24th Sep 2008 07:00
Savile Group plc ("Savile" or the "Group") PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2008 Highlights Year ended Year ended 30 June 2008 30 June 2007 ‚£'000 ‚£'000 Revenue on continuing activities 6,949 5,069 Operating profit/(loss) from continued 711 (185)operations Profit/(loss) for the year before tax 724 (186) Profit/(loss) for the year after tax 526 (518) Net assets 1,948 875 Net increase in cash and cash equivalents 822 31
Headlines 2008
Group sales on continuing activities up by 37% to ‚£6.95m (2007: ‚£5.07m)
Sales of talent management services increased by 100% to ‚£3.0m (2007: ‚£1.5m)
Sales of talent management services increased to 43% of total sales (2007: 30%)
Outplacement sales increased by 11% to ‚£4.0m (2007: ‚£3.6m)
Operating profit on continuing activities of ‚£0.7m for the year (2007: ‚£0.2m loss)
Cash and cash equivalents at year end ‚£1.1m (2007: ‚£0.3m)
Basic EPS 4.60 pence per share (2007: loss 5.28 pence per share)
Jonathan Cohen, Executive Chairman of Savile, commented:
"I am delighted to be able to report a 37% growth in revenue on continuing operations and pre tax profits of ‚£0.72m compared to a loss of ‚£0.19m in the previous year. This has been achieved against a background of considerable change in the Group, as part of our strategic plan, with the successful combination during the year of three distinct brands under the Savile Group investment banner.
Our individual brands are performing well, but we are also increasingly providing both talent management and outplacement services to our clients, With the City going through the biggest upheaval in a generation, Savile is perfectly positioned to assist its clients to nurture their best talent and to ease the transition brought about by restructuring of operations. 2009 will be the first year our revenues benefit from the full consolidation of CEDAR and IDDAS too.
With an excellent team in place at all three of our brands, a very strong balance sheet, positive cash flow, and a clear strategy, I am very confident in the Group's future.
Enquiries to:Savile Group plcJonathan CohenChairmanTel: 020 7816 0707Nominated Adviser to SavileDowgate Capital Advisers LimitedTony RawlinsonTel: 020 7492 4777Chairman's Review
In this, my first full year review since I became Chairman, I am delighted to be able to report a 37% growth in revenue on continuing operations and pre tax profits of ‚£0.72m compared to a loss of ‚£0.19m in the previous year.
This has been achieved against a background of considerable change in the Group, as part of our strategic plan, with the successful combination during the year of three distinct brands under the Savile Group investment banner. The year has also seen all employees of the Group joining the Company's share option scheme.
We will maintain and develop CEDAR, Fairplace and IDDAS, each in their own market space under the leadership of a Chief Executive, building on the unique professional excellence of each brand. I am delighted to report that we are increasingly providing services from more than one brand to our clients.
As I stated last year, the Group's strategy has been to create centres of excellence across a range of markets within the field of career and talent management, eliminate loss-making operations and reduce unnecessary costs. We have been successful in achieving all these elements during this year.
The turbulence in the markets caused by the sub-prime problems in the financial sector has been beneficial to our transition services in both Fairplace and IDDAS, whilst having no apparent adverse effect on our talent management operations. It is encouraging to note that most of our clients, some of whom are perforce undertaking extensive restructuring, are nevertheless determined to continue to invest in their ongoing talent pool. The increasing success of cross-selling our services means we are able to benefit from both of these trends in the same organisations.
With shareholders approval we renamed the Company Savile Holdings plc, and subsequently, with the acquisition of IDDAS Limited, Savile Group plc.
During the year Peter Evans was appointed CEO of the Group and Peter Conroy was appointed as a Non Executive Director.
There have been a number of important changes in the Group's services and management structure, a number of which took effect from 1st July 2008.
Fairplace, under the leadership of Michael Moran, now concentrates exclusively on career transition and career management. Talent management services up to Board level are provided by CEDAR and Board level services in both career and talent management are provided by IDDAS. Helen Pitcher has taken on the role of Deputy Chairman and Chief Executive of IDDAS with a remit to build significantly its Board level services, with David Stewart becoming Chairman; and Cindy Mahoney in turn has taken over the leadership of CEDAR from Helen.
We were fortunate during the year to make a number of excellent hires, and on your behalf I bid all our new colleagues a hearty welcome. Chief amongst these has been Mark Sidlin, who was appointed Chief Financial Officer, and Jo Bond, who has been appointed Chief Operating Officer, with a continuing client facing role.
With an excellent team in place at all three of our brands, a very strong balance sheet, positive cash flow, and a clear strategy, I am very confident in the Group's future. As ever, this can only be achieved by focus and hard work and an unswerving commitment to deliver a quality service to our clients. In thanking my colleagues for their efforts in the past year, I know we have the human skills to achieve our objectives.
Jonathan CohenChairman24 September 2008
Group Income Statement for the year ended 30 June 2008
2008 2007 ‚£ ‚£ Continuing operations Revenue 6,949,325 5,068,722 Other operating income 68,142 - Other operating expenses excluding goodwill (6,306,525) (4,853,833)impairment Goodwill impairment - (400,000) Operating expenses (6,306,525) (5,253,833) Operating profit/(loss) 710,942 (185,111) Finance income 14,936 1,024 Finance expenses (1,437) (2,405) Profit/(loss) before taxation 724,441 (186,492) Taxation (198,506) -
Profit/(loss) for the year from continuing 525,935 (186,492) operations
Loss for the year from discontinued - (331,296)operations net of tax
Profit/(loss) for the year attributable to 525,935 (517,788) equity shareholders
Earnings/(loss) per share for profit/(loss) Pence Pence attributable to the equity holders of the
parent during the year: Basic 4.60 (5.28) Diluted 4.55 (5.28) Continuing operations Basic 4.60 (1.90) Diluted 4.55 (1.90) Discontinuing operations Basic - (3.38) Diluted - (3.38)
Group Balance Sheet at 30 June 2008
2008 2007 ‚£ ‚£ Assets Non current assets Property, plant and equipment 278,708 187,647 Intangible assets 129,508 - Deferred tax assets - 16,443 408,216 204,090 Current assets: Inventories 18,268 15,383 Trade and other receivables 2,423,004 1,446,758 Cash and cash equivalents 1,093,201 271,098 3,534,473 1,733,239 Total assets 3,942,689 1,937,329 Liabilities Current liabilities Trade and other payables 1,994,570 1,062,533 Total liabilities 1,994,570 1,062,533 Net assets 1,948,119 874,796 Capital and reserves attributable to equity holders of the company Share capital 439,504 294,005 Share premium account 2,579,601 2,381,033 Merger reserve 193,666 - Capital redemption reserve 726,021 726,021 Retained earnings (1,990,673) (2,526,263) Total equity 1,948,119 874,796
Statement of Changes in Equity for the year ended 30 June 2008
Share Share Merger Capital Retained Total capital premium reserve redemption earnings equity account reserve At 1 July 2006 1,020,026 2,381,033 - - (2,013,628) 1,387,431 Loss for the period - - - - (517,788) (517,788) Total recognised - - - - (517,788) (517,788)income and expenses for the year Credit to equity for - - - - 5,153 5,153share based payments Cancellation of own (726,021) - - 726,021 - -shares
At 30 June 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
The Capital redemption reserve arose on cancellation of deferred shares of 1p each on 6 September 2006.
The Merger reserve represents the premium arising on the share for share acquisition of IDDAS Limited.
Group Cash Flow Statement for the year ended 30 June 2008
2008 2007
Cash flow from operating activities ‚£ ‚£ ‚£ ‚£
Profit/(loss) before tax Continuing operations 724,441 (186,492) Discontinued operations - (331,296) Amortisation and impairment of 2,000 400,000 intangibles Loss on disposal of property, plant 3,137 25,624 and equipment Depreciation 57,569 105,332 Share-based payment charge 9,655 5,153 Loss on disposal of Fairplace - 263,565 Consulting Italy Srl Interest paid 1,437 2,621 Interest received (14,936) (1,147) 58,862 801,148 Cash flows from operating activities 783,303 283,360before changes in working capital Changes in working capital (excluding the effects of acquisition): Inventories (2,885) 4,140 Trade and other receivables (829,990) 56,854 Trade and other payables 589,536 (366,710) (243,339) (205,716) Cash generated from operations 539,964 77,644 Investing activities Purchase of property, plant and (147,802) (17,307) equipment Proceeds on disposal of property, - 11,153 plant and equipment Costs of disposal - (39,320) Acquisition of trade and assets of (20,012) - CEDAR Acquisition of IDDAS Limited 167,354 - Interest received 14,936 1,147 Net cash from/(used in) investing 14,476 (44,327)activities 554,440 33,317 Financing activities Interest paid (1,437) (2,621) Issue of ordinary shares 269,100 - Net cash from/(used in) financing 267,663 (2,621)activities Net increase in cash and cash 822,103 30,696equivalents Cash and cash equivalents at 271,098 240,402beginning of year Cash and cash equivalents at end of 1,093,201 271,098year
Notes to the preliminary announcement for the year ended 30 June 2008
1. Accounting policies
The principal accounting policies adopted in the preparation of the financial information in this preliminary announcement are set out below and include policies that are either in respect of the most material transactions and balances and also those that reflect the biggest changes in treatment between UK GAAP and IFRSs. The policies have been consistently applied to both periods presented unless otherwise stated.
This financial information has been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards, International Accounting Standards and Interpretations issued by the International Accounting Standards Board as adopted by the European Union ('IFRSs').
The financial information in this preliminary announcement does not constitute the company's statutory accounts for the years ended 30 June 2008 or 30 June 2007 but is derived from those accounts. The statutory accounts for 2007, which were prepared under UK GAAP, have been delivered to the Registrar of Companies and those for 2008, prepared in accordance with IFRSs as adopted by the EU, will be delivered following the Company's annual general meeting. The auditors' reports on the accounts for both years were unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and did not contain statements under the Companies Act 1985, s 237(2) or (3).
Basis of consolidation
The Group financial statements consolidate the accounts of the Company and all its subsidiary undertakings drawn up to 30 June each year. The results of subsidiaries sold are consolidated for the period to the date on which control passed.
Business Combinations
The Group financial statements incorporate the results of business combinations using the purchase method. In the consolidated balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated income statement from the date on which control 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 the interest in the fair value of identifiable assets, liabilities and contingent liabilities acquired. Cost comprises the fair values of assets given, liabilities assumed and equity instruments issued, plus any direct costs of acquisition.
Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to the income statement.
At the date of transition to IFRS 1 July 2006, the goodwill carrying amount under UK GAAP was tested for impairment and based on the conditions existing at the transition date no impairment was identified.
Thus, the carrying amount of goodwill in Savile Group plc's IFRS opening balance was equal to the goodwill carrying amount under UK GAAP. 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 or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly.
Where it is not possible to estimate the recoverable amount of an individual asset, 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 are separately identifiable cash flows). Goodwill is allocated on initial recognition to each of the Group's cash-generating units that are expected to benefit from the synergies of the combination giving rise to the goodwill.
Impairment charges are included in the other operating expenses line item in the income statement, except to the extent they reverse gains previously recognised in the statement of recognised income and expense. An impairment loss recognised for goodwill is not reversed.
Financial assets
Financial assets are recognised initially at their fair value and are subsequently measured at amortised cost. For trade receivables this generally equates to original transaction value
Financial liabilities
Financial liabilities are recognised initially at their fair value and are subsequently measured at amortised cost. For trade payables and other short-term financial liabilities this equates to original transaction value.
Intangible assets
Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other contractual or legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation 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.
2. Taxation
Current taxation has been provided for at 28% (2007:30%).
3. Acquisitions
a. CEDAR TM Limited
On 21 September 2007 the Group acquired the business and assets of Corporate Executive Development and Resourcing Plc from the administrators of that company. The business and assets were transferred into a new company, CEDAR TM Limited, which is a 100% subsidiary of Savile Group plc. The purchase consideration, 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 IDDAS Limited. This was on a share for share basis and the equity consideration was satisfied by Savile Group plc issuing 2,498,912 3p ordinary shares. The issue price consists of the nominal value of the ordinary shares of ‚£0.03 and a share premium of ‚£0.0775.
4. Earnings/(loss) per share 2008 2008 2008 2007 2007 2007 Continuing Discontinuing Total Continuing Discontinuing Total operations operations operations operations ‚£ ‚£ ‚£ ‚£ ‚£ ‚£ Numerator Profit/(loss) for 525,935 - 525,935 (186,492) (331,296) (517,788)the year Denominator Weighted average of 11,433,210 - 11,433,210 9,800,174 9,800,174 9,800,174shares used in basic EPS Effects of: * Employee share 114,240 - 114,240 - - - options Weighted average of 11,547,450 - 11,547,450 9,800,174 9,800,174 9,800,174shares used in diluted EPS
5. AIM Compliance Committee
The AIM Compliance Committee is chaired by Ken Brotherston, a non-executive director of the Company. Having reviewed relevant Board papers, and met with the Company's Executive Board and the Nomad to ensure that such is the case, the AIM Committee is satisfied that the Company's obligations under AIM Rule 31 have been satisfied during the period under review.
6. Annual General Meeting
The Annual General Meeting will be held at 11.00am Tuesday 28 October 2008 at the Company's offices 36 - 38 Cornhill LONDON EC3V 3PQ.
7. Report and Accounts
Copies of the Report and Accounts for the year ended 30 June 2008 will be sent to shareholders in due course. Further copies will be available from the Company's website at www.savile.com or at the Company's registered office at 36 - 38 Cornhill LONDON EC3V 3PQ
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