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Union PLC (UDIS)

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Thursday 24 August, 2000

Union PLC

Interim Results

Union PLC
24 August 2000


INTERIM REPORT
FOR THE SIX MONTHS TO 30 JUNE 2000

The Group's pre-tax loss for the first six months to 30 June 2000 was
£283,000, after charging goodwill of £121,000 and exceptional items of
£123,000.  The exceptional items relate to a provision for the surrender of
the long-term lease of WorldInvest's former offices at Russell Square which
was partly off-set by a revaluation, back to original cost, of our broker's
current asset investment in Liffe shares.

This result represents a significant improvement over the loss of £1,095,000
for the same period in 1999.  The loss per ordinary share was 0.5p (undiluted)
and 0.4p (fully diluted) (1999: 1.8p and 1.4p respectively).
 
The Company remains unable to pay a dividend.
 
Review of Business

Fund Management Division - Equities and Bonds

Our Equity and Bonds fund management business, WorldInvest, suffered a loss of
£326,000 (1999: £224,000) before the write-off of goodwill of £121,000 (1999:
£121,000).  These results reflect both the continued investment in staff
necessary to sustain the quality of performance and service to existing
clients and the investment in marketing and business development required to
attract new clients and return fund management to profitability.

Our marketing efforts in Europe and the United States are now beginning to
bear some fruit with WorldInvest getting into an encouraging and increasing
number of final presentations of searches for new mandates.  There are,
however, long lead times in the placing of institutional business and, with
the exception of a new bond mandate, our efforts have yet to produce a flow of
new clients. We have strengthened our presence in the UK with the recruitment
of a senior marketing professional. It will, however, take some time in this
most tightly controlled consultant market to obtain the appropriate level of
recognition that our investment performance and abilities justify.

The WorldInvest European Special Situations Fund, the second in our series of
more aggressively managed funds, was launched in June.  We seeded this fund
with $2 million and by the end of July, it had returned us and the other
investors 4.69% (gross of management fees). After a very strong start, our
Asia Renaissance Fund had a more difficult start to this year in common with
other Far Eastern managers. Recent performance, however, has been more
encouraging and, at 30 June the fund was 8.67% above its December 1999 issue
price. 

The development of our SICAV continues and it is anticipated that the first of
the sub funds will be launched in October. Our aim is to harness our proven
investment process and offer a wider range of institutional and retail
investors access to the skills and performance of our team through the
development of unitised products. 

At 30 June, funds under management remained at approximately £1.2 billion.
This includes the funding of a bond mandate by our first European pension fund
client at £13 million and a net inflow of funds from existing clients of £20
million. 

Fund Management Division - Liquidity

Union Fund Management (UFM), our specialist manager of segregated cash and
liquidity portfolios, continued its strong performance into 2000, generating a
profit of £140,000.  The division has been successful in targeting those areas
where their services are in demand.  For example, they currently manage the
funds of 33 universities and colleges of higher education.  Whilst no standard
comparative performance tables are produced, UFM continues to achieve
excellent performance returns compared to published figures for collective
money funds.

UFM added 12 new clients in the first six months compared to 13 for the whole
of 1999 and prospects for the second half remain encouraging.  Funds under
management have grown by £67 million since the year end to stand at £1.33
billion at 31 July 2000. 

Broking

The Board is very encouraged by the strong performance of Union CAL, our
derivatives and foreign exchange broker, which generated a profit of £773,000
(1999: loss £44,000).  This performance was delivered by an experienced and
successful team who are able to provide a first class service to clients in
equity contracts for difference and foreign exchange.  These products have
benefited from their respective buoyant markets and from new and successful
marketing initiatives that we have undertaken.  Conversely, demand for the
more traditional derivatives business has fallen in the six months.

We are continuing to develop our internet business and products with FX2000,
our foreign exchange trading system, which is now operational and we are
cautiously optimistic that volumes transacted electronically will increase
during 2000.

The profit for the six months has also benefited from the sale of 10,000 LIFFE
shares for a profit of £46,500.

Banking

The Banking operations of Union Discount generated a small profit for the six
months, maintaining its deposit base at around £3 million (1999: £2.3
million).  

As announced on 2 August, we have entered into a conditional agreement to sell
Union Discount to our major shareholder Athenian Capital Holdings SA
('Athenian') for the equivalent of its net asset value at completion plus
£500,000.  Completion is currently expected to occur by the end of 2000,
subject, inter alia, to the approval of Union's Shareholders to the
transaction and the FSA's approval of Athenian becoming the controller of
Union Discount.  Union Discount currently owns 39 Cornhill and this property
will be sold to Athenian whether or not they obtain regulatory approval.  This
disposal represents a significant part of your Company's future development
and full details of the proposed transaction are set out in a Shareholders'
Circular.

Prospects

As I stated at the year end, we must look to our fund management operations
for the strong organic growth required to return the Company to profitability.
 Success in this area is dependent on the ability of the investment team to
produce and sustain above average performance.  The investment performance
that the team continues to produce compares favourably with both the
appropriate benchmarks and with their peer group managers.

The disposal of Union Discount, including 39 Cornhill, will generate
approximately £10.6 million, net of expenses and repayment of inter-company
debt between Union PLC and Union Discount.  Alternatively, if 39 Cornhill
alone is sold, consideration of £8.6 million, net of expenses, will be
received.  Either sale will reduce the Group's running costs and strengthen
the balance sheet.  As a result, the disposal will enable the Group to invest
further in the fund management operations, developing marketing of the
products and allowing the Board to target strategic alliances with or
potentially to acquire other fund management companies or other organisations
involved in the distribution of fund management products.

The costs of developing the fund management operations are considerable and
the impact of any new client mandates will not benefit the company until next
year. However, we now have an enviable five year record of investment
performance across all our product range and we will benefit the proposed
sales.


W Graeme Knox
Chairman
24 August 2000 


UNION PLC & SUBSIDIARIES 
 
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 JUNE 2000 (UNAUDITED) 
                                                                   
Notes                                     6 months    6 months      12 months
                                             ended       ended          ended 
                                           30 June     30 June             31
                                              2000        1999       December 
                                                                         1999 
                                              £'000       £'000         £'000 
                    Interest                                                  
                    Interest                    958         900         1,695
                    receivable                                                
                    Interest payable          (183)        (183)         (358)
                    Net interest                775         717         1,337
                    income                                                    

                    Commissions and           8,404       7,344        15,320
                    fees receivable                                           
                    Commissions and          (2,567)     (2,525)       (4,948)
                    fees payable                                              
                    Other operating             455         467           633
                    income                                                    

                    Operating income          7,067        6,003       12,342

                    Administrative           (7,186)      (6,882)     (13,951)
                    expenses                                                  
                    excluding                                                 
                    exceptional items                                         

  3                 Exceptional               (123)         (18)       (1,084)
                    administrative                                            
                    expenses                                                  
                    Total                   (7,309)      (6,900)      (15,035)
                    administrative                                            
                    expenses                                                  
                                                                           
                    Operating loss            (242)        (897)       (2,693)

                    Profit on                     -            -           22
                    disposal of                                               
                    subsidiaries                                              
                    (discontinued)                                            
                    Cost of                    (41)        (198)         (467)
                    withdrawal from                                           
                    discontinued                                              
                    operations                                                

  2                 Loss on ordinary          (283)      (1,095)       (3,138)
                    activities before                                         
                    tax                                                       

  4                 Taxation                   (39)         (78)          967
                    Loss for the              (322)      (1,173)       (2,171)
                    financial period                                          
                    transferred to                                            
                    reserves                                                  
                                                         
  6                 Loss per ordinary        (0.5)p       (1.8)p        (3.3)p
                    share - net basis                                         
                    - diluted                (0.4)p       (1.4)p        (2.6)p
 
There is no material difference between the loss on ordinary activities
before taxation and the retained loss for the year stated above and their
historical cost equivalents and there were no recognised gains and losses
other than those included above.
 
 
 
UNION PLC & SUBSIDIARIES 

CONSOLIDATED BALANCE SHEET 
30 JUNE 2000 (UNAUDITED) 
                                                        
                                                           
                                                30 June     30 June     31 Dec
                                                   2000        1999       1999
                                                  £'000       £'000      £'000
  Notes                                       
                                                                              
  Fixed Assets                                                                
  Intangible assets - Goodwill                    1,537       1,780      1,658
  Tangible fixed assets                           9,661       7,592      9,776
  Listed investments                              3,062         370      1,613
  Unlisted investments                              954         932        915
  Own shares                                        962         962        962

                                                 16,176      11,636     14,924

  Current Assets                                                              
  Amounts falling due after more than one                                     
  year:                                                                       
  Debtors                                         2,300           -      2,332
  Amounts falling due within one year:                                        
  Debtors                                        12,128      13,294     10,952
  Trading securities                              2,007       4,692      4,313
  Cash at bank and in hand                       12,044      12,565     11,479

                                                 28,479      30,551     29,076
                                                                              
  Current Liabilities                                                         
  Creditors: amounts falling due within one    (14,370)    (12,161)   (13,246)
  year                                                                        
  Net current assets                             14,109      18,390     15,830

  Total assets less current liabilities          30,285      30,026     30,754
  Provisions for liabilities and charges        (1,307)     (2,081)    (1,454)

  Net assets                                     28,978      27,945     29,300

  Capital and Reserves                                                        
  Called up share capital                        35,534      35,534     35,534
  Share premium                                   9,857       9,857      9,857
  Revaluation reserve                             2,353           -      2,353
  Profit and loss account                      (18,766)    (17,446)   (18,444)

  Equity Shareholders' Funds                     28,978      27,945     29,300
 

UNION PLC & SUBSIDIARIES

CONSOLIDATED CASHFLOW STATEMENT 
FOR THE SIX MONTHS ENDED 30 JUNE 2000 (UNAUDITED) 
                                                                              
                                           6 months     6 months    12 months 
                                              ended        ended        ended 
                                            30 June      30 June       31 Dec 
                                               2000         1999         1999 
 Notes                                        £'000        £'000        £'000 
          Operating Activities                                                

  7       Net cash inflow/(outflow)           1,737       (3,323)      (1,765)
          from operating activities                                           
          Net cash outflow in respect         (176)         (198)        (899)
          of discontinued activities                                          
                                                                              
          Net cash inflow/(outflow)           1,561       (3,521)      (2,664)
          from operating activities                                           

          Taxation                                                            
          UK Corporation tax paid                  -        (560)        (639)
          Overseas taxation paid               (64)          (94)        (104)
                                                                              
          Total tax paid                       (64)         (654)        (743)

          Capital Expenditure and                                             
          Financial Investment                                                
          Purchase of tangible fixed          (114)          (95)        (284)
          assets                                                              
          Purchase of fixed asset           (1,338)             -      (1,243)
          investments                                                         
          Sale of fixed assets                    -             -           38
          investments                                                         
          Sale of tangible fixed assets          50             2           16
          Sale of current asset                  85            38            -
          investments                                                         
                                                                              
                                            (1,317)          (55)      (1,473)

          Acquisitions and Disposals                                          
          Disposal of investment in               -             -           22
          subsidiaries                                                        
                                                                              
                                                  -             -           22

          Cash inflow/(outflow) before                                        
          use of liquid resources and           180       (4,230)      (4,858)
          financing                                                           
  8       Management of Liquid Resources     (1,039)        3,473        6,322

          (Decrease)/increase in cash                                         
  8       in the period                       (859)         (757)        1,464
 
 
UNION PLC & SUBSIDIARIES 
 
NOTES TO THE INTERIM REPORT 
30 JUNE 2000 (UNAUDITED) 
 
1.   BASIS OF PREPARATION

     The unaudited interim financial information for the six months ended
     30 June 1999 and 30 June 2000 have been prepared on the basis of
     accounting policies consistent with those adopted for the year ended 31
     December 1999 and the Interim Report was approved by the Board of        
     Directors on 23 August 2000.
 
     The 31 December 1999 comparatives have been extracted from the financial 
     statements for that year. Those financial statements have been reported  
     on by the Company's auditors and delivered to the Registrar of Companies.
     The report of the auditors was unqualified and did not contain a         
     statement under section 237(2) or (3) of the Companies Act 1985.
 
 2.  SEGMENTAL REPORTING AND LOSS ON ORDINARY ACTIVITIES
                                                                              
                             6 Months                      6 Months           
                              ended                          ended            
                           30 June 2000                  30 June 1999        
                      Turnover     Profit/(loss)    Turnover     Profit/(loss)
                                     before tax                    before tax 
                         £'000            £'000        £'000            £'000 
  Continuing                                                                  
  operations                                                                  
  Futures and                                                                 
  foreign                5,396              773         4,560             (44)
  exchange                                                                    
  broking                                                                     
  Fund management        2,269            (447)         2,101            (345)
  Liquidity                739              140           684              157
  management                                                                  
  Banking                    -                2             -               24
  activities                                                                  
  Holding company            -            (587)             -            (671)
  Operating                  -            (123)             -             (18)
  exceptional                                                                 
  items                                                                       
                                                                              
                         8,404            (242)         7,345            (897)
                                                                              
                                          (242)                          (897)
  Operating loss                                                              
  Cost of                                  (41)                          (198)
  withdrawal                                                                  
  from                                                                        
  discontinued                                                                
  operations                                                                  
  Loss for the                            (283)                        (1,095)
  financial                                                                   
  period                                                                      

The results of the fund management activity include amortisation of goodwill
of £121,000 (1999: £121,000).
 
The results and net assets for the Group arose from activities in the United
Kingdom and Channel Islands.
 
 
UNION PLC & SUBSIDIARIES 
 
NOTES TO THE INTERIM REPORT 
30 JUNE 2000 (UNAUDITED) 
 
3.  OPERATING EXCEPTIONAL ITEMS 
 
    The operating exceptional items consist of the following items:
  
    * Union holds an investment of 30,000 LIFFE shares in current assets as   
      they are surplus to the group's trading requirements.  Those shares were
      valued at 31 December 1999 at £3.85 per share which was below cost.     
      Given the increase in market value these LIFFE shares have been         
      restated to cost, adding £7,160 to their current balance sheet value. 
 
      The market value of these 30,000 shares and the 96,000 shares held as   
      fixed assets, as they are required for trading purposes, was £8.50 per  
      share at 30 June 2000, ie £578,740 greater than the value at which      
      they are recorded in the balance sheet. 
 
    * A provision for the surrender of the lease for the former WorldInvest   
      offices at Russell Square at an additional cost of £130,000. 
 
 4. TAXATION

    The tax charge for 2000 is comprised solely of overseas taxation.
 
 5. DIVIDENDS
 
    No interim dividend is being paid. (1999:Nil).
 
 6. LOSS PER ORDINARY SHARE

    The 2000 loss per ordinary share is calculated on the Group's loss after
    taxation of £322,000 (1999 Loss: £1,173,000) and is related to the        
    weighted average number of ordinary shares outstanding during the year,   
    less own shares not vesting unconditionally in employees, of 66,376,602   
    (1999:66,118,125). The 2000 diluted loss per ordinary share is calculated 
    by adjusting the weighted average by 13,941,984 in respect of convertible
    shares, 2,926,000 for share options and is based on 83,244,586 shares.
 
 
UNION PLC & SUBSIDIARIES 
 
NOTES TO THE INTERIM REPORT 
30 JUNE 2000 (UNAUDITED) 
 
7.  NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES 
                                                                      
                                                       6 months      6 months 
                                                          ended         ended 
                                                        30 June       30 June 
                                                           2000          1999 
                                                          £'000         £'000 
  Operating loss                                          (242)          (897)
  Decrease in banking assets                                519            336
  (Decrease)/increase in deposits                         (238)          1,224
  Increase/(decrease) in other amounts payable            1,376        (3,279)
  Decrease/(increase) in other amounts receivable            68        (1,001)
  Depreciation of fixed assets                              208            196
  Profit on sale of fixed assets                           (29)            (2)
  Amortisation of goodwill                                  121            121
  Profit on sale of current asset investments              (46)           (21)

  Net cash inflow/(outflow) from operating                1,737        (3,323)
  activities                                                                  
 
  
8. RECONCILIATION OF MOVEMENT IN NET FUNDING 
                                                                             
                          30 June   Cashflow          Exchange    31 December
                             2000                     Movement           1999 
                            £'000       £'000            £'000          £'000 
  Cash                      6,237       (859)              186          6,910
  Liquid Resources          5,807       1,039              199          4,569

                           12,044         180              385         11,479
 
  
UNION PLC & SUBSIDIARIES 
 
Independent Review Report to Union PLC 
 
 
Introduction
 
We have been instructed by the company to review the financial information
set out on pages 3 to 8 and 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.
 
Directors' responsibilities 
 
The interim report, including the consolidated financial information
contained therein, is the responsibility of, and has been approved by, the
directors. The Listing Rules of the Financial Services Authority 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 they are to be changed in the next annual accounts in
which case any changes, and the reason for them, are to be 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. 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 is substantially less in scope than an audit
performed in accordance with 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 30 June 2000.
 
 
KPMG Audit Plc
Chartered Accountants 
London 
23 August 2000