RNS Number:7568X
Sumus plc
05 June 2007
5th June 2007
Sumus Plc
2007 Interim results
Sumus Plc ('Sumus' or the 'Company'), the AIM listed holding company for IFA
businesses providing investment and financial advisory services and network
support services to IFA firms, today announces its interim results for the six
months ended 31st March 2007.
Highlights
Revenue up 100% to #14m (2006: #7m)
Profit from operations up 47% to #436,000 (2006: #297,000)
Profit before income tax up 40% to #550,000 (2006: #393,000)
Basic earnings per share up 37% to 1.37p (2006: 1.00p)
Cash flow from operating activities up 187% to #997,000 (2006: #347,000)
Interim dividend up 45% to 0.32p (2006: 0.22p)
Substantial cash resources of circa #3.5m available to fund further strategic
expansion
First time contribution from FSAS of #6.7m revenue and #115,000 profit from
operations
Brunel Funds launched on 1st March 2007 and have already attracted over #2m
Commenting on the results, Allan Rosengren, Chief Executive said:
"The interim results reflect the inclusion of FSAS for the whole of the period
and demonstrate the continuing success of our strategies, for both acquisitions
and organic growth.
The acquisition of 50.1% of Deverill Black & Company Limited announced earlier
today will be immediately earnings enhancing (as was the acquisition of FSAS in
2006). The launch of the Brunel Funds in March 2007 will enable us to
participate in the higher proportion of product revenues available from managing
client funds and demonstrates the Group's ability to develop and successfully
introduce new products to the market.
Sumus remains in an enviably strong financial position. We continue to review
opportunities to expand the Group's business by pursuing profitable and earnings
enhancing strategies.
The IFA market place is undergoing significant change at the present time. Sumus
is well placed to participate in, and benefit from, the opportunities that such
change will provide. These results give us confidence in the outturn for the
year as a whole. We look forward to developing the Group further in the second
half of the financial year."
Contact
Paul Bradshaw 07931 511 936
Chairman - Sumus Plc
Allan Rosengren 0117 9330777
CEO - Sumus Plc 07973 511941
Peter Smith 0117 9330777
FD - Sumus Plc 07713 885286
Edward Hutton / Rachel Kane 020 7510 8600
HB Corporate
Tom Cooper / Paul Vann 0117 9200092
Winningtons Financial 0797 122 1972
Chairman's statement
I have pleasure in presenting the interim results of Sumus for the six months
ended 31st March 2007. During this period the Group has seen a positive
contribution from Financial Services Advice and Support Limited (FSAS) acquired
in September 2006 and benefits from working more closely together are now
beginning to emerge. We have also successfully launched the Brunel Funds.
The results as set out in the Interim Report reflect another period of solid
achievement in an accelerating environment and the management teams across our
businesses are to be congratulated.
Financial performance
Group revenues increased by 100% to #14m, profits from operations increased by
47% to #436,000 and cash flow from operating activities continued to be
extremely positive with cash balances rising by 19% to #5.1m. The inclusion of a
full six months' trading at FSAS resulted, as we expected, in a reduction in
gross margins (12.9%, as compared with 16.5% and 16.7% in the comparative
periods) reflecting the impact of the lower margins implicit in the FSAS
business model which does not encompass commissions handling.
Basic earnings per share rose 37% to 1.37p per share and we are declaring an
interim dividend of 0.32p per share, an increase of 45% on the previous year.
This will be paid on 29th June 2007 to shareholders on the register at 15th June
2007.
Brunel Funds
As forecast in our Annual Report, the Brunel Funds investment proposition was
formally launched on 1st March 2007, offering both Growth and Distribution
sub-funds. We believe that these products will attract increasing interest as
they become accessible through various product wrappers and they will form an
important constituent of the Group's ambition to steadily increase the
proportion of recurring revenues.
FSAS
FSAS has delivered to expectations during the period and has contributed
significantly to revenue and profits. The integration of FSAS within the rest of
the Group has proceeded to plan and tangible benefits of our businesses working
more closely together are already beginning to emerge. As a result of the
acquisition and further organic growth in the period, the total number of
advisers within the Group at 31st March 2007 was 320, a creditable performance
against a difficult recruitment market.
Market developments
The market for the provision of independent financial advice has seen increased
activity, the flotation of Hargreaves Lansdown and the acquisitions of Thinc
Destini and Sesame by Axa and Friends Provident respectively indicate
substantially enhanced sector interest. The Retail Regulatory Review has already
raised significant debate on commission structures, and we look forward to the
Discussion Paper expected over the summer.
We see no fundamental threat to the dominance of the Independent Financial
Adviser but we recognise the strong desire for change in some aspects of the
existing model from the FSA and other stakeholders.
We also consider that the current environment will provide some interesting
opportunities for the Group to participate in the market consolidation that is
now clearly underway to the benefit of the Group and all of its stakeholders.
Current trading and outlook
Progress since 31st March 2007 has been satisfactory with revenue and profits in
line with expectations. I am delighted that, as announced today, we have
acquired 50.1% of the issued share capital of Deverill Black & Company Limited,
one of our Appointed Representative firms headed up by Iain Black. Iain is one
of our most productive advisers and served as a Non-Executive Director on the
Board of Sumus until December 2006. The acquisition, for #525,000 in cash and
#225,000 in new ordinary shares in Sumus, will be immediately earnings
enhancing, enabling us to retain more of the revenues processed by the Group,
and fits well with our strategy of offering appropriate capitalisation
strategies to IFAs which provide acceptable long term solutions both to them and
to the Group as a whole.
Your Board is currently assessing opportunities across the spectrum of the
financial services market and we remain committed to expansion whilst
maintaining and, indeed, growing our profitability.
The rest of 2007 and beyond holds challenges to all businesses within the
independent financial advisory sector but also tremendous opportunities to
participate profitably in further market consolidation and expansion. I am
confident that the Group will gain from the opportunities that lie ahead.
Paul Bradshaw
Chairman 5th June 2007
Consolidated Income Statement for the six months ended 31st March 2007
Unaudited Unaudited Audited &
restated
#000 #000 #000
Revenue 13,952 6,989 15,196
Cost of sales (12,151) (5,833) (12,662)
-------- ---------- ----------
Gross profit 1,801 1,156 2,534
Administrative expenses (1,351) (844) (1,867)
-------- ---------- ----------
Earnings before interest, tax,
depreciation and amortisation 450 312 667
Depreciation and amortisation (14) (15) (28)
-------- ---------- ----------
Profit from operations 436 297 639
Finance income 114 96 218
Finance expenses - - -
-------- ---------- ----------
Profit before income tax 550 393 857
Income tax expense (163) (118) (259)
-------- ---------- ----------
Profit for the period 387 275 598
-------- ---------- ----------
Attributable to:
Equity holders of the Company 385 275 597
Minority interests 2 - 1
-------- ---------- ----------
Profit for the period 387 275 598
-------- ---------- ----------
Earnings per share - from continuing
operations and acquisitions
Basic 1.37p 1.00p 2.17p
-------- ---------- ----------
Fully diluted 1.32p 1.00p 2.08p
-------- ---------- ----------
There were no recognised gains or losses other than the profit or loss for the
above financial periods. None of the Group's activities were acquired or
discontinued during the six months to 31st March 2007.
Consolidated Statement of Changes in Equity for the six months ended 31st March
2007
Unaudited Unaudited Audited &
restated
#000 #000 #000
Balance at start of period (year ended
30th September 2006: as restated)
As originally stated 4,876 3,823 3,823
Adjustment for goodwill
impairment (note 1) 17 - -
-------- --------- -----------
As restated 4,893 3,823 3,823
Profit for the period (2006:
as restated) 387 275 598
Minority interest (2) - (1)
Dividends paid (130) (90) (150)
Issue of shares - - 215
Contingent consideration - - 408
Balance at end of period (year ended -------- --------- -----------
30th September 2006: as restated) 5,148 4,008 4,893
-------- --------- -----------
Consolidated Balance Sheets
Unaudited Unaudited Audited &
restated
#000 #000 #000
Assets
Non-current assets
Property, plant and equipment 85 40 52
Intangible assets 1,733 6 1,733
Investments 27 27 27
-------- --------- -----------
Total non-current assets 1,845 73 1,812
-------- --------- -----------
Current assets
Trade and other receivables 1,069 1,277 1,286
Cash and cash equivalents 5,083 4,287 4,283
-------- --------- -----------
Total current assets 6,152 5,564 5,569
-------- --------- -----------
Total assets 7,997 5,637 7,381
-------- --------- -----------
Current liabilities
Trade and other payables (2,121) (1,220) (1,797)
Current income tax liabilities (164) (311) (135)
Provision for contingent
consideration (408) - -
-------- --------- -----------
Total current liabilities (2,693) (1,531) (1,932)
-------- --------- -----------
Net current assets 3,459 4,033 3,637
-------- --------- -----------
Non-current liabilities
Provision for contingent
consideration - - (408)
Other provisions (153) (98) (147)
-------- --------- -----------
Total non-current liabilities (153) (98) (555)
-------- --------- -----------
Total liabilities (2,846) (1,629) (2,487)
-------- --------- -----------
Net assets 5,151 4,008 4,894
-------- --------- -----------
Equity
Issued share capital 141 137 141
Share premium 2,674 2,463 2,674
Shares to be issued -
contingent consideration 408 - 408
Merger reserve 160 160 160
Retained earnings 1,765 1,248 1,510
-------- --------- -----------
Total equity attributable to
equity holders of the company 5,148 4,008 4,893
Minority interests 3 - 1
-------- --------- -----------
Total equity 5,151 4,008 4,894
-------- --------- -----------
Consolidated statement of cash flows for the six months ended 31st March 2007
Unaudited Unaudited Audited &
restated
#000 #000 #000
Profit before income tax 550 393 857
Adjustments for:
Depreciation 14 15 28
Finance income (114) (96) (218)
Changes in working capital (excluding the
effects of acquisitions):
Trade and other receivables 217 (186) 20
Trade and other payables 324 221 314
Other provisions 6 - 30
-------- ---------- -----------
Cash flows from operating
activities 997 347 1,031
Income tax paid (134) - (325)
Net cash generated from
-------- ---------- -----------
operating activities 863 347 706
-------- ---------- -----------
Cash flows from investing activities
Finance income received 114 96 218
Purchase of subsidiary undertaking, net of - -
cash acquired-
(416)
Purchase of property, plant and
equipment (47) (13) (22)
-------- ---------- -----------
Net cash from/(used in) investing
activities 67 83 (220)
-------- ---------- -----------
Cash flows from financing activities
Dividends paid to equity
shareholders (130) (90) (150)
-------- ---------- -----------
Net cash used in financing
activities (130) (90) (150)
-------- ---------- -----------
Net increase in cash and cash
equivalents 800 340 336
-------- ---------- -----------
Cash and cash equivalents at
beginning 4,293 3,947 3,947
of period
-------- ---------- -----------
Cash and cash equivalents at end 5,083 4,287 4,283
of period
-------- ---------- -----------
Notes to the Interim Report for the six months ended 31st March 2007
1 Basis of preparation and accounting policies
The financial information contained in the Interim Report has been prepared in
accordance with International Financial Reporting Standards ("IFRS") as adopted
by the EU. This Interim Report is the first consolidated financial report
prepared in accordance with IFRS. It has been prepared in accordance with IAS 34
and does not include all of the information required for full annual financial
statements. Full details of the accounting policies adopted will be included in
the financial statements for the year ending 30th September 2007 and are not
expected to be materially different from those set out in the audited financial
statements of the Group for the year ended 30th September 2006, with the
exception of the policies in relation to capitalisation of intangible assets on
acquisition and impairment of goodwill. This will be adopted in the 2007 Annual
Report and hence has been adopted in the preparation of this Interim Report with
the comparative figures being restated.
This change in policy, in order to comply with the requirements of IFRS 3, has
resulted in the elimination of goodwill amortisation of #17,000 previously
charged to profit and loss account in the comparative figures for the year ended
30th September 2006, with a corresponding increase in the carrying value of
goodwill arising on acquisition as at that date.
2 Nature of financial information
The financial information contained in this Interim Report for the six months
ended 31st March 2007 and 31st March 2006 are unaudited and do not comprise
statutory accounts within the meaning of section 240 of the Companies Act 1985.
The comparative figures for the year ended 30th September 2006 have been
abridged from the Group's audited financial statements (as amended for the
change in accounting policies referred to above) approved by the Company's
shareholders on 22nd February 2007 and which have been filed with the Registrar
of Companies. The auditor's report on those financial statements was unqualified
and did not contain any statement under section 273 of the Companies Act 1985.
3 Taxation
The charge for income tax expense included in the Interim Report is based on the
unaudited results for the six months ended 31st March 2007 and is calculated at
the expected rate applicable to the Group for the full year ending 30th
September 2007.
4 Earnings per share
Basic earnings per share has been calculated based on the profit for the period
attributable to the equity shareholders of #385,000 and the weighted average
number of ordinary shares in issue during the six months ended 31st March 2007
of 28,208,745 (six months ended 31st March 2006 - #275,000 and 27,500,000
respectively; year ended 30th September 2006 -#597,000 (as restated) and
27,544,660 respectively).
Fully diluted earnings per share has been calculated based on the profit for the
period attributable to the equity shareholders of #385,000 and the weighted
average number of ordinary shares in issue and potential shares to be issued
during the six months ended 31st March 2007 of 29,086,164 (six months ended 31st
March 2006 - #275,000 and 27,500,000 respectively; year ended 30th September
2006 - #597,000 (as restated) and 28,744,660 respectively).
5 Segment analysis
The group operates in one business segment, that of the provision of independent
financial advice, and in one geographic segment, within the UK. Accordingly no
segmental analysis is required.
6 Contingent consideration
The Company has a liability to pay additional consideration, contingent upon
certain future performance criteria and arising out of earn-out provisions
relating to the acquisition of Financial Services Advice and Support Limited in
September 2006. The directors' best estimate of the quantum of the contingent
additional consideration to be issued in respect of this acquisition at 31st
March 2007 was #816,000 (30th September 2006: #816,000) which is to be satisfied
once the audited results for that company are available, in late 2007 or early
2008, by a cash payment equivalent to 50% of the final amount so calculated in
cash and the balance by way of the issue of new ordinary shares in the Company,
fully paid and valued at the average mid-market price at that time.
Accordingly the contingent additional consideration has been included as to 50%
within shares to be issued within shareholders' equity and as to the remaining
50% as a provision for contingent consideration within current liabilities (30th
September 2006 - within non-current liabilities).
7 Transition statement from UK GAAP to IFRS
This is the Group's first Interim Report presented in accordance with IFRS. As
detailed in Note 1 above, in preparing its opening IFRS balance sheet and
comparative information for the six months ended 31st March 2006, the Group has
adjusted amounts reported previously in financial statements and Interim Reports
prepared in accordance with UK GAAP.
An explanation of how the transition from UK GAAP to IFRS has affected the
Group's financial position and financial performance is set out in Note 1 above.
There have been no changes to the Group's cash flows as a result of the
transition.
8 Dividends
An interim dividend of #90,000 equivalent to 0.32p per ordinary share (2006:
#60,000 equivalent to 0.22p per ordinary share) will be paid on 29th June 2007
to members on the register at 15th June 2007.
Note to Editors
Sumus, admitted to AIM in February 2005, is the group holding company of Falcon
Group Plc, a long established and consistently profitable IFA group, of
Financial Synergies Plc which was established in August 2004 and Financial
Services Advice and Support Limited which was acquired in September 2006. Falcon
was founded in 1983 by Allan Rosengren and Julian Telling, respectively the
Group Chief Executive and Group Operations Director of Sumus.
Sumus is a consolidator in the IFA sector, both by way of the organic expansion
of its operating businesses and through carefully selected investments in IFA
firms, which then become authorised through either the Falcon Group or FSAS. The
Sumus Group provides strategic direction, working capital, compliance and risk
management resources to the IFA businesses within its networks.
This information is provided by RNS
The company news service from the London Stock Exchange
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