Clarkson Hill Group Plc (the "Group")
Interim Report for the six months to 31 January 2006
Chief Executive Officer's Statement
I am delighted to report a first half-year profit for the Group.
During the six-month period, the Group has recruited 37 new financial advisers
and has also focussed on cost/benefit savings by introducing e-commerce and
online processing systems.
Highlights
* Profit after tax �37,653 (loss �265,321 to 31 January 2005).
* Turnover increased by 59% to �6.1 million (2005 �3.9 million)
* Number of advisers up by 18% to 240 as at 31 January 2006 (31 January 2005
- 203 advisers).
* Earnings per share 0.19p.
* London office opened January 2006.
* Installation of online processing programme specifically in relation to
protection products.
Financial Results
6 months to 6 months to
31 Jan 06 31 Jan 05
(�'000) (�'000)
Turnover 6,145 3,875
Gross profit 1,526 939
Administrative Expenses 1,436 1,243
Profit/(loss) on ordinary activities 60 (329)
before tax
Profit/(loss) for the group 38 (266)
Turnover for the six months to 31 January 2006 increased by 59% to �6.1 million
(2005 �3.9 million). This was due to the continued recruitment of high quality
financial advisers, evidenced by further improvement in adviser average
production to approximately �5,600 per month (in 12 months to 31 December 2005)
(12 months to December 2004 �4,063 per month).
In addition, there was a 110% increase in mortgage business to �1 million now
completed by the Group (2005 �492,000).
Gross profit increased by 63% to �1.5 million (2005 �939,000).
The Group is now experiencing the benefits it anticipated from the introduction
of online processing for mortgages and protection, with administrative expenses
now representing approximately 23% of turnover, down from approximately 32% for
the same period to 31 January 2005.
Profits
The Group's progress has resulted in a first-half profit, of �38,000, compared
with a loss of �266,000 for the same period to 31 January 2005.
Operations
As is evidenced in the financial results, the Group continues to focus on
implementing online and e-commerce solutions to administrative processes in
partnership with product providers and advisers. Further progress is
anticipated in this area, as branch operations benefit from further
computerisation.
Administration and processing staff numbers have grown modestly as the online
processing has facilitated the growth in numbers of advisers.
The London office -73 Leadenhall Market -opened in January 2006. Mike Robinson,
Group Managing Director has taken personal responsibility for the recruitment
and development of this branch. It now has 4 Independent Financial Advisers in
situ and in its first fully operational month, March 2006, wrote �127,000 of
business.
Current Trading
On 17 February 2006 the Company's shares were admitted to trading on AIM,
having been previously traded on Ofex.
The Company raised �1,400,000 before expenses by way of an open offer for
subscription. The offer for subscription was closed 17 February 2006, having
been fully subscribed.
The directors' objective is to continue to grow the Group, by the recruitment
of advisers and enhancing the average monthly production of each adviser.
Progress continues to be good. March 2006 was a record month for the Group with
�1.5 million of written business.
Adviser numbers continue to grow. As at the date of this statement the Group
had 247 advisers, which includes the new advisers in our recently opened
Cheshire office.
Further progress is anticipated in terms of administrative efficiency,
particularly in relation to asset management as the Group continues to increase
its market share.
Notwithstanding our growth objectives, the Group remains committed to its
independent status, high standards of compliance and its "Treating Customers
Fairly" programme. The administrative efficiency gains will allow more of our
experienced staff to concentrate on the compliance vetting of proposals.
The Group continues to progress and meet its targets - this is now reflected in
the improved financial performance. With the additional activity engendered by
'A' day and the recruitment planned, further progress is anticipated in the
second half.
Ron Pritchard
Chief Executive Officer
26 April 2006
Group Profit and Loss Account for the period 1 August 2005 to 31 January 2006
6 months to 6 months to Year ended
31 July
31 January 2006 31 January 2005 2005
Unaudited Unaudited Audited
� � �
Turnover 6,144,847 3,874,878 9,993,673
Cost of sales (4,618,540) (2,937,191) (7,537,940)
Gross profit 1,526,307 937,687 2,455,733
Administrative expenses (1,436,104) (1,241,071) (2,602,079)
Group operating profit/(loss) 90,203 (303,384) (146,346)
Interest receivable and similar - - 2,322
income
Interest payable and similar (30,630) (25,248) (54,813)
charges
Profit/(loss) on ordinary 59,573 (328,632) (198,837)
activities before taxation
Tax on profit/(loss) on (21,920) 63,311 95,972
ordinary activities
Retained profit/(loss) for the 37,653 (265,321) (102,865)
group
Accumulated loss brought forward (403,187) (300,322) (300,322)
Accumulated loss carried forward (365,534) (565,643) (403,187)
Basic earnings/(loss) per share 0.19p (1.46)p (0.55)p
Fully diluted earnings/(loss) per 0.19p (1.46)p (0.54)p
share
There are no recognised gains or losses other than the profit or loss for the
above financial periods.
None of the group's activities were acquired or discontinued during the above
financial periods.
Group Balance Sheet as at 31 January 2006
31 January 31 January 31 July
2006 2006 2005
Unaudited Unaudited Audited
� � �
Fixed Assets
Intangible assets 527,195 385,477 542,400
Tangible assets 173,423 138,197 165,237
Investments 7,000 - 7,000
707,618 523,674 714,637
Current Assets
Debtors 4,230,950 2,506,973 3,695,867
Cash at bank and in hand 27,892 19,573 16,371
4,258,842 2,526,546 3,712,238
Creditors: amounts falling due within (3,948,189) (2,504,958) (3,396,240)
one year
Net Current Assets 310,653 21,588 315,998
Total Assets Less Current Liabilities 1,018,271 545,262 1,030,635
Creditors: amounts falling due (17,413) (8,396) (29,330)
after more than one year
Net Assets 1,000,858 536,866 1,001,305
Capital and Reserves
Called up share capital 393,039 384,534 393,039
Share premium account 1,072,353 829,142 1,110,453
Merger reserve (99,000) (111,165) (99,000)
Profit and loss account (365,534) (565,645) (403,187)
Equity Shareholders' Funds 1,000,858 536,866 1,001,305
Equity interests 1,000,858 536,866 1,001,305
Group Cash Flow Statement for the period 1 August 2005 to 31 January 2006
6 months to 6 months to Year ended
31 January 31 January 31 July
2006 2005 2005
Unaudited Unaudited Audited
Reconciliation of operating profit/(loss) to net cash inflow/(outflow) from
operating activities
� � �
Operating profit/(loss) 90,203 (303,384) (146,346)
Depreciation 29,352 8,772 44,129
Increase in debtors (557,516) (122,889) (1,278,607)
Increase in creditors 522,148 184,404 961,486
Net cash inflow from operating 84,187 (233,097) (419,338)
activities
CASH FLOW STATEMENT
Net cash inflow/(outflow) from 84,187 (233,097) (419,338)
operating activities
Returns on investments and servicing (30,630) (25,248) (52,491)
of finance
Capital expenditure (22,333) (39,695) (76,950)
Acquisitions and disposals - (10,806) (186,306)
31,224 (308,846) (735,085)
Financing (note1) 6,991 176,484 585,924
Increase/(decrease) in cash in the 38,215 (132,362) (149,161)
period
Reconciliation of net cash inflow/(outflow) to movement in net debt
Increase/(decrease) in cash in the 38,215 (132,362) (149,161)
period
Cash (outflow)/inflow from increase (45,091) 178,822 95,968
in debts and lease financing
Change in net debt resulting from (6,876) 46,460 (53,193)
cash flows
New finance leases - - (36,770)
Movement in net (debt)/funds in the (6,876) 46,460 (89,963)
period
Net debt at start of period (860,890) (770,927) (770,927)
Net debt at period end (note 2) (867,766) (724,467) (860,890)
Notes to Cash Flow Statement
Note 1
6 months to 6 months to Year ended
31 January 31 January 31 July 2005
2006 2005
Audited
Unaudited Unaudited
Financing
Issue of ordinary share capital, net (38,100) 355,306 645,122
of expenses
Movement on long term loans (2,245) - -
Movement on short term loans 54,378 (178,824) (91,585)
New finance lease and hire purchase - - 36,770
contracts
Capital element of hire purchase (7,042) - (4,383)
contracts
6,991 176,482 585,924
Note 2
Analysis of changes in net debt
Opening Cash Closing
balance flows Balance
01/08/05 31/01/06
� � �
Cash at bank and in hand 16,371 11,521 27,892
Overdrafts (728,228) 26,694 (701,534)
(711,857) 38,215 (673,642)
Debt due within one year (108,250) (54,378) (162,628)
Debt due after one year (8,396) 2,245 (6,151)
Finance leases (32,387) 7,042 (25,345)
(149,033) (45,091) (194,124)
Net debt (860,890) (6,876) (867,766)
Earnings/(loss) per share
The earnings/(loss) per share is calculated on the profit attributable to
ordinary shareholders of �37,653 (period ended 31 January 2005: loss �265,321
and year ended 31 July 2005: loss �102,865) divided by 19,651,962 (period ended
31 January 2005: 18,260,389 and year ended 31 July 2005: 18,745,173) being the
weighted average number of ordinary shares in issue during these periods.
The calculation of fully diluted earning/(loss) per share is based on the
profit as above and on 19,725,072 (31 January 2005: 18,887,710 and 31 July
2005: 18,887,710 ordinary shares of 2p each being the weighted average number
of shares in issue and share warrants available, during these periods.
Contacts
Ron Pritchard, Chief Executive The Clarkson Hill Group Plc 01945 585 721
Officer
Liam Murray City Financial Associates 020 7090 7800
Limited
END
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