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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Clarkson Hill | LSE:CLKH | London | Ordinary Share | GB0032390055 | ORD 2P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 2.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMCLKH 2 July 2010 Clarkson Hill Group Plc ("Clarkson Hill" or the "Group") Final Results for the year to 31 December 2009 Results There was a Group operating loss before exceptional costs of GBP(104,999) (2008: GBP(645,095)), reflecting both the continued impact of economic uncertainty on investment business and the costs incurred in reorganisation and additional regulatory requirements placed on the group. Operating efficiency deteriorated to 21.7% (2008 17.7%) due largely to the reduction in turnover. The proportion of income derived from pension and investments increased by 9% over 2008. The proportion of protection remained broadly the same but mortgage related activities decreased by 47% down to just 8% of group income, as a result of the dramatic reduction in house sales and remortgages. Gross profit increased to 18.5% (2008 15.5%) this reflects the attention given to ensuring commission scale payments were in line with adviser production. Transition In order to prepare the Group for the impact of the Retail Distribution Review (RDR) the directors and advisers continue to focus on the creation of recurring income (trail and fees). Whilst RDR will not be implemented until the beginning of 2013, it is essential that this preparatory work is put in place now. As previously stated in the half year results, in order to establish recurring income, less initial commission is being received on single premium investment and pension sales. This is reflected in the fact that the average single premium investment commission income received in 2009 was 3.7% of premium, 4.5% in 2008 and 5.36% in 2007. Whilst income from Assets under management (AUM) continues to grow and is now running at the rate of approximately GBP3 million per year, it takes some time for the accumulated trail to fully compensate for the loss of initial commission. From the commencement of AUM in 2007 to December 2009 the effect of the decreased initial commission against the present increase in trail has caused a drop in gross profit of just over GBP300,000. Notwithstanding this transitional shortfall, the directors are clear that the work being done in this area is fundamental to the future strength of the Group post RDR and its valuation. Regulatory Costs During the second half of the year, the Group was subject to a regulatory review of its systems and controls. Independent consultants have reviewed the group's processes and revisions have taken place to bring them in line. This has resulted in changes in the Compliance department and significant exceptional costs. In April of 2010, The Financial Services Compensation Scheme raised a levy of GBP 80 million in respect of Pacific Continental Securities (UK) Ltd, Square Mile Securities Ltd and Keydata Investment Services. As a consequence the group received an invoice, 75% of which is backdated to the year 2009. This has been reflected in the accounts and identified as an exceptional item. In addition to the above costs the Group met its regulatory and P.I. annual costs of GBP608,000. Clearly the additional costs incurred against a background of a recession hit income, has resulted in the Group's loss for 2009. Qualifications for RDR The Group continues to assist its advisers in reaching the necessary qualification levels to be able to continue to provide client advice in 2013. 85% of advisers are either already qualified or completing the process of achieving the necessary level. The recent clarifications provided will assist in advisers obtaining the necessary qualifications. The Group will continue to provide both in-house and provider supported training to enable advisers to pass the examination within the time frame. The directors are confident that the vast majority of our advisers will achieve the necessary qualifications. For those advisers who chose not to pursue the examinations, plans are in place to enable them to continue to introduce clients to the group. It should be noted that some 7.5% of the CF30 advisers yet to proceed with the examination transact 90% of their business in the mortgage and protection market. The work already begun on moving Assets under Management will greatly assist both the Group and advisers in meeting the challenge of RDR. Treating Customers Fairly The Group continues to pay attention to regulatory and consumer aspects of Treating Customers Fairly. Since inception the group has carried out 132,300 advisory transactions. To date 30 complaints have been upheld, representing 0.022%. The directors continue to believe that the group's approach to compliance checking is the way to provide suitable advice to its clients and protect the group from future complaints. Outlook 2009 has been a difficult year for the Group, however, substantial steps have been taken, in the areas of cost savings, and increased recurring income, which will assist in going forward. The directors believe that continued focus on developing and recruiting professional qualified advisers, available to provide appropriate advice on a wide range of financial issues, to clients on a face to face basis is the way forward. This approach allied to an ever increasing recurring income base for the group will enhance the value of the Group. Following the losses incurred in 2009 and the increased regulatory costs, the Group needs to raise further capital to meet regulatory capital requirements. The directors are currently in discussions with a number of parties and are confident that this objective will be achieved. In the meantime the Group continues to trade as expected. Contact: Ron Pritchard The Clarkson Hill Group Tel: 01945 585721 plc Antony Legge / Stuart Lane Astaire Securities plc Tel: 020 7492 4750 www.clarksonhillgroup.co.uk The Clarkson Hill Group PLC Consolidated Statement of Comprehensive Income for the year ended 31 December 2009 12 months 17 months ended ended 31 December 31 December Notes 2009 2008 GBP GBP Revenue 3 17,551,520 29,093,190 Cost of sales (14,300,750) (24,590,999) Gross profit 3,250,770 4,502,191 Net operating expenses (3,355,769) (5,147,286) Operating loss 4 (104,999) (645,095) Exceptional items: 6 (465,107) - (570,106) (645,095) Interest receivable and similar 1,962 47,159 income Finance costs (68,555) (71,271) Loss on ordinary activities before (636,699) (669,207) taxation Tax on loss on ordinary (68,000) 163,721 activities Total comprehensive income for the (704,699) (505,486) year Basic loss per share 5 -2.6p -2.11p The Clarkson Hill Group PLC Consolidated Statement of Financial Position as at 31 December 2009 31 December 31 December 2009 2008 ASSETS GBP GBP Non current assets Intangibles 120,055 120,055 Property, Plant & Equipment 133,733 153,978 Investments 7,000 7,000 Deferred Tax 435,919 503,919 696,707 784,952 Current assets Trade and other receivables 3,509,013 3,189,357 Cash and cash equivalents 277,658 586,640 3,786,671 3,775,997 Total assets 4,483,378 4,560,949 EQUITIES & LIABILITIES Called up share capital 591,005 479,154 Share premium 2,205,159 2,087,011 Merger reserve (99,000) (99,000) Retained earnings (2,602,151) (1,897,452) Total equity 95,013 569,713 Non-current liabilities Long term borrowings 458,333 534,444 Current liabilities Trade and other payables 3,448,293 3,077,838 Short term borrowings 346,745 142,258 Current portion of long term 53,066 187,031 borrowings 81,928 49,665 Current taxes payable 3,930,032 3,456,792 Total equity and 4,483,378 4,560,949 liabilities The Clarkson Hill Group PLC Consolidated Statement of Cash Flows for the year ended 31 December 2009 12 months 17 months ended ended 31 31 December December 2009 2008 GBP GBP Cash flows from operating activities Loss before taxation (636,699) (669,207) Depreciation 73,500 80,200 Impairment - (1,775) Interest net 66,593 24,112 Operating loss before working capital (496,606) (566,670) changes (Increase)/decrease in trade and other (319,656) 211,095 receivables Increase in trade and other payables 402,718 405,316 Cash generated from operations (413,544) 49,741 Interest paid (68,555) (71,271) Net cash outflow from operating (482,099) (21,530) activities Cash flows from investing activities Net Disposals of intangibles - 18,000 Purchase property, plant & equipment (53,255) (40,645) Interest received 1,962 47,159 (51,293) 24,514 Cash flows from financing activities Share issue / Forfeiture of shares 229,999 (56,062) Proceeds from (repayment of) long term (4,444) 350,000 borrowings Movement in short term borrowings (1,145) (364,846) Payment of hire purchase and finance - (8,462) liabilities Net cash used in financing operations 224,410 (79,370) Net decrease in cash and cash (308,982) (76,386) equivalents Cash and cash equivalents at the 586,640 663,026 beginning of the period Cash and cash equivalents at the end 277,658 586,640 of the period The Clarkson Hill Group PLC Consolidated Statements of Changes in Equity for the year ended 31 December 2009 Share Share Merger Retained Total capital Premium reserve earnings equity At 1 January 2009 479,154 2,087,011 (99,000) (1,897,452) 569,713 Total comprehensive - - - (704,699) (704,699) income for the year Share issues 111,851 118,148 - - 229,999 Balance at 31 591,005 2,205,159 (99,000) (2,602,151) 95,013 December 2009 carried forward At 1 August 2007 482,154 2,140,073 (99,000) (1,391,966) 1,131,261 Total comprehensive - - - (505,486) (505,486) income for the year Share forfeiture (3,000) (53,062) - - (56,062) Balance at 31 479,154 2,087,011 (99,000) (1,897,452) 569,713 December 2008 carried forward Notes to the Accounts 1 Basis of preparation The accounts set out above do not constitute statutory accounts as defined by Section 428 of the UK Companies Act 2006. The balance sheets at 31 December 2009 and the income statement, cash flow statements and statement of changes in equity for the year then ended have been extracted from the Group's 2009 statutory financial statements upon which the auditors' opinion is unqualified. The results for the period ended 31 December 2008 have been extracted from the statutory accounts for that period, which contain an unqualified auditors' report. 2 Going Concern The directors have acknowledged the latest guidance on going concern and liquidity risk published by the Financial Reporting Council. Whilst the current uncertainty in financial markets has created general uncertainty, the group has well established trading and client relationships. The directors recognise that in order to meet regulatory capital requirements, an injection of capital is required. Currently the directors are in discussions with a number of parties and are confident that this objective will be achieved, however if it is not forthcoming the company may not continue as a going concern. If the company did not continue as a going concern some assets would need to be revalued, in particular the amount of GBP435,919 shown in non current assets as deferred tax recoverable would not exist. After making enquiries the directors have formed a judgement, at the time of approving the financial statements, that there is a reasonable expectation that the group will have adequate resources to continue in operational existence for the foreseeable future. For this reason, the directors continue to adopt the going concern basis in preparing the annual report and financial statements. 3 Segmental analysis During the year the group adopted IFRS 8 "Operating Segments". IFRS 8 replaces IAS 14 "Segmental reporting" and requires operating segments to be identified based on reporting to the Chief operating decision maker, which is the plc Board. The group operates as a National IFA, with all its advisers regulated through the company with the FSA. The clients advised and the products utilised are similar for all advisers. Therefore there is not considered to be any material difference in the identification of operating segments on the revised basis and accordingly the determination of the Group's operating segment continues to be by business type and as all business is carried out in the UK a secondary geographical segment is not considered relevant. The business segments can be analysed to the gross profit level; other costs, assets and liabilities are not directly attributable to any of the segments and apportionment is not considered meaningful. 12 months 12 months 17 months 17 months ended ended ended ended 31 31 31 31 December December December December 2009 2009 2008 2008 Turnover Gross Turnover Gross Profit Profit GBP GBP GBP GBP Investments 6,744,914 1,234,993 10,121,105 1,551,437 Pensions 5,548,766 1,063,345 8,675,232 1,313,374 Fees/Mortgages 1,327,285 245,107 4,337,616 624,187 Protection 3,771,080 597,850 5,783,488 873,750 Other 159,475 109,475 175,749 139,443 17,551,520 3,250,770 29,093,190 4,502,191 31 31 December December 4 Operating loss 2009 2008 GBP GBP Operating loss is stated after charging: Depreciation of owned fixed 73,500 72,573 assets Depreciation of - 7,627 assets held under finance leases and hire purchase contracts Amortisation - (1,775) Operating lease rentals - 299,427 481,192 land & buildings Auditors' remuneration Audit fee 42,400 27,050 5 Loss per share The earnings per share is calculated on the loss attributable to ordinary shareholders of GBP704,699 (2008: loss GBP505,486) divided by 27,115,161 (2008: 23,957,677) being the weighted average number of ordinary shares in issue during the year. During 2009 and 2008, the share warrants and options were antidilutive and accordingly there is no dilution of loss per share. However, the share options could potentially dilute basic earnings per share in the future 6 Exceptional items 2009 2008 GBP GBP Exceptional costs (465,107) - As highlighted in the Interim report, GBP129,320 of exceptional costs were incurred in a combination of redundancies and the renegotiation of office contracts. In order to meet the requirements of the FSA, Independent consultants were employed to review and then revise the groups processes and procedures resulting in an exceptional cost of GBP230,787. In April of 2010 The Financial Services Compensation Scheme raised a levy of GBP80 million in respect of Pacific Continental Securities (UK) Ltd, Square Mile Securities Ltd and Keydata Investment Services. As a consequence the group received an invoice, GBP105,000 of which, is backdated to the year 2009. This has been reflected in the accounts and identified as an exceptional item, as this is now subject to a judicial review. A mounts owed to group undertakings and undertakings in which the company has a participating interest END
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