RNS Number:3120Q
Management Consulting Group PLC
18 March 2008
Financial results for the year ended 31 December 2007
Management Consulting Group PLC ("MCG" or "the Group"), the international
management consultancy group, today announces its results for the year ended 31
December 2007.
Key points
* Revenue up 47% on last year to �215.8 million (2006: �146.9 million)++
* Profit from operations up 62% to �21.8 million (2006: �13.4 million) ++
* Underlying+ profit from operations up 60% to �25.9 million (2006: �16.2
million)
* Underlying EBITDA margin up 5% to 12.9% (2006: 12.3%)
* Underlying EPS up 15% to 6.2p (2006: 5.4p); Basic EPS up 15% to 4.7p (2006:
4.1p)
* Cash generated by operations up 1361% to �33.8 million (2006: �2.3 million)
* Net debt at year end up 111% to �60.9million (2006: �28.8million)
* Total dividend increased by 15% to 1.15p per share (2006: 1.0p)
* KSA integration progressing well and business out-performing expectations
* Current trading and order intake in line with expectations
++ Ineum Consulting was acquired on 1 September 2006, 51% of Salzer Consulting
on 6 October 2006, CBH Consulting on 6 September 2007 and Kurt Salmon
Associates on 12 October 2007. CBH Consulting was merged with Parson
Consulting in December 2007. All results in this statement include these
effects
+ Throughout this statement the term underlying is used to describe profits
before non-recurring items and amortisation of acquired intangible assets.
Alan Barber, Executive Chairman:
"The results for 2007 underline the good progress made by the Group during the
year. Revenue and profit increases were encouraging and the Group enters 2008
with a strong balance sheet. The integration of CBH Consulting and Kurt Salmon
Associates is nearing completion and we look forward to developing these
businesses in conjunction with the rest of our consultancies. Trading this year
has started well with work won so far ahead of work delivered."
For further information please contact:
Management Consulting Group PLC
Alan Barber Executive Chairman 020 7710 5000
Craig Smith Group Finance Director 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 N M Rothschild & Sons at 1
King William Street, London EC4N 7AR on Tuesday 18 March 2008 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.
MCG operates through six divisions: Ineum Consulting, Kurt Salmon Associates,
Parson Consulting, Proudfoot Consulting, Salzer Consulting and Viaduct
Consulting. Ineum Consulting provides consulting services with industry
expertise. Kurt Salmon Associates provides retail and healthcare consulting.
Parson Consulting provides financial management consulting. Proudfoot Consulting
provides operational improvement consulting. Salzer Consulting provides business
start-up, management and restructuring consulting in Asian markets. Viaduct
Consulting provides commercial due diligence services. The Group operates
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 17
March 2008. 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.
Group Results
The Group continued to make significant progress in the implementation of its
strategic plan during 2007. Two acquisitions were completed during the year, CBH
Consulting in September and Kurt Salmon Associates in October, which broadened
the service offering and deepened the Group's North American footprint. CBH
Consulting was merged with the US operations of Parson Consulting in December.
The performance of the Group's six consultancies is set out below:
Year ended Year ended
31 Dec 2007 31 Dec 2006
--------- ---------
�'000 �'000
--------- ---------
Revenue
Ineum Consulting++ 79,948 23,709
Kurt Salmon Associates++ 17,078 -
Parson Consulting++ 43,846 34,301
Proudfoot Consulting 73,603 88,658
Salzer Consulting++ 1,297 222
Viaduct Consulting 15 -
--------- ---------
Total revenue 215,787 146,890
--------- ---------
Operating profit
Ineum Consulting 11,880 2,780
Kurt Salmon Associates 2,635 -
Parson Consulting (498) (2,108)
Proudfoot Consulting 12,280 15,575
Salzer Consulting (198) (91)
Viaduct Consulting (180) -
--------- ---------
Underlying+ operating profit 25,919 16,156
Non-recurring items:
Integration of acquisitions (2,480) (2,100)
Proudfoot surplus provision - 335
--------- ---------
Operating profit before amortisation 23,439 14,391
Amortisation of acquired intangibles (1,665) (943)
--------- ---------
Profit from operations 21,774 13,448
--------- ---------
++ Ineum Consulting was acquired on 1 September 2006, 51% of Salzer Consulting
on 6 October 2006, CBH Consulting on 6 September 2007 and Kurt Salmon
Associates on 12 October 2007. CBH Consulting was merged with Parson
Consulting in December 2007. All results in this statement include these
effects
+ 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 ended 31 December 2007 was up 47% to �215.8m (2006:
�146.9m). Compared to the previous year, and as a result of the recent
acquisitions, there has been a material shift in the geographical distribution
of Group revenue with Europe accounting for 65% (2006: 48%) and the Americas 29%
(2006: 44%). The gross profit margin continues to be tightly managed and remains
at 50% of revenue.
Overall, underlying administrative expenses have increased by �25.6 million from
the previous year due primarily to the full year effect of administrative
expenses inherent in the companies acquired in 2006 and the part year effect of
the 2007 acquisitions.
Non-recurring costs of �1.7m were incurred in the completion of the integration
of Ineum Consulting and a further �0.8m in the commencement of the integration
of CBH Consulting and Kurt Salmon Associates. Additionally, �1.7 million of
amortisation has been charged in the income statement arising from these three
acquisitions as their brands, customer relationships and order books are
accounted for as intangible assets.
The underlying profit from operations rose 60% to �25.9 million (2006: �16.2
million).
The underlying EBITDA margin was 12.9% compared to 12.3% last year. Our target
EBITDA margin remains at 15%.
After charging the non-recurring costs of �2.5 million (2006: net �1.8 million)
and amortisation of intangible assets of �1.7 million (2006: �0.9 million), the
operating profit was �21.8 million (2006: �13.4 million). Group profit before
tax increased by 47% to �19.7 million (2006: �13.3 million). Underlying profit
before tax increased by 47% to �23.8 million (2006: �16.2 million).
The acquisitions of CBH Consulting and Kurt Salmon Associates were financed
partly by new debt and partly by new equity. The additional debt contributed to
an interest expense of �3.2 million (2006: �1.3 million) which was partly offset
by investment income of �1.1 million (2006: �1.2 million).
The effective tax charge on profit before tax, as adjusted for the amortisation
charge related to the Ineum, CBH and KSA acquisitions, is 31% (2006: 33%) and
includes 5% points (2006: 8% points) of non-cash tax items required to be
included in the charge by accounting standards and 2% points (2006: 3% points)
relating to prior year items. The amount payable, the current year "cash tax"
charge, is therefore 24% (2006: 22%).
Basic earnings per share were 4.7 pence (2006: 4.1 pence). After adjusting for
post tax, non-recurring items, the amortisation of intangibles and non "cash
tax" items, the underlying earnings per share were 6.2 pence (2006: 5.4 pence).
The Consultancies
Ineum Consulting
Ineum Consulting has performed ahead of our expectations during 2007. Revenue
increased to �79.9 million (2006: �23.7 million), reflecting a full year's
revenue (2006: 4 months) and good organic growth. The underlying operating
margin increased to 14.9% (2006: 11.7%). The integration plan was successfully
executed in line with plan.
Kurt Salmon Associates
Kurt Salmon Associates has performed ahead of our expectations and has
contributed �17.1 million of revenue to the 2007 results since its acquisition
in October. The underlying operating margin post-acquisition was 15.2%. The
consultancy has added a further dimension to the Group's services, particularly
in relation to Retail and Healthcare consulting. The integration plan which
commenced in October is proceeding to timetable and will continue into 2008.
Parson Consulting
Parson Consulting's revenue was up 28% to �43.8 million (2006: �34.3 million).
Whilst the business made good progress outside the US, as previously reported
trading in the US remained lacklustre. The operating loss for the year was �0.5
million (2006: �2.1 million) comprising a loss of �0.8 million in the first half
and a profit of �0.3 million in the second half (2006: losses of �1.9 million
and �0.2 million respectively). The US business was merged with CBH Consulting
in December 2007 to create a combined financial and performance management
consultancy which broadens its offering in the US market.
Proudfoot Consulting
Proudfoot Consulting revenues decreased by 17% compared to last year to �73.6
million (2006: 88.6 million). Its operating margin declined slightly to 16.7%
(2006: 17.6%). The consultancy continued to invest in the development of its
business outside its traditional markets of the US and Europe and good progress
was reported particularly in Brazil and the Pacific region. Trading in the US
and Europe was below expectations.
Salzer Consulting
Salzer Consulting's revenues increased by �1.1 million to �1.3 million compared
to last year, reflecting a full year's trading (2006: 3 months). Salzer's
underlying operating loss increased by �0.1 million compared to 2006, as the
business continued to invest for the future.
Viaduct Consulting
Viaduct Consulting is a new business, which commenced trading in the second half
of the year. Its revenues of �15 thousand and underlying operating loss of �0.2
million reflect the start up nature of the business.
Balance sheet
Net assets increased by �46.8 million to �159.0 million (2006: �112.2 million).
The vast majority of this increase was due to the acquisitions of CBH Consulting
and Kurt Salmon Associates.
CBH Consulting was acquired on 6 September 2007 for a total consideration of
�4.4 million, satisfied by �2.3 million of cash and shares in MCG worth �2.1
million. Kurt Salmon Associates was acquired on 12 October 2007 for a total
consideration of �61.2 million, satisfied by �36.8 million of cash and shares
and options in MCG worth �24.4 million.
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 �7.5 million before an associated
deferred tax liability of �2.6 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 2007 increased by �92 million primarily as a result
of the CBH and KSA acquisitions.
The Group's overall net debt as at 31 December 2007 was �60.9 million compared
to net debt of �28.8 million at 31 December 2006. The cash outflow relating to
the consideration for the acquisitions was �39.9 million.
The net post retirement obligations liability has risen from �5.4 million at 31
December 2006 to �7.8 million at 31 December 2007. The increase in the liability
arises from a defined benefit obligation in Germany acquired with Kurt Salmon
Associates, offset by payments into the closed US defined benefit scheme of �0.7
million (2006: �2.0 million), an increase in the discount rate from 5.8% to
6.2%, strong investment performance and the weakening of the US dollar by an
average of 2% in 2007.
Cash flow
Group trading was particularly cash generative in 2007. Cash generated from
operations was �33.8 million compared to �2.3 million in 2006. Of note was the
successful working capital management. Despite the organic growth being skewed
towards Ineum Consulting, which traditionally offers longer credit terms than
the Group's other consultancies, there was an absolute decrease in receivables
of �2.5 million (2006: increase of �6.4 million).
Strategic progress
During 2007 the Group made significant progress through broadening its
consulting offering in existing and new geographies. The acquisition of Kurt
Salmon Associates provided a substantial new consultancy for the Group's
portfolio diversifying the service offerings and deepening the Group's North
American footprint. The Group also increased its business intelligence and
financial performance offering by acquiring CBH Consulting. The diversification
of the offerings in 2007 has added to the strength and decreased the risks of
the Group from both a service line and a geographical perspective.
Dividend
In the light of the Group's increased size, the underlying profitability of the
business and the excellent cash generation during 2007, the Board is
recommending that the total dividend in respect of the year be increased by 15%
to 1.15 pence per share. An interim dividend of 0.33 pence per share was paid in
October, and, therefore, subject to shareholders' approval, a final dividend of
0.82 pence per share will be payable on 14 May 2008 to shareholders on the
register on 18 April 2008.
People
We were pleased, earlier in the year, to welcome CBH Consulting and Kurt Salmon
Associates employees to the Group. The Board is delighted by the contribution
that these businesses are already making to the Group.
Craig Smith, Finance Director, joined the Board on 26 April 2007. Jacques
Manardo, non-executive director, stood down from the Board on 30 May 2007.
On 19 February 2008 Rolf Stomberg, Chairman, and Kevin Parry, Chief Executive,
stood down from the Board. Rolf joined the Board in September 1998 and Kevin in
January 2000 and both have been instrumental in the development of the company
from a single, loss making, consultancy to one of the 30 largest consultancies
in the world with a global reach and a robust balance sheet. I would like to
take this opportunity to thank them for their hard work over the years and wish
them well in their future endeavours.
Also on 19 February 2008 Craig Smith tendered his resignation although he will
remain in office until 19 August 2008, or earlier if agreed. I would also like
to thank Craig for his contribution to the business during his tenure.
On the same date I was appointed Executive Chairman, having previously been a
Non-Executive Director of MCG.
On 6 March 2008 it was announced that Mr Luiz Carvalho, CEO of Proudfoot
Consulting, Mr Miguel de Fontenay, CEO of Ineum Consulting and Mr Mark Wietecha,
Chairman of Kurt Salmon Associates will join the Board as Executive Directors on
19 March 2008.
On the same date it was also announced that the Group has begun the search for
two independent Non-Executive Directors who will join the Board of Directors on
appointment.
MCG is continuing to assess the composition of the board and has under way the
formal process to appoint a new Chief Executive Director. A further announcement
will be made in due course.
Prospects
2008 has started well with work won so far this year ahead of work delivered.
The Board expects the Group to show good growth in first half revenue compared
to 2007, although it will continue to review whether or not the challenging
economic conditions currently prevalent in the United States will adversely
affect business during the second half of the year.
Alan Barber
Executive Chairman
Group income statement
year ended 31 December
2007 2006
Note �'000 �'000
Continuing operations
Revenue 3 215,787 146,890
Cost of sales (106,920) (73,415)
------ --------- ---------
Gross profit 108,867 73,475
------ --------- ---------
Administrative expenses - underlying (82,948) (57,319)
--------- ---------
Profit from operations before
non-recurring expenses and amortisation
of acquired intangibles 25,919 16,156
Administrative expenses - non-recurring (2,480) (1,765)
--------- ---------
Profit from operations before
amortisation of acquired intangibles 23,439 14,391
------ --------- ---------
Administrative expenses - amortisation
of acquired intangibles (1,665) (943)
------ --------- ---------
Total administrative expenses (87,093) (60,027)
------ --------- ---------
Profit from operations 3 21,774 13,448
Investment income 6 1,105 1,176
Finance costs 6 (3,224) (1,276)
------ --------- ---------
Profit before tax 19,655 13,348
Tax expense 7 (6,474) (4,598)
------ --------- ---------
Profit for the year attributable to
equity holders of the parent 13,181 8,750
------ --------- ---------
Earnings per share - pence
From continuing operations
Basic 8 4.7 4.1
Diluted 8 4.7 4.1
------ --------- ---------
Basic - excluding amortisations of
acquired 8
intangible assets and non-recurring
items 6.2 5.4
------ --------- ---------
Group statement of recognised income and expense
year ended 31 December 2007 2006
�'000 �'000
-------- --------
Exchange differences on translation of
foreign operations 9,057 (4,904)
Actuarial gains on defined benefit pension
fund and medical schemes 734 3,284
Loss on available for sale investments (26) -
Tax on items taken directly to equity 167 600
-------- --------
Net income/(expense) recognised directly in 9,932 (1,020)
equity
Profit for the year 13,181 8,750
-------- --------
Total recognised income and expense for the
year attributable to equity holders
of the parent 23,113 7,730
-------- --------
Group balance sheet
as at 31 December
2007 2006
�'000 �'000
Non-current assets
Intangible assets 256,107 162,647
Property, plant and equipment 3,572 1,849
Financial assets 6,650 -
Deferred income tax assets 15,014 3,412
-------- --------
Total non-current assets 281,343 167,908
-------- --------
Current assets
Trade and other receivables 74,075 47,327
Cash and cash equivalents 20,895 10,278
-------- --------
Total current assets 94,970 57,605
-------- --------
Total assets 376,313 225,513
-------- --------
Current liabilities
Financial liabilities (29,205) (14,792)
Trade and other payables (100,842) (54,101)
Current tax liabilities (7,670) (5,728)
-------- --------
Total current liabilities (137,717) (74,621)
-------- --------
Net current (liabilities) (42,747) (17,016)
-------- --------
Non-current liabilities
Financial liabilities (52,619) (24,255)
Retirement benefit obligation (7,752) (5,411)
Non-current tax liabilities (11,748) (7,711)
Long-term provisions (7,465) (1,326)
-------- --------
Total non-current liabilities (79,584) (38,703)
-------- --------
Total liabilities (217,301) (113,324)
-------- --------
Net assets 159,012 112,189
-------- --------
Equity
Share capital 82,225 67,735
Share premium account 48,894 38,163
Merger reserve 32,513 32,513
Shares to be issued - 46
Share compensation reserve 2,952 1,492
Own shares held by employee share trust (1,296) (1,270)
Translation reserve 3,896 (5,161)
Other reserves 7,038 7,064
Retained earnings (17,210) (28,393)
-------- --------
Total equity 159,012 112,189
-------- --------
Consolidated cash flow statement
year ended 31 December
2007 2006
Note �'000 �'000
Net cash inflow/(outflow) from operating
activities 9 31,197 (1,954)
------ -------- ---------
Investing activities
Interest received 784 1,013
Acquisitions of subsidiaries, net of cash and
overdrafts acquired (39,895) (44,932)
Purchases of property, plant and equipment (2,111) (1,202)
Purchases of intangible assets (994) (1,363)
Purchase of financial assets (1,152) -
------ -------- ---------
Net cash used in investing activities (43,368) (46,484)
------ -------- ---------
Financing activities
Interest paid (3,420) -
Dividends paid 4 (3,561) (1,486)
Proceeds from issue of shares 13 282
Proceeds from borrowings 45,069 39,009
Repayment of borrowings (12,657) -
Refinancing of acquired borrowings by term debt (2,587) (419)
------ -------- ---------
Net cash raised by financing activities 22,857 37,386
------ -------- ---------
Net increase/(decrease) in cash and cash
equivalents 10,686 (11,052)
Cash and cash equivalents at beginning of year 10,278 21,555
Effect of foreign exchange rate changes (69) (225)
------ -------- ---------
Cash and cash equivalents at end of year 20,895 10,278
------ -------- ---------
Notes
1. Basis of preparation
The financial information included in this statement does not constitute the
company's statutory accounts for the years ended 31 December 2007 or 2006, but
is derived from those accounts. Statutory accounts for 2006 have been delivered
to the Registrar of Companies and those for 2007 will be delivered following the
company's annual general meeting. The auditors have reported on those accounts;
their reports were unqualified, did not draw attention to any matters by way of
emphasis without qualifying their reports and did not contain statements under
S237(2) or (3) Companies Act 1985.
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.
The Group's Annual Report and Accounts will be sent to shareholders on 20 March
2008 and will be available at the Company's registered office at 10 Fleet Place,
London, EC4M 7RB, United Kingdom and on our website: www.mcgplc.com.
The Annual General Meeting will be held at 2.30pm on 23 April 2008 at the
offices of Baker & McKenzie LLP, 100 New Bridge Street, London, EC4V 6JA.
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 2007). The policies
have been consistently applied to all the periods presented.
Full details of the Group's accounting polices can be found in the 2006 Annual
Report in note 2 which is available on our website: www.mcgplc.com.
Notes (continued)
3. Segmental information
The Group has one business reporting segment: management consultancy consisting
of the six consultancies: Ineum Consulting, Kurt Salmon Associates, Parson
Consulting, Proudfoot Consulting, Salzer Consulting and Viaduct 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 2007
Americas Europe Rest of World Consolidated
�'000 �'000 �'000 �'000
-------- -------- -------- --------
Revenue 62,442 139,904 13,441 215,787
-------- -------- -------- --------
Profit from operations
before acquisition
integration costs,
depreciation and
amortisation of
acquired intangibles 8,948 18,710 126 27,784
Amortisation of acquired
intangibles (441) (1,224) - (1,665)
Depreciation and other
amortisation (447) (1,332) (86) (1,865)
-------- -------- -------- --------
Profit from operations
before non-recurring items 8,060 16,154 40 24,254
Acquisition integration
costs (799) (1,681) - (2,480)
-------- -------- -------- --------
Profit from operations 7,261 14,473 40 21,774
Finance costs (net) (2,119)
-------- -------- -------- --------
Profit before tax 19,655
Income tax expense (6,474)
-------- -------- -------- --------
Profit for the year 13,181
-------- -------- -------- --------
Notes (continued)
3. Segmental information (continued)
(b) Net assets
At 31 December 2007
Americas Europe Rest of World Consolidated
�'000 �'000 �'000 �'000
-------- -------- -------- --------
Assets
Intangibles, including
goodwill 148,927 106,507 673 256,107
Other segment assets 40,432 55,148 1,840 97,420
-------- -------- -------- --------
189,359 161,655 2,513 353,527
Unallocated corporate
assets 22,786
-------- -------- -------- --------
Consolidated total assets 376,313
-------- -------- -------- --------
Liabilities
Segment liabilities (55,282) (56,508) (3,428) (115,218)
Unallocated corporate
liabilities (102,083)
-------- -------- -------- --------
Consolidated total
liabilities (217,301)
-------- -------- -------- --------
Net assets 159,012
-------- -------- -------- --------
(c) Capital additions, depreciation and amortisation
Year ended 31 December 2007
Americas Europe Rest of World Consolidated
�'000 �'000 �'000 �'000
-------- -------- -------- --------
Acquisitions 11,769 3,728 - 15,497
Capital additions 1,158 1,354 420 2,932
Unallocated corporate
additions 1,325
-------- -------- -------- --------
Total capital additions 12,927 5,082 420 19,754
-------- -------- -------- --------
Depreciation and
amortisation 889 2,555 86 3,530
-------- -------- -------- --------
Notes (continued)
3. Segmental information (continued)
(d) 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-recurring - (2,100) - (2,100)
Release of indemnity
provision - - 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
-------- -------- -------- ---------
Notes (continued)
3. Segmental information (continued)
(e) Net assets
At 31 December 2006 Americas Europe Rest of World Consolidated
�'000 �'000 �'000 �'000
-------- -------- -------- ---------
Assets
Intangibles, including
goodwill 27,112 134,842 693 162,647
Other segment assets 3,374 42,089 1,085 46,548
-------- -------- -------- ---------
30,486 176,931 1,778 209,195
Unallocated corporate
assets 16,318
-------- -------- -------- ---------
Consolidated total assets 225,513
-------- -------- -------- ---------
Liabilities
Segment liabilities (12,422) (46,099) (2,275) (60,796)
Unallocated corporate
liabilities (52,528)
-------- -------- -------- ---------
Consolidated total
liabilities (113,324)
-------- -------- -------- ---------
Net assets 112,189
-------- -------- -------- ---------
(f) Capital additions, depreciation and amortisation
Year ended 31 December 2006
Americas Europe Rest of World Consolidated
�'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
-------- -------- -------- ---------
Notes (continued)
4. Dividends
2007 2006
�'000 �'000
Amounts recognised as distributions to equity holders in the
year:
Final dividend for the year ended 31 December 2006 of 1p
(2005: 0.8p) 2,667 1,486
Interim dividend for the year ended 31 December 2007 of
0.33p per share(2006: nil) 894 -
-------- --------
3,561 1,486
-------- --------
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 2007
(in respect of the year ended 31 December 2006) was �56,000 (2006: �34,000).
The directors recommend the payment of a final dividend in respect of 2007 of
0.82 pence per share to be paid on 14 May 2008 to ordinary shareholders on the
register on 18 April 2008.
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:
2007 2006
-------- --------
Sales and marketing 360 248
Consultants 1,066 555
Support staff 272 167
-------- --------
1,698 970
-------- --------
As at 31 December 2007, the Group employed 2,176 (2006: 1,448) people. The
increase is largely attributable to the acquisition of Kurt Salmon Associates.
The aggregate payroll costs of these persons were as follows:
2007 2006
�'000 �'000
-------- --------
Wages and salaries 97,191 67,571
Social security costs 24,843 11,934
Other pension costs 1,798 1,218
-------- --------
123,832 80,723
-------- --------
Wages and salaries include �779,000 (2006: �804,000) relating to share options
recognised as an expense under IFRS 2.
Notes (continued)
6. Finance income/(costs)
2007 2006
�'000 �'000
-------- --------
Interest receivable on bank deposits and similar income 784 1,013
Interest payable on bank overdrafts and loans and similar
charges (3,224) (1,276)
Net finance income on retirement benefit plans 321 163
-------- --------
(2,119) (100)
-------- --------
7. Tax
2007 2007
�'000 �'000
-------- --------
UK corporation tax (350) 326
Foreign tax 6,092 5,540
-------- --------
Deferred tax - acquired intangible assets (155) (316)
Deferred tax - tax losses and other temporary differences (368) (2,250)
Deferred tax - US goodwill 875 813
-------- --------
Total deferred tax 352 (1,753)
-------- --------
Total current year tax 6,094 4,113
Prior year taxation 380 485
-------- --------
6,474 4,598
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% (2006: 30%) of the estimated assessable profit for the
year. Taxation for other jurisdictions is calculated at the rate prevailing in
the respective jurisdictions.
Notes (continued)
8. Earnings per share
From continuing operations
The calculation of the basic and diluted earnings per share is based on the
following data:
2007 2006
Earnings �'000 �'000
Earnings for the purposes of basic earnings per
share being net profit attributable to equity
holders of the parent 13,181 8,750
--------- ---------
Amortisation of acquired intangibles 1,665 943
--------- ---------
Non-recurring items 2,480 1,765
--------- ---------
Earnings for the purpose of basic earnings per share
excluding amortisation and non-recurring items 17,326 11,458
--------- ---------
Number of shares Number Number
(million) (million)
Weighted average number of ordinary shares for the
purposes of basic earnings per share 281.5 212.5
Effect of dilutive potential ordinary
shares:
Share options 0.7 1.3
Long-term incentive plan - 0.2
--------- ---------
Weighted average number of ordinary shares for the
purposes of diluted earnings per share 282.2 214.0
--------- ---------
Pence Pence
Basic earnings per share 4.7 4.1
Diluted earnings per share 4.7 4.1
--------- ---------
Basic - excluding amortisation of acquired
intangibles and non-recurring items 6.2 5.4
--------- ---------
The average share price for the year ended 31 December 2007 was 45.2 pence
(2006: 54.3 pence).
Notes (continued)
9. Notes to the cash flow statement
2007 2006
�'000 �'000
Profit from operations 21,774 13,448
Adjustments for:
Depreciation of property, plant and equipment 1,259 1,000
Amortisation of intangible assets 2,271 1,790
Loss on disposal of plant and equipment 7 79
Adjustment for pension funding (692) (2,008)
Adjustment for share options charge 779 804
Decrease in provisions (540) (493)
--------- ---------
Operating cash flows before movements in working capital 24,858 14,620
Decrease/(Increase) in receivables 2,521 (6,447)
Increase/(Decrease) in payables 6,450 (5,858)
--------- ---------
Cash generated by operations 33,829 2,315
Income taxes paid (2,632) (4,269)
--------- ---------
Net cash from operating activities 31,197 (1,954)
--------- ---------
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.
Notes (continued)
10. Group statement of changes in equity
2007 2006
�'000 �'000
-------- --------
At 1 January 112,189 57,932
Dividends paid (3,561) (1,486)
Net profit for the year 13,181 8,750
Issue of share capital
Consideration for acquisitions 25,155 46,927
Exercise of share option schemes 13 282
Share options 2,103 804
Revaluation reserve (26) -
Other recognised income and expense 9,958 (1,020)
-------- --------
At 31 December 159,012 112,189
-------- --------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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