TIDMMMC
RNS Number : 9119J
Management Consulting Group PLC
08 April 2010
8 April 2010
Annual Financial Report Announcement
Management Consulting Group PLC ("MCG" or "the Group"), the international
professional services group, in accordance with DTR 6.3.5, today issues its
Annual Financial Report ("AFR") announcement in connection with its Annual
Report and Accounts for the year ended 31 December 2009, a copy of which can be
found on the Group's website www.mcgplc.com. The financial information for the
year ended 31 December 2009 was previously disclosed in the preliminary
announcement issued on 8 March 2010.
For further information please contact:
+-------------------------------+---------------+-----------------------+
| Management Consulting Group | | |
| PLC | | |
+-------------------------------+---------------+-----------------------+
| Alan Barber | Executive | 020 7710 5000 |
| | Chairman | |
+-------------------------------+---------------+-----------------------+
| Craig Smith | Finance | 020 7710 5000 |
| | Director | |
+-------------------------------+---------------+-----------------------+
| | | |
+-------------------------------+---------------+-----------------------+
| Financial Dynamics | | |
+-------------------------------+---------------+-----------------------+
| Ben Atwell | | 020 7831 3113 |
+-------------------------------+---------------+-----------------------+
Notes to Editors
Management Consulting Group PLC (MMC.L) provides professional services across a
wide range of industries and sectors.
It comprises three independently managed practices: Alexander Proudfoot; Ineum
Consulting; and Kurt Salmon Associates. Alexander Proudfoot develops and
implements operational improvements to its clients to increase productivity and
reduce costs. Ineum Consulting provides consultancy services to a wide range of
industries in both the private and public sectors. Kurt Salmon Associates
provides consultancy services to the retail and consumer products sector and to
the health care provider sector. The Group operates worldwide. For further
information, visit www.mcgplc.com.
Forward looking statements
This AFR 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 or 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 8
March 2010. The directors do not make any undertakings to update or revise any
forward-looking statements, whether as a result of new information, future
events, or otherwise. Nothing in this statement should be construed as a profit
forecast.
Chairman's Statement
Overview
2009 has been a challenging year for Management Consulting Group PLC but one
during which good progress has been made to establish a strong platform for
future development. In line with many other global consultancy and professional
services businesses, MCG was adversely affected by the unprecedented environment
that existed in the world economy over the past year and a half. Many client
companies cut back or delayed their discretionary expenditure budgets and, in
some sectors and geographies at different times of the year, business was
difficult to find. However MCG has survived one of the toughest trading periods
in the past fifty years in good shape with encouraging levels of business
developing in early 2010.
Trading as a professional services business during the recent recession, it is
unsurprising that 2009 proved to be a difficult year for MCG following the
record results achieved in 2008. Despite more favourable exchange rates, total
revenue was well below 2008 levels but the Group continued to take decisive
action to mitigate this influence on the bottom line, while leaving the Group in
a sound state to take advantage of the economic upturn as and when it arises. I
believe that maintaining the underlying operating margin at 10.1%, while revenue
was GBP66.6m down on 2008, demonstrates the success of this decisive action and
the resilience of the Group.
In the first half of 2009 the main area of concern in the Group was Kurt Salmon
Associates, which faced downturns in business in both of its sectors, retail and
consumer goods and health care, where revenues rely heavily on consumer and
capital expenditure respectively. The business was loss making in the period
ended June 2009. However, as predicted at the time of the half-year results,
this division staged a recovery in the second half of the year, with cost
cutting measures and encouraging signs of new business generation in both
sectors contributing to its return to profit for the year as a whole. The
management of Kurt Salmon Associates deserves great credit for the tight control
over costs that they exercised, which has created the base for increased profits
in 2010 in both areas of its focus.
Alexander Proudfoot reported good results in the first half of 2009 reflecting
the strong order book brought forward into the year from 2008. However, as
reported in November, the new business usually seen following the summer
slowdown did not materialise this year and, as a result, second half revenue was
lower than originally expected. Alexander Proudfoot is a business that generally
performs well when the world economy is experiencing either an upswing or a
downturn, as companies require throughput and revenue maximisation or cost
reduction projects respectively. In 2009 potential clients tended towards a
"wait and see" approach and, as a result, prospective business was often
deferred. Although Alexander Proudfoot ended 2009 with an order book
significantly lower than it started the year, this has improved in recent weeks
and there is room for cautious optimism that the spring 2010 selling season will
be more productive and that the second half of the year will therefore see
trading return to more traditional volumes.
Overall Ineum Consulting had a very satisfactory year, although its reported
results for 2009 benefited more than the other divisions from the continued
strength of the Euro. It has been the Group's most consistent performer
throughout the year, reporting profit 25.7% higher than 2008. Particularly
successful has been the division's well-diversified French business and in
particular its public sector division which has benefited from continued French
governmental expenditure during the recent economic crisis and its CIO advisory
practice. Outside France, where the division relies far more heavily on the
financial services industry for its revenue, business was slightly less robust
although this has improved during recent months.
The trading slowdown during 2009 has also had an adverse effect on the net debt
position of the Group and we ended the year with borrowings GBP21.4m higher than
we started it. While the shortfall in revenue results in a real reduction of
cash being deposited in our bank account, the profit has been protected largely
through a reduction in bonus accruals. Our 2010 cash flow will accordingly
benefit from the lower bonus payments relating to the 2009 profit.
The Board has again faced many difficult decisions to restructure the business
and minimise the effects of the economic downturn on the results. The number of
employees in MCG has fallen from a high of around 2,350 in June 2008 to below
1,650 at the end of 2009, and the Group now operates from a far slimmer
portfolio of offices.
In addition, as announced in November 2009, the Board considered offers from
three French private equity houses interested in purchasing some or all of Ineum
Consulting, the most enduring of which valued the business at around GBP85m.
Ultimately the Board rejected these offers as we felt strongly that they
materially undervalued Ineum Consulting and were significantly dilutive to MCG
shareholders. I am delighted that Ineum Consulting is remaining within MCG as it
is a vital element of our current offering to the market. I am very pleased to
announce that the managements of Ineum Consulting and Kurt Salmon Associates are
at an advanced stage of discussion to merge their businesses into one entity.
This will create a larger and more integrated global practice that will enlarge
our scope of services across geographies and increase the global scale of the
business. We believe that a new, unified practice will be a stronger competitor
in the world market, attracting new talent and delivering enhanced results to
all stakeholders.
Summary of trading performance
Total revenue for the year ended 31 December 2009 was down 19.4% to GBP276.5m
(2008: GBP343.1m) reflecting the weakness in trading conditions during 2009 and
the strong comparative period in 2008. Around 95% of the revenue reported by MCG
comes from outside the UK and the Sterling value of this fluctuates with the
exchange rates. A weaker Sterling results in higher reported revenue.
Underlying operating profit in 2009 was down GBP6.7m or 19.3% to GBP28.0m (2008:
GBP34.7m). Given that revenue was GBP66.6m below last year, this reflects the
success of the cost-reduction programme implemented by management throughout
2008 and 2009, and also the variable nature of many of the costs incurred by the
Group.
The performance of the Group's divisions is set out below:
+-------------------------------------------+----------+----------+
| | Year | Year |
| | ended | ended |
+-------------------------------------------+----------+----------+
| | 31 Dec | 31 Dec |
| | 2009 | 2008 |
+-------------------------------------------+----------+----------+
| | GBP'000 | GBP'000 |
+-------------------------------------------+----------+----------+
| | | |
+-------------------------------------------+----------+----------+
| Revenue | | |
+-------------------------------------------+----------+----------+
| Alexander Proudfoot | 71,171 | 106,975 |
+-------------------------------------------+----------+----------+
| Ineum Consulting | 142,239 | 153,109 |
+-------------------------------------------+----------+----------+
| Kurt Salmon Associates | 63,046 | 82,971 |
+-------------------------------------------+----------+----------+
| | | |
+-------------------------------------------+----------+----------+
| Total revenue | 276,456 | 343,055 |
+-------------------------------------------+----------+----------+
| | | |
+-------------------------------------------+----------+----------+
| | | |
+-------------------------------------------+----------+----------+
| Operating profit | | |
+-------------------------------------------+----------+----------+
| Alexander Proudfoot | 11,996 | 18,059 |
+-------------------------------------------+----------+----------+
| Ineum Consulting | 12,497 | 9,938 |
+-------------------------------------------+----------+----------+
| Kurt Salmon Associates | 3,532 | 6,739 |
+-------------------------------------------+----------+----------+
| Underlying operating profit | 28,025 | 34,736 |
+-------------------------------------------+----------+----------+
In view of the difficult trading conditions encountered by the Group during
2009, it has been necessary to protect the profit of the business by being
proactive in downsizing the cost base. A total of GBP15.7m (2008: GBP21.5m) is
reported as non-recurring costs associated with these programmes, with around
GBP6m of this still to be spent in 2010. This charge relates to the closure of
the Parson US and Alexander Proudfoot Australia businesses, the cost of the
project to consider the potential sale of Ineum Consulting and the further
office downsizing and redundancies throughout the year. There was no charge for
impairment of goodwill in respect of any past acquisitions (2008: GBP26.7m
relating to Parson Consulting). Consequently there was an overall profit from
operations of GBP9.6m (2008: GBP15.9m loss). The net interest expense, net of
investment income, benefited from the lower prevailing interest rates during the
year and was GBP3.3m (2008: GBP4.2m). The profit before tax was GBP6.3m (2008:
GBP20.0m loss).
With an underlying effective tax rate of 34% (2008: 33%), underlying earnings
per share were 5.0p (2008: 6.2p), reflecting the lower underlying earnings for
the year. Basic earnings per share were up to 0.4p (2008: -6.4p) due primarily
to no repeat of the goodwill impairment charge booked in 2008.
An interim dividend of 0.4p per share was paid to shareholders on 27 October
2009. This was in line with the 2008 payment, despite the fact that underlying
earnings for the first half of 2009 were below the levels of 2008, and was paid
because the Group had been cash-generative in the twelve months to June 2009.
This trend did not continue during the second half of 2009 and the net debt at
the end of 2009 was GBP21.4m above its level twelve months previously.
Consequently the Board has concluded that it is prudent not to declare a final
dividend for the 2009 financial year (2008: 0.9p per share). This will reduce
cash outflows in July 2010 by approximately GBP3m. However the Board intends to
resume dividend payments starting with the 2010 interim dividend with an initial
target dividend yield of between 2% and 3.5%.
The nature of 2009 trading meant that cash generated by operations was
significantly lower than in 2008 at GBP-13.5m (2008: GBP41.2m). Revenue in 2009
was GBP66.6m lower than in 2008. This represents a real cash shortfall. The
operating profit was buoyed in part by a reduction in costs such as bonuses
accrued during the year. In addition approximately GBP8m of cash expenditure
relating to non-recurring costs was incurred. As a result net debt at the end of
2009 was GBP83.5m (2008: GBP62.1m).
Group structure and strategy
The business is currently organised as three trading divisions: Alexander
Proudfoot; Ineum Consulting; and Kurt Salmon Associates, each of which currently
reports directly to me.
The strategy of MCG remains to be a leading, integrated, global consulting and
professional services company, comprising outstanding specialist practices
focused on delivering high quality solutions to complex issues for its clients.
The Group will achieve this by operating and investing in its businesses and
people to ensure they deliver profitable, sustainable revenue growth; acquiring
practices that either broaden or deepen the range of the offerings available to
clients; co-ordinating the cross referral of work between the practices to
achieve revenue and cost synergies; and communicating clearly, regularly and
fairly with all its stakeholders.
Given the difficult trading conditions experienced towards the end of 2008 and
throughout the majority of 2009, the management of the Group has been obliged to
run its business under conditions of depressed customer demand. Non-client
facing costs, particularly central costs, were reduced significantly during 2008
and this process has continued during 2009, with the cost cutting extended to
cover appropriate client-facing costs wherever these were no longer warranted by
current levels of demand. Further offices have been closed or downsized and all
other costs minimised. The Group has been decisive in its actions, however
difficult these were, but has managed to mitigate the top line shortfall to a
large degree. The Group has remained compliant with its covenant obligations
under its banking facility and will continue to manage its affairs to ensure
that this remains the case in 2010 and beyond.
MCG enters 2010 as a lean organisation, with around 30% fewer employees and over
twenty fewer offices than in mid-2008. Taking it to this level has been a costly
and painful affair, as our non-recurring costs over the last two years
demonstrate, but these actions have been necessary to maintain short term profit
and net debt at their current levels and to pave the way for an eventual
recovery when the global economy improves. The Group is well positioned to take
advantage of this recovery and will recommence its investment for growth when
positive signs emerge.
People
During the latter half of 2009 MCG underwent several changes to its Board of
Directors. On 21 October 2009 Nick Stagg joined the Board as an executive
director. He has taken charge of our human resources and corporate finance areas
of activity. Nick's extensive background in managing and developing businesses
which rely heavily on the motivation and talent of their employees will be
extremely valuable to MCG as we develop.
Also on 21 October 2009 JP Bolduc resigned as a non-executive director. I would
like to take this opportunity to thank JP, who was a director for thirteen
years, for his long and valuable service to the Group.
On 10 November 2009 Chiheb Mahjoub joined the Board as an executive director and
Miguel de Fontenay stood down from the Board. Chiheb was subsequently appointed
Chief Executive of Ineum Consulting and Miguel left the Group. I would like to
thank Miguel for his contribution as a director of MCG and welcome Chiheb, who
has been instrumental in driving both the domestic and international growth of
Ineum since its inception in 2003.
Under the terms of the acquisition of Ineum Consulting in 2006, the vendors have
the right to put forward a director for appointment to the Board of Directors
until 1 September 2010. As a consequence Marco Lopinto, who is responsible for
the strategy practice and the business development of Ineum Consulting, was
appointed to the Board on 15 December 2009 as an executive director. Marco's
broad experience of the consultancy industry will be of great help to the Board
over the coming months.
I announced last year that I intended to stand down as Executive Chairman of MCG
in the middle of 2010. The process for the selection of a new Chief Executive
for the Group is well advanced and we believe that an announcement regarding the
appointment will be made prior to the Annual General Meeting on 20 April 2010.
However, subject to re-election at the Annual General Meeting, I now intend to
continue to act as Executive Chairman until the end of 2010 to see through the
induction of the new Chief Executive and the merger between Ineum Consulting and
Kurt Salmon Associates, before transitioning to the Non-executive Chairman role.
2009 has been a difficult year for MCG, with the unprecedented external trading
conditions making life extremely challenging. I would like to take this
opportunity to thank everyone who worked for MCG during 2009 for their support
during this turbulent time in the Group's history.
Summary and outlook
Following the record results reported for 2008, doing business in the
professional services industry in 2009 proved to be far more difficult. Many
prospective clients chose to curtail their discretionary expenditure and many
took far longer to come to a positive decision. In particular Alexander
Proudfoot, whose average project is far larger than those of our other
divisions, found client commitment to projects extremely difficult to obtain.
However, since the final quarter of 2009, there is no doubt that the tough
economic climate has eased to a degree and we can look forward to better
conditions in 2010. Kurt Salmon Associates returned to profitability in the
second half of 2009 and Alexander Proudfoot has significantly more leads for new
business than six months ago. Ineum Consulting continues to trade well,
particularly in its French heartland. The proof of the recovery will be the
spring selling season, when we would hope to move to a new level of trading.
Over the past two years we have taken decisive action to manage the cost base of
the business during these uncertain trading times, and have mitigated top line
weakness in a way to deliver decent profits and to trade within the covenant
limits imposed by our financing facility. We are dedicated to ensuring that the
business is well positioned to benefit from the eventual recovery in the global
economy and to create long term value for shareholders.
Alan Barber
Executive Chairman
8 March 2010
Directors' responsibility statement
The following statement was prepared in connection with the full Annual Report
and Accounts and Directors' report. Certain notes and parts of the Directors
report are not included in this AFR Announcement. The Directors' responsibility
statement, which should be read in conjunction with the report of the
independent auditors contained in the full Annual Report and Accounts, is made
with a view to distinguishing for shareholders the respective responsibilities
of the directors and auditors in relation to the financial statements.
The directors are responsible for preparing the Annual Report and the financial
statements in accordance with applicable law and regulations.
Company law requires the directors to prepare the financial statements for each
financial year. Under that law the directors are required to prepare the Group
financial statements in accordance with International Financial Reporting
Standards ("IFRSs") as adopted by the European Union and Article 4 of the IAS
Regulation and have also chosen to prepare the parent company financial
statements under IFRSs as adopted by the EU. Under company law the directors
must not approve the accounts unless they are satisfied that they give a true
and fair view of the state of affairs of the Group and the parent company and of
the profit or loss of the Group for that period. In preparing these financial
statements, International Accounting Standard 1 requires that directors:
· properly select and apply accounting policies;
· present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable information;
· provide additional disclosures when compliance with the specific
requirements in IFRSs are insufficient to enable users to understand the impact
of particular transactions, other events and conditions on the entity's
financial position and financial performance; and
· make an assessment of the Group's ability to continue as a going concern.
The directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's transactions and disclose with
reasonable accuracy at any time the financial position of the Group and the
parent company and enable them to ensure that the financial statements comply
with the Companies Act 2006. They are also responsible for safeguarding the
assets of the Group and the parent company and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate
and financial information included on the Company's website. Legislation in the
United Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
The Chairman's Statement, the Business Review and the Financial Review contain
certain forward-looking statements with respect to the financial condition,
results of operations and businesses of the Group. These statements and
forecasts involve risk and uncertainty because they relate to events and depend
on circumstances that may occur in the future. There are a number of factors
that could cause actual results or 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 8 March 2010. 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 report
should be construed as a profit forecast.
Responsibility statement
We confirm that to the best of our knowledge:
· the financial statements, prepared in accordance with International
Financial Reporting Standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the company and the
undertakings included in the consolidation taken as a whole; and
· the management report, which is incorporated into the directors'
report, includes a fair review of the development and performance of the
business and the position of the company and the undertakings included in the
consolidation taken as a whole, together with a description of the principal
risks and uncertainties that they face.
By order of the Board
+-----------------------------------+-----------------------------------+
| Alan J Barber | Craig H Smith |
+-----------------------------------+-----------------------------------+
| Executive Chairman | Finance Director |
+-----------------------------------+-----------------------------------+
| | |
+-----------------------------------+-----------------------------------+
| 8 March 2010 | |
+-----------------------------------+-----------------------------------+
Group income statement
+------------------------------------------------------------+------+-----------+-----------+
| | | 2009 | 2008 |
+------------------------------------------------------------+------+-----------+-----------+
| | Note | GBP'000 | GBP'000 |
+------------------------------------------------------------+------+-----------+-----------+
| Continuing operations | | | Restated* |
+------------------------------------------------------------+------+-----------+-----------+
| Revenue | 4 | 276,456 | 343,055 |
+------------------------------------------------------------+------+-----------+-----------+
| Cost of sales | | (173,500) | (216,395) |
+------------------------------------------------------------+------+-----------+-----------+
| Gross profit | | 102,956 | 126,660 |
+------------------------------------------------------------+------+-----------+-----------+
| Administrative expenses - underlying | | (74,931) | (91,924) |
+------------------------------------------------------------+------+-----------+-----------+
| Profit from operations - underlying | | 28,025 | 34,736 |
+------------------------------------------------------------+------+-----------+-----------+
| Administrative expenses - non-recurring impairment | | - | (26,695) |
+------------------------------------------------------------+------+-----------+-----------+
| Administrative expenses - non-recurring other | | (15,739) | (21,502) |
+------------------------------------------------------------+------+-----------+-----------+
| Profit/(loss) from operations before amortisation of | | 12,286 | (13,461) |
| acquired intangibles | | | |
+------------------------------------------------------------+------+-----------+-----------+
| Administrative expenses - amortisation of acquired | | (2,739) | (2,390) |
| intangibles | | | |
+------------------------------------------------------------+------+-----------+-----------+
| Total administrative expenses | | (93,409) | (142,511) |
+------------------------------------------------------------+------+-----------+-----------+
| Profit/(loss) from operations | 4 | 9,547 | (15,851) |
+------------------------------------------------------------+------+-----------+-----------+
| Investment revenues | 8 | 805 | 1,232 |
+------------------------------------------------------------+------+-----------+-----------+
| Finance costs | 8 | (4,064) | (5,394) |
+------------------------------------------------------------+------+-----------+-----------+
| Profit/(loss) before tax | | 6,288 | (20,013) |
+------------------------------------------------------------+------+-----------+-----------+
| Tax | 9 | (4,932) | (907) |
+------------------------------------------------------------+------+-----------+-----------+
| Profit/(loss) for the year from continuing operations | | 1,356 | (20,920) |
+------------------------------------------------------------+------+-----------+-----------+
| Discontinued operations | | - | (1,099) |
+------------------------------------------------------------+------+-----------+-----------+
| Profit/(loss) for the year attributable to equity holders | | 1,356 | (22,019) |
| of the parent | | | |
+------------------------------------------------------------+------+-----------+-----------+
| | | | |
+------------------------------------------------------------+------+-----------+-----------+
| Earnings per share - pence | | | |
+------------------------------------------------------------+------+-----------+-----------+
| From continuing operations | | | |
+------------------------------------------------------------+------+-----------+-----------+
| Basic | 10 | 0.4 | (6.4) |
+------------------------------------------------------------+------+-----------+-----------+
| Diluted | 10 | 0.4 | (6.4) |
+------------------------------------------------------------+------+-----------+-----------+
| Basic - underlying | 10 | 5.0 | 6.2 |
+------------------------------------------------------------+------+-----------+-----------+
| From profit/(loss) for the year attributable to equity | | | |
| holders of the parent | | | |
+------------------------------------------------------------+------+-----------+-----------+
| Basic and diluted | 10 | 0.4 | (6.8) |
+------------------------------------------------------------+------+-----------+-----------+
*See note 2
Group statement of comprehensive income
+------------------------------------------------------------+------+----------+----------+
| | | 2009 | 2008 |
+------------------------------------------------------------+------+----------+----------+
| | Note | GBP'000 | GBP'000 |
+------------------------------------------------------------+------+----------+----------+
| Exchange differences on translation of foreign operations | | (18,166) | 51,195 |
+------------------------------------------------------------+------+----------+----------+
| Actuarial losses on defined benefit post-retirement | | (3,802) | (12,674) |
| obligations | | | |
+------------------------------------------------------------+------+----------+----------+
| Gain/(loss) on available for sale investments | | 717 | (1,652) |
+------------------------------------------------------------+------+----------+----------+
| Current tax | | (96) | - |
+------------------------------------------------------------+------+----------+----------+
| Deferred tax | | 203 | 2,334 |
+------------------------------------------------------------+------+----------+----------+
| Net (expense)/income recognised directly in equity | | (21,144) | 39,203 |
+------------------------------------------------------------+------+----------+----------+
| Profit/(loss) for the year | | 1,356 | (22,019) |
+------------------------------------------------------------+------+----------+----------+
| Total recognised (expense)/income for the period | | (19,788) | 17,184 |
| attributable to equity holders of the parent | | | |
+------------------------------------------------------------+------+----------+----------+
Group statement in changes in equity
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| | | | | | | | | | |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| | | | | Share | Shares | | | | |
| | | | | | held | | | | |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| | Share | Share | Merger | compensation | by | Translation | Other | Retained | |
| | | | | | employee | | | | |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| | capital | premium | reserve | reserve | benefits | reserve | reserves | earnings | Total |
| | | | | | trust | | | | |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| | | | | | | | | | |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| Shareholders' | 82,817 | 48,981 | 32,513 | 2,720 | (1,296) | 55,091 | 5,386 | (51,817) | 174,395 |
| equity 1 | | | | | | | | | |
| January 2009 | | | | | | | | | |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| Profit for | - | - | - | - | - | - | - | 1,356 | 1,356 |
| the period | | | | | | | | | |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| Exchange | - | - | - | - | - | (18,166) | - | - | (18,166) |
| differences | | | | | | | | | |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| Actuarial | - | - | - | - | - | - | - | (3,802) | (3,802) |
| movements | | | | | | | | | |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| Profit on | - | - | - | - | - | - | 717 | - | 717 |
| AFS | | | | | | | | | |
| investments | | | | | | | | | |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| Tax on | - | - | - | - | - | - | - | (155) | (155) |
| equity items | | | | | | | | | |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| Tax on items | - | - | - | - | - | - | - | 107 | 107 |
| recognised | | | | | | | | | |
| in Group | | | | | | | | | |
| statement of | | | | | | | | | |
| comprehensive | | | | | | | | | |
| income | | | | | | | | | |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| Reclassification | - | - | - | (1,624) | - | - | - | 1,624 | - |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| Share | - | - | - | 1,120 | - | - | - | - | 1,120 |
| options | | | | | | | | | |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| Shares | 31 | - | - | - | - | - | - | - | 31 |
| issued | | | | | | | | | |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| Shares | - | - | - | - | (114) | - | - | - | (114) |
| acquired by | | | | | | | | | |
| employee | | | | | | | | | |
| benefits | | | | | | | | | |
| trust | | | | | | | | | |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| Shares | - | - | - | - | 257 | - | - | - | 257 |
| transferred | | | | | | | | | |
| from | | | | | | | | | |
| employee | | | | | | | | | |
| benefits | | | | | | | | | |
| trust | | | | | | | | | |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| Dividends | - | - | - | - | - | - | - | (4,234) | (4,234) |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| Shareholders' | 82,848 | 48,981 | 32,513 | 2,216 | (1,153) | 36,925 | 6,103 | (56,921) | 151,512 |
| equity 31 | | | | | | | | | |
| December 2009 | | | | | | | | | |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| Shareholders' | 82,225 | 48,894 | 32,513 | 2,952 | (1,296) | 3,896 | 7,038 | (17,210) | 159,012 |
| equity 1 | | | | | | | | | |
| January 2008 | | | | | | | | | |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| Loss for the | - | - | - | - | - | - | - | (22,019) | (22,019) |
| period | | | | | | | | | |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| Exchange | - | - | - | - | - | 51,195 | - | - | 51,195 |
| differences | | | | | | | | | |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| Actuarial | - | - | - | - | - | - | - | (12,674) | (12,674) |
| movements | | | | | | | | | |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| Loss on AFS | - | - | - | - | - | - | (1,652) | - | (1,652) |
| investments | | | | | | | | | |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| Tax on | - | - | - | - | - | - | - | 155 | 155 |
| equity items | | | | | | | | | |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| Tax on items | - | - | - | - | - | - | - | 2,334 | 2,334 |
| recognised | | | | | | | | | |
| in Group | | | | | | | | | |
| statement of | | | | | | | | | |
| comprehensive | | | | | | | | | |
| income | | | | | | | | | |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| Reclassification | - | - | - | (1,556) | - | - | - | 1,556 | - |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| Share | - | - | - | 1,324 | - | - | - | - | 1,324 |
| options | | | | | | | | | |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| Shares | 592 | 87 | - | - | - | - | - | - | 679 |
| issued | | | | | | | | | |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| Dividends | - | - | - | - | - | - | - | (3,959) | (3,959) |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
| Shareholders' | 82,817 | 48,981 | 32,513 | 2,720 | (1,296) | 55,091 | 5,386 | (51,817) | 174,395 |
| equity 31 | | | | | | | | | |
| December 2008 | | | | | | | | | |
+------------------+---------+---------+---------+--------------+----------+-------------+----------+----------+----------+
Group balance sheet
+-------------------------------------------------+------+-----------+-----------+
| | | 2009 | 2008 |
+-------------------------------------------------+------+-----------+-----------+
| | Note | GBP'000 | GBP'000 |
+-------------------------------------------------+------+-----------+-----------+
| Non-current assets | | | |
+-------------------------------------------------+------+-----------+-----------+
| Intangible assets | | 283,748 | 307,992 |
+-------------------------------------------------+------+-----------+-----------+
| Property, plant and equipment | | 4,505 | 5,057 |
+-------------------------------------------------+------+-----------+-----------+
| Investments | | 2,977 | 7,076 |
+-------------------------------------------------+------+-----------+-----------+
| Deferred tax assets | | 17,856 | 21,899 |
+-------------------------------------------------+------+-----------+-----------+
| Total non-current assets | | 309,086 | 342,024 |
+-------------------------------------------------+------+-----------+-----------+
| Current assets | | | |
+-------------------------------------------------+------+-----------+-----------+
| Trade and other receivables | | 76,331 | 90,265 |
+-------------------------------------------------+------+-----------+-----------+
| Cash and cash equivalents | | 23,965 | 35,761 |
+-------------------------------------------------+------+-----------+-----------+
| Total current assets | | 100,296 | 126,026 |
+-------------------------------------------------+------+-----------+-----------+
| Total assets | | 409,382 | 468,050 |
+-------------------------------------------------+------+-----------+-----------+
| Current liabilities | | | |
+-------------------------------------------------+------+-----------+-----------+
| Financial liabilities | | (53,151) | (31,780) |
+-------------------------------------------------+------+-----------+-----------+
| Trade and other payables | | (100,079) | (145,638) |
+-------------------------------------------------+------+-----------+-----------+
| Current tax liabilities | | (13,293) | (14,971) |
+-------------------------------------------------+------+-----------+-----------+
| Total current liabilities | | (166,523) | (192,389) |
+-------------------------------------------------+------+-----------+-----------+
| Net current liabilities | | (66,227) | (66,363) |
+-------------------------------------------------+------+-----------+-----------+
| Non-current liabilities | | | |
+-------------------------------------------------+------+-----------+-----------+
| Financial liabilities | | (54,362) | (66,112) |
+-------------------------------------------------+------+-----------+-----------+
| Retirement benefit obligations | | (23,248) | (20,927) |
+-------------------------------------------------+------+-----------+-----------+
| Non-current tax liabilities | | (7,959) | (8,992) |
+-------------------------------------------------+------+-----------+-----------+
| Long-term provisions | | (5,778) | (5,235) |
+-------------------------------------------------+------+-----------+-----------+
| Total non-current liabilities | | (91,347) | (101,266) |
+-------------------------------------------------+------+-----------+-----------+
| Total liabilities | | (257,870) | (293,655) |
+-------------------------------------------------+------+-----------+-----------+
| Net assets | | 151,512 | 174,395 |
+-------------------------------------------------+------+-----------+-----------+
| | | | |
+-------------------------------------------------+------+-----------+-----------+
| Equity | | | |
+-------------------------------------------------+------+-----------+-----------+
| Share capital | | 82,848 | 82,817 |
+-------------------------------------------------+------+-----------+-----------+
| Share premium account | | 48,981 | 48,981 |
+-------------------------------------------------+------+-----------+-----------+
| Merger reserve | | 32,513 | 32,513 |
+-------------------------------------------------+------+-----------+-----------+
| Share compensation reserve | | 2,216 | 2,720 |
+-------------------------------------------------+------+-----------+-----------+
| Shares held by employee benefits trust | | (1,153) | (1,296) |
+-------------------------------------------------+------+-----------+-----------+
| Translation reserve | | 36,925 | 55,091 |
+-------------------------------------------------+------+-----------+-----------+
| Other reserves | | 6,103 | 5,386 |
+-------------------------------------------------+------+-----------+-----------+
| Retained earnings | | (56,921) | (51,817) |
+-------------------------------------------------+------+-----------+-----------+
| Total equity attributable to equity holders of | | 151,512 | 174,395 |
| the parent | | | |
+-------------------------------------------------+------+-----------+-----------+
Group cash flow statement
+-------------------------------------------------+------+----------+----------+
| | | 2009 | 2008 |
+-------------------------------------------------+------+----------+----------+
| | Note | GBP'000 | GBP'000 |
+-------------------------------------------------+------+----------+----------+
| Net cash (outflow)/inflow from operating | 11 | (18,490) | 40,688 |
| activities | | | |
+-------------------------------------------------+------+----------+----------+
| Investing activities | | | |
+-------------------------------------------------+------+----------+----------+
| Interest received | | 805 | 701 |
+-------------------------------------------------+------+----------+----------+
| Purchases of property, plant and equipment | | (1,419) | (2,469) |
+-------------------------------------------------+------+----------+----------+
| Purchases of intangible assets | | (1,093) | (784) |
+-------------------------------------------------+------+----------+----------+
| Proceeds on disposal of fixed assets | | - | 57 |
+-------------------------------------------------+------+----------+----------+
| Purchase of financial assets | | (363) | (606) |
+-------------------------------------------------+------+----------+----------+
| Proceeds on disposal of investments | | 738 | 1,359 |
+-------------------------------------------------+------+----------+----------+
| Net cash used in investing activities | | (1,332) | (1,742) |
+-------------------------------------------------+------+----------+----------+
| Financing activities | | | |
+-------------------------------------------------+------+----------+----------+
| Reclassification from investments | | 3,848 | - |
+-------------------------------------------------+------+----------+----------+
| Interest paid | | (4,264) | (4,591) |
+-------------------------------------------------+------+----------+----------+
| Dividends paid | 6 | (4,234) | (3,959) |
+-------------------------------------------------+------+----------+----------+
| Proceeds from borrowings | | 31,237 | 1,695 |
+-------------------------------------------------+------+----------+----------+
| Repayment of borrowings | | (18,343) | (8,833) |
+-------------------------------------------------+------+----------+----------+
| Proceeds on issue of shares | | 143 | 679 |
+-------------------------------------------------+------+----------+----------+
| Disposal of subsidiary | | - | (196) |
+-------------------------------------------------+------+----------+----------+
| Net cash raised by/(used in) financing | | 8,387 | (15,205) |
| activities | | | |
+-------------------------------------------------+------+----------+----------+
| Net (decrease)/increase in cash and cash | | (11,435) | 23,741 |
| equivalents | | | |
+-------------------------------------------------+------+----------+----------+
| Cash and cash equivalents at beginning of year | | 35,761 | 20,895 |
+-------------------------------------------------+------+----------+----------+
| Effect of foreign exchange rate changes | | (361) | (8,875) |
+-------------------------------------------------+------+----------+----------+
| Cash and cash equivalents at end of year | | 23,965 | 35,761 |
+-------------------------------------------------+------+----------+----------+
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 2009 or 2008, but
is derived from those accounts. Statutory accounts for 2008 have been delivered
to the Registrar of Companies and those for 2009 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 Section 498 Companies Act 2006.
While the financial information included in this AFR 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 are 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 20 April 2010 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 2009). The policies
have been consistently applied to all the periods presented.
Full details of the Group's accounting polices can be found in the 2009 Annual
Report and Accounts in Note 2 which is available on our website: www.mcgplc.com.
The Group has restated the Group income statement following a change in the
treatment of certain sales costs. This has resulted in the reclassification of
sales costs from administrative expenses to cost of sales for 2008, therefore
ensuring consistency with 2009. A balance sheet as at 31 December 2007 has not
been presented because there is no effect to the Group's results or financial
position.
3. Principle risks and uncertainties and going concern
The Group has operating and financial policies and procedures designed to
maximise shareholder value within a defined risk management framework. The key
risks to which the business is exposed are reviewed regularly by senior
management and the Board.
The major risks facing the business relate to the demand for services provided
by the Group in the markets and sectors in which it operates; the management of
its client base; the recruitment and retention of talented employees; and the
optimisation of the Group's intellectual capital. These risks are managed by
anticipating market trends, maximising staff utilisation, developing
remuneration policies that reward good performance and promote continued
employment with the Group and maintaining a comprehensive knowledge management
system.
Potential contractual liabilities arising from client engagements are managed
through control of contractual conditions and insurance arrangements. The
Directors are aware of no material outstanding litigation against the Group not
covered by an appropriate level of insurance or provision in the financial
statements.
The directors have acknowledged the latest guidance on going concern. Whilst the
current economic environment has caused general uncertainty, the Group has
committed borrowing facilities of $111.3 million and EUR81.5 million until
September 2012, together with a balanced and broad-based business which is not
reliant on any one industrial sector or geography. The Group prepares regular
business forecasts and monitors its projected compliance with its financial
covenants for the committed facilities. These are reviewed by the Board.
Forecasts are adjusted for sensitivities, which address the principal risks to
which the Group is exposed, and consideration given to actions open to
management to mitigate the impact of these sensitivities. In particular this
includes the discretionary nature of a significant amount of the cost incurred
by the Group. There is sufficient working capital headroom and the Group has met
all covenant tests. As a consequence, the directors believe that that Group is
well placed to manage its business risks successfully and as such the Group's
financial statements have been prepared on a going concern basis.
4. Segmental information
The Group's operating segments are defined as the three professional services
practices, Alexander Proudfoot, Ineum Consulting and Kurt Salmon Associates.
This is the basis on which information is provided to the Board of Directors for
the purposes of allocating certain resources within the Group and assessing the
performance of the business. The Board of Directors also receives information
based on geography; the segments for this purpose are Americas, Europe and Rest
of World. All revenues are derived from the provision of professional services.
(a) Geographical analysis
The Group operates in three geographical areas; the Americas, Europe and the
Rest of World. The following is an analysis of financial information by
geographic segment:
(i) Revenue and underlying operating profit by geography
+----------------------------------------+----------+---------+---------+----------+
| | | | Rest | |
| | | | of | |
+----------------------------------------+----------+---------+---------+----------+
| | Americas | Europe | World | Group |
+----------------------------------------+----------+---------+---------+----------+
| Year ended 31 December 2009 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------------+----------+---------+---------+----------+
| Revenue - continuing operations | 93,346 | 167,943 | 15,167 | 276,456 |
+----------------------------------------+----------+---------+---------+----------+
| Profit from operations before | 8,663 | 15,653 | 3,709 | 28,025 |
| non-recurring expenses and | | | | |
| amortisation of acquired intangibles | | | | |
+----------------------------------------+----------+---------+---------+----------+
| Non-recurring expenses and | (6,329) | (9,942) | (2,207) | (18,478) |
| amortisation of acquired intangibles | | | | |
+----------------------------------------+----------+---------+---------+----------+
| Profit from operations | 2,334 | 5,711 | 1,502 | 9,547 |
+----------------------------------------+----------+---------+---------+----------+
| Investment income | | | | 805 |
+----------------------------------------+----------+---------+---------+----------+
| Finance costs | | | | (4,064) |
+----------------------------------------+----------+---------+---------+----------+
| Profit before tax | | | | 6,288 |
+----------------------------------------+----------+---------+---------+----------+
+----------------------------------------+----------+----------+---------+----------+
| | | | Rest | |
| | | | of | |
+----------------------------------------+----------+----------+---------+----------+
| | Americas | Europe | World | Group |
+----------------------------------------+----------+----------+---------+----------+
| Year ended 31 December 2008 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------------+----------+----------+---------+----------+
| Revenue - continuing operations | 126,293 | 183,702 | 33,060 | 343,055 |
+----------------------------------------+----------+----------+---------+----------+
| Profit from operations before | 20,102 | 10,041 | 4,593 | 34,736 |
| non-recurring expenses and | | | | |
| amortisation of acquired intangibles | | | | |
+----------------------------------------+----------+----------+---------+----------+
| Non-recurring expenses and | (35,671) | (11,636) | (3,280) | (50,587) |
| amortisation of acquired intangibles | | | | |
+----------------------------------------+----------+----------+---------+----------+
| (Loss)/profit from operations | (15,569) | (1,595) | 1,313 | (15,851) |
+----------------------------------------+----------+----------+---------+----------+
| Investment income | | | | 1,232 |
+----------------------------------------+----------+----------+---------+----------+
| Finance costs | | | | (5,394) |
+----------------------------------------+----------+----------+---------+----------+
| Loss before tax | | | | (20,013) |
+----------------------------------------+----------+----------+---------+----------+
(ii) Net assets by geography
+----------------------------------------+----------+----------+----------+-----------+
| | | | Rest | |
| | | | of | |
+----------------------------------------+----------+----------+----------+-----------+
| | Americas | Europe | World | Group |
+----------------------------------------+----------+----------+----------+-----------+
| At 31 December 2009 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------------+----------+----------+----------+-----------+
| Assets | | | | |
+----------------------------------------+----------+----------+----------+-----------+
| Intangibles, including goodwill | 107,589 | 176,159 | - | 283,748 |
+----------------------------------------+----------+----------+----------+-----------+
| Other segment assets | 25,689 | 61,762 | 3,108 | 90,559 |
+----------------------------------------+----------+----------+----------+-----------+
| | 133,278 | 237,921 | 3,108 | 374,307 |
+----------------------------------------+----------+----------+----------+-----------+
| Unallocated corporate assets | | | | 35,075 |
+----------------------------------------+----------+----------+----------+-----------+
| Consolidated total assets | | | | 409,382 |
+----------------------------------------+----------+----------+----------+-----------+
| Liabilities | | | | |
+----------------------------------------+----------+----------+----------+-----------+
| Segment liabilities | (43,290) | (64,069) | (5,512) | (112,871) |
+----------------------------------------+----------+----------+----------+-----------+
| Unallocated corporate liabilities | | | | (144,999) |
+----------------------------------------+----------+----------+----------+-----------+
| Consolidated total liabilities | | | | (257,870) |
+----------------------------------------+----------+----------+----------+-----------+
| Net assets | | | | 151,512 |
+----------------------------------------+----------+----------+----------+-----------+
+----------------------------------------+----------+----------+----------+-----------+
| | | | Rest | |
| | | | of | |
+----------------------------------------+----------+----------+----------+-----------+
| | Americas | Europe | World | Group |
+----------------------------------------+----------+----------+----------+-----------+
| At 31 December 2008 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------------+----------+----------+----------+-----------+
| Assets | | | | |
+----------------------------------------+----------+----------+----------+-----------+
| Intangibles, including goodwill | 119,638 | 188,354 | - | 307,992 |
+----------------------------------------+----------+----------+----------+-----------+
| Other segment assets | 31,402 | 72,550 | 1,389 | 105,341 |
+----------------------------------------+----------+----------+----------+-----------+
| | 151,040 | 260,904 | 1,389 | 413,333 |
+----------------------------------------+----------+----------+----------+-----------+
| Unallocated corporate assets | | | | 54,717 |
+----------------------------------------+----------+----------+----------+-----------+
| Consolidated total assets | | | | 468,050 |
+----------------------------------------+----------+----------+----------+-----------+
| Liabilities | | | | |
+----------------------------------------+----------+----------+----------+-----------+
| Segment liabilities | (73,791) | (81,449) | (6,541) | (161,781) |
+----------------------------------------+----------+----------+----------+-----------+
| Unallocated corporate liabilities | | | | (131,874) |
+----------------------------------------+----------+----------+----------+-----------+
| Consolidated total liabilities | | | | (293,655) |
+----------------------------------------+----------+----------+----------+-----------+
| Net assets | | | | 174,395 |
+----------------------------------------+----------+----------+----------+-----------+
(iii) Capital additions, depreciation and amortisation by geography
+----------------------------------------+----------+---------+---------+---------+
| | | | Rest | |
| | | | of | |
+----------------------------------------+----------+---------+---------+---------+
| | Americas | Europe | World | Group |
| | | | | |
+----------------------------------------+----------+---------+---------+---------+
| Year ended 31 December 2009 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| | | | | |
+----------------------------------------+----------+---------+---------+---------+
| Capital additions | 410 | 469 | 174 | 1,053 |
+----------------------------------------+----------+---------+---------+---------+
| Unallocated corporate additions | | | | 689 |
+----------------------------------------+----------+---------+---------+---------+
| Total capital additions | 410 | 469 | 174 | 1,742 |
+----------------------------------------+----------+---------+---------+---------+
| Depreciation and amortisation | 1,778 | 3,244 | 101 | 5,123 |
+----------------------------------------+----------+---------+---------+---------+
+----------------------------------------+----------+---------+---------+---------+
| | | | Rest | |
| | | | of | |
+----------------------------------------+----------+---------+---------+---------+
| | Americas | Europe | World | Group |
| | | | | |
+----------------------------------------+----------+---------+---------+---------+
| Year ended 31 December 2008 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| | | | | |
+----------------------------------------+----------+---------+---------+---------+
| Capital additions | 654 | 719 | 58 | 1,431 |
+----------------------------------------+----------+---------+---------+---------+
| Unallocated corporate additions | | | | 1,192 |
+----------------------------------------+----------+---------+---------+---------+
| Total capital additions | 654 | 719 | 58 | 2,623 |
+----------------------------------------+----------+---------+---------+---------+
| Depreciation and amortisation | 1,725 | 3,003 | 140 | 4,868 |
+----------------------------------------+----------+---------+---------+---------+
(b) Revenue and underlying operating profit by operating segment
The three operating segments are combined into one reportable segment owing to
similar underlying economic characteristics across all three practices. Not all
significant non-recurring items and financial items can be allocated to the
practices and are therefore disclosed for the reportable segment as a whole.
Assets and liabilities by practice are not reviewed by the Board and are
therefore not disclosed.
+--------------------------------+-----------+------------+------------+----------+
| | |
+--------------------------------+------------------------------------------------+
| Year ended 31 December 2009 | Alexander | Ineum | Kurt | Total |
| | | Consulting | Salmon | |
| | Proudfoot | | Associates | |
+--------------------------------+-----------+------------+------------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------+-----------+------------+------------+----------+
| Revenue - continuing | 71,171 | 142,239 | 63,046 | 276,456 |
| operations | | | | |
+--------------------------------+-----------+------------+------------+----------+
| Underlying operating profit | 11,996 | 12,497 | 3,532 | 28,025 |
+--------------------------------+-----------+------------+------------+----------+
| Non-recurring expenses and | | | | (18,478) |
| amortisation of acquired | | | | |
| intangibles | | | | |
+--------------------------------+-----------+------------+------------+----------+
| Profit from operations | | | | 9,547 |
+--------------------------------+-----------+------------+------------+----------+
| Investment income | | | | 805 |
+--------------------------------+-----------+------------+------------+----------+
| Finance costs | | | | (4,064) |
+--------------------------------+-----------+------------+------------+----------+
| Profit before tax | | | | 6,288 |
+--------------------------------+-----------+------------+------------+----------+
+--------------------------------+-----------+------------+------------+----------+
| | |
+--------------------------------+------------------------------------------------+
| Year ended 31 December 2008 | Alexander | Ineum | Kurt | Total |
| | Proudfoot | Consulting | Salmon | |
| | | | Associates | |
+--------------------------------+-----------+------------+------------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------+-----------+------------+------------+----------+
| Revenue - continuing | 106,975 | 153,109 | 82,971 | 343,055 |
| operations | | | | |
+--------------------------------+-----------+------------+------------+----------+
| Underlying operating profit | 18,059 | 9,938 | 6,739 | 34,736 |
+--------------------------------+-----------+------------+------------+----------+
| Non-recurring expenses, non- | | | | (50,587) |
| recurring impairment and | | | | |
| amortisation of acquired | | | | |
| intangibles | | | | |
+--------------------------------+-----------+------------+------------+----------+
| (Loss) from operations | | | | (15,851) |
+--------------------------------+-----------+------------+------------+----------+
| Investment income | | | | 1,232 |
+--------------------------------+-----------+------------+------------+----------+
| Finance costs | | | | (5,394) |
+--------------------------------+-----------+------------+------------+----------+
| Loss before tax | | | | (20,013) |
+--------------------------------+-----------+------------+------------+----------+
Inter-segmental sales were not significant.
5. Profit/(loss) before tax
Profit/(loss) before tax has been arrived at after (crediting)/charging the
following:
+-----------------------------------------------+------+---------+----------+
| | | 2009 | 2008 |
+-----------------------------------------------+------+---------+----------+
| | Note | GBP'000 | GBP'000 |
+-----------------------------------------------+------+---------+----------+
| Foreign exchange gains | | (32) | (25) |
+-----------------------------------------------+------+---------+----------+
| Amortisation of intangible assets | | 3,597 | 3,367 |
+-----------------------------------------------+------+---------+----------+
| Depreciation of property, plant and equipment | | 1,526 | 1,501 |
| | | | |
+-----------------------------------------------+------+---------+----------+
| Loss on disposal of fixed assets | | 299 | - |
+-----------------------------------------------+------+---------+----------+
| Non-recurring items | | 15,739 | 21,502 |
+-----------------------------------------------+------+---------+----------+
| Non-recurring items - impairment | | - | 26,695 |
+-----------------------------------------------+------+---------+----------+
| Staff costs | 7 | 161,613 | 206,035 |
+-----------------------------------------------+------+---------+----------+
Non-recurring items in 2009 comprise GBP3.6 million in relation to property
rationalisation, GBP2.0 million in relation to the closure of Parson US, GBP1.3
million in relation to the closure of Alexander Proudfoot Australia, GBP1.4
million as the cost of the project to consider the potential sale of Ineum
Consulting, GBP1.1 million as severance costs for the departure of the Executive
Director and GBP6.3 million of restructuring costs across the business as a
whole.
6. Dividends
+--------------------------------------------------------+---------+---------+
| | 2009 | 2008 |
+--------------------------------------------------------+---------+---------+
| | GBP'000 | GBP'000 |
| | | |
+--------------------------------------------------------+---------+---------+
| Amounts recognised as distributions to equity holders | | |
| in the year | | |
+--------------------------------------------------------+---------+---------+
| Final dividend for the year ended 31 December 2008 of | 2,931 | 2,657 |
| 0.90p (2007 final dividend: 0.82p) per share | | |
+--------------------------------------------------------+---------+---------+
| Interim dividend for the year ended 31 December 2009 | 1,303 | 1,302 |
| of 0.40p (2008: 0.40p) per share | | |
+--------------------------------------------------------+---------+---------+
| | 4,234 | 3,959 |
+--------------------------------------------------------+---------+---------+
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 2009
(in respect of the final dividend for the year ended 31 December 2008 and the
interim dividend for the year ended 31 December 2009) was GBP73,806 (2008:
GBP51,000).
The 2009 interim dividend was paid on 27 October 2009. The directors do not
propose a final dividend for the year ended 31 December 2009.
7. Staff numbers and costs
The average number of persons employed by the Group (including executive
directors) during the year, analysed by category, was as follows:
+----------------------------------------------------+--------+--------+
| | 2009 | 2008 |
| | Number | Number |
| | | |
+----------------------------------------------------+--------+--------+
| Sales and marketing | 91 | 148 |
+----------------------------------------------------+--------+--------+
| Consultants | 1,386 | 1,685 |
+----------------------------------------------------+--------+--------+
| Support staff | 291 | 352 |
+----------------------------------------------------+--------+--------+
| | 1,768 | 2,185 |
+----------------------------------------------------+--------+--------+
The number of Group employees at the year end was 1,641 (2008: 2,152).
The aggregate payroll costs of these persons were as follows:
+----------------------------------------------------+---------+---------+
| | 2009 | 2008 |
+----------------------------------------------------+---------+---------+
| | GBP'000 | GBP'000 |
| | | |
+----------------------------------------------------+---------+---------+
| Wages and salaries | 126,654 | 166,209 |
+----------------------------------------------------+---------+---------+
| Social security costs | 32,138 | 35,463 |
+----------------------------------------------------+---------+---------+
| Other pension costs | 2,821 | 4,363 |
+----------------------------------------------------+---------+---------+
| | 161,613 | 206,035 |
+----------------------------------------------------+---------+---------+
Wages and salaries includes GBP1,120,000 (2008: GBP1,324,000) relating to
charges in respect of share options and share awards.
8. Investment revenues and finance costs
+-------------------------------------------------------+--------+---------+----------+
| Investment revenues | | 2009 | 2008 |
+-------------------------------------------------------+--------+---------+----------+
| | Note | GBP'000 | GBP'000 |
+-------------------------------------------------------+--------+---------+----------+
| Interest receivable on bank deposits and similar | | 805 | 779 |
| income | | | |
+-------------------------------------------------------+--------+---------+----------+
| Net finance income on retirement benefits plans | | - | 453 |
+-------------------------------------------------------+--------+---------+----------+
| | | 805 | 1,232 |
+-------------------------------------------------------+--------+---------+----------+
+-------------------------------------------------------+--------+---------+----------+
| Finance costs | | 2009 | 2008 |
+-------------------------------------------------------+--------+---------+----------+
| | Note | GBP'000 | GBP'000 |
+-------------------------------------------------------+--------+---------+----------+
| Interest payable on bank overdrafts and loans and | | (3,310) | (5,010) |
| similar charges | | | |
+-------------------------------------------------------+--------+---------+----------+
| Finance costs on retirement benefit plans | | (754) | (384) |
+-------------------------------------------------------+--------+---------+----------+
| | | (4,064) | (5,394) |
+-------------------------------------------------------+--------+---------+----------+
9. Tax
+-----------------------------------------------------------------+---------+---------+
| | 2009 | 2008 |
+-----------------------------------------------------------------+---------+---------+
| | GBP'000 | GBP'000 |
| | | |
+-----------------------------------------------------------------+---------+---------+
| Tax in respect of current year | | |
+-----------------------------------------------------------------+---------+---------+
| UK corporation tax | - | 200 |
+-----------------------------------------------------------------+---------+---------+
| Foreign tax | 8,896 | 11,970 |
+-----------------------------------------------------------------+---------+---------+
| Deferred tax - acquired intangible assets | (110) | (836) |
+-----------------------------------------------------------------+---------+---------+
| Deferred tax - temporary differences and other | 7,300 | 2,165 |
+-----------------------------------------------------------------+---------+---------+
| Deferred tax - tax losses | (6,535) | (361) |
+-----------------------------------------------------------------+---------+---------+
| Deferred tax - US goodwill | 2,434 | - |
+-----------------------------------------------------------------+---------+---------+
| Total deferred tax | 3,089 | 968 |
+-----------------------------------------------------------------+---------+---------+
| Total current year tax | 11,985 | 13,138 |
+-----------------------------------------------------------------+---------+---------+
| Prior year current taxation | (3,622) | (2,883) |
+-----------------------------------------------------------------+---------+---------+
| Total tax expense on underlying profit | 8,363 | 10,255 |
+-----------------------------------------------------------------+---------+---------+
| Tax in respect of non-recurring items | | |
+-----------------------------------------------------------------+---------+---------+
| Foreign tax | (3,877) | (3,245) |
+-----------------------------------------------------------------+---------+---------+
| Deferred tax - US goodwill | - | (4,702) |
+-----------------------------------------------------------------+---------+---------+
| Deferred tax - temporary differences and other | 446 | (1,401) |
+-----------------------------------------------------------------+---------+---------+
| Total tax expense | 4,932 | 907 |
+-----------------------------------------------------------------+---------+---------+
UK corporation tax is calculated at 28% (2008: 28.5%) of the estimated
assessable profit for the year. The UK corporation tax rate changed from 30% to
28% as of 1 April 2008 which resulted in a pro-rated tax rate of 28.5% in the
prior year.
Taxation for other jurisdictions is calculated at the rates prevailing in the
respective jurisdictions.
10. Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following data:
+-----------------------------------------------------------------+-----------+-----------+
| | 2009 | 2008 |
+-----------------------------------------------------------------+-----------+-----------+
| Earnings | GBP'000 | GBP'000 |
| | | |
+-----------------------------------------------------------------+-----------+-----------+
| Earnings for the purposes of basic earnings per share and | 1,356 | (22,019) |
| diluted earnings per share being net profit attributable to | | |
| equity holders of the parent | | |
+-----------------------------------------------------------------+-----------+-----------+
| Non-recurring items | 15,739 | 21,502 |
+-----------------------------------------------------------------+-----------+-----------+
| Non-recurring items - impairment | - | 26,695 |
+-----------------------------------------------------------------+-----------+-----------+
| Non-recurring items - tax | (3,431) | (9,347) |
+-----------------------------------------------------------------+-----------+-----------+
| Discontinued operations | - | 1,099 |
+-----------------------------------------------------------------+-----------+-----------+
| Amortisation of acquired intangibles | 2,739 | 2,390 |
+-----------------------------------------------------------------+-----------+-----------+
| Earnings for the purpose of basic earnings per share excluding | 16,403 | 20,320 |
| non-recurring items and amortisation of acquired intangibles | | |
+-----------------------------------------------------------------+-----------+-----------+
| | | |
+-----------------------------------------------------------------+-----------+-----------+
| | Number | Number |
| | | |
+-----------------------------------------------------------------+-----------+-----------+
| Number of shares | (million) | (million) |
| | | |
+-----------------------------------------------------------------+-----------+-----------+
| Weighted average number of ordinary shares for the purposes of | 326.1 | 326.0 |
| basic earnings per share, and basic excluding non-recurring | | |
| items and amortisation of acquired intangibles | | |
+-----------------------------------------------------------------+-----------+-----------+
| Effect of dilutive potential ordinary shares: | | |
+-----------------------------------------------------------------+-----------+-----------+
| - share options and performance share plan | 9.4 | - |
+-----------------------------------------------------------------+-----------+-----------+
| Weighted average number of ordinary shares for the purposes of | 335.5 | 326.0 |
| diluted earnings per share | | |
+-----------------------------------------------------------------+-----------+-----------+
| | | |
+-----------------------------------------------------------------+-----------+-----------+
| | Pence | Pence |
+-----------------------------------------------------------------+-----------+-----------+
| Basic profit/(loss) earnings per share - continuing operations | 0.4 | (6.4) |
+-----------------------------------------------------------------+-----------+-----------+
| Diluted profit/(loss) earnings per share - continuing | 0.4 | (6.4) |
| operations | | |
+-----------------------------------------------------------------+-----------+-----------+
| Basic earnings per share - excluding non-recurring items and | 5.0 | 6.2 |
| amortisation of acquired intangibles | | |
+-----------------------------------------------------------------+-----------+-----------+
| Basic earnings per share from profit/(loss) for the year | | (6.8) |
| attributable to equity holders of the parent | 0.4 | |
+-----------------------------------------------------------------+-----------+-----------+
| Diluted earnings per share from profit/(loss) for the year | | (6.8) |
| attributable to equity holders of the parent | 0.4 | |
+-----------------------------------------------------------------+-----------+-----------+
| Basic profit/(loss) earnings per share - discontinued | - | (0.4) |
| operations | | |
+-----------------------------------------------------------------+-----------+-----------+
| Diluted profit/(loss) earnings per share - discontinued | - | (0.4) |
| operations | | |
+-----------------------------------------------------------------+-----------+-----------+
The average share price for the year ended 31 December 2009 was 26.0p (2008:
31.6p).
11. Notes to the cash flow statement
+-----------------------------------------------------------------+----------+----------+
| | 2009 | 2008 |
+-----------------------------------------------------------------+----------+----------+
| | GBP'000 | GBP'000 |
| | | |
+-----------------------------------------------------------------+----------+----------+
| | | |
+-----------------------------------------------------------------+----------+----------+
| Profit/(loss) from operations | 9,547 | (15,851) |
+-----------------------------------------------------------------+----------+----------+
| Adjustments for: | | |
+-----------------------------------------------------------------+----------+----------+
| Depreciation of property, plant and equipment | 1,526 | 1,501 |
+-----------------------------------------------------------------+----------+----------+
| Amortisation of intangible assets | 3,597 | 3,367 |
+-----------------------------------------------------------------+----------+----------+
| Impairment | - | 26,695 |
+-----------------------------------------------------------------+----------+----------+
| Loss on disposal of plant and equipment | 633 | - |
+-----------------------------------------------------------------+----------+----------+
| Adjustment for pension funding | 303 | (919) |
+-----------------------------------------------------------------+----------+----------+
| Adjustment for share options charge | 1,120 | 1,324 |
+-----------------------------------------------------------------+----------+----------+
| Decrease in provisions | (2,313) | (2,295) |
+-----------------------------------------------------------------+----------+----------+
| Operating cash flows before movements in working capital | 14,413 | 13,822 |
+-----------------------------------------------------------------+----------+----------+
| Decrease/(increase) in receivables | 8,509 | (11,691) |
+-----------------------------------------------------------------+----------+----------+
| (Decrease)/increase in payables | (36,400) | 39,067 |
+-----------------------------------------------------------------+----------+----------+
| Cash (absorbed)/generated by operations | (13,478) | 41,198 |
+-----------------------------------------------------------------+----------+----------+
| Income taxes paid | (5,012) | (510) |
+-----------------------------------------------------------------+----------+----------+
| Net cash (outflow)/inflow from operating activities | (18,490) | 40,688 |
+-----------------------------------------------------------------+----------+----------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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