ARL.L Regulatory News (ARL)

29 Nov 2007 07:00

Arlington Group Ltd29 November 2007 ARLINGTON GROUP LIMITED UNAUDITED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30TH SEPTEMBER 2007 Incorporated in Bermuda with registered number 36035 www.arlingtongroup.bm Dear Shareholder: RESULTS I am pleased to report upon the unaudited results for the half year ended 30thSeptember 2007 which have been produced under International Financial ReportingStandards the financial highlights of which are: • The unaudited consolidated financial results of the Group for the period under review show a profit after taxation of £962,000 (2006: loss of £675,000). • Basic earnings per share (EPS) per share were 1.49 pence (2006: loss per share 1.05 pence) • Fully diluted EPS were 1.49 pence (2006: loss per share 1.05 pence). • The net cash position at the Balance Sheet date was £7.9 million (2006: £6.6 million) • At 30 September 2007, the Diluted Net Asset Value per share was 57.23 pence per share (2006: 55.17 pence per share). All comparative figures are as restated on transition to IFRS. CURRENT YEAR'S TRADING AND OUTLOOK Despite a difficult August, the period under review has generated positivereturns from the overall investment strategy for the Group, with the seed fundedArlington Special Situations Fund (ASSF) again making a strong contribution. Aspart of the company's ongoing investment strategy, the Group divested its entireeconomic interest in the Copenhagen Capital Opportunities Fund, which wasseed-funded in January 2006, during the period, thereby releasing additionalcapital for reinvestment in new distribution or seed-funding transactions. In consideration of the deepening discount to NAV being applied by the market,the Company is actively looking to find the most effective way of reducing thatdiscount for the benefit of all of our shareholders. In October, the Company bought back a parcel of 10,340,500 shares at an averageprice of 39.74 pence which shares have subsequently been cancelled; on a proforma basis, this has resulted in a modest increase in NAV per share of circa3.05 pence while also clearing a substantial overhang in the market. Subsequentto this transaction, other shareholders have asked if the Company will be anongoing buyer of its shares and I am able to confirm that, for the foreseeablefuture, the Company will consider buying back shares at an appropriate pricefrom any other shareholders seeking liquidity. Furthermore, to better synchronise its year end with the reporting timetable ofits subsidiary fund investments (almost all of which report on a calendar yearbasis), the Company is also changing its Accounting Reporting Date to 31December with effect from the end of this calendar year. From January 1st 2008, the Company will be also changing and capping the coststructure to a fixed annual management and performance fee structure in aneffort to deliver greater transparency as well as being more representative ofthe type of investment vehicle Arlington has become. From January 1st 2008,there will be a fixed annual management and performance fee of 1.75 per cent and15 per cent respectively, along with standard administration and custodiancharges as well as the mandatory directors, listing and regulatory fees. The Board's intent is that the foregoing will offer the market both greatertransparency as well as a fuller recognition of the nature of the Company'sbusiness which, notwithstanding that liquidity in the Company's shares willstill be an issue due to the structure of the existing register, may ultimatelyassist in reducing the level of the discount to NAV. PROPOSED DIVIDEND The Directors do not propose an interim dividend. Once again my fellow Directors and I would like to thank everyone who has workedso hard in supporting the success of the Group and wish to express our gratitudefor their continuing support and commitment. NICHOLAS BARHAM November 29th 2007 ARLINGTON GROUP LIMITED CONSOLIDATED INCOME STATEMENTFOR THE SIX MONTHS ENDED 30 SEPTMBER 2007 Six months to Six months to Year to 31/03 30/09/07 30/09/06 /07 Note £000 £000 £000 TRADING INCOME 2 2,142 465 2,704Operating expenses (1,357) (1,216) (2,794) ----------------------------------OPERATING PROFIT / (LOSS) 785 (751) (90)Finance income 177 87 400 ----------------------------------PROFIT / (LOSS) BEFORE TAXATION 962 (664) 310Taxation - (11) (45) ----------------------------------RETAINED PROFIT / (LOSS) FOR THE FINANCIAL PERIOD 962 (675) 265 ================================== Earnings per share 3 - basic (pence) 1.49 (1.05) 0.41 - fully diluted (pence) 1.49 (1.05) 0.41 ARLINGTON GROUP LIMITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE SIX MONTHS ENDED 30 SEPTEMBER 2007 Share capital Capital redemption Shares to Retained reserve be issued earnings Total £000 £000 £000 £000 £000As at 31 March 2007 323 3 44 36,596 36,966Profit for the PERIOD - - - 962 962 ----------------------------------------------------------------As at 30 September 2007 323 3 44 37,558 37,928 ================================================================ Share capital Capital redemption Shares to Retained reserve be issued earnings Total £000 £000 £000 £000 £000As at 31 March 2006 323 3 39 37,623 37,988Loss for the period - - - (675) (675)Distribution on 1 September 2006 - - - (1,292) (1,292)(2 pence per share)Share-based payments - - 5 - 5 ----------------------------------------------------------------As at 30 September 2006 323 3 44 35,656 36,026 ================================================================ Share capital Capital redemption Shares to Retained reserve be issued earnings Total £000 £000 £000 £000 £000 As at 31 March 2006 323 3 39 37,623 37,988Profit for the year - - - 265 265Distribution on 1 September 2006 - - - (1,292) (1,292)(2 pence per share)Share-based payments - - 5 - 5 ----------------------------------------------------------------As at 31 March 2007 323 3 44 36,596 36,966 ================================================================ ARLINGTON GROUP LIMITED CONSOLIDATED BALANCE SHEETAT 30 SEPTEMBER 2007 At At At 30/09/07 30/09/06 31/03/07 £000 £000 £000ASSETS NON-CURRENT ASSETSProperty, plant and equipment 71 25 21 --------------------------------------- 71 25 21 --------------------------------------- CURRENT ASSETSTrade and other receivables 3,825 268 348Held for trading investments 26,360 29,552 23,566Cash and cash equivalents 7,922 6,647 13,546 ---------------------------------------Total current assets 38,107 36,467 37,460 ---------------------------------------TOTAL ASSETS 38,178 36,492 37,481 ======================================= EQUITY AND LIABILITIES EQUITYShare capital 323 323 323Capital redemption reserve 3 3 3Shares to be issued 44 44 44Retained earnings 37,558 35,656 36,596 ---------------------------------------Total equity 37,928 36,026 36,966 ---------------------------------------CURRENT LIABILITIESTrade and other payables 250 462 515Provisions for liabilities and charges - 4 - ---------------------------------------Total current liabilities 250 466 515 ---------------------------------------TOTAL EQUITY AND LIABILITIES 38,178 36,492 37,481 ======================================= ARLINGTON GROUP LIMITED CONSOLIDATED CASH FLOW STATEMENTFOR THE SIX MONTHS ENDED 30 SEPTEMBER 2007 Six months to Six months to Year to 30/09/07 30/09/06 31/03/07 £000 £000 £000CASHFLOWS FROM OPERATING ACTIVITIESGroup operating profit / (loss) from 785 (751) (90)continuing operationsAdjustments to reconcile groupoperating profit to net cash inflowsfrom operating activitiesDepreciation of property plant and equipment 10 4 8Share based payments - 5 5(Increase)/Decrease in trade and (3,477) 832 749other receivablesDecrease in trade and other payables (264) (468) (453)(Increase)/Decrease in held for trading investments (2,794) 2,536 8,522 -----------------------------------------Net cash flow (used in) / generated (5,740) 2,158 8,741from operating activities before taxationTax paid - (392) (389) -----------------------------------------Net cash (used in) / generated from (5,740) 1,766 8,352operating activities -----------------------------------------CASHFLOWS FROM INVESTING ACTIVITIESInterest received 177 87 400Purchases of property plant and equipment (61) - - -----------------------------------------Net cash generated from investing activities 116 87 400activities -----------------------------------------FINANCING ACTIVITIESDividends paid to equity - (1,292) (1,292)shareholders of the parent -----------------------------------------Net cash used in financing activities - (1,292) (1,292) ----------------------------------------- Net (decrease)/increase in cash and (5,624) 561 7,460cash equivalentsCash and cash equivalents at the 13,546 6,086 6,086start of the period -----------------------------------------Cash and cash equivalents at the end 7,922 6,647 13,546of the period ========================================= ARLINGTON GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 SEPTEMBER 2007 1. ACCOUNTING POLICIES Basis of preparation These unaudited interim financial statements which are for the sixmonths ended 30 September 2007 have been prepared in accordance withInternational Financial Reporting Standards (IFRS) and the information containedtherein is in accordance with IAS 34 "Interim Financial Reporting". They do notinclude all the information required for full annual financial statements andshould be read in conjunction with the financial statements of the group for theyear ended 31 March 2007. These unaudited financial statements were approved by the board on 29November 2007. The impact of seasonality or cyclicality on operations is not regardedas significant on the interim financial statements. Significant accounting policies The accounting policies and presentation followed in the preparation ofthis interim report have been applied consistently to all periods in thesefinancial statements and are the same as those applied by the group in thepreparation of its Annual Report for the year ended 31 March 2007. 2. TRADING INCOME An analysis of trading income by type is given below: Six months to 30/09/07 Six months to 30/09/06 Year to 31/03/07 £000 £000 £000Income arising from financial 1,804 253 2,083assets (investments at fair valuethrough profit and loss)Fees and commission income 338 151 350Investment management fees - 61 271 -------------------------------------------------------- 2,142 465 2,704 ======================================================== 3. EARNINGS PER SHARE Basic earnings per share amounts are calculated by dividing the net profit forthe period attributable to ordinary equity holders of the parent by the weightedaverage number of ordinary shares outstanding during the period. Dilutedearnings per share amounts are calculated be dividing the net profitattributable to ordinary equity holders of the parent by the weighed averagenumber of ordinary shares outstanding during the period plus the weightedaverage number of ordinary shares that would be issued on the conversion of allthe dilutive potential ordinary shares into ordinary shares. The Group has oneclass of dilutive potential ordinary shares, being those share options grantedwhere the exercise price is less than the average market price of the Company'sordinary shares during the period. Reconciliations of the earnings and weighted average number of shares used inthe calculation are set out below: 3. EARNINGS PER SHARE continued Six months Six months Year to To 30/09/07 To 30/09/07 31/03/07Weighted average number of ordinary shares in issue ('000) 64,611 64,611 64,611 Dilutive effect of the weighted average number of share 152 - 225options in the period ('000) Profit/(Loss) after tax (£'000) 962 (675) 265 Basic earning per share - pence 1.49p (1.05)p 0.41p Fully diluted earnings per share - pence 1.49p (1.05)p 0.41p Diluted EPS is calculated by adjusting the weighted average number of shares inissue on the assumption of conversion of all dilutive potential ordinary shares.As there was a loss for the prior period the fully diluted earnings per shareis the same as the basic earnings per share for that period. 4. CONTINGENCIES The Company has provided certain warranties and indemnities in respectof the business, assets and liabilities of Sentinel Business Services GroupLimited. It is not possible to determine a fair value for these warranties andindemnities. 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