MMC.L Regulatory News (MMC)

18 Mar 2008 07:01

Management Consulting Group PLC18 March 2008 Financial results for the year ended 31 December 2007 Management Consulting Group PLC ("MCG" or "the Group"), the internationalmanagement consultancy group, today announces its results for the year ended 31December 2007. Key points • Revenue up 47% on last year to £215.8 million (2006: £146.9 million)++ • Profit from operations up 62% to £21.8 million (2006: £13.4 million) ++ • Underlying+ profit from operations up 60% to £25.9 million (2006: £16.2 million) • Underlying EBITDA margin up 5% to 12.9% (2006: 12.3%) • Underlying EPS up 15% to 6.2p (2006: 5.4p); Basic EPS up 15% to 4.7p (2006: 4.1p) • Cash generated by operations up 1361% to £33.8 million (2006: £2.3 million) • Net debt at year end up 111% to £60.9million (2006: £28.8million) • Total dividend increased by 15% to 1.15p per share (2006: 1.0p) • KSA integration progressing well and business out-performing expectations • Current trading and order intake in line with expectations ++ Ineum Consulting was acquired on 1 September 2006, 51% of Salzer Consulting on 6 October 2006, CBH Consulting on 6 September 2007 and Kurt Salmon Associates on 12 October 2007. CBH Consulting was merged with Parson Consulting in December 2007. All results in this statement include these effects + Throughout this statement the term underlying is used to describe profits before non-recurring items and amortisation of acquired intangible assets. Alan Barber, Executive Chairman: "The results for 2007 underline the good progress made by the Group during theyear. Revenue and profit increases were encouraging and the Group enters 2008with a strong balance sheet. The integration of CBH Consulting and Kurt SalmonAssociates is nearing completion and we look forward to developing thesebusinesses in conjunction with the rest of our consultancies. Trading this yearhas started well with work won so far ahead of work delivered." For further information please contact: Management Consulting Group PLC Alan Barber Executive Chairman 020 7710 5000 Craig Smith Group Finance Director 020 7710 5000 Maitland Suzanne Bartch 020 7379 5151 (mobile) 07769 710 335 Peter Ogden 020 7379 5151 (mobile) 07811 124 197 An analyst briefing will be held at the offices of N M Rothschild & Sons at 1King William Street, London EC4N 7AR on Tuesday 18 March 2008 at 9.30 am. Notes to Editors Management Consulting Group PLC (MMC.L) is an umbrella organisation for adiverse range of consulting and professional services offerings. MCG operates through six divisions: Ineum Consulting, Kurt Salmon Associates,Parson Consulting, Proudfoot Consulting, Salzer Consulting and ViaductConsulting. Ineum Consulting provides consulting services with industryexpertise. Kurt Salmon Associates provides retail and healthcare consulting.Parson Consulting provides financial management consulting. Proudfoot Consultingprovides operational improvement consulting. Salzer Consulting provides businessstart-up, management and restructuring consulting in Asian markets. ViaductConsulting provides commercial due diligence services. The Group operatesworldwide. For further information, visit www.mcgplc.com. Forward-looking statements This preliminary announcement contains certain forward-looking statements withrespect to the financial condition, results of operations and businesses ofManagement Consulting Group PLC. These statements and forecasts involve risk anduncertainty because they relate to events and depend upon circumstances thatwill occur in the future. There are a number of factors that could cause actualresults of developments to differ materially from those expressed or implied bythese forward-looking statements and forecasts. The forward looking statementsare based on the directors' current views and information known to them at 17March 2008. The directors do not make any undertaking to update or revise anyforward looking statements, whether as a result of new information, futureevents, or otherwise. Nothing in this announcement should be construed as aprofit forecast. Group Results The Group continued to make significant progress in the implementation of itsstrategic plan during 2007. Two acquisitions were completed during the year, CBHConsulting in September and Kurt Salmon Associates in October, which broadenedthe service offering and deepened the Group's North American footprint. CBHConsulting was merged with the US operations of Parson Consulting in December. The performance of the Group's six consultancies is set out below: Year ended Year ended 31 Dec 2007 31 Dec 2006 --------- --------- £'000 £'000 --------- ---------RevenueIneum Consulting++ 79,948 23,709Kurt Salmon Associates++ 17,078 -Parson Consulting++ 43,846 34,301Proudfoot Consulting 73,603 88,658Salzer Consulting++ 1,297 222Viaduct Consulting 15 - --------- ---------Total revenue 215,787 146,890 --------- --------- Operating profitIneum Consulting 11,880 2,780Kurt Salmon Associates 2,635 -Parson Consulting (498) (2,108)Proudfoot Consulting 12,280 15,575Salzer Consulting (198) (91)Viaduct Consulting (180) - --------- ---------Underlying+ operating profit 25,919 16,156 Non-recurring items:Integration of acquisitions (2,480) (2,100)Proudfoot surplus provision - 335 --------- ---------Operating profit before amortisation 23,439 14,391Amortisation of acquired intangibles (1,665) (943) --------- ---------Profit from operations 21,774 13,448 --------- --------- ++ Ineum Consulting was acquired on 1 September 2006, 51% of Salzer Consulting on 6 October 2006, CBH Consulting on 6 September 2007 and Kurt Salmon Associates on 12 October 2007. CBH Consulting was merged with Parson Consulting in December 2007. All results in this statement include these effects + Throughout this statement the term underlying is used to describe profits before non-recurring items and amortisation of acquired intangible assets Total revenue for the year ended 31 December 2007 was up 47% to £215.8m (2006:£146.9m). Compared to the previous year, and as a result of the recentacquisitions, there has been a material shift in the geographical distributionof Group revenue with Europe accounting for 65% (2006: 48%) and the Americas 29%(2006: 44%). The gross profit margin continues to be tightly managed and remainsat 50% of revenue. Overall, underlying administrative expenses have increased by £25.6 million fromthe previous year due primarily to the full year effect of administrativeexpenses inherent in the companies acquired in 2006 and the part year effect ofthe 2007 acquisitions. Non-recurring costs of £1.7m were incurred in the completion of the integrationof Ineum Consulting and a further £0.8m in the commencement of the integrationof CBH Consulting and Kurt Salmon Associates. Additionally, £1.7 million ofamortisation has been charged in the income statement arising from these threeacquisitions as their brands, customer relationships and order books areaccounted for as intangible assets. The underlying profit from operations rose 60% to £25.9 million (2006: £16.2million). The underlying EBITDA margin was 12.9% compared to 12.3% last year. Our targetEBITDA margin remains at 15%. After charging the non-recurring costs of £2.5 million (2006: net £1.8 million)and amortisation of intangible assets of £1.7 million (2006: £0.9 million), theoperating profit was £21.8 million (2006: £13.4 million). Group profit beforetax increased by 47% to £19.7 million (2006: £13.3 million). Underlying profitbefore tax increased by 47% to £23.8 million (2006: £16.2 million). The acquisitions of CBH Consulting and Kurt Salmon Associates were financedpartly by new debt and partly by new equity. The additional debt contributed toan interest expense of £3.2 million (2006: £1.3 million) which was partly offsetby investment income of £1.1 million (2006: £1.2 million). The effective tax charge on profit before tax, as adjusted for the amortisationcharge related to the Ineum, CBH and KSA acquisitions, is 31% (2006: 33%) andincludes 5% points (2006: 8% points) of non-cash tax items required to beincluded in the charge by accounting standards and 2% points (2006: 3% points)relating to prior year items. The amount payable, the current year "cash tax"charge, is therefore 24% (2006: 22%). Basic earnings per share were 4.7 pence (2006: 4.1 pence). After adjusting forpost tax, non-recurring items, the amortisation of intangibles and non "cashtax" items, the underlying earnings per share were 6.2 pence (2006: 5.4 pence). The Consultancies Ineum Consulting Ineum Consulting has performed ahead of our expectations during 2007. Revenueincreased to £79.9 million (2006: £23.7 million), reflecting a full year'srevenue (2006: 4 months) and good organic growth. The underlying operatingmargin increased to 14.9% (2006: 11.7%). The integration plan was successfullyexecuted in line with plan. Kurt Salmon Associates Kurt Salmon Associates has performed ahead of our expectations and hascontributed £17.1 million of revenue to the 2007 results since its acquisitionin October. The underlying operating margin post-acquisition was 15.2%. Theconsultancy has added a further dimension to the Group's services, particularlyin relation to Retail and Healthcare consulting. The integration plan whichcommenced in October is proceeding to timetable and will continue into 2008. Parson Consulting Parson Consulting's revenue was up 28% to £43.8 million (2006: £34.3 million).Whilst the business made good progress outside the US, as previously reportedtrading in the US remained lacklustre. The operating loss for the year was £0.5million (2006: £2.1 million) comprising a loss of £0.8 million in the first halfand a profit of £0.3 million in the second half (2006: losses of £1.9 millionand £0.2 million respectively). The US business was merged with CBH Consultingin December 2007 to create a combined financial and performance managementconsultancy which broadens its offering in the US market. Proudfoot Consulting Proudfoot Consulting revenues decreased by 17% compared to last year to £73.6million (2006: 88.6 million). Its operating margin declined slightly to 16.7%(2006: 17.6%). The consultancy continued to invest in the development of itsbusiness outside its traditional markets of the US and Europe and good progresswas reported particularly in Brazil and the Pacific region. Trading in the USand Europe was below expectations. Salzer Consulting Salzer Consulting's revenues increased by £1.1 million to £1.3 million comparedto last year, reflecting a full year's trading (2006: 3 months). Salzer'sunderlying operating loss increased by £0.1 million compared to 2006, as thebusiness continued to invest for the future. Viaduct Consulting Viaduct Consulting is a new business, which commenced trading in the second halfof the year. Its revenues of £15 thousand and underlying operating loss of £0.2million reflect the start up nature of the business. Balance sheet Net assets increased by £46.8 million to £159.0 million (2006: £112.2 million).The vast majority of this increase was due to the acquisitions of CBH Consultingand Kurt Salmon Associates. CBH Consulting was acquired on 6 September 2007 for a total consideration of£4.4 million, satisfied by £2.3 million of cash and shares in MCG worth £2.1million. Kurt Salmon Associates was acquired on 12 October 2007 for a totalconsideration of £61.2 million, satisfied by £36.8 million of cash and sharesand options in MCG worth £24.4 million. In accordance with International Financial Reporting Standards, intangibleassets arising on the purchases of businesses have been separately identifiedand quantified from goodwill and amount to £7.5 million before an associateddeferred tax liability of £2.6 million, as required by accounting standards. Theintangible assets are amortised through the income statement whereas thegoodwill is not. The aggregate goodwill and intangible assets beforeamortisation in respect of 2007 increased by £92 million primarily as a resultof the CBH and KSA acquisitions. The Group's overall net debt as at 31 December 2007 was £60.9 million comparedto net debt of £28.8 million at 31 December 2006. The cash outflow relating tothe consideration for the acquisitions was £39.9 million. The net post retirement obligations liability has risen from £5.4 million at 31December 2006 to £7.8 million at 31 December 2007. The increase in the liabilityarises from a defined benefit obligation in Germany acquired with Kurt SalmonAssociates, offset by payments into the closed US defined benefit scheme of £0.7million (2006: £2.0 million), an increase in the discount rate from 5.8% to6.2%, strong investment performance and the weakening of the US dollar by anaverage of 2% in 2007. Cash flow Group trading was particularly cash generative in 2007. Cash generated fromoperations was £33.8 million compared to £2.3 million in 2006. Of note was thesuccessful working capital management. Despite the organic growth being skewedtowards Ineum Consulting, which traditionally offers longer credit terms thanthe Group's other consultancies, there was an absolute decrease in receivablesof £2.5 million (2006: increase of £6.4 million). Strategic progress During 2007 the Group made significant progress through broadening itsconsulting offering in existing and new geographies. The acquisition of KurtSalmon Associates provided a substantial new consultancy for the Group'sportfolio diversifying the service offerings and deepening the Group's NorthAmerican footprint. The Group also increased its business intelligence andfinancial performance offering by acquiring CBH Consulting. The diversificationof the offerings in 2007 has added to the strength and decreased the risks ofthe Group from both a service line and a geographical perspective. Dividend In the light of the Group's increased size, the underlying profitability of thebusiness and the excellent cash generation during 2007, the Board isrecommending that the total dividend in respect of the year be increased by 15%to 1.15 pence per share. An interim dividend of 0.33 pence per share was paid inOctober, and, therefore, subject to shareholders' approval, a final dividend of0.82 pence per share will be payable on 14 May 2008 to shareholders on theregister on 18 April 2008. People We were pleased, earlier in the year, to welcome CBH Consulting and Kurt SalmonAssociates employees to the Group. The Board is delighted by the contributionthat these businesses are already making to the Group. Craig Smith, Finance Director, joined the Board on 26 April 2007. JacquesManardo, non-executive director, stood down from the Board on 30 May 2007. On 19 February 2008 Rolf Stomberg, Chairman, and Kevin Parry, Chief Executive,stood down from the Board. Rolf joined the Board in September 1998 and Kevin inJanuary 2000 and both have been instrumental in the development of the companyfrom a single, loss making, consultancy to one of the 30 largest consultanciesin the world with a global reach and a robust balance sheet. I would like totake this opportunity to thank them for their hard work over the years and wishthem well in their future endeavours. Also on 19 February 2008 Craig Smith tendered his resignation although he willremain in office until 19 August 2008, or earlier if agreed. I would also liketo thank Craig for his contribution to the business during his tenure. On the same date I was appointed Executive Chairman, having previously been aNon-Executive Director of MCG. On 6 March 2008 it was announced that Mr Luiz Carvalho, CEO of ProudfootConsulting, Mr Miguel de Fontenay, CEO of Ineum Consulting and Mr Mark Wietecha,Chairman of Kurt Salmon Associates will join the Board as Executive Directors on19 March 2008. On the same date it was also announced that the Group has begun the search fortwo independent Non-Executive Directors who will join the Board of Directors onappointment. MCG is continuing to assess the composition of the board and has under way theformal process to appoint a new Chief Executive Director. A further announcementwill be made in due course. Prospects 2008 has started well with work won so far this year ahead of work delivered.The Board expects the Group to show good growth in first half revenue comparedto 2007, although it will continue to review whether or not the challengingeconomic conditions currently prevalent in the United States will adverselyaffect business during the second half of the year. Alan BarberExecutive Chairman Group income statement year ended 31 December 2007 2006 Note £'000 £'000Continuing operations Revenue 3 215,787 146,890Cost of sales (106,920) (73,415) ------ --------- ---------Gross profit 108,867 73,475 ------ --------- ---------Administrative expenses - underlying (82,948) (57,319) --------- ---------Profit from operations beforenon-recurring expenses and amortisationof acquired intangibles 25,919 16,156 Administrative expenses - non-recurring (2,480) (1,765) --------- ---------Profit from operations beforeamortisation of acquired intangibles 23,439 14,391 ------ --------- ---------Administrative expenses - amortisationof acquired intangibles (1,665) (943) ------ --------- ---------Total administrative expenses (87,093) (60,027) ------ --------- ---------Profit from operations 3 21,774 13,448Investment income 6 1,105 1,176Finance costs 6 (3,224) (1,276) ------ --------- ---------Profit before tax 19,655 13,348Tax expense 7 (6,474) (4,598) ------ --------- ---------Profit for the year attributable toequity holders of the parent 13,181 8,750 ------ --------- ---------Earnings per share - penceFrom continuing operationsBasic 8 4.7 4.1Diluted 8 4.7 4.1 ------ --------- ---------Basic - excluding amortisations ofacquired 8intangible assets and non-recurringitems 6.2 5.4 ------ --------- --------- Group statement of recognised income and expense year ended 31 December 2007 2006 £'000 £'000 -------- --------Exchange differences on translation offoreign operations 9,057 (4,904)Actuarial gains on defined benefit pensionfund and medical schemes 734 3,284Loss on available for sale investments (26) -Tax on items taken directly to equity 167 600 -------- --------Net income/(expense) recognised directly in 9,932 (1,020)equityProfit for the year 13,181 8,750 -------- --------Total recognised income and expense for theyear attributable to equity holders of the parent 23,113 7,730 -------- -------- Group balance sheet as at 31 December 2007 2006 £'000 £'000Non-current assetsIntangible assets 256,107 162,647Property, plant and equipment 3,572 1,849Financial assets 6,650 -Deferred income tax assets 15,014 3,412 -------- --------Total non-current assets 281,343 167,908 -------- --------Current assetsTrade and other receivables 74,075 47,327Cash and cash equivalents 20,895 10,278 -------- --------Total current assets 94,970 57,605 -------- --------Total assets 376,313 225,513 -------- --------Current liabilitiesFinancial liabilities (29,205) (14,792)Trade and other payables (100,842) (54,101)Current tax liabilities (7,670) (5,728) -------- --------Total current liabilities (137,717) (74,621) -------- --------Net current (liabilities) (42,747) (17,016) -------- --------Non-current liabilitiesFinancial liabilities (52,619) (24,255)Retirement benefit obligation (7,752) (5,411)Non-current tax liabilities (11,748) (7,711)Long-term provisions (7,465) (1,326) -------- --------Total non-current liabilities (79,584) (38,703) -------- --------Total liabilities (217,301) (113,324) -------- --------Net assets 159,012 112,189 -------- --------EquityShare capital 82,225 67,735Share premium account 48,894 38,163Merger reserve 32,513 32,513Shares to be issued - 46Share compensation reserve 2,952 1,492Own shares held by employee share trust (1,296) (1,270)Translation reserve 3,896 (5,161)Other reserves 7,038 7,064Retained earnings (17,210) (28,393) -------- --------Total equity 159,012 112,189 -------- -------- Consolidated cash flow statement year ended 31 December 2007 2006 Note £'000 £'000 Net cash inflow/(outflow) from operating activities 9 31,197 (1,954) ------ -------- ---------Investing activitiesInterest received 784 1,013Acquisitions of subsidiaries, net of cash andoverdrafts acquired (39,895) (44,932)Purchases of property, plant and equipment (2,111) (1,202)Purchases of intangible assets (994) (1,363)Purchase of financial assets (1,152) - ------ -------- ---------Net cash used in investing activities (43,368) (46,484) ------ -------- ---------Financing activitiesInterest paid (3,420) -Dividends paid 4 (3,561) (1,486)Proceeds from issue of shares 13 282Proceeds from borrowings 45,069 39,009Repayment of borrowings (12,657) -Refinancing of acquired borrowings by term debt (2,587) (419) ------ -------- ---------Net cash raised by financing activities 22,857 37,386 ------ -------- ---------Net increase/(decrease) in cash and cash equivalents 10,686 (11,052)Cash and cash equivalents at beginning of year 10,278 21,555Effect of foreign exchange rate changes (69) (225) ------ -------- ---------Cash and cash equivalents at end of year 20,895 10,278 ------ -------- --------- Notes 1. Basis of preparation The financial information included in this statement does not constitute the company's statutory accounts for the years ended 31 December 2007 or 2006, but is derived from those accounts. Statutory accounts for 2006 have been delivered to the Registrar of Companies and those for 2007 will be delivered following thecompany's annual general meeting. The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their reports and did not contain statements under S237(2) or (3) Companies Act 1985. While the financial information included in this preliminary announcement hasbeen computed in accordance with International Financial Reporting Standards(IFRS), this announcement does not itself contain sufficient information tocomply with IFRSs. The Group's Annual Report and Accounts will be sent to shareholders on 20 March2008 and will be available at the Company's registered office at 10 Fleet Place,London, EC4M 7RB, United Kingdom and on our website: www.mcgplc.com. The Annual General Meeting will be held at 2.30pm on 23 April 2008 at the offices of Baker & McKenzie LLP, 100 New Bridge Street, London, EC4V 6JA. 2. Accounting policies The financial information has been prepared in accordance with IFRSs. Thesefinancial statements have been prepared in accordance with those IFRS standardsand IFRIC interpretations issued and effective or issued and early adopted as atthe time of preparing these statements (as at 31 December 2007). The policieshave been consistently applied to all the periods presented. Full details of the Group's accounting polices can be found in the 2006 AnnualReport in note 2 which is available on our website: www.mcgplc.com. Notes (continued) 3. Segmental information The Group has one business reporting segment: management consultancy consistingof the six consultancies: Ineum Consulting, Kurt Salmon Associates, ParsonConsulting, Proudfoot Consulting, Salzer Consulting and Viaduct Consulting. Primary reporting format - geographic segments The Group operates in three geographic areas: the Americas, Europe and the Restof the World. The Group reports segment information on the basis of geographic area asfollows: (a) Income statement year ended 31 December 2007 Americas Europe Rest of World Consolidated £'000 £'000 £'000 £'000 -------- -------- -------- --------Revenue 62,442 139,904 13,441 215,787 -------- -------- -------- --------Profit from operationsbefore acquisitionintegration costs,depreciation and amortisation ofacquired intangibles 8,948 18,710 126 27,784Amortisation of acquiredintangibles (441) (1,224) - (1,665)Depreciation and otheramortisation (447) (1,332) (86) (1,865) -------- -------- -------- --------Profit from operationsbefore non-recurring items 8,060 16,154 40 24,254Acquisition integrationcosts (799) (1,681) - (2,480) -------- -------- -------- --------Profit from operations 7,261 14,473 40 21,774Finance costs (net) (2,119) -------- -------- -------- --------Profit before tax 19,655Income tax expense (6,474) -------- -------- -------- --------Profit for the year 13,181 -------- -------- -------- -------- Notes (continued) 3. Segmental information (continued) (b) Net assets At 31 December 2007 Americas Europe Rest of World Consolidated £'000 £'000 £'000 £'000 -------- -------- -------- --------AssetsIntangibles, includinggoodwill 148,927 106,507 673 256,107Other segment assets 40,432 55,148 1,840 97,420 -------- -------- -------- -------- 189,359 161,655 2,513 353,527Unallocated corporateassets 22,786 -------- -------- -------- --------Consolidated total assets 376,313 -------- -------- -------- --------LiabilitiesSegment liabilities (55,282) (56,508) (3,428) (115,218)Unallocated corporateliabilities (102,083) -------- -------- -------- --------Consolidated totalliabilities (217,301) -------- -------- -------- --------Net assets 159,012 -------- -------- -------- -------- (c) Capital additions, depreciation and amortisation Year ended 31 December 2007 Americas Europe Rest of World Consolidated £'000 £'000 £'000 £'000 -------- -------- -------- --------Acquisitions 11,769 3,728 - 15,497Capital additions 1,158 1,354 420 2,932Unallocated corporateadditions 1,325 -------- -------- -------- --------Total capital additions 12,927 5,082 420 19,754 -------- -------- -------- --------Depreciation andamortisation 889 2,555 86 3,530 -------- -------- -------- -------- Notes (continued) 3. Segmental information (continued) (d) Income statement year ended 31 December 2006 Americas Europe Rest of World Consolidated £'000 £'000 £'000 £'000 -------- -------- -------- ---------RevenueExternal sales 63,981 70,251 12,658 146,890 -------- -------- -------- ---------Profit/(loss) from operationsbefore release of indemnity provision, acquisition integration costs, depreciationand amortisation of acquired intangibles 10,708 7,656 (361) 18,003Amortisation of acquiredintangibles - (943) - (943)Depreciation and otheramortisation (860) (926) (61) (1,847) -------- -------- -------- ---------Profit/(loss) from operationsbefore non-recurring items 9,848 5,787 (422) 15,213 Acquisition integration costs -non-recurring - (2,100) - (2,100) Release of indemnityprovision - - 335 335 -------- -------- -------- ---------Profit/(loss) fromoperations 9,848 3,687 (87) 13,448Finance costs (net) (100) -------- -------- -------- ---------Profit before tax 13,348Income tax expense (4,598) -------- -------- -------- ---------Profit for the year 8,750 -------- -------- -------- --------- Notes (continued) 3. Segmental information (continued) (e) Net assets At 31 December 2006 Americas Europe Rest of World Consolidated £'000 £'000 £'000 £'000 -------- -------- -------- ---------AssetsIntangibles, includinggoodwill 27,112 134,842 693 162,647Other segment assets 3,374 42,089 1,085 46,548 -------- -------- -------- --------- 30,486 176,931 1,778 209,195Unallocated corporateassets 16,318 -------- -------- -------- ---------Consolidated total assets 225,513 -------- -------- -------- ---------LiabilitiesSegment liabilities (12,422) (46,099) (2,275) (60,796)Unallocated corporateliabilities (52,528) -------- -------- -------- ---------Consolidated totalliabilities (113,324) -------- -------- -------- ---------Net assets 112,189 -------- -------- -------- --------- (f) Capital additions, depreciation and amortisation Year ended 31 December 2006 Americas Europe Rest of World Consolidated £'000 £'000 £'000 £'000 -------- -------- -------- ---------Acquisitions - 10,536 - 10,536Capital additions bysegment 393 709 64 1,166Unallocated corporateadditions 1,399 -------- -------- -------- ---------Total capital additions 393 11,245 64 13,101 -------- -------- -------- ---------Depreciation andamortisation 860 1,869 61 2,790 -------- -------- -------- --------- Notes (continued) 4. Dividends 2007 2006 £'000 £'000Amounts recognised as distributions to equity holders in theyear:Final dividend for the year ended 31 December 2006 of 1p(2005: 0.8p) 2,667 1,486Interim dividend for the year ended 31 December 2007 of0.33p per share(2006: nil) 894 - -------- -------- 3,561 1,486 -------- -------- Dividends are not payable on shares held in the employee share trust which haswaived its entitlement to dividends. The amount of the dividend waived in 2007(in respect of the year ended 31 December 2006) was £56,000 (2006: £34,000). The directors recommend the payment of a final dividend in respect of 2007 of0.82 pence per share to be paid on 14 May 2008 to ordinary shareholders on theregister on 18 April 2008. 5. Staff numbers and costs The average number of persons employed by the Group (including directors) duringthe year, analysed by category, was as follows: 2007 2006 -------- --------Sales and marketing 360 248Consultants 1,066 555Support staff 272 167 -------- -------- 1,698 970 -------- -------- As at 31 December 2007, the Group employed 2,176 (2006: 1,448) people. Theincrease is largely attributable to the acquisition of Kurt Salmon Associates. The aggregate payroll costs of these persons were as follows: 2007 2006 £'000 £'000 -------- --------Wages and salaries 97,191 67,571Social security costs 24,843 11,934Other pension costs 1,798 1,218 -------- -------- 123,832 80,723 -------- -------- Wages and salaries include £779,000 (2006: £804,000) relating to share optionsrecognised as an expense under IFRS 2. Notes (continued) 6. Finance income/(costs) 2007 2006 £'000 £'000 -------- --------Interest receivable on bank deposits and similar income 784 1,013Interest payable on bank overdrafts and loans and similarcharges (3,224) (1,276)Net finance income on retirement benefit plans 321 163 -------- -------- (2,119) (100) -------- -------- 7. Tax 2007 2007 £'000 £'000 -------- -------- UK corporation tax (350) 326 Foreign tax 6,092 5,540 -------- -------- Deferred tax - acquired intangible assets (155) (316)Deferred tax - tax losses and other temporary differences (368) (2,250) Deferred tax - US goodwill 875 813 -------- -------- Total deferred tax 352 (1,753) -------- -------- Total current year tax 6,094 4,113Prior year taxation 380 485 -------- -------- 6,474 4,598 The deferred tax charge includes tax deductions in the US for goodwill which isnot amortised in the income statement. A deferred tax liability is required tobe held for this item in accordance with accounting standards. UK corporationtax is calculated at 30% (2006: 30%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rate prevailing in the respective jurisdictions. Notes (continued) 8. Earnings per share From continuing operations The calculation of the basic and diluted earnings per share is based on thefollowing data: 2007 2006Earnings £'000 £'000Earnings for the purposes of basic earnings pershare being net profit attributable to equityholders of the parent 13,181 8,750 --------- ---------Amortisation of acquired intangibles 1,665 943 --------- ---------Non-recurring items 2,480 1,765 --------- ---------Earnings for the purpose of basic earnings per shareexcluding amortisation and non-recurring items 17,326 11,458 --------- ---------Number of shares Number Number (million) (million)Weighted average number of ordinary shares for thepurposes of basic earnings per share 281.5 212.5Effect of dilutive potential ordinaryshares:Share options 0.7 1.3Long-term incentive plan - 0.2 --------- ---------Weighted average number of ordinary shares for thepurposes of diluted earnings per share 282.2 214.0 --------- --------- Pence PenceBasic earnings per share 4.7 4.1Diluted earnings per share 4.7 4.1 --------- ---------Basic - excluding amortisation of acquiredintangibles and non-recurring items 6.2 5.4 --------- --------- The average share price for the year ended 31 December 2007 was 45.2 pence(2006: 54.3 pence). Notes (continued) 9. Notes to the cash flow statement 2007 2006 £'000 £'000 Profit from operations 21,774 13,448Adjustments for:Depreciation of property, plant and equipment 1,259 1,000 Amortisation of intangible assets 2,271 1,790Loss on disposal of plant and equipment 7 79Adjustment for pension funding (692) (2,008)Adjustment for share options charge 779 804Decrease in provisions (540) (493) --------- ---------Operating cash flows before movements in working capital 24,858 14,620Decrease/(Increase) in receivables 2,521 (6,447)Increase/(Decrease) in payables 6,450 (5,858) --------- ---------Cash generated by operations 33,829 2,315Income taxes paid (2,632) (4,269) --------- ---------Net cash from operating activities 31,197 (1,954) --------- --------- Cash and cash equivalents (which are presented as a single class of assets onthe face of the balance sheet) comprise cash at bank and other short-term highlyliquid investments with a maturity of three months or less. Notes (continued) 10. Group statement of changes in equity 2007 2006 £'000 £'000 -------- --------At 1 January 112,189 57,932Dividends paid (3,561) (1,486)Net profit for the year 13,181 8,750Issue of share capital Consideration for acquisitions 25,155 46,927 Exercise of share option schemes 13 282Share options 2,103 804Revaluation reserve (26) -Other recognised income and expense 9,958 (1,020) -------- --------At 31 December 159,012 112,189 -------- -------- This information is provided by RNS The company news service from the London Stock Exchange