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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Vantis | LSE:VTS | London | Ordinary Share | GB0031464620 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 10.25 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMVTS
RNS Number : 7452B
Vantis PLC
02 November 2009
+-----------------------------------+----------------------------------------+
| For immediate release | 2 November 2009 |
+-----------------------------------+----------------------------------------+
VANTIS plc
("Vantis", the "Company" or the "Group")
Audited Results for the Year Ended 30 April 2009
Vantis, the AIM listed accountancy and professional services group, today
announces its audited results for the financial year ended 30 April 2009.
Highlights
* The financial year ended 30 April 2009 and subsequent period has been one of
mixed fortunes for the Group;
* Solid trading from both Business Recovery and Business Advisory & Tax divisions;
* Revenue GBP90.0 million (2008 (restated): GBP92.2 million);
* Operating profit on continuing activities before amortisation and exceptional
items GBP11.1 million (2008 (restated): GBP14.1 million);
* Significant exceptional costs of GBP13.7 million principally relating to the
prudent treatment of Investment Plans and rationalisation costs (2008
(restated): GBP1.5 million);
* Loss before tax reported of GBP6.5 million (2008 (restated): GBP8.4 million
profit);
* Adjusted earnings per share 10.1p (2008 (restated): 15.4p);
* Basic loss per share 9.9p (2008 (restated): earnings per share 9.3p);
* Net bank debt increased to GBP38 million (2008 GBP32 million) as a result of an
increased working capital requirement arising principally from the Business
Recovery division;
* Amended facility agreement agreed with existing debt providers to provide
additional working capital headroom.
Chairman, Paul Gourmand, said:
"The year has been one of mixed fortunes for the Group. At an operational level,
we have shown resilience through a recessionary period with a solid set of
trading results. However, we have had setbacks giving rise to a substantial
write-off of value from our balance sheet, which is disappointing. Importantly,
our debt providers continue to be supportive and we are resolving the
challenging issues that face us."
For further information:
+--------------------------------------+--------------------------------+
| Vantis plc | +44 20 7417 0417 |
+--------------------------------------+--------------------------------+
| Paul Jackson, Chief Executive | |
+--------------------------------------+--------------------------------+
| Paul Ashton, Executive Director | |
+--------------------------------------+--------------------------------+
| | |
+--------------------------------------+--------------------------------+
| Investec Investment Banking | +44 20 7597 5970 |
+--------------------------------------+--------------------------------+
| Martin Smith/Tim Pratelli | |
+--------------------------------------+--------------------------------+
| | |
+--------------------------------------+--------------------------------+
| Buchanan Communications | +44 20 7466 5000 |
+--------------------------------------+--------------------------------+
| Richard Darby, James Strong, Chris | |
| McMahon | |
+--------------------------------------+--------------------------------+
Notes to Editors
Vantis plc is the AIM listed leading UK accounting, tax and business recovery
and advisory group, focused on helping owner-managed businesses and high net
worth individuals successfully achieve their personal and business aspirations.
Services are provided locally and nationwide by experienced professionals and
specialist industry teams who offer comprehensive sector knowledge and product
expertise. Vantis strives to provide all clients with successful, bespoke
solutions to help generate and preserve their wealth.
The Vantis group offers a range of specialist skills including Accounting,
Taxation, Business Advice, Corporate Finance, Asset Finance, Forensic Accounting
and Dispute Resolution, Business Recovery & Personal Insolvency Services,
Restructuring and Turnaround Services, Outsourcing, Management Consultancy,
Company Secretarial, Customs Duty Recovery and Advisory Services, Independent
Financial Advice, High Net Worth Services and Sports Advisory Services and
Solutions.
The Vantis group now has approximately 1,000 staff operating from 17 locations
throughout England.
For more information about Vantis, please visit www.vantisplc.com
Chairman's Statement
Introduction
The financial year ended 30 April 2009 ('FY2009') and subsequent period has been
one of mixed fortunes for the Group. Whilst we have shown resilience through a
recessionary period with a solid set of underlying trading results, the Group
has considered the revenue recognition of profits and assets relating to an
Investment Plan product introduced to would-be investors by Vantis Tax Ltd (a
specialist tax division of Vantis and now contained within the Business Advisory
and Tax services division) (the "Investment Plans") and discussed these with its
auditors. These discussions as well as discussions with finance providers, as
referred to below, led to a delay to the reporting of these results. The Group
has taken a prudent view of these matters resulting in a significant exceptional
cost recognised in the current year of GBP6.6 million and an adjustment to prior
years of GBP4.4m. The remainder of the exceptional cost for the current year
arose largely from the reorganisation of the Group into two divisions, Business
Advisory & Tax ("BATS") and Business Recovery Services ("BRS") to improve
operating efficiency and more fully exploit the Vantis brand.
In accordance with our strategy of building a balanced business model, BRS
division has performed well due to the challenging business environment and
higher levels of insolvency, whilst our BATS division continues to hold up as a
result of a strengthening client base in both number and quality.
In February 2009, Nigel Hamilton-Smith and Peter Wastell won a high profile role
as the joint receivers to Stanford International Bank in Antigua. In April 2009
those appointments became that of joint liquidators. The Company has committed
significant resource to this project; however, as a result of a US freezing
order and legal appeals by a US appointed receiver it has not been possible, so
far, to receive the majority of the cash owing to the Group. The Group fully
expects to receive this money; however this is likely to be delayed whilst
matters are decided in the Courts in various jurisdictions. The first of these,
in the UK, is scheduled for 17 November 2009. We are confident of success.
The Group has agreed an amended debt facility with its existing debt providers
in order to ensure that the Group has sufficient working capital. Although the
costs of the new facility are substantially higher than the Group's previous
facility, we are pleased with the continuing support shown from our lending
banks.
Given the shift in the economic landscape, our flexible and balanced business
model has enabled us to move many staff within the Group to maximise profit
opportunities following appropriate skills retraining. Additional resource has
been provided to BRS to facilitate the substantial increase in workload,
especially in the second half of FY2009.
The Group's resilience is underpinned by our ability to integrate complementary
businesses and recruit high quality staff within a framework of appropriate
internal systems and controls. Collaborative working between teams and
cross-referral of business between our main service lines continues to be
encouraging.
Results
In FY2009 the Group increased revenue before exceptional items marginally to
GBP93.2 million (2008 (restated): GBP92.2 million) achieving profit on
continuing activities before goodwill amortisation, exceptional items, interest
and tax of GBP11.1 million (2008 (restated): GBP14.1 million), a decrease of
21%. Group margin before amortisation and exceptional costs was 11.9% (2008
(restated): 15.2%). The decline in margin compared with FY2008 is a consequence
of lower levels of higher margin consultancy work coupled with investment into
the centre to strengthen management and systems.
Loss on continuing operations after tax and exceptional costs amounted to GBP5.2
million (2008 (restated): GBP6.7 million profit). Discontinued operations
representing the disposal of the sports division amounted to a loss of GBP0.2
million (2008 (restated): loss GBP2.0 million.)
Adjusted basic earnings per share on continuing operations excluding
amortisation and exceptional items amounted to 10.1 pence (2008 (restated): 15.4
pence). The Group's basic loss per share amounted to 9.9 pence (2008 (restated):
earnings of 9.3 pence).
The Directors are not recommending payment of a final dividend this year.
Business Development
During the year, we continued to recruit additional high calibre staff to
strengthen our expanding BRS division. Revenue from this division has increased
and now represents 31% of the Group's total. We anticipate that in the short
term BRS will continue to grow at a faster rate than other areas of the
business, particularly following the appointment to Stanford International Bank.
The non-audit business of Brewer Higgins, acquired in March 2008, has relocated
to our Beaconsfield office and has provided a full year's contribution to
profits. Having now brought four businesses into this one location, this office
has become a significant force in the Thames Valley and is a key contributor to
the Group's UK network. Also during the year, we recruited the partners and some
staff from Keith Robinson & Co., relocating them to our Middlesborough office to
become the leading provider of business advisory services in the region. We also
recruited senior staff to other regional hubs.
Our Steps 2 Success training programme, which has been running since 2005,
continues to equip our employees with the management and leadership skills to
grow the business. Recognition of the Group's excellence as an employer
culminated in the Investors in People Award in 2009.
At the start of the year, the marketing team was strengthened and as a result,
our brand has continued to gain prominence. Client feedback initiatives have
been put in place to further improve client service levels. This will form part
of a routine review process.
On 19 August 2009, we announced the launch of a new formal strategic alliance
with marketing services group PROBIZ Excellence to combine core business
competencies and build mutual market share.
The Board
In May 2009, we announced the appointment of David Potter to the Board as a
Non-executive Director. As former Deputy Chairman of Investec Bank UK, former
Managing Director of Global Corporate Banking at Midland Bank UK, and former
Managing Director of Credit Suisse First Boston, David brings many years of
experience in corporate governance and management to the Group. He is the fourth
Non-executive Director to join the plc Board.
Since Admission to AIM in 2002, I will have been Chairman of Vantis for over 7
years and it is my intention to retire following the next AGM. The Group will
provide an update in due course of my successor together with details of further
corporate governance changes.
Our People
Once again, the loyalty and dedication of our staff, who have worked tirelessly
throughout the year, is second to none. On behalf of the board, I thank them
sincerely for their energy, enthusiasm and commitment.
Outlook
At an operational level, the Group has continued to trade in line with our
expectations since 1 May 2009. In addition our banking syndicate are supportive
and we are resolving the challenging issues that face us.
There is a continuing requirement for general and specialist services advice,
especially in taxation, wealth management, independent financial advice and
business consultancy. We are well placed in the market to capitalise on our
strong position.
Paul Gourmand
Chairman
2 November 2009
Operational Review
Introduction
At an operational level, the Group continues to progress, which is particularly
encouraging given the difficult business environment. Revenue from continuing
operations before exceptional items has remained resilient at GBP93.2 million,
underpinned by significant increases in activity within the BRS division that
has offset the impact of the recession on other areas of the business. Our
flexible business model has continued to deliver profitable results and we have
integrated value enhancing acquisitions from prior periods and introduced
further talent into the Group. This positions us well to take the opportunities
offered in a changing competitive landscape. Our strong market position is
supported by the following factors:
* BRS offers increasing scale in a deteriorating economy;
* Good margins continue following synergies from acquisitions;
* Staff utilisation is maintained through retraining and career development;
* Breadth and depth of management is strengthened from high calibre recruitment;
* Entrepreneurial employer of choice for business service leaders.
* With over 11,000 corporate customers and over 8,000 personal customers, no more
than 0.35% of recurring group revenues are from any one customer.
Divisional Review
Since last year we have restructured the business into two divisions, combining
Consultancy into Business Advisory and Tax.
Business Advisory & Tax
The BATS division incorporates accounting, advisory and assurance, routine tax
work (including payroll services) and consultancy required by SMEs and wealthy
individuals. The division reported turnover of GBP65.4 million (2008 (restated):
GBP73.1 million) and operating profit (before amortisation and exceptional
items) of GBP3.7 million (2008 (restated): GBP9.0 million). As the Group's
largest division with 820 staff, BATS represents approximately two thirds of
Group revenues. Operating margin reduced to 6% (2008: 14%) as a result of our
premium consultants' time being devoted to the issues surrounding the Investment
Plan together with lower volumes of the higher margin consultancy work.
New business initiatives have particularly included business planning, providing
more tools to help clients through the recession, and client training. The
division has also continued to recruit talent from leading advisory firms across
the UK as well as training and developing staff from within. Our strategy for
growing the division is focused on providing a greater service offering from our
existing locations and continually looking for opportunities to cross-sell our
services.
The prominence of the Vantis brand and the breadth of our service offering have
attracted generally larger SME clients during FY2009. Combined with this, the
Group has developed its network of technical partners and business generators to
ensure that the skills of our staff are maximised for the benefit of the Group.
Our BATS network operates within an integrated framework of standardised systems
and processes from client engagement, client billing and collection to monthly
monitoring with KPI's.
Consultancy includes Vantis Financial Management, Vantis Investment Strategies,
Vantis Corporate Finance and other specialist services such as high level tax
planning.
The division has been assisted by Vantis Financial Management, as specialist
personal financial advice, investment & pension planning and private wealth
management has been provided to a growing number of clients looking for
stability during extreme market turbulence.
Business Recovery Services
The BRS division specialises in corporate recovery and personal insolvency. The
division reported turnover of GBP27.8 million (2008 (restated): GBP19.2 million)
and operating profit (before amortisation and exceptional items) of GBP6.9
million (2008 (restated): GBP3.4 million).
The majority of the work focuses on corporate recovery, which provides better
margins and healthy cash generation. BRS has grown significantly during the year
as a result of an increase in the number of corporate insolvencies and the
increased work flowing from Stanford International Bank and other high profile
appointments. Margins have increased to 25% (2008: 17.9%) as a result of the
improving quality of assignments taken on and increasing utilisation. The
division now accounts for 31% of Group revenue with 40 qualified insolvency
practitioners and another 80 in professional training out of a total of 215.
Approximately 50 employees were transferred from BATS to assist with increased
workflow in addition to the high quality senior consultants recruited during the
year. BRS foresees that increased demand will continue in the corporate sector.
Whilst continuing to focus on SME debtor-led and creditor-led debt recovery, the
BRS division is increasingly involved in larger projects such as Cheviot Foods
and Anglo Overseas, as well as international projects such as Stanford
International Bank. Creditor-led recovery work is often introduced from UK
clearing banks, where we enjoy panel status with the majority as well as from
asset based lenders where, to most, we are a preferred supplier, law firms and
accountancy practices. It is particularly pleasing that the BRS division is
taking high quality referrals as a result of its growing reputation.
Continuing BRS growth will be achieved by targeted and careful selection of
introducers, recruits and by control over the type and size of appointment. We
will continue to position ourselves predominantly in the mid corporate sector
where we can achieve acceptable margins that provide adequate funding within
normal parameters. We foresee opportunities within this sector remaining after
an upturn in the general economy.
The appointment of Nigel Hamilton-Smith and Peter Wastell, Client Partners of
BRS, as Joint Receivers to Stanford International Bank (SIB) and Stanford Trust
Company, has provided a significant uplift in activity within the division. BRS
Client Partners were appointed on 19 February 2009 by the Financial Services
Regulatory Commission of Antigua and Barbuda, ratified by the Antiguan Court on
26 February 2009. On 15 April 2009, they were appointed as joint liquidators for
SIB by Order of the High Court of Antigua and Barbuda, and liquidation
proceedings commenced immediately thereafter. By the end of April an online
claims validation system had been launched for the creditors of SIB holding
Certificates of Deposits, and a full Claims Management system has subsequently
been activated. In early July, the High Court of Justice of England & Wales
ruled that the Centre of Main Interest of SIB is Antigua and Barbuda, and not
the United States. However the US appointed receiver has appealed that decision.
It is due to be heard on 17 November 2009.
The conversion of work in progress into debtors and then into cash continues to
be closely monitored and with the exception of SIB, over the past 12 months BRS
has seen improvement in the overall timescale to 246 days from a peak of 331
days, a result of our constant focus on working capital improvement. The
substantial SIB project has increased our WIP with GBP1.7 million outstanding at
30 April 2009. It is hoped that at the court hearing on 17 November 2009,
significant monies due to BRS will be unlocked, thereby improving the cashflow
of the business considerably.
The ability of the Group to provide a service at all stages of the economic
cycle is illustrated by the year on year change in turnover mix:
+---------------------+--------------+--------------+--------------+
| Service Line | At 30 April | At 30 April | At 30 April |
| Revenue | 2009 | 2008 | 2007 |
+---------------------+--------------+--------------+--------------+
| | | | |
+---------------------+--------------+--------------+--------------+
| Business Advisory | 69% | 79% | 80% |
| and Tax | | | |
+---------------------+--------------+--------------+--------------+
| Business Recovery | 31% | 21% | 20% |
| Services | | | |
+---------------------+--------------+--------------+--------------+
| | | | |
+---------------------+--------------+--------------+--------------+
| Source: Company management information |
+---------------------+--------------+--------------+--------------+
Integration and Recruitment
The Group acquired a team of 14, including two partners, from the former general
practice firm Keith Robinson & Co. based in the North East. The team are
experienced and highly motivated and have many opportunities to develop the
business. Their relocation into available space in our Middlesborough office has
realised significant cost savings. With excellent potential for cross-referral
of work, the new team is benefiting from an enhanced range of expertise and
services that it can offer its clients. Our North East presence is the largest
in the Tees valley, providing a broad range of specialist services ranging from
business advisory and taxation to business recovery, corporate finance and
wealth management.
Elsewhere in the Group, several senior recruits have been appointed to our
offices in Birmingham, London, Leicester, Marlow and Worthing. In addition, a
number of senior promotions have been made within the Group, such as at our
Sidcup and Epsom offices. Appointments made from within the Group provide
incentive and encouragement to staff and are important for career development
and succession.
The successful integration of the non-audit business of Brewer Higgins
('Brewer') acquired at the end of the previous financial year has benefited the
Group with a full twelve months trading, and strengthened the Group's business
advisory practice in the Thames Valley. Following the acquisition of Brewer in
March 2008, the business was relocated to Beaconsfield where synergies and cost
savings have been fully realised. From a standing start three years ago, the
Beaconsfield office is now the third largest in the Group in terms of fee
income, having brought four businesses into one location. Strong financial
controls and standardised business systems optimise efficiency and financial
returns.
Organic Growth
Higher workload in BRS resulted in an additional 50 staff being transferred from
BATS and corporate finance, thereby optimising the utilisation of staff within
the Group. Appropriate skills training facilitated this transfer and having
recruited senior practitioners in our London and regional offices, the total
number of current staff in the BRS division increased in the year to 215.
The new divisional business structure of BATS and BRS is well suited to
proactive business development through our client relationship partners. Clients
are becoming increasingly aware of the full breadth of our service offering
through an increased focus on proactive account management implemented by client
partners who have received the appropriate training. We are increasingly active
in the marketing of our expertise to create additional opportunities and improve
growth.
The market is becoming increasingly aware of the Vantis brand. An experienced
marketing professional was appointed in the first half who is successfully
rolling out a number of PR and marketing initiatives to elevate the brand and
increase awareness of the services we offer. In addition, client feedback
surveys are being introduced to monitor client satisfaction.
Our staff development programme, Steps 2 Success, continues to play an important
part in developing, retaining and promoting our people. It is designed to equip
participants in our approach to client service, as well as manage and lead
people and to grow the business. Step one for newly qualified professionals and
supervisors lasts six months. Step two is divided between experienced and less
experienced managers; step three is for aspiring partners and step four for
partners. At 30 April 2009, approximately 100 of our most able team members
participated in the Steps 2 Success programme.
The Group's professional training programmes for staff and for third parties
continue to do well. Staff newsletters and the Group's intranet continue to keep
personnel well informed and our networking initiatives with other professional
advisors such as accountants, financial advisers and lawyers provide momentum.
On 19 August 2009, we announced the launch of a new formal strategic alliance
with marketing services group PROBIZ Excellence to combine core business
competencies and build mutual market share. PROBIZ is a leading marketing group
for UK-based accountants. The alliance provides exclusivity for PROBIZ to
introduce its clients to the breadth of tax and business services provided by
Vantis. We welcome PROBIZ's values, culture and business model. Through this
alliance many commercial businesses will have direct access to our leading-edge
business solutions and tax services.
Underpinning all of our activity is the continued support and development of our
people, as well as service excellence to all our clients. I am very grateful to
all our staff for their hard work and dedication to the Company. Further, in the
team, we all know how particularly difficult 2008/9 has been with the
distractions outside of our robust high quality underlying business divisions.
In particular, and in recession, to have sustained our BATS division and to have
increased our BRS division into a top ten provider is a source of great pride
for us all. To all of you who have participated in these achievements and to
those in the other committed business divisions, a very special thank you. It is
greatly appreciated and it is an inspiration to all. Finally, a special thank
you to Paul Gourmand, for his contribution as Chairman of the Board over the
past seven years.
P F Jackson
Chief Executive
2 November 2009
Financial Review
Revenue and Operating Profit
The Group achieved a total operating profit on continuing activities before
interest, tax, amortisation and exceptional items of GBP11.1 million (2008
restated: GBP14.1 million) on revenues before exceptional items of
GBP93.2 million (2008 restated: GBP92.2 million) for the year. Loss on
continuing operations after tax was GBP5.2 million (2008 restated: GBP6.7
million profit).
Exceptional costs during the year amounted to GBP13.7 million. (2008: GBP1.5
million)
Bank Facilities
Bank gearing at the year end was 88.9 % (2008 restated: 69.4%).
Bank interest cover from continuing activities before amortisation and
exceptional items, was approximately 3.5 times.
Amended Bank Facility
In light of the medium term increased working capital requirements of the Group,
including in relation to the Stanford International Bank work in progress, the
Group has agreed an amended debt facility with its existing banking providers.
The Group has agreed a total amended facility of GBP50.1 million, an increase in
the previous facility of GBP6.65 million. The facility is split between a
Revolving Credit Facility ("RCF") of GBP30.5 million (plus accumulated PIK
interest of GBP0.6 million) and a term loan of GBP19 million. Both the RCF and
the Term Loan have a final maturity date of 31 January 2011. The Group has paid
an arrangement fee of GBP0.8 million in relation to the amendment of the bank
facilities. In addition, the Group has granted warrants over 5.0 per cent. of
the Group's fully diluted issued share capital to the Group's banking providers.
The warrants are exercisable at par (10 pence) at any time until 1 November
2019.
RCF
The RCF attracts interest at LIBOR plus a margin of 400bps.
Term Loan
The Term Loan attracts interest at LIBOR plus a margin of 500bps. The Group will
repay capital of GBP3.25 million on both 31 August 2010 and 31 October 2010 with
the balance payable on 31 January 2011.
The Company intends to generate sufficient cash to repay the Term Loan in
advance of 31 January 2011. Further fees will become payable to the Company's
banking providers on each of 30 April 2010, 31 July 2010, 31 October 2010 and 31
January 2011 should the Term Loan not be repaid in full by those dates. The
fees will be between 300 bps and 750 bps depending on the amounts outstanding
under the Term Loan at the relevant date. These fees will be added to the
amounts due to the banks on maturity of the Term Loan (subject to a minimum of
GBP0.5 million).
Exceptional costs
Exceptional costs recognised in the current year of GBP13.7 million have been
incurred as a result of the following:
* Costs and provisions associated with the Investment Plans fully provided
amounting to GBP6.6 million;
* Transactions with previous partners of VTL Strategies LLP of GBP2.8 million;
* Reorganisation, rationalisation and redundancy costs of GBP3.4 million;
* Net financing costs of GBP0.4 million;
* Costs of disposal of operations discontinued in prior periods GBP0.5 million
In addition, some revenue and costs associated with the Investment Plan have
been provided by way of a prior year adjustment. The effect is to decrease
profits in 2008 by GBP1.2 million. The cumulative effect of 2008 and prior years
is a decrease in equity of GBP3.1 million.
Earnings Per Share and Dividends
The adjusted basic earnings per share on continuing operations for the year
under review excluding amortisation, and exceptional costs is 10.1 pence (2008
restated: 15.4 pence). Basic loss per share is 9.9 pence (2008 restated:
earnings of 9.3 pence per share).
A final dividend for the year ended 30 April 2008 of 1.5 pence per share was
paid as well as an interim dividend of 1.0 pence (2008: 1.5 pence) per share in
respect of the year ended 30 April 2009. The Directors are not recommending
payment of a final dividend for the year ended 30 April 2009.
Net Assets
At the year end net assets were GBP42.5 million (2008: GBP46.0 million
restated). Intangible assets of GBP54.4 million (2008: GBP48.5 million), consist
of goodwill on acquisitions, the fair value attributed to customer
relationships, product development costs and computer software. The related
deferred cash and share consideration is GBP6.5 million (2008: GBP4.5 million).
Amounts recoverable on contracts
Amounts recoverable from contracts net of payments on account has increased from
GBP21.1 million, at 30 April 2008 (restated) to GBP31.8 million at 30 April
2009. The increase arises principally in business recovery caused by the growth
in that business.
Total Equity
At the year end total equity stood at GBP42.5 million (2008 (restated): GBP46.0
million restated) of which GBP2.6 million (2008 restated: GBP9.4 million
restated) was retained profit.
Capital Expenditure
Capital expenditure amounted to GBP1.3 million (2008: GBP1.3 million).
Expenditure in the current year is not expected to be outside management
estimates.
Cash Flow
Net cashflow used by operating activities including investment in working
capital was GBP1.5 million (2008 restated: GBP8.2 million generated). The large
reduction was due principally to the exceptional items incurred during the year
as detailed above. The company paid GBP2.0 million (2008 (restated: GBP3.5
million) for businesses principally acquired in prior periods as part of
deferred consideration arrangements. The Group also received additional funding
from its bankers totalling net GBP7.1 million.
T Applin
Finance Director
2 November 2009
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| Group Income | | 2009 | 2009 | 2009 | 2008 | 2008 | Restated |
| Statement | | before | amortisation | GBP'000 | before | amortisation | 2008 |
| For the year ended | | amortisation | and | | amortisation | and | GBP'000 |
| 30 April 2009 | | and | exceptional | | and | exceptional | |
| | | exceptional | items | | exceptional | items | |
| | | items | GBP'000 | | items | restated | |
| | | GBP'000 | | | restated | GBP'000 | |
| | | | | | GBP'000 | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| | | | | | | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| Revenue from | | 93,183 | (3,622) | 89,561 | 92,232 | - | 92,232 |
| continuing | | | | | | | |
| operations | | | | | | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| Employee expense | | (58,748) | (4,466) | (63,214) | (57,914) | - | (57,914) |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| Depreciation and | | (876) | (476) | (1,352) | (994) | (169) | (1,163) |
| amortisation | | | | | | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| Other operating | | (22,447) | (5,225) | (27,672) | (19,260) | (1,494) | (20,754) |
| expenses | | | | | | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| | | | | | | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| Operating | | 11,112 | (13,789) | (2,677) | 14,064 | (1,663) | 12,401 |
| profit/(loss) | | | | | | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| Finance revenue | | 27 | - | 27 | 28 | - | 28 |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| Finance costs | | (3,499) | (386) | (3,885) | (4,015) | - | (4,015) |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| | | | | | | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| Profit/(loss) | | 7,640 | (14,175) | (6,535) | 10,077 | (1,663) | 8,414 |
| before tax | | | | | | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| | | | | | | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| Taxation | | (2,108) | 3,436 | 1,328 | (2,194) | 496 | (1,698) |
| credit/(charge) | | | | | | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| | | | | | | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| Profit/(loss) after | | 5,532 | (10,739) | (5,207) | 7,883 | (1,167) | 6,716 |
| tax-continuing | | | | | | | |
| operations | | | | | | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| Loss after tax for | | | | | | | |
| the year from | | | | | | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| discontinued | | | | (216) | | | (1,973) |
| operations | | | | | | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| | | | | | | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| (Loss)/profit for | | | | (5,423) | | | 4,743 |
| the year | | | | | | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| | | | | | | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| Attributable to: | | | | | | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| Equity holders of | | | | (5,422) | | | 4,743 |
| the parent | | | | | | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| Minority interests | | | | (1) | | | - |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| | | | | | | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| (Loss)/profit for | | | | (5,423) | | | 4,743 |
| the year | | | | | | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| | | | | | | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| Earnings/(loss) per | | | | | | | |
| share (pence) | | | | | | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| Basic - from | | | | 10.1p | | | 15.4p |
| continuing | | | | | | | |
| operations | | | | | | | |
| excluding | | | | | | | |
| amortisation and | | | | | | | |
| exceptional items | | | | | | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| Diluted - from | | | | 9.8p | | | 15.0p |
| continuing | | | | | | | |
| operations | | | | | | | |
| excluding | | | | | | | |
| amortisation and | | | | | | | |
| exceptional items | | | | | | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| Basic - from | | | | (9.5)p | | | 13.1p |
| continuing | | | | | | | |
| operations | | | | | | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| Diluted - from | | | | (9.5)p | | | 12.8p |
| continuing | | | | | | | |
| operations | | | | | | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| Basic - from all | | | | (9.9)p | | | 9.3p |
| operations | | | | | | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
| Diluted - from all | | | | (9.9)p | | | 9.0p |
| operations | | | | | | | |
+---------------------+------+--------------+--------------+----------+--------------+--------------+----------+
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Group Balance Sheet | | | | 2009 | Restated |
| At 30 April 2009 | | | | GBP'000 | 2008 |
| | | | | | GBP'000 |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Assets | | | | | |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Non current assets | | | | | |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Goodwill | | | | 50,397 | 46,178 |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Other intangible assets | | | | 3,984 | 2,348 |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Property and equipment | | | | 4,182 | 3,775 |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Available for sale financial | | | | 13 | 13 |
| assets | | | | | |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Deferred tax assets | | | | 2,090 | 923 |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| | | | | 60,666 | 53,237 |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Current assets | | | | | |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Inventories | | | | 103 | 103 |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Trade and other receivables | | | | 56,786 | 53,181 |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Derivative financial instruments | | | | 31 | 98 |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Current income tax | | | | 1,320 | - |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Cash and short term deposits | | | | 4,625 | 3,170 |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| | | | | 62,865 | 56,552 |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Total assets | | | | 123,531 | 109,789 |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Equity and liabilities | | | | | |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Current liabilities | | | | | |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Trade and other payables | | | | (27,020) | (20,136) |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Other financial liabilities | | | | (8,807) | (6,022) |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Current income tax | | | | (9) | (1,330) |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| | | | | (35,836) | (27,488) |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Non current liabilities | | | | | |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Financial liabilities | | | | (43,541) | (35,074) |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Deferred tax liabilities | | | | (1,389) | (863) |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Provisions | | | | (245) | (323) |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| | | | | (45,175) | (36,260) |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Total liabilities | | | | (81,011) | (63,748) |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Net assets | | | | 42,520 | 46,041 |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Equity attributable to equity holders of the | | | |
| parent | | | |
+-------------------------------------------------+-----------+-----------+-----------+
| Share capital | | | | 5,793 | 5,243 |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Share premium account | | | | 33,448 | 29,969 |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Treasury shares | | | | (30) | - |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Other reserves | | | | 656 | 1,391 |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Retained earnings | | | | 2,599 | 9,383 |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| | | 42,466 | 45,986 |
+-------------------------------------------------+-----------+-----------+-----------+
| Minority interest | | | | 54 | 55 |
+----------------------------------+--+-----------+-----------+-----------+-----------+
| Total equity | | | | 42,520 | 46,041 |
+----------------------------------+--+-----------+-----------+-----------+-----------+
+----------------+----------------+---------+----------+----------+----------+---------+----------+---------+
| Group | Attributable to equity holders of the parent | Minority | Total |
| Statement of | | | |
| Changes in | | | |
| Equity | | | |
+ +---------------------------------------------------------------------+----------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------+----------------+---------+----------+----------+----------+---------+----------+---------+
| At 30 April | Share | Share | Treasury | Other | Retained | Total | Interest | Equity |
| 2009 | capital | premium | shares | reserves | | | | |
| | | account | | | earnings | | | |
+----------------+----------------+---------+----------+----------+----------+---------+----------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------+----------------+---------+----------+----------+----------+---------+----------+---------+
| At 1 May 2007 | | | | | | | | |
+----------------+----------------+---------+----------+----------+----------+---------+----------+---------+
| As previously | 5,089 | 28,408 | - | 2,038 | 8,896 | 44,431 | 400 | 44,831 |
| reported | | | | | | | | |
+----------------+----------------+---------+----------+----------+----------+---------+----------+---------+
| Prior year | - | - | - | - | (1,549) | (1,549) | (370) | (1,919) |
| adjustment | | | | | | | | |
+----------------+----------------+---------+----------+----------+----------+---------+----------+---------+
| Balance at 1 | 5,089 | 28,408 | - | 2,038 | 7,347 | 42,882 | 30 | 42,912 |
| May 2007 - | | | | | | | | |
| restated | | | | | | | | |
+----------------+----------------+---------+----------+----------+----------+---------+----------+---------+
| | | | | | | | | |
+----------------+----------------+---------+----------+----------+----------+---------+----------+---------+
| Deferred tax | - | - | - | (707) | - | (707) | - | (707) |
| on share-based | | | | | | | | |
| payments | | | | | | | | |
+----------------+----------------+---------+----------+----------+----------+---------+----------+---------+
| Fair value | - | - | - | (41) | - | (41) | - | (41) |
| movement on | | | | | | | | |
| hedging | | | | | | | | |
| instruments | | | | | | | | |
| net of tax | | | | | | | | |
+----------------+----------------+---------+----------+----------+----------+---------+----------+---------+
| Total expense | - | - | - | (748) | - | (748) | - | (748) |
| recognised | | | | | | | | |
| directly in | | | | | | | | |
| equity | | | | | | | | |
+----------------+----------------+---------+----------+----------+----------+---------+----------+---------+
| Profit for the | - | - | - | - | 4,743 | 4,743 | - | 4,743 |
| year -restated | | | | | | | | |
+----------------+----------------+---------+----------+----------+----------+---------+----------+---------+
| Share-based | - | - | - | 101 | - | 101 | - | 101 |
| remuneration | | | | | | | | |
+----------------+----------------+---------+----------+----------+----------+---------+----------+---------+
| Equity | - | - | - | - | (2,707) | (2,707) | - | (2,707) |
| dividends | | | | | | | | |
+----------------+----------------+---------+----------+----------+----------+---------+----------+---------+
| Issue of share | 154 | 1,561 | - | - | - | 1,715 | 25 | 1,740 |
| capital | | | | | | | | |
+----------------+----------------+---------+----------+----------+----------+---------+----------+---------+
| | 154 | 1,561 | - | (647) | 2,036 | 3,104 | 25 | 3,129 |
+----------------+----------------+---------+----------+----------+----------+---------+----------+---------+
| At 30 April | 5,243 | 29,969 | - | 1,391 | 9,383 | 45,986 | 55 | 46,041 |
| 2008 - | | | | | | | | |
| restated | | | | | | | | |
+----------------+----------------+---------+----------+----------+----------+---------+----------+---------+
| | | | | | | | | |
+----------------+----------------+---------+----------+----------+----------+---------+----------+---------+
| Deferred tax | - | - | - | (50) | - | (50) | - | (50) |
| on share- | | | | | | | | |
| based payments | | | | | | | | |
+----------------+----------------+---------+----------+----------+----------+---------+----------+---------+
| Fair value | - | - | - | (854) | - | (854) | - | (854) |
| movements on | | | | | | | | |
| hedging | | | | | | | | |
| instruments | | | | | | | | |
| net of tax | | | | | | | | |
+----------------+----------------+---------+----------+----------+----------+---------+----------+---------+
| Total expense | - | - | - | (904) | - | (904) | - | (904) |
| recognised | | | | | | | | |
| directly in | | | | | | | | |
| equity | | | | | | | | |
+----------------+----------------+---------+----------+----------+----------+---------+----------+---------+
| Loss for the | - | - | - | - | (5,422) | (5,422) | (1) | (5,423) |
| year | | | | | | | | |
+----------------+----------------+---------+----------+----------+----------+---------+----------+---------+
| Share-based | - | - | - | 155 | - | 155 | - | 155 |
| remuneration | | | | | | | | |
+----------------+----------------+---------+----------+----------+----------+---------+----------+---------+
| Equity | - | - | - | - | (1,362) | (1,362) | - | (1,362) |
| dividends | | | | | | | | |
+----------------+----------------+---------+----------+----------+----------+---------+----------+---------+
| Issue of | - | - | - | 14 | - | 14 | - | 14 |
| financial | | | | | | | | |
| instrument | | | | | | | | |
+----------------+----------------+---------+----------+----------+----------+---------+----------+---------+
| Issue of share | 550 | 3,479 | (30) | - | - | 3,999 | - | 3,999 |
| capital | | | | | | | | |
+----------------+----------------+---------+----------+----------+----------+---------+----------+---------+
| | 550 | 3,479 | (30) | (735) | (6,784) | (3,520) | (1) | (3,521) |
+----------------+----------------+---------+----------+----------+----------+---------+----------+---------+
| At 30 April | 5,793 | 33,448 | (30) | 656 | 2,599 | 42,466 | 54 | 42,520 |
| 2009 | | | | | | | | |
+----------------+----------------+---------+----------+----------+----------+---------+----------+---------+
+--------------------------------------------------------+----------+----------+
| Group Cash Flow Statement | 2009 | Restated |
| For the year ended 30 April 2009 | GBP'000 | 2008 |
| | | GBP'000 |
+--------------------------------------------------------+----------+----------+
| Operating activities | | |
+--------------------------------------------------------+----------+----------+
| Profit/(loss) before tax from continuing operations | (6,535) | 8,414 |
+--------------------------------------------------------+----------+----------+
| Loss before tax from discontinued operations | (207) | (2,499) |
+--------------------------------------------------------+----------+----------+
| Profit/(loss) before tax | (6,742) | 5,915 |
+--------------------------------------------------------+----------+----------+
| Adjustments to reconcile profit before tax to net cash | | |
| flows | | |
+--------------------------------------------------------+----------+----------+
| Non-cash: | | |
+--------------------------------------------------------+----------+----------+
| Depreciation and impairment of property and | 876 | 1,036 |
| equipment | | |
+--------------------------------------------------------+----------+----------+
| Amortisation and impairment of intangible assets | 476 | 169 |
+--------------------------------------------------------+----------+----------+
| Share-based payments expense | 1,016 | 185 |
+--------------------------------------------------------+----------+----------+
| Gain on disposal of business | (7) | - |
+--------------------------------------------------------+----------+----------+
| Loss on disposal of property and equipment | - | 4 |
+--------------------------------------------------------+----------+----------+
| Adjustment to disposals made in prior periods | 543 | - |
+--------------------------------------------------------+----------+----------+
| Interest income | (27) | (28) |
+--------------------------------------------------------+----------+----------+
| Interest expense | 3,885 | 4,016 |
+--------------------------------------------------------+----------+----------+
| Movement in provisions | (78) | (1,024) |
+--------------------------------------------------------+----------+----------+
| Working capital adjustments: | | |
+--------------------------------------------------------+----------+----------+
| Increase in trade and other receivables | (3,978) | (1,101) |
+--------------------------------------------------------+----------+----------+
| Increase in inventories | - | (3) |
+--------------------------------------------------------+----------+----------+
| Increase in trade and other payables | 7,279 | 2,738 |
+--------------------------------------------------------+----------+----------+
| Cash generated from operations | 3,243 | 11,907 |
+--------------------------------------------------------+----------+----------+
| Finance costs paid | (3,040) | (3,094) |
+--------------------------------------------------------+----------+----------+
| Finance income received | 27 | 28 |
+--------------------------------------------------------+----------+----------+
| Taxation paid | (1,708) | (623) |
+--------------------------------------------------------+----------+----------+
| Net cash flows (used in)/generated from operating | (1,478) | 8,218 |
| activities | | |
+--------------------------------------------------------+----------+----------+
| | | |
+--------------------------------------------------------+----------+----------+
| Investing activities: | | |
+--------------------------------------------------------+----------+----------+
| Proceeds from sale of property and equipment | - | 5 |
+--------------------------------------------------------+----------+----------+
| Purchase of property and equipment | (990) | (520) |
+--------------------------------------------------------+----------+----------+
| Purchase of other intangible assets | (1,850) | (1,385) |
+--------------------------------------------------------+----------+----------+
| Acquisition of subsidiary undertakings | (1,997) | (3,464) |
+--------------------------------------------------------+----------+----------+
| Disposal of subsidiary undertakings | (1) | - |
+--------------------------------------------------------+----------+----------+
| Net cash flows used in investing activities | (4,838) | (5,364) |
+--------------------------------------------------------+----------+----------+
| | | |
+--------------------------------------------------------+----------+----------+
| Financing activities: | | |
+--------------------------------------------------------+----------+----------+
| Proceeds from issue of share capital | 2,413 | 1,108 |
+--------------------------------------------------------+----------+----------+
| Proceeds from issue of loan instrument | 284 | - |
+--------------------------------------------------------+----------+----------+
| Proceeds from new bank loans | 10,592 | 38,042 |
+--------------------------------------------------------+----------+----------+
| Repayment of bank loans | (3,500) | (29,402) |
+--------------------------------------------------------+----------+----------+
| Payment of finance lease liabilities | (684) | (391) |
+--------------------------------------------------------+----------+----------+
| Dividends paid to equity holders of the parent | (1,362) | (2,707) |
+--------------------------------------------------------+----------+----------+
| Net cash flows used in financing activities | 7,743 | 6,650 |
+--------------------------------------------------------+----------+----------+
| | | |
+--------------------------------------------------------+----------+----------+
| Net increase in cash and cash equivalents | 1,427 | 9,504 |
+--------------------------------------------------------+----------+----------+
| Cash and cash equivalents at 30 April | 3,163 | (6,341) |
+--------------------------------------------------------+----------+----------+
| Cash and cash equivalents at 30 April | 4,590 | 3,163 |
+--------------------------------------------------------+----------+----------+
Notes
1. Basis of preparation
The financial information set out in this preliminary announcement does not
constitute the Company's statutory accounts for the years ended 30 April 2009 or
2008 within the meaning of section 435 of the Companies Act 2006. The statutory
accounts for the year ended 30 April 2008 have been delivered to the Registrar
of Companies. Auditors have reported on the statutory accounts for the year
ended 30 April 2009 but those accounts have not yet been delivered to the
Registrar of Companies. The audit report on the statutory accounts for the year
ended 30 April 2009 was unqualified and did not contain statements under the
Companies Act 2006, sections 498(2) or 498(3). Neither did it draw attention to
any matter by way of emphasis. The results for the year ended 30 April 2008
have been restated to reflect the correction prior period errors as detailed in
note 6.
The results for the year ended 30 April 2009 have been prepared in accordance
with the accounting policies set out in the financial statements for the year
ended 30 April 2008 and AIM rules. While the financial information included in
this preliminary announcement has been prepared in accordance with the
recognition and measurement criteria of IFRS, this announcement does not contain
sufficient information to comply with IFRS.
Going concern
The Group's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Operational
Review. The financial position of the Group, its cash flows, liquidity position
and borrowing facilities are described in the Financial Review. The Group's full
financial statements include the Group's objectives, policies and processes for
managing its capital; its financial risk management objectives; details of its
financial instruments and hedging activities; and its exposures to credit risk
and liquidity risk.
As described in the Chairman's statement, the Group has recognised exceptional
costs of around GBP13.7 million arising from a prudent view of profits and
assets arising from the Investment Plans discussed therein, which has resulted
in a loss for the year of GBP5.4 million. The directors consider that the
Group's business model remains resilient but they have identified an increased
medium-term working capital requirement, largely due to the increase in Stanford
International work-in-progress. They have therefore negotiated an increased and
amended debt facility with its existing bankers, the particulars of which are
set out in the Financial Review. The Group's forecasts and projections, taking
account of reasonably possible changes in trading performance, show that the
Group should be able to operate within the level of this facility, which expires
in January 2011. The directors will commence detailed discussions with the
Group's bankers on the renegotiation of its facilities at the appropriate time
before expiration.
Taking these matters into consideration, the directors have a reasonable
expectation that the Group has adequate resources to continue in operational
existence for the foreseeable future. Thus they continue to adopt the going
concern basis of accounting in preparing the annual financial statements.
2. Exceptional items
Exceptional items are analysed as follows:
+---------------------------------------------------+------+---------+---------+
| | | 2009 | 2008 |
+---------------------------------------------------+------+---------+---------+
| | | GBP'000 | GBP'000 |
+---------------------------------------------------+------+---------+---------+
| Costs and revenue associated with | | 6,561 | - |
| the Investment Plan | | | |
+---------------------------------------------------+------+---------+---------+
| Acquisition of the remaining | | 2,780 | - |
| capital of VTL Strategies LLP | | | |
+---------------------------------------------------+------+---------+---------+
| Reorganisation and rationalisation | | 3,429 | 1,495 |
+---------------------------------------------------+------+---------+---------+
| Loss on disposal of operations | | 543 | - |
| discontinued in prior periods | | | |
+---------------------------------------------------+------+---------+---------+
| Financing costs | | 386 | - |
+---------------------------------------------------+------+---------+---------+
| | | 13,699 | 1,495 |
+---------------------------------------------------+------+---------+---------+
The acquisition of the remaining capital of VTL Strategies LLP has enabled the
Group to fully benefit from all future profits generated by its specialist high
level tax planning services.
The 'one off' finance costs resulted from the Group replacing interest rate
hedging instruments as part of its regular reviews of its hedging instruments.
The Group has continued its reorganisation and rationalisation of the business
as part of the focus to improve operating efficiency and more fully exploit the
Vantis brand. The reduction to two division, Business Advisory & Tax and
Business Recovery Services was a major part of this reorganisation.
In the previous year exceptional costs of GBP1,495,000 represented both the
Group's investment in the integration and development of its I.T. infrastructure
improving service lines' functionality and new business set-up thereby further
increasing its ability to offer a wider range of services to its clients.
3. Income tax
The tax (credit)/charge accrued in these results reflects tax rates of 30% (2008
29.8%).
4. Dividends paid and proposed
+--------------------------------------------+---------+---------+---------+
| | | 2009 | 2008 |
+--------------------------------------------+---------+---------+---------+
| | | GBP'000 | GBP'000 |
+--------------------------------------------+---------+---------+---------+
| Declared and paid during the year: | | | |
+--------------------------------------------+---------+---------+---------+
| Equity dividends on ordinary shares: | | | |
+--------------------------------------------+---------+---------+---------+
| Final dividend for 2008: 1.5p (2007: | | 793 | 1,940 |
| 3.8p) | | | |
+--------------------------------------------+---------+---------+---------+
| First interim for 2009: 1.0p (2008: | | 569 | 767 |
| 1.5p) | | | |
+--------------------------------------------+---------+---------+---------+
| Dividends paid | | 1,362 | 2,707 |
+--------------------------------------------+---------+---------+---------+
| | | | |
+--------------------------------------------+---------+---------+---------+
| No final dividend for 2009 is proposed | | | |
+--------------------------------------------+---------+---------+---------+
| | | | |
+--------------------------------------------+---------+---------+---------+
5. Earnings per share
Basic earnings/(loss) per share is calculated by dividing the profit or loss for
the year attributable to ordinary equity holders of the parent by the weighted
average number of ordinary shares outstanding during the year.
Diluted
earnings/(loss) per share is calculated by dividing the profit or loss
attributable to ordinary equity holders of the parent by the weighted average
number of ordinary shares outstanding during the year plus the weighted average
number of ordinary shares that would be issued on the conversion of all the
dilutive potential ordinary shares.
The following reflects the income and
share data used in the basic and diluted earnings per share computations:
+------------------------------------------------+---------+---------+----------+
| | | | Restated |
+------------------------------------------------+---------+---------+----------+
| | | 2009 | 2008 |
+------------------------------------------------+---------+---------+----------+
| | | GBP'000 | GBP'000 |
+------------------------------------------------+---------+---------+----------+
| Profit/(loss) attributable to | | (5,422) | 4,743 |
| equity holders of the parent - | | | |
| all operations | | | |
+------------------------------------------------+---------+---------+----------+
| Discontinued operations net of | | 216 | 1,973 |
| tax | | | |
+------------------------------------------------+---------+---------+----------+
| Profit/(loss) attributable to | | (5,206) | 6,716 |
| equity holders of the parent - | | | |
| continuing operations | | | |
+------------------------------------------------+---------+---------+----------+
| Amortisation and exceptional | | 10,739 | 1,167 |
| costs net of tax | | | |
+------------------------------------------------+---------+---------+----------+
| Profit attributable to equity | | 5,533 | 7,883 |
| holders of the parent - | | | |
| continuing operations before | | | |
| amortisation and exceptional | | | |
| costs | | | |
+------------------------------------------------+---------+---------+----------+
+-----------------------------------------------+---------+---------+---------+
| | | '000 | '000 |
+-----------------------------------------------+---------+---------+---------+
| Basic weighted average number of shares | 54,857 | 51,155 |
| (excluding treasury shares) | | |
+---------------------------------------------------------+---------+---------+
| Dilutive potential ordinary | | | |
| shares: | | | |
+-----------------------------------------------+---------+---------+---------+
| Employee share options | | 264 | 685 |
+-----------------------------------------------+---------+---------+---------+
| Deferred consideration | | 1,166 | 593 |
+-----------------------------------------------+---------+---------+---------+
| Diluted weighted average number | | 56,287 | 52,433 |
| of shares | | | |
+-----------------------------------------------+---------+---------+---------+
6. Prior period errors
Between 2004 and 2006 the specialist tax division of Vantis, Vantis Tax Limited
("VTL"), introduced four tax-efficient investment opportunities (the
"Investments") to possible investors. The Investments were in new trading
companies that issued shares to investors.
Her Majesty's Revenue and Customs ("HMRC") have been investigating the
Investments since 2006 following raids on four Vantis employees and their
offices at VTL. Vantis has cooperated fully with HMRC throughout its
investigation. Of the four Vantis employees involved, two subsequently left
Vantis. On 30 October 2009 the two continuing employees were further summoned to
appear in Court again in January 2010 in relation to the Investments. The
charges brought do not relate to Vantis's work or advice. HMRC have confirmed to
our advisers that it is not suggested that VTL itself bears any corporate
criminal responsibility. The employees vigorously maintain their innocence.
The outcome of the criminal action against the employees is, as yet, unknown.
However, the directors believe that a civil negotiation with HMRC will follow to
settle a question of valuation related to the Investments.
Vantis believed it had adopted a consistent accounting policy on income
recognition in relation to the Investments. That policy has been to recognise
income when a benefit was obtained by the client, at which point a contractual
obligation arose for the client to pay Vantis's fees.
In view of the current situation the directors have undertaken a full review of
amounts on the balance sheet relating to the Investments and to the four
employees with the following conclusions:
* In prior years errors were made in the preparation of the accounts, the result
of which was that income was recognised that should not have been. The
correction of those errors is made in these accounts as detailed below.
* In view of the recent actions of HMRC and the passage of time the directors
believe that it is appropriate for a provision to be made against all other
related balances. The resulting change to the income statement and other related
costs are shown as an exceptional item, detailed in note 2.
Having made these adjustments all future income receivable from clients relating
to the Investments will be recognised in the income statement when it meets the
Group's revenue recognition criteria.
For the avoidance of doubt, Vantis believe in the absence of any evidence to the
contrary that the claims for tax relief made by the investors in respect of
charitable gifts continue to be valid and that income to Vantis will therefore
eventually result.
Vantis will continue to assertively and vigorously pursue its legal position and
rights, backed by top-quality legal advice that has been consistently and wholly
positive.
+--------------------------------------------------+------------+--------------------------------------------+
| Prior period | | GBP'000 |
| errors | | |
+--------------------------------------------------+------------+--------------------------------------------+
| Reduce | | (1,658) |
| turnover | | |
+--------------------------------------------------+------------+--------------------------------------------+
| Reduce | | 495 |
| taxation | | |
+--------------------------------------------------+------------+--------------------------------------------+
| Decrease in | | (1,163) |
| profit | | |
+--------------------------------------------------+------------+--------------------------------------------+
| Decrease in | | (3,632) |
| trade | | |
| receivables | | |
+--------------------------------------------------+------------+--------------------------------------------+
| Decrease in | | (1,200) |
| amounts | | |
| recoverable | | |
| on contracts | | |
+--------------------------------------------------+------------+--------------------------------------------+
| Decrease in | | 432 |
| other taxes | | |
+--------------------------------------------------+------------+--------------------------------------------+
| Decrease in | | 1,318 |
| current | | |
| income tax | | |
+--------------------------------------------------+------------+--------------------------------------------+
| Decrease in | | (3,082) |
| equity | | |
+--------------------------------------------------+------------+--------------------------------------------+
The Group has also restated classifications of deferred tax and cash flow
analysis to ensure comparability with the current year and to correct
misstatements.
7. General
Copies of this announcement will be available at the Company's registered
office:
Vantis plc
82 St John Street
London EC1M 4JN
Copies of the announcement are also available on the Company's website,
www.vantisplc.com.
The annual report will be posted to shareholders in due course.
This preliminary announcement was approved by the directors on 2 November 2009.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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