Ambrian Capital PLC
21 March 2007
AMBRIAN CAPITAL PLC
21 March 2007
PRELIMINARY ANNOUNCEMENT OF UNAUDITED RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2006
Ambrian Capital plc, the investment bank, today announces its preliminary
unaudited results for the year ended 31 December 2006.
• Operating income up 47% to £19.99 million (2005: £13.64 million)
• Profit before tax up 34% to £12.44 million (2005: £9.29 million)
• Basic earnings per share up 35% to 8.16p (2005: 6.03p)
• Final dividend of 1.00p per share making 1.75p for the full year (2005:
1.25p for the full year)
• Investment Banking activities produced operating income up 167% to £7.99
million (2005: £3.00 million), representing 40% of the Group's total
• Realisations of portfolio investments produced operating income of £11.99
million (2005: £10.64 million)
• Shareholders' equity plus unrealised gains of approximately £50.9 million,
comprising £37.0 million of shareholders' equity (2005: £31.4 million) and
£13.9 million of unrealised gains (2005: £17.1 million)
• Return on average shareholder's equity of 25.0% for 2006
Commenting on the results, Malcolm Burne, Chairman of Ambrian Capital plc, said:
'We are very pleased with the substantial progress made during the year in
transforming the Group into an integrated investment bank. Not only has there
been significant expansion at Ambrian Partners Limited, our corporate finance
and stockbroking subsidiary, but we also launched Ambrian Commodities Limited
and Ambrian Asset Management Limited, which are both well positioned for further
Malcolm Burne Tel: +44 (0)20 7395 1930
Ambrian Capital plc
Tom Gaffney Tel: +44 (0)20 7776 6400
Chief Executive Officer
Ambrian Capital plc
Simon Atkinson Tel: +44 (0)20 7523 8306
Cathy Malins & Annabel Leather Tel: +44 (0)20 7851 7480
Further information on Ambrian Capital plc:
Further information on Ambrian Capital is available on the Company's website:
The year under review has been very eventful indeed, marked by a period of
record results, significant expansion within all Group subsidiaries,
diversification of product range and services, a tax efficient re-structuring of
our quoted precious metals assets and a name change to better reflect the new
focus of the Group.
The Group has evolved into an entity that works its assets intensively to
produce increasing and recurring earnings, achieves a greater than average
return on equity and ploughs its profits back into cash generative businesses
for the benefit of all shareholders.
We have now succeeded in building Ambrian Capital into a vehicle firing on all
cylinders. Our plan to convert our investment portfolio into operating
businesses has worked well but we have not given up our investment roots. Our
working capital, plus the market value of our investments, continues to increase
year-on-year, both absolutely and on a per share basis.
The best asset of any group is its people and under the guidance of our Chief
Executive Tom Gaffney, a strong recruitment programme has produced a team
excelling in integrity, prudence, professionalism and innovation. Our declared
strategies and philosophies, and increasing reputation, are attracting the very
best people who wish to work in the environment that we are creating.
Within robust central controls, each autonomous subsidiary is encouraged to
fulfil and expand its project pipeline, as well as to make strategic market
decisions where opportunities for synergy exist. Ambrian Capital is now a
fully-fledged investment bank and its objectives are the identification,
acquisition, financing, development and operation of earnings generative
businesses, which complement each other in providing maximum market
The Directors are pleased to report that the Group's profit before tax for the
year ended 31 December 2006 increased by 34% to a record £12.44 million (2005:
£9.29 million), while basic earnings per share increased by 35% to 8.16p from
The Group's operating income increased 47% to £19.99 million from £13.64
million. Investment Banking activities accounted for approximately 40% of
operating income (2005: 22%), while realised profits arising from our portfolio
investment activities accounted for approximately 60% (2005: 78%).
The Group's shareholders' equity at 31 December 2006 was £37.0 million (2005:
£31.4 million). The market value of listed investments at 31 December 2006 was
approximately £31.9 million (2005: £39.7 million), including unrealised gains
(pre-tax) of £13.9 million.
The Group's cash resources net of client deposits increased to £16.8 million
compared with £4.2 million at 31 December 2005.
The Board declares payment of a final dividend of 1.00p per share (2005: 0.75p),
making a total of 1.75p for the full year (2005: 1.25p). The dividend will be
payable on 25 May 2007 to all shareholders on the register as at 4 May 2007.
Investment Banking operating income for the year ended 31 December 2006 was
£7.99 million, up 167% from £3.00 million for the year ended 31 December 2005,
reflecting the rapid growth of our investment banking activities.
Ambrian Partners Limited
Ambrian Partners Limited, our wholly-owned corporate finance and stockbroking
subsidiary, was involved in 14 capital raisings with a total value of
approximately £135 million, including five Initial Public Offerings ('IPOs') on
AIM. At 31 December 2006 Ambrian Partners had 35 corporate clients who pay
regular retainer fees.
During the year Ambrian Partners made significant progress in broadening the
industry sectors in which it is active and was able to recruit additional
talented staff. Ambrian Partners has been replicating the industry specialist
model which it has successfully implemented in the mining sector.
Broadening sector expertise provides new growth opportunities and ensures the
development of a corporate finance and stockbroking business that is sustainable
over the long term. Ambrian Partners is now active in six industry sectors -
mining, oil & gas, soft commodities, renewable energy, telecommunications and
technology. The expertise of its sector focused research teams has given
Ambrian Partners a competitive edge when competing for corporate and
Despite the slowdown in new issue activity on AIM in the second half of 2006,
the mandated transaction 'pipeline' for Ambrian Partners in 2007 is healthy. In
response to changing market conditions our mix of business is evolving with an
increased amount of corporate finance advisory work and new equity issues
outside of our traditional mining sector.
For example, we are currently acting as joint-financial advisor to the Chinese
consortium which has made a £95 million recommended cash offer for Monterrico
Metals plc, the AIM listed Peruvian copper company. New clients include TMO
Renewables Ltd., a producer of enzymes used in the production of ethanol; Boreal
Energy, a US based developer of wind energy farms and Future Internet Technology
plc, an AIM listed solutions provider for telecom carriers.
To improve our secondary market service to our institutional clients we intend
in the coming months to commence making markets in the shares of our corporate
clients as well as selectively in the shares of companies we publish research
Ambrian Commodities Limited
In March 2006 we launched Ambrian Commodities Limited, an Associate Broker
Member of the London Metal Exchange. Ambrian Commodities is a broker/dealer in
aluminium, copper, lead, nickel and zinc, as well as precious metals (gold,
silver, platinum and palladium). Its business is client-driven and its clients
are located throughout the world and include the entire metals supply chain,
from miners to final industrial users.
Ambrian Commodities made an important contribution to the operating income of
our investment banking activities in 2006. Ambrian Commodities has benefited
from high customer activity levels and high volatility in metals prices. It is
these two factors that drive our profitability rather than the actual direction
of movement of metals prices.
We have recently commenced trading carbon credits and sugar, following our
success in the base and precious metals markets, and we have hired traders and
salesmen with a high level of expertise in these growth areas. This move into
carbon credits and sugar is a natural progression for Ambrian. Ambrian
Commodities proved its business model at a very early stage and continues to add
significant growth and revenues to the Group as a whole.
Ambrian Partners is already active in the alternative energy area, particularly
the renewable energy and bio-fuel sectors, and has specialist research teams for
both areas. The expansion of Ambrian Commodities demonstrates the Group's firm
commitment to the resource sector.
Ambrian Asset Management Limited
Towards the end of 2006, Ambrian Asset Management Limited launched its first
fund: the Golden Prospect Precious Metals Fund Limited ('GPPM'), a closed end
tax efficient vehicle registered in Guernsey and listed on AIM. Ambrian Asset
Management earns a management fee and, potentially, a performance fee for
providing investment management services to GPPM.
The Group transferred into GPPM the bulk of its portfolio of precious metals
investments, valued at approximately £9.4 million in return for GPPM shares.
GPPM has increased its share price significantly since listing on AIM. We plan
to build on this success by launching further funds that complement our
expertise in the wider resources sector.
Operating income from realisations of portfolio investments for the year ended
31 December 2006 was £11.99 million, up 12.7% from £10.64 million the previous
The liquidity raised from the profitable realisation of the principal investment
activities has enabled the Group to make significant strides over the past two
years in its transformation from a resource focused investment company into a
more broadly based investment bank. The increase in capital adequacy enables the
Group to realise its objective, which is to build a highly profitable investment
bank, capable of generating recurring income from its various business units
over the long term. The foundation for such an objective is built on the fact
that the Group's shareholders' equity plus unrealised gains on its listed
investment portfolio has grown by £36 million since January 2002 (compound
annual growth rate of 28%) after the payment of tax on realised profits.
At 31 December 2006 the market value of our portfolio of listed investments was
£31.9 million. The most important investments were our £9.3 million holding in
our 72% owned subsidiary, GPPM, and our £5.2 million holding in Jubilee Platinum
plc. We remain positive on the outlook for precious metals.
Our 9.43% stake in Jubilee Platinum plc continues to represent a highly
attractive holding with its valuable and strategic resource positions in South
Africa and Madagascar.
At 31 December 2006 we held approximately £8.0 million of investments in the oil
& gas sector. Our intention is either to use these investments to 'seed' a newly
formed energy fund managed by Ambrian Asset Management or to realise them as the
The remaining listed investments will be actively managed and will either be
used to 'seed' new managed funds or will be realised as they reach their profit
We have a portfolio of unlisted equity investments which we value at cost in our
accounts. At 31 December 2006 the book value of our unlisted equity investments
was £4.8 million.
Our most significant unlisted equity investments are our African mining
exploration assets, our 25% stake in Commodity Watch plc (which owns the leading
resources news websites Minesite and Oilbarrel) and various stakes acquired by
Ambrian Partners in connection with pre-IPO financings.
In November 2006 the Group announced that it had signed an agreement to merge
its African mining exploration assets with Palladex PLC, an AIM listed mineral
exploration and development company. The Group will retain an approximately 40%
interest in the merged company. All parties are working towards a target
completion date of May 2007.
Commodity Watch plc is expected to be listed in the second quarter of 2007 at a
valuation several times that at which the Group made its investment.
We have been able to achieve attractive returns from late stage pre-IPO
investments particularly where Ambrian Partners is appointed Corporate Broker to
the IPO. An ability to make pre-IPO investments provides Ambrian Partners with a
competitive advantage in securing IPO mandates.
We are well placed to source and evaluate unlisted, late stage, pre-IPO
investments. Through Ambrian Partners we have the knowledge of the equity
capital market required to assess potential investor appetite and to provide the
market access to effect an orderly realisation of the investment in due course.
We have recently formed Ambrian Private Equity as a division of Ambrian Capital
with a formal mandate to invest in late-stage, pre-IPO companies. The objective
is to build a portfolio of companies that are attractive investments in their
own right and to provide a 'pipeline' of IPO mandates for Ambrian Partners. We
intend to allocate actively up to £5 million of capital to this during 2007.
As of 31 December 2006, shareholders' equity was £37.0 million excluding
unrealised gains (pre-tax) of £13.9 million. Book value per ordinary share was
34.3p excluding unrealised gains and 47p including unrealised gains (pre-tax).
The Group's cash resources net of client deposits at 31 December 2006 was £16.8
million compared with £4.3 million at 31 December 2005.
From 1 January 2007 the Group is required by European Directives to report its
consolidated financial statements under International Financial Reporting
Standards ('IFRS') rather than under UK Generally Accepted Accounting Principles
('UK GAAP') as we have done in the past. Under IFRS our portfolio of
investments will be valued on the Group's balance sheet at market prices rather
than at the lower of cost or net realisable value. The Group's level of profits
will depend on changes in the value of the investment portfolio during 2007.
Accordingly, unrealised gains after tax at 31 December 2006 will be reflected in
reserves and movements in value thereafter will be reflected in the profits.
We look forward to 2007 with confidence despite the recent turbulence in the
markets. Our strong balance sheet provides us with a solid foundation. Ambrian
Partners' strategy of diversification into new industry sectors has brought a
number of new clients and attractive new issue mandates and our move into
commodities and investment management has provided important diversification for
the Group, providing a wider platform for growth.
The Group intends to capitalise on London's position as the world's centre for
equities, commodities and investment management by seeking ways of further
extending the international reach of each of our businesses.
Finally, I would like to take this opportunity to thank all our clients who have
entrusted us with their business, our employees for their dedication and my
fellow directors, without whose enthusiasm and wisdom the Group's growth would
not have been possible.
Malcolm A. Burne
As reported on 21 March 2007
AMBRIAN CAPITAL PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Year ended 31 December 2006
Operating Income 19,985,794 13,643,750
Administrative expenses (8,101,128) (4,380,702)
Operating profit - continuing operations 11,884,666 9,263,048
Investment income 593,096 155,398
Interest payable and similar charges (36,616) (123,480)
Profit on ordinary activities before taxation 12,441,146 9,294,966
Tax on profit on ordinary activities 3,816,605 2,825,975
Profit for the financial year 8,624, 541 6,468,991
Profit per ordinary share - basic 8.16p 6.03p
- diluted 7.76p 5.81p
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2006
£ £ £ £
Intangible assets 4,894,539 4,433,698
Tangible assets 199,766 138,799
Investments 730,932 589,682
Debtors: Amounts falling due within
one year 3,856,631 1,629,836
Investments 19,229,748 23,542,135
Deferred tax 1,727,034 84,178
Cash at bank and in hand 30,415,392 5,757,167
CREDITORS: Amounts falling due
within one year (20,535,109) (4,702,080)
NET CURRENT ASSETS 34,693,696 26,311,236
TOTAL ASSETS LESS CURRENT
LIABILITIES 40,518,933 31,373,415
CAPITAL AND RESERVES
Called up share capital 10,806,121 10,726,121
Share premium account 10,849,383 10,803,383
Merger reserve 1,245,256 1,245,256
Profit and loss account 15,568,008 8,529,698
Other reserves (1,433,512) 168,957
EQUITY SHAREHOLDERS' FUNDS 37,035,256 31,473,415
EQUITY MINORITY INTERESTS 3,483,677 -
CONSOLIDATED CASH FLOW STATEMENT
Year ended 31 December 2006
£ £ £ £
Net cash inflow from operating activities 29,426,056 5,432,020
Returns in investments and servicing of finance
Investment income 593,096 155,398
Interest payable (36,616) (123,480)
Net cash inflow from returns on investment and
servicing of finance 556,480 31,918
Taxation (4,302,766) (2,148,597)
Capital expenditure and financial investment
Payments to acquire intangible fixed assets (558,805) (330,031)
Payments to acquire tangible fixed assets (140,085) (148,132)
Payments to acquire fixed asset investments (141,250) (124,122)
Net cash outflow from capital expenditure and
financial investment (840,140) (602,285)
Equity Dividend paid (1,586,231) (536,306)
Net cash inflow before financing 23,253,399 2,176,750
Issue of ordinary share capital 126,000 -
Treasury shares acquired (163,217) -
Bank loan repayment (1,500,000) -
Issue of shares in subsidiary undertaking to minority
interest 3,483,677 -
Net cash inflow from financing 1,946,460 -
Increase in cash 25,199,859 2,176,750
NOTES TO THE UNAUDITED ACCOUNTS
Year ended 31 December 2006
1 The calculation of earnings per share is based on the profit after
tax of £8,624,541 (2005 - £6,468,991) and on the number of shares in issue being
the adjusted weighted average number of shares in issue during the period of
105,748,057 (2005 - 107,261,208).
2 The preliminary results for the year ended 31 December 2006 is
unaudited and were approved by the Directors on 20 March 2007. The financial
information set out above does not constitute statutory accounts within the
meaning of s.240 of the Companies Act 1985.
3 The accounting policies remain as stated in the Annual Report for the
year ended 31 December 2005 apart from the definition of turnover.
For the current year, operating income is used to describe revenue
rather than turnover as required by the Companies Act 1985, as the directors
consider it better reflects the nature of the business.
Operating income comprises institutional brokerage commission and
net trading profit or loss on trading positions, corporate broking retainers,
commodity commissions, deal fees (comprising cash based on advisory fees and the
award of options to the Group) and placing commissions. The comparatives
reflect this change in policy.
4. The comparatives for 2005 are re-stated to reflect the effect of the
introduction of share based payments charge under FRS 20.
This information is provided by RNS
The company news service from the London Stock Exchange