Embargoed: 0700hrs, 15 August 2007
Hichens, Harrison & Co. plc
London's oldest stockbroker, established in 1803
("Hichens" the "Company" or the "Group")
Interim Results for the Half Year Ended 30 June 2007
* Revenue increased by 89% to �10.6m (HY2006: �5.6m);
* Profit from operations rose 150% - significantly higher than the rate of
revenue growth - to �2.9m at the half year stage (HY2006: �1.2m);
* Strong progress in implementing strategy to replicate "old style" merchant
banking group, regrouping into separate services and investment divisions
with the intention to strengthen and enhance the Group's quality of
earnings;
* Hichens, Harrison (Ventures) Ltd ("HHV") shows strong growth during the
period;
* Hichens Investment Management ("HiM") firmly established with funds under
control and advice up to �300m by the period end;
* Additional working capital raised and shareholder base strengthened;
* Significant developments after the period end; including the purchase of
the entire share capital of ARM Corporate Finance Limited, the purchase of
a controlling stake in Global Traders Consultoria Internacional Ltda,
Brazil and a 10% strategic stake in Unicorn Asset Management Limited;
* Blomfield Street Securities Ltd ("Blomfield")achieved AIM Nominated Adviser
status.
Chairman's Statement
I am delighted to announce Hichens, Harrison & Co. plc's interim results to 30
June 2007. These are again the strongest results from the Company since it
joined AIM on 4 May 2005.
Hichens had initially set itself the challenging goal of becoming the broker of
choice for emerging markets. We have made substantial progress in this regard
and now we are looking to create a merchant banking group with both service and
investment divisions. Significant progress toward this goal was made during the
half year period and since the period end by a combination of organic growth
and acquisition.
Financial Review
In the first half of 2007 Hichens recorded a turnover of �10.6m, an increase of
89% compared to the previous half year period of �5.6m. This resulted in an
operating profit of �2.9m which compares with �1.2m operating profit (after
exceptional items) for the same period last year, a rise of 150%.
Despite the continued expensing of the costs of setting up and developing new
businesses the Directors are pleased to report that operating profit continues
to rise faster than the rate of turnover growth, the costs of the business
continue to be controlled carefully.
Review of Operations
During the first part of 2007, Hichens has continued to expand its
stock-broking business and was also able to significantly develop Blomfield
Street Securities Ltd ("Blomfield"), its subsidiary corporate finance service
business, which obtained Nominated Adviser ("NOMAD") status after the period
end. We have high expectations for the profitable expansion of Blomfield.
Hichens was also able to further develop its two investment businesses during
the period:
Hichens Investment Management Limited ("HiM"), had funds under control and
advice of �300m at the period end; this was up from �80m at Hichens float in
May 2005.
Hichens, Harrison (Ventures) Limited ("HHV"), has made considerable progress
with its investment portfolio showing a substantial gain over the period.
Outlook
The progress in the first half of 2007 has seen the Group grow considerably.
The Directors remain confident that the past growth rates are set to continue
and that, with the new businesses that have been added (some just after the
reporting period), the quality of the earnings stream should rise.
Immediately post the period end, Hichens Investment Management ("HiM") acquired
a 10.08% stake in Unicorn Asset Management Limited ("Unicorn") for a cash
consideration of �1,290,240. Unicorn is a specialist small to mid cap unitised
fund manager with approximately �308m in its funds at the time the stake was
acquired, and making a pre tax operating profit in its last reported accounts
of circa �1.8m.
By taking a strategic holding in Unicorn, HiM is diversifying its financial
services offering and investing in a complementary high quality earnings
business.
It is also HiM's intention to be able to offer its retail clients exposure to
various Global Sectors in defined emerging markets (such as Middle East
Healthcare, Mayfair Property and Indian growth companies) through a variety of
joint venture investment vehicles.
In addition and post the half year reporting period Hichens entered in to a
agreement to acquire ARM Corporate Finance Ltd ("ARM"), for a cash and shares
consideration of �4,327,000.
ARM Corporate Finance is a UK Listing Authority registered sponsor and an AIM
Nominated Adviser as well as a member of the London Stock Exchange. ARM
currently acts as NOMAD for 19 corporate clients.
In the 12 months to 30th April 2007 ARM Corporate Finance Limited reported
profits before tax of �342,405. As at 30 April 2007 ARM Corporate Finance
Limited had net assets of �779,945. The Board believe that this acquisition
will be earnings accretive and that the ARM management team and business will
add considerable strength to the Hichens Group.
The last two service divisions that were established post the year end are
detailed below:
Hichens, Harrison (Derivatives) LLP ("HHD"): Hichens, Harrison & Co PLC has a
controlling stake in this business, which it set up with the aim of expanding
the margin products traded at Hichens. HHD will hope to offer contracts for
difference on equities, bonds, indices, currencies and commodities, as well as
other spread betting services.
Hichens, Harrison (Commodities) Ltd ("HHC"): a wholly owned business, that was
very recently established (post the half year end) to hold our agency
commodities trading company.
HHC has just entered into an agreement to purchase 51% of Global Traders
Consultoria Internacional Ltda, using Hichens shares as consideration. This
company will be renamed Hichens, Harrison (Global) Limited.
Concurrently with the above purchase of Global Traders Consultoria
Internacional Ltda Hichens, Harrison (South America) Ltd hopes to set up a new
office in Rio de Janeiro Brazil. It is our intention that this new office will
become the regional head office for our already established office in Buenos
Aires, Argentina.
It is intended that the commodities business will be able to grow quickly and
be able to source sugar, iron ore and other commodities for clients introduced
to Hichens from its Middle East offices in Dubai.
It is the Directors' intention that the new service and investment businesses
will work alongside our more traditional stock-broking business in every region
in the world that we are represented. We hope that in time the Group will
become the merchant banking services group of choice for small and medium sized
companies across the globe, and especially in emerging markets.
During and post the half year end the Group has also placed a number of new
shares to increase its working capital in line with its stated strategy. This
has significantly strengthened the Company's balance sheet. Most notably
Blackrock Asset Management ("Blackrock") had built up a disclosable stake of 4%
in the Company through purchasing shares in the market and a placing of new
ordinary shares at 205p in the half year period. Since the period end Blackrock
have further supported the Company and recently doubled their stake to 7.9% via
an additional placing of new ordinary Hichens shares at 350p.
Strategy
Hichens will continue with its stated strategy of establishing itself as an
"old style" merchant bank but without the actual banking licence, and will
continue to apply for local regulatory licences with the objective of being
able to trade and raise capital in its expanding overseas operations.
The Directors believe that this geographical and business diversification will
greatly strengthen the quality of the Company's earnings going forward.
Hichens, Harrison (Commodities) offers the Group a revenue and profit stream
not dependent on potentially volatile equity markets.
In the second part of the year Hichens, Harrison (Africa) Ltd hopes to gain FSB
approval and has applied to become a full member of the Johannesburg Stock
Exchange.
Hichens, Harrison (Asia) Ltd ("HHA") intends to open new offices in both
Singapore and Japan (the latter by way of a joint venture).It is our intention
that the Singapore office will form the new regional head office for the
current Indonesian and Malaysian offices. HHA has also started the process of
gaining a regulatory licence in Singapore for this office.
We have been fortunate to be able to attract excellent candidates to the Group
both in the reporting period and immediately following it. Amongst the new
arrivals are:
Angus Samuels, the, former CEO of credit Suisse Asset Management and Sanlam
Investment Management, was appointed as Executive Chairman at Blomfield;
Toby Durrant was brought in to help with the formation of HHC and to manage
operations on a more global group level;
Julia Bernardie, former head of listings at Standard Bank in Johannesburg, is
joining Hichens, Harrison (Africa) to advise companies in Africa on public
listings;
Charlie Morgan, a former Director at Deutsche Bank London, has joined to
strengthen our European Sales Trading offering in London; and
Chris Cheverall, who has significant derivatives experience across many
companies, has joined Hichens to head up the newly established Hichens,
Harrison (Derivatives) LLP.
I would also like to welcome all the new shareholders in the last twelve months
and to express my thanks to those advisers who have continued to work with us
over the last year.
Lastly and most importantly on behalf of the entire board of Directors, we wish
to express our gratitude and appreciation to all the members of staff who have
worked so hard in order that the Company is able to continue along its
ambitious growth strategy. They all collectively share the Company's ambition
and, in a people business, their enthusiasm and professionalism is a credit to
each and every one of them.
Jeremy Delmar-Morgan
Chairman
Consolidated Income Statement for 6 months ended 30 June 2007
Note Unaudited Unaudited six Unaudited year
six months months ended ended 31
ended 30 30 June 2006 December 2006
June 2007
�'000 �'000 �'000
Revenue 4 10,665 5,635 12,718
Cost of Sales 2,025 965 2,123
Gross Profit 8,640 4,670 10,595
Administrative Expenses 5,787 3,420 7,943
Profit from Operations 2,853 1,250 2652
Finance costs 0 (44) (50)
Finance income 47 16 61
Profit before taxation 2,900 1,222 2,663
Income tax expense (926) (366) (914)
Profit for the period 1,974 856 1,749
attributable to the equity
holders of the parent
Basic earnings per share 5 13.63 6.49 13.10
(pence)
Diluted earnings per share 5 12.10 5.77 11.58
(pence)
Consolidated Balance sheet as at 30 June 2007
Unaudited Unaudited Unaudited
as at 30 as at 30 as at 31
June 2007 June 2006 December
2006
�'000 �'000 �'000
Assets
Non-Current Assets
Property Plant & Equipment 434 216 389
Deferred tax asset 446 446
Total Non-Current Assets 880 216 835
Current Assets
Financial Instruments held for trading 14,799 2,863 5,858
Trade & Other Receivables 27,786 16,982 24,194
Cash & Cash Equivalents 2,085 5,513 7,499
Total Current Assets 44,670 25,358 37,551
Total Assets 45,550 25,574 38,386
Liabilities
Current Liabilities
Bank Overdraft 0 0 53
Trade & Other Payables 30,448 20,414 30,547
Corporation Tax Liability 1,830 712 914
Current Tax Liabilities 113 81 154
Total Current Liabilities 32,391 21,207 31,668
TOTAL NET ASSETS 13,159 4,367 6,718
Financed By
Called up share capital 1,565 1,352 1,408
Share Premium Account 6,868 1,688 2,558
Capital Redemption Reserve 725 725 725
Own Shares Held (328) (250) (328)
Profit & Loss Account 4,329 852 2,355
TOTAL EQUITY 13,159 4,367 6,718
Consolidated Cashflow Statement for 6 months ended 30 June 2007
Unaudited Unaudited Unaudited
six months six months year ended
ended 30 ended 30 31
June 2007 June 2006 December
2006
�'000 �'000 �'000
Operating Activities
Net profit from ordinary activities 2,853 1,250 2,652
Adjustments for:
Depreciation 42 32 65
Share based payment charges 0 0 254
Operating profit before changes in working 2,895 1,282 2,971
capital & provisions
(Increase)/ decrease in trade & other (3,592) 7,147 (65)
receivables
Increase in financial instruments held for (8,941) (1,725) (4,720)
trading
(Decrease)/ increase in trade & other (141) (3,417) 6,733
payables
Cash generated from operations (9,779) 3,287 4,919
Corporation tax paid (9) (10) (380)
Cash flows from operating activities (9,788) 3,277 4,539
Investing Activities
Interest received 45 16 61
Purchase of Property Plant & Equipment (85) (148) (354)
(40) (132) (293)
Financing Activities
Issue of Ordinary Shares 4,467 910 1,836
Acquisition of own shares (78)
Interest paid 0 (44) (50)
4,467 866 1,708
Increase / (decrease) in cash & cash (5361) 4,011 5,954
equivalents
Opening cash and cash equivalents 7,446 1,502 1,492
Closing Cash and cash equivalents 2,085 5,513 7,446
Unaudited Consolidated Statement of changes in equity for the 6 months ended 30
June 2007
Share Share Capital Own Retained Total
share Earnings
Capital Premium Redemption
held
account Reserve
�'000 �'000 �'000 �'000 �'000 �'000
Balance at 31 December 2006 1,408 2,558 725 (328) 2,355 6,718
Profit for the period 1,974 1,974
Total recognised income and 1,974 1,974
expenditure for the period
Issue of Share Capital 157 4,310 4,467
Balance at 30 June 2007 1,565 6,868 725 (328) 4,329 13,159
Unaudited Consolidated Statement of changes in equity for the 6 months ended 30
June 2006
Share Share Capital Own Retained Total
shares Earnings
Capital Premium Redemption
held
account Reserve
�'000 �'000 �'000 �'000 �'000 �'000
Balance at 31 December 2005 1,300 830 725 (250) 352 2,957
Profit for the period 856 856
Total recognised income and 856 856
expenditure for the period
Issue of Share Capital 52 858 910
Balance at 30 June 2006 1,352 1,688 725 (250) 1,208 4,723
Notes to the Interim Unaudited Financial Statements
1. The Company had previously prepared its financial statements under UK GAAP.
With effect from periods commencing on or after 1 January 2007, the Group is
required to prepare its financial statements in accordance with IFRS as
endorsed for use in the European Union.
The financial information presented in this report has been prepared using
accounting policies that will be used in the preparation of the financial
statements for the year ended 31 December 2007. These policies are in
accordance with International Reporting Standards (IFRS) and International
Financial Reporting Interpretations Committee (IFRIC) interpretations that are
expected to be applicable for the year ended 31 December 2007.
The comparative figures included in this report for the six months ended 30
June 2006 and the full year ended 31 December 2006 are restated for IFRS and
are unaudited.
The conversion to IFRS has resulted in presentational adjustments only.
2. The comparatives for the full year ended 31 December 2006 are based on the
latest published audited accounts, but are subject to unaudited restatement to
IFRS as endorsed for use in the European Union. They are not the Company's full
statutory accounts for that year. A copy of the statutory accounts for that
year were prepared in accordance with UK GAAP and have been delivered to the
Registrar of Companies. The auditors' report on those accounts was unqualified,
did not include any references to matters to which the auditors drew attention
by way of emphasis without qualifying their report and did not contain a
statement under section 237(2) - (3) of the Companies Act 1985.
3. In the six months ended 30 June 2007 the company has issued the following
numbers of its 10p shares to provide additional working capital:
Date No of Shares Price Value Raised
11.04.2007 400,000 205p � 820,000
03.05.2007 525,000 250p �1,312,500
23.05.2007 200,000 345p �690,000
22.06.2007 438,332 375p �1,643,745
1,563,332 4,466,245
4 Revenue Unaudited Unaudited Unaudited
six months six months year ended
ended 30 ended 30 31 December
June 2007 June 2006 2006
�'000 �'000 �'000
The groups turnover is generated from
its three key operating area as
follows:
Agency dealing commissions and profit 3,097 2,392 4,780
less losses from riskless principal
bargains
Corporate broking, investment 3,518 3,172 6,296
management and advisory fees
Gains on financial instruments held 4,050 71 1,642
for trading
Total 10,665 5,635 12,718
5 Earnings per share has been calculated using the weighted average number
of shares in issue during the relevant financial period. The weighted
number of equity shares in issue and the earnings, being the profit after
tax , are as follows:
Unaudited 6 Unaudited 6 Unaudited
months ended months ended year ended 31
30 June 2007 30 June 2006 December 2006
Weighted number of equity shares 14,488,648 13,184,544 13,347,023
Effect of Employee share options 1,836,295 1,637,864 1,758,452
Weighted average number of shares 16,324,943 14,822,408 15,105,475
used in diluted EPS
Profit after tax (�,000) 1,974 856 1,749
Earnings per share (pence) 13.63 6.49 13.10
Diluted earnings per share (pence) 12.10 5.78 11.58
Enquiries:
Hichens, Harrison
Adam Wilson, CEO
Tel. 020 7382 4450
Ruegg & Co Ltd
Brett Miller
Tel. 020 7584 3663
Hansard Group
Ben Simons
Tel. 020 7245 1100
END
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