TIDMMRN
RNS Number : 0039T
Morson Group PLC
21 September 2010
+-------------------------------+-------------------------------+
| Immediate release | 21 September 2010 |
+-------------------------------+-------------------------------+
Morson Group PLC
("Morson" or the "Group")
Interim results for the six months ended 30 June 2010
Morson (AIM: MRN.L) the UK's leading provider of technical contracting personnel
to the aerospace and defence, nuclear and power, rail and other technical
industries, is pleased to announce its interim results for the six months ended
30 June 2010.
Highlights
· Solid trading performance across all sectors in line with Directors'
expectations:
o revenue up 0.9% to GBP221.8m (H1 2009: GBP219.9m);
o net fee income (gross profit) down 7.7% to GBP16.7m (H1 2009: GBP18.1m);
o profit from operations down 0.6% to GBP5.4m (H1 2009: GBP5.5m);
o profit before taxation up 7.7% to GBP5.3m (H1 2009: GBP4.9m);
o adjusted profit before taxation* down 22% to GBP4.2m (H1 2009: GBP5.4m);
o basic EPS of 8.33 pence (H1 2009: 7.48 pence); and
o adjusted EPS| of 7.05 pence (H1 2009 : 8.70 pence).
· Net Debt has increased during the period to GBP18.8m, up GBP7.8m from
GBP11.0m at 31 December 2009, largely due to the acquisition of Wynnwith.
· Key new or extended contract wins including:
+----------+----------+----------+------------+
| o | | o | |
| | Chubb | | Costain |
+----------+----------+----------+------------+
| | | | |
+----------+----------+----------+------------+
| o | | o | |
| | Ericsson | | Bombardier |
+----------+----------+----------+------------+
· Acquisitions of Wynnwith (June 2010) and Acetech (July 2010) with
integration progressing well.
· Overseas recruitment operations commenced in Brazil and Germany.
· Market conditions remain challenging but with positive longer
term prospects.
· Interim dividend maintained at 2.0 pence per share (H1 2009: 2.0
pence per share).
*Adjusted profit before taxation is profit before taxation of GBP5.3m (H1 2009:
GBP4.9m), excluding the fair value movement on the derivative financial
instrument of GBP0.5m (H1 2009: GBP0.2m), amortisation of intangible fixed
assets GBP0.2m (H1 2009: GBP0.6m) and exceptional income GBP0.7m (H1
2009: cost GBP0.1m).
| Adjusted EPS is net profit attributable to equity holders adjusted for
exceptional items, amortisation of intangible fixed assets and fair value
movement on the derivative financial instrument values as detailed in
note5.
Gerry Mason, Non Executive Chairman, said:
"The Group has historically remained resilient in difficult economic cycles and,
whilst we have been affected by the scale of the current UK economic recession,
we have performed well.
"The move into our new headquarters bringing together Morson International and
Morson Projects gives the business an added impetus, increasing opportunities
for cross selling our services and providing a modern and efficient environment
conducive to taking the Group forward in the coming years. We will continue to
build on our experience and capability and plan intelligently to progress our
longer term prospects and develop future opportunities, including consideration
of appropriate acquisitions. Whilst we expect market conditions to remain
challenging into 2011, we firmly believe that the prospects for the Group and
its long term future growth are encouraging."
For further information please contact:
Morson Group plc
0161 707 1516
Ged Mason,
CEO
Paul Gilmour, Financial Director
Brewin Dolphin Investment Banking (Nomad)
0845 270 8600
Matt Davis, Matt Cheetham
Buchanan Communications
0207 466 5000
Diane Stewart, James Strong,
Carrie Clement
Chairman's Statement
Introduction
As anticipated the year to date has seen the challenging underlying market
conditions continue. The Board expects these trading conditions to carry on
through to the year end and into 2011. Against this backdrop I am pleased to
report solid interim results for Morson, in line with our expectations. The
Group has also recently completed two acquisitions, adding to the client base,
service offering and geographic presence of the Group and increasing our market
share. Maximising the opportunities these bring by applying Morson's working
practices and economies of scale will be a focus during the remainder of this
year.
The move into the new Head Office premises just prior to the start of the year
has given a tangible boost to our staff, provided a greatly enhanced working
environment, increased business development opportunities and improved
presentation of the Group to our clients.
Our recruitment activity has been steady over the period with a number of
pleasing contract wins, adding to a variety of renewals and contract extensions
that will support and maintain revenues into the future. Contractor rate
inflation remains subdued and margins remain competitively priced, as is to be
expected. We continue to actively promote our offering to clients as one that
can deliver cost savings through the application of efficient delivery models of
engineering resource supply. Our client base is spread but biased toward the
private sector; we estimate circa 70:30 private:public based revenue derivation.
The strategic defence review is the area of public sector spending that holds
most potential to affect our revenues and this is anticipated to become clearer
in October when the government announces its proposals. The significant majority
of revenue remains sourced via framework agreements with substantial clients.
More marginal trade and permanent recruitment activity have both been steady
during the period at a relatively low base level. The newly acquired business
streams, which are discussed in more detail below, will almost entirely add to
the recruitment business segment.
Engineering design consultancy and management activity delivered by Morson
Projects has kept its focus on the nuclear and civil aerospace markets. The new
Head Office facilities give Morson Projects greater opportunity to outsource
significant client engineering projects. This design and consultancy capability
differentiates us from much of our competition and gives us an understanding of
client needs and the ability to be flexible in our offering. Morson Projects
will promote these services to the new clients gained via the acquisitions made.
We believe that the Group is well placed and has extensive experience to trade
through these difficult economic trading conditions, delivering efficient
business services to clients and gaining advantage from this in terms of market
share.
Acquisitions
We have recently announced two acquisitions, completed either side of the
reporting period end, and the Board is excited by the opportunities that they
represent.
The acquisition of the business and assets of the Wynnwith Group from its
administrator was achieved via a 51% owned new subsidiary, Morson Wynnwith
Limited, on 9th June 2010, just prior to the end of the reported period. Revenue
included in the Group results for the period was GBP5.3 million (representing
circa four weeks' trade), which would infer an annualised run-rate of
approximately GBP70 million. We are pleased to announce that all key contracts
have been retained. This is the largest acquisition Morson has made to date and
complements the existing operations very well with its focus on aerospace,
defence and rail sectors along with several complementary niche areas. It is
also pleasing to report that the acquisition has resulted in an exceptional gain
being realised from the transaction as good collections of debt acquired have
been achieved, reflecting the strength and retention of client relationships.
The quantum of this is estimated at some GBP0.7 million at present (net of
acquisition costs of GBP0.2 million) and in accordance with accounting standards
this will be finalised and fully reported on within the Annual Report and
Accounts. The Wynnwith business acquired had been historically loss-making and
thus a period of restructuring and assessment must clearly take place and this
is underway at present. There will be notable costs involved in this exercise,
which will be incurred and charged to the second half of this year. The Board
are confident that Morson Wynnwith will be profitable in 2011.
The acquisition of the business of Acetech Services Limited ("Acetech") was
achieved just after the close of the reporting period (9th July 2010) and saw
the Group take over the operations of the UK "in-house" recruitment business of
the Babcock Group. We have gained lengthy contracts to supply to the UK Babcock
Marine and Rail divisions together with the staff, database and contacts, which
will help this business grow and supplement our wider supply to the Babcock
Group, itself recently enlarged following its acquisition of the VT Group
Financial highlights
Net fee income for the first six months was GBP16.7 million, a decrease of 7.7%
from 2009 levels of GBP18.1 million, although comparing well with the preceding
six months result of GBP16.6 million (year to 31 December 2009: GBP34.8
million). Revenues of GBP221.8 million are slightly above the prior year
comparative of GBP219.9 million and in line with the preceding six month period.
Adjusted profit from operations of GBP4.9 million has been achieved, in line
with our expectations. The comparatives to the prior year and preceding period
are set out below:
+-------------------------+----------+----------+----------+--------+--------+--------+
| | 6mth | 6mth | 6mth | Change | Change | Change |
| | to | to | to | A-B | A-C | B-C |
| | 30.06.10 | 30.12.09 | 30.06.09 | | | |
+-------------------------+----------+----------+----------+--------+--------+--------+
| | A | B | C | | | |
+-------------------------+----------+----------+----------+--------+--------+--------+
| | GBPm | GBPm | GBPm | % | % | % |
+-------------------------+----------+----------+----------+--------+--------+--------+
| Revenue | 221.8 | 216.7 | 219.9 | 2.4% | 0.9% | -1.4% |
+-------------------------+----------+----------+----------+--------+--------+--------+
| Net fee income | 16.7 | 16.6 | 18.1 | 0.5% | -7.7% | -8.2% |
+-------------------------+----------+----------+----------+--------+--------+--------+
| Overheads | (11.8) | (10.5) | (12.0) | 12.5% | -1.2% | -12.1% |
+-------------------------+----------+----------+----------+--------+--------+--------+
| Amortisation | (0.2) | (0.6) | (0.6) | -71.5% | -71.5% | 0.0% |
+-------------------------+----------+----------+----------+--------+--------+--------+
| Exceptional net gain | 0.7 | - | - | | | |
| on acquisition | | | | | | |
+-------------------------+----------+----------+----------+--------+--------+--------+
| Exceptional head | - | (0.3) | (0.1) | | | 194.5% |
| office relocation | | | | | | |
| cost | | | | | | |
+-------------------------+----------+----------+----------+--------+--------+--------+
| Profit from | 5.4 | 5.2 | 5.5 | 4.3% | -0.6% | -4.7% |
| operations | | | | | | |
+-------------------------+----------+----------+----------+--------+--------+--------+
| Adjusted profit from | 4.9 | 6.1 | 6.2 | -19.9% | -20.4% | -0.7% |
| operations | | | | | | |
| (excluding amortisation | | | | | | |
| of intangible fixed | | | | | | |
| assets and exceptional | | | | | | |
| items) | | | | | | |
| | | | | | | |
+-------------------------+----------+----------+----------+--------+--------+--------+
| Interest | (0.7) | (0.8) | (0.8) | -10.3% | -9.2% | 1.2% |
+-------------------------+----------+----------+----------+--------+--------+--------+
| Adjusted profit | 4.2 | 5.4 | 5.4 | -21.2% | -22.0% | -0.9% |
| before taxation | | | | | | |
| (excluding | | | | | | |
| amortisation of | | | | | | |
| intangible fixed | | | | | | |
| assets, exceptional | | | | | | |
| items and fair value | | | | | | |
| adjustments) | | | | | | |
+-------------------------+----------+----------+----------+--------+--------+--------+
Overheads in the period are GBP0.2 million lower than the comparative period in
the prior year. This is despite both the new Head Office increased cost, an
anticipated GBP0.4 million, and the recognition of GBP0.5 million of overhead
for the Morson Wynnwith business. We have continued to focus on the overhead
base throughout the business. Savings identified and delivered have helped keep
costs down and achieve adjusted operating margins of 2.2% (H1 2009: 2.8%) and
the costs of these actions have been absorbed within results for the period.
Exceptional income of GBP0.7 million relates to the acquisition of the business
of Wynnwith Group Limited and comprises the net gain in the purchase of assets
released to the income statement of GBP0.9 million less non-recurring
acquisition costs of GBP0.2 million. Further costs in relation to the
restructuring and integration of this business will be incurred through the
remainder of this year.
Across the Group net fee income split across temporary recruitment, permanent
recruitment and engineering design consultancy was GBP12.9 million, GBP0.4
million and GBP3.4 million respectively (H1 2009: GBP14.4 million, GBP0.4
million, GBP3.3 million).
During the last two years recruitment markets have seen several companies
reporting large swings in profitability and even losses. The relative stability
shown by Morson demonstrates the business model adopted and differentiates us
from companies that are focused primarily on permanent recruitment, which
traditionally suffers more in economic downturns.
Adjusted profit before taxation* was GBP4.2 million, down 22.0% (H1 2009: GBP5.4
million). The Group's conversion ratio, calculated as the ratio of adjusted
profit from operations to net fee income was 29.4% (H1 2009: 34.1%), which has
reduced due to the more difficult trading environment and the Wynnwith
acquisition. However, given current market conditions the Board feels this is a
good result, firmly within the upper quartile of our sector.
Our financing requirements increased during the period in large part due to the
GBP7.8million cash consideration paid for the Wynnwith transaction. The Group's
invoice discounting facility at the period end was drawn to GBP20.0 million (H1
2009: GBP18.8 million; H2 2009: GBP11.1 million) against committed facilities of
up to GBP50.0 million. Our GBP5 million revolving credit facility was undrawn
(2009: GBPnil) and the overdraft was GBPnil (H1 2009: GBP0.3 million; H2 2009:
GBPnil). Cash was GBP1.2million (H1 2009: GBP0.3 million; H2 2009 GBP0.1
million). Our invoice discounting facility is entirely typical for the contract
recruitment industry and has proved very efficient and cost effective for the
Group over the last eighteen years.
We are pleased to announce that during September 2010 negotiations with our
current finance provider Barclays Bank have resulted in extension of our
existing core finance facility, for invoice discounting to 31 March 2014. Our
additional GBP5 million revolving credit facility runs to 23 March 2011 and we
are currently negotiating an extension of this which we believe will be achieved
on an acceptable basis.
Net assets of the Group at 30 June 2010 were GBP59.5 million (H1 2009: GBP54.6
million; H2 2009 GBP57.4 million).
Going Concern
The Directors are satisfied that this condensed set of financial statements
should be prepared on a going concern basis - further details are included in
note 1 to this half yearly report.
Dividends
The Company is maintaining an interim dividend of 2.0 pence per share (H1 2009:
2.0 pence per share) which reflects our firm confidence in the future prospects
of the business. This interim dividend is proposed to be paid on 29 October 2010
to shareholders on the register on 1 October 2010. The ex-dividend date will be
29 September 2010.
Board Changes
We report that Karl Monaghan, Non-executive Director, has stepped down from the
Board with effect from today, 21st September 2010. Following his resignation
from the Board Karl will continue to assist the Group on a consultancy basis in
the identification and assessment of acquisition opportunities. Morson intends
to appoint an additional non-executive director in due course. On behalf of the
Board I would like to thank Karl for his efforts and commitment since the
Company's flotation in 2006 and we look forward to working with Karl in his new
role as a consultant to the Company.
Sector review: Morson International Temporary and Permanent Recruitment Services
Over the first half of 2010 we have experienced more clients refocusing on cost
savings and efficiencies in their human capital resourcing. Whilst this
rationale can have a short term negative impact, it offers longer term
opportunities to introduce our efficient managing agent and project design
capabilities, creating new growth areas and potentially larger numbers of
contractors on assignment. We are actively marketing these benefits to improve
our market share.
All core sectors of Aerospace and Defence, Nuclear and Power and Rail and
Transport have seen varying but broadly sustained demand for our services. As
previously reported, the prevailing wider economic and more specific market
conditions saw adverse margin pressure and volumes impacted from Q2 2009,
continuing downward through to the end of that year. We feel the market has
"bottomed" and over the last six months have seen broadly steady conditions.
This is manifesting itself in low activity levels and margin awareness but is
also something that we believe is being felt across our competitor base.
We remain confident that the provision of outsourced engineering and technical
human resources is a resilient market and holds sustainable long-term prospects.
In the future we believe skill shortages and ongoing investment in long-term
infrastructure and engineering innovation is required in the United Kingdom,
which will require the support of market leading organisations such as Morson.
Aerospace and Defence
Performance in this sector, the largest in the Group, has again been strong,
benefiting from core substantial agreements with Xchanging/BAE Systems, Airbus
and Thales.
Morson's strength in this sector is that it spans both military and civil
aircraft programme development and we have seen somewhat of a shift in activity
through this period towards the civil side. There remain notable projects
requiring specialist skills such as the Queen Elizabeth carrier, Airbus 320 and
Bombardier Learjet 85 programmes. In relation to the Defence Sector, we
anticipate that the forthcoming UK Government's Defence Review, due October
2010, will provide greater clarity with regard to future spending focus and
activity. We do not feel our current level of defence business will materially
change as several projects are maintenance driven and outsourcing remains a
competitive and cost effective way for projects to be discharged.
The civil aerospace market is very competitive and investment into new "green"
technologies which deliver savings on fuel and engine maintenance is fundamental
to its future. Morson has experience of this and is working with clients in the
development and modification of existing and of conceptual aircraft and engine
programmes, requiring significant specialist skills and technical engineering
support.
Nuclear and Power
We have experienced slightly increasing levels of business in this area over the
last six months. As explained in our 2009 report the second half of this year
will however see a reduction in revenue due to our Magnox contract falling away.
Nevertheless we remain excited about future opportunities. The UK nuclear new
build programme has been initiated, albeit currently at low levels and with
varying degrees of urgency, by some of the major power providers and consortia
set up to bid for and deliver power to the market. Morson has relationships with
many of these and has been providing engineering talent in this field for over
thirty years. Morson supplied over 400 engineers over the project life of the
last PWR nuclear plant to be built at Sizewell and is geographically very well
placed to take advantage of the emerging energy markets. The potential for
growth in this sector is evident and increasing and will result in demand for
specialised human capital and engineering consultancy services, with the timing
dependent on macro-economic factors. At present the maintenance of existing
power stations is also key and this activity must continue through any build
cycle, before turning into decommissioning work. Morson aims to play an
important role in the support, maintenance, new build and eventual
decommissioning of the UK's current nuclear power renaissance.
Rail and Transport Infrastructure
The Group provides expertise and workforce resource solutions to both the London
Underground and the National Overground Networks. Activity under our core
framework contracts has been slightly suppressed over the period as within the
London Underground environment there has been a period of change as Transport
for London has consolidated operations previously let under Metronet and
Tubelines operations. We are pleased to advise that we have bid for and been
awarded renewed contracts to extend our supply into this wider business. We
supply a variety of white collar engineering skills and also the hands on skills
of track workforces, safety critical resource and other track maintenance and
enhancement skills.
Overground activity with Network Rail has been at a low level, however we
anticipate this will increase over the coming periods via maintenance works and
the London Cross Rail project. We continue to enhance our market position in
this area and have the addition of contracts to support Babcock Rail and Thales,
whilst the Wynnwith acquisition also brings several other client relationships
that we can develop.
Other developing markets
The Group continues to explore a number of markets that hold potential for
future growth. In particular the telecoms market holds potential with customers
who have global overseas operations. The last period has seen operations
commence in Brazil, together with the opening of an office in Hamburg, Germany.
Other overseas investment opportunities and regions are being explored. In the
period the total overseas recruitment office revenues are minor at GBP1.1
million and slightly loss-making, however collectively we expect these overseas
operations to be a net contributor at operating level in the second half of the
year.
Morson Projects: Provision of Engineering Design Consultancy and Management
Services
This business segment has also seen a challenging environment with reduced
workloads and competitive pressure on margins. However Morson Projects has the
diversity across Aerospace, Nuclear and our expanding Energy and Power offering
to adapt and exploit opportunities. The current lower level of military
aerospace activity is therefore balanced by our groundbreaking work with
Bombardier Canada in assisting them on the Learjet 85 programme. This involves
significant levels of design using lightweight composite materials and we feel
this expertise is something that will be embraced in most future aircraft design
and modification. Within the Nuclear offering we continue to bid for and win
substantial levels of design engineering works for the Sellafield site, this
being transferrable skills and knowledge which we believe will also be needed
for new build sites. Morson Projects remains a key differentiator for the Group
and as clients seek cost effective solutions to deliver programme efficiencies
we will be promoting this outsourcing option.
Growth strategy
The difficult economic environment has undoubtedly played a part in slowing the
growth pattern of the Group. However the business remains strong and Morson's
growth strategy remains unchanged. This is to combine organic growth from our
long-term embedded client relationships and the demonstrable savings and
efficiencies that Morson can deliver to its clients with the consideration of
selective acquisitions with the right prospects, opportunities and business
synergies.
Trading and outlook
The Group has historically remained resilient through difficult economic cycles
and, whilst we have been affected by the scale of the current UK economic
recession, we have performed well. This reflects our strategic focus on
temporary rather than permanent recruitment; the diversity of sectors covered
and their infrastructure bias; Morson Projects' outsourcing capacity; and
Morson's core resource skills capability. We will continue to build on these
using our experience and, as in prior periods, plan intelligently to progress
our longer term prospects and develop future opportunities.
Morson provides scarce engineering talent to specialised engineering sectors,
mostly related to long-term infrastructure projects and the maintenance of some
of the UK's prime assets. We have continued to win new contracts and retenders.
We have won new business with clients in and connected to all our specialist
sectors, particularly Nuclear, Rail, Aerospace and Defence and expect to
announce further progress over the next twelve months.
Bringing together the headquarters of the two operating business segments gives
Morson an added impetus, a more united business development approach and great
benefit, providing a modern and efficient environment conducive to taking the
Group forward in the coming years. We aim to increase market share and sustain
growth through a variety of organic initiatives and other business
opportunities. Whilst we are well aware that the present economic environment
might provide acquisition opportunities we will be disciplined when evaluating
these.
Current trading conditions remain challenging, however the executive management
team at Morson, and indeed many of our key staff who play an important role,
have been with the Group for a considerable time and have seen Morson's ability
to grow and meet the challenges faced over several economic cycles. We will use
this experience and firmly believe that the prospects for the Group and its long
term future growth are encouraging.
Gerry Mason
Non-executive Chairman
21 September 2010
+----------------------+-----------+-----------+-----------+-----------+
| Condensed | | | | |
| consolidated income | | | | |
| statement | | | | |
| for the six months | | | | |
| ended 30 June 2010 | | | | |
| | | | | |
| | | Unaudited | Unaudited | Audited |
+----------------------+-----------+-----------+-----------+-----------+
| | | six | six | year |
| | | months | months | |
+----------------------+-----------+-----------+-----------+-----------+
| | | ended | ended | ended |
+----------------------+-----------+-----------+-----------+-----------+
| | | 30 June | 30 June | 31 |
| | | | | December |
+----------------------+-----------+-----------+-----------+-----------+
| | | 2010 | 2009 | 2009 |
+----------------------+-----------+-----------+-----------+-----------+
| | Note | GBP'000 | GBP'000 | GBP'000 |
+----------------------+-----------+-----------+-----------+-----------+
| Continuing | | | | |
| operations | | | | |
+----------------------+-----------+-----------+-----------+-----------+
| Revenue | | 221,841 | 219,892 | 436,627 |
+----------------------+-----------+-----------+-----------+-----------+
| Cost of sales | | (205,110) | (201,759) | (401,854) |
+----------------------+-----------+-----------+-----------+-----------+
| Gross profit | | 16,731 | 18,133 | 34,773 |
+----------------------+-----------+-----------+-----------+-----------+
| Administrative | | | | |
| expenses: | | | | |
+----------------------+-----------+-----------+-----------+-----------+
| -amortisation of | | (174) | (611) | (1,222) |
| intangible fixed | | | | |
| assets | | | | |
+----------------------+-----------+-----------+-----------+-----------+
| -exceptional items | | | | |
| net gain on | 2 | 681 | - | - |
| acquisition | | | | |
+----------------------+-----------+-----------+-----------+-----------+
| head office | 3 | - | (110) | (434) |
| relocation cost | | | | |
+----------------------+-----------+-----------+-----------+-----------+
| -other | | (11,813) | (11,954) | (22,456) |
| administrative | | | | |
| expenses | | | | |
+----------------------+-----------+-----------+-----------+-----------+
| Profit from | | 5,425 | 5,458 | 10,661 |
| operations | | | | |
+----------------------+-----------+-----------+-----------+-----------+
| | | | | |
+----------------------+-----------+-----------+-----------+-----------+
| Fair value movements | | 512 | 172 | 530 |
| on derivative | | | | |
| financial instrument | | | | |
+----------------------+-----------+-----------+-----------+-----------+
| Finance cost | | (682) | (751) | (1,511) |
+----------------------+-----------+-----------+-----------+-----------+
| Profit before | | 5,255 | 4,879 | 9,680 |
| taxation | | | | |
+----------------------+-----------+-----------+-----------+-----------+
| Taxation | 4 | (1,285) | (1,487) | (2,434) |
+----------------------+-----------+-----------+-----------+-----------+
| Net profit for the | | 3,970 | 3,392 | 7,246 |
| period | | | | |
+----------------------+-----------+-----------+-----------+-----------+
| Attributable to: | | | | |
+----------------------+-----------+-----------+-----------+-----------+
| Equity holders of | | 3,712 | 3,350 | 7,193 |
| the parent | | | | |
+----------------------+-----------+-----------+-----------+-----------+
| Minority interests | | 258 | 42 | 53 |
+----------------------+-----------+-----------+-----------+-----------+
| | | 3,970 | 3,392 | 7,246 |
+----------------------+-----------+-----------+-----------+-----------+
| Earnings per share | | | | |
+----------------------+-----------+-----------+-----------+-----------+
| From continuing | | | | |
| operations | | | | |
+----------------------+-----------+-----------+-----------+-----------+
| Basic (pence) | 5 | 8.33 | 7.48 | 16.07 |
+----------------------+-----------+-----------+-----------+-----------+
| Diluted (pence) | 5 | 8.19 | 7.42 | 15.91 |
+----------------------+-----------+-----------+-----------+-----------+
The Group has no recognised gains or losses in the current and prior period or
prior year other than those reported above and therefore no separate condensed
consolidated statement of comprehensive income has been presented.
All activity has arisen from continuing operations.
+----------------------------------+-----------+-----------+-----------+
| Condensed consolidated balance | | | |
| sheet | | | |
| at 30 June 2010 | | | |
| | Unaudited | Unaudited | Audited |
+----------------------------------+-----------+-----------+-----------+
| | 30 June | 30 June | 31 |
| | | | December |
+----------------------------------+-----------+-----------+-----------+
| | 2010 | 2009 | 2009 |
+----------------------------------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------+-----------+-----------+-----------+
| Non-current assets | | | |
+----------------------------------+-----------+-----------+-----------+
| Goodwill | 32,945 | 32,945 | 32,945 |
+----------------------------------+-----------+-----------+-----------+
| Other intangible assets | 565 | 1,350 | 739 |
+----------------------------------+-----------+-----------+-----------+
| Property, plant and equipment | 3,790 | 2,526 | 3,282 |
+----------------------------------+-----------+-----------+-----------+
| Deferred tax asset | 106 | 486 | 252 |
+----------------------------------+-----------+-----------+-----------+
| | 37,406 | 37,307 | 37,218 |
+----------------------------------+-----------+-----------+-----------+
| Current assets | | | |
+----------------------------------+-----------+-----------+-----------+
| Trade and other receivables | 90,781 | 74,523 | 69,485 |
+----------------------------------+-----------+-----------+-----------+
| Cash and cash equivalents | 1,238 | 271 | 130 |
+----------------------------------+-----------+-----------+-----------+
| | 92,019 | 74,794 | 69,615 |
+----------------------------------+-----------+-----------+-----------+
| Total assets | 129,425 | 112,101 | 106,833 |
+----------------------------------+-----------+-----------+-----------+
| Current liabilities | | | |
+----------------------------------+-----------+-----------+-----------+
| Trade and other payables | (47,968) | (35,007) | (36,098) |
+----------------------------------+-----------+-----------+-----------+
| Current tax liabilities | (1,373) | (1,928) | (1,176) |
+----------------------------------+-----------+-----------+-----------+
| Obligations under finance leases | (47) | (100) | (61) |
+----------------------------------+-----------+-----------+-----------+
| Bank overdrafts and loans | (19,991) | (19,078) | (11,064) |
+----------------------------------+-----------+-----------+-----------+
| Derivative financial instrument | (551) | (1,421) | (1,063) |
+----------------------------------+-----------+-----------+-----------+
| Current and total liabilities | (69,930) | (57,534) | (49,462) |
+----------------------------------+-----------+-----------+-----------+
| Net current assets | 22,089 | 17,260 | 20,153 |
+----------------------------------+-----------+-----------+-----------+
| Net assets | 59,495 | 54,567 | 57,371 |
+----------------------------------+-----------+-----------+-----------+
| | | | |
+----------------------------------+-----------+-----------+-----------+
| | | | |
+----------------------------------+-----------+-----------+-----------+
| Equity | | | |
+----------------------------------+-----------+-----------+-----------+
| Issued capital | 2,267 | 2,267 | 2,267 |
+----------------------------------+-----------+-----------+-----------+
| Share premium account | 37,607 | 37,607 | 37,607 |
+----------------------------------+-----------+-----------+-----------+
| Retained earnings | 20,074 | 15,126 | 18,087 |
+----------------------------------+-----------+-----------+-----------+
| Other reserves | (815) | (526) | (694) |
+----------------------------------+-----------+-----------+-----------+
| Equity attributable to equity | 59,133 | 54,474 | 57,267 |
| holders of the parent | | | |
+----------------------------------+-----------+-----------+-----------+
| Minority interest | 362 | 93 | 104 |
+----------------------------------+-----------+-----------+-----------+
| Total equity | 59,495 | 54,567 | 57,371 |
+----------------------------------+-----------+-----------+-----------+
+----------------------+-----------+-----------+-----------+-----------+
| Condensed | | | | |
| consolidated | | | | |
| cash flow statement | | | | |
| for the six months | | | | |
| ended 30 June 2010 | | | | |
| | | | | |
| | | Unaudited | Unaudited | Audited |
+----------------------+-----------+-----------+-----------+-----------+
| | | six | six | year |
| | | months | months | |
+----------------------+-----------+-----------+-----------+-----------+
| | | ended | ended | ended |
+----------------------+-----------+-----------+-----------+-----------+
| | | 30 June | 30 June | 31 |
| | | | | December |
+----------------------+-----------+-----------+-----------+-----------+
| | | 2010 | 2009 | 2009 |
+----------------------+-----------+-----------+-----------+-----------+
| | Note | GBP'000 | GBP'000 | GBP'000 |
+----------------------+-----------+-----------+-----------+-----------+
| | | | | |
+----------------------+-----------+-----------+-----------+-----------+
| Net cash inflow from | 7 | 3,168 | 11,465 | 21,277 |
| operating activities | | | | |
+----------------------+-----------+-----------+-----------+-----------+
| Investing activities | | | | |
+----------------------+-----------+-----------+-----------+-----------+
| Purchases of | | (1,350) | (744) | (1,566) |
| property, plant and | | | | |
| equipment | | | | |
+----------------------+-----------+-----------+-----------+-----------+
| Proceeds on disposal | | 30 | 16 | 36 |
| of property, plant | | | | |
| and equipment | | | | |
+----------------------+-----------+-----------+-----------+-----------+
| Acquisition of | | (7,749) | - | - |
| subsidiaries | | | | |
+----------------------+-----------+-----------+-----------+-----------+
| Net cash used in | | (9,069) | (728) | (1,530) |
| investing activities | | | | |
+----------------------+-----------+-----------+-----------+-----------+
| Financing activities | | | | |
+----------------------+-----------+-----------+-----------+-----------+
| Dividends paid | | (1,783) | (1,792) | (2,686) |
+----------------------+-----------+-----------+-----------+-----------+
| Purchase of own | | (121) | - | (204) |
| shares | | | | |
+----------------------+-----------+-----------+-----------+-----------+
| Repayments of | | (14) | (71) | (110) |
| obligations under | | | | |
| finance leases | | | | |
+----------------------+-----------+-----------+-----------+-----------+
| Net cash used in | | (1,918) | (1,863) | (3,000) |
| financing activities | | | | |
+----------------------+-----------+-----------+-----------+-----------+
| Net | | (7,819) | 8,874 | 16,747 |
| (decrease)/increase | | | | |
| in cash and cash | | | | |
| equivalents | | | | |
+----------------------+-----------+-----------+-----------+-----------+
| Cash and cash | | (10,934) | (27,681) | (27,681) |
| equivalents at | | | | |
| beginning of | | | | |
| period/year | | | | |
+----------------------+-----------+-----------+-----------+-----------+
| Cash and cash | | (18,753) | (18,807) | (10,934) |
| equivalents at end | | | | |
| of period/year | | | | |
+----------------------+-----------+-----------+-----------+-----------+
+---------------------+--+---------+---------+----------+---------+-----------+---------+
| Condensed | | | | | | | |
| consolidated | | | | | | | |
| statement of | | | | | | | |
| changes in equity | | | Share | | | | |
| for the six months | | Share | premium | Retained | Own | Minority | Total |
| ended 30 June 2010 | | capital | account | earnings | shares | interests | equity |
+---------------------+--+---------+---------+----------+---------+-----------+---------+
| | | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------------+--+---------+---------+----------+---------+-----------+---------+
| | | | | | | | |
+---------------------+--+---------+---------+----------+---------+-----------+---------+
| At 1 January 2009 | | 2,267 | 37,607 | 13,520 | (526) | 51 | 52,919 |
| (audited) | | | | | | | |
+---------------------+--+---------+---------+----------+---------+-----------+---------+
| | | | | | | | |
+---------------------+--+---------+---------+----------+---------+-----------+---------+
| Retained profit for | | - | - | 3,350 | - | 42 | 3,392 |
| the period | | | | | | | |
+---------------------+--+---------+---------+----------+---------+-----------+---------+
| Dividends paid | | - | - | (1,792) | - | - | (1,792) |
+---------------------+--+---------+---------+----------+---------+-----------+---------+
| Share-based | | - | - | 48 | - | - | 48 |
| payments | | | | | | | |
+---------------------+--+---------+---------+----------+---------+-----------+---------+
| At 1 July 2009 | | 2,267 | 37,607 | 15,126 | (526) | 93 | 54,567 |
| (unaudited) | | | | | | | |
+---------------------+--+---------+---------+----------+---------+-----------+---------+
| | | | | | | | |
+---------------------+--+---------+---------+----------+---------+-----------+---------+
| Retained profit for | | - | - | 3,843 | - | 11 | 3,854 |
| the period | | | | | | | |
+---------------------+--+---------+---------+----------+---------+-----------+---------+
| Dividends paid | | - | - | (894) | - | - | (894) |
+---------------------+--+---------+---------+----------+---------+-----------+---------+
| Share-based | | - | - | 48 | - | - | 48 |
| payments | | | | | | | |
+---------------------+--+---------+---------+----------+---------+-----------+---------+
| Purchase of own | | - | - | - | (204) | - | (204) |
| shares | | | | | | | |
+---------------------+--+---------+---------+----------+---------+-----------+---------+
| Exercise of share | | - | - | (36) | 36 | - | - |
| options | | | | | | | |
+---------------------+--+---------+---------+----------+---------+-----------+---------+
| At 1 January 2010 | | 2,267 | 37,607 | 18,087 | (694) | 104 | 57,371 |
| (audited) | | | | | | | |
+---------------------+--+---------+---------+----------+---------+-----------+---------+
| | | | | | | | |
+---------------------+--+---------+---------+----------+---------+-----------+---------+
| Retained profit for | | - | - | 3,712 | - | 258 | 3,970 |
| the period | | | | | | | |
+---------------------+--+---------+---------+----------+---------+-----------+---------+
| Dividends paid | | - | - | (1,783) | - | - | (1,783) |
+---------------------+--+---------+---------+----------+---------+-----------+---------+
| Share-based | | - | - | 58 | - | - | 58 |
| payments | | | | | | | |
+---------------------+--+---------+---------+----------+---------+-----------+---------+
| Purchase of own | | - | - | - | (121) | - | (121) |
| shares | | | | | | | |
+---------------------+--+---------+---------+----------+---------+-----------+---------+
| At 30 June 2010 | | 2,267 | 37,607 | 20,074 | (815) | 362 | 59,495 |
| (unaudited) | | | | | | | |
+---------------------+--+---------+---------+----------+---------+-----------+---------+
Notes to the condensed set of financial statements
1. Basis of preparation
This unaudited condensed set of financial statements has been prepared using
accounting policies consistent with International Financial Reporting Standards
(IFRSs). The same accounting policies, presentation and methods of computation
are followed in the condensed set of financial statements as applied in the
Group's latest annual audited financial statements except for IFRS 3 (Revised
2008) "Business Combinations" which has been adopted in the period. Whilst the
financial figures included in this half-yearly report have been computed in
accordance with IRFSs applicable to interim periods, this half-yearly report
does not contain sufficient information to constitute an interim report as that
term is defined in IAS 34.
The comparative figures are an abridged version of the Group's full financial
statements and, together with other financial information contained in these
interim results, do not constitute statutory financial statements of the Group
as defined in section 434 of the Companies Act 2006.
Those financial statements for the year ended 31 December 2009 have been
delivered to the Registrar of Companies and include an auditors' report which
was not qualified, did not include a reference to any matters to which the
auditors drew attention by way of emphasis without qualifying their report and
did not contain statements under Section 498(2) or 498(3) of the Companies Act
2006.
Going Concern
The Directors are required to satisfy themselves as to whether the condensed set
of financial statements of the Group should be prepared on a going concern
basis. As part of the ongoing duties and activities of the Board there is
continual assessment of the Group's financial and commercial performance. This
review does consider business risks and uncertainties that exist and takes
account of how wider economic circumstances can impact these. It includes due
consideration and assessment of potentially adverse and testing situations. The
Board looks forward and appropriate forecasts of financial performance and
assessment of future business opportunities and challenges are regularly made.
The Directors have also considered the financial support required for these
anticipated income streams and note that during the period the Group's financing
arrangements have been successfully extended until 31 March 2014 for its invoice
discounting facility. The additional GBP5 million revolving credit facility runs
to 23 March 2011 and is currently being renegotiated. The directors believe this
will be achieved on an acceptable basis. Having properly considered the matter
the Directors conclude that they are satisfied that this condensed set of
financial statements should be prepared on a going concern basis.
2. Acquisition of a subsidiary
On 9 June 2010 the Group announced the formation of a 51% owned subsidiary,
Recruit Now Ltd, since renamed to Morson Wynnwith Limited. This subsidiary
acquired the business and assets of Wynnwith Group Limited ('Wynnwith') and the
issued share capital of Wynnwith SRL, its Italian trading subsidiary, out of
administration for a total cash consideration of GBP7,749,000.
Wynnwith provides technical and engineering personnel to a range of blue chip
clients in the aerospace, defence, marine, electronics and rail industries.
Management have adopted IFRS 3 (revised 2008) "Business Combinations" during the
current period. Initial assessment of the fair value of assets acquired is in
excess of the consideration paid and the resultant negative goodwill of
GBP898,000 has been released in full to the income statement.
As the business combination described took place in the final month of the
period the initial assessment of fair value is considered to be provisional and
further assessments are expected to be made and will be reported in full at the
year end.
Exceptional costs relating to the acquisition were GBP217,000, consisting
largely of professional fees. These exceptional costs, combined with the release
of negative goodwill, result in net exceptional income of GBP681,000. Further
significant costs are expected to be incurred throughout the second half of 2010
as reorganisation and integration with the wider Morson Group continues.
3. Exceptional head office relocation costs 2009
In the prior periods, operating costs of GBP434,000 (H1 2009: GBP110,000; H2
2009 GBP324,000) were presented as exceptional in relation to the relocation of
the Group's head office, which occurred in December 2009. This comprised
GBP271,000 (H1 2009: GBP110,000; H2 2009: GBP161,000) relating to the
accelerated depreciation and final write down of fixed assets at the previous
premises at Darwen House and Stableford Hall and GBP163,000 (H1 2009: GBPnil; H2
2009 GBP163,000) of costs directly associated with the move. This included an
accrual for professional fees, relocation costs and overtime costs incurred
which were directly related to the relocation and would not otherwise have been
incurred. No further move costs have been recognised as exceptional in the
current period.
4. Taxation
Tax for the six month period is charged at 28% (six months ended 30 June 2009:
28%; year ended 31 December 2009: 28%). The effective rate of current tax for
the six months ended 30 June 2010 is 22.5% (six months ended 30 June 2009:
30.5%; year ended 31 December 2009: 22.9%) after taking into consideration
expenses not deductible for tax purposes and income not taxable. The effective
tax rate is also impacted by the recognition of research and development tax
credits.
5. Earnings per share
The calculations of earnings per share are based on the following profits and
numbers of shares:
+----------------------------------+-----------+-----------+-----------+
| | Unaudited | Unaudited | Audited |
+----------------------------------+-----------+-----------+-----------+
| | six | six | year |
| | months | months | |
+----------------------------------+-----------+-----------+-----------+
| | ended | ended | ended |
+----------------------------------+-----------+-----------+-----------+
| | 30 June | 30 June | 31 |
| | | | December |
+----------------------------------+-----------+-----------+-----------+
| | 2010 | 2009 | 2009 |
+----------------------------------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------+-----------+-----------+-----------+
| Profit for the financial | 3,712 | 3,350 | 7,193 |
| period/year used for the | | | |
| calculation of basic earnings | | | |
| per share | | | |
+----------------------------------+-----------+-----------+-----------+
| Exceptional items | | | |
| - net gain on acquisition | (323) | - | - |
| (minority interest excluded) | - | 110 | 434 |
| - head office relocation cost | | | |
+----------------------------------+-----------+-----------+-----------+
| Amortisation of intangible | 174 | 611 | 1,222 |
| assets | | | |
+----------------------------------+-----------+-----------+-----------+
| Fair value movements on | (512) | (172) | (530) |
| derivative financial instruments | | | |
+----------------------------------+-----------+-----------+-----------+
| Tax effect of adjustments at 28% | 90 | - | (46) |
| (2009: 28%) | | | |
+----------------------------------+-----------+-----------+-----------+
| Earnings for the purposes of | 3,141 | 3,899 | 8,273 |
| adjusted earnings per share | | | |
+----------------------------------+-----------+-----------+-----------+
Weighted average number of shares:
+----------------------------------+------------+------------+------------+
| | Unaudited | Unaudited | Audited |
+----------------------------------+------------+------------+------------+
| | six | six | year |
| | months | months | |
+----------------------------------+------------+------------+------------+
| | ended | ended | ended |
+----------------------------------+------------+------------+------------+
| | 30 June | 30 June | 31 |
| | | | December |
+----------------------------------+------------+------------+------------+
| | 2010 | 2009 | 2009 |
| | Number | Number | Number |
+----------------------------------+------------+------------+------------+
| Weighted average number of | 44,580,399 | 44,808,750 | 44,766,798 |
| shares for the purposes of basic | | | |
| earnings per share | | | |
+----------------------------------+------------+------------+------------+
| Effect of potentially dilutive | | | |
| ordinary shares: | | | |
+----------------------------------+------------+------------+------------+
| - share options | 730,325 | 342,000 | 453,760 |
+----------------------------------+------------+------------+------------+
| For diluted earnings per share | 45,310,724 | 45,150,750 | 45,220,558 |
+----------------------------------+------------+------------+------------+
| Earnings per share: | | | |
+----------------------------------+------------+------------+------------+
| - basic (pence) | 8.33 | 7.48 | 16.07 |
+----------------------------------+------------+------------+------------+
| - diluted (pence) | 8.19 | 7.42 | 15.91 |
+----------------------------------+------------+------------+------------+
| Adjusted earnings per share: | | | |
+----------------------------------+------------+------------+------------+
| - basic (pence) | 7.05 | 8.70 | 18.48 |
+----------------------------------+------------+------------+------------+
| - diluted (pence) | 6.93 | 8.64 | 18.30 |
+----------------------------------+------------+------------+------------+
The adjusted earnings per share has been calculated on the basis of continuing
operations pre-amortisation, fair value movement on derivative financial
instrument and exceptional items (see notes 2 and 3). The Directors consider
that the adjusted earnings per share calculation gives a better understanding of
the Group's underlying earnings per share.
6. Dividends on equity shares
+-+--------------------------------+-----------+-----------+-----------+
| | Unaudited | Unaudited | Audited |
+----------------------------------+-----------+-----------+-----------+
| | six | six | year |
| | months | months | |
+----------------------------------+-----------+-----------+-----------+
| | ended | ended | ended |
+----------------------------------+-----------+-----------+-----------+
| | 30 June | 30 June | 31 |
| | | | December |
+----------------------------------+-----------+-----------+-----------+
| | 2010 | 2009 | 2009 |
+----------------------------------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------+-----------+-----------+-----------+
| Amounts recognised as | | | |
| distributions to equity holders | | | |
| in the period: | | | |
+----------------------------------+-----------+-----------+-----------+
| -| final dividend for the year | 1,783 | - | - |
| | ended 31 December 2009 of 4.0 | | | |
| | pence per ordinary share | | | |
+-+--------------------------------+-----------+-----------+-----------+
| -| interim dividend for the year | - | - | 894 |
| | ended 31 December 2009 of 2.0 | | | |
| | pence per ordinary share | | | |
+-+--------------------------------+-----------+-----------+-----------+
| -| final dividend for the year | - | 1,792 | 1,792 |
| | ended 31 December 2008 of 4.0 | | | |
| | pence per ordinary share | | | |
+-+--------------------------------+-----------+-----------+-----------+
| | 1,783 | 1,792 | 2,686 |
+-+--------------------------------+-----------+-----------+-----------+
The Directors have proposed an interim dividend of 2.0 pence per share in
respect of the six months ended 30 June 2010
7. Notes to the Group Cash Flow Statement
Reconciliation of profit from operations to net cash from operations
+----------------------------------+-----------+-----------+-----------+
| | Unaudited | Unaudited | Audited |
+----------------------------------+-----------+-----------+-----------+
| | six | six | year |
| | months | months | |
+----------------------------------+-----------+-----------+-----------+
| | ended | ended | ended |
+----------------------------------+-----------+-----------+-----------+
| | 30 June | 30 June | 31 |
| | | | December |
+----------------------------------+-----------+-----------+-----------+
| | 2010 | 2009 | 2009 |
+----------------------------------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------+-----------+-----------+-----------+
| Profit from operations | 5,425 | 5,458 | 10,661 |
+----------------------------------+-----------+-----------+-----------+
| Depreciation of property, plant | 381 | 440 | 1,075 |
| and equipment | | | |
+----------------------------------+-----------+-----------+-----------+
| Amortisation of intangible | 174 | 611 | 1,222 |
| assets | | | |
+----------------------------------+-----------+-----------+-----------+
| Exceptional items | | | |
+----------------------------------+-----------+-----------+-----------+
| - net gain on acquisition (see | (681) | - | - |
| note 2) | | | |
+----------------------------------+-----------+-----------+-----------+
| - head office relocation cost | - | 110 | 163 |
| (accelerated depreciation amount | | | |
| included in depreciation line) | | | |
| (see note 3) | | | |
+----------------------------------+-----------+-----------+-----------+
| Share option charge | 58 | 48 | 96 |
+----------------------------------+-----------+-----------+-----------+
| (Profit)/loss on sale of fixed | (17) | 4 | (2) |
| assets | | | |
+----------------------------------+-----------+-----------+-----------+
| Operating cash flows before | 5,340 | 6,671 | 13,215 |
| movements in working capital | | | |
+----------------------------------+-----------+-----------+-----------+
| (Increase)/decrease in | (11,006) | 718 | 5,565 |
| receivables | | | |
+----------------------------------+-----------+-----------+-----------+
| Increase in payables | 11,273 | 5,436 | 5,893 |
+----------------------------------+-----------+-----------+-----------+
| (Increase)/decrease in | (815) | 343 | 534 |
| inventories | | | |
+----------------------------------+-----------+-----------+-----------+
| Cash generated by operations | 4,792 | 13,168 | 25,207 |
+----------------------------------+-----------+-----------+-----------+
| Income taxes paid | (942) | (952) | (2,419) |
+----------------------------------+-----------+-----------+-----------+
| Interest paid | (682) | (751) | (1,511) |
+----------------------------------+-----------+-----------+-----------+
| Net cash generated from | 3,168 | 11,465 | 21,277 |
| operating activities | | | |
+----------------------------------+-----------+-----------+-----------+
8. Post balance sheet event
On 9 July 2010 the business, contracts and fixed assets of Acetech Personnel
Limited ("Acetech") were acquired for a cash consideration of GBP2.35 million.
Acetech is a wholly-owned subsidiary of Babcock International Group PLC
("Babcock") and provides recruitment and workforce services, on a preferred
supplier basis, to Babcock's UK Marine and Rail businesses. Acetech currently
engages approximately 450 contractors providing services under these contracts.
Contracts have been agreed with Babcock for a minimum five year term for the
continuation of supply of contractor
Independent review report to Morson Group PLC
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 June
2010, which comprises the condensed consolidated income statement, the condensed
consolidated statement of comprehensive income, the condensed consolidated
balance sheet, the condensed consolidated cash flow statement, the condensed
consolidated statement of changes in equity and related notes 1 to 8. We have
read the other information contained in the half-yearly financial report and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
This report is made solely to the company in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim
Financial Information Performed by the Independent Auditor of the Entity" issued
by the Auditing Practices Board. Our work has been undertaken so that we might
state to the company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the company for our review work, for this report, or for the conclusions we have
formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the half-yearly
financial report in accordance with the AIM Rules of the London Stock Exchange.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly financial
report have been prepared in accordance with the accounting policies the group
intends to use in preparing its next annual financial statements.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 30 June 2010 is not prepared, in all material
respects, in accordance with the AIM Rules of the London Stock Exchange.
Deloitte LLP
Chartered Accountants and Statutory Auditors
Manchester, United Kingdom
21 September 2010
This information is provided by RNS
The company news service from the London Stock Exchange
END
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