2nd Mar 2010 07:00
2 March 2010
InterQuest Group plc
("InterQuest" or the "Company")
Final Results
IT staffing specialist, InterQuest Group plc (AIM: ITQ.L) is pleased to announce its audited preliminary results for the year ended 31 December 2009.
Financial Highlights
§ Revenue £97.4m (2008: £105.5m) down 8%
§ Gross profit £12.4m (2008: £15.3m) down 19%
§ EBITA (before IFRS 2 and amortisation charges) £3.0m (2008: £5.4m) down 44%
§ Profit before taxation £1.8m (2008: £3.7m) down 51%
§ Basic adjusted earnings per share 7.0 pence (2008: 11.7 pence) down 40%
§ Basic earnings per share 4.3 pence (2008: 9.0 pence) down 52%
§ Net cash from operating activities £3.3m (2008: £4.9m)
§ Net debt reduced from £5.5m at start of 2009 to £3.0m at 31 December 2009
§ Final dividend of 2 pence per share paid on 19 February 2010 (2008: 1 pence per share)
Operational Highlights
§ Our business model of championing specialist niche businesses in different sectors has proven to be very resilient to the difficult market conditions of 2009
§ Launch of five businesses via the IQ Equity Division
§ Launch of two specialist house brands
§ Public Sector division awarded two national frameworks dealing with the NHS adding breadth to the Company's offering
§ Doubling of dividend to 2 pence per share reflecting confidence in the strength of our business model
Outlook
§ Stronger trading in the final quarter of the year compared to earlier quarters, led by permanent recruitment which increased 40% compared to the average of the first three quarters of 2009
§ Renewed contract recruitment activity in January and February 2010 with the number of contractors working on assignment 6% higher than at mid December
Gary Ashworth, Executive Chairman, commented:
"As is usual for the recruitment sector during times of economic downturn, 2009 saw a significant reduction of revenues and profits throughout our Group. However, we have utilised this time to invest for future growth and have entered the new year with a broader based Group, which is profitable and cash generative.
"The final quarter of 2009 was significantly stronger than the preceding one in our core businesses and with signs of strengthened trading continuing into 2010 we view the future with confidence."
For further information please contact:
|
InterQuest Group plc |
Cenkos Securities plc |
ICIS |
|
020 7025 0100 |
020 7397 8900 |
020 7651 8688 |
|
Gary Ashworth, Executive Chairman |
Ivonne Cantu |
Caroline Evans-Jones |
|
Michael Joyce, Finance Director |
Camilla Hume |
Fiona Conroy |
About InterQuest
The InterQuest Group is a specialist IT recruitment group providing contract and permanent recruitment services within niche disciplines in the UK and Europe. The Group comprises seven separately branded specialist divisions covering a broad range of skill sets and industries including Public Sector, SAP, Oracle, CRM Testing, Banking, Insurance, Retailing, Pharmaceuticals, Media, Analytics, Infrastructure and Communications plus five further specialist businesses in the IQ Equity division.
Chairman's and Chief Executive's Statement
Following several years of sustained revenue and profit growth, 2009 was a year of market contraction which impacted on both our top and bottom line. The nature of our business however is that market downturns are flagged well in advance and swift measures were put in place to cut costs and ensure continued profitability and cash generation. We are pleased therefore to report a significant reduction in group debt, from £5.5m at the start of the year to £3.0m at 31 December 2009.
Revenue (and gross profit) from permanent recruitment activities decreased significantly, by 46%, during the year, however demand for contract staff remained relatively buoyant (decreased by 8%) and now comprises 80% of the Group's overall gross profit.
During the course of the year, Sand Resources, our Public Sector division was awarded two national frameworks dealing with non medical, non clinical contract and permanent positions within the NHS which adds breadth to our offering.
Having pared our own internal staffing levels to the core in 2009, we have recently started hiring new fee-earners through our own training academy, recognising that most of our most competent performers in the business have been "home grown."
We have utilised the downturn to increase our investment in the business, building on our model of championing separately branded, specialist IT recruitment companies. At the end of 2008 we launched IQ Equity with the aim of backing teams of recruiters wanting a stake in their own IT recruitment business, providing them with training, finance and infrastructure. We are delighted to have identified five such opportunities, with 2009 seeing the launch of Sapian Solutions, Korus IT Recruitment, Lighthouse Testing, Fulcrum Telecom and Lanborne Associates via our IQ Equity division. Each business has been founded by an experienced recruitment specialist and we believe they have the potential to generate significant business in the years ahead.
As announced in our January Trading Update, we are pleased to have been able to double the dividend paid to shareholders this year, from 1 pence to 2 pence per share, demonstrating the Board's confidence in the strength of our business model.
Strengthened Q4 and Positive Outlook
The Group enjoyed strengthened trading in the final quarter of the year compared to earlier quarters, led by permanent recruitment which increased by 40% compared to the average in the first three quarters of 2009.
During the last four months of 2009 we saw increased demand for staff across financial markets through Genesis and SBS our City focused divisions. In addition, PeopleCo, our SAP specialist has also noted growth during this period.
In 2010, we have seen renewed contract recruitment activity in January and February with contractor numbers working on assignment 6% higher now than at mid December. We have emerged from 2009 with an enlarged, profitable business and the Board continues to look to the future with confidence.
I would like to thank the staff at all the InterQuest Group divisions for their skill and their continued hard work and commitment in what has been a difficult year for our industry.
Gary Ashworth
Executive Chairman and Chief Executive
1 March 2010
Finance Director's Review
Revenue (all from continuing operations) decreased by 8% during 2009 to £97.4m (2008: £105.5m).
Gross profit decreased by £2.9m or 19% to £12.4m (2008: £15.3m). Our gross margin percentage decreased from 14.5% to 12.7% as a result of significant increased bias towards contract recruitment which accounted for 80% of our gross profit in 2009 compared to 71% in 2008. The gross margin percentage achieved on contract business slipped slightly from 10.7% to 10.5%.
Cash based EBITA (earnings before interest, tax, amortisation of intangible assets and IFRS 2 share based payment charge) decreased by 44% to £3.0m (2008: £5.4m).
The intangible asset amortisation charge remained constant at £1.0m (2008: £1.0m).
The net interest expense decreased to £0.1m (2008: £0.5m), reflecting reduced net debt as described below.
Profit before tax decreased by 51% to £1.8m (2008: £3.7m).
Tax on profits was £0.5m representing an effective tax rate of 27% (2008: 27%).
Earnings per share and dividend
Basic earnings per share decreased by 52% to 4.3 pence (2008: 9.0 pence). When the effect of non-cash and non-trading items, being amortisation, deferred tax credit on intangible asset amortisation and the IFRS 2 share based payment charge, are removed the basic adjusted earnings per share was 7.0 pence representing a decrease of 40% from 11.7 pence in 2008. See note 5 for details of the calculation.
A dividend of 2 pence per share (2008: 1 pence per share) has been proposed and was paid to shareholders on 19 February 2010.
Balance sheet, cash flow and financing
The Group's net assets increased by £1.2m to £19.8m at 31 December 2009 (2008: £18.6m), the majority of this increase was due to the retained profit of £1.0m for the year.
Continued profitability and tight control of working capital delivered £4.1m of operating cash flow (before tax and interest payments). The Group paid £0.2m of deferred consideration in cash in respect of the acquisition of Sand Resources; £0.9m of corporation tax and £0.1m of interest during the year. Net capital expenditure was £0.1m and £0.2m was invested in a controlling stake in Korus Recruitment Group Limited.
As a result of these cash flows, net debt decreased from £5.5m at the start of the year to £3.0m at the end of 2009.
Michael Joyce
Finance Director
1 March 2010
Consolidated statement of comprehensive income
|
|
|
2009 |
2008 |
|
|
|
£'000 |
£'000 |
|
|
Note |
|
|
|
Revenue |
|
97,434 |
105,525 |
|
Cost of sales |
|
(85,042) |
(90,201) |
|
Gross profit |
|
12,392 |
15,324 |
|
|
|
|
|
|
Amortisation |
|
(1,011) |
(1,011) |
|
Other administrative expenses |
|
(9,467) |
(10,036) |
|
Total administrative expenses |
|
(10,478) |
(11,047) |
|
|
|
|
|
|
Operating profit |
|
1,914 |
4,277 |
|
|
|
|
|
|
Finance costs |
|
(127) |
(551) |
|
|
|
|
|
|
Profit before taxation |
|
1,787 |
3,726 |
|
Income tax expense |
|
(487) |
(990) |
|
Profit for the year |
|
1,300 |
2,736 |
|
Other comprehensive income for the year |
|
- |
- |
|
Total comprehensive income for the year |
|
1,300 |
2,736 |
|
|
|
|
|
|
Profit and total comprehensive income attributable to: |
|
|
|
|
- Owners of the parent |
|
1,350 |
2,736 |
|
- Minority interests |
|
(50) |
- |
|
Total comprehensive income for the year |
|
1,300 |
2,736 |
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
from both total and continuing operations: |
|
|
|
|
|
Note |
Pence |
Pence |
|
|
|
|
|
|
Basic earnings per share |
5 |
4.3 |
9.0 |
|
Diluted earnings per share |
5 |
4.0 |
8.5 |
All results for the Group are derived from continuing operations in both the current and prior year.
The accompanying notes form an integral part of this condensed report.
Consolidated statement of financial position
|
|
|
31 December |
31 December |
31 December |
|
|
2009 |
2008 |
2007 |
|
|
|
Note |
£'000 |
£'000 |
£'000 |
|
ASSETS |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Property, plant and equipment |
|
292 |
393 |
488 |
|
Goodwill |
6 |
14,005 |
14,607 |
15,183 |
|
Intangible assets |
6 |
1,870 |
2,881 |
3,892 |
|
Total non-current assets |
|
16,167 |
17,881 |
19,563 |
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
Trade and other receivables |
|
15,863 |
17,018 |
18,661 |
|
Cash and cash equivalents |
7 |
145 |
11 |
135 |
|
Total current assets |
|
16,008 |
17,029 |
18,796 |
|
|
|
|
|
|
|
Total assets |
|
32,175 |
34,910 |
38,359 |
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
|
(8,164) |
(8,412) |
(9,363) |
|
Borrowings |
7 |
(3,163) |
(5,544) |
(9,398) |
|
Current tax payable |
|
(688) |
(730) |
(833) |
|
Deferred consideration |
|
- |
(717) |
(664) |
|
Total current liabilities |
|
(12,015) |
(15,403) |
(20,258) |
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
Deferred consideration |
|
- |
(200) |
(1,495) |
|
Deferred income tax liabilities |
|
(330) |
(674) |
(768) |
|
Total non-current liabilities |
|
(330) |
(874) |
(2,263) |
|
|
|
|
|
|
|
Total liabilities |
|
(12,345) |
(16,277) |
(22,521) |
|
|
|
|
|
|
|
Net assets |
|
19,830 |
18,633 |
15,838 |
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
Share capital |
|
306 |
306 |
301 |
|
Share premium account |
|
8,479 |
8,479 |
8,344 |
|
Retained earnings |
|
10,505 |
9,461 |
6,916 |
|
Share based payment reserve |
|
490 |
387 |
277 |
|
Minority interest |
|
50 |
- |
- |
|
Total equity |
|
19,830 |
18,633 |
15,838 |
The accompanying notes form an integral part of this condensed consolidated report.
Consolidated statement of changes in equity
|
|
|
Share |
|
Share based |
|
|
|
Share |
premium |
Retained |
payment |
Minority |
Total |
|
|
capital |
account |
earnings |
reserve |
interest |
equity |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
Balance at 1 January 2008 |
301 |
8,344 |
6,916 |
277 |
- |
15,838 |
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
|
|
|
|
|
|
Profit for the year |
- |
- |
2,736 |
- |
- |
2,736 |
|
Total other comprehensive income for the year |
- |
- |
- |
- |
- |
- |
|
Total comprehensive income for the year |
- |
- |
2,736 |
- |
- |
2,736 |
|
|
|
|
|
|
|
|
|
Transactions with owners |
|
|
|
|
|
|
|
Deferred tax on employee share options |
- |
- |
(191) |
- |
- |
(191) |
|
Movement in share based payment reserve |
- |
- |
- |
110 |
- |
110 |
|
Issue of share capital |
5 |
135 |
- |
- |
- |
140 |
|
Total contributions by and distributions to owners |
5 |
135 |
(191) |
110 |
- |
59 |
|
Total transactions with owners |
5 |
135 |
(191) |
110 |
- |
59 |
|
Balance at 31 December 2008 |
306 |
8,479 |
9,461 |
387 |
- |
18,633 |
|
|
|
|
|
|
|
|
|
Balance at 1 January 2009 |
306 |
8,479 |
9,461 |
387 |
- |
18,633 |
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
|
|
|
|
|
|
Profit for the year |
- |
- |
1,350 |
- |
- |
1,350 |
|
Total other comprehensive income for the year |
- |
- |
- |
- |
- |
- |
|
Total comprehensive income for the year |
- |
- |
1,350 |
- |
- |
1,350 |
|
Transactions with owners |
|
|
|
|
|
|
|
Movement in share based payment reserve |
- |
- |
- |
103 |
- |
103 |
|
Issue of share capital |
- |
- |
- |
- |
- |
- |
|
Dividends relating to 2009 |
- |
- |
(306) |
- |
- |
(306) |
|
Total contributions by and distributions to owners |
- |
- |
306 |
103 |
- |
(203) |
|
Minority interests |
- |
- |
- |
- |
50 |
50 |
|
|
|
|
|
|
|
|
|
Balance at 31 December 2009 |
306 |
8,479 |
10,505 |
490 |
50 |
19,830 |
The accompanying notes form an integral part of this condensed consolidated report.
Consolidated statement of cash flows
|
|
|
2009 |
2008 |
2007 |
|
|
Note |
£'000 |
£'000 |
£'000 |
|
Cash flows from operating activities |
|
|
|
|
|
Profit after taxation |
|
1,300 |
2,736 |
2,400 |
|
Adjustments for: |
|
|
|
|
|
Depreciation |
|
183 |
239 |
160 |
|
Profit on sale of assets |
|
- |
(1) |
- |
|
Share based payment charge |
|
103 |
110 |
88 |
|
Finance costs |
|
127 |
551 |
535 |
|
Amortisation |
|
1,011 |
1,011 |
741 |
|
Income tax expense |
4 |
487 |
990 |
741 |
|
Decrease/(increase) in trade and other receivables |
|
1,191 |
1,643 |
(2,186) |
|
(Decrease)/increase in trade and other payables |
|
(263) |
(977) |
856 |
|
|
|
|
|
|
|
Cash generated from operations |
|
4,139 |
6,302 |
3,335 |
|
|
|
|
|
|
|
Income taxes paid |
|
(859) |
(1,436) |
(586) |
|
|
|
|
|
|
|
Net cash from operating activities |
|
3,280 |
4,866 |
2,749 |
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
Purchase of property, plant and equipment |
|
(74) |
(171) |
(356) |
|
Acquisition of subsidiaries, net of cash acquired |
|
(59) |
(2) |
(5,773) |
|
Payment of deferred consideration |
|
(200) |
(610) |
(622) |
|
Proceeds from sale of equipment |
|
- |
31 |
- |
|
Net cash used in investing activities |
|
(333) |
(752) |
(6,751) |
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
Proceeds from issue of share capital |
|
- |
140 |
312 |
|
Net (decrease)/increase in discounting facility |
|
(2,213) |
(2,999) |
3,952 |
|
Repayment of hire purchase liabilities |
|
- |
- |
(22) |
|
Interest paid |
|
(127) |
(551) |
(535) |
|
Dividends paid |
|
(306) |
- |
- |
|
Net cash (used in)/from financing activities |
|
(2,646) |
(3,410) |
3,707 |
|
|
|
|
|
|
|
Net increase/(decrease) in cash, cash equivalents and overdrafts |
|
301 |
704 |
(295) |
|
|
|
|
|
|
|
Cash, cash equivalents and overdrafts at beginning of year |
7 |
(156) |
(860) |
(565) |
|
Cash, cash equivalents and overdrafts at end of year |
7 |
145 |
(156) |
(860) |
Notes to the Financial Statements
1 Nature of operations and general information
InterQuest Group plc and its subsidiaries' ('the Group') principal activity is the provision of IT recruitment solutions in the United Kingdom. The Group is one of the UK's leading staffing businesses in the information and communications technology sector. The Group comprises seven specialist niche businesses operating from five UK locations, combined with a centralised finance and administration function plus five further specialist businesses in the IQ Equity division.
InterQuest Group plc is the Group's ultimate parent company. It is incorporated and domiciled in England and Wales. The address of InterQuest Group plc's registered office, which is also its principle place of business, is 16-18 Kirby Street, London, EC1N 8TS. InterQuest Group plc's shares are listed on the Alternative Investment Market (AIM).
2 Basis of preparation
The financial information in this preliminary announcement does not constitute the Group's statutory accounts for the years ended 31 December 2009, 31 December 2008 or 31 December 2007 within the meaning of Section 434 of the Companies Act 2006. Group statutory accounts for 31 December 2008 and 31 December 2007 have been delivered to the Registrar of Companies and those for 31 December 2009 will be delivered following the Company's annual general meeting. The auditors have reported on each set of Group statutory accounts and their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 237(2) or Section 237(3) of the Companies Act 1985 or Section 498(2) or Section 498(3) of the Companies Act 2006.
The Group's consolidated financial statements are presented in thousands of Pounds Sterling (£'000). The financial statements of the Group have been prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union (EU) and company law applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention.
3 Summary of significant accounting policies
The same accounting policies, presentation and methods of computation are followed in this condensed consolidated report as were applied in the preparation of the Group's annual financial statements for the year ended 31 December 2009.
4 Income tax expense
|
|
2009 |
2008 |
|
£'000 |
£'000 |
|
|
Current tax |
|
|
|
Corporation tax on profits for the period |
870 |
1,323 |
|
Adjustment in respect of prior periods |
(39) |
(48) |
|
Total current tax |
831 |
1,275 |
|
|
|
|
|
Deferred tax |
|
|
|
Tax losses carried forward |
(41) |
- |
|
Accelerated capital allowance |
24 |
5 |
|
Charge on share based payments |
(44) |
80 |
|
Other temporary differences |
- |
(9) |
|
Intangible asset temporary differences |
(283) |
(283) |
|
Effect of change in tax rates |
- |
(78) |
|
Total deferred tax |
(344) |
(285) |
|
|
|
|
|
Total income tax expense |
487 |
990 |
|
|
|
|
|
|
|
|
|
|
2009 |
2008 |
|
|
£'000 |
£'000 |
|
Profit before taxation |
1,787 |
3,726 |
|
|
|
|
|
Profit before taxation multiplied by standard rate of corporation tax in the UK of 28% (2008: 28%) |
500 |
1,043 |
|
Effects of: |
|
|
|
Expenses not deductible for tax purposes |
30 |
30 |
|
Other tax adjustments |
(3) |
(66) |
|
Over provision in prior years |
(38) |
(48) |
|
Profits chargeable at lower rates |
(2) |
31 |
|
|
|
|
|
Total income tax expense |
487 |
990 |
5 Earnings per share
The calculation of the basic earnings per share is based upon the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year.
The calculation of diluted earnings per share is based upon the basic earnings per share, adjusted to allow for the issue of shares and the post tax effect of dividends and/or interest, on the assumed conversion of all dilutive options and other dilutive potential ordinary shares.
Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below.
|
|
2009 |
2008 |
|
|
£'000 |
£'000 |
|
|
|
|
|
Profit for the period |
1,300 |
2,736 |
|
Basic earnings |
|
|
|
|
|
|
|
Adjustments to basic earnings |
|
|
|
Intangible assets amortisation |
1,011 |
1,011 |
|
Deferred tax credit on intangible asset amortisation |
(283) |
(283) |
|
Share based payment charge |
103 |
110 |
|
|
|
|
|
Adjusted earnings |
2,131 |
3,574 |
|
|
|
|
|
|
2009 |
2008 |
|
Number of shares |
|
|
|
Weighted average number of ordinary shares for the purposes of basic earnings per share |
30,578,076 |
30,438,663 |
|
Weighted average number of share options in issue |
1,618,493 |
1,864,483 |
|
Weighted average number of ordinary shares for the purposes of diluted earnings per share |
32,196,569 |
32,303,146 |
|
|
|
|
|
|
|
|
|
Earnings per share |
Pence |
Pence |
|
Basic earnings per share |
4.3 |
9.0 |
|
Diluted earnings per share |
4.0 |
8.5 |
|
|
|
|
|
Adjusted earnings per share |
|
|
|
Basic earnings per share |
7.0 |
11.7 |
|
Diluted earnings per share |
6.6 |
11.1 |
|
|
|
|
6 Goodwill and intangible assets
|
|
Goodwill |
Customer relationships |
Total |
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
Cost at 1 January 2008 |
15,183 |
5,055 |
20,238 |
|
Revision to deferred consideration |
(632) |
- |
(632) |
|
Fair value adjustment |
56 |
- |
56 |
|
Accumulated at 1 January 2008 |
- |
(1,163) |
(1,163) |
|
Amortisation for the year |
- |
(1,011) |
(1,011) |
|
|
|
|
|
|
Net book amount at 31 December 2008 |
14,607 |
2,881 |
17,488 |
|
|
|
|
|
|
Net book amount at 1 January 2009 |
14,607 |
2,881 |
17,488 |
|
Revision to deferred consideration |
(717) |
- |
(717) |
|
Additions from business combinations |
115 |
- |
115 |
|
Amortisation |
- |
(1,011) |
(1,011) |
|
|
|
|
|
|
Net book amount at 31 December 2009 |
14,005 |
1,870 |
15,875 |
|
|
|
|
|
|
Cost at 31 December 2009 |
14,005 |
5,055 |
19,060 |
|
Accumulated amortisation |
- |
(3,185) |
(3,185) |
|
Net book amount at 31 December 2009 |
14,005 |
1,870 |
15,875 |
There is no deferred consideration outstanding at 31 December 2009 on any acquisitions made by the Group.
On 5 August 2009 the Group acquired a 50.1% controlling interest in Korus Recruitment Group Limited ("Korus"). Korus commenced trading on 1 January 2009 and is the parent company for a Group of start-up, specialist IT recruitment companies.
Analysis of the acquisition of Korus Recruitment Group Limited:
|
|
Book and Provisional Fair Value |
|
|
£'000 |
|
Korus Recruitment Group Limited: |
|
|
|
|
|
Property, plant and equipment |
8 |
|
Trade and other receivables |
36 |
|
Cash and cash equivalents |
157 |
|
Trade and other payables |
(2) |
|
|
|
|
Total net assets |
199 |
|
|
|
|
Total net assets acquired |
100 |
|
Goodwill arising on acquisitions |
115 |
|
|
215 |
|
|
|
|
Discharged by: |
|
|
Consideration in cash |
200 |
|
Costs associated with the acquisition |
15 |
|
|
215 |
Since acquisition Korus has made an EBITA loss of £130,077. Management do not consider there are any other intangibles assets on acquisition as Korus is a recently incorporated entity.
Goodwill is allocated to the group's cash generating units (CGU's) identified according to business units as follows:
|
|
2009 |
2008 |
2007 |
|
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
InterQuest Group (UK) Limited |
5,053 |
5,053 |
5,053 |
|
|
PeopleCo Worldwide Limited |
3,093 |
3,093 |
3,093 |
|
|
Sand Resources Limited |
2,239 |
2,239 |
2,242 |
|
|
Intelect Recruitment plc |
1,894 |
2,094 |
2,197 |
|
|
e-CRM People Limited |
1,611 |
2,128 |
2,598 |
|
|
Korus Recruitment Group Limited |
115 |
- |
- |
|
|
|
14,005 |
14,607 |
15,183 |
|
The recoverable amount of goodwill and intangible assets associated with each CGU is determined based on value-in-use calculations. The key assumptions used for value-in-use calculations as at 31 December 2009 are that the CGU's will trade in accordance with the 2010 budget, which has a higher financial result than that reported for 2009, followed by range of 0% to 10% growth in sales and 5% growth in costs (from 2010 levels) in subsequent years until 31 December 2014, following which a long term growth rate of 2% has been used. An expected gross margin for each CGU ranging between 9% and 13% has been used in the forecasts. The resulting projected cashflows have been discounted at 9.7% to calculate their net present value at 31 December 2009.
The Board believes that the growth rates used in the value-in-use calculations are appropriate. The growth rate assumptions used between 2010 and 2014 are based on the results for 2009 which are comparatively low compared to 2008 results. Current trading activity in 2010 supports the growth rates used in our calculations.
Each CGU has been considered on an individual basis and the assumptions used fall within historic variations experienced by the Group and are considered as reasonable estimations. The discount rate is pre-tax and reflects specific risks relating to the relevant CGU's.
The assessment for value in use for each CGU is sensitive to both growth rates and gross margin. There would have to be a significant reduction in both growth rates and growth margin before impairment would need to be considered. These assumptions have been used for the analysis of each CGU because they share similar attributes and it is appropriate to use similar assumptions.
7 Cash, cash equivalents and net debt
|
|
2009 |
2008 |
2007 |
|
|
£'000 |
£'000 |
£'00 |
|
|
|
|
|
|
Cash and cash equivalents |
145 |
11 |
135 |
Cash, cash equivalents and bank overdrafts include the following for the purposes of the cash flow statement:
|
|
2009 |
2008 |
2007 |
|
|
£'000 |
£'000 |
£'00 |
|
|
|
|
|
|
Cash and cash equivalents |
145 |
11 |
135 |
|
Bank overdrafts |
- |
(167) |
(995) |
|
|
145 |
(156) |
(860) |
|
|
2009 |
2008 |
2007 |
|
|
£'000 |
£'000 |
£'00 |
|
|
|
|
|
|
Total debt |
3,163 |
5,544 |
9,398 |
|
Less: Cash and cash equivalents |
(145) |
(11) |
(135) |
|
Net debt |
3,018 |
5,533 |
9,263 |
The carrying value of cash and cash equivalents are considered to be a reasonable approximation of fair value.
Related Shares:
InterQuest Group