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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Sirvis | LSE:SRV | London | Ordinary Share | GB00B23PRH18 | ORD 40P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 160.00 | 0.00 | 00:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number:0226B
SiRViS IT PLC
30 July 2007
SiRViS IT plc
Preliminary results for the year ended 31 May 2007
Highlights
SiRViS IT plc, which provides a range of IT support services across the UK,
announces its preliminary results for the twelve months ended 31 May 2007.
KEY POINTS
* Operating profit* on continuing activities increased by 31% to #992,000
(2006: #757,000);
* Gross margin percentage increased by 4.5% to 36.5% (2006: 32.0%);
* Contracted revenues account for 79% of turnover (2006: 75%);
* Adjusted basic earnings per share* increased by 15% to 0.60p (2006:
0.52p);
* Acquisition of Technology Management Group Limited; and
* New Directors appointed.
* Operating profit and adjusted basic earnings per share are stated before
goodwill amortisation, exceptional items and share based payments.
Enquiries:
Mark Lewis 01773 825516, SiRViS IT plc, Chief Executive
Ian Bailey 01773 825516, SiRViS IT plc, Finance Director
Geoff Nash 020 7600 1658, J M Finn & Co, Nominated Adviser
SiRViS IT plc
Preliminary results
Chairman's statement
I am pleased to report the results for the year ended 31 May 2007. These show a
continued improvement in Group performance at operating profit level for the
year ended 31 May 2007 compared to the previous year. This was achieved in spite
of the adverse impact of the unsolicited, and ultimately unsuccessful, approach
for the Group in December 2006.
Financial review
The trading results for the year show operating profit before amortisation of
acquisition related goodwill, charges in respect of share based payments and
exceptional costs increased by 31% to #992,000 (2006: #757,000).
Adjusted basic earnings per share (before amortisation of acquisition related
goodwill, charges in respect of share based payments and exceptional costs)
increased by 15% to 0.60p per share (2006: 0.52p).
During the year, the Group has concentrated on underpinning its IT contracted
service revenues without pursuing low margin hardware sales. This resulted in a
slight fall in turnover for the year to #7,493,000 (2006: #7,998,000) and
substantially improved margins. It is significant and pleasing to report that
contracted revenues for the period accounted for over 79% of turnover (2006:
75%).
In the previous year, gross margin as a percentage of turnover, suffered from
high cost of sales and one of the Group's objectives for this year was to
improve margins. As a result of strict control of costs, gross margins for the
year increased by 4.5% to 36.5% (2006: 32.0%). Overheads (excluding the new
acquisition and FRS 20 charge) compared to the same period last year were
reduced by 7.5% to #1,671,000 (2006: #1,806,000).
The Group has adopted FRS20 "Share Based Payments" for the first time. The
adoption of this accounting standard represents a change in accounting policy
and the corresponding figures for last year have been restated accordingly. A
first time non-cash charge of #58,000 has been charged to the profit & loss
account for this period and a prior year adjustment in an amount of #97,000 has
been made in the equivalent period last year. Deduction for share based
payments, goodwill amortisation and exceptional items relating to restructuring
costs of the Group's recent acquisition of Technology Management Group Limited
has resulted in an operating loss of #462,000 (restated 2006: #83,000 loss).
Loss after tax and exceptional items was #493,000 (restated 2006: #1,000
profit), resulting in a loss per share of 0.43p (restated 2006: Nil) after tax.
The Board does not propose a dividend and will be unable to declare one until
such time as the accumulated deficit on the Company's profit and loss account
has been eliminated. When appropriate, proposals will be put to shareholders to
approve the utilisation of the share premium account to enable a dividend to be
declared.
Business review
During the financial year, two of our top five customers by value renewed their
long term contracts. Also this year, the Group's operating subsidiary Linetex
Computers Limited was awarded the Microsoft Gold Accreditation and was also
awarded a Becta contract (British Educational Communications and Technology
Agency) to provide ICT Infrastructure Support Services to UK schools. The Becta
contract further strengthens the Group's position as a leading provider of IT
Support Services.
In December 2006, the Group received an unsolicited approach from K3 Business
Technology Group plc ("K3") to acquire the Company. A significant amount of time
and expense was incurred during this approach to ensure the best outcome for our
shareholders, customers and employees, resulting in exceptional costs of
#58,000. Ultimately, K3 decided to pursue other opportunities and following
intervention from the Takeover Panel in February 2007, K3 announced that it no
longer intended making an offer for the Group. The uncertainty surrounding this
approach, had an adverse effect on trading in the second half of the year and
the Group was unable to pursue its stated strategy of growth by acquisition for
over three months.
On 11 May 2007, the Group acquired Technology Management Group Limited ("TMG")
for an initial consideration of #1.25m. Additional consideration may become
payable depending on the performance of TMG over a 15 month period. The
consideration was funded through the use of existing bank facilities and from
the proceeds of a placing of Ordinary Shares which raised #515,000 net of
expenses. TMG offers a range of contracted IT infrastructure services
throughout the United Kingdom to blue chip customers and approximately 50% of
itsturnover is underpinned with recurring contracted income. In the year to 30
November 2006, TMG achieved profit, before tax, of approximately #194,000 and
net assets of #139,000. Since the acquisition, TMG's operations have been
largely integrated into the Group's other operating subsidiary Linetex
Computers Limited and the early indications of the integration are very
positive.
The Board will continue to focus on maintaining gross margin performance by
strict control of staff numbers and related costs. This policy achieved, during
the period under review, improved underlying earnings per share for the period.
New Directors
I am pleased to welcome to the Board, Christopher Mills as a non-executive
Director with effect from 13 March 2007 and Bob Brittaine as executive Sales
Director with effect from 11 May 2007.
Employees
The Board recognises the importance of the Group's staff and management to the
success of the Group and would like to thank all employees for their commitment,
expertise and considerable contribution during the year.
Share Consolidation
There are currently 132,000,000 ordinary shares in issue which in the last 12
months have traded in the range of a high of 3.875p to a low of 2.75p. The
Board considers this relatively low share price to have a number of practical
disadvantages for shareholders.
The Board therefore propose to reduce by way of share consolidation the number
of ordinary shares the Company has in issue so as to mitigate the potential
negative effects of being a "penny share". Under the proposed share
consolidation, each shareholder will receive one consolidated share of 40p,
credited as fully paid, in place of every forty ordinary shares of 1p each
currently held (the "Consolidated Shares").
Approval for the share consolidation will be sought at the forthcoming Annual
General Meeting (AGM). The AGM will take place on 27 September 2007 and it is
expected that the Consolidated Shares will commence trading on the Alternative
Investment Market (AIM) on 28 September 2007. It is anticipated that share
certificates in respect of the Consolidated Shares will be dispatched within 7
working days of the AGM date to shareholders at their registered addresses.
Documents of title in respect of existing ordinary shares will cease to be valid
after the share consolidation and will not be recognised as such by the Company.
The record date in respect of the consolidation is 27 September 2007, being
the date of the AGM.
If an existing holding of ordinary shares held by any shareholder is not exactly
divisible by forty, the resultant number of Consolidated Shares issued to that
person will be dealt with by the Board on behalf of the member pursuant to the
Articles of Association of the Company.
The Consolidated Shares shall carry the rights and be subject to the resolutions
as set out in the articles of association of the Company.
The resolution to effect the share consolidation will be set out in the Notice
of Annual General Meeting, which is to be sent to shareholders with the Annual
Report in the week commencing 20 August 2007.
Outlook
The current year has started well and the Board looks forward to the future with
confidence. The IT services marketplace remains fragmented and the Board will
continue to explore corporate opportunities that will provide additional
economies of scale and enhance shareholder value.
Peter Addison
Non-executive Chairman
SiRViS IT plc
Preliminary results
Consolidated Profit & Loss Account for the year ended 31 May 2007
Restated
Continuing Total year total year
activities Acquisitions ended 31 May ended 31 May
2007 2007 2007 2006
#'000 #'000 #'000 #'000
Turnover 7,217 276 7,493 7,998
Cost of sales (4,580) (184) (4,764) (5,435)
Gross profit 2,637 92 2,729 2,563
Net operating expenses before goodwill
amortisation, share based payments and
exceptional items (1,671) (66) (1,737) (1,806)
Operating profit before goodwill
amortisation, share based payments and
exceptional items 966 26 992 757
Exceptional items (119) (827) (946) (301)
Share based payments (58) - (58) (97)
Goodwill amortisation (450) - (450) (442)
Total operating expenses (2,298) (893) (3,191) (2,646)
Operating (loss)/profit 339 (801) (462) (83)
Profit from disposal of discontinued
operations - - - 117
(Loss)/profit on ordinary activities before
interest and taxation 339 (801) (462) 34
Investment income - interest receivable 1 19
Interest payable and similar charges (28) (44)
(Loss)/profit on ordinary activities before
taxation (489) 9
Tax on (loss)/profit on ordinary activities (4) (8)
(Loss)/profit for the year (493) 1
(Loss)/earnings per ordinary share
- basic and diluted (0.43p) -
The Group has no recognised gains or losses other than the (loss)/profit above
and therefore no separate statement of total recognised gains and losses has
been presented.
All operating transactions arose from continuing activities.
SiRViS IT plc
Preliminary results
Consolidated Balance Sheet for the year ended 31 May 2007
Consolidated Balance Sheet
at 31 May 2007 Restated
2007 2006
#'000 #'000 #'000 #'000
Fixed assets
Intangible assets 8,884 7,182
Tangible assets 128 117
9,012 7,299
Current assets
Stocks 696 505
Debtors: amounts falling due within one year 2,376 968
Cash at bank and in hand 716 239
3,788 1,712
Creditors: amounts falling due within one year (2,709) (1,555)
Net current assets 1,079 157
Total assets less current liabilities 10,091 7,456
Creditors: amounts falling due after more than one year (188) (226)
Accruals and deferred income (2,988) (1,732)
Provisions for liabilities (1,337) -
(4,513) (1,958)
Net assets
5,578 5,498
Capital and reserves
Called up share capital 1,320 1,141
Share premium account 6,145 5,809
Profit and loss account (1,887) (1,452)
Shareholders' funds
5,578 5,498
SiRViS IT plc
Preliminary results
Reconciliation of movements in shareholders' funds
Restated
2007 2006
#'000 #'000
(Loss)/profit for the financial year (493) 1
Share based payments 58 97
Increase in issued share capital 179 -
Increase in share premium 336 -
Net increase in shareholders' funds 80 98
At beginning of year 5,498 5,400
At end of year 5,578 5,498
SiRViS IT plc
Preliminary results
Consolidated Cash Flow Statement for the year ended 31 May 2007
2007 2006
#'000 #'000
Net cash inflow from operating activities (see below)
547 856
Returns on investments and servicing of finance
Interest paid (28) (245)
Interest received 1 19
Net cash outflow from returns on investments and servicing of finance (27) (226)
Taxation (55) (330)
Capital expenditure and financial investment
Purchase of tangible fixed assets (55) (78)
Net cash outflow from capital expenditure and financial investment (55) (78)
Acquisitions and disposals
Cash at bank acquired with subsidiary 521 -
Purchase of subsidiary undertaking (925) -
Cash received from disposal of subsidiary - 117
Deferred consideration paid (360) (360)
Cash outflow from acquisitions and disposals (764) (243)
Net cash outflow before financing (354) (21)
Financing
Net proceeds of share issue 515 -
Berg and Berg Enterprises Inc. - loan repaid - (1,300)
Net cash inflow/(outflow) from financing 515 (1,300)
Increase/(decrease) in cash in the period 161 (1,321)
Reconciliation of operating profit to net cash inflow from operating
activities
Restated
2007 2006
#'000 #'000
Operating loss (462) (83)
Depreciation of tangible fixed assets 47 34
Amortisation of goodwill 450 442
Increase in restructuring provision 477 -
Increase in onerous lease provision 385 -
Decrease/(increase) in stocks 39 (77)
(Increase)/decrease in debtors (441) 520
Increase in creditors 321 139
Decrease in accruals and deferred income (327) (216)
Other non-cash changes - share based payments 58 97
Net cash inflow from operating activities 547 856
SiRViS IT plc
Preliminary results
Notes to the financial statements for the year ended 31 May 2007
1. The Directors are not recommending the payment of an ordinary share dividend.
2. Exceptional items were as follows: -
2007 2006
#'000 #'000
K3 Business Technology Group plc approach 58 -
Restructuring provision 494 -
Onerous lease provision 365 -
Aborted acquisition costs 29 -
Compensation for loss of office - 301
946 301
K3 Business Technology Group plc approach:
During December 2006, the Group received an unsolicited approach from K3 to
acquire the Company. Expenses were incurred during this approach to ensure the
best outcome for our shareholders, customers and employees. In February 2007 K3
decided to pursue other opportunities.
Restructuring provision:
A provision has been made for redundancy costs and other expenses in relation to
integrating the acquisition of Technology Management Group Limited into Group
operations. A charge of #494,000 was made, together with a release of #17,000
in the year.
Onerous lease provision:
Following the integration of two locations, a provision has been made relating
to the closure of the Technology Management Group Limited premises.
The redundancies and office closure were announced prior to the year end.
3. The calculation of (loss)/earnings per share are based on the (loss)/profit
for the financial period and the following numbers of shares:
2007 2006
Number of shares Number of shares
Weighted average number of shares
For basic (loss)/earnings per share 114,803,249 114,066,245
For diluted earnings per share 114,803,249 114,260,579
In view of the significant impact of the adoption of FRS20 Share Based Payments,
goodwill amortisation and exceptional items on earnings per share calculated in
accordance with FRS22, Earnings Per Share, an adjusted (loss)/earnings per share
has been provided below as the directors consider that they may be useful to
shareholders and potential investors.
Restated
2007 2006
Per Per
share share
(Loss)/ amount amount
earnings Basic and Earnings Basic and
#'000 diluted #'000 diluted
p p
(Loss)/profit for the period (493) (0.43) 1 -
Previous years tax charge adjustment 4 - (48) (0.04)
Effect of share based payments 58 0.05 97 0.09
Effect of goodwill amortisation 450 0.39 442 0.39
Earnings per share before share based payments and goodwill
amortisation 19 0.01 492 0.44
Exceptional items:
Compensation for loss of office (net of tax) - - 211 0.18
K3 Business Technology Group plc approach (net of tax) 41 0.04 - -
Restructuring provision (net of tax) 346 0.30 - -
Onerous lease provision (net of tax) 256 0.22 - -
Abortive acquisition costs 29 0.03 - -
Profit from disposal of discontinued activities (net of tax) - - (117) (0.10)
Earnings per share before share based payments, exceptional items
and goodwill amortisation 691 0.60 586 0.52
SiRViS IT plc
Preliminary results
Notes to the financial statements for the year ended 31 May 2007 cont:
4. Provisions for liabilities:
Group &
Group Company
Group Onerous Contingent Group
Restructuring Lease Consideration Total
#'000 #'000 #'000 #'000
Beginning of the year - - - -
Additions in the year due to acquisition 494 385 475 1,354
Utilised in the year (17) - - (17)
End of year 477 385 475 1,337
5. The financial information set out in this Preliminary announcement does
not constitute statutory accounts as defined in section 240 of the
Companies Act 1985.
Results for the year ended 31 May 2007 are abridged from the 2007 Annual
Report and Accounts, which received an unqualified auditor's report and
will be filed with the Registrar of Companies following the Annual General
Meeting.
6. The Annual Report will be posted to shareholders week commencing
20 August 2007.
Further copies will be available from the Company's head office:
Blackbrook House, Ashbourne Road, Blackbrook, Belper, Derbyshire, DE56 2DB.
7. The Annual General Meeting of the Company will be held at the offices of
J M Finn & Co, 4 Coleman Street, London, EC2R 5TA, England, on Thursday
27 September 2007 at 11.00 a.m.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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