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Quayle Munro Hldgs (QYM)

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Thursday 15 September, 2011

Quayle Munro Hldgs

Final Results

RNS Number : 2632O
Quayle Munro Holdings PLC
15 September 2011
 



 

 

Quayle Munro Holdings PLC

 

("Quayle Munro" or the "Group")

 

Results for the year ended 30 June 2011

 

Highlights

 

Strong Performance from Advisory Business

 

 

·      Revenue £14.7m compared with £15.7m last year.

 

·      Normalised profit before tax £3.0m (2010 - £3.1m).

 

·      Statutory profit before tax, including the impact of share awards, bonus payments and impairment charges £0.2m (2010 - £10.9m).

 

·      Strong second half performance from the advisory business - good pipeline of work.

 

·      Advised on a number of major transactions, for companies including Virgin Group, Lloyds Development Capital, Pell Frischmann, Telereal Trillium and TDR Capital.

 

·      Final dividend of 22p per share - increased by 10%. Total dividends 32p per share (2010 - 30p per share, excluding 2010 special dividend of 100p per share).

 

·      Net asset value per share at 30 June 2011, 908p  per share, (2010 - 1002p per share).

 

·      Basic earnings (23.2)p per share (2010 - 203.1p) with fully diluted earnings of (21.2)p per share (2010 - 194.4p).

 

 

Andrew Tuckey, Chairman, commented:

"After a slow start I am pleased that business picked up considerably in the second half and revenues for the year were only marginally lower than last year.  We regard this as being a most acceptable outcome, particularly when viewed against the market for advisory business which was especially difficult last year. While it is hard in our business to predict the outcome of the following year, our pipeline of prospects is good and our name and reputation in the market is growing."

 

 

For further information:

 

Quayle Munro Holdings PLC

Andrew Tuckey, Chairman                                               020 7907 4200

 

Brewin Dolphin Limited (Nominated Advisor)                             

Sandy Fraser                                                                        0131 529 0272

 

Smithfield (Financial PR)  

John Kiely                                                                            020 7360 4900   

 

 

 

 

 

Chairman's statement

 

I am pleased to report on our results for the latest financial year. Whilst on the face of it the overall result is disappointing, largely due to the statutory accounting requirements relating to impairment and share scheme cost charges as set out below, the strong performance from the advisory business is a considerable achievement in difficult market conditions.

 

Results

The Group result derives almost entirely from the advisory business which had another successful year. In contrast to last year there were no material investment gains and furthermore, in compliance with IAS 36, we were required to take an impairment accounting charge relating to our investments in Tayside Flow Technology Limited ("TFT") and Nevis Range Development Company plc ("Nevis"). Both investments were previously impaired in our balance sheet under UK generally accepted accounting practice. In value terms for our shareholders, there is no change resulting from the impairment accounting charge.

 

A summary of the Group's results is shown below. We show the figures both as set out in the statutory accounts and adjusted for the share scheme component in our remuneration. Under IFRS 2, (the accounting standard) we are required to amortise the costs of share issues over the vesting period; however, the Board regards the decision to award shares as a substitute for a cash bonus as being a commitment at the time it is made as these awards have been allocated from the bonus pool in each year. Accordingly, the table below also shows the effect on profits if all the commitments to award shares are charged against the year when they are made. In addition, the table also shows the Group's pre tax profit adjusted for non recurring items:


 

2011

2010



£'000

£'000


Profit before tax - under IFRS

162

10,860


***Profit before tax adjusted to account for JOE* and LTIP** schemes - to illustrate the effect on profits if all the commitments to award shares are charged against the year when they are made

 

 


Add the cost of the un-charged 2010 JOE bonus cost

-

(1,517)


Remove 2010 JOE cost - accounted for in 2011

708

-


Add the cost of the un-charged 2011 JOE bonus cost

(684)

-


Remove future LTIP tranche costs - IFRS accounted for in 2011

751

-


Re-stated profit before tax

937

9,343


Profit before tax adjusted to normalise for non recurring items

 

 


Add exceptional items

202

1,200


Remove investment gains

(167)

(7,107)


Remove share of profits of associate (sold FY 09/10)

-

(602)


Add impairment of investments held as available-for-sale

2,019

125


Add loss for the year from discontinued operations

-

95


 

 

 


Re-stated profit before tax

2,991

3,054


 

 

 





*Jointly owned equity award (JOE). 

**Long term incentive plan (LTIP). The LTIP was awarded in July 2010, with the primary objective of retaining key staff.

***In accordance with IFRS 2, the current year results include a charge of £1.2m in respect of the LTIP scheme reflecting amortisation of the cost of (all four tranches of) the LTIP award, from scheme implementation on 1 July 2010. Subject to achieving profit targets, each tranche vests annually (between December 2010 and December 2013) accordingly the LTIP cost chargeable against future profits will reduce in subsequent years as each tranche becomes fully vested. The effect of the LTIP adjustment above  is to account for only the cost of the LTIP first tranche, granted on 1 July 2010 (vested 31 December 2010), leaving further LTIP grants to be accounted for in future financial years. In addition, under IFRS 2, the JOE share based bonus is apportioned over the scheme vesting period. The current year bonus includes £0.4m (2010 - £0.5m) of such cost, leaving a balance of £0.7m (2010 - £1.5m) chargeable against future profits. 

 

 

 

Group administrative expenses (after bonus and before exceptional items and share based reward costs) were £10.2m, a decrease from £10.6m in 2010. Other operating expenses and gains (reflecting share based reward costs) were £2.8m, increasing from £1.1m in the previous year, reflecting charges for the 2011 JOE award and additional charges for both the 2010 LTIP and JOE schemes.

 

Total bonuses for the year, as approved by the Remuneration Committee of the Board, amounted to £3.8m, including £0.7m of JOE share based bonus, chargeable against future profits - (2010 - £5.4m including £1.5m of JOE share based bonus, chargeable against future profits). 28% of the bonus pool has not been paid in cash but awarded in shares, the recipients being Managing Directors and a small number of senior employees. These shares are awarded after the balance sheet date and will be held in a joint ownership structure, vesting in three equal amounts at the end of each year commencing 31 December 2012. The total number of shares to be issued under this scheme is approximately 175,000. The final award will be based on the average closing share price over the ten days immediately after the release of the annual results.

 

The bonus scheme is extremely important in retaining our key producers and attracting new talent. Paying part of the bonus in shares which vest over time is not only essential in aligning employees with shareholders but is in line with best practice as set out in the new Remuneration Code.

 

After the impairment of TFT and Nevis and after share option charges, basic earnings per share were (23.2)p (2010 - 203.1p) with fully diluted earnings per share of (21.2)p (2010 - 194.4p). Adjusting for deferred bonuses as if they were cash settled in the year and for non recurring items, basic earnings per share rise to 45.0p.

 

Advisory business

After a slow start, business picked up considerably in the second half and revenues for the year were only marginally lower than last year. I regard this as being a most satisfactory outcome, particularly when viewed against the market for advisory business which was especially difficult last year.

 

The sectors in which we participate are unchanged and, as with the previous year, the media group is our largest contributor. We continue to diversify our sources of revenue both by increasing our business in the other sectors and by seeking more public company and general advisory work. In addition, we are encouraged by the progress made in our debt advisory business, although this is still at an early stage of development. Some highlights from a wide range of assignments undertaken during the year are set out below:

 

·      Media - advising on the sale of Bentek and Steel Business Briefing to Platts, a division of The McGraw-Hill Companies and the sale of ODS Petrodata to IHS Inc.

·      Financial Institutions - advising TDR Capital on the acquisition of Lowell Group from Exponent.

·      Energy and Renewables - advising on the sale of a majority stake in Baillie Wind Farm to Statkraft, the state owned Norwegian utility.

·      Infrastructure - advising the Community Lighting Partnership consortium comprising Pell Frischmann and Telereal Trillium on the Oldham & Rochdale street lighting projects.

·      Education - advising University of Strathclyde on the sourcing and negotiation of a £90m loan facility from the European Investment Bank.

 

Despite strenuous efforts and some good relationships, no transactions were completed in the retail sector during the year, although we continue to believe this sector provides good opportunities for us in the future.

 

As reported at the interim stage, Tim Shortland and Stuart Roberts joined as Managing Directors during the year, strengthening our capabilities at a senior level. We continue to recruit at other levels and have recently added new associates and analysts and the business is now better balanced between origination and execution. The market for good staff remains very competitive and we devote much time and effort to recruitment, ensuring we only hire the highest quality professionals.

 

The advisory business is tightly managed to ensure we pursue the right new business opportunities, maintain the highest standards in client approvals and ensure our excellent reputation for execution is sustained.

 

The pipeline for the current year is strong and the team continues to be very busy and we are hopeful of another good result.

 

Morris

While the housing market has seen a measure of recovery, macroeconomic conditions remain challenging and it is anticipated that the market place will remain constrained in the medium term. Restriction of availability of finance for buyers along with fragile consumer confidence continue to impact sales activity and the volume of housing transactions in the UK.

 

Morris performed well for the year ended 31 March 2011, audited results include; sales of £136m (2010 - £126m), pre-exceptional operating profits of £22m (2010 - £19m) and pre-exceptional profits before tax of £3m, compared to £2m in the previous year.

 

Morris believes that it is well placed to address the market challenges, largely due to re-structuring the business over the last two years along with its strong history of developing high quality homes.

 

During the year Morris put in place a new bank facility for 3 years to 31 March 2014 with its existing bankers RBS and the Bank of Ireland.

 

The current financial year has started cautiously, with some slippage in volume, albeit that this is largely offset by strong operating margins. On a calendar year basis there is a marked improvement in trading with turnover up 20% and operating profits up 16% on the prior year.

 

We have carefully considered the valuation of our holding in Morris. Discounting the net tangible worth basis remains an appropriate valuation basis rather than using price earnings multiples which make little sense with continued earnings volatility in this sector. Using this basis (and applying a discount of 44%) results in an un-changed valuation of £5.1m for our equity interest, which when combined with our loan stock (fair valued at par) gives an un-changed total valuation of £9.3m (2010 - £9.3m).

 

Other investments

We continue to hold a number of other small unquoted investments. As mentioned above, we were required to impair the investments in TFT and Nevis. As one of its original investors, we have supported TFT over many years. TFT has recently received further funding from a number of new investors but it will need to raise further significant amounts of new funding in order to commercialise its products. Nevis, the outdoor sports facility near Fort William, has continued to broaden its range of visitor activities and had a satisfactory year. AMG Security Systems is continuing to perform well and is winning a number of new orders. As indicated in our interim results, Duncton, the subprime car loan provider, which recently changed its name to Moneybarn, completed a major refinancing last October. We have made small adjustments to our carrying valuations of AMG and Duncton.

 

Net assets and liquidity

In November 2010 the Company issued 258,001 ordinary shares of which 229,473 shares were allocated under the 2010 JOE share based award jointly to qualifying employees and to the trustee of The Quayle Munro Holdings PLC Employees' Share Trust ("the offshore Employee Benefit Trust").

 

After the 2010 special and final dividends, the Group's retained earnings fell from £24.2m to £18.0m. At 30 June 2011, net asset value per share was 908p (2010 - 1,002p).

 

After payment of the proposed dividends, set out below, and the cash element of the staff bonus, the Group has cash resources of approximately £13.7m. We will continue to buy in 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 some involvement and, very selectively, we expect to continue this policy in the future.

 

Dividend

The Company paid a final dividend of 20p per share and a special dividend of 100p per share during November 2010 and an interim dividend of 10p per share in March this year. It is now proposed to pay a final dividend of 22p per share, an increase of 10% over last year. The final dividend will be paid on 10 November 2011 to shareholders who are on the register on 14 October 2011.

 

 

Board and management

There have been no changes to the Board during the year and I am grateful to my colleagues for their time and commitment to the business.

 

The management structure which we put in place last year with Andrew Adams in London and Rob Cormie in Edinburgh jointly running the advisory business, with support from Simon Woolton as COO, continues to work well.

 

Staff

The result this year would not have been possible without the dedication of staff who, particularly in the second half, worked all hours and many weekends. On your behalf I would like to express my thanks to all our staff, both the professionals and support staff, for their fine efforts.  We now have a professional team of the very highest order who have the ability and ambition to take the business to the next level.

 

Prospects

I said last year that it is particularly difficult in our business to predict the outcome of the following year and this is compounded by the volatile and uncertain markets in which we currently operate. However, our pipeline of prospects is good and our name and reputation in the market is growing.

 

               

Andrew Tuckey

15 September 2011

 

 

 

 

 

 

Group statement of comprehensive income

For the year ended 30 June 2011




2011


2010





£'000


£'000


Continuing operations







Revenue



14,744


15,662









Administrative expenses



(10,188)


(10,564)


Impairment of investments held as available for-sale



(2,019)


(125)


Gain on sale of available-for-sale investments



-


2,297


Gain on sale of associate



167


4,810


Exceptional expenses



(202)


(1,200)


Other operating expenses and gains



(2,811)


(1,077)





(15,053)


(5,859)









Share of profit of associate accounted for using the equity method



-


602









Group operating (loss) / profit



(309)


10,405









Finance income



439


563


Other finance income / (costs) - pensions



32


(13)





471


550









Profit for the year from continuing operations



162


             10,955


Discontinued operations







Loss for the year from discontinued operations



-


          (95)









Profit on ordinary activities before tax



162


10,860


Tax expense



(1,123)


(1,606)


(Loss) / profit on ordinary activities after tax



(961)


9,254
















 

 

 

 

 

 

  Group statement of comprehensive income (continued)

For the year ended 30 June 2011

 


Note


2011


2010

 




£'000


£'000

 

 

 

(Loss) / profit for the year attributable to shareholders of the Company



(961)


9,254

 

Other comprehensive income / (expense)






 

Gain / (loss) on valuation of available-for-sale financial assets



368


(58)

 

Actuarial gain on defined benefit pension scheme



213


42

 

Total  comprehensive (expense) / income for the year



(380)


9,238

 















Earnings per share (pence)







Basic earnings per share

3


(23.2)

p

203.1

p

Diluted earnings per share

3


(21.2)

p

194.4

p

 

 

 

 

 

 

 Group statement of financial position

 At 30 June 2011




2011

2010





£'000


£'000


Non-current assets







Property, plant and equipment



742


731


Intangible assets



11,630


11,630


Financial assets



10,070


9,655


Defined benefit pension scheme surplus



785


265





23,227


22,281


Current assets







Trade and other receivables



5,571


2,300


Current tax asset



49


12


Cash and short-term deposits



17,494


23,237





23,114


25,549


Total assets



46,341


47,830


 

Current liabilities







Trade and other payables



4,137


3,831


Current tax liabilities



456


883





4,593


4,714


Non-current liabilities







Financial liabilities



260


6


Deferred tax liability



50


4





310


10


Total liabilities



4,903


4,724


Net assets



41,438


43,106


 

Capital and reserves







Equity share capital



11,145


9,277


Revaluation reserve



9,303


6,916


Other reserves



2,953


2,734


Retained earnings



18,037


24,179


Total equity



41,438


43,106


 

 

 

 

 

Andrew Tuckey

Chairman

15 September 2011

 

 

 

 

 

 

 

  Group statement of changes in equity

For the year ended 30 June 2011


 

Equity share capital

£'000

 

 

Revaluation reserve

£'000

 

Capital redemption reserve

£'000

 

 

Merger reserve

£'000

Share option expense reserve

£'000

Own shares held reserve

£'000

 

Total other reserves

£'000

 

 

Retained earnings

£'000

 
Total equity and reserves

£'000

Balance at 30 June 2009

9,305

7,262

127

1,229

1,151

-

2,507

17,639

36,713











Comprehensive Income




















Profit for the year

-

-

-

-

-

-

-

9,254

9,254











Realised on sale of investments

-

(413)

-

-

-

-

-

-

(413)











Loss on revaluation of investments

-

(58)

-

-

-

-

-

-

(58)











Re-classification of previous impairment

-

125

-

-

-

-

-

-

125











Actuarial gain on defined benefit pension scheme

-

-

-

-

-

-

-

42

42











Transactions with owners




















Share based payments

-

-

-

-

929

-

929

-

929











Purchase of shares for Employee Benefit Trust

-

-

-

-

-

(730)

(730)

-

(730)











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











Comprehensive income




















Loss for the year

-

-

-

-

-

-

-

(961)

(961)











Gain on revaluation of investments

-

368

-

-

-

-

-

-

368











Re-classification of previous impairment

-

2,019

-

-

-

-

-

-

2,019











Actuarial gain on defined benefit pension scheme

-

-

-

-

-

-

-

213

213











Transactions with owners




















Share based payments

-

-

-

-

2,372

-

2,372

-

2,372











Issue of shares

1,868

-

-

-

-

-

-

-

1,868











Movement of shares in  Employee Benefit Trust

-

-

-

-

-

(2,153)

(2,153)

29

(2,124)











Equity dividends paid

-

-

-

-

-

-

-

(5,423)

(5,423)

Balance at 30 June 2011

11,145

9,303

155

1,229

4,452

(2,883)

2,953

18,037

41,438



 Group statement of cash flows

 For the year ended 30 June 2011



2011


2010



£'000


£'000

Operating activities





Profit before tax


162


10,860

 

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





Finance income


(439)


(563)

Finance expense


-


1

Depreciation


180


151

Share of profit of associate


-


(602)

Share-based payments


2,372


929

Gain on disposal of equipment


(6)


-

Gains on disposals of financial assets


(167)


(7,107)

Impairment of financial assets


2,019


125

Movement in pensions


(181)


(52)

(Increase) / decrease in assets


(3,271)


1,215

Increase in liabilities


570


2,441

Cash generated from operations


1,239


7,398

Income taxes paid


(1,545)


(1,057)

Net cash flow from operating activities


(306)


6,341






Investing activities





Finance income received


334


548

Proceeds from sales of available-for-sale financial assets


167


16,057

Proceeds on disposal of equipment


93


-

Payments to acquire plant and equipment


(278)


(178)

Payments to acquire available-for-sale financial assets


(47)


(3,046)

Net cash flow from investing activities


269


13,381






Financing activities





Dividends paid to equity shareholders of the parent


(5,423)


(1,356)

Own shares purchased


(283)


(2,182)

Repayment of borrowings - loan notes repaid


-


(499)

Finance expense paid


-


(14)

Net cash flow from financing activities


(5,706)


(4,051)






(Decrease) / increase in cash and cash equivalents


(5,743)


15,671

Cash and cash equivalents at the beginning of the year


23,237


7,566

Cash and cash equivalents at the end of the year


17,494


23,237



Notes to the Group financial statements

At 30 June 2011

 

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 2011 were authorised for issue by the Board of Directors on 15 September 2011 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 2011.

 

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 two primary divisions: Advisory and Other (Head Office). Fund management activity was discontinued in the previous year. The following table presents revenue and results information regarding the Group's business segments for the years ended 30 June 2011 and 2010.

 

 

 

 

 

Advisory

 

 

 

Other

Year ended 30  June 2011

Total

 

 

 

Advisory

 

 

Fund Management

 

 

 

Other

Year

ended 30

  June 2010

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

Segment revenue

 

14,472

 

272

 

14,744

 

15,452

 

210

 

-

 

15,662

 

Segment profit / (loss) before tax

 

2,358

 

(2,196)

 

162

 

4,336

 

(745)

 

7,269

 

10,860

 

3.             Basic earnings per share is calculated by dividing earnings for the year of £(1.0)m (2010 - £9.3m) attributable to ordinary equity holders of the parent by 4.1m, being the weighted average number of shares in issue during the year (2010 - 4.6m). Diluted earnings per share is calculated by dividing the earnings attributable to ordinary equity holders of the parent by 4.5m, 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 (2010 - 4.8m).

 

4.             In view of the Group's continuing strong liquidity and a satisfactory level of continuing activity, the Directors recommend a final dividend of 22p per share. The final dividend will be paid on 10 November 2011 to shareholders who are on the register on 14 October 2011.

 

5.             The statement of comprehensive income and statement of financial position for the year ended 30 June 2011 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 908p (2010 - 1002p) based on net assets of £41.4m (2010 - £43.1m) and on 4.6m (2010 - 4.3m) ordinary shares being in issue at 30 June 2011 and 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 thirty first Annual General Meeting of the Company will be held at 22-24 Berners Street, London, W1T 3LP on 9 November 2011, at 12 noon.

 


This information is provided by RNS
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