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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Prestbury Hds | LSE:PBH | London | Ordinary Share | GB0032097965 | ORD 5P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 1.75 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
RNS Number:0057N Prestbury Holdings PLC 31 January 2008 31 January 2008 Prestbury Holdings PLC ("Prestbury", "the Company" or "the Group") Second Interim Results for the six months ended 31 October 2007 Prestbury, the AIM-listed low risk financial intermediary company, announces its unaudited results for the six months ended 31 October 2007. The highlights were: - Turnover improved to £4.7m (six months ended 30 April 2007: £4.5m*). - Margin improved to 18.9 per cent (six months ended 30 April 2007: 18.7 per cent*) - Gross Profit improved to £0.9m (six months ended 30 April 2007: £0.8m*) - Shareholders' funds unchanged at £2.3m - Cash position improved to £412,000 (six months ended 30 April 2007: £354,000) - Overheads reduced to £756,051 - (six months ended 30 April 2007: £871,104*) - EBITDA improved to £0.1m - (six months ended 30 April 2007: £0.0m*) - Advanced stage discussions for acquisition of entire share capital of the Company by Management. * The results for the six months ended 30 April 2007 have been restated primarily to reflect the re-allocation of personnel costs between Prestbury Financial Limited and Prestbury Investment Management Limited, which historically have been reviewed annually in arrears in December of each year, and an increase in broker commission payable for the period. Chairman's Statement Prestbury's trading has remained remarkably stable through an intensely difficult period in the mortgage market. However the business will be subject to intense pressure over the period ahead, with margins being squeezed. Other networks will be increasingly stressed and there are real opportunities for Prestbury to recruit new advisers. Your Board believes that the costs associated with being quoted on the AIM market are at a level that makes it much harder for Prestbury to deliver growth in shareholder value. The independent directors are therefore currently in discussions with the executive management team of Prestbury (the "Management") regarding a proposal from the executive management to make an offer to acquire the entire issued share capital of the Company ("Prestbury Shares"). Such discussions are at an advanced stage (but have not yet been concluded and therefore this announcement does not constitute a firm intention to make an offer for the Prestbury shares nor is there any certainty that an offer will be made) and it is intended that the consideration for the offer would be new shares in a company which is to be newly formed by the Management for the purposes of the offer ("Newco" and "Offeror"), such new shares to be issued on a one for one basis, with a loan note as an alternative form of offer consideration. The loan notes would be non interest bearing, unsecured and issued by Newco in the amount of 20p per Prestbury Share and would be redeemable in the same amount. It is intended that there would be no fixed date for redemption of the loan notes, but that they would be redeemed as soon as possible following issue as the first payment priority of Newco out of the net financial resources available to Newco (after payment of the operating costs of Newco and its subsidiaries) from time to time. Investors should note that although the principal amount and redemption terms of the loan notes are expected to be as described in this paragraph, there is no certainty as to what the actual value to investors of the loan notes will be. Further details in this regard will be set out in any offer document, if or when an offer is made by the Offeror. 20p is the price at which new shares in the Company were last placed in December 2006. This statement is made with the agreement and approval of the Offeror. Francis Maude Chairman Chief Executive's Statement The credit crunch in the second half of 2007 has hit the entire mortgage sector hard. Prestbury has understandably not been immune to the impact and downturn in property and mortgage transactions that followed, but I feel we have managed the associated risks well. The Northern Rock debacle has caused a great deal of concern and uncertainty in our industry, but the low risk whole of market business model that Prestbury champions has stood up well to the market downturn. Whilst Northern Rock accounted for 15 per cent of lending in the first half of 2007, this lending has now been taken up by Banco Santander - Abbey. Overall, however, mortgage transactions were down in the second half, but this drop in mortgage income was offset by an improvement in insurance margin delivering total revenues in the second half of the 2007 financial year marginally ahead of the first half. Less than one per cent of our lending partners have actually withdrawn from providing new mortgages to the prime market, i.e. those free of any bad credit. However, nearly all have increased the rates and reduced the loan-to-value ratio on their mortgage products. The costs associated post credit crunch of the mortgage market to the consumer and the lenders themselves have put such a squeeze on the market that new net lending across the industry has dropped by approximately 20 per cent, predominantly down to affordability of the higher interest rates and the higher loan to value products being withdrawn from the market. On a more positive note however, 60 per cent of Prestbury mortgage income is actually originated from existing client re-mortgages at below 75 per cent loan to value, and we expect this percentage of mortgage revenue to continue. The net drop in Prestbury advisers' income from mortgages has therefore only been around 10 per cent as a result of the credit crunch. Since August 2007, the money markets have effectively closed the doors for business to lenders who specialise in the higher margin sub-prime sector. These lending businesses have been unable to access affordable capital elsewhere, thereby removing their ability to lend competitively to the UK's poor credit population to the same levels they had previously achieved. The zero appetite to do business in the current market is as a direct result of the American sub-prime crisis. The American lenders have been hit the worst because of record levels of mortgage and loan defaults, and affecting the worldwide banking giants Citibank and Merrill Lynch to name just two, are also major lenders in the UK's bad credit market, so the UK lending arms have naturally been hit as a result. It also needs noting that Northern Rock, whilst not being a bad credit lender, used the same method of funding as the bad credit lenders and, as a result, the doors where closed to them also, resulting in the current Northern Rock crisis and the emergency funding being provided by the Bank of England. The result of the downturn in the sub-prime sector has only marginally hit the underlying operational margin and performance of the Prestbury Holdings PLC business, as the sub-prime activities were taken out of the Group as part of a risk strategy implemented in 2005. The business directly involved in the sub-prime crisis, Prestbury Investment Management Limited ("PIM"), a company owned by Stephen Keenan and myself, has seen new enquiries and demand hold up well, but due to the reduced ability of lenders to provide funding, completed transactions have recently fallen by 50 per cent. The reason that such a dramatic downturn has occurred so quickly is as a result of the credit crunch and the lenders historical business plans no longer being viable. These lenders sold the mortgages soon after they completed as part of a pool of securitised loan and mortgage bonds sold into the markets around the world. Two fundamental elements to these lenders business models, as a result of the credit crunch, have failed, not only being able to get the money in the front door to lend, but nobody to buy it at the back end either. As a result of the dramatic downturn, and in a similar way to the mainstream prime lenders, the sub-prime lenders who lend via PIM and operate a traditional risk-based balance sheet lending model, i.e. buildings societies and savings banks, have increased the interest rates to sub-prime borrowers by approx 40 per cent and the loan-to-value of products have reduced equally aggressively. This market is now operating at a level more akin to common sense lending, as the majority of lenders now price to risk, as opposed to those that operated via the money markets who priced to sell. Prestbury Investment Management Limited maintains strong relationships with these lenders. Lee Birkett Chief Executive Officer 31 January 2008 Consolidated profit and loss account for the six months ended 31 October 2007 Note Six months Six months Year ended 31 ended ended October 2006 31 October 2007 30 April (audited) (unaudited) 2007 (unaudited) (restated) £'000 £'000 £'000 £ £ £ Turnover 4,669,527 4,502,131 10,216,920 Cost of sales (3,786,149) (3,658,124) (7,918,327) --------- ---------- --------- Gross Profit 883,378 844,007 2,298,593 Administrative expenses (756,051) (871,104) (1,717,655) Other operating income - 24,206 53,482 --------- ---------- --------- Profit before interest, depreciation and amortisation 127,327 (2,891) 634,420 Depreciation and amortisation (89,282) (91,802) (192,443) --------- ---------- --------- Operating profit/(loss) 38,045 (94,693) 441,977 Interest receivable and similar income 26,156 5,538 339 --------- ---------- --------- 64,201 (89,155) 442,316 Interest payable and similar charges (795) (1,439) (15,645) --------- ---------- --------- Profit/(loss) on ordinary activities before taxation 63,406 (90,594) 426,671 Tax on (loss)/profit on ordinary activities (20,052) 28,343 (180,893) --------- ---------- --------- Profit/(loss) for the financial period after taxation 43,354 (62,251) 245,778 Retained loss brought forward (4,047,979) (3,985,728) (4,231,506) --------- ---------- --------- Retained loss carried forward (4,004,625) (4,047,979) (3,985,728) ========= ========== ========= Basic profit/(loss) per share 5 0.14p (0.22p) 0.98p ========= ========== ========= Consolidated Balance Sheet As at 31 October 2007 At At At 31 October 30 April 31 October 2007 2007 2006 (unaudited) (unaudited) (audited) £'000 (restated) £'000 £'000 Fixed Assets Tangible 127,171 139,150 141,775 assets Intangible 834,065 888,460 942,855 assets -------- -------- -------- 961,236 1,027,610 1,084,630 Current assets: Debtors due within one year Amounts due from related 188,593 188,592 76,667 undertaking Other debtors 459,162 427,329 666,485 Debtors due after one year Amounts due from related 660,072 754,368 774,692 undertaking Deferred tax 1,057,232 1,077,284 870,331 asset -------- --------- -------- 2,365,059 2,447,573 2,388,175 Cash at bank 412,010 354,728 24,394 -------- --------- -------- 2,777,069 2,802,301 2,412,569 Creditors: Amounts falling due (1,334,976) (1,452,774) (1,933,841) within one -------- --------- -------- year Net current 1,442,093 1,349,527 478,728 assets -------- -------- -------- Total assets less 2,403,329 2,377,137 1,563,358 current liabilities Creditors: Amounts falling due (5,585) (7,370) (9,115) after more than one year Provisions for (75,679) (91,056) (105,498) liabilties -------- -------- -------- and charges 2,322,065 2,278,711 1,448,745 ======== ======== ======== Capital and reserves Called up 1,517,389 1,517,389 1,267,389 share capital Share premium 4,840,006 4,840,006 4,197,789 account Treasury (30,705) (30,705) (30,705) shares Profit and (4,004,625) (4,047,979) (3,985,728) loss account -------- -------- -------- Shareholders' 2,322,065 2,278,711 1,448,745 Funds ======== ======== ======== Consolidated Cash Flow Statement For the six months ended 31 October 2007 Six months Six months Year ended to ended 31 ended 30 April October 2007 2007 31 October (unaudited) (unaudited) 2006 (restated) (audited) Notes £'000 £'000 £'000 Net cash inflow/(outflo w) from operating activities 1 149,316 (475,002) 79,462 Returns on investments and servicing of finance 2 25,361 4,099 (15,306) Capital expenditure and financial investment 2 (22,385) (34,782) (36,404) Financing 2 (95,010) 836,019 (10,455) ------------ ------------- ------------ Increase in cash in the period 57,282 330,334 17,297 ============ ============= ============ Reconciliation of net cash flow to movement in net debt Increase in cash in the period 3 57,282 330,334 17,297 Cash outflow from decrease in debt and lease financing 8,343 2,866 10,455 ------------ ------------- ------------ 65,625 333,200 27,752 Movement in net funds in the period Net funds/(debt) at beginning of period 337,270 4,070 (23,682) ------------ ------------- ------------ Net funds at end of period 402,895 337,270 4,070 ============ ============= ============ 1. Reconciliation of operating profit to net cash outflow from operating activities Six months Six months Year ended ended ended 31 October 2007 30 April 31 October 2006 (unaudited) £'000 2007 (audited) (unaudited) (restated) £'000 £'000 Operating profit/(loss) 38,045 (94,693) 441,977 Profit on sale of fixed assets (523) - - Depreciation charges 34,887 37,407 88,652 Amortisation of goodwill 54,395 54,395 103,791 Decrease/(increase) in debtors 62,462 (31,055) (813,724) (Decrease)/ increase in creditors (24,573) (426,614) 285,002 Decrease in provisions (15,377) (14,442) (26,236) --------- --------- --------- Net cash inflow/(outflow) from operating activities 149,316 (475,002) 79,462 ========= ========= ========= 2. Analysis of Cash Flows for headings netted in the cash flow statement Six months Six months Year ended ended ended 31 October 2007 30 April 31 October 2006 (unaudited) £'000 2007 (audited) (unaudited) (restated) £'000 £'000 Returns on investments and servicing of finance Interest received 26,156 5,538 339 Interest paid (528) (1,011) (14,159) Hire purchase interest (267) (428) (1,486) --------- --------- --------- Net cash inflow / (outflow) for returns on investments and servicing of finance 25,361 4,099 (15,306) ========= ========= ========= Capital expenditure and financial investment Sale of tangible fixed assets 5,772 - - Purchase of tangible fixed assets (28,157) (34,782) (36,404) --------- --------- --------- Net cash outflow for capital expenditure (22,385) (34,782) (36,404) ========= ========= ========= Financing Share issue - 892,217 - Deferred consideration repayment (86,667) (53,332) - Capital element of hire purchase and finance lease rental payments (8,343) (2,866) (10,455) --------- --------- --------- Net cash inflow/ (outflow) from financing (95,010) 836,019 (10,455) ========= ========= ========= 3. Analysis of changes in net debt At 31 October Cash flow At Cash flow At 31 October 2006 2007 30 April 2007 £ £ £ £ £ Cash at bank 24,394 330,334 354,728 57,282 412,010 ======= ======== ======== ========= ======== Debt: Hire purchase (20,324) 2,866 (17,458) 8,343 (9,115) ======= ======== ======== ========= ======== Total 4,070 333,200 337,270 65,625 402,895 ======= ======== ======== ========= ======== 4. Basis of Consolidation The unaudited interim group accounts consolidate the accounts of Prestbury Holdings plc and its subsidiary undertaking Prestbury Financial Limited. The combination between Prestbury Holdings Plc and Prestbury Financial Limited has been accounted for as a merger and accordingly the financial information has been presented as if Prestbury Financial Limited had been a subsidiary from the date of its incorporation. 5. Profit/(Loss) per share The calculation of the profit/(loss) per share is based on the profit/(loss) attributable to ordinary shareholders of £43,354 (six months ended 30 April 2007: £62,251 loss; year ended 31 October 2006: £245,778 profit) divided by 30,347,778 (six months ended 30 April 2007: 28,745,038; year ended 31 October 2006: 25,019,011), being the weighted average number of shares in issue during the period. 6. Dividends No dividend is proposed for the six months ended 31 October 2007. 7. Copies of the Interim Financial Statements Copies of the second interim financial statements are available on request from the Company's registered office at Prestbury Holdings Plc, Barrington House, Heyes Lane, Alderley Edge, Cheshire, SK9 7LA and on the Company's website www.prestbury.com. Further enquiries Prestbury Holdings plc Telephone Lee Birkett (Chief Executive) 01625 591 400 John East & Partners Limited 020 7628 2200 David Worlidge Simon Clements Dealing Disclosure Requirements Under the provisions of Rule 8.3 of the Code, if any person is, or becomes, 'interested' (directly or indirectly) in 1 per cent. or more of any class of 'relevant securities' of Prestbury Holdings Plc, all 'dealings' in any 'relevant securities' of that company (including by means of an option in respect of, or a derivative referenced to, any such 'relevant securities') must be publicly disclosed by no later than 3.30 pm (London time) on the London business day following the date of the relevant transaction. This requirement will continue until the date on which any offer (if made) becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on which the 'offer period' otherwise ends. If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an 'interest' in 'relevant securities', they will be deemed to be a single person for the purpose of Rule 8.3. Under the provisions of Rule 8.1 of the Code, all 'dealings' in 'relevant securities' by the Offeror or Prestbury Holdings Plc, or by any of their respective 'associates', must be disclosed by no later than 12.00 noon (London time) on the London business day following the date of the relevant transaction. A disclosure table, giving details of the companies in whose 'relevant securities' 'dealings' should be disclosed, and the number of such securities in issue, can be found on the Takeover Panel's website at www.thetakeoverpanel.org.uk. 'Interests in securities' arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an 'interest' by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities. Terms in quotation marks are defined in the Code, which can also be found on the Panel's website. If you are in any doubt as to whether or not you are required to disclose a 'dealing' under Rule 8, you should consult the Panel. This information is provided by RNS The company news service from the London Stock Exchange END IR KGGFMDMRGRZM
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