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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. 

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