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Union PLC (UDIS)

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Tuesday 03 April, 2001

Union PLC

Final Results

Union PLC
3 April 2001


                             Chairman's Statement

Results 2000

Union's performance improved significantly in 2000. Progress was made on the
business disposal programme started during the year whilst the remaining
operating businesses traded profitably. Although comparisons with previous
years are difficult because of the impact of disposals, the operating profit
from continuing operations, before exceptional items, of £1,723,000 contrasted
with a loss of £486,000 in 1999. The pre-tax profit was £4,458,000 against a
loss of £3,138,000 in 1999.

The sale of WorldInvest, the Group's equity and bond fund manager, was
completed on 31st December 2000 realising a profit of £7,124,000. 60% of the
goodwill from the sale will be held in escrow until November 2001. The amount
released will be reduced in line with any fall in funds under management
between 31st October 2000 and 2001. Despite some excellent investment
performance since Union acquired the business, WorldInvest was unable to
attract significant new mandates and made a loss of £1,343,000 in 2000 (1999:
£1,151,000). The Board decided that it was unlikely to return to profitability
within an acceptable time period and that disposal was therefore the best
option.

At the time of the disposal of WorldInvest the Board also announced that it
was selling its two remaining operating businesses, Union CAL and Union Fund
Management, and discussions on these two sales are progressing.

The Group will have no operating businesses following the disposal programme.
As a consequence, it will no longer be able to utilise the pension fund
surplus which it had credited to the profit and loss account in 1996 and has
carried as an asset in the balance sheet. Accordingly, the remaining balance
of the asset of £2,392,000 has been written off.

In August 2000, the Board announced it had reached an agreement to sell Union
Discount Company and the property it owns at 39 Cornhill, or the property
alone, to Athenian Capital Holdings SA ('ACH'), Union's largest shareholder.
ACH subsequently failed to complete on either transaction and has forfeited £
550,000 towards Union's costs, which amounted to £655,000. Union has issued
proceedings against ACH in the High Court in London to recover damages for
breach of contract. The Board of Union Discount subsequently reviewed its
options and decided to surrender its banking licence on 16th March 2001. This
ended 116 years of banking history for the Union Group. Union Discount made a
profit of £32,000 in 2000 (1999: £28,000).

Once the sales of the two remaining operating businesses are completed, Union
will have extracted further value out of its assets thereby creating a
stronger and largely liquid balance sheet. At 31st December 2000 the balance
sheet showed net assets of £33.5 million, including net cash of £19.5 million,
a claim on funds in escrow of £5.4 million and a freehold property situated in
the heart of the City of London included in the accounts at £8.6 million.



Review of the Business

Union CAL

Union CAL, our specialist broking business, performed strongly throughout the
year achieving a pre-tax profit for the year of £2,238,000 (1999: £140,000).
This represents a 48% return on capital employed. Turnover was £12,923,000, an
increase of 37% over the previous year. Equity contracts for differences
contributed a significant proportion of the profits with a successful
marketing campaign resulting in many new clients. The Board was pleased that
the foreign exchange unit saw an upswing in profitability. The futures unit
has seen a decline in volumes but continues to make a useful contribution.



Union Fund Management

Union Fund Management, our specialist manager of segregated cash and liquidity
portfolios, had another successful year winning 18 new mandates (1999: 13) and
increasing funds under management to £1.35 billion (1999: £1.27 billion). The
division made a profit of £326,000 (1999: £228,000), an increase of 43%. The
growth continues a seven year trend reflecting the high quality service
provided to clients by the fund management team.



The Alternative Investment Market (AIM)

The Board believes that Union has little to gain from being fully listed. It
has also slowed down and increased the cost of the disposal programme because
of the requirement to produce circulars to shareholders. This has a
significant cost in financial and human resource terms. Accordingly the Board
has agreed to de-list the entire issued share capital of Union from the
Official List with effect from 6th April 2001 and seek admission to AIM with
dealings commencing on 9th April 2001. The lower costs of maintaining a
quotation on AIM and the less onerous requirements will lead to significant
cost savings and reduce delays whilst we complete our reorganisation strategy
which is aimed at extracting value for shareholders.

The move to AIM will not impact the way that we manage the business nor on its
corporate governance. Shareholders will be able to buy or sell Union shares in
the same way as at present.



Prospects

Overall the Group is trading profitably and the balance sheet remains sound
and largely liquid. In the short term, this profitability is dependent on the
continuation of the two remaining operating businesses.

Union CAL has made a good start to the year and is trading ahead of
expectations. The volatile markets that we are facing are benefiting the
equity contracts for differences product by allowing investors to benefit from
declining as well as rising markets.

Union Fund Management is trading profitably and ahead of last year, with funds
under management at 28 February 2001 of £1.43 billion.



The Future

In view of the deficit on the profit and loss account reserve of £14,222,000
(1999: £18,444,000), it is not possible to pay dividends or to return capital
to shareholders without the approval of the High Court. Such approval will
take time to obtain primarily because of the amount of outstanding contingent
creditors arising from the disposal programme. Given this constraint the Board
believes it must make every effort to extract more value for shareholders by
seeking to narrow the gap between the market price of Union's shares and the
Group's net asset value. It considers that this is best achieved by Union
becoming an investment company. Keith Brown, the Chairman of WorldInvest and a
major shareholder, who remains on Union's Board as a Non-executive Director,
is leading the planning of the investment strategy which will involve
investing the Group's surplus cash in securities markets. During the early
stages of implementing this policy, Union will also have to manage the run-off
of its remaining liabilities and the residue of its former operating
businesses.



On 16th January 2001 the Company announced that it had received an approach
from an interested party that may or may not lead to a bid being made for the
whole of the share capital of Union. The discussions with this interested
party are continuing.



Board and Staff

Following the sale of WorldInvest, Graeme Knox resigned as Chairman of Union
on 7th February 2001. The Board is grateful to Mr Knox for his contribution to
Union since his appointment in 1996.

I took over as Chairman from Mr Knox. My focus will be on extracting value for
shareholders and it is my intention to utilise every practical way of doing
this.

The last year has been challenging for the Union Group both in changing
strategy and implementing a complex disposal programme. Staff showed great
loyalty and commitment throughout the year and their efforts were rewarded by
the turnaround in profitability. On behalf of the Board and shareholders I
wish to thank everyone concerned for their contribution.



John Simpson

3rd April 2001

                          UNION PLC AND SUBSIDIARIES

                UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT

                    FOR THE YEAR ENDED 31ST DECEMBER 2000

Notes                                     Continuing Discontinued  2000    1999

                                                                  Total Audited

                                               £'000        £'000 £'000   £'000
      Interest
      Interest receivable                      1,977        284   2,261   1,695
      Interest payable                          (456)      (156)   (612)   (358)
      Net interest income                      1,521        128   1,649   1,337
      Commissions and fees receivable         14,403      4,364  18,767  15,320
      Commissions and fees payable            (6,506)       (32) (6,538) (4,948)
                                               7,897      4,332  12,229  10,372
      Other operating income                     483        219     702     633
      Operating income                         9,901      4,679  14,580  12,342
      Administrative expenses excluding       (8,178)    (5,990)(14,168)(13,951)
      exceptional items

3     Exceptional administrative expenses     (2,834)      (198) (3,032) (1,084)
                                    
      Total administrative expenses          (11,012)    (6,188)(17,200)(15,035)
      Operating loss                          (1,111)    (1,509) (2,620) (2,693)
      Profit on sale of subsidiaries                              7,124      22
      (discontinued)
      Cost of withdrawal from                                      (210)   (899)
      discontinued operations
      Less: provision                                               164     432
                                                                    (46)   (467)
2     Profit/(loss) on ordinary                                   4,458  (3,138)
      activities before tax

4     Taxation (charge)/credit                                     (236)    967

      Profit/(loss) for the financial                             4,222  (2,171)
      year transferred to reserves
      reserves

5     Earnings/(loss) per ordinary share

      - basic                                                     6.4 p  (3.3)p
      - diluted                                                   5.1 p  (2.6)p


There is no material difference between the profit on ordinary activities
before taxation and the retained profit for the year stated above and their
historical cost equivalents.



                          UNION PLC AND SUBSIDIARIES

                     UNAUDITED CONSOLIDATED BALANCE SHEET

                              31ST DECEMBER 2000


                                                       2000          1999
Notes                                                              Audited
                                                    £'000     £'000 £'000 £'000

             FIXED ASSETS


     Intangible assets - Goodwill                                 -       1,658
                                                              
        Tangible assets                                       9,400       9,776


        Investments

                                                     
        Own shares                                    962             962

                                                        
        Listed investments                              -           1,243

                                                      
        Unlisted investments                          668           1,285

                                                              1,630       3,490

                                                             11,030      14,924

     CURRENT ASSETS

                                                     
        Debtors: amounts falling due after more         -           2,332
        than one year

                                                                   
        Debtors: amounts falling due within one     17,136         10,952
        year


                                                    17,136         13,284

                                                                    
        Trading securities                            623           4,313

                                                    
        Non-segregated client cash at bank          5,328           2,916

                                                    
        Cash at bank and in hand                   19,326           8,563


                                                   42,413          29,076

        CURRENT LIABILITIES


                                                    
        Creditors: amounts falling due within one (18,930)        (13,246)
        year

                                                             
        Net current assets                                   23,483       15,830

                                                             
        Total assets less current liabilities                34,513       30,754

                                                                     
        Provisions for liabilities and charges                (991)      (1,454)

                                                             33,522       29,300


        CAPITAL AND RESERVES


                                                             
        Called up share capital                              35,534       35,534

                                                              
        Share premium account                                 9,857       9,857

                                                              
        Revaluation reserve                                   2,353       2,353

                                                                  
        Profit and loss account                             (14,222)    (18,444)


6     EQUITY SHAREHOLDERS' FUNDS                             33,522       29,300




                          UNION PLC AND SUBSIDIARIES

                  UNAUDITED CONSOLIDATED CASHFLOW STATEMENT

                    FOR THE YEAR ENDED 31ST DECEMBER 2000


Notes                                                        2000          1999

                                                                        Audited
                                                            £'000         £'000

      OPERATING ACTIVITIES
7     Cash inflow/(outflow) from operating activities       7,240       (1,765)
      Cash outflow in respect of withdrawal from            (210)         (899)
      discontinued operations
                                                            7,030       (2,664)
      TAXATION
      UK Corporation tax paid                                (16)         (639)
      Overseas tax paid                                      (64)         (104)
      Total tax paid                                         (80)         (743)

      CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT

      Purchase of tangible fixed assets                     (209)         (284)
      Purchase of fixed asset investments                  (1,338)       (1,243)
      Sale of tangible fixed assets                            56            16
      Sale of fixed asset investments                       3,532            38
                                                            2,041       (1,473)

      ACQUISITIONS AND DISPOSALS

8     Disposal of investment in subsidiaries                3,740            22

      Cash inflow/(outflow) before use of liquid resources 12,731       (4,858)

9     MANAGEMENT OF LIQUID RESOURCES

      Movement in short term deposits with banks            2,528         6,322

9     INCREASE IN CASH IN THE YEAR                         15,259         1,464



                           UNION PLC & SUBSIDIARIES

                     NOTES TO THE UNAUDITED CONSOLIDATED

         PROFIT & LOSS ACCOUNT, BALANCE SHEET AND CASHFLOW STATEMENT

                              31ST DECEMBER 2000




 1. BASIS OF PREPARATION

    The preliminary financial information for the year to 31st December 2000
    has been prepared on the basis of accounting policies consistent with
    those adopted for the year ended 31st December 1999.

    The financial information set out on pages 4 to 11 does not constitute the
    Company's statutory accounts for the years ended 31st December 2000 or
    1999. The financial information for 1999 is derived from statutory
    accounts for 1999, which have been delivered to the Registrar of
    Companies. The auditors have reported on the 1999 accounts; their report
    was unqualified and did not contain a statement under section 237(2) or
    (3) of the Companies Act 1985. The statutory accounts for 2000 will be
    finalised on the basis of the financial information presented by the
    Directors in this preliminary announcement and will be delivered to the
    Registrar of Companies following the Company's annual general meeting. The
    2000 Annual Report and Accounts will be posted to shareholders in due
    course.



 2. SEGMENTAL REPORTING

                                                        2000                1999
                                                                         
                                                                         Audited
                                                                                
                                       Turnover    Profit/   Turnover    Profit/
                                                   (loss)                (loss)
                                                  before tax          before tax
                                            £'000      £'000    £'000      £'000
    Continuing Operations
    Futures and foreign exchange broking   12,923      2,238    9,415        140
    Liquidity management                    1,480        326    1,345        228
    Holding company                             -      (841)        -      (854)
    Operating exceptional items (note 3)        -    (2,834)        -      (884)

                                           14,403    (1,111)   10,760    (1,370)

    Discontinued Operations
    Fund management                         4,364    (1,343)    4,560    (1,151)
    Banking activities                          -         32        -         28
    Operating exceptional items (note 3)        -      (198)        -      (200)

                                           18,767    (2,620)   15,320    (2,693)


    Profit on sale of subsidiaries                     7,124                  22
    Cost of withdrawal from discontinued                (46)               (467)
    operations


    Profit/(loss) for the financial year               4,458             (3,138)


    The results of the fund management activity include amortisation of
    goodwill of £243,000 (1999: £243,000).



                             UNION PLC & SUBSIDIARIES

                       NOTES TO THE UNAUDITED CONSOLIDATED

           PROFIT & LOSS ACCOUNT, BALANCE SHEET AND CASHFLOW STATEMENT

                          31ST DECEMBER 2000 - continued



 3. OPERATING EXCEPTIONAL ITEMS


    The 2000 operating exceptional items consist of the following:


 a. A charge of £105,000 representing the excess of the costs incurred on the
    aborted sale of Union Discount Company Limited of £655,000 over the £
    550,000 forfeited by Athenian Capital Holdings SA following their failure
    to complete on the transaction.

 b. Costs of £198,000 associated with the surrender of the long-term Russell
    Square lease, the property formerly occupied by WorldInvest.

 c. A further provision of £337,000 against amounts receivable from clients of
    Union CAL Limited. The recovery of these debts is being vigorously
    pursued. However the provision is made against those debts where it is
    considered unlikely that the clients will be able to meet their
    obligations in full.

 d. As a result of the current disposal programme, the Group will have no
    operating businesses. As a consequence, it will no longer be able to
    utilise the remaining pension surplus which it had credited to the profit
    and loss account in 1996 and carried as an asset in the balance sheet.
    Accordingly, a charge of £2,392,000 has been made to write-off the balance
    of the asset.


    The impact of these exceptional items is to decrease taxable profits.

    In 1999, the operating exceptional items consisted of the following:-


 a. During the year, the LIFFE Market was restructured and subsequently the
    price of the shares held by the Group recovered. Following a review of the
    company's requirement to hold these shares, 10,000 shares were sold at a
    profit of £21,000 and given the increase in market price it has been
    possible to reduce, by £290,000, the provision that was made in 1998
    against the carrying value of the remaining shares.

 b. A provision of £200,000 was made against the costs associated with the
    outstanding lease commitment on the property formerly occupied by
    WorldInvest.

 c. A write-off of £129,000 following the termination of the development of a
    new computer system for the Union Fund Management division.

 d. A provision of £550,000 against amounts receivable from a significant
    number of clients of Union CAL Limited. The recovery of these debts is
    being vigorously pursued. However the provision is made against those
    debts where it is considered unlikely that the clients will be able to
    meet their obligation in full.

 e. A provision of £516,000 to write down the pension surplus previously
    recognised to its actuarial valuation of £2.5 million as at 1 January
    1999.



                           UNION PLC & SUBSIDIARIES

                     NOTES TO THE UNAUDITED CONSOLIDATED

         PROFIT & LOSS ACCOUNT, BALANCE SHEET AND CASHFLOW STATEMENT

                        31ST DECEMBER 2000 - continued



4.    TAXATION (CHARGE)/CREDIT                                 2000        1999

                                                                        Audited

                                                              £'000       £'000

      The taxation (charge)/credit comprises:

      Current year                                            (240)       (122)

      - Overseas tax
      Adjustments to prior years                                  4       1,089

      - UK Corporation tax                                    (236)         967


        No credit has been taken for the tax losses derived from the trading
        losses for the years ended 31st December 2000 and 31st December 1999.

        5.     EARNINGS/(LOSS) PER ORDINARY SHARE

        The 2000 earnings per ordinary share is calculated on the Group's
        profit after taxation of £4,222,000 (1999: loss: £2,171,000) 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: 66,247,363). The 2000 diluted earnings
        per ordinary share is calculated by adjusting the weighed average by
        13,941,984 in respect of convertible shares, 3,078,889 in respect of
        share options and is based on 83,397,475 shares (1999: 83,725,723).

 6. RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS

                                                        2000               1999

                                                                        Audited

                                                       £'000              £'000


Opening equity shareholders' funds                    29,300             29,118

Profit/(loss) for the financial year                   4,222            (2,171)

Revaluation of property                                    -              2,353


Closing equity shareholders' funds                    33,522             29,300




                           UNION PLC & SUBSIDIARIES

                     NOTES TO THE UNAUDITED CONSOLIDATED

         PROFIT & LOSS ACCOUNT, BALANCE SHEET AND CASHFLOW STATEMENT

                        31ST DECEMBER 2000 - continued



7.     NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES



                                                                 2000      1999

                                                                        Audited

                                                                £'000     £'000

Operating loss                                                (2,620)   (2,693)
Decrease/(increase) in banking assets                           5,673     (189)
(Decrease)/increase in deposits                                 (428)     2,185
Net increase/(decrease) in other amounts payable                6,666   (2,216)
Net (increase)/decrease in other amounts receivable           (2,422)       507
Depreciation of fixed assets                                      451       435
Goodwill                                                          243       243
Profit on sale of fixed assets                                   (27)      (16)
Profit on sale of fixed asset investments                       (296)      (21)
Net cash inflow/(outflow) from operating activities             7,240   (1,765)





8. SALE OF SUBSIDIARY UNDERTAKINGS

                                                                2000       1999

                                                               £'000    Audited

                                                                          £'000

Net Assets Sold - Cash                                         1,828          -
- Other                                                          601          -
Goodwill                                                       2,429          -
                                                               1,415          -
                                                               3,844          -

Net proceeds, after costs                                     10,968         22
Profit on sale                                                 7,124         22

Consideration satisfied as follows:
Cash consideration, after costs                                5,568         22
Deferred consideration paid to escrow account                  5,400          -
                                                              10,968         22


Net cash inflows in the year:
Cash consideration                                             5,568         22
Cash in subsidiary sold                                      (1,828)          -
                                                               3,740         22


The deferred consideration is subject to downwards adjustment if the funds
under management of WorldInvest at 31st October 2001 are less than they were
at 31st October 2000. The amount of any reduction will be in line with any
percentage fall in funds under management between those two dates. The
purchaser of WorldInvest has agreed to use its reasonable endeavours in that
period to retain the client relationships of WorldInvest and to preserve the
associated goodwill.



                           UNION PLC & SUBSIDIARIES

                     NOTES TO THE UNAUDITED CONSOLIDATED

         PROFIT & LOSS ACCOUNT, BALANCE SHEET AND CASHFLOW STATEMENT

                        31ST DECEMBER 2000 - continued



9.     RECONCILATION OF MOVEMENT IN NET FUNDING



                    31st December   Cashflow      Exchange        31st December

                             2000      £'000      Movement                 1999

                            £'000                    £'000                £'000

Cash                       22,379     15,259           210                6,910
Liquid Resources            2,275    (2,528)           234                4,569
                           24,654     12,731           444               11,479


Liquid resources comprise term deposits with banks with an original maturity
of up to three months.