TIDMARP
RNS Number : 2156S
Ashcourt Rowan PLC
16 November 2011
16 November 2011
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES,
AUSTRALIA, CANADA, REPUBLIC OF IRELAND, REPUBLIC OF SOUTH AFRICA OR
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OR DISTRIBUTION WOULD BE UNLAWFUL
Ashcourt Rowan plc
("Ashcourt Rowan" or the "Group")
Interim Results
Ashcourt Rowan Plc
Ashcourt Rowan plc (AIM:ARP.L) the UK wealth management group,
today announces its Interim Results for the six months ended 30
September 2011.
Financial and operational highlights for period:
-- Group revenues up 17.1% to GBP18.38 million compared to the
same period last year (six months to 30 September 2010: GBP15.69
million)
-- Funds under management/influence up 16% from GBP3.39 billion
at 30 September 2010 to GBP3.93 billion at 30 September 2011
-- Group losses of GBP1.31 million before tax but in line with management expectations
-- Successful sale of loss-making institutional asset management subsidiary EPIC
-- Appointment of new CEO (Jonathan Polin) from September 2011 and COO (Jeremy Rance)
-- Proposed equity raising designed to strengthen both balance
sheet and the business proposition
Commenting, Jonathan Polin, said:
"Despite the considerable internal and external headwinds
experienced by the business over the last six months, I strongly
believe Ashcourt Rowan has the potential to become one of the
leaders in UK wealth management over the next 3-5 years."
"With close to GBP4bn of assets under management or influence
and 18 offices around the country, Ashcourt Rowan is extremely well
positioned to take advantage of the opportunities in the wealth
management sector and I am committed to ensuring the business
reaches its full potential. While there is still a great deal of
hard work ahead, the forthcoming capital raising will provide the
best possible platform from which to build on our progress to date,
adding significant strength to the balance sheet and allowing for
considerable investment in our people, processes and
proposition."
-Ends-
For further information please contact:
Jonathan Polin, CEO Ashcourt Rowan plc
jonathanpolin@ashcourtrowan.com www.ashcourtrowan.com +44 (0) 20 7871 7373
Gordon Neilly +44 (0) 20 7050 6778
gneilly@canaccordgenuity.com
Sue Inglis +44 (0) 20 7050 6779
singlis@canaccordgenuity.com
Rishi Zaveri Canaccord Genuity Limited
rzaveri@canaccordgenuity.com www.canaccordgenuity.com +44 (0) 20 7050 6780
Media enquiries:
MRM London
Andrew Appleyard www.mrm-london.com MRM +44 (0) 20 3326 9908
Chairman's statement
I am pleased to report to you the results of your Company for
the six months ended 30 September 2011.
Whilst, I am delighted to say that we continue to make good
progress in growing the Group's revenues, the increased cost of
achieving that growth has seen profits fall below levels achieved
for the same period last year. For the six months to 30 September
2011 Group revenues were up 17.1% to GBP18.38 million when compared
to the same period last year (6 months to 30 September 2010:
GBP15.69 million). It must be noted however that a large part of
this uplift in revenue is as a result of the acquisition of the
Co-Op IFA business in the second half of last year. We have also
seen dealing commissions fall in the second quarter of this year as
the current volatile markets has left many reluctant to deal.
The Group's gross margin has declined in the period from 61% for
the 6 months to 30 September 2010 to 55% in the same period in
2011. The loss from operations has increased from GBP0.11 million
for the 6 months to 30 September 2010 to GBP1.34 million for the
same period in 2011. Historically we have generally seen an uplift
in financial performance in the second half of the year, excluding
exceptional expenditure, as end of year tax planning increases
dealing activity, However market conditions remain challenging and
could continue to affect our financial performance in the second
half of the current financial year.
Total funds under management or influence as at 30 September
2011 were GBP3.93 billion compared to GBP4.46 billion at 31 March
2011. The portion of these funds under discretionary or managed
advisory mandates fell 12.0% to GBP1.46 billion from GBP1.66
billion at the year end with equity markets (FTSE 100) falling
13.2% over the same period. Approximately 50% of this fall is as a
result of a number of Savoy clients being reclassified as
non-managed advisory or execution only. The rest of the fall in
total reported funds under management or influence is due to a
detailed review of the assets under influence for the financial
planning business and a re-evaluation of the figure deemed to be
under influence. This has seen the figures at 30 September 2011
being restated from GBP2.26 billion to GBP1.94 billion.
As reported in the annual report and accounts to 31 March 2011,
we have delivered on our goal of refocusing the group's business on
wealth management, with the completion of the sale of our last
non-private client business, EPIC, which specialised in
institutional asset management. The sale completed at the end of
April and the loss attributable to this business in the period to
30 September 2011 was GBP387,000.
The Group as whole therefore made a loss after tax for the
period of GBP1.62 million compared to a loss for the same period
last year of GBP0.03 million.
During the course of the period under review, and as previously
announced, we welcomed to the Group Board as a Director, Jeremy
Rance, who is the Group's Chief Operating Officer. I am also
pleased to be able to welcome to the Group Board, as our new Group
Chief Executive Officer, Jonathan Polin from September 2011.
Jonathan brings with him a wealth of experience from nearly 20
years in the financial services industry and he has already started
to indentify the key issues faced by the Group and to plan the
necessary steps required to deliver improved bottom line
performance and to enhance shareholder value. This process involves
a number of workstreams, some of which were already underway and
reported to you in the annual report and accounts under Project
Compass, and will require significant investment.
For that reason we will shortly be writing to shareholders with
regards an institutional fundraising that your company is
undertaking to ensure that this can all be delivered over the next
twelve months to give us a business platform on which the
Management can build and deliver value for shareholders through
greater profitability.
Once again there has been an enormous amount of personal
commitment and effort by many people across the Group. Some of this
effort is beginning to bear fruit but there is also, however, still
a significant amount of work to be done where the pay-back in
financial terms will take longer to reach maturity. I therefore
take this opportunity to thank all our staff, whose efforts are
putting in place the infrastructure and systems that will allow our
business to continue materially growing and prospering. Finally I
would like to take this opportunity to thank our clients for
continuing to ask us to provide services to them.
Kenneth West
Chairman of the Board
16 November 2011
Chief Executive's Report
I am delighted to have been invited to take up the role of Group
Chief Executive. Since my start, 9 weeks ago, I have been
familiarising myself with the business and completing and
delivering the strategy that the Group needs in order to compete
effectively in the wealth management space post the FSA's Retail
Distribution Review ("RDR") which is scheduled to take effect on 1
January 2013. I am broadly pleased with what I have encountered
over the last 9 weeks, and would like to thank both the Board and
staff for their warm welcome. My initial observations fall into the
following categories:-
-- Ashcourt Rowan is a company with the critical mass and
growing revenue base that will allow it to become one of the
leaders in wealth management.
-- A workforce with the desire and intellectual capital to grow
the company into the top 10, but hitherto without the leadership,
strategy, vision and investment to allow our staff to meet their
potential.
-- Strong client satisfaction and robust revenues.
-- The company has failed to integrate its many acquisitions on
to one central operating platform.
-- Attention needs to be a refocused on profitability and shareholder value.
-- We have outdated remuneration schemes where our revenue
generators are paid a revenue share instead of a profit share.
-- Our IT systems have been neglected and not invested in,
resulting in manual inputting of data and a lack of transparency in
our management information.
-- We need to have our investment proposition front and centre
of our business and concentrate on building upon the returns we are
achieving for our clients.
As noted in the Chairman's statement, we are shortly writing to
all shareholders in connection with an equity raising to allow the
company to invest in its future growth. The next 18 months will see
the company concentrating on the following key areas:-
-- A realignment of our cost structure, by significantly reducing our current cost base.
-- Developing a centralised and scaleable operating platform.
-- Developing one single pricing rate card for our business.
-- Increasing the percentage of clients' assets managed under
discretionary mandates by actively encouraging the transfer of
client assets under influence to our discretionary asset management
services.
-- Investing in and growing our investment capability, and
making it the central proposition of the company to ensure that we
deliver the best returns and service to our clients.
-- Ensuring our Financial Planning business is RDR ready and fit
for purpose in the new environment.
-- Investing in up to date systems that will help our staff complete their jobs efficiently.
-- Moving all of our staff into a remuneration scheme that more
closely aligns them with shareholders by paying them on a share of
profits, after achieving various growth targets.
Over the next 12 months we will be able to move the Group to
run-rate profitability for the first time in a number of years.
Although, as part of our strategic realignment there will be some
exceptional items that will affect actual booked profitability over
the period.
I believe that wealth management will be the most interesting
and vibrant sub-sector of financial services over the next 3 to 5
years. By ensuring that the Group has a firm foundation we will be
well placed to take advantage in the huge growth in our sector
during that period through organic growth via our Financial
Planning teams and intermediary team as well as be able to take
part in the inevitable consolidation in the sector.
Jonathan Polin
Group Chief Executive Officer
16 November 2011
Consolidated income statement Six months Six months
Six months ended 30 September ended ended
2011 30 September 30 September
Year ended
31 March
2011 2010 2011
(unaudited) (unaudited) (audited)
Note GBP'000s GBP'000s GBP'000s
Revenue 18,379 15,693 35,111
Cost of sales (8,212) (6,013) (14,865)
Gross profit 10,167 9,680 20,246
Administrative expenses (11,511) (9,789) (24,665)
Impairment of goodwill - - (1,500)
Loss from operations (1,344) (109) (5,919)
Finance income 12 28 49
Other gains and losses 25 24 136
Net finance costs (3) (7) (17)
Loss before tax (1,310) (64) (5,751)
Taxation 74 163 564
(Loss)/profit for the period
from continuing operations (1,236) 99 (5,187)
Loss for the period from discontinued
operations, net of tax 4 (387) (132) (11,584)
Loss for the period attributable
to the equity holders of the
parent (1,623) (33) (16,771)
Loss per share - continuing operations
Basic (0.07)p 0.00p (0.29)p
Diluted (0.07)p 0.00p (0.29)p
Loss per share - total operations
Basic (0.09)p (0.00)p (0.93)p
Diluted (0.09)p (0.00)p (0.93)p
Consolidated statement of comprehensive Six months Six months
income ended ended
Six months ended 30 September 2011 30 September 30 September
Year ended
31 March
2011 2010 2011
(unaudited) (unaudited) (audited)
GBP'000s GBP'000s GBP'000s
Loss for the period (1,623) (33) (16,771)
Total comprehensive income for
the year (1,623) (33) (16,771)
Attributable to:
Equity holders of the Parent (1,623) (33) (16,771)
30 September 30 September 31 March
2011 2010 2011
Consolidated statement of financial (audited)
position (unaudited) (unaudited)
30 September 2011 Note GBP'000s GBP'000s GBP'000s
Non-current assets
Goodwill 34,836 46,466 34,836
Other intangible assets 2,818 5,372 3,114
Property, plant and equipment 2,389 1,648 1,828
Available-for-sale investments 146 146 146
Total non-current assets 40,189 53,632 39,924
Current assets
Available for sale financial
asset 5 170 - -
Trade and other receivables 7,030 9,593 8,391
Cash and cash equivalents 2,118 8,962 5,286
9,318 18,555 13,677
Assets of a disposal group held
for sale - - 1,073
Total current assets 9,318 18,555 14,750
Total assets 49,507 72,187 54,674
Current liabilities
Trade and other payables (7,477) (10,905) (10,311)
Loans and deferred consideration (62) (62) (130)
Short-term provisions (25) (116) (25)
(7,564) (11,083) (10,466)
Liabilities of a disposal group
held for sale - - (548)
Total current liabilities (7,564) (11,083) (11,014)
Non-current liabilities
Deferred tax liabilities (383) (1,144) (454)
Long-term provisions (51) (154) (74)
Total non-current liabilities (434) (1,298) (528)
Total liabilities (7,998) (12,381) (11,542)
Net assets 41,509 59,806 43,132
Equity
Share capital 3,655 3,608 3,621
Share premium account 72,522 72,522 72,522
Equity reserve 1,369 1,305 1,369
Retained earnings (36,037) (17,629) (34,380)
Equity attributable to equity
holders of the parent 41,509 59,806 43,132
Consolidated statement
of changes in equity
30 September 2011
Share
Share Premium Equity Retained Total
Capital Reserve Reserve Earnings
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
At 31 March 2010 3,608 72,522 935 (17,596) 59,469
Total comprehensive income
for the period:
Loss for the period - - - (33) (33)
Transactions with owners
recorded directly in equity:
Share-based payments - - 370 - 370
At 30 September 2010 3,608 72,522 1,305 (17,629) 59,806
Total comprehensive income
for the period:
Loss for the period - - - (16,738) (16,738)
Transactions with owners
recorded directly in equity:
Share-based payments - - 64 - 64
Issue of shares to Employee
Benefit Trust 13 - (13) - -
Transfer to equity reserve
in respect of shares distributed
by Employee Benefit Trust - - 13 (13) -
At 31 March 2011 3,621 72,522 1,369 (34,380) 43,132
Total comprehensive income
for the period:
Loss for the period - - - (1,623) (1,623)
Transactions with owners
recorded directly in equity:
Share-based payments - - - - -
Issue of shares to Employee
Benefit Trust 34 - (34) - -
Transfer to equity reserve
in respect of shares distributed
by Employee Benefit Trust - - 34 (34) -
At 30 September 2011 3,655 72,522 1,369 (36,037) 41,509
Share capital represents the nominal value of shares subscribed
for. The share premium reserve represents the total amount
subscribed for shares in excess of the nominal value. The equity
reserve represents the total amount charged, less any credits, in
respect of share-based payments charged to the statement of
comprehensive income. Retained earnings include all other gains and
losses and transactions with owners not recognised elsewhere.
Consolidated statement of cash flows
Six months ended 30 September 2011
Six months
Six months ended
ended 30 September
30 September 2010
2011 (unaudited)
(unaudited) GBP'000s
GBP'000s restated
Year
ended
31 March
2011
(audited)
Operating activities: GBP'000s
(Loss)/profit for the period (1,236) 99 (5,187)
Adjustments for:
Depreciation of property, plant and
equipment 379 269 1,233
Amortisation of intangibles 296 296 592
Impairment of goodwill and intangibles
assets - - 1,500
Share based payment expense 38 287 274
Impairment of available-for-sale investments - - -
Discount on repayment of deferred
consideration - - (136)
Finance income (12) (28) (49)
Finance costs 3 7 17
Corporation tax (credit)/expense (73) (163) (564)
Operating cash inflow/(outflow) before
movements in working capital (605) 767 (2,320)
Decrease/(increase) in receivables 2,050 (410) (1,144)
(Decrease)/increase in payables (3,510) (600) 2,884
Decrease in provisions (23) (6) (86)
Cash outflow from operations (2,088) (249) (666)
Tax paid - - 80
Interest received 12 28 49
Interest paid (3) (7) (17)
Discontinued operations (157) 3,462 699
Cash (outflow)/inflow from operating
activities (2,236) 3,234 145
Investing activities
Purchases of property, plant and equipment (944) (935) (2,080)
Net proceeds from sale of subsidiary
net of cash disposed of (240) - 879
Net cash used in investing activities (1,184) (935) (1,201)
Financing activities
Repayments of loans and deferred consideration (68) (868) (869)
Net cash used in financing activities (68) (868) (869)
Net decrease in cash and cash equivalents (3,488) 1,431 (1,925)
Cash and cash equivalents at beginning
of period 5,606 7,531 7,531
Cash and cash equivalents at end of
period 2,118 8,962 5,606
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 2011
1. Reporting entity
Ashcourt Rowan 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 2011 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 2011
are available upon request from the Company's registered office at
60 Queen Victoria Street, London EC4N 4TR or at
www.ashcourtrowan.com.
2. Basis of preparation
As permitted, IAS 34, 'Interim Financial Reporting' has not been
applied in this interim report.
The financial information presented in this report has been
prepared using accounting policies that are expected to be applied
in the preparation of the financial statements for the year ending
31 March 2012.
These policies are in accordance with the recognition and
measurement principles of International Financial Reporting
Standards, International Accounting Standards and Interpretations
(collectively IFRS) issued by the International Accounting
Standards Board as endorsed for use in the European Union, and
these principles are disclosed in the Financial Statements for the
year ended 31 March 2011.
The financial information in this interim report does not
constitute statutory accounts within the meaning of Section 434 of
the Companies Act 2006. The Annual Report and Financial Statements
for 2011 have been filed with the Registrar of Companies. The
Independent Auditors' Report on the Annual Report and Financial
Statement for 2011 was unqualified, did not draw attention to any
matters by way of emphasis, and did not contain a statement under
498(2) or 498(3) of the Companies Act 2006.
3. Accounting policies
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 2011.
4. Discontinued operations
During the period the Company disposed of its institutional
investment management business, EPIC (see note 5). The results of
the discontinued operations are as follows:
Year
ended
Six months Six months
ended ended 31 March
30 September 30 September
2011 2010 2011
(unaudited) (unaudited) (audited)
GBP'000s GBP'000s GBP'000s
Revenue 165 2,758 4,917
Expense (461) (2,979) (5,261)
Loss from operating activities (296) (221) (344)
Investment income - 1 1
Finance costs - - (5)
Loss on sale of discontinued
operation (82) - (1,778)
Impairment of discontinued operation
held for sale - - (10,222)
Loss before tax (378) (220) (12,348)
Taxation - - 97
Deferred tax (9) 88 667
Loss for the period (387) (132) (11,584)
Basic loss per share (0.02)p (0.00)p (0.64)p
5. Disposal of Subsidiary
(a) EPIC Investment Partners Limited
On 27 April 2011 the Company disposed of its entire interest in
its wholly-owned subsidiary EPIC Investment Partners Limited
("EPIC"). The consideration received was made up as follows
GBP'000s
Cash consideration 572
Less costs of sale (254)
Total Net consideration 318
The cash consideration includes provision for GBP170,000 of
deferred consideration payable 12 months from completion. This
deferred consideration is contingent on levels of funds under
management within EPIC 12 months from completion. The maximum
deferred consideration receivable is GBP500,000 but management
estimate that only GBP170,000 will be received (included in
available for sale financial assets). The costs of sale include
legal fees, corporate finance advice and tax advice.
The book values of assets disposed of were
as follows:
Property plant and equipment 3
Trade and other receivables 663
Cash and cash equivalents 375
Trade and other payables (641)
Total Net assets on disposal 400
Loss on sale of subsidiary (82)
The income and expense up to the point of disposal which are
included within the Group financial results for the year are set
out in note 4.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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