Interim Results - 6 Months to 30 September 1999
Corporate Executive Search Intl PLC
24 January 2000
CORPORATE EXECUTIVE SEARCH INTERNATIONAL
INTERIM STATEMENT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 1999
CHAIRMAN'S STATEMENT
In my first statement to you as Chairman I am pleased to
report on a number of positive developments. Firstly, the
progress your Company has made in terms of results and
new initiatives within the existing high technology
search operation and secondly the exciting strategic
direction in which the Company intends to move as a
result of the proposed purchase of DataCash Limited.
In terms of results I am pleased to report that the
Company achieved a profit before tax, exceptional items
and interest of £103,000 for the six months to 30
September 1999 compared to £94,000 in the corresponding
period last year. This has been achieved on revenues of
£1,253,000, which were, as anticipated, lower than the
1998 revenues of £1,535,000. Operating costs were
reduced thereby improving the margin such that pre-tax
profits were recorded of £26,000 compared to a loss last
year of £57,000. The performance of the Company in the
final quarter of 1999 has been affected by the costs of
new initiatives and by a slowing towards the year-end in
candidate appointments. However, the Board considers that
the prospects for the future of the recruitment business
are good and I can report that the year has begun well.
Some of you may be aware that many changes have taken
place at Board level during the period with Roger Evans
resigning as Chief Executive on 31 August 1999 and Alan
Bates resigning as Chairman on 10 November 1999. I was
appointed as Chairman on 11 November 1999 and I would
like to take this opportunity to thank my predecessor for
his efforts and wish him well for the future.
The Company, having retrenched in the last couple of
years, has now begun to grow by two means. Firstly, we
are actively recruiting quality, proven consultants and I
am pleased to report that a leading team, with a
specialist knowledge of the internet start-up market, has
joined the Company from a major competitor.
Secondly, we have been exploring opportunities to
leverage our expertise in the recruitment of board level
and senior executives in the European high technology and
dot.com market places. As a result we have launched a
senior level contingency recruitment business known as
rocketscience distinct from the core executive search
business in the methods it uses to place candidates into
vacant positions. We will also shortly launch Boldly-
Go.com which has been developed to take advantage of the
Company's increasing experience of executive and senior
level recruitment into start-up and dot.com businesses.
It is our objective to ensure Boldly-Go.com becomes a
leading supplier of executives into dot.coms through
access to the highest quality candidates and strategic
partnerships with incubators, business accelerators and
internet investment funds, amongst others. We have
invested in people and technology in creating Boldly-
Go.com and we invite you to visit the web-site which will
be live shortly. We believe that operating in the dynamic
and exciting sectors of internet and high-technology
through the existing retained search business of
Corporate Executive Search as well as rocketscience and
Boldly-Go.com, will enable the Group to generate improved
revenues in the future.
The Board has also been examining opportunities to
utilise the position of the Company as a quoted vehicle.
In particular we have been excited by the prospects of
entering the 'enabling space' within the rapidly evolving
internet and e-commerce sector. Enablers provide the
essential services and technology that assist companies
wishing to develop internet activities to achieve their
objectives. We are already involved in this through the
recruitment businesses, as management and business skills
are even more critical to companies as they enter new
areas, change their business models and experience rapid
growth. The on-line business is distinct from the
traditional business in that it experiences all of these
changes simultaneously, and management, technology and
capital will be the defining differentiators between
success and failure in the web-world.
As we announced on 14 December 1999, the Company has
entered into an agreement to purchase the entire share
capital of DataCash Limited, a leading provider of e-
commerce payments solutions. DataCash is at the very
forefront of e-commerce enabling and we believe it will
show explosive growth over the next few years. DataCash,
established in September 1997, already has about 20% of
the UK internet payments processing market, with a number
of substantial companies as clients. It has also
established close relationships with most of the key
organisations within the internet world. DataCash will be
the first payments solutions provider listed in the UK,
and we are confident it will be able to leverage its
position significantly as part of the quoted Company.
This is a very significant deal for the Company and, as a
consequence, we asked the Stock Exchange to suspend
trading in the Company's shares until the circular
setting out the details of the acquisition had been
posted to shareholders. We will keep this period to a
minimum, but we currently expect the quote to be restored
in mid-to-late February.
The Board believes it will be useful to have co-terminus
accounting dates with DataCash, and we therefore propose
to shorten the current accounting year to the end of
December. It is also our intention to strengthen the
Board of the Company with the appointment of additional
executive and non-executive directors in order to provide
further guidance and expertise to the business.
This is a momentous point in the Company's history. We
would like to thank our shareholders who have remained
with us through the difficult times and we believe we now
have the strategy and the structure to provide you with
the prospect of the rewards you expect. I will provide a
further update of the Company's position with the
proposed circular.
David Bailey
Chairman
24 January 2000
CORPORATE EXECUTIVE SEARCH INTERNATIONAL PLC
Consolidated Profit and Loss Account
For the six months ended 30 September 1999
(unaudited)
Six Six
months months
ended ended
30 30
September September
1999 1998
£000 £000
Turnover 1,253 1,535
Administrative Expenses - normal (1,150) (1,441)
- exceptional (74) (145)
- total (1,224) (1,586)
Operating Profit/(Loss) - normal 103 94
- exceptional (74) (145)
Operating Profit / (Loss) 29 (51)
Net Interest Payable and Similar (3) (6)
Charges
Profit/(Loss) on Ordinary Activities 26 (57)
before Taxation
Tax on Profit/(Loss) on Ordinary (12) -
Activities
Profit/(Loss) on Ordinary Activities 14 (57)
after Taxation
Dividends - -
Retained Profit/(Loss) for the Period 14 (57)
Basic Earnings per Share 0.01p (0.04)p
Diluted Earnings per Share 0.01p (0.04)p
Basic Earnings per Share Before 0.06p 0.06p
Exceptional Items
CORPORATE EXECUTIVE SEARCH INTERNATIONAL PLC
Consolidated Balance Sheet
As at 30 September 1999
(unaudited)
As at As at
30 30
September September
1999 1998
£000 £000
Fixed Assets
Tangible Assets 174 326
Current Assets
Debtors 732 910
Cash at bank and in hand 635 340
1,367 1,250
Creditors
Amounts falling due within one year (624) (667)
Net Current Assets 743 583
Total Assets Less Current Liabilities 917 909
Creditors
Amounts falling due after more than (113) (142)
one year
Net Assets 804 767
Capital and Reserves
Called up share capital 156 156
Share premium account 686 686
Share scheme reserve 100 93
Merger reserve (124) (124)
Profit and loss account (14) (44)
Equity Shareholders' Funds 804 767
CORPORATE EXECUTIVE SEARCH INTERNATIONAL PLC
Consolidated Cash Flow Statement
For the six months ended 30 September 1999
(unaudited)
Six Six
months months
ended ended
30 30
September September
1999 1998
£000 £000
Net Cash Inflow From Operating 127 283
Activities
Returns on Investments and Servicing
of Finance
Interest received 8 6
Overdraft interest and similar - -
charges
Interest element of finance lease (11) (12)
rental payments
Net Cash Outflow From Returns on
Investments and Servicing of Finance (3) (6)
Taxation
Corporation tax paid (including ACT) - (5)
Tax Paid - (5)
Capital Expenditure and Financial
Investment
Purchase of tangible fixed assets (1) (32)
Sale of tangible fixed assets 10 30
Net Cash Inflow/(Outflow) From
Capital Expenditure and Financial 9 (2)
Investment
Net Cash Inflow Before Financing 133 270
Financing
Capital element of finance lease (29) (27)
rental payments
Net Cash Outflow From Financing (29) (27)
Increase in Cash in the Period 104 243
Notes
(1) The financial information contained in this report
does not constitute statutory accounts within the
meaning of Section 240 of the Companies Act 1985 (as
amended). The results for the year ended 31 March
1999 were reported on by the auditors and received
an unqualified report and contained no statement
under Section 237(2) or (3) of the Companies Act
1985 (as amended). Full accounts have been
delivered to the Registrar of Companies.
(2) The exceptional items in 1999 relate to the
following:
A charge of £74,000 representing notice period
payments made to Roger Evans, the Group's former
Chief Executive who left the Group on 17 August
1999, in accordance with his executive service
contract.
The exceptional items in 1998 relate to the
following:
A charge of £131,000 representing notice period
payments made to Mark Shields, the group's Non-
Executive Director and a previous Chief Executive,
and Mark Brooke, the Group's Director of
International Business Development, in accordance
with their executive service contracts. These
payments were a contractual liability of the Group.
A charge of £14,000 representing termination
payments made to employees of the Group's training
and development division that was terminated during
the period.
(3) Basic earnings per share for the six months ended 30
September 1999 have been calculated on the basis of
the profit after taxation for the period of £14,000
and the average number of shares in issue during the
period of
156, 002,000.
(4) Reconciliation of operating profit/(loss) to
operating cash flows
Six Six
months months
ended ended
30 30
September September
1999 1998
£000 £000
Operating profit/(loss) 29 (51)
Depreciation 69 72
Profit on sale of fixed assets (1) (11)
(Increase)/Decrease in debtors (20) 462
Increase/(Decrease) in creditors 50 (201)
Share scheme charge - 12
Net cash inflow from operating 127 283
activities
(5) Year 2000
The directors recognised the year 2000 problem as a
potentially serious business issue. They considered
the risks and implications not just across the Group
but also as a result of the systems of major
customers and suppliers not being Y2K compliant. At
the beginning of the year, the majority of the
Group's computer systems and associated software
were already Y2K compliant. Where problems were
identified, upgrading or replacement took place with
a significant proportion of these costs being
covered by existing maintenance contracts.
Additional costs not covered by existing contracts
did not exceed annual spending levels for ongoing
renewal and maintenance expenditure.
Since the end of 1999, no problems have been
experienced by any Group company. The Board,
however, is continuing to monitor the issue both
internally and externally.
(6) The financial statements for prior accounting
periods include a tax credit for tax losses
amounting to £310,000. These losses are not agreed
at 30 September 1999, however the directors are
confident that the credit will be agreed in due
course.
(7) Copies of the Interim Reports for the six months to
30 September 1999 will be available free of charge
from the Company's registered office at 7 Savoy
Court, Strand, London, WC2R 0EZ for a period of 14
days from the date hereof.
For further information, please call:
Corporate Executive Search International plc
Julian Compton, Finance Director 0171 550 1000
Clerkenwell Communications
John Coyle 0171 713 0900
0370 687 370
Chris Skyrme 0171 713 0900
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