Interim Results
Teather & Greenwood Holdings PLC
16 January 2003
Teather & Greenwood Holdings Plc ('Teather & Greenwood' or 'the Group')
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2002
Chairman's Statement
Poor trading conditions were referred to in the annual report produced in July
2002 and in the AGM statement of August and subsequent update in September 2002.
The interim figures show a loss of £2.6 million compared to a profit of £0.8
million in the previous year's interim report. This loss includes costs of
redundancy and other exceptional costs of £753,000 arising from the fundamental
reorganisation of our business undertaken in the period. It also includes the
profit of £607,000 arising from the sale of 150,000 London Stock Exchange
shares.
Since the financial year end of 30 April 2002, in an effort to achieve a sound
and profitable business, personnel numbers have been trimmed to 184 from 235
which, coupled with other savings, has led to overheads being cut by in excess
of £10 million per annum. As a result of these cost reductions, the cost base
of the Group now has been adjusted to current market conditions but cash costs
and loss of momentum are reflected in these results. However, it is a sign of
the resilience of our business that during this period there has been no
significant loss of corporate clients. The proceeds of the disposal of part of
our investment management business will strengthen our balance sheet and
counterparty profile. Accordingly, as a result of the difficult measures we
have taken, the Board looks forward to the future with cautious optimism.
Financial Highlights
Turnover for the Group was £11.3 million (six months to 31 October 2001: £19.8
million) producing an operating loss of £2.4 million before re-organisation
costs (six months to 31 October 2001: an operating profit of £0.4 million). Loss
per share was 9.5p (six months to 31 October 2001: earnings per share 2.7p).
The balance sheet shows net assets of £10.2 million (30 April 2002: £12.8m).
The Board is not recommending an interim dividend (31 October 2001: 0.5p) nor is
it currently envisaged that a final dividend will be recommended in respect of
the year ending 30 April 2002 but this will be reviewed again by the Board in
view of the outturn for the year.
Investment Management
On 15 January 2003 the Group announced the proposed disposal ('Disposal') of
part of Teather & Greenwood Investment Management ('TGIM') to Prudential-Bache
Limited, a subsidiary of Prudential Financial, Inc. for up to £3.65 million.
Accounting for approximately 11.4 per cent. of turnover in the year to 30 April
2002, the transferring team consists of 13 individuals responsible for £650
million of funds under management (as at 30 November 2002). The net initial
proceeds of the Disposal (after expenses) will be approximately £1,090,000 and
will be used to repay existing borrowings and invested in other areas of the
Group which have been given higher strategic priority. The net deferred and
contingency elements of consideration of up to £1,650,000 are expected to be
used similarly in due course. Remaining is the successful tax efficient
department specialising in EIS portfolios, film financing schemes and AIM and
VCT funds with around £75 million under management. The Open Ended Investment
Company (OEIC) has around £8 million under management. The department also
manages PEPS and ISAs and trading for private clients 'on-line'. Further
details of the Disposal were set out the announcement made on 15 January 2003.
No costs or benefits associated with the Disposal are included in the interim
figures.
Corporate Finance Advisory and Broking
The corporate finance team now consists of 13 professionals, supported by four
dedicated sales professionals, two in 'client care', three market makers, five
sales traders and three dealers. This is a strong team to support the current
103 brokerships compared to 98 at the year end of 30 April 2002 and 82 at the
same time last year. There continues to be a dearth of IPOs, but the team's
ability to make markets, distribute and research on behalf of clients as well as
provide corporate advice, bodes well for the future. The department was
involved in a number of important transactions during the period including
acting as broker for Duke Street Capital in its successful £150m hostile bid for
Esporta plc, participating in the £57.5 million placing for Unite Group plc, the
£16 million acquisition of Llewellyn Group by Rok property solutions plc and
other fundraisings for Hamleys and Medal Entertainment.
The Liverpool office has added four new clients and now has 19 compared to 15 on
1 May 2002 and was responsible for four corporate transactions including the
flotation of Lloyds British Testing plc.
Equities Research
The difficult market conditions necessitated a reduction in the number of
analysts within the Equities Research department. Nevertheless, the department
continued to provide comprehensive coverage of our extensive list of corporate
clients as well as peer comparisons. The analytical teams increasingly focused
on a core list of sectors in which they have an established, or are developing a
secondary franchise. Its previously stated aim of broadening coverage within
the mid-cap arena continued during the period and has led to an increased market
share of FTSE250 related agency business.
Institutional Department
The teams specialise in large, mid and small cap equities with a market share
generally of over 2 per cent. of UK agency turnover. It is supported by
effective sales trading and dealers.
In addition there is a strong closed end fund team of 14 including sales,
research and corporate finance who manage 30 brokerships compared to 27 at the
year end and 20 at the same time last year. The team has advised on a number of
corporate transactions in the first half.
The expanded derivatives team acts for private clients, high net worth
individuals, hedge funds and specialist institutions in CFDs, equities and other
instruments. The fixed interest, bonds and convertible team also had a
successful half year.
Outlook
There are no signs of any upturn in the areas in which the Group operates, other
than the fixed interest desk. The stock markets have fallen for almost three
years but the Group has now undertaken the necessary restructuring to cope with
these conditions. At all times our capital has remained significantly in excess
of our regulatory capital requirements and our balance sheet will be
strengthened following completion of the disposal of part of TGIM. The Board is
confident that the Group has the potential to grow in our chosen areas.
16th January 2003
Enquiries
Teather & Greenwood Holdings plc 020 7426 9000
Ken Ford, Chief Executive Officer
Nick Stagg, Chief Operating Officer
College Hill 020 7457 2020
Richard Pearson
UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the six month period ended 31 October 2002
Note 6 months 6 months 12 months
ended ended ended
31/10/02 31/10/01 30/04/02
£'000s £'000s £'000s
Turnover (1) 11,273 19,785 34,431
Operating costs (13,637) (19,356) (38,001)
--------- --------- ---------
Operating (loss)/profit (2,364) 429 (3,570)
Profit on disposal of fixed asset investments 607 667 1,777
Reorganisation costs (3) (753) - (1,510)
Amounts written off investments (74) - (440)
--------- --------- ---------
(Loss)/profit on ordinary activities before interest (2,584) 1,096 (3,743)
Net interest (payable)/receivable and similar income (38) 23 (101)
--------- --------- ---------
(Loss)/profit on ordinary activities before taxation (2,622) 1,119 (3,844)
Taxation on profit on ordinary activities - (315) 1,053
--------- --------- ---------
(Loss)/profit for the period (2,622) 804 (2,791)
Equity dividend (12) (143) (552)
--------- --------- ---------
(Loss)/profit transferred to reserves (2,635) 661 (3,343)
--------- --------- ---------
(Loss)/earnings per share (2) (9.5p) 2.9p (10.2p)
Diluted (loss)/earnings per share (2) (9.5p) 2.7p (10.2p)
Dividend per share 0.0p 0.5p 2.0p
UNAUDITED CONSOLIDATED BALANCE SHEET
AS AT 31 OCTOBER 2002
Note 31/10/02 31/10/01 30/04/02
(unaudited) (unaudited) (audited)
£'000s £'000s £'000s
FIXED ASSETS
Tangible assets 2,145 2,051 2,401
Investments (8) 1,445 1,662 1,488
Intangible assets 400 900 450
--------- --------- ---------
3,990 4,613 4,339
--------- --------- ---------
CURRENT ASSETS
Trading positions 7,161 6,287 4,993
Debtors 65,513 200,067 127,709
Cash at bank and in hand 2,504 7,027 8,074
--------- --------- ---------
75,178 213,381 140,776
--------- --------- ---------
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 68,455 200,458 131,851
--------- --------- ---------
NET CURRENT ASSETS 6,723 12,923 8,925
--------- --------- ---------
TOTAL ASSETS LESS CURRENT LIABILITIES 10,713 17,536 13,264
--------- --------- --------
CREDITORS: AMOUNTS FALLING DUE AFTER ONE YEAR 500 800 500
--------- --------- ---------
NET ASSETS 10,213 16,736 12,764
--------- --------- ---------
CAPITAL AND RESERVES
Called up share capital 2,848 2,812 2,821
Share premium account 2,352 2,273 2,296
Other reserves 14 14 14
Profit and loss account 4,999 11,637 7,633
--------- --------- ---------
EQUITY SHAREHOLDERS' FUNDS 10,213 16,736 12,764
--------- --------- ---------
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
for the 6 months ended 31 October 2002
Note 6 months ended 31 6 months ended 31 Year ended
October 2002 October 2001 30 April 2002
£'000s £'000s £'000s £'000s £'000s £'000s
Net cash (outflow)/inflow from
operating activities (5) (4,890) (4,750) (6,450)
RETURNS ON INVESTMENT AND
SERVICING OF FINANCE
Interest and other investment 78 23 33
income received
Interest paid (126) (114)
------ -------
Net cash (outflow) / inflow (48) 23 (81)
from returns on investments and
servicing of finance
TAXATION
Corporation tax received / 928 (700) (1,206)
(paid)
CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT
Payments to acquire tangible (429) (783) (1,650)
fixed assets
Payments to acquire trade - (686) (1,004)
investments
Receipts from sales of trade 667 667 1,777
investments
Payments to acquire intangible - (100) -
fixed assets
------ ------ ------
Net cash inflow / (outflow) 238 (902) (877)
from capital expenditure
EQUITY DIVIDEND PAID (423) (421) (561)
FINANCING
Issue of ordinary share capital 83 68 100
------- ------- -------
Decrease in cash (7) (4,112) (6,682) (9,075)
------- ------- -------
NOTES
1. TURNOVER AND SEGMENTAL ANALYSIS
6 months to 31/10/2002 6 months to 31/10/2001 12 months ended 30/04/2002
Net Turnover Operating Net Turnover Operating Net Turnover Operating
Assets Loss Assets Profit Assets Loss
£'000s £'000s £'000s £'000s £'000s £'000s £'000s £'000s £'000s
Financial 10,213 11,273 (2,364) 16,736 19,785 429 12,764 34,431 (3,570)
Services
The net gain on trading in financial instruments is shown and is included in the
turnover for financial services.
£'000s £'000s £'000s
850 329 1,654
2. EARNINGS PER SHARE
Earnings per share
6 months to 31/10/02 6 months to 31/10/01 12 months 30/04/02
ended
Diluted Earnings Diluted Earnings Diluted Earnings
Earnings Earnings Earnings
£'000s £'000s £'000s £'000s £'000s £'000s
Earnings (2,622) (2,622) 804 804 (2,791) (2,791)
Number of shares 27,522,291 27,405,145 29,929,175 28,007,491 27,276,277 27,276,277
(Loss) / earnings per share (9.5p) (9.5p) 2.7p 2.9p (10.2p) (10.2p)
Calculation of number of shares at 31 October 2002
At 1 May 28,213,245 28,213,245 27,877,245 27,877,245 27,877,245 27,877,245
Weighted average number of 117,146 117,146 130,246 130,246 207,132 207,132
shares issued in the period
-------- -------- -------- -------- -------- --------
Dilutive effect of share - - 1,921,684 - - -
option schemes
Own shares purchased and (808,100) (808,100) - - (808,100) (808,100)
held in EBT
-------- -------- -------- -------- -------- --------
At end of period 27,522,291 27,522,291 29,929,175 28,007,491 27,276,277 27,276,277
---------- ---------- ---------- ---------- ---------- ----------
FRS14 requires presentation of diluted EPS when a company would be called upon
to issue shares that would decrease net profit or increase net loss per share.
For a loss making company with outstanding share options, net loss per share
would only be increased by the exercise of out of the money options. Since it
seems inappropriate to assume that option holders would act irrationally, no
adjustment has been made to diluted EPS for out of the money share options.
3. REORGANISATION COSTS
This represents the costs of the redundancies incurred as a result of the
fundamental restructuring of the Group during the period.
4. CONTINGENT LIABILITIES
By mid December 2002 the Group's principal subsidiary, Teather & Greenwood
Limited, had received a number of complaints in respect of advice given to
clients, including in relation to Powernet and where their portfolios contained
some split capital trusts. The value of these complaints amounts to
approximately £2.3 million.
Complaints are assessed in accordance with the Group's complaints procedures
within the guidelines set down by the Financial Services Authority. To date,
none of the complaints have been sustained against the Group (save in one case
only), (and the Directors believe that the significant majority of complaints
will not be sustained). However, in circumstances where the Group is found to be
liable, the Directors are satisfied that such claims would fall within the level
of the Group's insurance cover, and accordingly the Directors believe no
provision to be necessary in the 6 months to 31 October 2002.
Higher salaried employees of the group have agreed to defer a portion of their
salary until such time as the group returns to profitability. The value of this
deferment during the six months to 31 October 2002 is £273,000. This has not
been provided for during the six months to 31 October 2002.
A VAT assessment in the amount of £265,000.00 has been levied against Teather &
Greenwood Limited in connection with a reverse premium payable by the Company,
on entering its current premises at Beaufort House. Based upon professional
advise the Company has lodged an appeal against this assessment and accordingly
the Directors believe no provision to be necessary in the 6 month period to 31
October 2002.
5. RECONCILIATION OF OPERATING (LOSS)/PROFIT TO NET CASH OUTFLOW FROM
OPERATING ACTIVITIES
6 months to 31/10/02 6 months to 31/10/01 12 months to 30/04/02
£'000s £'000s £'000s
Operating (loss) / profit (2,364) 429 (3,570)
Depreciation 735 475 1,094
Reorganisation costs (1,171) - (766)
Decrease in trading positions 1,425 989 1,196
Decrease in debtors 61,605 431 73,843
(Decrease) in creditors (65,120) (7,074) (78,247)
---------- ---------- ----------
Net cash outflow from operating activities (4,890) (4,750) (6,450)
--------- --------- ---------
6. NET FUNDS AT THE END OF THE PERIOD
6 months to 31/10/02 6 months to 31/10/01 12 months to 30/04/02
£'000s £'000s £'000s
Bank balances 2,504 7,027 8,074
Loan & overdraft (3,629) (1,647) (5,087)
---------- --------- ----------
Total Net funds (1,125) 5,380 2,987
--------- --------- ---------
7. COMBINED RECONCILIATION OF NET CASH FLOW AND ANALYSIS OF MOVEMENT IN
NET FUNDS
At 30/04/02 Cashflow At 31/10/02
£'000s £'000s £'000s
Bank balances 8,074 (5,570) 2,504
Bank overdrafts (5,087) 1,458 (3,629)
Total net funds 2,987 (4,112) (1,125)
--------- --------- ---------
8. INVESTMENTS
Fixed asset investments comprise shares in London Stock Exchange, Channel Island
Stock Exchange, Crestco and Teather & Greenwood Holdings plc.
The Company is the beneficial owner of 50,000 London Stock Exchange Shares of 5p
each, which have been included in the balance sheet at the cost of £1 (market
value £166,000).
The 808,100 Teather & Greenwood Holdings plc shares (cost £1,148,000, market
value £215,000) (April 2002: cost £1,148,000, market value £554,000) are held in
an Employee Benefit Trust and are included in the balance sheet at cost. These
shares are held to hedge future obligations, that may fall due on exercise of
employee share options over the next 9 years. As a result these shares have not
been impaired.
9. EVENTS OCCURING AFTER THE PERIOD END
On 15 January 2003 the proposed sale of part of Teather & Greenwood Investment
Management was announced. The sale of the business, which generated 11.4 per
cent. of turnover of the Group in the year to 30 April 2002, is part of the
fundamental reorganisation of the Group. The maximum consideration for the
transaction is £3.65 million payable in cash.
10. The interim figures are unaudited. The accounts for the year to 30
April 2002 are abridged. The periods ended 31 October 2001 and 2002
respectively do not constitute statutory accounts as defined in Section 240 of
the Companies Act 1985. Statutory accounts for the year ended 30 April 2002
have been delivered to the Registrar of Companies. These statutory accounts
were audited by Deloitte & Touche and their report thereon was unqualified.
Copies of the interim results are available, free of charge to the public on any
weekday at the registered office of the Company (Beaufort House, 15 St Botolph
Street, London EC3A 7QR).
Independent Review Report to Teather & Greenwood Holdings plc
We have been instructed by the Group to review the consolidated unaudited
financial information for the six months ended 31 October 2002 which comprises
the consolidated profit and loss account, the consolidated balance sheet, the
consolidated cashflow statement and related notes 1 to 10. We have read the
other information contained in the interim report and considered whether it
contains any apparent misstatement or material inconsistencies with the
financial information set out in the interim report.
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
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 United Kingdom 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 2002.
15 January 2003
Deloitte & Touche
Chartered Accountants
This information is provided by RNS
The company news service from the London Stock Exchange
Monday, 13th May 2024
COMPANIES COVERED:
Latest directors dealings
- 5 minutes ago BioPharma Credit
- 16 minutes ago Coca-Cola HBC AG (CDI)
- 1 hour ago British American Tobacco
- 1 hour ago F&C Investment Trust
- 1 hour ago F&C Investment Trust