AMBR.L Regulatory News (AMBR)

3 Apr 2008 07:01

Ambrian Capital PLC03 April 2008 3rd April 2008 AMBRIAN CAPITAL PLC Preliminary announcement of unaudited results for the Year Ended 31 December 2007 Ambrian Capital plc (AIM:AMBR), the specialist investment bank, today announcesits preliminary results for the year ended 31 December 2007: Highlights • Investment Banking revenue up 26.2 % to £10.64 million (2006: £8.43 million) - completed 16 transactions with a total value of £300 million - commenced Market Making in July 2007 - expanded LME metals sales team • The Investment Portfolio showed gains of £5.20 million (2006: £9.41million) - 17.3% increase in value of Investment Portfolio, including realised gains - 2006 was an exceptional year for the Investment Portfolio • Profit before tax of £5.79 million (2006: £8.07 million) made up of £4.16 million from Investment Banking (2006: £3.26 million) and £1.63 million from the Investment Portfolio (2006: £4.81 million) • Basic earnings per share of 4.32p (2006: 4.81p) • Shareholders' equity at 31 December 2007 of £45.04 million, after accounting for £6.04 million in respect of EBT and Treasury shares • Cash resources, net of client deposits, totalled £22.20 million at 31 December 2007 • Net asset value per share of 45.1p (2006: 43.8p) • Proposed final dividend of 1.00p per share making 1.75p for the full year (2006: 1.75p for the full year) Commenting on the results, Tom Gaffney, Chief Executive of Ambrian Capital plc,said: "Despite the challenging market conditions in the second half of 2007, ourInvestment Banking activities held up well and generated a significantimprovement in revenues and profits over the previous year. The strength ofcommodities prices during 2007, and especially gold and oil prices, benefitedus. Gains from our Investment Portfolio were up overall for the year after aweak second half. Market conditions at the start of 2008 remain volatile. Nevertheless, ourInvestment Banking subsidiaries and our Investment Portfolio made profits in thetwo months to the end of February. Our commodities business, in particular,profited from the high volatility in metals prices and had a record month inFebruary. We have a talented team, a focus on the most dynamic sectors in the market andcapital that we plan to invest in our businesses to support our objectives. Wefirmly believe that this combination of strengths will enable us to weather 2008and grow our business for the future." Enquiries: Tom Gaffney Chris Howard Justine Howarth / Louise GoodeveChief Executive Officer Collins Stewart Europe Parkgreen CommunicationsAmbrian Capital plcTel: +44 (0)20 7634 4700 Tel: +44 (0)20 7523 8314 Tel: +44 (0)20 7851 7480 Notes to Editors: 1. Ambrian Capital plc is an AIM listed specialist investment banking group focused on the mining, oil & gas, alternative energy and new technology sectors. Ambrian Capital plc provides corporate finance, stockbroking, commodity broking and investment management services to institutional and corporate clients. Ambrian Capital is also an active principal investor in the natural resources sector. 2. Ambrian Partners Limited, Ambrian Commodities Limited and Ambrian Asset Management are each authorised and regulated by the Financial Services Authority. Ambrian Partners Limited is a member of the London Stock Exchange and Ambrian Commodities Limited is an Associate Broker member of the London Metal Exchange. 3. Further information on Ambrian Capital is available on the Company's website: www.ambrian.com Chairman's Statement During 2007, the Investment Banking businesses made excellent progress as wecontinued the transformation of Ambrian Capital from an asset-based investmentcompany into a sector focused investment bank with a growing stream of operatingearnings. As a result of the adoption of International Financial Reporting Standards ("IFRS") in 2007, we are required to mark-to-market the value of our investments.The figures for 2006 have been re-stated for comparative purposes. Changes inthe value of the Investment Portfolio are now reported as revenues and this willresult in short-term fluctuations in our reported profits. The Investment Portfolio achieved significant gains during the year despite adifficult second half; while good, they were not as large as the exceptionalgains experienced in 2006. The effect has been a year-on-year reduction inconsolidated net profits for Ambrian Capital. We took market opportunities torealise a substantial portion of our investments and have reduced the InvestmentPortfolio to less than half of Ambrian Capital's net asset value at the end of2007. Our cash resources, net of client deposits, totalled £22.20 million at 31December 2007, an increase of 30% over the corresponding figure as at 31December 2006. During the year there were a number of changes to the board of Ambrian Capital.I was appointed Chairman of Ambrian Capital in succession to Malcolm Burne whostood down at the Annual General Meeting on 22 May 2007. Malcolm remains anadviser to Ambrian Capital and a director of Golden Prospect Precious MetalsLimited and we thank Malcolm for his significant contribution to the Companywhilst Chairman. We would also like to extend our thanks to Richard Lockwood,who stood down from the Board on 22 May, for his guidance and support. During the year Lee Seng Huang became a non-executive director of AmbrianCapital. Lee Seng Huang is Chairman of Sun Hung Kai Financial (the leading nonbank financial institution in Hong Kong) which purchased a 9.10% interest inAmbrian Capital in March 2007. Charles Crick joined us as a Non-ExecutiveDirector in May. Charles trained as a Solicitor with Allen & Overy and from1996 to 2004 was head of corporate finance and a main board director of NumisCorporation PLC. John Coles, who is the Finance Director of our regulated subsidiaries, succeededNathan Steinberg as Group Finance Director on 6 January 2008. Nathan Steinbergcontinues as a non-executive director. In a business such as Ambrian Capital where our people are our principal assetit is vital to align the long-term interests of shareholders and employees. Wetook steps during 2007 to increase significantly the number of shares held bythe Ambrian Capital plc Employee Benefit Trust ("EBT"). At 31 December 2007,the shareholdings of the Directors and employees of Ambrian Capital amounted inaggregate to approximately 19.5% of Ambrian Capital's share capital on a fullydiluted basis, including 9.3% held by the EBT. Despite the continuing market volatility Ambrian Capital has a resilientbusiness model based on a young, exceptionally talented team with a specialistfocus on some of the fastest growing sectors of the global economy and a strongand liquid balance sheet. I would like to thank our clients for their support and our staff and my fellowDirectors for their contribution to another successful year and we look forwardto the challenges and opportunities that 2008 will present. W. Lawrence Banks, CBEChairman3 April 2008 Chief Executive's Statement The Investment Banking businesses delivered very good results in 2007. Ourperformance reflects the continued effectiveness of our strategy of providing arange of services that are focused on the resources and new technology sectors. Investment Banking revenue grew 26% during 2007 to £10.64 million. Commoditydealing and equity Market Making more than compensated for the slow down inequity new issue activity in the second half of 2007. The Investment Portfolio showed gains of £5.20 million in 2007. While not ashigh as 2006, this still represented a 17.3% increase in value during the yearincluding realisations. Ambrian Capital's shareholders' equity stood at £45.04 million, or 45.1p pershare at 31 December 2007 and included £22.20 million of cash resources. Ourstrong balance sheet ensures the resilience of our business in difficultmarkets. Ambrian Capital is committed to creating value for our institutional andcorporate clients, our employees and our shareholders. Financial Review From 2007, Ambrian Capital is required to report its full year consolidatedfinancial statements under IFRS as adopted by the European Union rather thanunder UK Generally Accepted Accounting Principles ("UK GAAP") as we have done inthe past. Accordingly, (i) our Investment Portfolio at 31 December 2007 wasvalued on the Group's balance sheet at then market prices rather than at thelower of cost or net realisable value and (ii) changes in the value of theInvestment Portfolio are reported as revenue. Operating revenue for 2007 was £15.84 million (2006: £17.84 million). Investment Banking operating revenue for 2007 was £10.64 million (2006: £8.43million). This represented a 26 % increase over 2006 and accounted for 67% ofGroup revenue (2006: 47%). Revenue from the Investment Portfolio was £5.20 million compared with £9.41million for 2006. Administrative expenses were £10.01 million (2006: £9.74 million), and included£2.51 million for discretionary director and employee incentive payments. Profit before tax was £5.79 million (2006: £8.07 million). Investment Bankingprofit before tax for 2007 was £4.16 million (2006: £3.26 million). Thisrepresented a 28% increase over 2006 and accounted for 72% of Group profitbefore tax (2006: 40%). Profit before tax from the Investment Portfolio was£1.63 million compared with £4.81 million for 2006. All central costs areallocated to the Investment Portfolio. Net profit for the year was £4.51 million (2006: £5.07 million) after a reducedtax charge reflecting Substantial Shareholder Relief on certain investments andpre-IFRS 2 exercise of share options. Basic earnings per share decreased by 10.2% to 4.32p (2006: 4.81p). Balance Sheet The consolidated balance sheet remains strong with a substantial excess overtotal regulatory capital requirements. Shareholders' equity was £45.04 millionat 31 December 2007 (2006: £45.75 million), or 45.1p per share (2006: 43.8p),after accounting for £6.04 million in respect of EBT and Treasury shares. Our Financial Assets include the Investment Portfolio which was valued at £20.52million at 31 December 2007 of which 96% was in quoted investments. The Group's cash resources, net of client deposits, totalled £22.20 million at31 December 2007 compared with £17.04 million at 31 December 2006. Our cash isheld largely in the form of call deposits with our bankers, the Royal Bank ofScotland plc and Barclays Bank plc. In March 2008 we entered into an £8.5 million unsecured, multi-currencyrevolving credit facility with the Royal Bank of Scotland plc which remainsundrawn. The facility recognises our financial strength and provides a sourceof additional liquidity to take advantage of opportunities that may arise. Dividend The Board recommends payment of a final dividend of 1.00p per share (2006:1.00p) making a total of 1.75p for the full year (2006: 1.75p). The dividendwill be payable on 6 June 2008 to all shareholders on the register as at 16 May2008. Investment Banking During 2007, each of our corporate finance and stockbroking, commodity dealingand asset management subsidiaries made further progress in strengthening theirmarket positions. Our strategy of involvement in a range of different businessactivities in the natural resources sector has proved to be successful. In2007, revenue from equity placings accounted for approximately 30% of InvestmentBanking revenue. We have been particularly successful in developing our M&Aadvisory activities. Mining clients remain key to our business and accountedfor approximately 33% of Investment Banking revenue in 2007 compared with 59% in2006. This demonstrates our success in building a client base that includes oil& gas clients, alternative energy and new technology clients. Ambrian Partners Limited Ambrian Partners Limited, our corporate finance and stockbroking subsidiary, had35 retained corporate clients at 31 December 2007 with an average marketcapitalisation of approximately £86 million. Ambrian Partners' strategy is toprovide NOMAD, Corporate Broking and Financial Advisory services to a selectednumber of high quality, higher market capitalisation companies. Retainedcorporate clients include Centamin Egypt, Metorex, Avocet Mining and ZenergyPower. Ambrian Partners has a particularly strong market position in the AIM BasicMaterials Sector and was ranked, in a January 2008 survey by Hemscott, second bynumber of retained corporate clients and third by their aggregate marketcapitalisation. During 2007, Ambrian Partners was involved in 13 capital raisings with a totalvalue of approximately £148 million. Significant equity placements included: - £18 million for Sylvania Resources Limited- A$35 million (£15 million) for Monto Minerals Limited- £15 million for TMO Renewables Limited- £6 million for Zenergy Power plc- £4.5 million for IPSO Ventures plc Ambrian Partners was also active in providing M&A advisory services during 2007;notable transactions included: - Co-adviser to the Zijin Consortium on its recommended £95 million cash offer for Monterrico Metals plc- Adviser to Pan African Resources in connection with the £35.6 million acquisition of Barberton Mines (Pty) Limited and re-admission to AIM- Adviser to Kalahari Minerals plc in connection with the £26.4 million merger of its uranium assets with Extract Resources Ltd In July 2007, Ambrian Partners became a registered Market Maker and currentlymakes markets in the shares of 61 companies listed on AIM. Our focus is onmaking markets in the shares of our corporate clients and our research coveragelist. Market Making has enabled Ambrian Partners to provide a superior level ofservice to its institutional clients and has further strengthened revenue fromsecondary market activities. In February 2008, Ambrian Partners established Ambrian Asia and opened arepresentative office in Hong Kong. One of the senior members of the AmbrianPartners' corporate finance team has been seconded to Hong Kong. We are excitedby the prospects of developing business in Asia and in particular capitalisingon our partnership with Sun Hung Kai Financial. Ambrian Commodities Limited Ambrian Commodities' London Metal Exchange ("LME") metals business made goodprogress in 2007 and benefited from volatility in metals prices and highcustomer activity levels. Ambrian Commodities added to its sales team with theappointment of three highly experienced individuals who each brought with themhis own client base to complement the existing one. These appointments havefurther strengthened Ambrian Commodities' presence in the global metals marketand at the same time have broadened the geographical client base. The number ofactive clients has increased to 96 at 31 December 2007 from 53 at 30 June 2007.Approximately 20% of Ambrian Commodities' clients are now located in Asia. We are actively looking at a range of growth initiatives for Ambrian Commoditiesto build on our core expertise. For example, we have begun to explore thepotential for participating in the market for Exchange Traded Funds ("ETFs")which are equity instruments listed on the London Stock Exchange that trackunderlying commodity prices. Our primary focus is on ETFs for industrial metalstraded on the LME. We have decided to concentrate the activities of Ambrian Commodities onindustrial metals and we provide soft commodity and carbon credit broker-dealerservices as required by our clients. Ambrian Asset Management Limited Ambrian Asset Management is the manager of Golden Prospect Precious MetalsLimited ("GPPM"), a Guernsey registered, closed-ended investment fund listed onAIM dedicated to equity investments in the precious metals sector. GPPM was launched in November 2006 with an opening Net Asset Value ("NAV") pershare of 96.20p. GPPM had an NAV per share at 31 December 2007 of 111.22p, anincrease of 15.6% since launch. GPPM's share price at 31 December 2007 was96.5p and its market capitalisation was £12.5 million. Ambrian Asset Management receives a monthly management fee for managing GPPM andis eligible to receive an annual performance related fee equal to 20% of theincrease in the NAV of GPPM after a hurdle of 8% has been attained. Ambrian Asset Management continues to explore the possibility of launching newfunds in sectors in which it has expertise. Investment Portfolio Operating revenue from the Investment Portfolio for the year ended 31 December2007 was £5.20 million. Gains of over £1 million were made in each of theinvestments in Nido Petroleum, Anglesey Mining and Jubilee Platinum. The total value of Ambrian Capital's Investment Portfolio at 31 December 2007was £20.52 million compared with £30.05 million at 31 December 2006.Approximately 96% of the Investment Portfolio is in the shares of quotedcompanies. Our major realisations during 2007 included the sale of 4.5 million JubileePlatinum plc shares with total proceeds of approximately £4.00 million and thesale of 2.85 million GPPM shares with total proceeds of approximately £3.16million. As at 31 December 2007, precious metals investments represented approximately52% of the Investment Portfolio and energy investments represented a further 30%of the Investment Portfolio. The balance comprised a range of other resourcesand technology orientated investments. As at 29 February 2008 the Investment Portfolio was valued at £20.96 million,including profits realised since 31 December 2007. Quoted Investments At 31 December 2007, the market value of our portfolio of our quoted investmentswas £19.8 million. Our top ten holdings had a total market value of £19.2million and were as follows: Golden Prospect Precious Metals £6.1 million Nido Petroleum £2.7 million Jubilee Platinum £2.3 million Anglesey Mining £2.1 million Minerva Resources £2.0 million Kairiki Energy £1.4 million Samson Oil & Gas £1.2 million Commodity Watch £0.7 million Uranium One £0.4 million European Gas £0.3 million _____________ Total £19.2 million ============= In 2007, we concluded the capitalisation of our exploration assets by the saleof our exploration subsidiary, Golden Prospect Mining Company Limited, inexchange for a 39.84% interest in the share capital of Minerva Resources plc, anAIM listed exploration company. Also of note, during 2007, Commodity Watch plc (previously known as Minesite)was listed on Plus Markets. Ambrian Capital has a 25% holding in the company. Our Investment Portfolio will continue to be realised as fair value is achievedand liquidity opportunities arise. Unquoted Investments At 31 December 2007, the book value of Ambrian Capital's unquoted investmentswas £ 0.72 million. The reduction from £4.83 million at 31 December 2006 wasattributable primarily to the sale of the exploration assets in return forlisted shares of Minerva and the listing of Commodity Watch. Our unquotedinvestments include a £450,000 investment in TMO Renewables Limited. Employee Benefit Trust During 2007, in a series of market transactions, the EBT acquired a total of7,798,710 Ambrian Capital plc ordinary shares for a total cash consideration of£4.07 million and now owns a total of 11,092,043 Ambrian Capital plc ordinaryshares representing 9.96% of Ambrian Capital's outstanding share capital. Thesepurchases have been funded by the EBT with loans from Ambrian Capital plc. Going Forward Our objective is to build an investment banking business, focused on growingsectors requiring high intellectual capital, that deserves to be valued at asubstantial premium to net asset value. Ambrian Capital's results will fluctuate in line with market conditions and, inparticular, the revenues associated with the Investment Portfolio. Volatilemarket conditions at the start of this year have proved to be a challenge.Nevertheless, each of our businesses made a profit in the first two months of2008 and in, particular, our commodities business profited from the volatilityand had a record month in February. In March 2008 we moved to new and much needed larger premises in the City ofLondon on favourable terms. Our new offices provide scope for our futuregrowth. We have a talented team, a focus on the most dynamic sectors in the market andcapital that we plan to invest in our businesses to support our objectives. Wefirmly believe that this combination of strengths will enable us to weather 2008and grow our business for the future. Tom GaffneyChief Executive3 April 2008 AMBRIAN CAPITAL PLC CONSOLIDATED INCOME STATEMENT Year ended 31 December 2007 2007 2006 (as restated) £ £ Revenue 15,834,720 17,841,224 Administrative expenses (10,014,900) (9,735,426)Finance costs (32,628) (36,615) ------------- ------------Profit on ordinary activities before taxation 5,787,192 8,069,183 Tax on profit on ordinary activities (1,273,636) (2,995,305) ------------ -------------Profit for the year from continuing activities 4,513,556 5,073,878 ------------ -------------Profit for the year 4,513,556 5,073,878 ======= ======= Earnings per ordinary share- basic 4.32p 4.81p- diluted 4.18p 4.57p CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2007 2007 2006 (as restated) £ £ASSETSNon-current assetsProperty, plant and equipment 126,852 199,766Goodwill 1,836,828 1,836,828 ------------ ------------ 1,963,680 2,036,594Current Assets Financial assets 23,888,023 34,739,291Trade and other receivables 5,989,445 3,856,631Cash at bank and in hand 27,080,761 30,408,289 ------------- ------------ 56,958,229 69,004,211 Non-current assets classified as assets forresale - 1,557,500 ------------- ------------ 56,958,229 70,561,711 ------------- ------------Total Assets 58,921,909 72,598,305 LIABILITIESCurrent liabilitiesTrade and other payables (5,433,599) (4,198,794)Amounts due to clients (4,877,995) (13,371,613)Current tax payable (1,482,563) (3,091,685) ------------- ------------ (11,794,157) (20,662,092) ------------- -------------Non-current liabilitiesDeferred tax liabilities (2,090,110) (2,706,549) ------------- ------------Total Liabilities (13,884,267) (23,368,641) ------------- ------------Net Assets 45,037,642 49,229,664 ======= =======CAPITAL AND RESERVESCalled up share capital 11,136,121 10,806,121Share premium account 12,350,639 12,094,639Treasury shares (163,217) (163,217)Retained earnings 26,957,576 24,278,739Reserve for share based payments 636,342 543,262Employee benefit trust (5,879,819) (1,813,557) ------------- -------------Total equity attributable to equity holdersof the parent 45,037,642 45,745,987Minority interest - 3,483,677 ------------- ------------- 45,037,642 49,229,664 ======= ======== CONSOLIDATED CASH FLOW STATEMENT Year ended 31 December 2007 2007 2006 (as restated) £ £Cash flows from operating activities Profit after taxation 4,513,556 5,073,878Adjustments for Depreciation 104,954 79,118Foreign exchange (gains)/losses (357,915) 548,737Investment income (763,043) (593,096)Taxation expense recognized in profit and loss 1,273,636 2,995,305(Increase) in trade and other receivables (2,132,815) (2,226,795)Unrealised gains/(losses) on financialassets designated at fair value 4,009,590 (3,103,396)Realised gains on financial assets designatedat fair value (9,209,084) (6,308,489)Decrease in trade and other payables 1,234,805 2,797,618(Decrease)/increase in amounts owed to clients (8,493,618) 13,371,613Employee share benefit trust (4,066,262) (1,701,921)Share based payment reserve 93,080 262,669 ------------- -------------Cash generated from operations (13,793,116) 11,195,241Taxation (3,499,196) (4,302,766) ------------- -------------Net cash from operating activities (17,292,312) 6,892,475 ------------- ------------- Cash flows from investing activitiesPurchase of property, plant and equipment (32,040) (140,085)Purchase of intangible fixed assets - (558,805)Net proceeds on disposals of financialassets designated at fair value 17,608,262 18,052,949Disposal / acquisition of subsidiary (3,483,677) 3,483,677Investment income 763,043 593,096 ------------- -------------Net cash generated by investing activities 14,855,588 21,430,832 ------------- -------------Cash flows from financing activitiesProceeds of issue of share capital 586,000 126,000Treasury shares acquired - (163,217)Bank loan repayment - (1,500,000)Dividends paid (1,834,719) (1,586,231) ------------- -------------Net cash from investing activities (1,248,719) (3,123,448) ------------- -------------(Decrease)/increase in cash and cashequivalents (3,685,443) 25,199,859 CONSOLIDATED CASH FLOW STATEMENT (continued) Year ended 31 December 2007 2007 2006 (as restated) £ £ Net increase in cash and cash equivalents (3,685,443) 25,199,859 Cash and cash equivalents at the beginningof the year 30,408,289 5,757,167 Foreign exchange gains/(losses) 357,915 (548,737) ------------ ----------Cash and cash equivalents at the end of theyear 27,080,761 30,408,289 ======== ======== NOTES TO THE UNAUDITED ACCOUNTS Year ended 31 December 2007 1. The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year. The calculation of diluted earnings per share is based on the basic earnings per share adjusted to allow for the issue of shares on the assumed conversion of all dilutive options. Reconciliation of the earnings and weighted average number of shares in the calculations are set out below. 2007 2006 Earnings Weighted Per Earnings Weighted Per £ average Share £ average Share number of Amount number of Amount shares SharesBasic earningsper share 4,513,556 104,406,818 4.32p 5,073,878 105,748,058 4.81p ======= ==== ======= ==== Dilutive effect of share options 3,612,831 5,390,248 ------------ ----------- Diluted earningsper share 4,513,556 108,019,649 4.18p 5,073,878 111,138,306 4.57p ======= ========= ==== ======= ======== ==== 2. Segmental Analysis The group's revenue and profit before tax derived from the following activities : Revenue 2007 2006 £ £ Investment Banking 10,635,226 8,429,339Managed Portfolio 5,199,494 9,411,885 ------------- ------------- 15,834,720 17,841,224 ======== ======== Profit before tax 2007 2006 £ £Investment banking 4,156,037 3,257,494Managed portfolio 1,631,155 4,811,689 ------------ ----------- 5,787,192 8,069,183 ======= =======Managed portfolio revenue representsUnrealised losses on financial assets designated at fair value (4,009,590) 3,103,396Realised gains on financial assets designated at fair value 9,209,084 6,308,489 3. The preliminary results for the year ended 31 December 2007 are unaudited. The financial information set out above does not constitute statutory accounts within the meaning of s. 240 of the Companies Act 1985. 4. The accounting policies have been changed to reflect the introduction of IFRS accounting. The comparatives for 2006 are re-stated to reflect the changes required by the introduction of IFRS accounting and the effect of these changes were shown in the interim accounts previously amended. This information is provided by RNS The company news service from the London Stock Exchange