In what was a particularly challenging year for the global economy, we achieved a good result in 2009 by continuing to win new work and by maintaining tight control over our costs. The flexibility and resilience of our business model meant that we were able to generate operating profits of £42.8 million. Our financial position remains strong and we ended the year with cash and short-term investments of £178.8 million and no debt.
Turnover of £370.1 million
(2008: £440.1 million)
Total turnover for the year was £370.1 million (2008: £440.1 million).
The geographical spread of Group turnover remains broadly similar to that of 2008, with a small increase in the share of Group turnover generated in the UK at 57.6% of total turnover (2008: 54.3%).
Personnel and direct costs of £273.6 million
(2008: £338.5 million)
We maintain a tight control over all of our costs. In 2009, personnel and direct costs reduced by 19.2% compared to 2008. We have a substantial variable element to our compensation, so that any reduction in revenue is offset by a lower compensation cost. Bonuses are directly based on our consulting profitability and the total cost of bonus payments in 2009 was £41.3 million (2008: £67.2 million).
To maintain our strong financial position, we removed personnel and other direct costs from the business without affecting our service to clients. Average consultant headcount in the year was 1,909 (2008: 2,021).
Other administrative expenses of £52.9 million
(2008: £56.4 million)
We reduced administrative expenses (which include a substantial element of fixed costs) by 6.2% to £52.9 million (2008: £56.4 million).
We achieved this through a number of measures, including a programme to reduce all aspects of our variable corporate overhead.
Group operating profit of £42.8 million
(2008: £44.2 million)
Group operating profit was £42.8 million, a small reduction from the level in 2008. On a like-for-like basis, operating profit in 2009 reduced by approximately one-third. In 2008, the Group invested £8.3 million in the Ventures division, which was demerged part way through 2008 and so this cost did not recur this year. In both 2008 and 2009 there was an impact from changes in the level of specific provisions, which, in 2009, provided a benefit to operating profit.
Net interest receivable of £10.2 million
(2008: £4.9 million)
We held £178.8 million in cash and current asset investments at the year end (2008: £192.1 million). As a result of the reduction in UK bank base rates during the year, interest receivable on cash deposits declined to £5.3 million (2008: £10.3 million). Other interest receivable in 2009 was a non-cash item of £5.1 million arising from the release of a provision made in 2008 and recorded in that year as other interest payable.
Taxation charge of £12.0 million
(2008: £9.5 million)
The tax charge represents a Group tax rate of 22% (2008: 16%). The tax rate is lower than the standard UK corporation tax rate for both 2009 and 2008, in part as a result of tax having been overprovided in prior years. The Group also has prior period tax losses in some geographies. Based on our assessment of the ability to use these losses against future profits, we have recognised deferred tax assets on these losses and other timing differences.
Net assets of £176.8 million
(2008: £179.2 million)
Net assets reduced slightly during the year as the profit for the financial year of £43.4 million was substantially offset by the actuarial loss on the defined benefit pension arrangements (net of associated deferred tax) of £38.4 million. Our overall cash balances reduced slightly as a result of changes of working capital, substantially arising from the creditor for employee bonus payments being lower at the end of 2009 than 2008 and from net purchases of our shares by our employee benefit trusts.
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