RNS Number:1794J
Vega Group PLC
05 December 2007
5 December 2007
VEGA Group PLC
Interim results for the six months ended 31 October 2007
VEGA Group PLC ("VEGA"), the Specialist Professional Services Company, today
announces its interim results for the six months ended 31 October 2007.
Key Points - Financial
* Revenue up 14% to #35.8m (2006: #31.3m) as a result of the acquisition
of Anite Deutschland
* Strong organic revenue growth in Consulting (up 29%) and Managed
Solutions (up 8%)
* Reduced revenues in Technology (down 26%) but strong order intake in
Germany and France and good opportunities in new business pipeline
* Adjusted operating profit* reduced to #1.5m (2006: #2.5m) after
significant investment in sales and marketing
* Cash generated from operations #1.3m (2006: #0.7m)
* Reported operating profit #1.2m (2006: #2.0m) with diluted EPS of 3.07p
(2006: 6.49p)
* Interim dividend (expected to be paid in the event that the current
recommended cash offer from Finmeccanica S.p.A. for the company's shares
does not become unconditional) increased by 17% to 0.875p (2006: 0.75p)
* before amortisation of acquired intangibles and exceptional items
Key Points - Operational
* Investment in sales and marketing delivering strong order intake and
healthy new business pipeline
* Significant contract wins in the period, both with new customers and for
new services
* Recent acquisition, Anite Deutschland, performing as anticipated and
integration progressing to plan
Chief Executive, Phil Cartmell stated:
"We are very pleased with the progress we have made in the period in
re-positioning the Group as a specialist professional services company and
developing our relationships with our clients at senior levels. Our increased
focus on Consulting is delivering wider opportunities for the Group and our
investment in sales and marketing has given us a strong new business pipeline.
Both our Consulting and Managed Solutions business streams have delivered good
growth and in Technology we have had significant contract wins in both Germany
and France."
For further information please contact:
VEGA Group PLC: Phil Cartmell, Chief Executive +44 (0)1707 391999
Sue Bygrave, Group Finance Director
Smithfield: Reg Hoare +44 (0)20 7360 4900
Tania Wild
Notes to Editors:
About VEGA
VEGA is a specialist professional services company. It provides independent
consulting, technology and managed solutions, based on 30 years experience of
specialist market and technological domains. This enables VEGA to offer
independent expert advice and pragmatic support services in the effective
implementation of business strategy. In doing so, VEGA helps its clients to
identify business value, manage risk and realise higher levels of success from
their programmes and projects.
VEGA's principal markets are Aerospace, Defence and Government. Its key
geographies are the UK, Germany, Holland, France and Spain.
CONSULTING - VEGA offers advisory services to clients on the practical
implementation of business strategy, often in the early stages of programme and
project lifecycles. Services include: Business Consulting, Enterprise & Systems
Architecture, Procurement and Capability Acquisition, Programme and Project
Management and Information Security.
TECHNOLOGY - VEGA develops innovative systems and tools, to support the
successful execution of client programmes and projects; builds complex bespoke
solutions. Services include Bespoke Systems, Secure Systems, Simulation Systems,
Client and VEGA R&D.
MANAGED SOLUTIONS - VEGA provides teams of experienced, specialist practitioners
to manage and implement client programmes. Services include Managed Services,
Programme and Project Support, Science and Technology Research, and Operations
and Systems Engineering.
AEROSPACE - Within the Aerospace market, VEGA supports scientific, commercial
and military programmes worldwide and has been involved in almost every European
Space Agency mission over the last 30 years. Clients include: European Space
Agency, European Commission, French National Space Agency (CNES), German
National Aerospace Agency (DLR), Inmarsat, EUMETSAT, EADS Astrium, Thales Alenia
Space and SES Astra. On the military side, clients include BAE Systems, Thales,
CAE and EADS, working on programmes like the Eurofighter and the UK Army's new
UAV capability, Watchkeeper.
DEFENCE - VEGA has a long track record of working alongside our defence clients
to deliver strategically important defence information and communication systems
as a trusted partner. We work with UK and European defence agencies and armed
forces in the specification, acquisition, security, integration and deployment
of network enabled capability to ensure that it delivers the operational
benefits for which it is intended. Clients include the UK Ministry of Defence,
mainly through Defence Equipment and Support (DE&S), and armasuisse. Current
projects include client-side support for the Defence Information Infrastructure
(DII(F)) and Command Support Intelligence Systems (CSIS) Integrated Project Team
(IPT).
GOVERNMENT - VEGA is Catalist accredited and works with Government departments
and agencies to ensure that transformation initiatives are conceived,
implemented and integrated effectively and efficiently. We help our clients
deliver citizen-centric services that operate with the necessary levels of
accessibility and security. VEGA also works alongside the stakeholders of the UK
Resilience and Critical National Infrastructure communities to ensure UK
security at home and abroad. Clients include the Cabinet Office, Department of
Communities and Local Government, Home Office, Foreign & Commonwealth Office, UK
Emergency Services, Department of Trade and Industry and the Welsh Assembly
Government.
VEGA floated on the London Stock Exchange in 1992 at an issue price of 122p.
VEGA is listed in the Software & Computer Services sector, and has a RIC code of
VEG.L.
CHIEF EXECUTIVE'S REVIEW
INTRODUCTION
I am pleased to report good progress against our strategy to become a
professional services company delivering Consulting, Technology and Managed
Solutions in the Aerospace, Defence, Government and Financial Services markets
during the six months ended 31 October 2007. Significant investment in sales and
marketing has resulted in strong revenue growth in our Consulting and Managed
Solutions business streams in the period and we enter the second half of our
financial year with a strong new business pipeline.
Our Technology business has had a slow start to the year owing to low order
intake last year and delays on a couple of our large projects. The Technology
order book has, however, now begun to grow with some key wins in Germany and
France. There are also some significant Technology opportunities in the new
business pipeline.
During the period we also completed the acquisition of Anite Deutschland, for a
consideration of #8.0m funded wholly by cash. This extended our penetration into
the German defence market and opened a new market sector for us in Financial
Services which we believe will give us opportunities to cross-sell other VEGA
services. Anite Deutschland has performed as anticipated in the period and
integration of the back office systems of our two German businesses is
progressing to plan.
GROUP RESULTS
Group revenue for the six months to 31 October 2007 was up 14% to #35.8m (2006:
#31.3m), with #4.9m of the revenue for the current period resulting from the
acquisition of Anite Deutschland.
Adjusted operating profit* reduced to #1.5m (2006: #2.5m) reflecting the
increased investment in sales and marketing.
Reported operating profit was #1.2m (2006: #2.0m) with diluted EPS of 3.07p
(2006: 6.49p).
Cash generated from operations in the six months to 31 October 2007 was #1.3m
(2006: #0.7m). This was a good performance compared with the same period last
year, particularly as the operating profit for the period was somewhat lower.
Net debt at the end of the period was #9.1m (2006: #1.9m), after a net #7.9m
outflow in respect of the acquisition.
REVIEW OF OPERATIONS
Consulting
Six months to Six months to
31 October 31 October
2007 2006
--------------------- ----------------------- -------------
Revenue, #000 3,768 2,105
Adjusted operating profit*, #000 246 200
Adjusted operating profit margin**, % 6.5 9.5
Average direct headcount 57 39
--------------------- ----------------------- -------------
* before exceptional items and amortisation of acquired intangibles
** adjusted operating profit divided by revenue
In Consulting the organic growth in revenue was 29% compared with the same
period last year, reflecting contract wins both with new clients and for new
services. These include working with OFWAT as its principal service provider for
management and technical support services and with two prime contractors to
supply training advisory services in support of two of the British Army's key
future programmes. This puts us in a strong position to win further consulting
work but also potential follow-on in our Technology and Managed Solutions
business streams. We also won two high quality assignments to support the UK
MoD. These are in Special Projects and the Directorate for Information System
and Support. Both these contracts are direct results of the adoption of the new
consulting business model that we announced at the end of the year (2006-07).
Anite Deutschland contributed Consulting revenues of #1.1m in the period and
adjusted operating profits of #0.1m. Operating margins in Consulting were
depressed by the investment in sales and marketing across the Group.
Technology
Six months to Six months to
31 October 31 October
2007 2006
------------------------ ------------------- -------------
Revenue, #000 7,089 9,542
Adjusted operating (loss)/profit*, #000 (44) 469
Adjusted operating (loss)/profit margin**, % (0.6) 4.8
Average direct headcount 180 201
------------------------- ------------------- -------------
* before exceptional items and amortisation of acquired intangibles
** adjusted operating profit divided by revenue
In Technology revenue fell by 26% in the period compared with the same period
last year, reflecting falls of 32% in the UK and 29% in Germany. In France
revenue increased by 4%. The reduction in revenue in the UK was due to the
completion of a number of projects and a delay in the anticipated ramp up on
Watchkeeper, the #19m contract won last year to provide the training solution
for the MoD's Unmanned Air Vehicle system. In Germany low order intake has been
the issue but this improved significantly in the period, increasing 95% compared
with the same period last year, including a #1.2m training contract win with the
Swiss Air Force and contracts to supply two satellite simulators, together
totalling #0.7m. In France the increase in revenues reflected work starting on a
#0.7m order from the French National Space Agency, CNES, to develop a system for
the Franco-Israeli environmental satellite.
As in Consulting, operating margins in Technology were depressed in the period
by the investment in sales and marketing across the Group.
Managed Solutions
Six months to Six months to
31 October 31 October
2007 2006
--------------------- ----------------------- -------------
Revenue, #000 24,932 19,675
Adjusted operating profit*, #000 1,647 2,100
Adjusted operating profit margin**, % 6.6 10.8
Average direct headcount 305 274
--------------------- ----------------------- -------------
* before exceptional items and amortisation of acquired intangibles
** adjusted operating profit divided by revenue
Organic revenue growth in Managed Solutions was 8% compared with the same period
last year, reflecting growth of 13% in the UK, 24% in Rest of Europe (France,
Holland and Spain) and an 8% fall in revenue in Germany, primarily due to the
timing of the mission cycles at one of our key German clients, EUMETSAT. Further
success was achieved in the period in growing revenues outside of our
traditional customer base with a contract to supply new services at the German
Aerospace Agency Operations Centre, GSOC, a contract to provide technical
support for the MoD secure email system, our first prime contract with ESRIN in
Italy for the provision of Earth Observation data quality services and an
initial system engineering support contract for a Turkish national space
programme.
Anite Deutschland contributed Managed Solutions revenue of #3.8m in the period
and adjusted operating profits of #0.2m. Operating margins in Managed Solutions
were depressed by the investment in sales and marketing across the Group.
MARKET SECTOR REVIEW
Six months to Six months to Growth Share
31 October 31 October
2007 2006
#000 #000
----------------- ---------- ---------- ---------- ----------
Revenue by market sector
Aerospace 14,284 17,040 -16% 40%
Defence 13,564 12,476 9% 38%
Government 3,047 1,806 69% 8%
Anite Deutschland 4,894 - 14%
----------------- ---------- ---------- ---------- ----------
Total 35,789 31,322 14% 100%
----------------- ---------- ---------- ---------- ----------
Aerospace
For VEGA, the Aerospace market comprises institutional and commercial Space and
Aerospace manufacturers. Group revenue in the Aerospace market fell by 16% in
the period, reflecting primarily the reduction in Technology revenues, both in
the UK and Germany.
Defence
This market comprises the national Ministries of Defence and for VEGA this work
is predominantly in the UK. The market includes work for the intelligence
community contracted through the UK Ministry of Defence. Revenue in this sector
increased by 9% in the six months ended 31 October 2007 compared with the same
period last year, reflecting strong growth in UK Consulting and Managed
Solutions revenues in this market.
Government
The Government sector comprises primarily those departments dealing with
National Security, Criminal Justice, Emergency Services and Health. Revenue in
this sector increased by 69% in the six months ended 31 October 2007 compared
with the same period last year, reflecting strong growth in UK Managed Solutions
revenues in this market.
DIVIDEND
The Board is pleased to announce an intention to increase the interim dividend
by 17%, to 0.875p per share, in line with it's stated commitment of following a
prudent and progressive dividend policy. However, this dividend will only be
paid in the event that the current recommended cash offer from Finmeccanica
S.p.A. for the Company's shares does not become unconditional.
RISKS AND UNCERTAINTIES
The Board continually identifies, reviews and, where possible, mitigates the
risks that may impact VEGA's business, financial condition, prospects and share
price. The key high level risks to our business at any point in time are our
exposure to public sector spending (mitigated to some extent by our geographic
spread and focus on areas where government spending is less likely to be
reduced, such as national security), delays on major contracts (managed by
keeping such revenues below 30% of the Group's total revenue and promoting
resource sharing across the Group), the buoyancy of the recruitment market
(managed by creating a rewarding working environment to attract new staff) and
integration of acquisitions (managed by having a structured integration process,
careful monitoring of the target post acquisition and appropriate
incentivisation for the acquired management team).
SUMMARY
We are very pleased with the progress we have made in the period in
re-positioning the Group as a specialist professional services company and
developing our relationships with our clients at senior levels. Our increased
focus on Consulting is delivering wider opportunities for the Group and our
investment in sales and marketing has given us a strong new business pipeline.
Both our Consulting and Managed Solutions business streams have delivered good
growth and in Technology we have had significant contract wins in both Germany
and France.
Phil Cartmell
Chief Executive
DIRECTORS' RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
* The condensed set of financial statements has been prepared in
accordance with IAS 34;
* The interim management report includes a fair review of the information
required by DTR 4.2.7R of the 'Disclosure and Transparency Rules', being an
indication of important events that have occurred during the first six
months of the financial year and their impact on the condensed set of
financial statements; and a description of the principal risks and
uncertainties for the remaining six months of the year; and
* The interim management report includes a fair review of the information
required by DTR 4.2.8R of the 'Disclosure and Transparency Rules', being
related party transactions that have taken place in the first six months of
the current financial year and that have materially affected the financial
position or performance of the entity during the period; and any changes in
the related party transactions described in the last annual report that
could do so.
Phil Cartmell Sue Bygrave
Director Director
Consolidated Income Statement
Six months Six months Year ended
to to
31 October 31 October 30 April
2007 2006 2007
#000 #000 #000
-------------------------- ---------- ---------- ----------
Revenue (note 2) 35,789 31,322 64,120
Net operating costs (34,590) (29,353) (60,018)
-------------------------- ---------- ---------- ----------
Operating profit
Adjusted operating profit * 1,517 2,518 5,133
Amortisation of acquired
intangibles (318) (105) (183)
Exceptional items (note 3) - (444) (848)
-------------------------- ---------- ---------- ----------
Operating profit 1,199 1,969 4,102
Finance costs (365) (167) (354)
Finance revenue 52 20 61
-------------------------- ---------- ---------- ----------
Profit before tax 886 1,822 3,809
Income tax (note 4) (231) (457) (745)
-------------------------- ---------- ---------- ----------
Profit for the period 655 1,365 3,064
-------------------------- ---------- ---------- ----------
All profit for the period is attributable to equity holders of the parent and
derived from continuing operations.
* Adjusted operating profit is operating profit before exceptional items and
amortisation of acquired intangibles.
Earnings per share (note 5)
Basic 3.21p 6.71p 15.05p
Diluted 3.07p 6.49p 14.50p
Adjusted earnings per share (note 5)
Basic 4.71p 8.51p 18.42p
Diluted 4.51p 8.24p 17.75p
Consolidated Balance Sheet
As at As at As at
31 October 31 October 30 April
2007 2006 2007
#000 #000 #000
-------------------------- ---------- ---------- ----------
Non-current assets
Property, plant and equipment 1,502 1,068 1,041
Intangible assets - goodwill 21,156 14,874 14,906
Intangible assets - other 702 467 457
Trade and other receivables 1,372 1,487 1,366
Deferred tax assets 245 261 316
-------------------------- ---------- ---------- ----------
24,977 18,157 18,086
Current assets
Trade and other receivables 23,620 16,765 20,028
Income tax receivable 100 46 180
Financial assets (interest rate swap) 28 - 10
Cash 2,189 2,073 2,978
-------------------------- ---------- ---------- ----------
25,937 18,884 23,196
-------------------------- ---------- ---------- ----------
Total assets 50,914 37,041 41,282
-------------------------- ---------- ---------- ----------
Current liabilities
Trade and other payables (17,405) (12,785) (15,917)
Financial liabilities (2,399) (1,586) (1,291)
Income tax payable (1,477) (1,944) (1,904)
Provisions - - (191)
-------------------------- ---------- ---------- ----------
(21,281) (16,315) (19,303)
Non-current liabilities
Financial liabilities (8,885) (2,403) (1,960)
Provisions (386) (200) (200)
Deferred tax liabilities (49) (99) (62)
-------------------------- ---------- ---------- ----------
(9,320) (2,702) (2,222)
-------------------------- ---------- ---------- ----------
Total liabilities (30,601) (19,017) (21,525)
-------------------------- ---------- ---------- ----------
-------------------------- ---------- ---------- ----------
Net assets 20,313 18,024 19,757
-------------------------- ---------- ---------- ----------
Equity share capital 1,026 1,018 1,018
Share premium 6,226 6,226 6,226
Retained earnings 10,780 8,499 10,232
Merger reserve 2,281 2,281 2,281
-------------------------- ---------- ---------- ----------
Total equity 20,313 18,024 19,757
-------------------------- ---------- ---------- ----------
Consolidated Cash Flow Statement
Six months to Six months to Year ended
31 October 31 October 30 April
2007 2006 2007
#000 #000 #000
-------------------------- ---------- ---------- ----------
Operating activities
Profit after tax 655 1,365 3,064
Taxation 231 457 745
Net finance expense 313 147 293
-------------------------- ---------- ---------- ----------
Operating profit 1,199 1,969 4,102
Increase in debtors (547) (672) (3,673)
Increase/(decrease) in creditors 37 (919) 2,095
(Decrease)/increase in provisions (190) (85) 103
Depreciation and amortisation 622 369 721
Loss on sale of plant and
equipment 13 5 7
Share based payments 147 48 161
-------------------------- ---------- ---------- ----------
Cash generated from operations 1,281 715 3,516
Tax paid (513) (245) (759)
-------------------------- ---------- ---------- ----------
Net cash flow from operating
activities 768 470 2,757
Investing activities
Acquisition of subsidiary (net of
cash acquired) (7,875) - -
Purchase of plant and equipment (678) (406) (718)
Sale of plant and equipment - - 4
Interest received 52 20 61
-------------------------- ---------- ---------- ----------
Net cash flow from investing
activities (8,501) (386) (653)
Financing activities
New share capital issued 8 - -
New bank loan 8,355 - -
Debt issue costs (148) - -
Debt repayments (701) (597) (1,203)
Interest paid (365) (168) (310)
Dividends paid (458) (382) (534)
-------------------------- ---------- ---------- ----------
Net cash flow from financing
activities 6,691 (1,147) (2,047)
-------------------------- ---------- ---------- ----------
(Decrease)/increase in cash and
cash equivalents (1,042) (1,063) 57
Effect of exchange rate changes 44 (15) 86
Cash at beginning of period 2,937 2,794 2,794
-------------------------- ---------- ---------- ----------
Cash and cash equivalents at end
of period * 1,939 1,716 2,937
-------------------------- ---------- ---------- ----------
* Cash and cash equivalents comprise of cash and bank overdrafts.
Consolidated Statement of Recognised Income and Expense
Six months to Six months to Year ended
31 October 31 October 30 April
2007 2006 2007
#000 #000 #000
-------------------------- ---------- ---------- ----------
Exchange differences on
retranslation of foreign
operation 504 (81) 21
(Loss)/gain on hedge of net
overseas investment (318) 143 85
Movement on interest rate cash
flow hedges 18 29 18
Deferred tax credit on share
based payments - - 40
-------------------------- ---------- ---------- ----------
Income recognised directly in
equity 204 91 164
Profit for the period 655 1,365 3,064
-------------------------- ---------- ---------- ----------
Total recognised income and
expense for the period 859 1,456 3,228
-------------------------- ---------- ---------- ----------
Reconciliation of Movements in Equity
Six months to Six months to Year ended
31 October 31 October 30 April
2007 2006 2007
#000 #000 #000
------------------------- ---------- ---------- ----------
At beginning of period 19,757 16,902 16,902
Total recognised income and
expense for the period 859 1,456 3,228
New share capital issued* 8 - -
Share based payments 147 48 161
Deferred tax credit on share
based payments - - 40
Dividends paid (458) (382) (534)
-------------------------- ---------- ---------- ----------
At end of period 20,313 18,024 19,757
-------------------------- ---------- ---------- ----------
* During the period the Company issued 166,924 5p ordinary shares at par arising
from employee share options exercised.
Notes
1. Basis of preparation
Basis of preparation
These interim financial statements have been prepared in accordance with the
accounting policies set out in the Company's 2007 Annual Report which were
prepared in accordance with IFRSs as adopted by the European Union and were
approved by the Board of Directors on 5 December 2007. The interim financial
statements for the six months ended 31 October 2007 have been prepared in
accordance with IAS 34 Interim Financial Reporting. The interim financial
statements do not include all the information and disclosures in the annual
financial statements, and should be read in conjunction with the Group's annual
financial statements as at 30 April 2007.
The financial information in these interim financial statements does not
constitute statutory financial statements as defined in Section 240 of the
Companies Act 1985. The Group's 2007 Annual Report has been filed with the
Registrar of Companies and the auditors' report on those financial statements
was not qualified and did not contain statements under section 237(2) or (3) of
the Companies Act 1985.
The Interim Financial Statements are unaudited but have been formally reviewed
by the auditors, Ernst & Young LLP, and their report to the Company is set out
on page 17.
2. Segmental analysis - analysis by business segment
Six months to Six months to Year ended
31 October 31 October 30 April
2007 2006 2007
#000 #000 #000
---------------------- ---------- ---------- ----------
Revenue
Consulting 3,768 2,105 4,497
Technology 7,089 9,542 19,332
Managed Solutions 24,932 19,675 40,291
---------------------- ---------- ---------- ----------
Total revenue 35,789 31,322 64,120
---------------------- ---------- ---------- ----------
Adjusted operating profit/(loss)*
Consulting 246 200 483
Technology (44) 469 1,049
Managed Solutions 1,647 2,100 4,187
Central costs (332) (250) (586)
---------------------- ---------- ---------- ----------
Total adjusted operating profit 1,517 2,518 5,133
---------------------- ---------- ---------- ----------
Operating profit/(loss)
Consulting 183 186 425
Technology (73) 56 469
Managed Solutions 1,421 1,977 3,794
Central costs (332) (250) (586)
---------------------- ---------- ---------- ----------
Total operating profit 1,199 1,969 4,102
---------------------- ---------- ---------- ----------
*Adjusted operating profit is operating profit before exceptional items of #nil
(Six months to 31 October 2006: #444,000 of which Consulting #14,000; Technology
#308,000 and Managed Solutions #123,000; Year to 30 April 2007: #848,000 of
which Consulting #58,000; Technology #397,000 and Managed Solutions #393,000)
and amortisation of acquired intangibles #318,000 of which Consulting #63,000;
Technology #29,000 and Managed Solutions #226,000 (Six months to 31 October
2006: #105,000 (all Technology); Year to 30 April 2007: #183,000 (all
Technology))
3. Exceptional items
Six months to Six months to Year ended
31 October 31 October 30 April
2007 2006 2007
#000 #000 #000
---------------------- ---------- ---------- ----------
Property costs - 37 195
Staff termination costs - 407 653
---------------------- ---------- ---------- ----------
Exceptional items - 444 848
---------------------- ---------- ---------- ----------
Property costs comprise final lease payments and dilapidations arising on
rationalisation of the Group's office portfolio. Staff termination costs
comprise payments arising on the reorganisation of Group management, closure of
an office and withdrawal from a specific business sector.
4. Taxation
Six months to Six months to Year ended
31 October 31 October 30 April
2007 2006 2007
#000 #000 #000
---------------------- ---------- ---------- ----------
UK corporation tax 34 372 567
Foreign corporation tax 140 205 350
---------------------- ---------- ---------- ----------
Current tax charge 174 577 917
UK deferred tax charge/(credit) 71 (84) (100)
Foreign deferred tax credit (14) (36) (72)
---------------------- ---------- ---------- ----------
Total 231 457 745
---------------------- ---------- ---------- ----------
5. Earnings per share
Six months to Six months to Year ended
31 October 31 October 30 April
2007 2006 2007
#000 #000 #000
---------------------- ---------- ---------- ----------
Earnings attributable to
shareholders 655 1,365 3,064
Adjusted for:
Amortisation of acquired
intangibles (net of taxation) 307 64 112
Exceptional items (net of
taxation) - 304 574
---------------------- ---------- ---------- ----------
Adjusted earnings 962 1,733 3,750
---------------------- ---------- ---------- ----------
Amortisation is stated net of a foreign tax credit of #11,000 (Six months to 31
October 2006: #41,000; Year to 30 April 2007: #71,000). Exceptional items are
stated after a UK tax credit of #nil (Six months to 31 October 2006: #108,000;
Year to 30 April 2007: #189,000) and a foreign tax credit of #nil (Six months to
31 October 2006: #32,000; Year to 30 April 2007: #85,000).
Six months to Six months to Year ended
31 October 31 October 30 April
2007 2006 2007
Ordinary Ordinary Ordinary
shares Shares Shares
---------------------- ---------- ---------- ----------
Basic weighted average number of
shares 20,403,341 20,356,821 20,356,821
Dilutive potential ordinary
shares 950,522 680,612 770,532
---------------------- ---------- ---------- ----------
Diluted weighted average number
of shares 21,353,863 21,037,433 21,127,353
---------------------- ---------- ---------- ----------
6. Dividends
In the event that the current recommended cash offer from Finmeccanica S.p.A.for
the Company's shares announced on 29 November 2007does not become unconditional,
the directors intend that an interim dividend of 0.875p per share (Six months to
31 October 2006 and Year to 30 April 2007: 0.750p) amounting to a dividend of
#180,000 (Six months to 31 October 2006 and Year to 30 April 2007: #152,000).
Dividends paid in the period amounted to #458,000 (2.250p per share) (Six months
to 31 October 2006: #382,000 (1.875p per share); Year to 30 April 2007: #534,000
(2.625p per share)).
7. Acquisitions
On 9 July 2007 the Group acquired the entire share capital of Anite Deutschland
Management GmbH and its subsidiaries, from Anite Group PLC, for a consideration
of #8.0m plus acquisition expenses of #276,000. The acquisition was settled in
cash and was funded by a new #8,355,000 euro denominated five year term loan
from Bank of Scotland bearing an interest rate of 1.75% above EURIBOR.
The provisional fair value of the identifiable assets and liabilities acquired
were:
Carrying Fair value Provisional
amount adjustments fair value
pre-acquisition #000 #000
#000
------------------ -------------- ---------- ----------
Property, plant and equipment 87 - 87
Intangible assets 92 440 532
Trade and other receivables 2,734 - 2,734
Cash 401 - 401
Trade and other payables (1,402) - (1,402)
------------------ -------------- ---------- ----------
Net assets acquired 1,912 440 2,352
Goodwill 5,924
------------------ -------------- ---------- ----------
Total consideration 8,276
------------------ -------------- ---------- ----------
The fair values on acquisition of Anite Deutschland Management GmbH are
provisional due to the timing of the transaction and will be finalised during
the 2008 financial year.
From the date of acquisition to 31 October 2007, Anite has contributed #339,000
to the profit after tax of the Group. If the combination had taken place at the
beginning of the year, the consolidated profit of the Group would have been
#755,000 and revenue from continuing operations would have been #37,880,000.
Included in the #5,924,000 of goodwill recognised above are certain intangible
assets that cannot be individually separated and reliably measured due to their
nature. These items include the expected value of synergies and an assembled
workforce.
8. Post balance sheet events
On 29 November 2007 the Boards of VEGA and Finmeccanica S.p.A announced a
recommended cash offer for VEGA at 280 pence per share that values the issued
and to be issued share capital of VEGA at #61.6m. It is expected that the formal
documentation relating to the offer will be posted to shareholders in the near
future.
9. Movement in net debt
Six months to Six months to Year ended
31 October 31 October 30 April
2007 2006 2007
#000 #000 #000
---------------------- ---------- ---------- ----------
Opening net debt (263) (1,607) (1,607)
New bank loan (8,355) - -
Debt issue costs 148 - -
Repayment of bank loan 701 597 1,203
Exchange and other movements (256) 157 84
Net movement in cash and cash
equivalents excluding exchange
differences (1,042) (1,063) 57
---------------------- ---------- ---------- ----------
Movement in net debt (8,804) (309) 1,344
---------------------- ---------- ---------- ----------
Closing net debt (9,067) (1,916) (263)
---------------------- ---------- ---------- ----------
Independent review report to VEGA Group PLC
INTRODUCTION
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 31
October 2007 which comprises the Consolidated Income Statement, Consolidated
Balance Sheet, Consolidated Cash Flow Statement, Consolidated Statement of
Recognised Income and Expense, Reconciliation of Movements in Equity and notes
1 to 9. We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent misstatements
or material inconsistencies with the information in the condensed set of
financial statements.
This report is made solely to the Company in accordance with guidance contained
in ISRE 2410 (UK and Ireland) 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company, for our work, for this
report, or for the conclusions we have formed.
DIRECTORS' RESPONSIBILITIES
The half-yearly financial report is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure and Transparency Rules of
the United Kingdom's Financial Services Authority.
As disclosed in note 1, the annual financial statements of VEGA Group PLC are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, 'Interim Financial Reporting', as adopted by the European Union.
OUR RESPONSIBILITY
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
SCOPE OF REVIEW
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
CONCLUSION
Based on our review, nothing has come to our attention that causes us
to believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 31 October 2007 is not prepared, in
all material respects, in accordance with International Accounting Standard 34
as adopted by the European Union and the Disclosure and Transparency Rules of
the United Kingdom's Financial Services Authority.
Ernst & Young LLP
Cambridge
5 December 2007
This information is provided by RNS
The company news service from the London Stock Exchange
END
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