RNS Number:0624S
SiRViS IT PLC
28 February 2007
SiRViS IT plc
Half Yearly Report to 30 November 2006
SiRViS IT plc provides a wide range of IT services including support,
consultancy and systems installation across the UK.
Highlights
* Operating profit before share based payments, goodwill amortisation and
exceptional items up 37% to #437,000 (2005: #318,000)
* Adjusted earnings per share before share based payments, goodwill
amortisation and exceptional items up 56% to 0.28p (2005: 0.18p)
* Gross margin percentage to turnover up to 36.5% (2005: 31.7%)
* Contracted revenue percentage to turnover up to over 80% (2005: 75%)
Chairman's Statement
I am pleased to report a strong Group performance in the six months ended 30
November 2006 compared with the same period last year which is a direct result
of the restructuring undertaken by the Board in the early part of 2006 to reduce
the cost base and improve margin percentage.
Financial results
Turnover on continuing activities of the Group for the six months ended 30
November 2006 was #3,525,000 (2005: #4,028,000) a decrease of 12.5%, due to
competitive pressure on contract income and declining hardware sales. Operating
profit, before share based payments, goodwill amortisation and exceptional items
on continuing activities, increased by 37% to #437,000 (2005: #318,000).
Adjusted basic earnings per share (before share based payments, goodwill
amortisation and exceptional items) increased by 56% to 0.28p per share (2005:
0.18p per share).
During this period, the Group concentrated on underpinning the contracted
revenues without aggressively pursuing low margin hardware sales. Contracted
revenue for the period now accounts for over 80% of turnover (2005: 75%). I am
also pleased to report that gross margins as a percentage to turnover have
continued the progress made during the final quarter of the last financial year
(34.9%) and at end of this period averaged 36.5% (2005: 31.7%). Overheads
compared to the same period last year have been reduced by 12% to #848,000
(2005: #960,000).
Following the adoption of FRS20 Share Based Payments, a first time non-cash
charge of #44,000 has been charged to the profit & loss account for this period
and a prior year adjustment in an amount of #44,000 has been made in the
equivalent period last year. Deduction for share based payments, goodwill
amortisation and exceptional items relating to abortive acquisition costs in
connection with Technology Management Group Limited has resulted in an operating
loss of #40,000 (Restated 2005: #53,000 profit), resulting in a loss per share
of 0.08p (Restated 2005: 0.05p profit) after tax.
Operational performance
It is pleasing to report that since my last statement in August 2006, two of the
Group's top five customers by value, have renewed their contracts. In addition,
the Group's operating subsidiary, Linetex Computers Limited, was awarded
Microsoft Gold Accreditation. This will enable the Group to offer a much wider
range of Microsoft products to our customer base.
The Board's focus during the period under review has been on reducing the cost
base, primarily by strict control of staff numbers, and on improving margin
percentage, both of which have been satisfactorily achieved during this period.
This has resulted in significantly improved earnings per share for the period,
before taking account of share based payments, goodwill amortisation and
exceptional items, compared to the same period last year.
The Group considered a number of complementary acquisitions during the period,
some of which were rejected following internal due diligence. Another
acquisition, which could have significantly complemented the Group's contracted
revenue base and underpinned the Group's earnings, was rejected by shareholders
at the Extraordinary General Meeting held in December 2006 resulting in costs of
#210,000 in relation to this aborted acquisition.
SiRViS IT's strategy is to grow by acquisition in order to achieve market
credibility and create shareholder value in the long term. The Board will
continue to explore complementary corporate acquisitions.
Approach
In December 2006, the Group received an approach from K3 Business Technology
Group plc to acquire the Company at an indicative cash price of 4p per share.
The outcome of the approach remains uncertain, however following discussions
with both parties' advisers, the Takeover Panel has ruled that K3 must, by
5.00pm on 12 March 2007 either announce a firm intention to make an offer for
the Company under Rule 2.5 of the Code or announce that it does not intend to
make an offer for the Company.
Outlook
Trading in the first two months of the second half of the year is in line with
the Board's expectations and is ahead of the equivalent period last year.
However, it is too early to predict the outcome for the year as a whole. As
announced on 13 December 2006, the Group has received written notice from a
major customer (representing approximately 10.9% of total turnover for the year
to 31 May 2006) that should the offer by K3 Business Technology Group plc
proceed and become unconditional, it would terminate its contract with the
Group. The continuing uncertainty surrounding the approach from K3 and its
shareholding may have an impact on trading in the second half of the year. The
Board's strategy continues to be growth by acquisition, however due to the K3
approach, we have been unable to progress this acquisition strategy during the
last three months.
Acknowledgement
The Board recognises the importance of the Group's customers to the success of
the Company and thanks them for their continued loyalty and support during the
period. I would also like to thank the staff and management for their
considerable contribution to the achievements of the Group over the past six
months.
Peter Addison
Non-executive Chairman
28 February 2007
Report by Grant Thornton UK LLP
The Directors
SiRViS IT plc
Blackbrook House
Ashbourne Road
Blackbrook
Belper
Derbyshire
DE56 2DB
28 February 2007
Dear Sirs
SIRVIS IT PLC - REPORT ON PROFIT ESTIMATE
We report on the profit estimate comprising the half-yearly report of SiRViS IT
plc ("the Company") and its subsidiaries (together "the SiRViS Group") for the
period ended 30 November 2006 (the "Profit Estimate"). The Profit Estimate and
the basis on which it is prepared is set out in Note 1 of the half-yearly report
issued by the Company dated 28 February 2007. Our report on the Profit Estimate
is required by Rule 28.3(b) of the City Code on Takeovers and Mergers and is
given for the purpose of complying with that rule and for no other purpose.
Accordingly, we assume no responsibility in respect of this report to the
Offeror or any person connected to, acting in concert with, the Offeror or any
other person who is seeking or may in future seek to acquire control of the
Company (an "Alternative Offeror") or to any other person connected to, or
acting in concert with, an Alternative Offeror.
Responsibilities
It is the responsibility of the directors of the Company to prepare the Profit
Estimate in accordance with the requirements of the City Code on Takeovers and
Mergers.
It is our responsibility to form an opinion as required by the City Code on
Takeovers and Mergers as to the proper compilation of the Profit Estimate and to
report that opinion to you.
Basis of Preparation of the Profit Estimate
The Profit Estimate has been prepared on the basis stated in Note 1 of the
half-yearly report and comprises the unaudited interim financial results for the
six months ended 30 November 2006. The Profit Estimate is required to be
presented on a basis consistent with the accounting policies of the SiRViS
Group.
The Profit Estimate has been prepared in accordance with the UK Listing Rules
section 9.9.8 ("Contents of Half Yearly Report") as though it had been required
by that section.
Basis of opinion
We have not performed a review of the half-yearly report in accordance with the
Auditing Practices Board guidance as the Company is not required to have its
half-yearly report reviewed, nor have the directors instructed us to perform
such a review. Moreover, we have not carried out any work to verify the
accuracy of the information shown by the books and records of the Company and
accordingly, in setting out our findings in the paragraphs below, we express no
opinion beyond those findings.
Our work included evaluating the basis on which the historical financial
information for the 6 months to 30 November 2006 has been prepared and
considering whether the Profit Estimate has been accurately computed using that
information and is consistent with the accounting policies of the SiRViS Group.
We planned and performed our work so as to obtain the information and
explanations we considered necessary in order to provide us with reasonable
assurance that the Profit Estimate has been properly compiled on the basis
stated.
However, the Profit Estimate has not been audited and the actual results, if
audited, may be affected by required revisions to accounting estimates due to
changes in circumstances or the impact of unforeseen events and we can express
no opinion as to whether the actual results achieved, when audited, will
correspond to those shown in the Profit Estimate and differences may be
material.
Opinion
In our opinion, the Profit Estimate has been properly compiled on the basis
stated and the basis of accounting used is consistent with the accounting
policies of the SiRViS Group.
Yours faithfully
GRANT THORNTON UK LLP
Registered Auditors and Chartered Accountants
London
Consolidated Profit and Loss Account
-------------------------------- ------ --------- -------- ----------
Note Unaudited Unaudited Audited
6 months 6 months Year ended
to 30 Nov to 30 Nov 31 May
2006 2005 2006
#'000 Restated Restated
#'000 #'000
-------------------------------- ------ --------- -------- ----------
Turnover 3,525 4,028 7,998
Cost of sales (2,240) (2,750) (5,435)
-------------------------------- ------ --------- -------- ----------
Gross profit 1,285 1,278 2,563
36.5% 31.7% 32.0%
-------------------------------- ------ --------- -------- ----------
Net operating expenses before share
based payments, goodwill amortisation
and exceptional items (848) (960) (1,806)
-------------------------------- ------ --------- -------- ----------
Operating profit before share based
payments, goodwill amortisation and
exceptional items 437 318 757
Share based payments (44) (44) (89)
Goodwill amortisation (223) (221) (442)
Exceptional items 2 (210) - (301)
-------------------------------- ------ --------- -------- ----------
Total operating expenses (1,325) (1,225) (2,638)
Operating (loss)/profit (40) 53 (75)
Disposals
Profit from disposal of discontinued
activities - 117 117
-------------------------------- ------ --------- -------- ----------
(Loss)/profit on ordinary activities
before interest (40) 170 42
Investment income - interest
receivable 1 17 19
Interest payable and similar charges (9) (29) (44)
-------------------------------- ------ --------- -------- ----------
(Loss)/profit on ordinary activities
before taxation (48) 158 17
Tax on profit on ordinary activities 3 (43) (99) (8)
-------------------------------- ------ --------- -------- ----------
Retained (loss)/profit for the period (91) 59 9
--------------------------------
(Loss)/earnings per ordinary share
basic 4 (0.08p) 0.05p 0.01p
diluted n/a 0.05p 0.01p
The Group has no recognised gains or losses other than the profit/(loss) above
and therefore no separate statement of total recognised gains or losses has been
presented.
Consolidated Balance Sheet
-------------------------------- ------ -------- -------- ---------
Note Unaudited Unaudited Audited
30 Nov 30 Nov 31 May
2006 2005 2006
#'000 #'000 #'000
-------------------------------- ------ -------- -------- ---------
Fixed assets
Intangible assets 6,928 7,337 7,182
Tangible assets 124 102 117
-------------------------------- ------ -------- -------- ---------
7,052 7,439 7,299
-------------------------------- ------ -------- -------- ---------
Current assets
Stocks 460 489 505
Debtors: amounts falling due within
one year 5 1,079 1,208 968
Cash at bank and in hand 347 956 239
-------------------------------- ------ -------- -------- ---------
1,886 2,653 1,712
Creditors: amounts falling due within
one year 6 (1,885) (2,559) (1,555)
-------------------------------- ------ -------- -------- ---------
Net current assets 1 94 157
-------------------------------- ------ -------- -------- ---------
Total assets less current liabilities 7,053 7,533 7,456
Creditors: amounts falling due after
more than one year (15) (340) (226)
Accruals and deferred income 7 (1,587) (1,690) (1,732)
-------------------------------- ------ -------- -------- ---------
(1,602) (2,030) (1,958)
-------------------------------- ------ -------- -------- ---------
Net assets 5,451 5,503 5,498
-------------------------------- ------ -------- -------- ---------
Capital and reserves
Called up share capital 1,141 1,141 1,141
Share premium account 5,809 5,809 5,809
Profit and loss account (1,499) (1,447) (1,452)
-------------------------------- ------ -------- -------- ---------
Shareholders' funds 9 5,451 5,503 5,498
-------------------------------- ------ -------- -------- ---------
Consolidated Cash Flow Statement
--------------------------------- ------ -------- -------- --------
Note Unaudited Unaudited Audited
6 months 6 months Year to
to 30 Nov to 30 Nov 31 May
2006 2005 2006
#'000 #'000 #'000
--------------------------------- ------ -------- -------- --------
Net cash inflow from operating
activities (see below) 206 547 856
--------------------------------- ------ -------- -------- --------
Returns on investments and servicing of
finance
Interest paid (9) (127) (245)
Interest received 1 17 19
--------------------------------- ------ -------- -------- --------
Net cash outflow from returns on
investments and servicing of finance (8) (110) (226)
--------------------------------- ------ -------- -------- --------
Taxation - (331) (330)
--------------------------------- ------ -------- -------- --------
Capital expenditure and financial
investment
Purchase of tangible fixed assets (28) (46) (78)
--------------------------------- ------ -------- -------- --------
Net cash outflow from capital
expenditure and financial investment (28) (46) (78)
--------------------------------- ------ -------- -------- --------
Acquisitions and disposals
Cash received from disposal of - 117 117
subsidiary
Deferred consideration paid (180) (180) (360)
--------------------------------- ------ -------- -------- --------
Cash outflow from acquisitions and
disposals (180) (63) (243)
--------------------------------- ------ -------- -------- --------
Net cash outflow before financing (10) (3) (21)
Financing
Berg & Berg Enterprises Inc. - loan
repaid - (275) (1,300)
--------------------------------- ------ -------- -------- --------
Net cash outflow from financing - (275) (1,300)
--------------------------------- ------ -------- -------- --------
Decrease in cash in the period 8 (10) (278) (1,321)
--------------------------------- ------ -------- -------- --------
Reconciliation of operating (loss)/profit to net cash inflow from operating
activities
Operating (loss)/profit (40) 53 (75)
Depreciation of tangible fixed assets 21 17 34
Share based payments 44 44 89
Goodwill amortisation 223 221 442
Decrease/(increase) in stocks 45 (61) (77)
(Increase)/decrease in debtors (111) 280 520
Increase in creditors 203 251 139
Decrease in accruals and deferred income (179) (258) (216)
------------------------------------- -------- -------- --------
Net cash inflow from operating activities 206 547 856
------------------------------------- -------- -------- --------
Notes to the financial statements
1. Principal accounting policies
Basis of preparation
The interim financial statements have been prepared in accordance with the
historical cost convention, and comply with applicable United Kingdom accounting
standards (United Kingdom Generally Accepted Accounting Practice).
The principal accounting policies of the Group have remained unchanged from
those set out in the Group's annual report and financial statements for the year
ended 31 May 2006, with the exception of the adoption of FRS20, Share Based
Payments, which was adopted from 1 June 2006. The effect of FRS20 has been to
restate operating expenses with the result that profit has been reduced by
#44,000 for the six months ended 30 November 2006; #44,000 for the six months
ended 30 November 2005 and #89,000 for the year ended 31 May 2006. As the
options are equity settled these give rise to an equal and opposite adjustment
in reserves and therefore have no impact on net assets or cash flow. The
financial statements at 31 May 2006 and 30 November 2005 have been restated to
reflect this change in accounting policy.
The interim results are unaudited and do not constitute statutory accounts
within the meaning of Section 240 of the Companies Act 1985.
The figures for the year ended 31 May 2006 have been extracted from the
statutory accounts for the period, which have been delivered to the Registrar of
Companies on which the auditors gave an unqualified report.
2. Exceptional items
----------------------------------- -------- -------- ---------
30 Nov 30 Nov 31 May
2006 2005 2006
#'000 #'000 #'000
----------------------------------- -------- -------- ---------
Exceptional items - compensation relating to loss
of office - - 301
Exceptional items - abortive acquisition costs 210 - -
----------------------------------- -------- -------- ---------
210 - 301
----------------------------------- -------- -------- ---------
3. Taxation
The tax charge for the six months is based on the estimated effective rate of
tax for the year to 31 May 2007.
4. (Loss)/earnings per share
The calculation of (loss)/earnings per share are based on the (loss)/profit for
the financial period and following numbers of shares:
------------------------- ------------ ------------ ------------
Unaudited Unaudited Audited
Six months Six months Year
to 30 November to 30 November to 31 May 2006
2006 2005
Number of Number of Number of
shares shares shares
------------------------- ------------ ------------ ------------
Weighted average number of shares
For basic
(loss)/earnings
per share 114,066,245 114,066,245 114,066,245
For diluted
earnings per
share n/a 114,260,579 114,066,245
------------------------- ------------ ------------ ------------
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.
------------------------ ------- ------- ------- ------- ------- ------
Unaudited Unaudited Audited
Six months Six months Year
to 30 November to 30 November 2005 to 31 May 2006
2006
------------------------ ------- ------- ------- ------- ------- ------
(Loss)/ Per Earnings Per share Earnings Per
share share
earnings amount #'000 amount #'000 amount
#'000 Basic Basic and Basic
and and
diluted diluted diluted
p p p
------------------------ ------- ------- ------- ------- ------- ------
(Loss)/profit
for the period (91) (0.08) 59 0.05 9 0.01
Effect of
share based
payments 44 0.04 44 0.04 89 0.08
Effect of
goodwill
amortisation 223 0.19 221 0.19 442 0.38
------------------------ ------- ------- ------- ------- ------- ------
Earnings per
share before
share based
payments and
goodwill
amortisation 176 0.15 324 0.28 540 0.47
Exceptional
items -
compensation
relating to
loss of office
(net of tax) - - - - 211 0.19
Exceptional
items -
abortive
acquisition
costs (net of
tax) 147 0.13 - - - -
Profit from
disposal of
discontinued
activities
(net of tax) - - (117) (0.10) (117) (0.10)
------------------------ ------- ------- ------- ------- ------- ------
Earnings per
share before
share based
payments,
goodwill
amortisation
and
exceptional
items 323 0.28 207 0.18 634 0.56
------------------------ ------- ------- ------- ------- ------- ------
5. Debtors amounts falling due within one year
----------------------------------- -------- -------- ---------
30 Nov 30 Nov 31 May
2006 2005 2006
#'000 #'000 #'000
----------------------------------- -------- -------- ---------
Trade debtors 863 970 761
Prepayments and accrued income 216 238 207
----------------------------------- -------- -------- ---------
1,079 1,208 968
----------------------------------- -------- -------- ---------
6. Creditors amounts falling due within one year
----------------------------------- -------- -------- ---------
30 Nov 30 Nov 31 May
2006 2005 2006
#'000 #'000 #'000
----------------------------------- -------- -------- ---------
Trade creditors 610 535 371
Deferred consideration 360 360 360
Other taxation and social security 372 396 447
Corporation tax 99 140 51
Bank overdraft 444 - 326
Loan from Berg & Berg Enterprises, Inc. - 1,128 -
----------------------------------- -------- -------- ---------
1,885 2,559 1,555
----------------------------------- -------- -------- ---------
7. Accruals and deferred income
----------------------------------- -------- -------- ---------
30 Nov 30 Nov 31 May
2006 2005 2006
#'000 #'000 #'000
----------------------------------- -------- -------- ---------
Accruals 192 159 209
Deferred income 1,395 1,531 1,523
----------------------------------- -------- -------- ---------
1,587 1,690 1,732
----------------------------------- -------- -------- ---------
8. Reconciliation of net cash flow movement in net debt
------------------------------------------ -------- ---------
30 Nov 31 May
2006 2006
#'000 #'000
------------------------------------------ -------- ---------
Decrease in cash (10) (1,321)
Cash outflow from decrease in Berg & Berg Enterprises Inc. - 1,539
loan
------------------------------------------ -------- ---------
Change in net debt resulting from cash flows (10) 218
------------------------------------------ -------- ---------
Other non-cash items: - (38)
Accrual for finance cost of debt
------------------------------------------ -------- ---------
Movement in net debt in period (10) 180
Net debt at 1 June (87) (267)
------------------------------------------ -------- ---------
Net debt at end of period (97) (87)
------------------------------------------ -------- ---------
----------------------------------- --------- -------- ---------
1 June Cash 30 Nov
2006 flow 2006
#'000 #'000 #'000
----------------------------------- --------- -------- ---------
Net overdraft:
Cash at bank and in hand 239 108 347
Bank overdraft (326) (118) (444)
----------------------------------- --------- -------- ---------
Net debt (87) (10) (97)
----------------------------------- --------- -------- ---------
9. Reconciliation of movement in shareholders funds
----------------------------------- -------- -------- ---------
30 Nov 30 Nov 31 May
2006 2005 2006
#'000 #'000 #'000
----------------------------------- -------- -------- ---------
Opening shareholders funds 5,498 5,400 5,400
(Loss)/profit for the financial period (91) 59 9
Share based payments 44 44 89
----------------------------------- -------- -------- ---------
Closing shareholders funds 5,451 5,503 5,498
----------------------------------- -------- -------- ---------
10. Dividend
No interim dividend has been declared on the ordinary shares (2005: Nil).
11. This announcement is being circulated to all shareholders and
copies are available from the Group's head office at Blackbrook House, Ashbourne
Road, Blackbrook, Belper, Derbyshire, DE56 2DB
Enquiries:
Mark Lewis CEO SiRViS IT plc 01773 825516
John Simpson Nominated Adviser ARM Corporate Finance Limited 0207 512 0191
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PUUAAPUPMGAR
Sirvis It (LSE:SRV)
Gráfica de Acción Histórica
De Dic 2024 a Ene 2025
Sirvis It (LSE:SRV)
Gráfica de Acción Histórica
De Ene 2024 a Ene 2025
