TIDMSGR
RNS Number : 8120A
Shore Capital Group Limited
29 March 2017
Shore Capital Group Limited
("Shore Capital", the "Group", or the "Company")
Preliminary Results for the Year Ended 31 December 2016
Record Capital Markets performance defies year of geopolitical
surprises
Shore Capital, the independent investment group specialising in
capital markets, principal finance and asset management, today
announces its preliminary results for the year ended 31 December
2016.
Financial highlights
-- Revenue up 21% to GBP39.4 million (2015 Adjusted(1)
: GBP32.6 million)
o Capital Markets revenues up 21% to GBP28.3
million
o Asset Management revenues up 10% to GBP10.4
million
-- Profit before tax and impairments of GBP5.1
million(2) (2015 Adjusted(1) : GBP4.3 million)
-- Earnings per share before impairments of 13.4p(3)
(2015 Adjusted(1) : 12.1p)
(1) 2015 Adjusted figures exclude the impact of Spectrum licence
sales in 2015. (2015 Statutory Revenue: GBP42.0 million)
(2) Statutory profit before tax of GBP2.4 million (2015: GBP11.7
million)
(3) Statutory earnings per share of 6.0p (2015: 27.1p)
Operational highlights
-- Capital Markets advised on four IPOs, the
largest AIM fundraise of 2016 for Sirius Minerals
plc and Poundland Group plc's GBP600 million
takeover by Steinhoff International
-- Won 11 new clients, including 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)
-- Puma AIM Inheritance Tax Service named Best
AIM Investment Manager at 2016's Growth Investor
Awards
Commenting on the results, Howard Shore, Chairman, said:
"Despite the market uncertainty immediately pre-and-post the
Brexit vote, and the period leading up to the US Presidential
election, I am delighted by the performance of our Capital Markets
business and the strong progress made in our Asset Management
division.
"We have seen companies wanting to get on with growing their
businesses and institutions that want to buy into them. That cannot
happen in a vacuum, demonstrating that markets are again open for
business, focusing on the fundamentals of the deal, rather than
market participants sitting on their hands and worrying about
uncertainty.
"Having led the Group's growth and development for 32 years I am
relinquishing my operational responsibilities as Group Chief
Executive whilst remaining Chairman to focus on our international
investment strategy, including developing new relationships as well
as investment opportunities. Simon Fine and David Kaye have worked
closely with me for many years and I am delighted that they have
agreed to lead the Group's future development as Joint Chief
Executives. Our independence puts us in an ideal place to make the
most of the opportunities that will arise as market conditions
improve."
Enquiries:
+44 (0) 20 7468
Shore Capital 7911
Howard Shore, Chairman +44 (0) 14 8172
Lynn Bruce, Director 8902
Grant Thornton UK LLP
(Nominated Adviser)
Philip Secrett
Jamie Barklem +44 (0) 20 7383
Carolyn Sansom 5100
Bell Pottinger (Public
Relations)
James Henderson +44 (0) 20 3772
Jonathan Hodgkinson 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
Despite the market uncertainty immediately pre-and-post the
Brexit vote, and the period leading up to the US Presidential
election, I am delighted by the performance of our Capital Markets
business and the strong progress made in our Asset Management
division.
On a reported basis the Group's performance includes the
year-on-year comparison of 2015, during which it sold German
spectrum licences. Setting the licence sale to one side, Group
revenues grew by 21% to GBP39.4 million.
Of particular note is the excellent performance in our Capital
Markets business, where revenues grew 21% to GBP28.3 million;
profits rose 45% to GBP6.8 million; and net margins increased to
24%. This performance was driven by the addition of 11 new retained
corporate clients, including Dairy Crest Group plc; and the team's
work on an array of capital markets transactions, including four
IPOs, the largest AIM fundraise of 2016 for Sirius Minerals plc,
and advising Poundland Group plc on its GBP600 million takeover by
Steinhoff International.
The range and complexity of work our Capital Markets team has
undertaken during the year results from its ability to exploit
market opportunities arising in a challenging environment, as
bigger banks focused on the implications of Brexit. Looking ahead,
we believe there will continue to be high-quality opportunities
where our service-orientated approach will prove to be attractive
to more clients.
Having positioned our business to benefit from improving market
conditions, we are continually exploring new ways to develop our
proposition. As the quantity of equity capital markets research
decreases in future, it is clear that the demand for high-quality
investment opportunities and valuable ideas will only increase.
Accordingly, during the year we committed additional resources to
our research and distribution capabilities, enhancing our coverage
across a number of industries.
In a year of significant market volatility driven by
geopolitical events, the Group's market making operation performed
strongly, providing significant liquidity in the immediate
aftermath of the Brexit referendum and US election results. The
team grew both revenues and profits by double-digit percentages,
reinforcing our position as the third largest market maker on the
London Stock Exchange.
Our Asset Management business grew revenues by 10% to GBP10.4
million and whilst our investment in the business led to lower
profits of GBP2.0 million and a net margin of 19%, we have
increased the team's capabilities and capacity, enabling the
business to implement the next stage of its growth strategy.
The Private Client division increased funds under management to
GBP200 million (2015: GBP155 million), again achieving a
record-breaking GBP31 million fundraise for Puma VCT 12, as well as
securing and allotting significant inflows to the Puma EIS Service,
which is approaching GBP50 million under management. Puma Heritage
and the Puma AIM Inheritance Tax Service celebrated their third and
second anniversaries respectively, both continuing to deliver
impressive returns for investors, with the latter being named Best
AIM Investment Manager at 2016's Growth Investor Awards.
In Institutional Asset Management, Brandenburg Realty completed
its second investment. Using Shore Capital's advisory services, it
is focused on developing its existing portfolio and seeking new
acquisition opportunities. At Puma Brandenburg, the Group assisted
with a number of disposals and continued to look for new ways to
optimise capital resources and actively manage its asset base.
In Principal Finance, we incurred a GBP2.7 million pre-tax write
down of various assets during the year, which equated to GBP1.6
million after tax and minority interests. These impairments relate
to reassessments of the fair value of various Group assets at the
year end. Elsewhere in the division, DBD continues to hold its
remaining 32 regional radio spectrum licences which cover many of
Germany's largest metropolitan centres. An initial pilot utilising
a temporary licence has commenced in Berlin.
Finally, as announced separately, I am relinquishing my
operational responsibilities as Group Chief Executive and these
will be taken over by Simon Fine and David Kaye as joint Chief
Executive Officers. I will continue as Chairman of the Group,
focusing on our international investment strategy, including
developing new relationships as well as investment
opportunities.
Having led the Group's growth and development for 32 years I am
extremely excited by the favourable environment for our operating
businesses. Simon and David have worked closely with me for many
years and I am delighted that they have agreed to lead the Group's
future development.
Financial Review
Income and expenditure
Revenue for the year decreased by 6.1% to GBP39.4 million (2015:
GBP42.0 million) whilst administrative expenses increased by 13.5%
to GBP34.2 million (2015: GBP30.1 million). The Group recorded
balance sheet impairments of GBP2.7 million (2015: nil), leading to
an operating profit of GBP2.6 million (2015: GBP11.8 million).
Group profit before tax decreased by 79.4% to GBP2.4 million (2015:
GBP11.7 million).
At the Group level, comparisons to the prior year were impacted
by the sale of spectrum licences in the Principal Finance division
in June 2015. Excluding this sale, revenue for the period increased
21% year-on-year.
Revenue from Capital Markets increased by 21% to GBP28.3 million
(2015: GBP23.4 million). Profit before tax was up 44.6% to GBP6.8
million (2015: GBP4.7 million), with a net margin of 24.0% (2015:
20.1%).
Revenue from Asset Management was up 10% to GBP10.4 million
(2015: GBP9.5 million), generating profit before tax of GBP2.0
million (down 25.4% from 2015: GBP2.7 million), representing a net
margin of 19.0% (2015: 27.9%).
The Principal Finance division recorded a pre-tax loss of GBP4.2
million (2015: profit of GBP5.1 million, including the licence
sales).
Basic Earnings per Share
The Group generated earnings per share of 6.0p (2015:
27.1p).
Comprehensive Earnings per Share
On a comprehensive basis, the Group generated earnings per share
of 7.3p (2015: 27.7p).
Liquidity
As at the balance sheet date, available liquidity was GBP32.7
million (2015: GBP28.7 million) comprising GBP23.9 million (2015:
GBP22.1 million) of cash and GBP8.8 million (2015: GBP6.6 million)
of gilts and bonds. In addition, the Group has a GBP20 million
working capital facility which was unused at the year end.
This liquidity demonstrates 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
year end was GBP67.1 million (2015: GBP67.0 million), reflecting
the profit in the year offset by dividends paid to minority
shareholders in 2016.
In addition to the GBP23.9 million of cash and GBP8.8 million of
gilts and bonds referred to above, the Group held GBP4.0 million in
various of its Puma funds, GBP3.5 million net in quoted equities
and a further GBP3.6 million in other unquoted holdings. The
licences held in the Group's Spectrum Investments were valued at
GBP2.1 million (on a gross basis, before allowing for minority
interests).
The remainder of the balance sheet was GBP21.2 million net,
which included GBP15.1 million of net market and other debtors in
the Company's stockbroking subsidiary.
During the year, the Group recorded a GBP2.7 million pre-tax
write down in the Principal Finance division. The impact after tax
and minority interests was GBP1.6 million. These impairments relate
to reassessments of the fair value of various Group assets at the
year end.
Net Asset Value per Share
Net asset value per share at the year end was 269.6p (2015:
268.7p).
Dividend
The Board proposes a final dividend of 5.0p (2015: nil). The
dividend will be paid on Wednesday 26 April 2017 to shareholders on
the register as at Friday 7 April 2017.
Operating Review
Capital Markets
Overview
Despite a turbulent geopolitical environment, the Capital
Markets division performed strongly in 2016, increasing revenues by
21% to GBP28.3 million. The year saw the business grow its client
base, develop its service offering and act on a significant number
of high-profile transactions.
The team participated in four IPOs and a large number of
transformational fundraisings for its growing client base, to which
11 new, retained corporate clients were added during the year.
Particular highlights included acting on the largest AIM fundraise
of 2016, for Sirius Minerals plc; and advising Poundland Group plc
on its GBP600 million takeover by Steinhoff International.
Additional investment has been made to augment our research and
distribution proposition, enhancing our sector coverage across a
number of industries during the year. The high quality of our
research product continued to gain recognition during the year,
scoring strongly with clients and in external surveys, such as
Extel and Starmine.
Our Market Making and Fixed Income businesses have performed
very well in the face of substantial market uncertainty, delivering
increased levels of revenue and profitability and providing key
sources of liquidity in turbulent times.
The business remains alive to opportunities and will continue to
invest in high calibre individuals and teams where the Company
identifies opportunities for incremental growth.
Corporate Finance
During 2016, the team has continued to be very active and
participated in four IPOs, 20 secondary fundraisings and a number
of significant transactions including:
-- Sole sponsor and joint bookrunner to Chesnara
plc on its GBP70 million placing and open
offer to fund the EUR160 million acquisition
of L&G Netherland;
-- Joint bookrunner to John Menzies plc on its
GBP75 million rights issue to fund the US$202
million acquisition of ASIG from BBA Aviation
plc;
-- Co-lead manager on the GBP370 million placing
and open offer equity element of Sirius Minerals
plc's US$1.2 billion stage one financing,
the largest fundraise on AIM in 2016;
-- Co-bookrunner on the Main Market IPO of Motorpoint
Group plc, raising GBP100 million;
-- Co-lead manager on a placing by Playtech plc,
raising GBP329 million;
-- Joint bookrunner on a placing by Vernalis
plc, raising GBP40 million;
-- Joint bookrunner on the GBP27 million placing
by Stride Gaming plc to fund the acquisition
of Tarco, Netboost Media and 8Ball;
-- Sponsor and joint bookrunner to two placings
by NextEnergy Solar Fund Limited, raising
GBP115 million and GBP42 million;
-- Joint bookrunner on the EUR23 million placing
of founder stock by Applegreen plc; and
-- Nominated adviser and sole broker on the IPOs
of Cerillion plc and YĆ¼ Group plc and
nominated adviser and joint broker on the
IPO of Amryt Pharma plc;
Our advisory work included acting as joint financial adviser and
joint broker to Market Tech Holdings Limited in connection with its
move from AIM to the Main Market and as corporate broker to
Poundland Group plc in connection with its GBP600 million takeover
by Steinhoff International.
We continue to attract high quality corporate clients, adding 11
new retained corporate clients in the year, including Dairy Crest
Group plc, Chesnara plc, Motorpoint Group plc; Stride Gaming plc,
and Earthport plc.
Research and Sales
Equity capital markets continue to evolve within the context of
considerable macro-economic, political and industry-specific
change, not least the forthcoming implementation of MiFID II. In
these respects it is pleasing to see that the high calibre of our
equity research retains its relevance to portfolio managers and the
broader corporate community alike.
During the year we carefully grew the team, expanding our
coverage and capabilities, adding stock coverage in building
materials, healthcare, industrials, media and technology. The
team's stability and experience continued to resonate with the
asset management community, reflected in strong internal voting
scores from our clients and continuing excellent positions in the
Extel and Starmine surveys, where person-for-person we punch
materially above our weight.
Looking to the future, we remain confident in our team's
capabilities to compete and ultimately further expand our coverage,
reach and corporate client base. In this respect, our stock
execution function will evolve from its firm foundations so that it
continues to offer value and relevance to clients, whilst focusing
research coverage and capabilities where it can have the most
beneficial impact.
Market Making
In a year of significant market volatility driven by
geopolitical events, the Group's market making operation performed
strongly, growing both revenues and profits by double-digit
percentages. Trading volumes were 12% higher than in 2015, a
commendable result considering the market uncertainty that
prevailed throughout the year.
The team positioned its inventory prudently during the year,
enabling us to provide significant liquidity in the immediate
aftermath of the Brexit referendum and US election results. This
approach, reflected in the wide variety of equities to which we
provide access, enabled us to reinforce our position as the third
largest market maker on the London Stock Exchange.
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'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. The team enjoyed its first full year
within the Group, having joined from Edmond de Rothschild in late
2015, and made a positive contribution to the business in what has
been a challenging environment, demonstrating its capability to
grow primary capital opportunities for clients.
Asset Management
Overview
The Asset Management division enjoyed notable successes during
the period across its institutional and private client businesses
such that during the year total assets under management grew from
GBP770 million to GBP825 million.
In the institutional business, our German advisory team assisted
Brandenburg Realty in the completion of its second acquisition for
EUR32 million; and helped Puma Brandenburg to complete a EUR90
million refinancing. The team also helped Puma Brandenburg to
advance the implementation of its strategic objectives,
particularly with the sale of its housing estate in Neukoelln and
progress development works at its flagship Hyatt Regency Hotel in
Cologne.
The Private Client division increased funds under management to
GBP200 million (2015: GBP155 million), again achieving a
record-breaking fundraise for its latest VCT, Puma VCT 12, as well
as securing and allotting significant inflows to the Puma EIS
Service, which is approaching GBP50 million under management. Puma
Heritage and the Puma AIM Inheritance Tax Service celebrated their
third and second anniversaries respectively, both continuing to
deliver impressive returns for investors.
During the course of the year we continued our commitment to
invest in the business, hiring several key personnel, particularly
in the Private Client division, adding to its investment and
business development teams as it continues implementing its growth
strategy.
Institutional Asset Management
Brandenburg Realty
In line with its strategy to invest in German residential and
commercial real estate, Brandenburg Realty (the "Fund") completed
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 continues to seek and recommend
additional acquisition opportunities for the Fund, helping it to
implement the agreed strategy for this asset and also for the
Monumenten Strasse residential building, which was acquired in the
prior period. At this asset, the team assisted in the sale of five
apartments, achieving an average price per square metre
significantly in excess of expectations.
Puma Brandenburg Limited ("PBL")
The Group has continued to assist PBL to achieve success across
its portfolio, including:
-- The sale of the Sonnensiedlung housing estate
located in Neukoelln, Berlin through a share
sale in July 2016;
-- 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 and were
completed on schedule at the end of November
2016;
-- As previously reported, 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.
St Peter Port Capital ("SPPC")
SPPC announced its interim results for the six months ended 30
September 2016 on 26 October 2016. As at that date, excluding
investments written off, it had investments in 17 companies and
reported that it had generated GBP161,000 from realisations since 1
April 2016.
Prior to the release of its results, the company had announced
that it was launching a review of the strategic options available
to it, including a potential sale of the company. Accordingly, the
company entered an offer period, enabling any potentially
interested parties to approach it without having to make any formal
announcement.
The strategic review was launched in order to stimulate
liquidity in what remains a challenging market for its portfolio
companies. It reported its view that any significant cash return is
predicated on one or more of its top five holdings progressing to
the next planned phase of growth, which for several of them relies
on their raising significant further funds.
Private Client Investments
Overview
The Group's private client business, Puma Investments, continues
to make strong progress. During the year the company invested in
the next phase of its growth, hiring key personnel to expand its
capabilities.
Of particular note was the launch of Puma VCT 12, which closed
in 2016 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. In addition, we have seen continued expansion of
Puma EIS, Puma Heritage and the Puma AIM Inheritance Tax Service.
We were particularly proud that the strong performance of the AIM
service was recognised by the industry and named Best AIM
Investment Manager at 2016's Growth Investor Awards.
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 GBP223 million has been raised for Puma
VCTs and more than GBP89 million has been distributed back to
shareholders.
Puma's strong VCT track record is reflected in the fact that
each of the first five Puma VCTs have led their peer group for
total returns, with Puma VCT V having returned 106.3p per share (on
a net cost of investment of 70p) in cash distributions to
shareholders over its life. 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.
In view of the many changes to VCT investment rules which have
been introduced in recent months, the launch of our latest VCT,
Puma VCT 13, has been delayed whilst we await clarification on the
new rules in guidance notes which have not yet been issued by
HMRC.
The Group considers that the responsible approach is to allow
some time for these rules to bed in and to review the accompanying
guidance notes before raising additional capital. We are making
good progress in deploying the funds raised in previous VCTs and
have sufficient capital to continue to back businesses that meet
our stringent investment criteria.
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 over GBP28 million by 31
December 2016. Puma Heritage has participated in loans totalling
GBP162 million to date. 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, we 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. As at 31 December 2016, Puma Heritage
had made 384 loans of which 38 were live and 346 had been repaid in
full. 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 continue growing 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 throughout 2016,
raising the amount in the EIS Service to c.GBP47 million. To date
the EIS Service has invested into seven portfolio companies and has
a good pipeline of further deployment opportunities.
Puma AIM Inheritance Tax Service
The Puma AIM IHT Service (the "AIM 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.
Since launch in July 2014 to the end of 2016 the AIM Service has
delivered a 43.9% return, outperforming the FTSE AIM All Share
Index by 36.3%.
Our strong performance has resulted in us winning the Best AIM
Investment Manager award at the Growth Investor Awards for 2016.
Additionally, we were Highly Commended in the Best AIM IHT
Portfolio Service category at the Investment Week Tax Efficiency
Awards 2016/17.
The AIM Service has continued to grow assets and investor
numbers during the year and we are confident of growing the service
in the future. At the end of June 2017 we will reach our three year
track record; a key hurdle for many financial advisers. In early
2017 we announced that the service is available through the
Ascentric and Standard Life Investment Platforms, enabling us to
access a wider range of Financial Advisers.
Principal Finance
The Principal Finance division seeks to use the Group's strong
balance to invest in attractive opportunities and seed new
funds.
During the year, the division incurred a GBP2.7 million pre-tax
write down relating to various assets held in the division, which
equates to GBP1.6 million after tax and minority interests.
This division also holds the Group's investment in DBD, which
holds, through a subsidiary, 32 regional radio spectrum licences in
Germany of indefinite duration (the "Licences"). Shore Capital
holds a 59.94% interest in Spectrum Investments Limited, the parent
company of DBD.
DBD has been given consent by the German Telecoms Regulator
("BNetzA") to test the LTE TDD technology which will support its
business plan for the future use of the Licences, premised upon a
small radio cells network concept. An initial pilot scheme has
commenced in Berlin and DBD plans to roll out additional pilots in
other areas covered by the Licences.
For the initial Berlin trial, at the request of BNetzA, DBD is
using a temporary test licence granted to it by BNetzA. However,
DBD believes that, as a result of Article 9a of the EU Framework
Directive (2002/21/EC, as amended), implemented in Germany by Sec.
150 para 8 of the German Telecommunications Act, it should be
permitted to use its existing Licences to conduct the pilot schemes
and to support the roll out of its services in the future. BNetzA
has yet to confirm its agreement.
In correspondence with DBD, BNetzA has noted that its ongoing
consideration of the status and use of the Licences should be taken
in the context of its ongoing review of spectrum frequency planning
for the years after 2021/2022 and in particular its frequency
concept for the 3.5GHz band, into which the Licences fall.
Current Trading and Prospects
We have seen companies wanting to get on with growing their
businesses and institutions that want to buy into them. That cannot
happen in a vacuum, demonstrating that markets are again open for
business, focusing on the fundamentals of the deal, rather than
market participants sitting on their hands and worrying about
uncertainty.
Our independence puts us in an ideal place to make the most of
the opportunities that will arise as market conditions improve.
Howard Shore
Chairman
29 March 2017
Unaudited Consolidated Income Statement
For the year ended 31 December 2016
Notes 2016 2015
GBP'000 GBP'000
------------------------------ ------ --------- ---------
Revenue 39,408 41,952
Administrative expenditure (34,187) (30,129)
Balance sheet impairments (2,664) -
Operating profit 2,557 11,823
--------- ---------
Interest income 239 191
Finance costs (391) (317)
--------- ---------
(152) (126)
--------- ---------
Profit before taxation 2,405 11,697
Taxation (554) (1,002)
Profit for the year 1,851 10,695
========= =========
Attributable to:
Equity holders of the parent 1,302 6,445
Non-controlling interests 549 4,250
1,851 10,695
========= =========
Earnings per share
Basic 4 6.0p 27.1p
Diluted 4 5.8p 26.1p
Unaudited Consolidated Statement of Comprehensive Income
For the year ended 31 December 2016
Notes 2016 2015
GBP'000 GBP'000
Profit after tax for the year 1,851 10,695
--------- ---------
Losses on revaluation of available-for-sale
investments (43) (66)
--------- ---------
Items that may be reclassified
to the income statement
Gains on cash flow hedges 70 31
Tax thereon (14) (6)
--------- ---------
56 25
Exchange difference on translation
of foreign operations 468 186
--------- ---------
Other comprehensive income for
the year, net of tax 524 211
--------- ---------
Total comprehensive income for
the year, net of tax 2,332 10,840
========= =========
Attributable to:
Equity holders of the parent 1,582 6,599
Non-controlling interests 750 4,241
2,332 10,840
========= =========
Comprehensive earnings per share
Basic 4 7.3p 27.7p
Diluted 4 7.1p 26.7p
Unaudited Consolidated Statement of Financial Position
As at 31 December 2016
Notes 2016 2015
GBP'000 GBP'000
------------------------------- ------- ---------- ---------
Non-current assets
Goodwill 381 381
Intangible assets 2,135 1,841
Property, plant & equipment 9,423 10,864
Investment properties 2,885 -
Principal Finance investments 8,221 6,341
Deferred tax asset - 128
23,045 19,555
---------- ---------
Current assets
Trading assets 12,290 9,344
Trade and other receivables 51,774 71,739
Financial instruments 123 54
Cash and cash equivalents 23,937 22,113
---------- ---------
88,124 103,250
---------- ---------
Total assets 111,169 122,805
---------- ---------
Current liabilities
Trading liabilities (765) (946)
Trade and other payables (31,126) (43,998)
Financial instruments (224) (187)
Tax liabilities (770) (481)
Borrowings (431) (360)
(33,316) (45,972)
---------- ---------
Non-current liabilities
Borrowings (10,649) (9,256)
Deferred tax liability (15) -
Provision for liabilities and
charges (104) (535)
---------- ---------
(10,768) (9,791)
---------- ---------
Total liabilities (44,084) (55,763)
---------- ---------
Net assets 67,085 67,042
========== =========
Capital and reserves
Share capital - -
Share premium 336 336
Merger reserve 17,151 17,151
Other reserves 1,596 2,164
Retained earnings 39,587 38,845
---------- ---------
Equity attributable to equity
holders of the parent 58,670 58,496
Non-controlling interest 8,415 8,546
Total equity 67,085 67,042
========== =========
Unaudited Consolidated Statement of Changes in Equity
For the year ended 31 December 2016
Share Share Merger Other Retained Non-controlling Total
capital Premium reserve Reserves earnings interest
account
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
Profit for
the year - - - - 6,445 4,250 10,695
Revaluation
of available
for sale investments - - - (66) - - (66)
Foreign currency
translation - - - - 200 (14) 186
Valuation
change on
cash flow
hedge - - - 25 - 6 31
Tax on cash
flow hedge - - - (5) - (1) (6)
Total comprehensive
income - - - (46) 6,645 4,241 10,840
Decrease in
deferred tax
asset recognised
directly in
equity - - - (54) - - (54)
Equity dividends
paid - - - - (1,208) - (1,208)
Dividends
paid to /
rebalancing
of non controlling
interests - - - - (927) (1,015) (1,942)
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 - - - 4 - - 4
Investment
by non controlling
interest in
subsidiaries - - - - - 344 344
Adjustment
arising from
change in
non controlling
interest - - - - (56) 56 -
At 31 December
2015 - 336 17,151 2,164 38,845 8,546 67,042
========== ========= ========= ========== ========== ================ =========
Unaudited Consolidated Statement of Changes in Equity
For the year ended 31 December 2016
Share Share Merger Other Retained Non-controlling Total
capital Premium reserve Reserves earnings interest
account
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
Profit for
the year - - - - 1,302 549 1,851
Revaluation
of available
for sale
investments - - - (43) - - (43)
Foreign currency
translation - - - - 278 190 468
Valuation
change on
cash flow
hedge - - - 56 - 14 70
Tax on cash
flow hedge - - - (11) - (3) (14)
Total comprehensive
income - - - 2 1,580 750 2,332
Decrease
in deferred
tax asset
recognised
directly
in equity - - - (581) - - (581)
Dividends
paid to /
rebalancing
of non controlling
interests - - - - (838) (1,221) (2,059)
Credit in
relation
to share
based payments - - - 11 - - 11
Investment
by non controlling
interest
in subsidiaries - - - - - 340 340
At 31 December
2016 - 336 17,151 1,596 39,587 8,415 67,085
========== ========= ========= ========== ========== ================ ========
Unaudited Consolidated Cash Flow Statement
For the year ended 31 December 2016
Notes 2016 2015
GBP'000 GBP'000
---------------------------------------- ------- --------- ---------
Cash flows from operating activities
Operating profit 2,557 11,823
Adjustments for:
Depreciation and impairment
charges 3,534 977
Amortisation charges - 62
Share-based payment expense 11 4
Other losses/(gains) on Principal
Finance investments (255) 1,142
Other profit on sale of intangibles - (9,207)
Reduction in provision for (431) -
national insurance on options
--------- ---------
Operating cash flows before
movements in working capital 5,416 4,801
Decrease/(increase) in trade
and other receivables 19,896 (11,681)
(Decrease)/increase in trade
and other payables (12,765) 14,231
(Decrease)/increase in trading
assets positions (181) 100
Increase in trading liabilities
positions (2,946) (4,708)
--------- ---------
Cash generated by generated
by operations 9,420 2,743
Interest paid (391) (317)
Corporation tax paid (714) (1,652)
--------- ---------
Net cash generated by operating
activities 8,312 774
--------- ---------
Cash flows from investing activities
Purchase of fixed assets (517) (363)
Sale of intangibles - 10,680
Purchase of investment property (2,885) -
Purchase of available-for-sale
investments (1,808) (3,750)
Sale of available-for-sale investments 141 -
Interest received 239 191
--------- ---------
Net cash (used in)/generated
by investing activities (4,830) 6,758
--------- ---------
Cash flows from financing activities
Investment by non controlling
interest in subsidiaries 340 344
Repurchase of own shares - (10,047)
Capital distribution to non
controlling interests - (3,316)
Increase in borrowings (430) (360)
Dividends paid to equity shareholders - (1,208)
Dividends paid to non controlling
interests (2,059) (1,942)
--------- ---------
Net cash used in financing activities (2,149) (16,529)
--------- ---------
Net increase/(decrease) in cash
and cash equivalents 1,333 (8,997)
Effects of exchange rate changes 491 452
Cash and cash equivalents at
the beginning of the year 22,113 30,658
--------- ---------
Cash and cash equivalents at
the end of the year 23,937 22,113
========= =========
Notes
1. Financial information
Basis of preparation
The annual financial statements of Shore Capital Group Limited
(the "Company") have been prepared in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European
Union ("Adopted IFRS").
Presentation of the financial statements and financial
information
The financial information set out in the announcement does not
constitute the Company's statutory accounts for the year ended 31
December 2016 within the meaning of section 244 of the Companies
(Guernsey) Law, 2008.
The financial information for the year ended 31 December 2015 is
derived from the statutory accounts of the Company for that year.
The auditors reported on those accounts; their report was
unqualified, did not draw attention to any matters by way of
emphasis without qualifying their report and did not contain a
statement under section 263(2) or (3) of the Companies (Guernsey)
Law, 2008. Those accounts were prepared under Adopted IFRS and have
been reported on by the Company's auditors and delivered to the
Guernsey registry office.
The audit of the statutory accounts of Shore Capital Group
Limited for the year ended 31 December 2016 is not yet complete.
These accounts will be finalised on the basis of the financial
information presented by the directors in this preliminary
announcement.
The statutory accounts will be prepared in accordance with IFRS
as adopted by the European Union. Details of the accounting
policies that will be applied in the statutory accounts are set out
in the 2015 Annual Report and Accounts of the Company.
A copy of this statement is available on the Company's website
at www.shorecap.gg.
The financial statements have been prepared on the historical
cost basis, except for the revaluation of certain financial
instruments. The financial statements are rounded to the nearest
thousand except where otherwise indicated.
Adoption of new and revised standards
New standards, amendments and interpretations adopted
In the current year, the Group has applied the following
amendments to IFRSs issued by the IASB that are mandatorily
effective for accounting periods beginning on or after 1 January
2016. Their adoption has not had any material impact on the
disclosures or on the amounts reported in these financial
statements.
IAS 1 (Amended) Disclosure Initiative
IFRS 10 (Amended) Consolidated Financial Statements
IFRS 11 (Amended) Joint Arrangements
IFRS 12 (Amended) Disclosure of Interests in Other Entities
IAS 16 (Amended) Property, Plant and Equipment
IAS 27 (Amended) Consolidated and Separate Financial Statements
IAS 38 (Amended) Intangible Assets
IFRSs 2012-2014 Cycle Improvement cycle - various standards
Standards in issue but not yet effective
At the date of authorisation of these financial statements, the
following Standards and Interpretations which have not been applied
in these financial statements were in issue but not yet effective
(and in some cases had not yet been adopted by the EU):
Annual Improvements to:
IAS 7 (Amended) Disclosure Initiative
IAS 12 (Amended) Recognition of Deferred Tax Assets for Unrealised Losses
IFRS 2 (Amended) Share-based Payments
IFRS 9 Financial Instruments
IFRS 15 Revenue from Contracts with Customers
IFRS 16 Leases
IFRS 10 (Amended) Consolidated Financial Statements
IAS 28 (Amended) Investments in Associates
2. Segment Information
Additional analysis of revenue and results is presented in the
Chairman's Statement.
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
segments separately for the purpose of making decisions about
resource allocation and performance assessment. Segmental
performance is evaluated based on operating profit or loss.
Year ended Capital Asset Management Central Principal Consolidated
31 December Markets costs Finance
2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- --------- ----------------- -------- ---------- -------------
Revenue 28,286 10,446 - 676 39,408
========= ================= ======== ========== =============
Results
Balance
sheet impairments - - - 2,664 2,664
Depreciation 298 85 57 606 1,046
Interest
expense 64 - - 327 391
Profit/(loss)
before tax 6,787 1,980 (2,119) (4,243) 2,405
========= ================= ======== ========== =============
Assets 61,503 5,894 3,535 40,237 111,169
========= ================= ======== ========== =============
Liabilities (29,274) (2,149) (828) (11,833) (44,084)
========= ================= ======== ========== =============
Year ended Capital Asset Management Central Principal Consolidated
31 December Markets costs Finance
2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- --------- ----------------- -------- ---------- -------------
Revenue 23,350 9,500 - 9,102 41,952
========= ================= ======== ========== =============
Results
Depreciation 280 109 58 530 977
Interest
expense 27 - - 290 317
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)
========= ================= ======== ========== =============
No material amounts of revenue or profit before tax were
generated outside Europe.
3. Rates of Dividends Paid and Proposed
The directors propose a dividend of 5.0p for the year ended 2016
(2015: nil).
4. Earnings per Share
The earnings and number of shares in issue or to be issued used
in calculating the earnings per share and diluted earnings per
share in accordance with IAS 33 were as follows:
As at 31 December 2016 there were 21,768,791 ordinary shares in
issue (2015: 21,768,791).
2016 2015
Basic Diluted Basic Diluted
------------------------- ----------- ----------- ----------- -----------
Earnings (GBP) 1,302,000 1,302,000 6,445,000 6,445,000
Number of shares 21,768,791 22,347,760 23,796,516 24,698,644
Earnings per share
(p) 6.0 5.8 27.1 26.1
=========== =========== =========== ===========
Comprehensive earnings
(GBP) 1,582,000 1,582,000 6,599,000 6,599,000
Number of shares 21,768,791 22,347,760 23,796,516 24,698,644
Earnings per share
(p) 7.3 7.1 27.7 26.7
=========== =========== =========== ===========
Calculation of number 2016 2015
of shares
Basic Diluted Basic Diluted
------------------------- ----------- ----------- ----------- -----------
Weighted average number
of shares 21,768,791 21,768,791 23,796,516 23,796,516
Dilutive effect of
share option schemes - 578,969 - 902,128
21,768,791 22,347,760 23,796,516 24,698,644
=========== =========== =========== ===========
Notes
A copy of this announcement is available on the Company's
website at www.shorecap.gg. The annual report & accounts will
be sent to shareholders in due course and will also be available on
the Company's website from the date of posting.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR OKFDDOBKDQNB
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