Final Results
Teather & Greenwood Holdings PLC
01 July 2004
TEATHER & GREENWOOD HOLDINGS PLC
Preliminary results for the year ended 30 April 2004
Teather & Greenwood, one of the UK's leading independent stockbrokers, announces
its preliminary results for the year ended 30 April 2004.
Group Highlights
- Turnover on continuing operations up 35.6% to £18.6 million
(2003: £13.7 million)
- Operating profit on continuing operations £1.1 million
(2003: loss of £3.4 million)
- Profit before taxation £1.3 million (2003: loss of £6.8 million)
- Earnings per share 2.1p (2003: loss 21.8p)
- Increase in net cash funds of £2.8 million (2003: decrease £4.7 million)
- Lord Baker of Dorking appointed non-executive Chairman on 1 May 2004
Commenting on the results, Lord Baker of Dorking, Chairman, said:
'Teather & Greenwood is well placed with its efficient cost base and high
quality people to continue to drive profits even in difficult markets. If the
markets remain positive, I anticipate another year of good progress.'
Enquiries:
Ken Ford, Chief Executive
Nick Stagg, Chief Operating Officer
Teather & Greenwood 020 7426 9000
Richard Darby, Mark Edwards, Nicola Cronk
Buchanan Communications 020 7466 5000
Notes to Editors
Teather & Greenwood Limited, which is a Member of the London Stock Exchange, is
the principal operating company of Teather & Greenwood Holdings plc, which is
quoted on the Official List. Teather & Greenwood Limited provides a range of
complementary services focused on institutional stockbroking and corporate
finance advisory services and is authorized and regulated by the Financial
Services Authority.
For more information on Teather & Greenwood Limited and its services, please
visit the company's website: www.teathers.com.
CHAIRMAN'S STATEMENT
As reported at the interim stage, trading conditions have been better than
during the prior year. The first half allowed higher levels of secondary agency
commission whilst during the second half corporate activity increased, allowing
for some additional IPO fees and commissions, as predicted earlier in the year.
These factors, coupled with a significant reduction in costs, have had a very
positive effect on operating earnings.
Financial Summary
Turnover for the year was £18.8 million (2003: £18.7 million), comprising £18.6
million from continuing activities (2003: £13.7 million) and £0.2 million
relating to discontinued activities (2003: £5.0 million). Operating costs were
reduced by 30% from £25.9 million to £18.2 million resulting in an operating
profit of £0.6 million (2003: loss of £7.2 million) of which £1.1 million
related to continuing activities (2003: loss of £3.4 million) and a loss of £0.5
million for discontinued activities (2003: loss of £3.8 million).
Profit before tax of £1.3 million (2003: loss of £6.8 million) includes a profit
of £0.8 million (2003: £1.8 million) from the disposal of discontinued
activities. This represents the final element of the proceeds on sale of the
majority of our Private Client business to Prudential-Bache Limited (now
Dryden), taking the total cash consideration up to £3.65 million.
The balance sheet shows Group net assets of £9.0 million (2003: £7.8 million).
The net assets reflect the transfer of £1.2 million profit for the year to
reserves. Reserves have been restated by £1.2 million of Employee Benefit Trust
Shares, previously held as fixed asset investments, and now shown as a deduction
from shareholders funds, in accordance with the latest accounting standards.
The Board is not proposing the payment of a dividend for the year ended 30 April
2004.
Strategy
The objective of the Group is to become the independent UK Institutional
Stockbroker of choice.
Our strategic priorities include building our Institutional Agency sales team
further to increase our secondary market share, and growing the list of
corporate clients. This will be supported by maintaining research in those
sectors relevant to this objective and focusing on sectors offering potential
for corporate business. We will continue to strengthen our Investment Funds
team, which should increase our market share in this important niche market.
Alongside this strategy of growing our top line revenues, we will continue to
maintain a tight control on costs and to maintain high standards of client care
and regulatory compliance.
Board and Employees
As already announced, Jeremy Delmar-Morgan retired as Chairman at the end of our
financial year. Jeremy had been with the Group for 23 years and the Board would
like to take this opportunity to thank him for his counsel and input as Chairman
and director over the years. The Board is actively seeking to appoint a third
independent non-executive director. I was delighted to take over as the
non-executive Chairman on 1 May 2004.
On behalf of the Board, I would like to welcome our new recruits who joined
during the year and thank all staff for their continuing hard work and
dedication.
Outlook
The UK Stock Market having rallied in 2003 has been more subdued in the Spring
and early Summer of 2004. Uncertainties in respect of Iraq, terrorism, interest
rates and oil prices have led to a more uncertain stock market. However, with a
number of mandated corporate transactions anticipated, the Group is well placed
with its efficient cost base and high quality people to continue to drive
profits even in difficult markets. If the markets remain positive, I anticipate
another year of good progress.
Lord Baker of Dorking
Chairman
30 June 2004
CHIEF EXECUTIVE'S REVIEW OF OPERATIONS
It is very pleasant to deliver to shareholders a considerably improved set of
results. After three years of a bear market causing two consecutive years of
losses, I am pleased to report a return to profitability and positive cash flow.
This has been achieved by a significant reduction in costs from prior years and
a strategy of focusing on our core businesses. The implementation of our
strategy along with a modest improvement in market conditions, has placed the
Group in a strong position.
Corporate Finance Advisory and Broking
The climate for corporate finance work improved in the second half of the year
and allowed the team to complete a number of transactions as well as building
the list of corporate clients.
During the year we were involved in a number of primary and secondary issues,
raising in excess of £100 million and a further six quoted clients have retained
the Group as their broker. We have been involved in a number of other
transactions and market operations, such as a hostile bid for IDS on behalf of
Schroder Ventures Inc and have been retained in a broking capacity by Lord
Kirkham in his potential offer for D.F.S. Furniture Plc.
Equities Research
The team has been further strengthened and our strategy of providing an
independent research product is paying dividends by expanding our institutional
client base and hence growing market share in secondary agency business.
The quality of the team has been recognised by a recent survey carried out by
Starmine and reported in The Sunday Times. In this survey, Teather & Greenwood
was ranked sixth equal for 'the broker with most award-winning analysts', and we
achieved top three ranking in five sectors.
In addition, our technical research has been voted number one by the
Primark-Extel Survey; which is based on votes from institutional clients, an
excellent result.
Secondary Institutional Agency Sales and Market Making
The sales teams in both large and small/mid size companies have increased our
market share over the year. Institutions benefit from our high quality and
accurate research and the sales teams' market analysis, as well as our
independence.
A key part of our strategy is to continue to increase our market share in
institutional agency business. In order to help further this growth, we will be
opening a new office in Edinburgh this summer to improve service to
institutional clients in Scotland. The very experienced team which we have
recruited, should significantly add to our agency business.
Equity market making has expanded from 107 stocks last year to nearly 160, with
further growth expected during the current year. The Ofex market is moving from
a single market maker to competing market makers and our team will be taking
part in this for all Ofex stocks.
Investment Funds
Our investment funds business has gone from strength to strength. We have added
eight new corporate clients during the financial year and two more since the
year end, which adds significantly to our recurring retainer income. The market
making and trading teams have had an excellent year in identifying undervalued
funds for clients and making profits by establishing a re-rated valuation for
them.
The corporate team has carried out a number of different transactions for a
range of clients in the UK and overseas, including restructuring and fund
raising projects. The range of funds business is very diverse. We raised 4
billion yen for a new Japan Opportunities Fund. We advised the board of Gartmore
Distribution Trust on its liquidation, and Land Race Ltd on its acquisition of
another fund. We assisted Unicorn in a VCT fund raising as sponsor and broker.
We advised the board of S G Romania Fund on a share re-structuring and for
Thailand International Fund we carried out a share tender offer and scheme of
arrangement. With a number of competitors having withdrawn from the market the
team is well placed to increase its market share significantly in the future.
Staff
We continue to recruit high quality individuals to add skills and strength to
our established teams. Total staff numbers have remained relatively static over
the year. We recruit on an opportunistic basis where high quality people or
teams become available. All employees have worked extremely hard during the year
to achieve the return to profit and I would like to add my thanks to all staff
for their dedication and contribution to the business.
E K Ford
Chief Executive
30 June 2004
Consolidated Profit and Loss Account
for the year ended 30 April 2004
Note 2004 2004 2003 2003
£'000 £'000 £'000 £'000
Turnover
Continuing operations 18,647 13,747
Discontinued operations 146 4,998
Group turnover 1 18,793 18,745
Operating costs (18,163) (25,932)
Operating profit/(loss)
Continuing operations 1,070 (3,381)
Discontinued operations (440) (3,806)
Group operating profit/(loss) 630 (7,187)
Profit on disposal of fixed asset - 764
investments
Profit on disposal of fixed assets 1 -
Profit on disposal of discontinued 820 1,815
operations
Reorganisation costs - (1,870)
Amounts written off investments - (74)
Profit/(loss) on ordinary activities 1,451 (6,552)
before interest
Net interest payable (115) (209)
Profit/(loss) on ordinary activities 1,336 (6,761)
before taxation
Taxation on profit/(loss) on ordinary (150) -
activities
Profit/(loss) on ordinary activities 1,186 (6,761)
after taxation
Profit/(loss) transferred to/(from) 1,186 (6,761)
reserves
Earnings/(loss) per share 2 2.1p (21.8p)
Diluted earnings/(loss) per share 2 2.1p (21.8p)
There are no recognised gains or losses for the current or prior year other than
as stated above. Accordingly no statement of total recognised gains and losses
has been prepared.
Consolidated Balance Sheet
as at 30 April 2004
2004 2003*
£'000 £'000
Fixed assets
Intangible assets 250 350
Tangible assets 677 1,696
Investments 230 230
1,157 2,276
Current assets
Trading Positions 4,445 4,800
Debtors 48,200 55,327
Cash at bank and in hand 1,258 1,044
53,903 61,171
Creditors: amounts falling due within one year (46,045) (55,118)
Net current assets 7,858 6,053
Total assets less current liabilities 9,015 8,329
Creditors: amounts falling due after one year - (500)
Net assets 9,015 7,829
Capital and reserves
Called up share capital 5,710 5,703
Share premium account 2,418 2,408
Treasury reserve (1,185) (1,168)
Other reserves 14 14
Profit and loss account 2,058 872
Equity shareholders' funds 9,015 7,829
* Restated see note 3
Approved by the Board of directors on 30 June 2004.
E K Ford N S Stagg
Chief Executive Chief Operating Officer and Finance Director
Consolidated Cash Flow Statement
for the year ended 30 April 2004
Note 2004 2004 2003 2003
£'000 £'000 £'000 £'000
Net cash inflow/(outflow) 4 2,085 (9,292)
from operating activities
Returns on investments and servicing of finance
Interest and other investment income received 5 19
Interest paid (119) (230)
Net cash outflow from returns on investments and (114) (211)
servicing of finance
Taxation
Corporation tax refunded - 928
Capital expenditure
Payments to acquire tangible fixed assets (40) (677)
Receipts from sale of tangible fixed assets 1 -
Payments to acquire treasury shares (17) (20)
Receipts from sale of fixed asset investments - 824
Net cash (outflow)/inflow from capital (56) 127
expenditure
Acquisitions and disposals
Receipts from sale of part of Teather & 820 1,065
Greenwood Investment Management
Equity dividend paid - (349)
Financing
Issue of ordinary share capital 17 2,994
Increase/(decrease) in cash 5 2,752 (4,738)
Notes to the Preliminary Results
1. Turnover
Turnover arises entirely from financial services activities. All turnover was generated in the United
Kingdom.
2004 2003
Continuing Discontinued Total Continuing Discontinued Total
operations operations operations operations
£'000 £'000 £'000 £'000 £'000 £'000
Corporate Finance 4,271 - 4,271 4,016 - 4,016
Investment Management 2,354 - 2,354 1,775 3,180 4,955
Institutional 7,575 146 7,721 5,933 1,435 7,368
Investment Funds 4,447 - 4,447 2,023 383 2,406
Total 18,647 146 18,793 13,747 4,998 18,745
Discontinued activities in the year relate to the closure of the dedicated fixed income team.
2. Earnings/(loss) per share
The profit/(loss) and number of shares in issue or to be issued used in calculating the earnings and diluted earnings
per share were as follows:
2004 2003
Diluted 2004 Diluted 2003
Earnings Earnings Earnings Earnings
£'000 £'000 £'000 £'000
Profit/(loss) 1,186 1,186 (6,761) (6,761)
Weighted average number of shares 57,144,742 56,051,168 30,982,909 30,982,909
Earnings/(loss) per share 2.1p 2.1p (21.8p) (21.8)p
Calculation of number of shares
At 1 May 57,034,498 57,034,498 28,213,245 28,213,245
Weighted average number of shares 40,466 40,466 3,588,175 3,588,175
issued during year
Dilutive effect of share option 1,093,574 - - -
shares
Own shares purchased and held in EBT (1,023,796) (1,023,796) (818,511) (818,511)
Weighted average for the year 57,144,742 56,051,168 30,982,909 30,982,909
3. Accounting Policies
The preliminary announcement is prepared on the basis of the accounting policies as stated in the
previous year's financial statements with the exception noted below.
UITF 38 requires a change in the way shares in a company held by an Employment Benefit Trust are
accounted for, and is mandatory for periods ending on or after 24 June 2004. Early adoption is
encouraged, and has been implemented in the year end financial statements. Accordingly, such shares are
now shown as a reduction in shareholders' funds, and the prior year's Group figures have been restated to
conform with this presentation.
4. Reconciliation of operating profit/(loss) to net cash inflow/(outflow)
from operating activities
2004 2003
£'000 £'000
Operating profit/(loss) 630 (7,187)
Depreciation and amortisation 1,158 1,482
Reorganisation costs - (1,568)
(Increase)/decrease in trading positions (702) 1,574
Decrease in debtors 7,127 72,205
Decrease in creditors (6,128) (75,798)
Net cash inflow/(outflow) from operating activities 2,085 (9,292)
5. Combined reconciliation of net cash flow and analysis of movement in net cash funds/
(debt)
At 1 At 30 April
May
2003 Cash flow 2004
£'000 £'000 £'000
Bank balances 1,044 214 1,258
Bank overdrafts (2,795) 2,538 (257)
Total net cash funds/(debt) (1,751) 2,752 1,001
6. Announcement Based on Statutory Accounts
The financial information set out above does not constitute the company's statutory accounts for the
years ended 30 April 2004 or 2003, but is derived from those accounts. Statutory accounts for 2003
have been delivered to the Registrar of Companies and those for 2004 will be delivered following the
Company's annual general meeting. The auditors reported on those accounts; their reports were
unqualified and did not contain a statement under s237 (2) or (3) Companies Act 1985.
Copies of the statutory accounts are to be sent to shareholders and will shortly be available to the
public at the office of Teather & Greenwood Holdings plc, 15 St Botolph Street, London EC3A 7QR, as
well as on the Group's website, www.teathers.com.
This information is provided by RNS
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