MMC.L Regulatory News (MMC)

13 Aug 2007 07:01

Management Consulting Group PLC13 August 2007 Financial results for the six months ended 30 June 2007 Management Consulting Group PLC ("MCG" or "the Group"), the internationalmanagement consultancy group, today announces its results for the six monthsended 30 June 2007. Key points • Revenue up 49% on last year at £100.5 million (2006: £67.3 million) • Profit from operations before non-recurring items and amortisation of acquired intangibles up 55% to £10.2 million (2006: £6.6 million) • Profit from operations up 20% to £8.3 million (2006: £6.9 million) • Profit before tax and amortisation of intangibles up 11% at £8.1 million (2006: £7.3 million) • Basic earnings per share of 1.9 pence (2006: 2.9 pence) • Earnings per share excluding amortisation of acquired intangibles and non-recurring items of 2.6 pence (2006: 2.7 pence) • Current order book solidly ahead of last year on like-for-like basis • Ineum Consulting fully integrated and performing ahead of expectations • Interim dividend of 0.33 pence (2006: nil) Rolf Stomberg, Chairman: "In the light of the Group's increased size and diversity of consultingofferings, the board has decided to re-commence the payment of an interimdividend. The dividend has been set at one-third of the total pay out in respectof 2006 at 0.33 pence per share which will smooth the return to shareholdersover a year." Kevin Parry, Chief Executive: "This is the first set of results that include Ineum Consulting in the Group foran entire reporting period. I am delighted that its integration has beencompleted in a timely manner. Ineum has performed robustly, ahead of ourexpectations at the time of its acquisition, and is clearly earnings accretive. The Group's order book is solidly ahead of its position last year. For all ourbusinesses the pipelines of work are good and allow us to look to the futurewith confidence." For further information, please contact: Management Consulting Group PLC Kevin Parry Chief Executive 020 7710 5000Craig Smith Finance Director 020 7710 5000 Maitland Suzanne Bartch 020 7379 5151Peter Ogden 020 7379 5151 An analyst briefing will be held today at the offices of Management ConsultingGroup PLC on the 6th floor of Fleet Place House, 2 Fleet Place, Holborn Viaduct,London EC4M 7RF at 9.30 am. Notes to Editors Management Consulting Group PLC (MMC.L) is a group comprising a range ofconsulting and professional services offerings. It operates through five divisions: Ineum Consulting, Parson Consulting,Proudfoot Consulting, Salzer Consulting and Viaduct Consulting. Ineum Consultingprovides consulting services with industry expertise. Parson Consultingspecialises in financial management consulting. Proudfoot Consulting specialisesin operational improvement consulting. Salzer Consulting specialises instarting, managing and restructuring businesses in Asian markets and ViaductConsulting specialises in commercial due diligence. The businesses operateworldwide. Viaduct Consulting commenced operations in August 2007. For furtherinformation, visit www.mcgplc.com. Important note This interim statement contains certain forward-looking statements with respectto the financial condition, results, operations and businesses of ManagementConsulting 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 or developments to differ materially from those expressed or implied bythese forward-looking statements and forecasts. Nothing in this interimstatement should be construed as a profit forecast. Management Statement The Group's trading results are ahead of the board's expectations at the time ofthe trading update provided on 26 April 2007: Ineum Consulting's inauguralcontribution to the first half results showed significant like-for-like growthand Proudfoot Consulting performed slightly better than in the second half oflast year; Parson Consulting's results were mixed. The results for the six months ended 30 June 2007 are summarised as follows: Unaudited Unaudited Audited Six months Six months Year ended ended ended 30 June 2007 30 June 2006 31 Dec 2006 £'000 £'000 £'000 ---------- --------- ---------RevenueIneum Consulting 40,481 - 23,709Parson Consulting 21,382 15,687 34,301Proudfoot Consulting 38,203 51,656 88,658Salzer Consulting 473 - 222 ---------- --------- --------- 100,539 67,343 146,890 ---------- --------- ---------Underlying profit/(loss) fromoperations*Ineum Consulting 4,584 - 2,780Parson Consulting (827) (1,857) (2,108)Proudfoot Consulting 6,591 8,431 15,575Salzer Consulting (189) - (91) ---------- --------- --------- 10,159 6,574 16,156 ---------- --------- --------- *before non-recurring items and acquired intangible asset amortisation. In 2007,these comprise £1,277,000 integration costs and £603,000 amortisation ofacquired intangible assets (six months ended 30 June 2006: release of £335,000surplus provision). Group results Revenue for the six months ended 30 June 2007 was up by 49% compared with thefirst half of 2006. Ineum Consulting joined the Group on 1 September 2006. The aggregate revenue ofthe entities acquired grew by 27% to £49.9 million (2006 first halfpre-acquisition revenue: £39.3 million). The acquired financial managementbusiness is now operating as Parson Consulting and the revenue has been split inthe above table in line with the reorganised operating structure. The performance of Parson Consulting continued to be mixed. Overall thelike-for-like revenue declined by 9% compared with the first half of last yeardue to a shortfall in the US business. There was 8% revenue growth in Europe andthe rest of the world which now accounts for 72% of the Parson Consultingbusiness. Proudfoot Consulting's revenue increased slightly compared with the second halfof last year but, as previously anticipated, declined by 26% compared with theexceptionally strong first half of last year. Sterling's strength against the US dollar adversely impacted the reportedrevenue by approximately £3.7 million compared with the first half of 2006. In the period, 27% of Group revenue was attributable to the Americas (six monthsended 30 June 2006: 53%). American revenues decreased by 26% compared with thecorresponding period of 2006. Of that decrease, seven percentage points areaccounted for by currency translation. Europe's share of revenue was 68% (sixmonths ended 30 June 2006: 36%) with reported revenues 180% up compared with thecorresponding period of 2006 reflecting the acquisition of Ineum; on alike-for-like basis, the revenue increased by 15%. Approximately 5% (six monthsended 30 June 2006: 10%) of Group revenue is earned outside the Americas andEurope. The Group's gross margin continued to be well managed and was 50% (six monthsended 30 June 2006: 51%). Selling and underlying administrative costs increased due to the acquisitions ofIneum and Salzer. There were one-off integration costs, associated with theacquisitions, of £1.3 million which have been incurred in line with the estimatein the Ineum prospectus and substantially comprise technology, peoplereorganisation, legal and travel costs. The remaining non-recurring costs to beincurred in the second half will be less than £0.5 million. The underlying profit from operations before exceptional items and theamortisation of acquired intangible assets rose by 55% to £10.2 million (sixmonths ended 30 June 2006: £6.6 million). Including those items, profit fromoperations increased by 20% to £8.3 million (six months ended 30 June 2006: £6.9million). Net finance costs increased by £1.2 million to £0.8 million, reflecting the debttaken on to finance the acquisition and operations of Ineum Consulting. Theprofit before tax was little changed at £7.5 million (2006: £7.3 million). The tax charge on pre-tax profits is 31% compared with 28% for the first half of2006. This includes four percentage points in respect of deferred tax that isrequired to be charged in respect of tax deductions for goodwill but will notbecome payable unless consulting businesses are sold. The underlying tax rate of27% is below the statutory rate of tax due to the utilisation of brought forwardlosses that the Group has not previously been able to recognise as deferred taxassets. The consultancies Ineum Consulting has performed ahead of expectations at the time of itsacquisition. It made an underlying operating profit of £4.6 million in the firsthalf. All sectors have performed well with particularly strong results from thepublic and financial sectors. Ineum Consulting continues to invest in theexpansion of its offerings outside France. The margin for Ineum Consultingremained little changed on the increased revenue due to the growth in the publicsector which commands lower fee rates than the private sector. Parson Consulting's performance remained weak in North America. Overall therewas an operating loss of £0.8 million, down from a loss of £1.9 million in thefirst half of last year. It is however too soon to see an improvement in tradingassociated with the recent investment in people in the US. The businessesoutside the US made solid progress with a particularly strong contribution fromthe merged French business. Proudfoot Consulting revenues declined in the period, resulting in an operatingprofit of £6.6 million (2006 first half: £8.4 million). This result was expecteddue to the exceptionally strong first half last year where a number of largeclient engagements came to a natural end. Both the European and Americanbusinesses were adversely affected. The Brazilian business, which opened lastyear, has grown well and is already profitable. The margin for ProudfootConsulting remained little changed on the reduced revenue. Salzer Consulting made a small underlying operating loss of £0.2 million. Inline with the strategy for its development, we are investing in expanding itsresources to meet client demand. Earnings per share The basic earnings per share for the six months ended 30 June 2007 decreased by34% to 1.9 pence compared with 2.9 pence in the corresponding period last year.Excluding the impact of non-recurring items and the amortisation of intangibleassets, the earnings per share were little changed at 2.6 pence compared with2.7 pence in the first half of last year. The acquisition of Ineum enhancedearnings by approximately 22% before the amortisation of intangibles but theoverall earnings advancement was held back by the reduction in Proudfoot'soperating profit. Dividend In the light of the increase in the Group's size and increased diversity ofconsulting offerings, the board is pleased to re-commence the payment of aninterim dividend. It is our intention in future to target an interim dividend ofapproximately one third of the previous final dividend. Accordingly, a dividendof 0.33 pence per share will be paid on 22 October 2007 to shareholders on theregister on 21 September 2007. Balance sheet The Group's net debt was £28.8 million compared with net cash of £23.5 millionat 30 June 2006. The overall level of net debt is the same as at the year endreflecting the absorption of working capital resulting from the growth of IneumConsulting and the seasonality of the Group's cash flows. Progress has been made in improving Ineum's working capital management with anet inflow in the period from the better management of receivables. The deficit related to the closed defined benefit pension and medical plansdecreased substantially from £6.1 million at 30 June 2006 to £2.9 million at 30June 2007 as a result of cash contributions, the investment performance and theweaker US dollar compared with Sterling. Strategic direction Our strategic focus is unchanged. We are building a Group comprising a series ofconsultancies with particular specialisations in different geographies. Thediversification of the offerings in 2006 has added to the strength and decreasedthe risks of the Group from service line and geographical perspectives. Each ofthe consulting businesses currently comprising the Group has excellent mediumterm prospects. Ineum Consulting added new depth to our consulting offerings, enabling clientsto select a Group consultancy that has deep industry expertise. Its coredomestic market is France and this has resulted in a bias in the Group's revenuetowards Europe. It remains our desire to build a Group with a reasonably evenbalance of business between North America and Europe. The integration of Ineumhas progressed well and slightly ahead of our timetable; it is now fullyintegrated into the Group as one of the core consultancies. In the second half of the year, the Group commenced a start-up operation,Viaduct Consulting, which provides commercial due diligence, initially servingthe European market. This is in response to an identified gap in the marketplace for independent commercial due diligence. Its revenue and profitcontribution in the current year will be immaterial. The co-ordination of major client relationships across the consultanciescontinues to increase through the global accounts programme, as does engagementspecific co-operation, allowing us to bring a broad range of deep expertise toour clients. Going forward we will continue to expand the geographical overlap of thebusinesses to maximise the benefit that comes from our existing infrastructure.We will also expand our offerings organically and by acquisitions commensuratewith the market opportunities and the absorption of prior acquisitions into theGroup. Whilst size in itself is not a measure of success, the diversification ofrisk that comes with size and the wider product offerings are important aspectsof future success. Outlook As anticipated, Group's order book is solidly ahead of its position at thebeginning of the year and at the same time last year. On a like-for-like basis,taking account of the impact of acquisitions, the current order book issignificantly higher in both Ineum Consulting and Proudfoot Consulting andmarginally higher in Parson Consulting. The pipelines of work are good. Work to be won in the remainder of the year is, as usual, a key determinant ofthe outcome for the year as a whole and so it is premature to commentspecifically on the likely results for the current calendar year. Nevertheless,we remain confident that the Group will show good progress in 2007. Dr Rolf Stomberg Kevin ParryChairman Chief Executive 13 August 2007 Independent review reportby Deloitte & Touche LLP to Management Consulting Group PLC Introduction We have been instructed by the Company to review the financial information forthe six months ended 30 June 2007 which comprises the consolidated incomestatement, the consolidated statement of recognised income and expense, theconsolidated balance sheet, the consolidated cash flow statement and relatednotes 1 to 7. We have read the other information contained in the interim reportand considered whether it contains any apparent misstatements or materialinconsistencies with the financial information. This report is made solely to the Company in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the Company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe Company, for our review work, for this report, or for the conclusions wehave formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures are consistent withthose applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of Group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with International Standards on Auditing (UK andIreland) and therefore provides a lower level of assurance than an audit.Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2007. Deloitte & Touche LLPChartered AccountantsLondon13 August 2007 Group income statement Six months ended 30 June 2007 Unaudited Unaudited Audited Six months Six months Year ended ended ended 30 June 30 June 31 Dec 2007 2006 2006 Note £'000 £'000 £'000 ----- -------- -------- --------Continuing operationsRevenue 3 100,539 67,343 146,890Cost of sales (50,287) (32,697) (73,415) -------- -------- --------Gross profit 50,252 34,646 73,475Selling costs (23,990) (19,370) (40,169)-------------------------------------------------------------------------------Administrative expenses - (16,103) (8,702) (17,150)underlying -------- -------- -------- Profit from operations beforenon-recurring expenses and amortisation of acquired intangibles 10,159 6,574 16,156 Administrative (expenses)/income -non-recurring (1,277) 335 (1,765) -------- -------- -------- Profit from operations beforeamortisation of acquired intangibles 8,882 6,909 14,391 Administrative expenses -amortisation ofacquired intangibles (603) - (943)------------------------------------------------------------------------------- Total administrative expenses (17,983) (8,367) (19,858) -------- -------- --------Profit from operations 3 8,279 6,909 13,448Investment income 459 531 1,176Finance costs (1,271) (125) (1,276) -------- -------- --------Profit before tax 7,467 7,315 13,348Tax expense 5 (2,318) (2,014) (4,598) -------- -------- --------Profit for the period 5,149 5,301 8,750 -------- -------- --------Earnings per share - penceFrom continuing operationsBasic 6 1.9 2.9 4.1Diluted 6 1.9 2.8 4.1Basic - excluding amortisation ofacquiredintangibles and non-recurring items 6 2.6 2.7 5.4 -------- -------- -------- Group statement of recognised income and expense Six months ended 30 June 2007 Unaudited Unaudited Audited Six months Six months Year ended ended ended 30 June 30 June 31 Dec 2007 2006 2006 £'000 £'000 £'000 -------- -------- ------Exchange differences on translation offoreign operations (1,178) (3,261) (4,904)Actuarial gains on defined benefit pensionfund and medical schemes 1,783 3,734 3,284Tax on items taken directly to equity 101 449 600 -------- -------- ------Net income/(expense) recognised directly inequity 706 922 (1,020)Profit for the period 5,149 5,301 8,750 -------- -------- ------Total recognised income and expense for theperiod 5,855 6,223 7,730 -------- -------- ------ Group balance sheet As at 30 June 2007 Unaudited Unaudited Audited 30 June 30 June 31 Dec 2007 2006 2006 £'000 £'000 £'000 -------- -------- ------- Non-current assetsIntangible assets 161,804 67,419 162,546Property, plant and equipment 2,261 1,460 2,294Deferred income tax assets 3,345 1,258 3,597 -------- -------- -------Total non-current assets 167,410 70,137 168,437 -------- -------- ------- Current assetsTrade and other receivables 44,447 12,979 46,800Cash and cash equivalents 9,640 23,484 10,278 -------- -------- -------Total current assets 54,087 36,463 57,078 -------- -------- -------Total assets 221,497 106,600 225,515 -------- -------- ------- Current liabilitiesBorrowings (17,287) - (14,792)Trade and other payables (48,346) (27,056) (54,103)Current tax liabilities (7,308) (3,915) (5,728) -------- -------- -------Total current liabilities (72,941) (30,971) (74,623) -------- -------- -------Net current (liabilities)/assets (18,854) 5,492 (17,545) -------- -------- ------- Non-current liabilitiesBorrowings (21,182) - (24,255)Retirement benefit obligation (2,857) (6,146) (5,411)Non-current tax liabilities (7,572) (5,294) (7,711)Long-term provisions (757) (476) (829)Non-current accruals (425) (480) (497) -------- -------- -------Total non-current liabilities (32,793) (12,396) (38,703) -------- -------- -------Total liabilities (105,734) (43,367) (113,326) -------- -------- -------Net assets 115,763 63,233 112,189 -------- -------- ------- EquityShare capital 67,775 47,488 67,735Share premium account 38,189 38,151 38,163Merger reserve 32,513 5,683 32,513Shares to be issued - 46 46Share compensation reserve 1,225 1,133 1,492Own shares held by employee share trust (1,296) (1,270) (1,270)Translation reserve (6,339) (3,518) (5,161)Other reserves 7,064 7,064 7,064Retained earnings (23,368) (31,544) (28,393) -------- -------- -------Total equity 115,763 63,233 112,189 -------- -------- ------- Group cash flow statement Six months ended 30 June 2007 Unaudited Unaudited Six Six Audited months months Year ended ended ended 30 June 30 June 31 Dec 2007 2006 2006 Note £'000 £'000 £'000 ---- -------- -------- -------- Net cash from operating activities 7 4,784 5,690 (1,954) -------- -------- -------- Investing activitiesInterest received 297 442 1,013Acquisitions of subsidiaries, net ofcash and overdrafts acquired (204) - (44,932)Purchases of property, plant and equipment (597) (403) (1,202)Purchases of intangible assets (510) (1,193) (1,363) -------- -------- --------Net cash used in investing activities (1,014) (1,154) (46,484) -------- -------- -------- Financing activitiesDividends paid 4 (2,667) (1,486) (1,486)Interest paid (1,272) - -Net (repayment of)/proceeds from borrowings (523) - 39,009Refinancing of acquired borrowings byterm debtProceeds from issue of shares 13 120 282 -------- -------- --------Net cash (used in)/raised by financing (4,449) (1,366) 22,594activities -------- -------- -------- Net (decrease)/increase in cash andcash equivalents (679) 3,170 (25,844) Cash and cash equivalents at beginningof period 10,278 21,555 21,555 Net impact of new borrowings and - - 14,792refinancing Effect of foreign exchange rate changes 41 (1,241) (225) -------- -------- --------Cash and cash equivalents at end of 9,640 23,484 10,278period -------- -------- -------- Notes 1. General information The information for the year ended 31 December 2006 does not constitutestatutory accounts as defined in Section 240 of the Companies Act 1985. A copyof the statutory accounts for that year has been delivered to the Registrar ofCompanies. The auditors' report on those accounts was unqualified pursuant toSection 235 of the Companies Act 1985 and did not contain a statement underSection 237 (2) or (3) of that Act. 2. Significant accounting policies (a) Basis of preparation The interim report has been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS). The interim report was approved by the board on 13 August 2007. (b) Accounting policies The accounting policies and methods of computation applied by the Group in the interim report are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2006. The Group's consolidated financial statements for the year ended 31 December 2006 are available on our website www.mcgplc.com. 3. Segmental information The Group operates in three geographical areas - North America, Europe and Rest of the World. The following is an analysis of the revenue and results for the period, analysed by geographic segment, the Group's primary basis of segmentation: Income statement Six months ended 30 June 2007 Americas Europe Rest of World Consolidated(Unaudited) £'000 £'000 £'000 £'000 -------- -------- ---------- --------- RevenueExternal sales 26,723 68,669 5,147 100,539 -------- -------- ---------- ---------Profit from operations beforeacquisition integration costs,depreciation and amortisation ofacquired intangibles 2,955 7,592 512 11,059Amortisation of acquiredintangibles - (603) - (603)Depreciation and otheramortisation (164) (697) (39) (900) -------- -------- ---------- ---------Profit from operations beforenon- recurring items 2,791 6,292 473 9,556Acquisition integration costs - (1,247) (30) (1,277) -------- -------- ---------- ---------Profit from operations 2,791 5,045 443 8,279Finance costs (net) (812) -------- -------- ---------- ---------Profit before tax 7,467Income tax expense (2,318) -------- -------- ---------- ---------Profit for the period 5,149 -------- -------- ---------- --------- Six months ended 30 June 2006 Americas Europe Rest of World Consolidated(Unaudited) £'000 £'000 £'000 £'000 -------- -------- ---------- --------- RevenueExternal sales 35,935 24,552 6,856 67,343 -------- -------- ---------- ---------Profit from operations beforerelease of indemnity provision,acquisition integration costs,depreciation and amortisation ofacquired intangibles 4,856 2,629 (325) 7,160Amortisation of acquired - - - -intangiblesDepreciation and otheramortisation (348) (218) (20) (586) -------- -------- ---------- ---------Profit/(loss) from operationsbefore non-recurring items 4,508 2,411 (345) 6,574Release of indemnityprovision - - 335 335 -------- -------- ---------- ---------Profit/(loss) fromoperations 4,508 2,411 (10) 6,909Investment income (net) 406 -------- -------- ---------- ---------Profit before tax 7,315Income tax expense (2,014) -------- -------- ---------- ---------Profit for the period 5,301 -------- -------- ---------- --------- 4. Dividends Unaudited Audited 2007 2006 £'000 £'000 -------- --------Amounts recognised as distributions to equity holders inthe period:Final dividend for the year ended 31 December 2006 of1.0p (2005: 0.8p) per share 2,667 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 2006(in respect of the year ended 31 December 2006) was £42,000 (2006: £34,000). Aninterim dividend of 0.33 pence per share will be paid on 22 October 2007 toshareholders on the register on 21 September 2007. 5. Taxation The effective tax charge for the half year is 31% (30 June 2006: 28%), based onprofit before tax. The charge includes four percentage points in respect ofdeferred tax. The underlying tax rate of 27% is below the statutory rate due tothe utilisation of brought forward tax losses. Of the total tax charge, £0.2million arises within the UK (2006: £0.2 million) and £2.1 million overseas(2006: £1.8 million). 6. Earnings per share From continuing operations The calculation of earnings per share is based on the following data: Unaudited Unaudited Six Six Audited months months Year ended ended ended 30 June 30 June 31 Dec 2007 2006 2006 £'000 £'000 £'000 -------- -------- -------- Earnings for the purposes of basic earningsper share and diluted earnings per share being net profit attributable to equity holder of the parent 5,149 5,301 8,750Amortisation of acquired intangibles 603 - 943 -------- -------- -------- Earnings for the purpose of basic earnings pershare excluding amortisation of acquired intangibles 5,752 5,301 9,693Non-recurring items 1,277 (335) 1,765 -------- -------- -------- Earnings for the purpose of basic earnings pershare excluding amortisation of acquired intangibles and non-recurring items 7,029 4,966 11,458 -------- -------- -------- Number Number Number (million)(million)(million) -------- -------- --------Number of sharesWeighted average number of ordinary shares for thepurposes of basic earnings per share, basicexcluding amortisation and basic excluding amortisation and non-recurring items 266.8 185.5 212.5 Effect of dilutive potential ordinary shares:Share options 0.8 1.5 1.3Long-term incentive plan - 0.2 0.2 -------- -------- --------Weighted average number of ordinary shares for thepurposes of diluted earnings per share 267.6 187.2 214.0 -------- -------- -------- Pence Pence PenceBasic earnings per share 1.9 2.9 4.1Diluted earnings per share 1.9 2.8 4.1Basic - excluding amortisation of acquiredintangibles and non-recurring items 2.6 2.7 5.4 -------- -------- -------- The average share price for the six months ended 30 June 2007 was 48.3 pence (30June 2006: 57.3 pence and 31 December 2006: 54.3 pence). 7. Notes to the cash flow statement Unaudited Unaudited Audited Six months Six months Year ended ended ended 30 June 30 June 31 Dec 2007 2006 2006 £'000 £'000 £'000 -------- -------- -------- Profit from operations 8,279 6,909 13,448Adjustments for:Depreciation of property, plant andequipment 570 386 1,000Amortisation of intangible assets 933 200 1,790Loss on disposal of plant and equipment 9 - 79Adjustment for pension funding (530) (1,235) (2,008)Adjustment for share options charge 375 444 804Decrease in provisions (72) (395) (493) -------- -------- -------- Operating cash flows before movements inworking capital 9,564 6,309 14,620 Decrease/(Increase) in receivables 3,019 1,912 (6,447)Decrease in payables (5,953) (1,429) (5,858) -------- -------- -------- Cash generated by operations 6,630 6,792 2,315 Income taxes paid (1,846) (1,102) (4,269) -------- -------- --------Net cash from operating activities 4,784 5,690 (1,954) -------- -------- -------- Cash and cash equivalents comprise cash at bank and short term deposits with amaturity of three months or less. This information is provided by RNS The company news service from the London Stock Exchange