TIDMSGR
RNS Number : 6222J
Shore Capital Group Limited
13 September 2016
Shore Capital Group Limited
("Shore Capital," the "Group" or the "Company")
Interim results for the six months ended 30 June 2016
Shore Capital, the independent investment group specialising in
capital markets, principal finance and asset management, today
announces its interim results for the six months ended 30 June
2016.
Financial highlights
-- Revenue of GBP18.0 million (2015: GBP25.9 million,
GBP16.7 million excluding prior year impact
of licence sales) up 7.8% excluding licence
sales
-- Capital Markets revenues up 4.9% to GBP13.1
million (2015: GBP12.4 million) generating
profit before tax of GBP3.0 million, with
a net margin of 23.0%
-- Asset Management revenues up 7.2% to GBP5.2
million (2015: GBP4.9 million), generating
profit before tax of GBP1.3 million, with
a net margin of 25.0%
-- Profit before tax of GBP2.4 million (2015:
GBP9.5 million)
-- Earnings per share of 6.5p (2015: 20.8p)
Operational highlights
-- Capital Markets advised on four IPOs and five
secondary fundraisings, including the second
largest IPO fundraising of H1 2016, the Main
Market listing of Motorpoint Group plc, raising
GBP100 million
-- Recent client wins included Dairy Crest Group
plc; Chesnara plc; Stride Gaming plc; and Earthport
plc
-- Puma Investments again achieved the largest
limited life VCT fundraising of the tax year
(over half of the total raised in its category)
and significant inflows to its Private Client
Investment offerings continued
-- Brandenburg Realty made its second acquisition
in May 2016 - a EUR32 million commercial and
residential portfolio
Commenting on the results, Howard Shore, Executive Chairman,
said:
"In a first half overshadowed by uncertainty preceding Britain's
referendum on membership of the EU, it is pleasing to see the
progress in our Capital Markets and Asset Management divisions,
demonstrating the growth opportunity when market conditions
improve.
"The market malaise following Britain's vote to leave the EU
appears to be short-lived helped by the speed with which a new
Prime Minister and Cabinet was put in place and businesses and the
investment community are starting to adapt to the new
environment.
"Given our independent status we believe we have the flexibility
to take advantage of the opportunities that Brexit will create. We
hope that Brexit will provide an opportunity to remove some of the
regulations that impede the UK's ability to compete with the rest
of the world."
- Ends -
Enquiries:
Shore Capital +44 (0) 20 7468
Howard Shore, Executive 7911
Chairman +44 (0) 14 8172
Lynn Bruce, Director 8902
Grant Thornton UK LLP
(Nominated Adviser)
Philip Secrett +44 (0) 20 7383
Jamie Barklem 5100
Bell Pottinger (Public
Relations)
Olly Scott
Charles Stewart +44 (0) 20 3772
Georgia Way 2500
About Shore Capital
Shore Capital is an AIM quoted independent investment group.
Founded and majority owned by entrepreneurs, for three decades
Shore Capital has been helping entrepreneurial businesses reach
their full potential, find committed long term investors and
develop into significant enterprises. The business offers
innovative corporate advice; a leading market making business; some
of the most respected investment research available in the UK; and
a diverse range of high quality investment opportunities, including
its hugely successful VCTs and principal finance activities.
The Group is based in Guernsey, London, Liverpool, Edinburgh and
Berlin. Shore Capital Stockbrokers Limited, Shore Capital and
Corporate Limited, Shore Capital Limited and Puma Investment
Management Limited are each authorised and regulated by the
Financial Conduct Authority. Shore Capital Stockbrokers Limited is
a member of the London Stock Exchange.
www.shorecap.gg
Chairman's statement
Introduction
In a first half overshadowed by uncertainty, particularly in the
two months preceding Britain's referendum on membership of the EU,
it is pleasing to see the progress in our Capital Markets and Asset
Management divisions, demonstrating the growth opportunity when
market conditions improve.
Stripping out the sale of German spectrum licenses in June 2015
to more accurately compare performance in 2016 versus 2015, the
Group increased revenues by 7.8%. Revenues from the Capital Markets
division increased by 4.9% to GBP13.1 million (2015: GBP12.4
million) generating profit before tax of GBP3.0 million, with a net
margin of 23.0%. In Asset Management revenues increased 7.2% to
GBP5.2 million (2015: GBP4.9 million), generating profit before tax
of GBP1.3 million, representing a net margin of 25.0% (2015:
24.1%).
In Capital Markets we have added another eight retained clients;
committed new investment to our research and sales capabilities;
and again been active in transactions. The team advised on four
IPOs, including London's second largest listing of the year and
five secondary fundraisings. It acted as joint financial adviser
and joint broker to Market Tech Holdings Limited in connection with
its move from AIM to the Main Market and, post period end, acted
for Poundland Group on its c.GBP600 million offer by Steinhoff
Europe.
We have expanded our core consumer and financial teams whilst
developing our presence in digital technology; media; and house
building and building materials. In market making, we continued to
provide a principal source of liquidity for UK equities throughout
the period, maintaining our position as the third largest market
maker on the London Stock Exchange.
Our Capital Markets business has benefited from its reputation
for high quality advice, ideas and execution. Consequently, there
is much to be optimistic about in our business as market sentiment
improves. In the short term, as the big banks digest the
implications of Brexit for their businesses, there will be
opportunities for the Group. In the longer term, as the
implications of the UK's decision to leave the EU become clearer
and negotiations reach their conclusion, we can also look forward
to the possibility of some EU-originated regulations that stifle
growth in our sector being rolled-back, enabling us to compete more
effectively with the rest of the world.
In Asset Management we again experienced substantial demand for
our private client investment opportunities in VCTs and other
tax-efficient structures; and continued to successfully advise
institutional funds on their investment strategies. The diverse
nature of revenue growth in the Asset Management division reflects
the team's efforts to expand its offering and during the period it
invested in additional operational capacity.
On the institutional advisory side of the Asset Management
division's activities, Brandenburg Realty made its second
acquisition in May 2016 of a EUR32 million commercial and
residential portfolio located in the city of Potsdam near Berlin
and continues to seek additional acquisition opportunities for the
fund.
The latest of our successful Puma VCTs set a new fundraising
record and accounted for over half of all funds raised in the
2015/16 limited life VCT market. Regardless of the tax-efficient
structure into which private clients place their funds, the
asset-backed investment strategy underpinning them has continued to
achieve considerable success. With the withdrawal from our market
of mainstream banks, our approach to SME funding continues to enjoy
high demand, such that we have invested to expand our capabilities,
underpinning continued growth in our private client activities.
It is also worth noting the success of Puma's AIM IHT Service, a
discretionary portfolio that seeks to mitigate Inheritance Tax by
investing in carefully selected AIM shares. It celebrated its two
year anniversary at the end of the period, over which time it has
delivered a 21.9% return, outperforming the FTSE AIM All Share
Index by 31.8%.
Finally, in Principal Finance, having realised significant gains
from the sale of a number of licences in 2015, DBD continues to
hold its remaining 32 regional radio spectrum licences which cover
many of Germany's largest metropolitan centres - including Berlin,
Leipzig, Dresden, Düsseldorf and Hanover.
Financial review
Income and expenditure
Revenue for the period decreased by 30.6% to GBP18.0 million
(2015: GBP25.9 million) whilst administrative expenses decreased by
4.9% to GBP15.5 million (2015: GBP16.3 million), generating an
operating profit of GBP2.5 million (2015: GBP9.6 million). Group
profit before tax decreased by 74.5% to GBP2.4 million (2015:
GBP9.5 million). Comparisons to the prior year are impacted by the
sale of spectrum licences in June 2015; excluding this sale,
revenue for the period increased 7.8% year-on-year.
Revenue from the Capital Markets division increased by 4.9% to
GBP13.1 million (2015: GBP12.4 million). Profit before tax was down
1.4% to GBP3.0 million (2015: GBP3.1 million), with a net margin of
23.0% (2015: 24.7%).
Revenue from the Asset Management division was up 7.2% to GBP5.2
million (2015: GBP4.9 million), generating profit before tax of
GBP1.3 million (up 11.2% from 2015: GBP1.2 million), representing a
net margin of 25.0% (2015: 24.1%).
The Principal Finance division recorded a pre-tax loss of GBP1.2
million (2015: profit of GBP5.8 million).
Basic earnings per share
The Group generated basic earnings per share of 6.5p (2015:
20.8p).
Comprehensive earnings per share
On a comprehensive basis, the Group generated earnings of 7.6p
per share (2015: 21.2p).
Liquidity
As at the balance sheet date, available liquidity was GBP24.8
million (2015: GBP39.1 million), comprising GBP16.0 million (2015:
GBP37.4 million) of cash and GBP8.8 million (2015: GBP1.7 million)
of gilts and bonds. In addition, the Group has a GBP20 million
working capital facility which was undrawn at the period end.
This liquidity underpins the Group's continuing ability to
undertake a range of transactions as opportunities arise in the
near term.
Balance sheet
The Group's balance sheet remains strong. Total equity at the
period end was GBP66.9 million (2015: GBP78.2 million), the
reduction reflecting both a capital distribution to equity
shareholders of GBP10 million and the minority interest share of a
capital distribution paid by Spectrum Investments at the end of
2015.
In addition to the GBP16.0 million of cash and GBP8.8 million of
gilts and bonds (as referred to above), at the period end the Group
held GBP2.9 million in various of its Puma Funds; GBP2.9 million
net in quoted equities; and a further GBP3.8 million in other
unquoted holdings.
The remainder of the balance sheet was GBP32.5 million net,
which included GBP23.5 million of net market and other debtors in
the Company's stockbroking subsidiary. In addition, the remaining
licences held in Spectrum Investments were valued at GBP2.1 million
(on a gross basis, before allowing for minority interests).
Net Asset Value per Share
Net asset value per share at the period end was 270.3p (2015:
277.7p).
Dividend
The Board does not propose to pay an interim dividend for the
period (2015: nil).
Operating review
Capital Markets
Overview
The Capital Markets division recorded a successful first half of
2016, increasing revenues in a tough market environment; growing
its client base; and developing its service offering.
The team participated in a significant number of high-profile
transactions, including the second largest London IPO in the second
quarter, as well as adding eight new retained corporate clients.
Post period end the team acted for Poundland Group plc on its
c.GBP600 million offer by Steinhoff Europe AG.
Additional investment has been made to augment our research and
distribution proposition, enhancing our sector coverage across core
consumer; financials; digital technology; media; and house building
and building materials.
Our Market Making business has performed well in the face of
substantial market headwinds, delivering a good level of
profitability and providing a key source of liquidity.
The Fixed Income business has already made a positive
contribution to the Group, having been profitable from its
beginning, widening the Group's range of capital raising options
for clients.
The business continues to invest in high calibre individuals and
teams where the Company identifies opportunities for incremental
growth.
Corporate Finance
During the period under review the team has been very active and
participated in a number of significant transactions including four
IPOs and five secondary fundraisings. Notable transactions
completed during the period included:
-- acting as co-bookrunner on the Main Market
IPO of Motorpoint Group plc, the second largest
IPO in London in Q2, raising GBP100 million;
-- acting as joint bookrunner on the placing by
Vernalis plc, raising GBP40 million; and
-- acting as nominated adviser and sole broker
on the IPOs of Cerillion plc and Yü Group
plc.
In the advisory space, the team acted as joint financial adviser
and joint broker to Market Tech Holdings Limited in connection with
its move from AIM to the Main Market.
The Company continues to achieve success in growing its retained
client list and during the period added eight new retained
corporate clients, including FTSE 250 Dairy Crest Group plc,
Chesnara plc, Stride Gaming plc, and Earthport plc.
Research and Sales
The team's equity capital research and idea generation continued
to grow its presence and reputation for high quality in challenging
market conditions. The solidity, experience and stability of the
Shore Capital research and sales team is increasingly valued by the
investment community where insight and opinions from established
market practitioners is appreciated.
The breadth and depth of our equity research continues to
increase. We have expanded our core consumer and financial teams
whilst developing our presence in digital technology; media; and
house building and building materials. The capability of our
research team is evident in fund manager surveys where Shore
Capital scores highly in general and across our core sectors in
Thomson Extel; the quality of our forecasts and our stock picking
continued to be recognised by Starmine.
The strong profile and warm reception for Shore Capital's
overall research and distribution proposition also supports the
Company's primary activities where we remain very active in our
core segments. Strong primary activity in the healthcare, retail,
natural resources and technology segments plus key brokership wins
in the financial sector reflect the brand's growing presence in
corporate markets.
Market Making
Despite difficult market conditions in the first half of the
year, the Group's market making operation performed well,
maintaining revenue and profits in line with the previous year.
Trading volumes were 11% higher than the first half of 2015, a very
commendable result in light of market uncertainty ahead of the
Brexit vote.
The team positioned its inventory prudently throughout the
period, including the period leading up to the Brexit vote,
enabling us to provide significant liquidity in the immediate
aftermath of the referendum result.
Although clearly sensitive to the overall market environment,
Shore Capital remains focused and adaptable to changes in trading
conditions and to the needs of clients. Market Making operations
continue to benefit from the team's wide stock coverage and its
reputation as a strong and trusted counterparty. The market making
team comprises highly experienced traders who are able to identify
revenue opportunities despite challenging market conditions, whilst
operating within a risk framework that ensures loss days are a rare
occurrence.
Fixed Income
The fixed income team enjoyed their first full six month period
within the Group following their move from Edmond de Rothschild in
late 2015 and has performed very credibly, making a positive
contribution in what has been a highly challenging environment.
The fixed income team's extensive experience enables the Group
to offer its clients a fuller range of financing options for
mid-sized corporates, creating exciting opportunities for growth in
the Capital Markets business.
Asset Management
Overview
The Asset Management division enjoyed notable successes during
the period across both its Institutional and Private Client
businesses.
In the Institutional business Brandenburg Realty completed its
second acquisition for EUR32 million in the period. Puma
Brandenburg completed a EUR90 million refinancing as well as making
other advances in implementing its strategic objectives.
The Private Client division again achieved a record-breaking
fundraise for its latest VCT, Puma VCT 12, as well as securing and
allotting significant inflows to the Puma EIS Service. Puma
Heritage and the Puma AIM Inheritance Tax Service celebrated their
third and second anniversaries respectively, both continuing to
deliver impressive levels of return for investors.
Institutional Asset Management
Brandenburg Realty
Brandenburg Realty (the "Fund") completed its final close on 30
June 2015, raising EUR150 million from institutional investors and
family offices, (predominantly from the United States) and includes
a co-investment commitment of EUR7.7 million from Puma Brandenburg
Limited. Shore Capital has also made a commitment of EUR12.5
million to the Fund and is providing advisory services at a local
level, deploying its significant experience gained through the
Group's work with Puma Brandenburg. The Fund focuses on German real
estate, primarily on the acquisition of well-located, high quality
residential buildings and offices in major German cities,
especially in Berlin.
During the period, the Fund made its second acquisition in May
2016 of a EUR32 million commercial and residential portfolio
located in the city of Potsdam near Berlin. This portfolio benefits
from high quality commercial tenants and the possibility to develop
additional residential space. The asset advisory team is assisting
the Fund to implement the agreed strategy for this asset. In
parallel we continue to seek and recommend additional acquisition
opportunities for the Fund.
Puma Brandenburg Limited ("PBL")
The Group has continued to assist PBL to achieve significant
success across its portfolio.
Achievements in the period with which the Group has assisted PBL
include:
-- the planning and execution of a capital project
to add and enlarge conference and food and
beverage facilities at the Hyatt Regency, Cologne.
These works, which are co-funded by Hyatt,
commenced in June 2016.
-- the successful drawdown in June 2016 of an
eight year, EUR90 million loan facility for
the refinancing of a commercial portfolio.
The portfolio includes the Hyatt Regency Cologne
and IBIS Nuremberg and was refinanced with
an all-in cost of 2.19%, including the cost
of an eight year swap; and
-- the execution of a further framework agreement
for the refurbishment of four Lidl stores and
the sale of three other stores to Lidl for
EUR5.75 million.
St Peter Port Capital ("SPPC")
SPPC announced its results for the year ended 31 March 2016 on 4
July 2016. As at that date, it had investments in 19 companies and
reported that it had generated GBP588,000 from realisations since 1
April 2015.
The company reported that the majority of value in its
investment portfolio now resided in its five largest investments
and that whilst management of each of these five companies were
delivering against their own milestones, each company remained
susceptible to geo-political and/or financing challenges which were
likely to determine their future success.
SPPC continues to seek liquidity opportunities and recognises
that the majority of its shareholders will likely vote next year
for an orderly winding-up of the company or for some other
mechanism which will deliver shareholder value.
Private Client Investments
The Group's private client investments business, Puma
Investments, continues to make exciting progress. Of particular
note are the successful launch of Puma VCT 12, which closed during
the period having raised GBP31 million - accounting for more than
half of the total funds raised in the limited-life VCT market in
the 2015/16 tax year - and the continued expansion of Puma EIS,
which was fully subscribed for the same period and now has GBP40
million in the service.
Puma Venture Capital Trusts ("VCTs")
The Group's Puma VCTs are each limited-life vehicles, aiming to
distribute the initial capital and returns to their investors after
five years. Since 2005 over GBP220 million has been raised for Puma
VCTs and GBP85 million has been distributed to their
shareholders.
Puma's market-leading VCT track record is reflected in the fact
that the most recently fully distributed fund, Puma VCT V, is the
most successful limited-life VCT in the 20 year history of the
industry. Puma VCTs 1 to 4 have each produced the highest total
return of their respective peer groups. The current stable of funds
are all performing well and have paid out tax-free dividends of
between 5p and 7p per annum to shareholders.
Puma VCT 12 closed for subscriptions during the period, raising
GBP31 million which accounted for more than half of the total funds
raised in the limited-life VCT market in the 2015/16 tax year. The
Group considers this fundraising to be a considerable achievement
and an endorsement of Puma's standing in the VCT sector. The
business is pleased to be launching its latest VCT for the current
tax year, Puma VCT 13, and hopes to capitalise on its strong track
record.
Puma Heritage plc
Puma Heritage was launched in June 2013 to operate in a range of
sectors, with a primary focus on secured lending. It focuses on
capital preservation, whilst seeking to produce regular returns for
shareholders intended to counter long-term inflationary pressures.
An investment in Puma Heritage is intended to benefit from 100%
relief from Inheritance Tax after two years.
The company celebrated its third anniversary in June 2016,
having recorded a significant acceleration in its net asset value
("NAV") during the period. Subscriptions from new shareholders and
good levels of return generated from its diversified loan book have
increased the NAV of the company to GBP25 million. The business has
a strong pipeline of loans to deploy current and future funds and
remains optimistic about the prospects for further NAV growth over
the coming months and years.
During the period, Puma Investments advised Puma Heritage plc on
the completion of several asset-backed loans across a number of
sectors, all secured with a first charge over real estate at
conservative lending ratios. The team continues to assist the
business, helping it to source and analyse new lending
opportunities. Puma Heritage remains open for investment and having
reached critical mass, is in a position to grow more rapidly.
Puma EIS
The Puma EIS portfolio service (the "EIS Service") was launched
in November 2013 to offer investors the opportunity to invest in
asset-backed Enterprise Investment Scheme qualifying companies
utilising the team's strong track record and expertise in
asset-backed investing gained from their experience running the
Puma VCTs. Fundraising continued successfully through the 2015/16
tax year, raising the amount in the EIS Service to GBP40
million.
All of these funds were successfully allotted into qualifying
companies ahead of the tax year end in their relevant year. The
total amount in the EIS Service is now at GBP40 million with
fundraising for the current year running ahead of the equivalent
period in the previous year. The EIS Service has a good pipeline of
deployment opportunities and remains open for investment.
Puma AIM Inheritance Tax Service
The Puma AIM IHT Service (the "IHT Service") is a discretionary
portfolio service that seeks to mitigate Inheritance Tax by
investing in a carefully selected portfolio of AIM shares and is
particularly attractive for those that wish to invest via an ISA.
It celebrated its two year anniversary at the end of June 2016,
over which time it has delivered a 21.9% return, outperforming the
FTSE AIM All Share Index by 31.8%.
The IHT Service has grown customers and client assets during the
period. Equity market volatility at the end of the period as a
result of the EU referendum has not helped performance in UK
focused smaller companies; however, the IHT Service's comparative
performance against benchmark indices remains strong and we
continue to be confident of growing the service given our
impressive track record since inception and the significant
potential tax benefits for clients.
Principal Finance
Investment in German Telecoms Business
DBD is an entity that holds radio spectrum licences in Germany
in the 3.5 GHz frequency range, which is increasingly being
deployed around the world by regulators, equipment manufacturers
and operators as a frequency for 4G services. DBD is owned by
Spectrum Investments Limited, ("Spectrum") in which the Group holds
a 59.9% interest.
Having realised significant gains from the sale of a number of
licences in 2015, DBD continues to hold its remaining 32 regional
radio spectrum licences which cover many of Germany's largest
metropolitan centres - including Berlin, Leipzig, Dresden,
Düsseldorf and Hanover. The Company remains in discussions with the
German Telecoms Regulator regarding the status of the licences and
is in the process of presenting its plans for their potential
future utilisation. Shareholders will be updated in due course.
Current trading and prospects
The market malaise following Britain's vote to leave the EU
appears to be short-lived helped by the speed with which a new
Prime Minister and Cabinet was put in place and businesses and the
investment community are starting to adapt to the new
environment.
Given our independent status we believe we believe we have the
flexibility to take advantage of the opportunities that Brexit will
create. We hope that Brexit will provide an opportunity to remove
some of the regulations that impede the UK's ability to compete
with the rest of the world.
Howard P Shore
Executive Chairman
13 September 2016
Independent review report to Shore Capital Group Limited (the
"Group")
We have been engaged by Shore Capital Group Limited to review
the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2016 which
comprises the consolidated income statement, the consolidated
statement of comprehensive income, the consolidated statement of
financial position, the consolidated statement of changes in
equity, the consolidated cash flow statement and related notes 1 to
8. We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the Group in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. Our work has been undertaken so that we
might state to the Group those matters we are required to state to
it in an independent review report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Group, for our review work,
for this report, or for the conclusions we have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report as required by the
AIM rules issued by the London Stock Exchange and the Bermuda Stock
Exchange.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Group a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2016 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union, and the AIM rules of the London Stock Exchange.
Deloitte LLP
Chartered Accountants
Guernsey, Channel Islands
13 September 2016
Consolidated Income Statement
For the six months ended 30 June 2016 (unaudited)
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2015
2016 2015
Notes GBP'000 GBP'000 GBP'000
Revenue 3 17,988 25,912 41,952
Administrative expenditure (15,490) (16,325) (30,129)
Operating profit 2,498 9,587 11,823
----------- ----------- -------------
Interest income 102 109 191
Finance costs (159) (151) (317)
Profit before taxation 3 2,441 9,545 11,697
----------- ----------- -------------
Taxation (628) (607) (1,002)
Profit for the period 1,813 8,938 10,695
=========== =========== =============
Attributable to:
Equity holders of the
parent 1,407 5,028 6,445
Non controlling interests 406 3,910 4,250
1,813 8,938 10,695
=========== =========== =============
Earnings per share
Basic 4 6.5p 20.8p 27.1p
Diluted 4 6.2p 20.1p 26.1p
Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2016 (unaudited)
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2015
2016 2015
GBP'000 GBP'000 GBP'000
Profit for the period 1,813 8,938 10,695
----------- ----------- -------------
Losses on revaluation
of available-for-sale
investments taken to equity (128) (22) (66)
----------- ----------- -------------
(Losses)/ Gains on cash
flow hedges (210) (19) 31
Taxation 42 4 (6)
----------- ----------- -------------
(168) (15) 25
Exchange difference on
translation of foreign
operations 777 (2) 186
Other comprehensive income
for the period, net of
tax, from continuing operations 609 (17) 211
----------- ----------- -------------
Total comprehensive income
for the period, net of
tax 2,294 8,899 10,840
=========== =========== =============
Attributable to:
Equity holders of the
parent 1,658 5,116 6,599
Non controlling interests 636 3,783 4,241
2,294 8,899 10,840
=========== =========== =============
Comprehensive earnings
per share
Basic 7.6p 21.2p 27.7p
Diluted 7.4p 20.4p 26.7p
Consolidated Statement of Financial Position
As at 30 June 2016 (unaudited)
Notes As at As at As at
30 June 30 June 31 December
2016 2015 2015
GBP'000 GBP'000 GBP'000
Non-current assets
Goodwill 381 381 381
Intangible assets 2,091 1,771 1,841
Property, plant
& equipment 11,721 10,457 10,864
Available-for-sale
investments 7,020 3,331 6,341
Deferred tax asset - 275 128
21,213 16,215 19,555
---------- --------- -------------
Current assets
Trading assets 12,121 7,388 9,344
Trade and other
receivables 124,974 89,856 71,739
Derivative financial
instruments - 77 54
Cash and cash equivalents 15,988 37,435 22,113
153,083 134,756 103,250
---------- --------- -------------
Total assets 3 174,296 150,971 122,805
---------- --------- -------------
Current liabilities
Trading liabilities (773) (1,478) (946)
Trade and other
payables (94,085) (60,875) (43,998)
Derivative financial
instruments (688) - (187)
Tax liabilities (805) (708) (481)
Borrowings (401) (338) (360)
(96,752) (63,399) (45,972)
---------- --------- -------------
Non-current liabilities
Borrowings (10,110) (8,858) (9,256)
Deferred tax liability (318) - -
Provision for liabilities
and charges (176) (507) (535)
(10,604) (9,365) (9,791)
Total liabilities 3 (107,356) (72,764) (55,763)
---------- --------- -------------
Net Current Assets 56,331 71,357 57,278
Net Assets 66,940 78,207 67,042
========== ========= =============
Equity
Capital and Reserves
Called up share - - -
capital
Share premium account 336 336 336
Merger reserve 17,151 27,198 17,151
Other reserves 1,402 2,177 2,164
Retained earnings 39,955 37,389 38,845
Equity attributable
to equity holders
of the parent 58,844 67,100 58,496
Non controlling
interests 8,096 11,107 8,546
Total equity 66,940 78,207 67,042
========== ========= =============
Consolidated Statement of Changes in Equity
For the six months ended 30 June 2016 (unaudited)
Share Share Merger Other Retained Non Total
capital Premium reserve reserves earnings Controlling
account interests
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2015 - 336 27,198 2,260 34,391 8,236 72,421
Retained profit
for the period - - - - 5,028 3,910 8,938
Revaluation of
available for
sale investments - - - (22) - - (22)
Foreign currency
translation - - - - 122 (124) (2)
Valuation change
on cash flow hedge - - - (12) - (3) (15)
Total comprehensive
income - - - (34) 5,150 3,783 8,899
Decrease in deferred
tax asset - - - (54) - - (54)
Equity dividends
paid - - - - (1,208) - (1,208)
Dividends paid
to non controlling
interests - - - - (944) (998) (1,942)
Credit in relation
to share based
payments - - - 5 - - 5
Investment by
non controlling
interest in subsidiaries
other than Spectrum - - - - - 86 86
At 30 June 2015 - 336 27,198 2,177 37,389 11,107 78,207
========== ========= ========= ========== ========== ============= =========
Share Share Merger Other Retained Non Total
capital Premium reserve reserves earnings Controlling
account interests
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 30 June 2015 - 336 27,198 2,177 37,389 11,107 78,207
Retained profit
for the period - - - - 1,417 340 1,757
Revaluation of
available for
sale investments - - - (44) - - (44)
Foreign currency
translation - - - - 78 110 188
Valuation change
on cash flow hedge - - - 37 - 9 46
Tax on cashflow
hedge - - - (5) - (1) (6)
Total comprehensive
income - - - (12) 1,495 458 1,941
Dividends paid
to non controlling
interests - - - - 17 (17) -
Repurchase/cancellation
of Own shares - - (10,047) - - - (10,047)
Capital distribution
from Spectrum
to non controlling
interests - - - - - (3,316) (3,316)
Credit in relation
to share based
payments - - - (1) - - (1)
Investment by
non controlling
interest in subsidiaries
other than Spectrum - - - - - 258 258
Adjustment arising
in non controlling
interest - - - - (56) 56 -
At 31 December
2015 - 336 17,151 2,164 38,845 8,546 67,042
========== ========= ========= ========== ========== ============= =========
Consolidated Statement of Changes in Equity
For the six months ended 30 June 2016 (unaudited)
(continued)
Share Share Merger Other Retained Non Total
capital Premium reserve reserves earnings Controlling
account interests
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2016 - 336 17,151 2,164 38,845 8,546 67,042
Retained profit
for the year - - - - 1,407 406 1,813
Revaluation
of available
for sale investments - - - (128) - - (128)
Foreign currency
translation - - - - 537 240 777
Valuation change
on cash flow
hedge - - - (199) - (11) (210)
Tax on cash
flow hedge - - - 40 - 2 42
Total comprehensive
income - - - (287) 1,944 637 2,294
Decrease in
deferred tax
asset recognised
directly in
equity - - - (475) - - (475)
Dividends paid
to non controlling
interests - - - - (834) (1,225) (2,059)
Investment by
non controlling
interest in
subsidiaries - - - - - 138 138
At 30 June 2016 - 336 17,151 1,402 39,955 8,096 66,940
========== ========= ========= ========== ========== ============= ========
Consolidated Cash Flow Statement
For the six months ended 30 June 2016 (unaudited)
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2015
2016 2015
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Operating profit 2,498 9,587 11,823
Adjustments for:
Depreciation charges 495 487 977
Amortisation charges - 63 62
Share-based payment expense - 5 4
Loss on available-for-sale
investments (135) 993 1,142
Other profit on sale of
intangibles - - (9,207)
Decrease in provision
for NIC on options (359) (28) -
Operating cash flows before
movement in working capital 2,499 11,107 4,801
Increase in trade and
other receivables (53,181) (29,821) (11,681)
Increase in trade and
other payables 50,378 30,871 14,231
(Increase)/decrease in
bear positions (173) 632 100
Increase in bull positions (2,777) (1,277) (4,708)
Cash (utilised)/generated
by operations (3,254) 11,512 2,743
Interest paid (159) (151) (317)
Corporation tax paid (291) (1,167) (1,652)
Net cash (utilised)/generated
by operating activities (3,704) 10,194 774
----------- ----------- -------------
Cash flows from investing
activities
Purchases of fixed assets (283) (579) (363)
Sale of intangible assets - - 10,680
Purchase of AFS investments (707) - (3,750)
Sale of AFS investments 35 37 -
Interest received 102 109 191
Net cash utilised by investing
activities (853) (433) 6,758
----------- ----------- -------------
Cash flows from financing
activities
Investment in non controlling
interest in subsidiaries 138 86 344
Repurchase of shares - - (10,047)
Capital distribution to
non controlling interest - - (3,316)
Decrease in borrowings (200) (169) (360)
Dividends paid to non
controlling interests (2,059) (1,942) (1,942)
Dividends paid to Equity
Holders - (1,208) (1,208)
Net cash utilised by financing
activities (2,121) (3,233) (16,529)
----------- ----------- -------------
Net (decrease)/increase
in cash and cash equivalents
during the period (6,678) 6,528 (8,997)
Effects of exchange rate
changes 553 249 452
Cash and cash equivalents
at beginning of period 22,113 30,658 30,658
----------- ----------- -------------
Cash and cash equivalents
at end of period 15,988 37,435 22,113
=========== =========== =============
Notes to the Interim Financial Report
For the six months ended 30 June 2016 (unaudited)
1. Financial information
Basis of preparation
The annual financial statements of Shore Capital Group Limited
(the "Group") are prepared in accordance with International
Financial Reporting Standards as adopted by the European Union. The
condensed set of financial statements included in this interim
financial report for the period ended 30 June 2016 has been
prepared in accordance with International Accounting Standard 34
"Interim Financial Reporting", as adopted by the European
Union.
The information for the year ended 31 December 2015 does not
constitute statutory accounts. The Annual Report and Accounts of
the Group were issued on 30 March 2016. The auditor's report on
those accounts was not qualified and did not include a reference to
any matters to which the auditors drew attention by way of emphasis
without qualifying the report.
Going concern
The group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Chairman's Statement, together with the
financial position of the Group, its liquidity position and
borrowing facilities. In addition, the principal risks and
uncertainties of the Group are discussed in note 2 to this interim
financial report.
The Group has considerable financial resources together with an
established business model. As a consequence, the directors believe
that the Group is well placed to manage its business risks
successfully.
After making enquiries, the directors have a reasonable
expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in
preparing the financial statements.
Significant accounting policies
The same accounting policies, presentation and methods of
computation are followed in the condensed set of financial
statements as are applied in the Group's latest audited Annual
Report and Accounts for the year ended 31 December 2015.
2. Principal risks and uncertainties
The Group's policies for managing the risks arising from its
activities are set out in the last audited Annual Report and
Accounts of the group that were issued on 30 March 2016. The
Group's activities comprise equity market activities and investment
in alternative assets and property, and its income is therefore
subject to the level of general activity, sentiment and market
conditions in each of the markets in which it operates.
3. Segmental information
For management purposes, the Group is organised into business
units based on their services, and has four reportable operating
segments as follows:
-- Capital Markets provides research in selected
sectors, broking for institutional and professional
clients, market-making in AIM and small cap
stocks, fixed income broking and corporate
finance for mid and small cap companies.
-- Asset Management provides advisory services,
and manages specialist funds.
-- Central Costs comprises the costs of the Group's
central management team and structure.
-- Principal Finance comprises investments and
other holdings acquired, together with principal
finance activities conducted, using our own
balance sheet resources.
Management monitors the operating results of its business units
separately for the purpose of making decisions about resource
allocation and performance assessment. Segmental performance is
evaluated based on operating profit or loss. Transfer prices
between operating segments are on an arm's-length basis in a manner
similar to transactions with third parties.
6 months ended Capital Asset Central Principal Consolidated
30 June 2016 Markets Management costs Finance
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 13,059 5,200 - (271) 17,988
========= ============ ======== ========== =============
Profit/(loss)
before tax 3,004 1,300 (690) (1,173) 2,441
========= ============ ======== ========== =============
Assets 125,281 6,210 1,685 41,120 174,296
========= ============ ======== ========== =============
Liabilities (95,874) (2,726) (808) (7,948) (107,356)
========= ============ ======== ========== =============
6 months ended Capital Asset Central Principal Consolidated
30 June 2015 Markets Management costs Finance
GBP'000 GBP'000 GBP'000
Revenue 12,449 4,853 - 8,610 25,912
========= ============ ======== ========== =============
Profit/(loss)
before tax 3,076 1,169 (485) 5,785 9,545
========= ============ ======== ========== =============
Assets 81,694 6,283 1,977 61,017 150,971
========= ============ ======== ========== =============
Liabilities (51,528) (4,192) (151) (16,893) (72,764)
========= ============ ======== ========== =============
Year ended 31 Capital Asset Central Principal Consolidated
December 2015 Markets Management costs Finance
GBP'000 GBP'000 GBP'000
Revenue 23,350 9,500 - 9,102 41,952
========= ============ ======== ========== =============
Profit/(loss)
before tax 4,693 2,653 (788) 5,139 11,697
========= ============ ======== ========== =============
Assets 76,213 5,522 1,746 39,324 122,805
========= ============ ======== ========== =============
Liabilities (44,775) (2,229) (68) (8,691) (55,763)
========= ============ ======== ========== =============
4. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following:
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2015
2016 2015
Earnings (GBP) 1,407,000 5,028,000 6,445,000
=========== =========== =============
Number of shares
Basic
Weighted average number
of shares 21,768,791 24,164,000 23,796,516
Diluted
Dilutive effect of share
option scheme 787,412 904,296 902,128
22,556,203 25,068,296 24,698,644
=========== =========== =============
Earnings per share
Basic 6.5p 20.8p 27.1p
=========== =========== =============
Diluted 6.2p 20.1p 26.1p
=========== =========== =============
5. Dividends paid
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2015
2016 2015
GBP'000 GBP'000 GBP'000
Amounts recognised as distributions
to equity holders in the
period:
Final dividend for the
year ended 31 December
2014 of 5.0p per share - 1,208 1,208
1,208 967 2,175
========== ========== ============
6. Called up share capital
Shore Capital Group Limited - Number GBP'000
ordinary shares of nil par value of shares
At 1 January 2015 and 30 June 24,164,000 -
2015
Shares repurchased and cancelled (2,395,209) -
------------ --------
At 31 December 2015 and 30 June 21,768,791 -
2016
============ ========
7. Events after the period
There were no significant events subsequent to the period
end.
8. Financial instruments
Fair value of financial instruments
Fair value is the amount for which an asset could be exchanged,
or a liability settled, between knowledgeable, willing parties in
an arm's length transaction.
For trading portfolio assets and liabilities, financial assets
and liabilities designated at fair value and financial investments
available-for-sale which are listed or otherwise traded in an
active market, for exchange-traded derivatives, and for other
financial instruments for which quoted prices in an active market
are available, fair value is determined directly from those quoted
market prices (level 1).
For financial instruments which do not have quoted market prices
directly available from an active market, fair values are estimated
using valuation techniques, based wherever possible on assumptions
supported by observable market prices or rates prevailing at the
Balance Sheet date (level 2). This is the case for some unlisted
investments and other items which are not traded in active
markets.
For some types of financial instruments, fair values cannot be
obtained directly from quoted market prices, or indirectly using
valuation techniques or models supported by observable market
prices or rates. This is the case for certain unlisted investments.
In these cases, fair value is estimated indirectly using valuation
techniques for which the inputs are reasonable assumptions, based
on market conditions (level 3).
30 June 2016 Level Level Level
1 2 3
Quoted Market Non-market Total
market observable observable
price inputs inputs
GBP'000 GBP'000 GBP'000 GBP'000
Available-for-sale
financial investments 1,191 - 5,829 7,020
Trading assets 12,121 - - 12,121
Total financial assets 13,312 - 5,829 19,141
======== ============ ============ ========
Trading liabilities 773 - - 773
Financial instruments - 688 - 688
Total financial liabilities 773 688 - 1,461
======== ============ ============ ========
30 June 2015 Level Level Level
1 2 3
Quoted Market Non-market Total
market observable observable
price inputs inputs
GBP'000 GBP'000 GBP'000 GBP'000
Available-for-sale
financial investments 2,131 - 1,200 3,331
Trading assets 4,246 - 3,142 7,388
Derivative financial
instruments - 77 - 77
Total financial assets 6,377 77 4,342 10,796
======== ============ ============ ========
Trading liabilities 1,478 - - 1,478
Total financial liabilities 1,478 - - 1,478
======== ============ ============ ========
31 December 2015 Level Level Level
1 2 3
Quoted Market Non-market Total
market observable observable
price inputs inputs
GBP'000 GBP'000 GBP'000 GBP'000
Available-for-sale
financial investments 1,298 - 5,043 6,341
Trading assets 9,344 - - 9,344
Derivative financial
instruments - 54 - 54
Total financial assets 10,642 54 5,043 15,739
======== ============ ============ ========
Trading liabilities 946 - - 946
Derivative financial
instruments - 187 - 187
Total financial liabilities 946 187 - 1,133
======== ============ ============ ========
Included in the fair value of financial instruments carried at
fair value in the statement of financial position are those
estimated in full or in part using valuation techniques based on
assumptions that are not supported by market observable prices or
rates (level 3). For such financial instruments, the Directors have
generally made reference to published net asset values (derived the
manager of such instruments) and used judgement over the use of
those net asset values. The net asset values are generally derived
from the underlying portfolios which are themselves valued using
unobservable inputs. The significant unobservable inputs comprise
the long term revenue growth rate, long term pre-tax operating
margin and discounts for lack of marketability. A change in any of
these inputs may result in a change in the fair value of such
investments.
There have been no significant movements between level 1 and
level 2 during the period.
The following table shows a reconciliation of the opening and
closing amount of Level 3 financial assets and liabilities which
are recorded at fair value:
At 1 Gains Purchases Sales At 30
January recorded and transfers and transfers June
2016 in profit 2016
or loss
Total financial
assets 5,043 635 186 (35) 5,829
========= =========== =============== =============== ======
Based on the established fair value and model governance
policies and the related controls and procedural safeguards the
Group employs, management believe the resulting estimates in fair
values recorded in the statement of financial position are
reasonable and the most appropriate at the Balance Sheet date.
The interim report will be posted in due course to shareholders
on the register. Further copies of this report are available on the
Company's website at www.shorecap.gg.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR VLLFFQKFXBBQ
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