AMBR.L Regulatory News (AMBR)

21 Mar 2007 07:02

Ambrian Capital PLC21 March 2007 AMBRIAN CAPITAL PLC 21 March 2007 PRELIMINARY ANNOUNCEMENT OF UNAUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006 Ambrian Capital plc, the investment bank, today announces its preliminaryunaudited results for the year ended 31 December 2006. Highlights • Operating income up 47% to £19.99 million (2005: £13.64 million) • Profit before tax up 34% to £12.44 million (2005: £9.29 million) • Basic earnings per share up 35% to 8.16p (2005: 6.03p) • Final dividend of 1.00p per share making 1.75p for the full year (2005: 1.25p for the full year) • Investment Banking activities produced operating income up 167% to £7.99 million (2005: £3.00 million), representing 40% of the Group's total operating income • Realisations of portfolio investments produced operating income of £11.99 million (2005: £10.64 million) • Shareholders' equity plus unrealised gains of approximately £50.9 million, comprising £37.0 million of shareholders' equity (2005: £31.4 million) and £13.9 million of unrealised gains (2005: £17.1 million) • Return on average shareholder's equity of 25.0% for 2006 Commenting on the results, Malcolm Burne, Chairman of Ambrian Capital plc, said: "We are very pleased with the substantial progress made during the year intransforming the Group into an integrated investment bank. Not only has therebeen significant expansion at Ambrian Partners Limited, our corporate financeand stockbroking subsidiary, but we also launched Ambrian Commodities Limitedand Ambrian Asset Management Limited, which are both well positioned for furthergrowth." Enquiries: Malcolm Burne Tel: +44 (0)20 7395 1930ChairmanAmbrian Capital plc Tom Gaffney Tel: +44 (0)20 7776 6400Chief Executive OfficerAmbrian Capital plc Simon Atkinson Tel: +44 (0)20 7523 8306Collins Stewart Cathy Malins & Annabel Leather Tel: +44 (0)20 7851 7480Parkgreen Communications Further information on Ambrian Capital plc: Further information on Ambrian Capital is available on the Company's website:www.ambrian.com Chairman's Statement Dear Shareholders, The year under review has been very eventful indeed, marked by a period ofrecord results, significant expansion within all Group subsidiaries,diversification of product range and services, a tax efficient re-structuring ofour quoted precious metals assets and a name change to better reflect the newfocus of the Group. The Group has evolved into an entity that works its assets intensively toproduce increasing and recurring earnings, achieves a greater than averagereturn on equity and ploughs its profits back into cash generative businessesfor the benefit of all shareholders. We have now succeeded in building Ambrian Capital into a vehicle firing on allcylinders. Our plan to convert our investment portfolio into operatingbusinesses has worked well but we have not given up our investment roots. Ourworking capital, plus the market value of our investments, continues to increaseyear-on-year, both absolutely and on a per share basis. The best asset of any group is its people and under the guidance of our ChiefExecutive Tom Gaffney, a strong recruitment programme has produced a teamexcelling in integrity, prudence, professionalism and innovation. Our declaredstrategies and philosophies, and increasing reputation, are attracting the verybest people who wish to work in the environment that we are creating. Within robust central controls, each autonomous subsidiary is encouraged tofulfil and expand its project pipeline, as well as to make strategic marketdecisions where opportunities for synergy exist. Ambrian Capital is now afully-fledged investment bank and its objectives are the identification,acquisition, financing, development and operation of earnings generativebusinesses, which complement each other in providing maximum marketintelligence. Results The Directors are pleased to report that the Group's profit before tax for theyear ended 31 December 2006 increased by 34% to a record £12.44 million (2005:£9.29 million), while basic earnings per share increased by 35% to 8.16p from6.03p. The Group's operating income increased 47% to £19.99 million from £13.64million. Investment Banking activities accounted for approximately 40% ofoperating income (2005: 22%), while realised profits arising from our portfolioinvestment activities accounted for approximately 60% (2005: 78%). The Group's shareholders' equity at 31 December 2006 was £37.0 million (2005:£31.4 million). The market value of listed investments at 31 December 2006 wasapproximately £31.9 million (2005: £39.7 million), including unrealised gains(pre-tax) of £13.9 million. The Group's cash resources net of client deposits increased to £16.8 millioncompared with £4.2 million at 31 December 2005. Dividend The Board declares payment of a final dividend of 1.00p per share (2005: 0.75p),making a total of 1.75p for the full year (2005: 1.25p). The dividend will bepayable on 25 May 2007 to all shareholders on the register as at 4 May 2007. Investment Banking Investment Banking operating income for the year ended 31 December 2006 was£7.99 million, up 167% from £3.00 million for the year ended 31 December 2005,reflecting the rapid growth of our investment banking activities. Ambrian Partners Limited Ambrian Partners Limited, our wholly-owned corporate finance and stockbrokingsubsidiary, was involved in 14 capital raisings with a total value ofapproximately £135 million, including five Initial Public Offerings ("IPOs") onAIM. At 31 December 2006 Ambrian Partners had 35 corporate clients who payregular retainer fees. During the year Ambrian Partners made significant progress in broadening theindustry sectors in which it is active and was able to recruit additionaltalented staff. Ambrian Partners has been replicating the industry specialistmodel which it has successfully implemented in the mining sector. Broadening sector expertise provides new growth opportunities and ensures thedevelopment of a corporate finance and stockbroking business that is sustainableover the long term. Ambrian Partners is now active in six industry sectors -mining, oil & gas, soft commodities, renewable energy, telecommunications andtechnology. The expertise of its sector focused research teams has givenAmbrian Partners a competitive edge when competing for corporate andinstitutional business. Despite the slowdown in new issue activity on AIM in the second half of 2006,the mandated transaction "pipeline" for Ambrian Partners in 2007 is healthy. Inresponse to changing market conditions our mix of business is evolving with anincreased amount of corporate finance advisory work and new equity issuesoutside of our traditional mining sector. For example, we are currently acting as joint-financial advisor to the Chineseconsortium which has made a £95 million recommended cash offer for MonterricoMetals plc, the AIM listed Peruvian copper company. New clients include TMORenewables Ltd., a producer of enzymes used in the production of ethanol; BorealEnergy, a US based developer of wind energy farms and Future Internet Technologyplc, an AIM listed solutions provider for telecom carriers. To improve our secondary market service to our institutional clients we intendin the coming months to commence making markets in the shares of our corporateclients as well as selectively in the shares of companies we publish researchon. Ambrian Commodities Limited In March 2006 we launched Ambrian Commodities Limited, an Associate BrokerMember of the London Metal Exchange. Ambrian Commodities is a broker/dealer inaluminium, copper, lead, nickel and zinc, as well as precious metals (gold,silver, platinum and palladium). Its business is client-driven and its clientsare located throughout the world and include the entire metals supply chain,from miners to final industrial users. Ambrian Commodities made an important contribution to the operating income ofour investment banking activities in 2006. Ambrian Commodities has benefitedfrom high customer activity levels and high volatility in metals prices. It isthese two factors that drive our profitability rather than the actual directionof movement of metals prices. We have recently commenced trading carbon credits and sugar, following oursuccess in the base and precious metals markets, and we have hired traders andsalesmen with a high level of expertise in these growth areas. This move intocarbon credits and sugar is a natural progression for Ambrian. AmbrianCommodities proved its business model at a very early stage and continues to addsignificant growth and revenues to the Group as a whole. Ambrian Partners is already active in the alternative energy area, particularlythe renewable energy and bio-fuel sectors, and has specialist research teams forboth areas. The expansion of Ambrian Commodities demonstrates the Group's firmcommitment to the resource sector. Ambrian Asset Management Limited Towards the end of 2006, Ambrian Asset Management Limited launched its firstfund: the Golden Prospect Precious Metals Fund Limited ("GPPM"), a closed endtax efficient vehicle registered in Guernsey and listed on AIM. Ambrian AssetManagement earns a management fee and, potentially, a performance fee forproviding investment management services to GPPM. The Group transferred into GPPM the bulk of its portfolio of precious metalsinvestments, valued at approximately £9.4 million in return for GPPM shares.GPPM has increased its share price significantly since listing on AIM. We planto build on this success by launching further funds that complement ourexpertise in the wider resources sector. Portfolio Investments Operating income from realisations of portfolio investments for the year ended31 December 2006 was £11.99 million, up 12.7% from £10.64 million the previousyear. The liquidity raised from the profitable realisation of the principal investmentactivities has enabled the Group to make significant strides over the past twoyears in its transformation from a resource focused investment company into amore broadly based investment bank. The increase in capital adequacy enables theGroup to realise its objective, which is to build a highly profitable investmentbank, capable of generating recurring income from its various business unitsover the long term. The foundation for such an objective is built on the factthat the Group's shareholders' equity plus unrealised gains on its listedinvestment portfolio has grown by £36 million since January 2002 (compoundannual growth rate of 28%) after the payment of tax on realised profits. Listed Investments At 31 December 2006 the market value of our portfolio of listed investments was£31.9 million. The most important investments were our £9.3 million holding inour 72% owned subsidiary, GPPM, and our £5.2 million holding in Jubilee Platinumplc. We remain positive on the outlook for precious metals. Our 9.43% stake in Jubilee Platinum plc continues to represent a highlyattractive holding with its valuable and strategic resource positions in SouthAfrica and Madagascar. At 31 December 2006 we held approximately £8.0 million of investments in the oil& gas sector. Our intention is either to use these investments to "seed" a newlyformed energy fund managed by Ambrian Asset Management or to realise them as theopportunity arises. The remaining listed investments will be actively managed and will either beused to "seed" new managed funds or will be realised as they reach their profitpotential. Unlisted Investments We have a portfolio of unlisted equity investments which we value at cost in ouraccounts. At 31 December 2006 the book value of our unlisted equity investmentswas £4.8 million. Our most significant unlisted equity investments are our African miningexploration assets, our 25% stake in Commodity Watch plc (which owns the leadingresources news websites Minesite and Oilbarrel) and various stakes acquired byAmbrian Partners in connection with pre-IPO financings. In November 2006 the Group announced that it had signed an agreement to mergeits African mining exploration assets with Palladex PLC, an AIM listed mineralexploration and development company. The Group will retain an approximately 40%interest in the merged company. All parties are working towards a targetcompletion date of May 2007. Commodity Watch plc is expected to be listed in the second quarter of 2007 at avaluation several times that at which the Group made its investment. We have been able to achieve attractive returns from late stage pre-IPOinvestments particularly where Ambrian Partners is appointed Corporate Broker tothe IPO. An ability to make pre-IPO investments provides Ambrian Partners with acompetitive advantage in securing IPO mandates. We are well placed to source and evaluate unlisted, late stage, pre-IPOinvestments. Through Ambrian Partners we have the knowledge of the equitycapital market required to assess potential investor appetite and to provide themarket access to effect an orderly realisation of the investment in due course. We have recently formed Ambrian Private Equity as a division of Ambrian Capitalwith a formal mandate to invest in late-stage, pre-IPO companies. The objectiveis to build a portfolio of companies that are attractive investments in theirown right and to provide a "pipeline" of IPO mandates for Ambrian Partners. Weintend to allocate actively up to £5 million of capital to this during 2007. Capital As of 31 December 2006, shareholders' equity was £37.0 million excludingunrealised gains (pre-tax) of £13.9 million. Book value per ordinary share was34.3p excluding unrealised gains and 47p including unrealised gains (pre-tax). The Group's cash resources net of client deposits at 31 December 2006 was £16.8million compared with £4.3 million at 31 December 2005. From 1 January 2007 the Group is required by European Directives to report itsconsolidated financial statements under International Financial ReportingStandards ("IFRS") rather than under UK Generally Accepted Accounting Principles("UK GAAP") as we have done in the past. Under IFRS our portfolio ofinvestments will be valued on the Group's balance sheet at market prices ratherthan at the lower of cost or net realisable value. The Group's level of profitswill depend on changes in the value of the investment portfolio during 2007.Accordingly, unrealised gains after tax at 31 December 2006 will be reflected inreserves and movements in value thereafter will be reflected in the profits. Future We look forward to 2007 with confidence despite the recent turbulence in themarkets. Our strong balance sheet provides us with a solid foundation. AmbrianPartners' strategy of diversification into new industry sectors has brought anumber of new clients and attractive new issue mandates and our move intocommodities and investment management has provided important diversification forthe Group, providing a wider platform for growth. The Group intends to capitalise on London's position as the world's centre forequities, commodities and investment management by seeking ways of furtherextending the international reach of each of our businesses. Finally, I would like to take this opportunity to thank all our clients who haveentrusted us with their business, our employees for their dedication and myfellow directors, without whose enthusiasm and wisdom the Group's growth wouldnot have been possible. Malcolm A. BurneChairmanAs reported on 21 March 2007 AMBRIAN CAPITAL PLC CONSOLIDATED PROFIT AND LOSS ACCOUNTYear ended 31 December 2006 2006 2005 Restated £ £ Operating Income 19,985,794 13,643,750 Administrative expenses (8,101,128) (4,380,702) -------------- -------------- Operating profit - continuing operations 11,884,666 9,263,048 Investment income 593,096 155,398Interest payable and similar charges (36,616) (123,480) ------------- -------------Profit on ordinary activities before taxation 12,441,146 9,294,966 Tax on profit on ordinary activities 3,816,605 2,825,975 ------------- ------------- Profit for the financial year 8,624, 541 6,468,991 ======== ======== Profit per ordinary share - basic 8.16p 6.03p - diluted 7.76p 5.81p CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2006 2006 2005 Restated £ £ £ £FIXED ASSETSIntangible assets 4,894,539 4,433,698Tangible assets 199,766 138,799Investments 730,932 589,682 ------------- ------------- 5,825,237 5,162,179 CURRENT ASSETSDebtors: Amounts falling due withinone year 3,856,631 1,629,836Investments 19,229,748 23,542,135Deferred tax 1,727,034 84,178Cash at bank and in hand 30,415,392 5,757,167 ------------- ------------ 55,228,805 31,013,316CREDITORS: Amounts falling duewithin one year (20,535,109) (4,702,080) ------------- ------------NET CURRENT ASSETS 34,693,696 26,311,236 ------------- --------------TOTAL ASSETS LESS CURRENTLIABILITIES 40,518,933 31,373,415 ------------- --------------CAPITAL AND RESERVESCalled up share capital 10,806,121 10,726,121Share premium account 10,849,383 10,803,383Merger reserve 1,245,256 1,245,256Profit and loss account 15,568,008 8,529,698Other reserves (1,433,512) 168,957 ------------- --------------EQUITY SHAREHOLDERS' FUNDS 37,035,256 31,473,415 EQUITY MINORITY INTERESTS 3,483,677 - ------------- ------------- 40,518,933 31,473,415 ======== ======== CONSOLIDATED CASH FLOW STATEMENTYear ended 31 December 2006 2006 2005 Restated £ £ £ £Net cash inflow from operating activities 29,426,056 5,432,020 Returns in investments and servicing of financeInvestment income 593,096 155,398Interest payable (36,616) (123,480) ----------- ----------- Net cash inflow from returns on investment andservicing of finance 556,480 31,918 Taxation (4,302,766) (2,148,597) Capital expenditure and financial investmentPayments to acquire intangible fixed assets (558,805) (330,031)Payments to acquire tangible fixed assets (140,085) (148,132)Payments to acquire fixed asset investments (141,250) (124,122) ------------ ------------ Net cash outflow from capital expenditure andfinancial investment (840,140) (602,285) Equity Dividend paid (1,586,231) (536,306) -------------- ------------ Net cash inflow before financing 23,253,399 2,176,750 FinancingIssue of ordinary share capital 126,000 -Treasury shares acquired (163,217) -Bank loan repayment (1,500,000) -Issue of shares in subsidiary undertaking to minorityinterest 3,483,677 - ------------- ----------- Net cash inflow from financing 1,946,460 - ------------- ------------ Increase in cash 25,199,859 2,176,750 ======== ======= NOTES TO THE UNAUDITED ACCOUNTSYear ended 31 December 2006 1 The calculation of earnings per share is based on the profit aftertax of £8,624,541 (2005 - £6,468,991) and on the number of shares in issue beingthe adjusted weighted average number of shares in issue during the period of105,748,057 (2005 - 107,261,208). 2 The preliminary results for the year ended 31 December 2006 isunaudited and were approved by the Directors on 20 March 2007. The financialinformation set out above does not constitute statutory accounts within themeaning of s.240 of the Companies Act 1985. 3 The accounting policies remain as stated in the Annual Report for theyear ended 31 December 2005 apart from the definition of turnover. For the current year, operating income is used to describe revenuerather than turnover as required by the Companies Act 1985, as the directorsconsider it better reflects the nature of the business. Operating income comprises institutional brokerage commission andnet trading profit or loss on trading positions, corporate broking retainers,commodity commissions, deal fees (comprising cash based on advisory fees and theaward of options to the Group) and placing commissions. The comparativesreflect this change in policy. 4. The comparatives for 2005 are re-stated to reflect the effect of theintroduction of share based payments charge under FRS 20. This information is provided by RNS The company news service from the London Stock Exchange