1^st September 2009

 

 

DANIEL STEWART SECURITIES PLC(AIM)

 (“Daniel Stewart” or “the Company”)

 

FINAL RESULTS

FOR THE YEAR ENDED 31 MARCH 2009

The Board of Daniel Stewart Securities plc, the investment bank offering corporate advisory and institutional stockbroking services, announces its final results for the year ended 31 March 2009.

 

FINANCIAL AND OPERATIONAL HIGHLIGHTS

• Group Turnover of £4.4m (2008: £8.4m)
• Reported loss after tax of £2.9m (2008: Loss £2.0m); fully diluted Loss per Share of (1.15p) (2008: 0.80p)
• Liquidity remains strong. Cash at year end of £ 1.2m; now £2.0m
• Client numbers: 49 up from 46 at year end 2008
• Grew overseas revenues via US joint venture and Middle East licence
• Launched on-line CFD platform
• Post period end showing early signs of improvement in revenues

 Commenting on today’s announcement, Peter Shea, Group Chief Executive, said:“We have successfully completed a number of transactions and selectively strengthened our management team during the first period of the new-year despite markets remaining weak with tremendous volatility. We have extended our pipeline of transactions and have continued to add to our client base. “We are confident that, after completing a substantial cost reduction programme, which has left our annualised administrative costs lower in the current financial year versus the previous, we are structured to quickly reap the benefits of recovery as it develops.”

 

  --ENDS--

 

 

 

 

 

Enquiries:

DANIEL STEWART SECURITIES PLC                                     Tel: 020 7776 6550

Peter Shea 

 

Maxine Barnes                                                                   

Nick Rome

Siobhra Murphy    

danielstewart@bishopsgatecommunications.com                 

 

ARBUTHNOT SECURITIES                                                       Tel: 020 7012 2000

Nick Tulloch

Niamh Corbett

 

 

Notes to Editors:

 

 

About Daniel Stewart

Daniel Stewart Securities is an AIM-listed company providing a range of investment banking services to Small Cap publicly traded and non-publicly traded companies. The Group has two subsidiaries, Daniel Stewart and Company, the Group's principal operating subsidiary, which is authorised and regulated by the Financial Services Authority and is a member of the London Stock Exchange, and Daniel Stewart Capital, the Group's leasing and debt financing division.

CHAIRMAN’S LETTER TO THE SHAREHOLDERS

Dear Shareholder

I am pleased to be able to present our results for the year to March 31st 2009.

We have, as all are aware, been trading through a period of tumultuous financial upheaval with recession on a global basis. Conditions have been such that the IPO and Secondary markets effectively came to a stand still.

We have seen Small and Mid Cap companies unable to continue to access equity capital. The banking system close to systemic failure effectively stopped providing credit with few exceptions.

During 2008/9 we completed a total of 17 transactions across the business.

We took the opportunity in these difficult times to make some exceptional hires in our Research, Corporate Broking and Corporate Finance departments. In our sales team we strengthened our distribution capability by establishing a retail client arm supported by the creation of an on-line CFD product. We continue to strengthen our team and look to hire more quality individuals who are keen to work in a dynamic environment. We have completed negotiations with our Middle East partners and have seen the first of what we hope will be a number of transactions generated from the region.

Additionally we have consolidated our arrangements in the US with SMH Capital and successfully completed our first OTCQX transaction just after our year end and expect to begin the distribution of our research to their institutional client base very soon.

We were supported throughout the year by our shareholders who contributed £1.1 million in new capital up to March 31st 2009 and a further £1 million since the year end. As such our balance sheet, while reduced, still remains strong with cash balances today of £2 Million.

While we see no immediate sign of economic improvement we are confident that we are well positioned and financially strong enough to survive these unprecedented difficulties. 

 

Peter Dicks

Chairman

 

 

Chief Executive’s review

This review contains several subjective and forward looking statements which have been made by the Directors in good faith based upon the information available to them at the time.  Any subjective or forward-looking statement should be considered by the user within the context of economic and business risk.

 

Business Environment

Economic conditions throughout the period have been very poor. The capital markets for small and mid cap companies effectively closed with barely a handful of transactions being completed on AIM.

 

Results of Operations

Revenue for the twelve months was £4.4 million down from £8.3 million for the previous year - a fall of 47%. Our gross profit performance deteriorated by 47% on the previous year, to £4.2 million versus £7.9 million for 2008. At the operating level, before bonus, share based payments and exceptional items, we reported a loss of £2.2 million compared to a loss of £0.5 million for 2008. Staffing levels were 39 at year end down from 46 in 2008.  Administrative costs were reduced by 13% from £6.9 million in 2008 to £6.0 million. After taking into account interest, depreciation and amortisation the pre tax loss was £2.6 million compared with a loss of £2.0 million in 2008.  This loss is after £0.7 million in exceptional charges and share based payments. No bonuses of cash or shares were paid during the year. The charge for share based payments being related to awards from previous years.

 

Equity Capital Markets

At year-end 31st March 2009 our retained AIM and other public market client base consisted of 49 companies. We completed two transactions and acted on the admission of £13 million in new capital on both primary and secondary issues.

 

Liquidity and Capital Resources

Net Assets fell from £5.7 million in 2008 to £3.8 million, primarily due to reduced working capital as a result of cash utilisation. Working capital remained positive although reduced on last year at £1.2 million down from £2.5 million. Cash flow was negative, reducing cash balances at the year end by £1.5 million, of this £0.4 million was exceptional. Our cash position at year end had decreased although we have subsequently raised new capital and cash balances now stand at £2 million.

 

Corporate Finance

Our corporate finance team acted on 15 transactions during the year including 3 AIM introductions.

 

Equity Research

Our Equity research team now covers over 80 stocks across a number of sectors that we have elected to specialise in. These include General Financial, Healthcare, Leisure & Media, Software, IT & Telco’s and Support Services. Our analysts have won recognition throughout the year for the quality of their work from an array of market participants.  

 

Trading and Investment

Trading during the year was profitable, however our investment book consisting of positions held primarily in client stocks deteriorated by £0.5 million. Secondary commissions amounted to £0.8m.

.

Specialist Debt Services

Both our debt finance and leasing divisions performed satisfactorily during the year each providing a positive contribution. They were both hampered in their activities due to limited capital commitments from the parent company.

 

Employees

As at 31 March 2009 we employed 39 members of staff, compared to 46 at the end of 2008.

 

Premises

While we have not yet concluded our negotiations on the lease for our current premises we are confident of a satisfactory outcome. We anticipate a slight increase in property costs but do not believe that it will be significant.

 

Outlook

We have successfully completed a number of transactions during the first period of the new-year despite markets remaining weak with tremendous volatility. We are confident that, after completing a substantial cost reduction programme which has left our annualised administrative costs lower in the current financial year versus the previous, we are structured to quickly reap the benefits of recovery as it develops. Ours is a people business, and I would like to extend my gratitude to all employees, shareholders and clients who have shown continued commitment to your firm. Our pipeline of promising transactions continues to build and we remain cautiously optimistic.

 

Peter Shea

Group Chief Executive

The preliminary results for the year ended 31 March 2009 were approved by the Board on 30^th July 2009 and accounts for the year ended 31 March 2009 will be sent to shareholders in due course.

 

Consolidated income statement

Year ended 31 March 2009

			Adjusted for share based payments, bonus and exceptional items
Continuing operations	31 March 2009	31 March 2008	31 March 2009	31 March 2008
	£	£	£	£
Revenue	4,377,098	8,369,690	4,377,098	8,369,690
Cost of sales	(130,866)	(501,604)	(130,866)	(501,604)
Gross profit	4,246,232	7,868,086	4,246,232	7,868,086
Share trading account	(512,898)	(1,432,351)	(512,898)	(1,432,351)
Contribution to fixed costs	3,733,334	6,435,735	3,733,334	6,435,735
Administrative costs	(5,974,087)	(6,919,329)	(5,974,087)	(6,919,329)
Share based payments	(259,127)	(461,775)		-
Bonus payments		(1,018,407)		-
Operating Loss	(2,499,880)	(1,963,776)	(2,240,753)	(483,594)
Bank interest receivable and similar income	385,488	803,688	385,488	633,722
Interest payable	(136,621)	(317,207)	(136,621)	(147,240)
	(2,251,013)	(1,477,295)	(1,991,886)	2,888
Exceptional items	(396,036)	(527,777)		-
(Loss) / Profit before tax	(2,647,049)	(2,005,072)	(1,991,886)	2,888
Taxation	(228,000)	-	(228,000)	-
(Loss) / Profit for the year	(2,875,049)	(2,005,071)	(2,219,886)	2,888

Earnings per share

					31 March 2009	31 March 2008
Basic					(1.23)p	(0.93)p
Diluted					(1.15)p	(0.80)p

 

Consolidated balance sheet

As at 31 March 2009

											31 March 2009		31 March 2008
											£		£
Non current assets
Goodwill												1,731,532	1,731,532
Available for sale investments												210,064	389,364
Property, plant and equipment												181,015	334,014
Loans receivable												1,106,200	1,201,013
Deferred taxation													81,000
												3,228,811	3,736,923
Current assets
Financial assets												96,927	786,373
Trade and other receivables												2,508,372	3,054,852
Corporation tax													0
Cash and cash equivalents												1,161,181	2,687,565
												3,766,480	6,528,790
Total assets												6,995,291	10,265,713
Liabilities
Trade and other payables												2,550,730	4,003,882
Corporation Tax												79,000	-
												2,629,730	4,003,882
Non current liabilities												536,266	538,520
Total liabilities												3,165,996	4,542,402
Net assets											3,829,295		5,723,311
Equity
Capital and reserves attributable to equity shareholders
Share capital											650,781		538,459
Share premium											5,308,756		4,298,270
Retained earnings											(10,243,983)		(7,321,997)
Revaluation reserve											(1,150,577)		(1,150,577)
Capital redemption reserve fund											49,998		49,998
Capital reserve											8,524,435		8,524,435
Share compensation reserve											689,885		784,723
									3,829,295				5,723,311

 

Consolidated statement of changes in equity

For the year ended 31 March 2009

	Balance at 1 April 2008	Movement	Shares issued	Loss for the year	Cost to employee of share options	Total
Share capital	538,459		112,322			650,781
Share premium	4,298,270		1,010,486			5,308,756
Retained earnings	(7,321,997)	(147,775)		(2,875,049)	94,838	(10,243,983)
Revaluation reserve	(1,150,577)					(1,150,577)
Capital redemption reserve	49,998					49,998
Capital reserve	8,524,435					8,524,435
Share compensation reserve	784,723				(94,838)	689,885
	5,723,311	(147,775)	1,122,808	(2,875,049)	-	3,829,295