Interim Results

Teather & Greenwood Holdings PLC 16 January 2003 Teather & Greenwood Holdings Plc ('Teather & Greenwood' or 'the Group') INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2002 Chairman's Statement Poor trading conditions were referred to in the annual report produced in July 2002 and in the AGM statement of August and subsequent update in September 2002. The interim figures show a loss of £2.6 million compared to a profit of £0.8 million in the previous year's interim report. This loss includes costs of redundancy and other exceptional costs of £753,000 arising from the fundamental reorganisation of our business undertaken in the period. It also includes the profit of £607,000 arising from the sale of 150,000 London Stock Exchange shares. Since the financial year end of 30 April 2002, in an effort to achieve a sound and profitable business, personnel numbers have been trimmed to 184 from 235 which, coupled with other savings, has led to overheads being cut by in excess of £10 million per annum. As a result of these cost reductions, the cost base of the Group now has been adjusted to current market conditions but cash costs and loss of momentum are reflected in these results. However, it is a sign of the resilience of our business that during this period there has been no significant loss of corporate clients. The proceeds of the disposal of part of our investment management business will strengthen our balance sheet and counterparty profile. Accordingly, as a result of the difficult measures we have taken, the Board looks forward to the future with cautious optimism. Financial Highlights Turnover for the Group was £11.3 million (six months to 31 October 2001: £19.8 million) producing an operating loss of £2.4 million before re-organisation costs (six months to 31 October 2001: an operating profit of £0.4 million). Loss per share was 9.5p (six months to 31 October 2001: earnings per share 2.7p). The balance sheet shows net assets of £10.2 million (30 April 2002: £12.8m). The Board is not recommending an interim dividend (31 October 2001: 0.5p) nor is it currently envisaged that a final dividend will be recommended in respect of the year ending 30 April 2002 but this will be reviewed again by the Board in view of the outturn for the year. Investment Management On 15 January 2003 the Group announced the proposed disposal ('Disposal') of part of Teather & Greenwood Investment Management ('TGIM') to Prudential-Bache Limited, a subsidiary of Prudential Financial, Inc. for up to £3.65 million. Accounting for approximately 11.4 per cent. of turnover in the year to 30 April 2002, the transferring team consists of 13 individuals responsible for £650 million of funds under management (as at 30 November 2002). The net initial proceeds of the Disposal (after expenses) will be approximately £1,090,000 and will be used to repay existing borrowings and invested in other areas of the Group which have been given higher strategic priority. The net deferred and contingency elements of consideration of up to £1,650,000 are expected to be used similarly in due course. Remaining is the successful tax efficient department specialising in EIS portfolios, film financing schemes and AIM and VCT funds with around £75 million under management. The Open Ended Investment Company (OEIC) has around £8 million under management. The department also manages PEPS and ISAs and trading for private clients 'on-line'. Further details of the Disposal were set out the announcement made on 15 January 2003. No costs or benefits associated with the Disposal are included in the interim figures. Corporate Finance Advisory and Broking The corporate finance team now consists of 13 professionals, supported by four dedicated sales professionals, two in 'client care', three market makers, five sales traders and three dealers. This is a strong team to support the current 103 brokerships compared to 98 at the year end of 30 April 2002 and 82 at the same time last year. There continues to be a dearth of IPOs, but the team's ability to make markets, distribute and research on behalf of clients as well as provide corporate advice, bodes well for the future. The department was involved in a number of important transactions during the period including acting as broker for Duke Street Capital in its successful £150m hostile bid for Esporta plc, participating in the £57.5 million placing for Unite Group plc, the £16 million acquisition of Llewellyn Group by Rok property solutions plc and other fundraisings for Hamleys and Medal Entertainment. The Liverpool office has added four new clients and now has 19 compared to 15 on 1 May 2002 and was responsible for four corporate transactions including the flotation of Lloyds British Testing plc. Equities Research The difficult market conditions necessitated a reduction in the number of analysts within the Equities Research department. Nevertheless, the department continued to provide comprehensive coverage of our extensive list of corporate clients as well as peer comparisons. The analytical teams increasingly focused on a core list of sectors in which they have an established, or are developing a secondary franchise. Its previously stated aim of broadening coverage within the mid-cap arena continued during the period and has led to an increased market share of FTSE250 related agency business. Institutional Department The teams specialise in large, mid and small cap equities with a market share generally of over 2 per cent. of UK agency turnover. It is supported by effective sales trading and dealers. In addition there is a strong closed end fund team of 14 including sales, research and corporate finance who manage 30 brokerships compared to 27 at the year end and 20 at the same time last year. The team has advised on a number of corporate transactions in the first half. The expanded derivatives team acts for private clients, high net worth individuals, hedge funds and specialist institutions in CFDs, equities and other instruments. The fixed interest, bonds and convertible team also had a successful half year. Outlook There are no signs of any upturn in the areas in which the Group operates, other than the fixed interest desk. The stock markets have fallen for almost three years but the Group has now undertaken the necessary restructuring to cope with these conditions. At all times our capital has remained significantly in excess of our regulatory capital requirements and our balance sheet will be strengthened following completion of the disposal of part of TGIM. The Board is confident that the Group has the potential to grow in our chosen areas. 16th January 2003 Enquiries Teather & Greenwood Holdings plc 020 7426 9000 Ken Ford, Chief Executive Officer Nick Stagg, Chief Operating Officer College Hill 020 7457 2020 Richard Pearson UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT For the six month period ended 31 October 2002 Note 6 months 6 months 12 months ended ended ended 31/10/02 31/10/01 30/04/02 £'000s £'000s £'000s Turnover (1) 11,273 19,785 34,431 Operating costs (13,637) (19,356) (38,001) --------- --------- --------- Operating (loss)/profit (2,364) 429 (3,570) Profit on disposal of fixed asset investments 607 667 1,777 Reorganisation costs (3) (753) - (1,510) Amounts written off investments (74) - (440) --------- --------- --------- (Loss)/profit on ordinary activities before interest (2,584) 1,096 (3,743) Net interest (payable)/receivable and similar income (38) 23 (101) --------- --------- --------- (Loss)/profit on ordinary activities before taxation (2,622) 1,119 (3,844) Taxation on profit on ordinary activities - (315) 1,053 --------- --------- --------- (Loss)/profit for the period (2,622) 804 (2,791) Equity dividend (12) (143) (552) --------- --------- --------- (Loss)/profit transferred to reserves (2,635) 661 (3,343) --------- --------- --------- (Loss)/earnings per share (2) (9.5p) 2.9p (10.2p) Diluted (loss)/earnings per share (2) (9.5p) 2.7p (10.2p) Dividend per share 0.0p 0.5p 2.0p UNAUDITED CONSOLIDATED BALANCE SHEET AS AT 31 OCTOBER 2002 Note 31/10/02 31/10/01 30/04/02 (unaudited) (unaudited) (audited) £'000s £'000s £'000s FIXED ASSETS Tangible assets 2,145 2,051 2,401 Investments (8) 1,445 1,662 1,488 Intangible assets 400 900 450 --------- --------- --------- 3,990 4,613 4,339 --------- --------- --------- CURRENT ASSETS Trading positions 7,161 6,287 4,993 Debtors 65,513 200,067 127,709 Cash at bank and in hand 2,504 7,027 8,074 --------- --------- --------- 75,178 213,381 140,776 --------- --------- --------- CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 68,455 200,458 131,851 --------- --------- --------- NET CURRENT ASSETS 6,723 12,923 8,925 --------- --------- --------- TOTAL ASSETS LESS CURRENT LIABILITIES 10,713 17,536 13,264 --------- --------- -------- CREDITORS: AMOUNTS FALLING DUE AFTER ONE YEAR 500 800 500 --------- --------- --------- NET ASSETS 10,213 16,736 12,764 --------- --------- --------- CAPITAL AND RESERVES Called up share capital 2,848 2,812 2,821 Share premium account 2,352 2,273 2,296 Other reserves 14 14 14 Profit and loss account 4,999 11,637 7,633 --------- --------- --------- EQUITY SHAREHOLDERS' FUNDS 10,213 16,736 12,764 --------- --------- --------- UNAUDITED CONSOLIDATED CASH FLOW STATEMENT for the 6 months ended 31 October 2002 Note 6 months ended 31 6 months ended 31 Year ended October 2002 October 2001 30 April 2002 £'000s £'000s £'000s £'000s £'000s £'000s Net cash (outflow)/inflow from operating activities (5) (4,890) (4,750) (6,450) RETURNS ON INVESTMENT AND SERVICING OF FINANCE Interest and other investment 78 23 33 income received Interest paid (126) (114) ------ ------- Net cash (outflow) / inflow (48) 23 (81) from returns on investments and servicing of finance TAXATION Corporation tax received / 928 (700) (1,206) (paid) CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Payments to acquire tangible (429) (783) (1,650) fixed assets Payments to acquire trade - (686) (1,004) investments Receipts from sales of trade 667 667 1,777 investments Payments to acquire intangible - (100) - fixed assets ------ ------ ------ Net cash inflow / (outflow) 238 (902) (877) from capital expenditure EQUITY DIVIDEND PAID (423) (421) (561) FINANCING Issue of ordinary share capital 83 68 100 ------- ------- ------- Decrease in cash (7) (4,112) (6,682) (9,075) ------- ------- ------- NOTES 1. TURNOVER AND SEGMENTAL ANALYSIS 6 months to 31/10/2002 6 months to 31/10/2001 12 months ended 30/04/2002 Net Turnover Operating Net Turnover Operating Net Turnover Operating Assets Loss Assets Profit Assets Loss £'000s £'000s £'000s £'000s £'000s £'000s £'000s £'000s £'000s Financial 10,213 11,273 (2,364) 16,736 19,785 429 12,764 34,431 (3,570) Services The net gain on trading in financial instruments is shown and is included in the turnover for financial services. £'000s £'000s £'000s 850 329 1,654 2. EARNINGS PER SHARE Earnings per share 6 months to 31/10/02 6 months to 31/10/01 12 months 30/04/02 ended Diluted Earnings Diluted Earnings Diluted Earnings Earnings Earnings Earnings £'000s £'000s £'000s £'000s £'000s £'000s Earnings (2,622) (2,622) 804 804 (2,791) (2,791) Number of shares 27,522,291 27,405,145 29,929,175 28,007,491 27,276,277 27,276,277 (Loss) / earnings per share (9.5p) (9.5p) 2.7p 2.9p (10.2p) (10.2p) Calculation of number of shares at 31 October 2002 At 1 May 28,213,245 28,213,245 27,877,245 27,877,245 27,877,245 27,877,245 Weighted average number of 117,146 117,146 130,246 130,246 207,132 207,132 shares issued in the period -------- -------- -------- -------- -------- -------- Dilutive effect of share - - 1,921,684 - - - option schemes Own shares purchased and (808,100) (808,100) - - (808,100) (808,100) held in EBT -------- -------- -------- -------- -------- -------- At end of period 27,522,291 27,522,291 29,929,175 28,007,491 27,276,277 27,276,277 ---------- ---------- ---------- ---------- ---------- ---------- FRS14 requires presentation of diluted EPS when a company would be called upon to issue shares that would decrease net profit or increase net loss per share. For a loss making company with outstanding share options, net loss per share would only be increased by the exercise of out of the money options. Since it seems inappropriate to assume that option holders would act irrationally, no adjustment has been made to diluted EPS for out of the money share options. 3. REORGANISATION COSTS This represents the costs of the redundancies incurred as a result of the fundamental restructuring of the Group during the period. 4. CONTINGENT LIABILITIES By mid December 2002 the Group's principal subsidiary, Teather & Greenwood Limited, had received a number of complaints in respect of advice given to clients, including in relation to Powernet and where their portfolios contained some split capital trusts. The value of these complaints amounts to approximately £2.3 million. Complaints are assessed in accordance with the Group's complaints procedures within the guidelines set down by the Financial Services Authority. To date, none of the complaints have been sustained against the Group (save in one case only), (and the Directors believe that the significant majority of complaints will not be sustained). However, in circumstances where the Group is found to be liable, the Directors are satisfied that such claims would fall within the level of the Group's insurance cover, and accordingly the Directors believe no provision to be necessary in the 6 months to 31 October 2002. Higher salaried employees of the group have agreed to defer a portion of their salary until such time as the group returns to profitability. The value of this deferment during the six months to 31 October 2002 is £273,000. This has not been provided for during the six months to 31 October 2002. A VAT assessment in the amount of £265,000.00 has been levied against Teather & Greenwood Limited in connection with a reverse premium payable by the Company, on entering its current premises at Beaufort House. Based upon professional advise the Company has lodged an appeal against this assessment and accordingly the Directors believe no provision to be necessary in the 6 month period to 31 October 2002. 5. RECONCILIATION OF OPERATING (LOSS)/PROFIT TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES 6 months to 31/10/02 6 months to 31/10/01 12 months to 30/04/02 £'000s £'000s £'000s Operating (loss) / profit (2,364) 429 (3,570) Depreciation 735 475 1,094 Reorganisation costs (1,171) - (766) Decrease in trading positions 1,425 989 1,196 Decrease in debtors 61,605 431 73,843 (Decrease) in creditors (65,120) (7,074) (78,247) ---------- ---------- ---------- Net cash outflow from operating activities (4,890) (4,750) (6,450) --------- --------- --------- 6. NET FUNDS AT THE END OF THE PERIOD 6 months to 31/10/02 6 months to 31/10/01 12 months to 30/04/02 £'000s £'000s £'000s Bank balances 2,504 7,027 8,074 Loan & overdraft (3,629) (1,647) (5,087) ---------- --------- ---------- Total Net funds (1,125) 5,380 2,987 --------- --------- --------- 7. COMBINED RECONCILIATION OF NET CASH FLOW AND ANALYSIS OF MOVEMENT IN NET FUNDS At 30/04/02 Cashflow At 31/10/02 £'000s £'000s £'000s Bank balances 8,074 (5,570) 2,504 Bank overdrafts (5,087) 1,458 (3,629) Total net funds 2,987 (4,112) (1,125) --------- --------- --------- 8. INVESTMENTS Fixed asset investments comprise shares in London Stock Exchange, Channel Island Stock Exchange, Crestco and Teather & Greenwood Holdings plc. The Company is the beneficial owner of 50,000 London Stock Exchange Shares of 5p each, which have been included in the balance sheet at the cost of £1 (market value £166,000). The 808,100 Teather & Greenwood Holdings plc shares (cost £1,148,000, market value £215,000) (April 2002: cost £1,148,000, market value £554,000) are held in an Employee Benefit Trust and are included in the balance sheet at cost. These shares are held to hedge future obligations, that may fall due on exercise of employee share options over the next 9 years. As a result these shares have not been impaired. 9. EVENTS OCCURING AFTER THE PERIOD END On 15 January 2003 the proposed sale of part of Teather & Greenwood Investment Management was announced. The sale of the business, which generated 11.4 per cent. of turnover of the Group in the year to 30 April 2002, is part of the fundamental reorganisation of the Group. The maximum consideration for the transaction is £3.65 million payable in cash. 10. The interim figures are unaudited. The accounts for the year to 30 April 2002 are abridged. The periods ended 31 October 2001 and 2002 respectively do not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. Statutory accounts for the year ended 30 April 2002 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 weekday at the registered office of the Company (Beaufort House, 15 St Botolph Street, London EC3A 7QR). Independent Review Report to Teather & Greenwood Holdings plc We have been instructed by the Group to review the consolidated unaudited financial information for the six months ended 31 October 2002 which comprises the consolidated profit and loss account, the consolidated balance sheet, the consolidated cashflow statement and related notes 1 to 10. We have read the other information contained in the interim report and considered whether it contains any apparent misstatement or material inconsistencies with the financial information set out in the interim report. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the Directors. The Directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of Group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom auditing standards and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 31 October 2002. 15 January 2003 Deloitte & Touche Chartered Accountants This information is provided by RNS The company news service from the London Stock Exchange

Companies

Ten Entertainment Group (TEG)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today