TIDMSAVG
RNS Number : 3583N
Savile Group PLC
28 September 2012
Savile Group plc
("Savile" or the "Group")
PRELIMINARY AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2012
Financial summary 2012
Acquired Career Management Services Limited in May 2012
Revenue on continuing operations GBP7.4m (2011: GBP7.2m)
Operating loss on continuing activities before exceptional items
and tax GBP0.04m
(2011: Loss GBP0.31m)
Loss before tax on continuing activities GBP0.09m (2011: Loss
GBP0.69m)
No bank debt (2011: nil)
Fully diluted loss per share on continuing operations at 0.62
pence (2011: 4.33 pence loss per share)
David Harrel, Non Executive Chairman of Savile, commented:
"In this, my first year as Chairman, the Group has faced another
challenging year.
The Group made a small operating loss on continuing operations
and has written off its investment in 7 Days Limited.
The career transition business held up in the year but, although
opportunities in senior advisory services remained reasonably
constant throughout the year, there was a slow down towards the
year end in the conversion of these opportunities as projects were
delayed.
Towards the end of the financial year the Group acquired Career
Management Services Limited (CMC), which specialises in career
transition services.
Against a difficult trading environment the cash levels have
been maintained.
During the year Penny de Valk joined the board as CEO of
Fairplace Cedar and brings a wealth of experience with her.
During the year the Group repositioned the Fairplace and Cedar
brands and with the acquisition of CMC, has undertaken a
transformation project to ensure we have the most effective
operations for the businesses within the Group.
The board is also considering the most appropriate structure for
the Group.
All of this is aimed at putting the business in the strongest
position going forward to maximize shareholder value".
Enquiries to:
Savile Group plc Cairn Financial Advisers LLP
David Harrel Tony Rawlinson
Chairman Nominated advisor
Tel: 020 7204 6990 Tel: 020 7148 7901
Chairman's statement
In this, my first year as Chairman, the Group has faced another
challenging year.
The Group made a small operating loss on continuing operations
and has written off its investment in 7 Days Limited.
The career transition business held up in the year but, although
opportunities in senior advisory services remained reasonably
constant throughout the year, there was a slow down towards the
year end in the conversion of these opportunities as projects were
delayed.
Towards the end of the financial year the Group acquired Career
Management Services Limited (CMC), which specialises in career
transition services.
Against a difficult trading environment the cash levels have
been maintained.
Results for 2011/12
Group revenue on continuing operations for the year ended 30
June 2012 was GBP7.39m (2011: GBP7.15m). The operating loss before
exceptional items was GBP40,000 (2011: GBP305,000 loss) and
exceptional items on continuing operations of GBP62,000 have been
charged for the period (2011: GBP418,000) (note 2).
The liquidation of 7 Days Limited resulted in a charge of
GBP1.14m and further details are given in note 3.
As a result the Board does not propose to pay a dividend for the
year (2011: Nil pence).
The Group continues to be debt free.
Board
During the year Penny de Valk joined the board as CEO of
Fairplace Cedar and brings a wealth of experience with her.
Lord Freeman retired but will continue to work with the company
as required in an advisory role. We would like to thank him for his
support and input over the years.
Linda Jackson also left the board during the year.
Staff
As ever, our people remain the major asset of each business.
This has been a year of ongoing change in the Group and I would
like to thank all our staff for their support and hard work
throughout the year.
7 Days Limited
7 Days Limited had an extremely disappointing trading
performance in the first quarter of the year and in September 2011
Louise Palmer resigned from the boards of Savile and 7 Days
Limited.
Following a review of the business, the board concluded that it
was not in the best interests of the Group to provide the projected
working capital required by 7 Days Limited going forward. As a
result, the board of 7 Days Limited resolved to appoint a
liquidator.
As detailed in note 3, this resulted in a charge of GBP1.14m in
the year.
Outlook
During the year the Group repositioned the Fairplace and Cedar
brands and with the acquisition of CMC, has undertaken a
transformation project to ensure we have the most effective
operations for the businesses within the Group.
The board is also considering the most appropriate structure for
the Group.
All of this is aimed at putting the business in the strongest
position going forward to maximize shareholder value.
David Harrel
Chairman
27 September 2012
Group statement of comprehensive income
for the year ended 30 June 2012
Audited Audited
2012 2011
Notes GBP'000 GBP'000
Revenue 7,390 7,151
Operating expenses (7,430) (7,456)
--------- ---------
Operating loss before exceptional items (40) (305)
Exceptional items 2 (62) (418)
--------- ---------
Operating loss (102) (723)
Finance income 10 30
--------- ---------
Loss before taxation (92) (693)
Taxation - 4
--------- ---------
Loss after taxation on continued operations (92) (689)
Loss on discontinued operations 3 (1,136) (467)
--------- ---------
Loss and total comprehensive income
for the period attributable to equity
owners of the parent (1,228) (1,156)
--------- ---------
Loss per ordinary share (total) Pence Pence
Basic 7 (8.22) (7.26)
--------- ---------
Diluted 7 (8.22) (7.26)
--------- ---------
Loss per ordinary share (continued Pence Pence
operations)
Basic 7 (0.62) (4.33)
--------- ---------
Diluted 7 (0.62) (4.33)
--------- ---------
Group Balance Sheet
as at 30 June 2012
2012 2011
GBP'000 GBP'000
Assets
Non current assets:
Property, plant and equipment 312 369
Intangible assets 505 929
817 1,298
--------- ---------
Current assets:
Inventories 11 14
Trade and other receivables 2,796 2,701
Cash and cash equivalents 1,043 1,198
--------- ---------
3,850 3,913
--------- ---------
Total assets 4,667 5,211
--------- ---------
Liabilities:
Current liabilities
Trade and other payables 2,878 2,148
Non-current liabilities
Deferred tax - 50
--------- ---------
Total liabilities 2,878 2,198
--------- ---------
Net assets 1,789 3,013
--------- ---------
Capital and reserves
Share capital 448 448
Share premium account 1,851 1,851
Merger reserve 329 329
Capital redemption reserve 800 800
Retained earnings (1,639) (415)
Total equity 1,789 3,013
--------- ---------
Statement of Changes in Equity
for the year ended 30 June 2012
Capital
Share Share premium Merger redemption Retained Total
Group capital account reserve reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 July 2010 480 1,851 194 753 882 4,160
Loss and total comprehensive
income for the year - - - - (1,156) (1,156)
Credit to equity for
share-based payments - - - - 61 61
Issue of shares 15 - 135 - - 150
Treasury shares (47) - - 47 (58) (58)
Equity dividend paid - - - - (144) (144)
---------- --------------- ----------- ------------- ------------ ---------
At 30 June 2011 448 1,851 329 800 (415) 3,013
---------- --------------- ----------- ------------- ------------ ---------
Loss and total comprehensive
income for the year - - - - (1,228) (1,228)
Share-based payments - - - - 4 4
---------- --------------- ----------- ------------- ------------ ---------
At 30 June 2012 448 1,851 329 800 (1,639) 1,789
---------- --------------- ----------- ------------- ------------ ---------
Group Cash Flow Statement
for the year ended 30 June 2012
Notes 2012 2011
GBP GBP
Cash flow from operating activities
Loss before tax
Continuing operations (92) (693)
Discontinued operations 3 (1,136) (489)
------------ ---------
(1,228) (1,182)
Amortisation and impairment of intangibles 809 272
Depreciation 85 118
Loss on disposal of fixed assets 95 -
Share-based payment charge 4 61
Interest received (10) (30)
------------ ---------
983 421
------------ ---------
Changes in working capital:
(Increase)/decrease in inventories 3 (5)
Decrease in trade and other receivables 587 105
Decrease in trade and other payables (477) (172)
------------ ---------
113 (72)
------------ ---------
Tax Paid (26) (202)
Cash used from operations (158) (1,035)
Investing activities
Purchase of property, plant and equipment (104) (44)
Acquisition of CMC Limited (net of
cash acquired) 4 97 -
Acquisition of 7 Days Limited (net
of cash acquired) 5 - (1,268)
Interest received 10 30
------------ ---------
Net cash generated/(used) from investing
activities 3 (1,282)
------------ ---------
Financing activities
Purchase of own shares - (58)
Equity dividend paid - (144)
Issue of ordinary shares - 150
------------ ---------
Net cash used from financing activities - (52)
------------ ---------
Net decrease in cash and cash equivalents (155) (2,369)
Cash and cash equivalents at beginning
of year 1,198 3,567
Cash and cash equivalents at end of
year 1,043 1,198
------------ ---------
Notes to the preliminary announcement
for the year ended 30 June 2011
1. Accounting policies
The financial information set out in these preliminary results
does not constitute the company's statutory accounts for the years
ended 30 June 2012 or 30 June 2011.
Statutory accounts for the year ended 30 June 2011 have been
filed with the Registrar of Companies and those for the year ended
30 June 2012 will be delivered to the Registrar in due course; both
have been reported on by the Independent Auditors. The independent
auditors' reports on the Annual Report and accounts for the years
ended 30 June 2011 and 30 June 2012 were unqualified, did not draw
attention to any matters by way of emphasis, and did not contain a
statement under 498(2) or 498(3) of the Companies Act 2006.
The financial information in these preliminary results has been
prepared using the recognition and measurement principles of
International Accounting Standards, International Financial
Reporting Standards and Interpretations adopted for use in the
European Union (collectively Adopted IFRSs). The principal
accounting policies adopted are set out below, they have been
consistently applied to all the years presented and are consistent
with the policies used in the preparation of the statutory accounts
for the year ended 30 June 2012.
Basis of consolidation
The financial information in these preliminary results
consolidates the accounts of the Company and all its subsidiary
undertakings drawn up to 30 June each year using the purchase
method. In the 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 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. For business combinations prior to 1
July 2009, any direct costs of acquisition were included as part of
the cost of acquisition. Following IFRS 3 (revised) becoming
effective, direct costs of acquisition are expensed.
Goodwill is capitalised as an intangible asset with any
impairment in carrying value being charged to the statement of
comprehensive income.
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. The current year accounts do
not include comparatives for the transitional period.
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 operating expenses line
item in the income statement. An impairment loss recognised for
goodwill is not reversed. Previously recognised impairment losses
on assets other than goodwill are reversed when there is an
increase in the estimated service potential of an asset.
Financial assets and Liabilities
Financial assets and liabilities are recognised initially at
their fair value and are subsequently measured at amortised cost.
For trade receivables, trade payables and other short-term
financial liabilities this generally 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 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 Between 5 and 10 years Estimated royalty stream if
the rights were to be
licensed
Customer relationships 1 year Excess earnings
The amortisation charge is included in 'operating expenses'
within the statement of comprehensive income.
2. Exceptional items
Exceptional items comprise two main elements; Costs incurred by
the Group in reorganising the Fairplace and Cedar businesses and
costs arising from the acquisition and reorganisation of Career
Management Services Limited.
2012 2011
Reorganisation costs: GBP'000 GBP'000
Personnel 12 293
Consultancy - 38
Legal - 7
---------- ----------
12 338
---------- ----------
Costs relating to Career Management Services Limited
Personnel 31 -
Property 15 -
Legal 4 -
---------- ----------
50 -
---------- ----------
Provision against investment in Public Sector
included in other debtors - 80
---------- ----------
62 418
---------- ----------
3. Discontinued operations
The post tax loss on disposal of discontinued
operations was determined as follows:
2012 2011
GBP'000 GBP'000
Costs relating to 7 Days Limited (note 5)
Revenue 98 1,705
Operating expenses (454) (1,721)
Exceptional costs:
Impairment of goodwill (661) (220)
Write off of intangible assets (144) -
Remuneration costs relating to shares issued - (211)
Net liabilities on liquidation 82 -
Legal and professional (5) (42)
Leasing obligations (52) -
Loss before taxation (1,136) (489)
Taxation - 22
---------- ----------
Loss after taxation (1,136) (467)
---------- ----------
Loss per share from discontinued operations 2012 2011
Pence Pence
Basic and diluted loss per share (7.60) (2.93)
---------- ----------
Statement of cash flows
The statement of cash flows includes the following 2012 2011
amounts relating to discontinued operations: GBP'000 GBP'000
Operating activities (207) (48)
Investing activities - (1,300)
Net cash used from discontinued operations (207) (1,348)
---------- ----------
The prior year cash movement was predominantly the purchase consideration
for 7 Days Limited (note 5).
4. Acquisitions of Career Management Services Limited
On 31 May 2012 the Group acquired 100% of the share capital of
Career Management Services Limited (CMC), a company which was
engaged in the provision of career transition services. The
consideration was satisfied by GBP85,000 in cash. The acquisition
was made to strengthen the geographical and sector reach of the
Group's services.
Book value Fair value Fair value
adjustment
GBP'000 GBP'000 GBP'000
Non-current assets
Goodwill 62 (62) -
Brand - 65 65
Customer relationships - 10 10
Leasehold property 208 (208) -
Fixtures and fittings 19 - 19
------------ ------------- ------------
289 (195) 94
------------ ------------- ------------
Current assets
Trade receivables and other debtors 715 - 715
Cash 182 - 182
------------ ------------- ------------
897 - 897
------------ ------------- ------------
Current liabilities 1,216 - 1,216
------------ ------------- ------------
Net liabilities acquired (30) (195) (225)
------------ -------------
Goodwill on acquisition 310
Purchase consideration 85
------------
The purchase consideration comprised:
Cash 85
------------
The main elements which support the value of the goodwill which
arose on acquisition are the people and contacts of CMC which were
acquired. The commercial justification of the consideration paid in
excess of the net assets, was that to hire such a team in the open
market to generate the potential earnings for the Group, with their
contacts and reputation, as well as the synergies and cross selling
opportunities, would equate to the value of the goodwill.
It is not possible for the Directors to quantify the effect of
the acquisition on the Group revenue and profit had the acquisition
been made on 1 July 2011 as CMC's financial year end had previously
been 30 April and it is not possible retrospectively to establish
the position at 1 July 2011 . However draft figures for the 14
months ended 30 June 2012 show revenue of GBP3.85m and a pre tax
loss of GBP0.76m. During this period the cost base of CMC was
significantly reduced and this has continued since the acquisition.
The Board expect CMC to have a positive impact on the Group
operating results going forward. The contribution of CMC to the
results of the Group for the period between the date of acquisition
and the year end was revenue of GBP0.2m and profit before tax,
exceptional items and management charges of approximately
GBP36,000.
5. 7 Days Limited
Acquisition
On 30 October 2010 the Group acquired 100% of the share capital
of 7 Days Limited, a company which was engaged in the provision of
organisational design and restructuring services. The consideration
was satisfied by GBP1.29m in cash. The acquisition was made to
broaden the range of the Group's services.
Book value Fair value Fair value
adjustment
Non-current assets GBP'000 GBP'000 GBP'000
Brand - 73 73
Customer relationships 98 98
Contracts - 23 23
Fixtures and fittings 84 - 84
------------ ------------- ------------
84 194 278
------------ ------------- ------------
Current assets
Trade receivables 834 - 834
Cash 22 - 22
------------ ------------- ------------
856 - 856
------------ ------------- ------------
Current liabilities
Trade and other payables 683 - 683
Non- current liabilities 42 - 42
------------ ------------- ------------
Total liabilities 725 - 725
------------ ------------- ------------
Net assets acquired 215 194 409
------------ -------------
Goodwill on acquisition 881
Purchase consideration 1,290
------------
The purchase consideration comprised:
Cash 1,290
------------
The main elements which supported the value of the goodwill
which arose on acquisition were the people and contacts of 7 Days
Limited which were taken over. The commercial justification of the
consideration paid in excess of the net assets, was that to hire
such a team in the open market to generate the potential earnings
for the Group, with their contacts and reputation, as well as the
synergies and cross selling opportunities, would equate to the
value of the goodwill.
At the time of the acquisition Savile Group plc also issued
500,000 3 pence ordinary shares. The issue price consisted of the
nominal value of the ordinary shares of 3 pence and a share premium
of 27 pence. A further 450,000 ordinary shares were due to be
issued on the first anniversary of the acquisition date and then a
further 450,000 ordinary shares were due to be issued on second
anniversary of the acquisition date, both of these issues were
dependent on certain future conditions. The conditionality of the
issue of these shares meant they were treated as a share based
payment for services received rather than as contingent
consideration in the business combination.
The further consideration shares referred to above have not been
and will not be issued. The cumulative share based payment expense
recognised with regards to the unvested shares options is
immaterial.
Discontinued operation
7 Days had an extremely disappointing trading performance in the
first quarter of the year and Louise Palmer resigned as a Director.
Following a review of the business, the board concluded that it was
not in the best interests of the Group to provide the projected
working capital required by 7 Days Limited going forward.
As a result, the board of 7 Days Limited resolved to appoint a
liquidator, following which, the remaining goodwill and other
intangible assets relating to this company were fully impaired.
This resulted in a loss on this discontinued operation of
GBP1.14m in the current financial year (note 3).
6. Taxation
Current taxation has been provided for at 25.5% (2011:
27.5%).
7. Earnings per 2012 2011
share
GBP'000 GBP'000
Numerator
Loss for the year (1,228) (1,156)
------------ ------------
Denominator Number Number
Weighted average of shares used in
basic and diluted EPS 14,941,822 15,915,927
------------ ------------
Employee share options of 71,074 (2011: 14,859) were not
included within the diluted EPS due to them being
anti-dilutive.
Employee options whose exercise price is greater than the
weighted average share price during the year (i.e. they are out of
the money) are excluded from the earnings per share
calculations.
8. Annual General Meeting
The Annual General Meeting will be held at 10.30am Monday 29
October 2012 at the Company's offices 36 - 38 Cornhill, London EC3V
3PQ.
9. Report and Accounts
Copies of the Report and Accounts for the year ended 30 June
2012 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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