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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Shore Capital Group Limited | LSE:SGR | London | Ordinary Share | GG00BGCZJ741 | ORD NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 222.50 | 145.00 | 300.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMSGR
RNS Number : 6222J
Shore Capital Group Limited
13 September 2016
Shore Capital Group Limited
("Shore Capital," the "Group" or the "Company")
Interim results for the six months ended 30 June 2016
Shore Capital, the independent investment group specialising in capital markets, principal finance and asset management, today announces its interim results for the six months ended 30 June 2016.
Financial highlights
Hot Features
Premium
-- Revenue of GBP18.0 million (2015: GBP25.9 million,
GBP16.7 million excluding prior year impact
of licence sales) up 7.8% excluding licence
sales
-- Capital Markets revenues up 4.9% to GBP13.1
million (2015: GBP12.4 million) generating
profit before tax of GBP3.0 million, with
a net margin of 23.0%
-- Asset Management revenues up 7.2% to GBP5.2
million (2015: GBP4.9 million), generating
profit before tax of GBP1.3 million, with
a net margin of 25.0%
-- Profit before tax of GBP2.4 million (2015:
GBP9.5 million)
-- Earnings per share of 6.5p (2015: 20.8p)
Operational highlights
-- Capital Markets advised on four IPOs and five
secondary fundraisings, including the second
largest IPO fundraising of H1 2016, the Main
Market listing of Motorpoint Group plc, raising
GBP100 million
-- Recent client wins included Dairy Crest Group
plc; Chesnara plc; Stride Gaming plc; and Earthport
plc
-- Puma Investments again achieved the largest
limited life VCT fundraising of the tax year
(over half of the total raised in its category)
and significant inflows to its Private Client
Investment offerings continued
-- Brandenburg Realty made its second acquisition
in May 2016 - a EUR32 million commercial and
residential portfolio
Commenting on the results, Howard Shore, Executive Chairman, said:
"In a first half overshadowed by uncertainty preceding Britain's referendum on membership of the EU, it is pleasing to see the progress in our Capital Markets and Asset Management divisions, demonstrating the growth opportunity when market conditions improve.
"The market malaise following Britain's vote to leave the EU appears to be short-lived helped by the speed with which a new Prime Minister and Cabinet was put in place and businesses and the investment community are starting to adapt to the new environment.
"Given our independent status we believe we have the flexibility to take advantage of the opportunities that Brexit will create. We hope that Brexit will provide an opportunity to remove some of the regulations that impede the UK's ability to compete with the rest of the world."
- Ends -
Enquiries:
Shore Capital +44 (0) 20 7468 Howard Shore, Executive 7911 Chairman +44 (0) 14 8172 Lynn Bruce, Director 8902 Grant Thornton UK LLP (Nominated Adviser) Philip Secrett +44 (0) 20 7383 Jamie Barklem 5100 Bell Pottinger (Public Relations) Olly Scott Charles Stewart +44 (0) 20 3772 Georgia Way 2500
About Shore Capital
Shore Capital is an AIM quoted independent investment group. Founded and majority owned by entrepreneurs, for three decades Shore Capital has been helping entrepreneurial businesses reach their full potential, find committed long term investors and develop into significant enterprises. The business offers innovative corporate advice; a leading market making business; some of the most respected investment research available in the UK; and a diverse range of high quality investment opportunities, including its hugely successful VCTs and principal finance activities.
The Group is based in Guernsey, London, Liverpool, Edinburgh and Berlin. Shore Capital Stockbrokers Limited, Shore Capital and Corporate Limited, Shore Capital Limited and Puma Investment Management Limited are each authorised and regulated by the Financial Conduct Authority. Shore Capital Stockbrokers Limited is a member of the London Stock Exchange.
www.shorecap.gg
Chairman's statement
Introduction
In a first half overshadowed by uncertainty, particularly in the two months preceding Britain's referendum on membership of the EU, it is pleasing to see the progress in our Capital Markets and Asset Management divisions, demonstrating the growth opportunity when market conditions improve.
Stripping out the sale of German spectrum licenses in June 2015 to more accurately compare performance in 2016 versus 2015, the Group increased revenues by 7.8%. Revenues from the Capital Markets division increased by 4.9% to GBP13.1 million (2015: GBP12.4 million) generating profit before tax of GBP3.0 million, with a net margin of 23.0%. In Asset Management revenues increased 7.2% to GBP5.2 million (2015: GBP4.9 million), generating profit before tax of GBP1.3 million, representing a net margin of 25.0% (2015: 24.1%).
In Capital Markets we have added another eight retained clients; committed new investment to our research and sales capabilities; and again been active in transactions. The team advised on four IPOs, including London's second largest listing of the year and five secondary fundraisings. It acted as joint financial adviser and joint broker to Market Tech Holdings Limited in connection with its move from AIM to the Main Market and, post period end, acted for Poundland Group on its c.GBP600 million offer by Steinhoff Europe.
We have expanded our core consumer and financial teams whilst developing our presence in digital technology; media; and house building and building materials. In market making, we continued to provide a principal source of liquidity for UK equities throughout the period, maintaining our position as the third largest market maker on the London Stock Exchange.
Our Capital Markets business has benefited from its reputation for high quality advice, ideas and execution. Consequently, there is much to be optimistic about in our business as market sentiment improves. In the short term, as the big banks digest the implications of Brexit for their businesses, there will be opportunities for the Group. In the longer term, as the implications of the UK's decision to leave the EU become clearer and negotiations reach their conclusion, we can also look forward to the possibility of some EU-originated regulations that stifle growth in our sector being rolled-back, enabling us to compete more effectively with the rest of the world.
In Asset Management we again experienced substantial demand for our private client investment opportunities in VCTs and other tax-efficient structures; and continued to successfully advise institutional funds on their investment strategies. The diverse nature of revenue growth in the Asset Management division reflects the team's efforts to expand its offering and during the period it invested in additional operational capacity.
On the institutional advisory side of the Asset Management division's activities, Brandenburg Realty made its second acquisition in May 2016 of a EUR32 million commercial and residential portfolio located in the city of Potsdam near Berlin and continues to seek additional acquisition opportunities for the fund.
The latest of our successful Puma VCTs set a new fundraising record and accounted for over half of all funds raised in the 2015/16 limited life VCT market. Regardless of the tax-efficient structure into which private clients place their funds, the asset-backed investment strategy underpinning them has continued to achieve considerable success. With the withdrawal from our market of mainstream banks, our approach to SME funding continues to enjoy high demand, such that we have invested to expand our capabilities, underpinning continued growth in our private client activities.
It is also worth noting the success of Puma's AIM IHT Service, a discretionary portfolio that seeks to mitigate Inheritance Tax by investing in carefully selected AIM shares. It celebrated its two year anniversary at the end of the period, over which time it has delivered a 21.9% return, outperforming the FTSE AIM All Share Index by 31.8%.
Finally, in Principal Finance, having realised significant gains from the sale of a number of licences in 2015, DBD continues to hold its remaining 32 regional radio spectrum licences which cover many of Germany's largest metropolitan centres - including Berlin, Leipzig, Dresden, Düsseldorf and Hanover.
Financial review
Income and expenditure
Revenue for the period decreased by 30.6% to GBP18.0 million (2015: GBP25.9 million) whilst administrative expenses decreased by 4.9% to GBP15.5 million (2015: GBP16.3 million), generating an operating profit of GBP2.5 million (2015: GBP9.6 million). Group profit before tax decreased by 74.5% to GBP2.4 million (2015: GBP9.5 million). Comparisons to the prior year are impacted by the sale of spectrum licences in June 2015; excluding this sale, revenue for the period increased 7.8% year-on-year.
Revenue from the Capital Markets division increased by 4.9% to GBP13.1 million (2015: GBP12.4 million). Profit before tax was down 1.4% to GBP3.0 million (2015: GBP3.1 million), with a net margin of 23.0% (2015: 24.7%).
Revenue from the Asset Management division was up 7.2% to GBP5.2 million (2015: GBP4.9 million), generating profit before tax of GBP1.3 million (up 11.2% from 2015: GBP1.2 million), representing a net margin of 25.0% (2015: 24.1%).
The Principal Finance division recorded a pre-tax loss of GBP1.2 million (2015: profit of GBP5.8 million).
Basic earnings per share
The Group generated basic earnings per share of 6.5p (2015: 20.8p).
Comprehensive earnings per share
On a comprehensive basis, the Group generated earnings of 7.6p per share (2015: 21.2p).
Liquidity
As at the balance sheet date, available liquidity was GBP24.8 million (2015: GBP39.1 million), comprising GBP16.0 million (2015: GBP37.4 million) of cash and GBP8.8 million (2015: GBP1.7 million) of gilts and bonds. In addition, the Group has a GBP20 million working capital facility which was undrawn at the period end.
This liquidity underpins the Group's continuing ability to undertake a range of transactions as opportunities arise in the near term.
Balance sheet
The Group's balance sheet remains strong. Total equity at the period end was GBP66.9 million (2015: GBP78.2 million), the reduction reflecting both a capital distribution to equity shareholders of GBP10 million and the minority interest share of a capital distribution paid by Spectrum Investments at the end of 2015.
In addition to the GBP16.0 million of cash and GBP8.8 million of gilts and bonds (as referred to above), at the period end the Group held GBP2.9 million in various of its Puma Funds; GBP2.9 million net in quoted equities; and a further GBP3.8 million in other unquoted holdings.
The remainder of the balance sheet was GBP32.5 million net, which included GBP23.5 million of net market and other debtors in the Company's stockbroking subsidiary. In addition, the remaining licences held in Spectrum Investments were valued at GBP2.1 million (on a gross basis, before allowing for minority interests).
Net Asset Value per Share
Net asset value per share at the period end was 270.3p (2015: 277.7p).
Dividend
The Board does not propose to pay an interim dividend for the period (2015: nil).
Operating review
Capital Markets
Overview
The Capital Markets division recorded a successful first half of 2016, increasing revenues in a tough market environment; growing its client base; and developing its service offering.
The team participated in a significant number of high-profile transactions, including the second largest London IPO in the second quarter, as well as adding eight new retained corporate clients. Post period end the team acted for Poundland Group plc on its c.GBP600 million offer by Steinhoff Europe AG.
Additional investment has been made to augment our research and distribution proposition, enhancing our sector coverage across core consumer; financials; digital technology; media; and house building and building materials.
Our Market Making business has performed well in the face of substantial market headwinds, delivering a good level of profitability and providing a key source of liquidity.
The Fixed Income business has already made a positive contribution to the Group, having been profitable from its beginning, widening the Group's range of capital raising options for clients.
The business continues to invest in high calibre individuals and teams where the Company identifies opportunities for incremental growth.
Corporate Finance
During the period under review the team has been very active and participated in a number of significant transactions including four IPOs and five secondary fundraisings. Notable transactions completed during the period included:
-- acting as co-bookrunner on the Main Market
IPO of Motorpoint Group plc, the second largest
IPO in London in Q2, raising GBP100 million;
-- acting as joint bookrunner on the placing by
Vernalis plc, raising GBP40 million; and
-- acting as nominated adviser and sole broker
on the IPOs of Cerillion plc and Yü Group
plc.
In the advisory space, the team acted as joint financial adviser and joint broker to Market Tech Holdings Limited in connection with its move from AIM to the Main Market.
The Company continues to achieve success in growing its retained client list and during the period added eight new retained corporate clients, including FTSE 250 Dairy Crest Group plc, Chesnara plc, Stride Gaming plc, and Earthport plc.
Research and Sales
The team's equity capital research and idea generation continued to grow its presence and reputation for high quality in challenging market conditions. The solidity, experience and stability of the Shore Capital research and sales team is increasingly valued by the investment community where insight and opinions from established market practitioners is appreciated.
The breadth and depth of our equity research continues to increase. We have expanded our core consumer and financial teams whilst developing our presence in digital technology; media; and house building and building materials. The capability of our research team is evident in fund manager surveys where Shore Capital scores highly in general and across our core sectors in Thomson Extel; the quality of our forecasts and our stock picking continued to be recognised by Starmine.
The strong profile and warm reception for Shore Capital's overall research and distribution proposition also supports the Company's primary activities where we remain very active in our core segments. Strong primary activity in the healthcare, retail, natural resources and technology segments plus key brokership wins in the financial sector reflect the brand's growing presence in corporate markets.
Market Making
Despite difficult market conditions in the first half of the year, the Group's market making operation performed well, maintaining revenue and profits in line with the previous year. Trading volumes were 11% higher than the first half of 2015, a very commendable result in light of market uncertainty ahead of the Brexit vote.
The team positioned its inventory prudently throughout the period, including the period leading up to the Brexit vote, enabling us to provide significant liquidity in the immediate aftermath of the referendum result.
Although clearly sensitive to the overall market environment, Shore Capital remains focused and adaptable to changes in trading conditions and to the needs of clients. Market Making operations continue to benefit from the team's wide stock coverage and its reputation as a strong and trusted counterparty. The market making team comprises highly experienced traders who are able to identify revenue opportunities despite challenging market conditions, whilst operating within a risk framework that ensures loss days are a rare occurrence.
Fixed Income
The fixed income team enjoyed their first full six month period within the Group following their move from Edmond de Rothschild in late 2015 and has performed very credibly, making a positive contribution in what has been a highly challenging environment.
The fixed income team's extensive experience enables the Group to offer its clients a fuller range of financing options for mid-sized corporates, creating exciting opportunities for growth in the Capital Markets business.
Asset Management
Overview
The Asset Management division enjoyed notable successes during the period across both its Institutional and Private Client businesses.
In the Institutional business Brandenburg Realty completed its second acquisition for EUR32 million in the period. Puma Brandenburg completed a EUR90 million refinancing as well as making other advances in implementing its strategic objectives.
The Private Client division again achieved a record-breaking fundraise for its latest VCT, Puma VCT 12, as well as securing and allotting significant inflows to the Puma EIS Service. Puma Heritage and the Puma AIM Inheritance Tax Service celebrated their third and second anniversaries respectively, both continuing to deliver impressive levels of return for investors.
Institutional Asset Management
Brandenburg Realty
Brandenburg Realty (the "Fund") completed its final close on 30 June 2015, raising EUR150 million from institutional investors and family offices, (predominantly from the United States) and includes a co-investment commitment of EUR7.7 million from Puma Brandenburg Limited. Shore Capital has also made a commitment of EUR12.5 million to the Fund and is providing advisory services at a local level, deploying its significant experience gained through the Group's work with Puma Brandenburg. The Fund focuses on German real estate, primarily on the acquisition of well-located, high quality residential buildings and offices in major German cities, especially in Berlin.
During the period, the Fund made its second acquisition in May 2016 of a EUR32 million commercial and residential portfolio located in the city of Potsdam near Berlin. This portfolio benefits from high quality commercial tenants and the possibility to develop additional residential space. The asset advisory team is assisting the Fund to implement the agreed strategy for this asset. In parallel we continue to seek and recommend additional acquisition opportunities for the Fund.
Puma Brandenburg Limited ("PBL")
The Group has continued to assist PBL to achieve significant success across its portfolio.
Achievements in the period with which the Group has assisted PBL include:
-- the planning and execution of a capital project
to add and enlarge conference and food and
beverage facilities at the Hyatt Regency, Cologne.
These works, which are co-funded by Hyatt,
commenced in June 2016.
-- the successful drawdown in June 2016 of an
eight year, EUR90 million loan facility for
the refinancing of a commercial portfolio.
The portfolio includes the Hyatt Regency Cologne
and IBIS Nuremberg and was refinanced with
an all-in cost of 2.19%, including the cost
of an eight year swap; and
-- the execution of a further framework agreement
for the refurbishment of four Lidl stores and
the sale of three other stores to Lidl for
EUR5.75 million.
St Peter Port Capital ("SPPC")
SPPC announced its results for the year ended 31 March 2016 on 4 July 2016. As at that date, it had investments in 19 companies and reported that it had generated GBP588,000 from realisations since 1 April 2015.
The company reported that the majority of value in its investment portfolio now resided in its five largest investments and that whilst management of each of these five companies were delivering against their own milestones, each company remained susceptible to geo-political and/or financing challenges which were likely to determine their future success.
SPPC continues to seek liquidity opportunities and recognises that the majority of its shareholders will likely vote next year for an orderly winding-up of the company or for some other mechanism which will deliver shareholder value.
Private Client Investments
The Group's private client investments business, Puma Investments, continues to make exciting progress. Of particular note are the successful launch of Puma VCT 12, which closed during the period having raised GBP31 million - accounting for more than half of the total funds raised in the limited-life VCT market in the 2015/16 tax year - and the continued expansion of Puma EIS, which was fully subscribed for the same period and now has GBP40 million in the service.
Puma Venture Capital Trusts ("VCTs")
The Group's Puma VCTs are each limited-life vehicles, aiming to distribute the initial capital and returns to their investors after five years. Since 2005 over GBP220 million has been raised for Puma VCTs and GBP85 million has been distributed to their shareholders.
Puma's market-leading VCT track record is reflected in the fact that the most recently fully distributed fund, Puma VCT V, is the most successful limited-life VCT in the 20 year history of the industry. Puma VCTs 1 to 4 have each produced the highest total return of their respective peer groups. The current stable of funds are all performing well and have paid out tax-free dividends of between 5p and 7p per annum to shareholders.
Puma VCT 12 closed for subscriptions during the period, raising GBP31 million which accounted for more than half of the total funds raised in the limited-life VCT market in the 2015/16 tax year. The Group considers this fundraising to be a considerable achievement and an endorsement of Puma's standing in the VCT sector. The business is pleased to be launching its latest VCT for the current tax year, Puma VCT 13, and hopes to capitalise on its strong track record.
Puma Heritage plc
Puma Heritage was launched in June 2013 to operate in a range of sectors, with a primary focus on secured lending. It focuses on capital preservation, whilst seeking to produce regular returns for shareholders intended to counter long-term inflationary pressures. An investment in Puma Heritage is intended to benefit from 100% relief from Inheritance Tax after two years.
The company celebrated its third anniversary in June 2016, having recorded a significant acceleration in its net asset value ("NAV") during the period. Subscriptions from new shareholders and good levels of return generated from its diversified loan book have increased the NAV of the company to GBP25 million. The business has a strong pipeline of loans to deploy current and future funds and remains optimistic about the prospects for further NAV growth over the coming months and years.
During the period, Puma Investments advised Puma Heritage plc on the completion of several asset-backed loans across a number of sectors, all secured with a first charge over real estate at conservative lending ratios. The team continues to assist the business, helping it to source and analyse new lending opportunities. Puma Heritage remains open for investment and having reached critical mass, is in a position to grow more rapidly.
Puma EIS
The Puma EIS portfolio service (the "EIS Service") was launched in November 2013 to offer investors the opportunity to invest in asset-backed Enterprise Investment Scheme qualifying companies utilising the team's strong track record and expertise in asset-backed investing gained from their experience running the Puma VCTs. Fundraising continued successfully through the 2015/16 tax year, raising the amount in the EIS Service to GBP40 million.
All of these funds were successfully allotted into qualifying companies ahead of the tax year end in their relevant year. The total amount in the EIS Service is now at GBP40 million with fundraising for the current year running ahead of the equivalent period in the previous year. The EIS Service has a good pipeline of deployment opportunities and remains open for investment.
Puma AIM Inheritance Tax Service
The Puma AIM IHT Service (the "IHT Service") is a discretionary portfolio service that seeks to mitigate Inheritance Tax by investing in a carefully selected portfolio of AIM shares and is particularly attractive for those that wish to invest via an ISA. It celebrated its two year anniversary at the end of June 2016, over which time it has delivered a 21.9% return, outperforming the FTSE AIM All Share Index by 31.8%.
The IHT Service has grown customers and client assets during the period. Equity market volatility at the end of the period as a result of the EU referendum has not helped performance in UK focused smaller companies; however, the IHT Service's comparative performance against benchmark indices remains strong and we continue to be confident of growing the service given our impressive track record since inception and the significant potential tax benefits for clients.
Principal Finance
Investment in German Telecoms Business
DBD is an entity that holds radio spectrum licences in Germany in the 3.5 GHz frequency range, which is increasingly being deployed around the world by regulators, equipment manufacturers and operators as a frequency for 4G services. DBD is owned by Spectrum Investments Limited, ("Spectrum") in which the Group holds a 59.9% interest.
Having realised significant gains from the sale of a number of licences in 2015, DBD continues to hold its remaining 32 regional radio spectrum licences which cover many of Germany's largest metropolitan centres - including Berlin, Leipzig, Dresden, Düsseldorf and Hanover. The Company remains in discussions with the German Telecoms Regulator regarding the status of the licences and is in the process of presenting its plans for their potential future utilisation. Shareholders will be updated in due course.
Current trading and prospects
The market malaise following Britain's vote to leave the EU appears to be short-lived helped by the speed with which a new Prime Minister and Cabinet was put in place and businesses and the investment community are starting to adapt to the new environment.
Given our independent status we believe we believe we have the flexibility to take advantage of the opportunities that Brexit will create. We hope that Brexit will provide an opportunity to remove some of the regulations that impede the UK's ability to compete with the rest of the world.
Howard P Shore
Executive Chairman
13 September 2016
Independent review report to Shore Capital Group Limited (the "Group")
We have been engaged by Shore Capital Group Limited to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2016 which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of changes in equity, the consolidated cash flow statement and related notes 1 to 8. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Group in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Group those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Group, for our review work, for this report, or for the conclusions we have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report as required by the AIM rules issued by the London Stock Exchange and the Bermuda Stock Exchange.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Group a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2016 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union, and the AIM rules of the London Stock Exchange.
Deloitte LLP
Chartered Accountants
Guernsey, Channel Islands
13 September 2016
Consolidated Income Statement
For the six months ended 30 June 2016 (unaudited)
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2015
2016 2015
Notes GBP'000 GBP'000 GBP'000
Revenue 3 17,988 25,912 41,952
Administrative expenditure (15,490) (16,325) (30,129)
Operating profit 2,498 9,587 11,823
----------- ----------- -------------
Interest income 102 109 191
Finance costs (159) (151) (317)
Profit before taxation 3 2,441 9,545 11,697
----------- ----------- -------------
Taxation (628) (607) (1,002)
Profit for the period 1,813 8,938 10,695
=========== =========== =============
Attributable to:
Equity holders of the
parent 1,407 5,028 6,445
Non controlling interests 406 3,910 4,250
1,813 8,938 10,695
=========== =========== =============
Earnings per share
Basic 4 6.5p 20.8p 27.1p
Diluted 4 6.2p 20.1p 26.1p
Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2016 (unaudited)
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2015
2016 2015
GBP'000 GBP'000 GBP'000
Profit for the period 1,813 8,938 10,695
----------- ----------- -------------
Losses on revaluation
of available-for-sale
investments taken to equity (128) (22) (66)
----------- ----------- -------------
(Losses)/ Gains on cash
flow hedges (210) (19) 31
Taxation 42 4 (6)
----------- ----------- -------------
(168) (15) 25
Exchange difference on
translation of foreign
operations 777 (2) 186
Other comprehensive income
for the period, net of
tax, from continuing operations 609 (17) 211
----------- ----------- -------------
Total comprehensive income
for the period, net of
tax 2,294 8,899 10,840
=========== =========== =============
Attributable to:
Equity holders of the
parent 1,658 5,116 6,599
Non controlling interests 636 3,783 4,241
2,294 8,899 10,840
=========== =========== =============
Comprehensive earnings
per share
Basic 7.6p 21.2p 27.7p
Diluted 7.4p 20.4p 26.7p
Consolidated Statement of Financial Position
As at 30 June 2016 (unaudited)
Notes As at As at As at
30 June 30 June 31 December
2016 2015 2015
GBP'000 GBP'000 GBP'000
Non-current assets
Goodwill 381 381 381
Intangible assets 2,091 1,771 1,841
Property, plant
& equipment 11,721 10,457 10,864
Available-for-sale
investments 7,020 3,331 6,341
Deferred tax asset - 275 128
21,213 16,215 19,555
---------- --------- -------------
Current assets
Trading assets 12,121 7,388 9,344
Trade and other
receivables 124,974 89,856 71,739
Derivative financial
instruments - 77 54
Cash and cash equivalents 15,988 37,435 22,113
153,083 134,756 103,250
---------- --------- -------------
Total assets 3 174,296 150,971 122,805
---------- --------- -------------
Current liabilities
Trading liabilities (773) (1,478) (946)
Trade and other
payables (94,085) (60,875) (43,998)
Derivative financial
instruments (688) - (187)
Tax liabilities (805) (708) (481)
Borrowings (401) (338) (360)
(96,752) (63,399) (45,972)
---------- --------- -------------
Non-current liabilities
Borrowings (10,110) (8,858) (9,256)
Deferred tax liability (318) - -
Provision for liabilities
and charges (176) (507) (535)
(10,604) (9,365) (9,791)
Total liabilities 3 (107,356) (72,764) (55,763)
---------- --------- -------------
Net Current Assets 56,331 71,357 57,278
Net Assets 66,940 78,207 67,042
========== ========= =============
Equity
Capital and Reserves
Called up share - - -
capital
Share premium account 336 336 336
Merger reserve 17,151 27,198 17,151
Other reserves 1,402 2,177 2,164
Retained earnings 39,955 37,389 38,845
Equity attributable
to equity holders
of the parent 58,844 67,100 58,496
Non controlling
interests 8,096 11,107 8,546
Total equity 66,940 78,207 67,042
========== ========= =============
Consolidated Statement of Changes in Equity
For the six months ended 30 June 2016 (unaudited)
Share Share Merger Other Retained Non Total
capital Premium reserve reserves earnings Controlling
account interests
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2015 - 336 27,198 2,260 34,391 8,236 72,421
Retained profit
for the period - - - - 5,028 3,910 8,938
Revaluation of
available for
sale investments - - - (22) - - (22)
Foreign currency
translation - - - - 122 (124) (2)
Valuation change
on cash flow hedge - - - (12) - (3) (15)
Total comprehensive
income - - - (34) 5,150 3,783 8,899
Decrease in deferred
tax asset - - - (54) - - (54)
Equity dividends
paid - - - - (1,208) - (1,208)
Dividends paid
to non controlling
interests - - - - (944) (998) (1,942)
Credit in relation
to share based
payments - - - 5 - - 5
Investment by
non controlling
interest in subsidiaries
other than Spectrum - - - - - 86 86
At 30 June 2015 - 336 27,198 2,177 37,389 11,107 78,207
========== ========= ========= ========== ========== ============= =========
Share Share Merger Other Retained Non Total
capital Premium reserve reserves earnings Controlling
account interests
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 30 June 2015 - 336 27,198 2,177 37,389 11,107 78,207
Retained profit
for the period - - - - 1,417 340 1,757
Revaluation of
available for
sale investments - - - (44) - - (44)
Foreign currency
translation - - - - 78 110 188
Valuation change
on cash flow hedge - - - 37 - 9 46
Tax on cashflow
hedge - - - (5) - (1) (6)
Total comprehensive
income - - - (12) 1,495 458 1,941
Dividends paid
to non controlling
interests - - - - 17 (17) -
Repurchase/cancellation
of Own shares - - (10,047) - - - (10,047)
Capital distribution
from Spectrum
to non controlling
interests - - - - - (3,316) (3,316)
Credit in relation
to share based
payments - - - (1) - - (1)
Investment by
non controlling
interest in subsidiaries
other than Spectrum - - - - - 258 258
Adjustment arising
in non controlling
interest - - - - (56) 56 -
At 31 December
2015 - 336 17,151 2,164 38,845 8,546 67,042
========== ========= ========= ========== ========== ============= =========
Consolidated Statement of Changes in Equity
For the six months ended 30 June 2016 (unaudited) (continued)
Share Share Merger Other Retained Non Total
capital Premium reserve reserves earnings Controlling
account interests
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2016 - 336 17,151 2,164 38,845 8,546 67,042
Retained profit
for the year - - - - 1,407 406 1,813
Revaluation
of available
for sale investments - - - (128) - - (128)
Foreign currency
translation - - - - 537 240 777
Valuation change
on cash flow
hedge - - - (199) - (11) (210)
Tax on cash
flow hedge - - - 40 - 2 42
Total comprehensive
income - - - (287) 1,944 637 2,294
Decrease in
deferred tax
asset recognised
directly in
equity - - - (475) - - (475)
Dividends paid
to non controlling
interests - - - - (834) (1,225) (2,059)
Investment by
non controlling
interest in
subsidiaries - - - - - 138 138
At 30 June 2016 - 336 17,151 1,402 39,955 8,096 66,940
========== ========= ========= ========== ========== ============= ========
Consolidated Cash Flow Statement
For the six months ended 30 June 2016 (unaudited)
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2015
2016 2015
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Operating profit 2,498 9,587 11,823
Adjustments for:
Depreciation charges 495 487 977
Amortisation charges - 63 62
Share-based payment expense - 5 4
Loss on available-for-sale
investments (135) 993 1,142
Other profit on sale of
intangibles - - (9,207)
Decrease in provision
for NIC on options (359) (28) -
Operating cash flows before
movement in working capital 2,499 11,107 4,801
Increase in trade and
other receivables (53,181) (29,821) (11,681)
Increase in trade and
other payables 50,378 30,871 14,231
(Increase)/decrease in
bear positions (173) 632 100
Increase in bull positions (2,777) (1,277) (4,708)
Cash (utilised)/generated
by operations (3,254) 11,512 2,743
Interest paid (159) (151) (317)
Corporation tax paid (291) (1,167) (1,652)
Net cash (utilised)/generated
by operating activities (3,704) 10,194 774
----------- ----------- -------------
Cash flows from investing
activities
Purchases of fixed assets (283) (579) (363)
Sale of intangible assets - - 10,680
Purchase of AFS investments (707) - (3,750)
Sale of AFS investments 35 37 -
Interest received 102 109 191
Net cash utilised by investing
activities (853) (433) 6,758
----------- ----------- -------------
Cash flows from financing
activities
Investment in non controlling
interest in subsidiaries 138 86 344
Repurchase of shares - - (10,047)
Capital distribution to
non controlling interest - - (3,316)
Decrease in borrowings (200) (169) (360)
Dividends paid to non
controlling interests (2,059) (1,942) (1,942)
Dividends paid to Equity
Holders - (1,208) (1,208)
Net cash utilised by financing
activities (2,121) (3,233) (16,529)
----------- ----------- -------------
Net (decrease)/increase
in cash and cash equivalents
during the period (6,678) 6,528 (8,997)
Effects of exchange rate
changes 553 249 452
Cash and cash equivalents
at beginning of period 22,113 30,658 30,658
----------- ----------- -------------
Cash and cash equivalents
at end of period 15,988 37,435 22,113
=========== =========== =============
Notes to the Interim Financial Report
For the six months ended 30 June 2016 (unaudited)
1. Financial information
Basis of preparation
The annual financial statements of Shore Capital Group Limited (the "Group") are prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The condensed set of financial statements included in this interim financial report for the period ended 30 June 2016 has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting", as adopted by the European Union.
The information for the year ended 31 December 2015 does not constitute statutory accounts. The Annual Report and Accounts of the Group were issued on 30 March 2016. The auditor's report on those accounts was not qualified and did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report.
Going concern
The group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman's Statement, together with the financial position of the Group, its liquidity position and borrowing facilities. In addition, the principal risks and uncertainties of the Group are discussed in note 2 to this interim financial report.
The Group has considerable financial resources together with an established business model. As a consequence, the directors believe that the Group is well placed to manage its business risks successfully.
After making enquiries, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.
Significant accounting policies
The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as are applied in the Group's latest audited Annual Report and Accounts for the year ended 31 December 2015.
2. Principal risks and uncertainties
The Group's policies for managing the risks arising from its activities are set out in the last audited Annual Report and Accounts of the group that were issued on 30 March 2016. The Group's activities comprise equity market activities and investment in alternative assets and property, and its income is therefore subject to the level of general activity, sentiment and market conditions in each of the markets in which it operates.
3. Segmental information
For management purposes, the Group is organised into business units based on their services, and has four reportable operating segments as follows:
-- Capital Markets provides research in selected
sectors, broking for institutional and professional
clients, market-making in AIM and small cap
stocks, fixed income broking and corporate
finance for mid and small cap companies.
-- Asset Management provides advisory services,
and manages specialist funds.
-- Central Costs comprises the costs of the Group's
central management team and structure.
-- Principal Finance comprises investments and
other holdings acquired, together with principal
finance activities conducted, using our own
balance sheet resources.
Management monitors the operating results of its business units 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.
6 months ended Capital Asset Central Principal Consolidated
30 June 2016 Markets Management costs Finance
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 13,059 5,200 - (271) 17,988
========= ============ ======== ========== =============
Profit/(loss)
before tax 3,004 1,300 (690) (1,173) 2,441
========= ============ ======== ========== =============
Assets 125,281 6,210 1,685 41,120 174,296
========= ============ ======== ========== =============
Liabilities (95,874) (2,726) (808) (7,948) (107,356)
========= ============ ======== ========== =============
6 months ended Capital Asset Central Principal Consolidated
30 June 2015 Markets Management costs Finance
GBP'000 GBP'000 GBP'000
Revenue 12,449 4,853 - 8,610 25,912
========= ============ ======== ========== =============
Profit/(loss)
before tax 3,076 1,169 (485) 5,785 9,545
========= ============ ======== ========== =============
Assets 81,694 6,283 1,977 61,017 150,971
========= ============ ======== ========== =============
Liabilities (51,528) (4,192) (151) (16,893) (72,764)
========= ============ ======== ========== =============
Year ended 31 Capital Asset Central Principal Consolidated
December 2015 Markets Management costs Finance
GBP'000 GBP'000 GBP'000
Revenue 23,350 9,500 - 9,102 41,952
========= ============ ======== ========== =============
Profit/(loss)
before tax 4,693 2,653 (788) 5,139 11,697
========= ============ ======== ========== =============
Assets 76,213 5,522 1,746 39,324 122,805
========= ============ ======== ========== =============
Liabilities (44,775) (2,229) (68) (8,691) (55,763)
========= ============ ======== ========== =============
4. Earnings per share
The calculation of the basic and diluted earnings per share is based on the following:
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2015
2016 2015
Earnings (GBP) 1,407,000 5,028,000 6,445,000
=========== =========== =============
Number of shares
Basic
Weighted average number
of shares 21,768,791 24,164,000 23,796,516
Diluted
Dilutive effect of share
option scheme 787,412 904,296 902,128
22,556,203 25,068,296 24,698,644
=========== =========== =============
Earnings per share
Basic 6.5p 20.8p 27.1p
=========== =========== =============
Diluted 6.2p 20.1p 26.1p
=========== =========== =============
5. Dividends paid
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2015
2016 2015
GBP'000 GBP'000 GBP'000
Amounts recognised as distributions
to equity holders in the
period:
Final dividend for the
year ended 31 December
2014 of 5.0p per share - 1,208 1,208
1,208 967 2,175
========== ========== ============
6. Called up share capital
Shore Capital Group Limited - Number GBP'000
ordinary shares of nil par value of shares
At 1 January 2015 and 30 June 24,164,000 -
2015
Shares repurchased and cancelled (2,395,209) -
------------ --------
At 31 December 2015 and 30 June 21,768,791 -
2016
============ ========
7. Events after the period
There were no significant events subsequent to the period end.
8. Financial instruments
Fair value of financial instruments
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction.
For trading portfolio assets and liabilities, financial assets and liabilities designated at fair value and financial investments available-for-sale which are listed or otherwise traded in an active market, for exchange-traded derivatives, and for other financial instruments for which quoted prices in an active market are available, fair value is determined directly from those quoted market prices (level 1).
For financial instruments which do not have quoted market prices directly available from an active market, fair values are estimated using valuation techniques, based wherever possible on assumptions supported by observable market prices or rates prevailing at the Balance Sheet date (level 2). This is the case for some unlisted investments and other items which are not traded in active markets.
For some types of financial instruments, fair values cannot be obtained directly from quoted market prices, or indirectly using valuation techniques or models supported by observable market prices or rates. This is the case for certain unlisted investments. In these cases, fair value is estimated indirectly using valuation techniques for which the inputs are reasonable assumptions, based on market conditions (level 3).
30 June 2016 Level Level Level
1 2 3
Quoted Market Non-market Total
market observable observable
price inputs inputs
GBP'000 GBP'000 GBP'000 GBP'000
Available-for-sale
financial investments 1,191 - 5,829 7,020
Trading assets 12,121 - - 12,121
Total financial assets 13,312 - 5,829 19,141
======== ============ ============ ========
Trading liabilities 773 - - 773
Financial instruments - 688 - 688
Total financial liabilities 773 688 - 1,461
======== ============ ============ ========
30 June 2015 Level Level Level
1 2 3
Quoted Market Non-market Total
market observable observable
price inputs inputs
GBP'000 GBP'000 GBP'000 GBP'000
Available-for-sale
financial investments 2,131 - 1,200 3,331
Trading assets 4,246 - 3,142 7,388
Derivative financial
instruments - 77 - 77
Total financial assets 6,377 77 4,342 10,796
======== ============ ============ ========
Trading liabilities 1,478 - - 1,478
Total financial liabilities 1,478 - - 1,478
======== ============ ============ ========
31 December 2015 Level Level Level
1 2 3
Quoted Market Non-market Total
market observable observable
price inputs inputs
GBP'000 GBP'000 GBP'000 GBP'000
Available-for-sale
financial investments 1,298 - 5,043 6,341
Trading assets 9,344 - - 9,344
Derivative financial
instruments - 54 - 54
Total financial assets 10,642 54 5,043 15,739
======== ============ ============ ========
Trading liabilities 946 - - 946
Derivative financial
instruments - 187 - 187
Total financial liabilities 946 187 - 1,133
======== ============ ============ ========
Included in the fair value of financial instruments carried at fair value in the statement of financial position are those estimated in full or in part using valuation techniques based on assumptions that are not supported by market observable prices or rates (level 3). For such financial instruments, the Directors have generally made reference to published net asset values (derived the manager of such instruments) and used judgement over the use of those net asset values. The net asset values are generally derived from the underlying portfolios which are themselves valued using unobservable inputs. The significant unobservable inputs comprise the long term revenue growth rate, long term pre-tax operating margin and discounts for lack of marketability. A change in any of these inputs may result in a change in the fair value of such investments.
There have been no significant movements between level 1 and level 2 during the period.
The following table shows a reconciliation of the opening and closing amount of Level 3 financial assets and liabilities which are recorded at fair value:
At 1 Gains Purchases Sales At 30
January recorded and transfers and transfers June
2016 in profit 2016
or loss
Total financial
assets 5,043 635 186 (35) 5,829
========= =========== =============== =============== ======
Based on the established fair value and model governance policies and the related controls and procedural safeguards the Group employs, management believe the resulting estimates in fair values recorded in the statement of financial position are reasonable and the most appropriate at the Balance Sheet date.
The interim report will be posted in due course to shareholders on the register. Further copies of this report are available on the Company's website at www.shorecap.gg.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR VLLFFQKFXBBQ
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