2 Sep 2009 07:00
Cavanagh Group plc
("Cavanagh" or "The Group")
Unaudited Interim Results for the six months ended 30 June 2009
Cavanagh Group plc, one of the leading firms of Independent Financial Advisers, announces its interim results for the six months ended 30 June 2009.
Key Results
| H1 2009 | H1 2008 | % change | H2 2008 | % change | |
| £'000 | £'000 | £'000 | |||
| Revenue | 7,948 | 9,456 | -16% | 8,046 | -1% |
| EBITDA | 700 | 1,078 | -35% | 106 | +525% |
| EBITDA margin | 8.8% | 11.4% | n/a | 1.3% | n/a |
| Operating cashflow | 654 | 809 | -19% | 438 | +49% |
First half recovery after challenging H2 2008
Revenue stabilised
Margins improving
Cash generation remains strong
Revenue per adviser increased and remains well above industry average at £237,000 per annum
Andrew Fay, Chief Executive, comments:
" Under the circumstances I am pleased with our performance in the first half of the year which has been aided by our ongoing focus on our internal business processes and a reduction in our overheads that commenced in 2008"
Cavanagh Group plc
Andrew Fay (Chief Executive) 01444 475400
Brewin Dolphin Investment Banking
Andrew Emmott 0845 213 4736
Cavanagh Group plc
CHAIRMAN'S STATEMENT
Financial Results
I am pleased to report the Group's results for the six months ended 30 June 2009, which show EBITDA (earnings before interest, tax, depreciation and amortisation) of £700,000 against £106,000 in the second half of 2008 but £1,078,000 in the comparative period. This profit, from revenue of £7,948,000, has generated a reduction in net debt of £703,000.
I consider these results commendable following the market difficulties reported in the 2008 Annual Report, which showed a marked slowdown in revenue in the second half of last year.
The uncertainty experienced across the financial sector and the economy as a whole has come at time when Cavanagh has continued to develop its business propositions while ensuring that progress continues to be made in improving operational efficiencies across the Group.
Although revenue has been adversely affected by falling fund values and reduced numbers of new joiners in corporate benefit arrangements, both of which generate a large proportion of our recurring income, overall revenue for the first half has remained in line with the second half of 2008 with efficiency savings generating the increased EBITDA over the second half of 2008.
It was clear that the Group needed to be prudent following the downturn, and I consider, in what remains a very challenging environment, that we have stabilised our revenue figures and generated a creditable profit during the first half of 2009.
Operations
As previously reported, a major area of development has been the setting up of Cavanagh Asset Management, our discretionary fund management service, and despite the current economic conditions we had £69m of funds on this platform by the end of June, up by £51m from the end of December 2008.
We continue to discuss business opportunities on a broad front and notably we are pleased to announce that we have been successful in the tendering for a new partnership with the Bar Council which will see Cavanagh as the preferred Wealth Management adviser to their members. This appointment recognises Cavanagh's experience and expertise in providing financial advice to professionals and particularly those of the legal profession. This relationship will commence in September and we are looking forward to working closely with the Bar Council in the future.
We remain cautiously optimistic in our growth plans but remain committed that only propositions, whether organic or acquisitive, that present a complimentary business case and provide high quality client service will be considered in order to enhance rather than detract from our existing market proposition.
We feel that the Retail Distribution Review ("RDR") means further consolidation is unavoidable. However, the opportunity remains to build further a value added wealth management planning business based on high levels of recurring income, excellent service levels and true focus on our client's end value. In short, a market leading business is well within the Group's grasp and this leads us to remain optimistic about our future plans.
Staff
Despite the difficult market conditions and the implementation of structural changes to our business model our staff, as always, have shown tremendous commitment and loyalty to the Group and I would once again like to thank them for their dedication and commitment.
Outlook
Having entered the second half of 2009 at a time of continuing uncertainty, I believe that the Group has demonstrated it has a more efficient and comprehensive model that will create real value for the future. With RDR coming and the high level of recurring income which we generate, Cavanagh continues to establish itself as a leading provider of wealth management,corporate benefit and actuarial services with a robust model that can adapt and change, even in difficult times.
Paul Sinnett
Chairman
1 September 2009
Cavanagh Group plc
INCOME STATEMENT
| 6 months 30-June -09 | 6 months 30-June -08 | Year ended 31-Dec -08 | |||
| Unaudited | Unaudited | Audited | |||
| Notes | £'000 | £'000 | £'000 |
| REVENUE | 7,948 | 9,456 | 17,502 |
| PROFIT FROM OPERATIONS | 655 | 1,028 | 1,088 | |
| Share of joint venture profit after tax | 45 | 50 | 96 | |
| ------------------- | ------------------- | ------------------- | ||
| EARNINGS BEFORE INTEREST, DEPRECIATION, AMORTISATION AND TAX | 700 | 1,078 | 1,184 | |
| Net finance costs | (39) | (105) | (191) | |
| Depreciation | (101) | (104) | (213) | |
| Amortisation and impairment | (248) | (246) | (572) | |
| ------------------ | ------------------ | ------------------ | ||
| PROFIT BEFORE TAX EXPENSE | 312 | 623 | 208 | |
| Tax expense | (98) | (190) | (111) | |
| ------------------- | ------------------ | ------------------ | ||
| PROFIT FOR THE FINANCIAL PERIOD | 214 | 433 | 97 | |
| ========== | ========= | ========= | ||
| PROFIT ATTRIBUTABLE TO : | ||||
| Equity holders of Parent company | 211 | 430 | 67 | |
| Minority Interest | 3 | 3 | 30 | |
| ------------------ | ------------------ | ------------------- | ||
| 214 | 433 | 97 | ||
| ========= | ========= | ========= | ||
| Earnings per share | ||||
| Basic - pence | 2 | 1.8 | 3.7 | 0.6 |
| Fully diluted - pence | 2 | 1.8 | 3.7 | 0.6 |
The profit from operations arises from the Group's continuing operations.
There was no recognised income or expenditure other than the profit for the period. Accordingly no statement of Comprehensive Income and Expenditure has been prepared.
Cavanagh Group plc
CONSOLIDATED BALANCE SHEET
| 30-June-09 | 30-June -08 | 31-Dec- 08 | |
| Unaudited | Unaudited | Audited | |
| £'000 | £'000 | £'000 |
ASSETS
Non-current assets
| Property plant and equipment | 208 | 421 | 374 | ||||
| Intangible assets | 5,692 | 6,600 | 5,935 | ||||
| Investment in Joint Venture | 4 | 2 | 4 | ||||
| Deferred tax asset | - | - | 85 | ||||
| -------------------- | ------------------ | ------------------- | |||||
| 5,904 | 7,023 | 6,398 | |||||
| -------------------- | ------------------- | ------------------- | |||||
| Current assets | |||||||
| Trade and other receivables | 1,569 | 2,311 | 1,762 | ||||
| Cash and cash equivalents | 2,281 | 2,781 | 2,213 | ||||
| -------------------- | ------------------- | ----------------------- | |||||
| 3,850 | 5,092 | 3,975 | |||||
| -------------------- | ------------------ | ----------------------- | |||||
| TOTAL ASSETS | 9,754 | 12,115 | 10,373 | ||||
| -------------------- | ------------------ | ----------------------- | |||||
| LIABILITIES | |||||||
| Current liabilities | |||||||
| Trade and other payables | 1,809 | 2,540 | 2,032 | ||||
| Corporation tax payable | 188 | 359 | 96 | ||||
| Financial liabilities | 1,220 | 1,120 | 1,195 | ||||
| ----------------------- | -------------------------- | -------------------------- | |||||
| 3,217 | 4,019 | 3,323 | |||||
| --------------------- | -------------------- | ----------------------- | |||||
| Non-current liabilities | |||||||
| Financial liabilities | 2,532 | 3,827 | 3,192 | ||||
| Deferred tax liability | 726 | 871 | 798 | ||||
| Provisions | 176 | 217 | 176 | ||||
| --------------------- | ------------------- | ----------------------- | |||||
| 3,434 | 4,915 | 4,166 | |||||
| --------------------- | ------------------- | ------------------------ | |||||
| TOTAL LIABILITIES | 6,651 | 8,934 | 7,489 | ||||
| --------------------- | ------------------- | ------------------------ | |||||
| NET ASSETS | 3,103 | 3,181 | 2,884 | ||||
| =========== | ========== | ============ | |||||
| EQUITY | |||||||
| Issued share capital | 116 | 116 | 116 | ||||
| Share premium account | 7 | 7 | 7 | ||||
| Share based payment reserve | 261 | 230 | 256 | ||||
| Retained earnings | 2,655 | 2,775 | 2,444 | ||||
| ---------------------- | ------------------- | ----------------------- | |||||
| TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT COMPANY | 3,039 | 3,128 | 2,823 | ||||
| Minority interests | 64 | 53 | 61 | ||||
| --------------------- | ------------------ | ---------------------- | |||||
| TOTAL EQUITY | 3,103 | 3,181 | 2,884 | ||||
| ========== | ========= | =========== | |||||
Cavanagh Group plc
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the period ended 30 June 2009
| Share capital | Share premium account | Share based payment reserve | Retained earnings | Minority interests | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| At 1 January 2009 | 116 | 7 | 256 | 2,444 | 61 | 2,884 |
| Other movements | ||||||
| Share based payment | 5 | 5 | ||||
| Profit for the period | 211 | 3 | 214 | |||
| --------------- | ------------------ | ------------------ | ----------------- | ----------------- | ------------------ | |
| At 30 June 2009 | 116 | 7 | 261 | 2,655 | 64 | 3,104 |
| ======== | ========= | ========= | ========= | ========= | ========== |
Cavanagh Group plc
CONSOLIDATED CASH FLOW STATEMENT
for the period ended 30 June 2009
| 6 months 30-June-09 | 6 months 30-June-08 | Year ended 31-Dec-08 | ||
| Unaudited | Unaudited | Audited | ||
| £'000 | £'000 | £'000 | ||
| CASH FLOW FROM OPERATIONS | ||||
| Profit before tax | 312 | 623 | 208 |
| Share of profit in joint venture | (45) | (50) | (96) | |
| Share based payment | 5 | 7 | 65 | |
| Depreciation | 101 | 104 | 213 | |
| Amortisation and impairment of intangible assets | 248 | 246 | 572 | |
| Loss on disposal of property, plant and equipment | 23 | - | - | |
| Decrease / (increase) in trade and other receivables | 193 | (62) | 512 | |
| (Decrease) in trade and other payables | (221) | (172) | (385) | |
| Increase / (decrease) in provisions | (1) | 8 | (33) | |
| Finance costs | 39 | 105 | 191 | |
| ------------------- | ------------------ | ------------------ | ||
| NET CASH GENERATED FROM OPERATIONS | 654 | 809 | 1,247 | |
| Income taxes paid | - | - | (311) | |
| Interest paid | (59) | (184) | (329) | |
| ------------------ | ------------------ | ------------------ | ||
| NET CASH FROM OPERATING ACTIVITIES | 595 | 625 | 607 | |
| ------------------ | ------------------ | ------------------ |
| CASH FLOWS FROM INVESTING ACTIVITIES |
| Payments to acquire property, plant and equipment | (16) | (81) | (143) | |
| Payments to acquire intangible assets | (5) | (30) | (66) | |
| Payment to purchase share of Joint Venture | - | - | (2) | |
| Dividend paid to minority shareholders | - | - | (20) | |
| Proceeds from sale of property, plant and equipment | 65 | - | - | |
| Interest received | 19 | 79 | 139 | |
| Income received from joint venture | 45 | 50 | 120 | |
| ------------------- | ------------------ | ------------------ | ||
| NET CASH FROM INVESTING ACTIVITIES | 108 | 18 | 28 | |
| ------------------- | ------------------ | ------------------ |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||
| Proceeds from issue of new shares | - | 112 | 112 | |
| Repayment of borrowings | (635) | (572) | (1,132) | |
| ------------------ | ------------------ | ------------------ | ||
| NET CASH OUTFLOW FROM FINANCING | (635) | (460) | (1,020) | |
| ------------------ | ------------------ | ------------------ |
| Net increase / (decrease) in cash and cash equivalents | 68 | 183 | (385) |
| Cash & cash equivalents at the beginning of the financial period | 2,213 | 2,598 | 2,599 | |
| ------------------- | ------------------- | ------------------- | ||
| Cash & cash equivalents at the end of the financial period | 2,281 | 2,781 | 2,213 | |
| ========= | ========= | ========= |
NOTES TO THE RESULTS
1 Basis of PREPARATION OF INTERIM FINANCIAL INFORMATION
The interim financial information does not constitute full accounts within the meaning of section 434 of the Companies Act 2006. The preliminary announcement is prepared on the same basis as set out in the statutory accounts for the year ended 31 December 2008, which were prepared under accounting practices generally accepted in the UK, and have been filed with the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain any statement under Section 237 (2) or (3) of the Companies Act 1985.
While the financial information included has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS), as adopted by the European Union (EU), this announcement does not in itself contain sufficient information to comply with IFRS's.
The interim financial statements which were not audited by the Auditors, were approved by the Board of Directors on 1 September 2009.
2 EARNINGS PER SHARE
| 6 months | 6 months | Year ended | |
| 30-June-09 | 30-June-08 | 31-Dec-08 | |
| Unaudited | Unaudited | Audited | |
| £'000 | £'000 | £'000 | |
| Profit for the financial period after taxation attributable to Equity holders | 211 | 430 | 67 |
| Share based compensation charge | 5 | 7 | 65 |
| ----------------- | ---------------- | ----------------- | |
| Adjusted profit after taxation | 216 | 437 | 132 |
| ========= | ========= | ========= |
| Weighted average number of shares (No) | |||
| For basic earnings per ordinary share | 11,597,047 | 11,565,321 | 11,613,401 |
| Exercise of share options | 45,650 | 147,973 | 41,802 |
| ----------------- | ----------------- | ----------------- | |
| For fully diluted earnings per ordinary share | 11,642,697 | 11,713,294 | 11,655,203 |
| ========= | ======== | ======== | |
| Earnings per ordinary share - basic | 1.8 | 3.7p | 0.6p |
| Earnings per ordinary share - fully diluted | 1.8 | 3.7p | 0.6p |
| ========= | ========= | ========= |
3 ANALYSIS OF NET DEBT
| 1-Jan-09 | Cash Flow | Non-cash movements | 30-Jun-09 | |
| £'000 | £'000 | £'000 | £'000 | |
| Cash at bank | 2,213 | 68 | 2,281 | |
| Bank loan | (4,387) | 635 | (3,752) | |
| ---------------------- | -------------------- | -------------------- | --------------------- | |
| Net debt | (2,174) | 703 | - | (1,471) |
| =========== | =========== | =========== | =========== |
Copies of this report will be sent to shareholders shortly and are available on the web site www.cavanagh.co.uk or from The Courtyard, Staplefield Road, Cuckfield, West Sussex RH17 5JT.