Final Results

RNS Number : 0875Z

Sagentia Group PLC

04 March 2013

 



4 March 2013

SAGENTIA GROUP PLC

("Sagentia" or the "Group")

AUDITED RESULTS

FOR THE YEAR ENDED 31 DECEMBER 2012

Sagentia Group plc is an international technology consulting company providing outsourced R&D consultancy services from market analysis, through product development to transfer-to-manufacturing for the medical and commercial markets.

Summary

·   Good performance in more difficult market environment

·   Return to growth in second half of the year, resulting in Core Consultancy revenue   broadly flat for the year as a whole

·   Adjusted profit-before-tax increased to £3.4 million (2011 : £3.3 million)

·   Adjusted diluted EPS increased by 16%. Diluted EPS increased by 3% to 7.5 pence

·   Strong balance sheet maintained after share buy-back of 12.8% of issued share capital at a cost of £4.5 million. Gross cash balance at 31 December 2012 of £19.2 million (2011 : £21.2 million) and net funds of £12.9 million (2011 : £14.1 million)

·   Shareholders Funds per Share increased by 9% to 68.9 pence (2011 : 63.1 pence)

·   Proposed maiden dividend of 1.0 pence per share (2011 : nil)

Sagentia Group plc
Martyn Ratcliffe, Chairman	Tel: [phone]
Neil Elton, Finance Director	www.sagentia.com

Numis Securities
Oliver Cardigan / Simon Willis, Nominated Adviser James Serjeant, Corporate Broking	Tel: [phone]

Media enquiries:

Abchurch
Henry Harrison-Topham / Jamie Hooper	Tel: [phone]
[e-mail]	www.abchurch-group.com

Chairman's Statement

In the more difficult economic environment of the past year, Sagentia reports a very satisfactory operating performance for the year ended 31 December 2012, maintaining strong operating margins and cash flow.  While the first half of the year was made more challenging by a large customer deciding not to continue with a project, the latter part of the year was particularly strong resulting in a return to both sequential and year-on-year growth.

Despite the significant challenges early in the year, Consultancy Fees for the year as a whole only declined by 1%, due to the recovery in the second half of the year which recorded revenue growth of 5.6% on the prior year and 9.1% on the first half of 2012.  As anticipated, Product and Licence income declined on a comparative basis mainly due to 2011 benefiting from a one-off pre-production product manufacture for a European customer.  As a result, Group revenues decreased by 5.5% to £22.3 million (2011: £23.6 million).  However, operating profit, before the one-off charge related to the resignation of the Group's Chief Executive Officer in October 2012, remained unchanged at £3.9 million, a very strong operating margin of 17.6% (2011: 16.6%), and the corresponding adjusted profit before tax from continuing operations increased by 2.6% to £3.4 million (2011: £3.3 million).  Statutory profit before tax from continuing operations decreased by 10.4% to £3.0 million (2011: £3.4 million) due to the one-off charge referred to above.  With significant tax losses carried forward, the Board anticipates tax liabilities to be limited for the foreseeable future.

During the year, the Group undertook an active share buyback programme, acquiring 5.4 million of its own shares, equivalent to 12.8% of the issued share capital, at a total cost of £4.5 million.  Even after this significant return of capital to shareholders, due to continued focus on cash conversion and working capital, the cash balance at 31 December 2012 was £19.2 million (2011: £21.2 million), and net funds were £12.9 million (2011: £14.1 million).  The balance sheet continues to be very strong with Shareholders Funds of £25.3 million (2011: £26.4 million), approximately equal to the sum of the Group's cash balances and the carrying value of the Group's freehold property in Harston, net of the associated bank loan.  Shareholders' Funds per share, based on the shares in issue (excluding shares held in treasury) at 31 December 2012 were 68.9 pence (2011: 63.1 pence), benefitting from both the continued strong profitability of the Group and the reduction in shares in issue following the buy-back programme.

Operational Review

Sagentia's operations are based primarily in Harston, near Cambridge, UK.  In November 2012 the Group relocated its US operation from Cambridge, Massachusetts, to Boston, in order to better support its North American customer base and enable continued expansion of the US operations, from which broadly half of the Group's revenue is derived.  Most of the Group's consultants are managed through five skill groups (Science & Technology, Embedded Software, Mechanical Engineering and Design, Innovation Technology Management, and Project Management) and are deployed onto projects as required, providing the Group with the benefits of scale, customers with access to a breadth of science and engineering experience, and Sagentia's employees with a diversity of technical challenges.  Support functions (e.g. finance, HR, marketing and IT) are managed centrally to maximise the benefits of scale from shared resources.  Group headcount, excluding contract resources (approximately 40), at 31 December 2012 was 155, of which approximately 76% were fee-earning consultants (31 December 2011: 153 and approximately 27 contract resources).

In 2012, the top five clients accounted for approximately 46% (2011: 52%) and the top ten clients for approximately 64% (2011: 67%), of the Core Business revenues.  The changes in revenue profile reflect a project suspension (see below) and also an increase in the average revenue achieved per client.  This reflects the increasing focus on strategic sales initiatives by the Group and an emphasis on effective account management, balancing client concentration with reducing the cost of sale.

As noted above, in early 2012 a large Medical project in North America was suspended, impacting the first half of the year.  As a result, revenue from Medical customers decreased to £10.5 million (2011: £14.0 million) and accounted for approximately 53% of Group Core Business revenue for the year (2011: 68%).  Projects in the Medical market are generally for large corporate or well-financed start-up organisations and therefore, while these large projects generally tend to provide Sagentia with greater demand visibility, they do also result in greater customer concentration and changed priorities by clients may impact on Sagentia's performance at short notice.  The global medical market continues to be dominated by North American companies and approximately 64% of the revenue derived from Sagentia's Medical customers was sourced from North America (2011: 76%).

However, Sagentia reported strong growth of approximately 38% to £9.1 million (2011 : £6.6 million) from the Group's Commercial customers.  While the average project size from Commercial customers is generally smaller than for Medical projects, Sagentia has strong customer relationships with considerable repeat business from a number of large international organisations.  Furthermore, the multi-year contract with a North American consumer products group awarded in 2011 combined with a new major customer in the Oil & Gas sector, resulted in the Group's top two clients by revenue being derived from the Commercial market.  As a result, Commercial customers accounted for approximately 47% of the Group's Core Business revenue (2011: 32.0%) in the year.

Board and Management Changes

In October 2012, after three years in the post, Brent Hudson stood down as Chief Executive Officer. Mr Hudson made a significant contribution to the successful turnaround of the Group and the Board wishes him well for the future.  An exceptional charge of £435k is included in the income statement for the year relating to associated one-off charges, reflecting the settlement of contractual obligations by the Company and a discounted settlement of vested share options that could otherwise have been exercised.

Following Mr Hudson's resignation, Martyn Ratcliffe was appointed as Executive Chairman, with Mick Withers and Dan Edwards, formerly Head of the Medical and Commercial market groups respectively, being promoted to Joint Managing Directors of Sagentia Limited, the consultancy operating company, with responsibility for the day-to-day activities of the Group.

In October 2012 the Group also welcomed Michael Lacey-Solymar to the Board as a Non-Executive Director.  Mr Lacey-Solymar has over twenty-five years' corporate finance experience, having spent eighteen years at UBS and seven years at Investec and his appointment is consistent with the Board's continued evaluation of acquisition opportunities.

Annual General Meeting

The Annual General Meeting ("AGM") will be held on 15th May 2013.  In light of the Group's strong balance sheet and consistent performance, and responding to some shareholder representations, the Board considers that it is now appropriate for the Company to commence paying dividends.  The Board recommends a dividend of 1.0 pence per share (2011: nil), which subject to shareholder approval, will be payable on 7^th June 2013 to shareholders on the register at the close of business on 17^th May 2013.  In future, the Board anticipates recommending a single dividend being paid each year.

The Board will also seek approval from Shareholders at the AGM for authority to acquire up to 10% of the issued share capital of the Company so that, if deemed appropriate and in the best interests of shareholders, the Company may undertake further share purchases in the coming year.  This authority will be conditional on the passing of a general authority Panel Waiver by shareholders and on Takeover Panel approval of a waiver of Rule 9 of the UK Code on Takeovers and Mergers 

Finally, the Board has undertaken a review of the Group's share option schemes and, in accordance with standard practice, the Board is proposing to revise the scheme rules to allow for the cashless exercise of options by option holders and to introduce a new Performance Share Plan.  The Board will seek approval from Shareholders at the AGM.

Prospects

In summary, 2012 had a difficult start to the year, with the Group experiencing the effects of the deterioration in the macro-economic environment and the Medical project being discontinued.  The very satisfactory performance of the Group in terms of profitability and cash flow is therefore a credit to the management and staff of Sagentia.  Furthermore, with greater focus on developing strategic market opportunities and targeted investment, together with the significant performance improvement in the Commercial customer segment, the second half of 2012 returned to revenue growth and provides a platform for the year ahead.

For a technology consultancy business of Sagentia's size, the Group's operating margins are towards the upper end of its peer group.  Even in the more difficult market environment of the past year, these strong margins have been maintained.  However, the Board is committed to balancing operating margin and investment in order that the Group's performance is sustained and shareholder value is enhanced over the medium term.  As such, while in the current economic climate the Board will remain cautious and prudent in managing the business, Sagentia continues to explore and invest in growth opportunities.

The Board also continues to evaluate acquisition opportunities to accelerate the growth of the Group.  During the year, numerous potential acquisitions were considered, including both listed and private companies and, in February 2013, Sagentia acquired QDA Limited, a small Cambridge based industrial design company, consideration for which is based primarily on earn-out targets being achieved over the next three years.  Sagentia remains active in its pursuit of attractive acquisition opportunities and, although there can be no certainty that any transaction will occur, the Board is currently in discussions regarding a number of potential opportunities.

Martyn Ratcliffe

Chairman

1 March 2013

Financial Review

In the twelve months ended 31 December 2012, the Group generated revenue of £22.3 million (2011: £23.6 million) with the main reduction being in Product and Licence Income, while Consultancy Fees held broadly flat with just a 1% reduction and growth returning in the second half of the year.  Operating profit, before the one-off charge related to the resignation of the Chief Executive Officer in October 2012, remained unchanged at £3.9 million, an operating margin of 17.6% (2011: 16.6%), and the corresponding adjusted profit before tax from continuing operations increased by 2.6% to £3.4 million (2011: £3.3 million).  Statutory profit before tax from continuing operations decreased by 10.4% to £3.0 million (2011: £3.3 million) due to the one-off charge referred to above.

Due to the significant tax losses carried forward in the UK and US subsidiaries, approximately £23.0 million at 31 December 2012, (2011: £24.5 million), the tax liabilities on profits are anticipated to be minimal and relate largely to the profits generated on the property rental activities at Harston Mill.

Based on the average number of shares in issue during the year, basic earnings per share from continuing operations increased to 7.9 pence (2011: 7.8 pence) and diluted earnings per share from continuing operations increased to 7.5 pence (2011: 7.3 pence).  After stripping out the effect of the one-off charge in the year, diluted earnings per share from continuing operations increased to 8.5 pence, a 16% year-on-year increase.

The Group reports its results under two business segments (see Note 2).  The 'Core Business' represents all revenues derived from R&D Consultancy (comprising Technology Consultancy Fees and project expenses recharged on R&D Consultancy projects) and revenues from product sales and licence income.  The 'Other' segment comprises Fees and recharged project expenses derived from outsourced IT services (Manage5Nines Limited, a wholly owned subsidiary) and property income.

Revenue from Core Business activities declined by 6.4% to £19.6 million, compared with £20.9 million in 2011, although, as noted above, Consultancy Fees were down just 1% and returned to growth in the second half of the year.  Revenue from Core Business operations includes materials used in projects recharged to customers of £1.5 million (2011: £1.8 million), and product and licence revenue of £0.2 million (2011: £1.1 million).  The year-on-year decline reflects one-off product sales in 2011, not repeated in 2012, as well as a reduction in licence income in the second half of 2012 as a number of legacy licence agreements reached their termination dates.

Other revenue includes property income from rental space let in the Harston Mill facility of £1.4 million (2011: £1.4 million).  The Harston Mill property currently has a total of 10 tenants (2011: 12 tenants).  Approximately 7,700 square feet, or 25% of the total lettable area became available at the beginning of 2013 and is currently being marketed.  Other revenue also includes IT Support (including materials) through Manage5Nines Limited totalling £1.3 million (2011: £1.3 million).

The Group has a strong balance sheet with Shareholders' Funds at 31 December 2012 of £25.3 million, equivalent to 68.9 pence per share (2011: Shareholders' Funds of £26.4 million equivalent to 63.1 pence per share), representing an 9.2% year-on-year increase in Shareholders' Funds per share.  The gross cash position at 31 December 2012 was £19.2 million (2011: £21.2 million) and net funds were £12.9 million (2011: £14.1 million), after the share buy-back costs of £4.5 million and repayments on the bank loan of £0.8 million.  Net cash generated from operating activities was £3.7 million (2011: £4.7 million) and debtor days were 31 days (2011: 44 days).  The loan balance of £6.2 million at 31 December 2012 (2011: £7.0 million) is secured on the freehold property and associated lease structure and, subject to a minimum cash balance, is not subject to covenants related to the operating performance of the Consultancy business.  It should be noted that, as in previous years, the year-end cash position is enhanced by seasonal factors, particularly management and employee bonus payments accrued in 2012 and payable in March 2013.

Following approval at the Annual General Meeting in April 2012, the Company has since acquired 5.4 million of its own shares for £4.5 million in a share buyback at an average price of 82.8 pence per share.  The Company has also issued 0.2 million shares by way of settlement of exercised share options during the year.  The net effect is that there has been a net reduction in the issued share capital (excluding treasury shares) of 12.8% from 42,042,035 to 36,665,591.

Neil Elton

Finance Director

1 March 2013

Sagentia Group plc

Consolidated Income Statement

For the year ended 31 December 2012

					Group
	Note				2012 £000	2011 £000
Revenue	2				22,268	23,568
Operating expenses	2,3				(18,883)	(19,662)
Operating profit	2				3,385	3,906
Net loss on disposal of non-current asset investments					-	(80)
Share based payment charge					(155)	(206)
Profit before finance charges and tax					3,230	3,620
Finance costs					(319)	(353)
Finance income					87	79
Profit before income tax					2,998	3,346
Income tax	4				126	(78)
Profit for the year from continuing operations					3,124	3,268
Loss for the year from discontinued operations					-	(680)
Profit for the year					3,124	2,588
Profit for the year attributable to equity holders of the parent					3,124	2,588
Earnings per share
Earnings per share from continuing operations (basic)	5				7.9p	7.8p
Earnings per share from continuing operations (diluted)	5				7.5p	7.3p

Sagentia Group plc

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2012

					Group
					2012 £000	2011 £000
Profit for the year					3,124	2,588
Other comprehensive income:
Exchange difference on translating foreign operations Recycled translation reserve					(36) -	258 680
Other comprehensive income for the year					(36)	938
Total comprehensive income for the year					3,088	3,526
Total comprehensive income for the year attributable to owners of the parent					3,088	3,526

Sagentia Group plc

Consolidated Statement of Changes in Equity

For the year ended 31 December 2012

Group	Issued capital £000	Share premium £000	Treasury stock £000	Merger reserve £000	Translation reserve £000	Share based payment reserve £000	Retained earnings £000	Total - Shareholders funds £000	Non-controlling Interest £000	Total equity                 £000
Balance at 1 January 2011	417	7,518	-	22,211	(680)	832	(7,551)	22,747	70	22,817
Disposal of Sagentia Group AG	-	-	-	(11,868)	-	-	11,868	-	-	-
Change in ownership interest	-	-	-	-	-	-	(80)	(80)	(70)	(150)
New shares issued	1	20	-	-	-	-	-	21	-	21
Share based payment charge	-	-	-	-	-	206	-	206	-	206
Transactions with owners	1	20	-	(11,868)	-	206	11,788	147	(70)	77
Profit for the year	-	-	-	-	-	-	2,588	2,588	-	2,588
Other comprehensive income:
Exchange differences on translating foreign operations	-	-	-	-	258	-	-	258	-	258
Recycled to income statement	-	-	-	-	680	-	-	680	-	680
Total comprehensive income for the year	-	-	-	-	938	-	2,588	3,526	-	3,526
Balance at 31 December 2011	418	7,538	-	10,343	258	1,038	6,825	26,420	-	26,420
Balance at 1 January 2012	418	7,538	-	10,343	258	1,038	6,825	26,420	-	26,420
Purchase of own shares	-	-	(4,458)	-	-	-	-	(4,458)	-	(4,458)
New shares issued	2	43	-	-	-	-	-	45	-	45
Share based payment charge	-	-	-	-	-	155	-	155	-	155
Issue of shares out of treasury stock	-	-	7	-	-	-	(6)	1	-	1
Transactions with owners	2	43	(4,451)	-	-	155	(6)	(4,257)	-	(4,257)
Profit for the year	-	-	-	-	-	-	3,124	3,124	-	3,124
Other comprehensive income:
Exchange differences on translating foreign operations	-	-	-	-	(36)	-	-	(36)	-	(36)
Total comprehensive income for the year	-	-	-	-	(36)	-	3,124	3,088	-	3,088
Balance at 31 December 2012	420	7,581	(4,451)	10,343	222	1,193	9,943	25,251	-	25,251

The Merger reserve arose as a consequence of a Group reorganisation.  In 2008 Sagentia Group plc acquired Sagentia Group AG by way of a share for share exchange. Sagentia Group AG was liquidated during 2011 as a result of which the Merger reserve was reduced to £10.3 million and cumulative translation differences of £0.7 million have been recycled to the consolidated income statement as a loss from discontinued operations.

Sagentia Group plc

Consolidated Balance Sheet

For the year ended 31 December 2012

		Group
	Note	2012 £000	2011 £000
Assets
Non-current assets
Property, plant and equipment		14,302	14,120
Investments		-	-
Deferred income tax assets		3,323	3,237
		17,625	17,357
Current assets
Trade and other receivables	6	3,027	3,327
Current tax asset		-	-
Cash and cash equivalents		19,179	21,198
		22,206	24,525
Total assets		39,831	41,882
Liabilities
Current liabilities
Trade and other payables	7	6,096	5,778
Current income tax liabilities	7	32	180
Other borrowings	7	821	835
		6,949	6,793
Non-current liabilities
Borrowings	8	5,411	6,232
Deferred income tax liabilities	8	2,220	2,437
		7,631	8,669
Total liabilities		14,580	15,462
Net assets		25,251	26,420
Shareholders' equity
Share capital	9	420	418
Share premium		7,581	7,538
Treasury stock		(4,451)	-
Merger reserve		10,343	10,343
Translation reserve		222	258
Share based payment reserve		1,193	1,038
Retained earnings		9,943	6,825
Total equity		25,251	26,420

Sagentia Group plc

Consolidated Statement of Cash Flows

For the year ended 31 December 2012

		2012 £000	2011 £000
Profit before income tax		2,998	3,346
Depreciation and amortisation charges		236	231
Loss on disposal of current asset investments		-	80
Share based payment charge		155	206
Decrease in receivables		300	760
Increase in payables		318	104
Cash generated from operations		4,007	4,727
UK corporation tax received (paid) - net		(264)	(40)
Foreign corporation tax received (paid) - net		(61)	(20)
Cash flows from operating activities		3,682	4,667
Purchase of property, plant and equipment		(417)	(239)
Purchase of non-controlling interest		-	(150)
Sale of current assets investments		-	944
Cash flows from investing activities		(417)	555
Issue of ordinary share capital		45	21
Issue of shares out of treasury		1	-
Purchase of own shares		(4,458)	-
Repayment of bank loans		(800)	(800)
Proceeds from other loan		-	95
Repayment of other loan		(35)	(28)
Cash flows from financing activities		(5,247)	(712)
Increase (decrease) in cash and cash equivalents in the year		(1,982)	4,510
Cash and cash equivalents at the beginning of the year		21,198	16,430
Exchange gains (loss) on cash		(37)	258
Cash and cash equivalents at the end of the year		19,179	21,198

Extracts from notes to the financial statements

1  General Information

Sagentia Group plc (the 'Company') and its subsidiaries (together 'Sagentia' or 'Group') is an international technology consulting group providing outsourced R&D consultancy services from market analysis, through product development to transfer-to-manufacturing and the development and exploitation of intellectual property.

The Company is the ultimate parent company in which results of all Sagentia companies are consolidated.  The Company was incorporated on 17 March 2008 in order to acquire the whole of the undertaking of Sagentia Group AG via a share for share exchange.  Sagentia Group AG was liquidated in 2011.

Sagentia develops new and novel technologies in the Medical (Diagnostics, Patient Care and Surgical) and Commercial (Industrial and Consumer) industries.  Its key areas of expertise include: engineering, electronics, life sciences, business innovation, and materials.  Sagentia's facilities include offices and laboratories located in Europe in Cambridge and in the US in Boston, Massachusetts.

The Group and Company accounts of Sagentia Group plc were prepared under IFRS as adopted by the European Union, and have been audited by Grant Thornton UK LLP.  Accounts are available from the company's registered office; Harston Mill, Harston, Cambridge, CB22 7GG.

The Company is incorporated in England and Wales and has its primary listing on the AIM Market of the London Stock Exchange (SAG.L).  The value of Sagentia Group plc shares, as quoted on the London Stock Exchange plc at 31 December 2012, was 91.5 pence per share (31 December 2011: 87.5 pence).

2  Segment Information

Sagentia is organised on a worldwide basis into two segments, Core Business and Other. Core Business activities include the two industry sectors (Medical and Commercial) which Sagentia services and includes all Consultancy fees for services operations, including recharged expenses and product/licence revenue generated directly from these activities.  'Other' activities include rental income from Harston Mill and income from the provision of external IT services.  The segmental analysis is reviewed up to operating profit.  Other resources are shared across the Group.

Year ended 31 December 2012			Core Business £000	Other £000	Total £000
Fees			17,930	-	17,930
IT Support			-	796	796
Property income			-	1,363	1,363
Recharged project expenses			1,499	510	2,009
Product and licence income			170	-	170
Revenue			19,599	2,669	22,268
Operating profit			3,285	100	3,385
Share based payments					(155)
Profit before finance charges and tax					3,230
Finance charges					(232)
Profit before income tax					2,998
Tax charge					126
Profit for the year from continuing operations					3,124

Year ended 31 December 2011			Core Business £000	Other £000	Total £000
Fees			18,105	-	18,105
IT Support			-	840	840
Property income			-	1,370	1,370
Recharged project expenses			1,760	420	2,180
Product and licence income			1,073	-	1,073
Revenue			20,938	2,630	23,568
Operating profit			3,604	302	3,906
Loss on disposal of non-current asset investments					(80)
Share based payments					(206)
Profit before finance charges and tax					3,620
Finance charges					(274)
Profit before income tax					3,346
Tax income					(78)
Profit for the year from continuing operations					3,268

Revenue and non-current assets by geographical area are as follows:

	2012		2011
	Revenue £000	Non-current Assets £000	Revenue £000	Non-current Assets £000
United Kingdom	8,306	14,291	6,618	14,120
Other European countries	3,038	-	3,821	-
North America	10,924	11	13,091	-
Other	-	-	38	-
Total	22,268	14,302	23,568	14,120

For the purpose of the analysis of revenue, geographical markets are defined as the country or area in which the client is based.  Non-current assets are allocated based on their physical location.

During 2012, £2.2 million or 11% (2011: £3.8 million; 18%) of the Group's revenues depended on a single customer in the Core Business segment, based in North America.

3  Operating expenses

Expenses by nature				Group
Year ended 31 December				2012 £000	2011 £000
Employee remuneration and benefit expense (excluding share options)				10,808	10,886
Operating third party expenses				2,891	3,448
Occupancy costs				1,539	1,451
Equipment and consumables				797	618
Selling and marketing expenses				1,309	1,170
Depreciation of property, plant and equipment				236	231
Patent fees				59	82
Recruitment and training				322	652
Foreign currency losses				46	156
Other				876	968
				18,883	19,662

Included above				Group
				2012 £000	2011 £000
Research and development *				6,035	7,326
Operating lease rentals
- Plant and machinery				17	24
- Other				-	-
Auditors' remuneration
Services to the Company and its subsidiaries:
Fees payable to the Company's auditors for the audit of the financial statements				10	8
Fees payable to the Company's auditors and its associates for other services:
Audit of the financial statements of the Company's subsidiaries pursuant to legislation				27	27
Other non-audit fees				12	30

* R&D costs are represented by staff and material costs incurred in relation to third party R&D projects

4  Income Tax

The tax (charge) / credit comprises:

Year ended 31 December			2012 £000	2011 £000
Foreign taxation			1	9
Current taxation			(178)	(211)
Deferred taxation
- tax losses available			303	124
- other temporary differences			-	-
			303	124
			126	(78)

The tax on Sagentia's profit before tax differs from the theoretical amount that would arise using the weighted average statutory tax rate applicable to profits of the consolidated companies as follows:

			2012 £000	2011 £000
Profit before tax			2,998	3,346
Tax calculated at domestic tax rates applicable to profits(losses) in the respective countries			(734)	(916)
Expenses not deductible for tax purposes			(96)	(16)
Fixed asset differences			(42)	-
Income not subject to tax			7	-
Accelerated capital allowances			6	2
Adjustment in respect of prior periods			7	(22)
Other temporary differences			1	(2)
Other short term timing differences			4	-
Tax losses for which no deferred income tax asset was recognised			-	(123)
Movement in deferred tax due to change in tax rate Utilisation of tax losses			(71) 1,044	(64) 1,063
Tax (charge) / credit			126	(78)

The weighted average statutory applicable tax rate was 24.5% (2011: 26.7%).

The Group has available tax losses of approximately £23.0 million (2011: £24.5 million).

5  Earnings per share

The calculation of earnings per share is based on the following result and numbers of shares:

			2012 £000	2011 £000
Profit for the financial year from continuing operations			3,124	3,268
Profit for the financial year (including discontinued operations)			3,124	2,588

Weighted average number of shares:			2012 Number	2011 Number
For basic earnings per share			39,567,939	41,733,574
Dilutive effect of share options over Ordinary Shares			2,124,631	2,933,139
For fully diluted earnings per share			41,692,570	44,666,713

The profit for the 2011 financial year (including discontinued operations) is stated after the recycling of accumulated translation reserves through the income statement following the liquidation of Sagentia Group AG in 2011.

Basic earnings per share for continuing operations in 2012 were 7.9 pence (2011: 7.8 pence).  Fully diluted earnings per share from continuing operations were 7.5 pence (2011: 7.3 pence).

6. Trade and other receivables

	Group
	2012 £000	2011 £000
Current assets:
Trade receivables	2,509	2,415
Provision for impairment	(121)	(57)
Trade receivables - net	2,388	2,358
Amounts recoverable on contracts Other receivables	291 10	521 12
VAT	-	13
Prepayments and accrued income	338	423
	3,027	3,327

All amounts disclosed above are short term. The carrying value of trade receivables is considered a reasonable approximation of fair value.

All of Sagentia's trade and other receivables have been reviewed for indicators of impairment. Certain trade receivables were considered to be impaired and a provision of £121,000 (2011: £57,000) has been provided at 31 December. In addition, some of the unimpaired trade receivables are past due as at the reporting date.

	Group
	2012 £000	2011 £000
Provision brought forward	57	345
Debts written off	-	(223)
Provision released	(33)	(122)
Provision made	97	57
Provision carried forward	121	57

The age of trade receivables overdue but not impaired is as follows:

	Group
	2012 £000	2011 £000
Not more than 3 months	556	603
More than 3 months but not more than 6 months	-	2
More than 6 months but not more than 1 year	-	-
More than 1 year	-	-
	556	605

7.  Current Liabilities

	Group
	2012 £000	2011 £000
Trade and other payables - current
Payments received on account	1,811	1,054
Trade payables	63	346
Other taxation and social security	518	459
VAT	132	-
Accruals and deferred income	3,572	3,919
	6,096	5,778
Bank borrowings Other borrowings	800 21	800 35
Current tax liabilities	32	180
	6,949	6,793

8.  Other non-current liabilities

	Group
	2012 £000	2011 £000
Bank borrowings Other borrowings	5,400 11	6,200 32
	5,411	6,232
Deferred income tax liabilities	2,220	2,437
	7,631	8,669

9.  Called-up share capital

			2012 £000	2011 £000
Authorised
Ordinary shares of £0.01 each			465	465
Allotted, called-up and fully paid
Ordinary shares of £0.01 each			420	418
			Number	Number
Authorised
Ordinary shares of £0.01 each			46,534,390	46,534,390
Allotted, called-up and fully paid
Ordinary shares of £0.01 each			42,042,035	41,841,095

On 28 November 2011 the Company announced that an application had been made to the London Stock Exchange for the admission to trading on AIM of a blocklisting of 318,440 ordinary shares of 1 pence each.  During the year ended 31 December 2012 the Company allotted the remaining balance of 200,940 ordinary shares issued under this blocklisting in settlement of the exercise of various options.  As a result the allotted, called-up and fully paid share capital of the Company increased from 41,841,095 as at 31 December 2011 to 42,042,035 shares as at 31 December 2012.

During the year the Company purchased 5,385,555 of its 1 pence ordinary shares for an average price of 82.8 pence per share which it held in treasury.  Of the ordinary shares held in treasury the Company re-issued 9,111 shares in settlement of the exercise of share options.

As at 31 December 2012 the total number of ordinary shares in issue (excluding treasury shares) was 36,665,591 and the number of treasury shares held was 5,376,444 equivalent to 12.8% of the Company's issued share capital.  It is the intention of the Company to hold the treasury shares for the purpose of settling employee share schemes and in consideration for any future business acquisitions.  No dividend or other distribution may be made to the Company in respect of the treasury shares.

10. Statement by the directors

The preliminary results for the year ended 31 December 2012 and the results for the year ended 31 December 2011 are prepared under International Financial Reporting Standards as adopted for use in the EU ("IFRS").  The accounting policies adopted in this preliminary announcement are consistent with the Annual Report for the year ended 31 December 2012.

The financial information set out above, which was approved by the Board on 1 March 2013, is derived from the full Group accounts for the year ended 31 December 2012 and does not constitute the statutory accounts within the meaning of section 434 of the Companies Act 2006.  The Group accounts on which the auditors have given an unqualified report, which does not contain a statement under section 498(2) or (3) of the Companies Act 2006 in respect of the accounts for 2012, will be delivered to the Registrar of Companies in due course.

The Board of Sagentia approved the release of this audited preliminary announcement on 1 March 2013.

The Annual Report for the year ended 31 December 2012 will be posted to shareholders in due course and will be delivered to the Registrar of Companies following the Annual General Meeting of the Company.  The report will also be available on the investor relations page of the Group's website.

Further copies will be available on request and free of charge from the Company Secretary.

- Ends -

 

END

 

 

FR UAAWROSAORAR