Information  X 
Enter a valid email address

Warburg (S.G.) Group (WSGC)

  Print      Mail a friend

Thursday 28 September, 2006

Warburg (S.G.) Group

Interim Results

Warburg (S.G.) Group PLC
28 September 2006

                                                             Company No: 1874486






                                   S.G. WARBURG GROUP plc






                                   Half-Year Report


                                   For the six months ended 30 June 2006







Interim Statement





Principal activities



The Group, comprising the Company and its subsidiaries, carries on investment
activities including the provision of finance to a number of companies within
the UBS AG Group.





Events since the balance sheet date



On 13 July 2006, the Directors announced that following a strategic review they
had concluded that the business purpose of the Company had ceased and that they
intended to seek shareholder approval for the members' voluntary winding-up of
the Company once certain outstanding matters had been resolved.



In addition, on 13 July 2006, the Company announced an unconditional cash offer
of 168p per share for the entire issued preference share capital of the Company
had been received from S.G. Warburg & Company plc.  The Offer documentation was
distributed to Preference Shareholders on 10 August 2006 and the Offer closed on
14 September 2006 after acceptances in respect of 10,635,759 Preference shares
and representing approximately 97.3 per cent of the total Preference shares in
issue had been received.  The Directors will be making an application for the
cancellation of the listing of the Preference shares on the London Stock
Exchange effective 20 October 2006.  S.G Warburg & Company plc has commenced the
statutory compulsory acquisition procedure in respect of those Preference shares
which had not been tendered under the Offer on 22 September 2006. The transfer
of the compulsorily acquired Preference Shares is expected to take place on or
after 3 November 2006.



Since the Preference shares are being purchased by S.G. Warburg & Company plc
(another company within the UBS AG Group), the Directors of the Company do not
consider that any further cost to the Company will arise in respect of these
Preference shares over and above the dividends due.


In light of the Directors' intention to seek a members' voluntary liquidation
appropriate proposals will be made as soon as practicable to holders of the 9
per cent perpetual subordinated loan notes due 2024 issued by the Company.


The Directors do not consider it appropriate to provide for costs associated
with a members' voluntary winding-up as at present no obligation exists, since
the proposal has yet to be considered by the Shareholders at a General Meeting.





Dividends



Dividends, included within interest expense, on the 7 5/8 per cent Cumulative
Preference shares paid on 31 March 2006 amounted to £0.4m  (period to 30 June
2005: £0.4m; year to 31 December 2005: £0.8m).  The Directors do not at the date
hereof intend to declare an ordinary dividend for the six months ended 30 June
2006 (period to 30 June 2005: £nil; year to 31 December 2005: £nil).










Independent Review Report to S.G. Warburg Group plc



Introduction



We have been instructed by the Company to review the financial information for
the six months ended 30 June 2006, which comprises the Group Income Statement,
Group Balance Sheet, Group Statement of Changes in Equity, Group Cash Flow
Statement and the related Notes.  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.



This report is made solely to the Company in accordance with guidance contained
in Bulletin 1999/4 'Review of interim financial information' issued by the
Auditing Practices Board. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Company, for our work,
for this report or for the conclusions we have formed.





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
'Review of interim financial information' 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 International Standards on Auditing (UK and Ireland) 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 30 June 2006.



Ernst & Young LLP

London

28 September 2006


  
                                                                   Six months        Six months              Year
                                                                        ended             ended             ended
                                                                      30 June           30 June       31 December
                                                                         2006              2005              2005
                                                                          £m                £m                £m

Interest income                                                         30.1              31.9              63.1
Interest expense                                                      (12.2)            (15.7)            (28.1)

Net interest income                                                     17.9              16.2              35.0

Other operating income                                                     -               0.1               0.2
Administrative expenses                                                    -             (0.1)             (0.6)

Operating profit                                                        17.9              16.2              34.6

Loss on revaluation / repurchase of debt                               (4.7)            (45.6)            (45.6)

Profit / (loss) before income taxation                                  13.2            (29.4)            (11.0)

Tax (expense) / credit                                                 (4.0)               8.6               2.8

Profit / (loss) for the period after taxation                            9.2            (20.8)             (8.2)

Attributable to:
Equity holders of the parent                                             9.2            (20.9)             (8.3)
Minority Interests                                                         -               0.1               0.1

                                                                         9.2            (20.8)             (8.2)



Earnings per share based on profit / (loss) attributable to
the equity holders of the parent during the year
(expressed in pence per share):
- basic  and diluted                                                    3.92            (8.90)            (3.56)










                                                             30 June 2006      30 June 2005    31 December 2005


                                                                       £m                £m                  £m
ASSETS
Current assets

Amounts owed by Group undertakings                                1,355.0           1,294.8             1,326.6

Total assets                                                      1,355.0           1,294.8             1,326.6

LIABILITIES
Non-current liabilities
Debt securities in issue                                                -               8.3                 8.3
Preference shares                                                       -              10.9                10.9
                                                                        -              19.2                19.2

Current liabilities
Debt securities in issue                                             13.0                 -                   -
Preference shares                                                    10.9                 -                   -
Amounts owed to Group undertakings                                  516.1             492.6               505.2
Other liabilities                                                     1.1               0.6                 1.5
Current income tax liabilities                                       13.6               3.8                 9.6
                                                                    554.7             497.0               516.3


Total liabilities                                                   554.7            516.2                535.5


EQUITY
Capital and reserves attributable to the equity
holders of the parent
Share capital                                                        58.6              58.6                58.6
Share premium                                                       291.1             291.1               291.1
Capital redemption reserve                                           64.9              64.9                64.9
Other reserves                                                       84.9              84.9                84.9
Retained earnings                                                   300.8             279.1               291.6
Total equity                                                        800.3             778.6               791.1

Total equity and liabilities                                      1,355.0           1,294.8             1,326.6




Approved by the Board of Directors on 28 September 2006 and signed on their
behalf by:









Alistair N C Defriez, Director and Chairman

                                   Share       Share       Capital       Other    Retained  Minority     Total
                                 Capital     Premium    Redemption    Reserves              Interest
                                                           Reserve                Earnings
                                      £m          £m            £m          £m          £m        £m        £m

At 1 January 2005                   58.6       291.1          64.9        84.9       312.2     240.8   1,052.5

(Loss) / Profit for the period         -           -             -           -      (20.9)       0.1    (20.8)
Dividend on ordinary shares            -           -             -           -      (12.2)     (2.3)    (14.5)
                                       -           -             -           -           -   (238.6)   (238.6)

Reduction in minority interest
on loss of control of
subsidiary
                                    58.6       291.1          64.9        84.9       279.1         -     778.6

At 30 June 2005

Profit for the period                  -           -             -           -        12.5         -      12.5
At 31 December 2005                 58.6       291.1          64.9        84.9       291.6         -     791.1

Profit for the period                  -           -             -           -         9.2         -       9.2
At 30 June 2006                     58.6       291.1          64.9        84.9       300.8         -     800.3


                                                                    Six months      Six months            Year
                                                                         ended           ended           ended
                                                                       30 June         30 June     31 December
                                                                          2006            2005            2005
                                                                            £m              £m              £m
cash flows from operating activities
Interest received                                                         30.1            31.9            63.1
Interest paid                                                           (12.2)          (15.7)          (28.1)

Cash flows from operating profits before changes in operating
assets and liabilities
                                                                          17.9            16.2            35.0

Changes in operating assets and liabilities:
- net (decrease)/increase in loans and advances                         (17.5)           148.9           129.4
- net (decrease)/increase in other liabilities                           (0.4)                             0.2
                                                                                         (0.5)

Net cash from operating activities                                           -           164.6           164.6

cash flows from investing activities
Reduction in cash attributable to minority interest (see note                -           (1.1)           (1.1)
(a))

Net cash used in investing activities                                        -           (1.1)           (1.1)

Cash flows from financing activities
Repayments of borrowed funds and debt securities                             -         (152.3)         (152.3)
Equity dividends paid                                                        -          (12.2)          (12.2)

Net cash from financing activities                                           -         (164.5)         (164.5)

Net decrease in cash                                                         -                           (1.0)
                                                                                         (1.0)

Cash at beginning of period/year                                             -             1.0             1.0

Cash at end of period/year                                                   -               -               -








Note (a)

Reduction in cash attributable to minority interest

On 30 June 2005 S.G. Securities U.K. Limited redeemed at par and cancelled its
one special redeemable share previously held by S.G. Warburg Group plc. The
consideration of £1 represents the net asset value amounts included in those
consolidated accounts in respect of the S.G. Securities U.K. Limited group of
companies.


                                                                             £m
Decrease in loans and advances                                            230.2
Decrease in other assets                                                    3.2
Decrease in other liabilities                                             (0.2)
Decrease in fixed asset investments                                         6.4
Decrease in corporation tax liability                                     (2.1)
Decrease in cash at bank and in hand                                        1.1
Net Assets                                                                238.6
Reduction in Minority Interests                                         (238.6)
Consideration received                                                        -


1.  General Information



The financial information included in this Half-Year Report does not constitute
statutory accounts as defined in Section 240 of the Companies Act 1985.



The statutory accounts for the year ended 31 December 2005, upon which the
auditors issued an unqualified opinion and which did not contain a statement
under S.237 (2) or (3) of the Companies Act 1985 and did not contain an emphasis
of matter reference, have been delivered to the Registrar of Companies.





2. Summary of Significant Accounting Policies



•           Basis of Preparation

It is the Board's intention to effect, where appropriate, an orderly disposal of
the Company's assets and dividend available profits to Ordinary shareholders
before any Shareholders' resolution to place the Company into members' voluntary
liquidation.  Consequently, the interim financial information is not prepared on
a going concern basis and the interim financial information is prepared on the
basis described below.



The Company's assets comprise amounts due from other group companies, and are,
in the Directors' view recoverable so no adjustment has been made to the
carrying amounts.



The proposals in respect of the Preference shares are disclosed on page 8.
Since the Preference shares are being purchased by S.G. Warburg & Company plc,
the Directors of the Company do not consider that any further costs to the
Company will arise in respect of these Preference shares other than the
dividends due on those shares.  Accordingly, no adjustment has been made to the
carrying amounts of the Preference shares.



Given the Directors' stated intention to make appropriate proposals to the
holders of the Perpetual notes, the Directors have adjusted the carrying value
of the Perpetual notes to £13,027,813 to reflect the terms of the Trust Deed
governing the Perpetual notes.



The Perpetual notes and Preference shares have been reclassified as current
liabilities.



Interest income, expense and preference dividend payments which will arise in
the subsequent period will be recognised on an accruals basis in that period.
The Directors do not consider it appropriate to provide for costs associated
with a members' voluntary winding-up as at present no obligation exists, since
the proposal has yet to be considered by the Shareholders at a General Meeting.



These interim financial statements have been prepared on a basis consistent with
the Company's anticipated 2006 IFRS accounting policies.



•         Consolidation

The Interim Financial Statements comprise those of the parent company S.G.
Warburg Group plc and its subsidiaries. The effects of intra-group transactions
are eliminated in preparing the Interim Financial Statements. Subsidiaries
directly or indirectly controlled by the Group are consolidated. Subsidiaries
divested are consolidated up to the date of disposal.  Equity and net income
attributable to minority interests are shown separately in the balance sheet and
income statement.



•           Cash

Cash in the balance sheet comprises cash at bank.





•           Financial Instruments



i) Financial Liabilities



In 2005, all loans and borrowings including debt securities were recognised at
cost, being the fair value of the consideration received.  Thereafter, they are
stated at amortised cost using the effective interest method.  In 2006, as a
result of the proposal outlined above, the Perpetual notes have been valued as
described in note 3.



Preference shares, which carry a mandatory coupon, are classified as financial
liabilities and are presented within liabilities. The dividends on these
preference shares are charged in the income statement as an interest expense.



iii) Financial Assets



Non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market are classified as loans and receivables. They arise
when the Group finances borrowings within the UBS AG Group.





3.       Explanatory Notes



•           Segmental Analysis

The Group's activities constitute investment in subsidiaries and provision of
finance for subsidiaries within the UBS AG Group.  All material activities of
the Group are within the UK and subject to the same risks and returns.
Accordingly, the Group has not produced any segmental analysis.





•           Preference Shares

Since the balance sheet date, S.G. Warburg & Company plc announced an
unconditional cash offer of 168p per share for the entire issued preference
share capital of the Company.  The Offer documentation was distributed to
Preference Shareholders on 10 August 2006.  The Offer closed on 14 September
2006.



S.G. Warburg & Company plc will acquire pursuant to the statutory compulsory
acquisition procedure preference shares held by those Preference Shareholders
who have not accepted the Offer.  As holder of the Preference Shares, S.G.
Warburg & Company will then participate in the intended members' voluntary
winding-up but only to the extent of receiving an amount equivalent to the
amounts paid up on such shares and accrued dividend in accordance with the
Company's Articles of Association.  The Preference shares are accordingly
classified as current liabilities.



Since the Preference shares are being purchased by S.G. Warburg & Company plc,
the Directors of the Company do not consider that any further cost to the
Company will arise in respect of these Preference shares over and above the
dividends due.





•           Perpetual Notes

In light of the Directors' intention to seek a members' voluntary liquidation
the Company announced on 13 July 2006 that appropriate proposals would be made
in due course to holders of the 9 per cent perpetual subordinated loan notes due
2024 issued by the Company.  Accordingly, the liability has been classified as
current, since it reflects the expected position for the year-end financial
statements.

Given the Directors' stated intention to make appropriate proposals to the
holders of Perpetual notes, the Directors have adjusted the carrying value of
the Perpetual notes to £13,027,813 to reflect to the terms of the trust deed
governing the Perpetual notes.  The 2005 carrying value, under amortised cost
was £8,337,000.





•           Contingent Assets or Contingent Liabilities

There were no contingent assets or liabilities at the balance sheet date.


                      This information is provided by RNS
            The company news service from the London Stock Exchange                                                                                                                                                                                                                                             

a d v e r t i s e m e n t