30th Jun 2008 07:59
SERVOCA Plc
Interim report
For the six months ended 31 March 2008
Salient points
Revenue £16.5 m
Gross Profit £ 5.1 m
Loss £. 0.4 m
Strong organic growth
International Security & Surveillance Limited, ISS Special Projects Limited and Academics Holdings Limited were acquired in the period
Darren Browne, Chief Executive, commented:
"We are continuing the process of transforming the performance of the Group from a significant loss maker into a profitable leading provider of UK support services. We have commenced a number of new organic business activities during the period and are looking forward to their growth and contribution in the coming year.
We have a strong platform to build from, and look to deliver shareholder value as the Group continues to consolidate its position in the sector.
The board view the future with confidence."
For further enquiries:
Servoca Plc
Darren Browne, CEO 020 7747 3030
Threadneedle Communications
Trevor Bass / Alex White 020 7936 9665/6
FinnCap
Geoff Nash / Ed Frisby 020 7600 1658
Interim report for the six months ended 31 March 2008
SERVOCA Plc
Interim Statement
For the six months ended 31 March 2008
Introduction
The six month period ended 31 March 2008 is the first interim reporting period of Servoca Plc ("the Group") following the change of it's accounting period to 30 September. The results for the period show a loss of £0.4 million (£0.3 million before the share based payment charge of £0.1 million).
During this period the Group has made further strategic acquisitions in the Security and Education markets and has continued the integration programme to create three market facing divisions which is expected to be completed by the end of the year. Notes 8 and 9 to the interim report provide further information on these acquisitions.
The Group now trades from over 30 locations with more than 300 staff.
Financial review
During the six month period ended 31 March 2008, Group revenue was £16.5 million, which produced a gross profit of £5.1 million. Comparison with previous periods is not considered meaningful given the reverse acquisition and the various acquisitions that have taken place in the business during this time.
In April 2008, the Company raised £1.9 million, before expenses, through a placing of 6,333,340 ordinary shares of 10p each at price of 30p per share. The Balance sheet as at 31 March 2008 includes £2.65 million of deferred consideration under current liabilities. This consideration will be issued as shares but is classified as a current liability under the International Accounting Standards.
To facilitate the future payment of dividends, on 7 November 2007 the Company obtained Court approval for a capital reduction by way of cancellation of the balance of £8.81 million on the share premium account and £6.04 million on the Capital redemption reserve.
Operational highlights
Strategy and delivery
Our strategy is to further develop the breadth of our market offering and services that are provided by our three divisions -, Resourcing, Training and Secure Solutions.
Interim report for the six months ended 31 March 2008
SERVOCA Plc
Interim Statement (continued)
For the six months ended 31 March 2008
Strategy and delivery (continued)
Resourcing
Healthcare :
Within Healthcare we now have six trading companies: Berry, TLP, Dream, Windsor, Firstpoint and TripleWest which are being brought together to take advantage of the Servoca Healthcare branding . These supply a broad spectrum of skills providing allied health professionals, doctors, nurses, domiciliary care, social workers and other associated specialisations and we are now able to offer a complete service by having the ability to cover all major staffing disciplines within this sector. Servoca is one of only a handful of organisations who offer a one stop shop, and one of even fewer such organisations able to offer a national branch network attracting highly skilled healthcare professionals throughout the country. Servoca Healthcare is now in a position to bid for lucrative, long term, regional and national contracts which will help the Group to underpin plans to increase our visibility of earnings and recurring revenue streams within Healthcare. It has recently secured major contracts in South Yorkshire and the West Midlands.
The Healthcare sector demands an up-to-date and complex skill set and we therefore invest heavily in providing training for new and existing staff. Servoca Healthcare now provides large scale training courses for the NHS, private care homes, local authorities and many other business types involved in the health arena. Six specialist healthcare training suites have been established throughout the country, helping to satisfy the ever increasing demand for specialist training within healthcare.
Education :
We continue to grow our market presence both in the UK and abroad. Dream Education provides long term qualified teachers mostly within secondary schools. We have recently acquired Academics and Day to Day Teachers. Academics was acquired in March 2008 for an initial consideration of £2 million and an earn out of up to £5 million. Following the period end, in May 2008, the Company acquired the business trade and assets of a business trading as Day to Day Teachers Limited from the administrators. The Company paid a cash consideration of £0.38 million.
Academics operates as an Education recruitment and training provider which supplies qualified teachers on a contract or permanent basis to clients in London and the Home Counties. Day to Day Teachers operates from four branches and supplies qualified teachers and classroom assistants on a supply or temporary basis.
These acquisitions will enhance the Education resourcing division by enabling us to provide a wider service offering to our expanding client base.
Interim report for the six months ended 31 March 2008
SERVOCA Plc
Interim Statement (continued)
For the six months ended 31 March 2008
Strategy and delivery (continued)
Training Solutions :
Our newly created training provider has been formed due to the rapid growth in demand for these services from both existing and new clients. The division now provides bespoke training in the areas of criminal justice, education, healthcare manufacturing and security. It is the intention of the Company to grow this division organically into other areas of business whilst continuing to use this capability to skill up our own workforce. This process of adding value to our client facing employee's increases our ability to offer a premium service to our clients.
Servoca Secure Solutions
Our Security Division - Servoca Secure Solutions ("SSS"), - includes our acquisitions within security and our Criminal Justice Operation where both now enjoy significant cross-selling opportunities.
We have enjoyed particular success in the areas of criminal justice training, crime training, the outsourcing of cold case reviews, business process outsourcing and the provision of highly experienced teams into sensitive areas.
To strengthen our Security offering, in December 2007 we acquired both International Security & Surveillance Limited ("ISS") and ISS Special Projects Limited ("ISS (SP)") for an aggregate consideration of approximately £2.7 million which was paid in a combination of cash and ordinary shares. ISS provides security and manned guarding services, and ISS (SP) provides intelligence led security solutions including close protection, risk management, surveillance and proactive security.
The newly enlarged division is now able to offer a wide breadth of important and highly valued services to a variety of clients whose needs are often of a sensitive and high-profile nature. SSS provides confidential services to the majority of Police Constabularies throughout the UK It is now also providing manned guarding for galleries, high profile and high risk individuals, entertainment venues, exhibitions, government buildings and the aviation and automotive sectors. SSS is the only organisation of its type to have gained the "Skills for Justice Accreditation" for all of our policing training products. Over the past year SSS has run a number of specialist policing conferences and special interest days, further cementing our strategic relationship with the UK Police Service.
It is our intention to develop SSS into a unique specialist brand able to offer the full spectrum of security services ranging from manned guarding, covert operations, anti counterfeit investigations and computer/mobile phone forensics to business process outsourcing for the UK Police.
We are building this division to become a significant provider of high end specialist Security services.
The process of integration to create a single brand is underway and will be completed during this year.
Acquisitions
As detailed above, the Company has made a number of acquisitions in the period and following the year end. Further details are given in notes 8 and 9 to these interim statements.
Interim report for the six months ended 31 March 2008
SERVOCA Plc
Interim Statement (continued)
For the six months ended 31 March 2008
Board changes
Glenn Swaby became the new Chief Financial Officer on 28 March this year when Andrew Brundle stepped down.
Tony Rogers has decided to step down as an Executive Director with effect from 1 June 2008 but will remain on the board as a non executive Director.
Summary and prospects
We are continuing the process of transforming the performance of the Group from a significant loss maker into a profitable leading provider of UK support services. We have commenced a number of new organic business activities during the period and are looking forward to their growth and contribution in the coming year.
We have a strong platform to build from, and look to deliver shareholder value as the Group continues to consolidate its position in the sector.
The board view the future with confidence.
Bob Morton Darren Browne
Chairman Chief Executive
27 June 2008
Interim report for the six months ended 31 March 2008
SERVOCA Plc
Consolidated income statement
For the six months ended 31 March 2008
|
Six months ended 31 March 2008 (unaudited) |
Six months ended 31 March 2007 (unaudited) |
Eight months ended 30 September 2007 (audited) |
|||
|
Total |
Total |
Total |
|||
|
Note |
£'000 |
£'000 |
£'000 |
||
|
Revenue |
16,458 |
4,231 |
8,738 |
||
|
Cost of sales |
11,389 |
3,151 |
6,456 |
||
|
Gross profit |
5,069 |
1,080 |
2,282 |
||
|
Administrative expenses |
(5,285) |
(1,065) |
(9,411) |
||
|
Operating (loss)/profit before share based payment and goodwill impairment Share based payment |
(131) (85) |
15 - |
(1,858) - |
||
|
Goodwill impairment |
- |
(5,271) |
|||
|
(Loss)/profit from operations |
(216) |
15 |
(7,129) |
||
|
Finance income |
3 |
- |
308 |
||
|
Finance costs |
(150) |
(121) |
(81) |
||
|
Loss before taxation |
(363) |
(106) |
(6,902) |
||
|
Tax expense |
- |
- |
- |
||
|
Loss for the period attributable to equity holders of the parent |
(363) |
(106) |
(6,902) |
||
|
Loss per share: |
Pence |
Pence |
Pence |
||
|
- Basic |
4 |
(0.89) |
(0.59) |
(23.96) |
|
|
- Diluted |
4 |
(0.89) |
(0.59) |
(23.96) |
Interim report for the six months ended 31 March 2008
SERVOCA Plc
Consolidated balance sheet
At 31 March 2008
|
31 March 2008 (unaudited) |
31 March 2007 (unaudited) |
30 September 2007 (audited) |
|||
|
Note |
£'000 |
£'000 |
£'000 |
||
|
Assets |
|||||
|
Non-current assets |
|||||
|
Intangible assets |
10,606 |
690 |
1,683 |
||
|
Property, plant and equipment |
704 |
193 |
358 |
||
|
Total non-current assets |
11,310 |
883 |
2,041 |
||
|
Current assets |
|||||
|
Trade and other receivables |
8,949 |
1,099 |
4,742 |
||
|
Cash and cash equivalents |
1,322 |
1 |
99 |
||
|
Total current assets |
10,271 |
1,100 |
4,841 |
||
|
Total assets |
21,581 |
1,983 |
6,882 |
||
|
Liabilities |
|||||
|
Current liabilities |
|||||
|
Bank overdraft |
(1,282) |
(453) |
(80) |
||
|
Trade and other payables |
(6,440) |
(386) |
(3,377) |
||
|
Other financial liabilities |
5 |
(8,662) |
(1,331) |
(2,405) |
|
|
Corporation tax liability |
(698) |
- |
(285) |
||
|
Provisions |
(144) |
- |
(285) |
||
|
Total current liabilities |
(17,226) |
(2,170) |
(6,432) |
||
|
Non-current liabilities |
|||||
|
Other financial liabilities |
(3,258) |
(2,047) |
(157) |
||
|
Provisions |
(192) |
- |
(208) |
||
|
Total non-current liabilities |
(3,450) |
(2,047) |
(365) |
||
|
Total liabilities |
(20,676) |
(4,217) |
(6,797) |
||
|
Total net assets/(liabilities) |
905 |
(2,234) |
85 |
Interim report for the six months ended 31 March 2008
SERVOCA Plc
Consolidated balance sheet (continued)
At 31 March 2008
|
31 March 2008 (unaudited) |
31 March 2007 (unaudited) |
30 September 2007 (audited) |
|||
|
Note |
£'000 |
£'000 |
£'000 |
||
|
Capital and reserves attributable to equity holders of the company |
|||||
|
Called up share capital |
6 |
4,179 |
- |
3,931 |
|
|
Share premium account |
- |
- |
8,812 |
||
|
Capital redemption reserve |
- |
- |
6,036 |
||
|
Merger reserve |
3,622 |
- |
2,772 |
||
|
Reverse acquisition reserve |
(12,268) |
- |
(12,268) |
||
|
Retained earnings |
5,372 |
(2,234) |
(9,198) |
||
|
Total Equity |
905 |
(2,234) |
85 |
Interim report for the six months ended 31 March 2008
SERVOCA Plc
Consolidated statement of changes in equity
For the six months ended 31 March 2008
|
Unaudited |
Ordinary share capital |
Share premium |
Capital redemption reserve |
Merger reserve |
Reverse acquisition reserve |
Retained earnings |
Total equity |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
||
|
Balance as at 1 October 2007 |
3,931 |
8,812 |
6,036 |
2,772 |
(12,268) |
(9,198) |
85 |
|
|
Changes in equity for the period ended 31 March 2008 |
||||||||
|
Loss for the period |
- |
- |
- |
- |
- |
(363) |
(363) |
|
|
Total recognised income and expense for the period |
- |
- |
- |
- |
- |
(363) |
(363) |
|
|
Cost of share based payment |
85 |
85 |
||||||
|
Reduction in capital (see note 6) |
- |
(8,812) |
(6,036) |
- |
- |
14,848 |
- |
|
|
Issue of share capital |
248 |
- |
- |
850 |
- |
- |
1,098 |
|
|
248 |
(8,812) |
(6,036) |
850 |
- |
14,933 |
1,183 |
||
|
Balance as at 31 March 2008 |
4,179 |
- |
- |
3,622 |
(12,268) |
5,372 |
905 |
The movement on the merger reserve is after charging £5,000 of costs incurred with issuing the shares.
Interim report for the six months ended 31 March 2008
SERVOCA Plc
Consolidated cash flow statement
For the six months ended 31 March 2008
|
Six months ended 31 March 2008 (unaudited) |
Six months ended 31 March 2007 (unaudited) |
Eight months ended 30 September 2007 (audited) |
||
|
£,000 |
£'000 |
£'000 |
||
|
Operating activities |
||||
|
Loss before tax |
(363) |
(106) |
(6,902) |
|
|
Adjustments for: |
||||
|
Depreciation and amortisation charges |
79 |
30 |
71 |
|
|
Interest expense |
150 |
121 |
81 |
|
|
Investment income |
(3) |
- |
(308) |
|
|
Share option expense |
85 |
- |
- |
|
|
Loss on disposal of fixed assets |
- |
- |
13 |
|
|
Goodwill impairment |
- |
- |
5,271 |
|
|
Operating (loss)/profit before changes in working capital and provisions |
(52) |
45 |
(1,774) |
|
|
(Increase)/decrease in trade and other receivables |
(1,412) |
112 |
(388) |
|
|
Increase in trade and other payables |
1,518 |
68 |
1,335 |
|
|
Cash generated from operations |
106 |
180 |
947 |
|
|
Interest paid |
(150) |
(121) |
(81) |
|
|
Cash flows from operating activities |
(96) |
104 |
(908) |
|
|
Investing activities |
||||
|
Acquisitions, net of cash acquired |
(3,515) |
- |
(3,247) |
|
|
Purchase of property, plant and equipment |
(290) |
(21) |
(156) |
|
|
Interest received |
3 |
- |
11 |
|
|
(3,802) |
(21) |
(3,392) |
||
|
Financing activities |
||||
|
Issue of ordinary shares |
- |
- |
3,605 |
|
|
Share issue costs |
(5) |
- |
(103) |
|
|
Loan finance |
3,200 |
- |
- |
|
|
Repayment of finance lease creditor |
(3) |
- |
(2) |
|
|
3,192 |
- |
3,500 |
||
|
(Decrease)/increase in cash and cash equivalents |
(706) |
83 |
(800) |
|
|
Cash and cash equivalents at the beginning of the period |
(2,230) |
(1,366) |
(1,430) |
|
|
Cash and cash equivalents at the end of the period |
(2,936) |
(1,283) |
(2,230) |
Interim report for the six months ended 31 March 2008
SERVOCA Plc
Notes forming part of the financial information
For the six months ended 31 March 2008
1. Accounting periods
The accounting reference date of the Group is 30 September. The current interim results are for the six months ended 31 March 2008. The comparative interim results are for those for the six months ended 31 March 2007. The comparative period end's results are for the eight months ended 30 September 2007.
2. Financial information
The interim financial information for the six months ended 31 March 2008 does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The interim financial information has been prepared under the accounting policies set out in the Annual Report for the period ended 30 September 2007.
The financial information for the periods ended 31 March 2008 and 31 March 2007 are unaudited. The comparative figures for the eight months ended 30 September 2007 are not the full statutory accounts for the period. A copy of the statutory accounts for that period has been delivered to the Registrar of Companies. The auditors have reported on those accounts; their reports were unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain statements under s237(2) or (3) of the Companies Act 1985.
3. Basis of preparation
The interim financial statements have been prepared using the recognition and measurement principles of IFRS as endorsed for use in the European Union.
The accounting policies used in the preparation of these condensed financial statements are set out in the statutory financial statements for the period ended 30 September 2007 which are also the policies that are expected to be applicable at 30 September 2008.
As stated in the Annual Report for the period ended 30 September 2007, under IFRS 3, "Business Combinations", the acquisition of Dream Group Limited (Dream) by Servoca Plc (Servoca) on 7 June 2007, has been accounted for as a reverse acquisition. Although the consolidated financial information has been prepared in the name of the legal parent, Servoca, they are in substance a continuation of the financial information of the legal subsidiary, Dream. The following accounting treatment has been applied in respect of the reverse acquisition.
The assets and liabilities of the legal subsidiary, Dream, are recognised and measured in the consolidated financial information at the pre-combination carrying amounts, without restatement to fair value;
The retained (loss) earnings recognised in the consolidated financial information represent those of Dream to the date of the combination, 7 June 2007, and from this date to the period end represent those of Dream and Servoca;
The equity structure appearing in the consolidated financial information as at 31 March 2008 and 30 September 2007, reflects the equity structure of the legal parent, Servoca, including the equity instruments issued as part of the acquisition of Dream;
Interim report for the six months ended 31 March 2008
SERVOCA Plc
Notes forming part of the financial information
For the six months ended 31 March 2008
3. Basis of preparation (continued)
Comparative interim numbers presented in the consolidated financial information are those extracted from the accounting records of the legal subsidiary, Dream; and
The assets and liabilities of the legal parent, Servoca Plc, are recognised on combination at fair value.
4. Loss per share
The calculation of loss per share for the period ended 31 March 2008 is based on a weighted average number of shares in issue during the period of:
|
Basic |
Dilutive effect of share options and shares to be issued |
Diluted |
||
|
31 March 2008 |
40,865,463 |
- |
40,865,463 |
|
|
31 March 2007 |
17,839,944 |
- |
17,839,944 |
|
|
30 September 2007 |
28,801,555 |
- |
28,801,558 |
The above same number of shares are used in all of the loss per share calculations below. 1.625 million share options have not been included in the calculation as their effect would be anti-dilutive.
Additional disclosure is also given in respect of loss per share before goodwill impairment as the directors believe this gives a more accurate presentation of maintainable earnings.
|
Six months ended 31 March 2008 (unaudited) |
Six months ended 31 March 2007 (unaudited) |
Eight months ended 30 September 2007 (audited) |
||
|
£'000 |
£'000 |
£'000 |
||
|
Loss used for basic and diluted calculation |
(363) |
(106) |
(6,902) |
|
|
Goodwill impairment |
- |
- |
5,271 |
|
|
Loss before goodwill impairment |
(363) |
(106) |
(1,631) |
|
|
Pence |
Pence |
Pence |
||
|
Basic and diluted loss per share |
(0.89) |
(0.59) |
(23.96) |
|
|
Goodwill impairment |
- |
- |
18.30 |
|
|
Basic and diluted loss per share before goodwill impairment |
(0.89) |
(0.59) |
(5.66) |
Interim report for the six months ended 31 March 2008
SERVOCA Plc
Notes forming part of the financial information (continued)
For the six months ended 31 March 2008
5. Other financial liabilities
|
31 March 2008 (unaudited) |
31 March 2007 (unaudited) |
30 September 2007 (audited) |
||
|
£'000 |
£'000 |
£'000 |
||
|
Invoice discounting facilities |
2,976 |
831 |
2,248 |
|
|
Obligations under finance leases |
30 |
- |
7 |
|
|
Deferred consideration (see note 8) |
3,006 |
- |
150 |
|
|
Deferred share consideration in respect of Academics (see note 8) |
2,650 |
- |
- |
|
|
Loans |
- |
500 |
- |
|
|
8,662 |
1,331 |
2,405 |
6. Called up share capital
|
Servoca Plc |
31 March 2008 Number '000 (Unaudited) |
31 March 2008 £'000 (unaudited) |
30 September 2007 Number '000 (audited) |
30 September 2007 £'000 (audited) |
||
|
Authorised: |
||||||
|
Ordinary shares of 10p each |
60,000 |
6,000 |
60,000 |
6,000 |
||
|
Preference shares of £1 each |
7,400 |
7,400 |
7,400 |
7,400 |
||
|
Allotted, issued and fully paid: |
||||||
|
Ordinary shares of 10p each |
41,787 |
4,179 |
39,307 |
3,931 |
||
|
Preference shares of £1 each |
- |
- |
- |
- |
The preference shares hold no dividend rights except in the event of a winding up of the Company when any assets held for distribution are first applied to the holders of these shares to the extent they are paid up.
|
Dream Group Limited |
31 March 2007 Number (unaudited) |
31 March 2007 £ (unaudited) |
|
|
Authorised: |
|||
|
Ordinary shares of 0.001p each |
100,000 |
148 |
|
|
Allotted, issued and fully paid: |
|||
|
Ordinary shares of 0.001p each |
14,811 |
148 |
Interim report for the six months ended 31 March 2008
SERVOCA Plc
Notes forming part of the financial information (continued)
For the six months ended 31 March 2008
6. Called up share capital (continued)
Movements in issued share capital
|
Ordinary shares of 10p each Number '000 (unaudited) |
Ordinary Shares of 10p each £'000 (unaudited) |
||
|
Issued: |
|||
|
In issue at 1 October 2007 |
39,307 |
3,931 |
|
|
Issued during period |
2,480 |
248 |
|
|
In issue at 31 March 2008 |
41,787 |
4,179 |
On 7 December 2007, 1,337,142 and 1,142,857 ordinary 10p shares were issued at a price of 44.5p each in connection with the acquisition of ISS and ISS SP respectively.
7. Approved capital reduction
On 7 November 2007, the Company obtained court approval for a capital reduction by way of cancellation of the balance of £8,812,000 on the share premium account and £6,036,000 on the capital redemption reserve so that the amounts standing as credits on these undistributable reserves become realised profits which could be credited to the profit and loss account of Servoca Plc thus reducing the brought forward deficit of £9,198,000 at 30 September 2007.
8. Acquisitions
(a) ISS Limited and ISS SP Limited
On 7 December 2007, the Company acquired the entire issued share capital of both International Security & Surveillance Limited ("ISS") and ISS Special Projects Limited ("ISS SP").
Details on ISS
Servoca paid a total consideration of £1.295 million, satisfied in full by cash consideration of £0.7 million and by the issue of 1,337,142 ordinary shares of 10p each, at a bid price of 44.5 pence per share.
ISS trades from two locations with its head office based in the Thames Valley and an office in Edinburgh ISS provides security and manned guarding services. ISS has a total staff including guards of approximately 150. In the audited accounts for the year to 30 June 2007 ISS achieved a profit before tax of £27,000 on turnover of £3.47million. ISS's main clients are blue chip organisations which are based within the aviation industry and the corporate commercial markets. In addition ISS is well placed within the theatre, arts and exhibition sectors. At 30 June 2007, ISS had audited net assets of approximately £307,000.
Interim report for the six months ended 31 March 2008
SERVOCA Plc
Notes forming part of the financial information (continued)
For the six months ended 31 March 2008
8. Acquisitions (continued)
(a) ISS Limited and ISS SP Limited (continued)
Details in ISS (continued)
Details of the provisional fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows:
|
£'000 |
£'000 |
||
|
Property, plant and equipment |
75 |
||
|
Trade and other receivables |
1,149 |
||
|
Cash |
6 |
||
|
Trade and other payables |
(809) |
||
|
Bank overdraft |
(16) |
||
|
Invoice discounting facilities |
(248) |
||
|
Net assets |
157 |
||
|
Consideration paid |
|||
|
Cost of acquisition |
1,295 |
||
|
Costs associated with the acquisition |
84 |
||
|
Goodwill |
1,222 |
On the basis that the fair value exercise regarding the acquisition of ISS is not yet finalised, which would include the identification of separable intangible assets, the directors consider that it is impracticable to disclose the fair values of the assets and liabilities acquired and the above amounts are therefore prepared on a provisional basis.
Details on ISS SP
Servoca paid a total consideration of £1,385,000 satisfied in full by cash consideration of £0.87 million and by the issue of 1,142,857 Servoca ordinary shares of 10p each at a bid price of 44.5 pence each.
ISS(SP) also trades from one location based in the Thames Valley. ISS(SP) provides intelligence led security solutions including close protection, risk management, surveillance and proactive security. ISS(SP) has a total staff of 3. The founder of ISS(SP) has agreed to remain with Servoca for a minimum of three years. In the audited accounts for the year to 30 June 2007 ISS(SP) achieved a profit before tax of £734,000 on turnover of £1.84 million. ISS(SP's) services are provided to substantial organisations based both in the UK and internationally that require confidential and low profile assignments to be undertaken. At 30 June 2007, ISS(SP) had audited net assets of approximately £159,000.
Interim report for the six months ended 31 March 2008
SERVOCA Plc
Notes forming part of the financial information (continued)
For the six months ended 31 March 2008
8. Acquisitions (continued)
(a) ISS Limited and ISS SP Limited (continued)
Details in ISS SP (continued)
Details of the provisional fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows:
|
£'000 |
£'000 |
||
|
Property, plant and equipment |
27 |
||
|
Trade and other receivables |
421 |
||
|
Cash |
209 |
||
|
Trade and other payables |
(426) |
||
|
Net assets |
231 |
||
|
Consideration paid |
|||
|
Cost of acquisition |
1,384 |
||
|
Costs associated with the acquisition |
75 |
||
|
Goodwill |
1,228 |
On the basis that the fair value exercise regarding the acquisition of ISS (SP) is not yet finalised, which would include the identification of separable intangible assets, the directors consider that it is impracticable to disclose the fair values of the assets and liabilities acquired and the above amounts are therefore prepared on a provisional basis.
(b) Academics
On 28 March 2008, the Company acquired the entire issued share capital of Academics Holdings Limited and its wholly owned subsidiary, Academics Limited ("Academics"). Servoca paid an aggregate initial cash consideration of £2 million and there will be a further payment of up to £5 million dependant on certain EBITDA targets being achieved by Academics in the year to 31 March 2009. If paid in full, the deferred consideration will comprise up to £2.35 million in cash and £2.65 million in ordinary shares of Servoca Plc. Any ordinary shares to be issued as deferred consideration will be issued at the then share price, but will not be issued at less than 35 pence per share. In addition, cash consideration is payable to the vendors, pound for pound, based on defined net assets in excess of £325,000 at the date of acquisition. Although, the completion balance sheet has yet to be agreed, the estimated additional consideration included in these interim statements is £1,131,000, of which £725,000 has been paid in cash in the period.
Academics trades from one location in Gants Hill, Essex and it operates in the Education sector as a recruitment and training provider supplying qualified teachers on a contract or permanent basis to clients in London and the Home Counties. Academics has a total staff of 21. In the audited accounts for the year to 31 August 2007, Academics achieved a profit before tax of £910,000 on a turnover of £9.04 million. At 31 August 2007, Academics had audited net assets of approximately £1.7 million.
Interim report for the six months ended 31 March 2008
SERVOCA Plc
Notes forming part of the financial information (continued)
For the six months ended 31 March 2008
8. Acquisitions (continued)
(b) Academics Limited (continued)
Details in Academics (continued)
Details of the provisional fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows:
|
£'000 |
£'000 |
||
|
Property, plant and equipment |
36 |
||
|
Trade and other receivables |
1,350 |
||
|
Cash |
1,329 |
||
|
Trade and other payables |
(719) |
||
|
Net assets |
1,996 |
||
|
Consideration paid |
|||
|
Cost of acquisition |
8,131 |
||
|
Costs associated with the acquisition |
337 |
||
|
Goodwill |
6,472 |
On the basis that the fair value exercise regarding the acquisition of Academics is not yet finalised, which would include the identification of separable intangible assets, the directors consider that it is impracticable to disclose the fair values of the assets and liabilities acquired and the above amounts are therefore prepared on a provisional basis.
9. Subsequent events
On 4 April 2008, the Company raised £1.9 million, before expenses, through a placing of 6,333,340 ordinary shares of 10p each at a price of 30p per share.
On 23 May 2008 the Company acquired as a going concern, the business trade and assets of a business trading as Day to Day Teachers Limited ( Day to Day ) from the administrators. Day to Day provides temporary teachers on a supply basis from four offices. The Company paid an initial cash consideration of £0.38m for the debtor book including goodwill of £40,000. There will be no further payments.
SERVOCA Plc
Independent review report
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2008 which comprises the consolidated income statement, the consolidated balance sheet, the consolidated statement of changes in equity, the consolidated cash flow statement and the related notes.
We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
Directors' responsibilities
The interim report, including the financial information contained therein, is the responsibility of and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market which require that the half-yearly report be presented and prepared in a form consistent with that which will be adopted in the company's annual accounts having regard to the accounting standards applicable to such annual accounts.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Our report has been prepared in accordance with the terms of our engagement to assist the company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2008 is not prepared, in all material respects, in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market.
BDO Stoy Hayward LLP
Chartered Accountants and Registered Auditors
Epsom
27 June 2008
Related Shares:
Servoca