Interim Results

Teather & Greenwood Holdings PLC 14 December 2000 Teather & Greenwood Holdings plc Interim results for the six months ended 31 October 2000 HIGHLIGHTS - Strong growth across all business areas - Turnover £18,205,000 (1999: £9,189,000), up 98% - Operating profit £3,599,000 (1999: £1,958,000), up 84% - Profit before tax £3,665,000 (1999: £2,022,000), up 81% - Earnings per share 8.7p (1999: 5.0p), up 74% - Maiden interim dividend of 0.5p - Net cash of £5,503,000 (1999: £2,731,000) - The corporate client list grew to 78 (1999: 67) - 22 corporate transactions (1999: 14), with £164,800,000 (1999: £111,000,000) raised on behalf of clients Jeremy Delmar-Morgan, Chairman, comments: 'The first half of the year produced very profitable growth. We have historically generated the majority of our profits during the second half of the year, which has started well. We continue to view the future with considerable optimism.' For further information, please contact: Teather & Greenwood Limited 020 7426 9000 Jeremy Delmar-Morgan, Chairman Ken Ford, Chief Executive Brian Rowbotham, Finance Director Tim Davis, Director of Corporate Affairs NOTE TO EDITORS Teather & Greenwood Limited is one of the UK's leading independent stockbrokers, specialising in providing corporate finance (including M&A), institutional sales, research and market making services for an increasing number of growing smaller and mid-cap public companies. In addition, it provides institutional sales and research coverage of significant UK and international equities and has dedicated teams for closed-end funds, contracts for difference, bonds and fixed-interest instruments. Private clients are offered discretionary, advisory and execution-only broking services and a range of tax- efficient products. Teather & Greenwood Limited is the principal operating company of Teather & Greenwood Holdings plc. For more information on Teather & Greenwood Limited and its services, please visit the company's website: www.teathers.com CHAIRMAN'S STATEMENT I am delighted to be able to report on further progress across the company during the six months ended 31 October 2000. Teather & Greenwood Limited has again increased its range of services and grown its client bases across the various business areas with a consequent improvement in profitability. This progress was referred to in August's Annual General Meeting statement when shareholders were advised that since the publication of full-year results in June, revenues from all divisions of Teather & Greenwood Limited had exceeded the Board's expectations and that profitability in the first quarter of the new financial year was considerably better than the corresponding period last year. FINANCIAL HIGHLIGHTS AND DIVIDEND Turnover increased to £18,205,000 (1999: £9,189,000), producing operating profit of £3,599,000 (1999: £1,958,000). Profit before taxation increased to £3,665,000 (1999: £2,022,000). The balance sheet at the half-year end was equally sound, with net cash of £5,503,000 (1999: £2,731,000). These results take into account significant investment made during the period in a number of revenue-generating areas. We have added a bonds and fixed-interest team and expanded our closed-end funds and contracts for difference teams. As is always the case, the priority when making such investments is for an early contribution to profitability and these teams are proving no exception to that rule. We have also invested in information technology and substantially developed our on-line trading service. Earnings per share grew to 8.7p (1999: 5.0p). The Board is recommending a maiden interim dividend of 0.5p, which will be payable on 31 January 2001 to shareholders on the register at 3 January 2001. The Board believe that this dividend reflects a balance between profitability during the period, our confidence in the future and the need to reinvest in the continuing development of Teather & Greenwood Limited. TEATHER & GREENWOOD LIMITED The corporate finance department, which specialises in advising smaller and growing public companies, had another very successful period. The department completed 22 transactions, raising a total of £164.8 million on behalf of clients. Overall, the client list grew by 11 to 78. The department's dedicated mergers and acquisitions, smaller companies institutional sales, dealing and market making teams also contributed strongly to this success and the department currently has a very healthy pipeline of potential transactions. The equities research department continued to expand the number of analysts and companies followed. This expansion reflects the growing corporate client list and increasing coverage of non-client stocks, both large and small, which has the dual benefit of increasing the company's appeal to a wider range of institutional clients. In so doing, it also provides opportunities to generate higher levels of commission. Consequently, our larger companies sales and dealing teams had an extremely successful and profitable period. Teather & Greenwood Limited's membership of the European Securities Network is also proving very beneficial, particularly in respect of widening further the non-UK institutional client base. Yet perhaps the best endorsement of the quality of our research is winning, for the third year in succession, the AIM Awards' Best Research Award. Elsewhere, the market making team now provides coverage of almost all corporate clients, with further additions planned. The closed-end funds team improved profitability and completed its first corporate transaction during the period. The private client department has responded well to the operational review and subsequent reorganisation that has taken place. Given the new direction of this department and the nature of the business it is now developing, it has been renamed Teather & Greenwood Investment Management. To support this expansion and to ensure we have adequate operational flexibility in the future, considerable further investment is currently being made in systems renewal, development and support. MOVE TO THE OFFICIAL LIST AND SHARE BONUS ISSUE As part of Teather & Greenwood Holdings plc's continuing corporate development, the Group moved in July to the Official List of the London Stock Exchange. This incurred costs of £152,000 and was an appropriate step for Teather & Greenwood Holdings plc. This was followed in August by a two-for-one share bonus to improve liquidity of the shares. BOARD AND EMPLOYEES In August, the Board announced the appointment of Nicholas Stagg as a non-executive director. He is Managing Director of W S Atkins International Ltd and a Non- executive Director of Inventive Leisure plc. On behalf of the Board, I would like to welcome those employees who have joined since June and thank everybody for their continuing dedication and effort in building a very successful business. FUTURE DEVELOPMENTS A number of other complementary activities such as fund management products are currently under review. Given the often high prices attached to businesses within the financial sector, our preferred route remains the recruitment of individuals or teams who quickly can develop new business areas. During 2001, we expect to launch our proprietary on-line share trading system. This service will be a premium service to be made available to existing institutional and private clients as well as being marketed extensively in its own right. OUTLOOK The first half of the year produced very profitable growth. We have historically generated the majority of our profits during the second half of the year, which has started well. We continue to view the future with considerable optimism. Jeremy Delmar-Morgan Chairman 14 December 2000 Group profit and loss account for the six months ended 31 October 2000 6 months 6 months Year ended ended ended 31.10.00 31.10.99 30.04.00 (unaudited) (unaudited) (audited) £'000 £'000 £'000 TURNOVER 18,205 9,189 30,904 --------- --------- --------- OPERATING COSTS (14,606) (7,321) (21,274) --------- --------- --------- OPERATING PROFIT 3,599 1,958 9,630 --------- --------- --------- Profit on disposal of investment properties - 12 7 --------- --------- --------- Profit on ordinary activities before 3,599 1,970 9,637 interest Net interest receivable 66 52 96 --------- --------- --------- Profit on ordinary activities before 3,665 2,022 9,733 taxation Taxation on profit on ordinary activities (1,257) (692) (3,030) --------- --------- --------- Profit for the 2,408 1,330 6,703 period/year Equity dividend (139) - (370) --------- --------- --------- Profit transferred to reserves 2,269 1,330 6,333 ========= ========= ========= EARNINGS PER SHARE 8.7P 5.0P 24.8P ========= ========= ========= DILUTED EARNINGS PER 8.0P 4.7P 23.2P SHARE ========= ========= ========= DIVIDEND PER SHARE 0.5P - 1.3P ========= ========= ========= STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Profit for the financial period 2,408 1,330 6,703 ========= ========= ========= Balance sheet as at 31 October 2000 31.10.00 31.10.99 30.4.00 (unaudited) (unaudited) (audited) £'000 £'000 £'000 FIXED ASSETS Tangible assets 1,395 459 972 Investments 750 100 100 --------- --------- --------- 2,145 559 1,072 --------- --------- --------- CURRENT ASSETS Trading positions 8,153 992 3,073 Debtors 166,753 71,323 181,166 Cash 7,627 3,721 9,622 --------- --------- --------- 182,533 76,036 193,861 --------- --------- --------- CREDITORS: AMOUNTS FALLING DUE WITHIN ONE 170,034 70,877 182,601 YEAR --------- --------- --------- NET CURRENT ASSETS 12,499 5,159 11,260 --------- --------- --------- Total assets less current liabilities 14,644 5,718 12,332 ========= ========= ========= CAPITAL AND RESERVES Called up share capital 2,788 881 925 Share premium account 2,229 1,683 4,049 Other reserves 14 814 14 Profit and loss account 9,613 2,340 7,344 --------- --------- --------- EQUITY SHAREHOLDERS' 14,644 5,718 12,332 FUNDS ========= ========= ========= Group cash flow statement for the six months ended 31 October 2000 6 months 6 months Year to to to 30.4.00 31.10.00 31.10.99 (audited) (unaudited) (unaudited) £'000 £'000 £'000 NET CASH INFLOW/(OUTFLOW) FROM 3,858 (2,361) (262) OPERATING ACTIVITIES RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest received 66 53 97 Interest paid - (1) (1) --------- --------- --------- Net cash inflow from returns on investments and servicing of 66 52 96 finance TAXATION Corporation tax (paid)/recovered (1,298) 7 (1,229) CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Receipts from sales of tangible fixed assets - 824 1,048 Payments to acquire tangible fixed assets (698) (102) (1,022) Purchase of trade (650) - - investments --------- --------- --------- Net cash (outflow)/inflow from (1,348) 722 26 capital expenditure EQUITY DIVIDEND PAID (370) (112) (112) FINANCING Issue of ordinary share capital 42 - 1,611 --------- --------- --------- INCREASE/(DECREASE) IN 950 (1,692) 130 CASH ========= ========= ========= NOTES 1. TURNOVER AND SEGMENTAL ANALYSIS 6 MONTHS ENDED 31.10.00 OPERATING TURNOVER PROFIT/(LOSS) £'000 £'000 Financial services 18,205 3,599 Other income --------- --------- 18,205 3,599 ========= ========= 6 MONTHS ENDED 31.10.99 OPERATING TURNOVER PROFIT/(LOSS) £'000 £'000 Financial services 9,182 2,014 Other income 7 (56) --------- --------- 9,189 1,958 ========= ========= YEAR ENDED 30.04.00 OPERATING TURNOVER PROFIT/(LOSS) £'000 £'000 Financial services 30,897 9,774 Other income 7 (144) --------- --------- 30,904 9,630 ========= ========= The net gain on trading in financial instruments is shown below and is included in the turnover for financial services. 6 MONTHS 6 MONTHS YEAR ENDED ENDED ENDED 30.04.00 31.10.00 31.10.99 £'000 £'000 £'000 2,304 1,205 4,349 ========= ========= ========= 2.EARNINGS PER SHARE The earnings and numbers of shares in issue or to be issued used in calculating the earnings and diluted earnings per share were as follows: 31.10.00 DILUTED EARNINGS EARNINGS £'000 £'000 Earnings 2,408 2,408 ========== ========== Number of shares 30,005,888 27,777,012 ========== ========== Earnings per share 8.0p 8.7p ========== ========== 31.10.99 DILUTED EARNINGS EARNINGS £'000 £'000 Earnings 1,330 1,330 ========== ========== Number of shares 28,220,136 26,418,345 ========== ========== Earnings per share 4.7p 5.0p ========== ========== 30.04.00 DILUTED EARNINGS EARNINGS £'000 £'000 Earnings 6,703 6,703 ========== ========== Number of shares 28,865,427 27,042,705 ========== ========== Earnings per share 23.2p 24.8p ========== ========== The number of shares and earnings per share reflect the bonus issue of 2 for 1 made on 4 August 2000. The earlier periods have been adjusted accordingly. Calculation of number of shares at 31 October 2000. 31.10.00 DILUTED EARNINGS EARNINGS £'000 £'000 At 1 May 2000 9,246,415 9,246,415 Bonus issue 4 August 18,492,830 18,492,830 2000 Weighted average number of shares issued during 37,767 37,767 period Dilutive effect of share option schemes 2,228,876 ----------- ----------- 30,005,888 27,777,012 31.10.99 DILUTED EARNINGS EARNINGS £'000 £'000 At 1 May 2000 7,472,782 7,472,782 Shares issued 5 August 1,333,333 1,333,333 1999 Dilutive effect of share option schemes 600,597 ----------- ----------- 9,406,712 8,806,115 Comparatives restated as a result of bonus issue on 4 August 2000 28,220,136 26,418,345 30.04.00 DILUTED EARNINGS EARNINGS £'000 £'000 At 1 May 2000 7,472,782 7,472,782 Shares issued 5 August 1,333,333 1,333,333 1999 Weighted average number of shares issued during 208,120 208,120 period Dilutive effect of share option schemes 607,574 ----------- ----------- 9,621,809 9,014,235 Comparatives restated as a result of bonus issue on 4 August 2000 28,865,427 27,042,705 3.RECONCILIATION OF OPERATING PROFIT TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES 6 MONTHS 6 MONTHS 12 MONTHS TO TO TO 30.10.00 30.10.99 30.04.00 £'000 £'000 £'000 Operating profit 3,599 1,958 9,630 Depreciation 274 66 242 (Increase) in trading positions (5,080) (23) (2,028) Decrease/(increase) in 14,413 46,864 (62,979) debtors (Decrease)/increase in creditors (9,348) (51,226) 54,873 --------- --------- --------- NET CASH INFLOW/(OUTFLOW) FROM 3,858 (2,361) (262) OPERATING ACTIVITIES ========= ========= ========= 4.NET FUNDS AT THE END OF THE PERIOD 6 MONTHS 6 MONTHS 12 MONTHS TO TO TO 30.10.00 30.10.99 30.04.00 £'000 £'000 £'000 Bank balances 7,627 3,721 9,622 Loan and overdraft (2,124) (990) (5,069) --------- --------- --------- 5,503 2,731 4,553 ========= ========= ========= 5. INVESTMENTS The company is the beneficial owner of 100,000 London Stock Exchange ordinary shares of 5p, each which have been included in the balance sheet at the cost of £1 (1999 - £1). The financial information for the year ended 30 April 2000 and the period ended 31 October 2000 does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. Statutory accounts for the year ended 30 April 2000 have been delivered to the Registrar of Companies. These statutory accounts were audited by Deloitte & Touche and their report thereon was unqualified. Copies of the interim results are available, free of charge to the public on any week day at the registered office of the Company (Beaufort House, 15 St Botolph Street, London EC3A 7QR) and at the offices of the Company's financial adviser and stockbroker, ING Barings Limited, 60 London Wall, London EC2M 5TQ.

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