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 The company news service from the London Stock Exchange

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