Preliminary Results
Tribal Group PLC
26 March 2008
26 March 2008
Tribal Group plc ('Tribal' or the 'group')
Audited preliminary results for the nine months ended 31 December 2007
'A significantly improved financial performance across the Group with normalised
profits and earnings substantially ahead.' Strone Macpherson, Chairman
Tribal Group plc publishes its audited preliminary results for the nine months
ended 31 December 2007. The reported period is shorter than a full year due to
the change in year end from March to December. We have therefore included
like-for-like comparisons between the nine months ended 31 December 2007 and the
pro forma nine month period to 31 December 2006. In order to assist further with
analysis and comparison, unaudited pro forma information for the years ended 31
December 2006 and 31 December 2007 has also been provided and can be found in
Part II of this document. The nine months statutory numbers are presented in
Part I of this document.
Highlights
Nine months to 31 December 2007 compared to pro forma nine months to 31 December
2006
• Revenue growth of 11% to £153.3m (2006: £138.2m)
• Adjusted operating profit up 39% to £11.7m (2006: £8.4m)
• Adjusted profit before tax up 98% to £11.1m (2006: £5.6m)
• Adjusted diluted EPS up 112% to 8.9p (2006: 4.2p)
• Final dividend of 1.8p, an annualised increase of 13%
• Successful sale of Mercury Health completed at a profit of £27m
Pro forma 12 months to 31 December 2007
• Revenue increased by 8% to £209.2m (2006: £194.3m)
• Adjusted operating profit up 4% to £17.7m (2006: £17m)
• Adjusted profit before tax up 20% to £15.8m (2006: £13.2m)
• Adjusted diluted EPS up 20% to 12.7p (2006: 10.6p)
• Cash conversion 142%
• Net debt reduced substantially to £6.8m
Statutory for the nine months ended 31 December 2007
• Profit before tax £1.2m (year ended 31 March 2007: loss £4.3m)
• Profit for the period £25.4m (year ended 31 March 2007: loss
£8.6m)
Financial summary
Normalised pro forma results for the nine
months ended 31 December
2007 2006
Turnover £188.7m £166.7m +13%
Revenue £153.3m £138.2m +11%
Adjusted operating profit £11.7m £8.4m +39%
Adjusted operating margin 7.6% 6.1%
Adjusted profit before tax £11.1m £5.6m +98%
Adjusted diluted earnings per share 8.9p 4.2p +112%
Note: Adjusted results are presented to provide a better indication of the
underlying financial performance of the continuing operations. The adjusted
operating profit excludes goodwill impairment of £9m (2006: £14.4m), intangible
asset amortisation of £0.2m (2006: £0.2m) and share option costs of £0.5m (2006:
£0.1m). The adjusted profit before tax and adjusted earnings per share exclude
the financial instrument charge of £0.2m (2006: £nil) and, in the case of
adjusted earnings per share, the profit on disposal of Mercury Health.
Normalised pro forma results for the year
ended 31 December
2007 2006
Turnover £256.5m £233.7m +10%
Revenue £209.2m £194.3m +8%
Adjusted operating profit £17.7m £17.0m +4%
Adjusted operating margin 8.5% 8.7%
Adjusted profit before tax £15.8m £13.2m +20%
Adjusted diluted earnings per share 12.7p 10.6p +20%
Operating cash flow £22.4m £10.6m
Operating profit to cash conversion 142% 124%
Note: The adjusted operating profit excludes goodwill impairment of £9m (2006:
£14.4m), intangible asset amortisation of £0.3m (2006: £0.3m) and share option
costs of £0.4m (2006: £0.2m). The adjusted profit before tax and adjusted
earnings per share exclude the financial instrument charge of £0.1m (2006: £nil)
and, in the case of adjusted earnings per share, the profit on disposal of
Mercury Health.
Operating cash flow is defined as net cash from continuing operating activities
less interest.
Statutory results Nine
months Year
ended ended
31 December 31 March
2007 2007
Turnover £188.7m £234.5m
Revenue £153.3m £194.1m
Operating profit/(loss) £1.9m £(0.3)m
Profit/(loss) before tax £1.2m £(4.3)m
Loss after tax £(1.8)m £(7.2)m
Basic and diluted loss per share (2.6)p (9.8)p
Profit/(loss) for the period £25.4m £(8.6)m
Note: The normalised, pro forma and statutory results, with the exception of
profit for the period, are for continuing operations only and so exclude the
discontinued operations of Mercury Health. The statutory results include in the
profit for the period the profit on the disposal of Mercury Health.
Further information
A presentation of these results will be made to analysts and investors at 9.30am
on 26 March 2008 and a copy of this will be made available later that morning on
the Tribal Group website: www.tribalgroup.co.uk
Tribal Group plc Tel: 020 7323 7110
Peter Martin, Chief Executive
Simon Lawton, Group Finance
Director
Maitland Tel: 020 7379 5151
Colin Browne
Anthony Silverman
Editors' note: Tribal Group provides a range of consultancy, support and
delivery services focused on improving the delivery of public services in the
UK. Our core markets are in education, health, housing and regeneration, central
government and local government. The Group employs approximately 2,000 staff and
its shares are quoted on the London Stock Exchange (TRB.L).
Links: Tribal Group website: www.tribalgroup.co.uk
Chairman's statement
As previously announced, Tribal has changed its year end and is reporting the
nine month results to 31 December 2007 and the pro forma 12 month performance to
31 December 2007. The nine month period to 31 December 2007 has been
characterised by a significantly improved financial performance across the
Group, with normalised profits and earnings substantially ahead of the
comparable nine month period in 2006.
We are pleased by the level of organic revenue growth of 11% during the period.
This growth in the continuing business, combined with the improvement in
operating margins* from 6.1% to 7.6%, allowed operating profit* to improve by
39% to £11.7m. Profit before tax* nearly doubled to £11.1m and diluted earnings
per share* increased by 112% to 8.9p. The successful completion of the sale of
Mercury Health during the period realised a profit of £27m and enabled us to
reduce net debt significantly to £6.8m at the period end.
Demand for our services remained strong in our core markets of education,
health, housing and regeneration, central and local government. Overall, our
businesses performed well with good growth in education and a significant
improvement in the performance of consulting. In support services, trading
conditions were challenging for our resourcing activities as reported in our
interim results. However, this was offset by strong performances from our
architectural practice and communications business.
Following the appointment of Peter Martin as chief executive in June 2007, we
reviewed the Group's core competencies, competitive strengths and growth
opportunities. The review confirmed Tribal's focus on its core activity of
providing a range of consulting, support and delivery services that improve the
quality and value for money of public services.
We have identified significant opportunities for organic growth, building on the
Group's broad service offering and domain expertise to provide integrated
solutions for clients. We are seeking to increase the proportion of committed
revenue generated by our support and delivery services thereby increasing our
earnings visibility.
We have introduced measures to improve profitability and are driving greater
collaboration across the Group by ensuring that our internal structures,
processes and incentives enable us to shape our offering to meet the complex
needs of our clients.
Our principal financial goal is to drive earnings growth over the medium-term
through double digit increases in annual revenue and progressive improvement in
operating margins. We are continuing to invest in our systems and management
resources in order to support our growth objectives.
We are recommending a final dividend of 1.8p, which makes the nine month
dividend a total of 2.95p, equivalent to an annual increase of 13%.
In September 2007, Sheila Forbes CBE retired from the Board. In her three years
as a non-executive director, Sheila made a valuable contribution to the growth
of Tribal and we wish her well in her new role as Principal of St Hilda's
College, Oxford.
Henry Pitman, Tribal's founder and former chief executive, is stepping down from
his non-executive role on the board with effect from 26 March. On behalf of the
board and shareholders, I would like to thank Henry for his vision in
establishing Tribal and the enormous contribution he has made since 1999, which
has seen the Group become a major provider of consulting, support and delivery
services to the public sector in the UK. Henry has entered into an agreement
with the Group that places certain restrictions on any share sales for a period
of 12 months. The Company will, in due course, seek the appointment of an
additional independent non-executive director.
We have been pleased by the Group's trading performance since the start of the
year. We have secured a number of important new contract wins and the level of
committed revenue and the strength of the pipeline is encouraging. The Board is
confident about Tribal's prospects for 2008 and beyond.
Strone Macpherson
Chairman
26 March 2008
* The operating profit, operating margin, profit before tax and diluted earnings
per share are stated in accordance with the definitions given above in the
financial summary.
Chief executive's statement
Results for the nine months ended 31 December 2007
Tribal's core business is working in partnership with our client organisations
to improve the planning and delivery of essential public services. The Group
offers an integrated portfolio of consulting, support and delivery services
which enable our clients to meet increasingly challenging quality and efficiency
goals.
A favourable market environment for Tribal's services has enabled us to deliver
good revenue growth in the period and we continue to see significant
opportunities to grow and develop our businesses.
Financial results
We are pleased to report a significant improvement in financial performance for
the nine months ended 31 December 2007. The Group's revenue from continuing
operations for the period was up 11% at £153.3m (2006: £138.2m). Operating
profit* increased by 39% to £11.7m (2006: £8.4m) and the operating margin*
increased from 6.1% to 7.6%. Profit before tax* was up 98% at £11.1m (2006:
£5.6m) and the diluted earnings per share* increased by 112% to 8.9p (2006:
4.2p).
On a pro forma basis, the revenue for the year ended 31 December 2007 was up 8%
at £209.2m (2006: £194.3m). Operating profit* increased by 4% to £17.7m (2006:
£17.0m) and the operating margin* was 8.5% (2006: 8.7%). Profit before tax* was
up 20% at £15.8m (2006: £13.2m) and the diluted earnings per share* were up 20%
at 12.7p (2006: 10.6p).
The statutory profit before tax for the nine months ended 31 December 2007 of
£1.2m (year ended 31 March 2007: loss of £4.3m) is after an impairment charge of
£9.0m (March 2007: £14.4m), associated with our resourcing business, which we
announced in our Interim Results Statement on 21 November 2007. Retained profit
for the period was £25.4m (March 2007: loss of £8.6m), reflecting the profit
realised on the disposal of Mercury Health.
During the 12 months ended 31 December 2007, the Group generated operating cash
flow from continuing operations of £22.4m (2006: £10.6m), an operating profit*
to cash conversion of 142% (2006: 124%). Net debt at the year end was £6.8m.
* The operating profit, operating margin, profit before tax and diluted earnings
per share are stated in accordance with the definitions given above in the
financial summary.
Dividend
Tribal is pleased to announce that it is recommending a final dividend of 1.8p
per share, making a total of 2.95p per share for the nine month period to 31
December 2007. Subject to approval at Tribal's 2008 Annual General Meeting
(AGM), this dividend will be paid on 11 July 2008 to shareholders on the
register at 13 June 2008. On a pro rata annualised basis, the interim and final
dividends totalling 2.95p for the nine month period to 31 December 2007
represent an increase of 13%.
Markets
The Government's continuing commitment to improve the quality and value for
money of public services remains the key driver of market growth for Tribal's
consultancy, support and delivery services.
The Comprehensive Spending Review settlement in October 2007 and the budget
statement in March 2008 confirmed public spending and investment plans for the
next three years, creating significant opportunities for the private sector to
support the effective and efficient delivery of public services. Within the
overall spending plans for the period to 2011, above average awards were made in
real terms to our two most important market sectors: education (5.6% per annum)
and health (4% per annum).
In addition to the scale of the Government's reform agenda and the drive for
improved standards, our markets are increasingly characterised by new
opportunities to work with public sector organisations as they explore their
changing role.
Tribal shares with many of its clients a commitment to the ethos of public
service, but we are also able to bring to those clients the commercial rigour
and financial expertise of the private sector. We see increasing demand for the
Group's broad service offering and domain knowledge, and we are continuously
developing integrated solutions to support the implementation of specific
initiatives and fulfil complex client needs.
In the nine months ended 31 December 2007, 96% of our revenue was from the
public sector. Our principal markets were as follows: education 48%, health 17%,
central government 14%, housing and regeneration 10% and local government 7%.
While the UK public sector will remain the core focus for our business, we see
significant growth potential from marketing our services internationally and we
are actively exploring a number of opportunities.
Operating review
Segmental operating profit and operating profit margin figures for the nine
months ended 31 December 2007 are stated in accordance with the business segment
information in note 2 to the accounts. Pro forma segmental information for the
nine months ended 31 December 2006 was published on our website on 4 July 2007.
Pro forma segmental information for the year ended 31 December 2006 is stated in
accordance with the business segment information in the unaudited pro forma
financial information in Part II of this document.
Education
Unaudited Unaudited Unaudited
pro forma pro forma pro forma
Nine months nine months year year
ended ended ended ended
31 December 31 December 31 December 31 December
2007 2006 2007 2006
£000 £000 £000 £000
Revenue 61,761 56,572 83,889 80,514
Operating profit 8,618 7,570 15,150 13,570
Operating profit margin 14.0% 13.4% 18.1% 16.9%
Our education businesses saw an increase in revenue of 9.2% to £61.8m (2006:
£56.6m) during the nine month period ended 31 December 2007. Operating profit
was 14% higher at £8.6m (2006: £7.6m) and operating margins improved to 14%
(2006: 13.4%). We have seen good demand for our services across all of our
education businesses as we continue to focus on key areas of the Government's
agenda for education and skills.
We are an established 'partner of choice' for the Department for Innovation,
Universities and Skills (DIUS), Department for Children, Schools and Families
(DCSF), the Quality Improvement Agency (QIA), the TUC and several major
employers.
During the period, our learning and publishing business launched new training
products for handheld computers and created innovative services combining
Information and Communication Technologies (ICT) and more traditional
face-to-face learning in our work for McDonald's and Ford Motor Company. We have
also drawn on our technology and innovation capabilities to develop the
Government's 'English for Life and Work' portal. This development work underpins
the cross-government English for Speakers of Other Languages (ESOL) strategy.
The business has shown steady growth over the period with important wins focused
on developing education policy. We bid successfully to develop the national
strategy for improving adult numeracy and to deliver a programme to work with
families to improve language, literacy and numeracy. We secured a framework
agreement to provide consultancy, support and delivery services to the
Children's Workforce Development Council, and as part of the 'Alliance for
Lifelong Learning', we successfully tendered to manage the work of the Basic
Skills Agency.
Tribal is also a major provider of information, advice and guidance to people in
prison and this area of the business continues to grow. Our contracts for
existing provision in the South West and East of England have been extended and
we are in the process of preparing a detailed bid for the next stage of the
offender learning programme, which is worth up to £20m a year over a five year
period.
Our student and institution administration software products continue to perform
well. We lead the market in further education (FE), higher education (HE) and
work-based learning in the UK. In addition, around 70% of local authorities use
our software to manage children's services operations or to control and optimise
their building assets.
We are securing more long-term managed services IT contracts in both the public
and private sectors. We continue to develop new solutions for our existing
markets and see strong growth potential in new areas such as children's services
and health. There is also considerable opportunity for our software products
overseas and this will be a focus for our new business development activity in
the coming period.
Tribal is the largest provider of school inspections in the UK and our education
services business has continued to perform well in the third year of our
existing contract with Ofsted. This places us in a strong position to secure a
new contract from September 2009. In addition, Ofsted is considering outsourcing
a greater proportion of its work which would significantly increase the size of
the current market. The growing overseas school inspection and improvement
market also provides us with significant opportunities.
Our Building Schools for the Future (BSF) consulting team is securing an
important position as a provider of education services and has won contracts in
Southwark, Rochdale, Kirklees and Blackburn & Darwen. Tribal also remains a key
partner in taking forward the Government's flagship academy programme; in the
period we have won two new academy projects in Birmingham.
Our Pupils' Champions school improvement programme has supported 3,000 students
and their teachers, and 80% of the schools involved reported a significant
improvement in standards. Our benchmarking services business has seen growth in
the HE sector as well as overseas, where we have secured a major national FE
contract in New Zealand worth £2m.
Consulting
Unaudited Unaudited Unaudited
pro forma pro forma pro forma
Nine months nine months year year ended
ended ended ended ended
31 December 31 December 31 December 31 December
2007 2006 2007 2006
£000 £000 £000 £000
Revenue 50,084 43,719 69,408 61,166
Operating profit 3,420 2,422 3,899 4,567
Operating profit margin 6.8% 5.5% 5.6% 7.5%
The nine month period ended 31 December 2007 saw a considerable improvement in
the performance of our consulting business with revenue increasing by 15% to
£50.1m (2006: £43.7m) and operating profit increasing by 41% to £3.4m (2006:
£2.4m). Operating margins rose to 6.8% (2006: 5.5%). The operating performance
was a reflection of the continuing demand for our consulting services across the
public sector and tighter operational control.
Our health consulting business continues to be at the forefront of the
implementation of government policy initiatives. A highlight of the period was
being appointed as a supplier on a major new Department of Health framework
agreement. The Framework for procuring External Support for Commissioners (FESC)
provides primary care trusts (PCTs) with easy access to expert suppliers to
support the commissioning of local healthcare.
Our major contract wins during the period included leadership development, in
partnership with the King's Fund, for the Health Service Executive in Ireland
and support for the NHS Research Capability Programme. Our support for the NHS
National Programme for IT through the Secondary Uses Service Programme was
extended, building on our current work helping to reduce hospital treatment
waiting times and developing commissioning.
We are also working with the PPP joint venture, Partnerships UK, to support the
development of the primary and community care services provided by PCTs. This
work will enable them to implement new ways of working and deliver innovative
care pathways which improve the quality of care delivered to patients.
We anticipate that the publication of the next stage of Lord Darzi's strategic
review of the health service in the summer of 2008 will provide further growth
opportunities for our health business. These are likely to be focused on
commissioning services, the further development of care outside hospitals and
developing health services personalised to the needs of the individual.
During the period, we brought together our housing and regeneration consulting
businesses to provide a more integrated offering to clients and to better align
our operations with their requirements. Our market focus is supporting the
delivery of the Government's policy of increasing the supply of housing and the
creation and regeneration of sustainable communities.
Our housing and planning consultancy performed well during the period. We have
strengthened our position in social housing, working with a wide range of
clients to assist them in mergers, transfers of housing stock from local
authorities, seeking funding for development opportunities and in shaping their
development plans.
A key development has been the expansion of our regeneration practice in
February 2008, with the acquisition of a leading master planning team. This has
enabled us to offer an integrated solution to the challenges of housing
development and regeneration, and to deliver larger and more complex projects.
During the period, we supported the development of the new Housing and
Regeneration Bill, the creation of the new Homes and Communities Agency and
government programmes such as the First Time Buyers Initiative to improve
housing affordability.
Tribal continued its strong growth in central government consulting, with an
increase of 20% in revenue over the comparable period in 2006. In addition to
favourable market conditions, our performance has also been driven by our focus
on providing clients with better service and value for money, and successfully
attracting high calibre employees.
We continue to develop key NHS, Home Office, Foreign and Commonwealth Office,
justice and policing accounts and see significant opportunities for our
procurement and supply chain services. New wins included places on the MoD and
HM Revenue and Customs consulting frameworks. We anticipate an increasing
reliance on IT by government departments and we are building our capability to
offer advisory services in this area, as well as exploring opportunities to
extend our reach into other government departments and agencies.
We are currently restructuring our local government practice in order to better
position the business to take advantage of market opportunities, including
changes in the regulatory environment and the continued drive for greater
efficiency. These new consultancy opportunities are focused on the effectiveness
of local partnerships and the governance and performance management role of
local government.
During the period, Tribal was appointed to all ten categories of the Healthier
Communities procurement framework. The contract, issued by the Improvement and
Development Agency for local government, runs until October 2011 and will enable
a wide range of bodies, including strategic health authorities, local
authorities, PCTs and key government departments, to access Tribal's services
and expertise.
Support services
Unaudited Unaudited Unaudited
pro forma pro forma pro forma
Nine months nine months year year
ended ended ended ended
31 December 31 December 31 December 31 December
2007 2006 2007 2006
£000 £000 £000 £000
Revenue 43,022 39,555 58,402 55,347
Operating profit 3,825 2,686 5,035 5,209
Operating profit margin 8.9% 6.8% 8.6% 9.4%
Our support services businesses increased revenue by 9% to £43m (2006: £39.6m)
during the nine month period ended 31 December 2007. Operating profit was 42%
higher at £3.8m (2006: £2.7m) and operating margins increased to 8.9% (2006:
6.8%). The overall performance was supported by the £1.25m of fees earned for
reaching financial close on the Peterborough PFI hospital project, but also
reflected the challenging trading conditions experienced by our resourcing
business.
It was a particularly strong period for our architectural design business. We
reached financial close on significant PFI hospital schemes in addition to
Peterborough, including North Middlesex and NHS Local Improvement Finance Trust
(LIFT) projects in Bury, Tameside and Glossop. We continued to see many new
opportunities through the 'ProCure 21' framework and the 'Designed for Life'
healthcare framework in Wales and we are bidding for a new health framework in
Scotland. Science will also be an important area of growth.
We have won important new commissions through university frameworks. At
Bournemouth we have begun work on a new business school and at Oxford University
we won three repeat commissions following the completion of a major research
complex. FE has been buoyant with wins at Gateway College in Leicester and
SEEVIC College. We have increased our capacity to focus on key market
opportunities such as BSF.
Our Cape Town office has grown steadily in support of our UK business and is now
planning to expand into providing architectural design services in support of
public sector prospects in South Africa.
Our communications business achieved strong new business and organic growth and
was named as the UK's No 1 consumer PR agency in the annual PR Week survey for
the second year running.
We secured significant new work with clients such as Barclays, Cannons Health
Clubs, Everyclick and the Department of Transport, and won a contract to
encourage the use of ICT in learning. We also successfully tendered for a
number of DCSF contracts including the promotion of the new diplomas for 14-19
year olds.
It was a challenging trading environment for our resourcing business, which saw
reductions in advertising spend during the period, a further shift to online
media and a decrease in senior local government vacancies.
Although our market share remains strong, profitability in our core advertising
and search activities was significantly below the level we had anticipated at
the start of the period. As reported in our Interim Results, these factors lay
behind our decision to record a goodwill impairment charge of £9m. We have
reduced staff, strengthened our management team and realigned our cost
structure. The trading performance in these areas has improved following these
actions and the level of new business wins has been encouraging.
Our new recruitment process outsourcing activity has enjoyed early success,
winning the London Boroughs Recruitment Partnership contract for response
handling and process outsourcing for eight London boroughs and we have recently
been appointed as one of three providers to the Olympic Delivery Authority.
Strategy review
During the period, we undertook a review of the Group's core competencies,
competitive strengths and market opportunities.
The key elements of our future strategy will be:
•a focus on our core public services markets of education, health, housing and
regeneration, local government and central government;
•development of more integrated service offerings to meet the requirements of
our clients;
•a target to increase the proportion of revenue from support and delivery to 60%
of annual revenue by 2010;
•focused investment in key areas to take advantage of emerging opportunities
such as health commissioning; and
•selective acquisitions that support the strategic development of the Group.
People
Our improved results are the direct outcome of the hard work of our 2,000
employees and 1,000 associates. I would like to thank them all for their
dedication to our clients and their contribution to Tribal's success.
Ensuring that we have high calibre people with business critical skills has been
a key focus for the Group in the past nine months. We have made excellent
progress in attracting business development talent, particularly in education.
Driving forward the leadership agenda is a cornerstone to delivering our future
growth plans. Virginia Rothwell joined the executive management team in November
2007 as group HR director and we have established a senior leadership team who
are taking collaborative responsibility for delivering the Group's business
growth strategy.
Prospects
Tribal's new financial year began with approximately 40% of planned revenue
already committed (2006: 29%) and with total committed income of £124m (2006:
£108m), an increase of 15%. Since the start of the year, trading conditions for
the Group have remained favourable and we have secured a number of important
contract wins. The pipeline of opportunities is strong.
We are making a significant investment in new products and services and in
strengthening our management resources, particularly in our education business.
We believe that these actions will enable us to achieve our medium-term
financial goals of double digit increases in annual revenue and to delivering a
progressive improvement in operating margins. We continue to look selectively at
strategic acquisitions that will complement and enhance our offering.
The Board believes Tribal is very well-placed to build on its improved
performance and exploit the strong organic growth prospects that have been
identified. We remain confident about the Group's future in 2008 and beyond.
Peter J Martin
Chief Executive
26 March 2008
Part I
Consolidated income statement
for the nine months ended 31 December 2007
Before Other Nine Before Other
other administrative months other administrative Year
administrative expenses ended administrative expenses ended
expenses and and 31 expenses and and 31
financial financial December financial financial March
instruments instruments 2007 instruments instruments 2007
costs costs Total costs costs Total
Note £'000 £'000 £'000 £'000 £'000 £'000
Continuing
operations
Turnover 188,654 - 188,654 234,462 - 234,462
Direct agency
costs (35,355) - (35,355) (40,406) - (40,406)
_______ _______ _______ _______ _______ _______
Revenue 2 153,299 - 153,299 194,056 - 194,056
Cost of sales (92,266) - (92,266) (114,633) - (114,633)
_______ _______ _______ _______ _______ _______
Gross profit 61,033 - 61,033 79,423 - 79,423
Net
administrative
expenses (49,371) - (49,371) (64,957) - (64,957)
Other
administrative
expenses:
Share option
costs - (489) (489) - (4) (4)
Amortisation
of
IFRS 3
intangibles - (240) (240) - (320) (320)
Goodwill 8
impairment - (9,000) (9,000) - (14,429) (14,429)
Total
administrative
expenses (49,371) (9,729) (59,100) (64,957) (14,753) (79,710)
_______ _______ _______ _______ _______ _______
Operating
profit/(loss) 11,662 (9,729) 1,933 14,466 (14,753) (287)
Investment
revenues 3 1,119 - 1,119 810 - 810
Other gains
and losses 4 - (126) (126) - 291 291
Finance costs 5 (1,699) (43) (1,742) (4,991) (164) (5,155)
_______ _______ _______ _______ _______ _______
Profit/(loss)
before tax 11,082 (9,898) 1,184 10,285 (14,626) (4,341)
Tax (3,105) 103 (3,002) (2,855) 9 (2,846)
_______ _______ _______ _______ _______ _______
Profit/(loss)
for the period
from
continuing
operations 7,977 (9,795) (1,818) 7,430 (14,617) (7,187)
Discontinued
operations
Profit/(loss)
from
discontinued
operations 37 27,217 27,254 1,834 (3,255) (1,421)
_______ _______ _______ _______ _______ _______
Profit/(loss)
for the period 8,014 17,422 25,436 9,264 (17,872) (8,608)
_______ _______ _______ _______ _______ _______
Attributable
to:-
Equity holders
of the parent 25,034 (9,379)
Minority
interest 402 771
_______ _______
25,436 (8,608)
_______ _______
Earnings per
share from
continuing
operations
Basic 7 8.9p (11.5)p (2.6)p 8.1p (17.9)p (9.8)p
Diluted 7 8.9p (11.5)p (2.6)p 8.0p (17.8)p (9.8)p
From
continuing and
discontinued
operations
Basic 7 8.9p 20.6p 29.5p 10.4p (21.9)p (11.5)p
Diluted 7 8.9p 20.6p 29.5p 10.3p (21.8)p (11.5)p
Consolidated balance sheet
at 31 December 2007
31 31
December March
Note 2007 2007
£'000 £'000
Non-current assets
Goodwill 8 186,991 192,099
Other intangible assets 4,254 3,786
Property, plant and equipment 7,363 45,056
Investments 157 149
Amounts recoverable on contracts - 11,833
Deferred tax assets 1,389 772
Derivative financial instruments 178 1,017
--- -----
200,332 254,712
------- -------
Current assets
Inventories 1,055 1,298
Trade and other receivables 9 62,326 62,188
Amounts recoverable on contracts 63 2,840
Cash and cash equivalents 15,982 33,483
Collateralised cash 192 949
79,618 100,758
------ -------
Total assets 279,950 355,470
======= =======
Current liabilities
Trade and other payables 10 (67,418) (81,499)
Tax liabilities (5,400) (2,742)
Obligations under finance leases (3) (98)
Bank loans and loan notes (876) (5,530)
Provisions (577) (450)
Shares to be issued - (489)
(74,274) (90,808)
-------- --------
Net current assets 5,344 9,950
----- -----
Non-current liabilities
Bank loans (22,098) (102,307)
Pension liabilities (1,228) (1,436)
Deferred tax liabilities (1,108) (2,358)
Obligations under finance leases - (327)
(24,434) (106,428)
-------- ---------
Total liabilities (98,708) (197,236)
======== =========
Net assets 181,242 158,234
======= =======
Equity
Share capital 4,239 4,234
Share premium account 74,750 74,633
Other reserves 11 64,582 67,823
Retained earnings 11 36,606 9,941
------ -----
Equity attributable to equity 180,177 156,631
holders of the parent
Minority interest 1,065 1,603
------ -----
Total equity 181,242 158,234
======= =======
Consolidated cash flow statement
for the nine months ended 31 December 2007
Nine
months Year
ended ended
31 31
December March
Note 2007 2007
£'000 £'000
Net cash from operating activities 12 8,808 24,280
===== ======
Investing activities
Interest received 992 1,873
Proceeds on disposal to minorities 159 2
Disposal of subsidiary 36,251 -
Proceeds on disposal of property, 113 213
plant and equipment
Purchase of investments (8) -
Purchases of property, plant and (2,579) (12,196)
equipment
Expenditure on product development (1,657) (1,564)
Acquisitions (deferred consideration
and minority interests) (1,840) (556)
_______ _______
Net cash inflow/(outflow) from
investing activities 31,431 (12,228)
====== ========
Financing activities
Interest paid (2,219) (7,905)
Equity dividend paid (2,031) (2,685)
Dividends to minorities (390) (95)
Issue of shares 122 487
Repayment of borrowings (53,974) (2,352)
Repayments of obligations
under finance lease (5) (83)
New bank loans - 10,576
Movements in collateralised
cash 757 443
Purchase of own shares - (105)
Loan to third party - 535
_______ _______
Net cash used in
financing activities (57,740) (1,184)
======== =======
Net (decrease)/increase
in cash and cash equivalents (17,501) 10,868
Cash and cash equivalents
at beginning of period 33,483 22,615
_______ _______
Cash and cash equivalents
at end of period 15,982 33,483
====== ======
Consolidated statement of recognised income and expense
for the nine months ended 31 December 2007
Nine
months Year
ended ended
31 31
December March
Note 2007 2007
£'000 £'000
Actuarial (loss)/gain on defined
benefit plans (7) 436
Transfer to cash flow hedge reserve (241) 1,194
Deferred tax 67 (489)
_______ _______
Net (expense)/income recognised
directly to equity (181) 1,141
Profit/(loss) for the period 25,436 (8,608)
_______ _______
Total recognised income and expense
for the period 25,255 (7,467)
====== ========
Attributable to:
Equity holders of the parent 24,853 (8,238)
Minority interest 402 771
_______ _______
25,255 (7,467)
====== ========
Notes to the preliminary announcement
1. General information
The basis of preparation of this audited preliminary announcement is set out
below.
The financial information in this announcement, which was approved by the Board
of Directors on 26 March 2008, does not constitute the Company's statutory
accounts for the nine months ended 31 December 2007 or the year ended 31 March
2007, but is derived from these accounts.
Statutory accounts for the year ended 31 March 2007 have been delivered to the
Registrar of Companies and those for the nine months ended 31 December 2007 will
be delivered following the Company's annual general meeting. The auditors have
reported on these accounts; their reports were unqualified and did not contain
statements under S237 (2) or (3) of the Companies Act 1985.
Whilst the financial information included in this preliminary announcement has
been completed in accordance with International Financial Reporting Standards
(IFRSs), this announcement itself does not contain sufficient information to
comply with IFRSs.
The financial information has been prepared on the historical cost basis,
modified to include the revaluation of certain fixed assets and financial
instruments.
Copies of the announcement can be obtained from the Company's registered office
at 87-91 Newman Street, London, W1T 3EY.
It is intended that the full financial statements which comply with IFRSs will
be posted to shareholders on or around 23 April 2008 and will be available to
members of the public at the registered office of the Company from that date and
available on the Company's website: www.tribalgroup.co.uk
2. Business segments
The Group is currently organised into three business segments - Consulting,
Education and Support services.
Principal activities are as follows:-
Consulting - one of the largest consultancy businesses operating in the
public sector providing a broad range of management
consultancy services.
Education - one of the largest providers of education services to the
public sector including software, managed services, school
inspection services, consultancy, e-learning,
benchmarking, publishing and training.
Support - support services businesses largely operating in the
services public sector providing a range of PR communications,
resourcing and architectural design services.
The Group previously included Mercury Health, a healthcare delivery business
as a separate segment - that operation was discontinued with effect from 20
April 2007. As part of a business review, following the disposal of Mercury
Health, the Group has realigned its reporting structure, splitting out part of
its Consulting segment into a separate Support services segment. Accordingly,
the business segment information for the year ended 31 March 2007 has been
restated to show the current business segment structure. As a result, there
has been an adjustment to inter-segment sales.
2. Business segments (continued)
Segment information about the businesses is presented below:-
Nine months ended 31 December 2007
Consulting Education Support Eliminations Consolidated
services
31 31 31 31 31
December December December December December
2007 2007 2007 2007 2007
£'000 £'000 £'000 £'000 £'000
Revenue
External sales 49,956 61,084 42,259 - 153,299
Inter-segment sales 128 677 763 (1,568) -
_______ _______ _______ _______ _______
Total revenue 50,084 61,761 43,022 (1,568) 153,299
======== ======== ======= ======== =======
Segment operating
profit 3,420 8,618 3,825 - 15,863
====== ====== ====== ======== =======
Unallocated
corporate expenses (4,201)
_______
Adjusted operating
profit 11,662
Amortisation of
IFRS
3 intangibles (240)
Share option costs (489)
Goodwill impairment (9,000)
_______
Operating profit 1,933
Investment revenues 1,119
Other gains and
losses (126)
Finance costs (1,742)
_______
Profit before tax 1,184
Tax (3,002)
Profit for the
period from
discontinued
operations 27,254
_______
Profit after tax
and
discontinued
operations 25,436
=======
Included within the segmental revenue and profit for the period is £2.3m of
revenue and £0.2m of profit from the trading of Mercury Health for the period up
to the date of disposal.
Notes to the preliminary announcement (continued)
2. Business segments (continued)
Year ended 31 March 2007
Consulting Education Support Eliminations Consolidated
services
31 31 31 31 31
March March March March March
2007 2007 2007 2007 2007
£'000 £'000 £'000 £'000 £'000
Revenue
External sales 62,681 78,193 53,182 - 194,056
Inter-segment sales 359 507 1,735 (2,601) -
_______ _______ _______ _______ ______
Total revenue 63,040 78,700 54,917 (2,601) 194,056
========= ====== ====== ======= =======
_______ _______
Segment operating
profit 2,952 14,102 3,845 - 20,899
Unallocated corporate
expenses (6,433)
_______
Adjusted operating
profit 14,466
Amortisation of IFRS 3
intangibles (320)
Share option costs (4)
Goodwill
impairment (14,429)
_______
Operating loss (287)
Investment revenues 810
Other gains and losses 291
Finance costs (5,155)
_______
Loss before tax (4,341)
Tax (2,846)
Loss for the period
from discontinued
operations (1,421)
_______
Loss after tax and
discontinued operations (8,608)
=======
Included within the segment loss for the period is £37.8m of revenue and £3.8m
of segment operating profit for the trading of Mercury Health for the period.
Notes to the preliminary announcement (continued)
3. Investment revenues
Continuing operations
Nine
months Year
ended ended
31 31
December March
2007 2007
£'000 £'000
Interest on bank deposits 448 805
Other interest receivable 671 -
Dividends from equity investments - 5
______ ____
1,119 810
====== ====
4. Other gains and losses
Continuing operations
Nine
months Year
ended ended
31 31
December March
2007 2007
£'000 £'000
Change in the fair value of derivatives
classified as held for trading 62 294
Hedge ineffectiveness in
the cash flow hedges (188) (3)
______ ____
(126) 291
======= ====
5. Finance costs
Continuing operations
Nine
months Year
ended ended
31 31
December March
2007 2007
£'000 £'000
Finance charges
Interest on bank overdrafts and loans 1,666 4,894
Interest on loan notes 30 66
Interest on obligation under finance leases 1 1
Net interest payable on retirement
benefit obligations 2 30
______ ______
Total borrowing costs 1,699 4,991
Financial instruments
Discounting charge for
deferred consideration 43 164
______ ______
1,742 5,155
====== =====
Borrowing costs included in the cost of qualifying assets during the prior year
arose on the Mercury Health ISTC contract for which the related borrowings were
separately identifiable and were capitalised at the average rate of 6.9% for
the year ended 31 March 2007.
6. Dividends
Nine
months Year
ended ended
31 31
December March
2007 2007
£'000 £'000
Amounts recognised as distributions to equity holders
in the period:
Final dividend for the year ended 31 March 2007
of 2.42 pence(year ended 31 March 2006: 2.25 pence)
per share 2,031 1,812
Interim dividend for the year ended 31 March
2007: 1.05 pence per share - 880
______ ______
2,031 2,692
====== =====
Interim dividend for the nine months ended 31
December 2007 of 1.15 pence 966 -
==== ====
Proposed final dividend for the nine months ended
31 December 2007 of 1.8 pence
(year ended 31 March 2007: 2.42 pence) per share 1,530 2,050
====== =====
The interim dividend was approved by the Board on 21 November 2007. The dividend
was paid on 16 January 2008 to ordinary shareholders who were on the register on
14 December 2007.
The proposed final dividend is subject to approval by shareholders at the Annual
General Meeting and has not been included as a liability in these financial
statements. On a pro rata annualised basis, the interim and final dividend
totalling 2.95p for the nine month period ended 31 December 2007 represents an
increase of 13%.
7. Earnings per share
Earnings per share and diluted earnings per share are calculated by reference
to a weighted average number of ordinary shares calculated as follows:
Nine
months Year
ended ended
31 31
December March
2007 2007
thousands thousands
Weighted average number of
shares outstanding:
Basic weighted average
number of shares in issue 84,741 81,889
Employee
share options 73 176
Shares to be issued in
respect of deferred consideration - 410
______ ______
Weighted average number of shares
outstanding for dilution 84,814 82,475
======== =======
calculations
The adjusted basic and adjusted diluted earnings per share figures shown on the
consolidated income statement are included as the directors believe that they
provide a better understanding of the underlying trading performance of the
Group. A reconciliation of how these figures are calculated is set out below:
7. Earnings per share (continued)
Nine months ended Year ended
31 December 2007 31 March 2007
(Loss)/ (Loss)/
earnings earnings
Earnings per share Earnings per share
From continuing operations £'000 pence £'000 pence
Basic and adjusted basic
(loss)/earnings per share:
Loss and basic loss
per share (2,220) (2.6)p (7,958) (9.8)p
Adjustments:
Goodwill impairment 9,000 10.6p 14,429 17.6p
Share option costs 489 0.5p 4 -
Amortisation of IFRS
3 intangibles (net of tax) 173 0.2p 224 0.3p
Financial instruments net
charge
/(credit) (net of tax) 133 0.2p (40) -
______ ______ ______ ______
Adjusted earnings and
adjusted
basic earnings per share 7,575 8.9p 6,659 8.1p
===== ======= ===== ====
Diluted and adjusted
diluted
(loss)/earnings per share:
Loss and diluted loss per
share (2,220) (2.6)p (7,958) (9.8)p
Adjustments:
Goodwill impairment 9,000 10.6p 14,429 17.5p
Share option costs 489 0.5p 4 -
Amortisation of IFRS
3 intangibles (net of tax) 173 0.2p 224 0.3p
Financial instruments net
charge
/(credit) (net of tax) 133 0.2p (40) -
______ ______ ______ ______
Adjusted earnings and
adjusted
diluted earnings per share 7,575 8.9p 6,659 8.0p
====== ==== ===== ====
The loss of £2,220,000 (31 March 2007: £7,958,000) is arrived at after deducting
the minority interest charge of £402,000 (31 March 2007: £771,000) from the loss
for the period from continuing operations of £1,818,000 (31 March 2007:
£7,187,000).
7. Earnings per share (continued)
Nine months ended Year ended
31 December 2007 31 March 2007
(Loss)/ (Loss)/
earnings earnings
Earnings per share Earnings per share
For continuing and
discontinued operations £'000 pence £'000 pence
Basic and adjusted basic
earnings
/(loss) per share:
Profit and basic
earnings
/(loss) per share 25,034 29.5p (9,379) (11.5)p
Adjustments:
Goodwill impairment 9,000 10.6p 14,429 17.6p
Amortisation of IFRS
3 intangibles (net of
tax) 173 0.2p 224 0.3p
Share option costs 489 0.5p 10 -
Profit on disposal
of Mercury Health (27,217) (32.1)p - -
Mercury Health disposal
costs - - 3,300 4.0p
Financial instrument
charge
/(credit) (net of tax) 133 0.2p (91) -
______ ______ ______ _____
Adjusted earnings and
adjusted basic earnings
per share 7,612 8.9p 8,493 10.4p
====== ==== ====== =====
Basic and adjusted
diluted
earnings/(loss) per
share:
Profit and basic
earnings
/(loss) per share 25,034 29.5p (9,379) (11.5)p
Adjustments:
Goodwill impairment 9,000 10.6p 14,429 17.5p
Amortisation of IFRS
3 intangibles (net of
tax) 173 0.2p 224 0.3p
Share option costs 489 0.5p 10 -
Profit on disposal of
Mercury Health (27,217) (32.1)p - -
Mercury Health disposal
costs - - 3,300 4.0p
Financial instrument
charge
/(credit) (net of tax) 133 0.2p (91) -
______ ______ ______ _____
Adjusted earnings and
adjusted
diluted earnings per
share 7,612 8.9p 8,493 10.3p
====== ==== ====== =====
8. Goodwill
31 31
December March
2007 2007
£'000 £'000
Cost
At beginning of period 234,230 234,094
Additions - including
minority interests 4,183 274
Disposal of subsidiary (168) -
Revisions to
prior periods (123) (138)
At end of period 238,122 234,230
======= =======
Accumulated
impairment losses
At beginning of period 42,131 27,702
Impairment charge 9,000 14,429
______ ______
At end of period 51,131 42,131
====== =======
Net book value
At end of period 186,991 192,099
======== =======
At beginning of period 192,099 206,392
======== =======
Additions to goodwill during the period relate mainly to the purchase of the
remainder of the share capital in Sportsvine Holdings Limited.
Revisions to prior years primarily relate to changes, both increases and
decreases, in estimates of the likely final settlement values under various earn
out agreements, which are dependent on post acquisition performance.
Goodwill acquired in a business combination is allocated, at acquisition, to the
cash generating units that are expected to benefit from the business
combination. The carrying amount of goodwill has been allocated as follows:
31 31
December March
2007 2007
£'000 £'000
Support services -
Communications 17,677 17,677
Property 21,265 21,272
Resourcing 12,614 21,614
______ ______
51,556 60,563
Consulting 65,176 64,994
Education 70,259 66,374
Mercury Health - 168
______ ______
186,991 192,099
======== =======
The Group tests goodwill annually for impairment or more frequently if there are
indications that goodwill might be impaired.
8. Goodwill (continued)
The recoverable amounts of the cash generating units are determined from value
in use calculations. The key assumptions for the value in use calculations are
those regarding the discount rates, growth rates and expected changes to selling
prices and direct costs during the period. Management estimates discount rates
using pre-tax rates that reflect current market assessments of the time value of
money and the risks specific to the cash generating units. The growth rates are
based on internal budgets in the short term and general market rates thereafter.
Changes in selling prices and direct costs are based on past practices and
expectations of future changes in the market.
The Group prepares cash flow forecasts derived from the most recent financial
budgets approved by management for the next two years and extrapolates cash
flows for two further years at 4% and into perpetuity based on an estimated
growth rate of 2.5%. This rate does not exceed the average long-term growth rate
for the relevant markets.
The rate used to discount the forecast cash flow is 9.4%.
As reported at the time of our interim results, following the disappointing
performance of the resourcing business stream in the six months ended 30
September 2007, due to a significant decline in local government and health
recruitment spend and pressure on margins, a review of the goodwill carrying
value resulted in an impairment charge of £9.0m. As the forecast recoverable
amount now approximates to the carrying value, it follows that if future results
were to fall below those assumed for the purposes of the value in use
calculations, a further impairment charge would arise. In this respect the Group
considers that the anticipated recovery in operating cash flows in the period to
December 2008 is the most sensitive assumption.
Management do not believe there to be any other cash generating units for which
there is a 'reasonably possible' change in the key assumptions that would result
in an impairment.
9. Trade and other receivables
31 31
December March
2007 2007
£'000 £'000
Amount receivable from
sale of services 46,424 49,068
Allowance for doubtful debts (766) (705)
______ ______
45,658 48,363
Other receivables 400 725
Prepayments and accrued income 16,268 13,100
______ ______
62,326 62,188
======= ======
10. Trade and other payables
31 31
December March
2007 2007
£'000 £'000
Trade payables 18,441 24,046
Other taxation and social
security 8,603 11,734
Other payables 6,306 4,251
Accruals and deferred income 31,114 41,468
Deferred cash consideration 2,954 -
______ ______
67,418 81,499
====== ======
11. Reserves
Other Retained
reserves earnings Total
£'000 £'000 £'000
At 31 March 2007 67,823 9,941 77,764
Profit for the period - 25,034 25,034
Dividends paid - (2,031) (2,031)
Net expense recognised
directly in equity (147) (34) (181)
Goodwill impairment (3,235) 3,235 -
Own shares disposed 183 - 183
Credit in relation to share
based payments 489 - 489
Share option exercises - (70) (70)
Transfers (531) 531 -
_______ _______ _______
At 31 December 2007 64,582 36,606 101,188
====== ======= =======
The goodwill transfer of £3.2m is in accordance with section 131 of the
Companies Act 1985.
12. Notes to the cash flow statement
31 31
December March
2007 2007
£'000 £'000
Operating profit/(loss) from
continuing operations 1,933 (287)
Depreciation of property,
plant and equipment 2,296 5,356
Amortisation of other
intangible assets 1,275 1,189
Impairment of goodwill 9,000 14,429
Net pension charge (215) (105)
Gain on disposal of property,
plant and equipment (92) (133)
Gain on sale of investments (68) -
Share based payments 489 10
Operating cash flows before _______ _______
movements in working capital 14,618 20,459
Increase in receivables (5,519) (4,724)
Decrease/(increase) in amounts
recoverable on contracts 256 (4,041)
(Decrease)/increase in payables (437) 16,597
Increase in inventories (26) (168)
Increase in provisions 127 300
_______ _______
Net cash from operating
activities before tax 9,019 28,423
Tax paid (211) (4,143)
_______ _______
Net cash from
operating activities 8,808 24,280
======= ======
Net cash from operating activities before tax
can be analysed as follows:
£'000 £'000
Continuing operations 11,151 18,149
Discontinued operations (2,132) 10,274
_______ _______
9,019 28,423
======= ======
Part II
Unaudited pro forma financial information
The statutory accounts included in these financial statements cover a period
shorter than a full year due to the change in year end. Therefore we have
included below pro forma information to provide greater comparability.
Basis of preparation
The pro forma accounts are unaudited and do not constitute full statutory
accounts within the meaning of section 240 of the Companies Act 1985.
The unaudited pro forma information set out below comprises a consolidated
income statement and consolidated cash flow for the 12 months ended 31 December
2007 and the 12 months ended 31 December 2006. It is based on the consolidated
management accounts of the Group after making adjustments consistent with year
end procedures. On 4 July 2007, a separate document was published on our website
setting out unaudited abridged pro forma accounts for the 12 months ended 31
December 2006 and the nine months ended 31 December 2006.
The key issues and judgements are set out below:
1. Disposal of Mercury Health and its subsidiaries
The sale of the Group's healthcare delivery business, Mercury Health, to Care UK
was completed on 20 April 2007. In the audited accounts for the year ended 31
March 2007, Mercury Health was not classified as discontinued or held for resale
under IFRS 5 'Non current assets held for sale and discontinued operations' as
shareholder approval for the transaction had not been received at the balance
sheet date. It follows that had accounts been prepared at 31 December 2006, the
results of Mercury Health would have been included as part of continuing
operations.
As the unaudited pro forma accounts have been prepared to assist the user of the
financial information to understand the impact of this transaction as well as
the change of year end, Mercury Health has been disclosed as a discontinued
operation, as it will be in future financial reports. Accordingly its results
for the period are presented as single amounts in the consolidated income
statement.
2. Goodwill impairment
In the audited accounts for the year ended 31 March 2007, a goodwill impairment
charge of £14.4m was made in respect of certain business streams that were being
closed and other underperforming business units.
The unaudited pro forma accounts have been prepared on the basis that had
accounts been prepared to 31 December 2006, this impairment charge would have
been made at that date rather than in the three months period to March 2007.
In addition a further goodwill impairment charge of £9m has been made in respect
of the Resourcing business stream in the nine months ended 31 December 2007.
3. Tax charge
Over the last two years, Tribal has had the benefit of a low effective tax rate
due to HMRC agreement of various tax reliefs relating to prior periods.
The year ended 31 March 2006 benefited from the inclusion of a prior year tax
credit of £1.5m in respect of tax relief obtained mainly for share option costs
and certain management expenses relating to acquisition costs. This resulted
from the agreement with HMRC of the 2002 and 2003 enquiries which were closed in
October 2005. This prior year benefit therefore relates to the unaudited pro
forma period ended 31 December 2005 and so has been excluded from these pro
forma accounts.
In the interim accounts for the half year ended 30 September 2006 a further tax
credit of £1.1m was taken following the closure of the enquiry into the 2004 tax
computations. This benefit related to Mercury Health and as a result has been
included as part of the profit from discontinued operations.
The further tax credits taken in the financial statements for the year ended 31
March 2007 have been reflected in the three month period to 31 March 2007 as
they related to certain 2005 tax computations which were cleared without enquiry
on 31 March 2007. The credit has therefore been included in the unaudited pro
forma period ended 31 December 2007.
4. Employee benefits
Share option costs and holiday pay accruals are not calculated on a monthly
basis when preparing the management accounts. However an adjustment has been
made for these items when preparing the unaudited pro forma accounts.
Pension liabilities have not been formally calculated as at 31 December 2006;
the pro forma accounts therefore reflect the pension liability disclosed in the
audited accounts to 31 March 2006. The effect of this on the income statement
for both periods is not considered to be material since all actuarial gains or
losses are recorded in the statement of recognised income and expense.
Unaudited pro forma consolidated income statement
for the year ended 31 December 2007
Before Before
other Other Year other Other Year
administrative administrative ended administrative administrative ended
expenses expenses 31 expenses expenses 31
and and December and and December
exceptional financial 2007 exceptional financial 2006
costs instruments Total costs instruments Total
Note
Continuing £'000 £'000 £'000 £'000 £'000 £'000
operations
Turnover 256,509 - 256,509 233,707 - 233,707
Direct agency
costs (47,334) - (47,334) (39,428) - (39,428)
_______ _______ _______ _______ _______ _______
Revenue (i) 209,175 - 209,175 194,279 - 194,279
Cost of sales (122,769) - (122,769) (114,257) - (114,257)
_______ _______ _______ _______ _______ _______
Gross profit 86,406 - 86,406 80,022 - 80,022
Net
administrative
expenses (68,688) - (68,688) (63,066) - (63,066)
Other
administrative
expenses:
Share option
costs - (431) (431) - (192) (192)
Amortisation of
IFRS 3 - (322) (322) - (316) (316)
intangibles
Goodwill
impairment - (9,000) (9,000) - (14,429) (14,429)
Total
administrative
expenses (68,688) (9,753) (78,441) (63,066) (14,937) (78,003)
_______ _______ _______ _______ _______ _______
Operating
profit 17,718 (9,753) 7,965 16,956 (14,937) 2,019
Investment
revenues 1,431 - 1,431 597 - 597
Other gains
and losses - (30) (30) - 274 274
Finance costs (3,336) (58) (3,394) (4,349) (236) (4,585)
_______ _______ _______ _______ _______ _______
Profit/(loss)
before tax 15,813 (9,841) 5,972 13,204 (14,899) (1,695)
Tax (4,358) 100 (4,258) (3,950) 13 (3,937)
_______ _______ _______ _______ _______ _______
Profit/(loss)
for
the year from
continuing
operations 11,455 (9,741) 1,714 9,254 (14,886) (5,632)
Discontinued
operations
Profit for
the year from
discontinued
operations 571 23,917 24,488 1,814 39 1,853
_______ _______ _______ _______ _______ _______
Profit/(loss)
for the year 12,026 14,176 26,202 11,068 (14,847) (3,779)
====== ====== ====== ======= ======== ========
Attributable
to:-
Equity holders
of the parent 25,541 (4,407)
Minority
interest 661 628
_______ _______
26,202 (3,779)
====== =======
Unaudited pro forma consolidated income statement (continued)
for the year ended 31 December 2007
Before Other Before
other administrative Year other Other Year
administrative expenses ended administrative administrative ended
expenses and 31 expenses expenses 31
and financial December and and December
exceptional instruments 2007 exceptional financial 2006
Note costs Total costs instruments Total
From
continuing
operations £'000 £'000 £'000 £'000 £'000 £'000
Basic (ii) 12.7p (11.4)p 1.3p 10.7p (18.4)p (7.7)p
Diluted (ii) 12.7p (11.4)p 1.3p 10.6p (18.3)p (7.7)p
From
continuing
and
discontinued
operations
Basic (ii) 13.4p 16.8p 30.2p 12.9p (18.4)p (5.5)p
Diluted (ii) 13.4p 16.8p 30.2p 12.8p (18.3)p (5.5)p
Unaudited pro forma consolidated cash flow statement
for the year ended 31 December 2007
Note 2007 2006
£'000 £'000
Net cash from operating activities (iii) 27,063 26,392
Investing activities
Interest received 2,423 458
Proceeds on disposal to minorities 160 1
Disposal of subsidiary 36,251 -
Proceeds on disposal of property,
plant and equipment 298 28
Purchase of investments (8) -
Purchases of property,
plant and equipment (4,620) (14,134)
Expenditure on product development (2,336) (1,657)
Acquisitions (2,178) (218)
_______ _______
Net cash inflow/(outflow) from
investing activities 29,990 (15,522)
====== ========
Financing activities
Interest paid (4,543) (5,848)
Equity dividend paid (2,911) (2,637)
Dividends to minorities (485) -
Issue of shares 116 549
Repayment of borrowings (54,756) (1,918)
Repayments of obligations
under finance lease (28) (81)
New bank loans 684 11,875
Movements in
collateralised cash 790 410
Purchase of own shares - (430)
Loan to third party - 535
______ ______
Net cash (used in)/from
financing activities (61,133) 2,455
======== =====
Net (decrease)/ increase
in cash and cash equivalents (4,080) 13,325
Cash and cash equivalents
at beginning of year 20,062 6,737
______ ______
Cash and cash equivalents
at end of year 15,982 20,062
========== ======
(i) Business segments
Segment information about the businesses is presented below:-
Year ended 31 December 2007
Support
Consulting Education services Eliminations Consolidated
31 31 31 31 31
December December December December December
2007 2007 2007 2007 2007
£'000 £'000 £'000 £'000 £'000
Revenue
External sales 69,299 82,947 56,929 - 209,175
Inter-segment sales 109 942 1,473 (2,524) -
_______ _______ _______ _______ _______
Total revenue 69,408 83,889 58,402 (2,524) 209,175
====== ======== ====== ======= =======
Segment operating
profit 3,899 15,150 5,035 - 24,084
===== ====== ===== ======
Unallocated corporate
expenses (6,366)
_______
Adjusted operating profit 17,718
Amortisation of IFRS 3 intangibles (322)
Share option costs (431)
Goodwill impairment (9,000)
_______
Operating profit 7,965
Investment revenues 1,431
Other gains and losses (30)
Finance costs (3,394)
_______
Profit before tax 5,972
Tax (4,258)
_______
Profit for the year from continuing
operations 1,714
=======
(i) Business segments (continued)
Year ended 31 December 2006
Support
Consulting Education services Eliminations Consolidated
31 31 31 31 31
December December December December December
2006 2006 2006 2006 2006
£'000 £'000 £'000 £'000 £'000
Revenue
External sales 60,351 80,129 53,799 - 194,279
Inter-segment sales 815 385 1,548 (2,748) -
_______ _______ _______ _______ _______
Total revenue 61,166 80,514 55,347 (2,748) 194,279
====== ====== ====== ======= =======
Segment operating profit 4,567 13,570 5,209 - 23,346
===== ====== ===== ====== ======
Unallocated corporate
expenses (6,390)
_______
Adjusted operating profit 16,956
Amortisation of IFRS 3 intangibles (316)
Share option costs (192)
Goodwill impairment (14,429)
_______
Operating profit 2,019
Investment revenues 597
Other gains and losses 274
Finance costs (4,585)
_______
Loss before tax (1,695)
Tax (3,937)
_______
Loss for the year from
continuing operations (5,632)
=======
(ii) Earnings per share
Earnings per share and diluted earnings per share are calculated by reference to
a weighted average number of ordinary shares calculated as follows: -
Year Year
ended ended
31 31
December December
2007 2006
thousands thousands
Weighted average number of
shares outstanding:
Basic weighted average
number of shares in issue 84,727 80,769
Employee share options 68 232
Shares to be issued in respect
of deferred consideration - 397
______ ______
Weighted average number of
shares outstanding for dilution
calculations 84,795 81,398
====== ======
The adjusted basic and adjusted diluted earnings per share figures shown on
the consolidated income statement are included as the directors believe that
they provide a better understanding of the underlying trading performance of
the Group. A reconciliation of how these figures are calculated is set out
below:
Year Year
ended ended
31 31
December December
2007 2006
Earnings Earnings Earnings (Loss)/
per share per share
pence earnings
From continuing £'000 £'000 pence
operations
Basic and adjusted basic
earnings/(loss) per
share:
Profit/(loss) and basic
earnings/(loss) per share 1,053 1.3p (6,260) (7.7p)
Adjustments:
Goodwill impairment 9,000 10.6p 14,429 17.9p
Share option costs 431 0.5p 192 0.2p
Amortisation of IFRS 3
intangibles (net of tax) 255 0.3p 221 0.3p
Financial instruments
charge (net of tax) 55 - 44 -
Adjusted earnings and
adjusted basic
earnings per share 10,794 12.7p 8,626 10.7p
======= ====== ====== =====
Diluted and adjusted
diluted earnings/(loss)
per share:
Profit/(loss) and diluted
earnings/(loss) per share 1,053 1.3p (6,260) (7.7)p
Adjustments:
IAS 33 Adjustment* - - - 0.1p
Goodwill impairment 9,000 10.6p 14,429 17.7p
Share option costs 431 0.5p 192 0.2p
Amortisation of IFRS 3
intangibles (net of tax) 255 0.3p 221 0.3p
Financial instruments
charge (net of tax) 55 - 44 -
______ ______ ______ ______
Adjusted earnings and
adjusted diluted
earnings per share 10,794 12.7p 8,626 10.6p
======= ===== ===== =====
The profit of £1,053,000 (2006: loss of £6,260,000) is arrived at after
deducting the minority interest charge of £661,000 (2006: £628,000) from the
profit for the period from continuing operations of £1,714,000 (2006: loss
£5,632,000).
*IAS 33 requires presentation of diluted earnings per share when a company could
be called upon to issue shares that would decrease the net profit or increase
net loss per share. For a loss making company, net loss per share would only be
increased by the exercise of out-of-money options.
(ii) Earnings per share (continued)
Year Year
ended ended
31 31
December December
2007 2006
(Loss)/
Earnings Earnings Earnings earnings
per share per share
For continuing and
discontinued operations £'000 pence £'000 pence
Basic and adjusted basic
earnings/(loss) per
share:
Profit/(loss) and basic
earnings/(loss) per share 25,541 30.2p (4,407) (5.5)p
Adjustments:
Goodwill impairment 9,000 10.6p 14,429 17.9p
Amortisation of IFRS 3
intangibles (net of tax) 255 0.3p 221 0.3p
Share option costs 431 0.5p 192 0.2p
Profit on disposal
of Mercury Health (23,917) (28.2)p - -
Financial instrument
charge (net of tax) 55 - 5 -
______ ______ ______ ______
Adjusted earnings and
adjusted basic earnings
per share 11,365 13.4p 10,440 12.9p
====== ===== ====== =====
Basic and adjusted
diluted earnings/(loss)
per share:
Profit/(loss) and basic
earnings/(loss) per share 25,541 30.2p (4,407) (5.5)p
Adjustments:
IAS 33 adjustment - - - 0.1p
Goodwill impairment 9,000 10.6p 14,429 17.7p
Amortisation of IFRS 3
intangibles (net of tax) 255 0.3p 221 0.3p
Share option costs 431 0.5p 192 0.2p
Profit on disposal
of Mercury Health (23,917) (28.2)p - -
Financial instrument
charge (net of tax) 55 - 5 -
______ ______ ______ ______
Adjusted earnings and
adjusted diluted earnings
per share 11,365 13.4p 10,440 12.8p
====== ===== ====== ======
(iii) Notes to the unaudited pro forma cash flow statement
2007 2006
£'000 £'000
Operating profit from
continuing operations 7,965 2,019
Depreciation of property,
plant and equipment 3,607 5,050
Amortisation of other
intangible assets 1,751 883
Impairment of goodwill 9,000 14,429
Net pension charge (327) 7
Gain on disposal of
property,
plant and equipment (201) (24)
Increase in fair value of
investment property - (20)
Gain on sale of
investments (68) -
Share based payments 437 192
_______ _______
Operating cash flows before movements in
working capital 22,164 22,536
Increase in receivables (14,399) (3,077)
Increase in payables 20,993 11,077
Decrease in inventories 469 4
(Increase)/decrease in amounts
recoverable on contracts (1,875) 809
Increase in provisions 427 150
_______ _______
Net cash from operating
activities before tax 27,779 31,499
Tax paid (716) (5,107)
_______ _______
Net cash from operating
activities 27,063 26,392
====== ======
Net cash from operating activities before tax
can be analysed as follows:
£'000 £'000
Continuing operations 25,240 21,060
Discontinued operations 2,539 10,439
_______ _______
27,779 31,499
====== ======
This information is provided by RNS
The company news service from the London Stock Exchange
Monday, 20th May 2024
COMPANIES COVERED:
Latest directors dealings
- 1 hour ago BT Group
- 1 hour ago Dunelm Group
- 1 hour ago PZ Cussons
- 1 hour ago Aquila Energy Efficiency Trust (EUR)
- 1 hour ago London Stock Exchange Group