18th Nov 2005 07:01
Farley Group PLC18 November 2005 Farley Group plc ("Farley" or the "Company") Preliminary Results for the year ended 30 September 2005 Farley Group, the independent estate agent specialising in selling, letting andmanagement of property in Central London, announces its preliminary results forthe year ended 30 September 2005. Highlights • Turnover up 28% on previous year to £2.58 million; • Profit before tax and amortisation of goodwill also up 28% on previous year to £0.48 million; • Interim Dividend of 1.1p per ordinary share to shareholders on 11 November 2005 payable on 19 December 2005 (an increase of 10% compared with the final dividend for the year ending 30 September 2004); and • Conditional acquisition of Humberts and placing of up to £8 million through the issue of up to 13,333,334 ordinary shares in the Company. Commenting on the results, Tim James, Chairman of Farley, said: "I am delighted with the growth the Company has experienced over the last 12months particularly given the downturn experienced by many of our competitors. The acquisition of Humberts is the first step in our strategy to consolidatewithin the sector in which we operate and we look forward to working with theHumberts team to integrate Humberts into the Farley Group." Contacts: Max Ziff, Proposed Chief Executive Officer, Farley Group plc: 07802 472 774Tim James, Executive Chairman, Farley Group plc: 07768 833 029John Prior / David Seal, Corporate Synergy Plc: 020 7448 4400 Chairman's Statement During the year to 30 September 2005, your Company focused on managing thebusiness of Farley & Co and developing its future growth strategy. Despite a difficult market in which many of our competitors have noted adownturn in business, I am delighted to report that we managed to achieve agrowth in turnover up 28% on 2004 to £2.56 million and profit before taxand amortisation of goodwill also up 28% to £0.48 million. I wouldparticularly like to thank Patricia Farley for her major contribution inachieving this result, not only given the challenging market conditions we havefaced but also given the sad loss of her father, Vincent Farley, who helpedbuild up the Farley & Co brand over his 60 year association with the company.We all remember Vincent with great affection and he will be sadly missed by hisfamily, friends and colleagues. Given the increase in profits of the group, we intend to declare a specialinterim dividend of 1.1p per share to all shareholders on the registerimmediately prior to the forthcoming share placing in lieu of a final dividend,an increase of 0.1p per share compared with the final dividend for the year to30 September 2004. The interim dividend will be paid to shareholders on 19December 2005. In June this year Pendana Limited made a strategic investment of £ 2 million for a 25% stake in the Company. Pendana is a company which isultimately owned by Investec Trust (Guernsey) Limited as trustees of theTchenguiz Family Trust, who have many varied interests in the UK residentialproperty market. We are pleased to welcome Stephen Russell, Pendana'srepresentative to our board. The association with Pendana is already resultingin a number of business opportunities which I am confident will enhance the longterm prospects of the group. Post balance sheet events As you are all aware, Farley recently announced that, subject to shareholderapproval, it intends to acquire the business of Humberts, an independentnational firm of land and estate agents and chartered surveyors with amulti-disciplined practice providing integrated expertise in the residential,commercial, rural and professional services fields. Humberts has a total of 39 offices, 18 of which are owned and 21 of which arefranchised. Your Company intends to develop and grow the Humberts brand as partof its overall growth strategy. Over the next two years, as we integrateHumberts into the Farley group, we expect to incur one off costs of up to £1million including the cost of re-branding, normalising over-rent properties andintroducing a new technology and financial reporting platform needed for theeffective management and growth of the Humberts brand. In addition to the proposed acquisition of Humberts and also subject toshareholder approval, the company is proposing to raise up to £8 million (beforeexpenses) by way of a cash placing of new shares, the proceeds of which will beused to provide additional working capital to help finance the group's strategicgrowth going forward. In order to manage the integration of Humberts and develop our future growthstrategy I am particularly delighted to announce the appointment, subject toshareholder approval, of Max Ziff as group chief executive officer. Max, whom Ihave known and worked with for over ten years, has a wide range of financialexperience in corporate restructuring, mergers and acquisitions, liabilitymanagement and the raising of debt and equity capital across the internationalcapital markets. Max will take responsibility for managing the group'sactivities on a day to day basis and working closely with me and the board indeveloping the group's acquisition strategy. Following completion of the proposed acquisition of Humberts which will resultin the issue of 1,666,667 new ordinary shares and the issue of up to 13,333,334new ordinary shares pursuant to the proposed share placing, there will be38,526,215 ordinary shares in issue (assuming the placing is fully subscribed),and the interests of directors and major shareholders will be as follows: Shareholder Ordinary Shares Percentage Pendana Limited 9,631,552 25.0%Patricia Farley 3,798,898 9.9%Tim James 2,313,625 6.0%Westminster Enterprises Ltd 2,126,667 5.5%Intellectual Capital Trust 1,580,395 4.1%John Peter Gibson Morris 1,517,273 3.9%State Street Nominees Limited 1,288,432 3.3%Bryan Richmond-Dodd 1,213,411 3.2%Simon Wharmby 1,016,266 2.6%Max Ziff 465,151 1.2%Stephen Russell Nil Nil In addition to their shareholdings identified above, Max Ziff will hold2,000,000 and each of Patricia Farley, Tim James and Simon Wharmby will hold333,333 options over ordinary shares in the company, all exercisable at 60p pershare. Options will be exercisable between two and ten years from grant, with1/3rd exercisable if the ordinary share price rises above 100p per share, 1/3rdexercisable if the ordinary share price rises above 80p and 1/3rd exercisableunconditionally. Reduction of share capital The Company's balance sheet at 30 September 2005 included the sum of £4,324,171in respect of share premium which had arisen on the issue by the Company ofshares at a premium to their nominal value from time to time. Following theplacing referred to above of up to 13,333,334 ordinary shares of 5p each at 60p(i.e. a premium of 55p per share) and the allotment of 1,666,667 considerationshares to the vendors of Humberts credited as fully paid at the same premium,the amount standing to the credit of the share premium account will (assumingthe placing is subscribed in full) increase by £9,000,000 to £13,324,171. A share premium account is an undistributable reserve and, accordingly, thepurposes for which the Company can use its share premium account are extremelyrestricted. In particular, it cannot be used for the purpose of payingdividends. However, with the consent of the Court, the Company may reduce or cancel a sharepremium account and, subject to satisfying the Court that no creditor isprejudiced thereby, move the sum which results upon such reduction orcancellation to a distributable reserve where its application is not sorestricted. The Company therefore proposes to reduce the sum standing to the credit of itsshare premium account following the placing by the sum of £5,000,000 and tocarry the sums set free to a special reserve which, subject to suitableprotection being put in place for the benefit of the Company's creditors, may betreated as a distributable reserve. Once the reduction of the share premium account has become effective, there willbe sufficient distributable reserves to allow the Company to maintain aprogressive dividend policy. Without such reduction of share premium account,the one off costs of up to £1 million referred to above would have an adverseimpact on distributable reserves thereby restricting the Company's ability tomaintain such a dividend policy going forward. The reduction of the Company's share premium account requires shareholderapproval by way of special resolution to be sought at the Annual General Meetingof the company. The reduction of the Company's share premium account will only take effect ifconfirmed by the Court and upon the appropriate documents being lodged with theRegistrar of Companies. The Court will require the Company either to obtain theconsent of the Company's existing creditors or to put in place protection forthe benefit of the Company's existing creditors and your board anticipates thatthe company will obtain the consent of the Company's existing creditors. The application to the Court will be made soon after the AGM. A date for thehearing of the Petition has provisionally been arranged with the Court for 1February 2006 and the procedure is expected to be finalised by 14 February 2006.The provisional timetable is subject to alteration depending on the Court'sSchedule and is not something which your board is able to guarantee. However,there is no reason at present to anticipate any delay in the process which wouldpostpone completion of the reduction of share premium account beyond 31 March2006. Other special business at the AGM A resolution is being proposed as special business at the AGM to approve theentry by the Company into a contract for the purchase by the Company of all the4,700,000 issued deferred shares of 20p each in the Company for a totalconsideration of £1. A copy of that contract will be available for inspection atRussell Square House, 10-12 Russell Square, London WC1B 5LF, the registeredoffice of the Company from today until the date of the AGM. A resolution is also being proposed to grant authority to the directors to makemarket purchases of its own ordinary shares. The proposed authority to makemarket purchases of its ordinary shares is for a maximum of 3,852,621 ordinaryshares (representing approximately 10 per cent of the issued share capital ofthe Company following the completion of the acquisition of Humberts and theplacing (assuming full subscription) referred to above) will expire at the endof the Annual General Meeting in 2006. The maximum price which may be paid foran ordinary share is 105% of the average of the middle market quotations for thefive business days preceding the purchase and the minimum price that may be paidfor an ordinary share is 5p. The directors intend to use this authority only when they consider it to be inthe best interests of shareholders taking into account prevailing marketconditions and the financial position of the Company. In addition, it ispossible for the Company to hold any ordinary shares purchased by it in treasuryinstead of cancelling them as previously required. Such ordinary shares may besold by the Company for cash or alternatively transferred for the purposes of anemployees' share scheme. If the Company were able to purchase ordinary shares inaccordance with this authority, the directors would consider the possibility ofholding them in treasury. Group profit and loss account for the year ended 30 September 2005 Note 2005 2004 £ £ Turnover 2,556,033 2,002,498 Cost of sales (1,432,429) (1,037,856) ___________ ___________Gross profit 1,123,604 964,642 Administrative and establishment expenses (822,003) (682,349)Amortisation of goodwill (96,000) (72,000) ___________ ___________Operating profit 205,601 210,293 Interest receivable and similar income 184,186 97,485Interest payable (2,284) (2,501) ___________ ___________Profit on ordinary activities before tax 387,503 305,277 Tax (146,124) (124,026) ___________ ___________Profit on ordinary activities after tax 241,379 181,251 Dividends 2 (258,788) (174,656) ___________ ___________Retained (deficit)/profit for the year (17,409) 6,595 Losses brought forward (16,021) (22,616) ___________ ___________Retained losses carried forward (33,430) (16,021) Earnings per ordinary share - basic 1 1.30p 1.44p ___________ ___________ - diluted 1.25p 1.37p ___________ ___________ Group statement of total recognised gains and losses for the year ended 30 September 2005 2005 2004 £ £ Profit for the financial year 241,038 181,251Unrealised surplus on the revaluation of investment properties - 50,000 ___________ ___________Total recognised gains and losses relating to the year 241,038 231,251 ___________ ___________ The above results are derived from continuing operations. Group balance sheet as at 30 September 2005 Note 2005 2004 £ £Fixed assetsInvestments 375,000 375,000Tangible fixed assets 154,429 173,149Intangible fixed assets 1,755,728 1,851,728 ___________ ___________ 2,285,157 2,399,877 ___________ ___________Current assetsDebtors 316,219 388,135Cash at bank and in hand 4,687,455 2,328,523 ___________ ___________ 5,003,674 2,716,658 Creditors due within one year (797,689) (568,886) ___________ ___________Net current assets 4,205,985 2,147,772 ___________ ___________Total assets less current liabilities 6,491,142 4,547,649 Creditors due after more than one year (23,510) (19,627) Provisions for liabilities and chargesDeferred taxation (10,580) (12,108) ___________ ___________ 6,457,052 4,515,914 ___________ ___________Capital and reservesCalled up share capital 2,116,311 1,813,280Share premium account 4,324,171 2,668,655Revaluation reserve 50,000 50,000Profit and loss account (33,430) (16,021) ___________ ___________Equity shareholders' funds 6,457,052 4,515,914 ___________ ___________ Company balance sheet as at 30 September 2005 Note 2005 2004 £ £Fixed assetsInvestments 2,150,000 2,150,000 ___________ ___________Current assetsDebtors 429,126 275,343Cash at bank and in hand 4,214,134 2,267,737 ___________ ___________ 4,643,260 2,543,080 Creditors: due within one year (303,719) (184,883) ___________ ___________Net current assets 4,339,541 2,358,197 ___________ ___________Total assets less current liabilities 6,489,541 4,508,197 ___________ ___________Net assets 6,489,541 4,508,197 ___________ ___________Capital and reservesCalled up share capital 2,116,311 1,813,280Share premium account 4,324,171 2,668,655Profit and loss account 49,059 26,262 ___________ ___________Equity shareholders' funds 6,489,541 4,508,197 ___________ ___________ Group cash flow statement for the year ended 30 September 2005 Note 2005 2004 £ £ Cash inflow from operating activities 484,360 389,280 ___________ ___________Returns on investments and servicing of financeInterest received 184,186 97,485Interest paid (2,284) (2,501) ___________ ___________ 181,902 94,984 ___________ ___________ TaxationUK corporation tax paid (80,354) (28,972) ___________ ___________Capital expenditurePurchase of tangible fixed assets (11,624) (98,621)Sales of tangible fixed assets 4,798 13,006 ___________ ___________ (6,826) (85,615) ___________ ___________AcquisitionsNet cash acquired with subsidiary - (344,111) ___________ ___________FinancingIssue of share capital 1,958,556 2,451,092Repayment of loan stock - (544,157)Repayment of hire purchase (4,050) (12,609)Dividends (174,656) - ___________ ___________ 1,779,850 1,894,326 ___________ ___________Increase in cash in the year 2,358,932 1,919,892 ___________ ___________Reconciliation of net cash inflowto movement in net funds Increase in cash in the year 2,358,932 1,919,892Opening net funds 2,328,523 408,631 ___________ ___________Closing net funds 4,687,455 2,328,523 ___________ ___________ 1. Earnings per share The calculation of basic earnings per ordinary share is based on the profit on ordinary activities after tax and on the weighted average number of ordinary shares in issue during the year. The calculation of diluted earnings per ordinary share is based on the basic earnings per ordinary share adjusted to allow for the issue of shares on the assumed conversion of all dilutive instruments. 2005 2004 Weighted Earnings Weighted Earnings average per average per Profit number share Profit number share £ of shares pence £ of shares pence Basic 241,379 18,631,109 1.30p 181,251 12,621,459 1.44p __________ __________ __________ __________ __________ _________Diluted 241,379 19,244,051 1.25p 181,251 13,224,943 1.37p __________ __________ __________ __________ __________ _________ 2. Dividends 2005 2004 £ £ Special interim dividend (in lieu of final)1.1p per ordinary share 258,788 - Final - proposed: 1p per ordinary share - 174,656 _______ _______ 258,788 174,656 _______ _______ 3. The financial information set out in this announcement does not constitute statutory group accounts within the meaning of Section 240 of the Companies Act 1985. Statutory accounts for the year ended 30 September 2005, containing an unqualified auditors' report will be filed with the Registrar of Companies. The report and accounts of the company, which are being sent to shareholders today, will be available free of charge from 27 Hanover Square, London W1R 9AJ. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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