14th Aug 2008 07:00
14 AUGUST 2008
DANIEL STEWART SECURITIES PLC (AIM: DAN.L)
("Daniel Stewart" or "the Company")
FINAL RESULTS
FOR THE YEAR ENDED 31 MARCH 2008
The Board of Daniel Stewart Securities plc, the investment bank offering corporate advisory and institutional stockbroking services, announces its final results for the year ended 31 March 2008.
FINANCIAL AND OPERATIONAL HIGHLIGHTS
Group Turnover £8,369,690 up 11% (2007: £7,547,344);
Gross Profit £7,868,086 up 20% (2007: £6,560,629);
Adjusted* Profit before tax of £2,888 (2007: Loss £4,251,667);
Reported loss after tax (£2,005,071), (2007: Loss £5,367,718);
Net Assets £5,723,312 (2007: £7,250,713);
Loss/Earnings per share fully diluted (0.93p) (2007: 2.12p).
Client Numbers up from 39 to 46
Liquidity remains strong. Cash of £2,687,565 ( 2007: £2,623,549 ).
* before adjustment for bonus, exceptional items and share based payments.
Commenting on today's announcement, Peter Shea, Group Chief Executive, said "The 2008 financial year has been difficult with conditions deteriorating rapidly in the second half.
"As market conditions have remained unchanged since year end, we have undertaken a careful examination of our expenses and we have taken decisive action and reduced our costs down to a prudent level without reducing our effectiveness."
"Our team of highly respected and motivated individuals is confident in its ability to emerge from the current market malaise in a stronger competitive position. If we are able to sustain our efforts we will see continued growth in client numbers moving us towards our goal of being in the top five small cap brokers."
--ENDS--
Enquiries:
DANIEL STEWART SECURITIES PLC Tel: 020 7776 6550
Peter Shea
Tom Jenkins
BISHOPSGATE COMMUNICATIONS LIMITED Tel: 020 7562 3350
Maxine Barnes
Nick Rome
BLUE OAR SECURITIES PLC Tel: 020 7448 4400William Vandyk
Notes to Editors:
About Daniel Stewart
Daniel Stewart Securities is an AIM-listed company providing a range of investment banking services to Small Cap publicly traded and non-publicly traded companies. The Group has two subsidiaries, Daniel Stewart and Company, the Group's principal operating subsidiary, which is authorised and regulated by the Financial Services Authority and is a member of the London Stock Exchange, and Daniel Stewart Capital, the Group's leasing and debt financing division.
CHAIRMAN'S LETTER TO THE SHAREHOLDERS Dear Shareholder
I am pleased to present our final results for the year to 31 March 2008.
The year commenced well and we reported solid results for the first six months. However, the market, as is now well known, deteriorated rapidly in the second half and trading conditions became much more difficult and have continued to be so. Despite this we have been able to report an improved revenue and Adjusted Operating Profit result and have ensured that there has been no deterioration in our cash position.
Across the board broking houses have delayed IPO's and many declared substantially reduced numbers. The worsening credit conditions have caused both those companies planning to come to market and the institutional investor support to re-assess timing and pricing of new issues.
Although conditions have been difficult we successfully completed 25 transactions, raising for our clients £126 million. In addition, we completed 4 introductions not involving fund raising.
Our arrangements with our American Partner, Sanders Morris Harris, have continued to prove fruitful and we have established new relationships with several Institutional Investors.
We have continued with our planned strategy of a research led product and this assisted in many of this years client wins. Setting aside house stocks, we issued 50 hold or sell and 63 buy recommendations, evidencing our commitment to fulfilling our independent role in the market.
We are continually looking at how we might expand our distribution capabilities and during the year we investigated the establishment of JV arrangements in both the Middle East and Far East to allow us to both source and distribute product to a wider international audience. While we have not concluded any formal arrangements we will continue to investigate those markets that clearly offer potential enhancement to our capabilities.
Alastair Cade stood down from the board in January of this year. He has been with the company for 12 years and has decided to pursue other interests. I am sure you will join me in thanking him for his efforts and wishing him well for the future.
The year, while difficult, reflects an improvement for us over 2007 and this is primarily due to a team of quality professional staff who have shown commitment and dedication to the task. We firmly believe that the business is well positioned to sustain itself through this difficult period and move ahead in the future.
Peter Dicks
Chairman
Operating and financial review
This review contains several subjective and forward looking statements which have been made by the directors in good faith based upon the information utilised by them and available to them at the time. Any subjective or forward-looking statement should be considered by the user within the context of economic and business risk.
Business environment
The early part of the year presented favourable conditions and the market was reasonably buoyant. The second half deteriorated quickly compounded by fears, which subsequently materialised, about the health of the international debt markets. The deteriorating economic conditions and the associated lack of confidence has adversely affected our market. To put this into context, in Q1 2008 the number of new issues on AiM, where the majority of our publicly quoted clients are traded, declined by 41% compared to the previous year to 32 and total money raised for new issues fell by 74% to £291m. Investor appetite has continued to wane and in the seven months to the end of July 2008, the number of AiM new issues is down 55% against the equivalent period in 2007 and total money raised in new issues has fallen by 79% to £1bn.
Results of operations
Revenue for the twelve months was £8.4 million, up from £7.5 million for the previous year - an increase of 11%. At the gross profit level, the Company's performance improved by 20% on the previous year, returning £7.9 million versus £6.6 million for 2007. At the operating level, we had a loss of £2.0 million down from a loss of £4.4 million for 2007, after charging £0.5m in share based payments and £1.4 million against our share trading account. Staffing levels rose during the year, however despite this we again reduced administrative expenses from £7.5 million to £6.9 million. Since the year-end we have further cut our cost base.
After taking into account interest, depreciation and exceptional items, the reported Loss Before Tax was £2.0 million.(2007: loss of £5.0 million).
Equity capital markets
At year-end 2008, the Company's retained AiM and other public market client base consisted of 46 companies, up by 30% (2007: 39). We completed 25 transactions (2007: 12) raising £126 million (2007: £70 million) in new capital on both primary and secondary issues on total transaction values of £920 million (2007: £450 million) and in addition acted on the introduction of a further 3 companies without raising funds.
Liquidity and capital resources
Net Assets fell from £7.2 million in 2007 to £5.6 million. The working capital position remained positive at £2.5 million down from £4.4 million in 2007. Cash remained almost unchanged at £2.6 million.
Corporate finance
Our corporate finance team acted on 25 transactions (16: 2007) during the year including 4 introductions and 2 reverse takeovers.
Equity research
As a result of a continuing upgrade in the quality and breadth of coverage, the research department now provides a service which covers some 200 companies.
We do not aim to cover the whole market but rather specialise in a number of sectors where we believe that we can really add value to our corporate and institutional investor base. These sectors comprise; IT & Telco's, Leisure & Gaming, Media, Oil & Gas, Healthcare, Speciality Finance, Support Services and a General Small Cap product.
Trading and investment
Trading positions in the year resulted in a loss of £1.4 million. All trading positions of any size have now been realised. No trading or investment positions of any consequence remain.
Specialist debt services
Both our debt finance and leasing divisions performed satisfactorily during the year each providing a positive contribution. They were both hampered in their growth due to limited capital commitments from the parent company, despite this both saw some growth in their underlying business.
Employees
As at 31 March 2008, the Company employed 42 members of staff, compared to 40 at the end of 2007.
Premises
Our Manchester office is now fully operational. Our lease in London expires during the course of the next 2 years and we will begin the process of establishing new offices unless we can satisfactorily complete negotiations on a new arrangement at Becket House.
Outlook
The new financial year has commenced satisfactorily. The current economic climate shows no immediate sign of improvement and we do not anticipate this changing in the immediate future. We are however confident that the measures we have taken leave Daniel Stewart positioned as a stronger and more efficient business, ready to take advantage of the opportunities we see before us today.
Peter Shea
Group Chief Executive
The preliminary results for the year ended 31 March 2008 were approved by the Board on 30th July 2008 and accounts for the year ended 31 March 2008 will be sent to shareholders in due course.
Consolidated income statement
Year ended 31 March 2008
|
|
|
|
Adjusted for share based payments, bonus and exceptional items
|
|
|
Continuing operations
|
31 March 2008
|
31 March 2007
|
31 March 2008
|
31 March 2007
|
|
|
£
|
£
|
£
|
£
|
|
Revenue
|
8,369,690
|
7,547,344
|
8,369,690
|
7,547,344
|
|
Cost of sales
|
(501,604)
|
(986,715)
|
(501,604)
|
(986,715)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
7,868,086
|
6,560,629
|
7,868,086
|
6,560,629
|
|
|
|
|
|
|
|
Share trading account
|
(1,432,351)
|
(4,031,865)
|
(1,432,351)
|
(4,031,865)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution to fixed costs
|
6,435,735
|
2,528,764
|
6,435,735
|
2,528,764
|
|
|
|
|
|
|
|
Administrative costs
|
(6,919,329)
|
(7,493,216)
|
(6,919,329)
|
(7,493,216)
|
|
Share based payments
|
(461,775)
|
1,723,826
|
-
|
-
|
|
Bonus payments
|
(1,018,407)
|
(1,207,405)
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Loss
|
(1,963,776)
|
(4,448,031)
|
(483,594)
|
(4,964,452)
|
|
|
|
|
|
|
|
Bank interest receivable and similar income
|
633,722
|
862,259
|
633,722
|
862,259
|
|
Interest payable
|
(147,240)
|
(149,474)
|
(147,240)
|
(149,474)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,477,294)
|
(3,735,246)
|
2,888
|
(4,251,667)
|
|
|
|
|
|
|
|
Exceptional items
|
(527,777)
|
(1,632,472)
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) / Profit before tax
|
(2,005,071)
|
(5,367,718)
|
2,888
|
(4,251,667)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxation
|
-
|
350,000
|
-
|
350,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) / Profit for the year
|
(2,005,071)
|
(5,017,718)
|
2,888
|
3,901,667
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
31 March 2008 |
31 March 2007 |
|||||
|
Basic |
(0.93)p |
(2.35)p |
||||
|
Diluted |
(0.80)p |
(2.12)p |
||||
Consolidated balance sheet
As at 31 March 2008
|
31 March 2008 |
31 March 2007 |
||||||||||||
|
£ |
£ |
||||||||||||
|
Non current assets |
|||||||||||||
|
Goodwill |
1,731,532 |
1,731,532 |
|||||||||||
|
Available for sale investments |
389,364 |
389,364 |
|||||||||||
|
Property, plant and equipment |
334,014 |
363,592 |
|||||||||||
|
Loans receivable |
1,201,013 |
2,016,399 |
|||||||||||
|
Deferred taxation |
81,000 |
81,000 |
|||||||||||
|
3,736,923 |
4,581,887 |
||||||||||||
|
Current assets |
|||||||||||||
|
Financial assets |
786,373 |
1,369,744 |
|||||||||||
|
Trade and other receivables |
3,054,852 |
3,223,383 |
|||||||||||
|
Corporation tax |
0 |
280,498 |
|||||||||||
|
Cash and cash equivalents |
2,687,565 |
2,623,549 |
|||||||||||
|
6,528,790 |
7,497,174 |
||||||||||||
|
Total assets |
10,265,713 |
12,079,061 |
|||||||||||
|
Liabilities |
|||||||||||||
|
Trade and other payables |
4,003,882 |
3,118,861 |
|||||||||||
|
Corporation tax |
- |
- |
|||||||||||
|
4,003,882 |
3,118,861 |
||||||||||||
|
Non current liabilities |
538,519 |
1,231,817 |
|||||||||||
|
Total liabilities |
4,542,401 |
4,350,678 |
|||||||||||
|
Net assets |
5,723,312 |
7,728,383 |
|||||||||||
|
Equity |
|||||||||||||
|
Capital and reserves attributable to equity shareholders |
|||||||||||||
|
Share capital |
538,459 |
538,459 |
|||||||||||
|
Share premium |
4,298,270 |
4,298,270 |
|||||||||||
|
Retained earnings |
(7,321,996) |
(5,366,888) |
|||||||||||
|
Revaluation reserve |
(1,150,577) |
(1,150,577) |
|||||||||||
|
Capital redemption reserve fund |
49,998 |
49,998 |
|||||||||||
|
Capital reserve |
8,524,435 |
8,524,435 |
|||||||||||
|
Share compensation reserve |
784,723 |
834,686 |
|||||||||||
|
5,723,312 |
7,728,383 |
||||||||||||
Consolidated statement of changes in equity
For the year ended 31 March 2008
|
Balance at 1 April 2007 |
Loss for the year |
Cost to employee of share options |
Total |
||||
|
Share capital |
538,459 |
538,459 |
|||||
|
Share premium |
4,298,270 |
4,298,270 |
|||||
|
Retained earnings |
(5,366,888) |
(2,005,071) |
49,962 |
(7,321,996) |
|||
|
Revaluation reserve |
(1,150,577) |
(1,150,577) |
|||||
|
Capital redemption reserve |
49,998 |
49,998 |
|||||
|
Capital reserve |
8,524,435 |
8,524,435 |
|||||
|
Share compensation reserve |
834,686 |
(49,962) |
784,723 |
||||
|
7,728,383 |
(2,005,071) |
- |
5,723,312 |
||||
Consolidated cash flow statement
For the period ended 31 March 2008
|
31 March 2008 |
31 March 2007 |
||||||||
|
£ |
£ |
||||||||
|
Operating activities |
|||||||||
|
Operating (loss) / profit |
(1,963,776) |
(4,448,031) |
|||||||
|
Provision for impairment of fixed assets |
191,800 |
166,137 |
|||||||
|
Tax paid |
- |
(628,498) |
|||||||
|
Share based payments |
- |
(1,723,826) |
|||||||
|
Redundancy costs |
527,777 |
- |
|||||||
|
(1,244,199) |
(6,634,218) |
||||||||
|
Movement in working capital |
|||||||||
|
Decrease / (Increase) in receivables |
(592,255) |
1,453,714 |
|||||||
|
Increase in payables |
581,901 |
1,053,224 |
|||||||
|
Decrease in financial assets |
583,371 |
1,923,258 |
|||||||
|
573,017 |
4,430,196 |
||||||||
|
Operating cash flow |
(671,182) |
(2,204,022) |
|||||||
|
Investing activities |
|||||||||
|
Expenditure on tangible fixed assets |
(162,222) |
(135,219) |
|||||||
|
Expenditure on available for sale investments |
- |
(52,308) |
|||||||
|
Cash flow from investing activities |
(162,222) |
(187,527) |
|||||||
|
Financing |
|||||||||
|
Loans made to third parties |
(107,272) |
324,207 |
|||||||
|
Loans received |
390,178 |
1,015,188 |
|||||||
|
Loans written off |
- |
(1,632,466) |
|||||||
|
Issue of share capital |
- |
470,501 |
|||||||
|
Interest receivable |
633,722 |
862,259 |
|||||||
|
Interest payable |
(147,240) |
(149,474) |
|||||||
|
Cash flow from financing activities |
769,388 |
890,215 |
|||||||
|
Cash and cash equivalents at 1 April 2007 |
2,623,549 |
4,124,883 |
|||||||
|
Cash and cash equivalents at 31 March 2008 |
2,687,565 |
2,623,549 |
|||||||
|
(Decrease) / increase in cash and cash equivalents |
64,016 |
(1,501,334) |
|||||||
Notes to the financial statements - (extract)
Year ended 31 March 2008
1. Accounting policies
General information
Daniel Stewart Securities plc is a company incorporated in the United Kingdom under the Companies Act 1985. Daniel Stewart Securities plc the ultimate parent company of the group. The group's principal activities are the provision of financial advice to companies and trading in financial instruments. These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the group operates.
The financial information set out herein, which was approved by the board on 30 July 2008, does not comprise the companies' statutory accounts. The audit of these financial statements is still to be completed. Statutory accounts for the previous financial year ended 31 March 2007 have been delivered to the register of companies.
Basis of accounting
These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted for use in the European Union, for the first time. Up until 31 March 2006, the group prepared its financial statements under UK Generally Accepted Accounting Principles ("UK GAAP"). From 1 April 2006, the group consolidated financial statements are prepared in accordance with IFRS and International 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 period being presented on the same basis.
The financial statements have been prepared on the historical cost basis as modified by the valuation of certain financial instruments, as described below. The principal accounting policies adopted are set out below.
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