For immediate release: Monday, 7 December 2009, 7AM
Syndicate Asset Management Plc
("Syndicate", the "Company" or the "Group")
Interim Results
Syndicate Asset Management Plc (AIM: SAM), the fund management group with over
£6.4 billion under management, today announces its Interim Results for the six
months ended 30 September 2009.
Financial key points for the six months ended 30 September 2009:
- funds under management up 10.3% to £6.4bn from £5.8bn at 30 September 2008;
- revenue down 12.4% to £17.16m (£19.59m for six months to 30 September 2008);
and
- earnings before interest, tax, depreciation and amortisation (before one-off
costs) of £1.53m (£2.05m for six months to 30 September 2008).
Operational key points for the six months ended 30 September 2009:
- successful placing of shares raising £3.1 million combined with an additional
debt for equity swap with certain of the Company's deferred consideration
holders reducing deferred consideration owed by £2 million;
- appointment of Jonathan Freeman as Group CEO and Peter Dew as Executive
Director in August 2009; and
- commencement of major funding initiative.
Post-period operational and financial key points:
- completion of Placing and Open Offer on 29 October 2009 raising approximately
£17.2m;
- Ashcourt Rowan merger announced to create a single business advising 20,000
clients with approximately £2 billion of funds under management and 16 offices
across the UK;
- appointment of the former Director of Lloyds TSB UK Private Wealth Management
and Chief Executive Officer of Lloyds TSB Private Banking, Mark Cheshire, as
CEO for Ashcourt Rowan;
- Group wide efficiency and productivity programmes accelerated; and
- resignation of June Dumeresque, Finance Director, from the Board.
David Pinckney, non-executive Chairman of the Company, commented:
"The Group has, over the last 12 months, endured a period of great uncertainty
and has faced numerous issues which have tested the resolve of both employees
and shareholders. We believe that we are now well on the way to creating a
much stronger business for both our shareholders and employees and that this
will allow the Group to focus on revenue growth going forward. All employees
of the Group have shown true dedication and support to the Group and have
stood up to the challenges we have faced and the changes that have been made.
The Board would like to thank every member of staff for their contribution."
The Interim Results can additionally be downloaded from the Company's website
www.syndicateplc.com.
-Ends -
Further information:
Syndicate Asset Management Plc
David Pinckney (Chairman) Tel: 020 7659 8060
Jonathan Freeman (Group CEO)
Cenkos Securities plc
Stephen Keys/Julian Morse Tel: 020 7397 8900
GTH Communications
Toby Hall/Christian Pickel Tel: 020 7153 8039
Chairman's Statement
I am pleased to report to you the results of your Company for the six months
ended 30 September 2009.
We reported to you on 12 October 2009 that in the financial period from 1
April 2009 to 31 August 2009 the Group recorded unaudited turnover of
approximately £14.19 million. Our unaudited turnover for the full six month
period to 30 September 2009 was £17.16 million (compared to £19.59 million for
the same period last year). Revenues were particularly low in the first five
months of the period under review and improved markedly in the final month.
We have faced a number of significant challenges during the period under
review, which has had the unfortunate consequence of directing management's
and staff's attention away from revenue and profitability growth. The post
period completion of the Placing and Open Offer on 29 October 2009, the
completion of the various skilled person reviews and the implementation of the
resulting recommendations as well as the end of the offer period under the
Takeover Code, are examples of just a few of the challenges that we have
faced. These one-off challenges that we have faced are in addition to the
exceptionally harsh economic climate that the UK has experienced during 2009.
In the six months to 30 September 2009, we have reported an operating loss of
£62,000 (six months to 30 September 2008: profit of £1.3 million), a loss
before tax of £0.43 million (six months to 30 September 2008: profit of £0.89
million) and a loss after tax of £0.54 million (six months to 30 September
2008: profit of £0.66 million).
We have, for the first time, provided a breakdown of the revenues and profits
/ losses before tax for each of our operating businesses (EPIC, Savoy,
Ashcourt, Rowan (under the holding company name of IMH Group) and Zenith
(under the holding company name of Syndicate C.I.). We believe that this will
be of value to our shareholders in assessing the performance of our underlying
operating businesses. These show that in the period under review revenues for
our three wealth management businesses (Savoy, Ashcourt and Rowan) declined as
did the revenues of the off shore and on shore Zenith branded range of funds.
The revenues for EPIC, which provides cash and bond management services to
institutional investors, showed a pleasing increase as the number of clients
and funds managed by this subsidiary increased. The profitability of each of
the operating businesses, except for EPIC, also declined with Savoy and Zenith
being loss making. Clearly a major factor contributing to this decline in
profitability is the decline in revenues which came from the low market
valuation of assets, low dealing volumes and low interest rates that were
prevalent for most of the period under review. In addition, however, we have
incurred material costs as a result of the many issues and challenges that we
have faced over the course of 2009. Many of these costs have been included
within `Administrative Expenses' of the operating businesses and we expect
these costs to be one-off. It should be noted that with the merger of Ashcourt
and Rowan due to be completed before the end of the current financial year it
is likely that the number of operating businesses reported on in our annual
accounts will be reduced from five to four with Ashcourt and Rowan being
reported on as a single operating business.
During the period under review we undertook a placing of shares, raising
approximately £3.1 million and also undertook a debt for equity swap with
certain of the Company's deferred consideration holders which reduced our
deferred consideration owed by £2 million. These were necessary actions as a
part of the refinancing of the balance sheet which culminated in the Placing
and Open Offer to shareholders after the period end and which raised
approximately £17.2 million by the issue of approximately 1.15 billion new
ordinary shares. These fund-raisings have allowed us to re-finance completely
the Company's balance sheet and to now turn our attention towards revenue
growth and cost and management efficiencies. The clear intention is to return
the Group to profitability and to re-build shareholder value. To that end we
have announced the merger of our Ashcourt and Rowan operating businesses to
create a single wealth management business advising 20,000 clients with
approximately £2 billion of funds under management and 16 offices across the
UK. This is on schedule to be completed by the end of 2009. We have also
recruited a new Chief Executive Officer for this combined business, Mark
Cheshire. Mark brings a wealth of experience and knowledge having previously
been Chief Executive Officer of Lloyds TSB UK Private Wealth Management and
Chief Executive Officer of Lloyds TSB Private Banking.
We have also been undertaking a complete review of all aspects of the Group.
This has already resulted in an accelerated restructuring of our finance, HR
and compliance functions which will result in various management efficiencies
and cost savings. We have also made a number of Group Board changes, with
Jonathan Freeman being appointed Group Chief Executive Officer in August 2009,
Peter Dew becoming an Executive Director (having previously been a
Non-executive Director), and, after the period end, Jane Dumeresque, Finance
Director, resigning from the Board. We intend to strengthen the Group Board
through the appointment of an additional Non-executive Director once a
suitable candidate has been found. We continue to work on improving a whole
range of other aspects of the Group and expect to be able to update our
shareholders on these reviews and the actions being taken in the near future.
The end goal of these reviews and changes is to enhance our offering to our
customers.
The last month of the period under review saw an increase in market valuations
of assets which have, on the whole, continued post period. In addition dealing
volumes in the market are considerably better now than they were at the
beginning of this financial year. These are two of the key drivers to our
wealth management revenues. We have, however, also incurred a further number
of material one off costs and charges on top of those already accounted for in
the first half of the financial year. These one-off costs will be charged to
the income statement in the second half of this financial year ending 31 March
2010 and will adversely affect the profitability in this financial year only.
In terms of our funds under management the Group achieved a healthy increase
for the period under review of approximately £500 million through a
combination of organic growth and an increase in asset valuations. Since the
period end our wealth management businesses have continued to grow, again as a
result of organic growth and some further increase in asset valuations. Our
fixed income business, EPIC, was managing approximately £3.1 billion of funds
as at the period end. However, EPIC's largest client has withdrawn
approximately £500 million of FuM since the period end. The resulting loss of
management fees by this withdrawal is expected to be mostly offset by the
introduction of additional new funds by other existing clients during the
remainder of this financial year. However, due to the different charging
structures it is likely that the headline FuM figure for EPIC, and therefore
the Group, will be reduced. Market conditions have improved markedly over the
last six months and following the financial and operational restructuring
initiatives that are well underway I view the future with confidence.
The Group has, over the last 12 months, endured a period of great uncertainty
and has faced numerous issues which have tested the resolve of both employees
and shareholders. We believe that we are now well on the way to creating a
much stronger business for both our shareholders and employees and that this
will allow the Group to focus on revenue growth going forward. All employees
of the Group have shown true dedication and support to the Group and have
stood up to the challenges we have faced and the changes that have been made.
The Board would like to thank every member of staff for their contribution.
David Pinckney
Chairman of the Board
4 December 2009
Consolidated income statement
Six months ended 30 September 2009
Six months Six months
ended ended
Year ended
30 September 30 September
31 March
2009 2008 2009
(unaudited) (unaudited) (audited)
Note £'000s £'000s £'000s
Revenue 17,164 19,588 37,490
Cost of sales (6,460) (6,430) (13,107)
Gross profit 10,704 13,158 24,383
Administrative expenses 5 (10,766) (11,874) (23,225)
(Loss)/profit from operations (62) 1,284 1,158
Finance income 67 236 355
Other gains and losses 6 - - (19,314)
Finance costs (436) (633) (1,270)
(Loss)/profit before tax (431) 887 (19,071)
Taxation 7 (113) (224) 33
(Loss)/profit for the period
attributable
to the equity holders of the parent (544) 663 (19,038)
Earnings per share
Basic 8 (0.10)p 0.51p (14.29)p
Diluted (restated) 8 (0.10)p 0.50p (14.29)p
Consolidated statement of comprehensive income
Six months ended 30 September 2009
Six months Six months
ended ended
Year ended
30 September 30 September
31 March
2009 2008 2009
(unaudited) (unaudited) (audited)
£'000s £'000s £'000s
(Loss)/profit for the period (544) 663 (19,038)
Unrealised currency (loss)/gain
recognised
directly in equity (153) - 153
Transfer from equity reserve - - 160
Total recognised income and expense
for the period attributable to equity
holders of the parent (697) 663 (18,725)
Consolidated balance sheet
30 September 2009
31 March
30 September 30 September
2009
2009 2008
(audited)
(unaudited) (unaudited)
Note £'000s £'000s £'000s
Non-current assets
Goodwill 9 47,090 67,095 48,090
Other intangible assets 10 6,424 8,174 6,955
Property, plant and equipment 1,010 1,008 1,078
Interests in associates - 494 -
Available-for-sale investments 146 146 146
Total non-current assets 54,670 76,917 56,269
Current assets
Trade and other receivables 8,447 12,039 12,528
Cash and cash equivalents 6,480 7,070 7,101
Available-for-sale investments 21 21 22
Total current assets 14,948 19,130 19,651
Total assets 69,618 96,047 75,920
Current liabilities
Trade and other payables (7,506) (12,191) (12,515)
Obligations under finance leases (7) (7) (8)
Loans and deferred consideration 11 (5,564) (4,033) (9,128)
Short-term provisions 12 (1,309) (785) (1,073)
Total current liabilities (14,386) (17,016) (22,724)
Non-current liabilities
Loans and deferred consideration 11 (7,210) (12,940) (7,210)
Deferred tax liabilities (1,676) (2,222) (1,842)
Obligations under finance leases (5) (9) (5)
Long-term provisions 12 (1,131) (3,887) (2,761)
Total non-current liabilities (10,022) (19,058) (11,818)
Total liabilities (24,408) (36,074) (34,542)
Net assets 45,210 59,973 41,378
Equity
Share capital 13 1,295 265 275
Share premium account 14 59,192 55,241 55,750
Equity reserve 759 258 692
Retained earnings (16,036) 4,209 (15,339)
Equity attributable to equity
holders
of the parent 45,210 59,973 41,378
Consolidated statement of changes in equity
30 September 2009
Share Share Equity Retained Total
Capital Premium Reserve Earnings
£'000s £'000s £'000s £'000s £'000s
At 31 March 2008 261 53,517 560 3,386 57,724
(audited)
Share-based - - 76 - 76
payments
Issues of shares 4 1,724 - - 1,728
Cancellation of - - (200) - (200)
warrants
Costs of share - - (18) - (18)
issue
Transfer to - - (160) 160 -
retained
earnings
Profit for the - - - 663 663
period
At 30 September 265 55,241 258 4,209 59,973
2008 (unaudited)
Issue of equity 10 509 - - 519
shares
Share-based - - 434 - 434
payments
Unrealised - - - 153 153
currency
gain
Loss for the - - - (19,701) (19,701)
period
At 31 March 2009 275 55,750 692 (15,339) 41,378
(audited)
Share-based - - 67 - 67
payments
Issues of shares 1,020 4,085 - - 5,105
Costs of share - (643) - - (643)
issue
Loss for the - - - (544) (544)
period
Unrealised - - - (153) (153)
currency
loss
At 30 September 1,295 59,192 759 (16,036) 45,210
2009 (unaudited)
Consolidated cash flow statement
Six months ended 30 September 2009
Year
Six months Six months ended
ended ended
31 March
30 September 30 September
2009
2009 2008
(audited)
(unaudited) (unaudited)
£'000s £'000s £'000s
(Loss)/profit for the period (544) 663 (19,038)
Adjustments for:
Depreciation of property, plant and
equipment 226 267 515
Amortisation of intangibles 531 501 1,055
Impairment of goodwill and intangibles
assets - - 18,797
Share based payment expense 67 77 510
Impairment of available-for-sale investments - - 23
Impairment of investment in associate - - 494
Unrealised foreign exchange (loss)/gain (153) - 153
Finance income (67) (236) (355)
Finance costs 436 633 1,270
Corporation tax expense/(credit) 113 224 (33)
Operating cash inflow before movements
in working capital 609 2,129 3,391
Decrease/(increase) in receivables 4,079 (667) (1,871)
(Decrease)/increase in payables (4,492) (770) 210
(Decrease)/increase in provisions (14) (4) 81
Cash inflow from operations 182 688 1,811
Tax paid (987) (155) (3)
Interest received 67 236 286
Interest paid (188) (294) (964)
Cash (outflow)/inflow from operating
activities (926) 475 1,130
Investing activities
Acquisition of subsidiaries - (2,536) -
Acquisition of goodwill and intangible
assets - - (4,106)
Purchases of property, plant and equipment (157) (193) (512)
Sales of available-for-sale investments - 47 23
Dividends received 2 - 69
Net cash used in investing activities (155) (2,682) (4,526)
Financing activities
Proceeds of share issues 5,105 1,728 2,247
Costs of share issue (643) (18) (18)
Bank loans received - 1,000 3,000
Repayments of obligations under finance
leases (2) (3) (8)
Repayments of loans and deferred
consideration (4,000) (1,854) (3,148)
Cancellation of warrants - (200) (200)
Net cash from financing activities 460 653 1,873
Net decrease in cash and cash
equivalents (621) (1,554) (1,523)
Cash and cash equivalents at
beginning
of period 7,101 8,624 8,624
Cash and cash equivalents at end
of period 6,480 7,070 7,101
Cash and cash equivalents (which are presented as a single class of assets on
the face of the balance sheet) comprise cash at bank and other short-term
highly liquid investments, with a maturity of three months or less.
Notes to the unaudited interim financial report
Six months ended 30 September 2009
1. Reporting entity
Syndicate Asset Management plc (the "Company") is a company domiciled in the
United Kingdom. The condensed consolidated interim financial statements of the
Company as at and for the six months ended 30 September 2009 comprise the
Company and its subsidiaries (together referred to as the "Group") and the
Group's interests in associates and jointly controlled entities. The
consolidated financial statements of the Group as at and for the year ended 31
March 2009 are available upon request from the Company's registered office at
7 Hanover Square, London W1S 1HQ or at www.syndicateplc.com.
2. Statement of compliance
These condensed consolidated interim financial statements have been prepared
in accordance with IAS 34 Interim Financial Reporting. They do not include all
of the information required for full annual financial statements, and should
be read in conjunction with the consolidated financial statements of the Group
as at and for the year ended 31 March 2009. These condensed consolidated
interim financial statements were approved by the Board of Directors on 4
December 2009.
3. Accounting policies
Except as described below, the accounting policies applied by the Group in
these condensed consolidated interim financial statements are the same as
those applied by the Group in its consolidated financial statements as at and
for the year ended 31 March 2009.
Since 31 March 2009 the following additional accounting policies have been
adopted:
Segment reporting
The Group is adopting revised IFRS 8 - Operating Segments. An operating
segment is a component of the Group that engages in business activities from
which it may earn revenues and incur expenses, including revenues and expenses
that relate to transactions with any of the Group's other components. All
operating segments' operating results are reviewed regularly by the Group's
CEO to make decisions about resources to be allocated to the segment and
assess its performance, and for which discrete financial information is
available.
Presentation of financial statements
The Group applies revised IAS 1 Presentation of Financial Statements (2007),
which became effective as of 1 April 2009. As a result, the Group presents in
the Statement of changes in equity all changes in equity arising from
transactions with shareholders in their capacity as owners, whereas all other
changes in equity are presented in the consolidated statement of comprehensive
income. This presentation has been applied in these interim accounts.
Comparative information has been re-presented on a consistent basis. The
change in accounting policy only impacts presentational aspects and,
consequently, there is no impact on earnings per share.
Accounting for borrowing costs
In respect of borrowing costs relating to qualifying assets for which the
commencement date for capitalisation is on or after 1 April 2009, the Group
capitalises borrowing costs directly attributable to the acquisition,
construction or production of a qualifying asset as part of the cost of that
asset. Previously the Group immediately recognised all borrowing costs as an
expense. This change in accounting policy was due to the adoption of IAS 23
Borrowing Costs (2007) in accordance with the transitional provisions of such
standard; comparative figures have not been restated. The change in accounting
policy had no material impact on earnings per share.
Accounting for non-vesting conditions in a share-based payment transaction
The grant date fair value of equity-settled share-based payment awards granted
to employees is recognised as an employee expense, with a corresponding
increase in equity, over the period that employees become unconditionally
entitled to the awards. The amount recognised as an expense is adjusted to
reflect the number of awards for which the related service and non-market
vesting conditions are expected to be met, such that the amount ultimately
recognised as an expense is based on the number of awards that do meet the
related service and non-market performance conditions at the vesting date.
When a share-based payment arrangement contains a non-vesting condition, the
fair value is discounted to reflect such a condition and there is no true-up
for differences between expected and actual outcomes.
4. Operating Segments
The Group has five reportable segments, as described below, which are the
Group's strategic business units. The strategic business units offer a
different mix of products and services, and are managed separately. For each
of the strategic business units, the Group's CEO reviews internal management
reports on at least a monthly basis. The following summary describes the
operations in each of the Group's reportable segments:
Ashcourt Group - Wealth management and financial planning
EPIC - Institutional investment management
IMH Group (Rowan) - Wealth management and financial planning
Savoy - Wealth management
Syndicate C.I. (Zenith) - Retail fund management
Information regarding the results of each reportable segment is included
below. Performance is measured based on segment profit before tax, as included
in the internal management reports that are reviewed by the Group's CEO.
Segment profit is used to measure performance as management believes that such
information is the most relevant in evaluating the results of certain segments
relative to other entities that operate within these industries. Inter-segment
pricing is determined on an arm's length basis.
Operating segments - 6 months ending 30 September 2009 (unaudited)
Ashcourt EPIC IMH Savoy SAM C.I. Total
£'000s £'000s £'000s £'000s £'000s £'000s
External revenues 6,310 2,113 3,337 3,928 1,476 17,164
Inter-segment revenues 36 60 - - - 96
Total revenue 6,346 2,173 3,337 3,928 1,476 17,260
External cost of sales (2,483) (887) (1,078) (1,447) (565) (6,460)
Inter-segment cost of - - - - (96) (96)
sales
Total cost of sales (2,483) (887) (1,078) (1,447) (661) (6,556)
Gross Profit 3,863 1,286 2,259 2,481 815 10,704
Administrative expenses (3,075) (733) (1,806) (2,531) (851) (8,996)
Depreciation and
amortisation
(290) (79) (100) (79) (155) (703)
Total administrative
expenses
(3,365) (812) (1,906) (2,610) (1,006) (9,699)
Operating profit 498 474 353 (129) (191) 1,005
Finance income 5 2 50 4 3 64
Finance expense (120) - - - (20) (140)
Group management (287) (90) (180) (217) (72) (846)
charges
Reportable segment
profit
before tax 96 386 223 (342) (280) 83
Operating segments - 6 months ending 30 September 2008 (unaudited)
Ashcourt EPIC IMH Savoy SAM C.I. Total
£'000s £'000s £'000s £'000s £'000s £'000s
External revenues 6,808 1997 3,853 4,587 2,347 19,588
Inter-segment revenues 124 153 - - - 277
Total revenue 6,932 2,150 3,853 4,587 2,347 19,865
External cost of sales (2,286) (651) (1,050) (1,624) (819) (6,430)
Inter-segment cost of - - - - (281) (281)
sales
Total cost of sales (2,286) (651) (1,050) (1,624) (1,100) (6,707)
Gross Profit 4,646 1,499 2,803 2,963 1,247 13,158
Administrative expenses (3,496) (928) (1,919) (2,727) (797) (9,867)
Depreciation and (289) (130) (97) (82) (155) (753)
amortisation
Total administrative
expenses
(3,785) (1,058) (2,016) (2,809) (956) (10,620)
Operating profit 861 441 787 154 295 2,538
Finance income 37 29 105 28 21 220
Finance expense (159) (1) (2) (1) (16) (179)
Group management charges (400) (125) (250) (300) (100) (1,175)
Reportable segment
profit before tax
339 344 640 (119) 200 1,404
Reconciliation of reportable segment revenues, profit and loss
6 months 6 months
ended ended
30 September 30 September
2009 2008
£000's £000's
Revenues
Total revenue for reportable 17,260
segments 19,865
Less intra-segment revenue (96) (277)
Consolidated revenue 17,164 19,588
6 months 6 months
ended ended
30 September 30 September
2009 2008
£000's £000's
Total administrative expenses
Total administrative expenses for
reportable segments
(9,699) (10,620)
Less unallocated items (1,067) (1,254)
Consolidated total administrative
expenses (10,766) (11,874)
6 months 6 months
ended ended
30 September 30 September
2009 2008
£000's £000's
Profit or loss before tax
Total profit before tax for 83
reportable
segments 1,404
Unallocated amounts (514) (517)
Consolidated (loss)/profit before
tax (431) 887
Reportable
segment Unallocated Consolidated
total amounts totals
£000's £000's £000's
Other material items 2009
Finance income 64 6 70
Finance expense (140) (296) (436)
Amortisation and depreciation (703) (54) (757)
Reportable
segment Unallocated Consolidated
total amounts totals
£000's £000's £000's
Other material items 2008
Finance income 220 16 236
Finance expense (179) (454) (633)
Amortisation and depreciation (753) (15) (768)
5. Administrative expenses
Administrative expenses include depreciation of £226,000 (six months ended 30
September 2008: £267,000 and year ended 31 March 2009: £515,000) and
amortisation of non-goodwill intangible assets of £531,000 (six months ended
30 September 2008: £501,000 and year ended 31 March 2009: £1,055,000).
6. Other gains and losses
Year ended
Six months
Six months ended ended 31 March
30 September 30 September 2009
2009 2008
(audited)
(unaudited) (unaudited)
£'000s £'000s £'000s
Impairment of goodwill - - 18,133
Impairment of other intangible
assets - - 665
Impairment of investment in
associate company - - 494
Impairment of
available-for-sale-investment - - 22
- - 19,314
7. Taxation
Year ended
Six months
Six months ended ended 31 March
30 September 30 September 2009
2009 2008
(audited)
(unaudited) (unaudited)
£'000s £'000s £'000s
Current tax:
UK corporation tax (241) (393) (365)
Underprovision in prior periods (39) - (150)
Deferred tax:
Current year 167 169 548
(113) (224) 33
Corporation tax for the interim period is charged at 28% (year ended 31 March
2009: 28%), representing the best estimate of the weighted average annual
corporation tax rate expected for the full financial year.
8. Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following data:
Year
Six months Six months
ended ended ended
30 September 30 September 31 March
2009 2008 2009
(unaudited) (unaudited) (audited)
Earnings £'000s £'000s £'000s
Earnings for the purposes of basic
earnings per share being net profit
attributable to equity holders of
the parent (544) 663 (19,038)
Year
Six months Six months
ended ended ended
30 September 30 September 31 March
2009 2008 2009
Number Number Number
Number of shares
Weighted average number of ordinary
shares for the purposes of basic
earnings per share 522,113,438 131,013,067 133,245,612
Effect of dilutive potential ordinary
shares:
Warrants - 100,988 -
Options - 487,401 -
Weighted average number of ordinary
shares for the purposes of diluted
earnings per share 522,113,438 131,601,456 133,245,612
The denominator for the purposes of calculating basic earnings per share has
been adjusted to reflect the share issues which took place during the period.
During the period the potential ordinary shares under the options would have
the effect of reducing the loss per share and therefore are anti-dilutive.
9. Goodwill
£'000s
Cost
As at 31 March 2008 (audited) 62,603
Recognised on acquired businesses 4,557
Adjustment to the fair value of consideration payable:
EPIC (1,000)
Towerpoint (165)
PSD (171)
IFS 450
Burfield (51)
Impairment of goodwill:
Ashcourt (7,358)
IMH (987)
Savoy (5,692)
EPIC (1,925)
SAM C.I. (2,171)
As at 31 March 2009 (audited) 48,090
Adjustment to the fair value of consideration payable:
EPIC (1,000)
As at 30 September 2009 (unaudited) 47,090
10. Other intangible assets
Acquired Acquired
OEIC and Investment
unit trust trust
Acquired
management management
client contracts contracts
relationships £'000s £'000s Total
£'000s £'000s
Cost
At 31 March 2008 (audited) 5,779 3,251 442 9,472
Acquired on acquisition of
subsidiaries
640 - - 640
At 31 March 2009 (audited) 6,419 3,251 442 10,112
Acquired on acquisition of
businesses
- - - -
At 30 September 2009 6,419 3,251 442 10,112
(unaudited)
Amortisation
At 31 March 2008 (audited) 1,071 268 98 1,437
Charge for the year 642 325 88 1,055
Impairment losses - 665 - 665
At 31 March 2009 (audited) 1,713 1,258 186 3,157
Charge for the period 324 163 44 531
At 30 September 2009 2,037 1,421 230 3,688
(unaudited)
Carrying amount
At 30 September 2009 4,382 1,830 212 6,424
(unaudited)
At 31 March 2009 (audited) 4,706 1,993 256 6,955
At 31 March 2008 (audited) 4,708 2,983 344 8,035
11. Loans and deferred consideration
Loans and deferred consideration have arisen in connection with various
acquisitions as follows:
Deferred Sub-ordinated
Bank Loans consideration loans Total
30 September 2009 Loan notes
(unaudited) £'000s £'000s £'000s £'000s £'000s
Chartwell House Group plc
(note a) - - - - -
PSD Robinson Gear (note b) - - - - -
EPIC Investment Partners
(note c) - - 6,910 6,910
Syndicate Asset Management
(C.I.) Ltd formerly
Insight
Investment Management
(C.I.)
Ltd (note d) - - - - -
Independent Financial
Solutions
Group Ltd (note f) - - - - -
Pagan Osborne (note g) - - - - -
Other (notes e, h, i and
j) 5,800 - 32 32 5,864
5,800 - 6,942 32 12,774
Repayable as follows:
Within one year 5,500 - 32 32 5,564
In the second year 200 - 3,794 - 3,994
In the third to fifth
years
inclusive 100 - 3,116 - 3,216
5,800 - 6,942 32 12,774
Less: Amounts due within
one year (5,500) - 32 (32) (5,564)
Amounts due for settlement
after one year
300 - 6,910 - 7,210
Deferred Sub-ordinated
Bank Loans consideration loans Total
Loan notes
31 March 2009
(audited) £'000s £'000s £'000s £'000s £'000s
Chartwell House
Group plc (note
a) - 82 82
PSD Robinson
Gear (note b) - - 237 - 237
EPIC Investment
Partners (note c) - - 6,910 - 6,910
Syndicate Asset
Management (C.I.)
Ltd formerly
Insight
Investment
Management (C.I.)
Ltd (note d) 2,325 - - - 2,325
Independent
Financial
Solutions
Group Ltd (note
f) 1,275 - 1,245 - 2,520
Pagan Osborne
(note g) 2,300 - - - 2,300
Other (notes e, h
and i) 1,900 - 32 32 1,964
7,800 - 8,424 114 16,338
Repayable as
follows:
Within one year 7,500 - 1,514 114 9,128
In the second
year 200 - - - 200
In the third to
fifth
years inclusive 100 - 6,910 - 7,010
7,800 - 8,424 114 16,338
Less: Amounts due
within one year (7,500) - (1,514) (114) (9,128)
Amounts due for
settlement after
one year 300 - 6,910 - 7,210
(a) On 10 November 2005, Ashcourt Holdings Limited acquired 100% of the issued
share capital of Chartwell House Group Plc for a cash consideration of
£1,659,000 plus consideration of £900,000 by way of a subordinated loan. The
loan pays interest at a rate of 1% above the HSBC Bank Plc base rate and the
Directors estimated its fair value on issue to be £880,000. The loan is
repayable each year and the amount of repayment is based on 15% of the annual
turnover of the Chartwell House business acquired. The loan must be fully
repaid by 30 April 2011. The balance at 30 September 2009 was £nil (31 March
2009: £82,000)
(b) On 3 December 2006 Ashcourt Holdings Limited acquired 100% of PSD Robinson
Gear (Investment Planning) Limited. Consideration included deferred
consideration to the maximum of £1,500,000 based on 40% of revenue arising
post acquisition. The deferred consideration is payable over the period from
the date of acquisition to 30 November 2008 in the form of loan notes which
bear interest at the rate of 1% over the Bank of England base rate until
redeemed, with redemption at the option of the holder. At 30 September 2009
the amount of loan notes issued not yet redeemed amounted to £nil (31 March
2009: £237,000).
(c) On 19 January 2007 the company acquired 100% of the issued share capital
of EPIC Investment Partners plc for a cash consideration of £4,718,000,
5,404,451 ordinary shares in the company, loan notes totalling £6,910,000 and
additional contingent deferred consideration of £571,000 which is included in
provisions (see note 12). The loan notes carry a coupon of 6% and are
repayable in two instalments in 4 and 5 years. The deferred consideration is
payable over 3 years based on the performance of the acquired business. At 30
September 2009 the balance of loan notes outstanding was £6,910,000 (31 March
2009: £6,910,000).
(d) On 29th June 2007 Syndicate Asset Management PLC acquired 100% of the
issued share capital of Syndicate Asset Management (C.I.) Limited (formerly
Insight Investment Management (C.I.) Limited) for £5.5m plus expenses of
£203,000. This acquisition was partly financed by a 5 year term loan from
National Westminster Bank of £4.125m carrying an interest rate of 1.75% over
LIBOR. This loan has been rescheduled and combined with our bank loans (see
note (j) below)
(e) On 29th June 2007 Syndicate Asset Management PLC put in place a 3 year £3m
Revolving Credit Facility from National Westminster Bank carrying an interest
rate of 1.5% over LIBOR. To date £1.4m has been drawn down on this facility.
This loan has been rescheduled and combined with our loans (see (j) below)
(f) On 4 February 2008, Ashcourt Holdings Limited acquired 100% of the issued
share capital of Independent Financial Solutions Group Limited ("IFS").
Consideration included deferred consideration to the maximum of £2,100,000
based on 55% of revenue arising post acquisition. The deferred consideration
is payable over the period from the date of acquisition to 31 January 2010 in
the form of loan notes which bear interest at the rate of 0.5% over the Bank
of England base rate until redeemed, with redemption at the option of the
holder. At 30 September 2009 there were loan notes issued but not redeemed of
£nil (31 March 2009: £1.244 million). The balance of the contingent deferred
consideration of £841,000 is included within Provisions (see note 10).
(g) On 29 August 2008 the Company acquired the investment management and
financial planning businesses of Pagan Osborne solicitors. Consideration
included a maximum deferred consideration of £2.5 million payable in December
2008 and December 2009. This acquisition was partly financed by a 3 year term
loan from National Westminster Bank of £2.5 million carrying an interest rate
of 1.75% over LIBOR. This loan has been rescheduled and combined with our
loans (see (j) below)
(h) The unsecured loan notes carry interest at the rate of 7.25% per annum and
are redeemable in whole or in part at the note-holders' option on 30 April
2007 or on any 30 April or 31 October, up to and including 30 April 2010.
(i) The subordinated loan is repayable on demand and carries interest at a
fixed rate of 7.5% per annum.
(j) During the period the company rescheduled its various loan facilities with
National Westminster Bank into a single facility carrying an interest rate of
3% over LIBOR. The balance at 30 September 2009 was £5.3 million)
12. Provisions
Surplus
leasehold Contingent
property deferred
costs consideration Total
£'000s £'000s £'000s
At 31 March 2008 (audited) 227 5,114 5,341
On acquisitions - 964 964
Reduction in provision (4) (1,629) (1,633)
At 30 September 2008 (unaudited) 223 4,449 4,672
Change in provision 85 (920) (835)
At 31 March 2009 (audited) 308 3,526 3,834
Reduction in provision (14) (1,380) (1,394)
At 30 September 2009 (unaudited) 294 2,146 2,440
30 September 30 September 31 March
2009
2008 2009
(unaudited)
(unaudited) (audited)
£'000s
£'000s £'000s
Included in current liabilities 1,309 785 1,073
Included in non current
liabilities
1,131 3,887 2,761
2,440 4,672 3,834
The provision in respect of surplus leasehold assets reflects management's
best estimate of the liability arising from onerous lease obligations in
respect of leasehold property interests acquired on the acquisition of
subsidiaries in the periods ended 31 March 2006 and 2007.
The provision in respect of contingent deferred consideration relates to
consideration on acquisitions that will fall due only if future conditions are
met. These conditions include future levels of profitability, turnover or
values of funds under management as follows:
a) On 19 January 2007 the Company acquired EPIC Investment Partners Plc. The
total consideration on this acquisition included deferred consideration,
contingent on the profitability of the acquired business over the next three
years. The provision included above at the balance sheet date is £571,000.
b) On 4 February 2008 the Ashcourt Holdings Limited, a wholly owned subsidiary
of the Company, acquired Independent Financial Solutions Group Limited. The
total consideration included deferred consideration, contingent on the
turnover of the acquired business over the next two years. The provision
included above at the balance sheet date is £841,000.
c) On 29 February 2008 Investment Management Holdings Limited acquired 100% of
the issued share capital of Burfield and Partners Asset Management Limited.
Consideration included minimum deferred consideration of £100,000 to a maximum
of £275,000 based on 71% of revenue arising post acquisition. The deferred
consideration is payable over the period from the date of acquisition to 31
March 2011. The provision included at 30 September 2009 is £130,000.
d) On 28 August 2008 Ashcourt Holdings Limited, a wholly owned subsidiary of
the Company, acquired the business of St Andrews Asset Management and Pagan
Osborne IFA. The total consideration on this acquisition included deferred
consideration contingent on the funds under management of the asset management
business at a future date and the turnover of the IFA business over the next
15 months. The provision included at 30 September 2009 is £604,000.
Share Capital
30 September 30 September 31 March
2009 2008 2009
(unaudited) (unaudited) (audited)
£'000s £'000s £'000s
Authorised:
1,500,000,000 ordinary shares of 3,000 500 500
£0.002 each
Issued and fully paid:
647,691,511 ordinary shares of 1,295 265 275
£0.002 each
During the period the Company issued shares on the under-noted dates in the
following amounts:
Nominal Proceeds
Number
value of share
of shares
issued of shares issue
issued
£'000s
Number £'000s
Placing of ordinary shares of £0.002
each on 7 April 2009
112,469 - 5
Placing of ordinary shares of £0.002
each on 8 May 2009
310,000,000 620 3,100
Placing of ordinary shares of £0.002
each on 26 May 2009
200,000,000 400 2,000
The Company has one class of ordinary shares which carries no right to fixed
income.
Share capital
£'000s
At 31 March 2008 (audited) 261
Issue of equity shares 14
At 31 March 2009 (audited) 275
Issue of equity 1,020
At 30 September 2009 (unaudited) 1,295
Share Premium
Share premium
£'000s
At 31 March 2008 (audited) 53,517
Issue of equity shares 2,233
At 31 March 2009 (audited) 55,750
Issue of equity shares 4,085
Cost of share issues (643)
At 30 September 2009 (unaudited) 59,192
Post balance sheet events
(a) On 29 October 2009 the Company raised an additional £7.5 million of
capital by way of a conditional placing of 500 million new ordinary shares at
a price of 1.5p per share, and a further £9.7 million by the issue of 647.7
million new ordinary shares through an open offer also at an issue price of
1.5p per share.
Under the terms of the agreement with the Company's bankers, £3.3 million was
repaid against the Company's loan facility
(b) In October 2009 the Group announced the proposed merger of two of its cash
generating units, Ashcourt and IMH. The combined wealth management business
will be rebranded, Ashcourt Rowan and will be transacted through Ashcourt
Rowan Asset Management Limited and Ashcourt Rowan Financial Planning Limited.
The proposed date of the merger is 4 January 2010. As at 30 September 2009 no
material costs had been incurred in respect of the planned merger.