Highlights:
Profits before goodwill amortisation, interest, exceptional items and taxation of 0.412m (year to 31 August 2003: loss of 0.398m)
Total turnover of 5.757m (year to 31 August 2003: 2.626m)
Continued growth organically and by acquisition in both online and traditional recruitment businesses
Extending market penetration into new and profitable niche sectors
Five acquisitions completed between September 2003 and February 2004
Online division trading profitably
Online division achieving organic growth at the rate of over 20% per annum and renewal rates amongst existing customers exceeding 75%
Now fourth largest e-recruitment provider in the UK by turnover
Interim results from AIM quoted recruitment specialist hot group plc for the four months to 31 December 2003, show a profit before goodwill amortisation, interest, exceptional items and taxation of 0.412m, compared with a loss of 0.398m for the year to 31 August 2003. Total turnover increased to 5.757m compared with 2.626m for the year to 31 August 2003, of which 1.185m was generated by acquisitions. Furthermore our cash position remains healthy with 1.17m at bank which can be supplemented through a 1.50m un-drawn facility. The Board is not recommending a dividend.
ìIn the four months of trading covered in this interim report, hot group has continued to develop rapidly. Our two stand-alone businesses of online and traditional recruitment have grown strongly both organically and by acquisition. This has contributed significantly to our financial performance and has led to underlying operating profitability in the Companyís core trading activity.
ìOur online division is now trading profitably having generated profits before goodwill amortisation, interest, exceptional items and taxation of 0.199m from turnover of 1.311m. The division is achieving organic growth at the rate of over 20% per annum, with renewal rates amongst our agency customers exceeding 75%. hot group is now the fourth largest e-recruitment provider in the UK by turnover. Our strategy of offering two distinct products, one to agencies and one directly to employers, gives us a strong market base and the ability to expand quickly.
ìBetween September 2003 and February 2004 we completed three online acquisitions that strengthened our existing services in key sectors and extended our market penetration into new and profitable niche sectors. These included Jobsin.co.uk plc, a business in the healthcare sector; The Graduate Group Limited that publishes graduate career handbooks, replicated online which are distributed through a network of over 50 student representatives; and Vectis Innovations Limited (trading as ìNetrecruitî), a network of specialist recruitment websites targeted at 18 to 28 year olds. Established in 2001, its founder Andrew Bird has joined hot group as head of e-marketing.
ìEstablished last year with the acquisition of Parkside Recruitment Limited, our traditional division continues to develop rapidly and in the period recorded turnover of 4.446m and profits before goodwill amortisation, interest, exceptional items and taxation of 0.384m.
ìIn the four months we acquired three other traditional businesses: The Buzz Recruitment Consultancy Limited, a traditional business specialising in permanent recruitment in the leisure, retail and corporate sales markets; Buzztempz Limited, a supplier of temporary staff; and International Teachers Network Limited, which supplies temporary teachers to schools and local education authorities in London and the South East. Educational recruitment is a new sector for us to penetrate, but one that we feel offers considerable scope for growth.
ìConsiderable potential synergies exist between our traditional and online businesses. Our technology and online capability improves the effectiveness of our traditional recruitment services while our traditional recruitment business enables face-to-face discourse with our clients. The combination produces increased candidate flow on a cost-effective basis and faster response rates to customers.
ìOur acquisition strategy creates a virtuous circle; increased traffic to our sites leads to increased renewal rates from existing customers and greater selling power when attracting new customers. Our operational platform can integrate new businesses quickly and efficiently, maximising the impact of new revenue streams while keeping costs flat. Historically our integration process has been extremely efficient, resulting in up to 50% of acquired revenues contributing directly to the profitability of hot group within the first three months of acquisition. With this in mind, we continue to search for further acquisitions that will enhance our business offering and make an early contribution to profitability.
ìThere is evidence that the recruitment industry is showing signs of a strong recovery following at least two years of recession. However, during this difficult period, we have built a financially stable business and laid the foundations to take advantage of the projected upturn in the sector. Our strategy of combining traditional and online recruitment positions hot group well for the future, maximising the strengths of both models. Our online recruitment service provides speed, flexibility and cost efficiency, backed up by our bespoke candidate management software and our traditional business enhances our relationships with clients. Combining these channels strengthens both and enhances our ability to provide top quality candidate lists to recruiters on a fast, cost-efficient basis.
ìWe remain committed to our growth strategy both organically and by acquisition and aim to build on our initial success. Furthermore, we are confident that the benefits in terms of increased group performance will flow through as a result of our proven ability in swift business integration.
ìWe have succeeded in our business plan objectives of achieving underlying operating profitability within the first two years of trading as hot group plc. The last four months have illustrated that we are continuing to make significant and exciting progress in the development of the group. With market conditions and economic sentiment improving, we look forward to continued development throughout 2004.î
Hot interim results
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