15th Feb 2005 07:00
Rensburg plc15 February 2005 15 February 2005 Rensburg plc ("Rensburg" or "the Company") Preliminary Results for the Year Ended 30 November 2004 Rensburg, the Investment Management Group - Key Points: • Profit before tax, goodwill amortisation and exceptional items of £8.8m (2003: £6.8m) - an increase of 29% • Basic earnings per share before goodwill amortisation and exceptional items of 27.9p (2003: 22.6p) - an increase of 23% • Total dividend unchanged at 18.0p per share • Fee and other recurring income at £24.4m (2003: £20.6m) - an increase of 18% • Group funds under management at £4.18bn (2003: £3.81bn) - an increase of 10% Mike Burns, Chief Executive of Rensburg, commented: "The current year has started well and we are pleased with the performance ofall our offices. Our strategy to capitalise on the opportunities to develop asan investment management business remains unchanged." For further information, please contact: gcg hudson sandler Tel: 020 7796 4133Nick Lyon/Wendy Baker CHAIRMAN'S STATEMENT Financial Results and Dividend 2004 saw a continuation of the improvement ininvestor confidence experienced in the latter half of 2003; with no political oreconomic shocks to upset the equilibrium, equity markets rose steadily and thishas helped the Group to increase underlying earnings per share by 23%. Againstunderlying basic earnings of 27.9 pence (pre-goodwill), the Directors arerecommending a final dividend of 12p (2003: 12p) which, taken with the interimdividend of 6p (2003: 6p), produces an unchanged total dividend for the year of18p per share. These financial results are covered in detail in the ChiefExecutive's review and in the main body of this report. Name change I would like to recognise that this is our first year end under thename Rensburg; we believe that the concentration of all of the Group'sactivities under a single name has helped to provide clarity and consistency toboth shareholders and clients. Proposed acquisition and subsequent approach On 10 December 2004, the Companyannounced that, subject, inter alia, to approval by its shareholders, agreementhad been reached for the Company to acquire the entire share capital of CarrSheppards Crosthwaite Limited, a private client stockbroking and investmentmanagement company based in the southern half of the UK. Due to the size ofthis transaction, under the UK Listing Rules trading in the Company's shares isrequired to remain suspended until a circular, containing Listing Particulars,is posted to shareholders, or if either party decides to withdraw. On 14January 2005, shareholders were informed of a pre-conditional possible offerproposal made to the Board by Rathbone Brothers Plc. Discussions with both ofthese parties are continuing and further announcements relating to these eventswill be made in due course. Shareholding in London Stock Exchange plc Following increases in the shareprice of London Stock Exchange plc, since 30 November 2004 the Company has solda total of 662,857 of its shares in London Stock Exchange plc at an averageprice of 472 pence per share; Rensburg continues to hold an investment of100,000 shares in this company. Board and Employees Despite the modest recovery experienced, the operatingenvironment has remained competitive; hence, I would very much like to take thisopportunity to thank the directors and employees for all their skill and hardwork in achieving these results. Outlook It is pleasing to see that the rise in the markets experienced over thelast quarter of our financial year has continued. As a result of this, our ownexpectations of revenues, particularly from fee-based clients, continue to riseand we expect to benefit significantly from the operational leverage inherent inour business to the equity market. Whilst recognising the challenges that lieahead, the Board remains confident that we possess the personnel and financialresources to continue to develop this business. C.G. Clarke14 February 2005 CHIEF EXECUTIVE'S REVIEW OF OPERATIONS I am pleased to report that Group turnover increased by 11% to £36.9 million;if the contribution during 2003 from the discontinued administration division isexcluded, the underlying growth in turnover was 15% and within this amount, feeand other recurring income increased by 18% to £24.4 million. The increasedfee and other recurring income covered 82% of the Group's total operatingexpenses (2003: 78%). Profit before tax increased by 29% to £8.8 million (2003: £6.8 million) andbasic earnings per share increased by 23% to 27.9p (2003: 22.6p); these figuresare prior to goodwill amortisation and exceptional income. The recovery in the equity markets helped increase total Group funds undermanagement by 10% to £4.18 billion (2003: £3.81 billion); more importantly,within these figures, total fee-paying funds under management increased by 20%to £2.62 billion (2003: £2.19 billion). This year saw the start of significant enhancements to the running of ourbusiness. We used the name change to improve the clarity of the offering to ourclients and we also made changes to our charging structure. Several ITimprovements have been made to strengthen the working practices within theGroup, which will improve services to our clients. The first major phase ofupdating our database was also completed. We owe a debt of gratitude to all ofthe employees across the Group for their dedication and the extra effortrequired achieving all our targets. I am proud to be involved with such aworkforce. There is currently considerable interest in the possibility of a bid for LondonStock Exchange plc. As an interested party on behalf of our clients, we arewatching the situation closely. We would expect any proposed merger to beassessed on its ability to demonstrate that improved technology will increasethe liquidity within the market in order that our clients' business can becompleted even more quickly with closer spreads on quoted prices, together withreduced clearing and settlement costs. Rensburg Investment Management - Fee paying clients' funds increased by 17% to£2.09 billion (2003: £1.78 billion). Other managed funds declined to £1.56billion (2003: £1.62 billion) reflecting the conversion of clients onto afee-paying basis, together with the continued review of those clients that donot reward us fairly for our services. In time for the tax gathering season,Rensburg Aim VCT, one of the two venture capital trusts we manage, has recentlyissued a prospectus to raise up to an additional £8 million. The established team of three institutional sales traders, who joined us inFebruary 2004, have continued to settle in well in our London office. The benefits of developments in our IT platforms previously referred to havestarted to be delivered during this year. As a result of our investment, wehave an IT infrastructure that is not only more robust and adaptable to meet therapidly changing environment in which we operate, but is flexible to meet bothorganic and acquisitional growth. Throughout the year, we have also continuedto test and develop our new client support system and we are both encouraged andexcited by the prospect of putting this into a live environment in order that wefurther improve service delivery to our clients. Reference has previously been made to the Group's position concerning splitcapital investment trusts ("splits") and to the review into these beingundertaken by the UK's financial regulator, the Financial Services Authority ("FSA"). The FSA announced on 24 December 2004 that they had reached settlementregarding compensation for holders of certain splits. No company within theRensburg Group was a contributor to this settlement nor has any such companyever been notified by the FSA that the FSA are investigating their conduct aspart of the splits review. The Group therefore remains satisfied that nomaterial provision for splits is currently required, nor is likely to be so inthe foreseeable future. Rensburg Fund Management - Over the year net sales of £34 million wereachieved; this, together with consistent investment performance and thecontinued market recovery, produced a 24% increase in unit trust based fundsunder management to £505 million (2003: £406 million). During the second halfof the year, the Company successfully took on the management of its firstsegregated mandate; at the year end £27 million was being managed by theinvestment team under this mandate. M. H. Burns14 February 2005 Consolidated profit and loss accountfor the year ended 30 November 2004 2004 2003 12 months 12 months ended ended 30 Nov 30 Nov Note £'000 £'000 Turnover Continuing operations 36,936 32,005 Discontinued operations - 1,245 _______ _______ 36,936 33,250 Operating expenses (29,866) (27,555) Goodwill amortisation (868) (917) Total administrative expenses (30,734) (28,472) _______ _______Operating profit Continuing operations 6,202 4,669 Discontinued operations - 109 _______ _______ 6,202 4,778 Profit on disposal of subsidiaries - 10,472 Profit on disposal of fixed asset investments - 390 _______ _______ Profit on ordinary activities before interest and 6,202 15,640investment income Income from fixed asset investments - exceptional 1 490 - Net interest receivable 1,752 1,150 _______ _______ Profit on ordinary activities before taxation 8,444 16,790 Tax on profit on ordinary activities 2 (2,725) (1,928) _______ _______ Profit on ordinary activities after taxation 5,719 14,862 Dividends 3 (3,943) (3,933) _______ _______ Retained profit for the financial year 1,776 10,929 _______ _______ Earnings per share before goodwill amortisation and 4exceptional items -Basic 27.9p 22.6p -Diluted 27.3p 22.1p Earnings per share -Basic 26.1p 68.2p -Diluted 25.6p 66.8p Consolidated statement of total recognised gains and losses Note 2004 2003 £'000 £'000 Profit for the financial year 5,719 14,862 _______Prior year adjustment 5 (1,318) _______ Total gains recognised since last annual 4,401Report _______ Consolidated balance sheetat 30 November 2004 2004 2003 £'000 £'000Fixed assets Intangible assets 13,000 14,555 Tangible assets 4,132 3,267 Investments 500 500 _______ _______ 17,632 18,322 _______ _______ Current assets Debtors 26,226 23,662 Cash at bank and in hand 40,618 35,420 _______ _______ 66,844 59,082Creditors Amounts falling due within one year (40,389) (32,108) _______ _______ Net current assets 26,455 26,974 _______ _______ Total assets less current liabilities 44,087 45,296 Creditors Amounts falling due after more than one year (232) (3,340) Provisions for liabilities and charges (206) (92) _______ _______ Net assets 43,649 41,864 _______ _______Capital and reserves Called up share capital 2,209 2,208 Share premium account 9,252 9,244 Capital redemption reserve 100 100 Other reserves 6,086 6,086 Profit and loss account 26,002 24,226 _______ _______ Equity shareholders' funds 43,649 41,864 _______ _______ Consolidated cash flow statementfor the year ended 30 November 2004 2004 2003 Note £'000 £'000 Net cash inflow from operating activities a 11,850 6,813 Returns on investment and servicing of finance Interest received 1,565 1,240 Interest paid (69) (313) Income from fixed asset investments - exceptional 1 490 - Taxation paid (2,513) (2,022) Capital expenditure and financial investment Purchase of tangible fixed assets (1,354) (817) Proceeds from sale of tangible fixed assets - 1,432 Proceeds from sale of fixed asset investments - 390 Acquisitions and disposals Proceeds from sale of subsidiary undertakings - 18,469 Costs associated with disposal - (704) Cash disposed of with subsidiary undertakings - (1,704) Equity dividends paid (3,936) (3,920) _______ _______ Cash inflow before financing 6,033 18,864 Financing Issue of ordinary share capital 9 10 Decrease in debt - (4,000) Redemption of loan notes (844) (1,072) _______ _______ Increase in cash in the year b 5,198 13,802 _______ _______ Notes to the consolidated cash flow statement a. Reconciliation of operating profit to operating cash flows 2004 2003 £'000 £'000 Operating profit 6,202 4,778 Amortisation of goodwill 868 917 Depreciation 489 462 Profit on disposal of tangible fixed assets - (47) (Increase)/decrease in debtors (2,356) 2,157 Increase/(decrease) in creditors and provisions 6,647 (1,454) _______ _______ Net cash inflow from operating activities 11,850 6,813 _______ _______ Net cash inflow from operating activities comprises: Continuing operations 11,850 6,956 Discontinued operations - (143) _______ _______ 11,850 6,813 _______ _______ b. Analysis and reconciliation of net funds At 1 Dec Cash Other At 30 Nov 2003 Flow Changes 2004 £'000 £'000 £'000 £'000 Cash and deposits 35,420 5,198 - 40,618 Debt due after one year (982) - 750 (232) Debt due within one year (844) 844 (750) (750) _______ _______ _______ _______ Net Funds 33,594 6,042 - 39,636 _______ _______ _______ _______ 2004 2003 £'000 £'000 Increase in cash 5,198 13,802 Repayment of debt 844 5,072 Issue of loan notes - (2,482) _______ _______ Movement in net funds in the year 6,042 16,392 Net funds brought forward 33,594 17,202 _______ _______ Net funds at 30 November 39,636 33,594 _______ _______ NOTES 1. Income from fixed asset investments - exceptional Exceptional income from fixed asset investments represents a special dividend of55 pence per share paid by London Stock Exchange plc on 16 August 2004 inrespect of the 890,000 shares in London Stock Exchange plc held by the Companyat that date. The dividend was accompanied by a share consolidation of six newshares in London Stock Exchange plc for every seven existing shares held. TheCompany's holding therefore stood at 762,857 shares immediately following thisconsolidation. As explained in note 6 below, 662,857 of these shares were soldafter 30 November 2004. 2. Corporation tax Corporation tax at 30% (2003: 30%) 3. Dividends 2004 2003 £'000 £'000 Interim paid of 6.0p per share (2003: 6.0p) 1,314 1,311 Final proposed of 12.0p per share (2003: 12.0p) 2,629 2,622 _______ _______--- 3,943 3,933 _______ _______ The Directors are recommending a final dividend of 12.0p per share (2003:12.0p), which together with the interim dividend of 6.0p per share (2003: 6.0p)makes a total dividend for the year of 18.0p per share (2003: 18.0p). Theproposed dividend, to be paid on 8 April 2005 to shareholders who are on theregister at the close of business on 18 March 2005, is calculated on 21,908,901ordinary shares. This excludes 180,250 ordinary shares held by the EmployeeShare Ownership Trust for which all dividends have been waived. 4. Earnings per share Basic earnings per share before goodwill amortisation and exceptional items iscalculated with reference to earnings for shareholders of £6,097,000 (2003:£4,917,000) and the weighted average number of shares in issue during the yearof 21,876,641 (2003: 21,796,791). Basic earnings per share is calculated withreference to earnings for shareholders of £5,719,000 (2003: £14,862,000). Diluted earnings per share is the basic earnings per share, adjusted for theeffect of the conversion into fully paid shares of the weighted average numberof all employee share options outstanding during the year. The number ofadditional shares used for the diluted calculation is 495,756 shares (2003:438,568). 5. Prior year adjustment The prior year adjustment relates to the implementation of UITF Abstracts 17(Revised 2003) and 38, which are effective for the first time this year. UITFAbstract 17 (Revised 2003) changes the measurement and timing of the charge tothe profit and loss account in respect of share options previously awarded underthe Company's Employee Share Ownership Plan ("the Plan"). UITF Abstract 38changes the recognition of the Company's holding of shares in Rensburg plc thatwere previously acquired by the Employee Share Ownership Trust ("the Trust") tosatisfy the award of options under the Plan. UITF Abstract 17 (Revised 2003) requires that an amount be charged to the profitand loss account in respect of options awarded that is based on the Company'sshare price at the date the options are granted. The amount that has previouslybe charged to the profit and loss account, which was based on the UITF Abstractthat was applicable at the time, was based on the share price at the time theshares were acquired by the Trust. The difference between the share price atthe date of grant and the date of acquisition by the Trust amounts to£1,318,000. This amount has been recognised during the year in the Statement ofTotal Recognised Gains and Losses and relates to the years ending 30 November1998, 1999 and 2001. The prior year adjustment also includes a credit to theprofit and loss reserve during the same years of an equal amount, such thatthere is no net overall effect on the profit and loss reserve at 30 November2003 or 30 November 2004 as a result of the adoption of the requirements of thisUITF Abstract. UITF Abstract 38 requires that the shares in Rensburg plc held by the Trust arerecognised as a deduction from shareholders' funds. Previously, these shareshad been recognised within fixed asset investments, in accordance with the UITFAbstract that was applicable at the time. At 30 November 2004, the Trust held180,250 shares in Rensburg plc. The consideration of £330,000 that was paid atthe time the 180,250 shares were acquired by the Trust has been deducted inarriving at shareholders' funds. An equal and opposite adjustment has also beenmade to shareholders' funds to reinstate the amount that has previously beenwritten off to the profit and loss account in respect of these shares. The neteffect of these adjustments is nil and hence there is no overall effect on thevalue of shareholders' funds at 30 November 2003 or 30 November 2004. 6. Post balance sheet events On 10 December 2004, the Company announced that agreement had been reached forthe Company to acquire the entire share capital of Carr Sheppards CrosthwaiteLimited ("CSCL"), a wholly owned subsidiary of Investec plc. CSCL is a privateclient stockbroking and investment management company with offices in London,Farnham, Reigate and Cheltenham. The proposed transaction is subject, interalia, to approval by the shareholders of the Company and to certain regulatoryapprovals. On 14 January 2005, shareholders were informed of a pre-conditionalpossible offer proposal made to the Board by Rathbone Brothers Plc. Discussionswith both of these parties are continuing. As set out in note 1 above, the Company held 762,857 shares in London StockExchange plc at 30 November 2004. On 1 December 2004 the Company sold 400,000of these shares and sold a further 262,857 shares on 30 December 2004. Thesedisposals gave rise to a taxable gain of £3,129,000. The amount of tax payableis expected to be £939,000. Basis of preparation The financial information in this press release does not constitute statutoryaccounts within the meaning of section 240 of the Companies Act 1985, but isderived from the accounts. Statutory accounts for 2003 have been delivered tothe Register of Companies, and those for 2004 will be delivered following theCompany's Annual General Meeting. The independent auditor has reported on theaccounts for both 2003 and 2004; its reports were unqualified and did notcontain statements under section 237 (2) or (3) of the Companies Act 1985. Full Accounts The full accounts will be posted to shareholders on 23 February 2005 and will beavailable at the Company's registered office from this date, and on the Group'swebsite at www.rensburg.co.uk. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Revel Collect