RNS Number:8077N
Griffin Group PLC
12 February 2008
GRIFFIN GROUP plc
("Griffin" or the "Group")
FINAL RESULTS FOR THE YEAR ENDED 30TH SEPTEMBER 2007
FINANCIAL HIGHLIGHTS
* Turnover �6.74m (2006: �8.83m)
* Profit before tax �364,150 (2006: �613,932)
* Profit after tax �246,660 (2005: �456,525)
* Earnings per share 0.55p (2006: 1.08p)
* Net current assets �3,644,973 (2006: �2,520,434) including cash at bank of
�1,378,545 and publicly tradeable investments of �2,533,075
* Net assets �3,644,973 (2006: �2,520,434) equivalent to 3.33p per share
(2006: 5.77p)
CHAIRMAN'S STATEMENT
I am pleased to make this report on behalf of the Group.
Group Financial Overview
In the year ended 30th September 2007, Group turnover was �6,744,934 (2006 -
�8,834,618), operating profit was �254,098 (2006 - �398,813) and profit before
tax was �364,150 (2006 - �613,932). Basic earnings per share were 0.55 pence
(2006 - 1.08 pence).
At 30th September 2007, the Group held cash balances of �1,378,545 (2006 -
�1,284,584) and marketable investments of �2,533,075 (2006 - �1,074,159).
Shareholders' funds were �3,644,973 (2006 - �2,520,434), equivalent to 3.33
pence per share (2006 - 5.77 pence per share). The reduction in net assets per
share is due to the three for two open offer and placing which concluded just
prior to the year end.
The balance sheet debtors at 30th September 2006 included �1.5m of loan notes
which were converted into 123,557,500 New Ordinary Shares in Pearl Street
Holdings plc on 15th February 2007. The Group's only debts were the convertible
loan notes which were repaid early, with a 10% discount, on 2nd October 2006 for
a total of �450,000. The Group has made new loan investments totalling �640,000
during the year and these are repayable between one and two years.
As described above, a total of �982,724 was raised during the year through the
issue of 65,514,944 New Ordinary Shares at 1.5 pence each pursuant to a Placing
and Open Offer.
The Directors consider that the Group's financial position and its trading
position are satisfactory.
Review of activities
Griffin Group plc ('Griffin' or 'the Company') is listed on AIM as a capital
investor, actively investing in and bringing identified companies and special
purpose acquisition vehicles to the PLUS and AIM markets. In addition, Griffin
provides corporate financial advisory services, investment and financial
assistance to fund the growth of selected opportunities and businesses.
The Directors are pleased to report that results for the second half of the year
have shown an improvement on the reported results for the six months to 31st
March 2007, being generally in line with their expectations.
Over the last two years the Group has worked hard to generate momentum in its
fundraising ability and the number of companies it has bought to market. In the
year ended 30th September 2006 alone, the Company was responsible for the
fundraising, development and/or formation of six companies and three reverse
acquisitions on the AIM and PLUS markets, with an aggregate fundraising of in
excess of �20m.
Since the latter part of 2006 to date, Griffin has adapted its strategy to
conform with the AIM Rules in respect of investment companies. One of the
requirements was for larger fundraisings for investment vehicles on AIM. This
created a more challenging market in which to raise new equity funds and created
some short-term delays in completion and financing of projects. These
challenges are reflected in the results disclosed in these financial statements.
The changes in the AIM Rules in respect of investment companies led the Group to
concentrate its investment activities on PLUS Markets. While there have been
benefits for the Group on concentrating on PLUS as a route to market, one of the
effects of this change has been that PLUS Markets stocks have proven to be less
liquid compared to AIM. In addition, although the Group has been successful in
the PLUS Market fundraisings it has participated in to date, it has found this
to be a more challenging environment as a number of brokers are not able, or are
unwilling, to deal in PLUS Markets stocks and the directors believe that there
is a more limited pool of investors available to PLUS Markets-listed companies.
However, we are also encouraged by the progress achieved by PLUS Markets
themselves in securing the status of recognised investment exchange and their
efforts to attract extra brokers and market makers, which we believe, in time,
will provide the recognition and support of investors generally and lead to
greater liquidity in PLUS Markets stocks.
It has become clear to the Board that while PLUS Markets has made significant
steps towards solving the above issues, it will take time for PLUS Markets to
become a more liquid market. This is expected to have the following effect on
the Group's strategy in the near future. While Griffin will continue funding
new PLUS Markets investments it now intends to balance its portfolio by
promoting special purpose acquisition vehicles that qualify for AIM. However,
AIM vehicles are larger than PLUS Markets vehicles due to the level of
fundraising required and are therefore expected to require greater funding
support from the Group. In addition, as has been the experience of the Group
during this current trading period, PLUS Markets vehicles require the Group to
substantially support the initial funding stages of these businesses which is
often by way of equity investment. The investment will then normally take longer
to liquidate post flotation due to the lower liquidity in PLUS Markets.
We are encouraged by the progress and deal flow we have achieved during the last
12 months through the admission of Dovedale Ventures plc (now completed the
reverse acquisition of Property Mart Overseas and renamed accordingly), the
admission of Mediterranean Moorings plc (followed by its initial investment in
the moorings at Genoa), the admission of Aquarius Media plc (which included the
acquisition of Full Portion Media Limited) and the admission of Red Dragon
Investments plc (completing the acquisition of GJA Communications Limited).
The Group's principal assets are its investments in listed companies, amounting
to �2,533,075 at 30th September 2007 (2006 - �1,074,159). A large proportion of
these investments may be difficult to realise in the short term. The Board is
in the process of securing a range of suitable deals with which it intends to
enhance the capital value and liquidity of these investments.
On 25th September 2007, the Company issued 65,514,944 New Ordinary Shares at 1.5
pence each pursuant to a Placing and Open Offer. The reason for this
fundraising was to provide the Company with additional working capital
resources. The Company had recently utilised significant cash resources to
restructure and undertake substantial investment in a number of PLUS investments
where it had not yet exited or realised its investment. In addition, the
Company's debts were reduced by �450,000 to �nil. Accordingly, there is
currently no gearing or debt on the Company's balance sheet. This use of cash
to eliminate debt created some working capital constraints in terms of managing
the momentum of deal flow, but was justified by the early repayment discount.
Griffin Corporate Finance Limited ("Griffin Corporate")
During the year, Griffin Corporate has initiated the flotation of two PLUS
Market companies, with the Group acting as both investor and agent. In
addition, efforts have been concentrated on completing the reverse acquisitions
of our existing investment companies and I am pleased to report that two such
transactions were completed in the last half of the year. Work on the remaining
investment companies has taken longer than anticipated and will require further
cash investment from either Griffin or other investors.
Griffin's policy is not to remain as a long-term shareholder in these companies
and whilst management agreements exist whereby Griffin Corporate provides
administrative support to these new PLUS Market companies, Griffin Corporate
looks to input appropriate new executives into these companies at an early
opportunity, once the strategic direction of each company has been determined.
Corporate finance fee income amounted to �1.3m (2006 - �3.15m) and investment
trading revenues totalled �5.3m (2006 - �5.4m). The new PLUS Market admissions
promoted by Griffin Corporate were as follows:
Mediterranean Moorings plc Admitted in February 2007 with the purpose
of acquiring
Mediterranean yacht moorings and/or other
property within marina developments off plan
and selling them on at a profit. First
acquisition of four moorings made in March
2007, one of which has subsequently been
assigned.
Aquarius Media plc Admitted in July 2007 and at the same time
acquired the entire issued share capital of
Full Portion Media Limited, a company that
seeks to create, launch and sustain clients
in prominent positions within the media.
Reverse acquisitions and investments completed during the period were:
Property Mart Overseas plc Acquisition of Property Mart Overseas Limited
(formerly Dovedale Ventures plc) ("PMOL"), raising funds of �1.6m. PMOL
operates a website and magazine focusing on
classified advertising in the overseas
residential property market.
Red Dragon Investments plc Acquisition of GJA Communications Limited, a
strategic communications agency which
operates in the marketing services sector
with specific emphasis on communication
strategy, public relations and event
management.
Also during the year, the directors were able to source a new business
opportunity for Pearl Street Holdings plc. A new management team is now in
place and has commenced trading as a property investment advisory business,
providing services in relation to the off-plan property market both in the UK
and overseas. The business has been branded as "The Global Property Support
Network" and the company renamed "The Global Property Support Network plc" to
reflect this.
Griffin Communications Limited
Griffin Communications Limited provides marketing, investor relations, public
relations and research services, and is able to assist the companies that the
Group brings to the Market by ensuring they attract the attention of
institutional and private shareholders and the financial and trade press.
Principal Risks and Uncertainties
The Group's principal risks are that it may be unable to identify suitable
targets seeking a fund-raising and/or admission to a public market or that the
prevailing market conditions may make fund-raising at the required levels not
possible.
Key Performance Indicators
The directors consider that the results of the Group are dependent upon the
number of transactions undertaken in any financial period. The Group undertook
four admission/reverse transactions in the year to 30th September 2007 compared
to nine in the year to 30th September 2006. The reasons for the lower number of
transactions in the current period are noted in this Chairman's Statement.
Reduction of Share Premium Account and Dividend Policy
The annual report and accounts being sent to shareholders includes notice of the
forthcoming annual general meeting to be held at the offices of Beachcroft LLP,
100 Fetter Lane, London, EC4A 1BN at 11 am on 12th day of March 2008. In
addition to the ordinary business of the annual general meeting, the notice also
includes a resolution seeking shareholder approval to reduce the share premium
account by �808,775 from �1,339,713 to �530,938, and to apply this reduction to
eliminate the deficit on the profit and loss account. Approval of this
resolution will enable the Company to apply to the Court to confirm the
reduction and thereafter the Company will be able to pay out dividends from its
profits, rather than having to firstly apply those profits to eliminate the
historic deficit. This is the first stage in the directors' strategy to
commence paying dividends. The directors believe that the payment of dividends
will provide enhanced benefits to the Company's shareholders. In addition, once
the Company has distributable profits available, it is the directors' future
intention to implement a share buy back program utilising any available surplus
cash balances to further enhance shareholder value.
Outlook
In the year under review, we have continued to develop the trading activities of
the Group and increased shareholder value under difficult market conditions.
The start of the current financial period has also proved difficult with one
corporate finance transaction completed to date. The Directors do not
anticipate that the Group will be able to complete very many transactions in the
first half of the year but continue to actively seek strategic opportunities to
achieve increases in the Group's market value.
The employees and advisers of the Group have worked hard to achieve these
results and the Board would like to thank all of them for their continuing
support and loyalty.
Stephen Dean
Chairman
GROUP PROFIT & LOSS ACCOUNT
For The Year Ended 30th September 2007
2007 2006
� �
TURNOVER - Continuing operations 6,744,934 8,834,618
COST OF SALES (4,692,884) (4,177,596)
________ ________
GROSS PROFIT 2,052,050 4,657,022
Administrative expenses (1,797,952) (4,258,209)
_________ _________
OPERATING PROFIT 254,098 398,813
Interest receivable & similar income 110,753 257,744
Interest payable (701) (42,625)
_________ _________
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
364,150 613,932
Taxation (117,490) (157,407)
_________ _________
RETAINED PROFIT FOR THE YEAR 246,660 456,525
_________ _________
Basic and diluted earnings per share (note 1) 0.55p 1.08p
The Group had no recognised gains or losses other than the result for the year.
GROUP BALANCE SHEET
As at 30th September 2007
2007 2006
� �
FIXED ASSETS
Tangible fixed assets - -
________ ________
- -
________ ________
CURRENT ASSETS
Investments (note 5) 2,533,075 1,074,159
Debtors 1,932,436 2,780,635
Cash at bank & in hand 1,378,545 1,284,584
_______ _______
5,844,056 5,139,378
CREDITORS: Amounts falling due within one year
Convertible debt - (450,000)
Other creditors (2,199,083) (2,168,944)
________ ________
NET CURRENT ASSETS 3,644,973 2,520,434
________ ________
NET ASSETS 3,644,973 2,520,434
________ ________
CAPITAL & RESERVES
Called up share capital - equity 2,249,346 2,183,831
Share premium account 1,339,713 527,349
Profit & loss account 55,914 (190,746)
________ ________
EQUITY SHAREHOLDERS' FUNDS 3,644,973 2,520,434
________ ________
GROUP CASH FLOW STATEMENT
For The Year Ended 30th September 2007
2006 2005
� �
NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES (note 2) (314,360) 567,743
RETURNS ON INVESTMENTS &
SERVICING OF FINANCE
Interest received 110,753 257,744
Interest paid (701) (42,625)
________ ________
NET CASH INFLOW FROM RETURNS ON INVESTMENTS & SERVICING OF
FINANCE 110,052 215,119
TAXATION
UK corporation tax paid (125,262) (407,269)
CAPITAL EXPENDITURE & FINANCIAL INVESTMENT
Purchase of tangible fixed assets (4,348) -
________ ________
NET CASH OUTFLOW FROM CAPITAL EXPENDITURE & FINANCIAL
INVESTMENT (4,348) -
ACQUISITIONS & DISPOSALS
Net cash disposed of with subsidiary - (100,103)
Disposal of subsidiary undertaking - 429,643
________ ________
NET CASH INFLOW FROM ACQUISITIONS & DISPOSALS - 329,540
EQUITY DIVIDENDS PAID - -
________ ________
NET CASH (OUTLOW) /INFLOW BEFORE FINANCING (333,918) 705,133
________ ________
FINANCING
Issue of ordinary share capital 982,724 150,000
Costs of share issues (104,845) -
Debt finance repaid (450,000) (475,000)
________ ________
NET CASH INFLOW/(OUTFLOW) FROM FINANCING 427,879 (325,000)
________ ________
INCREASE IN CASH (notes 3 & 4) 93,961 380,133
________ ________
NOTES
1 Earnings per share
The basic earnings per share is calculated by dividing the profit for the
financial year attributable to shareholders by the weighted average number
of ordinary shares in issue. There are no share options and warrants
outstanding at 30th September 2007 and all the share options and warrants
outstanding at 30th September 2006 were antidilutive. Basic and diluted
earnings per share are therefore identical in both periods.
2007 2006
The weighted average number of shares were: Number Number
Weighted average number of shares 44,576,560 42,324,981
Effect of outstanding warrants and options - -
_________ _________
Adjusted weighted average number of ordinary shares 44,576,560 42,324,981
_________ _________
2 Net cash (outflow)/inflow from operating activities
2007 2006
� �
Operating profit 254,098 398,813
Depreciation 4,348 -
Profit on disposal of subsidiary - (997)
Provision against investments - 104,598
Increase in investments (1,458,916) (255,748)
Decrease in debtors 848,199 396,690
Increase/(decrease) in creditors 37,911 (75,613)
_______ _______
Net cash (outflow)/inflow from operating activities (314,360) 567,743
_______ _______
3 Reconciliation of change in cash to movement in net funds
2007 2006
� �
Increase in cash in the year 93,961 380,133
Debt finance repaid 450,000 325,000
Conversion of loan notes - 150,000
_______ _______
543,961 855,133
______ ______
4 Analysis of net cash and debt
2006 Cash flow Non-cash 2007
� � � �
Cash at bank 1,284,584 93,961 - 1,378,545
________ ________ ________ ________
Net funds 1,284,584 93,961 - 1,378,545
Debt due in less than one year (450,000) 450,000 - -
Debt due in more than one year - - - -
________ ________ ________ ________
834,584 543,961 - 1,378,545
________ ________ ________ ________
5 The investments represent shares which are publicly tradeable on a
recognised market in either USA or UK.
6 The Board of Directors does not propose to pay a dividend.
7 These final results for the year ended 30th September 2007 are an abridged
statement of the full Annual Report, which was approved by the Board of
Directors on 12th February 2008. The Auditors' Report on these accounts was
unqualified and did not contain statements under section 237(2) or 237(3)
of the Companies Act 1985. The financial statements have been prepared
under UK GAAP and the accounting policies of the company as set out in the
statutory financial statements. This financial statement does not
constitute statutory accounts within the meaning of Section 240 of the
Companies Act 1985 (the "Act").
8 The report and accounts for the year to 30th September 2007 will be posted
to shareholders and, after being laid before the Annual General Meeting,
will be delivered to the Registrar of Companies.
9 This statement was approved by the Board of Directors on 12th February
2008. Copies of this statement and the statutory financial statements
will be available free of charge from the office of Griffin Group plc,
Hilden Park House, 79 Tonbridge Road, Hildenborough, Kent, TN11 9BH during
normal office hours, with the exception of Saturdays, Sundays and bank
holidays, for one month from today. A copy will also be available on the
Company website (www.griffingroupplc.co.uk).
Enquiries:
Griffin Group plc
Stephen Dean, Chairman 01732 836180
Nominated Adviser to the Company
City Financial Associates Limited - Liam Murray, Director 020 7492 4777
This information is provided by RNS
The company news service from the London Stock Exchange
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