(HSS.L) Highams Systems Services Group PLC Buy/Sell

RNS Number : 3576W Highams Systems Services Group PLC 28 July 2009

For release at 0700 on 28 July 2009

Highams Systems Services Group plc

("Highams" or "the Group")

The AIM quoted recruitment consultancy and a leading niche provider of business, technology and professional services to the insurance and financial services sectors.

Preliminary Results

for the year ended 31 March 2009

Chairman's Statement

Introduction

Following the Board restructuring and capital reorganisation undertaken last October, Highams has continued to reduce overheads in line with the challenging climate within the recruitment sector. We have made significant cost savings across the Company and will continue to ensure that our overheads are tightly controlled. The second half to March 2009 showed reduced losses at £110k compared to £260k in the first half to September 2008.

We continue to focus in our niche market within the insurance sector and in maintaining the quality of service and delivery associated with our brand.

Although the results for the year are disappointing overall, we have probably endured in the second half of the year arguably the most difficult conditions seen by the recruitment sector as a whole. The current outlook remains uncertain, but we are pleased to report that in the first quarter of this financial year the business has produced a small profit at EBITDA level, and we continue to focus on finding higher value business through our niche networks.

Since the year end, further cost savings have been made. The strategy is to seek profits, whilst maintaining the quality of our offering and the Directors currently expect an improved performance in the current financial year.

Financial Results

Group revenue fell by 22.6 per cent. to £10.5m (2008: £13.6m) as contractor numbers declined during the last quarter of the financial year.

Gross profit was therefore reduced at £1.76m (2008: £2.1m). This represents 16.7 per cent. of revenue, which is slight improvement when compared to 15.6 per cent. in 2008.

Group loss before taxation and impairment was £370,000 (2008: loss of £851,000). The Directors are not recommending the payment of a final dividend for the year to 31 March 2009 (2008: nil).

Executives and Staff

We remain a strong team of very knowledgeable long serving staff; and whilst we are in a challenging market their loyalty and commitment to the group remains positive for which we are extremely grateful.

Ken Ford Chairman 27 July 2009

Enquiries:

Mark de Lacy , Managing Director Tel: 01883 341 144

Highams Systems Services Group plc www.highams.com

Rick Thompson / Carl Holmes Tel: 020 7149 6000

Charles Stanley Securities (Nominated Adviser)

Tarquin Edwards Tel: 07879 458 364

Peckwater PR

Consolidated income statement

For the year ended 31 March 2009

Note £'000 £'000

Revenue 10,533 13,606
Cost of sales (8,768) (11,481)

Gross profit 1,765 2,125

Administrative costs
Other administrative costs (1,988) (2,895)
Goodwill impairment - (1,071)
Total (2,082) (3,966)

Operating loss (317) (1,841)
Finance income 4 3
Finance costs (57) (84)

Loss before tax (370) (1,922)
Tax expense - -

Loss for the period attributable to equity shareholders (370) (1,922)

Loss per share
Basic and diluted earnings per share from continuing 1 (0.77)p (6.06)p

operations

All of the above relate to continuing operations

Consolidated statement of recognised income and expense

For the year ended 31 March 2009

2009 2008

£'000 £'000

Loss for the period (370) (1,922)
Foreign currency translation difference (1) 4
Total recognised income and expense for the period (371) (1,918)

attributable to equity shareholders

Consolidated balance sheet

At 31 March 2009

Note £'000 £'000

Assets Non-current assets
Intangible assets 3 11
Property, plant and equipment 12 20
Total 15 31

Current assets
Trade and other receivables 1,343 2,273
Cash and cash equivalents - -
Total 1,343 2,273
Total assets 1,358 2,304

Current Liabilities
Trade and other payables (1,039) (1,237)
Borrowings (256) (1,196)
Total (1,295) (2,433)
Net (Liabilities) / Assets 63 (129)

Equity
Share capital 2 1,597 1,594
Share premium account 2 1,239 679
Merger reserve 2 90 90
Employee share benefit trust reserve 2 (61) (61)
Currency reserve 2 3 4
Retained earnings 2 (2,805) (2,435)
Total Equity 63 (129)
Consolidated cash flow statement

For the year ended 31 March 2009

£'000 £'000

Operating activities
Loss for the year after tax (370) (1,922)
Depreciation of property, plant and equipment 10 14
Amortisation of intangible assets 8 13
Impairment of goodwill - 1,071
Net finance costs 53 81
Changes in trade and other receivables 930 662
Change in trade and other payables (198) (651)
Net cash used in operating activities 433 (732)

Cash flows from investing activities
Purchase of property, plant and equipment (10) (6)
Purchase of intangible assets - (14)
Proceeds of property plant and equipment 7 -
Interest received 4 3
Net cash used in investing activities 1 (17)

Financing activities
Decrease/increase in borrowings (890) 436
Proceeds from issue of share capital 650 -
Associated cost of share issue (87) -
Interest paid (57) (84)
Net cash from financing activities (384) 352
Net changes in cash and cash equivalents 50 (397)
Cash and cash equivalents, beginning of year (169) 228
Cash and cash equivalents, end of year (119) (169)

1. Loss per share

Loss Weighted average Loss per share Loss per share
number of shares Weighted average
number of shares
Profit/
(loss)
£'000 £'000 p £'000 £'000 p
Basic loss per share (370) 47,770 (0.77) (1,922) 31,692 (6.06)
Impairment of goodwill - - - 1,071 - -
Adjusted loss per share (370) 47,770 (0.77) (851) 31,692 (2.69)

The weighted average number of shares excludes 183,953 (2008 183,953) shares held by the Employee Share Benefit Trust.

There is no difference in either 2009 or 2008 between the basic and diluted loss per share.

2. Reconciliation of movements in equity

Share capital Share premium Merger reserve Employee share Total equity
benefit reserve
Currency reserve Retained earnings
£'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2007 1,594 679 90 (61) - (513) 1,789

Loss for the year - - - - - (1,922) (1,922)
At 1 April 2008 1,594 679 90 (61) - (2,435) (129)
Issue of new shares 3 647 - - - - 650
Associated cost of new shares - (87) - - - - (87)

issued
Currency adjustments - - - - (1) - (1)
Loss for the year - - - - - (370) (370)
At 31 March 2009 1,597 1,239 90 (61) 3 (2,805) 63

3. The financial information in this preliminary announcement does not constitute the company's statutory accounts for the years ended 31st March 2009 or 31st March 2008 but is derived from those accounts. The statutory accounts for 2008, prepared in accordance with IFRSs as adopted by the EU have been delivered to the Registrar of Companies and those for 2009; will be delivered following the Company's annual general meeting. The auditors' reports on the accounts for both years were unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and did not contain statements under the Companies Act 1985 s237(2) or (3).

4. Copies of the statutory accounts for the year ended 31 March 2009 will be posted to all shareholders. Additional copies will be available from the Company Secretary, Highams Systems Services Group plc, Quadrant House, 33/45 Croydon Road, Caterham, Surrey, CR3 6PB and will be available to download from the investor relations section on the Company's website www.highamsrecruitment.com

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

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