22nd Sep 2009 07:00
Savile Group plc ("Savile" or the "Group") PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2009
Highlights 2009
* Revenue up 49% to 10.38m (2008: 6.95m) * Profit before tax up 157% at 1.85m (2008: 0.72m) * Dividend 2.25 pence per share recommended (2008: nil) * Cash and treasury shares 3.0m (2008: 1.1m) * No bank debt (2008: nil) * Fully diluted EPS up 87% at 8.52 pence (2008: 4.55 pence)
Jonathan Cohen, Executive Chairman of Savile, commented:
"In this, my third annual review as Chairman, I am very pleased to report substantial growth of revenue, net margin, earnings per share and net cash and a much strengthened balance sheet.
Whilst the Group's outplacement and career transition businesses (Fairplace)have undoubtedly benefited from the downturn in the economy, our coaching andtalent management units (Cedar and IDDAS) have also made progress in the year.Outplacement activity has made a significant contribution to both turnover andprofits in the financial year. However, we believe that a more balanced revenuemix will emerge this year, and that this will be a growing trend.Although the prospects for an economic recovery over the next twelve months arefar from certain, it is clear that organisations in both the public and privatesectors increasingly recognise that investing in the talent of their people isnot an item of expenditure that can be turned on or off according to theeconomic climate.I am delighted that we are recommending a dividend of 2.25 pence per sharepayable on 10 November 2009 to shareholders on the register on 23 October 2009.If approved by shareholders, this would be the first dividend payment to bemade by the Company for five years. As an alternative to the recommended cashdividend of 2.25 pence per share, a warrant is to be offered to shareholders onthe register on 23 October 2009 to subscribe for 1 new ordinary share at 86pence per share. Certain Directors have expressed their presentintention to elect to take up the Warrant Alternative in respect of anaggregate of 3,514,060 Ordinary Shares, representing approximately 24% ofthe Company's issued share capital.
While we expect to achieve significant organic growth by building upon the strength of our existing brands, we continue to monitor closely opportunities to broaden our market offering through carefully targeted acquisitions.
With a strong team in place at all three of our brands, a very robust balancesheet, positive cash flow and a clear strategy, I am very confident in theGroup's future."Enquiries to: Savile Group plc Arbuthnot Securities Limited Cardew GroupJonathan Cohen Tom Griffiths James MiltonChairman Tel: 020 7012 2000 Richard SpiegelbergTel: 020 7816 0707 Tel: 020 7930 0777Chairman's Review
In this, my third annual review since I became Chairman, I am very pleased toreport substantial growth of revenue, net margin, earnings per share and netcash and a much strengthened balance sheet.
Results for 2008/9
Revenue for the year ended 30 June 2009 was up 49% at 10.4m (2008: 6.95m) and pre-tax profits of 1.85m were up over 150% compared to the previous year (2008: 0.72m).
Savile's business has continued to be highly cash generative, with a year end balance of 3m (2008: 1.1m) in cash and treasury shares.
This performance has been against a background of significant economicturbulence brought about by the credit crisis. Whilst the Group's outplacementand career transition businesses (Fairplace) have undoubtedly benefited fromthe downturn in the economy, our coaching and talent management units (Cedarand IDDAS) have also made progress in the year. Outplacement activity has madea significant contribution to both turnover and profits in the financial year.However we believe that a more balanced revenue mix will emerge this year, andthat this will be a growing trend.Although the prospects for an economic recovery over the next twelve months arefar from certain, it is clear that organisations in both the public and privatesectors increasingly recognise that investing in the talent of their people isnot an item of expenditure that can be turned on or off according to theeconomic climate.
Dividend
In December 2008 the Company obtained court approval to reorganise its balancesheet, thereby enabling the Company to eliminate the deficit on its profit andloss reserve at 30 June 2008. As a consequence we are now able to pay dividendsfrom distributable reserves generated from the date the reorganisation wasapproved.
With this in mind, I am delighted to inform shareholders that we are recommending a dividend of 2.25 pence per share. If approved by shareholders, this would be the first dividend payment to be made by the Company for five years.
A warrant is to be offered as an alternative to the cash dividend which willenable a shareholder to subscribe for ordinary shares. Details of the warrantwill be included in the Notice of Annual General Meeting.
Board
After the year end we conducted an internal review of the Board and concludedwe needed to streamline its composition and committee structure. As aconsequence, Peter Evans relinquished the role of Group Chief Executive, andhas become a Non Executive Director, although he has retained an ongoingbusiness development role. David Stewart and Jo Bond agreed to step down fromthe Board, but remain in key senior roles in the organisation. The threebusiness unit CEOs now report directly to me as Executive Chairman.
Staff
As in the previous year we made a number of excellent hires and on your behalf I bid all our new colleagues a hearty welcome.
As ever we can only achieve our objectives as a Group by focus and hard workand an unswerving commitment to deliver a quality service to our clients. Inthanking my colleagues for their efforts in the past year, I know we have thenecessary skills and drive to achieve these objectives.
Future
As the Savile Group continues to grow, we remain focused on keeping our cost base under control and ensuring we maintain good margins across all services.
While we expect to achieve significant organic growth by building upon the strength of our existing brands, we continue to monitor closely opportunities to broaden our market offering through carefully targeted acquisitions.
With a strong team in place at all three of our brands, a very robust balance sheet, positive cash flow and a clear strategy, I am very confident in the Group's future.
Jonathan CohenChairman22 September 2009Group Income Statementfor the year ended 30 June 2009 2009 2008 GBP GBP Revenue 10,384,681 6,949,325 Other operating income 73,841 68,142 Operating expenses (8,641,766) (6,306,525) Operating profit 1,816,756 710,942 Finance income 29,304 14,936 Finance expenses - (1,437) Profit before taxation 1,846,060 724,441 Taxation (524,038) (198,506)
Profit for the year attributable to equity 1,322,022 525,935
shareholders of the Company Earnings per share Pence Pence Basic 9.17 4.60 Diluted 8.52 4.55 Group Balance Sheetas at 30 June 2009 2009 2008 GBP GBP Assets Non current assets
Property, plant and equipment 413,622 278,708
Intangible assets 127,508 129,508 541,130 408,216 Current assets: Inventories 11,292 18,268 Trade and other receivables 2,760,491 2,423,004 Cash and cash equivalents 2,600,495 1,093,201 5,372,278 3,534,473 Total assets 5,913,408 3,942,689 Liabilities Current liabilities Trade and other payables 3,010,392 1,994,570 Total liabilities 3,010,392 1,994,570 Net assets 2,903,016 1,948,119 Capital and reserves Share capital 439,504 439,504 Share premium account 395,408 2,579,601 Merger reserve 193,666 193,666 Capital redemption reserve 726,021 726,021
Own Shares - held for treasury (418,893) -
Retained earnings 1,567,310 (1,990,673) Total equity 2,903,016 1,948,119 Statement of Changes in Equityfor the year ended 30 June 2009Group Share Share Merger Capital Retained Total capital premium reserve redemption earnings equity account reserve GBP GBP GBP GBP GBP GBP At 1 July 2007 294,005 2,381,033 - 726,021 (2,526,263) 874,796 Profit for the period - - - - 525,935 525,935 Total recognised - - - - 525,935 525,935income and expenses for the year Credit to equity for - - - - 9,655 9,655share based payments Issue of Shares 144,899 196,068 193,666 - 534,633 Exercise of options 600 2,500 - - - 3,100 At 30 June 2008 439,504 2,579,601 193,666 726,021 (1,990,673) 1,948,119 Profit for the period - - - - 1,322,022 1,322,022 Total recognised - - - - 1,322,022 1,322,022income and expenses for the year Credit to equity for - - - - 51,768 51,768share based payments Balance sheet - (2,184,193) - - 2,184,193 -reorganisation Treasury shares - - - - (418,893) (418,893)purchased At 30 June 2009 439,504 395,408 193,666 726,021 1,148,417 2,903,016
The Capital redemption reserve arose on cancellation of deferred shares of 1 pence each on 6 September 2006. The Merger reserve represents the premium arising on the share for share acquisition of IDDAS Limited.
Treasury shares are Savile Group plc shares held by the Company and recognised at cost.
An Order by the High Court of Justice (Chancery Division) dated 10 December 2008 reduced the share premium account of the Company by 2,184,193. This eliminated the Company's deficit in its profit and loss reserves at 30 June 2008.
Group Cash Flow Statementfor the year ended 30 June 2009 2009 2008 GBP GBP
Cash flow from operating activities Profit before tax 1,846,060 724,441 Amortisation and impairment of intangibles 2,000 2,000 Loss on disposal of property, plant and equipment - 3,137
Depreciation 108,028 57,569 Share-based payment charge 51,768 9,655 Interest paid - 1,437 Interest received (29,304) (14,936) 132,492 58,862
Changes in working capital (excluding the effects of acquisition): Decrease/(increase) in inventories 6,976 (2,885) Increase in trade and other receivables (337,487) (829,990) Increase in trade and other payables 666,160 589,536
335,649 (243,339) Tax Paid (174,376) -
Cash generated from operations 2,139,825 539,964 Investing activities Purchase of property, plant and equipment (242,942) (147,802) Acquisition of trade and assets of CEDAR - (20,012) Acquisition of IDDAS Limited net of cash acquired - 167,354 Interest received 29,304 14,936 Net cash (used)/generated from investing (213,638) 14,476
activities 1,926,187 554,440 Financing activities Interest paid - (1,437) Purchase of own shares (418,893) - Issue of ordinary shares - 269,100
Net cash (used)/generated from financing (418,893) 267,663activities Net increase in cash and cash equivalents 1,507,294 822,103 Cash and cash equivalents at beginning of year 1,093,201 271,098 Cash and cash equivalents at end of year 2,600,495 1,093,201Notes to the preliminary announcementfor the year ended 30 June 2009
1. Accounting policies
The financial information set out in these preliminary results does not constitute the company's statutory accounts for the years ended 30 June 2009 or 30 June 2008.
Statutory accounts for the year ended 30 June 2008 have been filed with theRegistrar of Companies and those for the year ended 30 June 2009 will bedelivered to the Registrar in due course; both have been reported on by theIndependent Auditors. The independent auditors' report on the Annual Report andaccounts for the year ended 30 June 2008 was unqualified, did not drawattention to any matters by way of emphasis, and did not contain a statementunder 237(2) or 237(3) of the Companies Act 1985. The independent auditors'report on the Annual Report and accounts for the year ended 30 June 2009 wasunqualified, did not draw attention to any matters by way of emphasis, and didnot contain a statement under 498(2) or 498(3) of the Companies Act 2006.The financial information in these preliminary results has been prepared usingthe recognition and measurement principles of International AccountingStandards, International Financial Reporting Standards and Interpretationsadopted for use in the European Union (collectively Adopted IFRSs). Theprincipal accounting policies adopted are set out below, they have beenconsistently applied to all the years presented and are consistent with thepolicies used in the preparation of the statutory accounts for the years ended30 June 2009.Basis of consolidationThe financial information in these preliminary results consolidates theaccounts of the Company and all its subsidiary undertakings drawn up to 30 Juneeach year using the purchase method. In the balance sheet, the acquiree'sidentifiable assets, liabilities and contingent liabilities are initiallyrecognised at their fair values at the acquisition date. The results ofacquired operations are included in the income statement from the date on whichcontrol is obtained.
Business combinations that took place prior to 1 July 2006 have not been restated.
Goodwill
Goodwill represents the excess of the cost of a business combination over theinterest in the fair value of identifiable assets, liabilities and contingentliabilities acquired. Cost comprises the fair values of assets given,liabilities assumed and equity instruments issued, plus any direct costs ofacquisition.
Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to the income statement.
From the date of transition to IFRS (1 July 2006) Savile Group plc discontinued the amortisation of goodwill and implemented annual impairment tests for goodwill.
Impairment of non-financial assets
Impairment tests on goodwill are undertaken annually at the financial year end.Other non-financial assets are subject to impairment tests whenever events orchanges in circumstances indicate that their carrying amount may not berecoverable. Where the carrying value of an asset exceeds its recoverableamount (i.e. the higher of value in use and fair value less costs to sell), theasset is written down accordingly.Where it is not possible to estimate the recoverable amount of an individualasset, the impairment test is carried out on the asset's cash-generating unit(i.e. the lowest group of assets in which the asset belongs for which there areseparately identifiable cash flows). Goodwill is allocated on initialrecognition to each of the Group's cash-generating units that are expected tobenefit from the synergies of the combination giving rise to the goodwill.Impairment charges are included in the other operating expenses line item inthe income statement. An impairment loss recognised for goodwill is notreversed. Previously recognised impairment losses on assets other than goodwillare reversed when there is an increase in the estimated service potential of anasset.
Financial assets and Liabilities
Financial assets and liabilities are recognised initially at their fair valueand are subsequently measured at amortised cost. For trade receivables, tradepayables and other short-term financial liabilities this generally equates
tooriginal transaction value.Intangible assetsIntangible assets are recognised on business combinations if they are separablefrom the acquired entity or give rise to other contractual or legal rights. Theamounts ascribed to such intangibles are arrived at by using appropriatevaluation techniques.
The significant intangibles recognised by the Group, their useful economic lives and the methods used to determine the cost of intangibles acquired in a business combination are as follows:
Intangible asset Useful economic life Valuation method
Brand value 5 years Estimated royalty stream
if the rights were to be licensed
The amortisation charge is included in `other operating expenses' within the income statement.
Shares held for Treasury and Employee Share Schemes
Savile Group plc shares held by the Company are classified in equity astreasury or share scheme shares and are recognised at cost. Considerationreceived for the sale of such shares is also recognised in equity, with anypositive difference between the proceeds from sale and the original cost beingtaken to share premium and any negative difference being taken to the profitand loss reserve. No gain or loss is recognised in the performance statement onthe purchase, sale, issue or cancellation of equity shares.
2. Taxation
Current taxation has been provided for at 28% (2008: 28%).
3. Prior period acquisitions
a. CEDAR TM Limited
On 21 September 2007 the Group acquired the business and assets of CorporateExecutive Development and Resourcing Plc from the administrators of thatcompany. The business and assets were transferred into a dormant company, CEDARTM Limited, which is a 100% subsidiary of Savile Group plc. The purchaseconsideration, all of which was payable in cash, was 20,012.
b. IDDAS Limited
On 7 April 2008 the Company acquired 100% of the share capital of IDDASLimited. This was on a share for share basis and the equity consideration wassatisfied by Savile Group plc issuing 2,498,912 3p ordinary shares. The issueprice consists of the nominal value of the ordinary shares of 3 pence and ashare premium of 7.75 pence.4. Earnings per share 2009 2008 Total Total GBP GBP Numerator Profit for the year 1,322,022 525,935 Denominator Weighted average of shares used in 14,410,799 11,433,210basic EPS Effects of: * Employee share 1,101,942 114,240 options Weighted average of shares used in diluted EPS 15,512,741
11,547,450
5. Annual General Meeting
The Annual General Meeting will be held at 10.30am Tuesday 27 October 2009 at the Company's offices 36 - 38 Cornhill, London EC3V 3PQ.
6. Report and Accounts
Copies of the Report and Accounts for the year ended 30 June 2009 will be sentto shareholders in due course. Further copies will be available from theCompany's website at www.savile.com or at the Company's registered office at 36- 38 Cornhill, London EC3V 3PQ.
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