Interim Results - Pre-tax Profit Up 340%

Teather & Greenwood Holdings PLC 13 December 1999 Teather & Greenwood Holdings plc Interim results for the six months ended 31 October 1999 HIGHLIGHTS Significant growth in all areas of the business: institutional and private client stockbroking, corporate finance, market making and closed-end funds * Turnover £9,189,000 (1998: £5,374,000) * Operating profit £1,958,000 (1998: £437,000) * Profit before tax £2,022,000 (1998: £460,000) * Earnings per share 15.1p (1998: 4.0p) * Net cash of £2,731,000 (1998: £2,356,000) * The corporate client list grew to 67 (1998: 61) * There were 14 corporate transactions during the period (1998: 10), with £52,000,000 raised on behalf of clients Derek Boothman, Chairman, comments: 'In the past 18 months, Teather & Greenwood Limited has continued to make excellent progress. Our skills and range of services have expanded and the business is on a very sound financial footing with a growing reputation within its target markets. Growth to date has been organic, but we will consider appropriate acquisitions. 'Whilst we must not lose sight of the sometimes unpredictable nature of the equity markets, I believe that Teather & Greenwood Holdings plc is well placed for further progress during the remainder of the year'. For further information, please contact: Teather & Greenwood Limited 0171 426 9000 Jeremy Delmar-Morgan, Chairman Ken Ford, Chief Executive Brian Rowbotham, Finance Director Ludgate Communications 0171 253 2252 Tim Davis Note to Editors Teather & Greenwood is one of the United Kingdom's leading independent stockbrokers, providing institutional research and sales and corporate finance services for an increasing number of smaller and growing public companies. In addition, it offers its private clients an advisory broking service. Teather & Greenwood Holdings plc is quoted on the Alternative Investment Market and has a market capitalisation in excess of £80 million. Chairman's statement I am delighted to be able to report on an excellent set of results for the six months ended 31 October 1999. They reflect not only the impressive organic growth by Teather & Greenwood Limited as it continues to transform into a broadly-based financial services group, but also significant growth in our chosen markets and the resources available to our clients. Financial highlights and dividend The group's financial position continued to develop strongly, with turnover increasing to £9,189,000 (1998: £5,374,000). This produced operating profit of £1,958,000 (1998: £437,000) and profit before taxation of £2,022,000 (1998: £460,000). The final outcome for the period was considerably better than we had expected at the outset, hence we chose in October to issue a trading update to this effect. The balance sheet is equally sound, with net cash at the half year end of £2,731,000 (1998: £2,356,000). This was assisted by £824,000 net proceeds from the sale of 13 residential properties. Of the remaining properties, two have been disposed of since the end of the half year realising £109,000. The two remaining properties valued at £115,000 are in the course of disposal. Since the half year end the cash position has been augmented by a share placing raising £1,611,500. Earnings per share grew to 15.1p (1998: 4.0p). Given the Board's policy of balancing returns to shareholders with the continuing need to reinvest in the further development of Teather & Greenwood Limited, the Directors have decided, as per last year, not to recommend the payment of an interim dividend, but expect to recommend the payment of a final dividend dependent upon profitability in the second half. Teather & Greenwood Limited We continue to invest in the measured expansion of our three main business areas, namely institutional and private client stockbroking and corporate finance. The institutional department continues to improve its penetration of additional sectors through building relationships with new investing institutions in the UK, and increasingly, abroad. This has been achieved in part by the hiring of further new staff, but also by improving our existing working practices and technology. Our institutional research, for example, now has a clear corporate identity and is available via First Call and Multex. More recently and for the second year running, the research department won the AIM Award for Best Research. Elsewhere, the market making team, introduced in late October 1998, is performing very well and is covering an expanding range of house stocks. Likewise, the team specialising in closed end funds, who joined last December, continues to flourish. The private client department continues to expand, adding both new clients and experienced managers. Further tax- efficient products were introduced as we seek to improve the range of products and services available to our clients. The corporate finance department was equally active and also increased its numbers: during the period it raised approximately £52,000,000 on behalf of clients and completed 14 transactions of varying sizes across a range of sectors. We welcomed seven new corporate clients, bringing the total to 67. Of these, 29 are on the Official List, 34 on AIM and four use the OFEX trading facility. Board and employees Given the rate of expansion of Teather & Greenwood Limited, the Board is pleased to announce the appointment of Ken Ford, currently Managing Director of the Group and Head of Corporate Finance, as Chief Executive of Teather & Greenwood Limited. Jeremy Delmar-Morgan, Chief Executive of Teather & Greenwood Holdings Plc, continues as Chairman of Teather & Greenwood Limited. The appointment is with immediate effect. On behalf of the Board, I would like to thank all employees for their hard work and continuing dedication. The rate of transformation of the group and the momentum that is evident is a credit to the people who have made it happen. I would also like to welcome those who joined Teather & Greenwood Limited during the first half of the year. New premises At the end of November, the Group moved into much larger and more modern offices within the City of London. This is a necessary investment in order to provide ample space for our continuing expansion, as well as improved facilities, both for clients and employees. Placing of new ordinary shares On 29 October of this year, we announced the placing of 440,300 new 10p ordinary shares at a price of 366p per share which was completed in November and raised £1,611,500. The shares were placed with two institutional investors and the proceeds are being invested in the continuing expansion of Teather & Greenwood Limited. Outlook In the past 18 months, Teather & Greenwood Limited has continued to make excellent progress. Our skills and range of services have expanded and the business is on a very sound financial footing with a growing reputation within its target markets. Growth to date had been organic, but we will consider appropriate acquisitions. Whilst we must not lose sight of the sometimes unpredictable nature of the equity markets, I believe that Teather & Greenwood Holdings plc is well placed for further progress during the remainder of the year. Derek Boothman Chairman 13 December 1999 TEATHER & GREENWOOD HOLDINGS PLC Group profit and loss account for the six months ended 31 October 1999 6 months 6 months Year Ended ended ended 31.10.99 31.10.98 30.04.99 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Turnover 9,189 5,374 12,312 ----------- ----------- --------- Operating costs 7,231 4,937 10,477 ----------- ----------- --------- Operating profit 1,958 437 1,835 ----------- ----------- --------- Loss arising from the disposal of subsidiary - (34) (55) Profit/(loss) on disposal of investment properties 12 - (2) ----------- ----------- --------- Profit on ordinary activities before interest 1,970 403 1,778 Net interest receivable 52 57 141 ----------- ----------- --------- Profit on ordinary activities before taxation 2,022 460 1,919 Taxation on profit on ordinary activities (692) (162) (656) ----------- ----------- --------- Profit for the period/year 1,330 298 1,263 Dividend - - (112) ----------- ----------- --------- Profit transferred to reserves 1,330 298 1,151 =========== =========== ========= Earnings per share 15.1p 4.0p 16.9p =========== =========== ========= Diluted earnings per share 14. 1p 3.4p 13.8p =========== =========== ========= Statement of total recognised gains and losses Profit for the financial period 1,330 298 1,263 Unrealised deficit on revaluation of investment properties - - (54) ----------- ----------- --------- Total recognised gains and losses for the period/year 1,330 298 1,209 =========== =========== ========= TEATHER & GREENWOOD HOLDINGS PLC Balance Sheets as at 31 October 1999 31.10.99 31.10.98 30.04.99 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Fixed assets Tangible assets 459 1,919 1,233 Investments 100 100 100 ----------- ----------- --------- 559 2,019 1,333 =========== =========== ========= Current assets Trading positions 992 137 969 Debtors 71,323 60,027 118,194 Cash 3,721 3,248 4,886 ----------- ----------- --------- 76,036 63,412 124,049 ----------- ----------- --------- Creditors: amounts falling due within one year 70,877 61,842 120,994 ----------- ----------- --------- Net current assets 5,159 1,570 3,055 ----------- ----------- --------- Total assets less current liabilities 5,718 3,589 4,388 =========== =========== ========= Capital and reserves Called up share capital 881 747 747 Share premium account 1,683 1,683 1,683 Revaluation reserve - 162 63 Other reserves 814 947 947 Profit and loss account 2,340 50 948 ----------- ----------- --------- Equity shareholders' funds 5,718 3,589 4,388 =========== =========== ========= TEATHER & GREENWOOD HOLDINGS PLC Group cash flow statement for the six months ended 31 October 1999 6 months 6 months Year Ended ended ended 31.10.99 31.10.98 30.04.99 (unaudited) (unaudited) (audited) £'000 £'000 £'000 £'000 £'000 £'000 Net cash outflow (2,361) (2,407) (834) from Operating activities Returns on investments and servicing of finance Interest received 53 89 196 Interest paid (1) (32) (55) ------- ------ ----- Net cash inflow from returns on 52 57 141 Investments and servicing of finance Taxation Corporation tax 7 - 15 recovered/paid Capital expenditure and financial Investment Receipts from sales of tangible fixed 824 - 565 assets Payments to acquire (102) (103) (252) tangible fixed assets Payments on - - (55) disposal of leased property ------- ------ ----- Net cash inflow/(outflow) from capital expenditure and financial investment 722 (103) 258 Acquisition and disposal of subsidiaries Disposal of subsidiary - (34) (34) - Equity dividend paid (112) - - ------- ------- ----- Decrease in cash (1,692) (2,487) (420) ======= ======= ===== 1. Turnover and segmental analysis 6 months 6 months 12 months to 31.10.99 to 31.10.98 to 30.04.99 Operating Operating Operating Turn Profit/ Turn Profit/ Turn Profit/ over (loss) over (loss) over (loss) £'000 £'000 £'000 £'000 £'000 £'000 Property letting 7 1 71 49 117 76 Financial services 9,182 2,014 5,303 451 12,195 1,834 Central costs - (57) - (63) - (75) ------ --------- ----- --------- ------ --------- 9,189 1,958 5,374 437 12,195 1,835 ====== ========= ===== ========= ====== ========= The net gain on trading in financial instruments is shown below and is included in the turnover for financial services. £1,205,000 £ nil £655,000 ========== ===== ======== 2. Earnings per share The earnings and number of shares in issue or to be issued used in calculating the earnings and diluted earnings per share were as follows: 31.10.99 31.10.98 Diluted Diluted Earnings Earnings Earnings Earnings £'000 £'000 £'000 £'000 Earnings 1,330 1,330 298 298 ========= ========= ========= ========= Number of Shares 9,406,712 8,806,115 8,806,115 7,472,782 ========= ========= ========= ========= Earnings per Share 14.1p 15.1p 3.4p 4.0p ========= ========= ========= ========= 30.04.99 Diluted Earnings Earnings £'000 £'000 Earnings 1,263 1,263 Number of Shares 9,155,448 7,472,782 ========== ============ Earnings per Share 13.8p 16.9p ========== ============ Calculation of number of shares At 1 May 1999 7,472,782 7,472,782 7,472,782 Shares issued 5 August 1999 1,333,333 1,333,333 1,333,333 Dilutive effect of share option schemes 600,597 - - ---------- --------- ------------ 9,406,712 8,806,115 8,806,115 ========== ========= ============ At 1 May 1999 7,472,782 7,472,782 7,472,782 Shares issued 5 August 1999 - 1,333,333 - Dilutive effect of share option schemes - 349,333 - ---------- --------- ------------ 7,472,782 9,155,448 7,472,782 ========== ========= ============ 3. Reconciliation of operating profit to net cash outflow from operating activities 6 months 6 months 12 months To To To 31.10.99 31.10.98 30.04.99 £'000 £'000 £'000 Operating profit 1,958 437 1,835 Depreciation 66 60 274 (Increase)/decrease in debtors 46,864 (2,886) (61,046) Increase/(decrease) in (51,226) 119 59,072 creditors Increase in trading positions (23) (137) (969) --------- -------- -------- Net cash outflow from operating activities (2,361) (2,407) (834) ========= ======== ======== 4. Net funds at the end of the period Bank balances 3,721 3,248 4,886 Loan and overdraft (990) (892) (463) ------- ------- ------- 2,731 2,356 4,423 ======= ======= ======= 5. The financial information shown for the year ended 30 April 1999 and the period ended 31 October 1999 does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. Statutory accounts for the year ended 30 April 1999 have been delivered to the Registrar of Companies. These statutory accounts were audited by Deloitte & Touche and their report thereon was unqualified. A copy of this interim statement will be posted to shareholders shortly. Copies of the interim results are available, free of charge to the public on any week day (excluding Saturdays), at the registered office of the Company (Beaufort House, 15 St Botolph Street, London EC3A 7QR) and at the offices of the Company's nominated advisers, Arthur Andersen Corporate Finance, PO Box 55, 1 Surrey Street, London, WC2R 2NT from the date of this announcement and for a period of 14 days thereafter. Review Report to the Board of Directors of Teather & Greenwood Holdings plc by Deloitte & Touche on the interim financial information of the Group We have been instructed by the company to review the financial information set out in this announcement on pages 6 to 10 and we have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the Directors. The Listing Rules of the London Stock Exchange 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. 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 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 1999. Deloitte & Touche Chartered Accountants 13 December 1999 Copies of the interim announcement will be sent to shareholders shortly. Copies are available from Teather & Greenwood Limited, the company's Nominated Broker, Beaufort House, 15 St Botolph street, London, EC3A 7QR. Telephone 0207 426 9000

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