14 198

TOTAL NON-CURRENT ASSETS 7,272 973 7,247

Trade and other receivables 1,505 1,069 2,013

Cash and cash equivalents 51 - 643

TOTAL CURRENT ASSETS 1,556 1,069 2,656

TOTAL ASSETS 8,828 2,042 9,903

TOTAL CURRENT LIABILITIES (4,239) (2,990) (4,384)

Non-current liabilities (4,217) (323) (4,475)

TOTAL LIABILITIES (8,456) (3,313) (8,859)

TOTAL ASSETS LESS TOTAL

LIABILITIES 372 (1,271) 1,044

Issued share capital 5,709 4,944 5,709

Share premium account 4,868 3,853 4,868

Retained earnings (10,205) (10,068) (9,533)

TOTAL EQUITY 372 (1,271) 1,044

CONSOLIDATED CASHFLOW STATEMENT & NOTES

Year
Six months Six months ended 31
ended 30 ended 30 December
June 2009 June 2008 2008

(unaudited) (unaudited) (audited)

Notes £000 £000 £000

Net cash from operating activities (i) (673) (192) 894

Cash flows from investing activities and servicing of finance
Interest paid (17) (43) 107

Payments to acquire tangible assets (58) (3) (3)

Acquisition of subsidiary, inclusive of cash acquired - - (566)

Net cash used in investing activities (75) (46) (462)

Cash flows from financing activities
Net cash inflow from equity placing - 10 633

Repayment of secured loans (102) - (94)

Payment/(repayment) of advances from directors 160 90 88

Payment of transaction costs - (272)

Increase in invoice discounting 246 78 (198)

Repayment of deferred consideration (148) - -

Net cash from financing activities 156 178 157

Net movement in cash and cash equivalents (592) (60) 589

Net cash and cash equivalents at beginning of period

Net cash and cash equivalents at end of period 51 (4) 643

Analysis of net funds
Cash and cash equivalents 51 - 643

Bank overdraft - (4) -

Borrowings due within one year (810) (932) (556)

Borrowings due after one year (211) (323) (321)

Directors loan account (260) (156) (100)

Deferred consideration (5,066) - (5,214)

Net funds (6,296) (1,415) (5,548)

Note (i) Reconciliation of operating profit to net cash from operating activities

Year
Six months Six months ended 31
ended 30 ended 30 December
June 2008 June 2008 2008

(unaudited) (unaudited) (audited)

£000 £000 £000

Operating profit (643) 72 243

Depreciation of property plant and equipment 34 3 10

Amortisation of loan arrangements fees - 3 -

(Increase) in trade and other receivables 508 (257) 508

(Decrease) in trade and other payables (514) 77 232

Taxation paid (58) (90) (99)

Net cash from operating activities (673) (192) 894

NOTES TO THE UNAUDITED INTERIM REPORT

1. BASIS OF PREPARATION

The financial information set out in this interim report does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The group's statutory financial statements for the year ended 31 December 2008, prepared under International Financial Reporting Standards (IFRS), have been filed with the Registrar of Companies. The auditor's report on those statements was unqualified.

The interim financial information for the six months ended 30 June 2009, has been prepared in accordance with International Financial Reporting Standards (IFRS) and on the same basis and using the same accounting policies as used in the financial statements for the year ended 31 December 2009. The interim financial statements have not been audited.

BASIS OF CONSOLIDATION

The group financial statements consolidate those of the Company and of its subsidiary undertakings Garner International Limited, BNB Recruitment Consultancy Limited, Bancomm Limited and BNB Recruitment Overseas Holdings Limited, companies incorporated in England and Wales. Profits or losses on intra-group transactions are eliminated in full.

2. earnings PER ORDINARY SHARE

The calculation of the losses per share is based on the loss attributable to ordinary shareholders of £672,000 (2008: profit of £20,000) and the weighted average number of ordinary shares in issue during the period, being 70,855,519 (2008: 38,061,315).

3 COPIES OF THE UNAUDITED INTERIM REPORT

Copies of this report are available on request from the Company's registered office at 6 Derby Street, London, W1J 7AD and are also available on the Company's website www.garnerinternational.com.

END