TIDMSGRS
For Immediate Release
4 April 2012
Shore Capital Group Limited
Preliminary Results for the Year Ended 31 December 2011
Shore Capital Group Limited ("Shore Capital"), the independent investment group
specialising in principal finance, equity capital market activities and
alternative asset management, today announces its preliminary results.
Financial Key Points
* Revenue from operating businesses(*) of GBP32.3m (2010: GBP37.3m)
* Profit before tax from operating businesses(*) of GBP5.4m (2010: GBP10.2m)
* Statutory revenue of GBP29.5m (2010: GBP35.5m), and loss before tax of GBP0.9m
(2010: Profit GBP8.4m) which includes:
* GBP4.8m loss on investment in Puma Hotels; and
* GBP1.3m loss due to the requirement to consolidate in full our investment
in Spectrum Investments
* Balance sheet liquidity of GBP50.5m (2010: GBP47.6m) of which GBP47.3m (2010:
GBP44.2m) in cash
*Operating businesses exclude Spectrum / DBD
Operational Highlights
* Extremely resilient performance from ECM achieving a pre tax profit of GBP5.0m
(2010: GBP7.6m)
* ECM starts 2012 with a significantly expanded corporate client base with
more AIM advisory mandates won than any of its competitors in the last
quarter of 2011
* Asset management builds on strong VCT track record with launch of Puma VCT
8
* Acquisition of Spectrum Investments presents significant opportunity
Howard Shore, Executive Chairman of Shore Capital, said:
"2011 proved to be one of the most challenging years for our industry since the
establishment of our business in 1985. Despite this tough backdrop, our
diversified business continued to demonstrate considerable resilience with
healthy profit contributions from our operating businesses.
While it is disappointing to report a statutory loss, as foreshadowed last
November, it arises from the combination of the loss on our investment in Puma
Hotels and the loss in Spectrum as anticipated when it was acquired.
Activity levels so far in 2012 have picked up well from the quieter months of
last year's second half but are still behind the comparable period last year.
We continue to focus on the development of the Group's diverse niches of
expertise with the aim of creating meaningful upside for shareholders."
Enquiries:
Howard Shore Shore Capital Group Limited +44 (0) 20 7468 7911
Lynn Bruce +44 (0) 1481 728 902
Richard Oldworth Buchanan +44 (0) 20 7466 5000
Jeremy Garcia, Helen Chan
Jonathan Hinton Deloitte Corporate Finance +44 (0) 20 7936 3000
James Lewis (Nominated Adviser)
Josh Critchley RBC Capital Markets (Broker) +44 (0) 20 7653 4000
Martin Eales
Notes to Editors
Shore Capital
1. Shore Capital is an AIM-listed independent investment group. It specialises
in principal finance, equity capital market activities and alternative asset
management. The Equity Capital Markets division ("ECM") offers a wide range of
services for companies, institutions and other sophisticated clients, including
corporate finance, stockbroking and market-making. Shore Capital Limited manages
specialist funds, with a particular focus on alternative asset classes.
2. Shore Capital is based in Guernsey, London, Liverpool, Edinburgh and Berlin.
Shore Capital Limited, Shore Capital Stockbrokers Limited and Shore Capital and
Corporate Limited are each authorised and regulated by the Financial Services
Authority. Shore Capital Stockbrokers Limited is a member of the London Stock
Exchange.
3. Further information on Shore Capital, its products and services can be found
at www.shorecap.gg
Chairman's Statement
Introduction
2011 proved to be one of the most challenging years for our industry since the
establishment of our business in 1985. Despite this tough backdrop, our
diversified business continued to demonstrate considerable resilience, achieving
a profit before tax from our operating businesses of GBP5.4m (2010: GBP10.2m).
After a good start to the year, corporate activity levels waned in the third
quarter amid Eurozone fears and poor IPO market conditions. However, our Equity
Capital Markets ("ECM") division achieved a very creditable performance for the
full year, adding 18 new mandates to its list of retained corporate clients and
handling 9 fundraisings in the natural resources sector alone. Market making,
specialist research and corporate broking all contributed to one of the most
resilient performances in the sector.
Other highlights of the year included the acquisition of a 51% controlling stake
in Spectrum Investments Limited ("Spectrum"), which acquired a 58 per cent
interest in DBD Deutsche Breitband Dienste GmbH ("DBD"). The investment in this
German telecoms business builds further upon our existing presence in Germany,
where we manage a substantial property portfolio.
Having used 2011 to focus our operating businesses on areas where we have strong
market niches, we have closed those activities which we consider to be sub-
scale, namely private client discretionary management and our fund of hedge
funds.
Our statutory results for the year disappointingly show a loss before tax of
GBP0.9m due to a combination of a loss of GBP4.8m on our investment in Puma Hotels
and a loss of GBP1.3m as a result of the accounting requirement to consolidate in
full our investment in Spectrum/DBD.
Financial Review
Table 1 gives an analysis of the results of the group on a like-for-like basis
for the current and comparative years, split between the results of the
operating businesses and movements in the value of investments held on our
balance sheet. It is pro forma as it excludes the income and expenditure
relating to Spectrum and DBD in 2011 and the income and expenditure of Puma
Brandenburg in 2010. As a result of the acquisition structure used, the
accounting rules require the revenue and costs of Spectrum and DBD to be
consolidated in full even though we only have a net economic interest in DBD of
just under 30 per cent (via our holding in Spectrum).
Table 1: Analysis of the Pro forma Unaudited Consolidated Comprehensive Income
Statement (excluding Spectrum and DBD for 2011 and Puma Brandenburg for 2010)
Balance Balance
Operating Operating sheet sheet
Businesses Businesses holdings holdings Total Total
2011 2010 2011 2010 2011 2010
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 32,261 37,308 (5,037) (1,825) 27,224 35,483
Administrative
expenditure (26,488) (26,755) - - (26,488) (26,755)
------------------------- ------------------- ------------------
Operating
profit/(loss) 5,773 10,553 (5,037) (1,825) 736 8,728
------------------------- ------------------- ------------------
Interest income 283 284 - - 283 284
Finance costs (642) (643) - - (642) (643)
------------------------- ------------------- ------------------
(359) (359) - - (359) (359)
------------------------- ------------------- ------------------
Profit/(loss)
before taxation 5,414 10,194 (5,037) (1,825) 377 8,369
(Losses)/gains
recognised in
Statement of
Comprehensive
Income - - (1,064) 385 (1,064) 385
Other amounts
recognised in
Statement of
Comprehensive
Income 46 41 - - 46 41
------------------------- ------------------- ------------------
5,460 10,235 (6,101) (1,440) (641) 8,795
Comprehensive
taxation (1,508) (2,703) 1,280 735 (228) (1,968)
------------------------- ------------------- ------------------
Comprehensive
(loss)/profit
for the year
after tax 3,952 7,532 (4,821) (705) (869) 6,827
------------------------- ------------------- ------------------
Attributable to:
Equity holders
of the parent 3,261 5,634 (4,821) (705) (1,560) 4,929
Non controlling
interests 691 1,898 - - 691 1,898
------------------------- ------------------- ------------------
3,952 7,532 (4,821) (705) (869) 6,827
------------------------- ------------------- ------------------
Comprehensive
(loss)/earnings
per share
Basic 1.34p 2.29p (1.98p) (0.29p) (0.64p) 2.00p
Diluted 1.32p 2.21p (1.95p) (0.28p) (0.63p) 1.93p
Table 2 takes the total from Table 1 and shows the effect of consolidating the
income and expenditure relating to Spectrum and DBD since their acquisition. We
own an economic interest of 51% in Spectrum and accordingly the balance of the
loss before tax is not attributable to our shareholders.
Table 2: Analysis of the Unaudited Consolidated Comprehensive Income Statement
(including Spectrum and DBD for 2011, and excluding Puma Brandenburg for 2010)
Total Total
excluding excluding
Spectrum / Spectrum / Spectrum Spectrum
DBD DBD / DBD / DBD Total Total
2011 2010 2011 2010 2011 2010
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 27,224 35,483 2,289 - 29,513 35,483
Administrative
expenditure (26,488) (26,755) (3,595) - (30,083) (26,755)
----------------------- --------------------- ------------------
Operating
(loss)/profit 736 8,728 (1,306) - (570) 8,728
----------------------- --------------------- ------------------
Interest income 283 284 5 - 288 284
Finance costs (642) (643) - - (642) (643)
Negative
goodwill on
acquisition of
DBD - - 49 - 49
----------------------- --------------------- ------------------
(359) (359) 54 - (305) (359)
----------------------- --------------------- ------------------
(Loss)/profit
before taxation 377 8,369 (1,252) - (875) 8,369
(Losses)/gains
recognised in
Statement of
Comprehensive
Income (1,064) 385 - - (1,064) 385
Other amounts
recognised in
Statement of
Comprehensive
Income 46 41 111 - 157 41
----------------------- --------------------- ------------------
(641) 8,795 (1,141) - (1,782) 8,795
Comprehensive
taxation (228) (1,968) - - (228) (1,968)
----------------------- --------------------- ------------------
Comprehensive
(loss)/profit
for the year
after tax (869) 6,827 (1,141) - (2,010) 6,827
----------------------- --------------------- ------------------
Attributable to:
Equity holders
of the parent (1,560) 4,929 (599) - (2,159) 4,929
Non controlling
interests 691 1,898 (542) - 149 1,898
----------------------- --------------------- ------------------
(869) 6,827 (1,141) - (2,010) 6,827
----------------------- --------------------- ------------------
Comprehensive
(loss)/earnings
per share
Basic (0.64p) 2.00p (0.25p) - (0.89p) 2.00p
Diluted (0.63p) 1.93p (0.24p) - (0.87p) 1.93p
Income and Expenditure
The Group excluding Spectrum/DBD
Revenue from operating businesses declined by 13.5 per cent to GBP32.3m (2010:
GBP37.3m), reflecting a highly resilient performance in an extremely challenging
market.
Including the net loss of GBP5.0m from balance sheet holdings, total revenue for
the Group was GBP27.2m (2010: GBP35.5m). Last November we issued an announcement to
alert our investors to the possibility of a substantial reduction in the value
of our investment in Puma Hotels ("PHP"), and GBP4.8m of the loss from balance
sheet holdings was attributable to this. As at 31 December 2011, our investment
in PHP was valued at GBP450,000.
Administrative expenses were slightly down on the prior year at GBP26.5m (2010:
GBP26.8m) providing an operating profit from our operating businesses of GBP5.8m
(2010: GBP10.6m).
Interest income was GBP0.3m (2010: GBP0.3m), whilst finance costs were GBP0.6m (2010:
GBP0.6m) resulting in profit before tax from operations of GBP5.4m (2010: GBP10.2m).
The net margin before tax from operations was 16.8 per cent (2010: 27.3 per
cent). Including the net loss from balance sheet holdings, the profit before tax
was GBP0.4m (2010: GBP8.4m).
Revenue from ECM was GBP22.5m (2010: GBP26.3m) with a net margin of 22.3 per cent
(2010: 29.1 per cent). Revenue from Asset Management was GBP8.6m (2010: GBP10.0m)
with a net margin of 26.0 per cent (2010: 41.4 per cent).
Spectrum Investments / DBD
As a result of the acquisition structure used, the accounting rules require the
revenue and costs of Spectrum and DBD to be consolidated in full even though we
only have a net economic interest in DBD of just under 30 per cent (via our
holding in Spectrum).
The consolidated loss before tax arising from this investment is GBP1.3m. This has
offset the profit before tax of the rest of the group and has led to a reported
loss before tax of GBP0.9m (2010: profit of GBP8.4m).
Contribution from PBL
In the prior year, Puma Brandenburg generated GBP1.0m after tax in the period
during which it was part of the Group. As a consequence of the de-merger we have
presented, in accordance with accounting rules, the contribution from Puma
Brandenburg separately from the continuing operations of the Group.
Basic Earnings per Share
Including the effects of Spectrum/DBD, the Group generated losses per share of
0.45p (2010: earnings of 1.83p).
Comprehensive Earnings per Share
On a Comprehensive basis, the group generated a loss of 0.89p per share (2010:
earnings of 2.00p).
Staff Costs
Staff costs, including incentive costs, were 43.9 per cent of operating revenue
(2010: 40.1 per cent). For 2011, operating revenue excludes revenue from
Spectrum and DBD, and for 2010 it excludes revenue from PBL as it was de-merged.
Liquidity
We extended our medium term evergreen bank facility by one year so that it now
runs to June 2014 with a minimum two year notice period. The facility size is
GBP20m, of which GBP15m is committed and was drawn down at the year end.
Separately, our GBP20m working capital facility (which was unutilised at the year
end) was also extended for a further year.
As at the balance sheet date, available liquidity was GBP50.5m (2010: GBP47.6m),
comprising GBP47.3m (2010: GBP44.2m) of cash and GBP3.2m (2010: GBP3.4m) of gilts and
bonds. This demonstrates the Group's flexibility to undertake a range of
transactions as opportunities arise.
Share Buy-backs and Cancellations
During the year, we bought back and cancelled 3,638,549 shares at a cost of
GBP946,000 in aggregate, equating to an average price of 26.0 pence per share.
Balance Sheet
Our balance sheet remains strong. Total equity at the year end was GBP65.4m (2010:
GBP69.8m). The movement comprised the comprehensive loss for the year of GBP2.0m,
dividends paid of GBP3.7m (including those to minority interests), and GBP0.9m which
the Group spent in the year buying back its own shares, against which there was
an increase of GBP2.3m from the investment by the non controlling interests in
Spectrum.
At the year end we held GBP3.2m of gilts and bonds, GBP1.2m net in quoted equities
and GBP0.7m net in the Lily Partnership. After allowing for GBP15.0m of borrowings
on the Group's bank facilities, net cash was GBP32.3m. There were GBP8.4m of
holdings in the various Puma Funds and GBP1.4m in other holdings, all of which
were unquoted, and (on a gross basis, before allowing for non controlling
interests) GBP4.7m of assets in Spectrum. The remainder of the balance sheet was
GBP13.5m net, which includes GBP17.0m of net market debtors in our stockbroking
subsidiary less various accruals.
Net Asset Value per Share
Net asset value per share at the year end was 24.2p (2010: 26.2p).
Dividend
We propose a final dividend of 0.25p per share (2010: 0.625p). In addition to
the interim dividend of 0.25p (2010: 0.25p) per share, this gives a total
dividend of 0.50p per share (2010: 0.875p per share). The dividend will be paid
on Thursday 3 May, 2012 to shareholders on the register as at Friday
20 April, 2012.
Last year I wrote that the dividend policy would be reviewed by the Directors in
light of the changing fiscal environment, and we shall continue to keep this
under review. Given the changes to the rate of income tax announced in the
recent UK budget, it is the Board's current intention not to declare an interim
dividend for 2012, but to declare a final dividend to be paid in April 2013.
Operating Review
The following operating review reports on our two main areas of focus, namely
Equity Capital Markets and Alternative Asset Class Fund Management/Principal
Finance.
Equity Capital Markets ("ECM")
Overview
In ECM we provide research in selected UK sectors covering c.200 companies,
broking for institutional and professional clients, market-making in c.1,250 UK
stocks, with a particular focus on the AIM segment, and corporate finance for
mid and small cap companies.
Following on from its strong performance in the first half the division had a
resilient performance in the second half trading profitably in the most
challenging of environments and achieving a profit before tax for the year of
GBP5.0m (2010: GBP7.6m). Each of the division's operating businesses continued to
produce robust revenues and we continue to benefit from the division's diverse
income streams. Having a strong balance sheet and continuing to be viewed as a
strong and consistent counterparty by both our clients and market participants
is believed to be a key strength in the current trading environment.
Our natural resource franchise continued to grow and we now have 19 clients
which is an increase of 10 during the second half. Overall we are now retained
adviser to some 60 companies having added a further 3 clients since the start of
2012.
We saw strong interest in our equity income product that was introduced in the
second half of 2011 and look forward to further progress.
Since the year end we have added three senior, experienced individuals to our
sales team providing added breadth to our core UK distribution and also
broadening our reach to (Swiss) Private banks and the Nordic region.
Market-making
After a very strong first half our market-making team had to contend with a back
drop of fragile, volatile and much reduced volumes in the second half of the
year. However, we are pleased to report that the team performed well, although
at a lower level of profitably than in the first half. We continue to benefit
from a relatively low inventory and tight cost structure, and this performance
again demonstrates the strength and robustness of our franchise. Since the start
of 2012 we have seen a recovery in volumes in the AIM and smaller companies
segment. Any continuation of such trend will benefit the business.
We deal direct with the major retail brokers as a Retail Service Provider
through a broad range of electronic links and with the institutions active in
small cap stocks. London Stock Exchange statistics show us to be the third
largest market maker by number of stocks covered, second largest on AIM by
volume of trades and third largest by value.
Research and Sales
2011 saw a continuation of the difficult market conditions seen in 2010
as volumes across the UK market declined. Market participants continued to
grapple with the combination of an uncertain economic outlook and the knock on
effect from regulatory changes which lessened trading activities.
Despite this difficult back drop, the strong and growing positive reputation of
Shore Capital's equity research and distribution capabilities came to the fore
in these prolonged challenging market conditions. An experienced, settled and
expanding team grew market share through its close relationships with their
clients; relationships that were also reflected in an excellent measure in the
Thomson Reuters Extel survey, which positioned Shore Capital in the top ten for
UK Small & Mid Cap research.
Our expanding presence in the market is also reflected in the many road shows
and institutional investor events that we stage, often for FTSE-100 companies,
and our high profile in leading financial journals. In addition to robust
business flows, whereby we gained market share, our high quality research,
distribution and execution also played a key role in the further development of
our corporate client list.
Corporate Finance
Our corporate finance team had a busy year in 2011 completing several notable
transactions including five admissions, two takeovers, eleven placings and a
number of other transactions. The admissions involved companies in a number of
sectors including Clontarf (Oil & Gas Exploration), Beale (Department Stores)
and New World Oil & Gas (Investing Company in Oil & Gas) in the first half of
the year and Sovereign Mines of Africa (Gold Exploration Company) and Inspired
Energy (Provider of Energy Purchasing and Energy Consultancy Services) in the
second half of the year. We also acted for OpSec Security Group on its takeover
by Investcorp and for a consortium of major banks on their offer for Cattles.
The team also achieved continued success in growing its retained client list
adding 18 new clients in the period (excluding new clients floated as
highlighted above) including Cranswick, a FTSE 250 company. We are now retained
adviser to some 60 companies having added a further 3 clients since the period
end.
Overall, there was a significantly improved contribution from corporate finance
and corporate broking.
Since the year end, we have concluded a further fundraising for New World Oil &
Gas raising GBP8.5 million, acted as broker for Tangiers Petroleum in relation to
its admission on AIM and advised Bisichi Mining in relation to a disposal. The
stronger market in resource related stocks continues and this together with the
other marketing initiatives, have generated a healthier pipeline for 2012.
Alternative Asset Class Fund Management and Principal Finance
Overview
The revenue of our alternative asset class fund management business fell 14 per
cent compared to 2010, primarily because of changes in the fee arrangements for
Puma Hotels. The Board took the decision to close two sub-scale activities,
namely the discretionary investment management service for private clients and
the hedge fund of funds to focus on areas where we have strong market niches.
This will have the effect of reducing funds under management by c. GBP90m. We
believe that the asset management business is well-positioned to grow
organically by focusing on the activities in which it has critical mass.
Fund performance
The table below summarises the performance of the various funds we run, both
absolute and relative return, for the calendar year 2011 where applicable and
since inception.
Returns from Absolute Return Products
Performance in 2011 and since Inception (net of management and performance fees)
Inception Date Asset type Performance IRR to
in 2011 Date
% % p.a.
Absolute Return
Products
PumaAbsolute Return May 2003 Fund of (7.0) 4.6
Fund hedge funds
Puma VCTs I & Apr/May 2005 VCT (5.7) 0.7/11.7((3))
II((1) ) pre/post tax
Puma VCTs III and Apr/May 2006 VCT (4.9) (3.4)/7.3((3))
IV((1) ) pre/post tax
Puma VCT V April/May 2008 VCT (1.2) 1.7/12.3((3))
pre/post tax
Puma High Income April/May 2010 VCT (4.0) (2.8)/18.0((3))
VCT pre/post tax
Puma VCT VII April/May 2011 VCT (4.6) (6.1)/56.8((3))
pre/post tax
Puma Sphera Dec 2006 Equity long/short (8.1) 10.0
Puma Hotels July 2004 Hotels (4.0) 10.5
plc((2))
St Peter Port April 2007 Growth Capital (7.0) 2.4
Capital((2))
((1))( ) Weighted composite of VCTs ((2)) Based on last published Net Asset
Values
((3))( ) Post tax returns include the effect of the tax relief gained upon
initial investment
Funds Under Management
Funds under management as at 31 December 2011 were GBP1.21 billion ($1.86
billion), compared to the GBP1.31 billion ($2.06 billion) at 31 December 2010.
Venture Capital
Puma Venture Capital Trusts ("VCTs")
To date we have successfully launched seven Puma VCTs and are currently raising
Puma VCT 8 which will follow the same successful investment strategy, and build
on the market-leading track record, of the previous Puma VCTs.
Each of our VCTs has a focus on providing secured loans to well-run companies
finding it hard to raise finance on attractive terms from banks. They are each
limited-life vehicles, aiming to distribute to their investors the initial
capital and returns after five years. Puma VCTs I-V have each produced the
highest total return of their respective peer groups.
The first two of our VCTs, which were raised in 2005, are the only such VCTs to
have paid out in cash 100p to investors (which relates to a net investment cost
of 60p per share). They have approximately 3p of assets yet to distribute and
are the top performing VCTs in their limited-life peer group. In accordance
with the plans set out in their original prospectus, they are now being wound
up.
Puma VCTs III and IV have also passed their five year period and are in the
process of completing the return of their capital to their shareholders. A
substantial proportion of their respective assets have been successfully
liquidated and they have so far returned 85.5p per share in cash to their
investors (which again relates to a net investment cost of 60p per share). They
have approximately 9p of assets yet to distribute, representing the highest
total return of any limited life VCT raised in that year.
Puma VCT V is the top performing VCT of all those raised in 2007, whilst Puma
High Income VCT (launched in 2010) and Puma VCT VII (launched in 2011) have both
started well and have paid out dividends to date of 14p and 5p respectively.
The continuing tight market in credit for companies since the financial crisis
of 2008 has engendered a strong demand for this type of offering so we are
pleased to have recently launched our eighth VCT for the current tax year and
hope to capitalise on our excellent track record.
St Peter Port Capital ("St Peter Port")
St Peter Port Capital was launched in April 2007 as a pre-IPO fund but has since
widened its investment mandate to include providing bridging finance ahead of
trade sales and other opportunistic investing in development capital
situations. As at 31 December 2011 it had investments in 49 investee companies
and had a NAV per share of 105.35p after payment of an inaugural dividend of 3p
per share and a special dividend of 2p per share. The reduction in NAV over the
year of 7.0% was a particularly resilient performance in the face of another
extremely distressed period for small cap and illiquid securities.
St Peter Port's portfolio is weighted towards stocks exposed to commodities (oil
and gas, mining and resources). The climate, both in the UK and in other
relevant markets such as Canada, is currently conducive to listings of these
kinds of stocks and as a result St Peter Port has benefited. It has had several
significant successes including a very large gain from Brazilian oil explorer
HRT Participacoes em Petroleo ("HRT"), where it generated a gain of GBP20.7m from
an initial investment of $5.0m.
Real Estate
Puma Brandenburg Limited ("PBL")
On 13 February 2012, Puma Brandenburg Holdings Limited ("PBHL") amalgamated with
its subsidiary PBL to achieve a simplified corporate structure. The amalgamated
entity, PBL, for which Shore Capital acts as the property investment adviser, is
no longer listed. Shore Capital Stockbrokers Limited intends to continue to
provide an over-the-counter matched bargain service for holders of the new PBL
shares wishing to trade their shareholdings.
PBHL reported solid results for the 6 months ended 30 September 2011 with a
profit after tax of EUR3.4m generated from revenues of EUR16.4m. A number of rent
increases took effect in October across the Berlin residential portfolio and
irrecoverable costs have been kept low due to fewer repairs and a lower cost
associated with flat refurbishment. The demand for apartments at Mendelsohn
Quartier in Berlin remains strong and sales generated EUR1.7m of cashflow in the
6 month period.
Significant progress was also made on extending debt maturity within PBL's
various subsidiaries. An extension of the "Barrel" portfolio debt was agreed in
November for an additional two years, until August 2014, with an option to
extend for a further two years. The portfolio holds the Hyatt Regency Hotel in
Cologne, an Ibis hotel in Nuremberg and two other smaller assets. During this
period, the Company also secured an extension option for an additional two years
to July 2014 on the Lidl portfolio senior debt. PBL also completed the drawdown
of a new EUR2 million loan facility with Landesbank Berlin AG on part of the
Mendelsohn Quartier Portfolio.
Germany's economy continues to demonstrate a comparatively robust and resilient
position and investor sentiment towards the German real estate market has
increased with investment levels in 2011 hitting EUR23.5bn, 20% up on 2010.
Confidence has particularly improved in the Berlin residential market.
The team continues to actively manage the fundamentals of the portfolio to
assist PBL in meeting its objective of delivering long term value.
Puma Hotels ("PHP")
PHP announced on 3 April 2012 that it had signed a business transfer agreement
providing for the early termination of leases with
Barceló Corporación Empresarial S.A. ("BCE") and various UK subsidiary
undertakings of BCE (together "the BCE Entities"). This agreement relates to
the leases of the hotels owned by PHP ("the Leases") which are held by the BCE
Entities.
The agreement with BCE and the BCE Entities, subject to certain conditions being
met, provides for the termination of the Leases on 25 April 2012. BCE will pay
on the completion date to PHP the net sum of GBP20.25m (excluding VAT) in respect
of the early termination of the Leases. There will also be a completion
adjustment payment made to PHP on completion to take account of various working
capital apportionments.
The agreement also provides for an orderly handover of the operations of the
hotels from the BCE Entities to PHP. Prior to the grant of the Leases in 2007,
PHP itself operated the hotels through the head office infrastructure and team
which it established in Hinckley and that head office will transfer back to PHP
upon completion of the agreement.
In conjunction with the negotiation of the agreement with BCE, PHP has
negotiated with its bankers, Irish Bank Resolution Corporation Limited, an
option to extend its current debt facility until 31 December 2013, subject to
meeting certain conditions.
Shore Capital will continue to provide asset management services to PHP. PHP has
also appointed Chardon Management Ltd ("Chardon") to assist in the management of
the hotels. Chardon is a leading independent UK hotel management company
working on behalf of numerous hotel owners and investment groups. It currently
manages 33 hotels, across the UK, with 3 new openings scheduled in Glasgow,
Windsor and Southend this year.
PHP intends to revive its Paramount Hotels brand as part of a strategy to focus
on the strengths of its hotels in their local and regional markets. It is
intended that a full public re-launch of the Paramount brand will be made
following the successful handover of the hotels from the BCE Entities.
Hedge Funds
Puma Sphera
Asset markets were highly volatile in 2011, impacted by a range of events
including social uprisings in several Arab countries and the re-emergence of the
European debt crisis. Puma Sphera had a difficult year, returning -8.1% with a
volatility of 5.3%. This compares with a return and volatility for the Tel Aviv
Stock Exchange of -20.1% and 11.8% respectively. Nevertheless, Puma Sphera's
investment strategy remains robust and its long term track record highly
attractive; with an IRR since inception of 10% compared with 2.3% for the index.
Puma Absolute Return Fund ("PARF") and Private Client Investment Management
In 2011 PARF had a resilient performance in the face of volatile markets. Over
the year it returned -7.03% per cent, which compared to -6.21% per cent for the
BarclayHedge Fund of Hedge Funds Index (the relevant benchmark). In light of the
size of PARF, which at the year end had a net asset value of c.$14m, Shore
Capital advised the Board of PARF that it considered PARF to be sub-scale and
recommended that it be closed. The Board of PARF has since determined to
liquidate the portfolio and return the proceeds to investors. It is anticipated
that cash will be returned to shareholders on or about 30 April 2012 and that
thereafter PARF will be liquidated.
Following the year end, the Board of Shore Capital has also taken the decision
to cease to provide discretionary investment management services to private
clients. The strategic decision was taken despite the division's strong track
record because it was considered that the offering was sub-scale and it would be
preferable to focus our efforts on building upon our strong record in delivering
investment products. Existing clients have been notified and arrangements made
for an orderly and efficient transfer of funds under management.
In conjunction with the closure of PARF and the private client discretionary
investment management service, Alex Abadie will be stepping down as Chief
Executive Officer of the Asset Management division on 30 April 2012. The Board
would like to thank Alex for his hard work since joining Shore Capital in 2009.
I am pleased to announce that the Board intends to appoint David Kaye,
currently Commercial Director and General Counsel of the Group, to the role with
effect from 1 May 2012.
Principal Finance
Investment in German Telecoms Business
We completed a new investment of EUR2.9m to take a controlling interest in
Spectrum Investments Limited ("Spectrum"). Spectrum was formed in 2011 to
acquire a 58 per cent controlling interest in DBD Deutsche Breitband Dienste
GmbH ("DBD"), a German telecoms business. Spectrum plans to exploit Israeli-
developed radio technology to broaden the use of the radio frequencies licensed.
The aim is to provide services which would enable mobile operators to supply
4G data services to their customers more efficiently and reliably.
As anticipated at the time of the acquisition of DBD, operating expenses have
exceeded revenues within DBD. Our share of these losses through our holding in
Spectrum resulted in a reduction in basic earnings per share of 0.26p for the
period since completion on 13 April 2011. On acquisition of Spectrum's interest
in DBD, EUR3m of new capital was injected into DBD to fund the projected negative
cashflow of DBD until the implementation of the business plan results in new
sources of revenue from business customers.
Since we acquired DBD, there have been a number of significant market
developments in the 3.5GHz band where DBD operates. In particular, this band has
now been included in the range of frequencies to be included within the 4G LTE
standard, which will be used by the next generation of wireless equipment. Some
major manufacturers have adapted their LTE equipment to support 3.5GHz
transmission and a number of operators in Asia-Pacific and Europe plan to deploy
LTE at 3.5GHz. As a result, customer equipment operating at 3.5GHz is also
beginning to be available. These developments demonstrate the potential to
exploit the significant commercial opportunity arising from the growth of 4G in
Germany. Increased corporate activity is expected to accompany these
developments.
Employees and Board Change
I should like to thank our employees for their commitment and hard work during
the year. In another volatile year for the investment markets, they are to be
congratulated on achieving strong operational profitability in both ECM and
Asset Management.
As previously announced, I also welcome to the Board Lynn Bruce, who is a
Chartered Accountant (Scotland) having trained at KPMG. She was the CFO of an
international wealth management group, Stenham Limited, for 11 years where she
was also a member of both their Risk and Audit Committees. Prior to that, she
was the CFO for The Leasing Corporation plc and Financial Controller at AT&T
Capital Europe. At the same time, Chris Cochrane stepped down from the Board and
I would like to thank him for his contribution to Shore Capital.
Current Trading and Prospects
Activity levels so far in 2012 have picked up well from the quieter months of
last year's second half but are still behind the comparable period last year.
Our ECM division has started 2012 with a significantly expanded corporate client
base with more AIM advisory mandates won than any of its competitors in the last
quarter of 2011.
Within the Asset Management division the launch of Puma VCT8 is receiving a warm
reception, building on our excellent track record in the VCT arena.
Our German telecoms investment, Spectrum, held within the Principal Finance
division represents an excellent medium term capital growth prospect while we
have taken steps to limit its short term cash burn in its current phase of
development
The Board will continue to focus on the development of the Group's diverse
niches of expertise with the aim of creating meaningful upside for shareholders.
Howard Shore
Executive Chairman
4 April 2012
Unaudited Consolidated Income Statement
For the year ended 31 December 2011
Excluding
Spectrum/DBD Spectrum/DBD Total Total
2011 2011 2011 2010
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 27,224 2,289 29,513 35,483
Administrative (26,488) (3,595) (30,083) (26,755)
expenditure
-----------------------------------------------------
Operating (loss)/profit 736 (1,306) (570) 8,728
-----------------------------------------------------
Interest income 283 5 288 284
Finance costs (642) - (642) (643)
Negative goodwill on
acquisition of DBD - 49 49 -
-----------------------------------------------------
(359) 54 (305) (359)
-----------------------------------------------------
(Loss)/profit before 377 (1,252) (875) 8,369
taxation
Taxation (189) - (189) (1,977)
-----------------------------------------------------
(Loss)/profit for the
year after taxation
including negative
goodwill but excluding
profit from operations
being demerged 188 (1,252) (1,064) 6,392
Profit after tax from PBL - - - 987
-----------------------------------------------------
Retained (loss)/profit 188 (1,252) (1,064) 7,379
for the year
-----------------------------------------------------
Attributable to:
Equity holders of the (452) (636) (1,088) 4,520
parent
Non controlling interests 640 (616) 24 1,872
Equity holders of demerged - - - 987
assets
-----------------------------------------------------
188 (1,252) (1,064) 7,379
-----------------------------------------------------
(Loss)/earnings per share
Basic (0.19p) (0.26p) (0.45p) 1.83p
Diluted (0.18p) (0.26p) (0.44p) 1.77p
Unaudited Consolidated Statement of Comprehensive Income
For the year ended 31 December 2011
Excluding Spectrum/DBD Spectrum/DBD Total Total
2011 2011 2011 2010
GBP'000 GBP'000 GBP'000 GBP'000
Retained (loss)/profit after
tax for the year 188 (1,252) (1,064) 7,379
----------------------------------------------------
(Losses)/gains on
revaluation of available-
for-sale investments taken
to equity (1,064) - (1,064) 385
----------------------------------------------------
Gains/(losses) on cash flow
hedges 146 - 146 (3,163)
Income tax thereon (39) - (39) 9
----------------------------------------------------
107 - 107 (3,154)
Exchange difference on
translation of foreign
operations (100) 111 11 532
----------------------------------------------------
Other comprehensive
income/(loss) for the
year, net of tax 7 111 118 (2,622)
----------------------------------------------------
Total comprehensive
(loss)/income for the
year, net of tax (869) (1,141) (2,010) 5,142
----------------------------------------------------
Attributable to:
Equity holders of the
parent (1,560) (599) (2,159) 4,929
Non controlling interests 691 (542) 149 1,898
Equity holders of demerged
assets - - - (1,685)
----------------------------------------------------
(869) (1,141) (2,010) 5,142
----------------------------------------------------
Comprehensive
(loss)/earnings per share
Basic (0.64p) (0.25p) (0.89p) 2.00p
Diluted (0.63p) (0.24p) (0.87p) 1.93p
Unaudited Consolidated Statement of Financial Position
As at 31 December 2011
2011 2010
GBP'000 GBP'000
Non-current assets
Goodwill 381 381
Intangible assets 4,251 -
Property, plant & equipment 12,516 12,710
Available-for-sale investments 4,505 11,167
Deferred tax asset - 340
---------- ---------
21,653 24,598
---------- ---------
Current assets
Bull positions and other holdings at fair value 7,048 8,202
Available-for-sale investments 450 -
Trade and other receivables 42,681 60,759
Tax assets 629 -
Cash and cash equivalents 47,305 44,249
---------- ---------
98,113 113,210
---------- ---------
Total assets 119,766 137,808
---------- ---------
Current liabilities
Bear positions (786) (1,343)
Trade and other payables (25,267) (38,508)
Derivatives (360) (806)
Tax liabilities - (1,443)
Borrowings (345) (339)
---------- ---------
(26,758) (42,439)
---------- ---------
Non-current liabilities
Borrowings (27,264) (25,424)
Deferred tax liability (279) -
Provision for liabilities and charges (36) (172)
---------- ---------
(27,579) (25,596)
---------- ---------
Total liabilities (54,337) (68,035)
---------- ---------
Net assets 65,429 69,773
---------- ---------
Capital and reserves
Called up share capital - -
Share premium 336 170
Merger reserve 27,198 27,198
Capital redemption reserve - -
Own shares - -
Other reserves 1,187 2,113
Retained earnings 29,867 34,484
---------- ---------
Equity attributable to equity holders of the parent 58,588 63,965
Non controlling interest 6,841 5,808
---------- ---------
Total equity 65,429 69,773
---------- ---------
Unaudited Consolidated Statement of Changes in Equity
For the year ended 31 December 2011
Share Capital Non
Share Premium Merger redemption Own Other Retained controlling
capital account reserve reserve shares Reserves earnings interest Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2010 5,590 20,112 - 1,511 (9,070) 2,303 112,552 8,508 141,506
Retained profit for the
year - - - - - - 4,520 1,872 6,392
Revaluation of
available for sale
investments - - - - - 385 - - 385
Credit in relation to
share based payments - - - - - 161 - - 161
Foreign currency
translation - - - - - - 43 31 74
Deferred tax charge
recognised directly in
equity - - - - - (731) - - (731)
Valuation change on
cash flow hedge - - - - - (28) - (5) (33)
Equity dividends paid - - - - - - (2,154) - (2,154)
Dividends paid to non
controlling interests - - - - - - - (1,301) (1,301)
Shares issued before
the re-organisation in
respect of options
exercised 29 230 - - 55 - - - 314
Repurchase/cancellation
of own shares (147) - - 147 - - (3,419) - (3,419)
Changes associated with
the demerged assets:
Profit for the period
from PBL - - - - - - 937 50 987
Valuation change on
cash flow hedges - - - - - (2,973) - (157) (3,130)
Foreign currency
translation - - - - - 435 - 23 458
Share issued in
subsidiaries to non
controlling interests - - - - - - - 251 251
Changes associated with
the corporate re-
organisation: - - - - - - - - -
De-merger of PBL - - - - - 2,561 (68,976) (3,518) (69,933)
Cancellation of own
shares - - - - 9,015 - (9,015) - -
Re-organisation of
share capital (net of
associated costs) (5,472) (20,342) 27,198 (1,658) - - - - (274)
Shares issued after the
re-organisation in
respect of options
exercised - 170 - - - - - - 170
Share/participations
issued in subsidiaries
to non controlling
interests - - - - - - - 150 150
Cancellation of
share/participations in
subsidiaries - - - - - - (4) (96) (100)
-----------------------------------------------------------------------------------
At 31 December 2010 - 170 27,198 - - 2,113 34,484 5,808 69,773
-----------------------------------------------------------------------------------
Unaudited Consolidated Statement of Changes in Equity
For the year ended 31 December 2011
Share Capital Non
Share Premium Merger redemption Own Other Retained controlling
capital account reserve reserve shares Reserves earnings interest Total
At 1 January 2011 - 170 27,198 - - 2,113 34,484 5,808 69,773
Retained loss for the
year - - - - - - (1,088) 24 (1,064)
Revaluation of
available for sale
investments - - - - - (1,064) - - (1,064)
Credit in relation to
share based payments - - - - - 52 - - 52
Foreign currency
translation - - - - - - (93) 104 11
Valuation change on
cash flow hedge - - - - - 86 - 21 107
Equity dividends paid - - - - - - (2,132) - (2,132)
Dividends paid to non
controlling interests - - - - - - - (1,568) (1,568)
Shares issued in
respect of options
exercised - 166 - - - - - - 166
Repurchase/cancellation
of own shares - - - - - - (946) - (946)
Deferred tax charge
recognised directly in
equity - - - - - - (298) - (298)
Investment by non
controlling interest in
subsidiaries including
Spectrum - - - - - - (60) 2,452 2,392
--------------------------------------------------------------------------------
At 31 December 2011 - 336 27,198 - - 1,187 29,867 6,841 65,429
--------------------------------------------------------------------------------
Unaudited Consolidated Cash Flow Statement
For the year ended 31 December 2011
2011 2010
GBP'000 GBP'000
Cash flows from operating activities
Operating (loss )/profit (570) 8,728
Adjustments for:
Depreciation charges 868 921
Share-based payment expense 52 161
Loss on sale of fixed assets 27 -
Other Losses/(Gains) on AFS investments 4,682 (224)
Decrease in provision for National Insurance on options (136) (557)
---------- ---------
Operating cash flows before movements in working capital 4,923 9,029
Decrease/(Increase) in trade and other receivables 20,104 (26,496)
(Decrease )/Increase in trade and other payables (18,778) 17,851
Decrease in bear positions (557) (1,900)
Decrease/(Increase) in bull positions 1,154 2,794
---------- ---------
Cash generated by operations 6,846 1,278
Interest paid (642) (643)
Corporation tax paid (1,979) (3,385)
---------- ---------
Net cash generated/(utilised) by operating activities 4,225 (2,750)
---------- ---------
Cash flows from investing activities
Purchase of fixed assets (536) (570)
Sale of fixed assets 11 -
Acquisition of subsidiary net of cash acquired (914) -
Purchase of additional intangible assets (295) -
Purchase of AFS investments (74) (451)
Sale of AFS investments 540 -
Purchase of shares issued by PBL and de-merged - (4,749)
Interest received 288 284
---------- ---------
Net cash utilised by investing activities (980) (5,486)
---------- ---------
Cash flows from financing activities
Shares purchased in subsidiary from Non Controlling
Interests - (100)
Costs of corporate reorganisation - (274)
Shares/participations issued to Non Controlling Interests
in subsidiaries including Spectrum 2,392 150
Shares issued in respect of exercise of options/share
scheme 166 484
Repurchase of shares (946) (3,419)
Increase/(decrease) in borrowings 1,659 (339)
Dividends paid to Equity shareholders (2,132) (2,154)
Dividends paid to Non Controlling Interests (1,568) (1,301)
---------- ---------
Net cash utilised by financing activities (429) (6,953)
---------- ---------
Net increase/(decrease) in cash and cash equivalents 2,816 (15,189)
Effects of exchange rate changes 240 36
Cash and cash equivalents at the beginning of the year 44,249 59,402
---------- ---------
Cash and cash equivalents at the end of the year 47,305 44,249
---------- ---------
Notes
1. Financial information
Basis of preparation
The annual financial statements of Shore Capital Group Limited (the "Company")
have been prepared in accordance with International Financial Reporting
Standards ("IFRS") as adopted by the European Union ("Adopted IFRS").
Presentation of the financial statements and financial information
The Company was formed in the prior year on 18 January 2010. On 26 March 2010 it
acquired the entire share capital of Shore Capital Group plc. In accordance with
merger accounting principles, the comparative period in these financial
statements covers the twelve month period to 31 December 2010 including the
period prior to the acquisition during which Puma Brandenburg Limited ("PBL")
was part of the Group prior to its de-merger.
The financial information set out in the announcement does not constitute the
company's statutory accounts for the year ended 31 December 2011 within the
meaning of section 244 of the Companies (Guernsey) Law, 2008.
The financial information for the year ended 31 December 2010 is derived from
the statutory accounts of the company for that year. The auditors reported on
those accounts; their report was unqualified, did not draw attention to any
matters by way of emphasis without qualifying their report and did not contain a
statement under section 263(2) or (3) of the Companies (Guernsey) Law, 2008.
Those accounts were prepared under Adopted IFRS and have been reported on by
the Company's auditors and delivered to the Guernsey registry office.
The audit of the statutory accounts of Shore Capital Group Limited for the year
ended 31 December 2011 is not yet complete. These accounts will be finalised on
the basis of the financial information presented by the directors in this
preliminary announcement.
The statutory accounts will be prepared in accordance with IFRS as adopted by
the European Union. Details of the accounting policies that will be applied in
the statutory accounts are set out in the 2010 Annual Report and Accounts of the
Company.
A copy of this statement is available on the Company's website at
www.shorecap.gg.
The financial statements have been prepared on the historical cost basis, except
for the revaluation of certain financial instruments. The financial statements
are rounded to the nearest thousand except where otherwise indicated.
Adoption of new and revised standards
In the current year, the adoption of the following new and revised Standards and
Interpretations has not had any significant impact on the amounts reported in
these financial statements but may impact the accounting for future transactions
and arrangements.
IAS 32 (amended) Classification of Rights The Amendment clarifies the
Issues classification of rights, options
and warrants issued to acquire a
fixed number of an entity's own
non derivative equity instruments.
IFRIC 19 Extinguishing Financial Liabilities The Interpretation addresses
with Equity Instruments divergent accounting by entities
issuing equity instruments in
order to extinguish all or part of
a financial liability (often
referred to as "debt for equity
swaps").
IFRS 3 Business Combinations IFRS 3 has been amended such that
only those non-controlling
interests which are current
ownership interests and which
entitle their holders to a
proportionate share of net assets
upon liquidation can be measured
at fair value or the proportionate
share of net identifiable assets.
Other non-controlling interests
are measured at fair value, unless
another measurement basis is
required by IFRS.
IFRS 7 Financial Instrument: Disclosure The amendment clarifies the
required level of disclosure
around credit risk and collateral
held and provides relief from
disclosure of renegotiation
financial assets.
The impact of this amendment has
been to reduce the level of
disclosure provided on collateral
that the entity holds as security
on financial assets that are past
due or impaired.
Standards in issue but not yet effective
At the date of authorisation of these financial statements, the following
Standards and Interpretations which have not been applied in these financial
statements were in issue but not yet effective (and in some cases had not yet
been adopted by the EU):
IFRS 9 Financial Instruments
IFRS 10 Consolidated Financial Statements
IFRS 11 Joint Arrangements
IFRS 12 Disclosure of Interests in Other Entities
IFRS 13 Fair Value Measurement
IAS 1 (amended) Presentation of Items of Other Comprehensive Income
IAS 12 (amended) Deferred Tax: Recovery of Underlying Assets
IAS 19 (revised) Employee Benefits
IAS 27 (revised) Separate Financial Statements
IAS 28 (revised) Investments in Associates and Joint Ventures
The Directors do not expect that the adoption of the standards listed above will
have a material impact on the financial statements of the Group in the period of
initial and future application, except as follows:
* IFRS 9 will impact both the measurement and disclosure of financial
instruments
* IFRS 12 will impact the disclosure of interests the Group has in other
entities;
* IFRS 13 will impact the measurement of fair value for certain assets and
liabilities as well as the associated disclosures.
2. Segment Information
Additional analysis of revenue and results is presented in the Chairman's
Statement on page 4.
For management purposes, the group is organised into business units based on
their services, and has five reportable operating segments as follows:
* Equity Capital Markets provides research in selected sectors, broking for
institutional and professional clients, market-making in AIM and small cap
stocks and corporate finance for mid and small cap companies.
* Asset Management provides advisory and discretionary fund management
services, and manages specialist funds invested in alternative asset
classes.
* Central Costs comprises the costs of the group's central management team and
structure
* Balance Sheet / Principal Finance comprises investments and other holdings
acquired, together with principal finance activities conducted, using our
own balance sheet resources.
* Spectrum / DBD comprises the group's investment in a German-based telecoms
business
Management monitors the operating results of its business segments separately
for the purpose of making decisions about resource allocation and performance
assessment. Segmental performance is evaluated based on operating profit or
loss.
Transfer prices between operating segments are on an arm's-length basis in a
manner similar to transactions with third parties.
Balance
Equity Sheet and
Year ended 31 Capital Asset Central Principal
December 2011 Markets Management costs Finance Spectrum/DBD Consolidated
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 22,545 8,563 - (3,884) 2,289 29,513
------------------------------------------------------------------
Results
Depreciation 129 180 54 505 - 868
Interest
expense (57) - (27) (558) - (642)
Profit/(loss)
before tax 5,018 2,224 (725) (6,140) (1,252) (875)
------------------------------------------------------------------
Assets 47,883 5,800 1,765 56,820 7,498 119,766
------------------------------------------------------------------
Liabilities (22,375) (1,337) (1,075) (25,529) (4,021) (54,337)
------------------------------------------------------------------
No material amounts of revenue or profit before tax were generated outside of
Europe.
Balance
Equity Sheet and
Year ended 31 Capital Asset Central Principal
December 2010 Markets Management costs Finance Spectrum/DBD Consolidated
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 26,268 9,952 - (737) - 35,483
------------------------------------------------------------------
Results
Depreciation 127 205 45 544 - 921
Interest
expense (22) - (22) (599) - (643)
Profit/(loss)
before tax 7,632 4,118 (496) (2,885) - 8,369
------------------------------------------------------------------
Assets 63,395 7,467 1,535 65,411 - 137,808
------------------------------------------------------------------
Liabilities (40,179) (1,407) (286) (26,163) - (68,035)
------------------------------------------------------------------
No material amounts of revenue or profit before tax were generated outside of
Europe.
3. Acquisition of subsidiary
On 10 March 2011 the Group subscribed for 51 per cent of the share capital of
Spectrum Investments Limited ("Spectrum") a newly incorporated company. On 13
April 2011 Spectrum completed the purchase of 58.35 per cent of the share
capital of Deutsche Breitband Dienste GmbH ("DBD"), a German telecoms business.
This was achieved through both the acquisition of existing shares and a
subscription for new shares in DBD. Spectrum plans to exploit Israeli-developed
radio technology to expand the use of the use of the radio frequencies licensed.
The aim is to provide services which would enable mobile operators to supply 4G
data services to their customers more efficiently and reliably.
The Group has elected to measure the non controlling interests in both Spectrum
and DBD at their fair value.
Recognised amounts of assets acquired and liabilities assumed:
i. Spectrum
As a newly incorporated company there were no prior assets or liabilities when
Shore Capital subscribed for shares of Spectrum. The company's only asset was
the cash subscribed and accordingly there was no goodwill. The fair value of the
non controlling interests in Spectrum has been recognised as their share of the
monies subscribed into Spectrum.
ii. DBD
Book value Fair value
( GBP'000) ( GBP'000)
Tangible and intangible fixed assets 20,332 4,174
Other debtors 1,592 1,592
Cash 3,013 3,013
Deferred taxes and prepaid expenses 434 434
Accrued liabilities (1,442) (1,442)
Short term liabilities (956) (956)
Long term liabilities (48,227) (2,839)
--------------------------------
Total identifiable assets (25,254) 3,976
----------------------
Less share of assets acquired attributable to Non Controlling
interests -
-----------
3,976
Goodwill (49)
-----------
Total consideration 3,927
-----------
Net cash outflow arising on acquisition:
Consideration paid 3,927
Less: cash and cash equivalent balances
acquired (3,013)
-----------
Net cash outflow 914
-----------
The tangible fixed assets represent equipment currently installed and available
for new customers, and the intangible fixed assets represent the spectrum
licences held by DBD. Their fair value was GBP4,174,000 at the acquisition date.
The carrying value of the current assets and of the current liabilities each
approximated their fair value.
The long term liabilities represent loans to the company from its shareholders.
These obligations are only repayable to the extent that DBD has surplus net
assets and this is the basis used to determine their fair value. This fair value
has then been adjusted to only reflect the long term liabilities due to the non
controlling interests, as the balance of the liabilities eliminate on
consolidation. As a result, the fair value recognised was GBP2,839,000 at the
acquisition date.
The fair value of the non controlling interests in DBD has been recognised as
their share of the fair valued assets and liabilities at the acquisition date
(as above) and their share of the results since acquisition.
In line with the anticipated business plan, during the period Spectrum and DBD
combined have contributed revenues of GBP2,289,000 and a loss of GBP1,252,000 to the
results of the Group.
Goodwill
The negative goodwill arising on acquisition of GBP49,000 comprises the amount by
which the fair value of the expected benefit of owning the rights to the
spectrum held by DBD, once the spectrum has been expanded using Israeli-
developed radio technology, exceeds the acquisition price paid.
4. Rates of Dividends Paid and Proposed
2011 2010
GBP'000 GBP'000
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2010 of 0.625p per
share (2009 second interim dividend: 0.625p) 1,528 1,537
Interim dividend for the year ended 31 December 2011 of 0.25p per
share (2010: 0.25p) 604 617
------------
2,132 2,154
------------
Proposed final interim dividend for the year ended 31 December 2011
of 0.25p per share (2010: final dividend of 0.625p) 604
-------
5. Earnings per Share
The earnings and number of shares in issue or to be issued used in calculating
the earnings per share and diluted earnings per share in accordance with IAS 33
were as follows:
2011 2010
Basic Diluted Basic Diluted
(Loss)/earnings ( GBP) (1,088,000) (1,088,000) 4,520,000 4,520,000
Number of shares 243,038,613 247,529,383 246,919,948 254,870,584
(Loss)/earnings per share (0.45) (0.44) 1.83 1.77
------------------------------------------------
Comprehensive (loss)/earnings (2,159,000) (2,159,000) 4,929,000 4,929,000
( GBP)
Number of shares 243,038,613 247,529,383 246,919,948 254,870,584
(Loss)/earnings per share (0.89) (0.87) 2.00 1.93
------------------------------------------------
Calculation of number of 2011 2010
shares
Basic Diluted Basic Diluted
Weighted average number of 243,038,613 243,038,613 246,919,948 246,919,948
shares
Dilutive effect of share - 4,490,770 - 7,950,636
option schemes
------------------------------------------------
243,038,613 247,529,383 246,919,948 254,870,584
------------------------------------------------
As at 31 December 2011 there were 241,639,601 ordinary shares in issue (2010:
244,450,877).
A copy of this announcement is available on the Company's website
at www.shorecap.gg. The annual report & accounts will be sent to shareholders in
due course and will also be available on the Company's website from the date of
posting.
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Shore Capital Group Limited via Thomson Reuters ONE
[HUG#1599926]
|
