20th Mar 2008 07:01
Cenkos Securities PLC20 March 2008 Cenkos Securities plc ("the Company") together with its subsidiaries ("the Group") PRELIMINARY ANNOUNCEMENT OF AUDITED RESULTS OF THE GROUP FOR THE YEAR ENDED 31 DECEMBER 2007 Cenkos Securities plc today announced its audited preliminary results for the year to 31 December 2007. The highlightsof the results comparing them with the last accounting period (which was for thirteen months) and these figuresproduced on a pro-forma basis (to illustrate the effect on the Group's profit had all individual members of Cenkos LLPbeen employed by the Group) are: Financial Highlights • Revenue up 65% to £53.8 million (2006: £32.7 million) • Profit before tax for the year based on the figures presented within the attached preliminary information are up 14% to £23.8 million (2006: £20.8 million) • Profit before tax for the year is up 81% to £23.5 million (2006: £13.0 million) based on the pro forma accounts set out in the operating and financial review. • Underlying diluted EPS up 26% to 20.4p per share from 16.2p per share. This figure has been adjusted for the non-recurring items so as to give a better view of the Group's performance on an on-going basis (see note 7) • Diluted EPS up 40% to 22.6p per share from 16.2p per share • Other gains of £1.7 million has been recognised in the accounts relating to the profit on the part disposal of our Guernsey based subsidiary • The Board proposes a final dividend of 12p per share. This equals a total dividend of 22p per share for the year and reflects the Company's dividend policy of having a low dividend cover, reflecting the cash generative nature of the business. Equally the dividend levels take account of regulatory capital requirements and are set so as not to constrain the growth of the business Business Highlights • Continued success in attracting new institutional and corporate clients • The new teams recruited in the second half of 2006 have made a significant contribution to the present set of results • The successful flotation of our Guernsey based subsidiary on the Channel Island Stock Exchange and part disposal of our holding in this company. • The establishment of a fund management operation, recruitment of a team charged with setting up a private client operation in Jersey. • Delaying tactics by target company forced us to withdraw from a bid for Close Brothers Group plc. Andrew Stewart - Chief Executive Officercommented: "This set of strong results clearly demonstrates that the Cenkos business model works and whilst successfully expandingour Group we have managed to maintain the partnership ethos throughout all the businesses. Whilst the markets in which we operate are difficult at the moment, the skill and commitment of our employees reducethe impact of these conditions and indeed give rise to opportunities". Enquiries: Andrew Stewart - CEO Tel: +44 (0) 20 7397 8900 Further information on the Group and its activities is available on the Group's website www.cenkos.com Chairman's Statement It gives me great pleasure to announce a very strong set of results for the year ended 31 December 2007. This is thefirst full year of trading since we floated on the Alternative Investment Market (AIM) in October 2006. Revenue hasincreased by 65% from £32.7 million to £53.8 million. This increase is more impressive given that the comparison ismade against a thirteen month period and that it was achieved whilst the problems of the "credit crunch" weresignificantly affecting the markets in which we operate. The strength of these results, I believe, reflects the factthat by the addition of high quality new teams in the latter part of 2006 and 2007, we have diversified our earnings.This also bodes well for the future. These teams include ones specialising in investment funds, small cap companies,institutional equities, fund management in the UK and wealth management in Jersey. During the year our teams completed36 transactions raising some £1.7 billion of funds for our clients. These funds raisings covered a number of industrysectors including media, clean energy, technology and investment funds. At 31 December 2007 we had a client base which includes 72 (2006: 53) listed companies with a combined marketcapitalisation of approximately £10.2 billion (2006: £8 billion). This represents a net increase of 19 clients duringthe year. It is very much the Group's intention to continue to enlarge this base by adding good quality businessesthat meet our strict take on procedures. The present downturn in markets in our view increases our ability to recruitfurther teams who have proven track records and who will respond to the Cenkos environment. In the second half of the year we, along with our partner Landsbanki Islands hf, mounted a much publicised bid forClose Brothers Group plc. We spent a considerable amount of time in putting this offer together and I am pleased toreport it had the full support of both our equity and debt providers. Our approach was welcomed by a number ofsignificant shareholders in and employees of Close Brothers Group plc. We were therefore extremely disappointed thatthe transaction could not be completed and we note the movement in Close Brothers Group plc's shares since ourwithdrawal. We will continue to look for other businesses where there can be significant shareholder value creation byimplementing the Cenkos business model within the target companies. At the time of announcing our interim results to 30 June 2007 I discussed the uncertainty caused by concerns over theUS sub-prime market, a market to which we have no direct exposure. In most people's views general market conditionshave deteriorated further since I made these comments. Whilst Cenkos is not immune from these uncertainties and theresulting lack of confidence within the investor community, we have an exciting pipeline which, allied with our lowfixed cost base and an overall remuneration package heavily skewed towards performance, we are in a better positionthan most to deal with such events. As I have mentioned before, the Directors intend to retain sufficient profits to meet the Group's regulatory capitalrequirements and intend only to retain further profits where they consider that attractive investment opportunitieshave been identified, which should be financed by the Group's internal resources. The Board are proposing a finaldividend of 12p per share. This equals a total dividend of 22p per share for the year. If approved at the Company'sAGM on 27 May 2008 we intend paying this dividend on 5 June 2008 to all shareholders on the register at 9 May 2008. Inthe view of your Board, after this distribution the Group still has sufficient funds to pursue its growth strategy andmeet its regulatory capital obligations. John HodsonChairman20th March 2008 Financial Review In order to provide greater clarity about the 2007 and 2006 performance, set out below is unaudited pro forma financialinformation. The pro forma statement of profits has been prepared to illustrate the effect on the profits of the Groupif all individual members of Cenkos Securities LLP had been employed by the Group during the period to 31 December 2006and year to 31 December 2007. On the basis of these pro forma figures revenue in the year ended 31 December 2007 roseby 65% to £53.8 million (13 month period to 31 December 2006: £32.7 million) and profit before tax increased by 81% to£23.5 million (13 month period to 31 December 2006: £13.0 million). Pro forma Unaudited 1 January 07 1 December 05 to to 31 December 07 31 December 06 £ £Continuing Operations Revenue 53,791,053 32,670,329Administrative expenses (33,960,937) (20,477,994) Operating profit 19,830,116 12,192,335 Investment revenues - interest receivable 1,997,303 811,526Finance costs - interest payable (13,686) (13,740)Other gains and losses 1,708,518 - Profit before tax 23,522,251 12,990,121Tax (7,056,863) (3,978,747) Profit for the year 16,465,388 9,011,374 Profit for periodAttributable to:Equity holders of the parent 16,551,534 9,011,374Minority interests (86,146) - 16,465,388 9,011,374 Earnings per shareBasic 22.8p 16.2p Diluted 22.6p 16.2p In the statements for each period the administrative expenses have been increased by the amount of the minorityinterest related to Cenkos LLP (31 December 2007: £296,167, 31 December 2006: £7,762,584) as this would be theestimated increase in the Group's costs if all members of Cenkos LLP were to be employed by the Group. As at the 31December 2007 the final partner resigned and was employed by Cenkos Securities plc. We are delighted by this year's performance with earnings being up 83% to £16.5 million from £9.0 million. The tablebelow sets out the various income streams which make up our total revenue. 1 January 07 1 December 05 to to 31 December 07 31 December 06 £ £ Placing fees 32,146,030 21,408,581Corporate Finance Fees 10,109,268 4,362,676Commission income 7,679,972 2,210,026Market Making 1,969,021 3,415,943Wealth Management 1,886,762 1,273,103 53,791,053 32,670,329 This table demonstrates the point made in the Chairman's statement concerning the growing diversification of income andwhilst placing fees are still a major component of our revenue, M&A Corporate Finance fees and commission income fromsecondary trading have grown significantly. The Board is proposing a final dividend of 12 p per share. The level ofdividend payout reflects the policy set by the Board which was set out in our last annual report and accounts. Corporate broking and advisory We have seen another year of growth, not only in turnover but also in the number of transactions completed and fundsraised. We continue to grow the number of retained corporate clients and have a clear defined strategy in place toattract new clients. The Group was nominated adviser or corporate broker to 45 (2006: 32) companies as at 31 December2007. During the year, the Group also raised some £ 1.1 billion (2006: £0.8 billion) for its clients. During the yearwe have continued to add staff to these teams which we believe will enable us to organically grow this revenue area. Institutional equities The institutional equities team currently provides research driven investment recommendations to institutional clients.At present, the team has particular expertise in the business services and consumer sectors, having recruitedprofessionals who were previously top ranked analysts in these sectors. Given that this activity is affected by themove to unbundled services it is encouraging to note that the research produced is perceived by clients to be importantto them and a number have now elected to pay for research separately in addition to paying commission. The success ofthis team has contributed to the significant increase in commission income during the year. Market Making The Group has market making capabilities to support the other services that it provides to its clients. The Groupmakes markets in the securities of all companies where it has a broking relationship, its strategy being to take smallpositions in a wide range of stocks, thereby providing liquidity. The Group does not engage in propriety trading and,applies a range of position limits and monitoring procedures to any positions taken. By following this strategy wehave not experienced significant losses on our market making positions as a result of the recent instability in worldstock markets. Investment Funds In 2006, the Group recruited an Investment Funds Team. This team provides a broad range of services includingcorporate broking, corporate finance, market making, and sales, with a sole focus on investment funds. They act ascounterparty for a large number of investment fund investors, and have a detailed knowledge of their asset allocationstrategies enabling successful secondary distributions and primary sales. The Group currently makes markets inapproximately 200 (2006: 200) investment fund securities, and by 31 December 2007, the Group has been appointed ascorporate broker to 27 (2006: 14) investment funds raising over £0.6 billion (2006: £0.1 billion), having completed 7(2006: 2) transactions. Offshore wealth management and stockbroking services Offshore wealth management and stockbroking services are primarily provided through Cenkos Channel Islands Limited, a50 per cent. owned subsidiary of the Company, which is based in Guernsey. Varying levels of stockbroking services,from discretionary to execution-only, are provided primarily to high net-worth individuals, and also to financialintermediaries and institutions. The business during the year has grown both in terms of the number of clients andfunds managed. These now stand at 530 (2006: 272) and £186 million (2006: £147 million) respectively. We have nowopened up an office in Jersey servicing the stockbroking requirements of high net worth private clients on that Island.The office is staffed by experienced professionals recruited from Rathbones and we are in the process of recruitingfurther teams of brokers. In addition to the significant progress made during the year, we successfully floated the company on the Channel IslandStock Exchange. We feel that this is an important step in the history of the company as it has created the only quotedbroker on the islands, serving the needs of that community. It also shows how we enable the worker-owners of thebusiness to be incentivised in a way that aligns their interests with the shareholders'. During the process oflisting, we took the opportunity to realise some of the value that had been created and reduced our holding from 75% to50%. Fund Management Business During the year through a subsidiary, Cenkos Fund Management Limited, we set up a fund management business. Thisoperation already has an investment management agreement with an AIM quoted fund, which has a market capitalisation ofcirca £60 million. The fund, The Rapid Realisations Fund Limited, specialises in making investments in pre-IPOcompanies. The team we have recruited to run this business has a well established track record in this particulararea. Whilst we believe that this business will be a valuable contributor to the Group in the future it is unlikely tomake a positive contribution to the Group until 2008. Balance Sheet As can be seen from the balance sheet, the investment fund team uses (and will continue to use) significant levels ofcapital to take position in the shares of quoted investment funds. These positions primarily facilitate institutionalclient trading and support the strategies of its investment fund clients. As the investment funds business grows, thelevel of capital used is expected to increase. As mentioned before, during the year, we have increased the amount of secondary trading we undertake. This has causeda significant increase in both our trade receivables and payables. The amounts included represent outstanding tradesat the balance sheet date. The balance sheet also shows a healthy increase in our cash resources, especially given theincrease in secondary trading positions. People We have continued to invest in our staff whilst maintaining a tight control over our overhead base and are looking toacquire further high quality teams and businesses. Like our present teams, we believe that these teams should berewarded by a mixture of bonus and equity based payments that align their interests with those of our shareholders. Wehave assembled an excellent team and I would like to thank them all for their achievements and hard work. We have madea commitment to grow the business and we look forward to their continued support. Close Brothers Group plc ("Close") In November 2007 we, together with our partners Landsbanki Islands hf, made an indicative cash offer at a substantialpremium to the then share price for the entire equity of Close, as we believed a new incentivisation of the managementof the subsidiaries would lead to creating value and removing excessive costs. The directors of Close refused to meetwith us in spite of engaging with other parties who had not launched any bid at any price.In January 2008, in spite of the turbulent markets we had the consideration firmly in place to increase our bid. Itquickly became obvious that in the period from November some Close directors had sought to undermine the Cenkosapproach with many of their staff to enable them to continue to dismiss the approach and had little intention ofpursuing this to a conclusion. I am saddened by the total reluctance of Close to even talk to us whilst this was clearly against the expressed wishesof a significant number of their shareholders. We are a small company without large corporate overhead departments and therefore conducted a considerable amount ofwork on this takeover internally. The majority of our 'costs' were personal ones but that said we incurred feesrelating to the bid of approximately £841,000 which have been fully expensed in 2007. Outlook Whilst the markets in which we operate are difficult at the moment, the skill and commitment of our employees reducethe impact of these conditions and indeed give rise to opportunities. We will continue to expand our corporate clientbase and believe that our ability to attract high quality individuals will serve the Group well in its objective ofbeing a first class, relationship based stock broking business. Andrew StewartChief Executive Officer20 March 2008 Consolidated income statementfor the year ended 31 December 2007 1 January 07 1 December 05 to to 31 December 07 31 December 06 Note £ £ Revenue 53,791,053 32,670,329Administrative expenses (33,664,770) (12,715,410) Operating profit 20,126,283 19,954,919 Investment income - interest 2 1,997,303 811,526receivableFinance costs - interest payable 3 (13,686) (13,740)Other gains and losses 4 1,708,518 - Profit before tax 23,818,418 20,752,705Tax 5 (7,056,863) (3,978,747) Profit for the year 16,761,555 16,773,958 Attributable to:Equity holders of the parent 16,551,534 9,011,374Minority interests 210,021 7,762,584 16,761,555 16,773,958 Earnings per shareBasic 7 22.8p 16.2p Diluted 7 22.6p 16.2p All amounts shown in the consolidated income statement derive from continuing operations of the Group. The profit attributable to the company in the year ended 31 December 2007 was £16,571,015 (13 month period ended 31December 2006, £8,762,275) Consolidated balance sheet31 December 2007 31 December 07 31 December 06 £ £Non-current assetsProperty, plant and equipment 943,602 737,174Available for sale investments 3,543,111 3,229,164Deferred tax asset 320,996 158,356 4,807,709 4,124,694Current assetsTrading investments - long positions 26,597,490 13,123,643Trade and other receivables 56,762,723 39,620,045Cash and cash equivalents 16,244,160 9,780,584 99,604,373 62,524,272 Total assets 104,412,082 66,648,966 Current liabilitiesTrading investments - short (11,802,867) (5,127,238)positionsTrade and other payables (46,761,366) (26,968,091) (58,564,233) (32,095,329) Net current assets 41,040,140 30,428,943 Non-current liabilitiesDeferred tax liabilities (761,216) (669,032) Total liabilities (59,325,449) (32,764,361) Net assets 45,086,633 33,884,605 EquityShare capital 725,936 725,936Share premium account 22,699,777 22,733,114Available for sale reserve 1,776,171 1,556,408Retained earnings 19,632,501 8,843,146 Equity attributable to equity holders of theparent 44,834,385 33,858,604 Minority interests 252,248 26,001 Total equity 45,086,633 33,884,605 Consolidated cash flow statementfor the year ended 31 December 2007 1 January 07 1 December 05 to to 31 December 07 31 December 06 £ £Operating activitiesProfit for the period 16,761,556 16,773,958Adjustments for:Net finance income (1,983,617) (797,786)Tax expense 7,056,863 3,978,747Depreciation of property, plant and equipment 227,546 133,552Other gains and losses (1,708,517) -Share based payment expense 1,349,126 372,832 Operating cash flows before movements in working capital 21,702,957 20,461,303 Increase in net trading investments (6,798,218) (7,973,865)Increase in trade and other (17,056,353) (14,198,456)receivablesIncrease in trade and other payables 18,573,611 13,452,715Distributions to former members of a subsidiary (208,500) (7,762,584) Net cash flow from operating activities before tax and interest 16,213,497 3,979,113 Interest paid (13,686) (13,605)Taxation paid (5,942,443) (2,891,208) Net cash generated from operating activities 10,257,368 1,074,300 Investing activitiesInterest received 1,911,625 535,729Net proceeds from the part disposal of 2,021,261 -subsidiaryPurchase of property, plant and equipment (433,974) (506,281) Net cash generated in investing activities 3,498,912 29,448 Financing activitiesDividends paid (7,259,367) (4,822,834)Proceeds from issue of equity shares - 1,612,147Fees related to issue of equity (33,337) -sharesRedemption of preference shares - (400,000)Issue of capital by subsidiary to minority interests - 26,000 Net cash used in financing activities (7,292,704) (3,584,687) Net increase/(decrease) in cash and cash equivalents 6,463,576 (2,480,939) Cash and cash equivalents at beginning of period 9,780,584 12,261,523 Cash and cash equivalents at end of period 16,244,160 9,780,584 Consolidated statement of changes in equityfor the year ended 31 December 2007 Share Share Available Retained Minority Total capital premium for sale earnings Interests account reserve £ £ £ £ £ £ At 1 December 2005 440,283 3,962,551 2,325,452 4,281,774 6,001 11,016,061 Shares issued 285,653 20,819,945 - - - 21,105,598Capital contributed by minority - - - - 26,000 26,000interestProfit for the period - - - 9,011,374 - 9,011,374Profit allocated to minority - - - - 7,762,584 7,762,584interestsDistribution of profit to former - - - - (7,762,584) (7,762,584)members of a subsidiaryTransfer of amounts to payables on - - - - (6,000) (6,000)retirement of minority interestmembersRevaluation of available-for-sale - - (1,098,634) - - (1,098,634)investmentsReversal of deferred tax liability - - 329,590 - - 329,590on revaluation of available-for-saleinvestmentsCredit to equity for equity settled - - - 372,832 - 372,832share based paymentsShare issue costs taken through - (2,049,382) - - - (2,049,382)premiumDividends paid - - - (4,822,834) - (4,822,834) At 31 December 2006 725,936 22,733,114 1,556,408 8,843,146 26,001 33,884,605 Interest acquired by minority - - - - 313,393 313,393interestProfit for the period - - - 16,551,534 - 16,551,534Profit allocated to minority - - - - 210,021 210,021interestsDistribution of profit to former - - - - (208,500) (208,500)members of a subsidiaryTransfer of amounts to payables on - - - - (88,667) (88,667)retirement of minority interestmembersRevaluation of available-for-sale - - 313,947 - - 313,947investmentsDeferred tax liability on - - (94,184) - - (94,184)revaluation of available-for-saleinvestmentsCredit to equity for equity settled - - - 1,349,126 - 1,349,126share based paymentsDeferred Tax on share based payments - - - 148,062 - 148,062Share issue costs taken through - (33,337) - - - (33,337)premiumDividends paid - - - (7,259,367) - (7,259,367) At 31 December 2007 725,936 22,699,777 1,776,171 19,632,501 252,248 45,086,633 Notes to the financial informationfor the year ended 31 December 2007 1. Accounting policies General informationCenkos Securities plc is a company incorporated in the United Kingdom under the Companies Act 1985. The Group'sprincipal activity is the provision of investment banking services. This financial information is presented in poundssterling because that is the currency of the primary economic environment in which the Group operates. Basis of accountingThe accounting policies used in arriving at the preliminary figures are consistent with those which were set out in theaudited financial statements for the thirteen month period ended 31 December 2006. Whilst the financial informationincluded in this preliminary annoucement has been computed in accordance with International Finacnial ReportingStandards (IFRSs) as adopted by the European Union, this announcement does not itself contain sufficient information tocomply with IFRSs. The Group's 2007 Statutory Accounts comply with IFRSs. Adoption of new and revised standards In the current year, the Group has adopted IFRS 7: Financial Instruments Disclosures, which is effective for annualreporting periods beginning on or after 1 January 2007, and the related amendment to IAS 1 Presentation of FinancialStatements. The impact of the adoption of IFRS 7 and the changes to IAS 1 has been to expand the disclosures providedin these financial statements regarding the Group's financial instruments and management of capital.All financial information has been prepared in accordance with IFRSs for use in the European Union. Up until 30November 2005, the Group prepared its financial statements under UK Generally Accepted Accounting Principles ("UK GAAP"). From 1 December 2005, the Group consolidated financial statements are prepared in accordance with IFRS andInternational Financial Reporting Interpretations Committee ("IFRIC") interpretations adopted by the European Union,and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS, with the prior periodbeing presented on the same basis. At the date of authorisation of this financial information, the following Standards and Interpretations which have notbeen applied in these financial statements were in issue but not yet effective: IFRS 8 - Operating Segments IFRIC 11 IFRS 2 - Group and Treasury Share TransactionsThe directors anticipate that the adoption of these Standards and Interpretations in future periods will have nomaterial impact on the financial statements of the Group. 2. Investment income - interest receivable 1 January 07 1 December 05 to to 31 December 07 31 December 06 £ £Interest income generated from:Bank deposits 584,357 535,866Other loans and receivables 1,412,946 275,660 Total Interest revenue 1,997,303 811,526 Interest income generated from other loans and receivables represents the recognition of the unwinding of the discountfactor applied to the amount due in respect of the partly paid B shares. 3. Finance costs - interest payable 1 January 07 1 December 05 to to 31 December 07 31 December 06 £ £ Interest on bank overdrafts and 13,686 13,740loans 4. Other gains and losses 1 January 07 1 December 05 to to 31 December 07 31 December 06 Revenue Expenses Net gain Net gain £ £ £ £ Gain on part disposal of a 2,150,161 (441,643) 1,708,518 -subsidiary Part disposal of subsidiaryOn 15th November 2007, the Group disposed of part of its holding in Cenkos Channel Islands Limited, amounting to 11% ofits share capital. A further 14% was disposed of on 11th December 2007, when Cenkos Channels Islands Limited wassuccessfully floated on the Channel Islands Stock Exchange. These disposals of shares have reduced the Group's holdingfrom 75% to 50%, however control is still maintained by the parent and as such the results of Cenkos Channel IslandsLimited have continued to be consolidated. 15 November 07 11 December 07 31 December 07 £ £ £ Non-current assets 18,187 17,227 15,616Current assets 2,813,102 3,160,526 2,227,040Cash & cash equivalents 1,369,761 1,057,469 1,125,295Current liabilities (3,524,976) (3,561,251) (2,734,561) Net assets at date of disposal 676,074 673,971 633,390 15 November 07 11 December 07 Total £ £ £ Share of net assets disposed 218,387 94,356 312,743Fees related to disposal - 128,900 128,900 Cost of sale 218,387 223,256 441,643 Gain on disposal 531,613 1,176,905 1,708,518 Total Consideration 750,000 1,400,161 2,150,161 Satisfied by Cash 750,000 1,400,161 2,150,161 Net cash inflow arising on disposal:Cash consideration 750,000 1,400,161 2,150,161 5. TaxThe tax charge comprises: 1 January 07 1 December 05 to to 31 December 07 31 December 06 £ £Current taxUnited Kingdom corporation tax at 30% (2006 - 30%) based on the profit for the period 7,071,441 4,091,258 Adjustment in respect of prior period - 43,845 Total current tax 7,071,441 4,135,103 Deferred TaxCredit on account of timing (14,578) (158,356)differencesCharge on account of timing - 2,000differences Total deferred tax (14,578) (156,356) Total tax on profit on ordinary activities 7,056,863 3,978,747 The tax charge for the period differs from that resulting from applying the standard rate of UK corporation tax of 30%to the profit before tax for the reasons set out in the following reconciliation. 1 January 07 1 December 05 to to 31 December 07 31 December 06 £ £ Profit on ordinary activities before tax 23,818,418 20,752,705 Tax on profit on ordinary activities at the UK corporation tax rate of 30% (2006: 30%) 7,145,525 6,225,812Tax effect of:Depreciation in excess of capital allowances 1,801 (22,990)Expenses that are not deductible in determining taxable profits 595,504 91,161Different tax rates of subsidiaries operating in other jurisdictions (13,294) (31,632)Income not subject to corporation tax (733,850) (2,327,449)Adjustment for IFRS 2 relating to staff options 21,905 -Adjustment for IFRS 2 relating to staff options due to tax rate change 3,436 -Adjustment for loss relief not claimed 35,836 - -Adjustment in respect of prior period - 43,845 Tax expense and effective tax rate for the period 7,056,863 3,978,747 In addition to the amount charged to the income statement, deferred tax relating to the fair value of the Group'savailable for sales investments amounting to £94,184 (2006: £329,590 credited directly to equity) has been chargeddirectly to equity. 6. Dividends 1 January 07 1 December 05Amounts recognised as distributions to equity holders in the period: to to 31 December 07 31 December 06 £ £ Interim dividend for the year ended 30 June 2007 of 10p (May 2006: 100p) per share 7,259,367 4,822,834 Proposed final dividend for the year ended 31 December 2007 of 12p (2006: Nil) per share.The proposed final dividend has not been included as a liability in these financial statements. Subject to shareholdersapproval at the Annual General Meeting, the final dividend will be paid on 5th June 2008 to all shareholders on theregister of members as at 9th May 2008.The Annual General Meeting of the Company will be held 27th May 2008 at 12 noon at 6.7.8. Tokenhouse Yard, London, EC2R7AS. 7. Earnings per share 1 January 07 1 December 05The calculation of the basis and diluted earnings per share is based on the following to todata: 31 December 07 31 December 06 £ £EarningsEarnings for the purposes of basic earnings per share being net profit attributable to 16,551,534 9,011,374equity holders of the parentEffect of dilutive potential ordinary shares: - - Earnings for the purposes of diluted earnings per share 16,551,534 9,011,374 Number of shares No. No.Weighted average number of ordinary shares for the purposes of basic earnings per share 72,593,670 55,503,588Effect of dilutive potential ordinary shares:Share options 520,806 57,870 Weighted average number of ordinary shares for the purpose of diluted earnings per share 73,114,476 55,561,458 The denominators for the purposes of calculating both basic and diluted earnings per share have been adjusted toreflect the sub-division of shares on 31 October 2006. The weighted average number of shares considered for the currentperiod also includes the total number of B shares, even though they are partly paid shares, as these shares areentitled to a full dividend payout.In the calculation above earnings includes other gains and losses. In the view of the Board, these are non-recurringitems and as a result should be excluded to present the true on-going earnings of the Group. The table below shows theresults of this adjustment: EarningsEarnings for the purposes of basic & diluted earnings per share 16,551,534 9,011,374Other gains and losses (1,708,518) -Costs associated with aborted takeover bid 841,313 -Gain from disposal of employee B shares (803,593) - Underlying earnings for the purposes of basic and diluted earnings per share 14,880,736 9,011,374 Underlying EPSBasic 20.5p 16.2p Diluted 20.4p 16.2p Additional Information The financial information in this announcement does not constitute statutory accounts within the meaning of section 240of the Companies Act 1985 but is derived from those accounts. The auditors have reported on the statutory accounts forthe year ended 31 December 2007. Their report was unqualified and did not contain statements under section 237 (2) or(3) of the Companies Act 1985. Those accounts have not been delivered to the Registrar of Companies, but will bedelivered following the Company's Annual General Meeting. Statutory accounts for the thirteen month period ended 31 December 2006 have been delivered to the Registrar ofCompanies. The auditors have reported on those accounts. Their report was unqualified and did not contain statementsunder section 237 (2) or (3) of the Companies Act 1985. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
CNKS.L