In this challenging economic climate, cost control has remained one of our key objectives. We have maintained our productivity while headcount reduced. In 2010 we have generated an operating profit of £20.5 million and continue to maintain a healthy financial position with cash and short-term investments of £155.1 million.
Turnover of £327.9 million
(2009: £370.1 million)
Total turnover for the year was £327.9 million (2009: £370.1 million) of which £311.2 million (2009: £351.2 million) related to continuing operations. Discontinued operations comprise the former Infrastructure & Development Services (I&DS) business, which was sold in July 2010.
In generating this turnover, we charged out a higher percentage of available hours than in 2009 and maintained our billing rates in the market.
The geographical spread of Group turnover remains similar to 2009, with a small decrease in the share of Group turnover generated in the UK at 55.0% of total turnover (2009: 57.6%).
Personnel and direct costs of £254.9 million
(2009: £273.6 million)
We maintain tight control over all our costs. In 2010 personnel and direct costs reduced by 6.8% compared to 2009. The underlying reduction is 9.5% as 2009 included a one-off non-cash provision release that was not repeated in 2010. 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 2010 was £35.7 million (2009: £41.3 million).
Other administrative expenses of £53.8 million
(2009: £52.9 million)
We reported an increase in administrative expenses of 1.7%. The 2010 expense includes a one-off non-cash provision of £5.8 million required as a result of subleasing part of our global headquarters. This will be released to profit over the period of the sublet. Aside from this one-off charge, we have reduced our underlying other administrative expenses by 9.1% to £48.1 million (2009: £52.9 million).
Group operating profit of £20.5 million
(2009: £42.8 million)
Group operating profit was £20.5 million, a reduction of 52.1%. On an underlying basis, excluding the two one-off non-cash items noted in ‘personnel and direct costs’ and ‘other administrative expenses’ above, our operating profit in 2010 reduced by 20.6%.
Exceptional profit on disposal of £6.5 million
As a result of our strategic review in 2010, we sought to focus more tightly on certain sectors and service offerings. As a result of this we sold our I&DS business which, although a successful business in its own right, was non-core to the offerings in the rest of PA.
Net interest receivable of £1.9 million
(2009: £10.2 million)
We held £155.1 million in cash and current asset investments at the year end (2009: £178.8 million). As a result, and with the continuing low level of UK bank base rates, interest receivable declined to £2.2 million (2009: £5.3 million). 2009 also included other interest receivable of £5.1 million arising from the release of a provision previously made.
Net assets of £189.8 million
(2009: £176.8 million)
Net assets have increased during the year as the profit for the year of £23.2 million was enhanced by a substantial actuarial gain on the defined benefit pension arrangements of the Group (net of deferred taxes) of £11.9 million (2009: actuarial loss of £38.4 million), the profit on the sale of our I&DS operation of £6.5 million (2009: £nil) as offset by the impact of purchases of our own shares of £19.2 million (2009: £4.6 million). Our overall cash position declined during the year primarily as a result of payment of bonuses, taxation paid and the purchase of our own shares.
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