1 Jul 2010 07:00
1st July 2010
Cyril Sweett Group plc ("Cyril Sweett" or "the Group")
Unaudited preliminary results for the year ended 31 March 2010
Cyril Sweett is a leading international construction and property consultancy providing expertise in cost management, project management and a comprehensive range of specialist services such as management consultancy, operating across Europe, the Middle East, North Africa, India, Sri Lanka, Asia Pacific and Australia. The Group works with and advises, private sector developers, occupiers, investors, construction companies and government agencies, undertaking infrastructure and property projects across a diverse range of market sectors.
The Group is pleased to announce its unaudited preliminary results for the year ended 31 March 2010.
| Highlights | 2010 | 2009 |
|
|
|
|
| Revenue | £65.6m | £78.9m |
|
|
|
|
| Operating profit | £2.3m | £2.4m |
|
|
|
|
| Headline operating profit1 | £3.2m | £6.4m |
|
|
|
|
| Profit before tax | £2.1m | £2.2m |
|
|
|
|
| Headline pre-tax profit2 | £3.0m | £6.2m |
|
|
|
|
| Basic earnings per share | 2.5 pence | 2.9 pence |
|
|
|
|
| Net (debt) / funds | £(0.5)m | £0.1m |
|
|
|
|
| Full year dividend | 1.6 pence | 2.4 pence |
|
|
|
|
| Current contracted order book | £58.0m | £74.0m |
Chief Executive Officer Dean Webster said:
"I am pleased with the Group's robust performance, particularly against an extremely challenging market backdrop. This reflects the success of our strategy to diversify the portfolio internationally and across industry sectors, whilst maintaining a prudent approach to operational costs. The business has maintained its strong balance sheet and continues to operate with little net debt.
"Whilst we expect the market environment to remain tough, we are confident that our exposure to both private and public markets, coupled with our continued diversification, places us in a strong position to maintain our market share in the UK and to further strengthen our foothold in international markets."
____________________
Enquiries
| Cyril Sweett Group plc Dean Webster, Chief Executive Officer Chris Goscomb, Chief Financial Officer Gary Travers, Group Marketing Director
|
020 7061-9303 020 7061-9520 020 7061-9003 |
| Brewin Dolphin Andrew Kitchingman Sean Wyndham-Quin
|
0845 213-4787 0845 213-4747 |
| Financial Dynamics Billy Clegg Georgina Bonham | 020 7831-3113 |
Chairman's Statement
The Group has had a strong year despite the continued poor market conditions in the construction and property sectors. Results for the year were slightly above the current market expectation. Critically, the Group continues to achieve one of its key performance targets by remaining profitable and cash generative at the operating cash flow level. The robust performance continues to be as a result of the pursuit of our strategy to diversify the portfolio internationally and across industry sectors whilst maintaining a prudent approach to operational costs.
The executive team members have all experienced working through market recessions. This experience has been put into force through the year with strong discipline around our cash management, resulting in the preservation of a very healthy balance sheet. Given the potential for the market to remain uncertain, management continues to build in to the Group a flexible, operational methodology, one that allows for responsive management and the ability to adapt the business in order to deliver client-orientated services on demand.
The Group continued to diversify in the year whilst maintaining strong relationships with its existing clients. The business benefited from its pedigree in strong relationships in construction and property sectors by maintaining market share in the United Kingdom ("UK"), albeit within a smaller market spend. Industry diversification has focused on growing further in the transportation, infrastructure, hospitality and health sectors - in the UK and overseas.
International expansion through the year has included consolidation within areas where the Group is already present, as well as reaching into new territories. Exciting opportunities for growth in the Middle East and North Africa are being pursued from our base in the United Arab Emirates ("UAE"), with new offices opening across the region. This year also saw the reinforcement of our operations in India, a strong foundation laid in Asia Pacific and a further acquisition in Australia.
To achieve all of the above, under difficult trading conditions, our people have performed exceptionally well. Our ability to deliver a quality service to clients in a turbulent market is evident. It is the people within the business that have delivered our robust performance and my thanks go to them all. We are confident that the experiences of this year will stand us in good stead for a positive future.
After 40 years with the firm, 19 at the helm, I have decided to retire from Cyril Sweett at the AGM in September. I have had an incredible journey with the firm, and have established lifelong friendships within the business and across the industry. I leave confident that the business is in a strong position to capitalise on its future.
Outlook
Operating within the construction and property sectors will remain a challenge, particularly given the requirement for governments across the world to consider a more prudent approach to investment.
There are early signals that there may be an upswing in private sector opportunities as the new year progresses, and the Group is well placed to benefit from these. Our experience in both private and public markets provides a good foundation to be as flexible as the market demands.
Our approach to this challenging market is to be agile and prudent and to continue our diversification, which opens opportunities to pursue growth and to enable our people to focus on delivering our clients' needs.
Francis Ives - Chairman
Chief Executive's Review
Introduction
The Group operates within the international construction and property markets, providing advice on cost management, project management and specialist services such as management consulting. The last year has seen the continuation of the exceptionally challenging trading conditions within our markets that arose during 2009. Against this backdrop I am pleased with the Group's performance.
The strong performance of the Group in this turbulent market demonstrates the success of our strategy to diversify the portfolio internationally and across industry sectors whilst maintaining a prudent approach to operational costs. The Group delivers its services across sectors including commercial and retail, health, education, industrial, social housing, defence, life sciences, hospitality, transportation, energy and infrastructure. We operate from 35 offices across Europe, the Middle East, North Africa, India, Sri Lanka, Asia Pacific and Australia.
The Group enjoys a healthy balance of public and private clients throughout its regions.
Sustained, prudent management has resulted in a robust financial performance for the Group in the challenging marketplace. In the year, the business has maintained its strong balance sheet and operates with little net debt. Our activities in the year were cash generative at an operational level and we ended the year with minimal net borrowings and operating profit of £2.3m (2009: £2.4m), after the impact of exceptional administrative expenses of £0.7m (2009: £3.8m) and amortisation of acquired intangible assets of £0.2m (2009: £0.2m).
Last year saw decisive action taken, with the business right-sizing its shape and headcount to address the challenges of the market, particularly in the UK, where there was a dramatic reduction in private sector projects coming to market. The Group's executive team continues to address the resource requirements of the business on an ongoing basis as the market demands but is also re-aligning the Group to pursue opportunities in growing sectors such as infrastructure and energy. During the year, we have developed our sector experience, become more competitive and increased our capacity to deliver the responsive services that clients are demanding across the globe. Our continued expansion outside the UK brings additional balance to the Group.
Our people have risen to the challenge of the market, by adopting increasingly flexible working conditions and skill-sets. This is positioning us to take advantage of the opportunities that are arising as a result of pursuing our strategy.
During the year we invested in our management systems and business infrastructure to enhance our business connectivity. One of the main benefits of the enhancement of these systems is to enable more accurate and timely measurement of the Group's performance against its key performance indicators. As the Group pursues growth across an increased number of geographical, cultural and industrial sectors, the ability for our people to be connected with each other is increasingly important. The ability to communicate best practice, share thought-leading ideas and disperse knowledge or 'knowhow' throughout the business will remain essential to the success of the Group and the value we deliver to our clients. We are investing in additional systems and programmes that enable an increasingly connected set of people to perform more competitively with the common purpose to deliver world-class advice.
All the elements above contributed to the winning of Building Magazine's 'Consultant of the Year' award for 2010. I am proud of everyone's hard work across the business to realise this industry accolade. The judges commented that Cyril Sweett is "creating new benchmarks for the whole profession". Recognition of this is public testament to our successful year in a difficult market. Our success is down to our people and my personal thanks go to them all.
Financial performance
Revenue for the year was £65.6m (2009: £78.9m). Operating profit, before tax and exceptional expenses decreased to £3.2m (2009: £6.4m) and on a post-exceptional basis decreased to £2.3m (2009: £2.4m). Basic earnings per share were 2.5p (2009:2.9p) and operating margins were 3.5% (2009: 3.0%). Despite trading performance being below expectations, the Group had a positive year in a difficult market. Our current order book is £58m, a slight reduction from the year-end total of £60m.
We have continued to focus on delivering a service that is client-orientated and, in doing so, the average revenue per fee earner has risen to £110,000 from £106,000 in 2009, due to increased efficiency.
The Board has proposed a final dividend in respect of the year of 0.8p per share which, together with the interim dividend, totals 1.6p per share. The final dividend will be paid on 17 September 2010 to shareholders on the register on 20 August 2010.
Review of operations
UK and Ireland overview
Revenue in the UK and Ireland in the year was £50.8m (2009 £66.6m), accounting for 77.4% (2009: 84.4%) of Group revenue.
The business continues to win appointments on framework contracts that are further translated into orders. Our clients' appetite for using frameworks as a means of procurement continues to increase. As such, the business has taken steps to enhance both its competitiveness to win frameworks and its capability to advise clients on best-practice framework procurement.
In the UK the business has maintained its healthy balance between public and private sector clients. However, UK operations continued to suffer lower levels of activity and increased pricing pressure than in previous years. As necessary, management continue to adjust the shape of the business in order to deliver market expectations. We remain committed to our relationships with our existing clients. During the year, we have focused on consolidating our position in sectors where we are industry leaders and we have made key hires that maintain our growth in our relatively newer sectors such as infrastructure and energy.
The uncertainty in the UK construction and property market remains, particularly given the need for the UK Government to reduce public stimulus programmes. We await the result of the Government's comprehensive spending review in October. In the meantime it appears, based on the June 2010 budget, that operational rather than capital spend is the target for cuts. Our approach is to maintain operational flexibility alongside the continued focus on cost-efficient delivery. Given the current shape of our UK operations, the business is both competitive and well-placed to take advantage of any market opportunities wherever they occur across the UK regions and within the public or private sector.
International overview
Overseas revenue for the year totalled £14.8m (2009: £12.3m), accounting for 22.6% (2009: 15.6%) of Group revenue.
In the Middle East, trading conditions within the UAE, particularly Dubai, remained a challenge. However, this was countered by increased business wins across other key territories, such as the Kingdom of Saudi Arabia and other Gulf Coast Countries. From our bases in the Middle East, the business has developed new project offices in North Africa and grown further in India and Sri Lanka. Access to new markets in the Indian sub-continent provides both the foundation for growth within these territories and an efficient asset in serving elements of our value-chain, at competitive rates, across the Group. Although the local market conditions in the UAE remain tough, the UAE provides the business infrastructure necessary to host our regional headquarters and Cyril Sweett remains committed to the Emirates for the long-term.
We have found that operating bases in Singapore and Hong Kong provide excellent access to the wider Asia Pacific market. Our Asia Pacific business has performed satisfactorily during the year and continues to win signature contracts for the Group to capitalise upon within Asian markets and across other international regions. In March 2010 we announced our alliance and joint venture agreement with the Hong Kong, Macau and mainland China based business Widnell. Widnell has operated in these markets for over 30 years and is a significant business offering cost management and project management services in the region. Our alliance provides us with substantially increased access to the Chinese market and Widnell with the opportunity to access the Cyril Sweett skill-set and our networked presence across the globe.
Given that China is the largest export market for Australia, we see our presence in Australia benefiting from increased access to the Chinese marketplace. In the year, the Group acquired the cost management business Padghams to complement its existing offering in Australia and to reinforce its position in India. Padghams is now fully integrated into the Group and has proved a successful acquisition to strengthen our offering in this robust market.
We have absorbed the start-up costs associated with fulfilling our business strategy of international diversification and expansion with a focus on growing markets. Actions taken this year will position the business well for years to come.
Investment activity
The Group continues to invest in infrastructure projects and has a specialist business unit to take advantage of this market.
In line with our aim to grow the Group's Investment business across a wider sector base, we are currently working on several PPP and PFI prospects, having achieved construction completion on one such project, South Ayrshire Schools, during the year under review. We are also part of the consortium appointed by NHS Cumbria to form a Local Improvement Finance Trust (LIFT) company to finance and redevelop the county's existing community hospitals. This "Express LIFT" opportunity is expected to deliver an initial pipeline of projects in the region of £100m.
Management
After 40 years with the firm, almost half at the helm, Francis Ives has elected to retire at the AGM on 10 September 2010. Francis has been a talisman for this business and we wish him well in his retirement.
I am delighted to announce that Michael Henderson is proposed by the Board to succeed Francis as our Chairman, following the AGM. Michael has been a Non-Executive Director at Cyril Sweett since 1998, and has an in-depth understanding of both the business and our market challenges. A selection process to appoint a fourth Non-Executive Director is underway and will be concluded before the AGM.
Outlook
The market within which we operate is expected to remain challenging and uncertain for the foreseeable future. We are confident that the Group's strategy of diversification across territories and sectors, with a prudent approach to operational costs, alongside the installation of flexible working practices, together with the continued focus on a client-orientated service, all supported by investment in a networked infrastructure, is the right approach.
It takes exceptional people to succeed in exceptionally challenging markets and we have exceptional people within Cyril Sweett. Thanks are due to them for their tremendous work in the year. It is the people of Cyril Sweett that drive the business and who will continue to meet our challenges.
We believe the business has competed well in the year, will continue to do so and is positioned to take advantage of all opportunities as they arise.
Dean Webster - Chief Executive Officer
Cyril Sweett Group plc
Consolidated Income Statement (unaudited)
For the year ended 31 March
|
| Notes | 2010 |
| 2009 |
|
| £'000 | £'000 | ||
|
|
|
|
|
|
| Revenue | 3 | 65,618 |
| 78,912 |
| Cost of sales |
| (44,650) |
| (54,043) |
|
|
|
|
|
|
| Gross profit |
| 20,968 |
| 24,869 |
|
|
|
|
|
|
| Administrative expenses before the following: |
| (17,818) |
| (18,502) |
| Exceptional administrative expenses | 4 | (668) |
| (3,761) |
| Amortisation of acquired intangibles |
| (213) |
| (201) |
| Total administrative expenses |
| (18,699) |
| (22,464) |
|
|
|
|
|
|
|
|
|
|
|
|
| Operating profit before the following: |
| 3,150 |
| 6,367 |
| Exceptional administrative expenses |
| (668) |
| (3,761) |
| Amortisation of acquired intangibles |
| (213) |
| (201) |
| Operating profit |
| 2,269 |
| 2,405 |
|
|
|
|
|
|
|
|
|
|
|
|
| Finance income |
| 93 |
| 249 |
| Finance expense |
| (241) |
| (452) |
| Net finance expense |
| (148) |
| (203) |
|
|
|
|
|
|
| Profit before taxation |
| 2,121 |
| 2,202 |
| Income tax expense | 5 | (668) |
| (568) |
| Profit for the period from continuing operations attributable to owners of the parent |
| 1,453 |
| 1,634 |
|
|
|
|
|
|
| Basic earnings per share (pence) | 6 | 2.5 |
| 2.9 |
|
|
|
|
|
|
| Diluted earnings per share (pence) | 6 | 2.5 |
| 2.8 |
Cyril Sweett Group plc
Consolidated Statement of Comprehensive Income (unaudited)
For the year ended 31 March
|
|
|
|
|
|
|
|
| 2010 |
| 2009 |
|
| Note | £'000 |
| £'000 |
|
|
|
|
|
|
| Profit for the year |
| 1,453 |
| 1,634 |
|
|
|
|
|
|
| Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
| Exchange differences on translation of foreign operations |
| (141) |
| 690 |
| Valuation gain / (loss) on available for sale financial assets |
| 253 |
| (325) |
| Actuarial loss on pension scheme |
| (1,593) |
| (1,727) |
| Deferred tax on items taken directly to equity |
| 161 |
| 575 |
|
|
|
|
|
|
| Other comprehensive expense net of tax | (1,320) |
| (787) | |
|
|
|
|
|
|
| Total comprehensive income attributable to equity holders of the parent |
| 133 |
| 847 |
Cyril Sweett Group plc
Consolidated Balance Sheet (unaudited)
as at 31 March
|
|
| 2010 |
| 2009 |
|
| Notes | £'000 |
| £'000 |
| Non-current assets |
|
|
|
|
| Goodwill | 7 | 12,124 |
| 10,572 |
| Other intangible assets | 8 | 2,087 |
| 1,920 |
| Property, plant and equipment |
| 1,741 |
| 1,862 |
| Financial assets |
| 1,311 |
| 627 |
| Deferred income tax asset |
| 1,475 |
| 817 |
| Total non-current assets |
| 18,738 |
| 15,798 |
|
|
|
|
|
|
| Current assets |
|
|
|
|
| Trade and other receivables |
| 24,000 |
| 27,744 |
| Cash and cash equivalents |
| 3,924 |
| 3,818 |
|
|
| 27,924 |
| 31,562 |
|
|
|
|
|
|
| Total assets |
| 46,662 |
| 47,360 |
|
|
|
|
|
|
| Current liabilities |
|
|
|
|
| Financial liabilities |
| (749) |
| (277) |
| Trade and other payables |
| (10,629) |
| (13,000) |
| Current income tax liabilities |
| (306) |
| - |
| Total current liabilities |
| (11,684) |
| (13,277) |
|
|
|
|
|
|
| Non-current liabilities |
|
|
|
|
| Financial liabilities |
| (3,719) |
| (3,431) |
| Trade and other payables |
| (278) |
| (643) |
| Deferred income tax liability |
| (149) |
| (77) |
| Provisions for other liabilities and charges |
| (480) |
| (300) |
| Retirement benefit obligations |
| (2,556) |
| (1,290) |
| Total non-current liabilities |
| (7,182) |
| (5,741) |
|
|
|
|
|
|
| Total liabilities |
| (18,866) |
| (19,018) |
|
|
|
|
|
|
| Net assets |
| 27,796 |
| 28,342 |
|
|
|
|
|
|
| Equity |
|
|
|
|
| Share capital |
| 5,860 |
| 5,759 |
| Share premium |
| 12,142 |
| 11,955 |
| Treasury shares |
| (11) |
| (118) |
| Share option reserve |
| 369 |
| 249 |
| Retained earnings |
| 9,436 |
| 10,497 |
| Total equity shareholders' funds |
| 27,796 |
| 28,342 |
Cyril Sweett Group plc
Consolidated statement of changes in equity (unaudited)
For the year ended 31 March
|
Group |
|
Share capital |
Share premium |
Treasury shares | Share option reserves |
Other reserves |
Retained earnings |
Total equity |
|
|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| At 1 April 2008 |
| 5,534 | 9,987 | (341) | 615 | 559 | 10,247 | 26,601 |
| Comprehensive income |
|
|
|
|
|
|
|
|
| Profit for the year |
| - | - | - | - | - | 1,634 | 1,634 |
| Other comprehensive income: |
|
|
|
|
|
|
|
|
| Exchange differences on translation of foreign operations | - | - | - | - | 690 | - | 690 | |
| Valuation loss on available for sale financial assets | - | - | - | - | (325) | - | (325) | |
| Actuarial loss on pension scheme | - | - | - | - | - | (1,727) | (1,727) | |
| Deferred tax on items taken directly to equity | - | - | - | - | 91 | 484 | 575 | |
| Total other comprehensive expense | - | - | - | - | 456 | (1,243) | (787) | |
|
|
|
|
|
|
|
|
|
|
| Total comprehensive income |
| - | - | - | - | 456 | 391 | 847 |
|
|
|
|
|
|
|
|
|
|
| Transactions with owners: |
|
|
|
|
|
|
|
|
| Dividends |
| - | - | - | - | - | (1,430) | (1,430) |
| Employee share option scheme |
|
|
|
|
|
|
| |
| - value of services provided |
| - | - | - | 105 | - | - | 105 |
| - exercise of awards |
| - | - | - | (12) | - | 12 | - |
| - deferred tax on unexercised options | - | - | - | (459) | - | - | (459) | |
| Purchase of shares by the EBT less exercise price of options exercised over these shares | - | - | - | - | - | (262) | (262) | |
| Cost of treasury shares less value transferred in settlement of deferred acquisition consideration | - | - | - | - | - | (202) | (202) | |
| Revaluation of shares held in treasury | - | - | - | - | - | 726 | 726 | |
| Disposal of shares during the year | - | - | 223 | - | - | - | 223 | |
| New shares issued during the year | 225 | 1,998 | - | - | - | - | 2,223 | |
| Issue costs |
| - | (30) | - | - | - | - | (30) |
| Transactions with owners |
| 225 | 1,968 | 223 | (366) | - | (1,156) | 894 |
|
|
|
|
|
|
|
|
|
|
| At 31 March 2009 |
| 5,759 | 11,955 | (118) | 249 | 1,015 | 9,482 | 28,342 |
|
|
|
|
|
|
|
|
|
|
| Comprehensive income |
|
|
|
|
|
|
|
|
| Profit for the year |
| - | - | - | - | - | 1,453 | 1,453 |
| Other comprehensive income: |
|
|
|
|
|
|
|
|
| Exchange differences on translation of foreign operations | - | - | - | - | (141) | - | (141) | |
| Valuation gain on available for sale financial assets | - | - | - | - | 253 | - | 253 | |
| Actuarial loss on pension scheme | - | - | - | - | - | (1,593) | (1,593) | |
| Deferred tax on items taken directly to equity | - | - | - | - | (71) | 232 | 161 | |
| Total other comprehensive expense | - | - | - | - | 41 | (1,361) | (1,320) | |
|
|
|
|
|
|
|
|
|
|
| Total comprehensive income | - | - | - | - | 41 | 92 | 133 | |
|
|
|
|
|
|
|
|
|
|
| Transactions with owners: |
|
|
|
|
|
|
|
|
| Dividends |
| - | - | - | - | - | (1,285) | (1,285) |
| Employee share option scheme |
|
|
|
|
|
|
| |
| - value of services provided |
| - | - | - | 120 | - | - | 120 |
| Revaluation of treasury shares acquired for acquisition consideration | - | - | - | - | - | 91 | 91 | |
| Disposals during the year |
| - | - | 107 | - | - | - | 107 |
| New shares issued during the year |
| 101 | 187 | - | - | - | - | 288 |
| Transactions with owners |
| 101 | 187 | 107 | 120 | - | (1,194) | (679) |
|
|
|
|
|
|
|
|
|
|
| At 31 March 2010 |
| 5,860 | 12,142 | (11) | 369 | 1,056 | 8,380 | 27,796 |
Cyril Sweett Group plc
Consolidated Statement of Cash Flow (unaudited)
For the year ended 31 March
|
|
|
|
|
|
|
| Notes | 2010 |
| 2009 |
|
|
| £'000 |
| £'000 |
| Cash flows from operating activities |
|
|
|
|
| Cash flows from operations | 10 | 5,426 |
| 3,912 |
| Interest received |
| 56 |
| 210 |
| Interest paid |
| (182) |
| (240) |
| Income taxes paid |
| (700) |
| (1,767) |
|
|
| 4,600 |
| 2,115 |
| Net cash generated from operating activities |
|
| ||
|
|
|
|
|
|
| Cash flows from investing activities |
|
|
|
|
| Proceeds on disposal of property, plant and equipment |
| 11 |
| 4 |
| Purchase of property, plant and equipment |
| (472) |
| (1,229) |
| Purchase of computer software |
| (330) |
| (347) |
| (Increase) / decrease in financial assets (loans and receivables) |
| (394) |
| 38 |
| Settlement of deferred consideration |
| (1,174) |
| - |
| Acquisition of subsidiary, net of cash acquired |
| (752) |
| (4,228) |
| Net cash used in investing activities |
| (3,111) |
| (5,762) |
|
|
|
|
|
|
| Cash flows from financing activities |
|
|
|
|
| Dividends paid |
| (1,285) |
| (1,430) |
| Repayments of borrowings |
| (270) |
| (672) |
| Repayments of obligations under finance leases |
| (7) |
| (115) |
| Purchase of own shares in satisfaction of acquisition consideration |
| (425) |
| (881) |
| Purchase of own shares in satisfaction of share options |
| - |
| (262) |
| Decrease in treasury shares |
| 107 |
| 223 |
| New bank loans raised |
| - |
| 3,606 |
| Net cash (used in) / generated from financing activities |
| (1,880) |
| 469 |
| Net decrease in cash and cash equivalents |
| (391) |
| (3,178) |
| Cash, cash equivalents and bank overdrafts at beginning of year |
| 3,818 |
| 6,730 |
| Exchange gains on cash, cash equivalents and bank overdrafts |
| (63) |
| 266 |
| Cash, cash equivalents and bank overdrafts at end of year |
| 3,364 |
| 3,818 |
Cyril Sweett Group plc
Notes to the unaudited preliminary statements
1. General information
This preliminary announcement does not constitute the Group's full financial statements for the year ended 31 March 2010. The financial information for the year ended 31 March 2009, set out in this announcement does not constitute statutory accounts as defined in section 434 of the Companies Act 2006 and has been extracted from the Annual Report for the year ended 31 March 2009. Statutory accounts for the year ended 31 March 2009 have been delivered to the Registrar of Companies and those for the year ended 31 March 2010 will be available to shareholders by 11 August 2010 for approval at the Annual General Meeting to be held on 10 September 2010. Those accounts have not yet been delivered to the Registrar, nor have the auditors reported on them.
Cyril Sweett Group plc is an unlisted company, quoted on the Alternative Investment Market, and is incorporated and domiciled in the United Kingdom under the Companies Act 1985. The address of the registered office is 60 Gray's Inn Road, London, WC1X 8AQ. The principal activities of the Group include the provision of construction cost consultancy, project management and other specialised consultancy services, including building surveying.
2. Significant accounting policies
The accounting policies adopted for the year ended 31 March 2010 are consistent with the policies included in the annual report for the year ended 31 March 2009.
Basis of preparation
The consolidated financial statements of Cyril Sweett Group plc have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU), IFRIC Interpretations and the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention, as modified by available-for-sale financial assets, and financial assets and financial liabilities at fair value through income statement and statement of comprehensive income..
3. Segmental analysis
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board that implements agreed strategic decisions and runs the day-to-day operations of the Cyril Sweett Group.
Primary segments (unaudited)
|
| UK and Ireland | Rest of the world | 2010 Total |
| UK and Ireland | Rest of the world | 2009 Total |
| Revenue by | £'000s | £'000s | £'000s |
| £'000s | £'000s | £'000s |
| geographical regions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| External sales | 50,804 | 14,814 | 65,618 |
| 66,635 | 12,277 | 78,912 |
| Gross profit | 16,731 | 4,237 | 20,968 |
| 20,598 | 4,271 | 24,869 |
| Administrative expenses before exceptional expenses | (12,522) | (4,138) | (16,660) |
| (14,229) | (3,693) | (17,922) |
| Exceptional administrative expenses | (668) | - | (668) |
| (3,553) | (208) | (3,761) |
| Amortisation of acquired intangibles | (96) | (117) | (213) |
| (96) | (105) | (201) |
| Total administrative expenses | (13,286) | (4,255) | (17,541) |
| (17,878) | (4,006) | (21,884) |
| Segment results | 3,445 | (18) | 3,427 |
| 2,720 | 265 | 2,985 |
| Unallocated corporate costs * |
|
| (1,158) |
|
|
| (580) |
| Finance income |
|
| 93 |
|
|
| 249 |
| Finance expense |
|
| (241) |
|
|
| (452) |
|
|
|
|
|
|
|
|
|
| Profit before tax |
|
| 2,121 |
|
|
| 2,202 |
| Taxation |
|
| (668) |
|
|
| (568) |
|
|
|
|
|
|
|
|
|
| Profit for the year |
|
| 1,453 |
|
|
| 1,634 |
* Unallocated corporate costs comprise directors' remuneration, advertising, public relations, corporate financing costs and legal and professional fees.
| Other information | UK and Ireland | Rest of the world | 2010 Total |
| UK and Ireland | Rest of the world | 2009 Total |
|
| £'000s | £'000s | £'000s |
| £'000s | £'000s | £'000s |
|
|
|
|
|
|
|
|
|
| Capital additions | 591 | 423 | 1,014 |
| 2,145 | 1,377 | 3,522 |
| Depreciation and amortisation | 819 | 303 | 1,122 |
| 1,111 | 243 | 1,354 |
Capital additions comprise the acquisition of property, plant and equipment and other intangible assets.
Primary segments (unaudited)
|
| UK and Ireland | Rest of the world | 2010 Total |
| UK and Ireland | Rest of the world | 2009 Total |
|
| £'000s | £'000s | £'000s |
| £'000s | £'000s | £'000s |
| BALANCE SHEET |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Assets |
|
|
|
|
|
|
|
| Segmental assets | 31,676 | 14,986 | 46,662 |
| 36,652 | 10,708 | 47,360 |
|
|
|
|
|
|
|
|
|
| Liabilities |
|
|
|
|
|
|
|
| Segmental liabilities | 12,580 | 6,286 | 18,866 |
| 13,363 | 5,655 | 19,018 |
The assets of the segments include intangible assets, property, plant and equipment, assets from finance leases, financial assets, trade receivables and other receivables and cash and cash equivalents. The liabilities comprise trade and other payables and retirement benefit obligations.
4. Exceptional administrative expenses (unaudited)
|
|
| 2010 | 2009 |
|
|
| £'000 | £'000 |
| Exceptional administrative expenses: |
|
|
|
| Restructuring costs |
| 277 | 1,459 |
| Costs incurred on abandoned PFI project * |
| 391 | - |
| Impairment loss recognised on trade receivables ** |
| - | 1,788 |
| Vacant property costs |
| - | 514 |
|
|
|
|
|
|
|
| 668 | 3,761 |
* Expenditure incurred on a PFI project abandoned by Norfolk County Council after preferred bidder status had been achieved.
** Approximately £0.2m of impairment loss recognised on trade receivables in the previous year was released during the current year.
5. Taxation (unaudited)
| Analysis of charge in the year |
| 2010 | 2009 |
|
|
| £'000 | £'000 |
| Current tax: |
|
|
|
| UK corporation tax |
| 962 | 421 |
| Overseas tax |
| 39 | 68 |
| Irrecoverable overseas tax |
| 11 | - |
| Adjustments in respect of previous years |
| (21) | 14 |
|
|
| 991 | 503 |
| Deferred taxation: |
|
|
|
|
|
|
|
|
| Origination and reversal of timing differences | (399) | 43 | |
| Adjustments in respect of previous years | 76 | 22 | |
|
|
|
| |
| Income tax expense |
| 668 | 568 |
6. Earnings per share (unaudited)
|
| 2010 |
| 2009 |
|
| £'000 |
| £'000 |
| Profit for the financial year attributable to equity shareholders | 1,453 |
| 1,634 |
|
|
|
|
|
|
| Number |
| Number |
|
|
|
|
|
| Weighted average number of shares in issue | 57,628,848 |
| 57,184,008 |
|
|
|
|
|
| Basic earnings per share (pence) | 2.5 |
| 2.9 |
|
|
|
|
|
| Weighted average number of |
|
|
|
| shares in issue | 57,628,848 |
| 57,184,008 |
| Adjustment for: |
|
|
|
| Diluted effect of share options | 430,555 |
| 1,345,095 |
| Weighted average number of ordinary shares for diluted earnings per share | 58,059,403 |
| 58,529,103 |
|
|
|
|
|
| Diluted earnings per share (pence) | 2.5 |
| 2.8 |
7. Goodwill (unaudited)
|
| Goodwill |
|
| £'000 |
| Cost |
|
| At 1 April 2008 | 3,615 |
| Additions | 7,252 |
| At 31 March 2009 | 10,867 |
|
|
|
| Foreign exchange | 740 |
| Additions | 1,000 |
| Adjustment to deferred consideration | (188) |
|
|
|
| At 31 March 2010 | 12,419 |
|
|
|
| Impairment |
|
| At 1 April 2008, 1 April 2009 and at 31 March 2010 | 295 |
|
|
|
| Net book amount |
|
| At 31 March 2010 | 12,124 |
| At 31 March 2009 | 10,572 |
On 4 March 2010 Cyril Sweett Australia Pty Limited, the company's wholly owned subsidiary undertaking in Australia, completed the acquisition of Padgham & Partners Pty Limited. Estimated goodwill arising on this acquisition amounted to £1m.
8. Other intangible assets (unaudited)
| Group | Order book and customer relationships |
Asset under the course of construction | Externally acquired computer software | Total |
|
| £'000 | £'000 | £'000 | £'000 |
| Cost |
|
|
|
|
| At 1 April 2008 | - | - | 922 | 922 |
| Exchange differences | - | - | 1 | 1 |
| Additions | - | - | 347 | 347 |
| Acquired on business combinations | 1,692 | - | 7 | 1,699 |
| Disposals | - | - | (120) | (120) |
| At 31 March 2009 | 1,692 | - | 1,157 | 2,849 |
|
|
|
|
|
|
| Exchange differences | 189 | - | 17 | 206 |
| Additions | - | 322 | 83 | 405 |
| Disposals | - | - | (169) | (169) |
| At 31 March 2010 | 1,881 | 322 | 1,088 | 3,291 |
|
|
|
|
|
|
| Accumulated amortisation and impairment |
|
|
|
|
| At 1 April 2008 | - | - | 568 | 568 |
| Exchange differences | - | - | 1 | 1 |
| Charge for the year | 201 | - | 279 | 480 |
| Disposals | - | - | (120) | (120) |
| At 31 March 2009 | 201 | - | 728 | 929 |
|
|
|
|
|
|
| Exchange differences | 43 | - | 12 | 55 |
| Charge for the year | 213 | - | 167 | 380 |
| Disposals | - | - | (160) | (160) |
| At 31 March 2010 | 457 | - | 747 | 1,204 |
|
|
|
|
|
|
| Net book amount |
|
|
|
|
| At 31 March 2010 | 1,424 | 322 | 341 | 2,087 |
|
|
|
|
|
|
| At 31 March 2009 | 1,491 | - | 429 | 1,920 |
On 4 March 2010 Cyril Sweett Australia Pty Limited, the company's wholly owned subsidiary undertaking in Australia, completed the acquisition of Padgham & Partners Pty Limited.
The book value of assets and liabilities acquired amounted to £0.3m. A fair value exercise has not yet been undertaken but will be concluded for incorporation in the accounts for the year to 31 March 2011.
9. Acquisitions (unaudited)
On 4 March 2010 the Group acquired 100% of the equity of Padgham & Partners Pty Limited, whose principal activity is that of construction consultancy.
Details of net assets and goodwill are as follows:
Purchase consideration:
|
| 2010 £'000 | 2009 £'000 |
| Cash paid | 585 | 3,953 |
| Direct costs relating to the acquisition | 90 | 371 |
| Fair value of shares issued | 289 | 2,204 |
| Fair value of treasury shares | - | 1,406 |
| Deferred consideration payable | 333 | 2,460 |
| Total purchase consideration | 1,297 | 10,394 |
The provisional fair values of assets and liabilities at the date of acquisition were as follows:
|
| 2010 £'000 | 2009 £'000 |
| Cash and cash equivalents | - | 96 |
| Property, plant and equipment | 137 | 400 |
| Customer relationships and order book | - | 1,692 |
| Deferred tax assets | - | 88 |
| Trade and other receivables | 765 | 2,326 |
| Trade and other payables | (424) | (1,339) |
| Current tax liabilities | (104) | (121) |
| Bank overdraft | (77) | - |
| Fair value of net assets acquired | 297 | 3,142 |
| Goodwill | 1,000 | 7,252 |
| Total purchase consideration | 1,297 | 10,394 |
|
| 2010 £'000 | 2009 £'000 |
| Purchase consideration settled in cash | 675 | 4,324 |
| Bank overdraft / (cash and cash equivalents) in subsidiaries acquired | 77 | (96) |
|
|
|
|
| Cash outflow on acquisitions | 752 | 4,228 |
10. Cash flows from operations (unaudited)
|
| 2010 |
| 2009 |
|
| Group |
| Group |
|
| £'000 |
| £'000 |
|
|
|
|
|
| Operating profit | 2,269 |
| 2,405 |
|
|
|
|
|
| Adjustment for: |
|
|
|
| Depreciation of property, plant and equipment | 742 |
| 874 |
| Amortisation of intangible assets | 380 |
| 480 |
| Loss on disposal of plant and equipment and intangible assets | 50 |
| 21 |
| Defined benefit pension scheme - excess of interest cost over expected return on plan assets | 153 |
| 43 |
| Share based payments | 120 |
| 105 |
| Operating cash flows before movements in working capital | 3,714 |
| 3,928 |
|
|
|
|
|
| Decrease / (increase) in receivables | 3,949 |
| (328) |
| (Decrease) / increase in payables | (1,757) |
| 792 |
| Payment to fund the defined benefit pension scheme deficit | (480) |
| (480) |
|
| 5,426 |
| 3,912 |
Company information
Company registration number 03452251
Directors F R Ives FRICS Dip.Proj.Man (Non Executive Chairman)
D L Webster MBA, BSc, MRICS, MAPM (Chief Executive Officer)
C R J Goscomb FCA (Chief Financial Officer)
D R Pitcher BSc FRICS Dip.Proj.Man (Director of UK & Ireland Operations)
E D Kerr MSc Dip.Proj.Man, MCIOB (Director of International Operations)
M J G Henderson FCA, FRSA, KHS (Non-executive)
R S Mabey CMG, FCIOB, FRSA (Non-executive)
P N Woollacott BSc CIGEM (Non-executive)
Secretary F J Wilson ACIS BSc
Registered office 60 Gray's Inn Road
London
WC1X 8AQ
Nominated Adviser Brewin Dolphin Limited
and broker 12 Smithfield Street
London
E1A 9BD
Registered Auditors PricewaterhouseCoopers LLP
1 Embankment Place
London
WC2N 6RH
Bankers Bank of Scotland plc
The Mound
Edinburgh
EH1 1YZ
Registrars Capita Registrars
Northern House
Woodsome Park
Fenay Bridge
Huddersfield
HD8 0LA
Head office 60 Gray's Inn Road
London
WC1X 8AQ
Telephone number (0)20 7061 9000
Fax number (0)20 7430 0603
www.cyrilsweett.com