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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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City Of London Group Plc | LSE:CIN | London | Ordinary Share | GB00BD9GS058 | ORD 2P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 10.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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RNS Number:0603M City Of London Group PLC 9 June 2003 CITY OF LONDON GROUP PLC Triton Court, 14 Finsbury Square, London EC2R 1BY 9th June, 2003 Preliminary Results And Chairman's Report For The Year Ended March 31st, 2003 A GLIMPSE OF LIGHT AFTER A LONG PERIOD OF DARKNESS Group Clears The Decks As It Prepares To Move Forwards The past financial year to put it mildly has been a shocker and upsetting for all. At the investment portfolio level, almost weekly, and sometimes daily at one stage, there was news on individual shares that had a harsh impact on values. Remarkably despite the dramatic downturn in stockmarkets we have survived in better shape than once feared. Net assets at year end stood at 58p (98p) per share. The fallow year in operating profits predicted at the interim stage has resulted in no dividend being recommended for the year in order to preserve funds. We continue to nurture our investment in compliance archiving through Archive-it (renamed from Rchive-it and 72.5pc. held after full dilution) which is now revenue producing. In order to greatly accelerate its progress, and only if favourable terms can be agreed, a decision has been taken to dilute/dispose of part or all of our shareholding during the course of the next year but retaining an interest in its future. Discussions to this end are taking place with interested parties and may continue throughout the summer. My view is it will probably go to the foresighted Americans as do so many good British inventions. Pre-tax profits for the year ended March 31, 2003 fell to #369,208 (#704,622) before the previously announced write-off of #2.6m against our technology investments. In addition we have provided #1.25m against the fall in value of listed holdings. At the operating level the PR division made a small pre-tax loss of #43,534 (profit #37,339) with little sign of improvement in the mining sector it serves. Dividends and interest payments held up well and brought in #245,386 (#284,493) before payment of bank interest of #112,656 (#44,364). Gains from sales of investments amounted to #285,173 (#387,890), the biggest contributor being gold stock Oxiana Resources. Group losses for the year totalled 40.62p (profit 6.66p) per share which reflects all the exceptional provisions made. Our tax charge was #17,736 (#136,257). The group's investment portfolio of quoted holdings at market value totalled #5.57m before deducting bank borrowings of #2.96m. At year end the twelve largest quoted holdings had a mid-market value of #2,978,000 against a book cost of #2,594,000. The mid-market value last year was #3,926,000 and illustrates the steepness of the fall which has taken place in share prices. The portfolio net worth (including #244,000 of unlisted holdings) was equivalent to 32.8p per share, with an additional 27.5p per share (#2.39m) invested in Archive-it. This investment is through a mixture of equity and loans in Archive-it which is now 91p.c. owned (72.5p.c. effectively after full dilution). Archive-it made a pre-interest loss of #242,456 on sales of #65,435 in the three months to end-March and in view of the decision taken to sell or refinance the business during the course of the next year, our portion of the loss has not been consolidated. There is always the temptation to sell shares in a falling market and when values are low. History shows it is better to sit tight through periods of such great uncertainty. We are experiencing some small uplift currently ... may it continue. Our mixed adventures into the world of the internet are on record. Moving into the 21st Century captured the imagination of the capitalist world thirsting for braver types of investment with a potential for huge returns. The internet and the multitude of opportunities it presented was irresistible for most investors with red blood coursing in their veins. The internet, no one could deny, was here to stay; the dotcoms were not. We picked on three areas for our activity. One was a bulletin trade site, ECeurope.com which was built up into a membership of 136,000 but failure to convert to paying membership led to immediate closure of the site Our second investment was Direct Broadcasting Corporation (effectively 40p.c. held), designers of media management software, providing scheduling, production, distribution and automated billing for digital networks; this has been mothballed for the moment. The two above investments have been written off for book purposes. Our resources have been concentrated on the third investment, Archive-it, where we backed a software design team with a background in secure messaging to come up with an email archiving solution for compliance and storage. This would be easy to use, built on open architecture, and sort, store, index emails as they became an increasing problem to organizations worldwide. So far only 2p.c. of UK business has adopted an email archiving product according to a survey we carried out. Our own Enterprise product, MailStore, is in the marketplace and orders have been received, though on the slow side , from a variety of police forces, legal and architectural firms, local authorities, and government bodies. The sales cycle has been lengthened by lack of education amongst IT staff about the real impact of regulation around email which the U.S. has just caught on to. Cash flow from Archive-it is spluttering to life but a monthly break-even position is not expected before the end of the year as the larger sales from the channel-driven sources we have been developing start coming through. The required funding to break-even in December this year is estimated by management at around #300,000. All these stakes were taken on reasonable investment grounds and the anticipation that second-round funding would be later forthcoming with only a slight change in market sentiment. But investor sentiment turned sour towards all forms of development companies and products took longer to development completion. Archive-it was always a five year investment to yield major returns. We have completed three years of this investment and appreciate the company is undercapitalized for the role it is destined to play as "The Best of Breed" in the compliance archiving market and the marketing spend this entails. After an unsolicited approach by an American firm with a strong corporate customer base who likes the product, and now by other parties, we are appraising the options before reaching a decision. Separately talks are being held with another U.S. company specializing in the email area with a view of closer ties. Archive-it has also started meetings with venture capitalists in the UK who have expressed interest in raising funds to develop the sales and service infrastructure and look at voice mail archiving. The value of our investment in Archive-it, whose results are not included in the figures, has not been written up or down since worth can be judged only on product sales and future profitability and, quite rightly, the auditors have again flagged uncertainty of this investment. LOOKING TO THE FUTURE These are times of significant change in business throughout the world. They come at both organizational and personal level and City of London Group in the year ahead will initiate change although keeping to a role within the media and investment sectors. Hefty provisions have been made this year as it is prudent to do so but we hold steady to our purpose of increasing shareholder value again after the downturn. The storm is abating and some sense of values beginning to return. It is to be noted that we hold at zero book value the PR business, and intellectual property rights over the ECeurope and DBC software. The tone for business generally will be set in America over the next year as Stock Markets warm towards the November 2004 presidential election. There will be opportunity again for fledgling companies with ideas. In the meantime, Archive-it's MailStore software is winning clients and more recently has sold to a leading firm of City solicitors. Talks to integrate the system into a major manufacturer's software are reaching an interesting stage. The Archive-it software - it took longer to be better - is a 'Rolls Royce' engine designed to power many different planes in the email world and provide safe and secure flights to and from all storage destinations. MailStore has been rebadged in the United States where marketing has just begun, and a #100m enterprise solutions provider in London is carrying out a similar exercise. Sales from these sources should start coming through shortly. Leading software channel Computacenter has also adopted MailStore as a priority product to sell through its government division. The PR industry has seen some of the worst retrenchment in a very long time. Our own business continues to find the going difficult although mostly able to cope in slow but deteriorating circumstances. Taking advantage of a weak market it will look for a suitable partner in the coming year with the emphasis on the UK side. Yes, despite the severity of the setbacks in the past year, there are grounds for both hope and some optimism. We are in a settling down mode after a particularly discouraging and gloomy period ... and ready to move forwards. 9th June, 2003 JOHN GREENHALGH Chairman 020 7628 5518 (M: 070500 39678) CITY OF LONDON GROUP PLC GROUP PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2003 2003 2002 # # TURNOVER - CONTINUING OPERATIONS 371,789 496,414 Cost of sales 52,628 71,984 ----------- ------------ GROSS PROFIT 319,161 424,430 Administrative expenses 375,397 399,480 ----------- ---------- (56,236) 24,950 Other operating income 7,541 11,653 ----------- ---------- OPERATING (LOSS)/PROFIT (48,695) 36,603 Interest payable (112,656) (44,364) Interest receivable and other investment income 245,386 284,493 ----------- ----------- 84,035 276,732 Profit on sale of subsidiary - 190,000 Profit on disposal of investments 285,173 387,890 Provision for diminution in investments (3,859,800) (150,000) ------------- ----------- (LOSS)/PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION (3,490,592) 704,622 Tax on (loss)/profit on ordinary activities (18,042) (136,257) ------------- ----------- (Loss)/profit on ordinary activities after taxation (3,508,634) 568,365 Dividends - 584,826 -------------- ----------- RETAINED LOSS FOR THE YEAR (3,508,634) (16,461) ============== =========== Earnings per share - undiluted (40.62)p 6.66p - diluted (40.62)p 6.65p Notes: 1. The financial information contained in this preliminary announcement does not constitute full accounts as defined in section 227 of the Companies Act 1985 and has been extracted from the financial statements for the years ended 31 March 2003 and 31 March 2002 upon which the auditors have neither qualified their opinion nor included a statement under section 237 (2) or (3) of the Companies Act 1985. The statutory accounts will be filed with the Registrar of Companies in due course. 2. The calculation of earnings per share is based on the profit after taxation, divided by the weighted average number of shares in the period of 8,636,797 (2002: 8,535,340). The calculation of diluted earnings per share divided this profit by a revised average of 8,636,797 diluted shares (2002: 8,552,862). CITY OF LONDON GROUP PLC GROUP BALANCE SHEET AT 31 MARCH 2003 2003 2002 # # # FIXED ASSETS Tangible assets 7,600 12,199 Investments 5,842,654 10,609,935 ------------- ----------- 5,850,254 10,622,134 ------------- ------------ CURRENT ASSETS Current asset investments 2,392,142 - Debtors 60,952 149,462 Cash at bank and in hand 209,525 93,882 ------------- ------------- 2,662,619 243,344 CREDITORS: amounts falling due within one year (3,478,199) (2,474,168) ------------- ------------- NET CURRENT LIABILITIES (815,580) (2,230,824) ---------- ------------- TOTAL ASSETS LESS CURRENT LIABILITIES 5,034,674 8,391,310 ========== ============= CAPITAL AND RESERVES Called up share capital 868,973 853,760 Share premium account 4,200,838 4,064,053 Profit and loss account (35,137) 3,473,497 ------------- ------------- EQUITY SHAREHOLDERS' FUNDS 5,034,674 8,391,310 ============= ============= CITY OF LONDON GROUP PLC CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2003 2003 2002 # # # CASH FLOW FROM OPERATING ACTIVITIES (957,772) 159,537 RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest received 9,567 20,091 Interest paid (112,656) (44,364) Dividends received 249,079 266,664 ---------- ---------- NET CASH INFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE 145,990 242,391 TAXATION (185,724) (67,919) CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Purchase of tangible fixed assets (2,536) (6,688) Payments made under loan guarantees (300,000) - Purchase of investments (496,193) (1,937,678) Sale of investments 590,691 666,686 ---------- ------------ NET CASH FLOW FROM CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT (208,038) (1,277,680) ACQUISITIONS AND DISPOSALS Sale of subsidiary - 190,000 ---------- ------------ NET CASH FLOW FROM ACQUISITIONS AND DISPOSALS - 190,000 EQUITY DIVIDENDS PAID (400,954) (307,007) ----------- ----------- NET CASH OUTFLOW BEFORE FINANCING (1,606,498) (1,060,678) FINANCING Issue of ordinary share capital - 10,563 Increase in bank loans 1,722,141 1,018,123 ---------- ----------- INCREASE/(DECREASE) IN CASH IN THE PERIOD 115,643 (31,992) ========== =========== This information is provided by RNS The company news service from the London Stock Exchange END FR NKAKDOBKDFAK
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