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Savile Group plc
("Savile", the "Group" or the "Company")
Β
INTERIM RESULTS FOR THE SIX MONTHS ENDED
31 DECEMBER 2010
Savile Group plc (SAVG.L), the AIM quoted human resources consulting group, specialising in coaching, talent management, career transition, mentoring and organisational change and design, announces its unaudited interim results for the six months ended 31 December 2010.
Β Financial SummaryΒ | Six months ended 31 December 2010 (Unaudited) Β£000 | Six months ended 31 December 2009 (Unaudited) Β£000 | Year ended 30 June 2010 (Audited) Β£000 |
Revenue | 4,028 | 4,160 | 8,200 |
(Loss)/profit before tax and exceptional items | (171) | 139 | 505 |
(Loss)/profit before tax | (214) | 139 | 505 |
Cash at bank | 1,175 | 3,309 | 3,567 |
Diluted (loss)/earnings per share | (1.02)p | 0.60p | 2.07p |
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Jonathan Cohen, Executive Chairman of Savile, commented:
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"In the first half of the financial year, three of the Group's businesses, including the newly acquired 7 Days Limited ("7 days") have made positive contributions but the outplacement business has continued to suffer in difficult market conditions and this has resulted in an overall loss for the first six months. Whilst disappointing, this was in line with our revised expectations. The anticipated business from the public sector has not yet materialised as decisions at both a local and central government level have yet to be finalised and actioned.
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Following the trading performance of the first six months, the Board has carried out a thorough review and a consequent restructuring is under way. We have appointed an external transformation consultant to assist us in managing the process and expect to have completed this by the new financial year.
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Whilst the trading environment remains challenging, we believe that the restructuring process will put the Group in a much stronger position to move forward. Our balance sheet remains strong."
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Enquiries to:
Savile Group plc
Jonathan Cohen, Chairman
Mark Sidlin, CFO 020 7204 6990
FinnCap
Geoff Nash/Ed Frisby
Tom Jenkins (Broking) 020 7600 1658
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Notes to Editors
Savile has four centres of excellence: Cedar Talent Management, Fairplace, IDDAS and 7 days providing coaching, talent management, career transition, mentoring and organisational change and design to leading companies, professional services firms and the public sector.
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Further information on the Company can be found on its website, atΒ www.savile.com
Chairman's Statement
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In the first half of the financial year, three of the Group's businesses, including the newly acquired 7 Days Limited ("7 days") have made positive contributions but the outplacement business has continued to suffer in difficult market conditions and this has resulted in an overall loss for the first six months. The expected business from the public sector has not yet materialised as decisions at both a local and central government level have yet to be finalised and actioned.
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The Group's unaudited revenue in the six months ended 31 December 2010 was Β£4.03m (2009: Β£4.16m) and loss before tax and exceptional items was Β£0.17m (2009: Profit Β£0.14m). Net assets at 31 December 2010 were Β£3.95 (2009: Β£4.3m) including net cash of Β£1.17m (2009: Β£3.31m). The Group has no debt and during the period completed the acquisition of 7 days for cash consideration of Β£1.29m. In addition Savile Group issued 500,000 shares with a further 900,000 to be issued over the next two years, contingent on certain conditions being met.
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Following the trading performance of the first six months, the Board has carried out a thorough review and a consequent restructuring is under way. We have appointed an external transformation consultant to assist us in managing the process and expect to have completed this by the new financial year.
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The Board expects a better second half to the year which will include a full contribution from 7 days. Accordingly the Board still anticipates results, before exceptional items (largely acquisition and reorganisation costs), for the year to 30 June 2011 to be in line with market expectations.
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As recently announced, Michael Moran has stepped down from the board. The Board wishes to thank Michael for his hard work during his time with the Group.
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Whilst the trading environment remains challenging, we believe that the restructuring process will put the Group in a much stronger position to move forward. Our balance sheet remains strong.
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Jonathan Cohen
Chairman
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Group Statement of Comprehensive Income
for the six months ended 31 December 2010
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Β
Β | Six months ended 31 December 2010 | Β Six months ended 31 December 2009 | Year ended 30 June 2010 | |
Note | Β Unaudited | Β Unaudited | Audited | |
Β£ | Β£ | Β£ | ||
Β | Β | Β | Β | Β |
Revenue | Β | 4,028,011 | 4,160,342 | 8,199,828 |
Β | Β | Β | Β | Β |
Other operating income | Β | - | 37,000 | 104,992 |
Β | Β | Β | Β | Β |
Operating expenses | Β | (4,222,775) | (4,078,140) | (7,851,914) |
Β | Β | Β | Β | Β |
Operating (loss)/profit before non-recurring exceptional items | Β | (194,764) | 119,202 | 452,906 |
Β | Β | Β | Β | Β |
Non-recurring exceptional items | 3 | (42,688) | - | - |
Β | Β | Β | Β | Β |
Operating (loss)/profit | Β | (237,452) | 119,202 | 452,906 |
Β | Β | Β | Β | Β |
Finance income | Β | 23,322 | 20,212 | 51,875 |
(Loss)/profit before taxation | Β | (214,130) | 139,414 | 504,781 |
Β | Β | Β | Β | Β |
Taxation | Β | 43,000 | (40,000) | (161,809) |
(Loss)/profit and total comprehensive income for the period attributable to equity owners of the parent | Β | (171,130) | 99,414 | 342,972 |
Β | Β | Β | Β | Β |
Earnings per share | 5 | Pence | Pence | Pence |
Basic | Β | (1.08) | 0.66 | 2.25 |
Diluted | Β | (1.08) | 0.60 | 2.07 |
Β | Β | Β | Β | Β |
Β
Β
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Group Balance Sheet
as at 31 December 2010
Β
As at 31 December 2010 | As at 31 December 2009 | As at 30 June Β 2010 | |
Unaudited | Unaudited | Audited | |
Β£ | Β£ | Β£ | |
Assets | |||
Non current assets |
| ||
Property, plant and equipment | 420,383 | 409,289 | 359,872 |
Intangible assets | 1,193,776 | 126,508 | 125,508 |
Β | 1,614,159 | 535,797 | 485,380 |
Current assets: | Β | Β | |
Inventories | 24,823 | 20,120 | 9,208 |
Trade and other receivables | 3,499,088 | 2,311,952 | 1,939,858 |
Cash and cash equivalents | 1,174,884 | 3,309,065 | 3,567,379 |
Β | 4,698,795 | 5,641,137 | 5,516,445 |
Β | Β | Β | |
Total assets | 6,312,954 | 6,176,934 | 6,001,825 |
Β | Β | Β | |
Liabilities | Β | Β | |
Β | Β | Β | |
Current liabilities: | Β | Β | |
Trade and other payables | 2,365,811 | 1,883,988 | 1,842,201 |
Total liabilities | 2,365,811 | 1,883,988 | 1,842,201 |
Β | Β | Β | |
Net assets | 3,947,143 | 4,292,946 | 4,159,624 |
Β | Β | Β | |
Capital and reserves attributable to equity holders of the company | Β | Β | |
Share capital | 448,254 | 506,915 | 479,554 |
Share premium account | 1,985,630 | 1,850,630 | 1,850,630 |
Merger reserve | 193,666 | 193,666 | 193,666 |
Capital redemption reserve | 799,681 | 726,021 | 753,381 |
Own Shares - held for treasury | - | (487,974) | (376,878) |
Retained earnings | 519,912 | 1,503,688 | 1,259,271 |
Total equity | 3,947,143 | 4,292,946 | 4,159,624 |
Β | Β | Β | Β |
Β
Group Statement of Changes in Equity
for the six months ended 31 December 2010
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Β
Share capital | Share premium account | Β Merger reserve | Capital redemption reserve | Β Retained earnings | Total equity | |
At 1 July 2010 | 479,554 | 1,850,630 | 193,666 | 753,381 | 882,393 | 4,159,624 |
Loss and total comprehensive income for the period | - | - | - | - | (171,130) | (171,130) |
Credit to equity for share based payments | - | - | - | - | 11,000 | 11,000 |
Equity dividend paid | - | - | - | - | (144,418) | (144,418) |
Treasury shares | (46,300) | Β | 46,300 | (57,933) | (57,933) | |
Issue of shares | 15,000 | 135,000 | - | - | - | 150,000 |
At 31 December 2010 | 448,254 | 1,985,630 | 193,666 | 799,681 | 519,912 | 3,947,143 |
At 1 July 2009 | 439,504 | 395,408 | 193,666 | 726,021 | 1,148,417 | 2,903,016 |
Profit and total comprehensive income for the period | - | - | - | - | 99,414 | 99,414 |
Credit to equity for share based payments | - | - | - | - | 14,000 | 14,000 |
Equity dividend paid | - | - | - | - | (177,036) | (177,036) |
Treasury shares purchased | - | - | - | - | (255,944) | (255,944) |
Treasury shares | - | 75,675 | - | - | 186,863 | 262,538 |
Issue of shares | 67,411 | 1,379,547 | - | - | - | 1,446,958 |
At 31 December 2009 | 506,915 | 1,850,630 | 193,666 | 726,021 | 1,015,714 | 4,292,946 |
At 1 July 2009 | 439,504 | 395,408 | 193,666 | 726,021 | 1,148,417 | 2,903,016 |
Profit and total comprehensive income for the year | - | - | - | - | 342,972 | 342,972 |
Credit to equity for share based payments | - | - | - | - | 14,000 | 14,000 |
Issue of shares | 67,410 | 1,455,222 | - | - | - | 1,522,632 |
Treasury shares | (27,360) | - | - | 27,360 | (445,960) | (445,960) |
Equity dividend paid | - | - | - | - | (177,036) | (177,036) |
At 30 June 2010 | 479,554 | 1,850,630 | 193,666 | 753,381 | 882,393 | 4,159,624 |
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The Capital redemption reserve arose on cancellation of deferred shares of 1p each on 6 September 2006 and the cancellation of Treasury shares of 3 pence each in March and October 2010.
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The Merger reserve represents the premium arising on the share for share acquisition of IDDAS Limited.
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Group Cash Flow Statement
for the six months ended 31 December 2010
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Cash flow from operating activities | Six months ended 31 December Β 2010 Unaudited Β£ | Β Six months ended 31 December 2009 Unaudited Β£ | Year ended 30 June 2010 Audited Β£ |
Β | |||
(Loss)/profit before tax | (214,130) | 139,414 | 504,781 |
Β | Β | ||
Amortisation of intangibles | 7,000 | 1,000 | 2,000 |
Depreciation | 52,446 | 53,430 | 114,092 |
Share-based payment charge | 11,000 | 14,000 | 14,000 |
Interest received | (23,322) | (20,212) | (51,875) |
47,124 | 48,218 | 78,217 | |
Β | |||
Changes in working capital: | Β | ||
Inventories | (15,615) | (8,828) | 2,084 |
Trade and other receivables | (725,269) | 448,539 | 820,633 |
Trade and other payables | (158,241) | (1,166,404) | (800,176) |
(899,125) | (726,693) | 22,541 | |
Β | Β | Β | |
Tax paid | - | - | (529,825) |
Net cash (used by)/generated from operations | (1,066,131) | (539,061) | 75,714 |
Β | |||
Investing activities | Β | ||
Purchase of property, plant and equipment | (29,429) | (49,097) | (60,342) |
Interest received | 23,322 | 20,212 | 51,875 |
Acquisition of 7 days Limited | (1,267,906) | - | - |
Net cash used in investing activities | (1,274,013) | (28,885) | (8,467) |
(2,340,144) | (567,946) | 67,247 | |
Financing activities | Β | ||
Purchase of own shares | (57,933) | (255,944) | (632,823) |
Sale of own shares | - | 262,538 | - |
Equity dividend paid | (144,418) | (177,036) | (177,036) |
Issue of ordinary shares | 150,000 | 1,446,958 | 1,709,496 |
Net cash (used in)/from financing activities | (52,351) | 1,276,516 | 899,637 |
Β | |||
Net increase in cash and cash equivalents | (2,392,495) | 708,570 | 966,884 |
Β | |||
Cash and cash equivalents at beginning of period | 3,567,379 | 2,600,495 | 2,600,495 |
Β | |||
Cash and cash equivalents at end of period | 1,174,884 | 3,309,065 | 3,567,379 |
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Notes to the interim results
for the six months ended 31 December 2010
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1. Accounting policies
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The financial information in these interim results has been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union (collectively Adopted IFRSs). The principal accounting policies used in preparing the interim results are those the Group expects to apply in its financial statements for the year ending 30 June 2011 and, other than those detailed below, are unchanged from those disclosed in the Group's Report and Financial Statements for the year ended 30 June 2010.
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The financial information for the six months ended December 2010 does not constitute the full statutory accounts for that period. The Annual Report and Financial Statements for 2010 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statement for 2010 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.
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The Group has adopted the revised IFRS 3 'Business combinations'. Under the revised standard the Group is required to write off all acquisition costs to profit or loss instead of including them in the cost of investment and recognise an intangible asset even if it cannot be reliably measured
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The Group has also adopted Amendments to IAS 27 Consolidated and Separate Financial Statements: This Amendment affects in particular the treatment of non-wholly-owned subsidiaries. The Amendment does not require the restatement of previous transactions and has had no effect on the current financial year.
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2. Taxation
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Current taxation has been provided for at 28% (2009: 28%).
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3. Exceptional items
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The exceptional items are acquisition costs relating to the acquisition of 7 days Limited which have been charged to the income statement as occurred in accordance with the new requirements of IFRS 3.
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4. Dividend
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A final dividend of 1.00 pence (2009: 2.25 pence) per share for the year ended 30 June 2010 was paid on 12 November 2010.
5. Earnings per share | |||
As at 31 December 2010 | As at 31 December 2009 | As at 30 June 2010 | |
Unaudited | Unaudited | Audited | |
Β | Β£ | Β£ | Β£ |
Numerator | Β | Β | Β |
(Loss)/profit for the period | (171,130) | 99,414 | 342,972 |
Β | Β | ||
Denominator | Β | ||
Weighted average of shares used in basic EPS | 15,915,927 | 15,114,774 | 15,213,386 |
Effects of: | Β | Β | |
Employee share options | 801,853 | 1,560,018 | 1,327,624 |
Weighted average of shares used in diluted EPS | 16,717,780 | 16,674,792 | 16,541,010 |
Β | Β | Β | Β |
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The diluted loss per share for the period to 31 December 2010 has been restricted to a loss of 1.08 pence per share as the loss per share cannot be reduced by dilution in accordance with IAS 33, Earnings per Share.
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6. Acquisition
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On 30 October 2010 the Group acquired 100% of the share capital of 7 Days Limited. The consideration was satisfied by Β£1.29m in cash.
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At the time of the acquisition Savile Group plc also issued 500,000 3 pence ordinary shares. The issue price consists of the nominal value of the ordinary shares of 3 pence and a share premium of 27 pence.
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A further 450,000 ordinary shares will be issued on the first anniversary of the acquisition date and then a further 450,000 ordinary shares will be issued on second anniversary of the acquisition date, both dependent on certain future conditions.
Book value | Provisional fair value adjustment | Fair value | |
Β | Β£ | Β£ | Β£ |
Non-current assets | Β | Β | Β |
Brand | Β - | 100,000 | 100,000 |
Contracts | Β - | Β 30,000 | Β 30,000 |
Fixtures and fittings | Β 83,528 | Β 83,528 | |
Β | Β 83,528 | 130,000 | Β 213,528 |
Current assets | Β | Β | Β |
Trade payables | Β 833,961 | Β | Β 833,961 |
Cash | Β 22,094 | Β 22,094 | |
Β | Β 856,055 | Β - | Β 856,055 |
Current liabilities | Β | Β | Β |
Trade and other payables | Β 682,747 | Β | Β 682,747 |
Non- current liabilities | Β 42,104 | Β | Β 42,104 |
Total liabilities | Β 724,851 | Β | Β 724,851 |
Net assets acquired | Β 214,732 | 130,000 | Β 344,732 |
Goodwill on acquisition | Β | Β | Β 945,268 |
Purchase consideration | Β | Β | Β 1,290,000 |
Β | Β | Β | Β |
The purchase consideration comprised: | Β | Β | Β |
Cash | 1,290,000 |
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The identification and valuation of the intangible assets are provisional figures and further work will be carried out in these areas.
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The goodwill arose on acquisition as, apart from the net assets shown above, it was the people and contacts of 7 days which were taken over. The commercial justification of the consideration paid in excess of the net assets, was that to hire such a team in the open market to generate the potential earnings for the Group, with their contacts and reputation, as well as the synergies and cross selling opportunities, would equate to the value of the goodwill.
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The fair values on acquisition are provisional and further work is being carried out with regard to the revised criteria of IFRS 3.
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7. Availability of Interim statement
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The interim statement was approved by the Board of Directors on 21 February 2011.
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This Interim Statement is being sent by post to all registered shareholders. Additional copies are available from the Company's registered office, 36-38 Cornhill, London, EC3V 3PQ and on its website: www.savile.com.
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