23 Sep 2008 07:00
23 September 2008
Work Group plc - Interim results
Results for the six months ended 30 June 2008
Work Group plc announces its results for the six months ended 30 June 2008.
Headlines
Net fee income up 2% to £7.99 million (2007: £7.87 million)
Global employer marketing contracts contribute 18% of net fee income
New business accounted for 16% of net fee income
Investment in US and new office in Hong Kong
Operating profit down 20% to £1.01 million (2007: £1.26 million)
Diluted EPS down 26% to 2.38p (2007: 3.21p)
Stronger balance sheet - no debt and cash generation from operations up £0.9m to £0.73 million (2007: £(0.21) million)
Commenting, Simon Howard, Executive Chairman said:
"Despite more difficult market conditions, the first half of 2008 was a period of further progress with Work Group performing in line with the board's expectations. We grew our net fee income and made some positive steps in the development of our client base. 16% of our income in the first half came from new business and we won some impressive new clients. We opened our second overseas office, in Hong Kong, on 4 July.
We have always had a second half bias to our income and this was expected to be even more pronounced in the current year. Whilst we have had some new wins, the trading environment for many of our clients has become less certain and we are also currently experiencing slower project flow and sign-off as well as project deferrals. As a result it has become apparent that our income expectations for the key months of September, October and November are unlikely to be met and, consequently, we are taking a more cautious stance about our performance for the remainder of the year.
We are in no doubt that we will face uncertain market conditions for some time to come but as every service we provide to our clients is about achieving greater cost effectiveness, we believe there are opportunities for us to sell more effectively and to continue to gain market share.
We are a people business and in order for us to pursue market share opportunities it is important for us to retain and invest in the quality of the Work team. This we are doing in the UK as well as in Hong Kong and the US where we are building secure, growing operations. With no debt and a strong balance sheet, Work Group is well-positioned to address these opportunities and, indeed, to continue to invest in the growth of its businesses both in the UK and overseas.
www.workgroup.plc.uk
Further enquiries:
| Work Group Simon Howard, Executive Chairman Michael Warren, Finance Director | Tel: +44 (0)20 7492 0000 |
| Altium Tim Richardson Sam Fuller | Tel: +44 (0)20 7484 4040 |
About Work Group
Work Group is a marketing services company which offers a range of solutions which enable employers to win the war for talent. It focuses on providing services in "talent acquisition and talent development" which enable employers to more effectively recruit and retain key staff.
Work Group's approach is to help employers reduce their traditional reliance on third-party recruiters such as head-hunters and recruitment firms through helping them establish and maintain a direct relationship between employer and prospective employee. It also helps employers reduce attrition costs through better employee engagement and retention of key talent.
Work Group currently operates through two divisions; Communications and Talent Management, providing services from its six locations in the UK and offices in New York and Hong Kong.
Chairman's review
Despite more difficult market conditions, the first half of 2008 was a period of further progress with Work Group performing in line with the board's expectations. We grew our net fee income and made some positive steps in the development of our client base. 16% of our income in the first half came from new business and we won some impressive new clients. We opened our second overseas office, in Hong Kong, on 4 July.
We have always had a second half bias to our income and this was expected to be even more pronounced in the current year. Whilst we have had some new wins, the trading environment for many of our clients has become less certain and we are also currently experiencing slower project flow and sign-off as well as project deferrals. As a result it has become apparent that our income expectations for the key months of September, October and November are unlikely to be met and, consequently, we are taking a more cautious stance about our performance for the remainder of the year.
The tougher market which we are now facing makes it more important than ever that our strategy and positioning is clearly understood.
Since coming to market in March 2006 we have spent some considerable time highlighting to our investors our points of difference from other companies within the recruitment sector. We believe that the key difference is that, at its core, Work Group is a marketing services company. It is a marketing services company in terms of the structure of its relationships with its principal customers, in terms of the people it employs and the basis on which it employs them, and in terms of the winning and retention of business. However, whereas most marketing services companies focus on the relationship between a company and its current and future customers, we concentrate on the relationship between a company and its current and future talent.
In order to highlight this, we are now reporting two income segments: Communications (previously described as Employer Marketing) and Talent Management (a combination of what was previously Executive Research (Armstrong Craven) and Recruitment Process Outsourcing). We have restated the corresponding period in 2007 along these divisions.
We continue in our view that employers are demanding greater efficiencies from their recruitment budgets and that, as a consequence, they are seeking to reduce their dependence on third party recruiters - particularly recruitment agencies. The combined services of Work Group enable employers to manage their own recruitment more effectively through building employer websites, attracting, identifying and assessing candidates, in addition to managing recruitment back offices.
In order to fully exploit this opportunity, we are currently engaged on the "One-Work" project which will enable all our services to be offered as a package, rather than bought individually from each of our trading identities. This project will see the company enter 2009 offering streamlined services from a more efficient operating base.
We are in no doubt that we will face uncertain market conditions for some time to come but as every service we provide to our clients is about achieving greater cost effectiveness, we believe there are opportunities for us to sell more effectively and to continue to gain market share.
We are a people business and in order for us to pursue market share opportunities it is important for us to retain and invest in the quality of the Work team. This we are doing in the UK as well as in Hong Kong and the US where we are building secure, growing operations. With no debt and a strong balance sheet, Work Group is well-positioned to address these opportunities and, indeed, to continue to invest in the growth of its businesses both in the UK and overseas.
Simon Howard
Chairman
Operating review
Trading in the first half was in line with the board's expectations. Group net fee income increased by 1.5% to £7.99m (2007: £7.87m). Operating profit was impacted by the costs of investment in our overseas offices and by a share based payment charge (see below) and declined by £0.26m or 20% to £1.01m (2007: £1.26m).
| 6 months to 30 June 2008 £'000 | 6 months to 30 June 2007 £'000 | Change % | Year ended 31 Dec 2007 £'000 | |
| Gross profit (net fee income) | ||||
| Communications | 4,723 | 4,549 | 4 | 9,482 |
| Talent Management | 3,265 | 3,321 | (2) | 6,659 |
| Group gross profit | 7,988 | 7,870 | 2 | 16,141 |
| Operating profit | ||||
| Communications | 772 | 872 | (11) | 1,941 |
| Talent Management | 510 | 616 | (17) | 1,238 |
| Corporate (non-recharged) | (217) | (226) | 4 | (240) |
| Share based payment | (60) | 2 | - | (30) |
| Group operating profit | 1,005 | 1,264 | (20) | 2,909 |
This has been a period of planned investment with key hires made in New York and start up costs incurred in setting up the Hong Kong office. These investment costs have primarily impacted Communications' profitability resulting in an 11% reduction in its operating profit to £0.77m (2007: £0.87m).
We opened the New York office in May last year to facilitate the servicing of US based clients and to demonstrate to clients our commitment to winning global business. The Communications division now has five global contracts which delivered £1.44m of net fee income in the period, up from £0.58m last year. Global clients were responsible for delivering increased Group net fee income in the US of £0.38m up 58% from £0.24m last year.
In addition to the Head of Operations appointed in New York at the end of 2007, further hires have now been made in the US including a Director of Research Services.
The Hong Kong office opened in early July with experienced people seconded from the UK including two business leaders. The Group already has clients and contracts in Hong Kong which it is seeking to grow further through a local presence as well as developing new relationships. The office has generated incremental Group income in its first month.
Net fee income from Communications' fee based services grew by 24% and now represents 56% of Communications' income. Across the Group, fee based services account for 79% of total net fee income (2007: 74%) and helped drive the gross margin up to 42.6% (2007: 39.5%).
Growth in Talent Management has been affected by the economic slowdown. Clients and prospects frequently delayed project authorisation and deferred commitments for our research services.
Net fee income in Talent Management declined by 2% to £3.27m (2007: £3.32m). Profitability consequently fell leading to an overall reduction in operating profit of 17% to £0.51m (2007: £0.62m).
Selling activity has been re-focused to exploit the competitive advantage that the range of research services offers against traditional recruitment methods, particularly in a more difficult market.
However, within Talent Management, income from outsourcing services grew 10% to £1.07m (2007: £0.97m).
In addition to the costs of investment in the US and Hong Kong a share based payment charge of £60k (2007: £2k) also had a negative impact on operating profit.
Operational cash flow has been strong during the period. Cash generated from operations was £0.73m (2007: cash outflow of £0.21m). The final deferred consideration payment of £2.0m for The Recruitment Communications Company was made during the period, being settled half in shares and half in cash. At the end of the period we have positive cash and no debt.
The balance sheet strengthened further and at the end of the period net assets were £15.2m (2007: £12.3m).
| Group Financial Performance | 6 months to 30 June 2008 £'000 | 6 months to 30 June 2007 £'000 | Change % | Year ended 31 Dec 2007 £'000 |
| Adjusted profit (Operating | 1,005 | 1,381 | (27) | 3,220 |
| profit before exceptional items) | ||||
| Operating profit | 1,005 | 1,264 | (20) | 2,909 |
| Profit before tax | 1,011 | 1,280 | (21) | 2,951 |
| Profit after tax | 723 | 897 | (19) | 2,018 |
| Diluted EPS (pence) | 2.38 | 3.21 | (26) | 7.06 |
Michael Warren
Finance Director
Independent review report to Work Group plc
Introduction
We been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2008, which comprises the consolidated income statement, consolidated balance sheet, consolidated statement of changes in equity, consolidated cash flow statement and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the AIM Rules for Companies which require that the financial information must be presented and prepared in a form consistent with that which will be adopted in the company's annual financial statements.
As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the AIM Rules for Companies and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2008 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the AIM Rules for Companies..
PricewaterhouseCoopers LLP Chartered AccountantsLondon September 2008
Notes:
Consolidated income statement
for the 6 month period ended 30 June 2008
| Note | Unaudited 6 month period ended 30 June 2008 | Unaudited 6 month period ended 30 June 2007 | Audited Year ended 31 December 2007 | ||
| £'000 | £'000 | £'000 | |||
| Revenue | 4 | 18,731 | 19,907 | 38,906 | |
| Cost of sales | (10,743) | (12,037) | (22,765) | ||
| Gross profit | 7,988 | 7,870 | 16,141 | ||
| Net operating expenses | (6,983) | (6,606) | (13,232) | ||
| Operating profit | 4 | 1,005 | 1,264 | 2,909 | |
| Operating profit before exceptional items | 1,005 | 1,381 | 3,220 | ||
| Exceptional items | - | (117) | (311) | ||
| Finance costs | (16) | (8) | (22) | ||
| Finance income | 22 | 24 | 64 | ||
| Profit before taxation | 1,011 | 1,280 | 2,951 | ||
| Taxation | 5 | (288) | (383) | (933) | |
| Profit for the period attributable to Equity shareholders | 723 | 897 | 2,018 | ||
| Earnings per share (pence) | 7 | 2.55 | 3.49 | 7.64 | |
| Diluted earnings per share (pence) | 7 | 2.38 | 3.21 | 7.06 | |
| Dividend paid per share (pence) | 6 | 0.5 | 0.4 | 0.4 |
The results above are all in respect of continuing operations.
Consolidated balance sheet
as at 30 June 2008
| Note | Unaudited 6 month period ended 30 June 2008 | Unaudited 6 month period ended 30 June 2007 (Restated) | Audited Year ended 31 December 2007 | |
| £'000 | £'000 | £'000 | ||
| Assets | ||||
| Non-current assets | ||||
| Goodwill | 8 | 12,197 | 12,167 | 12,197 |
| Property, plant & equipment | 9 | 769 | 816 | 812 |
| Deferred tax assets | 212 | 382 | 252 | |
| 13,178 | 13,365 | 13,261 | ||
| Current assets | ||||
| Inventories | 496 | 241 | 241 | |
| Trade and other receivables | 8,448 | 8,325 | 6,944 | |
| Cash and cash equivalents | 384 | 1,854 | 1,638 | |
| 9,328 | 10,420 | 8,823 | ||
| Liabilities | ||||
| Current liabilities | ||||
| Financial liabilities - borrowings | - | (1,383) | (595) | |
| Trade and other payables | (6,217) | (7,269) | (4,973) | |
| Provisions | - | (2,000) | (2,000) | |
| Current tax liabilities | (1,093) | (803) | (883) | |
| (7,310) | (11,455) | (8,451) | ||
| Net current assets/(liabilities) | 2,018 | (1,035) | 372 | |
| Net assets | 15,196 | 12,330 | 13,633 | |
| Shareholders' equity | ||||
| Ordinary share capital | 10 | 572 | 535 | 542 |
| Share premium | 8,240 | 7,202 | 7,261 | |
| Other reserves | 2,826 | 2,826 | 2,826 | |
| Retained earnings | 3,558 | 1,767 | 3,004 | |
| Total shareholders' equity | 15,196 | 12,330 | 13,633 |
Consolidated statement of changes
in Shareholders' equity as at 30 June 2008
| Unaudited | Note | Share Capital | Share premium | Retained Earnings (Restated - note 3) | Special reserve | Total Reserves |
| £'000 | £'000 | £'000 | £'000 | £'000 | ||
| At 1 January 2007 | 510 | 6,433 | 1,077 | 2,826 | 10,846 | |
| Profit for the period | - | - | 897 | - | 897 | |
| Value of employee services | - | - | (2) | - | (2) | |
| Deferred taxation on share options | - | - | (99) | - | (99) | |
| Ordinary shares issued | 25 | 769 | - | - | 794 | |
| Dividends paid | 6 | - | - | (106) | - | (106) |
| At 30 June 2007 | 535 | 7,202 | 1,767 | 2,826 | 12,330 | |
| Profit for the period | - | - | 1,121 | - | 1,121 | |
| Value of employee services | - | - | 32 | - | 32 | |
| Deferred taxation on share options | - | - | 84 | - | 84 | |
| Ordinary shares issued | 7 | 59 | - | - | 66 | |
| At 31 December 2007 | 542 | 7,261 | 3,004 | 2,826 | 13,633 | |
| Profit for the period | - | - | 723 | - | 723 | |
| Value of employee services | - | - | 60 | - | 60 | |
| Deferred taxation on share options | - | - | (87) | - | (87) | |
| Ordinary shares issued | 10 | 30 | 979 | - | - | 1,009 |
| Foreign Exchange | - | - | 1 | - | 1 | |
| Dividends paid | 6 | - | - | (143) | - | (143) |
| At 30 June 2008 | 572 | 8,240 | 3,558 | 2,826 | 15,196 |
Consolidated cash flow statement
for the 6 month period ended 30 June 2008
| Note | Unaudited 6 month period ended 30 June 2008 £'000 | Unaudited 6 month period ended 30 June 2007 £'000 | Unaudited Year ended 31 December 2007 £'000 | |
| Cash flows from operating activities | ||||
| Cash generated from/(absorbed by) operations | 11 | 726 | (206) | 1,457 |
| Interest paid | (17) | (2) | (22) | |
| Tax paid | (124) | (81) | (336) | |
| Net cash inflow/(outflow) from operating activities | 585 | (289) | 1,099 | |
| Cash flows from investing activities | ||||
| Deferred consideration paid | (1,000) | - | - | |
| Interest received | 18 | 22 | 64 | |
| Purchase of property, plant and equipment | 9 | (117) | (131) | (323) |
| Proceeds from sale of property, plant and equipment | - | 5 | - | |
| Net cash used in investing activities | (1,099) | (104) | (259) | |
| Cash flows from financing activities | ||||
| Net proceeds from issue of ordinary share capital | 9 | 79 | 144 | |
| Loan notes repaid | (10) | (4) | (728) | |
| Dividend paid | 6 | (143) | (106) | (106) |
| Finance lease payments | (1) | - | (2) | |
| Net cash outflow from financing | (145) | (31) | (692) | |
| (Decrease)/increase in cash in the period/year | (659) | (424) | 148 | |
| Cash and cash equivalents at start of period/year | 1,043 | 895 | 895 | |
| Cash and cash equivalents at end of period/year | 384 | 471 | 1,043 |
Notes to the interim financial information
1 Financial information and presentation
The financial information contained in this Interim Report does not constitute statutory accounts within the meaning of the Companies Act 1985 and has not been audited.
The IFRS financial information for the year ended 31 December 2007 is derived from the statutory accounts for that period, which have been filed with the Registrar of Companies and on which the auditors gave an unqualified opinion.
2 Principal accounting policies
Basis of preparation
This interim consolidated financial information is for the six months ended 30 June 2008 and has been prepared in accordance with IAS 34 "Interim financial reports" and with the accounting policies set out in the group's 2007 annual report as amended for new standards effective during the period where relevant. These accounting policies are based on the EU-adopted IFRS and IFRIC interpretations that are applicable at the balance sheet date. IFRS and IFRIC interpretations that will be applicable at 31 December 2008, including those that will be applicable on an optional basis, are not known with certainty at the time of preparing this interim financial information. It is therefore possible that further changes to the accounting policies and the comparative financial information may be required before their publication in the 2008 annual report and financial statements.
This consolidated interim financial information has been prepared under the historical cost convention.
The following standards and interpretations became effective this financial period but did not have an effect on this financial information:
IFRIC 11, 'IFRS-2 Group and Treasury Share Transaction', effective for annual periods beginning on or after 1 March 2008
IFRIC 12, 'Service Concession Arrangements', effective for annual periods beginning on or after 1 January 2008
IFRIC 14 - IAS 19, 'The Limit on a Defined Benefit Asset, Minimum Funding requirements and their Interaction', effective for annual periods beginning on or after 1 January 2008
At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in this financial information were in issue but not yet effective:
IFRS 8, 'Operating Segments', effective for annual periods beginning on or after 1 January 2009, subject to EU endorsement
IFRIC 13, 'Customer Loyalty Programmes', effective for annual periods beginning on or after 1 July 2008
IFRIC 15, 'Agreements for the Construction of Real Estate', effective for annual periods beginning on or after 1 January 2009
IFRIC 16, 'Hedges of net investment in a foreign operation', effective for annual periods beginning on or after 1 October 2008
Management do not currently forsee any changes to the group's business segments arising from adoption of IFRS 8, and do not expect IFRIC 13, IFRIC 15 and IFRIC 16 to be relevant for the group.
3 Comparatives
An adjustment of £129k was made between Deferred tax assets and Retained earnings on the group's 2007 opening IFRS balance sheet. An exercise to translate the group's accounts from UK GAAP to IFRS was performed during the 2007 interim review, however, the £129k was an additional IFRS adjustment that was made at a later date and was recorded in the group's 2007 annual financial statements.
As a result, the comparative figures for the group's balance sheet and Statement of changes in Shareholders' equity at 30th June 2007 have been restated to account for the £129k adjustment.
4 Segmental analysis
This is the first period in which the Group reports two segments, Communications and Talent Management. Communications was previously described as Employer Marketing and Talent Management combines what was previously described as Executive Research and Recruitment Process Outsourcing. These segments better describe the services we deliver as a marketing services company specialising in employer marketing.
Accordingly prior period comparatives have been restated for consistency with the new segmental analysis.
Primary Segmental analysis - Business segments
| Unaudited 6 month period ended 30 June 2008 | Communications | Talent Management | Corporate | Group |
| £'000 | £'000 | £'000 | £'000 | |
| Revenue | 14,735 | 3,996 | - | 18,731 |
| Net fee income | 4,723 | 3,265 | - | 7,988 |
| Operating profit (segment result) | 772 | 510 | (277) | 1,005 |
| Unaudited 6 month period ended 30 June 2007 | Communications | Talent Management | Corporate | Group |
| Revenue | 16,156 | 3,800 | (49) | 19,907 |
| Net fee income | 4,549 | 3,321 | - | 7,870 |
| Operating profit (segment result) | 872 | 616 | (224) | 1,264 |
| Unaudited Year ended 31 December 2007 | Communications | Talent Management | Corporate | Group |
| £'000 | £'000 | £'000 | £'000 | |
| Revenue | 31,646 | 7,335 | (75) | 38,906 |
| Net fee income | 9,482 | 6,659 | - | 16,141 |
| Operating profit (segment result) | 1,941 | 1,238 | (270) | 2,909 |
Secondary segmental analysis - Geographical segments
| Unaudited | 6 month period ended 30 June 2008 | 6 month period ended 30 June 2007 | Year ended 31 December 2007 |
| Revenue | £'000 | £'000 | £'000 |
| United Kingdom | 17,672 | 19,157 | 37,150 |
| Europe | 329 | 410 | 672 |
| USA | 405 | 306 | 1,050 |
| Rest of the World | 325 | 34 | 34 |
| Total | 18,731 | 19,907 | 38,906 |
5 Taxation
The tax charge for the six month period ended 30 June 2008 is based on the estimated expected effective tax rate of 28.5% for the year ended 31 December 2008 (2007 actual rate: 31.6%).
6 Dividends
| Unaudited Period ended 30 June 2008 | Unaudited Period ended 30 June 2007 | Audited Year ended 31 December 2007 | |
| £'000 | £'000 | £'000 | |
| 2007 Final dividend - 0.5 pence per share (2006 final dividend : 0.4 pence per share) | 143 | 106 | 106 |
7 Earnings per share
| Unaudited 6 month period ended 30 June 2008 | Unaudited 6 month period ended 30 June 2007 | Audited Year ended 31 December 2007 | |||||||
| Earnings | Weighted average number of shares | Per share amount | Earnings | Weighted average number of shares | Per share amount | Earnings | Weighted average number of shares | Per share amount | |
| £'000 | '000 | Pence | £'000 | '000 | Pence | £'000 | '000 | Pence | |
| Basic earnings per share | 723 | 28,377 | 2.55 | 897 | 25,703 | 3.49 | 2,018 | 26,419 | 7.64 |
| Effect of dilutive share options | - | 2,015 | (0.17) | - | 2,227 | (0.28) | - | 2,180 | (0.58) |
| Diluted earnings per share | 723 | 30,392 | 2.38 | 897 | 27,930 | 3.21 | 2,018 | 28,599 | 7.06 |
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the period.
For diluted earnings per share, the weighted average number of shares is adjusted to reflect the impact of all dilutive potential ordinary shares.
8 Goodwill
| | Unaudited 30 June 2008 | Unaudited 30 June 2007 | Audited 31 December 2007 |
| | £’000 | £’000 | £’000 |
| Cost | | | |
| At 1 January | 12,197 | 11,451 | 11,451 |
| Additions | - | - | 30 |
| Adjustment to deferred consideration | - | 716 | 716 |
| At 30 June / 31 December | 12,197 | 12,167 | 12,197 |
| | | | |
| Net book value | | | |
| At 30 June / 31 December | 12,197 | 12,167 | 12,197 |
| | | | |
9 Capital Expenditure
| Unaudited | Six months ended 30 June 2008 £'000 |
| Opening net book value at 1 January 2008 | 812 |
| Additions | 117 |
| Disposals | - |
| Depreciation | (160) |
| Closing net book value at 30 June 2008 | 769 |
| Unaudited | Six months ended 30 June 2007 £'000 |
| Opening net book value at 1 January 2007 | 856 |
| Additions | 131 |
| Disposals | (7) |
| Depreciation | (164) |
| Closing net book value at 30 June 2007 | 816 |
| Audited | Year ended 31 December 2007 £'000 |
| Opening net book value at 1 January 2007 | 856 |
| Additions | 323 |
| Acquisitions | - |
| Disposals | (58) |
| Depreciation | (309) |
| Closing net book value at 31 December 2007 | 812 |
10 Called up share capital
| | Unaudited 30 June 2008 £’000 | Unaudited 30 June 2007 £’000 | Audited 31 December 2007 £’000 |
| Authorised | | | |
| 75,000,000 ordinary shares of 2p each | 1,500 | 1,500 | 1,500 |
| | | | |
| | 1,500 | 1,500 | 1,500 |
| Allotted, called up and fully paid | | | |
| 28,622,473 ordinary shares of 2p each (30 June 2007 26,768,093 ordinary shares of 2p each; 31 December 2007 27,091,793 ordinary shares of 2p each) | 572 | 535 | 542 |
| | | | |
| | 572 | 535 | 542 |
Share options were exercised during the period, as detailed in the table below. The resultant ordinary shares were issued for cash. In addition, a portion of the deferred consideration for The Recruitment Communications Company Limited was settled by 1,483,680 ordinary shares in Work Group plc.
The following ordinary shares were issued during the period:
| Date of issue | No. shares | Reason |
| 14 January 2008 | 5,000 | Exercise of options |
| 29 January 2008 | 1,483,680 | Deferred Consideration for acquisition of The Recruitment Communications Limited |
| 5 February 2008 | 42,000 | Exercise of options |
| Total | 1,530,680 |
The cash received for all share options exercised in the period amounted to £9,400. The shares issued in respect of the deferred consideration for The Recruitment Communications Company Limited were valued at £1,000,000 on the day they were issued, however they did not generate any cash inflow. A share price of 64 pence per share was derived for the deferred consideration by averaging the mid market value on AIM over a fifteen trading day period, 7th to 25th January 2008.
11 Reconciliation of operating profit to net cash inflow / (outflow) from operations
| Unaudited 6 month period ended 30 June 2008 | Unaudited 6 month period ended 30 June 2007 | Audited Year ended 31 December 2007 | |
| £'000 | £'000 | £'000 | |
| Profit attributable to shareholders | 723 | 897 | 2,018 |
| Adjustments: | |||
| Taxation | 288 | 383 | 933 |
| Finance income | (22) | (24) | (64) |
| Finance costs | 16 | 8 | 22 |
| Depreciation of plant property and equipment | 160 | 164 | 309 |
| Loss on disposal of plant property and equipment | - | - | 58 |
| Share based payments | 60 | (2) | 30 |
| Increase in inventories | (255) | (146) | (146) |
| Increase in trade and other receivables | (1,271) | (2,532) | (1,086) |
| Increase/(decrease) in trade and other payables | 1,027 | 1,046 | (617) |
| Net cash inflow/(outflow) from operations | 726 | (206) | 1,457 |
12 Statement of directors' responsibilities
The directors confirm that this condensed interim financial information has been prepared in accordance with IAS 34 as adopted by the European Union.
13 Interim Report
A copy of the interim report will be circulated to all registered shareholders of the Company and copies will be available for members of the public upon application to the Registered Office at Safron House, 6 - 10 Kirby Street, London EC1N 8EQ or on the Company's website at www.workgroup.plc.uk