RNS Number:8891P
Quayle Munro Holdings PLC
18 September 2003
QUAYLE MUNRO HOLDINGS PLC
Statement of preliminary results for the year ended 30 June 2003
CHAIRMAN'S STATEMENT
On behalf of the Board I can report another successful year. Although profits
are slightly down from last year we have managed to significantly increase asset
value and return per share. We believe we are in a strong position to make
further progress in the future.
RESULTS
The Group profit before taxation in the year ended 30th June 2003 was #1,091,000
and this compares with #1,172,000 for the previous year, a fall of 7 per cent.
Fee and other income, adjusting for movements in work in progress, fell to
#1,648,000 compared with #2,028,000 for the previous year, a decrease of 19 per
cent. The share of operating profits from the joint venture in the Quayle Munro
PFI Fund Limited Partnership rose to #80,000 from #30,000. There were gains
from the sale of fixed asset investments totalling #120,000, somewhat reduced
from #191,000 last year, but income from investments was #863,000 compared with
#623,000 the previous year. There was a decrease in operating costs, which fell
by 7 per cent from #1,738,000 to #1,620,000.
Earnings per share were 29.0p compared with 26.9p last year, an increase of 8
per cent. Net assets per share have risen to 527.7p compared with 440.2p as at
30th June 2002, a rise of 20 per cent. The total return per share, which
comprises earnings per share plus the increase in the value of the Group's
assets and includes taxation on gains from sales of investments charged directly
to reserves, rose to a record 104.0p compared with 85.8p the previous year (also
a record), a rise of 21 per cent.
In view of the continuing growth in net worth and a satisfactory current level
of activity the Directors are pleased to recommend a final dividend of 11p per
share, making 16.5p for the year, an increase over last year of 10 per cent.
PENSION COSTS
I advised shareholders last year that our defined benefits pension scheme had
been closed to new entrants since 2000 but that we were embarking upon a
detailed evaluation of the contractual and financial implications of altering
our pension arrangements with a view to limiting the future cost to the company.
We have decided to maintain the defined benefits pension scheme for existing
members, but the employee contribution rate has been increased from 3 per cent
to 11 per cent, with the company's contribution reducing from 34.8 per cent to
26.8 per cent. We will review this question again prior to publication of the
results for the year ending 30th June 2006, with the review based on any funding
deficit at that time.
OUR ASSETS
Our portfolio, besides net working capital and our office building and other
fixed assets, currently comprises a mix of house building, other unlisted
investments in healthcare and offshore oil services, private finance
investments, and reserve capital in cash and listed securities. As at 30th June
2003 the breakdown was as follows:
# million %'age
Office building and other fixed assets 1.4 7.5
Housebuilding 10.2 54.8
PFI investments 3.6 19.4
Other unlisted investments 1.8 9.7
Cash, or cash equivalent, listed securities and net
working capital 1.6 8.6
Total Net Assets 18.6 100.0
A key factor of the capital appreciation over the last few years has been our
investment in Morris Group, one of the UK's largest unlisted housebuilders.
With a geographical spread from the North West, down to Northamptonshire in the
East and Worcestershire in the West, Morris improved turnover by 30.7 per cent
to #133.2 million in the year to 31st March 2003. Pre-tax profits were up some
85 per cent at #14.8 million. In the current financial year which started on
1st April 2003 Morris has continued to make sound progress and is forecasting
increased profits based on a strong order book and a substantial land bank of
undeveloped plots with planning permission. Throughout our long association
with Morris, which dates back to 1990, we have benefited from very significant
returns on equity and we have every reason to believe that this will continue.
We have continued to be active as investors, mainly through our joint fund with
the Bank of Scotland in schemes under the Private Finance Initiative. These
investments are being made at attractive cash and total rates of return.
Investment in special purpose PFI companies requires a presence in the industry
and specialised professional experience. We are continuing to actively invest
in this area. More details of our new investments and of prospects for this
sector are included in the Chief Executive's report.
One other specialist investment has been the subject of some activity last year
and is somewhat unusual for us. Three years ago we made a modest investment in
a medical device company called Tayside Flow Technologies Limited (TFT) which
has developed and patented technology applicable to vascular grafts and stents
based on research into the special characteristics of blood flow in the body.
During the year we invested a further #400,000 in TFT, and QM is now the largest
shareholder with an equity interest of 23.4 per cent. As at the year end, in
terms of the valuation at 30th June 2003, we have an exposure of #650,000 to
TFT. Development to date has been most encouraging, and it should become
apparent in the course of the current financial year whether our confidence in
this particular technology is justified.
Despite uncertainties in world securities markets I am confident that we can
continue our historic growth rates with contributions from each component of the
portfolio.
THE EXECUTIVE
The team have had another busy and successful year, and progress is being made
in our professional activities and in our somewhat eclectic portfolio. As usual
I would like to thank the executive for their commitment during the year. While
other professional organisations in our industry have been releasing staff I am
pleased to say that we have been maintaining numbers.
PROSPECTS
I believe I could repeat what I said last year in this paragraph, in confirming
that we have had another good year in a difficult market environment. We remain
commited to two main areas of growth, namely in Morris Group and in PFI
investments. Professional activity has started the year satisfactorily.
It remains our policy to distribute excess capital back to our shareholders by
way of special dividends when we believe it is appropriate to do so, taking
account of the cash generated by our trading and investment activities.
OUR LISTING
We have now successfully completed ten years as a fully listed company, during
which we have consistently grown net assets and dividends in line with our main
objective of creating shareholder value. Much has changed in this period
including a lessening of market interest in small companies. After very careful
consideration we now feel it is appropriate to transfer our listing from the
main market to the Alternative Investment Market (AIM), which we believe is more
suitable for our company. We have appointed stockbrokers to act as our
nominated adviser and we would expect the transfer to be completed before the
Annual General Meeting.
I. Q. JONES
Chairman
17th September 2003
GROUP PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30TH JUNE 2003
Notes 2003 2002
#'000 #'000
TURNOVER - group and share of joint venture's turnover 1,567 2,100
Less: share of joint venture's turnover (99) (35)
GROUP TURNOVER 1,468 2,065
Movements in work in progress 180 (37)
1,648 2,028
Gain on trading in financial instruments - 19
Other operating charges (1,620) (1,738)
GROUP OPERATING PROFIT 28 309
Share of joint venture's operating profit 80 30
TOTAL OPERATING PROFIT 108 339
Profit on sales of fixed asset investments 120 191
Income from investments 863 623
Interest receivable 25 49
Loan interest payable (25) (30)
TOTAL PROFIT BEFORE TAXATION 1,091 1,172
Tax charge (71) (228)
PROFIT ATTRIBUTABLE TO MEMBERS OF PARENT COMPANY 1,020 944
Dividends on equity shares 4 (580) (1,407)
RETAINED PROFIT/(LOSS) FOR THE YEAR 440 (463)
BASIC EARNINGS PER SHARE 2 29.0p 26.9p
DILUTED EARNINGS PER SHARE 2 28.4p 26.5p
GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED
30TH JUNE 2003
2003 2002
#'000 #'000
Profit for the year excluding share of profit of joint venture 940 914
Share of joint venture's profit for the year 80 30
PROFIT ATTRIBUTABLE TO MEMBERS OF PARENT COMPANY 1,020 944
Unrealised revaluation gains during the year 2,627 2,075
Taxation charged directly to reserves 10 (10)
TOTAL RECOGNISED GAINS RELATING TO THE YEAR 3,657 3,009
RETURN PER SHARE 3 104.0p 85.8p
GROUP BALANCE SHEET
AS AT 30TH JUNE 2003
Notes 2003 2003 2002 2002
#'000 #'000 #'000 #'000
FIXED ASSETS
Tangible assets 1,408 1,446
Investments in joint venture
- share of gross assets 1,614 1,024
- share of gross liabilities (54) (5)
1,560 1,019
Investments - listed 1,122 1,681
- unlisted 14,063 10,735
16,745 13,435
18,153 14,881
CURRENT ASSETS
Debtors 1,193 936
Work in progress 355 175
Taxation recoverable 46 38
Short term deposits and cash at bank 174 2,285
1,768 3,434
CREDITORS:
AMOUNTS FALLING DUE WITHIN ONE YEAR
Bank loan 43 43
Creditors 384 954
Taxation payable 112 124
Proposed dividends 387 1,231
926 2,352
NET CURRENT ASSETS 842 1,082
TOTAL ASSETS LESS CURRENT LIABILITIES 18,995 15,963
CREDITORS:
AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Bank loan (425) (467)
PROVISIONS FOR LIABILITIES AND CHARGES
Deferred Taxation (11) (14)
TOTAL NET ASSETS 18.559 15,482
CAPITAL AND RESERVES
Called up share capital 352 352
Share premium account 738 738
Revaluation reserve 7,795 5,168
Other reserves 1,356 1,356
Profit and loss account 8,318 7,868
EQUITY SHAREHOLDERS' FUNDS 18,559 15,482
NET ASSETS PER SHARE 4 527.7p 440.2p
SUMMARISED STATEMENT OF GROUP CASH FLOWS FOR THE YEAR ENDED 30TH JUNE 2003
2003 2002
#'000 #'000
NET CASH (OUTFLOW)/ INFLOW FROM
OPERATING ACTIVITIES (338) 319
Net cash inflow from returns on investments and servicing of finance 793 548
Taxation (85) (74)
Net cash (outflow)/inflow from capital expenditure and financial investment (1,015) 401
Equity dividends paid (1,424) (525)
Management of liquid resources 464 689
CASH (OUTFLOW)/INFLOW BEFORE FINANCING (1,605) 1,358
Cash (outflow) from financing (42) (6)
(DECREASE)/INCREASE IN CASH (1,647) 1,352
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET (DEBT)/FUNDS FOR THE YEAR
ENDED 30TH JUNE 2003
(DECREASE)/INCREASE IN CASH IN THE YEAR (1,647) 1,352
Cash outflow from repayment of debt 42 43
Cash used to (decrease) liquid resources (464) (689)
Movement in net (debt)/funds in the year (2,069) 706
NET (DEBT)/FUNDS AT 30TH JUNE 2002 1,775 1,069
NET (DEBT)/FUNDS AT 30TH JUNE 2003 (294) 1,775
RECONCILIATION OF OPERATING PROFIT BEFORE TAXATION TO NET CASH (OUTFLOW)
/INFLOW FROM OPERATING ACTIVITIES FOR THE YEAR ENDED 30TH JUNE 2003
OPERATING PROFIT 28 309
Depreciation net of losses on sales of tangible fixed assets 51 67
Changes in working capital and other non cash items (417) (57)
NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES (338) 319
NOTES ON THE ACCOUNTS
1. The preliminary financial information has been prepared on the basis
of accounting policies which are consistent with those used in the Group's
statutory accounts for the year ended 30th June 2002.
2. The calculation of basic earnings per share is based on earnings of
#1,020,000 (2002 - #944,000) and on 3,516,801 ordinary shares, being the
weighted average number of shares in issue during the year (2002 - 3,505,972).
The calculation of diluted earnings per share is based on the weighted average
of 3,588,706 ordinary shares (2002 - 3,565,188).
3. The calculation of return per share is based on total recognised gains
of #3,657,000 (2002 - #3,009,000) and on 3,516,801 ordinary shares, being the
weighted average number of shares in issue during the year (2002 - 3,505,972).
Return per share when diluted for options granted is 101.9p (2002 - 84.4p), and
the calculation is based on the weighted average of 3,588,706 ordinary shares
(2002 - 3,565,188) and the average share price during the year.
4. The Directors recommend a final dividend of 11p per ordinary share
which, with the interim dividend of 5.5p per ordinary share paid on 6th April
2003, makes a total of 16.5p per ordinary share amounting to #580,000 (2002 -
#528,000) for the year. The amount of the dividend payable is based on
3,516,801 shares, being the present number in issue, and the proposed final
dividend shall, if approved at the Company's Annual General Meeting on 7th
November 2003, be paid on 12th November 2003 to shareholders on the register on
18h October 2003. The special dividend of 25p per share announced on 4th March
2002 was paid on 1st July 2002 and absorbed #879,000.
5. The profit and loss account and balance sheet for the year ended 30 th
June 2003 do not constitute statutory accounts within the meaning of s240
Companies Act 1985. They are an extract from the full group accounts, which
will be the subject of an unqualified audit report.
6. The net asset value per share as at 30 th June 2003 is based on
3,516,801 ordinary shares in issue as at that date (2002 - 3,516,801). The
fully diluted net asset value per share was 508.8p (2002 - 427.4p). This is
calculated on the assumption that all options granted were fully exercised at
the year end resulting in a larger number of ordinary shares totalling 3,786,096
(2002 - 3,789,024) and increased net assets of #19,293,000 (2002 - #16,196,000).
The diluted net asset value per share calculated in accordance with FRS14 is
517.1p (2002 - 432.9p). This is based on net assets and on 3,588,706 (2002 -
3,576,016) ordinary shares, being the number of ordinary shares in issue at 30th
June 2003 plus 71,905 (2002 - 59,216) ordinary shares, being the notional number
of ordinary shares that would have been issued for no consideration using a year
end share price of 357.5p (2002 - 335p) to represent the fair value of an
ordinary share.
7. The Annual Report will be circulated to all shareholders. Thereafter,
copies will be available from the Company Secretary at 8 Charlotte Square,
Edinburgh EH2 4DR.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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