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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Hexagon Human | LSE:HHC | London | Ordinary Share | GB00B12G3G91 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 8.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMHHC
RNS Number : 5614U
Hexagon Human Capital PLC
26 June 2009
Date: 26 June 2009
On Behalf of: Hexagon Human Capital plc ("the Group" or "the
Company")
Embargoed until: 0700hrs
HEXAGON HUMAN CAPITAL PLC
Preliminary Results for the year ended 31 March 2009
Hexagon Human Capital Plc (AIM: HHC), the UK's leading provider of senior
interim management and one of the UK's leading executive search businesses,
announces its unaudited preliminary results for the year ended 31 March 2009.
Financial and Operational Highlights:
- Net fee income (NFI) increased by 15% to GBP22.5m (2008: GBP19.5m)
- Earnings before interest, tax, amortisation, impairment and non operating
charges (EBITA) increased by 4% to GBP5.9m (2008: GBP5.7m)
- Achieved EBITA conversion 26% (2008: 29%)
- Adjusted earnings per share 19.04p (2008:19.42p)
- Operating cash inflow GBP3.1m (2008: GBP3.9m)
- Debtor days reduced to 41 (2008: 48)
- Total net debt and deferred consideration reduced by GBP5.5m (29%) to
GBP13.7m (2008: GBP19.2m)
- Well balanced performance across a number of market sectors and functional
areas
- Decisive action taken to enable business to operate successfully in
challenging markets
- Operational management re-structured streamlining senior management team
- Goodwill impairment review resulting in write down of goodwill by GBP7.1m
- Debt restructured in April 2009 by conversion of GBP2.3m of a term loan to a
convertible loan maturing December 2011
Robert Walker, Chairman of Hexagon Human Capital Plc, commented:
"The year to 31 March 2009 was one of further progress for Hexagon. Management
focus during this year particularly in the second half has been on cost control,
cash generation and on reducing the Group's bank and other indebtedness rather
than on acquisition initiatives. Acquisition activity in the year was limited to
a number of infill acquisitions to support the Group's international presence.
Trading in the first quarter of the current financial year remains volatile. The
board has continued its programme of cost reduction to protect the business from
the effects of the global recession in what will continue to be a challenging
year."
For further information, please contact:
Hexagon Human Capital Plc
Jonathan Wright, Chief Executive Officer
Carl Thompson, Chief Financial Officer 020 7337 1133
Brewin Dolphin Investment Banking (Nomad)
Matt Davis
Alison Barrow
0845 270 8605
Redleaf Communications hexagon@redleafpr.com
Emma Kane/ Sanna Sumner/ Rebecca Sanders-Hewett 020 7566 6700
Notes to Editors:
* Hexagon Human Capital is the market-leader in providing senior interim
management and is a leading executive search company;
* The Group floated on AIM on February 2007;
* It was established in 2004 by Jonathan Wright and Dr Swee Lip Quek with a
strategy to buy and build in the interim management and executive search
sectors;
* Hexagon has built up a portfolio of profitable companies operating in a variety
of sectors:
*
* Archer Mathieson: A leading UK provider of interim management and executive
recruitment in the specialist fields of finance, IT and human resources;
* BIE Interim Executive: The UK's leading senior interim management company;
* Correlate Search : Provider of specialist executive search in the international
financial services industry, with operations in the UK, Dubai and Hong Kong ;
* Euromedica: the UK's leading life sciences and healthcare executive search
company with operations in the UK, Benelux, France, Switzerland, Scandinavia and
India;
* Oxygen Executive Search: providing leadership talent through offices in the UK
and US to international clients in the retail financial services, industrial,
consumer, professional services and real estate sectors.
* The Group's report and accounts for the year ended 31 March 2009 are expected to
be posted to shareholders on or around 24 August 2009 and will also be available
from the Company's head office at 33 Cornhill, London EC3V 3ND and will be
available to download from its website at: www.hexagongroup.com
CHAIRMAN'S STATEMENT
Introduction
On behalf of the board of Hexagon Human Capital Plc I am pleased to report
another year of progress for the Group in volatile market conditions.
Results
We have successfully grown both our senior interim management and executive
search divisions in the year and are pleased to be able to report overall growth
of NFI by 15% to GBP22.5m and growth in EBITA of 4% to GBP5.9m. The second half
of the year proved to be more challenging and management has focused on reducing
costs within the business and maximising cross selling opportunities.
Acquisition activity has been purposely limited to infill businesses that
enhance the Group's international capabilities.
Dividend
The board recommends no dividend is paid at this time. The position will be
reviewed again based on results for the year ending 31 March 2010.
Unsolicited bid
In February 2009 the Group received an unsolicited approach from a third party
which in the board's opinion not only undervalued the Company but was also
conditional on raising equity and bank leverage. The board accordingly rejected
this proposal. Whilst this approach and continued interest from other parties in
various of parts of the Group underscores the valuable nature of Hexagon's core
assets the board does not believe that it is in shareholders interests to look
to sell businesses at current valuations. Nor is the Company under any pressure
to do so.
Bank support
In April 2009 the company secured a revised debt facility from Barclays Bank
Plc, more detail is included in the Chief Executive's Review. We have agreed
with our bankers an increased availability under our current facilities; this is
ahead of the conclusion of discussions by end July 2009 on extended facilities.
The fact that the bank continues to work alongside us in these difficult times
is testament to the underlying quality of the business.
Current Trading and Outlook
The current financial year has started slowly which has led the board to
reassess its expectations of future trading levels, accordingly a further
restructuring of our cost base has taken place designed to ensure that the Group
continues to weather the impact of the global recession in what is likely to be
a challenging year.
Robert Walker
Chairman
25 June 2009
CHIEF EXECUTIVE'S REVIEW
Introduction
Hexagon has performed solidly during the year in increasingly difficult market
conditions. Following a strong first half where we achieved good growth in NFI
and EBIT, the second half performance was impacted by a significantly harder
trading climate. The board believes that our full year result of EBITA of
GBP5.9m and NFI to EBITA conversion of 26% (2008: 29%) compares favourably with
our peer group companies and is testament to the Group's prudent management.
We have remained focused on our core strategy of building a leading senior
interim management business supported by a portfolio of specialist executive
search businesses. During the year we traded with over 300 clients including 25
of the FTSE 100. Consistent with our stated strategy of developing incremental
business by managing our two divisions to work more cooperatively an increasing
number of our clients are now shared between the divisions.
The board started to see the effects of more difficult trading conditions in
December 2008 and as a consequence decisive action, as detailed later in this
report, has been taken to reduce the Company's cost base and restructure its
debt service and deferred consideration obligations.
Business Review
* Senior Interim Management
Hexagon is the UK's leading provider of senior interim managers through its two
brands BIE and Archer Mathieson. Although growth in the period proved
challenging our senior interim business proved relatively resilient to current
market pressures with NFI of GBP8.5m (2008: GBP7.8m). NFI production per
consultant remained strong at GBP500,000 (2008: GBP520,000) and we converted NFI
to operating profit at 46% (2008: 50%).
During the year the founders of BIE retired from the business, accordingly this
strong performance was delivered by the next generation of management, which
augers well for future periods.
The year saw changes to the skills required by our clients with a clear focus on
more financially orientated interims capable of managing businesses in
distressed situations. Although overall demand for interim managers has declined
our margins have been increasing since January 2009, reflecting a greater
requirement for more senior interim managers in the challenging economic
environment.
* Executive Search
Our executive search businesses enjoyed an outstanding first half to the year,
which set the platform to grow NFI by 19% for the full year. Organic growth was
supported by the acquisitions of Correlate Search (formerly Akamai) and The
Winchester Group. Our senior search brand Oxygen continued to penetrate its FTSE
100 and 250 client base and through the acquisition of the Winchester Group in
Atlanta (see below) has been able to support its key clients in their two most
important markets.
Although all areas of the market have seen falling demand for executives our
strategy of having a broad portfolio of specialist brands has proved valuable.
In particular our market leading pharmaceutical and healthcare business
Euromedica has seen consistent demand from its clients and it is important to
note that more than 80% of its business has been transacted with organisations
based in Continental Europe. It is disappointing to report that during the year
members of the founding management team of Roberts & Corr unexpectedly left the
business. This inevitably impacted the performance of this business and was the
key driver for the merger of Roberts & Corr with Correlate Search mentioned
below.
Overall NFI production fell from GBP370,000 per consultant to just over
GBP300,000 in the year and we converted NFI to operating profit at 14% (2008:
15%).
* Acquisitions
During the year acquisition activity was purposely limited with the Group
acquiring the Winchester Group in Atlanta USA and Correlate Search in the UK and
the Middle East.
The acquisition of the Winchester Group, which has been re-branded Oxygen, was
part of Oxygen's strategic development and enables them to remain as a key
supplier to a number of large FTSE clients who demand coverage in the USA from
their executive search providers.
We reported in our interim results that we had worked on the acquisition of a
major European interim management provider but were forced to abort negotiations
in September 2008 after a strengthening in the Euro, tightening of the debt
markets and reduction in our share price. This required us to write off advisors
fees of GBP0.5m.
During the year the board's focus has been on effective management of its
existing businesses and whilst introductions to interesting acquisition
opportunities have continued we do not believe the current climate is
appropriate for the group to utilise cash resources to make further
acquisitions. This will remain under review.
Restructuring Programme
The impact of the global economic slow down began to impact the Group materially
in the final quarter of the financial year and the board has accordingly
reassessed their expectations of likely trading levels for the current financial
year. The board has taken the following actions which it believes will allow it
to successfully weather a continuing weak trading environment:
* Restructuring of Bank debt
Towards the end of the third quarter of financial year the board produced
proposals to enhance the Company's cash position. This pro-active action would
assist the Group in its ability to trade through a prolonged downturn whilst
meeting its deferred consideration and bank indebtedness repayment obligations.
However, the board became aware that certain shareholder groups, which by virtue
of the size of their shareholding would be able to block a non pre-emptive issue
of fresh equity, were unwilling to support an equity fundraising and did not
want to be diluted by other investors. Accordingly, the board was forced to look
at alternative options.
Following a shareholder vote at an extraordinary general meeting on 5 March 2009
the Company was successful in securing revised banking facilities. Under these
new banking facilities maturing in December 2011 Barclays Bank has the option of
converting GBP2.3m of senior debt into equity at a price of 48p. Since this time
given current market conditions and pressure on working capital the Company has
agreed with its bankers an increased availability under its current facilities.
This is ahead of the conclusion of discussions by 31 July 2009 on extended
facilities.
* Costs savings
Through recent initiatives taken, both pre and post the end of the financial
year, the board has made cost savings of over GBP1.7m on an annualised basis.
Key features of the cost reduction programme include:
*
* A headcount reduction across the Group of approximately 15% of the workforce,
saving GBP700,000.
* Salary reductions agreed with senior executives in excess of GBP800,000
* An office consolidation exercise to reduce rent and property service costs by
GBP150,000
* The cessation of all discretionary expenditure
* A reorganisation of senior management responsibilities to ensure that with the
exception of our central finance function all senior executives are in business
producing roles
The beneficial effects of this programme have been progressive but from July
2009 onwards we expect the full impact of these savings to be seen in our
results.
* Deferred Consideration Payments
In June 2008, the board entered into negotiations with the vendors of BIE to
restructure future deferred consideration obligations. These negotiations were
successfully concluded resulting in a reduction of the outstanding deferred
consideration liability by GBP1.6m. Importantly this will result in the Company
avoiding a cash outflow of GBP0.8m in the current financial year. In addition,
as a consequence of the founders of Roberts & Corr leaving the business deferred
consideration obligations were reduced by a further GBP1.8m avoiding a cash
outflow of GBP0.9m in the current financial year (based on the deferred
consideration accrued at 31 March 2008).
* Management Team and Company Structure
We have continued to follow our founding principles of shared ownership and
empowered management and building our Group around a portfolio of specialist
brands. During the year we have merged two of our executive search businesses -
Roberts & Corr and Correlate Search - under the Correlate brand.
We have taken the opportunity to enhance our leadership team and one of our most
senior operational managers Ian Lloyd has taken on broader general management
responsibilities across the Group.
In addition to the appointment of Ian we have taken the decision during the
first quarter of the current year to make changes to the management of some of
our businesses to ensure that all senior executives have direct responsibility
for developing revenues and are accountable for business performance.
Financial management of our operating companies remains with our central
financial management team under the direction of the CFO. During the year we
have further developed the quality of operational reporting and we have good
visibility of all key performance metrics.
Current Trading and Prospects
The final quarter of the financial year produced volatile trading however
monthly performance has been steadily improving in the first quarter of the
current year which gives us confidence that demand is stabilising.
We expect trading conditions to remain difficult for the rest of the current
year and as a result the board has adjusted its expectations regarding trading
levels for the remainder of the current financial year. Our predictions are that
we will see some recovery in the second half of the current year but demand will
remain below that of the first half of last year. Consequently a goodwill
impairment review has led to us writing down the carrying value of goodwill by
GBP7.1m to reflect more accurately the value of our assets in the current
market.
* Performance Improvement
The Group's current consulting workforce is now amongst the most experienced in
the industry. In the current climate the average NFI run rate is GBP370,000 per
year. When measured against the same run rate 12 months ago this shows we have
approximately GBP3.4m of surplus NFI capacity, which illustrates the short term
potential of the business when the market improves.
Since a low point in November 2008 our interim daily margins will have improved
by 10% by the end of the first quarter of the current financial year.
The final two months of the first quarter of the current year has seen improved
volumes of retained executive search work; the best performance since November
2008.
Our management team are fully focused on increasing sales activity within all
our divisions and through a consistent initiative to explore cross selling
opportunities within our major clients. Our position of supplying leadership
talent, and in particular our leading position in the senior interim management
market, has insulated us from the worst of the economic downturn. We are
confident that the quality of our brands and our people will enable Hexagon to
continue to outperform its peers.
Group Strategy
Despite the current difficult trading conditions we believe that the Group is
well placed to benefit from a recovery in the market. Our consultant
productivity levels remain amongst the highest in the sector and our ability to
convert NFI to EBITA at premium levels will in the board's opinion see us build
market share once our clients become confident about economic recovery.
We remain committed to our prime objective of developing Europe's leading senior
interim management company supported by a portfolio of high quality specialist
Executive Search businesses. We expect to deliver organic growth as well as
value enhancing acquisitions to achieve this once we have a supportive trading
market.
Jonathan Wright
Chief Executive Officer
25 June 2009
FINANCIAL REVIEW
Unaudited results for the year to March 2009
In the year to March 2009 we grew Net Fee Income (NFI) by 15% to GBP22.5m and
Earnings Before Interest, Tax and Amortisation (EBITA) by 4% to GBP5.9m, a
conversion rate of 26%. In the year our executive search business grew NFI by
19% to GBP14.0m and our interim management business grew NFI by 9% to GBP8.5m.
In the year our operating cost base grew by GBP2.9m from GBP13.8m to GBP16.7m,
primarily as a result of acquiring the Correlate team, whose total costs in the
year were GBP2.7m. Central management and administration costs were held at
GBP1.1m as last year.
+--------------------+----------+----------+----------+
| Year to March | 2009 | 2008 | Growth |
+--------------------+----------+----------+----------+
| Net Fee Income | GBPm | GBPm | |
+--------------------+----------+----------+----------+
| Interim Management | 8.5 | 7.8 | 9% |
| | | | |
+--------------------+----------+----------+----------+
| Executive Search | 14.0 | 11.7 | 19% |
+--------------------+----------+----------+----------+
| Total | 22.5 | 19.5 | 15% |
+--------------------+----------+----------+----------+
| | | | |
+--------------------+----------+----------+----------+
| EBITA | | | |
+--------------------+----------+----------+----------+
| Interim Management | 4.0 | 3.9 | 3% |
+--------------------+----------+----------+----------+
| Executive Search | 1.9 | 1.8 | 6% |
+--------------------+----------+----------+----------+
| Total | 5.9 | 5.7 | 4% |
+--------------------+----------+----------+----------+
| | | | |
+--------------------+----------+----------+----------+
The impact of acquisitions in the year was to add the following:
GBPmNFI EBITA
Correlate Search (formerly Akamai) 2.9 0.2
Oxygen Inc (formerly Winchester) 0.3 (0.1)
Total 3.2 0.1
Organic NFI was therefore GBP19.4m with 9% growth in interim management and an
8% decline in executive search. Organic EBITA growth was 2% coming entirely from
interim management.
EBITA of GBP5.9m is before the following non-operating charges:
* Amortisation of intangibles
* Ongoing charge GBP1.1m (2008: GBP1.5m)
* Additional impairment charge GBP7.1m (2008: nil)
* Advisors' costs in respect of an aborted acquisition GBP0.5m (2008: nil)
* Share based payments charge GBP0.1m (2008:
GBP0.1m)
Total non-operating charges
GBP8.8m (2008: GBP1.6m)
These largely non cash costs ultimately reduced the operating result for the
year to a loss of GBP2.9m (2008: profit of GBP4.1m). Without the additional
impairment charge the operating result would have been a profit of GBP4.1m in
line with last year.
Net finance costs rose by GBP0.4m in the year to GBP1.7m and included:
* Net cost of bank interest to the Group of GBP0.8m (2008: GBP0.6m), being the net
interest arising on the net cash/debt in the Group during the year. It should be
noted that in April 2007, we took out an interest rate swap to protect against
the impact of any increases in interest rates
* Other finance charges of GBP0.9m (2008: GBP0.6m)
The loss before tax (after the amortisation and goodwill impairment charges
totalling GBP8.1m) was GBP4.6m (2008: profit before tax GBP2.9m). Ordinarily a
GBP4.6m loss from ordinary activities would result in a tax credit of GBP1.3m
(based on a notional 28% tax rate) but the impact of non-deductible charges
(including amortisation, goodwill impairment and finance charges relating to
deferred consideration) a tax charge of GBP0.9m.
Basic earnings per share were (30.30p) (2008: 9.79p) and was 19.04p (2008:
19.42p) after adjusting for amortisation net of tax, impairment, non operating
costs and finance charges on deferred consideration. Adjusted fully diluted
earnings per share (after tax but before amortisation, impairment, non operating
costs and finance charges on deferred consideration) were 18.26p (2008: 18.6p).
Reported Balance Sheet at March 2009
Intangible Assets
Intangible fixed assets, GBP31.8m (2008: GBP41.3m) represents the cost of
goodwill and intangibles (net of amortisation charges) on acquisitions to date.
Under IFRS the intangibles are being amortised as follows:
Brands indefinite life Order book
12 months
Customer contracts 6 years Computer software
3 years
Intangible assets have reduced by GBP9.5m as follows:
* amortisation charge GBP1.1m ; being the normal write down of intangibles based
on the useful lives defined above, plus
* impairment charges to the goodwill arising on the acquisition on the following
businesses:
* Roberts & Corr Ltd GBP2.6m
* BIE Interim Executive Ltd GBP2.4m
* Archer Mathieson Ltd GBP1.8m
* The Winchester Group GBP0.3m
Total impairment charge GBP7.1m, plus
* the release of GBP3.4m deferred consideration provisions originally due over the
next two years but no longer payable after the departure of the vendors of BIE
and Roberts & Corr. The liability to deferred consideration has reduced to
GBP4.2m discounted to take into account the timing of payments (2008: GBP13.4m)
with the potential payments still subject to EBIT performance, less
* Intangible assets arising on the acquisitions of Correlate Search and the
Winchester Group, GBP2.1m
Other Assets and Liabilities
Current assets reduced to GBP6.1m (2008: GBP12.6m) primarily due to the use of
GBP4.7m cash to fund deferred consideration obligations. In addition, the
consolidated outstanding gross receivables from clients totalled GBP4.0m (2008:
GBP5.6m) representing 41 days sales outstanding (2008: 48 days). This is a major
improvement year on year after a significant focus on cash collections.
Total liabilities reduced to GBP25.0m (2008: GBP38.0m) primarily after the
reduction of deferred consideration obligations by GBP9.2m.
Net Debt and Cash Flow
At 31 March 2009, with Barclays Bank plc we had an GBP0.7m overdraft (2008: cash
GBP4.2m) and term loans of GBP8.7m (2008: GBP10m) therefore net debt of GBP9.4m
(2008: GBP5.8m). The increased debt is largely due to the payments of deferred
consideration on Archer Mathieson, BIE and Roberts & Corr, totalling GBP4.7m.
Cash absorbed in the year was GBP5.0m (2008: absorbed GBP6.6m). Operating cash
generated was GBP3.1m (2008: GBP3.9m) with non-operating cash absorbed of
GBP8.1m (2008: absorbed GBP10.5m),
GBP0.7m of funds generated were spent on acquisitions (net of cash acquired)
(2008: GBP5.4m) and GBP0.2m (2008: GBP0.1m) on capital expenditure. Tax payments
were GBP0.2m (2008: payment GBP0.1m).
In April 2009, given the uncertain trading climate and the desire to conserve
cash in the forthcoming year, we agreed the switch up to GBP2.3m of our term
loan into a convertible loan (according to the terms published on 17 February
2009) enabling the company to benefit from a GBP2.3m reduction in loan
repayments in the year to March 2010 and giving the Bank the option to convert
GBP2.3m debt into equity in the period to December 2011.
Additionally given current market conditions and pressure on cash flow we are in
discussions with Barclays regarding the extension of our short term working
capital facilities to ensure we have adequate headroom to successfully trade
through this challenging period.
Carl Thompson
Chief Financial Officer
25 June 2009
+--------------------------------+------------+------------+-----------+-----------+
| Unaudited Consolidated Income Statement | | |
+----------------------------------------------------------+-----------+-----------+
| for the year ended 31 March 2009 | | | |
+---------------------------------------------+------------+-----------+-----------+
| | | | | |
+--------------------------------+------------+------------+-----------+-----------+
| | | Year ended | Year |
| | | | ended |
+--------------------------------+------------+------------------------+-----------+
| | | 31 March | | 31 March |
| | | 2009 | | 2008 |
+--------------------------------+ +------------+-----------+-----------+
| | | GBP'000 | | GBP'000 |
+--------------------------------+------------+------------+------------+-----------+
| | | | | |
+--------------------------------+------------+------------+-----------+-----------+
| Revenue | | 35,073 | | 28,664 |
+--------------------------------+------------+------------+-----------+-----------+
| Cost of sales | | (12,540) | | (9,176) |
+--------------------------------+------------+------------+-----------+-----------+
| Net Fee Income | | 22,533 | | 19,488 |
+--------------------------------+------------+------------+-----------+-----------+
| | | | | |
+--------------------------------+------------+------------+-----------+-----------+
| Administrative expenses | | (25,469) | | (15,361) |
+--------------------------------+------------+------------+-----------+-----------+
| | | | | |
+--------------------------------+------------+------------+-----------+-----------+
| Operating (loss)/profit | | (2,936) | | 4,127 |
+--------------------------------+------------+------------+-----------+-----------+
| | | | | |
+--------------------------------+------------+------------+-----------+-----------+
| Analysed as: | | | | |
+--------------------------------+------------+------------+-----------+-----------+
| Earnings before interest, tax, | | 5,860 | | 5,745 |
| impairment and amortisation | | | | |
+--------------------------------+------------+------------+-----------+-----------+
| Impairment | | (7,050) | | - |
+--------------------------------+------------+------------+-----------+-----------+
| Amortisation | | (1,089) | | (1,545) |
+--------------------------------+------------+------------+-----------+-----------+
| Abortive acquisition costs | | (544) | | - |
+--------------------------------+------------+------------+-----------+-----------+
| Equity-settled share-based | | (113) | | (73) |
| payments | | | | |
+--------------------------------+------------+------------+-----------+-----------+
| | | (2,936) | | 4,127 |
+--------------------------------+------------+------------+-----------+-----------+
| | | | | |
+--------------------------------+------------+------------+-----------+-----------+
| Finance costs | | (1,707) | | (1,462) |
+--------------------------------+------------+------------+-----------+-----------+
| Finance income | | 8 | | 207 |
+--------------------------------+------------+------------+-----------+-----------+
| (Loss)/profit before tax | | (4,635) | | 2,872 |
+--------------------------------+------------+------------+-----------+-----------+
| | | | | |
+--------------------------------+------------+------------+-----------+-----------+
| Income tax expense | | (932) | | (998) |
+--------------------------------+------------+------------+-----------+-----------+
| (Loss)/(profit) after taxation | | (5,567) | | 1,874 |
+--------------------------------+------------+------------+-----------+-----------+
| | | | | |
+--------------------------------+------------+------------+-----------+-----------+
| Attributable to: | | | | |
+--------------------------------+------------+------------+-----------+-----------+
| Equity holders of the parent | | (5,559) | | 1,794 |
+--------------------------------+------------+------------+-----------+-----------+
| Minority interests | | (8) | | 80 |
+--------------------------------+------------+------------+-----------+-----------+
| | | | | |
+--------------------------------+------------+------------+-----------+-----------+
| | | (5,567) | | 1,874 |
+--------------------------------+------------+------------+-----------+-----------+
| | | | | |
+--------------------------------+------------+------------+-----------+-----------+
| Earnings per share | | | | |
+--------------------------------+------------+------------+-----------+-----------+
| | | | | |
+--------------------------------+------------+------------+-----------+-----------+
| Basic (pence) | | (30.30) | | 9.79 |
+--------------------------------+------------+------------+-----------+-----------+
| Diluted (pence) | | (30.30) | | 9.36 |
+--------------------------------+------------+------------+-----------+-----------+
| Adjusted earnings per share* | | 19.04 | | 19.42 |
+--------------------------------+------------+------------+-----------+-----------+
| Adjusted diluted earnings per | | 18.26 | | 18.56 |
| share* | | | | |
+--------------------------------+------------+------------+-----------+-----------+
| | | | | |
+--------------------------------+------------+------------+-----------+-----------+
| *Adjusted earnings per share are before the effect of amortisation of other |
| intangible assets (net of deferred tax), impairment and finance charges on |
| deferred consideration. |
+----------------------------------------------------------------------------------+
| | | | | |
+--------------------------------+------------+------------+-----------+-----------+
| All amounts relate to continuing activities | | | |
+--------------------------------+------------+------------+-----------+-----------+
+---------------------------------+---------------------------------+---------------------------------+-------------+----------+-----------+----------+----------+-----------+--------------+-----------+----------------------------------------------------------------------------------------+---------+
| Consolidated Statement of Changes in Equity | | | | | | | | | |
+-----------------------------------------------------------------------------------------------------+-------------+----------+-----------+----------+----------+-----------+--------------+----------------------------------------------------------------------------------------------------+---------+
| as at 31 March 2009 | | | | | | | | | | |
+-------------------------------------------------------------------+---------------------------------+-------------+----------+-----------+----------+----------+-----------+--------------+-----------+--------------------------------------------------------------------------------------------------+
| | | Called up | Share | Merger | Share | Equity | Foreign | Retained | Attributable | Minority | Total equity |
| | | share | premium | reserve | incentive | reserve | exchange | earnings | to equity | interests | |
| | | capital | | | plan | | reserve | | holders of | | |
| | | | | | | | | | the parent | | |
+ +---------------------------------+---------------------------------+-------------+----------+-----------+----------+----------+-----------+--------------+-----------+--------------------------------------------------------------------------------------------------+
| | | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------------------------+---------------------------------+---------------------------------+-------------+----------+-----------+----------+----------+-----------+--------------+-----------+--------------------------------------------------------------------------------------------------+
| | | | | | | | | | | | |
+---------------------------------+---------------------------------+---------------------------------+-------------+----------+-----------+----------+----------+-----------+--------------+-----------+--------------------------------------------------------------------------------------------------+
| Balance at 1 April 2007 | 246 | 9,392 | 5,171 | - | 147 | (1) | (357) | 14,598 | 48 | 14,646 |
+-------------------------------------------------------------------+---------------------------------+-------------+----------+-----------+----------+----------+-----------+--------------+-----------+--------------------------------------------------------------------------------------------------+
| Exchange differences on translation of foreign operations | - | - | - | - | - | 6 | - | 6 | - | 6 |
+-------------------------------------------------------------------+---------------------------------+-------------+----------+-----------+----------+----------+-----------+--------------+-----------+--------------------------------------------------------------------------------------------------+
| Income tax on items taken directly to equity | - | - | - | - | (45) | - | - | (45) | - | (45) |
+-------------------------------------------------------------------+---------------------------------+-------------+----------+-----------+----------+----------+-----------+--------------+-----------+--------------------------------------------------------------------------------------------------+
| Net income recognised directly in equity | - | - | - | - | (45) | 6 | - | (39) | - | (39) |
+-------------------------------------------------------------------+---------------------------------+-------------+----------+-----------+----------+----------+-----------+--------------+-----------+--------------------------------------------------------------------------------------------------+
| Profit for the year ended 31 March 2008 | - | - | - | - | - | - | 1,794 | 1,794 | 80 | 1,874 |
+-------------------------------------------------------------------+---------------------------------+-------------+----------+-----------+----------+----------+-----------+--------------+-----------+--------------------------------------------------------------------------------------------------+
| Total recognised income/(expense) for the period | - | - | - | - | (45) | 6 | 1,794 | 1,755 | 80 | 1,835 |
+-------------------------------------------------------------------+---------------------------------+-------------+----------+-----------+----------+----------+-----------+--------------+-----------+--------------------------------------------------------------------------------------------------+
| | | | | | | | | | | | |
+---------------------------------+---------------------------------+---------------------------------+-------------+----------+-----------+----------+----------+-----------+--------------+-----------+--------------------------------------------------------------------------------------------------+
| Shares issued in the period | 2 | 298 | - | - | - | - | - | 300 | - | 300 |
+-------------------------------------------------------------------+---------------------------------+-------------+----------+-----------+----------+----------+-----------+--------------+-----------+--------------------------------------------------------------------------------------------------+
| Equity-settled share-based payments credit | - | - | - | - | - | - | 73 | 73 | - | 73 |
+-------------------------------------------------------------------+---------------------------------+-------------+----------+-----------+----------+----------+-----------+--------------+-----------+--------------------------------------------------------------------------------------------------+
| Balance at 31 March 2008 | 248 | 9,690 | 5,171 | - | 102 | 5 | 1,510 | 16,726 | 128 | 16,854 |
+-------------------------------------------------------------------+---------------------------------+-------------+----------+-----------+----------+----------+-----------+--------------+-----------+--------------------------------------------------------------------------------------------------+
| | | | | | | | | | | | |
+---------------------------------+---------------------------------+---------------------------------+-------------+----------+-----------+----------+----------+-----------+--------------+-----------+--------------------------------------------------------------------------------------------------+
| | | | | | | | | | | | |
+---------------------------------+---------------------------------+---------------------------------+-------------+----------+-----------+----------+----------+-----------+--------------+-----------+--------------------------------------------------------------------------------------------------+
| Exchange differences on translation of foreign operations | - | - | - | - | - | 53 | - | 53 | - | 53 |
+-------------------------------------------------------------------+---------------------------------+-------------+----------+-----------+----------+----------+-----------+--------------+-----------+--------------------------------------------------------------------------------------------------+
| Income tax on items taken directly to equity | - | - | - | - | (68) | - | - | (68) | - | (68) |
+-------------------------------------------------------------------+---------------------------------+-------------+----------+-----------+----------+----------+-----------+--------------+-----------+--------------------------------------------------------------------------------------------------+
| Net income recognised directly in equity | - | - | - | - | (68) | 53 | - | (15) | - | (15) |
+-------------------------------------------------------------------+---------------------------------+-------------+----------+-----------+----------+----------+-----------+--------------+-----------+--------------------------------------------------------------------------------------------------+
| Loss for the year ended 31 March 2009 | - | - | - | - | - | - | (5,559) | (5,559) | (8) | (5,567) |
+-------------------------------------------------------------------+---------------------------------+-------------+----------+-----------+----------+----------+-----------+--------------+-----------+--------------------------------------------------------------------------------------------------+
| Total recognised (expense)/income for the period | - | - | - | - | (68) | 53 | (5,559) | (5,574) | (8) | (5,582) |
+-------------------------------------------------------------------+---------------------------------+-------------+----------+-----------+----------+----------+-----------+--------------+-----------+--------------------------------------------------------------------------------------------------+
| | | | | | | | | | | | |
+---------------------------------+---------------------------------+---------------------------------+-------------+----------+-----------+----------+----------+-----------+--------------+-----------+--------------------------------------------------------------------------------------------------+
| Shares issued in the period | 31 | 2,039 | - | - | - | - | - | 2,070 | - | 2,070 |
+-------------------------------------------------------------------+---------------------------------+-------------+----------+-----------+----------+----------+-----------+--------------+-----------+--------------------------------------------------------------------------------------------------+
| Purchase of minority interest | - | - | - | - | - | - | - | - | (128) | (128) |
+-------------------------------------------------------------------+---------------------------------+-------------+----------+-----------+----------+----------+-----------+--------------+-----------+--------------------------------------------------------------------------------------------------+
| Share incentive plan shares | - | - | - | (28) | - | - | - | (28) | - | (28) |
+-------------------------------------------------------------------+---------------------------------+-------------+----------+-----------+----------+----------+-----------+--------------+-----------+--------------------------------------------------------------------------------------------------+
| Equity-settled share-based payments credit | - | - | - | - | - | - | 113 | 113 | - | 113 |
+-------------------------------------------------------------------+---------------------------------+-------------+----------+-----------+----------+----------+-----------+--------------+-----------+--------------------------------------------------------------------------------------------------+
| Balance at 31 March 2009 | 279 | 11,729 | 5,171 | (28) | 34 | 58 | (3,936) | 13,307 | (8) | 13,299 |
+---------------------------------+---------------------------------+---------------------------------+-------------+----------+-----------+----------+----------+-----------+--------------+-----------+----------------------------------------------------------------------------------------+---------+
+----------------------------------------+-----------+--------------+-----------+
| Unaudited Consolidated Balance Sheet | | | |
+----------------------------------------+-----------+--------------+-----------+
| as at 31 March 2009 | | | |
+----------------------------------------+-----------+--------------+-----------+
| | | 31 March | 31 March |
+ + +--------------+-----------+
| | | 2009 | 2008 |
+ + +----------------------------------------+-----------+
| | | GBP'000 | GBP'000 |
+----------------------------------------+-----------+----------------------------------------+-----------+
| ASSETS | | | |
+----------------------------------------+-----------+--------------+-----------+
| Non-current assets | | | |
+----------------------------------------+-----------+--------------+-----------+
| Goodwill | | 24,058 | 32,206 |
+----------------------------------------+-----------+--------------+-----------+
| Other intangible assets | | 7,708 | 9,072 |
+----------------------------------------+-----------+--------------+-----------+
| Property, plant and equipment | | 467 | 380 |
+----------------------------------------+-----------+--------------+-----------+
| Held-to-maturity investments | | 3 | 3 |
+----------------------------------------+-----------+--------------+-----------+
| Deferred tax asset | | 34 | 658 |
+----------------------------------------+-----------+--------------+-----------+
| | | 32,270 | 42,319 |
+----------------------------------------+-----------+--------------+-----------+
| | | | |
+----------------------------------------+-----------+--------------+-----------+
| Current assets | | | |
+----------------------------------------+-----------+--------------+-----------+
| Trade receivables | | 3,998 | 5,639 |
+----------------------------------------+-----------+--------------+-----------+
| Prepayments and accrued income | | 2,116 | 2,763 |
+----------------------------------------+-----------+--------------+-----------+
| Cash and cash equivalents | | - | 4,223 |
+----------------------------------------+-----------+--------------+-----------+
| | | 6,114 | 12,625 |
+----------------------------------------+-----------+--------------+-----------+
| | | | |
+----------------------------------------+-----------+--------------+-----------+
| Total assets | | 38,384 | 54,944 |
+----------------------------------------+-----------+--------------+-----------+
| | | | |
+----------------------------------------+-----------+--------------+-----------+
| LIABILITIES | | | |
+----------------------------------------+-----------+--------------+-----------+
| Non-current liabilities | | | |
+----------------------------------------+-----------+--------------+-----------+
| Borrowings | | (6,051) | (7,811) |
+----------------------------------------+-----------+--------------+-----------+
| Deferred consideration on acquisitions | | (2,818) | (8,372) |
+----------------------------------------+-----------+--------------+-----------+
| Other payables | | - | (1,246) |
+----------------------------------------+-----------+--------------+-----------+
| Derivative financial instruments | | (141) | (62) |
+----------------------------------------+-----------+--------------+-----------+
| Deferred tax liabilities | | (2,153) | (2,535) |
+----------------------------------------+-----------+--------------+-----------+
| | | (11,163) | (20,026) |
+----------------------------------------+-----------+--------------+-----------+
| Current liabilities | | | |
+----------------------------------------+-----------+--------------+-----------+
| Bank overdraft | | (760) | - |
+----------------------------------------+-----------+--------------+-----------+
| Trade and other payables | | (6,438) | (8,857) |
+----------------------------------------+-----------+--------------+-----------+
| Deferred consideration on acquisitions | | (1,405) | (5,030) |
+----------------------------------------+-----------+--------------+-----------+
| Borrowings | | (2,644) | (2,189) |
+----------------------------------------+-----------+--------------+-----------+
| Current tax payable | | (2,675) | (1,988) |
+----------------------------------------+-----------+--------------+-----------+
| | | (13,922) | (18,064) |
+----------------------------------------+-----------+--------------+-----------+
| | | | |
+----------------------------------------+-----------+--------------+-----------+
| Total liabilities | | (25,085) | (38,090) |
+----------------------------------------+-----------+--------------+-----------+
| | | | |
+----------------------------------------+-----------+--------------+-----------+
| Net Assets | | 13,299 | 16,854 |
+----------------------------------------+-----------+--------------+-----------+
| | | | |
+----------------------------------------+-----------+--------------+-----------+
| EQUITY | | | |
+----------------------------------------+-----------+--------------+-----------+
| Issued capital | | 279 | 248 |
+----------------------------------------+-----------+--------------+-----------+
| Share premium | | 11,729 | 9,690 |
+----------------------------------------+-----------+--------------+-----------+
| Merger reserve | | 5,171 | 5,171 |
+----------------------------------------+-----------+--------------+-----------+
| Share incentive plan reserve | | (28) | - |
+----------------------------------------+-----------+--------------+-----------+
| Equity reserve | | 34 | 102 |
+----------------------------------------+-----------+--------------+-----------+
| Foreign exchange reserve | | 58 | 5 |
+----------------------------------------+-----------+--------------+-----------+
| Retained earnings | | (3,936) | 1,510 |
+----------------------------------------+-----------+--------------+-----------+
| Capital and reserves attributable to | | 13,307 | 16,726 |
| equity holders of the parent | | | |
+----------------------------------------+-----------+--------------+-----------+
| Minority interests | | (8) | 128 |
+----------------------------------------+-----------+--------------+-----------+
| | | | |
+----------------------------------------+-----------+--------------+-----------+
| Total equity | | 13,299 | 16,854 |
+----------------------------------------+-----------+--------------+-----------+
+----------------------------------------------+-----------+-----------+-----------+
| Unaudited Consolidated Cash Flow statement | | | |
+----------------------------------------------+-----------+-----------+-----------+
| for the year ended 31 March 2009 | | | |
+----------------------------------------------+-----------+-----------+-----------+
| | | Year | Year |
| | | ended | ended |
+----------------------------------------------+-----------+-----------+-----------+
| | | 31 March | 31 March |
+----------------------------------------------+ +-----------+-----------+
| | | 2009 | 2008 |
+----------------------------------------------+ +-----------+-----------+
| | | GBP'000 | GBP'000 |
+----------------------------------------------+-----------+-----------+-----------+
| Cash flows from operating activities | | | |
+----------------------------------------------+-----------+-----------+-----------+
| (Loss)/profit before taxation | | (4,635) | 2,872 |
+----------------------------------------------+-----------+-----------+-----------+
| Adjustments for: | | | |
+----------------------------------------------+-----------+-----------+-----------+
| Depreciation and amortisation | | 1,260 | 1,661 |
+----------------------------------------------+-----------+-----------+-----------+
| Impairment | | 7,050 | - |
+----------------------------------------------+-----------+-----------+-----------+
| Equity-settled share-based payments | | 113 | 73 |
+----------------------------------------------+-----------+-----------+-----------+
| Finance income | | (8) | (207) |
+----------------------------------------------+-----------+-----------+-----------+
| Finance expense | | 1,707 | 1,462 |
+----------------------------------------------+-----------+-----------+-----------+
| Operating profit before working capital and | | 5,487 | 5,861 |
| provision changes | | | |
+----------------------------------------------+-----------+-----------+-----------+
| | | | |
+----------------------------------------------+-----------+-----------+-----------+
| Decrease/(increase) in trade and other | | 3,123 | (1,254) |
| receivables | | | |
+----------------------------------------------+-----------+-----------+-----------+
| Decrease in trade and other payables | | (5,283) | (580) |
+----------------------------------------------+-----------+-----------+-----------+
| Cash generated from operating activities | | 3,327 | 4,027 |
+----------------------------------------------+-----------+-----------+-----------+
| Income tax paid | | (210) | (132) |
+----------------------------------------------+-----------+-----------+-----------+
| Net cash flows from operating activities | | 3,117 | 3,895 |
+----------------------------------------------+-----------+-----------+-----------+
| | | | |
+----------------------------------------------+-----------+-----------+-----------+
| Cash flows from investing activities | | | |
+----------------------------------------------+-----------+-----------+-----------+
| Purchase of property, plant and equipment | | (224) | (141) |
+----------------------------------------------+-----------+-----------+-----------+
| Purchase of intangible assets | | - | (14) |
+----------------------------------------------+-----------+-----------+-----------+
| Purchase of subsidiary undertakings (net of | | (715) | (5,362) |
| cash) | | | |
+----------------------------------------------+-----------+-----------+-----------+
| Purchase of minority interest | | (128) | - |
+----------------------------------------------+-----------+-----------+-----------+
| Payment of deferred consideration | | (4,687) | (3,755) |
+----------------------------------------------+-----------+-----------+-----------+
| Interest received | | 8 | 207 |
+----------------------------------------------+-----------+-----------+-----------+
| Net cash flows used in investing activities | | (5,746) | (9,065) |
+----------------------------------------------+-----------+-----------+-----------+
| | | | |
+----------------------------------------------+-----------+-----------+-----------+
| Cash flows from financing activities | | | |
+----------------------------------------------+-----------+-----------+-----------+
| Interest paid | | (1,049) | (742) |
+----------------------------------------------+-----------+-----------+-----------+
| Repayment of borrowings | | (2,281) | (3,753) |
+----------------------------------------------+-----------+-----------+-----------+
| Proceeds from borrowings | | 976 | 3,089 |
+----------------------------------------------+-----------+-----------+-----------+
| Net cash flows (used in)/from financing | | (2,354) | (1,406) |
| activities | | | |
+----------------------------------------------+-----------+-----------+-----------+
| | | | |
+----------------------------------------------+-----------+-----------+-----------+
| Net increase in cash and cash equivalents | | (4,983) | (6,576) |
+----------------------------------------------+-----------+-----------+-----------+
| Net foreign exchange difference | | - | 13 |
+----------------------------------------------+-----------+-----------+-----------+
| Cash and cash equivalents at the beginning | | 4,223 | 10,786 |
| of the period | | | |
+----------------------------------------------+-----------+-----------+-----------+
| Cash and cash equivalents at the end of the | | (760) | 4,223 |
| period | | | |
+----------------------------------------------+-----------+-----------+-----------+
Notes to the Financial Statements
for the year ended 31 March 2009
1 Significant accounting policies
Basis of preparation
Hexagon Human Capital plc is a public limited company incorporated and domiciled
in the United Kingdom and listed on the AIM market.
The preliminary announcement does not constitute the Group's statutory financial
statements within the meaning of S.434 of the Companies Act 2006. The financial
information included in this announcement has been extracted from the un-audited
financial statements for the year ended 31st March 2009 and the published
financial statements for the year ended 31st March 2008.
The financial information contained within this preliminary report have been
prepared using accounting policies consistent with those of the financial
statements for the year ended 31 March 2008, which are based on the recognition
and measurement principles of IFRS as adopted by the European Union.
The consolidated financial statements have been prepared on a historical cost
basis except for derivative financial instruments that have been measured at
fair value. The consolidated financial statements are presented in pounds
sterling and all values are rounded to the nearest thousand except when
otherwise indicated.
2 Segmental analysis
+--+-------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| | | | Interim Management | | Executive Search | | Group |
+--+-------------------+--------+-------------------------------+---+-------------------------------+--+-------------------------------+
| | | | Year ended | Year ended | | Year ended | Year ended | | Year ended | Year ended |
+--+-------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| | | | 31 March | 31 March | | 31 March | 31 March | | 31 March | 31 March |
+--+-------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| | | | 2009 | 2008 | | 2009 | 2008 | | 2009 | 2008 |
+--+-------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| | | | GBP'000 | GBP'000 | | GBP'000 | GBP'000 | | GBP'000 | GBP'000 |
+--+-------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| Revenue | | | | | | | | | |
+----------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| Ongoing operations | | 21,078 | 16,945 | | 10,822 | 11,719 | | 31,900 | 28,664 |
+----------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| Acquisitions | | - | - | | 3,173 | - | | 3,173 | - |
+----------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| Total revenue | | 21,078 | 16,945 | | 13,995 | 11,719 | | 35,073 | 28,664 |
+----------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| | | | | | | | | | | |
+--+-------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| Net fee income | | 8,538 | 7,769 | | 13,995 | 11,719 | | 22,533 | 19,488 |
+----------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| | | | | | | | | | | |
+--+-------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| Result | | | | | | | | | |
+----------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| Segment result | | 3,950 | 3,886 | | 1,797 | 1,786 | | 5,747 | 5,672 |
+----------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| Impairment of intangible | (4,200) | - | | (2,850) | - | | (7,050) | - |
| assets | | | | | | | | |
+-------------------------------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| Amortisation of intangible | (614) | (1,150) | | (475) | (395) | | (1,089) | (1,545) |
| assets | | | | | | | | |
+-------------------------------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| Unallocated expenses | | | | | | | | (544) | - |
+----------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| Earnings before interest and | (864) | 2,736 | | (1,528) | 1,391 | | (2,936) | 4,127 |
| tax | | | | | | | | |
+-------------------------------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| | | | | | | | | | | |
+--+-------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| Net finance costs | | | | | | | | (1,699) | (1,255) |
+----------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| (Loss)/profit before | | | | | | | | (4,635) | 2,872 |
| tax | | | | | | | | | |
+----------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| | | | | | | | | | | |
+--+-------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| Assets and | | | | | | | | | |
| liabilities | | | | | | | | | |
+----------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| Segment assets | | 25,872 | 33,045 | | 10,143 | 14,255 | | 36,015 | 47,300 |
+----------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| Unallocated assets | | | | | | | | 2,369 | 7,644 |
+----------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| Total assets | | 25,872 | 33,045 | | 10,143 | 14,255 | | 38,384 | 54,944 |
+----------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| | | | | | | | | | | |
+--+-------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| Segment liabilities | | (2,516) | (3,576) | | (3,606) | (3,496) | | (6,122) | (7,072) |
+----------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| Unallocated | | | | | | | | (18,963) | (31,018) |
| liabilities | | | | | | | | | |
+----------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| Total liabilities | | (2,516) | (3,576) | | (3,606) | (3,496) | | (25,085) | (38,090) |
+----------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| | | | | | | | | | | |
+--+-------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| Segment net assets | | 23,356 | 29,469 | | 6,537 | 10,759 | | 29,893 | 40,228 |
+----------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| Unallocated net | | | | | | | | (16,594) | (23,374) |
| assets | | | | | | | | | |
+----------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
| Total net assets | | 23,356 | 29,469 | | 6,537 | 10,759 | | 13,299 | 16,854 |
+--+-------------------+--------+------------+------------------+---+------------+------------------+--+--------------+----------------+
3 Business Combination
+-------------------------+---+-------------------+----------------+--------------+
| Correlate Search |
| In April 2008, the Group purchased the business and assets of Akamai Financial |
| Markets (UK) Ltd and the entire share capital of Akamai Financial Markets |
| Executive Search (Dubai) Ltd (collectively referred to as 'Akamai') from Hat |
| Pin Plc for consideration of GBP1 each. Deal costs were GBP113k. The acquired |
| business has been rebranded Correlate Search. |
| Correlate is a specialist provider of executive search services to the |
| international financial services industry and has operations in the UK and in |
| Dubai which provides the Group with an important Middle East base. |
| For the 12 months to December 2007 Akamai had unaudited net fee income of |
| GBP4.3m and losses before interest and tax of GBP0.4m. |
| The allocation of the purchase price to the assets and liabilities of Akamai at |
| the date of acquisition are: |
+---------------------------------------------------------------------------------+
| | | | |
+-----------------------------+-------------------+----------------+--------------+
| |
+---------------------------------------------------------------------------------+
| | | Book | Fair value | Fair |
+-------------------------+---+-------------------+----------------+--------------+
| | | value | adjustments | value |
+-------------------------+---+-------------------+----------------+--------------+
| | | GBP'000 | GBP'000 | GBP'000 |
+-------------------------+---+-------------------+----------------+--------------+
| | | | | |
+-------------------------+---+-------------------+----------------+--------------+
| Property, plant and | 4 | - | 4 |
| equipment | | | |
+-----------------------------+-------------------+----------------+--------------+
| Intangible assets | - | 176 | 176 |
+-----------------------------+-------------------+----------------+--------------+
| Trade and other receivables | 632 | - | 632 |
+-----------------------------+-------------------+----------------+--------------+
| Cash and cash equivalents | 299 | - | 299 |
+-----------------------------+-------------------+----------------+--------------+
| Total assets | 935 | 176 | 1,111 |
+-----------------------------+-------------------+----------------+--------------+
| | | | | |
+-------------------------+---+-------------------+----------------+--------------+
| Trade and other payables | (1,422) | - | (1,422) |
+-----------------------------+-------------------+----------------+--------------+
| Deferred tax | - | (49) | (49) |
+-----------------------------+-------------------+----------------+--------------+
| | | | | |
+-------------------------+---+-------------------+----------------+--------------+
| Total liabilities | (1,422) | (49) | (1,471) |
+-----------------------------+-------------------+----------------+--------------+
| | | | | |
+-------------------------+---+-------------------+----------------+--------------+
| Net assets | (487) | 127 | (360) |
+-----------------------------+-------------------+----------------+--------------+
| | | | | |
+-------------------------+---+-------------------+----------------+--------------+
| Goodwill arising on | | | 473 |
| acquisition | | | |
+-----------------------------+-------------------+----------------+--------------+
| | | | | |
+-------------------------+---+-------------------+----------------+--------------+
| Total consideration | | | 113 |
+-----------------------------+-------------------+----------------+--------------+
| | | | | |
+-------------------------+---+-------------------+----------------+--------------+
| Satisfied by: | | | |
+-----------------------------+-------------------+----------------+--------------+
| Cash paid | | | - |
+-----------------------------+-------------------+----------------+--------------+
| Direct costs relating to | | | 113 |
| the acquisition | | | |
+-----------------------------+-------------------+----------------+--------------+
| | | | | 113 |
+-------------------------+---+-------------------+----------------+--------------+
| Net cash outflow arising on | | | |
| acquisition: | | | |
+-----------------------------+-------------------+----------------+--------------+
| Cash consideration | | | - |
+-----------------------------+-------------------+----------------+--------------+
| Cash and cash equivalents | | | (299) |
| acquired | | | |
+-----------------------------+-------------------+----------------+--------------+
| Direct costs relating to | | | 113 |
| the acquisition | | | |
+-----------------------------+-------------------+----------------+--------------+
| Net cash outflow | | | (186) |
+-------------------------+---+-------------------+----------------+--------------+
+----------------------------------------------------------------------------------+--+
| |
+-------------------------------------------------------------------------------------+
| Since the acquisition Akamai has contributed towards the Group GBP2.9m of net |
| fee income and GBP0.2m of earnings before interest and tax for the year ended 31 |
| March 2009. |
| The goodwill that arose from the combination can be attributed to the value of |
| anticipated revenues, and the value of the workforce of Akamai which cannot be |
| recognised as an intangible asset under IAS 38 Intangible assets. |
| |
+----------------------------------------------------------------------------------+--+
+-------------------------+---+---------------------+----------------+-------------+
| The Winchester Group Limited |
| In October 2008, the Group acquired the entire share capital of The Winchester |
| Group Limited for a consideration of GBP1,504k including deferred consideration |
| of GBP667k and excluding deal costs of GBP164k. The Winchester Group Limited is |
| an executive search provider to the real estate, hospitality, telecommunications |
| and pharmaceutical sectors. |
| The allocation of the purchase price to the assets and liabilities of The |
| Winchester Group Limited at the date of acquisition are: |
| |
+----------------------------------------------------------------------------------+
| | | Book | Fair value | Fair |
+-------------------------+---+---------------------+----------------+-------------+
| | | value | adjustments | value |
+-------------------------+---+---------------------+----------------+-------------+
| | | GBP'000 | GBP'000 | GBP'000 |
+-------------------------+---+---------------------+----------------+-------------+
| | | | | |
+-------------------------+---+---------------------+----------------+-------------+
| Property, plant and | 30 | - | 30 |
| equipment | | | |
+-----------------------------+---------------------+----------------+-------------+
| Intangible assets | - | 297 | 297 |
+-----------------------------+---------------------+----------------+-------------+
| Trade and other receivables | 203 | - | 203 |
+-----------------------------+---------------------+----------------+-------------+
| Cash and cash equivalents | 12 | - | 12 |
+-----------------------------+---------------------+----------------+-------------+
| Total assets | 245 | 297 | 542 |
+-----------------------------+---------------------+----------------+-------------+
| | | | | |
+-------------------------+---+---------------------+----------------+-------------+
| Trade and other payables | (218) | - | (218) |
+-----------------------------+---------------------+----------------+-------------+
| Deferred tax | - | (83) | (83) |
+-----------------------------+---------------------+----------------+-------------+
| | | | | |
+-------------------------+---+---------------------+----------------+-------------+
| Total liabilities | (218) | (83) | (301) |
+-----------------------------+---------------------+----------------+-------------+
| | | | | |
+-------------------------+---+---------------------+----------------+-------------+
| Net assets | 27 | 214 | 241 |
+-----------------------------+---------------------+----------------+-------------+
| | | | | |
+-------------------------+---+---------------------+----------------+-------------+
| Goodwill arising on | | | 1,427 |
| acquisition | | | |
+-----------------------------+---------------------+----------------+-------------+
| | | | | |
+-------------------------+---+---------------------+----------------+-------------+
| Total consideration | | | 1,668 |
+-----------------------------+---------------------+----------------+-------------+
| | | | | |
+-------------------------+---+---------------------+----------------+-------------+
| Satisfied by: | | | |
+-----------------------------+---------------------+----------------+-------------+
| Cash paid | | | 749 |
+-----------------------------+---------------------+----------------+-------------+
| Retention | | | 88 |
+-----------------------------+---------------------+----------------+-------------+
| Deferred consideration | | | 667 |
+-----------------------------+---------------------+----------------+-------------+
| Direct costs relating to | | | 164 |
| the acquisition | | | |
+-----------------------------+---------------------+----------------+-------------+
| | | | | 1,668 |
+-------------------------+---+---------------------+----------------+-------------+
| Net cash outflow arising on | | | |
| acquisition: | | | |
+-----------------------------+---------------------+----------------+-------------+
| Cash consideration | | | 749 |
+-----------------------------+---------------------+----------------+-------------+
| Cash and cash equivalents | | | (12) |
| acquired | | | |
+-----------------------------+---------------------+----------------+-------------+
| Direct costs relating to | | | 164 |
| the acquisition | | | |
+-----------------------------+---------------------+----------------+-------------+
| Net cash outflow | | | 901 |
+-------------------------+---+---------------------+----------------+-------------+
+---------------------------------------------+--------------+--------------+--------+
| The amount of deferred consideration is variable subject to the performance of The |
| Winchester Group Limited during the trading periods up to 2012. It has been |
| provided for on a discounted basis in creditors at the directors' estimate of the |
| final payments. |
| |
+------------------------------------------------------------------------------------+
| Since the acquisition Winchester Group Limited has contributed to the Group |
| GBP320k of net fee income and a GBP30k |
+------------------------------------------------------------------------------------+
| loss before interest and tax for the year ended 31 March 2009. Had the acquisition |
| occurred on 1 April 2008 |
+------------------------------------------------------------------------------------+
| the net fee income for the year ended 31 March 2009 would have been GBP1,300k and |
| the earnings before interest and |
+------------------------------------------------------------------------------------+
| tax for the year would have been GBP150k. | | | |
| | | | |
+---------------------------------------------+--------------+--------------+--------+
| The goodwill that arose on the combination can be attributed to the value of |
| anticipated future revenues, and the value of the workforce of The Winchester |
| Group Limited which cannot be recognised as an intangible asset under IAS 38 |
| Intangible assets. |
| Deferred consideration will be settled in a mixture of cash and ordinary shares. |
| |
+------------------------------------------------------------------------------------+
| |
+------------------------------------------------------------------------------------+
| | |
+---------------------------------------------+--------------+--------------+--------+
4 Earnings per share
+--+---------------------------------------------------+------------------+------------------+
| | | Year ended | Year ended |
+--+---------------------------------------------------+------------------+------------------+
| | | 31 March | 31 March |
+--+---------------------------------------------------+------------------+------------------+
| | | 2009 | 2008 |
+--+---------------------------------------------------+------------------+------------------+
| | | GBP'000 | GBP'000 |
+--+---------------------------------------------------+------------------+------------------+
| | | | |
+--+---------------------------------------------------+------------------+------------------+
| (Loss)/profit attributable to equity holders of the | (5,559) | 1,794 |
| parent | | |
+------------------------------------------------------+------------------+------------------+
| Add back: | | |
+------------------------------------------------------+------------------+------------------+
| Amortisation of other intangible assets net of | 784 | 1,105 |
| deferred tax | | |
+------------------------------------------------------+------------------+------------------+
| Finance charges on deferred consideration | 681 | 581 |
+------------------------------------------------------+------------------+------------------+
| Impairment | 7,050 | - |
+------------------------------------------------------+------------------+------------------+
| Abortive acquisition costs | 544 | - |
+------------------------------------------------------+------------------+------------------+
| Minority interest | (8) | 80 |
+------------------------------------------------------+------------------+------------------+
| Adjusted profit for the year | 3,492 | 3,560 |
+------------------------------------------------------+------------------+------------------+
| | | | |
+--+---------------------------------------------------+------------------+------------------+
| | | Number | Number |
+--+---------------------------------------------------+------------------+------------------+
| | | | |
+--+---------------------------------------------------+------------------+------------------+
| Weighted average number of shares | 18,343,591 | 18,331,782 |
+------------------------------------------------------+------------------+------------------+
| Dilutive effect of share plans | 775,209 | 844,985 |
+------------------------------------------------------+------------------+------------------+
| | | | |
+--+---------------------------------------------------+------------------+------------------+
| Diluted weighted average number of shares | 19,118,800 | 19,176,767 |
+------------------------------------------------------+------------------+------------------+
| | | | |
+--+---------------------------------------------------+------------------+------------------+
| | | Pence | Pence |
+--+---------------------------------------------------+------------------+------------------+
| Basic earnings per share | (30.30) | 9.79 |
+------------------------------------------------------+------------------+------------------+
| Diluted earnings per share | (30.30) | 9.36 |
+------------------------------------------------------+------------------+------------------+
| Adjusted earnings per share* | 19.04 | 19.42 |
+------------------------------------------------------+------------------+------------------+
| Adjusted diluted earnings per share* | 18.26 | 18.56 |
+------------------------------------------------------+------------------+------------------+
| | | | |
+--+---------------------------------------------------+------------------+------------------+
| *Adjusted earnings per share are before the effect of amortisation of other intangible |
| assets (net of deferred tax), impairment and finance charges on deferred consideration. |
+--+---------------------------------------------------+------------------+------------------+
5 Post balance sheet events
In April 2009, the Group transferred GBP2.3m of its term loan into a convertible
loan (according to the terms published on 17 February 2009) enabling the Group
to benefit from a GBP2.3m reduction in loan repayments in the year to March 2010
and giving the Bank the option to convert GBP2.3m of debt into equity in the
period to December 2011.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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