ARL.L Regulatory News (ARL)

1 Aug 2006 07:01

Arlington Group Ltd01 August 2006 ARLINGTON GROUP LIMITED PRELIMINARY ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 31 MARCH 2006 Incorporated in Bermuda with registered number 36035 CHAIRMAN'S STATEMENT Dear Shareholder: RESULTS I am pleased to report upon the results for the year ended 31 March 2006. The audited consolidated financial results of the Group for the period underreview show a profit after taxation of £5.40 million (2005: £5.19 million). Basic earnings per share (EPS) per share were 8.32 pence (2005: 8.58 pence),with fully diluted EPS at 8.29 pence (2005: 8.55). The net cash position at the Balance Sheet date was £6.09 million (2005: £23.57million) reflecting the increased level of investment activity. Net Asset Value per share (undiluted) has increased over the same period by16.73% to 58.54 pence per share (2005: 50.15 pence per share). CURRENT YEAR'S TRADING The year under review saw positive returns from the overall investment strategy. Arlington Special Situations Fund (ASSF) - formerly reported as "ArlingtonGlobal Resources" As of 31 March 2006, the Company held 97.4% of the investment shares in ASSFvalued at £8.03 million. In the period to 31 March 2006, the Fund has shownstrong growth and is seeking third party capital with a view to building assetsunder management to a maximum US$100 million. Copenhagen International Opportunities Fund In January 2006 the Company invested €20.7 million at the launch of theCopenhagen International Opportunities Fund, a European long/short equity fundwhich has yielded positive NAV growth since inception. POST BALANCE SHEET EVENT The Company seed-funded Arlington Alphex in April 2006 with US$7.0m. Thisinvestment was the first to be made under the joint venture with EurekaHedge andwill be marketed to third parties through this joint venture. Arlington Alphexis a long only Japanese equity fund with the ability to manage market riskthrough the use of index futures. Whilst the performance of the Japanese equitymarkets and the fund has been disappointing, the fund continues to trade in linewith its benchmark "TOPIX" index. FUTURE PROSPECTS AND OUTLOOK The year 2005-06 has seen your Company make progress in the restructuringprogramme first set out in my half year Chairman's Statement of September 2004.Going forward, earnings will be derived from investment returns on the Company'sproprietary capital and from revenues generated from the growth in funds undermanagement. The organisational changes that are being implemented have created adecentralized business model. Against this background, Colin Hill will step downas Finance Director of the Company with effect from the end of September. Iwould particularly like to thank Colin for his efforts on behalf of the Companyover many years and also to everyone else who has worked so hard in supportingthe continued success of the Group and wish to express my gratitude for theircontinuing commitment for the future. PROPOSED DIVIDEND The Directors have approved the payment of a maiden dividend of two pence perordinary share. This dividend will be payable on 1 September 2006 toshareholders of record as at 5 p.m. on 18 August 2006; the shares will,therefore, go "ex div" from normal close of business on 16 August 2006. ANNUAL GENERAL MEETING The Company's AGM will be held in Hong Kong at 18:00 hours (local time) on 18August 2006. NICHOLAS BARHAMHong Kong: 31 July 2006 CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31 MARCH 2006 2006 2006 2005 2005 £000 £000 £000 £000TURNOVERContinuing operations 16,050 19,713Discontinued operations 4,994 16,177 ------- ------- 21,044 35,890 Cost of sales (15,421) (24,780) ------- -------GROSS PROFIT 5,623 11,110 Changes in market valueof open-ended hedge funds 2,343 17Administrative expenses (3,529) (5,352) ------- -------OPERATING PROFITContinuing operations 4,354 4,943Discontinued operations 83 832 ------- ------- 4,437 5,775 Profit on sale of discontinued operations 714 -Interest receivable and similar income 903 1,287Interest payable (20) (245) ------- ------- PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 6,034 6,817 Tax on profit on ordinary activities (638) (1,627) ------- -------RETAINED PROFIT FOR THEFINANCIAL YEAR 5,396 5,190 ======= ======= Earnings per share- basic (pence) 8.32 8.58- fully diluted (pence) 8.29 8.55 Earnings per share from continuing operations- basic (pence) 7.10 7.58- fully diluted (pence) 7.07 7.56 The Group has no recognised gains or losses other than the results for the yearas set out above. CONSOLIDATED BALANCE SHEETAT 31 MARCH 2006 2006 2005 £000 £000 £000 FIXED ASSETSIntangible assets - (284)Tangible assets 29 1,211 -------- -------- 29 927 --------CURRENT ASSETSStocks - 809Debtors 1,100 5,125Investments 31,345 9,505Property held for resale 579 -Cash at bank 6,086 24,693 -------- -------- 39,110 40,132CREDITORS:Amounts falling duewithin one year (1,311) (8,446) -------- -------- NET CURRENT ASSETS 37,799 31,686 -------- -------- TOTAL ASSETS LESS CURRENT LIABILITIES 37,828 32,613 CREDITORS: Amounts falling due after more - (29)than one year Provisions forliabilities and charges (4) - Government grants - (27) -------- -------- 37,824 32,557 ======== ======== CAPITAL AND RESERVESCalled-up equity sharecapital 323 325Capital redemption reserve 3 1Profit and loss account 37,498 32,228 -------- --------SHAREHOLDERS' FUNDS 37,824 32,554Minority interest - 3 -------- -------- 37,824 32,557 ======== ======== COMPANY BALANCE SHEETAT 31 MARCH 2006 2006 2005 £000 £000 £000 FIXED ASSETSFixed assetinvestments 293 1,633Tangible assets 29 35 -------- -------- 322 1,668 CURRENT ASSETSDebtors 1,081 232Investments 31,364 7,745Cash at bank 5,163 21,872 -------- -------- 37,608 29,849CREDITORS: Amountsfalling due within one year (677) (368) -------- --------NET CURRENT ASSETS 36,931 29,481 -------- --------TOTAL ASSETS LESS CURRENTLIABILITIES 37,253 31,149 ======== ========CAPITAL AND RESERVESCalled-up equity sharecapital 323 325Capital redemption reserve 3 1Profit and loss account 36,927 30,823 -------- --------SHAREHOLDERS' FUNDS 37,253 31,149 ======== ======== CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 31 MARCH 2006 2006 2005 £000 £000 NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES (18,943) 10,447 RETURNS ON INVESTMENTS AND SERVICING OF FINANCE 883 1,042 TAXATION (1,613) (229) CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT 566 (151) ACQUISITIONS AND DISPOSALS 1,751 (20) -------- --------CASH(OUTFLOW)/INFLOW BEFORE FINANCING (17,356) 11,089 FINANCING (298) (1,371) -------- --------DECREASE)/INCREASE IN CASH (17,654) 9,718 ======== ======== RECONCILIATION OF OPERATING PROFIT TO NET CASH(OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES 2006 2005 £000 £000Continuing operationsOperating profit 4,354 4,943Amortisation - 3Depreciation 19 34(Increase)/decrease in debtors (774) 50(Increase)/decrease in current asset investments (22,378) 5,049(Decrease)/increase in creditors (825) 532 -------- --------Net cash(outflow)/inflow fromcontinuing operations (19,604) 10,611 -------- -------- Discontinued operationsOperating profit 83 832Amortisation (71) (142)Depreciation 173 339Release of government grants - (35)Loss on disposal of tangible fixed assets - 1Decrease/(incr ease) in stocks 100 (15)Decrease/(incr ease) in debtors 2,498 (2,471)(Decrease)/increase in creditors (2,122) 1,327 -------- --------Net cash inflow/(outflow) fromdiscontinued operations 661 (164) -------- --------Total net cash(outflow)/inflow fromoperating activities (18,943) 10,447 ======== ======== RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 2006 2005 £000 £000 £000 (Decrease)/increase in cash in the period (17,654) 9,718 Net cash outflow from loans 161 173Cash outflow in respect of hire purchase andfinance lease 11 43 -------- -------- Change in net funds (17,482) 9,934 New finance leases (24) -Finance leasesdisposed of with subsidiary undertakings 22 - Net funds at 1 April 2005 23,570 13,636 ------- ------Net funds at 31 March 2006 6,086 23,570 ======= ====== ANALYSIS OF CHANGES IN NET FUNDS At Cash flows Other At 1 Apr 2005 31 Mar 2006 £000 £000 £000 £000Cash in handand at bank 24,693 (18,607) - 6,086Overdrafts (953) 953 - - --------------- --------------- --------------- --------------- 23,740 (17,654) - 6,086 --------------- --------------- --------------- --------------- Debt duewithin 1 year (132) 161 (29) -Debt due after1 year (29) - 29 -Hire Purchaseand financeleaseagreements (9) 11 (2) - --------------- --------------- --------------- --------------- (170) 172 (2) - --------------- --------------- --------------- ---------------Net funds 23,570 (17,482) (2) 6,086 =============== =============== =============== =============== 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 2006 and 31 March 2005 is extracted from the auditedaccounts for the year ended 31 March 2006, upon which the Auditors haveexpressed an unqualified opinion. 2. BASIS OF CONSOLIDATION The acquisition of Arlington Group plc in the comparative period has beenaccounted for as a merger under the provisions of United Kingdom FinancialReporting Standard No. 6, and the results are presented as if this company hadbeen in existence throughout the previous year. No goodwill was created on the transaction and the carrying values of the assetsand liabilities were not adjusted by virtue of this transaction. The results of other subsidiary undertakings acquired or disposed of in the yearare included in the group financial statements from the effective date ofacquisition or to the effective date of disposal. The financial statements areadjusted, where appropriate, to conform to Group accounting policies. 3. TAX ON PROFIT ON ORDINARY ACTIVIES Taxation is due only on profits arising from the Company's UK subsidiaryArlington Group plc and former subsidiary Cemtron Limited. Analysis of charge in the year 2006 2005 £000 £000Current tax: UK Corporation tax based on the results for the year at 30% (2005 - 30%) 611 1,056 Adjustments in respect of prior periods 23 571 --------------- --------------- Total current tax 634 1,627 Deferred tax 4 - --------------- --------------- 638 1,627 =============== =============== 4. CHANGES IN ACCOUNTING POLICIES In preparing the financial statements for the current year, the Company hasadopted the following Financial Reporting Standards: - FRS 21 'Events after the balance sheet date'- FRS 22 'Earnings per share'- FRS 25 'Financial instruments: disclosure'- FRS 28 'Corresponding amounts' The adoption of these new standards has had no impact on the Group's orCompany's result for the year, the preceding year or the financial position atthe year end. There has also been a change in accounting policy regarding the valuation ofcurrent asset investments. Open-ended hedge funds are now marked to market,where previously they were recorded at the lower of cost and net realisablevalue. The adoption of this new policy has no material effect on the prior yearaccounts. 5. EARNINGS PER SHARE Basic earnings per share is calculated on profit attributable to shareholders of£5,396,000 (2005: £5,190,000) divided by the weighted average number of ordinaryshares in issue during the year of 64,826,000 (2005: 60,468,000). Basic earningsper share for continuing operations is calculated on profit arising fromcontinuing operations of £4,606,000 (2005: £4,587,000) divided by the weightedaverage number of ordinary shares in issue during the year as above. Fully diluted earnings per share is calculated on profit attributable toshareholders of £5,396,000 (2005: £5,190,000) divided by the weighted averagenumber of ordinary shares in issue during the year including dilutive shares of65,072,000 (2005: 60,675,000). Fully diluted earnings per share for continuingoperations is calculated on profit arising from continuing operations of£4,606,000 (2005: £4,587,000) divided by the weighted average number of ordinaryshares in issue during the year including dilutive shares as above. 6. ANNUAL REPORT AND ACCOUNTS Copies of the Report and Accounts will be sent to shareholders on 2nd August2006 and will be available from the Secretary at the company's registeredoffice, Thistle House, 4 Burnaby Street, Hamilton, Bermuda, HM11. This information is provided by RNS The company news service from the London Stock Exchange