12th Nov 2013 09:19
LONDON (Alliance News) - Penna Consulting PLC Tuesday said it has made a recommended GBP1.1 million cash takeover offer for AIM-listed rival Savile Group PLC, as it reported higher profits for the first half of its financial year despite a slight drop in revenue.
In a joint statement, Penna and Savile said they had agreed a deal which will give Savile shareholders seven pence a share in cash, more than double Savile's closing share price of 3.25 pence Monday. Penna said it already has irrevocable undertakings to accept the offer from shareholders with 27.3% of Savile's outstanding shares.
Both companies are human resources consulting companies.
"Penna and Savile have complementary businesses," Penna Chairman Stephen Rowlinson said in a statement.
"The enlarged group will provide clients with a broad range of Human Resource services and could benefit from opportunities to reduce costs by elimination of duplicated administrative functions. The board of Penna believes the merger will be earnings enhancing in the first full financial year following the offer becoming, or being declared, unconditional in all respects," he added.
Separately Penna reported a GBP1.1 million profit for the six months to end-September, up from GBP1.0 million a year earlier, as it cut costs and raised margins. Revenues fell to GBP31.9 million, from GBP32.8 million.
"The UK economy is now growing and we are seeing benefits from this and from a series of important client contract renewals and new client wins. We intend and expect all of our service lines to capitalise on this improving economic outlook to expand both by organic growth and by carefully planned acquisitions." Rowlinson said.
The company had no debt at the end of the first half, and had GBP2 million of cash.
Savile, meanwhile, reported a jump in revenues from continuing operations in its latest financial year, but losses widened and it said it will have to further cut costs.
The company reported revenue of GBP8.11 million in the year to end-June, up from GBP7.4 million a year earlier, while its pretax loss widened to GBP326,000, from GBP92,000, after it booked GBP446,000 in restructuring costs.
"As noted in our recent trading update, the first quarter of the new financial year has been extremely disappointing and below the directors' expectations, with a significant downturn in activity in the Group's career transition business," Chairman David Harrel said in a statement.
"Trading during July and August was below the Directors' expectations in what are traditionally quiet months and the usual recovery in September was much weaker than in previous years," he added.
Savile is moving to cut costs further, and warned that the downturn had hit its cash position.
Penna Consulting shares last traded at 90 pence. Savile shares had doubled early Tuesday to 6.5 pence, the biggest gain on AIM.
By Steve McGrath; [email protected]; @SteveMcGrath1
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