30th Nov 2007 17:00
Cyril Sweett Group PLC30 November 2007 The following announcement replaces RNS no. 7386I correcting Note 2 of thestatement regarding segmental analysis. 29 November 2007 Cyril Sweett Group plc Interim results for the six months ended 30 September 2007 Cyril Sweett Group plc the international construction and property consultancyproviding quantity surveying, project management and management consultancyservices, operating in the UK, Europe, the Middle East and India, is pleased toreport its first interim results as a publicly listed Group on AIM. The Group works with and advises government agencies, private sector developers,investors and construction companies, undertaking infrastructure and propertyprojects across a wide range of market sectors. Highlights • Performance ahead of last year and in line with expectations; • Revenue for the period up 23% to £29.3m (2006: £23.8m); • Operating profit up 26% to £2.61m (2006: £2.07m); • Pre-tax profit up 23% to £2.52m (2006: £2.04m); • Operating profit margin of 8.9% (2006: 8.7%); • Net debt reduced in the six month period by £1.31m to £1.91m; • Earnings per share up 19% to 3.7p (2006: 3.1p); • Interim dividend 0.80p per share (2006: 0.90p per share); • Contracted order book stands at £67m to 2013; • Listed on AIM on 31 October 2007; • Placed 9.1 million new ordinary shares at £1.10 per share to raise £10m; • Over 75% of our employees own shares in the Company; • Appointment of Nick Woollacott as independent Non-Executive Director; • Board confident of outlook for the full year. Chairman Francis Ives said: "I am very pleased to announce our first set of results following the AIMlisting. Our markets are strong, we continue to maintain our margins and we seesignificant opportunities to extend our activities into new markets overseas.The proceeds from the placing will not only support organic growth but will alsogive us significant opportunity to extend our growth in the UK and overseasthrough acquisitions. I would also like to welcome Nick Woollacott who joined the Board as aNon-Executive Director. Nick's depth of experience will no doubt support theGroup in realising its plans. Current trading is strong and given our clear growth strategy, our values andstrong opportunities in our markets, the Board is confident of the outcome forthe full year and beyond." Enquiries Cyril Sweett Group plc Francis Ives, Chairman, 020 7061-9001Dean Webster, Chief Executive Officer, 020 7061-9303Mike Kemsley, Chief Financial Officer, 020 7061-9092 Financial Dynamics, 020 7831-3113 Jonathon BrillBilly Clegg Brewin Dolphin Investment Banking Andrew Kitchingman, 0113 245-9341Sean Wyndham-Quin, 0845 270-9518 Chief Executive's Report I am very pleased to report that our interim results are well ahead of the sameperiod last year and in line with the Board's expectations. Results Revenues for the period increased by 23% to £29.3m (2006: £23.8m) reflectingstrong market conditions across all our market sectors. The Group order book increased to a healthy £67m demonstrating the strength ofour client base with over 70% of new orders coming from our existing frameworksand repeat customers. Operating profit (after corporate costs and staff profit sharing) increased by26% to £2.61m (2006: £2.07m), and the operating profit margin increased to 8.9%(2006: 8.7%). Profit before tax increased by 23% to £2.52m (2006: £2.04m). Basic earnings per share increased to 3.7p (2006: 3.1p). Net debt amounted to £1.91m at September 2007, compared with £3.22m at 31 March2007 and £3.73m at 30 September 2006. The movement is as a result of improvedbilling processes and an increasing focus on collection of debtors. Dividend The Board has declared an interim dividend of 0.80 pence per share (2006: 0.90pence) payable on 7 January 2008 to shareholders on the register at 7 December2007. Fundraising In October we placed 9.1 million new shares as part of the AIM flotation raising£8.4m, net of fees, enabling us to pursue our UK and international acquisitionstrategy. We have commenced negotiations on a number of potential acquisitionsand hope to be able to announce these progressively in the next 6-12 months. Business Review - UK We continue to analyse market movement across each sector monitoring the levelsof user demand and market sentiment. This allows us to concentrate ourresources in maintaining our dominance in markets where we are strong and toshift activity to where we see growth potential in the future. This policy haslimited our exposure to the London office market, maximised our opportunity inRetail and Health, and developed opportunities in Education, Waste andSustainable Development. Revenue in the year to date has continued to be strong with new project winsbeing achieved in all our key market sectors. Retail and Shopping Centres Our expertise in this segment continues to carry us through the complete cycleof new development planning, construction and asset regeneration. Notable awardsinclude Trinity Quarter in Leeds, Covent Garden Estate in London, West Quay 4 inSouthampton, and three new schemes for Tesco Developments. Mixed Use projectsinclude the Titanic Quarter in Belfast and the Snodgrass Mill project inGlasgow, amongst others. Commercial, Hotel and Leisure This is a sector where, as a result of introducing new key personnel to thebusiness, we have been able to grow our market share. Notable awards includeBarclays Capital Space Strategy, Societe Generale framework, refurbishment ofthe Marriott Hotel in Grosvenor Square, the redevelopment of the HammersmithPalais and major regeneration projects at Radcliffe Village, Bristol and theBoatyard, Plymouth. Health Healthcare is changing from a focus on major acute hospital development to anemphasis on primary and community care. Cyril Sweett's team are adapting tothese changes and won recent commissions for Tayside, Derbyshire and West LondonMental Health Trusts and Community schemes in Sussex, Surrey and London. Prisons As part of our existing framework agreements we have received appointments forBelmarsh, Dover, Winchester and Camphill among others, as well as a frameworkappointment for the Scottish Executive Justice Department. Transport/Utilities We continue to generate additional revenue in the Rail segment from our ScottishExecutive contract. At the end of September we were successful in beingappointed to the Network Rail framework and we will also be providing costplanning advice to parts of the Crossrail Scheme. In the Air Transport segmentBAA appointed us onto their framework for Heathrow. Education The Group's expertise in PFI/PPP has enabled us to develop our involvement intothe expanding education sector. In the period we have secured several schoolscommissions, including two multiple schools contracts as both investor andservice provider. In addition we are actively pursuing college and universityprogrammes and have secured recent commissions at Farnborough and NorwichFurther Education Colleges and Exeter, Ulster and Cambridge Universities. Frameworks Framework agreements provide the Group with long term potential income.Presently the Group has 49 formal frameworks, producing approximately 20% of ourannual income. In addition to the transport frameworks, recent successesinclude being appointed to the framework for the Office of Government Commerce(OGC), Barclays Bank and Societe Generale. International Europe In terms of our European operations, our offices in France and Spain, althoughsmall at present, have produced encouraging results over the period. Many ofour clients are overseas investors and new awards have included HSBC, Primarkframework, HBOS, Goldman Sachs, JPMorgan Chase, Pitney Bowes, LaSalleInvestments and Marriott Hotels. In the Republic of Ireland the market continues to remain very buoyantsupporting plans for continued growth in both the public and private sectors.Notable wins during the period have included a framework with Health ServicesExecutive, Samuel Beckett Civic Campus and Custom House Plaza for DublinDocklands Development Association. Middle East Our emerging operations in the Middle East are producing very encouragingresults. Notable wins in the period include a contract to support the JV on thenew Dubai Metro and Yas Island, a retail and mixed use project in Abu Dhabi.Other projects secured in Abu Dhabi include the Masdar Zero Carbon City projectand the Foster & Partners designed Abu Dhabi World Trade Centre building at theAl Raha Beach development. We have been also been awarded a framework agreementto deliver 24 Holiday Inn Express hotels in Dubai, Abu Dhabi and Bahrain. India We have commenced operations in India, operating from our first office inMumbai. New business generated in the period includes new commercial officesfor Alliance Bernstein, Goldman Sachs and Royal Bank of Scotland, together withresidential and leisure developments for Indian developers. Board Changes Nick Woollacott recently joined the Board as a Non-Executive Director. Nick waspreviously the Chief Operating Officer of Transco plc and more recently theSenior Non-Executive Director of Enterprise plc. In addition to this depth ofexperience, the Board will also benefit from his knowledge of the energy sector. Strategic Plan The Group has developed a three year strategic plan to build a broader basedbusiness doubling turnover to £100 million over the period. Objectives withinthe plan comprise: • To continue with strong organic growth by taking greater market share in our existing sectors and to move into other sectors with growth potential; • To seek acquisitions in both the UK and overseas, aiming to acquire businesses in our fields that have the same drive and vision for an independent quantity surveying and project management service offer; • To increase our overseas activity five fold, in the Middle East, India and Australasia, delivering 25% of our revenues from these areas by 2010; • To maintain our profit margins at existing levels through this growth period; • To recruit and retain high performing people; • To promote our ethos of employee ownership, aligning the interests of both our internal and external shareholders; • To deliver a top quality and continually improving level of service to our clients. Our strategy of combining organic growth with a buy and build plan is not onlylogical; it is supported by our three key attributes: • Staff shareholding ethos: Inspire commitment and collaboration of internal and external shareholders toshare in the long term success of the business; • People development: Recruit top quality people, invest in their professional development, and helpthem be the best they can be, enabling us to build high performing teams; • Desire for quality: Invest time and resources in developing our business processes, ultimatelyachieving the best available service to our clients. Outlook We see that the economic conditions, when viewed across all our UK marketsectors, will remain positive. We are also encouraged by the prospects in anumber of growing areas of our business, in particular the Waste, Sustainabilityand Education sectors. Our strong order book, combined with our continuedstrategy of developing market share across our regional network, gives the Boardconfidence that the Group will continue to deliver its expected UK growth plans. Overseas, construction demand, particularly in the Middle East and India,presents us with significant opportunities for growth in the short and mediumterm. Our pipeline for acquisitions is being developed and we hope to be able toincrease the momentum for acquisitions over the next 6 to 12 months. I am pleased that our progress is proceeding as planned, which together with astrong order book, and an improving cash flow, should ensure that we deliver ourbusiness plans. Dean Webster - Chief Executive Officer Consolidated Income StatementFor the six months ended 30 September 2007 6 months to 6 months to Year ended 30 September 2007 30 September 2006 31 March 2007 (unaudited) (unaudited) (unaudited)* £'000 £'000 £'000 Revenue 29,302 23,752 52,061Cost of sales (19,345) (15,913) (33,287) Gross profit 9,957 7,839 18,774Administrative expenses (7,352) (5,772) (14,038) Operating profit 2,605 2,067 4,736Finance income 29 28 58Finance costs (115) (138) (322)Net finance costs (86) (110) (264)Share of results of joint venture - - 4Profit on sale of investment in associate - 85 85 Profit before taxation 2,519 2,042 4,561Taxation (840) (702) (1,370)Profit for the period 1,679 1,340 3,191Profit attributable to:Equity shareholders of the parent company 1,679 1,340 3,191Basic earnings per share 3.7p 3.1p 7.4p * The financial information for the year ended 31 March 2007 has been restatedin accordance with IFRS based on the statutory accounts which have beendelivered to the Registrar of Companies, and on which the auditors gave anunqualified opinion. Consolidated statement of recognised income and expenseFor the six months ended 30 September 2007 6 months to 6 months to Year ended 30 September 30 September 31 March 2007 2006 2007 (unaudited) (unaudited) (unaudited) £'000 £'000 £'000 Foreign exchange translation difference (3) 7 5Available for sale investments: Valuation gains taken to equity - - 600Deferred tax on valuation gain - - (180)Actuarial gain/(loss) on pension scheme 542 (285) (60)Deferred tax on actuarial gain/(loss) (163) 86 18 Net income/(expense) recognised directly in 376 (192) 383equityProfit for the period 1,679 1,340 3,191Total recognised income for the period 2,055 1,148 3,574Attributable to:Equity shareholders 2,055 1,148 3,574 Consolidated Balance Sheet 30 September 30 September 31 March 2007 2006 2007 (unaudited) (unaudited) (unaudited) £'000 £'000 £'000Non-current assetsIntangible assets 3,264 3,341 3,258Plant and equipment 1,229 1,288 1,241Financial assets 905 263 904Investment accounted for using the equity method 220 216 220Deferred income tax asset 190 698 435Total non-current assets 5,808 5,806 6,058Current assetsTrade and other receivables 24,060 20,149 21,731Cash and cash equivalents 1,140 1,172 1,221 25,200 21,321 22,952Current liabilitiesFinancial liabilities (2,847) (3,503) (3,960)Trade and other payables (10,982) (8,487) (8,819)Current income tax liabilities (614) (570) (460)Total current liabilities (14,443) (12,560) (13,239) 10,757 8,761 9,713 Net current assets Total assets less current liabilities 16,565 14,567 15,771 Non-current liabilitiesFinancial liabilities (201) (1,399) (481)Retirement benefit obligations (394) (1,749) (1,211)Total non-current liabilities (595) (3,148) (1,692) Net assets 15,970 11,419 14,079 EquityShare capital 4,584 4,283 4,451Share premium 2,196 1,613 1,923Treasury shares - (495) (354)Share option reserve 187 172 154Retained earnings 9,003 5,846 7,905Total equity shareholders' funds 15,970 11,419 14,079 Consolidated Cash Flow Statement 6 months to 30 6 months to 30 Year ended 31 September 2007 September 2006 March 2007 (unaudited) (unaudited) (unaudited) £'000 £'000 £'000Cash flows from operating activitiesCash flows from operations 2,699 622 2,415Interest paid (116) (138) (322)Income taxes paid (686) (980) (1,544)Net cash generated from operating activities 1,897 (496) 549 Cash flows from investing activitiesInterest received 29 28 58Proceeds on disposal of investment in associate - 125 125Proceeds on disposal of plant, equipment, - - 8fixtures and fittingsPurchase of plant, equipment, fixtures and (307) (23) (230)fittingsPurchase of computer software (109) - (98)Purchases of financial assets (1) (27) (68)Decrease in treasury shares 354 - 141Acquisition of subsidiary - - (115)Overdraft/cash acquired with subsidiary - - (58)Net cash (used in) / generated from investing (34) 103 (237)activities Cash flows from financing activitiesDividends paid (957) (827) (1,253)Repayments of borrowings (585) (740) (2,026)Repayments of obligations under finance leases (155) (195) (406)Proceeds on issue of ordinary shares 406 - 229New bank loans raised 786 1,061 1,423Net cash used in financing activities (505) (701) (2,033)Net increase / (decrease) in cash, cash 1,358 (1,094) (1,721)equivalents and (bank overdraft)Cash, cash equivalents and (bank overdraft) at (1,084) 637 637beginning of period Cash, cash equivalents and (bank overdraft) at 274 (457) (1,084)end of period Cash, cash equivalents and (bank overdraft)compriseCash at bank and in hand 1,140 1,172 1,221Bank overdraft (866) (1,629) (2,303) 274 (457) (1,084) Notes to the Financial Information 1. Basis of preparation General information Cyril Sweett Group plc is a company incorporated and domiciled in the UnitedKingdom under the Companies Act 1985. The address of the registered office is 60Gray's Inn Road, London, WC1X 8AQ. The principal activities of the Group includethe provision of construction cost consultancy, project management and otherspecialised consultancy services, including building surveying. This financial information is presented in pounds sterling, the currency of theprimary economic environment in which the group operates. The group comprisesthe company and entities controlled by the company (its subsidiaries). Basis of preparation The consolidated financial information presented is for the six month periods to30 September 2007 and 2006 and the full year to 31 March 2007. The most recent statutory accounts of the Group, prepared in accordance with UKGAAP are for the year ended 31 March 2007 which have been delivered to theRegistrar of Companies, and on which the auditors gave an unqualified opinion. The Group was admitted to trading on the Alternative Investment Market, a marketoperated by London Stock Exchange plc, on 31 October 2007. In seeking admissionto trading, the UK GAAP statutory accounts were restated in accordance withInternational Financial Reporting Standards and this restatement together withthe accounting policies to be adopted for the financial year to 31 March 2008,have been included in the AIM Admission Document. This restatement includes areconciliation of the UK GAAP accounts to the accounts on an IFRS basis and fulldetails can be found in the Admission Document at the Investor section of thecompany's web site: www.cyrilsweett.com. This interim consolidated financial information has been prepared in accordancewith the requirements of the AIM Rules and with International FinancialReporting Standards (IFRS), and is presented on a basis consistent with theaccounting policies to be adopted in the consolidated financial information ofCyril Sweett Group plc for its next financial year, ending on 31 March 2008. Itdoes not constitute accounts as defined by section 240 of the Companies Act1985. Estimates and judgements The preparation of accounts in accordance with IFRS requires management to makeestimates and assumptions that affect the reported amounts of assets andliabilities at the date of the accounts and the reported amounts of revenues andexpenses during the reported period. These estimates are based on historicalexperience and various other assumptions that management and directors believeare reasonable under the circumstances, the results of which form the basis formaking judgements about the carrying value of assets and liabilities that arenot readily apparent from other sources. Areas comprising critical judgements that may significantly affect the Group'searnings and financial position are revenue recognition, valuation ofintangibles including goodwill, restructuring activities, provisions forpensions, income taxes, and share-based payments. 2. Segmental analysis For management purpose, the Group manages its operations through twogeographical regions, which are viewed as the primary segments. There are nomaterial sales to other geographical segments. There was no material intersegment trading. Primary segments 6 months 6 months Year to 30 to 30 ended September September 31 March 2007 2006 2007 (unaudited) (unaudited) (unaudited) UK Ireland Total UK Ireland Total UK Ireland Total £'000s £'000s £'000s £'000s £'000s £'000s £'000s £'000s £'000sRevenue byGeographical regionsExternal sales 27,818 1,484 29,302 22,678 1,074 23,752 49,210 2,851 52,061Gross profit 9,332 625 9,957 7,366 473 7,839 17,232 1,542 18,774Administrative (7,057) (295) (7,352) (5,497) (275) (5,772) (12,494) (695) (13,189)expensesShare of operating - - - - - - 4 - 4results of jointventuresSegment results 2,275 330 2,605 1,869 198 2,067 4,742 847 5,589Unallocated corporate - - (849)costsFinance income 29 28 58Finance costs (115) (138) (322)Profit on sale of - 85 85investment InassociateProfit before tax 2,519 2,042 4,561Taxation (840) (702) (1,370)Profit for the year 1,679 1,340 3,191Other informationCapital additions 397 19 416 19 4 23 643 29 673Depreciation and 411 11 422 396 11 407 822 29 851amortisationImpairment of - - - - - - 295 - 295intangible assets 6 months 6 months to 30 to 30 Year ended September September 31 March 2007 2006 2007 (unaudited) (unaudited) (unaudited) UK Ireland Total UK Ireland Total UK Ireland Total £'000s £'000s £'000s £'000s £'000s £'000s £'000s £'000s £'000sBalance sheetAssetsSegmental assets 23,363 1,647 25,010 19,629 994 20,623 26,400 2,175 28,575Unallocated corporate 190 698 435assetsConsolidated total 25,200 21,321 29,010assetsLiabilitiesSegmental liabilities 10,667 704 11,371 9,378 488 9,866 9,412 618 10,030Unallocated corporate 3,662 5,472 4,901liabilitiesConsolidated total 15,033 15,338 14,931liabilities The assets of the segments include intangible assets, plant and equipment,assets from finance leases, financial assets, investments accounted for usingthe equity method, trade and other receivables and cash and cash equivalents.The liabilities comprise trade and other payables and retirement benefitobligations. Secondary format 6 months to 6 months to Year ended 30 September 30 September 31 March 2007 2006 2007 (unaudited) (unaudited) (unaudited) £'000 £'000 £'000Revenue by Business activityCost Consulting 15,540 13,158 27,113Project Management 9,396 7,449 18,182 4,366 3,145 6,766 Management Consultancy / Specialist Services 29,302 23,752 52,061 The group manages its business through segments based on geographical region.All revenue is generated from the rendering of services. 3. Taxation 6 months to 6 months to Year ended 30 September 30 September 31 March 2007 2006 2007 (unaudited) (unaudited) (unaudited) £'000 £'000 £'000Current tax:UK corporation tax 712 592 1,179Overseas tax 46 28 127Adjustments in respect of previous - - (150)periods 758 620 1,156Deferred taxation:Origination and reversal of timing 82 82 214differencesTaxation charge 840 702 1,370 4. Dividends £'000 £'000 £'000Interim dividend paid - - 426Final dividend paid 957 827 827 957 827 1,253 The board has declared an interim dividend in respect of the half year 0.8p pershare (2006: 0.9p), which is not reflected in this financial information. Duringthe period the final dividend of 2.15p per share (2006: 2.0p per share) inrespect of the year ended 31 March 2007 was paid. This amounted to £957,026(2006: £826,660). 5. Earnings per share 6 months to 6 months to Year ended 30 September 30 September 31 March 2007 2006 2007 (unaudited) (unaudited) (unaudited) £'000 £'000 £'000Profit for the financial period 1,679 1,340 3,191attributable to equity shareholders Number Number NumberWeighted average number of 45,457,736 43,477,413 42,813,568shares in issueBasic earnings per share 3.7p 3.1p 7.4p 6. Statement of changes in equity Share Share Treasury Retained Share option Total capital premium shares earnings reserves Equity £'000 £'000 £'000 £'000 £'000 £'000 At 1 April 2006 4,283 1,613 (495) 5,525 145 11,071Exchange differences - - - 7 - 7Profit for the period - - - 1,340 - 1,340Dividends - - - (827) - (827)Actuarial gain / (loss) - - - (285) - (285)Deferred tax on actuarial - - - 86 - 86 gain / (loss)Employee share option schemes - - - - 27 27 - value of service provided At 30 September 2006 4,283 1,613 (495) 5,846 172 11,419 Exchange differences - - - (2) - (2)Profit for the period - - - 1,851 - 1,851Dividends - - - (426) - (426)Actuarial loss - - - 225 - 225Deferred tax on actuarial loss - - - (68) - (68)Available-for-sale investments - - - 600 - 600Deferred tax on available-for-sale - - - (180) - (180) investmentsEmployee share option schemes -value of services provided - - - - 41 41 -exercise of awards - - - 59 (59) -Net shares issued on acquisition 168 310 - - - 478Movement in Treasury shares - - 141 - - 141 At 31 March 2007 4,451 1,923 (354) 7,905 154 14,079 Exchange differences - - - (3) - (3)Profit for the period - - - 1,679 - 1,679Dividends - - - (957) - (957)Actuarial gain / (loss) - - - 542 - 542Deferred tax on actuarial - - - (163) - (163) gain / (loss)Employee share option schemes - - - - 33 33 - value of service providedNew shares issued during 133 273 - - - 406the yearMovement in Treasury shares - - 354 - - 354 At 30 September 2007 4,584 2,196 - 9,003 187 15,970 7. Post balance sheet event On 31 October 2007 the company was admitted to trading on the AlternativeInvestment Market, a market operated by London Stock Exchange plc. Immediatelyprior to admission the company issued 9,090,910 ordinary shares of 10 pence eachat a premium of £1 per share raising £10m before expenses and £8.4m net ofexpenses. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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