RNS Number:9703Q
Hichens Harrison & Co PLC
28 March 2008
28th March 2008
HICHENS, HARRISON & CO. PLC
FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007
Hichens, Harrison & Co. plc ("Hichens" or "the Company") is pleased to announce
its annual results to 31 December 2007.
Highlights:
*Details of the acquisition of ARM Corporate Finance Ltd and its impact on
the Group are detailed in note 6.
+----------------+----------------+----------------+--------------+
| |Per Consolidated| Adjust to| Group on|
| |income statement| include full 12| continuing|
| | | months of ARM| basis|
+----------------+----------------+----------------+--------------+
| | �'000| �'000| �'000|
+----------------+----------------+----------------+--------------+
|Revenues | 19,463| 1,586| 21,049|
+----------------+----------------+----------------+--------------+
|Profit before | 4,997| 676| 5,673|
|tax | | | |
+----------------+----------------+----------------+--------------+
* Revenue increased (on a continuing basis) to �21m up 56% from 2006
turnover of �13.5m (restated).
* Profit before tax (on a continuing basis) rose by 60% to �5.6m from
�3.5m in 2006
* Corporate clients at the end of 2007 stood at 63 (up from 52 for
the same period last year) for whom we raised the equivalent of over
$380m in the period.
* Acquired ARM Corporate Finance to add further critical mass
to Blomfield Street Securities our fully licensed AiM Nominated
Adviser and corporate finance advisory business. These
businesses merged to form Blomfield Corporate Finance with a
combined 22 Nomad clients and only one client in common with
Hichens.
* Further developed Hichens Investment Management with the appointment post the
period end of Jim Julyan as CEO. Funds under management and advice at 31
December 2007 total $600m up from $450m a year ago.
* Launched Healthcare Investment Vehicle in Middle East "MENA Healthcare"
which has shown substantial growth in both customers and its valuation.
* Significant development of two new product lines to help the continued
expansion in 2008.
* As announced on 26 March 2008, the Company is in talks with Religare
Enterprises Limited in relation to a possible cash offer for the
Company at a proposed offer price of 285 pence per share. There can be no
certainty that an offer will be made for the company.
CHAIRMAN'S STATEMENT
In 2007 Hichens continued its impressive growth and its strategy of becoming a
global merchant bank, specialising in emerging markets for small to medium size
international companies.
In the 2006 results we announced that the overseas offices had been established
and I am delighted to say that 2007 saw a significant number of cross border
transactions taking place between all of these established offices. As a
result of this rapid development overseas we saw a shift from raising capital in
London to the overseas locations which reduces the Group's exposure to UK
investors.
Financial Review
At the same time as expensing the growth in overseas locations and new products
Hichens recorded revenue of �19m and profit before tax of �5m. This equates to
revenue of c. �21m (on a continuing basis), an increase of �7.5m compared
to the previous year; and profit before tax of �5.6m (on a continuing basis)
which includes the consolidated operating profit from ARM Corporate
Finance; this continued the recent growth rates of the past two years and
resulted in a year-on-year consolidated growth figure of 60%.
Review of operations
In 2006 we announced that we had restructured the Group into two divisions
"Services Division" and "Investments Division"
Services
* Hichens, Harrison & Co. plc (the traditional stockbroking company)
* Blomfield Corporate Finance (our Nomad Corporate Finance Boutique)
* HH (Derivatives) which includes HH1803
* Hichens, Harrison (Commodities)
Investments
*Hichens Investment Management
*Hichens, Harrison (Ventures) which includes investments, options and warrants
All of these divisions are now well established and contributing to the
revenues of the Group and Hichens is in a strong position to offer clients a
wide range of services that complement each other providing clients with a full
range of financial services and ultimately maximising the revenue
potential from clients.
Hichens, Harrison (Commodities) has already completed its first transaction
and we expect this division to be profitable in 2008.
Hichens Investment Management has also shown considerable development with the
appointment post the period end of Jim Julyan as CEO. Funds under management
and advice at 31 December 2007 total $600m, up from $450m a year ago and we
intend to actively expand this division in 2008.
Outlook
As a result of the substantial growth achieved during 2007 combined with the
continued expansion in emerging market economies we will be opening a number of
new offices during 2008 in Qatar (where it is intended that our Chief Executive
becomes resident), Singapore, India, Japan and Thailand.
We have two major product launches in 2008, which have been funded and
developed in 2007 which makes the strong growth in 2007 more pleasing.
1. HH1803 is our multi currency CFD online trading platform, available in global
equities which will be officially launched in April 2008.
2. HH offshore currency account - a gross paying debit card in partnership with
Lloyds Bank, this is one global account which offers 3 currencies (�, $ and Euro)
and pays 5% interest with free switching amongst the 3 currencies and global
instant access. The intention is to actively market this within our South
African network.
Hichens has spent a considerable amount of resource in 2007 establishing
business lines that have strengthened our global merchant banking strategy and
provided the business with defensive qualities in the challenging market
environment of the latter part of last year. Despite market conditions
remaining difficult we have had a strong start to 2008 and are very well
positioned to see further growth in our businesses in the coming year. All of
our operating businesses are performing well and with our increasing presence in
overseas markets providing more and larger cross border opportunities for
our businesses we remain optimistic for the current financial year.
Jeremy Delmar-Morgan
Non-Executive Chairman
For further information please contact:
Adam Wilson, Chief Executive
Hichens, Harrison & Co. plc
Tel - 020 7382 7776
Adam Reynolds
Hansard Group
Tel - 020 7245 1100
Brett Miller
Ruegg & Co. Limited
Tel - 020 7584 3663
Consolidated Income Statement for the
year ended 31 December 2007
+--------------------------------------+------+------------+------------+
| | Note| Year ended| Year ended|
| | | 31 December| 31 December|
| | | 2007| 2006|
| | | | restated|
| | | | |
| | | | �'000|
| | | �'000| |
+--------------------------------------+------+------------+------------+
|Revenue | | 19,463| 13,548|
+--------------------------------------+------+------------+------------+
|Cost of sales | | (3,157)| (2,123)|
+--------------------------------------+------+------------+------------+
|Gross profit | | 16,306| 11,425|
+--------------------------------------+------+------------+------------+
| | | | |
+--------------------------------------+------+------------+------------+
|Other operating income | | 225| -|
+--------------------------------------+------+------------+------------+
|Administrative expenses | | (11,638)| (7,943)|
+--------------------------------------+------+------------+------------+
| | | | |
+--------------------------------------+------+------------+------------+
|Profit from operations | | 4,893| 3,482|
| | | | |
+--------------------------------------+------+------------+------------+
|Finance expense | | (32)| (50)|
+--------------------------------------+------+------------+------------+
|Finance income | | 136| 61|
+--------------------------------------+------+------------+------------+
| | | | |
|Profit before taxation | | 4,997| 3,493|
+--------------------------------------+------+------------+------------+
| | 3 | | |
| | | | |
|Income tax expense | | (1,632)| (1,163)|
+--------------------------------------+------+------------+------------+
|Profit for the year | | 3,365| 2,330|
+--------------------------------------+------+------------+------------+
|Attributable to: | | | |
| | | | |
+--------------------------------------+------+------------+------------+
|- Equity holders of the parent | | 3,363| 2,330|
| | | | |
+--------------------------------------+------+------------+------------+
|- Minority interests | | 2| -|
| | | | |
+--------------------------------------+------+------------+------------+
| | | | |
| | | | |
+--------------------------------------+------+------------+------------+
|Earnings per share for profit | | | |
|attributable to equity holders of the | | | |
|parent company in the year | | | |
| | | | |
+--------------------------------------+------+------------+------------+
|Basic earnings per share (pence) | 4 | 21.78| 17.45|
| | | | |
|Diluted earnings per share (pence) | 4 | 19.24| 15.42|
| | | | |
| | | | |
+--------------------------------------+------+------------+------------+
Consolidated Statement of recognised income and expense for the year ended
31 December 2007
2007 2006
�,000 Restated
�,000
Total recognised income and expense for the 3,365 2,330
year
Attributable to:
Equity holders of the parent company 3,363 2,330
Minority interests 2 -
3,338 2,136
Consolidated Balance Sheet
31 December 2007 31 December
2006 Restated
�'000 �'000
Assets
Non-current assets
Property, plant and equipment 372 389
Investments 168 -
Investment property 524 -
Intangible assets 4,230 -
Deferred tax assets 509 446
Total non-current assets 5,803 835
Current assets
Financial instruments held for 16,860 6,688
trading
Trade and other receivables 7,793 24,194
Cash and cash equivalents 4,288 7,499
Total current assets 28,941 38,381
Total assets 34,744 39,216
Liabilities
Bank overdraft 64 53
Trade and other payables 9,217 30,547
Corporation tax liability 2,573 1,163
Current tax liabilities 293 154
Shares to be issued 1,805 -
Total current liabilities 13,952 31,917
Total net assets 20,792 7,299
Capital and reserves
Called up share capital 1,738 1,408
Share premium account 9,700 2,558
Merger reserve 2,226 -
Capital redemption reserve fund 725 725
Own shares held (328) (328)
Retained earnings 6,514 2,936
Equity attributable to equity 20,575 7,299
holders of the parent Company
Minority interests 217 -
20,792 7,299
Consolidated cash flow statement
Year ended Year
31 December ended 31
2007 December
2006
Restated
Note
�'000 �'000
Cash flows from operating activities
Profit for the year 3,365 2,330
Adjustments for:
Interest income (136) (61)
Interest expense 32 50
Impairment of trade & other receivables 96 -
Depreciation 101 65
Loss on disposal of non-current assets 13 -
Gain on financial instruments held for (4,341) (2,472)
trading
Gain on investment property (333) -
Amortisation of intangible assets 30 -
Dividends received (69) -
Share based payment charges 215 254
Other operating income (225) -
Income tax expense 1,632 1,163
Operating cash flows before changes in 380 1,329
working capital and provisions
(Increase)/ decrease in trade and other 16,401 (65)
receivables
(Decrease)/ increase in trade and other (21,191) 6,733
payables
Cash (used in) / generated from operations (4,410) 7,997
Income taxes paid (359) (380)
Net cash flows from operating activities (4,769) 7,617
Investing activities
Investment in subsidiaries net of cash (213) -
acquired
Interest received 136 61
Purchase of property, plant and equipment (145) (354)
Purchase of financial Instruments held for (19,634) (8,216)
trading
Sale of property, plant and equipment 29 -
Sale of financial Instruments held for 14,076 5,138
trading
Dividend received 69 -
(5,682) (3,371)
Financing Activities
Issue of ordinary shares 7,261 1,836
Acquisition of own shares - (78)
Interest paid (32) (50)
7,229 1,708
Increase / (decrease) in cash and cash 7 (3,222) 5,954
equivalents
1. Accounting policies
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 December 2007 or 2006 but is derived
from those accounts. Statutory accounts for 2006 have been delivered to the
registrar of companies, and those for 2007 will be delivered in due course. The
auditors have reported on those accounts; their report was (i) unqualified,(ii)
did not include a reference to any matters to which the auditors drew attention
by way of emphasis without qualifying their report and (iii) did not contain a
statement under section 237(2) or (3) of the Companies Act 1985.
Basis of preparation
The principal accounting policies adopted in the preparation of the financial
statements are set out below. The policies have been consistently applied to all
the years presented, unless otherwise stated.
These financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRSs and IFRIC interpretations) issued by the
International Accounting Standards Board (IASB) and adopted by the European
Union; and with those parts of the Companies Act 1985 applicable to companies
preparing their financial statements under IFRS.
The date of transition to IFRS was 1 January 2006. This is the first time that
the Company has prepared its financial statements in accordance with IFRSs,
having previously prepared its financial statements in accordance with UK
accounting standards, however the application of IFRSs has resulted in
presentational adjustments only.
Revenue
Revenue, which is stated exclusive of value added tax, comprises:
* Commission from acting as agent in investment business, which is recognised
on the trade date;
* Profits less losses from matched risk-less principal dealing, which is
recognised on the trade date;
* Fee income from corporate broking and related activities which are brought
into account when the transaction has been completed and authorised by the
client. Some of this revenue is taken in the form of shares, options or warrants
in the client enterprise rather than cash. In the case of shares the amount
taken to revenue will be the value of the fee agreed with the client or, if no
specific fee was agreed, then the fair value of the shares with reference to
the work done or if this is not possible then on the basis of the market value
of the shares at the date of the completion of the transaction. The shares are
subsequently recognised as financial instruments held for trading. In the
case of warrants and options the instruments are valued using the Black
Scholes valuation model.
* Fee income from investment management and advisory services which
is recognised at the date of delivery of the service;
* Profits less losses from other principal trading; and
* Financial instruments held for trading are valued at fair value and the
difference between this value and cost is recognised in the income statement.
In the case of quoted investments fair value is taken to be the quoted bid
price. For unquoted investments the fair value is taken to be the last price at
which identical financial instruments were traded in an arms length
transaction or the group establishes fair value using other valuation
techniques. In the absence of any external basis of assessing fair value
the directors will attribute a fair value based on the original cost and
their knowledge of the activities and results of the underlying company. For
warrants and options fair value is established by applying the
Black Scholes valuation model.
Basis of consolidation
Where the Company has the power, either directly or indirectly, to govern the
financial and operating policies of another entity or business so as to obtain
benefit from its activities, it is classified as a subsidiary. The consolidated
financial statements present the results of the Company and its subsidiaries
("the Group") as if they formed a single entity. Intercompany transactions and
balances between group companies are therefore eliminated in full.
Goodwill
Goodwill represents the excess of the cost of a business combination over the
interest in the fair value of the identifiable assets, liabilities and
contingent liabilities acquired. Cost comprises the fair value of assets given,
liabilities assumed and equity instruments issued, plus any direct costs of
acquisition.
Goodwill is capitalised as an intangible asset with any impairment in carrying
value being charged to the income statement.
Impairment of non-financial assets
Impairment tests on goodwill and other intangible assets with indefinite useful
economic lives are undertaken annually on 31 December. Other non-financial
assets are subject to impairment tests whenever events
or changes in circumstances indicate that their carrying amounts may not be
recoverable. Where the carrying value of an asset exceeds its recoverable amount
(i.e. the higher of value in use and fair value less cost to sell), the asset
is written down accordingly.
Where it is not possible to estimate the recoverable amount of an individual asset,
the impairment test is carried out on the asset's cash generating unit (i.e. the
lowest group of assets in which the asset belongs for which there are separately
identifiable cash flows). Goodwill is allocated on initial recognition to each
of the group's cash generating units that are expected to benefit from the
synergies of the combination giving rise to the goodwill.
Impairment charges are included in the administrative expenses line in the
income statement, except to the extent they reverse gains previously recognised
in the statement of recognised income and expense.
Cost of Sales
Cost of sales comprises costs directly attributable to transactions undertaken
and is mainly commissions on dealing paid to third parties and the costs
associated with back to back Contracts for Difference.
Balances with Clients and Counterparties
In accordance with market practice certain balances with clients, stock exchange
member firms and settlement offices are included in
debtors and creditors gross for their unsettled bought and sold transactions
respectively.
Foreign Currency
Transactions entered into by group entities in a currency other than the
currency of the primary economic environment in which it
operates (the "functional currency") are recorded at the rates ruling when the
transactions occur. Foreign currency monetary assets and liabilities are
translated at the rates ruling at the balance sheet date. Exchange differences
arising on the retranslation of unsettled monetary assets and liabilities are
similarly recognised immediately in the income statement.
Financial Assets
The group classifies its financial assets into one of the following categories,
depending on the purpose for which the asset was acquired. The Group's
accounting policy for each category is as follows:
Fair value through profit or loss: This category comprises financial instruments
held for trading. They are carried in the balance sheet at fair value with
changes in fair value recognised in the income statement.
Fair value is determined as follows:
* Listed investments are marked to
market based on the quoted bid price on
the last business day of every month.
* Warrants and options are valued
using the Black Scholes valuation model.
* Unlisted investments are valued on
the basis of the value ascribed to
identical investments that have been the
subject of arm's length transactions
within the six months prior to the date
of valuation or the group establishes
fair values using other valuation
techniques.
Loans and receivables: These assets are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active market. They
arise principally through the provision of services to customers (trade
debtors), but also incorporate other types of contractual monetary asset.
They are carried at cost less any provision for impairment. Impairment is
recognised if an amount remains unpaid when the debtor ceases to be a client of
the group or where the original invoice is over 12 months old.
Financial liabilities
All the Group's liabilities are classified as other financial
liabilities. They comprise trade payables and other monetary liabilities,
which are initially recognised at fair value and subsequently at amortised
cost.
Retirement benefits: Defined contribution schemes
Contributions to defined contribution pension schemes are charged to the income
statement in the year to which they relate.
Share-based payments
Where share options are awarded to employees, the fair value of the options at
the date of grant is charged to the income statement. To date no vesting
conditions have been applied to share options and
therefore the whole of the fair value is charged to the income statement in the
period in which the option is granted.
Deferred Taxation
Deferred tax assets and liabilities are recognised where the carrying amount of
an asset or liability differs from its tax base, except for differences arising
from:
* The initial recognition of goodwill;
* Goodwill for which amortisation is not deductible;
* The initial recognition of an asset or liability in a transaction that is
not a business combination and at the time of the transaction effects neither
accounting or taxable profit; and
* Investments in subsidiaries and jointly controlled entities where the
group is able to control the reversal of the difference and it is probable that
the difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those circumstances where
it is probable that taxable profit will be available against which the
difference can be utilised.
The amount of the asset or liability is determined using tax rates that have
been enacted or substantively enacted by the balance sheet date and are expected
to apply when the deferred tax liabilities / (assets) are settled /
(recovered).
Deferred tax assets and liabilities are offset when the group has a legally
enforceable right to offset current tax assets and liabilities and the deferred
tax assets and liabilities relate to taxes levied by the same tax authority
on either:
* The same taxable group company; or
* Different group entities which intend either to settle current tax
assets and liabilities on a net basis, or to realise the assets and settle the
liabilities simultaneously, in each future period in which significant
amounts of deferred tax assets or liabilities are expected to be settled
or recovered.
Clients' Deposits
The Company holds money on behalf of clients in accordance with the Clients'
Money Rules of The Financial Services Authority. Such monies and the
corresponding liability to clients are not shown on the face of the balance
sheet as the Company is not beneficially entitled thereto.
Leases
Operating lease rentals are charged to the income statement in equal amounts
over the lease term.
Property, plant and equipment
Items of property, plant and equipment are initially recognised at cost. As
well as the purchase price, cost includes directly attributable costs.
Depreciation is provided on all items of property, plant and equipment to write
off the carrying value of items over their expected useful lives. It is
applied at the following rates:
Office equipment - 33.3% straight line
Furniture and fixtures - 33.3% straight line
Investment property
The Group's investment property is revalued annually to open market value, with
changes in the carrying value recognised in the income statement.
Externally acquired Intangible Assets
Externally acquired intangible assets are initially recognised at cost and
subsequently amortised on a straight line basis over their estimated useful
economic lives. The amortisation expense is included
within the administrative expense line in the income statement.
Intangible assets are recognised on business combinations if they are separable
from the acquired entity or give rise to other contractual / legal rights. The
amount ascribed to such intangibles are arrived at by using appropriate
valuation techniques.
The significant intangibles recognised by the group, their useful economic life
and the method used to determine the costs of intangibles acquired in business
combination are as follows:
Intangible asset Useful economic Valuation method
life
Non-contracual client 6 years Estimated discounted cash
lists and relationships flow
Licences 4 years Estimated cost of
obtaining a
new licence
Provisions
Provisions are recognised for liabilities of uncertain timing or amount that
have arisen as a result of past transactions and are
discounted at a pre-tax rate reflecting current market assessment of the time
value of money and the risks specific to the liability.
Segment reporting
Note 8 to the financial statements contains an analysis of the Group's performance
broken down both by geographical area and by the revenue streams that the
directors and other management monitor in their day to day
management of the business. The geographical analysis also includes an
indication of the allocation of assets and liabilities to the
different areas. This is not feasible in the case of the analysis by revenue
streams due to the interrelationship of the various
departments within the group which prevents an accurate analysis.
Judgements, estimates and assumptions
(a) Valuation of financial instruments held
for trading
The Directors have reviewed all available evidence of the performance of the
unlisted companies in the Group's investment portfolio and any activity falling
short of an actual purchase of shares that indicates
a valuation different from the carrying value of the investment in the Company's
balance sheet. In respect of one company where the directors considered that the
performance of the company in the period prior to 31 December 2007 indicated a
higher share price than that paid for the shares and where interest had been
expressed by a number of bidders in acquiring the investment, the directors have
revised the carrying value of the investment to reflect these facts. This has
resulted in an increase in the carrying value of the investment of �1,000,000.
(b) Intangible Assets
The Directors have reviewed the recurring income of the part of Blomfield Corporate
Finance Limited that consists of the business that was ARM Corporate Finance
Limited. They have formed the opinion that the average life of their clients will be
approximately 6 years. These assumptions have been used in the calculation of the
value of intangible assets described in note 16.
ARM Corporate Finance Ltd held a licence to act as NOMAD to companies listed on the
London Stock Exchange full list. The Directors have estimated the cost of
obtaining such a licence and have used this as an indication of the carrying value of
the licence. The value is amortised over 4 years.
2. First time adoption of International Financial Reporting Standards (IFRS)
The adoption of IFRS has not resulted in changes to any of the values in the
financial statements but only in changes in presentation.
Cash flow statement for the year ended 31
December 2007
In the cash flow statement the key presentational changes are:
* Presenting a statement showing movements in cash and cash equivalents,
rather than just cash. Cash under UK GAAP comprised only amounts accessible
within 24 hours without penalty less overdrafts repayable on demand. The
components of cash equivalents are shown in note 7.
* Classifying tax cash flows as relating to operating activities.
3. Tax expense
Year ended Year ended
31 December 2007 31 December 2006
�'000 Restated
�'000
Current tax expense
UK Corporation tax and income tax of
overseas operations on profit for
the year 1,695 1,187
Deferred tax expense
Origination and reversal of timing (63) (24)
differences
Total tax charge 1,632 1,163
The reasons for the difference between the
actual tax charge for the year and the
standard rate of corporation tax in the UK
applied to profits for the year are as
follows:
Year ended Year ended
31 December 2007 31 December 2006
�'000 Restated
�'000
Profit before tax 4,997 3,493
Expected tax charge based on the
standard rate of corporation tax in
the UK of 30% (2006- 30%) 1,499 1,048
Expenses not deductible for tax 194 133
purposes
Depreciation in excess of capital (8) 6
allowances
Corporation tax losses carried 10 -
forward
Deferred tax adjustment (63) (24)
1,632 1,163
4. Earnings per share
Year ended Year ended
31 December 31 December
2007 2006
�'000 �'000
Restated
Numerator
Profit for the year 3,363 2,330
Denominator
Weighted average number of shares used in 15,443,500 13,347,023
basic EPS
Effect of employee share options 2,035,842 1,758,452
Weighted average number of shares used in 17,479,342 15,105,475
diluted EPS
Earnings per share, basic (pence) 21.78 17.45
Earnings per share, diluted (pence) 19.24 15.42
5. Changes in shareholders' equity
2007 2006
�'000 Restated
�'000
Total recognised income and expense 3,363 2,330
Issue of new ordinary shares for
cash (net of expenses) 7,241 1,828
Shares issued for equity 2,434 -
Shares purchased by EBT - (78)
Share options exercised 23 8
Share based payment adjustment 215 254
Net additions to shareholders funds 13,276 4,342
Capital and reserves attributable to
equity holders of the parent at the
beginning of the period 7,299 2,957
Capital and reserves attributable to
equity holders of the parent at the
end of the period 20,575 7,299
6. Acquisitions during the period
On 1 November 2007 the group acquired 100%
of the voting equity of ARM Corporate
Finance, a company whose principal activity
is the provision of corporate finance advice
and acting as nominated advisor to companies
floating on the London Stock Exchange, AIM
and PLUS Markets.
Details of the fair value of identifiable �'000 �'000
assets and liabilities acquired, purchase
consideration and goodwill are as follows:
Fair Value of assets acquired
Property plant and equipment 11
Investments 169
Receivables 727
Cash and cash equivalents 558
Payables (130)
Intangibles - fair value of customer 1,088
relationships
- Licences 50
2,473
Consideration paid
Cash 1,360
832,192 Ordinary shares 2,309
Shares to be issued 1,805
Costs of acquisition 121
5,595
Goodwill 3,122
The fair value of shares issued was determined by reference to their quoted
market price of � 2.775 at the date of acquisition. The fair value of
receivables and payables are the same as the IFRS carrying amounts immediately
prior to the acquisition. The IFRS carrying amount of indefinable intangibles
immediately prior to the acquisition would be nil
The difference between the price paid for ARM and the value of the net assets
acquired has been recognised in the group balance sheet as goodwill and will be
subject to an annual impairment review.
The cash and equity consideration payable is dependent on profits generated by
ARM Corporate Finance Limited for the year ended 30 April 2008. The amount
included above represents the directors' current best estimate of the amount
payable.
On 1 November 2007 the existing business of Blomfield Street Securities Limited
was merged with ARM Corporate Finance Limited and the resulting business was
renamed Blomfield Corporate Finance Limited.
In the period from its acquisition to 31 December 2007 the acquired business
made profits before tax of �31,000
Had ARM Corporate Finance Limited been part of the group for the whole of 2007,
the group results would have been as follows:
+----------------------------+-----+------------+-----------+-----------+
| | Note| Per|Addition of| Income|
| | |Consolidated| ARM| statement|
| | | Income| Corporate| on a|
| | | statement|Finance Ltd| continuing|
| | | | for 10| basis|
| | | | months to| |
| | | | 31.10.07| |
| | | | | |
| | | | �'000| |
| | | �'000| | |
| | | | | �'000|
+----------------------------+-----+------------+-----------+-----------+
|Revenue | | 19,463| 1,586| 21,049|
| | | | | |
+----------------------------+-----+------------+-----------+-----------+
|Cost of sales | | (3,157)| -| (3,157)|
+----------------------------+-----+------------+-----------+-----------+
|Gross Profit | | 16,306| 1,586| 17,892|
+----------------------------+-----+------------+-----------+-----------+
| | | | | |
+----------------------------+-----+------------+-----------+-----------+
|Other Operating Income | | 225| -| 225|
+----------------------------+-----+------------+-----------+-----------+
|Administrative Expenses | | (11,638)| (935)| (12,573)|
+----------------------------+-----+------------+-----------+-----------+
| | | | | |
+----------------------------+-----+------------+-----------+-----------+
|Profit from Operations | | 4,893| 651| 5,544|
| | | | | |
+----------------------------+-----+------------+-----------+-----------+
|Finance Costs | | (32)| -| (32)|
+----------------------------+-----+------------+-----------+-----------+
|Finance Income | | 136| 25| 161|
+----------------------------+-----+------------+-----------+-----------+
| | | | | |
| | | | | |
|Profit / before taxation | | 4,997| 676| 5,673|
| | | | | |
+----------------------------+-----+------------+-----------+-----------+
| | | | | |
| | | | | |
|Income tax expense | 3 | (1,632)| (203)| (1,835)|
+----------------------------+-----+------------+-----------+-----------+
|Profit for the year | | 3,365| 473| 3,838|
+----------------------------+-----+------------+-----------+-----------+
|Attributable to: | | | | |
| | | | | |
+----------------------------+-----+------------+-----------+-----------+
|- Equity holders of the | | 3,363| 473| 3,836|
|parent | | | | |
| | | | | |
+----------------------------+-----+------------+-----------+-----------+
|- Minority interests | | 2| -| 2|
| | | | | |
+----------------------------+-----+------------+-----------+-----------+
7. Notes supporting cash flow statement
Cash and cash equivalents comprise:
2007 2006
�'000 �'000
Cash available on demand 4,288 7,499
Overdrafts (64) (53)
4,224 7,446
Net cash increase in cash and
cash equivalents
(3,222) 5,954
Cash and cash equivalents at
the beginning of the year
7,446 1,492
Cash and cash equivalents at
the end of the year
4,224 7,446
8. Prior year adjustment
In the year ending 31 December 2006 a number of share options were received in
lieu of fees for corporate broking services which had been omitted from the
financial statements. The comparative figures have been restated for this
omission. The effect of the restatement on the comparatives is
summarised below:
Effect on
2006
�'000
Increase in revenue 829
Increase in income tax expense (249)
Increase in profit 580
Increase in financial instruments held for
trading 829
Increase in income tax payable (249)
Increase in equity 580
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAKDXASNPEFE
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