The Clarkson Hill Group plc (the "Group")
Preliminary Announcement for the year to 31 July 2007
HIGHLIGHTS
* Profit before tax �25,279 (2006 Loss: (�323,998)).
* Turnover increased 36% to �18.3 million (2006 �13.4 million).
* Gross profit increased by 31% to �3.6 million (2006: �2.7 million).
* New single premium investments increased to �250 million (2006: �165
million).
* Total funds under management grew by 88% to approximately �712 million
(2006: �378 million).
* Operating efficiency improved to 19.6% (2006: 22%). Plimsoll* named the
Group the 6th most efficient IFA (March 2007).
* The Group is now the 9th largest UK National IFA. Plimsoll*.
* Plimsoll Portfolio Analysis, March 2007
CHAIRMAN'S STATEMENT
I am delighted to announce the first full year profit for the company. This
comes after four consecutive years of increased turnover and recruitment,
resulting in the company's position in the top 10 of UK National IFA's.
Trading Highlights Year to Year to
31 July 2007 31 July 2006
Turnover 18,300,143 13,416,271
Gross Profit 3,651,013 2,784,849
Operating Costs (excluding development costs) (3,595,257) (2,956,088)
Profit (loss) before Tax 25,279 (323,998)
Profit (loss) after Tax 703 (229,032)
International Accounting Standards
The financial statements for the year ended 31 July 2007 have been prepared
under EU endorsed International Financial Reporting Standards (IFRS) for the
first time. The full effect of adopting IFRS is set out in note 2 to the
financial statements. The directors have amended the income recognition policy
to defer the recognition of commission for mortgage fees and protection due to
the higher risk of transactions not taking place, the effect of which on the
current year is to reduce profit before tax by �5,444 and net assets at the
31st July 2007 by �317,665.
Results
As a result of both increased turnover and continued attention to operating
efficiencies, the Group is able to report a profit of �25,279 (2006: (�
323,998)).
Turnover has increased by 36% to �18.3 million (2006: �13.4 million) and
operating efficiency improved to 19.6% (2006: 22%).
Funds under advice
New single premium investment business, both life and pensions, increased to �
250million (2006: �165 million), with total funds under advice growing to
approximately �712 million (2006: �378 million), an increase of 88%.
It should be noted that these figures are currently based on values at
inception, not current fund values. As the Group develops its wrap platform
approach, revaluation of these assets will take place, enabling a current fund
value to be quoted.
The market has recognised that funds under advice form a major part of an IFA's
value and as this aspect of Clarkson Hill's business grows, the Board believes
this will be reflected in the Group's value.
Mortgage Business
The Group now has 154 advisers (2006: 130) registered to give mortgage advice.
This has resulted in an increase in earnings from mortgage business of 22% to �
2.8 million (2006: �2.3 million).
The total Clarkson Hill mortgage book now stands at �2 billion (2006: �975
million).
Notwithstanding any future reduction in house sales, Clarkson Hill has
significant existing clients who will require to re-mortgage over the next 12
months and business in this area is anticipated to continue at current levels.
Retail Distribution Review
The FSA has instigated a review into the future for the distribution of retail
financial products in the UK. It is likely to be 18 months to 2 years before
any concrete proposals start to appear.
What this review has done is to focus IFA's like Clarkson Hill on the `real
value' they represent as distributors of retail products.
The directors of the Group will continue to work on the realisation of this
real value. Progress is being made in respect of realistic rates for investment
advice, which reflect the work put in by the advisers and offer the potential
for ongoing income as the value of the investment rises.
The Board believes that as `funds under advice' grows this will enable the
Group to retain a greater share of the annual management charge from fund
providers. The Group is already experiencing this development.
It is too early to determine the outcome of this Review, but the Board see this
Review as a further opportunity to develop and grow the Group - particularly as
the Regulator is combining this review with a potential increase in solvency
levels for the smaller IFA's. The Group continues to recruit `Trading Styles',
which now stand at 20 (2006:16).
Summary
The Board continues to focus on profitability by way of recruitment of
qualified and quality advisers, with currently 350 advisers.
The continued growth in both `funds under advice and the mortgage book the
Board believes will enhance the view taken by the market of the Group.
Since July, the Group has continued to trade in line with the Board's
expectations.
RD Pritchard, CEO
14 January 2008
Group Profit and Loss Account for the year ended 31 July 2007
Year ended Year ended
31 July 2006
31 July 2007 Audited
Audited
� �
Turnover 18,300,143 13,416,271
Cost of sales (14,649,130) (10,631,422)
Gross profit 3,651,013 2,784,849
Net operating expenses (3,595,257) (3,063,748)
Group operating profit/(loss) 55,756 (278,899)
Interest receivable and similar 18,631 8,376
income
Interest payable and similar (49,108) (53,475)
charges
Profit/(loss) on ordinary 25,279 (323,998)
activities before taxation
Tax on profit/(loss) on (24,576) 94,966
ordinary activities
Retained profit/(loss) for the 703 (229,032)
group
Basic earnings/(loss) per share 0 p (1.06)p
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 July 2007
31 July 2007 31 July 200
6
Audited
Audited
� �
Fixed Assets
Intangible assets 136,280 75,693
Property, Plant & Equipment 193,533 177,963
Investments 7,000 7,000
Deferred Tax 340,198 364,774
677,011 625,430
Current Assets
Trade and other receivables 3,400,452 2,888,005
Cash and cash equivalents 663,026 546,637
4,063,478 3,434,642
Total Assets 4,740,489 4,060,072
EQUITIES AND LIABILITIES
Called up share capital 482,154 482,154
Share premium account 2,140,073 2,140,073
Merger reserve (99,000) (99,000)
Retained earnings (1,391,966) (1,392,669)
Total Equity 1,131,261 1,130,558
Non-current liabilities
Long term borrowings 206,584 341,213
Current Liabilities
Trade and other payables 2,631,468 2,283,431
Short term borrowings 555,457 96,094
Current portion of long term 125,000 136,453
borrowings
Current taxes payable 90,719 72,323
3,402,644 2,588,301
Total equity and liabilities 4,740,489 4,060,072
Group Cash Flow Statement for the period 1 August 2006 to 31 July 2007
Year ended Year ended
31 July 2007 31 July 2006
Audited Audited
Cash flows from operating activities
� �
Profit before taxation 25,279 (323,998)
Depreciation 52,994 47,408
Amortisation 31,242 11,645
Interest net 30,477 45,099
Operating profit before working 139,992 (219,846)
capital changes
Increase in trade and other (514,177) (615,009)
receivables
Increase in trade and other payables 366,433 742,458
Cash generated from operations (7,752) (92,397)
Interest paid (49,108) (53,475)
Net cash outflow from operating (56,860) (145,872)
activities
Cash flows from investing activities
Taxation 1,730 -
Purchase of intangibles (91,829) (87,338)
Purchase of property, plant and (68,564) (60,134)
equipment
Interest received 18,631 8,376
(140,032) (139,096)
Cash flows from financing activities
Net proceeds of issue of shares - 1,118,735
Proceeds from (repayment of) long 325,538 448,551
term borrowings
Movement in short term borrowings - (740,384)
Payment of hire purchase and finance (12,257) (11,668)
liabilities
313,281 815,234
Net increase in cash and cash 116,389 530,266
equivalents
Cash and cash equivalents at the 546,637 16,371
beginning of the period
Cash and cash equivalents at the end 663,026 546,637
of the period
Group Statement of changes in equity
Share Share Merger Retained Total
capital premium reserve earnings equity
Balance at 31 July 2005 393,039 1,110,453 (99,000) (403,187) 1,001,305
Goodwill impairment - - - (542,400) (542,400)
Income recognition - - - (218,050) (218,050)
As restated 393,039 1,110,453 (99,000) (1,163,637) 240,855
Changes in equity for 2006
Loss for the period - - - (169,977) (169,977)
Goodwill impairment - - - 30,410 30,410
Income recognition - - - (89,465) (89,465)
Total recognised income and - - - (229,032) (229,032)
expense for the period
Issue of share capital 89,115 1,029,620 - - -
Balance at 31 July 2006 482,154 2,140,073 (99,000) (1,392,669) 1.130.558
carried forward
Changes in equity for 2007
Profit for the period - - - 703 703
Balance at 31 July 2007 482,154 2,140,073 (99,000) (1,391,966) 1,131,261
carried forward
Basis of preparation
The financial information has been prepared in accordance with accounting
policies as presented in the Financial Statements as at 31 July 2007.
Earnings/(loss) per share
The earnings per share is calculated on the profit attributable to ordinary
shareholders of �703 (2006: restated loss �229,032) divided by 24,107,677
(2006: 21,558,510) being the weighted average number of ordinary shares in
issue during the year.
During 2007 and 2006, the share warrants and options disclosed in note 19 were
antidilutive and accordingly there is no dilution of loss per share. However,
they could potentially dilute basic earnings per share in the future
Analysis of changes in net debt
Opening Cash Closing
balance flows Balance
1 August 31 July 20
2006 07
� � �
Cash at bank and in hand 546,637 116,389 663,026
Total 546,637 116,389 663,026
Financial Information
The financial information set out above does not constitute the Company's
statutory financial statements for the year ended 31 July 2007 or 2006 (but is
derived from those financial statements). Statutory financial statements for
2006 have been delivered to the Registrar of Companies and those for 2007 will
be delivered shortly. The auditors have reported on those financial statements;
their reports were unqualified and did not contain statements under section 237
(2) or (3) of the Companies Act 1985.
Report and financial statements
Copies of the Report and financial statements for the year ended 31 July 2007
will be sent to shareholders shortly. Further copies will be available from the
Company's registered office at Alexandra House, Alexandra Road, Wisbech,
Cambridgeshire PE13 1HQ. The financial statements are also available on the
Company's website www.theclarksonhillgroup.co.uk.
Contact
Ron Pritchard, Director
The Clarkson Hill Group Plc
Telephone 01945 585721
Liam Murray, Nominated Adviser
City Financial Associates Limited
Telephone 020 7492 4777
END
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