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Quayle Munro Hldgs (QYM)

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Thursday 16 September, 2010

Quayle Munro Hldgs

Final Results

RNS Number : 7638S
Quayle Munro Holdings PLC
16 September 2010
 



 

 

Quayle Munro Holdings PLC

 

("Quayle Munro" or the "Group")

 

Results for the year ended 30 June 2010

 

Highlights

 

·      Revenue was £15.7m compared with £8.3m last year, an increase of 89%.

 

·      Group profit before tax was £10.9m (2009: £1.2m). The increase was due to a number of factors including increased professional revenue and investment gains of £7.1m consisting of £4.8m on the sale of our shareholding in Submersible Technology Services (Holdings) Limited ("STS"), and £2.3m on the sale of our shareholding in Cath Kidston Limited.

 

·      Strong recovery in Advisory business in the second half - good pipeline of work.

 

·      Advised on a number of major transactions including:

§ The purchase by Virgin Money of Church House Trust;

§ The sale of New Energy Finance to Bloomberg;

§ The sale of Cath Kidston Limited to TA Associates; and

§ The acquisition of DFS by Advent.

 

·      A final dividend of 20p per share has been declared. It is also proposed that a special dividend of 100p per share should be paid at the same time.

 

·      Improvement in both net assets and liquidity following sales of investments during the year. Net asset value per share increased from 801p (diluted 743p) at 30 June 2009 to 1002p (diluted 932p) per share at 30 June 2010.   

 

·      Basic earnings were 203.1p per share (2009: 34.0p) with fully diluted earnings of 194.4p per share (2009: 32.0p).

 

 

Andrew Tuckey, Chairman, commented:

"In what has been a challenging period, I am pleased to announce that we have had a very satisfactory year with a strong recovery in the advisory business. While it is difficult to predict the outcome for the next year, with our strong financial position and healthy pipeline of work I believe there is scope for further growth both organically and by attracting more senior people to our advisory platform. Quayle Munro is now a simple business, clearly focused, independent and free from conflicts: a construct very much in tune with the times."

 

 

For further information:

 

Quayle Munro Holdings PLC

Andrew Tuckey, Chairman                                               0207 907 4200

 

Brewin Dolphin Limited (Nominated Advisor)                             

Sandy Fraser                                                                        0131 529 0272

 

Smithfield (Financial PR)  

John Kiely                                                                            020 7360 4900   

                               

 

Chairman's statement

By any measure the year just ended has been most eventful. My first year as CEO and now as Chairman has been challenging as Quayle Munro has been through a period of considerable change. Against this background the Group has shown great resilience with the resurgence of the advisory business in the second half being the best possible response.

 

Results

The Group result for the year was very satisfactory with a strong recovery in the advisory business and an improvement in both net assets and liquidity following sales of investments during the year.

 

Revenues improved from £8.3m last year to £15.7m, an increase of 89%. At the same time the cost base, before bonus, was reduced following the closure of the New York office and lower staff numbers following some senior departures during the year: in consequence our revenue per professional and our profitability improved markedly.

 

The Group profit before tax was £10.9m (2009: £1.2m). Under IFRS 2 profit before tax excludes a proportion of the cost of annual bonus awarded in shares. If these costs were charged against year end results, the Group profit before tax would be £9.7m. The increase was due to a number of factors including the increased professional revenue to which I have already referred and investment gains of £7.1m consisting of £4.8m on the sale of our shareholding in Submersible Technology Services (Holdings) Limited ("STSH"), and £2.3m on the sale of our shareholding in Cath Kidston Limited.

 

Basic earnings per share were 203.1p (2009: 34.0p) with fully diluted earnings per share of 194.4p (2009: 32.0p).

 

A summary of the profit figures is as follows:


£'000


£'000

Continuing operations

Professional revenue



 

15,662

All Group costs excluding bonuses



(7,710)




7,952

Bonuses*



(3,931)

Exceptional items




Redundancies and other similar costs

(850)



Costs relating to promotion of new fund

(350)


(1,200)

Overall profit before investment gains



2,821

Investment gains



7,107

Share of profits of associate (now sold)



602

Finance income - dividend & loan stock



563

Finance costs



(1)

Finance cost - pension



(12)

Impairment of investments held as available-for-sale

Discontinued operations **

Professional revenue

Costs

Exceptional items

Loss for the year from discontinued operations

 

 

 979

(586)

(488)


(125)

 

 

 

 

(95)

Profit before tax



10,860

 

*Under IFRS 2 share based bonus is apportioned over the vesting period. The bonus above includes £0.5m of such cost, the balance of £1.2m is chargeable against future profits. Includes bonus to non advisory staff

 

** New York office closure

 



As described in the Interim Report issued in March and in the circular to shareholders dated 23 April this year, a new bonus and long term incentive plan was approved by the Remuneration Committee of the Board. Bonuses to advisory staff of approximately half the normalised (excludes exceptional items) advisory business profits have been allocated to the bonus pool. 26% of the bonus pool has not been paid in cash but awarded in shares, the participants being the Managing Directors and a small number of senior staff. These shares were awarded after the balance sheet date and are held in a joint ownership structure with the Employee Benefit Trust and cannot vest before 31 December 2011. If the shares are retained in the joint ownership structure beyond that date the number of shares available to staff increases. The maximum number of shares to be issued under this scheme is 203,000. Increasing the share ownership by our staff is a high priority and we will continue to seek ways to achieve this.

 

I believe these new arrangements have played an important part in delivering the improved operating performance and give our revenue generators a clear alignment with the interests of shareholders. The market for experienced advisory staff is highly competitive and it is vital we retain and motivate our key people.

 

As mentioned in the Interim Report we hoped to launch a successor to The PFI Infrastructure Company plc and significant efforts toward this end were made during the year. Unfortunately we were unable to raise sufficient funds to make this a viable proposition notwithstanding a good management team and a promising pipeline. After careful review we decided to abandon the initiative. With no plans to revive fund management we have decided to discontinue our activity in financial management of PFI special purpose vehicles.

 

Advisory Business

During the year following the disappointing results in 2009 we conducted a thorough review of this business leading to:

 

·      The appointment of Andrew Adams and Rob Cormie jointly to run the advisory business and their appointment to the Group Board;

·      A more clearly defined management structure with revenue goals for Managing Directors and a rigorous new business process;

·      A critical examination of our cost base and some redundancies;

·      Closure of our New York office through its sale to the incumbent management;

·      Amalgamation of Corporate and Public Finance to make better use of our professional staff; and

·      The new bonus and capital incentive scheme as outlined above.

The exceptional costs in both the Advisory and Fund Management business during the year arising from this reorganisation amounted to £1.7m.

 

The clearly defined focus on independent advice in our core sectors proved a good strategy in a challenging market and the Group concluded a number of important transactions during the year. Some highlights from the wide range of completed assignments undertaken during the year are set out below:

 

·      Media - the key sector this year with landmark deals such as the sale of New Energy Finance to Bloomberg and Point Carbon to Thomson Reuters.

·      Financial Institutions - the acquisition of Church House Trust for Virgin Money and the commitment of £100m in new capital to Virgin Money by WL Ross.

·      Retail - two of the most important transactions in this sector: the sale of Cath Kidston Limited to TA Associates and the acquisition of DFS by Advent.

·      Energy and Renewables - the largest wind farm financing in Norway for Eurus and the sale of STS, the Aberdeen based underwater remotely operated vehicle operator.

·      Infrastructure - advisory assignments in higher education (University of Edinburgh), healthcare (Taycare) and street lighting (Blackpool).

·      General - advice to John Swire & Sons Limited in connection with their property interests in Hong Kong and Huntsworth plc in respect of various acquisitions.

Looking ahead, the pipeline is strong and the advisory team is motivated to deliver another good result in the coming year.

 

We are continuing to recruit advisory professionals at all levels. This is a time consuming and competitive process but we are confident we can attract new talent to the firm.

 

Investments

As previously reported the Group sold its shareholdings in STS and Cath Kidston Limited during the year realising profits of £7.1m and in addition received the proceeds from the sale of the office at 8 Charlotte Square, Edinburgh (the profit from which was booked in the last financial year). These transactions have considerably strengthened our liquidity.

 

Following these disposals the only significant investment remaining is our 22.96% shareholding in Morris Group Limited ("Morris"). Whilst the housing market has seen a measure of recovery Morris continues to operate in some of the most challenging conditions in the sector for many years. Restriction of availability of finance for buyers along with fragile consumer confidence continues to impact the volume of housing transactions in the UK and sales activity. Despite this, Morris performed well for the year ended 31 March 2010 with sales of £126.1m* (2009: £112.3m). Volumes were slightly lower than budgeted, however the average sales price was better than envisaged. Operating profits (after exceptionals) were £18.3m* (2009: £15.7m). Profit before tax (after exceptionals) was £1.3m* compared with a loss of £(11.9)m in the previous year.

 

The Morris current financial year started cautiously, with some volume shortfall during the period, offset by a positive move in average selling prices which are 13% ahead of budget. Volumes were impacted by the later than expected start on affordable contracts, resulting from the change in government. Approvals for affordable funding contracts are now in place and should be progressed during the second quarter. There is also an improving trend with an increase in net private reservations of 10% compared to last year. Morris has a number of new developments opening during the year and is optimistic about achieving improvements in the reservation rate as the new outlets open. The Morris Group continues to meet all banking covenants and is considering with its bankers the best financial structure with the aim of achieving further reductions in its debt.

 

As in previous years we have reviewed carefully the valuation of our holding in Morris. We continue to believe discounting net tangible worth is the appropriate basis, rather than using price earnings multiples because of the volatility in earnings reported by listed companies in the sector.  Using this basis results in a valuation of £5.1m for our equity interest and with our loan stock fair valued at par gives a total valuation of £9.3m (2009: £9.3m).

 

Net Assets and liquidity

In March this year the Company bought in 435,442 ordinary shares of which 280,052 have been cancelled and 21,213 were purchased by staff. At the same time the Employee Benefit Trust purchased 134,177 shares.

 

Taking account of the above the net asset value per share increased from 801p per share (fully diluted 743p per share) at 30 June 2009 to 1,002p per share (fully diluted 932p per share) at 30 June 2010.

 

 

* Source: 31 March 2010 draft statutory accounts

After payment of the proposed dividends set out below and the cash element of the staff bonus the Group has cash resources of approximately £15.5m. We will continue to buy in our shares when opportunities arise and where this is financially beneficial to the Company. Given the low level of market activity in our shares this also provides liquidity for shareholders. Over many years the Company has been successful in making investments in businesses in which we have had some involvement and, very selectively, we expect to continue this policy in the future.

 

 

 

Dividend

The Company paid an interim dividend of 10p per share in March this year. It is now proposed to pay a final dividend of 20p, unchanged from last year. In the light of the Group's results, particularly the realised profits on the sale of investments, it is also proposed that a Special Dividend of 100p per share should be paid at the same time. The combined final and Special Dividend of 120p per share will be paid on 12 November 2010 to shareholders on the register on 15 October 2010.

 

Edinburgh office

In June we moved into our new office in West Port, a modern top floor office with stunning views of the castle. The works were completed on time and on budget and the office has been exceptionally well received by clients and staff alike. The new office in Edinburgh is very much in line with our strong commitment to the business in Scotland where we see good opportunities for growth.

 

The Board and Management

Andrew Adams and Rob Cormie joined the board in May this year as Executive Directors, based respectively in London and Edinburgh. They bring considerable experience to our Advisory business with the drive and ambition to develop this business further.

 

Kit van Tulleken leaves the Board at the AGM. Kit was the founder of the firm that carried her name and became part of Quayle Munro in 2008. The franchise which she developed particularly in the media and technology sectors has become an important part of our business.

 

Jo Elliot also leaves the Board at the AGM. Jo was the first professional employed by Quayle Munro when the company was established in 1983 and he has played an important role in many aspects of the Group as it developed including a period as its CEO.

 

We will maintain a close relationship with both Kit and Jo in the future and they leave the Board with our sincere thanks for their contribution and our best wishes.

 

Peter Norris left the Board in November last year to take up his position as Chairman of Virgin Holdings but remains a consultant to the Group and continues actively to support the business.

 

As set out in the interim report, Nick Lyons joined the Board as a Non Executive Director earlier in the year; we benefit considerably from his experience and wisdom.

 

As shareholders know, Ian Jones, our co-founder, retired as Chairman in March. The occasion was marked by a successful party in Charlotte Square attended by many distinguished guests who had worked with Ian over the years.

 

Following these changes the Board will comprise a majority of Non Executive Directors which we are committed to maintain.

 

Prospects

Ours is a business that does not readily lend itself to anticipating the future and I do not propose to do so now. However, of this I am confident: we have a high class professional team with a fast improving track record and increasing market recognition. With our strong financial position and healthy pipeline of work, I believe there is scope for further growth both organically and by attracting more senior people to our advisory platform. Quayle Munro is now a simple business, clearly focused, independent and free from conflicts: a construct very much in tune with the times.

 

Staff

As I said at the beginning of this statement the past year has been one of challenge and change; this required dedication, loyalty and hard work of all our staff, both the professionals and the support staff. On behalf of your Board I thank and congratulate them all. I know, like me, they will want to build on this success in the coming year.

 

 

 

Andrew Tuckey

15 September 2010



Group statement of comprehensive income

For the year ended 30 June 2010




2010


2009





£'000


£'000


Continuing operations







Revenue



15,662


8,287









Administrative expenses



(10,564)


(8,271)


Impairment of investments held as available-for-sale



(125)


(1,423)


Gain/(loss) on sale of investments held as available-for-sale



2,297


(37)


Gain on sale of associate



4,810


-


Gain on sale of property



-


100


Exceptional expenses



(1,200)


-


Other operating expenses and gains



(1,077)


(753)





(5,859)


(10,384)









Share of profit of associate accounted for using the equity method



602


2,124









Group operating profit



10,405


27









Finance income



563


1,309


Finance costs



(1)


(15)


Other finance costs - pensions



(12)


(91)





550


1,203









Profit for the year from continuing operations



             10,955


 1,230


Discontinued operations







Loss for the year from discontinued operations



(95)


 -









Profit on ordinary activities before tax



10,860


1,230


Tax (expense)/credit



(1,606)


331


Profit on ordinary activities after tax



9,254


1,561
















  

 

  Group statement of comprehensive income (continued)

For the year ended 30 June 2010

 


Note


2010


2009

 




£'000


£'000

 

 

 

Profit for the year attributable to shareholders of the Company



9,254


1,561

 

Other comprehensive income/(expense)






 

Loss on valuation of available-for-sale financial assets



(58)


(1,411)

 

Actuarial gain/(loss) on defined benefit pension scheme



42


(476)

 







 

Total  comprehensive income/(expense) for the year



9,238


 






















Earnings per share







Basic earnings per share

3


203.1

p

34.0

p

Diluted earnings per share

3


194.4

p

32.0

p

 

 

 Group statement of financial position

 At 30 June 2010




2010


2009





£'000


£'000


Non-current assets







Property, plant and equipment



731


748


Intangible assets



11,630


11,713


Financial assets



9,655


10,599


Investments accounted for using the equity method



-


4,554


Defined benefit pension scheme surplus



265


92


Deferred tax asset



-


215





22,281


27,921


Current assets







Trade and other receivables



2,300


3,597


Current tax asset



12


339


Cash and short-term deposits



23,237


7,566





25,549


11,502


Total assets



47,830


39,423


 

Current liabilities







Trade and other payables



3,831


1,390


Current tax liabilities



883


815





4,714


2,205


Non-current liabilities







Financial liabilities



6


505


Deferred tax liability



4


-





10


505


Total liabilities



4,724


2,710


Net assets



43,106


36,713


 

Capital and reserves







Equity share capital



9,277


9,305


Revaluation reserve



6,916


7,262


Other reserves



2,734


2,507


Retained earnings



24,179


17,639


Total equity



43,106


36,713


 

 

 

 

 

 

Andrew Tuckey

Chairman

15 September 2010

 

 

  Group statement of changes in equity

For the year ended 30 June 2010

 


 

Equity share capital

£'000

 

 

Revaluation reserve

£'000

 

Capital redemption reserve

£'000

 

 

Merger reserve

£'000

Share option expense reserve

£'000

 

Treasury share reserve

£'000

 

Total other reserves

£'000

 

 

Retained earnings

£'000

Total equity and reserves

£'000

Balance at 30 June 2008

9,305

9,568

127

1,229

544

-

1,900

17,190

37,963











Profit for the year

-

-

-

-

-

-

-

1,561

1,561











Realised on sale of property

-

(895)

-

-

-

-

-

895

-











Loss on revaluation of investments

-

(1,411)

-

-

-

-

-

-

(1,411)











Share-based payments

-

-

-

-

607

-

607

-

607











Actuarial loss on defined benefit pension scheme

-

-

-

-

-

-

-

(476)

(476)











Other

-

-

-

-

-

-

-

(174)

(174)











Equity dividends paid

-

-

-

-

-

-

-

(1,357)

(1,357)

Balance at 30 June 2009

9,305

7,262

127

1,229

1,151

-

2,507

17,639

36,713











Profit for the year

-

-

-

-

-

-

-

9,254

9,254











Realised on sale of investments

-

(413)

-

-

-

-

-

-

(413)











Loss on revaluation of investments

-

(58)

-

-

-

-

-

-

(58)











Impairment of investment


125

-

-

-

-

-

-

125











Share-based payments

-

-

-

-

929

-

929

-

929











Purchase of shares for Employee Benefit Trust

-

-

-

-

-

(730)

(730)

-

(730)











Actuarial gain on defined benefit pension scheme

-

-

-

-

-

-

-

42

42











Cancelled shares

(28)

-

28

-

-

-

28

(1,400)

(1,400)











Equity dividends paid

-

-

-

-

-

-

-

(1,356)

(1,356)

Balance at 30 June 2010

9,277

6,916

155

1,229

2,080

(730)

2,734

24,179

43,106



 Group statement of cash flows

 For the year ended 30 June 2010



2010


2009



£'000


£'000

Operating activities





Profit before tax


10,860


1,230

 

Adjustments to reconcile profit before tax to net cash inflow from operating activities





Finance income


(563)


(1,309)

Finance expense


1


15

Depreciation


151


145

Share of profit of associate


(602)


(2,124)

Share-based payments


929


607

Loss on disposal of fixed assets


-


151

Gains on disposals of financial assets


(7,107)


(174)

Impairment of financial assets


125


1,423

Movement in pensions


(52)


(54)

Decrease/(increase) in assets


1,215


(242)

Increase /(decrease) in liabilities


2,441


(1,056)

Cash generated from/(absorbed by) operations


7,398


(1,388)

Income taxes paid


(1,057)


(284)

Net cash flow from operating activities


6,341


(1,672)






Investing activities





Finance income received


548


1,309

Proceeds from sales of available-for-sale financial assets


16,057


1,005

Payments to acquire plant and equipment


(178)


(520)

Payments to acquire available-for-sale financial assets


(3,046)


(747)

Net cash flow from investing activities


13,381


1,047






Financing activities





Dividends paid to equity shareholders of the parent


(1,356)


(1,357)

Own shares purchased


(2,182)


-

Repayment of borrowings


(499)


(91)

Finance expense paid


(14)


(15)

Net cash flow from financing activities


(4,051)


(1,463)






Increase /(decrease) in cash and cash equivalents


15,671


(2,088)

Effect of exchange rates on cash and cash equivalents


-


(46)

Cash and cash equivalents at the beginning of the year


7,566


9,700

Cash and cash equivalents at the end of the year


23,237


7,566



Notes to the Group financial statements

At 30 June 2010

 

1.             The financial statements of Quayle Munro Holdings PLC and its subsidiaries (the "Group and Parent Company financial statements") for the year ended 30 June 2010 were authorised for issue by the Board of Directors on 15 September 2010 and the statement of financial position was signed on the Board's behalf by Andrew Tuckey. Quayle Munro Holdings PLC is a public limited company incorporated and domiciled in Scotland. The Company's ordinary shares are traded on the Alternative Investment Market.

 

The Group's financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union as they apply to the financial statements of the Group for the year ended 30 June 2010.

 

2.             The Group is managed primarily by class of business and presents the segmental analysis on that basis. The Group's activities are organised in three primary divisions: Advisory, Fund Management and Other (investment management and Head Office). The following table presents revenue and results information regarding the Group's business segments for the years ended 30 June 2010 and 2009.

 


 

 

 

Advisory

 

 

Fund Management

 

 

 

Other

Year ended 30  June 2010

Total

 

 

 

Advisory

 

 

Fund Management

 

 

 

Other

Year ended 30  June 2009

Total


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Segment revenue

 

15,452

 

210

 

-

 

15,662

 

6,594

 

1,693

 

-

 

8,287

Segment profit before tax

 

 

4,336

 

 

(745)

 

 

7,269

 

 

10,860

 

 

(175)

 

 

677

 

 

728

 

 

1,230

 

 

3.             Basic earnings per share is calculated by dividing earnings for the year of £9.3 million (2009 - £1.6 million) attributable to ordinary equity holders of the parent by 4.6 million being the weighted average number of shares in issue during the year (2009 - 4.6 million). Diluted earnings per share is calculated by dividing the earnings attributable to ordinary equity holders of the parent by 4.8 million being the weighted average of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares (2009 - 4.9 million).

 

4.             In view of the Group's continuing strong liquidity and a satisfactory level of continuing activity, the Directors recommend an unchanged final dividend of 20p per share, and a special dividend of 100p per share making 130p for the year as a whole. The final dividend and the special dividend will be paid on 12 November 2010 to shareholders on the register on 15 October 2010.

 

5.             The statement of comprehensive income and statement of financial position for the year ended 30 June 2010 do not constitute statutory accounts within the meaning of s240 Companies Act 2006.  They are an extract from the full Group accounts, which will be the subject of an unqualified audit report.

 

6.             The net asset value per share was 1002p (2009 - 801p) based on net assets of £43.1 million (2009 - £36.7 million) and on 4.3 million (2009 - 4.6 million) ordinary shares in issue at 30 June 2010.

 

7.             The Annual Report will be circulated to all shareholders and thereafter, copies will be available from the Company Secretary at 102 West Port, Edinburgh EH3 9DN.

 

8.             Notice is hereby given that the Thirtieth Annual General Meeting of the Company will be held at 22-24 Berners Street, London, W1T 3LP on 9 November 2010, at 12 noon.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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