Interim Results
Trio Holdings PLC
04 May 2004
4 May 2004
TRIO HOLDINGS PLC
Interim Report for the six months ended 31 March 2004
CHAIRMAN'S STATEMENT
Highlights for the six months ended 31 March 2004:
Profit before tax £0.45 million
(2003 - £0.51 million)
Interim dividend 0.25p per share
(2003 - 0.25p per share)
Net assets at 31 March 2004 of £11.54 million
(2003 - £11.17 million)
Cash balances £10.29 million
(2003 - £10.24 million)
Turnover £16.05 million
(2003 - £15.64 million)
The six months under review can be characterised as 'uneventful'. In October
2003, moderately active trading was underpinned by the general expectation of
rising US Dollar interest rates, but the unexpected US Employment statistics
published in November 2003 tempered such expectations and a climate of low and
stable rates has prevailed until recently. The 'money market' side of our
business thrives on volatility in the shorter end of the yield curve, and
therefore trading conditions during the period for traditional brokers in these
product areas were becalmed.
Happily these conditions led to material volatility in exchange rates,
reciprocally providing lively trading conditions for our excellent Forward
foreign exchange broking teams. A vivid example is that the US $/£ Stg spot
exchange rate at the beginning of the period was 1.6630 then rising to a peak of
1.9140 in mid-February just under five months later, easing to 1.7745 today.
A significant proportion of our revenue is calculated in US Dollars, and a
lesser proportion in Euros. Our expenditure is inherently in Sterling. Overall
there was therefore an adverse effect on the revenue/expense model of the Group
that, although difficult to quantify precisely, was in the region of £250,000.
Also during the last two months under review some preliminary expenditure of
approximately £60,000 was incurred with a view to the establishment of a small
satellite broking office in Switzerland.
Therefore in this comparatively uneventful six months and despite the above
factors, I am pleased that turnover overall, and indeed market share in Forward
foreign exchange, improved modestly. The consolidated results for the Group show
turnover of £16.05 million, and a profit before taxation of £0.45 million.
Relative to the scale of our business, our very sizable and liquid balance sheet
continues to underpin the Group. Net assets were £11.54 million, including the
substantial cash balances of £10.29 million. In addition, trading since the
half-year end is in line with expectations and the Board will therefore maintain
the traditional interim dividend at 0.25p per share, which will be paid on 14
June 2004 to shareholders on the register on 14 May 2004.
As mentioned above initial steps have been taken for the establishment of a
small satellite broking office in Switzerland. Our strategy looks forward in the
light of the growing appetite, inter alia, of particularly our indigenous
European customer base, for Euro-expressed overnight index swaps known as
EONIAs. We are presently engaged in the judicious and opportunistic employment
of a few key brokers. Small premises have been secured, telephone dealer boards
and the necessary Reuter, Bloomberg and computer facilities have been installed,
and our expert IT team in London have created a virtual private network such
that substantially all the back office functions can be provided remotely from
London, at low marginal cost.
In parallel with the establishment of this new Swiss office, the relevant
interest rate product desks in London have been appropriately restructured to
enable us to take advantage in due course of the expected enhanced complimentary
order flows.
Inherently such organic growth weighs onerously on operating profitability
during the establishment period, which can be a significant length of time. But
this modest expansionist move reflects our growing confidence in the longer-term
viability of money broking within a 'hybrid' model, supporting traditional voice
broking with the highest levels of technology and IT sophistication.
I am once again pleased to report the continuing good performance of our 'Locals
and Commercials' team, and particularly the success of our secure electronic
transactional dealing system www.UK-Locals.com for Local Authority treasurers,
building societies and banks, now extending to housing associations and
universities.
There were further landmarks in the period. We effected the first external sale
directly to a bank of Trio Vantage, the sophisticated multi-instrument pricing,
analytics and arbitrage software developed by our expert team within Trio
Internet Systems Limited www.triointernetsystems.com. In March 2004, our small
but highly professional OTC equity option broking team in Trio Equity
Derivatives Limited, achieved a record month following a relatively quiet
period.
Corporate rumour and speculation continue to abound in this sector, where
further consolidation is perhaps overdue, and competition for the attraction and
retention of competent staff remains fierce, often to the advantage of only the
legal profession. However we will continue to nurture and protect our recognised
areas of niche excellence, and our balance sheet strength: therefore my
cautiously confident view of the longer term future is undiminished.
Enquiries to: DAVID HAGAN
Executive Chairman, TRIO Holdings PLC
Tel: 020 7469 9100
www.trio.co.uk
www.uk-locals.com
www.martin-brokers.com
www.triointernetsystems.com
www.acx.aero
TRIO HOLDINGS PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the six months ended 31 March 2004 (unaudited)
6 months 6 months Year
to to to
31 March 31 March 30 Sept
2004 2003 2003
£000s £000s £000s
Turnover 16,046 15,643 32,860
Net operating expenses (15,660) (15,224) (31,159)
Operating profit 386 419 1,701
Share of loss of associated company (70) (69) (94)
Net interest receivable less payable 131 156 246
Profit on ordinary activities before taxation 447 506 1,853
Taxation on profit on ordinary activities (346) (384) (834)
Profit on ordinary activities after taxation 101 122 1,019
Dividends paid and proposed (209) (209) (626)
Retained (loss)/profit for the period transferred to reserves (108) (87) 393
Basic earnings per share 0.12p 0.15p 1.22p
Diluted earnings per share 0.12p 0.15p 1.22p
Dividends per share 0.25p 0.25p 0.75p
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
6 months 6 months Year
to to to
31 March 31 March 30 Sept
2004 2003 2003
£000s £000s £000s
Profit for the period 101 122 1,019
Foreign exchange translation differences on foreign
currency investment in subsidiaries - 3 2
Total recognised gains and losses 101 125 1,021
TRIO HOLDINGS PLC
CONSOLIDATED BALANCE SHEET
as at 31 March 2004 (unaudited)
31 March 31 March 30 Sept
2004 2003 2003
£000s £000s £000s
Fixed Assets
Tangible assets 1,865 2,201 1,993
Investments 1 95 71
1,866 2,296 2,064
Current Assets
Stock - 91 -
Investments 277 - 277
Debtors: due within one year 5,016 4,950 5,062
Cash at bank and in hand 10,290 10,244 10,376
15,583 15,285 15,715
Creditors: due within one year (5,479) (5,640) (5,449)
Net Current Assets 10,104 9,645 10,266
Total Assets Less Current Liabilities 11,970 11,941 12,330
Creditors: due after more than one year (429) (771) (681)
Equity minority interests (1) (1) (1)
Net Assets 11,540 11,169 11,648
Capital and Reserves
Called up share capital 4,174 4,174 4,174
Capital reserve 2,474 2,474 2,474
Profit and loss account 4,892 4,521 5,000
Equity Shareholders' Funds 11,540 11,169 11,648
RECONCILIATION OF CONSOLIDATED MOVEMENT IN EQUITY SHAREHOLDERS' FUNDS
6 months 6 months Year
to to to
31 March 31 March 30 Sept
2004 2003 2003
£000s £000s £000s
Profit for the period 101 122 1,019
Dividends paid and proposed (209) (209) (626)
(108) (87) 393
Other recognised gains and losses - 3 2
Net (reduction in)/addition to equity shareholders' funds (108) (84) 395
Opening equity shareholders' funds 11,648 11,253 11,253
Closing equity shareholders' funds 11,540 11,169 11,648
TRIO HOLDINGS PLC
CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 31 March 2004 (unaudited)
6 months 6 months Year
to to to
31 March 31 March 30 Sept
2004 2003 2003
£000s £000s £000s
Net cash inflow from operating activities 1,126 755 1,917
Returns on investments and servicing of finance 131 156 246
Taxation (600) (1,256) (1,770)
Capital expenditure and financial investment (107) (27) (69)
Acquisitions and disposals - - (141)
Dividends paid (417) (626) (835)
Net cash flow before financing 133 (998) (652)
Financing (219) (221) (435)
Decrease in cash in the period (86) (1,219) (1,087)
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 31 March 2004 (unaudited)
1. Reconciliation of operating profit to net cash inflow from operating results
6 months 6 months Year
to to to
31 March 31 March 30 Sept
2004 2003 2003
£000s £000s £000s
Operating profit 386 419 1,701
Depreciation charges 235 250 483
Decrease in debtors 46 226 167
Increase/(decrease) in creditors 459 (144) (449)
Decrease in stock - 1 13
Exchange rate movements - 3 2
Net cash inflow from operating activities 1,126 755 1,917
2. Reconciliation of net cash flow to movement in net funds
6 months 6 months Year
to to to
31 March 31 March 30 Sept
2004 2003 2003
£000s £000s £000s
Decrease in cash in the period (86) (1,219) (1,087)
Cash inflow from decrease in debt and lease financing 219 221 435
Movement in net funds in the period 133 (998) (652)
Opening net funds 9,527 10,179 10,179
Closing net funds 9,660 9,181 9,527
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 31 March 2004 (unaudited)
3. Analysis of net funds
At 1.10.03 Cash flow At 31.3.04
£000s £000s £000s
Cash in hand and at bank 10,376 (86) 10,290
Finance leases (849) 219 (630)
Total 9,527 133 9,660
NOTES TO THE ACCOUNTS
For the six months ended 31 March 2004 (unaudited)
1. Profit and Loss Account
There were no acquired or discontinued activities during the current period.
The result arises from continuing operations. The results in foreign currencies
are translated into Sterling at the average exchange rates ruling in the period.
2. Taxation
Taxation has been estimated on the basis that the six month period forms an
integral part of an annual reporting period.
3. Earnings per share
The profit per share is based on the net profit after taxation attributable to
ordinary shareholders and on a weighted average of the number of shares in issue
in the period: 83,484,325 (2003: 83,484,325).
4. Unaudited accounts
The interim results have been prepared in accordance with accounting policies
set out in the accounts for the year ended 30 September 2003. The financial
information in this report does not constitute full accounts as defined by
section 240 of the Companies Act 1985. The figures and the financial information
for the year ended 30 September 2003 have been compiled from an extract of the
latest published accounts and do not constitute statutory accounts for the year.
Those accounts have been delivered to the Registrar of Companies and included
the report of the independent auditors which was unqualified and did not contain
a statement under either section 237(2) or section 237(3) of the Companies Act
1985.
TRIO HOLDINGS PLC
REVIEW REPORT OF THE INDEPENDENT AUDITORS
Introduction
We have been instructed by the company to review the financial information for
the six months ended 31 March 2004 which comprises the consolidated profit and
loss account, the consolidated statement of total recognised gains and losses,
the reconciliation of consolidated movements in equity shareholders funds, the
consolidated balance sheet, the consolidated cash flow statement and related
notes 1 to 4. 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 Bulletin 1999/4
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the company, for our review 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 are 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 the 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 March 2004.
Deloitte & Touche LLP
Chartered Accountants
London
30 April 2004
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