Final Results
Teather & Greenwood Holdings PLC
2 July 2002
TEATHER & GREENWOOD HOLDINGS PLC
Preliminary results for the year ended 30 April 2002
HIGHLIGHTS
• Turnover virtually unchanged at £34.4m (2001: £34.6 million)
• Loss before taxation of £3.8m (2001: profit of £6.3million)
• Progress made in restructuring parts of the business and repositioning of
the Group to create additional recurring earnings in the future
• Dividend maintained at 1.5p, making a total of 2p for the year
• Liverpool office added, with experienced corporate finance team and
further brokership relationships
• Net assets of £12.8 million
Commenting on the results, Ken Ford, Chief Executive, said:
'The year under review has been difficult. However, progress has been made
internally, with selective recruitment and some restructuring, and a reduction
in costs of 20% from the peak. There has also been an increase in the products
and services provided for the benefit of our clients. Good progress has been
made and the Directors are confident that the firm has the critical mass,
infrastructure and personnel to now return to profitability and to prosper in
the years ahead.'
1 July 2002
ENQUIRIES:
Teather & Greenwood Tel: 020 7426 9000
Ken Ford, Chief Executive
Nick Stagg, Chief Operating Officer
College Hill Tel: 020 7457 2020
Richard Pearson
CHAIRMAN'S STATMENT
Against a background of deteriorating stock market conditions, I am pleased to
be able to report that progress has been made in the necessary restructuring of
parts of the business and repositioning of the Group to create additional
recurring revenues in the future and to raise the quality of the services that
Teather & Greenwood provide. A more detailed review of these changes follows in
the Chief Executive's Review.
Financial Highlights and Dividend
Turnover fell £0.2 million to £34.4 million (2001 £34.6 million). Losses as
indicated in our trading statement of 28 February 2002, which forecast a loss to
the year end of up to £4 million has turned out to be £3.8 million. (2001 £6.3
million profit) The balance sheet remains sound with net assets of £12.8
million.
The loss reflects not only difficult trading conditions, but the cost of
redundancies since the total number of employees has fallen from a peak in
summer 2001 of over 300 to 245 currently. It also includes the write-down of a
small number of unquoted investments and restructuring costs incurred in
strengthening the business for the future.
Loss per share was 10.2p (2001 earnings 15.1p) and as previously indicated, the
Board is recommending a final dividend for the year ended 30 April 2002 of 1.5p
per share (2001 1.5p) making a dividend for the year of 2p per share. It is
proposed to give shareholders the option of receiving the final dividend in the
form of shares rather than cash and I refer to my letter of 1 July 2002 which is
being sent to shareholders with the annual report and accounts, which explains
the operation of the proposed share dividend alternative scheme. The Executive
Directors intend to avail themselves of this option in respect of their entire
holdings. Part of the business of the AGM will be to approve the scheme. The
dividend will be payable on 19 August 2002 to shareholders on the register at 26
July 2002. The maintenance of the dividend reflects the confidence of the
Directors in the Group's future prospects.
Strategy
The Board's strategy is to continue to develop a broadly-based financial
services organisation serving the wide-ranging needs of corporate, institutional
and private clients principally in the United Kingdom. Within this strategy the
company has focused on recruiting high-quality personnel where appropriate. The
company continued to invest in the development of its infrastructure ensuring it
has the financial controls, compliance, information technology and support
services to keep pace within an increasingly complex financial services
environment. A number of acquisition possibilities have been explored and
rejected on the grounds of price or lack of synergy.
Board and Employees
At the AGM in August 2001, I became non-Executive Chairman of the Group. At the
same time, Philip Ashfield, stepped down as a Director but remains a director of
Teather & Greenwood Limited, the operating subsidiary of the Group. Philip
Ashfield's contribution to the Group has proved invaluable over the years.
We were pleased to welcome Nicholas Stagg in April 2001 as Chief Operating
Officer of Teather and Greenwood Holdings plc. In April 2002 he took on the
additional responsibilities of Finance Director, Brian Rowbotham having retired.
The Board would like to thank Brian for his work with the Teather and
Greenwood partnership and the successful flotation of the company on AIM in 1998
and its subsequent move to a full listing in 2000.
On behalf of the Board I would like to welcome those recruited by Teather &
Greenwood during the year and thank staff for the hard work and dedication in
further building the group in difficult market conditions.
Outlook
At the time of writing stock market conditions continue to deteriorate.
Nevertheless, The board believe that Teather & Greenwood has the infrastructure,
critical mass and financial resources with the potential and ability to grow and
expand. The Board will continue to structure the Group to achieve a sound
profitable business whatever the prevailing market conditions.
Jeremy Delmar-Morgan
Non-Executive Chairman
1 July 2002
CHIEF EXECUTIVE'S REVIEW
There were many changes last year. A more difficult IPO market and depressed
private client activity in particular have adversely affected business. Whilst
deteriorating market conditions required overhead reduction in all areas, there
has also been a repositioning of the teams and new business areas added for the
benefit of future growth.
Corporate Finance
During the year a number of interesting and growing companies were added to the
list of brokerships and a number of successful transactions completed. The team
raised approximately £200m in the course of 24 transactions (excluding closed
end funds). In addition, a Liverpool office was added with an experienced
corporate finance team joining the Group, bringing expertise and further
brokership relationships. The corporate client list currently stands at 98 at
the year-end (excluding closed end funds).
An equity capital markets team was established specifically for new fundraisings
for clients. Sales trading was further strengthened and market making increased
to cover 110 stocks (2001-100).
Equities Research
Teather & Greenwood's research department covered 17 industry sectors
encompassing about 70% of the UK Market, as well as contributing to pan-European
sector research as part of the European Securities Network. It produces high
quality and independent equity-based sector and company research on over 350 UK
corporates.
The sectors covered are: aerospace and defence; banks; beverages; construction
and building materials; electronic and electrical equipment; engineering and
machinery; food and general retailers; leisure, entertainment and hotels; oil
and gas; media; pharmaceuticals; real estate; software and computer services;
specialist finance; telecommunication services and miscellaneous smaller
companies.
Over the coming months, the research department plans to widen its coverage of
mid-cap stocks and thereby provide new value-added secondary advice in the
FTSE250 arena. To this end we have added coverage of the important sector of
support services bringing the total number of sectors covered to 18.
Institutional
The sales trading function was expanded and now covers all UK equities. This
better serves clients who, for regulatory and other reasons, increasingly use a
centralised dealing function.
Our secondary agency sales teams of large and smaller capital market companies
have been merged to provide total UK equity coverage based on client
requirements through client account management.
Our investment funds business, which has expanded during the year under review,
is now firmly established as one of Teather & Greenwood's core businesses. We
were joined in May 2001 by the highly regarded country funds team from Bear
Stearns. With this, and with additional resource on the corporate finance side
of the business, we now have a team of eighteen, providing sales and
distribution, market making, analysis and research and corporate finance.
During the year under review we have successfully sponsored the launch of four
new closed end funds: this is a considerable achievement in difficult market
conditions. In addition, we have carried out a number of advisory mandates and
taken on 14 new brokerships, bringing our total number of brokerships in this
area to 27. We have capacity to take on more brokerships and intend to do so on
a selective basis, as and when suitable opportunities arise.
This has been a successful and profitable year for our investment funds
business. Coupled with the recent departure of several of the larger investment
banks from this area, it has vindicated the investment we made at the start of
the year. I am confident that we have the necessary expertise and long-term
commitment to continue to grow this business with a view to becoming one of the
leading participants in the sector.
The bond and fixed interest team continued to develop its client base and had a
successful year.
An equity convertible service was added in February 2002 and has had an
encouraging reception from clients.
The derivatives team, specialising in Contracts for Difference increased revenue
as new clients were added as many took the advantage of 'shorting' stocks as
well as going long over an extended period, without the imposition of stamp
duty.
Investment Management
Difficult market conditions have inevitably affected our investment management
division, but this has not interrupted the modernisation of the department
during the last 12 months. The emphasis continues to be the conversion of
clients, whether discretionary or advisory, to a fee-based agreement, in
exchange for which they benefit from a rigorous investment process and in the
coming months, a new and highly sophisticated front office system, capable of
up-to-date modelling and risk measurements, of the kind normally found in only
the very largest houses.
We continue to look at ways of providing a wide and innovative stable of
investment vehicles. Towards the end of last year, we launched our own Open
Ended Investment Company (OEIC), and now run four UK biased funds - UK Growth,
UK Income, UK Smaller Companies, and Ethical. These are run by experienced,
successful fund managers recruited externally. In an extremely difficult
environment, we also successfully launched our own VCT for the first time, as
well as a SIPP. Our on-line system, Teathers-i-deal (www.teathers-i-deal.com)
continues to attract substantial interest from clients and intermediaries alike.
The tax-efficient solutions team had another successful year despite generally
very depressed levels of investment and a marked drop in requirements for
capital gains tax shelters. The unit is now fully established as a supplier of
high quality tax efficient investments to the retail market. During the period,
subscription to the 'Take 3 TV Partnerships' was completed and 'Take 4'
launched. Due to changes in the Finance Act 2002, 'Take 4' was closed in April
and has been replaced by 'Take 5'. The fifth in the successful series of
children's nursery EIS issues was launched. There was also steady continuing
demand for the team's range of tax-efficient portfolios, which can shelter
capital gain and income.
Much work has been done over the year to lower the cost base and adjust the
make-up of our revenue stream. The result of this is that we are now far better
positioned to weather current market conditions and well placed for any upside.
The integration of our new front-office system will provide us with the very
latest technology to provide our clients with the services and products they
require, as well as the tools for a sophisticated investment process. The goal
remains to establish a modern fund management organisation to serve clients,
whether individuals, charities or pension funds with the same levels of
disciplines and expertise and high levels of service.
After a difficult year, we look forward to the coming months with greater
confidence, with the right systems and people in place to deliver modern and
creative solutions to our clients.
Support Services
An information technology director was recruited during the year and progress
has been made on system upgrading as well as negotiations on reducing costs of
some services.
The main thrust of compliance activity throughout the year was aimed at ensuring
that Teather & Greenwood Limited was ready for N2, when all the financial
regulators became combined into the FSA, which became effective on 1 December
2001. This has involved extensive work on training for staff, introduction of
new rules and responsibilities, new systems and controls and a complete overhaul
and upgrading of documentation, as well as completing the work necessary on
phase two when the transitional period ended on the 30 June 2002. This has
resulted in the cost of compliance increasing by at least a factor of 2.
Other
During the year I accepted the appointment as non-Executive Chairman of the
Quoted Companies Alliance, which is relevant to work at Teather & Greenwood. It
has seven committees and looks after the interests of smaller quoted companies.
In particular, it is campaigning against the pernicious 0.5% stamp duty on UK
equities. This is not levied in most competitor countries and is leading to a
loss of client business from the UK.
The government has increasingly added to smaller companies' regulatory costs and
'HR' burdens whilst raising taxes directly affecting employment (NIC) and via
pensions tax; at the same time exhorting companies to be more productive. No
political party has adopted the necessary removal of stamp duty, which while not
a populist move could increase volumes of shares traded, benefit our clients,
and lead to a higher overall tax 'take' in the UK over time, as firms benefit.
Staff
During the year, a number of high quality individuals were recruited into many
areas of the business and regrettably some have had to leave Teather & Greenwood
due to the restructuring of the cost base to suit the current market conditions.
I would like to thank all the staff for their contributions during the year in
difficult market conditions.
Summary
The year under review has been difficult. However, progress has been made
internally with selective recruitment and some restructuring, and a reduction in
costs of 20% from the peak. There has also been an increase in the products and
services provided for the benefit of our clients. Good progress has been made
and the Directors are confident that the firm has the critical mass,
infrastructure and personnel to now return to profitability and to prosper in
the years ahead.
Ken Ford
Chief Executive
1 July 2002
GROUP PROFIT & LOSS ACOUNT
For year ended 30 April 2002
Year ended Year ended
2002 2001
£'000 £'000
Turnover 34,431 34,584
Operating costs (38,001) (29,394)
Operating (loss)/profit (3,570) 5,190
Profit on disposal of fixed asset investments 1,777 1,009
Reorganisation costs (1,510) -
Amounts written off investments (440) -
(Loss)/profit on ordinary activities before
interest (3,743) 6,199
Net interest (payable)/receivable & similar (101) 126
income
(Loss)/profit on ordinary activities before
taxation (3,844) 6,325
Tax credit/(charge) on (loss)/profit on ordinary
activities 1,053 (2,135)
(Loss)/profit for the year (2,791) 4,190
Equity dividend (552) (558)
(Loss)/profit transferred (from)/to reserves (3,343) 3,632
(Loss)/earnings per share (10.2p) 15.1p
Diluted (loss)/earnings per share (10.2p) 13.9p
Dividend per share 2.0p 2.0p
All operations are continuing, and there are no recognised gains or losses for
the current or prior year other than as stated above
BALANCE SHEETS
As at 30 April 2002
Group Group Company Company
Year ended Year ended Year ended Year ended
2002 2001 2002 2001
£'000 £'000 £'000 £'000
Fixed assets
Intangible assets 450 - 450 -
Tangible assets 2,401 1,795 - -
Investments 1,488 924 9,221 9,171
4,339 2,719 9,671 9,171
Current assets
Trading positions 4,993 10,725 - -
Debtors 127,709 200,499 472 471
Cash at bank and in hand 8,074 13,754 195 56
140,776 224,978 667 527
Creditors: amounts falling due
within one year 131,851 211,690 2,099 2,057
Net current assets/(liabilities) 8,925 13,288 (1,432) (1,530)
Total assets less current
liabilities 13,264 16,007 8,239 7,641
Creditors: amounts falling due
after one year 500 - 500 -
Net assets 12,764 16,007 7,739 7,641
Capital and reserves
Called up share capital 2,821 2,788 2,821 2,788
Share premium account 2,296 2,229 2,296 2,229
Other reserves 14 14 2,606 2,606
Profit and loss account 7,633 10,976 16 18
Equity shareholders' funds 12,764 16,007 7,739 7,641
Approved by the Board of directors on 1 July 2002.
E K Ford N S Stagg
Chief Executive Chief Operating Officer and Finance Director
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 April 2002
Year ended Year ended Year ended Year ended
2002 2002 2001 2001
£'000 £'000 £'000 £'000
Net cash (outflow)/inflow from
operating activities (6,450) 12,386
Returns on investments and
servicing of finance
Interest and other investment
income received 33 126
Interest paid (114) -
Net cash (outflow)/inflow from
returns on investments and
servicing of finance (81) 126
Taxation
Corporation tax paid (1,206) (3,267)
Capital expenditure
Payments to acquire tangible
fixed assets (1,650) (1,455)
Payments to acquire fixed asset
investments (1,004) (874)
Receipts from sale of fixed asset
investments 1,777 1,059
Net cash outflow from capital
expenditure (877) (1,270)
Equity dividend paid (561) (509)
Financing
Issue of ordinary share capital 100 43
(Decrease)/increase in cash (9,075) 7,509
NOTES
1. TURNOVER AND SEGMENTAL ANALYSIS
Turnover arises entirely from financial services activities. All turnover was
generated in the United Kingdom.
2002
Operating
Net Assets Turnover (loss)/profit
£'000 £'000 £'000
Financial services 12,764 34,431 (3,570)
The net gain on trading in financial instruments was £1,653,876 (30 April 2001: £4,745,389) and
is included in the turnover for financial services
2001
Operating
Net Assets Turnover (loss)/profit
£'000 £'000 £'000
Financial services 16,007 34,584 5,190
Analysis of turnover
Turnover 2002 2001
£'000 £'000
Corporate Finance 9,981 14,000
Investment Management 7,438 10,184
Institutional 10,811 7,000
Investment Funds 6,201 3,400
Total 34,431 34,584
2. (LOSS)/EARNINGS PER SHARE
The (loss)/earnings and number of shares in issue or to be issued used in
calculating the earnings and diluted earnings per share were as follows:
2002 2002 2001 2001
Diluted Diluted
Earnings Earnings Earnings Earnings
(Loss)/earnings (£'000) (2,791) (2,791) 4,190 4,190
Number of shares 27,276,277 27,276,277 30,208,104 27,827,815
(Loss)/earnings per share (10.2p) (10.2p) 13.9p 15.1p
Calculation of number of shares
At 1 May 27,877,245 27,877,245 9,246,415 9,246,415
Bonus Issue 4 August 2002 - - 18,492,830 18,492,830
Weighted average number of shares issued
during year
207,132 207,132 88,570 88,570
Dilutive effect of share option schemes - - 2,380,289 -
Own shares purchased and held in EBT (808,100) (808,100) - -
At 30 April 27,276,277 27,276,277 30,208,104 27,827,815
3. RECONCILIATION OF OPERATING (LOSS) /PROFIT TO NET CASH (OUTFLOW)/ INFLOW
FROM OPERATING ACTIVITIES
Year Ended Year Ended
2002 2001
£'000 £'000
Operating (loss)/profit (3,570) 5,190
Depreciation and amortisation 1,094 632
Reorganisation costs (766) -
Decrease/(increase) in trading positions 1,196 (1,889)
Decrease/(increase) in debtors 73,843 (19,333)
(Decrease)/increase in creditors (78,247) 27,786
Net cash (outflow)/inflow from
operating activities (6,450) 12,386
4. COMBINED RECONCILIATION OF NET CASHFLOW AND ANALYSIS OF MOVEMENT IN
NET FUNDS
At 30 April At 30 April
2001 Cashflow 2002
£'000 £'000 £'000
Bank balances 13,754 (5,680) 8,074
Bank overdrafts (1,692) (3,395) (5,087)
Total net funds 12,062 (9,075) 2,987
5 STATUTORY ACCOUNTS
The financial information set out in the announcement does not constitute the
company's statutory accounts for the years ended 30 April 2002 or 2001. The
financial information for the year ended 30 April 2001 is derived from the
statutory accounts for that year which have been delivered to the Registrar of
Companies. The auditors reported on those accounts; their report was
unqualified and did not contain a statement under s237 (2) or (3) Companies Act
1985. The statutory accounts for the year ended 30 April 2002 will be finalised
on the basis of the financial information presented by the directors in this
preliminary announcement using the same accounting policies and will be
delivered to the Registrar of Companies following the company's annual general
meeting.
This information is provided by RNS
The company news service from the London Stock Exchange
Monday, 13th May 2024
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