18 Nov 2008 07:00
18 November 2008
CHARLES STANLEY GROUP PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2008
Charles Stanley Group PLC, one of the UK's leading independent full service stockbroking, corporate finance and investment management groups, announces its interim results for the six months ended 30 September 2008.
Highlights:
Revenue down by 7% to £49.0 million (September 2007 £52.5 million)
Private client revenue down less than 1% to £43.8 million (September 2007 £44.1 million)
Private client fee income up 10% to £21.2 million (September 2007 £19.2 million)
Charles Stanley Securities remained profitable on reduced revenue of £5.1 million (September 2007 £8.3 million)
Total funds under management and administration down 8% to £10.1 billion (March 2008 £11.0 billion)
Interim dividend maintained at 2.10p
Acquisitions of the business of Truro Stockbrokers and of the UK private client business of Insinger de Beaufort
Acquisition of Griffiths & Armour (Financial Services) Ltd after the period end
Sir David Howard, Chairman, commented:
"It will take time for the consequences of the credit crunch to work through, and no doubt there will be further shocks before we can safely claim that the ship is righted. But already we are seeing signs of steadier conditions and a narrowing of margins in the wholesale lending markets. It is too early to tell how firm and lasting these early indications will be, or what actions we can expect from the Obama presidency. Against this background of uncertainty, Charles Stanley is well placed, as we have been for the last 200 years, to ride out the current financial turmoil."
For further information please contact:
| Charles Stanley Group PLC | ||
| Sir David Howard, Chairman | ||
| Peter A Hurst, Finance Director | ||
| Magnus Wheatley, Public Relations Manager | ||
| Phone: 020 7739 8200 | ||
| Fax: 020 7953 2948 |
Chairman's Statement
Against the very difficult background of recent months Charles Stanley Group is pleased to report a resilient result for the six months ended 30 September 2008. Income for the half-year period was £49.0 million, 6.7% less than the figure of £52.5 million for the six months ended 30 September 2007. Within this latest figure the income of the Private Client Division was almost unchanged, at £43.8 million compared with £44.1 million (a reduction of 0.7%). Inevitably, though, our corporate and institutional business, Charles Stanley Securities, has been affected by the general decline in new issue and merger activity, and its revenue for the half-year was £5.1 million compared with £8.3 million in the equivalent period last year.
Within the revenue figure for the Private Client Division there has been a further re-balancing between our two principal streams of income, commission on transactions and fees for investment management and administration. Comparing the latest six months with the equivalent period of the previous year, commission income fell by 8.9% from £24.8 million to £22.6 million. Fee income, on the other hand, was some 10.4% higher, increasing from £19.2 million to £21.2 million.
We have been active in making carefully judged acquisitions since the first signs of the downturn, and during the half-year we announced the successful completion of the acquisitions of Truro Stockbrokers and of the UK private client stockbroking business of Insinger de Beaufort. Our series of acquisitions in the past three years has helped to support our revenue. But as these acquisitions are financed fully from our own internal resources they affect our cash balances - which nevertheless remain strong at £20.1 million - and in the initial post-acquisition stage they generate lower margins as we incur take-on and restructuring costs. In general the businesses that we acquire operate at higher margins than the existing business, so this effect should be short-lived. We have a long record of integrating acquired businesses successfully.
At this half-year stage the combination of the reduction in income and a lower overall operating margin has resulted in our reported profit before tax of £5.1 million for the six months, compared with £7.2 million for the first half of 2007-08, and with £5.2 million for the second half of 2007-08.
Shareholders will be aware of the turmoil in the market in recent months, and we view these figures as a robust result in the circumstances. The value of the funds which we manage or administer for clients has also been affected, as one would expect. The FTSE-100 Share Index has fallen by 14.0% over the six month period, the FT-All Share Index by 15.1% and the APCIMS Balanced Portfolio Index by 8.9%. By contrast the funds which we manage or administer for clients stood at £10.1 billion at 30 September 2008, which is a reduction of 8.2% from their total at 31 March 2008 of £11.0 billion. Within this figure the funds which we manage for clients on a purely discretionary basis declined by 6.5% from £3.1 billion to £2.9 billion.
The directors consider that it would be inappropriate in such uncertain market conditions to increase the dividend, and therefore propose to maintain the interim dividend at 2.10p per share, as at this stage last year. This will be paid on 23 December 2008 to shareholders registered on 28 November 2008.
Review of operations
As one of the largest independently-owned UK stockbroking and personal investment companies, the fortunes of Charles Stanley Group are intricately linked to the wider economic and financial environment. Over the longer term our objective remains to build a successful and reputable business offering the highest quality of personal service to our clients. We have never shared the view that the cycle of boom and bust has become obsolete, and in a business which is dependent on the economic cycle we have always measured our success in growing the company, not year-by-year, but from one cycle to the next. In the fallow years trading will fall back, but these conditions present opportunities for building the company for the future.
In the shorter term, on a one year view, we seek to navigate through the extraordinary circumstances which have assailed the stock market and undermined the confidence of investors. The results for the first six months of the current year demonstrate a resilient performance. Trading levels and investment values have both suffered severely but our income has held up; only the corporate and institutional side of the business - a common theme amongst investment firms - has fallen back sharply.
Over recent months we have been undertaking a very detailed project to review our fee and commission structures. Building on this, during the half-year we launched a major client-facing programme to simplify the wide range of different rates that we have been charging.
Within the Private Client Division, our financial planning department continued to grow revenues at some 7.6% higher than in the equivalent period last year with good further growth in our SIPP administration business. More than 150 SIPPS were added in the period, the majority of which are also being managed by Charles Stanley. The post-period-end acquisition of Griffiths & Armour (Financial Services) Ltd, which is referred to below, will bolster our position in the Employee Benefits Market, and I would like to take the opportunity to welcome our new colleagues in Liverpool and Watford.
Charles Stanley Securities, the Group's corporate advisory and institutional broking division remained profitable during the six months ended 30 September 2008. In common with its peers, the division experienced a decline in commission and fee income as a result of the challenging and volatile market conditions that have affected the small and mid cap sector. Corporate finance revenues declined significantly, reflecting both the absence of equity fundraisings and fewer corporate transactions. Secondary commissions, meanwhile, remained relatively resilient. Selective recruitment has continued, bringing with it coverage of new sectors including pharmaceuticals, healthcare and support services. The overall number of retained corporate clients has remained stable at 51 companies, including several new client wins during the period.
Acquisitions & new developments
In June we completed the acquisition of the UK private client stockbroking business of Insinger de Beaufort and, in July we completed the acquisition of the business of Truro Stockbrokers, in Cornwall, extending our presence in the south-west of England. Both operations have already integrated very successfully into Charles Stanley, and we are delighted to welcome our new colleagues.
Immediately following the half-year end, on 1 October 2008, we completed the acquisition of Griffiths & Armour (Financial Services) Ltd, the benefits consultancy division of the leading Liverpool insurance broker Griffiths & Armour. Not only does this add significantly to our growing benefits consultancy business, based currently in London, Southampton and Plymouth, but it brings a wealth of further expertise with a team of highly-regarded professionals.
The Charles Stanley team
This has been a very difficult period for everyone who works in the Group. Every day brings more surprises, and this has called for careful judgement and steady nerves - qualities which I believe our team has in abundance. The directors are very grateful to everyone in the company for performing so well during this unusual time.
Outlook
A year ago I commented that the shocks to the market had, until then, been confined to particular financial companies and particular types of primarily wholesale financial instruments. But the effects of this sadly familiar cycle - cheap credit, over-priced asset classes, and the mispricing of risk - were starting to ripple out into the broader economy. I expressed the hope that this would turn out to be a "blip" and not spill over, but I added that it was too early to tell.
Sadly we know now that the subsequent management of the macro-economic situation has proved disastrous. Neither the management of many financial institutions nor the regulators seem to have appreciated the extent of low-quality debt on the institutions' books, nor the spectacular degree to which they were over-leveraged. Aggressive re-financing of the banks led largely by the UK has, so far, administered sufficient support globally, to calm the runaway spiral.
It will take time for the consequences of the credit crunch to work through, and no doubt there will be further shocks before we can safely claim that the ship is righted. But already we are seeing signs of steadier conditions and a narrowing of margins in the wholesale lending markets. It is too early to tell how firm and lasting these early indications will be, or what actions we can expect from the Obama presidency. Against this background of uncertainty, Charles Stanley is well placed, as we have been for the last 200 years, to ride out the current financial turmoil.
Sir David Howard Bt.
Chairman
18 November 2008
CHARLES STANLEY GROUP PLC
FUNDS UNDER MANAGEMENT AND ADMINISTRATION
| 30 Sept 2008 | 30 Sept 2007 | 31 Mar 2008 | |
| £ billion | £ billion | £ billion | |
| Discretionary funds under management | |||
| In Group's nominee or Euroclear UK and Ireland (EUI) | 2.9 | 2.9 | 3.1 |
| Advisory managed funds | |||
| In Group's nominee or EUI personal membership | 2.1 | 2.6 | 2.4 |
| Not held in Group's nominee | 0.3 | 0.5 | 0.5 |
| 2.4 | 3.1 | 2.9 | |
| Total managed funds | 5.3 | 6.0 | 6.0 |
| Advisory dealing funds | |||
| In Group's nominee or EUI personal membership | 2.3 | 2.5 | 2.2 |
| Execution only funds | |||
| In Group's nominee or EUI personal membership | 2.5 | 3.0 | 2.8 |
| Total administered funds | 4.8 | 5.5 | 5.0 |
| Total funds under management and administration | 10.1 | 11.5 | 11.0 |
Financial Calendar
18 November 2008 Results announced
26 November 2008 Ex-dividend date for interim dividend
28 November 2008 Record date for interim dividend
23 December 2008 Interim dividend paid
June 2009 Final results announced
Charles Stanley Group PLC
Consolidated Income Statement
Six months ended 30 September 2008
| Unaudited Half-year | Unaudited Half-year | Audited Year | ||
| 30 Sept 2008 | 30 Sept 2007 | 31 Mar 2008 | ||
|
| Notes | £'000 | £'000 | £'000 |
| Continuing operations | ||||
| Revenue | 1 | 48,961 | 52,483 | 105,564 |
| Administrative expenses | (44,651) | (46,390) | (95,225) | |
| Operating profit | 2 | 4,310 | 6,093 | 10,339 |
| Interest payable and similar charges | 4 | (71) | (46) | (100) |
| Interest receivable | 4 | 904 | 1,001 | 2,078 |
| Underlying profit before tax | 5,143 | 7,048 | 12,317 | |
| Profit on disposal of available for sale investments | 4 | 1 | 163 | 80 |
| Profit before tax | 5,144 | 7,211 | 12,397 | |
| Taxation | 5 | (1,555) | (2,283) | (3,459) |
| Profit for the period | 3,589 | 4,928 | 8,938 | |
| Profit attributable to equity shareholders | 3,589 | 4,928 | 8,938 | |
Earnings per Share
| Based on reported profit for the period | ||||
| Basic | 6 | 8.13p | 11.59p | 20.89p |
| Diluted | 6 | 8.13p | 11.17p | 20.21p |
Charles Stanley Group PLC
Statement of Recognised Income and Expense
Six months ended 30 September 2008
| Unaudited Half-year | Unaudited Half-year | Audited Year | |
| 30 Sept 2008 | 30 Sept 2007 | 31 Mar 2008 | |
| £'000 | £'000 | £'000 | |
| Profit for the period | 3,589 | 4,928 | 8,938 |
| Revaluation of available for sale investments taken to income statement on disposal | - | (163) | (26) |
| Revaluation of available for sale investments | (411) | 196 | 332 |
| Deferred tax on revaluation of available for sale investments | 115 | (12) | (86) |
| Retirement benefit scheme actuarial deficit | - | - | (578) |
| Deferred tax on retirement benefit scheme actuarial deficit | - | - | 162 |
| Net (expense)/gains recognised directly in equity | (296) | 21 | (196) |
| Total recognised income for the period | 3,293 | 4,949 | 8,742 |
| Attributable to equity shareholders | 3,293 | 4,949 | 8,742 |
Charles Stanley Group PLC
Consolidated Balance Sheet
At 30 September 2008
| Unaudited 30 Sept 2008 | Unaudited 30 Sept 2007 | Audited 31 Mar 2008 | ||
|
| Notes | £'000 | £'000 | £'000 |
| Assets | ||||
| Non-current assets | ||||
| Goodwill | 8 | 23,238 | 23,318 | 23,238 |
| Intangible assets | 9 | 9,624 | 3,138 | 5,561 |
| Property, plant and equipment | 10 | 8,170 | 7,065 | 7,420 |
| Available for sale investments | 11 | 4,411 | 4,792 | 4,907 |
| 45,443 | 38,313 | 41,126 | ||
| Current assets | ||||
| Trade and other receivables | 12 | 242,792 | 219,660 | 299,052 |
| Held for trading investments | 13 | 1,853 | 2,001 | 2,575 |
| Cash and cash equivalents | 14 | 20,144 | 28,263 | 32,527 |
| 264,789 | 249,924 | 334,154 | ||
| Liabilities | ||||
| Current liabilities | ||||
| Financial liabilities | 15 | (412) | (536) | (519) |
| Trade and other payables | 16 | (234,057) | (213,670) | (297,341) |
| Current tax liabilities | (949) | (2,288) | (798) | |
| (235,418) | (216,494) | (298,658) | ||
| Net current assets | 29,371 | 33,430 | 35,496 | |
| Non-current liabilities | ||||
| Financial liabilities | 15 | (1,393) | (1,411) | (1,404) |
| Retirement benefit liability | (1,952) | (1,521) | (1,952) | |
| Deferred tax liabilities | (81) | (170) | (195) | |
| Other non-current liabilities | 16 | - | (1,992) | (1,992) |
| (3,426) | (5,094) | (5,543) | ||
| Net assets | 71,388 | 66,649 | 71,079 | |
| Shareholders' equity | ||||
| Ordinary shares | 17 | 11,036 | 10,638 | 11,029 |
| Share premium | 18 | 1,873 | 742 | 1,855 |
| Other reserves | 18 | 2,214 | 2,311 | 2,509 |
| Retained earnings | 18 | 56,168 | 52,861 | 55,589 |
| Total shareholders' equity | 18 | 71,291 | 66,552 | 70,982 |
| Minority interest in equity | 97 | 97 | 97 | |
| Total equity | 71,388 | 66,649 | 71,079 | |
Charles Stanley Group PLC
Consolidated Cash Flow Statement
Six months ended 30 September 2008
| Unaudited Half-year | Unaudited Half-year | Audited Year | ||
| 30 Sept 2008 | 30 Sept 2007 | 31 Mar 2008 | ||
|
| Notes | £'000 | £'000 | £'000 |
| Cash flows from operating activities | ||||
| Cash (absorbed by)/generated from operations | 19 | (2,947) | (513) | 10,027 |
| Interest received | 904 | 1,001 | 2,078 | |
| Interest paid | (71) | (46) | (100) | |
| Tax paid | (1,177) | (2,898) | (5,672) | |
| Net cash (outflows)/inflows from operating activities | (3,291) | (2,456) | 6,333 | |
| Cash flows from investing activities | ||||
| Acquisition of subsidiaries and other businesses | - | (4,776) | (5,032) | |
| Proceeds from sale of subsidiaries | - | - | 100 | |
| Acquisition of intangible assets | (4,657) | (2,119) | (5,045) | |
| Purchase of property, plant and equipment | (2,104) | (1,670) | (3,314) | |
| Proceeds from disposal of investments | 1,048 | 434 | 534 | |
| Purchase of available for sale investments | (244) | (767) | (1,408) | |
| Dividends received | 7 | 75 | 83 | |
| Net cash used in investing activities | (5,950) | (8,823) | (14,082) | |
| Cash flows from financing activities | ||||
| Net proceeds from issue of ordinary share capital | 25 | 80 | 1,584 | |
| Cash outflow from change in debt and lease financing | (118) | (187) | (62) | |
| Dividends paid to minority interests | (180) | - | - | |
| Dividends paid to equity shareholders | (2,869) | (2,656) | (3,551) | |
| Net cash used in financing activities | (3,142) | (2,763) | (2,029) | |
| Net decrease in cash and cash equivalents | (12,383) | (14,042) | (9,778) | |
| Cash and cash equivalents at start of period | 32,527 | 42,305 | 42,305 | |
| Cash and cash equivalents at end of period | 20,144 | 28,263 | 32,527 | |
Charles Stanley Group PLC
Notes to the Financial Statements
General information
The interim financial information for the six months ended 30 September 2008 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 2008. These unaudited interim financial statements should therefore be read in conjunction with the 2008 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 2008 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 to 17 of the 2008 Annual Report and Financial Statements. Their impact on the six months to 30 September 2008 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 71 of the 2008 Annual Report and Financial Statements. No transactions took place during the six months to 30 September 2008 that would materially affect the financial position or performance of the group during the period.
1 Revenue
| Private Clients | Charles Stanley Securities | Other | Total | |
| 6 months ended 30 September 2008 | £'000 | £'000 | £'000 | £'000 |
| Commission | 22,617 | 3,886 | - | 26,503 |
| Fees | ||||
| Investment management | 8,519 | - | - | 8,519 |
| Administration | 12,704 | - | - | 12,704 |
| Corporate finance | - | 1,228 | - | 1,228 |
| 21,223 | 1,228 | 22,451 | ||
| Other income | - | - | 7 | 7 |
| Total for 6 months ended 30 September 2008 | 43,840 | 5,114 | 7 | 48,961 |
| Allocated administrative expenses | (26,266) | (4,981) | - | (31,247) |
| 17,574 | 133 | 7 | 17,714 | |
| Unallocated administrative expenses | (13,404) | |||
| Operating profit | 4,310 | |||
| 6 months ended 30 September 2007 | ||||
| Commission | 24,811 | 5,234 | - | 30,045 |
| Fees | ||||
| Investment management | 9,130 | - | - | 9,130 |
| Administration | 10,119 | - | - | 10,119 |
| Corporate finance | - | 3,114 | - | 3,114 |
| 19,249 | 3,114 | - | 22,363 | |
| Other income | - | - | 75 | 75 |
| Total for 6 months ended 30 September 2007 | 44,060 | 8,348 | 75 | 52,483 |
| Allocated administrative expenses | (28,573) | (6,232) | - | (34,805) |
| 15,487 | 2,116 | 75 | 17,678 | |
| Unallocated administrative expenses | (11,585) | |||
| Operating profit | 6,093 | |||
| Year ended 31 March 2008 | ||||
| Commission | 48,578 | 10,199 | - | 58,777 |
| Fees | ||||
| Investment management | 19,089 | - | - | 19,089 |
| Administration | 21,881 | - | - | 21,881 |
| Corporate finance | - | 5,734 | - | 5,734 |
| 40,970 | 5,734 | - | 46,704 | |
| Other income | - | - | 83 | 83 |
| Total for year ended 31 March 2008 | 89,548 | 15,933 | 83 | 105,564 |
| Allocated administrative expenses | (58,427) | (12,965) | - | (71,392) |
| 31,121 | 2,968 | 83 | 34,172 | |
| Unallocated administrative expenses | (23,833) | |||
| Operating profit | 10,339 |
The divisional analysis has been modified since 31 March 2008. Other income is now reported under Charles Stanley Securities. The comparatives for 30 September 2007 and 31 March 2008 have been restated to show this reallocation.
2 Operating profit
The following items have been included in arriving at operating profit:
| 30 Sept 2008 £'000 | 30 Sept 2007 £'000 | 31 Mar 2008 £'000 | |
| Depreciation of property, plant and equipment: | |||
| - owned assets | 1,310 | 1,084 | 2,234 |
| - assets held under finance leases | 16 | 21 | 39 |
| Amortisation of intangibles | 594 | 150 | 653 |
| Other operating lease rentals payable | 726 | 837 | 1,541 |
| One-off revenue costs relating to new investment teams | 1,224 | 2,129 | 4,418 |
3 Staff costs
| Staff costs for the group during the period: | |||
| Wages and salaries | 14,693 | 16,169 | 34,933 |
| Social security costs | 1,635 | 1,626 | 4,140 |
| Other pension costs | 1,603 | 1,423 | 2,794 |
| 17,931 | 19,218 | 41,867 | |
4 Finance income - net
| Interest expense: | |||
| Interest payable on bank borrowings | (24) | (6) | (3) |
| Interest payable on other loans | (43) | (34) | (85) |
| Interest payable on finance leases | (4) | (6) | (12) |
| Interest and similar charges payable | (71) | (46) | (100) |
| Interest income | 904 | 1,001 | 2,078 |
| Profit on disposal of available for sale investments | 1 | 163 | 80 |
| Finance income - net | 834 | 1,118 | 2,058 |
5 Taxation
| Analysis of charge in the period | |||
| Current tax | |||
| - Continuing operations | 1,555 | 2,161 | 3,353 |
| - Adjustment in respect of prior periods | - | - | (89) |
| Deferred tax | |||
| - Continuing operations | - | 122 | 195 |
| 1,555 | 2,283 | 3,459 | |
6 Earnings per share
| 30 Sept 2008 £'000 | 30 Sept 2007 £'000 | 31 Mar 2008 £'000 | |
| Earnings attributable to ordinary shareholders | 3,589 | 4,928 | 8,938 |
| Profit on disposal of available for sale investments | (1) | (163) | (80) |
| Tax on profit on disposal of available for sale investments | - | 49 | 24 |
| Underlying earnings attributable to ordinary shareholders | 3,588 | 4,814 | 8,882 |
| No. | No. | No. | |
| '000 | '000 | '000 | |
| Weighted average number of shares in issue in the period | 44,142 | 42,512 | 42,788 |
| Dilution | - | 1,600 | 1,437 |
| 44,142 | 44,112 | 44,225 | |
| Based on reported earnings | |||
| Basic earnings per share | 8.13p | 11.59p | 20.89p |
| Diluted earnings per share | 8.13p | 11.17p | 20.21p |
| Based on underlying earnings | |||
| Basic earnings per share | 8.13p | 11.32p | 20.76p |
| Diluted earnings per share | 8.13p | 10.91p | 20.08p |
7 Dividends paid
| Final 2008: 6.50p (2007: 6.25p) per 25p share | 2,869 | 2,657 | 2,657 |
| Interim 2.10p per 25p share | - | - | 894 |
| 2,869 | 2,657 | 3,551 | |
In addition, the Directors are proposing an interim dividend in respect of the six months ended 30 September 2008 of 2.10p per share which will absorb an estimated £927,000 of shareholders' funds. It will be paid on 23 December 2008 to shareholders who are on the register of members on 28 November 2008.
8 Goodwill
| Cost | |||
| At beginning of period | 23,238 | 15,434 | 15,434 |
| Additions | - | 7,884 | 7,884 |
| Disposals and adjustments to deferred consideration | - | - | (80) |
| At end of period | 23,238 | 23,318 | 23,238 |
9 Intangible assets
| Customer lists | Brand costs | Total | |
| £'000 | £'000 | £'000 | |
| Cost | |||
| 1 April 2008 | 6,031 | 183 | 6,214 |
| Acquisitions | 4,657 | - | 4,657 |
| 30 September 2008 | 10,688 | 183 | 10,871 |
| Amortisation | |||
| 1 April 2008 | 616 | 37 | 653 |
| Amortisation during period | 594 | - | 594 |
| 30 September 2008 | 1,210 | 37 | 1,247 |
| Net book value | |||
| 30 September 2008 | 9,478 | 146 | 9,624 |
| 31 March 2008 | 5,415 | 146 | 5,561 |
The acquisitions arise principally from the purchases of the business of Truro Stockbrokers and of the UK private client business of Insinger de Beaufort.
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 2008 | 474 | 1,984 | 4,585 | 10,510 | 17,553 |
| Additions | - | 18 | 414 | 1,672 | 2,104 |
| Disposals or scrapping | - | - | - | (53) | (53) |
| 30 September 2008 | 474 | 2,002 | 4,999 | 12,129 | 19,604 |
| Depreciation | |||||
| 1 April 2008 | 31 | 1,600 | 2,280 | 6,222 | 10,133 |
| Charge for the period | 2 | 14 | 189 | 1,121 | 1,326 |
| Disposals or scrapping | - | - | - | (25) | (25) |
| 30 September 2008 | 33 | 1,614 | 2,469 | 7,318 | 11,434 |
| Net book value 30 September 2008 | 441 | 388 | 2,530 | 4,811 | 8,170 |
| 31 March 2008 | 443 | 384 | 2,305 | 4,288 | 7,420 |
11 Available for sale investments
| Listed investments | Unlisted investments | Total | |
| £'000 | £'000 | £'000 | |
| 1 April 2008 | |||
| Cost | 1,087 | 303 | 1,390 |
| Revaluation | 428 | 3,089 | 3,517 |
| Fair value | 1,515 | 3,392 | 4,907 |
| Additions | 244 | - | 244 |
| Disposals | (329) | - | (329) |
| Revaluation in period | (411) | - | (411) |
| Fair value | |||
| 30 September 2008 | 1,019 | 3,392 | 4,411 |
| Cost | 1,002 | 303 | 1,305 |
| Revaluation | 17 | 3,089 | 3,106 |
12 Trade and other receivables
| 30 Sep 2008 £'000 | 30 Sep 2007 £'000 | 31 Mar 2008 £'000 | |
| Current | |||
| Trade debtors | 239,341 | 216,601 | 295,772 |
| Other debtors | 663 | 341 | 668 |
| Prepayments and accrued income | 2,788 | 2,718 | 2,612 |
| 242,792 | 219,660 | 299,052 | |
13 Held for trading investments
| Current | |||
| Listed investments | 1,853 | 2,001 | 2,575 |
14 Cash and cash equivalents
| Cash at bank | 20,144 | 28,263 | 32,527 |
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 £1,052 million (September 2007: £856 million; March 2008: £996 million).
15 Financial liabilities
| 30 Sept 2008 £'000 | 30 Sept 2007 £'000 | 31 Mar 2008 £'000 | |
| Current | |||
| Bank of England base rate redeemable loan | 157 | 157 | 157 |
| 4.5% convertible redeemable loan note | 234 | 311 | 311 |
| Obligations under finance leases | 21 | 68 | 51 |
| 412 | 536 | 519 | |
| Non-current | |||
| Bank of England base rate unsecured loan note | 1,336 | 1,336 | 1,336 |
| Obligations under finance leases | 57 | 75 | 68 |
| 1,393 | 1,411 | 1,404 | |
16 Trade and other payables
| Current | |||
| Trade payables | 225,076 | 206,659 | 286,180 |
| Other taxes and social security | 1,802 | 1,672 | 2,788 |
| Other creditors | 4,593 | 1,618 | 1,984 |
| Accruals and deferred income | 2,586 | 3,721 | 6,389 |
| 234,057 | 213,670 | 297,341 | |
| Non current | |||
| Other creditors | - | 1,992 | 1,992 |
17 Ordinary shares
| 30 Sept 2008 £'000 | 30 Sept 2007 £'000 | 31 Mar 2008 £'000 | |
| Authorised | |||
| 80,000,000 ordinary shares of 25p each | 20,000 | 20,000 | 20,000 |
| Allotted and fully paid | |||
| 44,142,718 ordinary shares of 25p each | 11,036 | 10,638 | 11,029 |
During the period 25,000 ordinary shares were issued fully paid for cash at 96p each following the exercise of options by former employees.
On 30 September 2008 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 | 427,598 | £2.48 | |
| Exercisable during the six months commencing 1 February 2011 | |||
18 Statement of changes in shareholders' equity
| Share capital | Share premium | Otherreserves | Retained earnings | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | |
| 1 April 2008 | 11,029 | 1,855 | 2,509 | 55,589 | 70,982 |
| Net profit | - | - | - | 3,589 | 3,589 |
| Dividends paid to equity shareholders | - | - | - | (2,869) | (2,869) |
| Dividends paid to minority interests | - | - | - | (180) | (180) |
| Revaluation of available for sale investments | - | - | (411) | - | (411) |
| Transfer of realised revaluation surplus | - | - | 1 | (1) | - |
| Deferred tax on revaluation of available for sale investments | - | - |
115 | - |
115 |
| Share options - value of employee services | - | - | - | 40 | 40 |
| Share options - proceeds of shares issued | 7 | 18 | - | - | 25 |
| 30 September 2008 | 11,036 | 1,873 | 2,214 | 56,168 | 71,291 |
19 Reconciliation of net profit to cash generated from operations
| 30 Sept 2008 £'000 | 30 Sept 2007 £'000 | 31 Mar 2008 £'000 | |
| Net profit | 5,144 | 7,211 | 12,397 |
| Adjustments for | |||
| Depreciation | 1,326 | 1,102 | 2,273 |
| Amortisation of customer lists | 594 | 150 | 653 |
| Share option cost | 40 | 21 | 49 |
| Dividend income | (7) | (75) | (83) |
| Interest income | (904) | (1,001) | (2,078) |
| Interest expense | 71 | 46 | 100 |
| Profit on disposal of available for sale investments | (1) | (163) | (80) |
| Investments acquired in lieu of fees | - | (50) | (50) |
| Changes in working capital | |||
| Decrease/(increase) in debtors | 56,178 | 47,814 | (31,282) |
| (Decrease)/increase in creditors | (65,388) | (55,568) | 28,128 |
| Cash (absorbed by)/generated from operations | (2,947) | (513) | 10,027 |
Directors' Responsibility Statement
On behalf of the board:
PETER HURST
FINANCE DIRECTOR18 November 2008
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 2008 which comprises the consolidated income statement, statement of recognised income and expense, consolidated balance sheet, consolidated cash flow statement 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 2008 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 AccountantsLondon18 November 2008
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.