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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Cbg Group | LSE:CB. | London | Ordinary Share | GB0033696344 | ORD 4P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 29.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMCB.
RNS Number : 3506D
CBG Group Plc
22 March 2011
22 March 2011
CBG GROUP PLC
(AIM: CB.)
PRELIMINARY ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER 2010
CBG Group plc ("CBG" or the "Group"), the Manchester based insurance broker and financial services specialist, is pleased to announce full year results for the year to 31 December 2010.
HIGHLIGHTS
-- Revenue GBP7,708,000 (2009: GBP8,961,000);
-- Adjusted * EBITD GBP1,160,000 (2009: GBP1,386,000);
-- Adjusted * pre-tax profits GBP842,000 (2009: GBP1,026,000);
-- Diluted adjusted * earnings per share 3.83p (2009: 4.69p);
-- Earnings per share - diluted (pence) adjusted for loss on disposal of Personal Lines business 1.79p (2009: 1.18p);
-- Final dividend proposed 0.75p per share (2009: 0.70p per share);
-- Acquisition of Rockbridge Healthcare Limited;
-- Deferred consideration payments of GBP1,055,000 fully settled, including cash payments of GBP945,000;
-- New product initiatives, including the development of PALM, a strategic partnership with MPS Risk Solutions (17 January 2011).
* Adjusted to add back exceptional operating and non-operating expenses, amortisation, and share option charges.
Mike Askew, Group Managing Director of CBG said:
"I am in no doubt that the trading environment will continue to be tough in 2011. While some of our customer markets remain under pressure, our future prospects are encouraging. I remain confident that the fundamentals of our businesses are strong, our balance sheet is in good shape and new management is in place with the background, experience and ambition to drive the business forward."
---ENDS---
Enquiries CBG Group plc 0161 920 0200 Mike Askew, Group Managing Director 07720 400356 Martyn Hughes, Group Finance Director 07734 543454 www.cbg-group.co.uk Zeus Capital (Nomad & Broker) 0161 831 1512 Alex Clarkson / Nick Cowles Daniel Stewart & Company plc (Joint Broker) 020 7776 6550 Martin Lampshire Bishopsgate Communications Ltd 020 7562 3350 Nick Rome / Laura Stevens
Chairman's statement
Financial overview
I am pleased to be announcing my first set of year end results for our business as Chairman. Like the prior year, 2010 was one of continued market uncertainty and economic fragility which has impacted heavily on the performance of the majority of our core client base. Their revenues and activity levels have fallen, ensuring that the year has not been without challenge for CBG given the knock on effect on our supporting advisory business.
Decisive actions have been undertaken in moving away from non-core business activities and marginally profitable areas and, whilst this has been detrimental to revenues, the return on capital employed has been enhanced. We have a clear plan to improve the fortunes of the business built upon the high level of client retention we maintain. We are passionate about customer service and strive for operational excellence across the breadth of our activities. Our management structure is focused upon a customer centric operation and we have continued to evolve the CBG brand successfully within a changing market.
In the twelve months to 31 December 2010 the Group's revenue fell by GBP1,253,000 to GBP7,708,000 (2009: GBP8,961,000), with the fall in adjusted * pre tax profit limited to GBP184,000 to GBP842,000 (2009: GBP1,026,000). In recognition of disposing of our non-core private client car and household activities it has been appropriate to allocate GBP902,000 of goodwill to the disposal of these activities thus generating a loss on disposal of GBP944,000 in these accounts. The basic diluted loss per share for the year ended 31 December 2010 was 4.18 pence (2009: Profit 1.18 pence). However, adjusting for the effects of the loss on disposal outlined above, the basic diluted earnings per share equates to a profit of 1.79 pence. In the same period diluted adjusted * earnings per share was 3.83 pence (2009: 4.69 pence).
* Adjusted to add back exceptional operating and non-operating expenses, amortisation, and share option charges.
Strategy
We have announced our intention to prioritise our future investment in speciality schemes, by putting service and the customer at the heart of the business, and giving our teams the tools and resources to serve our clients, I am confident that CBG can fulfil its mission and rank amongst the most profitable independent brokers in the UK.
CBG's key strengths have helped us manage our way through this undoubtedly difficult period. Our management took decisive action to stabilise the business in the face of the downturn, focussing on our customers, managing our business tightly, and with a close eye on costs and cash. We have introduced further operational efficiencies to improve our business and I believe very strongly that CBG is at a very exciting stage of its journey.
These changes are described in more detail in the Group Managing Director's review. Through these changes we will build the platform from which we will deliver sustainable long-term growth.
Dividend
The Board is recommending a final dividend of 0.75p, up 7% on the dividend paid in the previous year. The dividend will be paid, subject to shareholders approval, on 27 May 2011 to shareholders on the register on 6 May 2011.
Board
There have been changes to the composition of the Group Board this year. Stephen Darcy, an Executive Director and Managing Director of CBG Insurance Brokers, left the Company in August 2010. Stephen Rees, the Managing Director of our Financial Services division, was appointed to the Board on 23 March 2010.
Going concern
The directors acknowledge the guidance on going concern and financial reporting published by the Financial Reporting Council in October 2009. The Group is well placed to manage its business risks and has adequate resources to continue in operational existence for the foreseeable future. Our current banking arrangements are due for renewal in August 2011 and based on ongoing discussions with current banking partners, the directors are confident that facilities will be available and appropriate for our requirements.
The directors have reviewed the Group's forecasts and budgets for the next 12 months and based on the information set out above, the directors believe that it is appropriate to prepare the financial statements on a going concern basis.
Outlook
As expected, there has been no let up to the significant changes that are taking place in our chosen markets, and we will continue to take a realistic view about how these are likely to impact our business.
We know that we need to be both thoughtful and vigorous in addressing these changes and, though there is much for us to do to execute this plan, the Board is satisfied that appropriate steps have been taken. While the rate of recovery in our markets is difficult to predict I am confident that our underlying profitability will recover significantly as end-markets improve.
We remain cautious about 2011 but very optimistic that we are well positioned to meet the challenges ahead. More than most sectors, we depend heavily on the quality of our people. It is people who make a difference and I believe we have a great team of loyal hard-working staff, a team which has been collectively responsible for the progress the Group has made this year. I look forward to working with them in the year ahead.
Robin Slinger
Chairman
22 March 2011
Group Managing Director's statement
Our business has faced similar challenges to those in the prior year, in what still remains a very difficult market to trade in. We have continued to focus on our client retention policy, ensuring we deliver value and quality service to our relationships, albeit at the same time continuing to take out costs where we can, so as to maintain our operating margins. We will continue to focus on profitable organic growth in the existing businesses, constantly looking for opportunities in niche markets where we have knowledge and expertise, and where we believe we can make an acceptable margin.
Group Overview
CBG has coped well in difficult trading conditions, improving margins through careful management of resource, costs and investment. The Group has delivered an adjusted * pre-tax profit of GBP842,000 (2009: GBP1,026,000) and the 7% increase in the final dividend reflects our confidence in the future outlook. We have undertaken a review of our operating management structure and made changes in the final quarter of 2010 that will enable us to utilise our resources effectively to achieve our goals.
* Adjusted to add back exceptional operating and non-operating expenses, amortisation, and share option charges.
Our strategic focus remains on four core elements: consistently delivering excellent customer service, strong leadership and sensible business practices, profitable organic growth and a results driven culture.
Acquisitions
The general outlook for acquisitions towards the end of 2010 has seen a cautious optimism return, although this outlook is tempered by a general lack of quality targets and ongoing differences in perception of value between buyers and sellers.
CBG acquired Rockbridge Healthcare Limited on the 30 September 2010, immediately integrating the trade into our already profitable healthcare division. This has broadened the number of opportunities to cross-sell other services to the acquired client base as well as allowed us to accelerate our review of the management structure . A deferred consideration amount of GBP35,000 is payable based on earn out targets contingent on the achievement of minimum income levels.
Business Operations
Whilst our two main trading divisions continue to operate as separate legal entities the responsibility for the day to day management of the businesses is now undertaken by a Group operating management team. The team of five, including myself, all have clear roles and responsibilities for the key functions of operations & finance, client services, business development and strategic planning.
Beneath this team is a second tier of management all of who represent the future succession plans for the Group. All have defined accountabilities and are measured in their performance by agreed key performance indicators. Whilst these changes are still in their infancy, the early signs are that they are having a positive impact, particularly in how we interact with our clients and a developing creativity in everything we do.
Trading conditions in 2010 have continued to be difficult particularly in our insurance broking division where market rates remained stubbornly soft, and revenues were impacted by the disposal of our non-core personal lines business in the first quarter of the year, but it remains very competitive with the obvious pressure on margins. The financial services division responded well to the challenges of the slower market conditions and further progress has been made in repositioning the division to enable greater revenue resilience.
New product initiatives, including the development of PALM, a strategic partnership with MPS Risk Solutions www.palm-insurance.co.uk launched in January 2011, and major marketing campaigns feature heavily in the plan to combat the challenges of a difficult market. The business now has a strongly motivated and high calibre team, focused on growth and profit delivery and we will continue to develop our proposition to our end user customers.
Compliance
We operate in a highly regulated industry and compliance is a significant and increasingly demanding obligation. New and improved professional standards come into force in December 2012 within financial services, representing a fundamental change to the way in which advisors do business. We will ensure our training & competence schemes are fit for purpose, as well as ensuring our sales processes deliver the right quality of service.
We feel it is important that we look for the advantages rather than focus on resisting change and will be presenting clients with a clear picture of what they are being offered as a service and importantly explain how they will pay for that service.
We will continue to ensure uniformity across all areas of the business by applying in depth knowledge of the regulatory obligations.
Employees
Our employees are passionate about what they do and have an exceptional commitment to our customers. Their performance underpins my confidence in our ability to deliver in the coming years. On behalf of the Board, I would like to thank everyone at CBG for their determined efforts in a difficult year and their commitment to the future success of our business.
Outlook
I am in no doubt that the trading environment will continue to be tough in 2011. While some of our customer markets remain under pressure, our future prospects are encouraging. I remain confident that the fundamentals of our businesses are strong, our balance sheet is in good shape and new management is in place with the background, experience and ambition to drive the business forward.
Mike Askew
Group Managing Director
22 March 2011
Consolidated Income Statement
Year ended 31 December 2010
Year to Year to 31/12/10 31/12/09 Note GBP'000 GBP'000 Revenue 2 7,708 8,961 Administrative expenses (7,776) (8,774) Operating profit before amortisation, exceptional operating expenses and share option charges 910 1,133 Amortisation (600) (704) Exceptional operating expenses 3 (302) (177) Share option charges (76) (65) --------------------------------------- ----- --------- --------- Administrative expenses excluding exceptional items (6,798) (7,828) --------------------------------------- ----- --------- --------- Operating (loss)/ profit 2 (68) 187 Investment income 6 10 Finance costs (74) (117) --------------------------------------- ----- --------- --------- (Loss) / profit before tax from continuing operations (136) 80 Loss for the year from the disposal of Personal Lines business 3 (944) - (Loss) / profit before tax (1,080) 80 Income tax 419 106 (Loss) / profit attributable to ordinary shareholders (661) 186 --------------------------------------- ----- --------- --------- (Loss) / earnings per share from continuing operations: Pence Pence (Loss) / earnings per share - basic 4 (4.18) 1.19 --------------------------------------- ----- --------- --------- (Loss) / earnings per share - diluted 4 (4.18) 1.18 --------------------------------------- ----- --------- ---------
The Group has no items, other than the profit for the year, to be recognised in the "Consolidated statement of comprehensive income" and consequently this statement has not been shown.
Consolidated Statement of Financial Position
31 December 2010
2010 2009 Note GBP'000 GBP'000 Non-current assets Goodwill 12,342 13,067 Other intangible assets 2,119 2,907 Property, plant and equipment 357 550 Deferred tax asset 136 27 ------------------------------- ----- -------- --------- 14,954 16,551 ------------------------------- ----- -------- --------- Current assets Trade and other receivables 3,731 4,652 Cash and cash equivalents 1,207 1,844 ------------------------------- ----- -------- --------- 4,938 6,496 ------------------------------- ----- Total Assets 19,892 23,047 ------------------------------- ----- -------- --------- Current liabilities Bank overdraft (389) - Trade and other payables (4,573) (5,825) Deferred consideration (35) (1,055) Current tax (364) (122) Borrowings (2,325) (410) ------------------------------- ----- -------- --------- (7,686) (7,412) ------------------------------- ----- -------- --------- Non-current liabilities Deferred tax (302) (820) Borrowings - (2,325) (302) (3,145) Total liabilities (7,988) (10,557) ------------------------------- ----- -------- --------- Equity Ordinary shares 7 636 627 Share premium account 7,891 7,790 Merger reserve 449 449 Retained earnings 2,928 3,624 Shareholders' equity 11,904 12,490 ------------------------------- ----- -------- --------- Total equity and liabilities 19,892 23,047 ------------------------------- ----- -------- ---------
These financial statements were approved by the Directors on 22 March 2011.
Consolidated Statement of Changes in Shareholders' Equity
Year ended 31 December 2010
Share Share premium Merger Retained Total capital account reserve earnings equity GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Balance at 1 January 2009 620 7,675 449 3,534 12,278 Dividends paid - - - (102) (102) Issue of ordinary shares 7 115 - - 122 Other reserves movement due to share options charge - - - 65 65 Impact of deferred tax on share option charge - - (59) (59) Transactions with owners 627 7,790 449 3,438 12,304 Net profit for the period attributable to equity shareholders - - - 186 186 Balance at 31 December 2009 627 7,790 449 3,624 12,490 Dividends paid - - - (111) (111) Issue of ordinary shares 9 101 - - 110 Other reserves movement due to share options charge - - - 76 76 Transactions with owners 636 7,891 449 3,589 12,565 Net profit for the period attributable to equity shareholders - - - (661) (661) Balance at 31 December 2010 636 7,891 449 2,928 11,904 ----------------------- --------- --------- --------- ---------- --------
The Group has applied s131 of the Companies Act (1985) in respect of Merger Relief in relation to a prior period acquisition.
Consolidated Statement of Cash Flows
Year ended 31 December 2010
2010 2009 Note GBP'000 GBP'000 Operating Activities Cash generated by operations 8 542 2,998 Income taxes paid 6 (507) Interest paid (74) (117) ---------------------------------------- ----- -------- -------- Net cash inflow from operating activities 474 2,374 ---------------------------------------- ----- -------- -------- Investing activities Interest received 6 8 Proceeds from disposal of Personal Lines business 268 - Purchases of property, plant and equipment (92) (196) Deferred consideration paid (945) (1,850) Acquisition of subsidiary net of cash acquired 6 (216) - Net cash used in investing activities (979) (2,038) ----------------------------------------------- -------- -------- Financing activities Dividends paid (111) (102) Proceeds from issue of shares - 14 Repayment of bank loans - (1,250) Repayment of other loans (410) (420) Repayment of hire purchase obligations - (36) Net cash used in financing activities (521) (1,794) ---------------------------------------- ----- -------- -------- Net decrease in cash and cash equivalents 9 (1,026) (1,458) Cash and cash equivalents at start of period 1,844 3,302 Cash and cash equivalents at end of period 818 1,844 ---------------------------------------- ----- -------- -------- Cash 1,207 1,844 Overdraft (389) - Cash and cash equivalents at end of period 818 1,844 ---------------------------------------- ----- -------- --------
1. Results and accounting policies
The financial information set out in this announcement does not constitute the statutory accounts of the Group for the year ended 31 December 2010. The auditors reported on those accounts; their report was unqualified and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. The statutory accounts for the year ended 31 December 2010 will be delivered to the registrar of Companies following the Company's Annual General Meeting.
Whilst the financial information included in this preliminary announcement has been computed in accordance with International Financial Reporting Standards (IFRS), this announcement in itself does not contain sufficient information to comply with IFRS. Details of the accounting policies are those set out in the annual report for the year ended 31 December 2009. These accounting policies have remained unchanged for the financial year ended 31 December 20010.
2. Segment information
For management purposes, the Group is organised into three divisions; Insurance Broking, Financial Services and Premium Finance. These divisions are the basis on which the Group reports its major income generating and cash flow results to its chief operating decision maker.
Revenue and operating profit
Year ended Year ended 31 December 2010 31 December 2009 Operating profit Operating Revenue / (loss) Revenue profit GBP'000 GBP'000 GBP'000 GBP'000 By class of business: Insurance Broking 5,839 1,324 6,795 1,461 Financial Services 1,775 111 1,833 48 Premium Finance 94 75 303 217 Other - - 30 30 --------------------------------- -------- ---------- -------- ---------- 7,708 1,510 8,961 1,756 -------- -------- Amortisation (600) (704) Exceptional operating expenses (302) (177) Central costs (676) (688) --------------------------------- ---------- ---------- (Loss) / profit from continuing operations (68) 187 --------------------------------- ---------- ----------
Assets and liabilities
Year ended Year ended 31 December 2010 31 December 2009 Assets Assets GBP'000 Liabilities GBP'000 Liabilities GBP'000 GBP'000 By segment: Insurance Broking 8,169 (5,390) 9,213 (5,751) Financial Services 1,668 (1,203) 1,600 (1,104) Premium Finance 414 (12) 286 (477) Eliminations (5,243) 5,243 (1,674) 1,674 ---------------------------- --------- ------------ --------- ------------ Segment assets and liabilities 5,008 (1,362) 9,425 (5,658) Unallocated corporate 14,884 (6,626) 13,622 (4,899) ---------------------------- --------- ------------ --------- ------------ Consolidated assets and liabilities 19,892 (7,988) 23,047 (10,557) ---------------------------- --------- ------------ --------- ------------
3. Exceptional operating expenses
2010 2009 GBP'000 GBP'000 Redundancy costs 123 100 Reorganisation costs 154 35 Acquisition related 25 42 Exceptional operating expenses 302 177 ======== ========
All redundancy and reorganisation costs have been charged against operating profit derived from continuing operations.
Exceptional non-operating expenses
2010 2009 GBP'000 GBP'000 Disposal proceeds less legal costs (271) - Goodwill associated with Personal 902 - Lines business Customer related intangibles associated 313 - with Personal Lines business Loss on disposal of Personal Lines 944 - business ======== ========
4. Earnings per share
The calculation of basic earnings per share for the year ended 31 December 2010 is based on the loss attributable to ordinary shareholders of GBP661,000 (2009: Profit GBP186,000) divided by the weighted average number of shares in issue of 15,823,685 (2009: 15,576,570), amounting to 4.18p (2009: 1.19p)
At 31 December 2010, there were 658,875 (2009: 1,046,000) share options in issue of which 7,546(2009: 195,622) were dilutive potential ordinary shares on average during the year. At the year end there were nil (2009: 239,130) shares to be issued in respect of deferred consideration for acquisitions made during or prior to the current year, and there were nil (2009: nil) dilutive potential ordinary shares on average during the year. At 31 December 2010, there were therefore a total of 7,546 (2009: 195,622) dilutive potential ordinary shares on average during the year. At 31 December 2010, the share options in issue are anti-dilutive in respect of the basic loss per share and have therefore not been included. The calculation of diluted earnings per share for the year ended 31 December 2010 is based on the loss attributable to ordinary shareholders of GBP661,000 (2009: Profit GBP186,000) divided by the weighted average number of diluted shares in issue of 15,823,685 (2009: 15,772,192), amounting to 4.18p (2009: 1.18p)
The adjusted earnings per share is based on the profit attributable to ordinary shareholders, after adding back amortisation, exceptional operating and non-operating expenses, share option charges and reflecting an ongoing tax charge of 28% (2009: 28%), as follows:
2010 2009 GBP000 Pence GBP000 Pence (Loss) / profit for the year (661) (4.18) 186 1.19 Exceptional non-operating charges 944 5.97 - - Profit for the year before loss on disposal of Personal Lines business 283 1.79 186 1.19 Amortisation 600 3.79 704 4.52 Exceptional operating charges 302 1.91 177 1.14 Share option charge 76 0.48 65 0.42 Adjustment to reflect an ongoing tax charge of 28% (655) (4.14) (393) (2.52) Adjusted earnings per share 606 3.83 739 4.75 ----------------------------------- ------- ------- ------- ------- Diluted adjusted earnings per share 606 3.83 739 4.69 ----------------------------------- ------- ------- ------- -------
5. Dividends
Amounts recognised as distributions to equity shareholders in the year:
2010 2009 GBP'000 GBP'000 Dividend paid per share in the period 0.70 pence (2009: 0.66p) 111 102 ---------------------------------- -------- --------
A final dividend of 0.75p per share (2009: 0.70p per share) amounting to GBP119,000 (2009: GBP109,000) in respect of the year ended 31 December 2010 is proposed. If approved at the Annual General Meeting, it will be paid on 27 May 2011 to those shareholders on the register on 6 May 2011.
6. Acquisitions
On 30 September 2010, the Company acquired the whole of the issued share capital and voting rights of Rockbridge Healthcare Limited.
This acquisition may be summarised as follows:
Rockbridge Healthcare Limited GBP'000 Trade and other receivables 7 Cash and cash equivalents 44 Trade and other payables (21) Fair value of net assets acquired 30 Goodwill 177 Other intangible assets 122 Deferred tax on other intangible assets (34) Consideration 295 ====================== Comprising: Cash 260 Deferred consideration: Cash 35 295 ====================== Purchase consideration settled in cash 260 Cash and cash equivalents acquired (44) Cash outflow on acquisitions 216 ======================
The assets and liabilities included in net assets acquired are stated at book values which are equivalent to their fair values. The only fair value adjustments made are in respect of intangible assets acquired. The initial accounting for the acquisitions made during the year ended 31 December 2010 has only been provisionally determined at the balance sheet date as adjustments may be necessary to book values following assessment after a further period of ownership.
The goodwill paid in respect of current period acquisitions relates to expected synergies to be achieved. Synergies to be achieved are as a result of a stronger presence in the market and synergies in sourcing and selling.
7. Share capital
Authorised share capital: 2010 2009 GBP'000 GBP'000 20,000,000 (2009: 20,000,000) Ordinary shares of GBP0.04 each 800 800 =========== ======== Allotted, called up and fully paid: 2010 2009 No GBP'000 No GBP'000 Ordinary shares of GBP0.04 each 15,878,753 636 15,665,161 627 =========== ======== =========== ======== Allotted, called up and fully paid: 2010 2009 GBP'000 GBP'000 At 1 January 627 620 Issued in the year: Acquisitions 9 5 Share option exercises - 2 At 31 December 636 627 =========== ========
8. Reconciliation of profit before taxation to net cash inflow from operating activities
2010 2009 GBP'000 GBP'000 (Loss) / profit before taxation (1,080) 80 Depreciation and loss on disposal of property plant & equipment 250 253 Amortisation 600 704 Loss on disposal of Personal Lines business 944 - Share option charge 76 65 Investment income (6) (10) Finance charges 74 117 Movements in working capital: Decrease in receivables 928 3,770 Decrease in payables (1,244) (1,981) Net cash inflow from operating activities 542 2,998 ======== ========
9. Reconciliation of net cash flow to movement in net debt
2010 2009 GBP'000 GBP'000 Net debt at 1 January (891) (1,139) Decrease in cash in the period (1,026) (1,458) Cash outflow from decrease in debt financing 410 1,706 Net debt at 31 December (1,507) (891) ======== ========
10. Annual Report
The annual report will be posted to shareholders on or around the 6 May 2011 and will also be available from the Group's website (www.cbg-group.co.uk) or from the Company Secretary at the Company's registered office: Southmoor House, Southmoor Road, Manchester M23 9XD.
22 March 2011
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
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