TIDMLSL
RNS Number : 4829Q
LSL Property Services
04 August 2010
+-------------------------------+-------------------------------------+
| For immediate release | 4 August 2010 |
+-------------------------------+-------------------------------------+
LSL Property Services plc ("LSL")
Interim Results
LSL Property Services plc, a leading provider of residential property services
incorporating both estate agency and surveying businesses, announces interim
results for the six months ended 30 June 2010.
Highlights
Group
* Group revenue increased by 36% to GBP101.1m (2009: GBP74.1m)
* Like-for-like(1) Group Revenue increased by 22% to GBP90.2m (2009: GBP74.1m)
* Group Underlying Operating Profit (2) increased by 24% to GBP13.4m (2009:
GBP10.9m)
* Like-for-like(1) Group Underlying Operating Profit increased 56% to GBP17.0m
(2009: GBP10.9m)
* Growth in profit was driven by strong market share growth in both estate
agency and surveying
* Overall operating margin was 13.3% (2009: 14.6%). Like-for-like operating
profit margin increased from 14.6% to 18.8%
* Net exceptional profit of GBP11.1m (2009: cost GBP0.2m) arising from an
exceptional profit on acquisition of HEAL, GBP15.8m and other exceptional costs
of GBP4.7m.
* Profit before tax increased to GBP19.7m (2009: GBP4.3m)
* Basic earnings per share 19.4p (2009: 2.6p). Adjusted basic earnings per share
increased by 31% to 8.8p (2009: 6.7p)
* Half Year dividend declared of 2.5p per share (2009 half year: nil, 2009 full
year: 5.4p)
* Significant cash generation during the period. Net debt reduced to GBP14.3m at
30 June 2010 (30 June 2009: GBP43.1m)
* New GBP75m bank facility arranged on competitive terms to March 2014
Surveying Performance
* Underlying Operating Profit increased by 20% to GBP15.2m (2009: GBP12.7m)
* Continued growth in revenue and profit through the cycle, despite an overall
contraction in the mortgage market
Estate Agency
* Like-for-like Underlying Operating Profit increased to GBP2.9m (2009: loss of
GBP0.8m)
* Revenue growth supported by improved contribution from asset management up 18%
to GBP4.8m and lettings up 4% to GBP9.8m
* HEAL integration completed with trading loss for the half year in line with
expectations. HEAL well placed to be profitable in H2
(1) Excluding the Halifax Estate Agencies Ltd ("HEAL") branches acquired in
January 2010
(2) Underlying Operating Profit is before exceptional costs, amortisation of
intangible assets and share based payments
Commenting on today's announcement, Roger Matthews, Chairman, said:
"We are delighted with our progress during the first half year which underpins
the Board's confidence in the expected full year outturn. Underlying Group
operating profit on a like-for-like basis has increased by 56% to GBP17.0m in a
challenging market where mortgage approvals for house purchase are at half
historic norms.
"The outlook for the market continues to be uncertain and we remain
cautious in view of well documented broader economic challenges. However against
this backdrop we have continued to strengthen our counter-cyclical income
businesses, in particular, asset management, and as a result the Group is
becoming increasingly robust through the cycle.
"We are well placed to grow the business both organically and through selective
acquisitions and deliver significant increases in shareholder value when the
market recovers."
For further information, please contact:
Simon Embley, Group Chief Executive Officer
Steve Cooke, Group Finance Director
LSL Property Services plc
01904 715 324
Richard Darby, Nicola Cronk, Catherine Breen
Buchanan Communications
0207 466 5000
An analysts' briefing will be held today at 10.00am at the offices of Buchanan
Communications, 45 Moorfields London, EC2Y 9AE.
Notes to Editors:
LSL Property Services plc is one of the leading residential property services
companies in the UK and provides a broad range of services to its clients who
are principally mortgage lenders, as well as buyers and sellers of residential
properties. For further information, please visit our website: www.lslps.co.uk.
Chairman's Statement
I am delighted to report a 36% increase in Group Revenue to GBP101.1m (2009:
GBP74.1m) and a 24% increase in Group Underlying Operating Profit to GBP13.4m
(2009: GBP10.9m) for the six months ended 30 June 2010. Both the Estate Agency
and Surveying divisions have made strong progress and the integration of the
acquisition of Halifax Estate Agencies Limited ("HEAL") has been successfully
completed.
On a like-for-like basis, excluding the HEAL estate agency branches acquired in
January 2010, Group Revenue increased by 22% to GBP90.2m (2009: GBP74.1m), and
the Group Underlying Operating Profit increased by 56% to GBP17.0m (2009:
GBP10.9m). The growth in profit was driven by strong market share growth in both
our estate agency (including asset management) and surveying divisions.
Our Surveying division has continued to grow revenue and profit through the
cycle, despite an overall contraction in the market where mortgage approvals are
down by 5% from historically low levels. Revenue increased by 17% to GBP42.3m
(2009: GBP36.0m) and the underlying operating profit increased by 20% to
GBP15.2m (2009: GBP12.7m). This excellent result was underpinned by the
strength of LSL's client base, the significant contract extension with Santander
signed in December 2009, together with the continued material contribution from
the panel management arrangements with Cheltenham and Gloucester.
The results from our Estate Agency division continue to demonstrate growing
resilience with a particularly strong contribution from our asset management
business. On a like-for-like basis, excluding the acquisition of HEAL, revenue
increased by 26% and the underlying operating profit increased to GBP2.9m (2009:
a loss of GBP0.8m). The growth in revenue was supported by improved contribution
from counter-cyclical income streams with like-for-like growth in asset
management of 18% to GBP4.8m and in core lettings of 4% to GBP9.8m.
The integration of HEAL has been completed and results to the half year are in
line with our expectations. The acquisition completed on 15 January 2010, adding
206 branches to the estate agency network and establishing LSL as the second
largest estate agency business in the United Kingdom. The division recorded a
loss of GBP3.6m in H1 but is well placed to be profitable in H2 2010 with
instruction volumes increasing month on month, pipelines up by 29% during the
period, increasing counter-cyclical income streams from lettings and asset
management and the cost base right sized to an annual run rate of circa GBP28m.
Cash generation in the period was particularly strong with net debt reduced from
GBP43.1m at 30 June 2009 to GBP14.3m at 30 June 2010. The Group signed a new
bank agreement in June 2010 securing a GBP75m facility on competitive terms
through to March 2014.
Group
· Group revenue increased by 36% to GBP101.1m (2009: GBP74.1m). On a
like-for-like basis excluding HEAL, Group revenue increased by 22% to GBP90.2m
(2009: GBP74.1m)
· Underlying Group Operating Profit increased by 24% to GBP13.4m (2009:
GBP10.9m). (On a like-for-like basis, Underlying Group Operating Profit was up
56% to GBP17.0m (2009: GBP10.9m).
· Overall margin was 13.3% (2009: 14.6%) Like-for-like operating margin
increased from 14.6% to 18.8%.
· Net interest payable was GBP1.1m (2009: GBP1.1m) and the Group profit
before tax, amortisation and exceptional profit was GBP12.6m (2009: GBP9.5m).
· A net exceptional profit of GBP11.1m (2009: cost GBP0.2m) for the period,
reflects an exceptional profit on the acquisition of HEAL of GBP29.1m, offset by
restructuring costs relating to HEAL of GBP13.3m, an increase in the
professional indemnity (PI) provision of GBP2.0m and redundancy and exceptional
finance costs of GBP2.2m.
· Profit before tax was GBP19.7m (2009: GBP4.3m)
· The effective rate of tax was -1.4%. The underlying effective tax rate,
excluding exceptional and prior year tax adjustments, was 29%.
· Earnings per share was 19.4p(2009: 2.6p); adjusted basic earnings per
share was 8.8p (2009: 6.7p)
· Half Year dividend of 2.5p per share (2009 half year: nil, 2009 full year
5.4p)
Divisions
· Estate Agency turnover on a like-for-like basis increased by 26% to
GBP47.9m (2009: GBP38.1m) and generated underlying operating profit of GBP2.9m
(2009: loss of GBP0.8m)
· HEAL impacted the trading result with a loss of GBP3.6m (turnover
GBP10.8m)
· Surveying turnover increased by 17% to GBP42.3m (2009: GBP36.0m), and the
Underlying Operating Profit increased by 20% to GBP15.2m (2009: GBP12.7m). The
overall surveying margin was maintained at 36%
Balance Sheet
Net assets at 30 June 2010 were GBP60.9m (2009: GBP37.1m). Net debt at 30 June
2010 was GBP14.3m representing a reduction of GBP28.8m from June 2009. The Group
has a new bank facility in place of GBP75m until March 2014.
Cashflow and Capital Expenditure
The Group has delivered strong cash generation in H1 2010 with cash inflow from
operations pre exceptionals of GBP14.5m (2009:GBP8.6m). Cash received in the
acquisition of HEAL was GBP26.0m and cash expenditure relating to the
acquisition was GBP13.7m as expected. GBP1.9m was invested in capital
expenditure on refurbishment of the estate agency branch network compared to
GBP0.2m in the first half of 2009.
Exceptional costs and profit
A net exceptional profit of GBP11.1m was recorded in H1, reflecting an
exceptional profit of GBP15.8m as a result of the acquisition of the assets of
HEAL for GBP1. The assets included cash of GBP26m and freehold property valued
at GBP8.9m. The exceptional profit was offset by exceptional costs of GBP18.0m,
of which GBP13.3m related to HEAL, GBP2.0m to increasing the PI provision and
GBP2.2m to finance costs.
Interim Dividend
As a result of the strong operating performance and continued reduction in net
debt in the first half of the year, the Board has declared an interim dividend
payable of 2.5 pence per share. No dividend was paid at the half year in 2009,
but this represents a 39% increase on the pro-rated dividend paid for the full
year in 2009 of 5.4 pence per share. The dividend payment is in line with our
previously stated policy of applying a dividend pay out ratio of between 30% to
40% of Underlying Group Profit after Tax. The dividend will be paid on 13
September 2010 to shareholders on the register at 13 August 2010.
Developments
Our Surveying division further strengthened its market position as a result of
delivering continued service excellence. The Santander contract which commenced
on 1 December 2009 has contributed significantly to the increase in turnover and
has provided the opportunity to drive further operating efficiencies across the
Surveying division. The surveying market however remains difficult: the volume
of mortgage approvals at 604,000 in H1 2010 is at its lowest point in the cycle,
reflecting the continued slowdown of remortgage and further advances.
Professional Indemnity claims have remained at a high level across the industry
reflecting the higher repossession rates over the past two years or so. These
claims are monitored extremely carefully and accordingly we have increased our
specific provision by GBP2m in the period with the total provision at the half
year being GBP9m (2009: GBP7.5m).
Our Estate Agency division has continued to make significant progress. The
acquisition of HEAL and the re-branding of 206 branches to Your Move, Reeds
Rains and Intercounty has dramatically increased our market profile and
contributed to an increase in our market share from 3.1% to 4.4%. The
acquisition has delivered a loss of GBP3.6m in H1 which was in line with our
expectations, but more importantly the cost base has been right sized -
instructions continue to increase month on month, and the pipeline has increased
by 29% in the period.
There continues to be strong focus on growing counter-cyclical income streams
across the estate agency network. Lettings is now a core income stream for the
Group which has now been rolled out to the majority of the ex HEAL branches and
growth in this income stream will be a major contributor to HEAL operating
profit in the future. Asset Management is an increasingly important income and
profit driver within the Estate Agency division and we are now in a market
leading position with combined H1 revenue across LSL CCD and St Trinity,
(acquired as part of HEAL), of GBP7.1m (2009; GBP4.0m).
Furthermore, the division has achieved growth in market share on a like-for-like
basis to 3.3% from 3.1% as a result of its investment in additional headcount,
branch refurbishment and a targeted marketing campaign. The Group plans to
continue its investment in the division in order to drive market share gains and
secure increased long term profitability within the Estate Agency division.
Selective acquisitions continue to be important for the Group. Within the Estate
Agency division there were a number of small acquisitions during H1 2010 which
have increased our branch footprint in the South East and further expanded our
counter-cyclical business. The Group acquired the assets of Goodfellows, a small
seven branch agency chain within London for GBP1.0m and of Templeton LPA
Limited, a receiver of property, for GBP0.4m.
In addition, as announced on 7 May 2010, the business and assets of Home of
Choice, now re-branded to First Complete, was acquired for a total consideration
of GBP0.4m to provide a step change to our financial services offer. The
acquisition of Home of Choice together with LSL's existing financial services
assets creates the fourth largest mortgage network in the UK. We believe that
this further strengthens LSL's proposition to the mortgage lender market and in
turn further cements our relationships with our key clients.
Board
As previously announced Steve Cooke has joined the Board as Group Finance
Director and Dean Fielding has left the Board. Paul Latham, previously Group
Deputy CEO, is now a non executive director and Alison Traversoni and David
Newnes have joined the Board as Executive Director for Surveying and Executive
Director for Estate Agency respectively. The Group intends to further
strengthen the Board with the appointment of an additional non executive
director during H2 2010.
Outlook
We are delighted with our progress during the first half year which underpins
the Board's confidence in the expected full year outturn. Underlying Group
operating profit on a like-for-like basis has increased by 56% to GBP17.0m
(2009: GBP10.8m) in a challenging market where mortgage approvals for house
purchase are at half historic norms.
The outlook for the market continues to be uncertain and we remain cautious
in view of well documented broader economic challenges. The continued shortage
of available mortgage finance, the fiscal tightening on consumer spending and
the cuts in government spending leading to further pressures on employment, are
likely to impact market conditions in the short term.
However against this backdrop we have continued to strengthen our
counter-cyclical income businesses, in particular, asset management, and as a
result the Group is becoming increasingly robust through the cycle. We are
committed to further investing in the Group to continue growing our market share
which will deliver earnings growth even if volumes remain at low levels. Our
financial position remains strong, with low levels of gearing and new bank
facilities in place to March 2014. We are well placed to grow the business both
organically and through selective acquisitions and deliver significant increases
in shareholder value when the market recovers.
Roger Matthews
4 August 2010
Principal risks and uncertainties
There are a number of risks and uncertainties facing the business in the
second half of the financial year. With the exception of the heightened
regulatory risk arising from the expansion of the Group's regulated financial
services activity, the Board considers these risks and uncertainties to be the
same as described on page 11 of the 2009 Report & Accounts, dated 3 March 2010,
a copy of which is available on the Group's website at www.lslps.co.uk.
Responsibility statement of the directors in respect of the
half-yearly
financial report
We confirm that to the best of our knowledge:
· The condensed set of financial statements has been prepared in accordance
with IAS 34
Interim Financial Reporting as adopted by the EU;
· The interim management report includes a fair review of the information
required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important
events that have occurred during the first six
months of the financial year and their impact
on the condensed set of
financial statements; and a description of the principal risks
and
uncertainties for the remaining six months of the financial year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related
party transactions
that have taken place in the first six months of the
current financial year and that have
materially affected the financial
position or performance of the entity during that period;
and any changes in
the related party transactions described in the last annual report
that
could do so.
By order of the Board
Interim Group Income Statement
for the six months ended 30 June 2010
+------------------------------------+------+----------+----------+---------------+
| | | Unaudited | Audited |
+------------------------------------+------+---------------------+---------------+
| | | Six Months Ended | Year |
| | | | Ended |
+------------------------------------+------+---------------------+---------------+
| | | 30 June | 30 June | 31 Dec |
+------------------------------------+------+----------+----------+---------------+
| | | 2010 | 2009 | 2009 |
+------------------------------------+------+----------+----------+---------------+
| | Note | | GBP'000 | GBP'000 |
| | | GBP'000 | | |
+------------------------------------+------+----------+----------+---------------+
| | | | | |
+------------------------------------+------+----------+----------+---------------+
| Revenue | 3 | 101,084 | 74,118 | 157,703 |
+------------------------------------+------+----------+----------+---------------+
| | | | | |
+------------------------------------+------+----------+----------+---------------+
| Operating expenses: | | | | |
+------------------------------------+------+----------+----------+---------------+
| Employee and subcontractor costs | | 54,382 | 39,542 | 80,100 |
+------------------------------------+------+----------+----------+---------------+
| Establishment costs | | 7,564 | 4,955 | 10,991 |
+------------------------------------+------+----------+----------+---------------+
| Depreciation on property, plant | | 706 | 757 | 1,407 |
| and equipment | | | | |
+------------------------------------+------+----------+----------+---------------+
| Other | | 25,834 | 18,269 | 37,374 |
+------------------------------------+------+----------+----------+---------------+
| | | (88,486) | (63,523) | (129,872) |
+------------------------------------+------+----------+----------+---------------+
| | | | | |
+------------------------------------+------+----------+----------+---------------+
| Rental income | | 825 | 264 | 488 |
+------------------------------------+------+----------+----------+---------------+
| Group operating profit before | | 13,423 | 10,859 | 28,319 |
| exceptional profit / (costs), | | | | |
| amortisation and share-based | | | | |
| payments | | | | |
+------------------------------------+------+----------+----------+---------------+
| | | | | |
+------------------------------------+------+----------+----------+---------------+
| Share-based payments | | (208) | (332) | (532) |
+------------------------------------+------+----------+----------+---------------+
| Amortisation of intangible assets | | (4,038) | (4,960) | (8,635) |
+------------------------------------+------+----------+----------+---------------+
| Exceptional profit | 5 | 13,275 | (234) | (400) |
+------------------------------------+------+----------+----------+---------------+
| Group operating profit | | 22,452 | 5,333 | 18,752 |
+------------------------------------+------+----------+----------+---------------+
| | | | | |
+------------------------------------+------+----------+----------+---------------+
| Dividend income | | 516 | - | 24 |
+------------------------------------+------+----------+----------+---------------+
| Finance income | | 2 | - | 54 |
+------------------------------------+------+----------+----------+---------------+
| Finance costs | | (1,114) | (1,069) | (2,221) |
+------------------------------------+------+----------+----------+---------------+
| Exceptional finance costs | 5 | (2,186) | - | - |
+------------------------------------+------+----------+----------+---------------+
| Net financial costs | | (2,782) | (1,069) | (2,143) |
+------------------------------------+------+----------+----------+---------------+
| | | | | |
+------------------------------------+------+----------+----------+---------------+
| Profit before tax | 3 | 19,670 | 4,264 | 16,609 |
+------------------------------------+------+----------+----------+---------------+
| | | | | |
+------------------------------------+------+----------+----------+---------------+
| Taxation | | | | |
+------------------------------------+------+----------+----------+---------------+
| - related to exceptional costs | | 3,841 | 75 | 112 |
+------------------------------------+------+----------+----------+---------------+
| - others | | (3,574) | (1,615) | (4,974) |
+------------------------------------+------+----------+----------+---------------+
| | 7 | 267 | (1,540) | (4,862) |
+------------------------------------+------+----------+----------+---------------+
| | | | | |
+------------------------------------+------+----------+----------+---------------+
| Profit for the period/year | | 19,937 | 2,724 | 11,747 |
+------------------------------------+------+----------+----------+---------------+
| | | | | |
+------------------------------------+------+----------+----------+---------------+
| Earnings per share expressed in | | | | |
| pence per share: | | | | |
+------------------------------------+------+----------+----------+---------------+
| Basic | 4 | 19.4 | 2.6 | 11.4 |
+------------------------------------+------+----------+----------+---------------+
| Diluted | 4 | 19.3 | 2.6 | 11.4 |
+------------------------------------+------+----------+----------+---------------+
| Basic (adjusted) | 4 | 8.8 | 6.7 | 18.1 |
+------------------------------------+------+----------+----------+---------------+
| Diluted (adjusted) | 4 | 8.8 | 6.7 | 18.1 |
+------------------------------------+------+----------+----------+---------------+
Interim Group Statement of Comprehensive Income
for the six months ended 30 June 2010
+--------------------------------------+---------+----------+-----------+
| | Unaudited | Audited |
+--------------------------------------+--------------------+-----------+
| | Six Months Ended | Year |
| | | Ended |
+--------------------------------------+--------------------+-----------+
| | 30 June | 30 June | 31 Dec |
| | | | |
+--------------------------------------+---------+----------+-----------+
| | 2010 | 2009 | 2009 |
+--------------------------------------+---------+----------+-----------+
| | GBP'000 | GBP'000 | |
| | | | GBP'000 |
+--------------------------------------+---------+----------+-----------+
| | | | |
+--------------------------------------+---------+----------+-----------+
| Profit for the period | 19,937 | 2,724 | 11,747 |
+--------------------------------------+---------+----------+-----------+
| | | | |
+--------------------------------------+---------+----------+-----------+
| | | | |
+--------------------------------------+---------+----------+-----------+
| Net profit/(loss) on cash flow hedge | - | 431 | (87) |
| | | | |
+--------------------------------------+---------+----------+-----------+
| Recycling of cash flow hedge | 87 | - | - |
+--------------------------------------+---------+----------+-----------+
| Income tax | (24) | (121) | 24 |
+--------------------------------------+---------+----------+-----------+
| Other comprehensive income/(loss) | | | |
| for the period, net of tax | 63 | 310 | (63) |
+--------------------------------------+---------+----------+-----------+
| | | | |
+--------------------------------------+---------+----------+-----------+
| Total comprehensive income for the | | | |
| period, net of tax^ | 20,000 | 3,034 | 11,684 |
+--------------------------------------+---------+----------+-----------+
^ all attributable to equity shareholders of the parent
Interim Group Balance Sheet
as at 30 June 2010
+----------------------------------+--+---------+---------+---------+
| | Unaudited | Audited |
+----------------------------------+----------------------+---------+
| | | At 30 | At 30 | At 31 |
| | | June | June | Dec |
| | | 2010 | 2009 | 2009 |
+----------------------------------+--+---------+---------+---------+
| | | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------+--+---------+---------+---------+
| | | | | |
+----------------------------------+--+---------+---------+---------+
| Non-current assets | | | | |
+----------------------------------+--+---------+---------+---------+
| Goodwill |9 | 72,416 | 66,316 | 66,472 |
+----------------------------------+--+---------+---------+---------+
| Other intangible assets | | 21,355 | 26,569 | 22,895 |
+----------------------------------+--+---------+---------+---------+
| Property, plant and equipment | | 11,708 | 2,277 | 2,077 |
+----------------------------------+--+---------+---------+---------+
| Financial assets | | 4,798 | 4,479 | 4,052 |
+----------------------------------+--+---------+---------+---------+
| Other receivables | | 150 | - | - |
+----------------------------------+--+---------+---------+---------+
| Deferred tax asset |8 | - | 389 | 621 |
+----------------------------------+--+---------+---------+---------+
| Total non-current assets | | 110,427 | 100,030 | 96,117 |
+----------------------------------+--+---------+---------+---------+
| Current assets | | | | |
+----------------------------------+--+---------+---------+---------+
| Trade and other receivables | | 27,891 | 19,312 | 20,052 |
+----------------------------------+--+---------+---------+---------+
| Current tax assets | | 433 | - | - |
+----------------------------------+--+---------+---------+---------+
| Cash and cash equivalents | | 1,783 | 840 | 858 |
+----------------------------------+--+---------+---------+---------+
| Total current assets | | 30,107 | 20,152 | 20,910 |
+----------------------------------+--+---------+---------+---------+
| Total assets | | 140,534 | 120,182 | 117,027 |
+----------------------------------+--+---------+---------+---------+
| | | | | |
+----------------------------------+--+---------+---------+---------+
| Current liabilities | | | | |
+----------------------------------+--+---------+---------+---------+
| Financial liabilities |8 | 556 | 1,191 | 993 |
+----------------------------------+--+---------+---------+---------+
| Trade and other payables | | 50,401 | 29,285 | 33,209 |
+----------------------------------+--+---------+---------+---------+
| Current tax liabilities | | - | 1,199 | 2,183 |
+----------------------------------+--+---------+---------+---------+
| Deferred tax liabilities | | 1,011 | - | - |
+----------------------------------+--+---------+---------+---------+
| Provisions for liabilities and | | 665 | 1,068 | 748 |
| charges | | | | |
+----------------------------------+--+---------+---------+---------+
| Total current liabilities | | 52,633 | 32,743 | 37,133 |
+----------------------------------+--+---------+---------+---------+
| | | | | |
+----------------------------------+--+---------+---------+---------+
| Non-current liabilities | | | | |
+----------------------------------+--+---------+---------+---------+
| Financial liabilities |8 | 15,537 | 42,737 | 25,573 |
+----------------------------------+--+---------+---------+---------+
| Trade and other payables | | 1,128 | 72 | 27 |
+----------------------------------+--+---------+---------+---------+
| Provisions for liabilities and | | 10,379 | 7,569 | 8,437 |
| charges | | | | |
+----------------------------------+--+---------+---------+---------+
| Total non-current liabilities | | 27,044 | 50,378 | 34,037 |
+----------------------------------+--+---------+---------+---------+
| | | | | |
+----------------------------------+--+---------+---------+---------+
| Net assets | | 60,857 | 37,061 | 45,857 |
+----------------------------------+--+---------+---------+---------+
| | | | | |
+----------------------------------+--+---------+---------+---------+
| Equity | | | | |
+----------------------------------+--+---------+---------+---------+
| Share capital | | 208 | 208 | 208 |
+----------------------------------+--+---------+---------+---------+
| Share premium account | | 5,629 | 5,629 | 5,629 |
+----------------------------------+--+---------+---------+---------+
| Share-based payment reserve | | 1,090 | 2,242 | 2,259 |
+----------------------------------+--+---------+---------+---------+
| Treasury shares | | (2,272) | (2,934) | (2,805) |
+----------------------------------+--+---------+---------+---------+
| Unrealised gain reserve | | 3,900 | 3,900 | 3,900 |
+----------------------------------+--+---------+---------+---------+
| Hedging reserve | | - | 310 | (63) |
+----------------------------------+--+---------+---------+---------+
| Retained earnings | | 52,302 | 27,706 | 36,729 |
+----------------------------------+--+---------+---------+---------+
| Total equity | | 60,857 | 37,061 | 45,857 |
+----------------------------------+--+---------+---------+---------+
+------------------------------+------+----------+----+-----+---------+----------+------+-------------+-------+----------+
| Interim Group Cash Flow Statement | | | |
| for the six months ended 30 June | | | |
| 2010 | | | |
| | | | |
+-------------------------------------+------------------------------------------+----------------------------+----------+
| | Unaudited | Audited | |
+-------------------------------------+------------------------------------------+----------------------------+----------+
| | Six months ended | Year ended | |
+-------------------------------------+------------------------------------------+----------------------------+----------+
| | 30 June | 30 June 2009 | 31 December 2009 | |
| | 2010 | | | |
+-------------------------------------+---------------+--------------------------+----------------------------+----------+
| | Note | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Cash generated from operating activities | | | | | |
+------------------------------------------------+----------+---------+-----------------+-------------+------------------+
| Profit before tax | | | 19,670 | | 4,264 | | 16,609 |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| | | | | | | | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Adjustments to reconcile profit before tax to net cash inflows | | | |
| from operating activities | | | |
+---------------------------------------------------------------------+-----------------+-------------+------------------+
| | | | | | | | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Negative goodwill | | (29,145) | | - | | - | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Amortisation of intangible | | 4,038 | | 4,960 | | 8,635 | |
| assets | | | | | | | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Dividend income | | (516) | | - | | (24) | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Exceptional costs | | 18,056 | | - | | - | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Finance income | | (2) | | - | | (54) | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Finance costs | | 1,114 | | 1,069 | | 2,221 | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Share-based payments | | 208 | | 332 | | 574 | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| | | | (6,247) | | 6,361 | | 11,352 |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Group operating | | | 13,423 | | 10,625 | | 27,961 |
| (loss)/profit before | | | | | | | |
| amortisation and share-based | | | | | | | |
| payments | | | | | | | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Depreciation | | 706 | | 757 | | 1,407 | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Impairment of goodwill | | - | | 126 | | 126 | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Gain on sale of property, | | - | | - | | 6 | |
| plant | | | | | | | |
| and equipment | | | | | | | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| | | 706 | | 883 | | 1,539 | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| (Increase)/decrease in trade | | (1,862) | | (5,388) | | (6,128) | |
| and other receivables | | | | | | | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Decrease/(increase) in trade | | 2,213 | | 2,485 | | 7,233 | |
| and other payables and | | | | | | | |
| provisions | | | | | | | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| | | | 1,057 | | (2,020) | | 2,644 |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Cash generated from | | | 14,480 | | 8,605 | | 30,605 |
| operations pre exceptional | | | | | | | |
| costs | | | | | | | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| | | | | | | | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Exceptional costs paid | | | (13,726) | | - | | - |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| | | | | | | | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Cash generated from | | | 754 | | 8,605 | | 30,605 |
| operations | | | | | | | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| | | | | | | | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Interest paid | | (1,145) | | (1,209) | | (2,397) | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Tax paid | | (3,638) | | (1,153) | | (3,578) | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| | | | (4,783) | | (2,362) | | (5,975) |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Net cash (expended | | | (4,029) | | 6,243 | | 24,630 |
| on)/generated from operating | | | | | | | |
| activities | | | | | | | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| | | | | | | | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Cash flows from investing | | | | | | | |
| activities | | | | | | | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Cash acquired on purchase of | | | | | | | |
| subsidiary undertakings and | | 25,972 | | - | | - | |
| commercial business | | | | | | | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Purchase of subsidiary | | (1,993) | | (135) | | (150) | |
| undertakings, minority | | | | | | | |
| interest and commercial | | | | | | | |
| business | | | | | | | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Dividends received | | 516 | | - | | 54 | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Interest received | | 2 | | - | | 24 | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Purchase of property, plant | | | | | | | |
| and | | (1,935) | | (193) | | (662) | |
| equipment | | | | | | | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Proceeds from sale of | | | | | | | |
| property, | | 719 | | - | | 13 | |
| plant and equipment | | | | | | | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Proceeds from treasury | | 394 | | | | - | |
| shares | | | | | | | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Proceeds from sale of | | - | | 4 | | - | |
| subsidiary undertakings, | | | | | | | |
| minority interest and | | | | | | | |
| commercial business | | | | | | | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| Net cash generated | | | 23,675 | | (324) | | (721) |
| from/(expended on) investing | | | | | | | |
| activities | | | | | | | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| | | | | | | | |
+------------------------------+------+----------+----------+---------+-----------------+-------------+------------------+
| | | | | | | | | | | |
+------------------------------+------+----------+----+-----+---------+----------+------+-------------+-------+----------+
+-------------------------------+-------+---------+-----+---+---------+---------+---------+------------+----------+
| Interim Group Cash Flow Statement | | | |
| (Continued) | | | |
| for the six months ended 30 June 2010 | | | |
| | | | |
+---------------------------------------+---------------------------------------+----------------------+----------+
| | Unaudited | Audited | |
+---------------------------------------+---------------------------------------+----------------------+----------+
| | Six months ended | Year ended | |
+---------------------------------------+---------------------------------------+----------------------+----------+
| | 30 June | 30 June 2009 | 31 December 2009 | |
| | 2010 | | | |
+---------------------------------------+---------------+-----------------------+----------------------+----------+
| | Note | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------------------+-------+---------+---------+---------+---------+---------+-----------------------+
| | | | | | | | | | |
+-------------------------------+-------+---------+-----+---+---------+---------+---------+------------+----------+
+-----------------------------+-----+----------+----------+---------+---------+----------+----------+
| | | | | | | | |
+-----------------------------+-----+----------+----------+---------+---------+----------+----------+
| Cash flows from financing | | | | | | | |
| activities | | | | | | | |
+-----------------------------+-----+----------+----------+---------+---------+----------+----------+
| | | | | | | | |
+-----------------------------+-----+----------+----------+---------+---------+----------+----------+
| Repayment of loans | 8 | (13,154) | | (5,726) | | (23,698) | |
+-----------------------------+-----+----------+----------+---------+---------+----------+----------+
| Dividends paid | | (5,567) | | - | | - | |
+-----------------------------+-----+----------+----------+---------+---------+----------+----------+
| | | | | | | | |
+-----------------------------+-----+----------+----------+---------+---------+----------+----------+
| Net cash (used)/generated | | | (18,721) | | (5,726) | | (23,698) |
| in | | | | | | | |
| financing activities | | | | | | | |
+-----------------------------+-----+----------+----------+---------+---------+----------+----------+
| Net increase in cash | | | 925 | | 193 | | 211 |
| and cash equivalents | | | | | | | |
| | | | | | | | |
+-----------------------------+-----+----------+----------+---------+---------+----------+----------+
| Cash and cash equivalents | | | | | | | |
| at the beginning of the | | | 858 | | 647 | | 647 |
| period | | | | | | | |
+-----------------------------+-----+----------+----------+---------+---------+----------+----------+
| Cash and cash equivalents | | | | | | | |
| at the | 8 | | 1,783 | | 840 | | 858 |
| end of the period | | | | | | | |
+-----------------------------+-----+----------+----------+---------+---------+----------+----------+
Interim Group Statement of changes in equity
for the six months ended 30 June 2010
Unaudited six months ended 30 June 2010
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| | Share | | Share- | Investment | Unrealised | Hedging | Retained | Total |
| | capital | Share | based | in | gains | reserve | earnings | equity |
| | | premium | payment | treasury | reserve | | | |
| | | account | reserve | shares | | | | |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| At 1 | 208 | 5,629 | 2,259 | (2,805) | 3,900 | (63) | 36,729 | 45,857 |
| January | | | | | | | | |
| 2010 | | | | | | | | |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| Profit for | - | - | - | - | - | - | 19,937 | 19,937 |
| the period | | | | | | | | |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| Other | - | - | - | - | - | 63 | - | 63 |
| comprehensive | | | | | | | | |
| income | | | | | | | | |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| Total | - | - | - | - | - | 63 | 19,937 | 20,000 |
| comprehensive | | | | | | | | |
| income | | | | | | | | |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| Reissuance | - | - | (1,377) | 533 | - | - | 1,203 | 359 |
| of treasury | | | | | | | | |
| shares | | | | | | | | |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| Share-based | - | - | 208 | - | - | - | - | 208 |
| payments | | | | | | | | |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| Dividends | - | - | - | - | - | - | (5,567) | (5,567) |
| paid | | | | | | | | |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| | | | | | | | | |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| At 30 June | 208 | 5,629 | 1,090 | (2,272) | 3,900 | - | 52,302 | 60,857 |
| 2010 | | | | | | | | |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
Unaudited six months ended 30 June 2009
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| | | | Share- | Investment | Unrealised | Hedging | | Total |
| | Share | Share | based | in | gains | reserve | Retained | equity |
| | capital | premium | payment | treasury | reserve | | earnings | |
| | | account | reserve | shares | | | | |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| At 1 | 208 | 5,629 | 531 | (2,934) | 3,900 | - | 26,395 | 33,729 |
| January | | | | | | | | |
| 2009 | | | | | | | | |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| Change in | - | - | 1,413 | - | - | - | (1,413) | - |
| accounting | | | | | | | | |
| policy | | | | | | | | |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| Restated | 208 | 5,629 | 1,944 | (2,934) | 3,900 | - | 24,982 | 33,729 |
| balance | | | | | | | | |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| Profit for | - | - | - | - | - | - | 2,724 | 2,724 |
| the period | | | | | | | | |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| Other | - | - | - | - | - | 310 | - | 310 |
| comprehensive | | | | | | | | |
| income | | | | | | | | |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| Total | - | - | - | - | - | 310 | 2,724 | 3,034 |
| comprehensive | | | | | | | | |
| income | | | | | | | | |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| Share-based | - | - | 298 | - | - | - | - | 298 |
| payments | | | | | | | | |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| At 30 June | 208 | 5,629 | 2,242 | (2,934) | 3,900 | 310 | 27,706 | 37,061 |
| 2009 | | | | | | | | |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
Year ended 31 December 2009
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| | | Share | Share- | Investment | Unrealised | | Retained | |
| | Share | premium | based | in | gains | Hedging | earnings | Total |
| | capital | account | payment | treasury | reserve | reserve | | equity |
| | | | reserve | shares | | | | |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | | GBP'000 | GBP'000 |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| At 1 | 208 | 5,629 | 531 | (2,934) | 3,900 | - | 26,395 | 33,729 |
| January | | | | | | | | |
| 2009 | | | | | | | | |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| Change in | - | - | 1,413 | - | - | - | (1,413) | - |
| accounting | | | | | | | | |
| policy | | | | | | | | |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| Restated | 208 | 5,629 | 1,944 | (2,934) | 3,900 | - | 24,982 | 33,729 |
| balance | | | | | | | | |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| Profit for | - | - | - | - | - | - | 11,747 | 11,747 |
| the year | | | | | | | | |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| Other | - | - | - | - | - | (63) | - | (63) |
| comprehensive | | | | | | | | |
| loss | | | | | | | | |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| Total | - | - | - | - | - | (63) | 11,747 | 11,684 |
| comprehensive | | | | | | | | |
| income | | | | | | | | |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| Reissuance | - | - | (109) | 129 | - | - | - | 20 |
| of treasury | | | | | | | | |
| shares | | | | | | | | |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| Share-based | - | - | 424 | - | - | - | - | 424 |
| payments | | | | | | | | |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
| At 31 | 208 | 5,629 | 2,259 | (2,805) | 3,900 | (63) | 36,729 | 45,857 |
| December | | | | | | | | |
| 2009 | | | | | | | | |
+---------------+---------+---------+---------+------------+------------+---------+----------+---------+
Notes to the interim condensed group financial statements
The interim condensed group financial statements for the six months ended 30
June 2010 was approved by the board of directors on 3 August 2010. The Group's
published financial statements for the year ended 31 December 2009 have been
reported on by the Group's auditors and filed with the Registrar of Companies.
The auditor's report on those accounts, which have been filed with the Registrar
of Companies, was unqualified and did not contain an emphasis of matter
paragraph, and did not make a statement under section 498 of the Companies Act
2006. The financial information for the half year ended 30 June 2010 and the
equivalent period in 2009 has not been audited.
The figures for the year ended 31 December 2009 do not constitute the Company's
statutory accounts for that period but have been extracted from the statutory
accounts.
1 Basis of preparation
The interim condensed group financial statements for the six months ended 30
June 2010 have been prepared in accordance with the Disclosure and Transparency
Rules of the Financial Services Authority and IAS 34 Interim Financial Reporting
(as adopted by the EU). The interim condensed group financial statements have
been prepared on a going concern basis.
The interim condensed group financial statements do not include all the
information and disclosures required in the annual financial statements, and
should be read in conjunction with the Group's annual financial statements as at
31 December 2009.
Significant accounting policies
The accounting policies adopted in the preparation of the interim condensed
group financial statements are consistent with those followed in the preparation
of the Group's annual financial statements for the year ended 31 December 2009,
except for the adoption of new Standards and Interpretations as of 1 January
2010 which are applicable to the group, as noted below:
Revised IFRS 3 Business Combinations
The amendment to IFRS 3 changes the treatment of acquisition-related costs and
contingent consideration relating to acquisitions after 1 January 2010. The
standard also changes the treatment of non-controlling interests (formerly
minority interests) with an option to recognise these at full fair value as at
the acquisition date and a requirement for previously held non-controlling
interests to be fair valued as at the date control is obtained, with gains and
losses recognised in the income statement.
Some of the key features of the revised IFRS3 include:
- Acquisition-related costs to be expensed and not included in the
purchase price;
- Contingent consideration to be recognised at fair value on the
acquisition date (with subsequent changes recognised in the income statement and
not as a change to goodwill); and
- Changes to the accounting treatment of step acquisitions.
Revised IFRS 3 applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after 1 July 2009.
The group treated the acquisition-related costs in respect of acquisitions made
in the six months ended 30 June 2010 as exceptional costs and these were
expensed to the income statement. The adoption of this amendment had the effect
of decreasing the profit by GBP1,988,000 for the period ended 30 June 2010.
IAS 27R Consolidated and Separate Financial Statements
The revision to this Standard requires the group to attribute losses to
non-controlling interests even if this results in the non-controlling interest
having a deficit balance. This change is applicable prospectively and the
controlling shareholder will not be able to recover any past losses absorbed
under the old rules.
The revision of the Standard had no material effect on the results for the six
months ended 30 June 2010.
1. Basis of preparation (continued)
Significant accounting policies (continued)
Judgements and estimates
The preparation of financial information in conformity with IFRS as adopted by
European Union requires management to make judgements, estimates and assumptions
that affect the application of policies and reporting amounts of assets and
liabilities, income and expenses. The estimates and associated assumptions are
based on historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of
making the judgements about carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
The key assumptions concerning the future and other key sources of estimation
uncertainty at the balance sheet date, that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the
next six months are largely the same as those at 31 December 2009. These
assumptions are discussed in detail on page 50 and in notes 14, 16, 20 and 21 of
the Group's annual financial statements for the year ended 31 December 2009. The
assumptions discussed are as follows:
- Impairment of intangible assets
- Fair value of unquoted equity instruments, and
- Other areas (contingent consideration, provisioning for professional
indemnity claims and onerous leases)
For the period to 30 June 2010, management now consider the determination of
acquisition fair values to be a further key assumption to be considered.
Improvements to IFRSs
The amendments to the following standards below did not have any impact on the
accounting policies, financial position or performance of the Group:
· IFRIC 17 Distributions of non-cash assets to owners
· IFRIC 18 Transfers of assets from customers
· Additional exemptions for first-time adopters (Amendments to IFRS 1)
· Improvements to International Financial Reporting Standards 2009
The following new standards, new interpretations and amendments to standards and
interpretations have been issued but are not effective for the financial year
beginning 1 January 2010 and have not been early adopted:
· IFRS 9
· IAS 24
· IAS 32
· IFRIC 14, and
· IFRIC 19
Hedge accounting
For those derivatives designated as hedges and for which hedge accounting is
desired, the hedging relationship is documented at its inception. This
documentation identifies the hedging instrument, the hedged item or transaction,
the nature of the risk being hedged and how effectiveness will be measured
throughout its duration. Such hedges are expected at inception to be highly
effective.
1. Basis of preparation (continued)
Significant accounting policies (continued)
Hedge accounting (continued)
For the purpose of hedge accounting, hedge is classified as cash flow hedge when
hedging exposure to variability in cash flows that is either attributable to a
particular risk associated with a recognised asset or liability or a highly
probable forecast transaction.
For cash flow hedges, the effective portion of the gain or loss on the hedging
instrument is recognised directly in equity, while the ineffective portion is
recognised in profit or loss. Amounts taken to equity are transferred to the
profit and loss account when the hedged transaction affects profit or loss.
If a forecast transaction is no longer expected to occur, amounts previously
recognised in equity are transferred to profit or loss. If the hedging
instrument expires or is sold, terminated or exercised without replacement or
rollover, or if its designation as a hedge is revoked, amounts previously
recognised in equity remain in equity until the forecast transaction occurs and
are transferred to the profit and loss account. If the related transaction is
not expected to occur, the amount is taken to profit or loss.
Exceptional items
The Group presents as exceptional items on the face of the income statement,
those material items of income and expense which, because of the nature and
expected infrequency of the events giving rise to them, merit separate
presentation to allow shareholders to understand better the elements of
financial performance in the year, so as to facilitate comparison with prior
periods and to assess better trends in financial performance.
Going concern
The Group has in place borrowing facilities to March 2014 to a maximum of
GBP75m. These facilities are
subject to financial performance covenants. The
Board has prepared a working capital forecast based upon assumptions as to
trading and has concluded that the Group has adequate working capital, will meet
the financial performance covenants and that therefore it is appropriate to use
the going concern basis of preparation for this financial information.
2. Seasonality of operations
Due to the seasonal nature of the property market turnover is normally higher in
the second half of the year.
3. Segment analysis of revenue and operating profit
For management purposes, the group is organised into business units based on
their products and services and has two reportable operating segments as
follows:
· The estate agency and related activities provides services related to the
sale and letting of housing via a network of high street branches. In addition,
it provides repossession asset management services to a range of lenders. It
also sells mortgages for a number of lenders and sells life assurance and
critical illness policies, etc for a number of insurance companies via the
estate agency branch and First Complete network.
· The surveying and valuation segment provides a professional survey
service of domestic properties to various lending corporations.
No operating segments have been aggregated to form the above reported operating
segments.
3. Segment analysis of revenue and operating profit
(continued)
Management monitors the operating results of its business units separately for
the purpose of making decisions about resource allocation and performance
assessment. Segment performance is evaluated based on operating profit or loss
which in certain respects, as explained in the table below, is measured
differently from operating profit or loss in the consolidated financial
statements. Head office costs, group financing (including finance costs and
finance incomes) and income taxes are managed on a group basis and are not
allocated to operating segments.
All of the Group's assets are situated in the United Kingdom.
Operating segments
The following table present revenue and profit/(loss) information regarding the
group's operating segments for the six months ended 30 June 2010 and 2009, and
financial year ended 31 December 2009 respectively.
Six months ended 30 June 2010
+-----------------------------+-------------+-----------+-------------+---------+
| | Estate | Surveying | | |
| | agency and | and | | |
| | related | valuation | Unallocated | Total |
| | activities | services | GBP'000 | GBP'000 |
| | GBP'000 | GBP'000 | | |
+-----------------------------+-------------+-----------+-------------+---------+
| Income statement | | | | |
| information | | | | |
+-----------------------------+-------------+-----------+-------------+---------+
| Segmental revenue | 58,761 | 42,323 | - | 101,084 |
+-----------------------------+-------------+-----------+-------------+---------+
| | | | | |
+-----------------------------+-------------+-----------+-------------+---------+
| Segmental result: | | | | |
+-----------------------------+-------------+-----------+-------------+---------+
| - before exceptional costs, | | | | |
| amortisation | | | | |
+-----------------------------+-------------+-----------+-------------+---------+
| and share-based payments | (606) | 15,217 | (1,188) | 13,423 |
+-----------------------------+-------------+-----------+-------------+---------+
| - after exceptional costs, | | | | |
| amortisation | | | | |
+-----------------------------+-------------+-----------+-------------+---------+
| and share based payments | 11,514 | 9,940 | (1,188) | 20,266 |
+-----------------------------+-------------+-----------+-------------+---------+
| | | | | |
+-----------------------------+-------------+-----------+-------------+---------+
| Dividend income | | | | 516 |
+-----------------------------+-------------+-----------+-------------+---------+
| Finance income | | | | 2 |
+-----------------------------+-------------+-----------+-------------+---------+
| Finance costs | | | | (1,114) |
+-----------------------------+-------------+-----------+-------------+---------+
| | | | | |
+-----------------------------+-------------+-----------+-------------+---------+
| Profit before tax | | | | 19,670 |
+-----------------------------+-------------+-----------+-------------+---------+
| | | | | |
+-----------------------------+-------------+-----------+-------------+---------+
| Taxation | | | | 267 |
+-----------------------------+-------------+-----------+-------------+---------+
| Profit for the period | | | | 19,937 |
+-----------------------------+-------------+-----------+-------------+---------+
In the period ended 30 June 2010, there is no revenue from one customer that
accounts for 10% or more of the Group's total revenue (2009: none).
3. Segment analysis of revenue and operating profit (continued)
Operating segments (continued)
+-----------------------------+-------------+-----------+-------------+----------+
| Six months ended 30 June | Estate | Surveying | Unallocated | Total |
| 2010 | agency and | and | GBP'000 | GBP'000 |
| | related | valuation | | |
| | activities | services | | |
| | GBP'000 | GBP'000 | | |
+-----------------------------+-------------+-----------+-------------+----------+
| Balance sheet information | | | | |
+-----------------------------+-------------+-----------+-------------+----------+
| Segment assets | 99,539 | 34,746 | 6,249 | 140,534 |
+-----------------------------+-------------+-----------+-------------+----------+
| Segment liabilities | (40,967) | (21,347) | (17,363) | (79,677) |
+-----------------------------+-------------+-----------+-------------+----------+
| | | | | |
+-----------------------------+-------------+-----------+-------------+----------+
| Net assets/(liabilities) | 58,572 | 13,399 | (11,114) | 60,857 |
+-----------------------------+-------------+-----------+-------------+----------+
| | | | | |
+-----------------------------+-------------+-----------+-------------+----------+
Unallocated net liabilities comprise certain property, plant and equipment
(GBP46,000), financial assets (GBP3,900,000), corporation tax assets
(GBP433,000), trade and other receivables (GBP87,000), cash and bank balances
(GBP1,783,000), financial liabilities (GBP13,912,000), trade and other payables
(GBP2,440,000) and deferred tax liabilities (GBP1,011,000).
+-----------------------------+-------------+-----------+-------------+---------+
| Six months ended 30 June | Estate | Surveying | Unallocated | |
| 2009 | agency and | and | GBP'000 | Total |
| | related | valuation | | GBP'000 |
| | activities | services | | |
| | GBP'000 | GBP'000 | | |
+-----------------------------+-------------+-----------+-------------+---------+
| Income statement | | | | |
| information | | | | |
+-----------------------------+-------------+-----------+-------------+---------+
| Segmental revenue | 38,095 | 36,023 | - | 74,118 |
+-----------------------------+-------------+-----------+-------------+---------+
| | | | | |
+-----------------------------+-------------+-----------+-------------+---------+
| Segmental result: | | | | |
+-----------------------------+-------------+-----------+-------------+---------+
| - before exceptional costs, | | | | |
| amortisation | | | | |
+-----------------------------+-------------+-----------+-------------+---------+
| and share-based payments | (844) | 12,725 | (1,022) | 10,859 |
+-----------------------------+-------------+-----------+-------------+---------+
| - after exceptional costs, | | | | |
| amortisation | | | | |
+-----------------------------+-------------+-----------+-------------+---------+
| and share based payments | (1,841) | 8,196 | (1,022) | 5,333 |
+-----------------------------+-------------+-----------+-------------+---------+
| | | | | |
+-----------------------------+-------------+-----------+-------------+---------+
| Finance income | | | | - |
+-----------------------------+-------------+-----------+-------------+---------+
| Finance costs | | | | (1,069) |
+-----------------------------+-------------+-----------+-------------+---------+
| Profit before tax | | | | 4,264 |
+-----------------------------+-------------+-----------+-------------+---------+
| Taxation | | | | (1,540) |
+-----------------------------+-------------+-----------+-------------+---------+
| Profit for the period | | | | 2,724 |
+-----------------------------+-------------+-----------+-------------+---------+
3. Segment analysis of revenue and operating profit (continued)
Operating segments (continued)
+-----------------------------+-------------+-----------+-------------+----------+
| Year ended 31 December 2009 | Estate | Surveying | Unallocated | Total |
| | agency and | and | GBP'000 | GBP'000 |
| | related | valuation | | |
| | activities | services | | |
| | | GBP'000 | | |
| | GBP'000 | | | |
+-----------------------------+-------------+-----------+-------------+----------+
| Income statement | | | | |
| information | | | | |
+-----------------------------+-------------+-----------+-------------+----------+
| Segmental revenue | 87,655 | 70,048 | - | 157,703 |
+-----------------------------+-------------+-----------+-------------+----------+
| | | | | |
+-----------------------------+-------------+-----------+-------------+----------+
| Segmental result: | | | | |
+-----------------------------+-------------+-----------+-------------+----------+
| - before exceptional costs, | | | | |
| amortisation | | | | |
+-----------------------------+-------------+-----------+-------------+----------+
| and share-based payments | 6,705 | 23,554 | (1,940) | 28,319 |
+-----------------------------+-------------+-----------+-------------+----------+
| - after exceptional costs, | | | | |
| amortisation | | | | |
+-----------------------------+-------------+-----------+-------------+----------+
| and share-based payments | 4,910 | 15,782 | (1,940) | 18,752 |
+-----------------------------+-------------+-----------+-------------+----------+
| | | | | |
+-----------------------------+-------------+-----------+-------------+----------+
| Dividend income | | | | 24 |
+-----------------------------+-------------+-----------+-------------+----------+
| Finance income | | | | 54 |
+-----------------------------+-------------+-----------+-------------+----------+
| Finance costs | | | | (2,221) |
+-----------------------------+-------------+-----------+-------------+----------+
| Profit before tax | | | | 16,609 |
+-----------------------------+-------------+-----------+-------------+----------+
| Taxation | | | | (4,862) |
+-----------------------------+-------------+-----------+-------------+----------+
| Profit for the year | | | | 11,747 |
+-----------------------------+-------------+-----------+-------------+----------+
+-----------------------------+-------------+-----------+-------------+----------+
| Year ended 31 December 2009 | Estate | | | |
| | agency and | Surveying | Unallocated | Total |
| | related | and | | |
| | activities | valuation | | |
| | GBP'000 | services | GBP'000 | GBP'000 |
| | | GBP'000 | | |
+-----------------------------+-------------+-----------+-------------+----------+
| Balance sheet information | | | | |
+-----------------------------+-------------+-----------+-------------+----------+
| Segment assets | 76,246 | 33,698 | 7,083 | 117,027 |
+-----------------------------+-------------+-----------+-------------+----------+
| Segment liabilities | (25,466) | (17,410) | (28,294) | (71,170) |
+-----------------------------+-------------+-----------+-------------+----------+
| | | | | |
+-----------------------------+-------------+-----------+-------------+----------+
| Net assets/(liabilities) | 50,780 | 16,288 | (21,211) | 45,857 |
+-----------------------------+-------------+-----------+-------------+----------+
| | | | | |
+-----------------------------+-------------+-----------+-------------+----------+
Unallocated net liabilities comprise certain property, plant and equipment
(GBP56,000), financial assets (GBP3,900,000), deferred tax assets (GBP621,000),
trade and other receivables (GBP1,648,000), cash and bank balances (GBP858,000),
financial liabilities (GBP25,171,000), trade and other payables (GBP940,000) and
taxation (GBP2,183,000).
4. Earnings per share
Basic earnings/(loss) per share amounts are calculated by dividing net
profit/(loss) for the period attributable to ordinary equity holders of the
parent by the weighted average number of ordinary shares outstanding during the
period.
Diluted earnings/(loss) per share amounts are calculated by dividing the net
profit/(loss) attributable to ordinary equity holders of the parent by the
weighted average number of ordinary shares outstanding during the period plus
the weighted average number of ordinary shares that would be issued on the
conversion of all the dilutive potential ordinary shares into ordinary shares.
+--------------------+---------+-------------+--------+---------+-------------+--------+
| Six months ended | | | | | | 2009 |
| 30 June | | | | Profit | | Per |
| | | | 2010 | after | | share |
| | | Weighted | Per | tax | Weighted | amount |
| | Profit | average | share | GBP'000 | average | Pence |
| | | number | amount | | number | |
| | after | of | Pence | | of | |
| | tax1 | shares | | | shares | |
| | GBP'000 | | | | | |
+--------------------+---------+-------------+--------+---------+-------------+--------+
| | | | | | | |
| | | | | | | |
+--------------------+---------+-------------+--------+---------+-------------+--------+
| Basic EPS | 19,937 | 102,970,688 | 19.4 | 2,724 | 102,811,731 | 2.6 |
+--------------------+---------+-------------+--------+---------+-------------+--------+
| Effect of dilutive | | | | | | |
| share options | - | 556,589 | - | - | 195,615 | - |
+--------------------+---------+-------------+--------+---------+-------------+--------+
| Diluted EPS | 19,937 | 103,527,278 | 19.3 | 2,724 | 103,007,346 | 2.6 |
+--------------------+---------+-------------+--------+---------+-------------+--------+
The Directors consider that the adjusted earnings shown below give a better and
more consistent indication of the Group's underlying performance:
+---------------------------------------------+-----------+----------+
| | |
| | Six months ended |
+---------------------------------------------+----------------------+
| | 30 June | 30 June |
| | 2010 | 2009 |
| | GBP'000 | GBP'000 |
+---------------------------------------------+-----------+----------+
| | | |
+---------------------------------------------+-----------+----------+
| | 13,423 | 10,859 |
| Group operating profit before exceptional | | |
| costs, share-based payments and | | |
| amortisation | | |
+---------------------------------------------+-----------+----------+
| | | |
+---------------------------------------------+-----------+----------+
| Net finance costs | (596) | (1,069) |
+---------------------------------------------+-----------+----------+
| Normalised taxation | (3, 756) | (2,898) |
+---------------------------------------------+-----------+----------+
| Adjusted Profit after tax1 before | 9, 071 | 6,892 |
| exceptional costs, share-based payments and | | |
| amortisation | | |
+---------------------------------------------+-----------+----------+
Adjusted basic and diluted EPS
+------------------+----------+-------------+--------+----------+-------------+----------+
| Six months ended | | Weighted | | | Weighted | 2009 |
| 30 June | Adjusted | average | | Adjusted | average | Per |
| | Profit | number | 2010 | Profit | number | share |
| | after | of | Per | after | of | amount |
| | tax1 | shares | share | tax | shares | restated |
| | GBP'000 | | amount | GBP'000 | | Pence |
| | | | Pence | | | |
+------------------+----------+-------------+--------+----------+-------------+----------+
| | | | | | | |
+------------------+----------+-------------+--------+----------+-------------+----------+
| Adjusted Basic | 9, 071 | 102,970,688 | 8.8 | 6,892 | 102,811,731 | 6.7 |
| EPS | | | | | | |
+------------------+----------+-------------+--------+----------+-------------+----------+
| Effect of | - | 556,589 | - | - | 195,615 | - |
| dilutive share | | | | | | |
| options | | | | | | |
+------------------+----------+-------------+--------+----------+-------------+----------+
| Adjusted Diluted | 9, 071 | 103,527,277 | 8.8 | 6,892 | 103,007,346 | 6.7 |
| EPS | | | | | | |
+------------------+----------+-------------+--------+----------+-------------+----------+
1 This represents adjusted profit after tax attributable to equity holders of
the parent. Tax has been adjusted to exclude the prior year tax adjustments, and
the tax impact of exceptional items, amortisation and share-based payments. The
effective tax rate used is 29% (2009: 30%).
5. Exceptional profit and other exceptional costs
+--------------------------------------------+----------+---------+----------+----------+
| | | Year | |
| | Six months Ended | Ended | |
+--------------------------------------------+--------------------+----------+----------+
| | 30 June | 30 | 31 Dec |
| | 2010 | June | 2009 |
| | GBP'000 | 2009 | GBP'000 |
| | | GBP'000 | |
+--------------------------------------------+----------+---------+---------------------+
| Exceptional profit arising through | | | |
| acquisition of HEAL: | | | |
+--------------------------------------------+----------+---------+---------------------+
| Negative goodwill arising on acquisition | (29,145) | - | - |
+--------------------------------------------+----------+---------+---------------------+
| Employee costs | | | |
+--------------------------------------------+----------+---------+---------------------+
| Redundancy costs due to branch closures | | | |
| and business reorganisation of the | 7,242 | - | - |
| acquisition | | | |
+--------------------------------------------+----------+---------+---------------------+
| Other | | | |
+--------------------------------------------+----------+---------+---------------------+
| Acquisition and re-branding costs | 6,125 | - | - |
+--------------------------------------------+----------+---------+---------------------+
| | (15,778) | - | - |
+--------------------------------------------+----------+---------+---------------------+
| Other exceptional costs: | | | |
+--------------------------------------------+----------+---------+---------------------+
| Employee costs | | | |
+--------------------------------------------+----------+---------+---------------------+
| Redundancy costs due to branch closures | 358 | 66 | 232 |
| and business reorganisation | | | |
+--------------------------------------------+----------+---------+---------------------+
| Accelerated share-based payments | 27 | - | 42 |
+--------------------------------------------+----------+---------+---------------------+
| Other | | | |
+--------------------------------------------+----------+---------+---------------------+
| Impairment of goodwill | - | 126 | 126 |
+--------------------------------------------+----------+---------+---------------------+
| Others | - | 42 | - |
+--------------------------------------------+----------+---------+---------------------+
| Acquisition related costs | 88 | - | - |
+--------------------------------------------+----------+---------+---------------------+
| Provision for professional indemnity | 2,030 | - | - |
| claims | | | |
+--------------------------------------------+----------+---------+---------------------+
| Total operating exceptional costs | 2,503 | 234 | 400 |
+--------------------------------------------+----------+---------+---------------------+
| Finance costs | | | |
+--------------------------------------------+----------+---------+---------------------+
| Banking fees incurred for extension of | 886 | - | - |
| facility | | | |
+--------------------------------------------+----------+---------+---------------------+
| Interest rate swap (note 8) | 1,300 | - | - |
+--------------------------------------------+----------+---------+---------------------+
| | 2,186 | - | - |
+--------------------------------------------+----------+---------+---------------------+
| | (11,089) | 234 | 400 |
+--------------------------------------------+----------+---------+----------+----------+
6. Dividends paid and proposed
+--------------------------------------------+------------+---------+---------+
| | Six months Ended | Year |
| | | Ended |
+--------------------------------------------+----------------------+---------+
| | 30 June | 30 | 31 Dec |
| | 2010 | June | 2009 |
| | GBP'000 | 2009 | GBP'000 |
| | | GBP'000 | |
+--------------------------------------------+------------+---------+---------+
| | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------------------+------------+---------+---------+
| | | |
| Declared and paid during the period: | | |
+--------------------------------------------+------------+-------------------+
| Equity dividends on ordinary shares: | | |
+--------------------------------------------+------------+-------------------+
| Final dividend for full year 2009: 5.40 | 5,567 | - | - |
| pence (2008: nil pence) | | | |
+--------------------------------------------+------------+---------+---------+
| Dividends on ordinary shares proposed (not | | | |
| recognised as a liability as at 30 June): | | | |
+--------------------------------------------+------------+---------+---------+
| Interim dividend for 2010: 2.50 pence per | | | |
| share (full year 2009: 5.40 pence) | 2,577 | - | 5,555 |
+--------------------------------------------+------------+---------+---------+
7. Taxation
The major components of income tax (credit)/charge in the interim group income
statements are:
+------------------------------------------+---------+---------+---------+
| | Six months | Year |
| | Ended | Ended |
+------------------------------------------+-------------------+---------+
| | 30 June | 30 June | 31 Dec |
| | 2010 | 2009 | 2009 |
+------------------------------------------+---------+---------+---------+
| | GBP'000 | GBP'000 | GBP'000 |
+------------------------------------------+---------+---------+---------+
| | | | |
+------------------------------------------+---------+---------+---------+
| UK corporation tax - current year | 940 | 2,417 | 5,615 |
+------------------------------------------+---------+---------+---------+
| - tax underprovided/(overprovided) in | | | |
| prior year | - | 190 | 401 |
+------------------------------------------+---------+---------+---------+
| - utilisation of tax losses | - | - | - |
+------------------------------------------+---------+---------+---------+
| | 940 | 2,607 | 6,016 |
+------------------------------------------+---------+---------+---------+
| | | | |
+------------------------------------------+---------+---------+---------+
| Deferred tax: | | | |
+------------------------------------------+---------+---------+---------+
| Origination and reversal of temporary | (2,214) | (1,067) | (603) |
| differences | | | |
+------------------------------------------+---------+---------+---------+
| Adjustment in respect of prior year | 1,007 | - | (551) |
+------------------------------------------+---------+---------+---------+
| Total deferred tax | (1,207) | (1,067) | (1,154) |
+------------------------------------------+---------+---------+---------+
| Total tax (credit)/charge in the income | (267) | 1,540 | 4,862 |
| statement | | | |
+------------------------------------------+---------+---------+---------+
The Group's current taxation credit comprises corporation tax calculated at
estimated effective tax rates for the period.
Income tax charged directly to equity is GBP24,000 (2009: GBP121,000) which
relates to deferred tax on the net loss on the cash flow hedge.
8. Analysis of net debt
+------------------------------------------+-----------+----------------+---------+
| | Six months Ended | Year |
| | | Ended |
+------------------------------------------+----------------------------+---------+
| | 30 June | 30 June | 31 Dec |
| | 2010 | 2009 | 2009 |
+------------------------------------------+-----------+----------------+---------+
| | GBP'000 | GBP'000 | GBP'000 |
+------------------------------------------+-----------+----------------+---------+
| | | | |
+------------------------------------------+-----------+----------------+---------+
| Interest bearing loans and borrowings | 16,087 | 43,928 | 26,566 |
+------------------------------------------+-----------+----------------+---------+
| Less: cash and short-term deposits | (1,783) | (840) | (858) |
+------------------------------------------+-----------+----------------+---------+
| Net debt at the end of the period | 14,304 | 43,088 | 25,708 |
+------------------------------------------+-----------+----------------+---------+
During the six months ended 30 June 2010, the Group has repaid GBP13.1m of the
revolving credit facility. The utilisation of this revolving credit facility may
vary each month as long as this does not exceed the maximum GBP75m facility. The
banking facility was renegotiated in advance of expiry in July 2010. The new
banking facility expires in March 2014.
During April and May 2009, the group entered into three fixed interest rate swap
arrangements with their banker for a total principal amount of GBP25m to hedge
against potential increase in future LIBOR payable on the revolving credit
facility. This hedge was initially treated as cash flow hedge and accounted for
under hedge accounting.
The terms of the interest rate swap agreements are now notexpected to match the
terms of the commitments. The cash flow hedge of the expected future interest
payment was assessed to be ineffective and as at 30 June 2010 an unrealised loss
of GBP 1,300,000 with a deferred tax charge of GBP 364,000 relating to the
hedging instrument that arose in the period is included in the income statement
as exceptional finance costs.
9. Acquisitions during the year
Period ended 30 June 2010
On 15 January 2010, the Group acquired the Group acquired the entire share
capital of Halifax Estate Agencies Limited for the consideration of GBP1. The
details of the acquisition had the following effect on the Group's assets and
liabilities:
+--------------------------------+---------+--+-------------+-------------+
| | Book | | Fair |Provisional |
| | value | | value |fair value* |
| | | |adjustments | |
+--------------------------------+---------+--+-------------+-------------+
| | GBP'000 | | GBP'000 | GBP'000 |
+--------------------------------+---------+--+-------------+-------------+
| | | | | |
+--------------------------------+---------+--+-------------+-------------+
| Property, plant and equipment | 13,941 | | (5,013) | 8,928 |
+--------------------------------+---------+--+-------------+-------------+
| Other intangible assets - | - | | 2,500 | 2,500 |
| contracts | | | | |
+--------------------------------+---------+--+-------------+-------------+
| Financial assets | 4,413 | | (3,663) | 750 |
+--------------------------------+---------+--+-------------+-------------+
| Trade and other receivables | 8, 591 | | (3, 320) | 5,271 |
+--------------------------------+---------+--+-------------+-------------+
| Cash and cash equivalents | 25,946 | | - | 25,946 |
+--------------------------------+---------+--+-------------+-------------+
| Trade and other payables | (711) | | (10,527) | (11,238) |
+--------------------------------+---------+--+-------------+-------------+
| Deferred tax liabilities | - | | (2,839) | (2,839) |
+--------------------------------+---------+--+-------------+-------------+
| Provisions for liabilities and | - | | (173) | (173) |
| charges | | | | |
+--------------------------------+---------+--+-------------+-------------+
| | 52,180 | | (23,035) | 29,145 |
+--------------------------------+---------+--+-------------+-------------+
| Negative goodwill arising on | | | | (29,145) |
| acquisition | | | | |
+--------------------------------+---------+--+-------------+-------------+
| | | | | 0 |
+--------------------------------+---------+--+-------------+-------------+
| Discharged by: | | | | |
+--------------------------------+---------+--+-------------+-------------+
| Cash | | | | 0 |
+--------------------------------+---------+--+-------------+-------------+
* The fair values at acquisition are provisional due to the timing of the
transaction and will be finalised within 12 months of the acquisition date.
The negative goodwill of GBP29,145,000 comprises the value of cash and other
assets acquired.
The income statement of the acquisition for the period ended 30 June 2010 was as
follows:
+--------------------------------+-------------+--+-------------+----------+
| | Pre | | Post | |
| | acquisition | |acquisition | Total |
+--------------------------------+-------------+--+-------------+----------+
| | GBP'000 | | GBP'000 | GBP'000 |
+--------------------------------+-------------+--+-------------+----------+
| | | | | |
+--------------------------------+-------------+--+-------------+----------+
| Revenue | 879 | | 10,849 | 11,728 |
+--------------------------------+-------------+--+-------------+----------+
| | | | | |
+--------------------------------+-------------+--+-------------+----------+
| Operating loss before | (1,101) | | (3,538) | (4,639) |
| exceptional costs | | | | |
+--------------------------------+-------------+--+-------------+----------+
| Exceptional costs | - | | (13,417) | (13,417) |
+--------------------------------+-------------+--+-------------+----------+
| Amortisation | - | | (476) | (476) |
+--------------------------------+-------------+--+-------------+----------+
| Operating loss | (1,101) | | (17,431) | (18,532) |
+--------------------------------+-------------+--+-------------+----------+
| Dividend income | - | | 500 | 500 |
+--------------------------------+-------------+--+-------------+----------+
| Loss before tax | (1,101) | | (16,931) | (18,032) |
+--------------------------------+-------------+--+-------------+----------+
| Current tax charge | - | | 5,249 | 5,249 |
+--------------------------------+-------------+--+-------------+----------+
| | (1,101) | | (11,682) | (12,783) |
+--------------------------------+-------------+--+-------------+----------+
The increase in goodwill of GBP6.1m in the period reflects a number of
acquisitions including GBP4.1m regarding the acquisition of the Home of Choice
business.
+--------------------------------------------------------+--------+
| | |
+--------------------------------------------------------+--------+
Independent Review Report to LSL Property Services plc
Introduction
We have 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
2010 which comprises interim group income statement, interim group statement of
comprehensive income, interim group balance sheet, interim group cash flow
statement, Interim Group Statement of Changes in Equity and the related notes 1
to 9. 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.
This report is made solely to the Company in accordance with guidance contained
in ISRE 2410 (UK and Ireland) "Review of Interim Financial Information Performed
by the Independent Auditor of the Entity" issued by the Auditing Practices
Board. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company, for our work, for this report,
or for the conclusions we have formed.
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 Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
As disclosed in note 1, 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.
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 2010 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Services Authority.
Ernst & Young LLP
Leeds
4 August 2010
This information is provided by RNS
The company news service from the London Stock Exchange
END
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