20th Jul 2006 07:01
Daniel Stewart Securities PLC20 July 2006 20 JULY 2006 DANIEL STEWART SECURITIES PLC (AIM) FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2006 AND TRADING UPDATE TO 30 JUNE 2006 The Board of Daniel Stewart Securities plc ('Daniel Stewart' or 'the Company')is pleased to announce its final results for the year ending 31 March 2006. FINANCIAL AND OPERATIONAL HIGHLIGHTS • Group Turnover doubled to £12,232,725 (2005: £6,027,842); • Gross Profit doubled to £11,326,826 (2005: £ 5,649,663 ); • Profit before Tax up over 150% to £5,075,000 (2005:£2,004,947); • Net Assets up 50% to £12,997,557 (2005: £8,287,705); • Earnings per share before amortisation goodwill up 86% to 1.85p (2005: 1.02p); • Continued strong performance of the Group's principal operating subsidiary, Daniel Stewart & Company and continuing development of Daniel Stewart Capital and Daniel Stewart Leasing; • Significant investment in hiring high quality staff across the business; and • Substantial increase in transactions completed and capital raised on behalf of clients - the Company raised in excess of £160 million (2005: £60 million) in primary and secondary issues. Commenting on today's announcement, Peter Shea, Group Chief Executive, said "Theyear has seen further improvements in the quality of our delivered services -evidenced by increased transaction completions and the continuing demand for our services across all areas of the firm. We have created greater stability inour earnings, differentiating us from our competition by the development of ourleasing and loan books. "We continue to enjoy high profit margins, which are close to the highest in theindustry, reflecting our commitment to providing greater returns for ourshareholders. Trading in the first quarter has been firm and our order book issolid. We have hired a significant number of new staff, strengthening ourpersonnel and leaving us well placed for the year." --ENDS-- Enquiries:DANIEL STEWART SECURITIES PLC Tel: 020 7776 6550Peter SheaAlastair Cade BISHOPSGATE COMMUNICATIONS LIMITED Tel: 0207 430 1600Maxine BarnesNick Rome/Sophie Davis Chairman's Letter to Shareholders Dear Shareholder I am pleased to present our report and accounts for the year to 31 March 2006. The year offered benign trading conditions throughout, enabling us to continueto advance and develop all of our product lines and business units. Our focushas remained in the small cap arena where, as a result of a number of excellenttransactions, we have enjoyed an enhanced reputation. Daniel Stewart & Co During the year we successfully completed Nine Initial Public Offerings (IPOs)and 29 Secondary offerings, all but one being on AIM, raising in excess of £160million in primary and secondary issues. Transactions of particular note included acting for World Gaming Plc in its $90million acquisition of Sportsbetting where, in addition to arranging the equitywe also arranged £25 million in bank debt. We completed a range of transactionswithin our corporate finance department - including the sale of XN Checkout toTorex Retail for £80 million, and we now act as Nomad for 29 companies. Our research department is now well established and has received much favourablecomment including being short-listed for Best Research of the year at the AIMAwards dinner. Daniel Stewart Capital The Company added two new clients providing £150,000 in loan facilities. Thetotal value of loans written now exceeds £1.25million with a yield substantiallyabove average. Daniel Stewart Leasing The leasing business commenced trading in September 2005. It concentrates onproviding leasing services in the form of finance/operating leases to theprinting industry. During the year, we wrote leases for a total value of£2.6million with 19 customers. Our average yield was considerably above industrystandards with an average tenor of 3.2 years. Summary Yet again the Company has had a very successful year, doubling turnover andprofitability. Our balance sheet as a result of this performance is strong andcash flows have continued to be positive. Our order book at year-end reflectsthe demand for our services with an ever-widening geographic range of clientsserved. As always, our ability to deliver is reliant upon the performance of ourpeople - all of whom have provided quality execution over the last twelvemonths. We continue to recruit individuals of the highest calibre and willalways welcome dedicated staff that assist us in the maintenance of ourcommitment to excellence. Finally the Board would like to thank shareholders for their continuedconfidence and support and hope that they will enjoy the benefits of ourcontinued growth. Peter DicksChairman Chief Executive's Year in Review Equity Capital Markets. At year-end 2006 our retained AIM and other public market client base consistedof 37 companies. We completed 38 transactions (2005: 25) and acted on theadmission of over £160 million (2005: £60 million) in new capital on bothprimary and secondary issues on total transaction values of £860 million (2005:£434 million). Corporate Finance. Our corporate finance team has been very active during the year, assisting inthe successful completion of our IPO's on AIM, where we acted as Nomad for 9 newclients and completing a wide range of transactions including the sale of XNCheckout to Torex Retail for £80 million. Equity Research Our research department has improved in both terms of breadth and quality ofcoverage. As a result we are now distributing to almost all UK institutionalmanagers and to a wide range of international investment managers. Trading and Investment This department has traded profitably throughout the year. Our Agency businesshas grown steadily, with a corresponding increase in clients that now number inexcess of 100 (8: 2005). Our proprietary trading book provided excellent returnsfor the period and we will continue to develop both our Agency and Proprietarybusiness. Specialist Debt Services We established Daniel Stewart Leasing during the year to add to our alreadyexisting operations in Daniel Stewart Capital. We have successfully deployedexcess capital into these markets - to provide improved returns and improvedquality of earnings, ensuring further differentiation from our competition. Employees The firm currently employs 36 members of staff, compared to 25 at the end of2005. We enjoy a high level of dedication and commitment from all employees andeach has made a substantial contribution to the very successful year. Premises We moved into our new offices approximately ten months ago. The change ofaccommodation has proven to be very successful and has helped us to provide afully integrated service to our clients. Outlook Having completed the first quarter of this financial year, I am pleased toadvise that all divisions are performing satisfactorily and that we are wellpositioned for the year ahead. We enjoy a solid order book and are seeing asteady improvement in both quality and size of transactions offered to us. Peter Shea Group Chief Executive Management Discussion Business Environment Equity markets throughout the year remained firm, with AIM continuing toflourish. It has attracted companies from all over the World and is now thesmall cap growth market of choice. Economies worldwide have been buoyant and, assuch, demand for banking and broking services has grown unabated. Results of Operations Revenue for the twelve months was £12,232,725 up from £6,027,842 for theprevious year - an increase of 100 %. At the gross profit level we improved ourperformance by 100%, returning £11,326,826 versus £5,649,663 for 2005. At theoperating level we returned a profit of £4,949,255 or 40.4% versus revenues, upfrom £2,054,913 or 34.1% versus revenue for 2005. Staffing levels rose from 25to 36, and as such our administrative expenses rose in real terms from£3,594,750 in 2005 to £6,377,571, however, when measured against revenue thisrepresented a slight improvement down from 59% in 2005 to 57%. After taking intoaccount interest, depreciation and amortisation our profit before tax was£5,075,012 or 41.5% against revenues, up from £2,004,947 or 33.3% in 2005. Liquidity and Capital Resources Net Assets rose from £8,539,955 in 2005 to £12,997,557 with our working capitalposition improving from £6,429,081 in 2005 to £11,282,153. While thisimprovement can be attributed to a number of factors, of particular significancewas the growth in our loan and leasing portfolios and our increased cashposition - up to £4,201,880. Operating cash flow remained strong and almostunchanged at £1,857,298 despite an increased investment in our trading assets.Our Return on Capital Employed was 26.2% (25.1% in 2005) and our Return onEquity was 29.0%, up from 22.0 % in 2005. The preliminary results for the year ended 31 March 2006 were approved bythe Board on 19 July 2006 and accounts for the year ended 31 March 2006 will besent to shareholders in due course. DANIEL STEWART SECURITIES PLC Consolidated profit and loss accountfor the year ended 31 March 2006 Year ended 31 March 2006 31 March 2005 £ £ Turnover 12,232,725 6,027,842 Cost of sales (905,899) (378,179) ---------- ---------- Gross profit 11,326,826 5,649,663 Administration costs (6,377,571) (3,594,750) ---------- ---------- Operating profit / (loss) 4,949,255 2,054,913 Amortisation of goodwill (107,670) (98,375) Depreciation (124,229) (33,735) Interest receivable 397,333 124,105 Finance costs (39,677) (41,961) ---------- ---------- Profit / (loss) on ordinary 5,075,012 2,004,947 activities before taxation Tax on profit / (loss) on ordinary (1,303,735) (180,000) activities ---------- ---------- Profit / (loss) on ordinary 3,771,277 1,824,947 activities after taxation ---------- ---------- DANIEL STEWART SECURITIES PLC Consolidated balance sheet as at 31 March 2006 31 March 2006 31 March 2005 £ £ Fixed assets Tangible 394,510 64,551 Investments 337,056 367,106 Goodwill 1,623,862 1,731,532 ---------- ---------- 2,355,428 2,163,189 ---------- ---------- Current assets Investments 3,293,002 1,530,704 Trade and other debtors 6,886,535 2,733,565 Cash at bank and in hand 4,201,880 3,000,157 ---------- ---------- 14,381,417 7,264,426 Creditors - amounts falling due within one year (3,099,264) (835,345) ---------- ---------- Net current assets 11,282,153 6,429,081 Creditors - amounts falling due within one year Bank loan (130,010) (304,565) Hire purchase (510,014) - ---------- ---------- Net assets 12,997,557 8,287,705 ========== ========== Capital and reserves Called up share capital 527,596 508,123 Share premium account 3,838,632 2,889,480 Capital redemption reserve fund 49,998 49,998 Revaluation reserve (1,150,577) (1,120,527) Capital reserve 8,524,435 8,524,435 Profit and loss account 1,207,473 (2,563,804) ---------- ---------- Shareholders' funds 12,997,557 8,287,705 ========== ========== DANIEL STEWART SECURITIES PLC Consolidated cash flow statement for the year ended 31 March 2006 Year ended 31 March 31 March 2006 2005 £ £ £ £ Operating activities Net operating Profit / (loss) from consolidated companies 4,717,356 1,922,803 Amortisation of goodwill 107,670 98,375 Depreciation of tangible fixed assets 124,229 33,735 Tax paid (213,735) 18,164 132,110 ---------- --------- --------- ---------- 4,735,520 2,054,913 Movement in working capital Decrease in debtors (1,884,805) 106,820 Decrease in creditors 768,881 230,752 Increase in investments held for trading (1,762,298) (342,934) ---------- --------- (2,878,222) (5,362) --------- ---------- Operating cash flow 1,857,298 2,049,551 --------- ---------- Investing activities Expenditure on tangible fixed assets (454,188) (57,229) Disposal of tangible fixed assets - 46,630 Acquisition of fixed asset investments - - --------- ---------- Cash flow from (454,188) (10,599) investing activities --------- ---------- Financing activities Loans made to third parties (2,268,165) (1,811,861) Loans received from third parties 740,497 511,766 Share capital; issued 968,625 1,023,667 Interest receivable 397,333 124,105 Interest payable (39,677) (41,961) --------- ---------- Cash flow from financing activities (201,387) (194,284) --------- ---------- Cash and cash equivalents at 1 April 2005 3,000,157 1,155,489 Cash and cash equivalents at 31 March 2006 4,201,880 3,000,157 --------- ---------- Increase/(decrease) in cash and cash equivalents 1,201,723 1,844,668 --------- ---------- The financial information for the year ended 31 March 2006 has not been auditedand does not constitute the Company's statutory financial statements within themeaning of S240 of the Companies Act 1985. The statutory accounts for the yearended 31 March 2006 have not been filed with the Registrar of Companies norreported on by the Company's auditors. Notes to the financial statements 1 Accounting policies These financial statements have been prepared in accordance with applicable lawand United Kingdom accounting standards. Accounting convention The financial statements are prepared under the historical cost conventionmodified to include the revaluation of investments to market value. Turnover Turnover comprises income from advisory and asset management services inclusiveof disbursements, and is recognised as work is carried out and fees have beenagreed. Turnover also derives from principal share dealing and commissionsreceivable. Turnover is stated after deduction of value added tax. Basis of consolidation The consolidated financial statements include the subsidiary companies reportedin note 8. Subsidiaries are bought into the consolidation at the time ofacquisition on the basis of the fair value of the assets. Deferred taxation Deferred tax is provided at anticipated tax rates on differences arising fromthe inclusion of items of income and expenditure in taxation computations inperiods different from those in which they are included in the financialstatements. Tangible fixed assets Depreciation is provided at the rate of 25% per annum on a written down valuebasis on office equipment and furniture in order to reduce to estimatedrealisable values over useful working lives, Depreciation in respect of computerequipment and software is provided at the rate of 25% per annum on a straightline basis. Improvements to leasehold property are written off over theremaining useful life of the lease. Fixed asset Investments Quoted investments are valued at closing sale price on the relevant stockexchange. The market value of certain securities may be discounted where thereare restrictions on their disposal or whether other special factors apply. Unlisted investments are valued by the directors on the basis of all theinformation available to them at the time. In the cases of companies which arein an early stage, valuation will normally be at cost unless, in the directors'opinion there has been a permanent diminution in value or a change of valuationis justified by reference to subsequent issues of capital or dealings betweenthird parties at a different price. Unrealised gains or losses are recognised in the revaluation reserve Realised profits or losses on disposal and provisions for permanent diminutionin value of investments are transferred to the profit and loss account from therevaluation reserve. Current asset investments Current asset investments are valued at market value. Any unrealised loss isrecognised in the profit and loss account. Goodwill and amortisation Goodwill arising on consolidation, which represents the excess of the fair valueof consideration given over the fair value of the separable net assets of thesubsidiary undertaking, is capitalised and written off over it's estimateduseful economic life, which in the opinion of the directors is twenty years. Leased assets Rentals applicable to operating leases where substantially all of the benefitsand risks of ownership remain with the lessor are charged against profit asincurred. 2 Turnover 31 March 2006 31 March 2005 £ £ Share trading 3,242,015 1,978,245Corporate finance 8,990,710 4,049,597 ---------- --------- Turnover 12,237,725 6,027,842 ========== ======== Share trading 3,135,331 1,978,245Corporate finance 8,191,495 3,671,418 --------- -------- Gross profit 11,326,826 5,649,663 ========= ======== 3 Staff costs Total staff costs for the year ending 31 March 2006 were £4,180,359, (2004:£2,430,660). During the year the group had an average of 29 employees, includingthe directors. The aggregate group directors' remuneration was £1,550,458, (2005: £717,132).The remuneration of the highest paid director was £525,000, (2005: £386,667).The emoluments of the chairman were £20,000, (2005: £20,000). 4 Result from operating activitiesIs stated after charging: 31 March 31 March 2006 2005 £ £ Auditorsremuneration - for audit services 42,800 12,000 - for non audit services 25,520 17,388Directors' remuneration includingbenefits in kind 1,780,658 719,132Operating lease rentals 306,602 121,680 ======== ======= 5 Bank interest receivable and similar income 31 March 31 March 2006 2005 £ £ On bank deposit 224,739 48,357Loan stock interest receivable 170,578 73,140Dividends receivable 2,016 2,608 -------- -------- 397,333 124,105 ======== ======== 6 Interest payable 31 March 31 March 2006 2005 £ £ On bank loan and overdraft 14,174 41,961Hire purchase interest payable 13,480 -Other interest payable 12,023 - -------- -------- 39,677 41,961 ======== ======== 7 Taxation 31 March 31 March 2006 2005 £ £ Mainstream Corporation tax deriving from profits on operating activities 1,270,000 180,000Adjustment for earlier years 33,735 - -------- ------- 1,303,735 180,000 ======== ======= No provision has been considered necessary for deferred taxation. These financial statements remain subject to Inland Revenue agreement.Factors affecting group tax charge 31 March 2006 31 March 2005 Profit per financial statements 5,095,608 2,004,947Disallowable items 120,000 116,000Losses utilised (982,275) (1,520,947) -------- -------- (862,275) (1,404,947) -------- ------------ Taxable profit 4,233,333 600,000 -------- -------- Taxation at 30% 1,270,000 180,000 ======== ======== 8 Earnings per share The weighted average number of ordinary shares in issue during the period ended31 March 2006 was 210,146,513 , (2005 : 188,773,180). 31 March 31 March 2006 2005 pence pence Group Company Including amortisation of goodwill 1.79 0.97 Excluding amortisation of goodwill 1.85 1.02 ======= ======= 9 Property, plant and equipment - Group only 31 March 2006 Improvements to leasehold premises Plant and equipment Total £ £ £ Cost at 1 April 2005 - 109,801 109,801Additions 281,009 173,179 454,188 --------- -------- -------- At 31 March 2006 281,009 282,980 563,989 --------- -------- -------- Accumulated depreciation at 1 April 2005 - 45,250 45,250Provision in the year 59,151 65,078 124,229 --------- -------- -------- At 31 March 2006 - 110,328 169,479 --------- -------- -------- Net book value at 31 March 2005 - 64,551 64,551 ========= ======== ======== Net book value at 31 March 2006 221,858 172,652 394,510 ========= ======== ======== 10 Intangible assets Goodwill 31 March 2006 £ Group Arising on acquisition of subsidiary 2,071,094 -------- Accumulated depreciation at 1 April 2005 339,562Provision in the year 107,670 -------- 447,232 -------- Net book value at 31 March 2005 1,731,532 ======== Net book value at 31 March 2006 1,623,862 ======== 11 Investments - fixed assetsInvestments in quoted companies 31 March 2006 £ £ Company Valuation at 1 April 2005 and 31 March2006 150,056 ======= Investments in un-quoted companies 31 March 2006 £ £ Company Valuation at 1 April 2005 217,050Provided during period to revaluation reserve (30,050) ------- 187,000 ======= Total 31 March 2006 337.056 ======= 12 Investments - current assets 31 March 2006 31 March 2005 £ £ Investments in quoted companies at marketvaluation 3,293,002 1,530,704 ======== ======== 13 Trade and other debtors 31 March 2006 31 March 2005 £ £ Trade debtors 1,844,120 449,287Loans outstanding 4,293,326 2,025,161Other debtors and prepayments 749,089 259,117 -------- -------- 6,886,535 2,733,565 ======== ======== All debtors are receivable within one year of the balance sheet date, exceptloans of £659,961. Which are all recoverable within five years Included within other debtors is an amount of £38,745 due from Tom Jenkins, whois a director of Daniel Stewart Securities plc, which results from a doublepayment of PAYE on the exercise of share options. This amount is interest freeand the company expects it to be repaid on receipt of the tax refund. 14 Cash at bank and in hand 31 March 2006 31 March 2005 £ £ Held by UK clearing bank 2,961,398 2,159,637Held by third party service providers 1,240,482 840,520 -------- -------- 4,201,880 3,000,157 ======== ======== 15 Trade and other payables Due within one year 31 March 2006 31 March 2005 £ £ Group Company Bank loan 407,232 207,201Trade creditors 177,277 112,961Accruals 872,343 280,641Tax and social security 167,405 54,542hire purchase 205,007 202,886Corporation tax 1,270,000 180,000 -------- ------- 3,099,264 835,345 ======== ======= 16 Share capital 31 31 March March 2006 2005 £ £ Authorised 322,098,000 Ordinary shares of 0.25p each 805,245 805,245 2,902,000 Deferred shares of 0.25p each 7,255 7,255 ------- ------- 812,500 812,500 ======= ======= Issued At start of year 203,249,066 Ordinary shares of 0.25p each 508,123 456,526 Issued during the year 7,789,600 Ordinary shares of 0.25p each 19,473 51,597 ------- ------- 211,038,666 Ordinary shares of 0.25p each 527,596 508,123 ======= ======= During the year, under the rules of the Daniel Stewart Securities plc unapprovedoption scheme staff and directors were granted a total of 7,775,000 shares atbetween 6.5p and 12p. 17 Reconciliation of movement in shareholders funds 31 March 2006 31 March 2005 £ £ Profit / (loss) on ordinaryactivities after taxation 3,771,277 1,824,947Opening shareholders funds 8,287,705 5,852,099Other recognised gains and losses (30,050) (413,008)Issue of ordinary share capital 968,625 1,023,667 ------------- --------- 12,997,557 8,287,705 ============= ========= 18 Commitments and contingent liabilities The financial statements remain subject to Inland Revenue agreement on thecorporation tax position. A contingent liability in respect of exposure to client share trading will existat any given time. All unsettled trades at 31 March 2006 have now been fullysatisfied. The group also undertakes contract for difference trading. At 31March 2006, the group had an open position of £983,000. At March 2006 the Company had guaranteed the borrowings of Daniel StewartCapital Limited. At that date Daniel Stewart Capital Limited owed Singer andFriedlander Limited £426,386. Daniel Stewart Securities plc has provided aguarantee on behalf of the same subsidiary to Lloydstsb plc: at 31 March 2006;at 31 March 2006 there were no monies due under this agreement. At 31 March 2006 the company had guaranteed the borrowings of Daniel StewartLeasing Limited. At that date Daniel Stewart Capital Limited owed Lombard£615,428. 19 Operating leases At 31 March 2006 the group had annual commitments under operating leases as follows: 31 March 2006 31 March 2005 £ £ £ £ Land and Other Land and Other buildings buildings Operating leases which expire: Within one year 91,667In the second to fifth year inclusive 140,000 23,308 116,000 12,612 --------- --------- -------- -------- 231,667 23,308 116,000 12,612 ========= ========= ======== ======== This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Daniel Stewart Securities Plc