ARL.L Regulatory News (ARL)

21 Jul 2005 07:00

Arlington Group Ltd21 July 2005 Arlington Group Limited Preliminary Accouncement of Results for Year Ended 31 March 2005 CHAIRMAN'S STATEMENT Dear Shareholder: RESULTS I am pleased to report upon the results for the year ended 31 March 2005. The audited consolidated financial results of the Group for the period underreview show a profit before taxation of £6.82 million (2004: £4.32 million)while earnings per share have risen by 39.7% to 8.58 pence per share (2004: 6.14pence). The Group's cash position at the Balance Sheet date was £23.74 million (2004:£14.02 million), equivalent to 36.56 pence per share, while Net Asset Value pershare (calculated on the lower of cost or market value) has increased over thesame period to 50.15 pence per share. CURRENT YEAR'S TRADING During the period under review the Company generated positive returns in all ofits internally segregated funds. Arlington Special Situations The Special Situations fund made profitable realizations in the followingsectors: •Property •Public equity •Private equity (including the Ster Century cinema chain) •Structured financial products (including Archipelago Resources plc) Arlington Global Resources The global trend in the natural resources sector showed continued strength inthe period. This was reflected in the underlying performance of the fund whichincreased its NAV per share by 6.8% between October 2004 (when Arlingtonincreased its stake in the fund) and 31 March 2005. As from 1 April 2005 AGL'sinterest in the investment shares of the underlying Excelsior Mining FundLimited will be reported as part of the Special Situations Fund which also takespositions in the natural resource sector from time to time. Arlington Asian Focus The Asian market environment generally was difficult throughout much of theyear. Against this background the NAV of the Arlington Asian Focus fund hasincreased by 6.2% in the period from 1 October 2004 to 31 March 2005. Azure I In November 2004 the Board had anticipated launching a new fund in partnershipwith DTZ Asset Management targeting investment opportunities in the Eurozoneproperty sector. In the latter part of 2004 the economics of investment in thisspace became increasingly less attractive and reached the point where theBoard's risk/return objectives were unlikely to be met. Accordingly, Arlingtonand DTZ took the decision not to proceed with this venture. NEW HOLDING COMPANY All of the legal approvals necessary to implement the proposals to put a newholding company in place by means of a Scheme of Arrangement (the "Scheme") wereduly ratified in January 2005. The Scheme was effected by a one-for-one shareexchange resulting in the former holding company (Arlington Group plc ("AGP"))becoming a 100% subsidiary of Arlington Group Limited ("AGL"). The interests ofshareholders were not affected in any way as the share register of AGL at theeffective date was established as a precise mirror image of that of AGP prior tothe Scheme. POST BALANCE SHEET EVENTS Joint venture with EurekaHedge - Arlington Asia Seeding Programme In June this year, Arlington agreed to participate in a joint venture withEurekaHedge. EurekaHedge is a leading Asian based alternative investmentconsulting company focusing on research, publishing and capital introduction. Itwas founded in 2001 and currently employs 55 people in Singapore, Hong Kong,London and New York. The purpose of the venture is to create a platform for seed funding Asianfocused single managers. AGL will commit seed capital to individual funds andthe joint venture will seek to obtain marketing rights in respect of raisingadditional monies. EurekaHedge will provide origination and analytical supportand the resources of its capital introduction team. DIVIDEND POLICY The Directors do not recommend the payment of a dividend. FUTURE PROSPECTS AND OUTLOOK The current year has started positively with one profitable realization and onenew private equity investment. However, against an uncertain market background,the balance sheet is positioned defensively with some £23 million of net cash inshort term cash deposits. New investment opportunities continue to be sought forall of the funds but management is being highly selective in its investmentapproach. In this regard shareholders should know that the existing managementteam holds more than 70% of the ordinary equity of the Company and therefore hasits interests aligned to all other shareholders. Once again, my fellow Directors and I would like to thank everyone who hasworked so hard in supporting the success of the Group and wish to express ourgratitude for their continuing commitment for the future. NICHOLAS BARHAM20 July 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31 MARCH 2005 2005 2005 £000 £000TURNOVER 35,890 20,407 Cost of sales 24,763 12,401 --------------- --------------- --------------- --------------- - -GROSS PROFIT 11,127 8,006 Administrative expenses 5,352 4,571 --------------- --------------- --------------- ---------------OPERATING PROFIT 5,775 3,435 Interest receivable 1,287 925Interest payable (245) (40) --------------- --------------- --------------- --------------- PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 6,817 4,320 Tax on profit on ordinary activities 1,627 307 --------------- --------------- RETAINED PROFIT FOR THEFINANCIAL YEAR 5,190 4,013 =============== =============== Earnings pershare - basic(pence) 8.58 6.14 =============== =============== =============== =============== Earnings pershare - fullydiluted (pence) 8.55 6.14 =============== =============== All of the activities of the Group are classed as continuing. The Group has no recognised gains or losses other than the results for the yearas set out above. CONSOLIDATED BALANCE SHEETAT 31 MARCH 2005 2005 2004 £000 £000 £000FIXED ASSETSIntangible assets (284) (426)Tangible assets 1,211 1,434 --------------- --------------- 927 1,008 --------------- CURRENT ASSETSStocks 809 794Debtors 5,125 2,675Investments 9,505 14,554Cash at bank 24,693 14,022 --------------- --------------- 40,132 32,045 CREDITORS:Amountsfalling duewithin oneyear 8,446 4,295 --------------- --------------- - NET CURRENTASSETS 31,686 27,750 --------------- --------------- TOTAL ASSETS LESS CURRENTLIABILITIES 32,613 28,758 CREDITORS: Amounts falling due after more than one year 29 177 Governmentgrants 27 62 --------------- ------------- 32,557 28,519 =============== =============== CAPITAL AND RESERVESCalled-upequity sharecapital 325 329Capitalredemptionreserve 1 -Profit andloss account 32,228 28,190 ------------------- --------------- SHAREHOLDERS'FUNDS 32,554 28,519Minorityinterest 3 - ------------------- --------------- - - 32,557 28,519 =============== =============== COMPANY BALANCE SHEETAT 31 MARCH 2005 2005 £000 £000FIXED ASSETSFixed asset investments 1,633Tangible assets 35 --------------- 1,668CURRENT ASSETSDebtors 232Investments 7,745Cash at bank 21,872 --------------- 29,849CREDITORS: Amounts falling due withinone year 368 --------------- --------------- NET CURRENT ASSETS 29,481 --------------- TOTAL ASSETS LESS CURRENT LIABILITIES 31,149 =============== CAPITAL AND RESERVESCalled-up equity share capital 325Capital redemption reserve 1Profit and loss account 30,823 --------------- SHAREHOLDERS' FUNDS 31,149 =============== CONSOLIDATED CASH FLOWFOR THE YEAR ENDED 31 MARCH 2005 Restated 2005 2004 £000 £000 NET CASH INFLOW/(OUTFLOW) FROM OPERATING 10,447 (7,630)ACTIVITIES RETURNS ON INVESTMENTS AND SERVICING OF FINANCE 1,042 885 TAXATION (229) (212) CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT (151) (142) ACQUISITIONS AND DISPOSALS (20) - ------ ----- CASHINFLOW/(OUTFLOW)BEFOREFINANCING 11,089 (7,099) FINANCING (1,371) (1,692) ------ ----- INCREASE/(DECREASE)IN CASH 9,718 (8,791) ========= ========= RECONCILIATION OF OPERATING PROFIT TO NET CASHINFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES Restated 2005 2004 £000 £000Operating profit 5,775 3,435Amortisation (139) (142)Depreciation 373 483Release of government grants (35) (21)Loss/(profit) on disposal of tangible fixed assets 1 (2)Increase in stocks (15) (275)Increase in debtors (2,421) (58)Decrease/(increase) in current asset investments 5,049 (11,438)Increase in creditors 1,859 388 ------- ------- Net cashinflow/(outflow)from operatingactivities 10,447 (7,630) ====== ======= RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 2005 2004 £000 £000 £000 Increase/(decrease) in cash in the period 9,718 (8,791) Net cash outflowfrom loans 173 169Cash outflow inrespect of hirepurchase andfinance lease 43 59 --------------- --------------- Change in netfunds 9,934 (8,563) New financeleases - (69)Net funds at 1April 2004 13,636 22,268 --------------- --------------- Net funds at31 March 2005 23,570 13,636 =============== =============== =============== =============== ANALYSIS OF CHANGES IN NET FUNDS At Cash flows Other At 1 Apr 2004 31 Mar 2005 £000 £000 £000 £000Cash in handand at bank 14,022 10,671 - 24,693Overdraft - (953) - (953) --------------- --------------- --------------- --------------- 14,022 9,718 - 23,740 --------------- --------------- --------------- ---------------Debt duewithin 1 year (166) 173 (139) (132)Debt due after1 year (168) - 139 (29)Hire Purchaseand financeleaseagreements (52) 43 - (9) --------------- --------------- --------------- --------------- (386) 216 - (170) --------------- --------------- --------------- --------------- Net funds 13,636 9,934 - 23,570 =============== =============== =============== =============== NOTES TO THE ACCOUNTS 1. REPORT AND ACCOUNTS The financial information contained in the Preliminary Results does notconstitute the Company's full financial statements. The information for theyears ended 31 March 2005 and 31 March 2004 is extracted from the auditedaccounts for the year ended 31 March 2005, upon which the Auditors haveexpressed an unqualified opinion. 2. BASIS OF CONSOLIDATION The acquisition of Arlington Group plc is accounted for as a merger under theprovisions of United Kingdom Financial Reporting Standard No. 6, and the resultsare presented as if this company had been in existence throughout the year andthe previous year. The corresponding amounts for the previous year in theconsolidated balance sheet have been presented on a proforma basis as if theGroup had been in existence throughout the comparative period. No goodwill is created on the transaction and the carrying values of the assetsand liabilities are not adjusted by virtue of this transaction. The results of other subsidiary undertakings acquired in the year are includedin the group financial statements from the effective date of acquisition. Thefinancial statements are adjusted, where appropriate, to conform to Groupaccounting policies. 3. TAX ON PROFIT ON ORDINARY ACTIVITIES Analysis of charge in the year 2005 2004 £000 £000Current tax: UK Corporation tax based on the results for the year at 30% (2004 - 30%) 1,056 307 Adjustments in respect of prior periods 571 - --------------- ------------- Total current tax 1,627 307 =============== ============= 4. EARNINGS PER SHARE Basic earnings per share is calculated on profit attributable to shareholders of£5,190,000 (2004:£4,013,000) divided by the weighted average number of theordinary shares in issue during the year of 60,468,175 (2004:65,322,210). Fully diluted earnings per share is calculated on profit attributable toshareholders of £5,190,000 (2004: £4,013,000) divided by the weighted averagenumber of ordinary shares in issue during the year including dilutive shares of60,674,694 (2004: 65,322,210). 5. ANNUAL REPORT AND ACCOUNTS Copies of the Report and Accounts will be sent to shareholders on 20 July 2005and will be available from the Secretary at the company's registered office,Reid House, 31 Church Street, Hamilton, Bermuda, HM12. This information is provided by RNS The company news service from the London Stock Exchange