30 Sep 2008 07:00
Cavanagh Group plc
("Cavanagh" or "The Group")
Unaudited Interim Results for the six months ended 30 June 2008
Cavanagh Group plc, one of the leading firms of Independent Financial Advisers, announces its interim results for the six months ended 30 June 2008.
Key Results
Revenue increased by 22% to £9,456,000 (2007: £7,739,000)
EBITDA up by 23% to £1,078,000 (2007: £875,000)
Net debt reduced by £755,000
Andrew Fay, Chief Executive, comments:
Cavanagh has achieved another good performance in the first half of 2008 generating increased revenue and profitability.
Cavanagh Group plc
Andrew Fay (Chief Executive) 01444 475400
Brewin Dolphin Investment Banking
Andrew Emmott 0845 2708610
Cavanagh Group plc
CHAIRMAN'S STATEMENT
Financial Results
I am pleased to report the Group's results for the six months ended 30 June 2008, which show EBITDA of £1.078m against £875k in 2007. This profit is generated from increased revenue of £9.465m, up 22% on the equivalent period last year which has generated a reduction in net debt of £755k.
When measured against the challenges of the volatile global economic markets, I consider these results to be very creditable.
Operations
Cavanagh's strategy is to generate consistent, profitable growth both organically and, where appropriate, by suitable acquisition. A key element of this is the recruitment of new consultants who we believe can produce above-industry average levels of income and I'm able to report that we have identified a number of suitably qualified consultants some of whom have already joined and others will follow later in the year.
Although we are pleased with the progress made during the first half of the year, the current market turmoil and financial climate present conditions that are the most challenging we have seen and therefore we cannot be complacent. However, this environment also produces opportunities and we feel we are well placed to take advantage by providing much-needed advice to our clients and attracting new consultants.
The launch of the Cavanagh Asset Reporting Service,("CARS") has been developed to a point where significant funds are moving across to this platform, which in turn has led to increasing levels of recurring revenue. This platform has also enhanced the wealth management proposition at Cavanagh, together with our improved asset allocation investment process which gives a sophisticated process for financial planning.
An important part of our business has been the positive adoption of "treating customers fairly" ("TCF") - we see this as core to our business principles and as part of this we continue to invest in an education programme to enhance the technical knowledge of staff across the group. We believe this will keep Cavanagh well positioned and comfortably ahead of the expected regulatory requirements to increase the level of qualifications within the industry which are anticipated as a key element of the 'retail distribution review' (RDR).
We have successfully completed the integration of JRG Financial Consultancy Limited ("JRG") during the first half, with its trade and assets being merged into Cavanagh Financial Management. Our corporate business now accounts for approximately a third of our total revenue.
The Group's average adviser productivity remained in line with the high standards we have previously set.
Reduction of Capital
As reported in the 2007 accounts we obtained shareholder approval at the AGM to reduce our share premium account; this was subsequently approved in the High Court of Justice (Chancery Division) on 25 June 2008. Subject to working capital requirements and meeting the FSA's financial resources tests, Cavanagh is now in a position to declare a dividend although this is unlikely during the next twelve months.
Staff
On behalf of the Board, I would like to thank our colleagues for their continued commitment, expertise and dedication in working with our clients and product providers to continue to build a successful Group.
Outlook
Cavanagh's improved financial performance over the last two years, and the resultant stability that this has created, has left the Group well positioned in what is an uncertain economic climate. The Board currently expects the results for the second half of the year to be challenging, but similar to the first six months.
Paul Sinnett
Chairman
29 September 2008
Cavanagh Group plc
CONSOLIDATED INCOME STATEMENT
| 6 months 30-June -08 | 6 months 30-June -07 | Year ended 31-Dec -07 | |||
| Unaudited | Unaudited | Audited | |||
| Notes | £'000 | £'000 | £'000 |
| REVENUE | 9,456 | 7,739 | 16,639 |
| PROFIT FROM OPERATIONS | 1,028 | 793 | 1,776 | |
| Share of joint venture profit after tax | 50 | 82 | 123 | |
| --------------------------------------- | ---------------------------------------- | ---------------------------------------- | ||
| EARNINGS BEFORE INTEREST, DEPRECIATION, AMORTISATION AND TAX | 1,078 | 875 | 1,899 | |
| Net finance costs | (105) | (74) | (116) | |
| Depreciation | (104) | (89) | (177) | |
| Amortisation | (246) | - | (50) | |
| --------------------------------------- | ---------------------------------------- | ---------------------------------------- | ||
| PROFIT BEFORE TAX EXPENSE | 623 | 712 | 1,556 | |
| Income tax expense |
| (190) | (238) | (484) |
| ----------------------------------------- | ---------------------------------------- | ---------------------------------------- | ||
| PROFIT FOR THE FINANCIAL PERIOD | 433 | 474 | 1,072 | |
|
| ================ | ================ | ================ | |
| PROFIT ATTRIBUTABLE TO :
|
|
|
|
|
| Equity holders of Parent company |
| 430 | 452 | 1,038 |
| Minority Interest |
| 3 | 22 | 34 |
|
|
| --------------------- | -------------------- | ---------------------- |
|
|
| 433 | 474 | 1,072 |
|
|
| ================ | =============== | ============== |
| Earnings per share |
|
|
|
|
| Basic - pence | 2 | 3.7 | 4.2 | 9.5 |
| Fully diluted - pence | 2 | 3.7 | 4.1 | 9.4 |
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 Recognised Income and Expenditure has been prepared.
Cavanagh Group plc
CONSOLIDATED BALANCE SHEET
|
| 30-June-08 | 30-June -07 | 31-Dec- 07 |
|
| Unaudited | Unaudited | Audited |
|
| £'000 | £'000 | £'000 |
ASSETS
Non-current assets
| Property plant and equipment | | 421 | 315 | 444 | |
| Intangible assets | | 6,600 | 1,565 | 7,191 | |
| Investment in Joint Venture | | 2 | 2 | 2 | |
| Deferred tax asset | | - | 445 | 244 | |
| | ------------------ | ------------------ | ------------------- | ||
| | 7,023 | 2,327 | 7,881 | ||
| | ------------------ | ------------------ | ------------------ | ||
| Current assets | | | | | |
| Trade and other receivables | | 2,311 | 1,586 | 2,249 | |
| Cash and cash equivalents | 3 | 2,781 | 2,399 | 2,598 | |
| | ------------------ | ------------------ | ------------------ | ||
| | 5,092 | 3,985 | 4,847 | ||
| | ------------------ | ------------------ | ------------------ | ||
| TOTAL ASSETS | 12,115 | 6,312 | 12,728 | ||
| | ------------------ | ------------------ | ------------------ | ||
| LIABILITIES | | | | ||
| Current liabilities | | | | ||
| Trade and other payables | | 2,540 | 1,841 | 3,118 | |
| Corporation tax payable | | 359 | 40 | 310 | |
| Financial liabilities | 3 | 1,120 | 670 | 1,132 | |
| | ------------------ | ------------------ | ------------------ | ||
| | 4,019 | 2,551 | 4,560 | ||
| | ------------------ | ------------------ | ------------------ | ||
| Non-current liabilities | | | | ||
| Financial liabilities | 3 | 3,827 | 2,600 | 4,387 | |
| Deferred tax liability | | 871 | - | 943 | |
| Provisions | | 217 | 212 | 209 | |
| | ------------------ | ------------------ | ------------------ | ||
| | | 4,915 | 2,812 | 5,539 | |
| | ------------------ | ------------------ | ------------------ | ||
| TOTAL LIABILITIES | 8,934 | 5,363 | 10,099 | ||
| | ------------------ | ------------------ | ------------------ | ||
| NET ASSETS | 3,181 | 949 | 2,629 | ||
| | ========== | ========== | ========== | ||
| EQUITY | | | | ||
| Issued share capital | | 116 | 109 | 115 | |
| Share premium account | | 7 | 2,706 | 3,743 | |
| Share based payment reserve | | 230 | 184 | 223 | |
| Retained earnings | | 2,775 | (2,089) | (1,502) | |
| | ------------------ | ------------------ | ------------------ | ||
| TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT COMPANY | 3,128 | 910 | 2,579 | ||
| | | | | ||
| Minority interests | 53 | 39 | 50 | ||
| | ------------------ | ------------------ | ------------------ | ||
| TOTAL EQUITY | 3,181 | 949 | 2,629 | ||
| | ========== | ========== | ========== | ||
Cavanagh Group plc
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the period ended 30 June 2008
| Share Capital | Share Premium Account | Share Based Payment Reserve | Retained Earnings | Minority Interests | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| At 1 January 2008 | 115 | 3,743 | 223 | (1,502) | 50 | 2,629 |
| Other movements |
|
|
|
|
|
|
| Issue of new shares | 1 | 111 |
|
|
| 112 |
| Share based payment |
|
| 7 |
|
| 7 |
| Reduction in share premium account |
| (3,847) |
| 3,847 |
| - |
| Profit for the period |
|
|
| 430 | 3 | 433 |
| -------------------------- | ---------------------------------- | --------------------------------------- | ----------------------------------- | ---------------------------------- | ---------------------------------- | |
| At 30 June 2008 | 116 | 7 | 230 | 2,775 | 53 | 3,181 |
|
| ======= | ========== | ========== | ========== | ========== | ========== |
On 25 June 2008, the High Court of Justice (Chancery Division) approved the reduction of the Company's share premium account and the reduction was registered on 2 July 2008. The share premium account was reduced by £3,846,947.
Share Capital as at 30 June 2008 amounted to £11,597,047. During the period, 76,521 shares were issued as a result of two separate share options being exercised for consideration of £112,499, which resulted in an increase in the share capital of £765 and an increase in the share premium account of £111,734.
Cavanagh Group plc
CONSOLIDATED CASH FLOW STATEMENT
for the period ended 30 June 2008
| 6 months 30-June-08 | 6 months 30-June-07 | Year ended 31-Dec-07 | |
| Unaudited | Unaudited | Audited | |
|
| £'000 | £'000 | £'000 |
| CASH FLOW FROM OPERATIONS |
|
|
|
|
| Profit before tax | 623 | 712 | 1,556 |
|
|
|
|
|
|
| Share of profit in joint venture |
| (50) | (82) | (123) |
| Share based payment |
| 7 | 26 | 65 |
|
|
|
|
|
|
| Depreciation |
| 104 | 89 | 177 |
| Amortisation |
| 246 | - | 50 |
| (Increase) / decrease in trade and other receivables |
| (62) | 54 | (380) |
| (Decrease) / increase in trade and other payables |
| (172) | 73 | 393 |
| Increase / (decrease) in provisions |
| 8 | (19) | (37) |
| Finance costs |
| 105 | 74 | 116 |
|
|
| ---------------------------------------- | --------------------------------------- | ---------------------------------------- |
| NET CASH GENERATED FROM OPERATIONS |
| 809 | 927 | 1,817 |
| Income taxes paid | - | - | (18) | |
| Interest paid | (184) | (126) | (242) | |
| ---------------------------------------- | ---------------------------------------- | ---------------------------------------- | ||
| NET CASH FROM OPERATING ACTIVITIES | 625 | 801 | 1,557 | |
|
| ---------------------------------------- | ---------------------------------------- | ---------------------------------------- |
| CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
| Payments to acquire property, plant and equipment |
| (81) | (32) | (126) |
| Payments to acquire intangible assets |
| (30) | (40) | (72) |
| Payment to acquire subsidiary (net of cash acquired) |
| - | - | (2,837) |
| Interest received |
| 79 | 52 | 126 |
| Income received from joint venture |
| 50 | 82 | 95 |
|
|
| ---------------------------------------- | ---------------------------------------- | ---------------------------------------- |
| NET CASH FROM / (USED IN) / INVESTING ACTIVITIES |
| 18 | 62 | (2,814) |
|
|
| --------------------------------------- | --------------------------------------- | ---------------------------------------- |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||
| Proceeds of new borrowings | - | - | 3,519 | |
| Proceeds from issue of new shares | 112 | - | - | |
| Repayment of borrowings | (572) | (300) | (1,500) |
|
|
| ---------------------------------------- | ---------------------------------------- | ---------------------------------------- |
| NET CASH (OUTFLOW) / INFLOW FROM FINANCING | (460) | (300) | 2,019 |
|
|
| ----------------------------------------- | ----------------------------------------- | ----------------------------------------- |
| Net increase in cash and cash equivalents | 183 | 563 | 762 | |
| Cash & cash equivalents at the beginning of the financial period | 2,598 | 1,836 | 1,836 | |
| ------------------ | ------------------ | ------------------ | ||
| Cash & cash equivalents at the end of the financial period | 2,781 | 2,399 | 2,598 | |
| ========== | ========== | ========== |
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 240 of the Companies Act 1985. The preliminary announcement is prepared on the same basis as set out in the statutory accounts for the year ended 31 December 2007, 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 neither audited nor reviewed by the Auditors, were approved by the Board of Directors on 29 September 2008.
2 EARNINGS PER SHARE
|
| 6 months | 6 months | Year ended |
|
| 30-June-08 | 30-June-07 | 31-Dec-07 |
|
| Unaudited | Unaudited | Audited |
|
|
|
|
|
|
| £'000 | £'000 | £'000 |
|
|
|
|
|
| Profit for the financial period after taxation attributable to Equity holders | 430 | 452 | 1,038 |
| Share based compensation charge | 7 | 26 | 65 |
|
| _______________________ | _______________________ | _______________________ |
| Adjusted profit after taxation | 437 | 478 | 1,103 |
|
| ================== | ================== | ================== |
| Weighted average number of shares (No) | |||
| For basic earnings per ordinary share | 11,565,321 | 10,868,421 | 10,930,952 |
| Exercise of share options | 147,973 | 81,495 | 122,013 |
|
| _______________________ | _______________________ | _______________________ |
| For fully diluted earnings per ordinary share | 11,713,294 | 10,967,916 | 11,052,965 |
| ================== | ================== | ================== | |
|
|
|
|
|
| Earnings per ordinary share - basic | 3.7 | 4.2 | 9.5p |
| ================== | ================== | ================== | |
| Earnings per ordinary share - fully diluted | 3.7 | 4.1 | 9.4p |
| ================== | ================== | ================== |
3 ANALYSIS OF NET DEBT
| 1-Jan-08 | Cash Flow | Non-cash movements | 30-Jun-08 | |
| £'000 | £'000 | £'000 | £'000 | |
| Cash at bank | 2,598 | 183 | 2,781 | |
| Bank loan | (5,519) | 572 | (4,947) | |
| --------------------------------------- | ----------------------------------------- | ----------------------------------------- | ------------------------------------------ | |
| Net debt | (2,921) | 755 | - | (2,166) |
|
| ================== | ================== | ================== | ================== |
Copies of this report will be sent to shareholders shortly and are available on the website www.cavanagh.co.uk or from The Courtyard, Staplefield Road, Cuckfield, West Sussex RH17 5JT.