8th Jun 2006 07:01
Charles Stanley Group PLC08 June 2006 8 June 2006 CHARLES STANLEY GROUP PLC RESULTS FOR THE YEAR ENDED 31 MARCH 2006 Charles Stanley, a major independent stockbroker, announces its preliminaryresults for the year ended 31 March 2006. Highlights: • Revenue up by 18% to £92.6 million (2005: £78.7 million) • Profit before tax up by 24% to £13.0 million (2005: £10.5 million) • Funds under management up by £2 billion (26%) to £9.7 billion (2005: £7.7 billion) • Earnings per share up 26% to 20.45p (2005: 16.18p) • Final dividend up by 28% to 5.35p (2005: 4.15p) • Total dividend up by 28% to 6.75p (2005: 5.25p) • New 15 strong investment team in London made an excellent start • New Birmingham and Glasgow offices extend Charles Stanley's nationwide presence Sir David Howard, Chairman, commented: "Charles Stanley has enjoyed anotherexcellent year. The income of the Group reached a new record figure and ourprofit before tax was up by 24%. In the next two or three years stockbrokersface some fundamental changes in the way that they do things, due principally tothe Financial Services Action Plan of the European Union. I believe that CharlesStanley is well positioned to implement this challenging programme of change.Despite the uncertainties, and the obvious risks of making predictions in abusiness like this, I look forward to the year ahead with a degree of optimism." For further information please contact: Charles Stanley Group PLC Bridgewell Securities Ltd Tavistock CommunicationsSir David Howard, Chairman Simon Bridges Jeremy Carey, ChairmanPeter A Hurst, Finance Director Director David Foxman, DirectorPhone: 020 7739 8200 Phone 020 7003 3103 Phone: 020 7920 3150Fax: 020 7953 2948 Chairman's Statement Charles Stanley has enjoyed another excellent year. The income of the Group forthe twelve months ended 31 March 2006 reached a new record figure of £92.6million, an increase of 17.7% compared with the figure for 2004/05 of £78.7million. Profit before tax was £13.0 million, an increase of 23.9% on theprevious year (2005: £10.5 million). While our transaction volumes increased by 3% the commission income which thesevolumes generated rose by nearly 19%, from £48.15 million to £57.25 million. At the same time our investment management and administration fees increased by18.6% from £23.6 million to £27.9 million, and our corporate finance incomeincreased by 34.0% from £5.2 million to £6.9 million. The investment funds that we manage and administer for clients rose during theyear by 26% from £7.7 billion to £9.7 billion. The net assets of the Group at the year-end have risen from £48.5 million (as at31 March 2005, as restated under IFRS accounting principles) to £55.4 million,while our cash balances at the year-end have increased to £48.1 million (2005:£44.2 million). In view of these results we propose raising the final dividend to 5.35p (2005:4.15p), making a total dividend for the year of 6.75p, an increase of 28.5% onlast year's total dividend of 5.25p per share. The dividend will be paid on 28July 2006 to shareholders who are registered on 7 July 2006. In the past 15 years the dividend per share (adjusted for bonus issues) hasrisen by 4,300%. This represents an annual average compound rate over thisfifteen year period which works out at approximately 28.5% per annum. Review of the Year Charles Stanley remains, as always, committed to providing a comprehensivestockbroking and wealth management service, tailoring different levels of ouroffering to meet the varied needs of our client base. But we strive constantlyto make these services increasingly valuable to our clients. The funds which we manage or administer on behalf of our clients, on afee-charging basis, rose during the year by 26% from £7.7 billion to £9.7billion. Within this figure the funds under discretionary management increasedby 57% from £1.4 billion to £2.2 billion, whereas those under advisorymanagement rose by 28% from £2.1 billion to £2.7 billion. The range and value of our fee-based services continues to move ahead. Theincrease in the numbers of clients choosing our discretionary or advisoryinvestment management services, and the rise in the value of their portfolios,led to an increase of 23.4% in our investment management fee income from £10.6million to £13.0 million. We hold a further £4.8 billion of clients' assets on their behalf for which wecharge administration but not investment management fees. The figures are asfollows: 31.3.2006 31.3.2005 £ billion £ billionDiscretionary funds under managementIn Group's nominee or Crest personal membership 2.2 1.4 Advisory portfolio funds under managementIn Group's nominee or Crest personal membership 2.1 1.6Not held in Group's nominee 0.6 0.5 2.7 2.1 Total managed funds 4.9 3.5 Advisory dealing fundsIn Group's nominee or Crest personal membership 2.4 1.9Execution only fundsIn Group's nominee or Crest personal membership 2.4 2.3 Total administered funds 4.8 4.2 Total funds under management and administration 9.7 7.7 The overall impact of the improvements on our total investment management,administration and corporate finance income was an increase of 21.6% from £28.7million to £34.9 million. The ratio of fee income to total revenue moved furtherahead, to 37.7% (2005: 36.5%). As I indicated in my annual statement last year, our target for the margin ofprofit before tax and the sale of fixed assets, as a percentage of revenue, is15%. In the past the margin has been both significantly higher and significantlylower in volatile market conditions. In 2004-05 we achieved 13.4%, and themargin in the latest year is 14.1%. Our target of 15% would have been exceededbut for one-off revenue costs incurred following the acquisitions which weremade during the year. Acquisitions I am pleased to report that a number of brokers joined us during the year bothin London and in several of our branches. I advised in our half-year statementthat we opened a new office in Glasgow on 1 June 2005, based on an institutionalteam formerly with Aitken Campbell. This has added to Charles Stanley's growingpresence in Scotland. On 1 August 2005 we opened a new office in the centre of Birmingham, based on agroup of private client stockbrokers formerly with Gerrards. And over the courseof the year we were delighted to welcome a group of 15 investment managers toour London office who were previously with Dryden Wealth Management. These, and indeed all who have joined Charles Stanley in the past 12 months,have made an excellent start, and they add yet greater breadth and depth to thelevel of service that we offer. Corporate Finance This division had another strong year, growing its retained corporate clientlist to an overall fifty five. Its focus remains upon acting for good qualitysmaller and growing UK-listed companies across the majority of stock marketsectors. Overall £83 million was raised on behalf of corporate clients across fourteentransactions and the division advised on a further eleven transactions valued intotal at £286 million. Nine IPOs were also completed, including those of severalforeign companies. In consequence, our corporate finance income increased by34.0% to £6.9 million (2005: £5.2m). Several highly experienced individuals have been appointed to ensure that thisdivision remains appropriately resourced to service both its existing clientbase and its expected growth. This includes a significant investment in theexpansion of its institutional sales trading activities. Earlier this year the division was re-branded as Charles Stanley Securities. This not only reflects the growth of the division, but is more in keeping withthe particular nature of its activities. EBS (Pensions Administration), Financial Planning and Benefit Consultancy The division has shown a further year of growth with revenues rising to £4.5million compared with revenues in 2005 of £3.2 million. EBS has advanced strongly, with more than 300 SIPPs taken on in the latesttwelve months. During the year the Benefit Consultancy Division has further consolidated itsposition with the integration into a single division of our Plymouth, London andSouthampton offices. We are actively looking at expanding each of these areas through a mixture ofacquisition and organic growth. The quality of our service As always, I draw the attention of shareholders to the enormous amount of hardwork, skill and dedication from a large and growing team of very professionalpeople, in producing such an excellent set of results at Charles Stanley. During the year we engaged an independent consultant to conduct a major surveyof our clients. This was very well received and provided independentconfirmation of Charles Stanley's strong reputation for client service. Theresults will help us with future planning to improve still further the qualityof our services. In the next two or three years we face some fundamental changes in the way thatwe do things, due principally to the Financial Services Action Plan of theEuropean Union. We are a company that engages pro-actively with our regulators,with trade bodies and with industry working groups. This not only enhances ourskills and the quality of the service that we offer but also keeps us in closetouch with regulatory developments. Thus, I believe we are well positioned toimplement this challenging programme of change. On behalf of shareholders I offer my thanks to everyone at Charles Stanley whohas made 2005-06 such a successful year. Outlook Against a turbulent financial background the world's stock exchanges are dancinga strange quadrille: a whirl of partners who move to and fro in dizzy patterns.This at a time when European legislation threatens to dismantle the monopolythat some of these exchanges have enjoyed. We see interesting opportunities inthe merger of markets, whether these involve the London Stock Exchange or not.But the range of possible outcomes is too varied at this stage to know with anyprecision what these opportunities might be. In such conditions our shareholders might expect even greater caution this yearthan I express in every annual statement about the prospects for the year ahead.But I see other factors too. Economic conditions remain generally benign.Forthcoming European legislation, however complicated and onerous, opens up newopportunities with its promise of breaking down barriers. Despite the obvious risks of making predictions, I look forward to the yearahead with, once again, a degree of optimism. Sir David HowardChairman Financial Calendar 8 June 2006 Results announced 5 July 2006 Ex-dividend date for final dividend 7 July 2006 Record date for final dividend 18 July 2006 Annual General Meeting 28 July 2006 Final dividend paid Charles Stanley Group PLCConsolidated Income StatementYear ended 31 March 2006 2006 2005 Notes £'000 £'000 Continuing operationsRevenue 2 92,555 78,687 Administrative expenses (81,194) (69,657) Operating profit 4 11,361 9,030 Interest payable and similar charges 5 (153) (118)Interest receivable 5 1,825 1,605 Profit before tax 13,033 10,517Taxation 6 (4,377) (3,688) Profit for the year 8,656 6,829 Profit attributable to minority interest 34 9Profit attributable to equity shareholders 8,622 6,820 8,656 6,829 Earnings per Share 2006 2005 NotesBased on profit for the yearBasic 7 20.45p 16.18p Diluted 7 19.62p 15.47p Statement of Recognised Income and Expense £'000 £'000 Profit for the year 8,656 6,829 Revaluation of financial assets 2,483 2,406Deferred tax on revaluation of financial assets (443) (427)Retirement benefit scheme actuarial loss (2,284) (311)Deferred tax on retirement benefit scheme actuarial loss 729 - Net gains not recognised in the income statement 485 1,668 Total recognised income for the year 9,141 8,497 Attributable to minority interest 34 9Attributable to equity shareholders 9,107 8,488 9,141 8,497 Charles Stanley Group PLCConsolidated Balance Sheet31 March 2006 2006 2005 Notes £'000 £'000 AssetsNon-current assetsGoodwill 9 15,603 15,575Property, plant and equipment 10 5,480 5,995Financial assets 11 7,170 4,787 28,253 26,357 Current assetsTrade and other receivables 12 239,890 232,055Financial assets - 1,108Cash and cash equivalents 13 48,108 44,234 287,998 277,397 LiabilitiesCurrent liabilitiesFinancial liabilities 14 (1,001) (991)Trade and other payables 15 (253,190) (249,357)Current tax liabilities (3,099) (2,250) (257,290) (252,598) Net current assets 30,708 24,799 Non-current liabilitiesFinancial liabilities 14 (556) (600)Retirement benefit liability (2,429) (111)Deferred tax liabilities (504) (831)Other non-current liabilities 15 (100) (1,079) (3,589) (2,621) Net assets 55,372 48,535 Shareholders' equityOrdinary shares 16 10,541 10,538Share premium 17 21 3Other reserves 17 3,955 2,863Retained earnings 17 40,675 34,928 Total shareholders' equity 18 55,192 48,332Minority interest in equity 180 203 Total equity 55,372 48,535 Charles Stanley Group PLCConsolidated Cash Flow StatementYear ended 31 March 2006 2006 2005 Notes £'000 £'000 Cash flows from operating activitiesCash generated from operations 19 10,062 18,258Interest received 1,825 1,605Interest paid (153) (118)Tax paid (3,527) (3,489) Net cash from operating activities 8,207 16,256 Cash flows from investing activitiesAcquisition of subsidiaries and other businesses (2,461) (2,802)Proceeds from sale of property, plant and equipment 28 408Purchase of property, plant and equipment (1,846) (2,922)Proceeds from available for sale investments 2,956 1,415Purchase of available for sale investments (445) (298)Dividends received 83 438 Net cash used in investing activities (1,685) (3,761) Cash flows from financing activitiesNet proceeds from issue of ordinary share capital 21 4Capital element of finance lease payments (329) (214)Dividends paid to shareholders (2,340) (2,044) Net cash used in financing activities (2,648) (2,254) Net increase in cash and cash equivalents 3,874 10,241 Cash and cash equivalents at start of year 44,234 33,993 Cash and cash equivalents at end of year 48,108 44,234 Charles Stanley Group PLCNotes to the Financial Statements General information Basis of preparation The results are an abridged extract from the financial statements for the yearended 31 March 2006, which have not yet been delivered to the Registrar ofCompanies. The auditors' report on the full financial statements has yet to besigned. The results have been prepared on a basis consistent with the accountingpolicies set out below. The financial information as set out in this report isunaudited and does not comprise statutory accounts for the purposes of Section240 of the Companies Act 1985. The comparative figures for the year ended 31 March 2005 have been taken from,but do not constitute, the Company's statutory financial statements for thatfinancial year as restated for the effects of the adoption of InternationalFinancial Reporting Standards. Those financial statements have been reported onby the Company's auditors and delivered to the Registrar of Companies. Thereport was unqualified. The financial information for the year ended 31 March 2006 has been prepared inaccordance with International Financial Reporting Standards ("IFRS") subject toexemptions referred to below. Explanation of transition to IFRS This is the first year for which the Group has presented its financialstatements under IFRS. The last financial statements under UK GAAP were for theyear ended 31 March 2005. The Group has applied the transitional provisions of IFRS 1 "First time adoptionof International Financial Reporting Standards". The date of transition toInternational Financial Reporting and Accounting Standards was 1 April 2004 andall comparative information in these financial statements has been restated toreflect the Group's adoption of International Financial Reporting and AccountingStandards. IFRS 1 contains a number of exemptions which companies are permitted to apply.The Group has elected: - not to restate its financial information for acquisitions occurring before 1 April 2004; - to deem cumulative translation differences to be zero at 1 April 2004; - to recognise all actuarial gains and losses on pensions and other post-retirement benefits directly in equity attributable to equity holders of the parent at 1 April 2004; - To apply IFRS 2 to all grants of equity instruments after 7 November 2002 that had not vested as of 1 January 2005. The financial information for the year ended 31 March 2005 has been derived fromaudited UK GAAP information adjusted for the impact of IFRS. The impact of thetransition from UK GAAP to IFRS at 1 April 2004 and 31 March 2005 is containedin the reconciliations of equity that are shown as note 20 of this announcement. 1 Accounting Policies Basis of consolidation The consolidated financial statements combine the financial statements ofCharles Stanley Group PLC and all its subsidiaries, drawn up to 31 March 2006.For the purposes of these accounts, uniform accounting policies have beenfollowed by the Group. All significant intercompany transactions and balancesbetween Group entities are eliminated on consolidation. Revenue Revenue comprises stockbroking commission, investment management fees, corporatefinance fees, the profit on buying and selling securities, and the profit orloss arising on positions held in securities. Dividends are credited to the income statement in the year in which they arereceivable and are shown exclusive of tax credits. Stockbroking commission andfees are stated gross but exclude value added tax. Foreign currencies Foreign currency items have been translated into sterling at the rate ofexchange ruling at the balance sheet date. Transactions in foreign currenciesare recorded at the rate ruling at the date of the transaction. All differencesare taken to the income statement. Intangible assets Goodwill arising on consolidation represents the excess of the cost ofacquisition over the Group's interest in the fair value of the identifiableassets, liabilities and contingent liabilities of a subsidiary at the date ofacquisition. Goodwill is recognised as an asset and is reviewed for impairment at leastannually, or on such other occasions where changes in circumstances indicatethat it might be impaired. Any impairment is recognised immediately in theincome statement and is not subsequently reversed. Goodwill arising onacquisition is allocated to cash-generating units for purposes of impairmenttesting. Goodwill arising on acquisitions before the date of transition to IFRS has beenretained at the previous UK GAAP amount and was subject to an impairment reviewat the date of transition. Impairment The Group reviews the carrying amounts of its tangible and intangible assetswith finite lives to determine whether there is any indication that those assetshave suffered an impairment loss on an annual basis. If any such indicationexists, the recoverable amount of the asset is estimated in order to determinethe extent of the impairment loss (if any). Where the asset does not generatecash flows that are independent from other assets, the Group estimates therecoverable amount of the cash-generating unit to which the asset belongs. Anintangible asset with an indefinite useful life is tested for impairmentannually and whenever there is an indication that the asset may be impaired. The recoverable amount is the higher of fair value less any cost to sell andvalue in use. In assessing value in use, the estimated future cash flows arediscounted to their present values using a pre-tax discount rate. This ratereflects current market assessments of the time value of money as well as therisks specific to the asset for which the estimates of future cash flows havenot been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated tobe less than its carrying amount, the carrying amount of the asset(cash-generating unit) is reduced to its recoverable amount. Impairment lossesare recognised as an expense immediately, unless the relevant asset is carriedat a revalued amount, in which case the impairment loss is treated as arevaluation decrease. Where an impairment loss subsequently reverses, thecarrying amount of the asset (cash-generating unit) is increased to the revisedestimate of its recoverable amount, but so that the increased carrying amountdoes not exceed the carrying amount that would have been determined had noimpairment loss been recognised for the asset (cash-generating unit) in prioryears. A reversal of the impairment loss is recognised as income immediately,unless the relevant asset is carried at a revalued amount, in which case thereversal of the impairment loss is treated as a revaluation increase. However,impairment losses relating to goodwill may not be reversed. Property, plant and equipment Property, plant and equipment are included in the balance sheet at cost lessaccumulated depreciation and any provisions for impairment. Freehold land is not depreciated. Other property, plant and equipment aredepreciated on a straight-line basis at rates sufficient to write off the costless estimated residual values of individual assets over their estimated usefullives. The depreciation periods of the principal categories of assets are asfollows: Freehold buildings and leasehold properties up to 50 years Office equipment and motor vehicles 3 to 10 years Leased assets and obligations Where assets are financed by leasing agreements that give rights approximatingto ownership ("finance leases"), the assets are treated as if they had beenpurchased outright. The amount capitalised is the present value of the minimumlease payments payable during the lease term. The corresponding leasingcommitments are shown as obligations to the lessor. Lease payments are treatedas consisting of capital and interest elements, and the interest is charged tothe income statement using the annuity method. Depreciation on the relevantassets is charged to the income statment. All other leases are "operatingleases", and the annual rentals are charged to the income statement on astraight line basis over the lease term. Financial assets Investments in securities are recognised and derecognised on trade date. Suchinvestments are initially measured at cost, excluding transaction costs whichare expensed immediately. After initial recognition, investments which are classified as held for tradingor available-for-sale are measured at fair value. Gains or losses oninvestments held for trading are recognised in the profit and loss for theperiod. Gains or losses on available-for-sale investments are recogniseddirectly as a separate component of equity until the investment is sold, orotherwise disposed of, or until the investment is determined to be impaired, atwhich time the cumulative gain or loss previously reported in equity is includedin the profit or loss for the period. Investments are classified as held to maturity when they are non-derivativeswith fixed or determinable payments and a fixed maturity that the Group has apositive intention and ability to hold to maturity. Investments intended to beheld for an undefined period are not included in this classification. For investments that are actively traded in organised financial markets, fairvalue is determined by reference to quoted bid prices at the close of businesson the balance sheet date. For investments where there is no quoted marketprice, fair value is determined by reference to the current market value ofanother instrument which is substantially the same. Alternatively, it iscalculated based on the expected cash flows of the underlying net asset base ofthe investment. Retirement benefit costs The cost of providing benefits under defined benefit plans are determined usingthe projected unit credit method, with actuarial valuations being carried out onan annual basis. Actuarial gains and losses are recognised in full in the period in which theyoccur. They are recognised outside the income statement and are presented inthe statement of recognised income and expense. Past service cost is recognisedimmediately to the extent that the benefits are already vested. The amountrecognised in the balance sheet represents the present value of the definedbenefit obligation as adjusted for unrecognised actuarial gains and losses andunrecognised past service cost, and reduced by the fair value of plan assets.Any asset resulting from this calculation is limited to the unrecognisedactuarial losses and past service cost, plus the present value of availablerefunds and reductions in future contributions to the plan. Taxation Current tax is provided at amounts expected to be paid (or recovered) using thetax rates and laws that have been enacted or substantively enacted by thebalance sheet date. The tax currently payable is based on taxable profit for the period. Taxableprofit differs from net profit as reported in the income statement because itexcludes items of income or expense that are taxable or deductible in otherperiods and it further excludes items that are never taxable or deductible. Deferred tax is recognised in respect of all timing differences that haveoriginated but not reversed at the balance sheet date where transactions orevents that result in an obligation to pay more tax in the future or a right topay less tax in the future have occurred at the balance sheet date. Deferred tax is accounted for using the balance sheet liability method inrespect of temporary differences between the carrying amount of assets andliabilities in the financial statements and the corresponding tax basis used inthe computation of taxable profit. Deferred tax liabilities are recognised forall temporary differences and deferred tax assets are recognised to the extentthat it is probable that taxable profits will be available against whichdeductible temporary differences may be utilised. Such assets and liabilitiesare not recognised if the temporary difference arises from goodwill or from theinitial recognition (other than in a business combination) of other assets andliabilities in a transaction that affect neither the tax profit nor theaccounting profit. The carrying amounts of deferred tax assets are reviewed at each balance sheetdate and reduced to the extent that it is no longer probable that sufficienttaxable profits will be available to allow all or part of the asset to berecovered. Deferred tax is calculated at the rates that are expected to apply when theasset or liability is settled or when the asset is realised. Deferred tax ischarged or credited in the income statement, except when it relates to itemscredited or charged directly to equity, in which case the deferred tax is alsodealt with in equity. Share-based payments The Group has applied the requirements of IFRS 2 "Share-based Payments". Inaccordance with the transitional provisions, IFRS 2 has been applied to allgrants of equity instruments after 7 November 2002 that had not vested as of 1January 2005. The Group grants share options to certain employees. These are measured at fairvalue at the date of grant. The fair value so determined is expensed on astraight-line basis over the vesting period, based on the Group's estimate ofthe number of shares that will eventually vest. The fair value of share optionsgranted at market price is determined using a Black Scholes valuation model. 2 Revenue 2006 2005 £'000 £'000 Commission 57,248 48,150Investment management fees 13,021 10,556Administration fees 14,923 13,012Corporate finance fees 6,911 5,158Other income 452 1,811 92,555 78,687 3 Staff costs The average number of persons employed (including Directors) during the year was517 (2005: 485). Staff costs for the Group during the year:Wages and salaries 26,781 21,401Social security costs 3,315 2,394Other pension costs 2,364 2,116 32,460 25,911 4 Operating profit The following items have been included in arriving at operating profit: Depreciation of property, plant and equipment:- owned assets 2,193 2,108- assets held under finance leases 212 171Profit on disposal of property, plant and equipment (61) -Profit on disposal of financial assets (408) (257)Auditors' remuneration- Audit services 106 101- Further assurance services (including "due diligence" work) - 27- Tax Services 40 36Operating lease rentals payable 1,215 1,210Sublet of lease - George Street, Edinburgh - 444One-off revenue costs relating to new investment teams 2,201 - 5 Finance income - net 2006 2005 £'000 £'000Interest expense:Interest payable on bank borrowings (32) (13)Interest payable on other loans (102) (83)Interest payable on finance leases (19) (22) Interest payable and similar charges (153) (118) Interest income 1,825 1,605 Finance income - net 1,672 1,487 6 Taxation Current taxation- Continuing operations 4,489 3,723- Relating to prior years (106) -Deferred taxation- Continuing operations (6) (35) 4,377 3,688 7 Earnings per share £'000 £'000 Earnings attributable to ordinary shareholders 8,622 6,820 No. No. '000 '000 Weighted average number of shares in issue in the year 42,158 42,151Dilution 1,780 1,932 43,938 44,083 Basic earnings per share 20.45p 16.18p Diluted earnings per share 19.62p 15.47p 8 Dividends paid £'000 £'000 Final paid for 2005: 4.15p (2004: 3.75p) per 25p share 1,750 1,581Interim paid for 2006: 1.40p (2005: 1.10p) per 25p share 590 463 2,340 2,044 In addition, the Directors are proposing a final dividend in respect of the yearended 31 March 2006 of 5.35p per share which will absorb an estimated £2.3million of shareholders' funds. It will be paid on 28 July 2006 to shareholderswho are on the register of members on 7 July 2006. 9 Goodwill 2006 2005 £'000 £'000Cost1 April 2005 19,664 15,935Additions 660 3,729Disposals and adjustment to deferred consideration (718) - 31 March 2006 19,606 19,664 Aggregate amortisation1 April 2005 4,089 4,089Disposals (86) - 31 March 2006 4,003 4,089 Net book value at 31 March 2006 15,603 15,575 10 Property, plant and equipment Freehold Long Short Office Total premises leasehold leasehold equipment and premises premises motor vehicles £'000 £'000 £'000 £'000 £'000Cost1 April 2005 185 1,893 3,393 11,212 16,683Additions - 8 661 1,271 1,940Disposals - - (262) (4,581) (4,843) 31 March 2006 185 1,901 3,792 7,902 13,780 Depreciation1 April 2005 21 1,324 1,446 7,897 10,688Charge for year 3 160 466 1,776 2,405Disposals - - (262) (4,531) (4,793) 31 March 2006 24 1,484 1,650 5,142 8,300Net book value31 March 2006 161 417 2,142 2,760 5,480 31 March 2005 164 569 1,947 3,315 5,995 11 Financial assets Listed investments Unlisted investments TotalFixed asset investments £'000 £'000 £'0001 April 2005Cost 394 305 699Revaluation 2,027 2,061 4,088 Book value 2,421 2,366 4,787 Additions 1,065 - 1,065Disposals (1,165) - (1,165)Revaluation in year 2,391 92 2,483 31 March 2006 4,712 2,458 7,170 Cost 1,218 305 1,523Revaluation 3,494 2,153 5,647 12 Trade and other receivables 2006 2005 £'000 £'000Current:Trade debtors 237,530 229,897Other debtors 556 630Prepayments and accrued income 1,804 1,528 239,890 232,055 13 Cash and cash equivalents Cash at bank and in hand 48,108 44,234 14 Financial liabilities Current:3% redeemable loan 157 1574.5% convertible redeemable loan note 469 4694.5% redeemable unsecured loan note 81 171Obligations under finance leases 94 194Short position holdings 200 - 1,001 991 Non-current:4.5% convertible redeemable loan note 468 468Obligations under finance leases 88 132 556 600 15 Trade and other payables 2006 2005 £'000 £'000Current:Trade payables 902,061 788,643 Less funds held on behalf of clients in segregated bank accounts (658,166) (548,817) 243,895 239,826Other taxes and social security 2,570 2,100Other creditors 1,293 3,121Accruals and deferred income 5,432 4,310 253,190 249,357 Non-current:Other creditors 100 1,079 16 Called up share capital Authorised:80,000,000 ordinary shares of 25p each 20,000 20,000 Allotted and fully paid:42,165,335 (2005: 42,153,753) ordinary shares of 25p each 10,541 10,538 On 31 March 2006 the following options have been granted and remain outstandingin respect of ordinary shares of 25p in the company under the company's Save AsYou Earn Scheme. No of shares Option price Grant dated 11 July 2001 38,583 £2.87Exercisable during the six months commencing 1 September 2006 Grant dated 2 January 2003 1,741,110 £0.96Exercisable during the six months commencing 1 February 2008 During the year 6,666 ordinary shares were issued fully paid for cash at 96peach and 4,916 ordinary shares were issued fully paid for cash at 287p eachfollowing the exercise of options by former employees. 17 Reserves Share premium Revaluation Retained £'000 reserve earnings £'000 £'000 1 April 2005 3 2,863 34,928Net profit - - 8,622Dividends paid - - (2,340)Revaluation of financial assets - 2,483 -Deferred tax on revaluation of financial assets - (443) -Transfer of realised revaluation surplus - (948) 948Retirement benefit scheme actuarial loss - - (2,284)Deferred tax on retirement benefit scheme actuarial loss - - 729Share options - value of employee services - - 72 - issue of shares 18 - - 31 March 2006 21 3,955 40,675 18 Statement of changes in shareholders' equity Share Share Other Retained Total capital premium reserves earnings £'000 £'000 £'000 £'000 £'000 1 April 2004 10,537 - 1,876 29,428 41,841Net profit - - - 6,820 6,820Dividends paid - - - (2,044) (2,044)Revaluation of financial assets - - 2,406 - 2,406Deferred tax on revaluation of financial assets - - (427) - (427)Transfer realised revaluation surplus - - (992) 992 -Retirement benefit scheme actuarial loss - - - (311) (311)Share options - value of employee services - - - 43 43 - issue of shares 1 3 - - 4 31 March 2005 10,538 3 2,863 34,928 48,332 Net profit - - - 8,622 8,622Dividends paid - - - (2,340) (2,340)Revaluation of financial assets - - 2,483 - 2,483Deferred tax on revaluation of financial assets - - (443) - (443)Transfer realised revaluation surplus - - (948) 948 -Retirement benefit scheme actuarial loss - - - (2,284) (2,284)Deferred tax on retirement benefit scheme - - - 729 729actuarial lossShare options - value of employee services - - - 72 72 - proceeds of shares issued 3 18 - - 21 31 March 2006 10,541 21 3,955 40,675 55,192 19 Reconciliation of net profit to cash generated from operations 2006 2005 £'000 £'000 Net profit 13,033 10,517Adjustments for:Depreciation 2,405 2,279Retirement benefit credit - (49)Share option cost 72 43Dividend income (83) (436)Interest income (1,825) (1,605)Interest expense 153 118Profit on disposal of property, plant and equipment (61) -Profit on disposal of financial assets (408) (257)Financial assets acquired in lieu of fees (620) -Changes in working capital:Increase in debtors (7,710) (60,566)Increase in creditors 5,106 68,214 Cash generated from operations 10,062 18,258 20 Reconciliation of net assets and profit under UK GAAP to IFRS Charles Stanley Group PLC reported under UK GAAP in its previous publishedfinancial statements for the year ended 31 March 2005. The analysis below showsa reconciliation of net assets and profit as reported under UK GAAP as at 31March 2005 to the revised net assets and profit under IFRS as reported in thesefinancial statements. In addition there is a reconciliation of net assets underUK GAAP to IFRS at the transition date for this company, being 1 April 2004. Reconciliation of profit for the year ended 31 March 2005 Previous GAAP Effect of IFRS transition to IFRS Notes £'000 £'000 £'000 Continuing operationsRevenue 78,021 666 78,687Administrative expenses (a) (c) (d) (71,773) 2,116 (69,657) Operating profit 6,248 2,782 9,030Profit on sale of fixed assets 257 (257) -Income from fixed asset investments 438 (438) -Interest payable and similar charges (118) - (118)Interest receivable 1,605 - 1,605 Profit before tax 8,430 2,087 10,517Taxation (e) (3,723) 35 (3,688) Profit for the year 4,707 2,122 6,829 Under IFRS profit on sale of fixed assets and income from fixed assetinvestments are included in revenue. Reconciliation of equity at 1 April 2004 (date of transition to IFRS) Previous GAAP Effect of IFRS transition to IFRS Notes £'000 £'000 £'000 AssetsNon-current assetsGoodwill 11,846 - 11,846Property, plant and equipment 5,493 - 5,493Financial assets 3,670 - 3,670Retirement benefit asset (d) - 73 73 21,009 73 21,082 Current assetsTrade and other receivables 171,489 - 171,489Financial assets 908 - 908Cash and cash equivalents 33,993 - 33,993 206,390 - 206,390 LiabilitiesCurrent liabilitiesFinancial liabilities (509) - (509)Trade and other payables (b) (182,640) 1,581 (181,059)Current tax liabilities (2,016) - (2,016) (185,165) 1,581 (183,584) Net current assets 21,225 1,581 22,806 Non-current liabilitiesFinancial liabilities (293) - (293)Deferred tax liabilities (e) - (385) (385)Other non-current liabilities (1,125) - (1,125) (1,418) (385) (1,803) Net assets 40,816 1,269 42,085 Shareholders' equityOrdinary shares 10,537 - 10,537 Other reserves (e) 2,675 (799) 1,876Retained earnings (a to e) 27,360 2,068 29,428 Total shareholders' equity 40,572 1,269 41,841Minority interest in equity 244 - 244 Total equity 40,816 1,269 42,085 Reconciliation of equity at 31 March 2005 Previous GAAP Effect of IFRS transition to IFRS Notes £'000 £'000 £'000 AssetsNon-current assetsGoodwill (a) 13,518 2,057 15,575Property, plant and equipment 5,995 - 5,995Financial assets 4,787 - 4,787 24,300 2,057 26,357 Current assetsTrade and other receivables 232,055 - 232,055Financial assets 1,108 - 1,108Cash and cash equivalents 44,234 - 44,234 277,397 - 277,397 LiabilitiesCurrent liabilitiesFinancial liabilities (991) - (991) Trade and other payables (b) (251,107) 1,750 (249,357)Current tax liabilities (2,250) - (2,250) (254,348) 1,750 (252,598) Net current assets 23,049 1,750 24,799 Non-current liabilitiesFinancial liabilities (600) - (600)Retirement benefit liabilities (d) - (111) (111)Deferred tax liabilities (e) - (831) (831)Other non-current liabilities (1,079) - (1,079) (1,679) (942) (2,621) Net assets 45,670 2,865 48,535 Shareholders' equityOrdinary shares 10,538 - 10,538 Share premium 3 - 3Other reserves (e) 4,089 (1,226) 2,863Retained earnings (a to e) 30,837 4,091 34,928 Total shareholders' equity 45,467 2,865 48,332Minority interest in equity 203 - 203 Total equity 45,670 2,865 48,535 Notes to the reconciliation of equity due to IFRS This is the first year that the Group has presented its accounts under IFRS.The following disclosures are required in the year of transition to describe howthe transition from UK generally accepted accounting principles (UK GAAP) hasaffected the reported financial position, financial performance and cash flowsof the Group. The date of transition to IFRS is 1 April 2004, and the earliestperiod for which full comparative information is presented in accordance withIFRS is the year ended 31 March 2005. The effects that each of these statementshave on the restated comparative information are also shown below. (a) IFRS 3 - Business Combinations In accordance with the transitional provisions of IFRS 1, the Group has chosento apply IFRS 3 retrospectively from the date of transition. The result of thisapplication is that the value of goodwill arising from previous acquisitions isfrozen at the value held on the Group balance sheet as at 1 April 2004, and thereversal of any amortisation charged in the year to 31 March 2005. This change results in the reversal of £2.1 million previously charged to theincome statement under UK GAAP for the year ended 31 March 2005. The value ofintangible assets is therefore also increased by £2.1 million for the year ended31 March 2005. (b) IAS 10 - Events after Balance Sheet Date Under this standard, assets and liabilities should be adjusted for subsequentevents that existed at the balance sheet date, but not for events that areindicative of conditions that arose subsequent to the balance sheet date. UnderUK GAAP proposed dividends at the year end were accrued even though there is noobligation to pay until the dividend is declared. Under IAS 10, entities arenot permitted to recognise a liability for dividends declared after the balancesheet date. The impact of this change is to increase equity at 1 April 2004 by £1.5 million,and at 31 March 2005 by £1.7 million. (c) IFRS 2 - Share-based Payment The Group recognises a charge to the income statement for the fair value ofoutstanding share options in relation to the Company's Save As You Earn schemegranted to employees after 7 November 2002 and not vested by 1 January 2005.These charges are calculated using a Black-Scholes technique, and are spreadover the relevant vesting periods, taking account of actual and expected levelsof vesting. Under UK GAAP, there was no charge in the income statement inrelation to share option awards. This change results in a charge of £0.02 million to profit for the year ended 31March 2005. (d) IAS 19 - Employee Benefits The Group recognises the net asset/liability on defined benefit schemes in thebalance sheet and takes all service costs to the profit and loss statement. These changes increase equity at 1 April 2004 by £0.1 million, and reduce equityat 31 March 2005 by £0.1 million. This standard also requires an increase inprofit of £0.05 million to be recorded for the year ended 31 March 2005. (e) IAS 12 - Income Taxes The Group recognises a deferred tax liability on timing differences, unusedcapital tax losses, revaluations of investments and on retirement benefit assets/liabilities. These changes result in the recording of a deferred tax liability of £0.4million at 1 April 2004, and a deferred tax liability of £0.8 million at 31March 2005. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
CAY.L