5 Nov 2009 07:00
CHARLES STANLEY GROUP PLC
RESULTS FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2009
Charles Stanley is one of the UK's leading independently owned, full service stockbroking and investment management groups, advising on substantial funds. Today it announces its interim results for the half-year ended 30 September 2009.
Highlights:
Revenue for the half-year £55.9 million (2008/09: £49.0 million) 14.1% increase
Reported profit before tax £5.49 million (2008/09: £5.14 million) 6.8% increase
Adjusted profit before tax (before profit/loss on disposal of available for sale investments, one-off costs and amortisation of client lists) £6.6 million (2008/09: £6.9 million) 4.3% decrease
Funds under management or administration £11.6 billion (2008/09: £10.1 billion)
Discretionary funds under management at a new record high of £3.5 billion
Private client income up 10.9% to £45.7 million (2008/09: £41.2 million)
Reported earnings per share 8.60p (2008/09: 8.13p)
Adjusted earnings per share 10.37p (2008/09: 11.09p)
Interim dividend increased to 2.20p up 4.8% (2008/09: 2.10p)
Joined by Matterley Asset Management - a fund management boutique
Commenting on the outlook Sir David Howard, Chairman said:
"I am very pleased to report an increase of 6.8% in profit before tax, up from £5.14 million to £5.49 million. In commenting on our full-year results five months ago I pointed to the early signs of recovery. 2010 will be an uncertain year that will include a general election. But the indications at this stage are favourable, and I look forward to the months ahead with a degree of optimism."
For further information please contact:
| Charles Stanley Group PLC | Canaccord Adams | Oriel Securities Ltd |
| Sir David Howard, Chairman | Simon Bridges | Tom Durie |
| Peter A Hurst, Finance Director | Managing Director | Partner |
| Phone: 020 7739 8200 | Phone: 020 7050 6500 | Phone: 020 7710 7600 |
| Magnus Wheatley, Public Relations Manager | ||
| Phone: 020 7149 6273 |
CHAIRMAN'S STATEMENT
Charles Stanley is pleased to report a solid set of results for the half-year ended 30 September 2009. Revenue for the period rose by 14.1% from £49.0 million (half-year ended 30 September 2008) to a new record of £55.9 million. Much of this was due to an increase in income in our Private Client division, but it is also pleasing to see an upturn in the result from Charles Stanley Securities, our corporate finance, broking and institutional sales division. At the same time, in our Financial Services division, the benefit of recent acquisitions is now coming well on stream.
The Group holds substantial cash balances of its own and for its clients, and our profitability has inevitably been impacted adversely by the historically very low level of interest rates. But the diversity of our income streams means that a shortfall in one area can be balanced by an improvement in another, and I am very pleased to report an increase of 6.8% in profit before tax, up from £5.14 million to £5.49 million.
Share prices have recovered strongly since the low point that they reached in March this year. But they are still substantially below the high point they reached in the second half of 2007. It is therefore very pleasing to report that the value of funds under discretionary management has achieved a new record of £3.5 billion, up 29.6% compared with £2.7 billion at 31 March 2009, in line with the FTSE 100 Index over the same period, and well ahead of the APCIMS Balanced Portfolio Index, which rose by 19.2%. At the half-year end the total value of clients' funds under management and administration was £11.6 billion (up 28.9% compared with £9.0 billion at 31 March 2009), with the total managed funds (including discretionary funds) increasing by 26.1% to £5.8 billion.
In August we were joined by Matterley Asset Management, a fund management boutique. Our range of managed funds has grown well, and with the Matterley team joining us we have the opportunity to develop this area of the Group as a more focussed unit.
Once again we have financed this from our own resources and we have made deferred payments, during the latest period, for earlier acquisitions. But in these uncertain times we continue to focus on maintaining strong cash balances. These stand at £34.6 million compared with £36.0 million at 31 March 2009 and £20.1 million at this time last year.
In the light of these results the Directors have decided to increase the interim dividend from 2.10p to 2.20p, (an increase of 4.8%). In July this year shareholders voted in favour of the proposal to offer an alternative to the cash dividend in the form of shares of equivalent value (a "scrip" dividend), and many shareholders took advantage of this offer. In view of its popularity the Directors plan to make a similar offer in relation to the dividend now proposed. The additional timing required to implement the scrip dividend means that the dividend will be paid on 23 December 2009 to shareholders registered on 13 November 2009. Further details about the scrip dividend alternative are set out below.
Review of operations
Private Client division
The Private Client division has performed strongly during the half-year ended September 2009, with revenues increasing by 10.9% to £45.7 million. This reflects not only new business and the improvement in value of our clients' portfolios, but also our major programme of streamlining and simplifying our competitive charges for our services.
Despite considerably lower income from interest turn as a result of the exceptionally low levels of interest rates, both fee income at £19.6 million (2008/09: £18.6 million) and commission income at £26.1 million (2008/09: £22.6 million) were higher.
Financial Services
The Financial Services division has continued its development, as announced in the results to 31 March 2009, and has performed well. Revenues have increased to £4.3 million from £2.7 million, mainly as a result of the acquisition of Griffiths & Armour that had a good start to the year. Garrison's revenue, though slightly down on the period due to the average lower level of markets, maintained profitability levels similar to the period to September 2008. EBS continued to grow throughout the latest full year and further still during the latest six months. Our SIPP numbers increased to 2,394 with two further significant intermediaries using our services. The division was strengthened in August 2009 when we were joined by Matterley Asset Management, a fund management boutique which currently has one small fund. Overall the funds management division has grown well with approximately £87 million under management (31 March 2009: £51 million) and we are looking at ways to develop this growth further.
Charles Stanley Securities
Against a backdrop of historically low activity in small and mid cap equity fundraisings and corporate activity the division has achieved solid results. Revenue increased from £5.1 million to £5.9 million. Corporate Finance income has improved due to an increase both in M&A and fund raising activity, whilst our institutional bond trading arm, CS Sutherlands, has continued to benefit from the buoyancy in fixed income markets.
The Charles Stanley team
As always, I make the point that these results are due to our dedicated team at Charles Stanley, who continue to strive to provide the highest quality of service and care to our clients. These are strange times for all of us, but I can do no better than repeat the comments of shareholders at our AGM in July, paying tribute to everyone at Charles Stanley for their dedication, skill and professionalism.
Outlook
In commenting on our full-year results five months ago I pointed to the early signs of recovery in the stock market. I said that while opinions differed as to whether this was a temporary bounce or had the momentum for a longer-term upturn, I thought the latter more likely.
The economic outlook is no clearer today than it was in June. On the one hand the strength of share prices and a range of anecdotal indicators tell us that we have recovered quickly from the deepest point of the recession. On the other hand the statisticians tell us that the recession remains as deep as ever, and economists say that the boost in asset prices has been fuelled by excess liquidity.
Historically our economy has moved in cycles of seven to ten years. There is nothing unusual in experiencing a periodic recession, and this is not yet the worst recession that I can remember. Nor is it the first truly global recession, as commentators have claimed. What is unique, I think, is the speed of it all, the blink of an eye in which the global economic system so nearly fell into an abyss of 1929-33 proportions. Equally unique is the unimaginable size of the public policy response.
We are in uncharted waters, but the fog is clearing a little, to show us what might happen next. One suspects that there are still great quantities of doubtful debts and worthless assets to be written off. But, in compensation, rising asset prices may go far towards repairing the balance sheets of the banks. Furthermore, one can envisage a period of global competitive currency devaluation. In other circumstances the penalty for this would be to stoke inflation, but at a time of weak consumer demand that is less of an issue at this stage of the cycle.
2010 will be an uncertain year that will include a general election. So I am as cautious as ever in predicting the outcome for our second six months. But the indications at this stage are favourable, and I look forward to the months ahead with a degree of optimism.
Sir David Howard
Chairman
CHARLES STANLEY GROUP PLC
FUNDS UNDER MANAGEMENT AND ADMINISTRATION
| 30 Sept 2009 | 30 Sept 2008 | 31 Mar 2009 | |
| £ billion | £ billion | £ billion | |
| Discretionary funds under management | |||
| In Group's nominee or Euroclear UK and Ireland (EUI) personal membership | 3.5 | 2.9 | 2.7 |
| Advisory managed funds | |||
| In Group's nominee or EUI personal membership | 1.9 | 2.1 | 1.7 |
| Not held in Group's nominee | 0.4 | 0.3 | 0.2 |
| 2.3 | 2.4 | 1.9 | |
| Total managed funds | 5.8 | 5.3 | 4.6 |
| Advisory dealing funds | |||
| In Group's nominee or EUI personal membership | 2.6 | 2.3 | 2.0 |
| Execution only funds | |||
| In Group's nominee or EUI personal membership | 3.2 | 2.5 | 2.4 |
| Total administered funds | 5.8 | 4.8 | 4.4 |
| Total funds under management and administration | 11.6 | 10.1 | 9.0 |
Interim dividend
The Board is recommending an interim dividend of 2.20p (2008/09: 2.10p). A scrip alternative will be offered giving shareholders the opportunity to increase their shareholding without incurring dealing costs or stamp duty.
Details of the scrip dividend, including an election form, will be sent to shareholders with the interim report on 19 November 2009. If your shareholding is in uncertificated form in CREST (and was in uncertificated form as at the relevant record date), you can only elect to receive your dividend in the form of new shares by means of the CREST procedure to effect such an election.
Calendar
| Date | Event |
| 5 November 2009 | Results announced |
| 11 November 2009 | Shares quoted ex-Dividend |
| 11 to 17 November 2009 | Dealing days for calculating the price of the new shares to be offered pursuant to the scrip |
| 13 November 2009 | Record date for the interim dividend |
| 19 November 2009 | Interim Report posted to shareholders |
| 30 November 2009 | Final date for receipt of the scrip dividend mandate forms, electronic elections or CREST elections |
| 23 December 2009 | Dividend payment date, first day of dealing in the new shares |
| June 2010 | Final results announced |
Charles Stanley Group PLC
Consolidated Interim Income Statement
Six months ended 30 September 2009
| Unaudited Half-year | Unaudited Half-year | Audited Year | ||
| 30 Sept 2009 | 30 Sept 2008 | 31 Mar 2009 | ||
| Notes | £'000 | £'000 | £'000 | |
| Continuing operations | ||||
| Revenue | 1 | 55,949 | 48,961 | 101,765 |
| Administrative expenses | (50,867) | (44,651) | (93,834) | |
| Operating profit | 3 | 5,082 | 4,310 | 7,931 |
| Interest receivable | 4 | 204 | 904 | 1,445 |
| Interest payable and similar charges | 4 | (30) | (71) | (106) |
| Underlying profit before tax | 5,256 | 5,143 | 9,270 | |
| Profit/(loss) on disposal of available for sale investments | 4 | 233 | 1 | (56) |
| Profit before tax | 5,489 | 5,144 | 9,214 | |
| Taxation | 5 | (1,688) | (1,555) | (2,746) |
| Profit for the period attributable to equity shareholders | 3,801 | 3,589 | 6,468 | |
Earnings per Share
| Based on reported profit for the period | ||||
| Basic and diluted | 6 | 8.60p | 8.13p | 14.65p |
Charles Stanley Group PLC
Consolidated Interim Statement of Comprehensive Income
Six months ended 30 September 2009
| Unaudited Half-year | Unaudited Half-year | Audited Year | |
| 30 Sept 2009 | 30 Sept 2008 | 31 Mar 2009 | |
| £'000 | £'000 | £'000 | |
| Profit for the period | 3,801 | 3,589 | 6,468 |
| Other comprehensive income | |||
| Revaluation of available for sale investments taken to income statement on disposal | (219) | - | 201 |
| Revaluation of available for sale investments | 372 | (411) | (581) |
| Deferred tax on revaluation of available for sale investments | (103) | 115 | 166 |
| Retirement benefit scheme actuarial deficit | - | - | (2,048) |
| Deferred tax on retirement benefit scheme actuarial deficit | - | - | 545 |
| Other comprehensive income for the period, net of tax | 50 | (296) | (1,717) |
| Total comprehensive income for the period attributable to equity shareholders | 3,851 | 3,293 | 4,751 |
Charles Stanley Group PLC
Consolidated Interim Statement of Financial Position
At 30 September 2009
| Unaudited 30 Sept 2009 | Unaudited 30 Sept 2008 | Audited 31 Mar 2009 | ||
|
| Notes | £'000 | £'000 | £'000 |
| Assets | ||||
| Non-current assets | ||||
| Goodwill | 8 | 25,450 | 23,238 | 25,450 |
| Intangible assets | 9 | 10,618 | 9,624 | 11,197 |
| Property, plant and equipment | 10 | 6,653 | 8,170 | 7,747 |
| Deferred tax asset | 309 | - | 587 | |
| Available for sale investments | 11 | 6,487 | 4,411 | 6,200 |
| 49,517 | 45,443 | 51,181 | ||
| Current assets | ||||
| Trade and other receivables | 12 | 207,045 | 242,792 | 257,187 |
| Held for trading investments | 13 | 50 | 1,853 | 163 |
| Cash and cash equivalents | 14 | 34,554 | 20,144 | 35,951 |
| 241,649 | 264,789 | 293,301 | ||
| Liabilities | ||||
| Current liabilities | ||||
| Financial liabilities | 15 | (420) | (412) | (1,749) |
| Trade and other payables | 16 | (210,359) | (234,057) | (264,363) |
| Current tax liabilities | (1,886) | (949) | (574) | |
| (212,665) | (235,418) | (266,686) | ||
| Net current assets | 28,984 | 29,371 | 26,615 | |
| Non-current liabilities | ||||
| Financial liabilities | 15 | (8) | (1,393) | (28) |
| Retirement benefit liability | (3,894) | (1,952) | (3,894) | |
| Deferred tax liabilities | - | (81) | - | |
| Other non-current liabilities | 16 | (900) | - | (1,724) |
| (4,802) | (3,426) | (5,646) | ||
| Net assets | 73,699 | 71,388 | 72,150 | |
| Shareholders' equity | ||||
| Ordinary shares | 17 | 11,096 | 11,035 | 11,035 |
| Share premium | 1,812 | 1,873 | 1,873 | |
| Revaluation reserve | 2,345 | 2,214 | 2,295 | |
| Retained earnings | 58,349 | 56,169 | 56,850 | |
| Total shareholders' equity | 73,602 | 71,291 | 72,053 | |
| Minority interest in equity | 97 | 97 | 97 | |
| Total equity | 73,699 | 71,388 | 72,150 | |
Charles Stanley Group PLC
Consolidated Interim Statement of Changes in Equity
Six months ended 30 September 2009
| Share capital | Share premium | Revaln reserve | Retained earnings | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | |
| 1 April 2009 | 11,035 | 1,873 | 2,295 | 56,850 | 72,053 |
| Total comprehensive income for the period | - | - | 50 | 3,801 | 3,851 |
| Dividends paid to equity shareholders | - | - | - | (2,935) | (2,935) |
| Value of scrip dividends | - | (560) | - | 560 | - |
| Shares issued in lieu of dividends | 61 | 499 | - | - | 560 |
| Share options - value of employee services | - | - | - | 73 | 73 |
| 30 September 2009 | 11,096 | 1,812 | 2,345 | 58,349 | 73,602 |
| Six months ended 30 September 2008 | |||||
| 1 April 2008 | 11,029 | 1,855 | 2,509 | 55,589 | 70,982 |
| Total comprehensive income for the period | - | - | (296) | 3,589 | 3,293 |
| Realised revaluation surplus | - | - | 1 | - | 1 |
| Dividends paid to equity shareholders | - | - | - | (2,869) | (2,869) |
| Dividends paid to minority interests | - | - | - | (180) | (180) |
| Share options - value of employee services | - | - | - | 40 | 40 |
| Share options - issue of shares | 6 | 18 | - | - | 24 |
| 30 September 2008 | 11,035 | 1,873 | 2,214 | 56,169 | 71,291 |
Year ended 31 March 2009
| 1 April 2008 | 11,029 | 1,855 | 2,509 | 55,589 | 70,982 |
| Total comprehensive income for the period | - | - | (214) | 4,965 | 4,751 |
| Dividends paid to equity shareholders | - | - | - | (3,796) | (3,796) |
| Share options - value of employee services | - | - | - | 92 | 92 |
| Share options - issue of shares | 6 | 18 | - | - |
24 |
| 31 March 2009 | 11,035 | 1,873 | 2,295 | 56,850 | 72,053 |
Charles Stanley Group PLC
Consolidated Interim Statement of Cash Flows
Six months ended 30 September 2009
| Unaudited Half-year | Unaudited Half-year | Audited Year | ||
| 30 Sept 2009 | 30 Sept 2008 | 31 Mar 2009 | ||
|
| Notes | £'000 | £'000 | £'000 |
| Cash flows from operating activities | ||||
| Cash generated from/(absorbed by) operations | 18 | 5,780 | (2,947) | 20,791 |
| Interest received | 204 | 904 | 1,445 | |
| Interest paid | (30) | (71) | (106) | |
| Tax paid | (202) | (1,177) | (3,029) | |
| Net cash inflows/(outflows) from operating activities | 5,752 | (3,291) | 19,101 | |
| Cash flows from investing activities | ||||
| Acquisition of subsidiaries and other businesses | (4,315) | - | (1,471) | |
| Acquisition of intangible assets | (261) | (4,657) | (5,295) | |
| Purchase of property, plant and equipment | (358) | (2,104) | (3,118) | |
| Proceeds from disposal of investments | 373 | 1,048 | 445 | |
| Purchase of available for sale investments | (274) | (244) | (2,398) | |
| Dividends received | 76 | 7 | 79 | |
| Net cash used in investing activities | (4,759) | (5,950) | (11,758) | |
| Cash flows from financing activities | ||||
| Net proceeds from issue of ordinary share capital | - | 24 | 24 | |
| Cash outflow from change in debt and lease financing | (15) | (117) | (147) | |
| Dividends paid to minority interests | - | (180) | - | |
| Dividends paid to equity shareholders | 7 | (2,375) | (2,869) | (3,796) |
| Net cash used in financing activities | (2,390) | (3,142) | (3,919) | |
| Net decrease in cash and cash equivalents | (1,397) | (12,383) | 3,424 | |
| Cash and cash equivalents at start of period | 35,951 | 32,527 | 32,527 | |
| Cash and cash equivalents at end of period | 34,554 | 20,144 | 35,951 | |
Charles Stanley Group PLC
Notes to the Consolidated Interim Financial Statements
General information
The interim financial information for the six months ended 30 September 2009 has been prepared under International Financial Reporting Standards ("IFRS") as adopted by the EU. These interim accounts are presented in accordance with IAS 34 Interim Financial Reporting. The interim accounts have been prepared on the basis of the accounting policies set out in the Group's consolidated accounts for the year ended 31 March 2009. These unaudited interim financial statements should therefore be read in conjunction with the 2009 Annual Report and Financial Statements.
The financial information as set out in this report is unaudited and does not comprise statutory accounts for the purposes of Section 240 of the Companies Act 1985. The Auditors have carried out a review and their report is set out below.
The comparative figures for the year ended 31 March 2009 have been taken from but do not constitute the Company's statutory financial statements for that financial year. Those financial statements have been reported on by the Company's Auditors and delivered to the Registrar of Companies. Their report is unqualified and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985.
Principal risks and uncertainties
The principal risks and uncertainties facing the group are described in detail on pages 15 and 16 of the 2009 Annual Report and Financial Statements. Their impact on the six months to 30 September 2009 and for the remainder of the financial year is discussed in the Chairman's statement above.
Related party transactions
Related party transactions are described in detail on page 66 of the 2009 Annual Report and Financial Statements. No transactions took place during the six months to 30 September 2009 that would materially affect the financial position or performance of the Group during the period.
Presentation of financial statements
In these interim financial statements the Group has implemented the revised IAS 1 Presentation of Financial Statements (2007), which became effective for accounting periods beginning on or after 1 January 2009. As a result the consolidated statement of changes in equity shows all changes relating to the shareholders in their capacity as owners and all other changes in equity are presented in the consolidated statement of comprehensive income. Comparative information has been re-presented on a consistent basis.
1 Revenue
| Private Clients | Financial Services | Charles Stanley Securities | Other | Total | |
| Six months ended 30 September 2009 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Commission | 26,141 | 27 | 4,081 | - | 30,249 |
| Fees | |||||
| Investment management | 11,090 | 103 | - | - | 11,193 |
| Administration | 8,472 | 4,144 | - | - | 12,616 |
| Corporate finance | - | - | 1,816 | - | 1,816 |
| 19,562 | 4,247 | 1,816 | - | 25,625 | |
| Other income | - | - | - | 75 | 75 |
| Total for 6 months ended 30 September 2009 | 45,703 | 4,274 | 5,897 | 75 | 55,949 |
| Allocated administrative expenses | (27,557) | (4,053) | (5,627) | - | (37,237) |
| 18,146 | 221 | 270 | 75 | 18,712 | |
| Unallocated administrative expenses | (13,630) | ||||
| Operating profit | 5,082 | ||||
| Six months ended 30 September 2008 | |||||
| Commission | 22,575 | 42 | 3,886 | - | 26,503 |
| Fees | |||||
| Investment management | 7,293 | 109 | - | - | 7,402 |
| Administration | 11,300 | 2,521 | - | - | 13,821 |
| Corporate finance | - | - | 1,228 | - | 1,228 |
| 18,593 | 2,630 | 1,228 | - | 22,451 | |
| Other income | - | - | - | 7 | 7 |
| Total for 6 months ended 30 September 2008 | 41,168 | 2,672 | 5,114 | 7 | 48,961 |
| Allocated administrative expenses | (23,716) | (2,550) | (4,981) | - | (31,247) |
| 17,452 | 122 | 133 | 7 | 17,714 | |
| Unallocated administrative expenses | (13,404) | ||||
| Operating profit | 4,310 | ||||
| Year ended 31 March 2009 | |||||
| Commission | 46,038 | 28 | 8,020 | - | 54,086 |
| Fees | |||||
| Investment management | 17,252 | 155 | - | - | 17,407 |
| Administration | 21,200 | 6,404 | - | - | 27,604 |
| Corporate finance | - | - | 2,655 | - | 2,655 |
| 38,452 | 6,559 | 2,655 | - | 47,666 | |
| Other income | - | - | - | 13 | 13 |
| Total for year ended 31 March 2009 | 84,490 | 6,587 | 10,675 | 13 | 101,765 |
| Allocated administrative expenses | (52,052) | (6,346) | (9,964) | - | (68,362) |
| 32,438 | 241 | 711 | 13 | 33,403 | |
| Unallocated administrative expenses | (25,472) | ||||
| Operating profit | 7,931 |
2 Staff costs
| 30 Sept 2009 £'000 | 30 Sept 2008 £'000 | 31 Mar 2009 £'000 | |
| Staff costs for the Group during the period: | |||
| Wages and salaries | 17,300 | 14,693 | 34,810 |
| Social security costs | 1,909 | 1,635 | 3,601 |
| Other pension costs | 1,754 | 1,603 | 3,102 |
| 20,963 | 17,931 | 41,513 | |
3 Operating profit
The following items have been included in arriving at operating profit:
| Depreciation of property, plant and equipment: | |||
| - owned assets | 1,430 | 1,310 | 2,726 |
| - assets held under finance leases | 22 | 16 | 33 |
| Amortisation of intangibles | 840 | 594 | 1,659 |
| Other operating lease rentals payable | 929 | 726 | 1,741 |
| One-off revenue costs relating to new investment teams | 485 | 1,224 | 1,564 |
4 Finance income - net
| Interest expense: | |||
| Interest payable on bank borrowings | (3) | (24) | (29) |
| Interest payable on other loans | (21) | (43) | (69) |
| Interest payable on finance leases | (6) | (4) | (8) |
| Interest and similar charges payable | (30) | (71) | (106) |
| Interest income | 204 | 904 | 1,445 |
| Profit/(loss) on disposal of available for sale investments | 233 | 1 | (56) |
| Finance income - net | 407 | 834 | 1,283 |
5 Taxation
| Analysis of charge in the period | |||
| Current tax | |||
| - Continuing operations | 1,713 | 1,555 | 2,821 |
| - Adjustment in respect of prior periods | (200) | - | - |
| Deferred tax | |||
| - Continuing operations | 175 | - | (75) |
| 1,688 | 1,555 | 2,746 | |
6 Earnings per share
The Directors believe that a truer reflection of the performance of the Group's on-going business is given by a number of different measures of earnings per share. "Underlying earnings" represent operating profit plus net interest but excludes profits/ (losses) on the disposal of available for sale investments. "Underlying earnings before one-off costs" represent underlying earnings before one-off revenue costs relating to new investment teams. "Adjusted earnings" represent underlying earnings before one-off costs and amortisation of client lists. These measures are also followed by the analyst community as benchmarks of the Group's on-going performance.
| 30 Sept 2009 | 30 Sept 2008 | 31 Mar 2009 | |
| No. 000 | No. 000 | No. 000 | |
| Weighted average number of shares in issue in the period | 44,219 | 44,142 | 44,136 |
| Dilution | - | - | - |
| 44,219 | 44,142 | 44,136 | |
| £'000 | £'000 | £'000 | |
| Reported earnings attributable to ordinary shareholders | 3,801 | 3,589 | 6,468 |
| Profit on disposal of available for sale investments | (233) | (1) | 56 |
| Tax on profit on disposal of available for sale investments | 65 | - | (16) |
| Underlying earnings | 3,633 | 3,588 | 6,508 |
| One-off revenue costs relating to new investment teams | 485 | 1,224 | 1,564 |
| Tax on one-off revenue costs | (136) | (343) | (438) |
| Underlying earnings before one-off costs | 3,982 | 4,469 | 7,634 |
| Amortisation of client lists | 840 | 594 | 1,659 |
| Tax on amortisation | (235) | (166) | (464) |
| Adjusted earnings | 4,587 | 4,897 | 8,829 |
| Based on reported earnings | |||
| Basic and diluted earnings per share | 8.60p | 8.13p | 14.65p |
| Based on underlying earnings | |||
| Basic and diluted earnings per share | 8.22p | 8.13p | 14.75p |
| Based on underlying earnings before one-off costs | |||
| Basic and diluted earnings per share | 9.00p | 10.12p | 17.30p |
| Based on adjusted earnings | |||
| Basic and diluted earnings per share | 10.37p | 11.09p | 20.00p |
7 Dividends paid
| 30 Sept 2009 £'000 | 30 Sept 2008 £'000 | 31 Mar 2009 £'000 | |
| Final 2009: 6.65p (2008: 6.50p) per 25p share | 2,935 | 2,869 | 2,869 |
| Interim 2.10p per 25p share | - | - | 927 |
| 2,935 | 2,869 | 3,796 | |
As a result of shares issued in lieu of dividends of £560,000 (2008/09: nil), dividends paid in cash, as set out in the consolidated interim statement of cash flows, were £2,375,000 (2008/09: £2,869,000).
In addition, the Directors are proposing an interim dividend in respect of the six months ended 30 September 2009 of 2.20p per share which will absorb an estimated £976,000 of shareholders' funds. A scrip alternative will also be offered. It will be paid on 23 December 2009 to shareholders who are on the register of members on 13 November 2009.
8 Goodwill
| Cost | |||
| At beginning of period | 25,450 | 23,238 | 23,238 |
| Additions | - | - | 2,420 |
| Disposals and adjustments to deferred consideration | - | - | (208) |
| At end of period | 25,450 | 23,238 | 25,450 |
9 Intangible assets
| Customer lists | Brand costs | Total | |
| £'000 | £'000 | £'000 | |
| Cost | |||
| 1 April 2009 | 13,326 | 183 | 13,509 |
| Acquisitions | 261 | - | 261 |
| 30 September 2009 | 13,587 | 183 | 13,770 |
| Amortisation | |||
| 1 April 2009 | 2,129 | 183 | 2,312 |
| Amortisation during period | 840 | - | 840 |
| 30 September 2009 | 2,969 | 183 | 3,152 |
| Net book value | |||
| 30 September 2009 | 10,618 | - | 10,618 |
| 31 March 2009 | 11,197 | - | 11,197 |
10 Property, plant and equipment
| Freehold premises | Long leasehold premises | Short leasehold premises | Office equipment and motor vehicles | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | |
| Cost | |||||
| 1 April 2009 | 474 | 2,002 | 5,251 | 9,654 | 17,381 |
| Additions | - | - | 76 | 282 | 358 |
| 30 September 2009 | 474 | 2,002 | 5,327 | 9,936 | 17,739 |
| Depreciation | |||||
| 1 April 2009 | 40 | 1,627 | 2,691 | 5,276 | 9,634 |
| Charge for the period | 5 | 11 | 218 | 1,218 | 1,452 |
| 30 September 2009 | 45 | 1,638 | 2,909 | 6,494 | 11,086 |
| Net book value 30 September 2009 | 429 | 364 | 2,418 | 3,442 | 6,653 |
| 31 March 2009 | 434 | 375 | 2,560 | 4,378 | 7,747 |
11 Available for sale investments
| Listed investments | Unlisted investments | Total | |
| £'000 | £'000 | £'000 | |
| Fair value | |||
| 1 April 2009 | 2,808 | 3,392 | 6,200 |
| Additions | 274 | - | 274 |
| Disposals | (349) | (10) | (359) |
| Revaluation in period | 374 | (2) | 372 |
| Fair value | |||
| 30 September 2009 | 3,107 | 3,380 | 6,487 |
12 Trade and other receivables
| 30 Sep 2009 £'000 | 30 Sep 2008 £'000 | 31 Mar 2009 £'000 | |
| Current | |||
| Trade debtors | 202,865 | 239,341 | 253,086 |
| Other debtors | 717 | 663 | 780 |
| Prepayments and accrued income | 3,463 | 2,788 | 3,321 |
| 207,045 | 242,792 | 257,187 | |
13 Held for trading investments
| 30 Sep 2009 £'000 | 30 Sep 2008 £'000 | 31 Mar 2009 £'000 | |
| Current | |||
| Listed investments | 50 | 1,853 | 163 |
14 Cash and cash equivalents
| Cash at bank | 34,554 | 20,144 | 35,951 |
At the balance sheet date there were also deposits for clients, not included in the consolidated balance sheet, which were held in trust in segregated bank accounts amounting to £924 million (September 2008: £1,052 million; March 2009: £916 million).
15 Financial liabilities
| Current | |||
| Bank of England base rate redeemable loan | 157 | 157 | 157 |
| 4.5% convertible redeemable loan note | 201 | 234 | 201 |
| Bank of England base rate unsecured loan note | - | - | 1,336 |
| Obligations under finance leases | 62 | 21 | 55 |
| 420 | 412 | 1,749 | |
| Non-current | |||
| Bank of England base rate unsecured loan note | - | 1,336 | - |
| Obligations under finance leases | 8 | 57 | 28 |
| 8 | 1,393 | 28 | |
16 Trade and other payables
| Current | |||
| Trade payables | 200,880 | 225,076 | 248,848 |
| Other taxes and social security | 1,968 | 1,802 | 2,628 |
| Other creditors | 3,907 | 4,593 | 8,047 |
| Accruals and deferred income | 3,604 | 2,586 | 4,840 |
| 210,359 | 234,057 | 264,363 | |
| Non current | |||
| Other creditors | 900 | - | 1,724 |
17 Ordinary shares
| 30 Sept 2009 £'000 | 30 Sept 2008 £'000 | 31 Mar 2009 £'000 | |
| Authorised | |||
| 80,000,000 ordinary shares of 25p each | 20,000 | 20,000 | 20,000 |
| Allotted and fully paid | |||
| 44,385,422 (44,142,748) ordinary shares of 25p each | 11,096 | 11,035 | 11,035 |
During the period 242,674 shares were issued in lieu of cash dividends.
On 30 September 2009 the following options have been granted and remain outstanding in respect of ordinary shares of 25p in the Company under the Company's Save As You Earn Scheme.
| No of shares | Option price | ||
| Grant dated 19 December 2007 | 384,233 | £2.48 | |
| Exercisable during the six months commencing 1 February 2011 | |||
18 Reconciliation of net profit to cash generated from operations
| 30 Sept 2009 £'000 | 30 Sept 2008 £'000 | 31 Mar 2009 £'000 | |
| Net profit | 5,489 | 5,144 | 9,214 |
| Adjustments for | |||
| Depreciation | 1,452 | 1,326 | 2,759 |
| Amortisation of customer lists | 840 | 594 | 1,659 |
| Share option cost | 73 | 40 | 92 |
| Dividend income | (76) | (7) | (79) |
| Interest income | (204) | (904) | (1,445) |
| Interest expense | 30 | 71 | 106 |
| Loss on disposal of fixed assets | - | - | 25 |
| (Profit)/loss on disposal of available for sale investments | (233) | (1) | 56 |
| Changes in working capital | |||
| Decrease in held for trading investments | 113 | 722 | 2,411 |
| Decrease in debtors | 50,142 | 55,456 | 42,152 |
| Decrease in creditors | (51,846) | (65,388) | (36,159) |
| Cash generated from/(absorbed by) operations | 5,780 | (2,947) | 20,791 |
Directors' Responsibility Statement
We confirm that to the best of our knowledge:
The condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the EU;
The interim management report includes a fair review of the information required by:
DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of principal risks and uncertainties for the remaining six months of the year; and
DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.
On behalf of the board:
PETER HURST
FINANCE DIRECTOR
5 November 2009
Independent review report to Charles Stanley Group PLC
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the half-year financial report for the six months ended 30 September 2009 which comprises the consolidated income statement, statement of comprehensive income, statement of financial position, statement of changes in equity, statement of cash flows and the related explanatory notes. We have read the other information contained in the half-year financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Disclosure and Transparency Rules ('the DTR') of the UK's Financial Services Authority ('the UK FSA'). Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The half-year financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-year financial report in accordance with the DTR of the UK FSA.
As disclosed in the notes to the financial statements, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-year financial report has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-year financial report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-year financial report for the six months ended 30 September 2009 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA.
Saffery Champness
Chartered Accountants
London
5 November 2009
Notes: A review does not provide assurance on the maintenance and integrity of the website, including controls used to achieve this, and in particular on whether any changes may have occurred to the financial information since first published. These matters are the responsibility of the Directors but no control procedures can provide absolute assurance in this area. Legislation in the United Kingdom governing the preparation and dissemination of financial information differs from legislation in other jurisdictions.