RNS Number:7329S
Management Consulting Group PLC
12 March 2007
Financial results for the year ended 31 December 2006
Management Consulting Group PLC ("MCG" or "the Group"), the international
management consultancy group, today announces its results for the year ended 31
December 2006.
Key points
* Revenue 13% up on last year to #146.9 million (2005: #129.6 million)
* Underlying+ operating profit 28% up to #16.2 million (2005: #12.7 million)
* Underlying EBITDA margin up 16% to 12.3% (2005: 10.6%)
* Operating profit #13.4 million (2005: #13.6 million)
* Underlying EPS up 22% to 6.1p (2005: 5.0p); Basic EPS 4.1p (2005: 5.3p)
* Dividend increased by 25% to 1.0p per share (2005: 0.8p)
* Ineum integration progressing well and out-performing expectations
* Current trading and order intake in line with expectations
+Throughout this statement the term underlying is used to describe profits
before non-recurring items and amortisation of acquired intangible assets
Rolf Stomberg, Chairman:
"In the light of the Group's performance and its prospects, I am delighted that
the board is recommending that shareholders approve a 25% increase in the
dividend to 1.0p per share."
Kevin Parry, Chief Executive:
"In 2006 we continued the execution of our strategy of delivering growth by
creating a significant multi-disciplinary consultancy group with particular
specialisms in different geographies. In the year we made good margin progress
and added Ineum Consulting and Salzer Consulting to the Group's portfolio of
consultancies. Both acquired consultancies are trading well and their
integration into the Group is on schedule."
For further information please contact:
Management Consulting Group PLC
Kevin Parry Chief Executive 020 7710 5000
Maitland
Suzanne Bartch 020 7379 5151 (mobile) 07769 710 335
Peter Ogden 020 7379 5151 (mobile) 07811 124 197
An analyst briefing will be held at the offices of Management Consulting Group
PLC on the 6th floor of Fleet Place House, 2 Fleet Place, Holborn Viaduct,
London, EC4M 7RF on Monday 12 March 2007 at 9.30 am.
Notes to Editors
Management Consulting Group PLC (MMC.L) is an umbrella organisation for a
diverse range of consulting and professional services offerings.
It operates through four divisions: Ineum Consulting, Parson Consulting,
Proudfoot Consulting and Salzer Consulting. Ineum Consulting provides consulting
services with industry expertise. Parson Consulting specialises in financial
management consulting. Proudfoot Consulting specialises in operational
improvement consulting and Salzer Consulting specialises in starting, managing
and restructuring business in Asian markets. The businesses operate worldwide.
For further information, visit www.mcgplc.com.
Forward-looking statements
This preliminary announcement contains certain forward-looking statements with
respect to the financial condition, results of operations and businesses of
Management Consulting Group PLC. These statements and forecasts involve risk and
uncertainty because they relate to events and depend upon circumstances that
will occur in the future. There are a number of factors that could cause actual
results of developments to differ materially from those expressed or implied by
these forward-looking statements and forecasts. The forward looking statements
are based on the directors' current views and information known to them at 9
March 2007. The directors do not make any undertaking to update or revise any
forward looking statements, whether as a result of new information, future
events, or otherwise. Nothing in this announcement should be construed as a
profit forecast.
Overview
The Group made significant progress in implementing its strategic plan to
deliver growth through broadening its consulting offering in existing and new
geographies. The acquisition of Ineum provided a third, substantial consultancy
to the Group's portfolio diversifying the service offerings and deepening the
Group's European footprint. The Group also invested in Salzer Consulting, a
specialist human resources consultancy operating in the fast expanding market
place of Asia, with a particular focus on China.
Operationally, all businesses are making progress towards realising their
potential albeit that each is at different stages of individual development.
The current year has started with good momentum and the order book has improved
solidly from its satisfactory position at the year end.
The performance of the four consultancies is set out below:
Year ended Year ended
31 Dec 2006 31 Dec 2005
--------- ---------
#'000 #'000
--------- ---------
Revenue
Ineum Consulting 23,709 -
Parson Consulting 34,301 43,216
Proudfoot Consulting 88,658 86,385
Salzer Consulting 222 -
--------- ---------
Total revenue 146,890 129,601
--------- ---------
Operating profit
Ineum Consulting 2,780 -
Parson Consulting (2,108) 2,245
Proudfoot Consulting 15,575 10,417
Salzer Consulting (91) -
--------- ---------
Underlying+ operating profit 16,156 12,662
Non-recurring items:
Ineum integration (2,100) -
Proudfoot surplus provision 335 897
--------- ---------
Operating profit before amortisation 14,391 13,559
Amortisation of acquired intangibles (943) -
--------- ---------
Profit from operations 13,448 13,559
+Throughout this statement the term underlying is used to describe profits
before non-recurring items and amortisation of acquired intangible assets
Total revenue for the year was up 13% to #146.9 million. Ineum Consulting (which
was a member of the Group for four months) accounted for 16% of revenue, Parson
Consulting accounted for 23% of revenue, Proudfoot Consulting accounted for 60%
of revenue and Salzer Consulting (which was a member of the Group for three
months) accounted for 1% of revenue.
The acquisition of Ineum Consulting resulted in a material shift in the
geographic distribution of revenue. The Americas accounted for 44% (2005: 61%)
and Europe accounted for 48% (2005: 31%) of Group revenue.
The gross profit margin continues to be tightly managed and remains at 50% of
revenue. Selling costs remain at 27% of revenue.
Overall, underlying administrative expenses are unchanged from the previous
year, but this masks an increase of #2.5 million due to administrative expenses
inherent in the acquired companies which were offset by cost savings over the
course of the year in the remainder of the Group.
Following the acquisition of Ineum Consulting, we embarked on a rapid plan to
integrate that consultancy into the Group. Non-recurring costs of #2.1 million
were incurred in respect of rebranding, financial management alignment, office
moves, knowledge management, launch meetings, works council procedures and
professional fees. Partially offsetting those costs, was a non-recurring credit
of #0.3 million (2005: #0.9 million) associated with a surplus provision arising
from the disposal of Proudfoot's Japanese business in 2000. No further profits
or losses will arise from that transaction. Additionally, #0.9 million of
amortisation has been charged in the profit and loss account arising from the
acquisition of Ineum's customer relationships and orders which are accounted for
as intangible assets.
The underlying profit from operations rose 28% to #16.2 million (2005: #12.7
million).
The underlying EBITDA margin was 12.3% compared with 10.6% last year. Our target
EBITDA margin remains at 15%.
After charging the non-recurring costs of a net #1.8 million (2005: #0.9 million
credit) and amortisation of intangible assets arising on the acquisition of
Ineum of #0.9 million (2005: #-), the operating profit was little changed at
#13.4 million (2005: #13.6 million).
The Ineum acquisition was partly financed out of cash resources and new debt
resulting in financing costs of #1.3 million (2005: #0.1 million) which was
partly offset by investment income of #1.2 million (2005: #0.5 million) arising
primarily in the first eight months of the year. Group pre-tax profits were
#13.3 million (2005: #13.9 million).
The effective tax charge on profit before tax, as adjusted for the credit
associated with the Japan indemnity provision and the amortisation charge
related to the Ineum acquisition, is 33% (2005: 32%) and includes: 8% points
(2005: 12% points) of non-cash tax items required to be included in the charge
by accounting standards; and 3% points (2005: 9% points credit) related to prior
years. The current year "cash tax" charge is therefore 22% (2005: 29%).
Basic earnings per share were 4.1 pence (2005: 5.3 pence). After adjusting for
post tax, non-recurring items, the amortisation of intangibles and non "cash
tax" items, the adjusted earnings per share were 6.1 pence (2005: 5.0 pence). It
is estimated that the Ineum acquisition increased underlying earnings per share
by over 15% in the period.
Ineum Consulting
Ineum Consulting has performed ahead of our expectations. Revenue increased by
23% over the same period of last year. The integration plan that commenced on
closing is being executed in line with the planned timetable and the consultancy
is adding a new dimension to the Group's services in the French speaking markets
of Europe. Its operating margin before the one-off costs was 11.7% compared with
10.5% achieved in its last financial year ended 31 May 2006. The increased
margin is primarily associated with the seasonality of the business.
Parson Consulting
As previously reported, Parson Consulting's revenue was held back by its US
operation which was slow to transition its offerings from Sarbanes-Oxley related
engagements. In April 2006, we strengthened the management of Parson North
America, so separating that unit's management from that of the consultancy's
management as a whole. In addition, the management structure was simplified and
restructured and there was intense reinforcement of core sales disciplines. Good
progress was made outside the US. The operating loss for the year was #2.1
million of which #1.9 million was incurred in the first half.
Proudfoot Consulting
Proudfoot Consulting grew its revenues by 3% over last year. Excellent progress
was made by Proudfoot Consulting in improving its operating margin to 18% (2005:
12%), primarily due to the elimination of European losses through better
management of resources. The consultancy continued to invest in the development
of its business in China and re-entered the Brazilian market after an absence of
some seven years.
Salzer Consulting
Salzer Consulting's impact on the Group results was immaterial for the period of
ownership. 2007 will be a year where we largely reinvest its profits back into
the business to ensure that it is able to take advantage of the market
opportunities in China.
Balance sheet
Net assets increased by #54.3 million to #112.2 million. The largest component
of the increase was the consideration for Ineum being partly settled in the form
of new MCG shares.
In accordance with International Financial Reporting Standards, intangible
assets arising on the purchases of businesses have been separately identified
and quantified from goodwill and amount to #9.0 million before an associated
deferred tax liability of #3.0 million, as required by accounting standards. The
intangible assets are amortised through the income statement whereas the
goodwill is not. The aggregate goodwill and intangible assets before
amortisation in respect of 2006 increased by #93.9 million primarily as a result
of the Ineum acquisition.
Debtors have increased significantly from 18 days at the end of 2005 to 39 days
at the end of 2006. Ineum Consulting does not currently operate the same credit
policies as the rest of the Group and as a result the Group has absorbed #10.8
million of working capital since the date of acquisition. This is in addition to
#4.1 million of net borrowings assumed at the time of the acquisition.
Management is in the process of developing revised credit control procedures.
The Group's overall net debt as at 31 December 2006 was #28.8 million compared
with net funds of #21.6 million at 31 December 2005. #41.0 million of the
movement is accounted for by the cash element of the Ineum purchase
consideration and #4.1 million by the refinancing of Ineum's working capital at
the time of acquisition.
The liability of the post retirement obligations has decreased from #11.9
million at 31 December 2005 to #5.4 million at 31 December 2006. The decrease in
the liability arises from payments into the closed US defined benefit scheme of
#2.0 million (2005: #2.5 million), an increase in the discount rate from 5.5% to
5.8%, strong investment performance and the weakening of the US dollar by 14% in
2006.
Strategic progress
Our strategic focus is unchanged. We are building a Group comprising a series of
consultancies with particular specialisms in different geographies. The
diversification of the offerings in 2006 has added to the strength and decreased
the risks of the Group from service line and geographic perspectives. Each of
the four consulting businesses currently comprising the Group have excellent
medium term prospects.
We now co-ordinate and develop major client relationships across the
consultancies to increase the services provided by the Group's consultancies.
Going forward we will continue to expand the geographical overlap of the
businesses to maximise the benefit that comes from our existing infrastructure.
We will also expand our offerings by acquisitions commensurate with the market
opportunities and the absorption of prior acquisitions into the Group. Whilst
size itself is not a measure of success, diversification of risk that comes with
size and wider offerings is an important aspect of continued success.
Management Consulting Group PLC is now one of the 30 largest consultancies in
the world operating through its four lines of business and in six continents.
Dividend
In the light of the increase in the size, the underlying profitability of the
business and the cash generation, the Board is recommending that the dividend in
respect of the year is increased by 25% to 1.0 pence per share. Subject to
shareholders' approval, the dividend will be payable on 9 May 2007 to
shareholders on the register on 13 April 2007.
People
We were pleased, earlier in the year, to welcome Ineum's and Salzer's employees
to the Group. The Board is delighted by the way that our people are working
together.
Mark Currie, Finance Director, stood down from the Board on 13 October 2006. He
will be replaced by Craig Smith who will join the Board on 26 April 2007. Craig
Smith and Jacques Manardo (who joined the board as a non-executive director on 1
September 2006), being eligible offer themselves for re-election at the
forthcoming Annual General Meeting.
Prospects
The order book has grown solidly since the beginning of the year with trading
and work won in the first two months of 2007 being in line with directors'
expectations. We expect Proudfoot Consulting to trade in line with the second
half of 2006 and for the other consultancies to show good growth in first half
revenue.
The directors are confident that the Group will show good progress in 2007.
Dr Rolf Stomberg Kevin Parry
Chairman Chief Executive
Management Consulting Group PLC 12 March 2007
Group income statement
year ended 31 December 2006 2005
Note #'000 #'000
--- ---
Continuing operations 3
Revenue 146,890 129,601
Cost of sales (73,415) (64,847)
--------- ---------
Gross profit 73,475 64,754
Selling costs (40,169) (34,931)
------------------------------------------------------------------------------
Administrative expenses - underlying (17,150) (17,161)
--------- ---------
Profit from operations before
non-recurring expenses and amortisation
of acquired intangibles 16,156 12,662
Administrative (expenses)/income -
non-recurring (1,765) 897
--------- ---------
Profit from operations before
amortisation of acquired intangibles 14,391 13,559
Administrative expenses - amortisation
of acquired intangibles (943) -
------------------------------------------------------------------------------
Total administrative expenses (19,858) (16,264)
--------- ---------
Profit from operations 3 13,448 13,559
Investment income 6 1,176 453
Finance costs 6 (1,276) (92)
--------- ---------
Profit before tax 13,348 13,920
Tax expense 7 (4,598) (4,128)
--------- ---------
Profit for the year 8,750 9,792
--------- ---------
Earnings per share - pence
From continuing operations
Basic 8 4.1 5.3
Diluted 8 4.1 5.2
Basic - excluding amortisation of
acquired intangible assets 8 4.6 5.3
Basic - excluding amortisation,
non-recurring and non-cash tax items 8 6.1 5.0
Group statement of recognised income and expense
year ended 31 December 2006 2005
#'000 #'000
-------- --------
Exchange differences on translation of
foreign operations (4,904) 1,488
Actuarial gains/(losses) on defined benefit
pension fund and medical schemes 3,284 (1,646)
Tax on items taken directly to equity 600 825
-------- --------
Net (expense)/income recognised directly in
equity (1,020) 667
Profit for the year 8,750 9,792
-------- --------
Total recognised income and expense for the 7,730 10,459
year
Group balance sheet
as at 31 December
2006 2005
#'000 #'000
Non-current assets
Intangible assets 162,546 68,696
Property, plant and equipment 2,294 1,521
Deferred income tax assets 3,597 1,358
-------- --------
Total non-current assets 168,437 71,575
-------- --------
Current assets
Trade and other receivables 46,800 14,801
Cash and cash equivalents 10,278 21,555
-------- --------
Total current assets 57,078 36,356
-------- --------
Total assets 225,515 107,931
-------- --------
Current liabilities
Borrowings (14,792) -
Trade and other payables (54,103) (28,045)
Current tax liabilities (5,728) (3,959)
-------- --------
Total current liabilities (74,623) (32,004)
-------- --------
Net current (liabilities)/assets (17,545) 4,352
-------- --------
Non-current liabilities
Borrowings (24,255) -
Retirement benefit obligation (5,411) (11,869)
Non-current tax liabilities (7,711) (4,674)
Long-term provisions (829) (871)
Non-current accruals (497) (581)
-------- --------
Total non-current liabilities (38,703) (17,995)
-------- --------
Total liabilities (113,326) (49,999)
-------- --------
Net assets 112,189 57,932
-------- --------
Equity
Share capital 67,735 47,373
Share premium account 38,163 38,146
Merger reserve 32,513 5,683
Shares to be issued 46 46
Share compensation reserve 1,492 1,256
Own shares held by employee share trust (1,270) (1,270)
Translation reserve (5,161) (257)
Other reserves 7,064 7,064
Retained earnings (28,393) (40,109)
-------- --------
Total equity 112,189 57,932
Consolidated cash flow statement
year ended 31 December
2006 2005
Note #'000 #'000
Net cash from operating activities 9 (1,954) 8,826
-------- ---------
Investing activities
Net interest received 1,013 323
Acquisitions of subsidiaries, net of cash and
overdrafts acquired (44,932) -
Purchases of property, plant and equipment (1,202) (669)
Purchases of intangible assets (1,363) (454)
Proceeds on disposal of property, plant and
equipment - 13
-------- ---------
Net cash used in investing activities (46,484) (787)
-------- ---------
Financing activities
Dividends paid 4 (1,486) (1,241)
Purchases of own shares - (181)
Proceeds from issue of shares 282 35
Proceeds from borrowings 39,009
Refinancing of acquired borrowings by term debt (15,211)
-------- ---------
Net cash used in financing activities 22,594 (1,387)
-------- ---------
Net (decrease)/increase in cash and cash
equivalents (25,844) 6,652
Cash and cash equivalents at beginning of period 21,555 14,510
Effect of foreign exchange rate changes (225) 393
-------- ---------
Cash and cash equivalents net of current
borrowings at end of period (4,514) 21,555
Notes
1. Basis of preparation
The financial information included in this statement does not constitute
statutory accounts as defined in Section 240 of the Companies Act 1985. The
financial information has been extracted without material adjustment from the
consolidated financial statements of Management Consulting Group PLC for the
year ended 31 December 2006, which have been audited. The auditors have made a
report under Section 235 of the Companies Act 1985 in respect of the statutory
consolidated accounts for the years ended 31 December 2006 and 31 December 2005.
Their reports were unqualified within the meaning of Section 262(1) of the
Companies Act 1985 and did not contain a statement under Section 237(2) or (3)
of that Act.
While the financial information included in this preliminary announcement has
been computed in accordance with International Financial Reporting Standards
(IFRS), this announcement does not itself contain sufficient information to
comply with IFRSs.
Statutory accounts for the financial year ended 31 December 2005 have been
delivered to the Registrar of Companies pursuant to Section 242 of the Act
whereas those for 2006 will be delivered following the Annual General Meeting.
The Group's Annual Report and Accounts will be sent to shareholders on 23 March
2007 and will be available at the Company's registered office at Fleet Place
House, 2 Fleet Place, London, EC4M 7RF, United Kingdom and on our website:
www.mcgplc.com.
The Annual General Meeting will be held at The Law Society's Halls, Old Council
Chamber, 113 Chancery Lane, London, WC2A 1PL on 26 April 2007 at 10 am.
2. Accounting policies
The financial information has been prepared in accordance with IFRSs. These
financial statements have been prepared in accordance with those IFRS standards
and IFRIC interpretations issued and effective or issued and early adopted as at
the time of preparing these statements (as at 31 December 2006). The policies
have been consistently applied to all the periods presented.
Full details of the Group's accounting polices can be found in the 2005 Annual
Report in note 2 which is available on our website: www.mcgplc.com.
3. Segmental information
The Group has one business reporting segment: management consultancy comprising
the four consultancies: Ineum Consulting, Parson Consulting, Proudfoot
Consulting and Salzer Consulting.
Primary reporting format - geographic segments
The Group operates in three geographic areas: the Americas, Europe and the Rest
of the World.
The Group reports segment information on the basis of geographic area as
follows:
(a) Income statement
year ended 31 December 2006 Americas Europe Rest of World Consolidated
#'000 #'000 #'000 #'000
-------- -------- -------- --------
Revenue
External sales 63,981 70,251 12,658 146,890
-------- -------- -------- --------
Profit/(loss) from operations
before
release of indemnity provision,
acquisition integration costs,
depreciation and amortisation of
acquired intangibles 10,708 7,656 (361) 18,003
Amortisation of acquired
intangibles - (943) - (943)
Depreciation and other
amortisation (860) (926) (61) (1,847)
-------- -------- -------- --------
Profit/(loss) from operations
before
non-recurring items 9,848 5,787 (422) 15,213
Acquisition integration
costs - non- - (2,100) - (2,100)
recurring
Release of indemnity provision -
non-recurring - - 335 335
-------- -------- -------- --------
Profit/(loss) from
operations 9,848 3,687 (87) 13,448
Finance costs (net) (100)
-------- -------- -------- --------
Profit before tax 13,348
Income tax expense (4,598)
-------- -------- -------- --------
Profit for the year 8,750
(b) Net assets
At 31 December 2006 Americas Europe Rest of World Consolidated
#'000 #'000 #'000 #'000
-------- -------- -------- --------
Assets
Intangibles, including
goodwill 27,112 134,741 693 162,546
Other segment assets 3,374 42,192 1,085 46,651
-------- -------- -------- --------
30,486 176,933 1,778 209,197
Unallocated corporate
assets 16,318
-------- -------- -------- --------
Consolidated total assets 225,515
-------- -------- -------- --------
Liabilities
Segment liabilities (12,422) (46,101) (2,275) (60,798)
Unallocated corporate
liabilities (52,528)
-------- -------- -------- --------
Consolidated total
liabilities (113,326)
-------- -------- -------- --------
Net assets 112,189
(c) Capital additions, depreciation and amortisation
Year ended 31 December 2006 Americas Europe Rest of Consolidated
World
#'000 #'000 #'000 #'000
-------- -------- ------- ---------
Acquisitions - 10,536 - 10,536
Capital additions by segment 393 709 64 1,166
Unallocated corporate additions 1,399
-------- -------- ------- ---------
Total capital additions 393 11,245 64 13,101
-------- -------- ------- ---------
Depreciation and amortisation 860 1,869 61 2,790
(d) Income statement
Year ended 31 December 2005 Americas Europe Rest of Consolidated
World
#'000 #'000 #'000 #'000
-------- ------- ------ ---------
Revenue
External sales 79,484 40,701 9,416 129,601
-------- ------- ------ ---------
Profit/(loss)from operations before
release of indemnity provision,
acquisition integration costs,
depreciation and amortisation of
acquired intangibles 14,988 427 (1,688) 13,727
Amortisation of acquired - - - -
intangibles
Depreciation and other
amortisation (885) (121) (59) (1,065)
-------- ------- ------ ---------
Profit/(loss) from operations
before non-
recurring items 14,103 306 (1,747) 12,662
Acquisition integration costs -
non-recurring - - - -
Release of indemnity provision -
non-recurring - - 897 897
-------- ------- ------ ---------
Profit/(loss) from operations 14,103 306 (850) 13,559
Finance income (net) 361
-------- ------- ------ ---------
Profit before tax 13,920
Income tax expense (4,128)
-------- ------- ------ ---------
Profit for the year 9,792
(e) Net assets
At 31 December 2005 Americas Europe Rest of Consolidated
World
#'000 #'000 #'000 #'000
-------- ------- ------- ---------
Balance sheet
Assets
Goodwill 30,856 37,840 - 68,696
Other segment assets 8,047 6,055 835 14,937
-------- ------- ------- ---------
38,903 43,895 835 83,633
Unallocated corporate assets 24,298
-------- ------- ------- ---------
Consolidated total assets 107,931
-------- ------- ------- ---------
Liabilities
Segment liabilities (14,576) (10,855) (2,587) (28,018)
Unallocated corporate liabilities (21,981)
-------- ------- ------- ---------
Consolidated total liabilities (49,999)
-------- ------- ------- ---------
Net assets 57,932
(f) Capital additions, depreciation and amortisation
At 31 December 2005 Americas Europe Rest of Consolidated
World
#'000 #'000 #'000 #'000
-------- ------- ------ ---------
Capital additions 718 168 83 969
Unallocated corporate additions 154
-------- ------- ------ ---------
Total capital additions 1,123
-------- ------- ------ ---------
Depreciation and amortisation 886 121 59 1,066
-------- ------- ------ ---------
4. Dividends
2006 2005
#'000 #'000
-------- --------
Amounts recognised as distributions to equity holders in the
year:Final dividend for the year ended 31 December 2005 of
0.8p (2004: 0.67p) 1,486 1,241
Dividends are not payable on shares held in the employee share trust which has
waived its entitlement to dividends. The amount of the dividend waived in 2006
(in respect of the year ended 31 December 2005) was #34,000 (2005: #26,000).
The directors recommend the payment of a final dividend in respect of 2006 of
one pence per share to be paid on 9 May 2007 to ordinary shareholders on the
register on 13 April 2007.
5. Staff numbers and costs
The average number of persons employed by the Group (including directors) during
the year, analysed by category, was as follows:
2006 2005
-------- --------
Sales and marketing 248 201
Consultants 555 459
Support staff 167 136
-------- --------
970 796
As at 31 December 2006, the Group employed 1,448 (2005: 793) people.
The aggregate payroll costs of these persons were as follows:
2006 2005
#'000 #'000
-------- --------
Wages and salaries 67,571 62,936
Social security costs 11,934 6,932
Other pension costs 1,218 1,085
-------- --------
80,723 70,953
Wages and salaries include #804,000 (2005: #640,000) relating to share options
recognised as an expense under IFRS 2.
6. Finance income/(costs)
2006 2005
#'000 #'000
-------- --------
Interest receivable on bank deposits and similar income 1,013 453
Interest payable on bank overdrafts and loans and similar
charges (1,276) (10)
Net finance income/(charge) on retirement benefit plans 163 (82)
-------- --------
(100) 361
-------- --------
7. Tax
2006 2005
#'000 #'000
-------- --------
Tax in respect of current year 326 500
Foreign tax 5,540 4,899
-----------------------------------------------------------------------------
Deferred tax - acquired intangible assets (316) -
Deferred tax - tax losses and other temporary differences (2,250) (838)
Deferred tax - US goodwill 813 795
-----------------------------------------------------------------------------
Total deferred tax (1,753) (43)
Total current year tax 4,113 5,356
Prior year taxation 485 (1,228)
-------- --------
4,598 4,128
The deferred tax charge includes tax deductions in the US for goodwill which is
not amortised in the income statement. A deferred tax liability is required to
be held for this item in accordance with accounting standards. UK corporation
tax is calculated at 30% (2005: 30%) of the estimated assessable profit for the
year. Taxation for other jurisdictions is calculated at the rate prevailing in
the respective jurisdictions.
8. Earnings per share
From continuing operations
The calculation of the basic and diluted earnings per share is based on the
following data:
2006 2005
Earnings #'000 #'000
Earnings for the purposes of basic earnings per share
being net profit attributable to equity holders of the
parent 8,750 9,792
Amortisation of acquired intangibles 943 -
--------- ---------
Earnings for the purpose of basic earnings per share
excluding amortisation of acquired intangibles 9,693 9,792
Non-recurring items 1,765 (897)
Non-cash tax items and prior year tax 1,582 392
--------- ---------
Earnings for the purpose of basic earnings per share
excluding amortisation and non-recurring items 13,040 9,287
--------- ---------
Number of shares Number Number
(million) (million)
Weighted average number of ordinary shares for the
purposes of basic earnings per share 212.5 185.2
Effect of dilutive potential ordinary shares:
Share options 1.3 1.4
Long-term incentive plan 0.2 0.2
--------- ---------
Weighted average number of ordinary shares for
the purposes of diluted earnings per share 214.0 186.8
--------- ---------
Pence Pence
Basic earnings per share 4.1 5.3
Diluted earnings per share 4.1 5.2
Basic - excluding amortisation of acquired intangibles 4.6 5.3
Basic - excluding amortisation of acquired intangibles,
non-recurring, non-cash tax items and prior year tax 6.1 5.0
The average share price for the year ended 31 December 2006 was 54.3 pence
(2005: 51.5 pence). There is no "cash tax" associated with the non-recurring
items and amortisation.
9. Notes to the cash flow statement
2006 2005
#'000 #'000
Profit from operations 13,448 13,559
Adjustments for:
Depreciation of property, plant and equipment 1,000 604
Amortisation of intangible assets 1,790 462
Loss on disposal of plant and equipment 79 14
Management incentive plan - (56)
Adjustment for pension funding (2,008) (2,528)
Adjustment for share options charge 804 640
Decrease in provisions (493) (903)
--------- ---------
Operating cash flows before movements in working capital 14,620 11,792
Increase in receivables (6,447) (4,153)
(Decrease)/Increase in payables (5,858) 3,911
--------- ---------
Cash generated by operations 2,315 11,550
Income taxes paid (4,269) (2,724)
--------- ---------
Net cash from operating activities (1,954) 8,826
Cash and cash equivalents (which are presented as a single class of assets on
the face of the balance sheet) comprise cash at bank and other short-term highly
liquid investments with a maturity of three months or less.
10. Group statement of changes in equity
2006 2005
#'000 #'000
-------- --------
At 1 January 57,932 48,276
Dividends paid (1,486) (1,241)
Net profit for the year 8,750 9,792
Own shares purchased for deferred share awards - (181)
Issue of share capital
Consideration for acquisitions 46,927 -
Exercise of share option schemes 282 35
Share compensation expense 804 640
Movement in reserve for management incentive plan - (56)
Other recognised income and expense (1,020) 667
-------- --------
At 31 December 112,189 57,932
This information is provided by RNS
The company news service from the London Stock Exchange
END
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