TIDMMRN
RNS Number : 3502D
Morson Group PLC
22 March 2011
For Immediate Release 22 March 2011
Morson Group PLC
("Morson" or "the Group")
Preliminary results for the year ended 31 December 2010
Morson (AIM: MRN.L), the UK's leading provider of technical
engineering personnel and project design solutions, supplying over
10,000 highly skilled personnel to the aerospace and defence,
nuclear and power, rail and other technical industries, is pleased
to announce its preliminary results for the year ended 31 December
2010.
Financial Highlights
Solid trading performance across the Group aided by our focus on
core activities:
-- Group revenues up 4.8% to GBP457.6 million (2009: GBP436.6
million);
-- Group net fee income (gross profit) up 0.9% to GBP35.1
million (2009: GBP34.8 million);
-- profit before tax down 2.9% to GBP9.4 million (2009: GBP9.7
million);
-- profit after tax up 3.9% to GBP7.5 million (2009: GBP7.2
million);
-- adjusted profit before tax down to GBP8.1 million (2009:
GBP10.8 million);
-- adjusted basic earnings per share down 23.9% to 14.06 pence
(2009: 18.48 pence)( ) ;and
-- basic earnings per share down 2.4% to 15.69 pence (2009:
16.07 pence).
Business Highlights
-- Continued resilience across the Group.
-- Average contractor numbers placed with clients up 12% to
10,200 (2009: 9,100).
-- Two acquisitions completed and fully integrated into the
Group during the year, including the Group's largest ever
acquisition, the business and assets of Wynnwith Group Limited.
-- Core markets remain strong and current trading is in line
with Directors' expectations.
-- Proposed final dividend of 4.0 pence per share (2009: 4.0
pence) bringing the total dividend for the year to 6.0 pence (2009:
6.0 pence).
( )
( ) Before amortisation of GBP620,000 (2009: GBP1,222,000),
exceptional gain on acquisition of businesses GBP1,249,000 (2009:
GBPnil), exceptional restructuring costs GBP404,000 (2009:
exceptional head office relocation cost GBP434,000) and fair value
gain regarding the derivative financial instrument GBP1,063,000
(2009: 530,000)
Commenting on the outlook Gerry Mason, Non Executive Chairman,
said:
"Our order book for managed vendor opportunities in 2011 and
2012 remains strong. Morson has a market leading position in the UK
within the Aerospace, Nuclear and Rail markets and we continue to
look into expanding into other complementary areas with a
particular focus on overseas markets and permanent business. Whilst
we expect trading through 2011 to remain challenging, these
qualities position the Group well to increase its market share as
the economy recovers. In due course there is significant
opportunity to see growth in these areas and this, coupled with new
customer gains, will further strengthen our enviable client
portfolio.
Our strategy for 2011 is to focus on our core strengths, develop
new sectors and revenue streams and select new geographic locations
that will put the Group in a strong position through these unique
and uncertain market conditions. We are capitalising on our strong
brand image and competitive advantages and will continue to
leverage our unique client base.
The Board views Morson's prospects for the coming year with
confidence."
For further information please contact:
Morson Group plc 0161 707 1516
Ged Mason, CEO
Paul Gilmour, Group Financial Director
Brewin Dolphin Investment Banking (Nomad) 0845 213 4730
Matt Davis
Nikki Cooper
Buchanan Communications 020 7466 5000
Diane Stewart, James Strong, Carrie Clement
CHAIRMAN'S STATEMENT
INTRODUCTION
During the year under review I am pleased to report that Morson
Group PLC ("Morson" or "the Group") has performed well and
continued to demonstrate the inherent resilience and strength of
the Morson business model, which has enabled our businesses to
deliver another set of solid results. These have been achieved
against an ongoing backdrop of a very challenging market and in
spite of the severity of some of the recent cut-backs announced in
the Strategic Government Defence Review (SGDR). This, as previously
announced, has resulted in specific loss of business from certain
areas within aerospace, most particularly affecting 2011.
Our core market positions remain strong. During the year we
enhanced these with the largest acquisition yet made by the Group
of the business and assets of Wynnwith Group Limited ("Wynnwith")
in June 2010, resulting in a net gain on the transaction of
GBP1,274,000. Further details of this acquisition are given below
but I am pleased to report that the integration of this business
has been a major aim and achievement of the second half of the
year. Whilst not contributing to Group operating profits before
exceptional items in 2010, we look forward to Wynnwith delivering
profits moving forward, contributing to wider growth opportunities
and increasing the Group's market share when economic improvement
comes through.
RESULTS
Key financial and business highlights include:
Financial Highlights
Solid trading performance across the Group aided by our focus on
core activities:
-- Group revenues up 4.8% to GBP457.6 million (2009: GBP436.6
million);
-- Group net fee income (gross profit) up 0.9% to GBP35.1
million (2009: GBP34.8 million);
-- profit before tax down 2.9% to GBP9.4 million (2009: GBP9.7
million);
-- profit after tax up 3.9% to GBP7.5 million (2009: GBP7.2
million);
-- adjusted profit before tax down to GBP8.1 million (2009:
GBP10.8 million);
-- adjusted basic earnings per share down 23.9% to 14.06 pence
(2009: 18.48 pence);and
-- basic earnings per share down 2.4% to 15.69 pence (2009:
16.07 pence).
Business Highlights
-- Continued resilience across the Group.
-- Average contractor numbers placed with clients up 12% to
10,200 (2009: 9,100).
-- Two acquisitions completed and fully integrated into the
Group during the year, including the Group's largest ever
acquisition, the business and assets of Wynnwith Group Limited.
-- Core markets remain strong and current trading is in line
with Directors' expectations.
-- Proposed final dividend of 4.0 pence per share (2009: 4.0
pence) bringing the total dividend for the year to 6.0 pence (2009:
6.0 pence).
( ) Before amortisation of GBP620,000 (2009: GBP1,222,000),
exceptional gain on acquisition of business GBP1,249,000 (2009:
GBPnil), exceptional restructuring costs GBP404,000 (2009:
exceptional cost re Head Office relocation GBP434,000) and fair
value gain on the derivative financial instrument GBP1,063,000
(2009: 530,000)
STRATEGY
A key foundation for Morson in 2010 has been the Board's focus
on core capabilities and delivering the underlying Group strategy,
including:
-- maintaining our market position in core sectors of Aerospace
and Defence, Nuclear Energy and Process and Rail and Transport;
-- starting to exploit the potential of the new Head Office
facility;
-- investment into new areas and services, for example in
overseas locations;
-- ongoing review of all overhead areas, reflecting changing
business levels, to improve efficiencies;
-- appropriate headcounts and direct spend reduction; and
-- acquisitions which deliver future growth opportunities.
In order to deliver our strategy, it was important for us to
take action during the year to drive profitability throughout the
business to protect operating margins. However we also made and
continue to make a measured commitment to the investment which the
Board believes is necessary to build the Group in preparation for
the next cycle of growth, despite the uncertainty we face within
the current economy.
There are a number of positive factors that will drive this
momentum over the coming years, which include engineering and
technical skills shortages, increased demand for flexible
employment and new client opportunities in terms of sectors
supplied and contractor disciplines.
We feel that in the UK and globally, the demand for power will
drive the energy market forward inexorably and an element of this,
whilst acknowledging the current global focus on this area with the
unfortunate events in Japan, will create a nuclear renaissance
requiring significant demand for expertise, talent and innovation,
which we are well placed to support. Both Morson International and
Morson Projects have a strong position and history in providing
specialist design solutions and unique engineering skills to
nuclear and power new build, maintenance and decommissioning
project design and management. We have excellent relationships with
key companies in this sector, such as British Energy (EDF),
Sellafield and National Grid.
During 2011 we will be actively looking to increase our network
of overseas offices and contracts building on the 2010 expansion
that saw subsidiaries in Brazil, Colombia, Germany and Italy added
to the Group. We aim to achieve this through our existing client
base and developing new international opportunities through our
Business Development Team.
Morson Projects remains a differentiating aspect of our client
offering and reinforces our understanding of many of our client's
requirements. Our work with Bombardier on the Learjet programme has
been one that has engaged our engineers in challenging and
innovative areas of composite design, building skill sets and
expertise through the use of pioneering composite material in this
21(st) century project.
ACQUISITIONS
During the period we have acquired the trade and assets of
Acetech Personnel Limited ("Acetech") and the trade and assets of
Wynnwith Group Limited ("Wynnwith").
Acetech was the acquisition of the business and assets of
Babcock International Group PLC's ("Babcock") "in-house" provider
of temporary skilled trades within UK Marine, Defence and Rail
divisions. Morson had and maintains an established position with
Babcock as one of their largest suppliers of technical skills, in
particularly within Nuclear. This acquisition helps cement the
relationship with a key market leader in the engineering sector,
whose areas of activity and expertise align very well with those of
Morson and thus gives us opportunities to further develop our
footprint within the enlarged Babcock group, which has subsequently
grown substantially through its own acquisition of VT Services.
Wynnwith was a great opportunity identified and taken by Morson.
Here we acquired, via a controlling stake in a joint venture
company, Morson Wynnwith Limited, the business and assets of
Wynnwith Group Limited that had passed into administration. The
Group and fellow shareholders of Morson Wynnwith Limited were
uniquely well placed to negotiate for the business. A high level of
expertise was prevalent in our bid team and we have no doubt that
this and the strength of the wider Morson Group added to the
quality of our bid and our business case. I am pleased to report
that a gain has been realised on this transaction as the price
negotiated was lower than the subsequently assessed accounting fair
value of the assets acquired.
Wynnwith was a long-standing competitor which had long term
contracts operating in predominantly Aerospace and Defence markets
and an excellent brand and reputation. We secured the business
activity in such a way as to ensure continuity to clients and
contractors and this has strengthened and expanded Morson's client
base. During 2010 we focused on restructuring and integrating
Wynnwith with Morson Group policies and operations and realigned
its cost base. In February 2011 we announced the acquisition of the
remaining minority stake for consideration of GBP4.0 million,
bringing the business entirely within the Group. We are confident
going forward that the business acquired will consolidate our
future position and produce a favourable return on our
investment.
PEOPLE
On behalf of the board I would like to take this opportunity to
thank all management and staff during these difficult and
unprecedented market conditions for their loyalty, support and hard
work during this past trading period.
We really have an exceptional workforce across all our areas of
the business. In a services sector, human resource focused business
it is rare to have so many long term employees committed to and
enhancing the quality of the services we provide. I would also like
to warmly welcome Wynnwith and Acetech staff to the Group. I firmly
believe if we all remain focused and determined we will grow
stronger and even more resilient during the coming years.
DIVIDEND
The Board proposes payment of a final dividend of 4.0p resulting
in a full year dividend of 6.0p per share. This is in line with
last year, which demonstrates the Board's confidence in the future
prospects for the Group.
PROSPECTS AND OUTLOOK
Our business development pipeline for managed vendor
opportunities remains strong. We have market leading UK positions
within the Aerospace, Nuclear and Power and Rail markets and are
looking to expand into other complementary areas including overseas
markets and permanent business. Whilst we expect trading through
2011 to remain challenging, these qualities position the Group well
to increase its market share as the economy recovers. In due course
there is significant opportunity to see growth in these areas and
this, coupled with new customer gains, will further strengthen our
enviable client portfolio.
Following the Government's review of defence spending, it is
clear that its funding on certain defence programmes will be at
lower levels. However the review also provides clarity and
certainty on a number of other projects that we now know will
require our engineering manpower. These include the Queen Elizabeth
and Prince of Wales aircraft carriers, helicopter maintenance and
transport infrastructure such as Crossrail and Regional Rail
Upgrades.
The majority of Morson's business is focused on the private
sector, where the recovery is more likely to occur in the medium
term. Here there are some exciting projects that include the civil
aviation emphasis on design change to improve fuel efficiency,
Nuclear and Power investment and planning and a general return of
our clients to growing their business lines once more requiring our
support, capability and market knowledge.
Our strategy for 2011 and beyond is to drive profitability
through a focus on our core strengths, develop new sectors and
revenue streams and select new geographic locations that will put
the Group in a strong position through these unique and uncertain
market conditions. We are capitalising on our strong brand image
and competitive advantages and will continue to leverage our unique
and outstanding client base.
The Board views Morson's prospects for the coming year with
confidence.
GERRY MASON
NON EXECUTIVE CHAIRMAN
BUSINESS REVIEW
INTRODUCTION
Morson operates through two main business areas:
Recruitment
Morson Human Resources Limited, trading as Morson International,
and Morson Wynnwith Limited, provide recruitment solutions across a
range of technical and engineering industries. Together they
recruit for a wide variety of roles including technical,
non-technical, manual, skilled trades and professional. The
principal business activity is the supply of temporary staffing
solutions, which are offered through a number of models including
recruitment process outsourcing, managed and neutral vendor
contracts and ad hoc or "spot" supply. In addition, we recruit for
permanent staff roles across professional technical disciplines and
have a dedicated search and select team.
Engineering Design Consultancy
Morson Projects Limited provides outsourced engineering design
and engages over 600 personnel housed within modern, fully equipped
offices, utilising the latest design technology. We offer an
innovative and complementary service to our clients in a committed,
partnership environment. Morson Projects' engineering capability
enables it to offer complete multi-disciplined project management
services led by suitably qualified and experienced personnel.
Morson International, Morson Wynnwith and Morson Projects work
both as separate businesses and collaboratively to deliver the
highest standards of service to our clients. Examples of high
profile projects that this collaborative partnership approach has
been deployed on include; the Joint Strike Fighter, nuclear design
projects at Sellafield site, Airbus A380 and Bombardier Learjet. We
are committed to 'Best Practice' and continuous improvement
throughout the business, helping us to provide and develop the high
quality of these services.
The Group operates within the Rail, Power, Aerospace, Defence,
Nuclear, Telecommunication ("Telecoms"), Marine, Oil & Gas and
Automotive sectors, but also supplies engineering skills to many
other niche markets. We work across the UK in 35 locations (being
25 stand alone branches and 10 offices co-located at client sites),
from Thurso to Plymouth, and internationally through a strategic
network of 7 overseas offices in Italy, Germany, South Africa,
Serbia, Brazil, Colombia and Australia.
MARKET REVIEW AND POSITION
The world has been operating through an extended recessionary
period. The Group does have an acknowledged bias towards the UK,
which accounts for approximately 95% of revenues. Thus the UK
recession has affected most of our markets and our public and
private sector clients. Morson has sought to successfully navigate
these conditions by focusing on our core capabilities, offering our
clients value and cost savings through supply chain rationalisation
and reducing our own costs and flexing resources to meet demand. At
the same time we continue to make balanced investments in new
overseas operations and contracts which offer future growth
potential including areas such as Europe, South America, Africa and
others. We have strong capability in a number of robust markets
where candidate quality is a significant determinant for selection.
The Group remains well placed with a broad range of sector exposure
and end-client activities, for example maintenance of nuclear and
rail asset infrastructure, which lend a high degree of resilience
to the business.
The recession provides opportunities for strong businesses to
reinforce their market position and this is what we have achieved
over the year. We have concentrated our resources on the more
resilient parts of the market and have developed our services to
ensure that they are relevant to our clients in an evolving
marketplace. This has allowed us to continue to grow parts of our
business despite the prevailing economic backdrop and lost
contracts causing decline in some sectors. Our aerospace and
defence sector, for example, grew revenues by 6%.
Within Recruitment our focus has always been on that of
temporary rather than permanent and this will remain so. This has
helped our performance through the recession as permanent
recruitment is a more cyclical area of business. However we see
opportunity in a recovering market, and with some of the skill-sets
acquired with the Wynnwith transaction, aim to do more in the
permanent area and hence to increase the contribution from this
activity.
In the UK we have niche positions in numerous markets and have a
market leading share in our chosen core sectors of Aerospace,
Nuclear and Rail. We have 35 offices in the UK representing, in our
view, the most comprehensive and well-placed coverage amongst all
our competitors. This is a conscious approach giving access to
several UK client national accounts where our business is a natural
market leader as well as to local business communities. We will
continue to invest in management and deepen our skill base, to
position emerging sectors of the group for growth and review
unrepresented geographic areas.
SECTOR REVIEW
Morson International and Morson Wynnwith: Provision of Temporary
and Permanent Recruitment Services
The Group's temporary and permanent recruitment segment
contributes 91.8% of Group sales and 81.1% of Net Fee Income (gross
profit, "NFI"). We have seen the segment deliver a 4.6% growth in
net revenue (revenue to third parties) to GBP420.2 million (2009:
GBP401.8 million) however a difficult trading environment has seen
gross margin reduce to 6.8% (2009: 7.0%) delivering gross profits
of GBP28.5 million (2009: GBP28.1 million) (segment gross margins
are based on net revenue).
Aerospace and Defence
Our largest sector which accounts for approximately 40% of the
Group's revenues, has again delivered a very good performance,
benefiting from core substantial agreements with Xchanging/BAE
Systems, Airbus and Thales and following the acquisition of
Wynnwith, with GKN and Finmeccanica Group. Morson's strength in
this sector is its capability that spans both military and civil
aircraft programme development.
However the effect on our clients' budgets which resulted from
the Government's defence spending review in late October had an
immediate impact on contractor numbers. Most particularly we
experienced a significant downturn from the unexpected cancellation
of the NIMROD and Harrier programmes. This has clearly affected the
outlook for military aerospace business in the forthcoming period.
However, our presence in this area is still very substantial and
BAE Systems has many business strands and activities that include
overseas customers, the Queen Elizabeth and Prince of Wales
Carriers, Land and Marine Systems as well as its core ongoing
requirements for the UK military, all of which require manpower
support.
The civil aerospace market is very competitive and investment
into new "green" technologies to deliver savings on fuel via weight
reduction and improved design is very prevalent in our clients'
thinking. This and the need for reduced engine maintenance provide
a driver for investment in engineering research and development,
which is a fundamental requirement for them. Morson has extensive
experience of providing these skills and is working with clients in
the enhancement and modification of existing and conceptual
aircraft and engine programmes.
Nuclear Energy and Process
The second half of 2010 showed a reduction in revenue due to our
Magnox contract falling away, a contract lost on price grounds.
Aside from this we experienced broadly steady levels of activity in
this sector during the year. The UK nuclear new build programme has
been initiated, albeit as expected at low activity levels in these
planning stages and with varying degrees of urgency, by some of the
major national and international power providers and consortia
which have been set up to bid for and deliver power to the market.
Morson is well placed to aim for preferred supplier status with
these as they develop and has already secured contracts with EDF
Energy and Horizon Nuclear.
Looking forward we would acknowledge that the current
unfortunate events in Japan might give cause for contemplation and
reassessment of the nuclear option. However several countries have
already reconfirmed their nuclear programmes are to continue and we
feel that for the UK's energy security it will be necessary to have
a strategic proportion of that supply provided via nuclear
power.
Morson also historically has relationships with many of the
"tier one" suppliers, i.e. companies who will undertake large
contracts for civil and engineering build and delivery for the
station operator, and has been providing engineering talent in this
field for over 30 years. For example 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, with our
branch network in close proximity to all planned sites, 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 also the engineering consultancy
services we provide through Morson Projects, with the timing
dependent on government and wider macro economic factors.
At present the maintenance of existing power stations and their
output is also key to the UK 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 and
future nuclear power capability.
Rail and Transport
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, particularly affected by the loss of
the "Trackforce" contract with Metronet as previously
highlighted.
Within the London Underground environment there has been a
period of change as Transport for London ("TfL") has consolidated
some operations previously let under Metronet and Tubelines
operations. We are pleased to advise that during 2010 we have bid
for and been awarded renewed contracts to extend our supply into
this wider business. We provide both a variety of white collar
engineering skills and also the hands on skills of track
workforces, safety critical resource and other track maintenance
and renewal skills.
Overground activity with Network Rail has been at a low level.
However we believe this is set to increase via maintenance works
spend and also the London Crossrail project. We continue to promote
our market position in this area and have gained through 2010 the
addition of contracts to support Babcock Rail and Thales. The
Wynnwith acquisition also adds to several other client
relationships within the rail sector that we aim to develop.
Morson Projects: Provision of Engineering Design Consultancy and
Management
Morson Projects is the Group's engineering and design
consultancy business and contributes 8.2% of Group sales and 18.9%
of Net Fee Income. Morson Projects has delivered a 7.6% growth in
net revenue however again due to a difficult trading environment
has seen gross margin reduce to 17.7% (2009: 19.3%) delivering
gross profits of GBP6.6 million (2009: GBP6.7 million).
The key contracts in the Aerospace sector have been on the
Bombardier Learjet 85 and the Airbus A350 and work in these areas
continues into 2011. The work on these contracts has allowed Morson
Projects to create one of the UK's largest teams of composite
design specialists, which positions the company well for the
industry's continuous progression to lighter airframes and thereby
more fuel efficient aircraft. A key client EADS has selected Morson
as part of its reducing supply chain, which positions the business
well to meet EADS' target of greater outsourced work packages.
One of the strengths of Morson Projects' business model is the
multi industry exposure which allows complementary skills to be
used to support peak demands across the two core markets of
Aerospace and Nuclear. The sales growth in 2010 has also required
further recruitment of staff and in particular of graduates, which
represents a long term strategic investment to support the
anticipated future demand for technical engineering talent.
Key framework agreements and contracts with Sellafield, Alstom,
Siemens and Regional Electricity Companies continue to supply many
repeat project opportunities, which positions us well for the UK
planned Nuclear New Build (NNB), renewable energy focus and the
resulting power infrastructure upgrades.
Alongside the focus on supporting the UK's demand, Morson
Projects have also won projects during the past 12 months in
Germany, France, Sweden, Denmark, Canada, US and South Korea, which
demonstrates a global competitiveness and demand for our highly
skilled resources and project solutions.
Other Markets
The Group continues to provide to and look to expand into a
number of other markets that hold potential for future growth. For
example we are increasing our provision of information and
communication technology ("ICT") contractors to our UK client
community and the Telecoms market holds potential with customers
who have global overseas operations. Telecoms Operations commenced
during 2010 in Brazil and Colombia and in early 2011 in South
Africa. Other overseas investment opportunities and regions are
being explored, for example we opened an office in Hamburg, Germany
to support European Aerospace activity. In the period the total
revenues attributable to all overseas activities were relatively
minor at GBP24.0 million, however collectively we expect these to
grow through 2011 and beyond.
MORSON GROUP STRATEGY
Strategy
The Group's existing strategic aim is to focus on our core
technical market, retaining existing market leading positions,
whilst expanding sector spread and niche expertise. Our Recruitment
and Engineering Consultancy segments complement each other and give
us great understanding of our clients' needs. We continue to seek
to grow organically and will consider acquisition opportunities
that fit with our business and strategic aims.
Client Satisfaction
Long term partnerships are the foundation of Morson's business,
so the need to build and maintain strong relationships with clients
is of great importance. Some of the Group's client relationships
extend beyond thirty years and this has given us a deeper
understanding of their needs, helping them and us to deliver
projects and services that exceed expectations.
Morson's approach is to look at how we can best serve our
clients, and often their customers too, while ensuring we provide a
competitive and high quality service. This requires an intimate
knowledge of our clients' working environment, their priorities and
aspirations and of course the technical recruitment and engineering
design market.
Morson regularly collects feedback at both the project delivery,
service and contractor level using a variety of techniques
including inherent key performance indicators, proactive client
spend information, feedback forums and for larger accounts, face to
face client surveys.
Organic Growth
Our markets continue to offer good opportunities and our new
sales performance in 2010 was solid. However, due to the prevailing
economic conditions it was more difficult to secure additional
revenues from existing clients.
Our central business development team pursues complex, long term
contracts which bring together a wide range of the Group's skills
and generate high quality and recurring revenues. Securing and
renewing major contracts is an important component of our
growth.
Investment
Targeted, measured and controlled investment is always necessary
to seek to grow income streams. This is done on a wide variety of
scales throughout the business. Some examples of these investments
include:
-- new, improved or expanded office infrastructure, in the UK or
abroad;
-- commitment to graduate recruitment and staff training;
-- latest version CAD (Computer Aided Design) software and
hardware;
-- bespoke communication and management systems platforms;
-- commitment to attract, retain and develop talented
individuals; and
-- development of new service offerings or sector expansion.
OUR PEOPLE
We are very proud of our colleagues who are our most important
assets, being the drivers of profitability, growth and performance
within our business. We recognise that our staff must be well
motivated and experienced and we encourage participation and career
progression at all levels. Through this we will continue to deliver
the service that our clients expect and deserve. We ensure our
employees remain motivated by providing a strong support network,
offering learning and development opportunities and providing
performance-based bonus schemes. We have won and been nominated for
several awards and we are pleased to be able to reward long serving
members of staff. This year saw ten 10 year, one 20 year and one 30
years service awards. We firmly believe our success flows from the
commitment and energy of all our colleagues who "go that extra
mile".
Morson is committed to quality of service and the satisfaction
of the clients it serves. We strive for the highest standards of
service excellence at all times. Long term client relationships
include BAE Systems (30 years), British Energy (24 years) and Rolls
Royce (18 years) and over 70% of our major (largest 25) client base
have been with us for more than 10 years. This demonstrates the
innovation, evolution and understanding with which we have provided
services to our clients.
Within the recruitment industry, Morson is equally as committed
to candidate service. As a measure of our dedication to candidate
care, Morson has recently been awarded two 'RecruitRank' awards,
which are based solely on the feedback of work seekers and are
therefore an objective award, demonstrating true capabilities in
delivering excellent service to candidates. We would like to thank
our valued contractors working on assignments for their loyalty,
expertise and commitment which is very much appreciated. We are
continually investing in our information systems platforms and
interaction with our candidates and listening to feedback from them
to develop and improve our service.
2010 ACHIEVEMENTS AND OUTLOOK
Morson has performed well and continued to deliver substantial
profits despite the difficult economic cycle, the contracts we lost
with Magnox and Metronet Track Services as reported last year, and
latterly the strategic defence review. This reflects our spread of
sector coverage, focus on temporary rather than permanent
recruitment and Morson Projects' outsourcing capacity. Our core
resource skills capability will allow us to build on this
experience, developing our longer-term prospects and future
opportunities. Morson provides scarce engineering talent to
specialised engineering sectors, largely 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
re-tenders. We have won new business with clients in and connected
to all our specialist sectors, and expect further positive progress
over the next twelve months.
The acquisitions we made during the year consolidated our
position as the market leader in our field. Acetech allowed Morson
to significantly increase its services to the Babcock Group and
secure long-term contracts within the rail and marine sectors,
strengthening our expertise and increasing our market share.
Wynnwith has reinforced Morson's dominance within the Aerospace
and Defence market with the addition of excellent contracts and
relationships with GKN, Agusta Westland and the wider Finmeccanica
Group. Additional niche benefits include new skill-sets within its
database of contractors and the capability to supply pilots to the
world's airlines. Wynnwith has also provided additional geographic
coverage to support our customers in the UK, adding Woking and
Yeovil offices, plus a European base in Milan.
The contractor headcount for the acquisitions added over 2,500
to Morson contractor numbers and each comes with a valuable
database, bringing Morson's total database of contractors to over
400,000.
Inevitably there is restructuring necessary and the cost
relating to this, with regards only to the two businesses acquired,
has been charged within 2010 as an exceptional item. There has been
a determined and successful effort made when undertaking this
restructuring to focus on back office synergies and support
functions, whilst maintaining the continuity and quality of client
facing operations and recruitment. This exercise has provided
synergies, helping overcome the losses that the acquired Wynnwith
business was making and we anticipate these income streams giving a
positive contribution henceforth.
It has been notable that the integration of the Wynnwith and
Acetech businesses into Morson has progressed timely and
efficiently. The cultural fit of the organisations has been
remarkably close and in terms of client focus, quality of service,
delivery and business ethics the Board are very pleased with the
outcome achieved. All involved are now focused on maximising the
opportunities created by the larger Group.
On 11 February 2011 the Group announced the acquisition of the
entire minority non-controlling interest of Morson Wynnwith Limited
for a consideration of GBP4.0 million, making it a 100% owned
subsidiary. Bringing together the Group and the acquired businesses
gives Morson an added impetus, providing greater business
development opportunities across the Group as a whole and more
scope for Morson Projects to cross-sell its services.
Outlook
During 2010, the Group's order book has remained stable and we
have experienced some slowdown in the progression of new contracts
coming out to tender during the year. However looking forward to
2011 there is an increase in tender enquiry and activity and there
are few re-bids of our main recruitment contracts.
It is an accepted feature of the specialist staffing market that
temporary hiring tends to be more robust in a downturn and hence
our bias in this area has helped stability. However, the permanent
recruitment market is now showing some signs of improvement and
therefore Morson has targeted this as a potential growth area and
will be making a measured investment in this market.
The Group's key markets remain attractive, with a number of
significant long term projects that give growth opportunities via
organic activity and market share. The scale of the enlarged
Group's operations, our expertise and track record will place us in
a strong position from which to benefit and give us confidence in
the outlook for the future.
FINANCIAL REVIEW
Some Key Performance Indicators are displayed in the table set
out below.
Key Performance Indicators
2010 2009 Variance
GBP'000 GBP'000 GBP'000 %
Revenue 457,639 436,627 21,012 4.8
Net Fee Income (gross profit) 35,095 34,773 322 0.9
Adjusted operating profit
(see below) 9,215 12,317 (3,102) (25.2)
Adjusted profit before tax
(see below) 8,113 10,806 (2,693) (24.9)
Conversion ratio (adjusted
operating profit to NFI) 26.3% 35.4%
Adjusted operating profit
margin 2.0% 2.8%
Interest cover (being ratio
of other finance costs to
adjusted operating profit
-see below) x8.4 x8.2
Dividend cover measured against
adjusted basic earnings per
share (see note 7) 2.3 3.1
Net debt (see note 8) 23,196 10,934 12,262 112.1%
Average net debt during the
year 22,796 21,130 1,666 7.9%
Number Number Number
Average contractor numbers
(not in '000) 10,200 9,100 1,100 12.1%
Derivation of key performance indicators from Consolidated
Income Statement
2010 2009
GBP'000 GBP'000
Operating profit 9,440 10,661
Add: amortisation of intangible assets 620 1,222
Less: exceptional gain on acquisition
of business (1,249) -
Add: exceptional restructuring costs 404 -
Add: exceptional head office relocation
cost - 434
Adjusted operating profit 9,215 12,317
Profit before tax 9,401 9,680
Less fair value gain on financial instrument (1,063) (530)
Add: amortisation of intangible assets 620 1,222
Less: exceptional net gain on acquisition
of businesses (1,249) -
Add: exceptional restructuring costs 404 -
Add: exceptional head office relocation
cost - 434
Adjusted profit before tax 8,113 10,806
Derivation of key performance indicators from Notes to the
Consolidated Income Statement regarding segmental reporting
2010 2009 Variance
GBP'000 GBP'000 GBP'000 %
Morson International: temporary
and permanent recruitment
services
Operating profit 9,101 10,096
Add: amortisation of intangible
assets 620 1,222
Less: exceptional gain on
acquisition of business (1,249) -
Add: exceptional restructuring
costs 404 -
Add: exceptional head office
relocation cost - 90
Adjusted segmental operating
profit 8,876 11,408 (2,532) (22.2%)
Morson Projects: engineering
design consultancy and management
Operating profit 1,707 1,986
Add: exceptional head office
relocation cost - 344
Adjusted segmental operating
profit 1,707 2,330 (623) (26.7%)
These results show resilience and consistency against a backdrop
of two notable contract losses, a rarity for the Group, and a
severe recession in the UK economy, which contains the majority of
the Group's activity. Underlying revenues across the Group have
been boosted by the acquisitions in the year, and whilst adjusted
profit before tax has decreased compared to 2009, it remains
substantial. The average number of contractors measured over the
whole period has increased, aided by the acquisitions in the
period. Our working capital has been controlled, however has
clearly been impacted by the acquisitions made, the flexible nature
of the finance facility and the headroom within it demonstrating
the suitability of this funding to such acquisition opportunities.
We have focused on maintaining or improving market share which
carries forward as opportunity to the future. Underlying operating
margins have seen pressures as the gross margin achievable has been
reduced, though action has been taken to address this with
appropriate reductions to operating overheads, particularly in
light of the reductions caused by the Governments' Strategic
Defence Review. The costs of such operational reductions have been
taken as a charge within the results for the year 2010 and not as
an exceptional item.
Acquisitions contribution
Some performance measures of the acquisitions of Acetech and
Wynnwith are set out to aid understanding of the performance of
these and the wider Group. Whilst Morson Wynnwith is a corporate
entity, now 100% owned, that will file separate Statutory Report
and Accounts, Acetech is completely absorbed within Morson
International. Results relate to the period since acquisition and
thus consolidated within the Group financial statements. In future
years these activities will not be separately reported as they are
simply part of the main temporary and permanent recruitment
business segment.
Wynnwith: Revenues GBP44.1 million. NFI GBP3.6 million, of which
GBP0.4 million is permanent, and adjusted operating profit (i.e.
before and exceptional items and amortisation) GBPnil
Acetech: Revenues GBP6.9 million, NFI GBP0.4 million, all
relating to temporary activity, and adjusted operating profit (i.e.
before and exceptional items and amortisation) GBP0.2 million
Revenue
2010 has seen Group revenue increase by 4.8% to GBP457.6 million
(2009: GBP436.6 million), with acquisitions contributing GBP51.0
million (2009: nil) impacting wholly the temporary and permanent
recruitment segment. Net revenues excluding acquisitions in this
segment were therefore down from GBP401.8 million to GBP369.2
million, a fall of GBP32.6 million or 8.1%, of which management
estimate some GBP20.5 million is directly attributable to the loss
of two contracts (Magnox and TfL Trackforce) as highlighted within
the 2009 financial statements and earlier in this report. Morson
Projects had net revenue of GBP37.5 million up 7.6% on the
preceding year (GBP34.8 million).
Net Fee Income ("NFI")
Group NFI, or gross profit, has increased to GBP35.1 million
(2009: GBP34.8 million), a rise of 0.9%. The split of NFI across
temporary and permanent recruitment and engineering design
consultancy was GBP27.4 million, GBP1.1 million and GBP6.6 million
respectively (2009: GBP27.3 million, GBP0.8 million and GBP6.7
million).
The Group therefore saw a decrease in its percentage gross
margin to 7.7% (2009: 8.0%). Split by operating segments this
reflects reduced margins in temporary and permanent recruitment at
6.8% (2009: 7.0%). Within this segment Morson Wynnwith achieved
gross margin of 8.3% and the Morson International business saw a
decline in gross margins to 6.6% (2009: 7.0%). There was also a
reduced position for engineering design consultancy and management
to 17.7% (2009: 19.3%).
For recruitment the reduced margin was driven by a difficult and
competitive market resulting in a mix of margin pressure on new and
existing business, loss of the more profitable Trackforce contract
and less recruitment activity in some areas where replacement
contractors attract higher margins. Morson Projects also traded
through a difficult period and some larger contracts caused a lower
mix of margins achieved.
Operating profit and conversion ratio
Compared to 2009, adjusted operating profit decreased by GBP3.1
million to GBP9.2 million (2009: GBP12.3 million), a fall of 25.2%
on the comparable year. Considering this by business segment shows
recruitment activity falling from GBP11.4 million to GBP8.9
million, noting this comprises Morson International's contribution
as Morson Wynnwith was at break-even levels in this period, and in
engineering design consultancy and management Morson Projects has
also experienced falls with adjusted operating profit down from
GBP2.3 million to GBP1.7 million.
Adjusted operating margins before amortisation and exceptional
items for the Group, which are calculated after shared group costs
of GBP1.4 million (2009: GBP1.4 million), were 2.0% (2009: 2.8%).
This is a reflection of gross margin erosion, difficult trading
conditions and includes increased establishment costs through the
move into a new Head Office and the costs of aligning some areas of
the Group's overhead to reduced levels of activity.
The "Conversion Ratio" is measured as the ratio of adjusted
operating profit before amortisation and exceptional items to NFI
(as shown in the table above). For the Group this year this measure
is 26.3% (2009: 35.4%). The Board feels that whilst this is a
reasonable result in a difficult market and in line with or above
many other recruitment businesses, Morson should aim to improve
this when our market improves. A key contributory factor here is
the Morson Wynnwith business, which when acquired was loss making
and excluding this activity from the measure would mean an
underlying conversion ratio of 29.2%. The Group's business model
can deliver high volume services in an efficient manner across a
wide offering of engineering technical resource and services to our
clients from a nationwide network of offices which is required to
achieve consistently high Conversion Ratios.
Exceptional items
There are two exceptional items identified in 2010. Firstly
there is an exceptional gain of GBP1.2 million realised on
assessment of the fair value of the acquisitions, a detailed
analysis of which is set out at note 11. Secondly GBP0.4 million is
charged in respect of the acquisition and integration of the
Acetech and Wynnwith businesses. Exceptional charges in 2009 of
GBP0.4 million related to costs associated with the move into new
Head Office premises, comprising a charge of GBP271,000 resulting
from accelerated depreciation charge on fixed assets at the Group's
vacated properties along with other costs directly related to the
move of GBP163,000.
Finance costs
As in prior years finance costs incurred in the consolidated
income statement include two key elements.
First a finance charge of GBP1.1 million (2009: GBP1.5 million)
being the costs incurred on borrowings through a function of both
bank base rates and the financial instrument (as described below)
connected to these. With average net debt during 2010 of GBP22.8
million (2009: GBP21.1 million) this gives a blended cost of
finance of 4.8% (2009: 7.2%).
Interest on the Group's core confidential invoice discounting
facility and revolving credit facility is calculated on bank base
rates plus an agreed margin and there is also an overdraft
facility. These flexible facilities allow the Group to borrow only
what it needs and thus the Group's interest cost is commensurate
with the working capital needs and cash generated from our
operations.
Second, there is a gain of GBP1,063,000 (2009: gain of
GBP530,000) recognised in the consolidated income statement
relating to the fair value movement of the derivative financial
instrument entered into to protect the Group against high interest
rates. The instrument expired on 20 October 2010 and was a
structured interest rate collar with a cap of 6.00% and a floor of
3.95%, meaning that as the base rate falls below 3.95% the cost
increases in direct proportion from this lower level to the cap of
6.00%. The significant and unprecedented drop in the UK bank base
rate thus caused a large negative fair value of the instrument to
be recognised in the 2008 Report. The credit to the 2009 and 2010
accounts reflects the movement in the fair value of the derivative
financial instrument over the year to the balance sheet date.
Interest payable under this instrument was paid quarterly in
arrears and was dependent on the actual base rate during that
period. Thus the charge in 2010 reflected actual determined
interest (included in the recognised finance cost above) together
with the non-cash fair value movement as the term of the instrument
unwound.
At 31 December 2010 no financial instruments to protect against
base interest rate movements were in place. In January 2011 an
interest base rate swap instrument was entered into for GBP5.0
million at a rate of 2.03% for a period of three years commencing
on 1 April 2011. This is an area that is kept under review by the
Board.
Interest cover for the finance charge before fair value movement
on the derivative, exceptional items and amortisation for the year
increased to 8.4 times (2009: 8.2 times).
Adjusted profit before tax
With the difficult trading environment, lost contracts and
margin erosion, adjusted profit before tax has fallen by 24.9% to
GBP8.1 million (2009: GBP10.8 million). The adjusting items are set
out in the table above. We consider that the measure of adjusted
profit before tax gives a meaningful and informative comparator
against the prior year's performance. Actual profit before tax
after these matters was GBP9.4 million (2009: GBP9.7 million), a
fall of GBP0.3 million or 2.9%. The tables above provide a
reconciliation of the adjusted operating profit and adjusted profit
before tax back to the statutory figures per the consolidated
income statement.
Tax
The Group's effective rate of tax for the year was 19.9% (2009:
25.1%), lower than the standard rate of tax of 28% (2009: lower
than standard rate of 28%). The key factors impacting this
underlying charge for the Group which tend to decrease the tax rate
is certain costs that qualify as research and development
expenditure eligible for tax relief. However, offsetting this
somewhat is the absence of tax relief on certain amortisation costs
and certain disallowable business expenses that tend to increase
the tax rate for the Group.
Earnings per share
Basic earnings per share decreased to 15.69 pence (2009: 16.07
pence), a fall of 2.4%. Adjusted earnings per share (before
amortisation of intangible assets, exceptional items and fair value
movement of the derivative financial instrument) as calculated in
note 7 was down by 23.9% to 14.06 pence (2009: 18.48 pence).
Share options have been granted during the year and further
information will be given within the Remuneration Report which
forms part of the full 2010 Report and Accounts.
Dividend
The Board has recommended that dividend levels be maintained in
line with the previous year as a final dividend of 4.0 pence (2009:
4.0 pence) per share payable on 1 June 2011 to shareholders on the
register at 6 May 2011, subject to approval at the annual general
meeting on 26 May 2011. An interim dividend of 2.0 pence per share
(2009: 2.0 pence) was paid on 29 October 2010, making a total
dividend of 6.0 pence per share (2009: 6.0 pence) for the year. The
total dividend is covered 2.8 times (2009: 2.7 times) by current
year earnings.
Cash flow and financing
Group net debt is most affected by temporary and permanent
recruitment segment activity rather than by design consultancy and
management. This is due to the nature of temporary recruitment
activity, where payments to contractors are usually weekly and cash
receipts from clients are per commercial terms and framework
agreement terms that can range from 14 to 90 days. As a result of
these factors, all else being equal, growth necessarily causes the
absorption of cash. The converse may also be said to be true, thus
the slowing of growth experienced by this business would benefit
the net debt position. Working capital still needs managing and may
very well be impacted by material key client contract terms.
During 2010 we have seen a rise in recruitment activity driven
by the acquisitions completed mid-year and this has been a key
reason for the rise in the net debt position, also the outgoing
consideration on the Acetech transaction impacted. Net cash
generated by operations (before tax and interest) was GBP5.5
million (2009: GBP25.2 million), representing a conversion of 60%
of adjusted operating profit (2009: 205%). The 2009 amount was
somewhat of an exceptional position assisted by cut-off timing
factors and very good 2009 year end debtor collection, 2008
conversion was 119%. 2010 has shown some decline impacted by slower
debt receipts in the acquired businesses, increases in Morson
Projects contracts in progress and other working capital movements.
Tax paid fell from GBP2.4 million to GBP1.9 million due to a
reduction in adjusted profit before tax, adjustment for prior
periods and some allowable research and development expenditure.
During the year, working capital increased by GBP4.6 million (2009:
decreased by GBP12.0 million), due principally to the increased
activity in recruitment through the acquisitions made. Cash
collection achieved through the year has been good with core
activity and contracts running smoothly. The acquired debtors of
Morson Wynnwith were collected to c.98% levels which is very
pleasing. Some accounts since acquisition have proved a little
problematic in terms of purchase order cover and increased debt
turn above target levels, however this is expected to be brought
back in line with directors' expectations during the first half of
2011. An indicative calculation counting revenue plus closing rate
VAT back into trade and other receivables gives debt turn at the
year end of 57 days (2009: 51 days). Capital expenditure at GBP2.3
million (2009: GBP1.6 million) is stated gross of grant income
received of GBP0.5m (2009: GBPnil) and GBP0.4m (2009: GBPnil) of
opening accruals for Head Office property improvements and fixtures
and fittings valued but not billed at 31 December 2009. This was as
expected with the majority of the capital commitments and outflows
connected with the new Head Office and also some further investment
in design software for Morson Projects.
In September and October 2010 the financing facilities utilised
by the Group were extended following discussions with Barclays, our
finance provider, and remain largely consistent with 2009. The core
facility is an invoice discounting facility that can grow with the
business as it expands and is secured on our largely blue chip
debtor book. The Directors believe this type of facility is
entirely consistent with that used by companies providing similar
services and is one that suits the Group's business model very
well. Costs are on a bank base rate plus margin basis and the
facility has been extended to 31 March 2014. The current capacity
of the facility affords the Group significant headroom. The Group
also has a revolving credit facility of GBP5 million, extended and
in place until 31 October 2013. At year end this was not utilised
(2009: not utilised) as there was plenty of capacity within the
invoice discounting facility. Consideration of the going concern
basis is provided in note 1 to this preliminary announcement.
On 11 February 2011 the Group completed the acquisition of all
of the 49% non-controlling interest in Morson Wynnwith making it a
100% owned subsidiary. The consideration was GBP4.0 million and
this was financed via the revolving credit facility.
Balance sheet
Net assets have increased to GBP62.0 million (2009: GBP57.4
million). This increase principally reflects the impact of the
retained profit for the year. Net cash and cash equivalents,
including the invoice discounting facility overdraft, at the 2010
year end were debt of GBP23.2 million (2009: GBP10.9 million).
Consolidated income statement
Year ended 31 December 2010
2010
Unaudited 2009
Note GBP'000 GBP'000
---------------------------------------------- ----- ----------- ----------
CONTINUING OPERATIONS
Revenue 2 457,639 436,627
---------------------------------------------- ----- ----------- ----------
Cost of sales (422,544) (401,854)
---------------------------------------------- ----- ----------- ----------
GROSS PROFIT 35,095 34,773
Administrative expenses:
- amortisation of intangible fixed assets
- exceptional items: (620) (1,222)
- net gain on acquisition of businesses 11 1,249 -
- restructuring costs 3 (404) -
- head office relocation cost 3 - (434)
- other administrative expenses (25,880) (22,456)
---------------------------------------------- ----- ----------- ----------
OPERATING PROFIT 3 9,440 10,661
Finance costs:
- fair value movements on derivative
financial instrument 1,063 530
- other finance costs 4 (1,102) (1,511)
---------------------------------------------- ----- ----------- ----------
PROFIT BEFORE TAXATION 9,401 9,680
Taxation 5 (1,870) (2,434)
---------------------------------------------- ----- ----------- ----------
NET PROFIT FOR THE YEAR 7,531 7,246
---------------------------------------------- ----- ----------- ----------
Attributable to:
Equity holders of the parent 6,985 7,193
Non-controlling interests 546 53
---------------------------------------------- ----- ----------- ----------
7,531 7,246
---------------------------------------------- ----- ----------- ----------
EARNINGS PER SHARE
From continuing operations
Basic (pence) 7 15.69 16.07
Diluted (pence) 7 15.42 15.91
---------------------------------------------- ----- ----------- ----------
All activity has arisen from continuing operations.
Consolidated statement of comprehensive income
Year ended 31 December 2010
2010
Unaudited 2009
GBP'000 GBP'000
------------------------------------------- ----------- --------
PROFIT FOR THE YEAR 7,531 7,246
Exchange differences on translation
of foreign operations 28 -
------------------------------------------- ----------- --------
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 7,559 7,246
------------------------------------------- ----------- --------
Attributable to:
Equity holders of the parent 7,013 7,193
Non-controlling interests 546 53
------------------------------------------- ----------- --------
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 7,559 7,246
------------------------------------------- ----------- --------
Consolidated balance sheet
At 31 December 2010
2010
Unaudited 2009
Note GBP'000 GBP'000
------------------------------------ -------- ----------- ---------
NON-CURRENT ASSETS
Goodwill 33,513 32,945
Other intangible assets 2,650 739
Property, plant and equipment 3,753 3,282
Deferred tax asset - 252
------------------------------------ -------- ----------- ---------
39,916 37,218
------------------------------------ -------- ----------- ---------
CURRENT ASSETS
Trade and other receivables 85,939 69,485
Cash and cash equivalents 8 1,701 130
------------------------------------ -------- ----------- ---------
87,640 69,615
------------------------------------ -------- ----------- ---------
TOTAL ASSETS 127,556 106,833
------------------------------------ -------- ----------- ---------
CURRENT LIABILITIES
Trade and other payables (39,648) (36,098)
Current tax liabilities (602) (1,176)
Obligations under finance leases (37) (61)
Bank overdrafts 8, 9 (24,897) (11,064)
Derivative financial instrument - (1,063)
------------------------------------ -------- ----------- ---------
(65,184) (49,462)
------------------------------------ -------- ----------- ---------
NET CURRENT ASSETS 22,456 20,153
------------------------------------ -------- ----------- ---------
NON-CURRENT LIABILITIES
Deferred tax liabilities (333) -
(333) -
------------------------------------ -------- ----------- ---------
TOTAL LIABILITIES (65,517) (49,462)
------------------------------------ -------- ----------- ---------
NET ASSETS 62,039 57,371
------------------------------------ -------- ----------- ---------
EQUITY
Issued capital 10 2,267 2,267
Share premium account 10 37,607 37,607
Retained earnings 10 22,443 18,087
Other reserves 10 (928) (694)
------------------------------------ -------- ----------- ---------
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS
OF THE PARENT 61,389 57,267
Non-controlling interest 650 104
------------------------------------ -------- ----------- ---------
TOTAL EQUITY 62,039 57,371
------------------------------------ -------- ----------- ---------
Consolidated cash flow statement
Year ended 31 December 2010
2010
Unaudited 2009
Note GBP'000 GBP'000
-------------------------------------------- ----- ----------- ---------
NET CASH INFLOW FROM OPERATING ACTIVITIES 12 2,541 21,277
-------------------------------------------- ----- ----------- ---------
INVESTING ACTIVITIES
Grant income received 479 -
Proceeds on disposal of property, plant
and equipment 68 36
Purchases of property, plant and equipment (2,307) (1,566)
Acquisition of businesses (10,104) -
-------------------------------------------- ----- ----------- ---------
NET CASH USED IN INVESTING ACTIVITIES (11,864) (1,530)
-------------------------------------------- ----- ----------- ---------
FINANCING ACTIVITIES
Dividends paid (2,671) (2,686)
Purchase of own shares (262) (204)
Repayments of obligations under finance
leases (24) (110)
-------------------------------------------- ----- ----------- ---------
NET CASH USED IN FINANCING ACTIVITIES (2,957) (3,000)
-------------------------------------------- ----- ----------- ---------
NET (decrease)/ INCREASE IN CASH AND CASH
EQUIVALENTS (12,280) 16,747
Effects of foreign exchange rate changes 18 -
-------------------------------------------- ----- ----------- ---------
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 8 (10,934) (27,681)
-------------------------------------------- ----- ----------- ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR 8 (23,196) (10,934)
-------------------------------------------- ----- ----------- ---------
Consolidated statement of changes in equity
Year ended 31 December 2010
Share
Share Premium Retained Translation Own Non-controlling Total
capital account earnings reserve shares Total interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- ---------- -------- --------- ------------ -------- -------- ---------------- --------
At 1 January
2009 2,267 37,607 13,520 - (526) 52,868 51 52,919
Profit for
the year - - 7,193 - - 7,193 53 7,246
Dividends
paid - - (2,686) - - (2,686) - (2,686)
Share-based
payments - - 96 - - 96 - 96
Purchase of
own shares - - - - (204) (204) - (204)
Exercise of
share options - - (36) - 36 - - -
----------------- ------ -------- --------- ------------ -------- -------- ---------------- --------
At 1 January
2010 2,267 37,607 18,087 - (694) 57,267 104 57,371
Profit for
the year - - 6,985 - - 6,985 546 7,531
Dividends
paid - - (2,671) - - (2,671) - (2,671)
Share-based
payments - - 42 - - 42 - 42
Purchase of
own shares - - - - (262) (262) - (262)
Exchange
differences on
translating the
net assets of
foreign
operations - - - 28 - 28 - 28
AT 31 DECEMBER
2010
(unaudited) 2,267 37,607 22,443 28 (956) 61,389 650 62,039
----------------- ------ -------- --------- ------------ -------- -------- ---------------- --------
1. GENERAL INFORMATION
Morson Group PLC is a company incorporated in the United Kingdom
under the Companies Act. The address of the registered office is
Adamson House, Centenary Way, Salford, Manchester M50 1RD. The
nature of the Group's operations and its principal activities are
set out in note 2 and in the Business Review.
These financial statements are presented in Pounds Sterling
because that is the currency of the primary economic environment in
which the Group operates.
While the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement criteria of International Financial Reporting
Standards (IFRSs), this announcement does not itself contain
sufficient information to comply with IFRSs. The Company expects to
publish full financial statements that comply with IFRSs in April
2011.
The financial information set out in the announcement does not
constitute the company's statutory accounts for the years ended 31
December 2010 or 2009. The financial information for the year ended
31 December 2009 is derived from the statutory accounts for that
year which have been delivered to the Registrar of Companies. The
auditors reported on those accounts: their report was unqualified,
did not draw attention to any matters by way of emphasis and did
not contain a statement under s498(2) or (3) of the Companies Act
2006. The audit of the statutory accounts for the year ended 31
December 2010 is not yet complete. These accounts will be finalised
on the basis of the financial information presented by the
directors in this preliminary announcement and will be delivered to
the Registrar of Companies following the company's annual general
meeting.
Basis of accounting
The financial statements will be prepared in accordance with
IFRS as adopted by the European Union.
The financial statements will be prepared on the historical cost
basis, except for the revaluation of certain financial instruments.
The financial statements will be prepared in accordance with
accounting policies previously published in the Company's 2009
financial statements with the exception of changes required as a
result of adopting IFRS 3 (2008) Business Combinations and IAS 27
(2008) Consolidated and Separate Financial Statements with effect
from 1 January 2010. These standards have introduced a number of
changes in the accounting for business combinations when acquiring
a subsidiary or an associate. IFRS 3 (2008) has also introduced
additional disclosure requirements for acquisitions.
Going concern
The Directors are required to satisfy themselves as to whether
the 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 considers business risks and
uncertainties that exist and takes account of how wider economic
circumstances can impact these, including 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
the Group's current financing arrangements run until 31 March 2014
for its invoice discounting facility and until 31 October 2013 for
its revolving credit facility.
Having properly considered the matter the Directors conclude
that they are satisfied that these financial statements should be
prepared on a going concern basis.
2. BUSINESS AND GEOGRAPHICAL SEGMENTS
Business segments
The two reported operating segments in this note are reported as
the provision of temporary and permanent recruitment services and
the provision of engineering design consultancy and management.
These operating segments are consistent with the reporting
regularly provided to the Board of Directors. It is these reports
which the Directors use to review the Group's operating results,
assess performance and make decisions about resource
allocation.
The Group's business is described in sectors for the purposes of
the Business Review. This is to enable readers to gain a better
understanding of the breadth of our service offering as well as
allowing an informed and helpful comparison to other organisations
also operating in our markets. The database of candidates held by
the Group to supply to these sectors is a combined one,
encompassing a wide diversity of skills and talent, and whilst it
has some sector specific requirements, is in essence provided in
the same manner across all sectors. Performance and analysis of
activity by these sectors is not a key management measure, nor is
it reported regularly to the Board of Directors and the business is
not managed or divided internally by these sectors. The key
information used to manage the business is by activity type, i.e.
the provision of temporary and permanent recruitment services and
the provision of engineering design consultancy and management.
The acquisitions of the Wynnwith and Acetech businesses in the
year (see note 11) have been recognised in the provision of
temporary and permanent recruitment services sector.
Provision of Provision of
temporary engineering
and permanent design consultancy
recruitment
services and management Total
------------------- --------------------- -----------------
2010 2010 2010
Unaudited 2009 Unaudited 2009 Unaudited 2009
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ------------- --------- -------------- --------- ------------ -----------
Gross revenue 434,142 412,277 37,599 35,358 471,741 447,635
Inter-segment sales (13,969) (10,470) (133) (538) (14,102) (11,008)
-------------------------- ------------- --------- -------------- --------- ------------ -----------
Revenue to third
parties 420,173 401,807 37,466 34,820 457,639 436,627
-------------------------- ------------- --------- -------------- --------- ------------ -----------
Segmental gross profit 28,468 28,054 6,627 6,719 35,095 34,773
Administrative expenses (19,592) (16,646) (4,920) (4,389) (24,512) (21,035)
Exceptional
items: - net
gain on
acquisition
of
businesses 1,249 - - - 1,249 -
-
restructuring
costs (404) - - - (404) -
- head office
relocation
cost - (90) - (344) - (434)
Amortisation of
intangible assets (620) (1,222) - - (620) (1,222)
Shared costs - - - - (1,368) (1,421)
-------------------------- ------------- --------- -------------- --------- ------------ -----------
Segment result 9,101 10,096 1,707 1,986 9,440 10,661
Finance charge (net) (1,086) (1,489) (21) (20) (1,107) (1,509)
Shared finance income
(net of shared finance
costs) - - - - 1,068 528
-------------------------- ------------- --------- -------------- --------- ------------ -----------
Segment result after
finance charges 8,015 8,607 1,686 1,966 9,401 9,680
Taxation (1,870) (2,434)
------------ -----------
PROFIT AFTER TAXATION 7,531 7,246
------------ -----------
Capital additions 695 1,050 704 989 1,399 2,039
Depreciation and
amortisation 1,072 1,610 377 687 1,449 2,297
-------------------------- ------------- --------- -------------- --------- ------------ -----------
NET ASSETS
Segment assets excluding
amounts
due from other Group
companies 106,260 87,619 20,372 18,106 126,632 105,725
Unallocated corporate
assets 924 1,108
------------ -----------
Consolidated total
assets 127,556 106,833
------------ -----------
Segment liabilities
excluding amounts
due to other Group
companies (58,227) (38,381) (6,548) (7,774) (64,775) (46,155)
------------- --------- -------------- ---------
Unallocated corporate
liabilities (742) (3,307)
------------ -----------
Consolidated total
liabilities (65,517) (49,462)
------------ -----------
Consolidated net
assets 62,039 57,371
------------ -----------
The centre of operations for all services delivered to clients
is the UK. The Directors consider that the Group does not generate
material profits from overseas operations and therefore no
geographical segmental information is presented.
Inter-segment sales are charged at prevailing market prices.
Within the engineering design consultancy and management segment
there exists some provision of temporary recruitment services,
however this is entirely related to the provision of engineering
design consultancy and management.
Accelerated depreciation charged of GBPnil (2009: GBP271,000) as
a result of the move to new premises at Adamson House, Centenary
Way, is included in the depreciation and amortisation line above as
well as within the exceptional head office relocation cost line.
See note 3 for further details.
Segment profit is measured as those income streams and costs
which are directly attributable to the segment in question. Segment
assets and liabilities are those held within the segment in
question with the exception of goodwill which is allocated to
business segments.
Unallocated corporate assets and liabilities consist of
receivables and payables in Morson Holdings Limited and Morson
Group PLC.
Included in revenues arising from the provision of temporary and
permanent recruitment services are revenues of GBP63,155,000 (2009:
GBP80,103,000) which arose from sales to the Group's largest
customer.
3. PROFIT FOR THE YEAR
2010
Unaudited 2009
GBP'000 GBP'000
------------------------------------------- ------------------- ------------
Profit for the year has been arrived at
after charging/(crediting):
Depreciation of property, plant and
equipment 829 1,075
Foreign exchange gains (264) (30)
Loss/ (profit) on disposal of fixed assets 31 (2)
Amortisation of intangible assets 620 1,222
Staff costs Exceptional items: - net gain 34,556 19,970
on acquisition of businesses (see note 11) (1,249) -
- restructuring costs 404 -
- head office relocation cost - 163
Movement in allowance for doubtful debts 1,135 (459)
------------------------------------------- ------------------- ------------
Restructuring costs of GBP404,000 have been incurred following
the acquisition and integration of the Wynnwith and Acetech
businesses (see note 11). This includes an accrual for redundancy
costs committed to at the balance sheet date.
Operating costs of GBP434,000 have been presented as exceptional
costs in the prior year in relation to the relocation of the
Group's head office, which occurred in December 2009.This comprises
GBP271,000 relating to the accelerated depreciation and final
write-down of fixed assets relating to the previous premises at
Darwen House and Stableford Hall (included within the depreciation
line shown above) and GBP163,000 of costs directly associated with
the move. This includes an accrual for professional fees,
relocation costs and overtime costs incurred that are directly
related to the relocation and would not otherwise have been
incurred.
4. FINANCE COSTS
Fair value movements on the derivative financial instrument have
been disclosed on the face of the consolidated income
statement.
2010
Unaudited 2009
GBP'000 GBP'000
--------------------------------------- ------------------------ ---------
Interest on bank overdrafts and loans 296 297
Interest paid in respect of the
derivative financial instrument 780 1,172
Other financing charges payable 22 29
Interest on obligations under finance
leases 4 13
--------------------------------------- ------------------------ ---------
Total other finance costs 1,102 1,511
--------------------------------------- ------------------------ ---------
The loans and overdraft which result in the interest charge are
described in more detail in note 9
No gains or losses have been recognised on financial liabilities
measured at amortised cost.
5. TAXation
2010
Unaudited 2009
GBP'000 GBP'000
------------------------------------------- --------------------- -------------
Current tax - current year 1,501 2,214
- adjustments in respect of prior years (45) (2)
Deferred tax - current year 343 67
- prior year 71 155
------------------------------------------ --------------------- -------------
1,870 2,434
------------------------------------------- --------------------- -------------
Corporation tax is calculated at 28.0% (2009: 28.0%) of the
estimated assessable profit for the year.
Taxation for other jurisdictions is calculated at the rate
prevailing in the respective jurisdiction.
The charge for the year can be reconciled to the profit as per
the income statement as follows:
2010
Unaudited 2009
GBP'000 GBP'000
------------------------------------------------ ----------- --------
Profit before taxation 9,401 9,680
------------------------------------------------ ----------- --------
Tax at the UK corporation tax rate of 28.0%
(2009: 28.0%) 2,632 2,710
Expenses not deductible for tax purposes 9 257
Income not taxable (230) (30)
Tax effect of higher/ (lower) rates of tax
on overseas income 123 (234)
Effect of research and development tax credits (615) (365)
Utilisation of losses (65) (51)
Adjustments to tax charge in respect of prior
periods 26 153
Other (10) (6)
------------------------------------------------ ----------- --------
Tax expense for the year 1,870 2,434
------------------------------------------------ ----------- --------
6. DIVIDENDS
2010
Unaudited 2009
GBP'000 GBP'000
------------------------------------------------- ----------- --------
Amounts recognised as distributions to equity
holders in the year:
Final dividend for the year ended 31 December
2009 of 4.0 pence per share (year ended 31
December 2008: 4.0 pence) 1,783 1,792
Interim dividend for the year ended 31 December
2010 of 2.0 pence per ordinary share (year
ended 31 December 2009: 2.0 pence) 888 894
------------------------------------------------- ----------- --------
2,671 2,686
------------------------------------------------- ----------- --------
Proposed final dividend for the year ended
31 December 2010 of 4.0 pence (2009: 4.0
pence) 1,777 1,787
------------------------------------------------- ----------- --------
The proposed final dividend is subject to approval by
shareholders at the Annual General Meeting and has not been
included as a liability in these financial statements.
7. EARNINGS PER SHARE
The calculation of EPS is based on the following data and
numbers of shares:
2010
Unaudited 2009
GBP'000 GBP'000
------------------------------------------------- ----------- -----------
Profit for the year used for the calculation
of basic earnings per share 6,985 7,193
Amortisation of intangible assets 569 1,222
Exceptional Items: -
- net gain on acquisition of businesses (625) -
- restructuring costs 244 -
- head office relocation cost - 434
Fair value movements on derivative financial
instruments (1,063) (530)
Tax effect of adjustments 149 (46)
------------------------------------------------- ----------- -----------
Earnings for the purposes of adjusted earnings
per share 6,259 8,273
------------------------------------------------- ----------- -----------
2010 2009
------------------------------------------------- ----------- -----------
NUMBER OF SHARES
Weighted average number of ordinary shares
for the purposes of basic earnings per share 44,520,191 44,766,798
Effect of potentially dilutive ordinary shares:
- share options 794,207 453,760
------------------------------------------------- ----------- -----------
Weighted average number of ordinary shares
for the purposes of diluted earnings per
share 45,314,398 45,220,558
------------------------------------------------- ----------- -----------
Earnings per share:
- basic (pence) 15.69 16.07
- diluted (pence) 15.42 15.91
Adjusted earnings per share:
- basic (pence) 14.06 18.48
- diluted (pence) 13.81 18.30
------------------------------------------------- ----------- -----------
The adjusted earnings per share has been calculated on the basis
of continuing operations before amortisation of intangible assets,
the exceptional items and the fair value movement of the derivative
financial instrument, net of tax. Adjustments have been made to
these values to account for the share of non-controlling interests.
The Directors consider that the adjusted earnings per share
calculation gives a better understanding of the Group's earnings
per share.
8. CASH AND CASH EQUIVALENTS
2010
Unaudited 2009
GBP'000 GBP'000
--------------------------------------- ----------- ---------
Cash and cash equivalents 1,701 130
Bank overdrafts (see note 9) (24,897) (11,064)
--------------------------------------- ----------- ---------
Cash and cash equivalents in the cash
flow statement (23,196) (10,934)
--------------------------------------- ----------- ---------
9. BORROWINGS
2010
Unaudited 2009
GBP'000 GBP'000
------------------------------------------ ----------- --------
SECURED BORROWING AT AMORTISED COST
Bank overdrafts 24,897 11,064
The borrowings are repayable as follows:
- on demand or within one year 24,897 11,064
------------------------------------------ ----------- --------
2010 2009
% %
------------------------------------------ ----- -----
The weighted average interest rates paid
were as follows:
- bank overdrafts 1.50 1.58
- bank loans 1.79 -
------------------------------------------ ----- -----
All borrowings are in Pounds Sterling and are arranged at
floating rates, thus exposing the Group to cash flow interest rate
risk.
The Directors consider that the carrying value of borrowings
approximates to their fair value.
The other principal features of the Group's borrowings are as
follows:
(i) bank overdrafts are repayable on demand. Overdrafts of
GBP24,897,000 (2009: GBP11,064,000) have been secured on the trade
debtors of the Group. The average effective interest rate on bank
overdrafts approximates 1.50% (2009: 1.58) per annum; and
(ii) bank loans represent a revolving credit facility whereby
the Group may borrow up to GBP5 million subject to satisfaction of
the requirements of the facility. The interest rate of the loan is
set at 1.25% above LIBOR lending rate. Subject to the conditions of
the facility the loan may be used for both working capital and
acquisitions. The period of the loan is set by interest periods at
the end of which the Group may repay all, part of or borrow more up
to the ceiling. The loan has been utilised in the current year but
there were no borrowings at the balance sheet date.
At 31 December 2010, the Group had available GBP22,694,000
(2009: GBP24,561,000) of undrawn committed borrowing facilities in
respect of which all conditions precedent had been met.
10. EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
Share
Share premium Retained Translation Own
capital account earnings Reserve shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- -------- -------- --------- ------------ -------- --------
At 1 January
2009 2,267 37,607 13,520 - (526) 52,868
Profit for
the year - - 7,193 - - 7,193
Dividends
paid - - (2,686) - - (2,686)
Share-based
payments - - 96 - - 96
Purchase of
own shares - - - - (204) (204)
Exercise of
share
options - - (36) - 36 -
------------- -------- -------- --------- ------------ -------- --------
At 1 January
2010 2,267 37,607 18,087 - (694) 57,267
Profit for
the year - - 6,985 - - 6,985
Dividends
paid - - (2,671) - - (2,671)
Share-based
payments - - 42 - - 42
Purchase of
own shares - - - - (262) (262)
Exchange
differences
on
translating
the net
assets of
foreign
operations - - - 28 - 28
------------- -------- -------- --------- ------------ -------- --------
AT 31
DECEMBER
2010
(unaudited) 2,267 37,607 22,443 28 (956) 61,389
------------- -------- -------- --------- ------------ -------- --------
Investments in "own shares" to a value of GBP109,000 (2009:
GBP109,000) are held by Morson Employee Benefit Trust Limited to
satisfy options awarded on 1 March 2006 under an EMI Scheme equally
to three senior employees who are not statutory Directors of the
Company or a Group company.
During 2008 the Morson Group PLC Employee Benefit Trust was
established with a view to facilitating employee share schemes and
satisfying share options that might be awarded by the Group from
time to time. Loans to a value of GBP262,000 (2009: GBP204,000)
have been made to this Trust during the year and these have been
used completely and exclusively to buy Morson Group PLC shares. As
at 31 December 2010 the Trust held 763,884 ordinary 5 pence shares
in Morson Group PLC and no other securities or investments. There
has been no charge to the consolidated income statement during the
year.
11. acquisition of businesses
The Group has adopted IFRS 3 (2008) Business Combinations and
IAS 27 (2008) Consolidated and Separate Financial Statements with
effect from 1 January 2010.
During the year ended 31 December 2010, the Group made two
acquisitions.
1) On 9 June 2010 the Group announced the formation of a 51%
subsidiary, Recruit Now Limited, 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. Wynnwith provides technical and engineering
personnel to a range of blue-chip clients in the aerospace,
defence, marine, electronics and rail industries and had been a
well-established and respected competitor of the Group.
2) On 9 July 2010 the Group acquired the business, contracts and
fixed assets of Acetech Personnel Limited ("Acetech"). Acetech is a
wholly owned subsidiary of Babcock International Group PLC and
provides recruitment and workforce services, on a preferred
supplier basis, to Babcock's UK Marine and Rail businesses.
Contracts have been agreed with Babcock for a minimum five-year
term for the continuation of supply of contractors.
Wynnwith Acetech Total
GBP'000 GBP'000 GBP'000
Recognised amounts of identifiable assets
acquired and liabilities assumed
Financial assets 9,659 - 9,659
Property, plant and equipment 27 16 43
Identifiable intangible assets 725 1,806 2,531
Deferred tax asset 25 488 513
Financial liabilities (987) (35) (1,022)
Deferred tax liability (196) (488) (684)
Total identifiable assets 9,253 1,787 11,040
Goodwill (1,504) 568 (936)
Total consideration 7,749 2,355 10,104
Satisfied by:
Cash 7,749 2,355 10,104
Total consideration transferred and net cash
outflow arising on acquisition 7,749 2,355 10,104
Acquisition-related costs 230 25 255
Release of negative goodwill from bargain
purchase (1,504) - (1,504)
Total exceptional (gain)/ cost on acquisition
of businesses (1,274) 25 (1,249)
Wynnwith contributed GBP44,068,000 revenue and GBP876,000 to the
Group's profit for the period between the date of acquisition and
the balance sheet date. The contribution to profit consists of
profit before amortisation and exceptional items GBP32,000, less
exceptional restructuring costs GBP326,000, add exceptional gain on
acquisition GBP1,274,000, less amortisation GBP104,000.
If the acquisition of Wynnwith had been completed on the first
day of the financial year, group revenues for the period would have
been GBP491,653,000 and group profit would have been GBP7,437,000.
These figures have been estimated based on an extrapolation of
results achieved in the period since acquisition.
The fair value of the financial assets of Wynnwith includes
trade receivables with a fair value of GBP9,264,000 and a gross
contractual value of GBP9,464,000. The best estimate at acquisition
date of the contractual cash flows to be collected are
GBP9,264,000.
Wynnwith was acquired out of administration. A gain has been
realised as the price negotiated was lower than the subsequently
assessed accounting fair value of the assets acquired.
Acetech contributed GBP6,907,000 revenue and GBP(71,000) to the
Group's profit for the period between the date of acquisition and
the balance sheet date. The contribution to profit consists of
profit before amortisation and exceptional items GBP213,000 less
exceptional restructuring costs GBP78,000, exceptional cost of
acquisition GBP25,000 and amortisation GBP181,000.
If the acquisition of Acetech had been completed on the first
day of the financial year, group revenues for the period would have
been GBP465,057,000 and group profit would have been GBP7,546,000.
As above these figures have been estimated based on an
extrapolation of results achieved in the period since
acquisition.
The goodwill of GBP568,000 arising from the acquisition of
Acetech consists of the skills and technical capabilities of the
employees who joined the Group and synergies that are expected to
be achieved as a result of the transaction along with competitive
advantage and unidentifiable customer relationships. This goodwill
is expected to be deductible for income tax purposes.
12. NOTES TO THE CASH FLOW STATEMENT
RECONCILIATION OF OPERATING PROFIT TO NET CASH FROM
OPERATIONS
2010
Unaudited 2009
GBP'000 GBP'000
------------------------------------------------------- ----------- --------
Operating profit 9,440 10,661
Adjustments for:
Exceptional net gain on acquisition of businesses
Exceptional restructuring costs
Exceptional head office relocation cost (accelerated (1,249) -
depreciation amount included in depreciation 404 -
line) - 163
Depreciation of property, plant and equipment 829 1,075
Amortisation of intangible assets 620 1,222
Share-based payment expense 42 96
Loss/ (gain) on disposal of property, plant
and equipment 31 (2)
------------------------------------------------------- ----------- --------
Operating cash flows before movements in working
capital 10,117 13,215
(Increase)/ decrease in inventories (1,830) 534
(Increase)/ decrease in receivables (4,930) 5,565
Increase in payables 2,187 5,893
------------------------------------------------------- ----------- --------
Cash generated by operations 5,544 25,207
Income taxes paid (1,901) (2,419)
Interest paid (1,102) (1,511)
------------------------------------------------------- ----------- --------
Net cash generated from operating activities 2,541 21,277
------------------------------------------------------- ----------- --------
13. POST-BALANCE SHEET EVENT
On 11 February 2011 Morson Group PLC acquired the remaining
issued shares in Morson Wynnwith Limited for a cash consideration
of GBP4,005,000, taking its shareholding to 100%.
14. COPIES OF THIS STATEMENT
The Group's report and accounts for the year ended 31 December
2010 are expected to be posted to shareholders on
6 April 2011and will also be available from the Company's head
office at Adamson House, Centenary Way, Salford,
Manchester, M50 1RD and will be available for download from its
website at: www.morson.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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