Kingsbridge Holdings PLC
1 November 2001
KINGSBRIDGE HOLDINGS PLC
Kingsbridge Holdings Plc, ('Kingsbridge') a provider of financial services and
advice to sports and entertainment clients and other high net worth
individuals, announces its Preliminary Results for the since formation in the
period April 2001 to 31 August 2001. The first results since flotation in
* Considerable progress made, growth accelerating
* Acquisitions integrated, new technology platform implemented
* Profit before tax and goodwill amortisation £1.5 million, ahead of
* EPS, excluding goodwill amortisation, 1.81p
* Moves into other sports proving fruitful
* IFP acquisition broadens client base, adds a new dimension to the Group
* Now established alongside the largest national IFA's
Charles Green, Chairman, commented:
'I am pleased to be able to report a very active and successful period of some
fourteen months since the flotation of the Company on the Alternative
'Following the acquisition of Benson McGarvey we are now undoubtedly the No. 1
football related IFA and the addition of IFP to the Group further strengthens
our infrastructure and enhances the Group's buying power, which will benefit
'The Board believe that the future for the enlarged Group is exciting and we
are optimistic that the current year will be a year of continuing progress and
1st November 2001
Kingsbridge Holdings Plc Tel: 0115 852 3620
Martin Greenwood, Chief Executive Tel: 07950 932914
David McKee, Director Tel: 07768 390896
College Hill Associates Tel: 020 7457 2020
Michael Padley / Nicholas Nelson
I am pleased to be able to report a very active and successful period of some
fourteen months since the flotation of the Company on the Alternative
Investment Market. The Group has made significant progress, through both
organic growth and acquisition, in the period. Our commercial and
professional reputation as a premier provider of financial services has been
enhanced by our public status and we have cemented our position as the leading
football related IFA.
The results show a profit before amortisation of goodwill and tax of £1.51
million for the period on turnover of £7.35 million. The basic earnings per
share for the period was 0.63p whilst the earnings per share before goodwill
amortisation was 1.81p. At 31 August 2001, the Group had cash reserves of £
284,244. Goodwill amortisation of £683,619 reduces the profit before taxation
to £824,247. As stated in the prospectus, there will be no dividend payment
although this policy will be reviewed in future years.
We highlighted our intention to make acquisitions in the prospectus, and I am
pleased to report that we have been very active in this area. Our first
acquisition in September 2000 was Murray Management Group Limited ('Murray
Management') for the sum of £3.99 million, with £0.81 million deferred for one
year. Murray Management is based in Glasgow, Scotland and has close links
with Scottish football at the highest levels. I am pleased to report that
Murray Management had an excellent year, achieving their earn-out target in
the year to 31 August 2001.
Our next large acquisition was Stafford Group Limited ('Stafford') and its
principal trading subsidiary Independent Financial Partnership Limited ('IFP
'), based in Harrogate, in April 2001. Stafford was acquired for the sum of £
12.6 million with a maximum deferred payment of £2.50 million, based on
profits. They are making good progress towards achieving this target. IFP's
high net worth client base, their expertise, particularly in pensions matters,
and their administration infrastructure gives an extra dimension to the Group,
enabling it to add further businesses whilst maintaining the high service and
regulatory standards necessary to succeed in this competitive market.
In July 2001, the Group purchased Benson McGarvey Limited ('Benson McGarvey')
the main rival to Kingsbridge among the top earning soccer players, for the
sum of £13.50 million with a maximum deferred element of £3.0 million. Benson
McGarvey, which is also based in Nottingham provides an opportunity for cost
savings through a close integration of their activities.
Two smaller acquisitions were also made during the period, Kingweb Limited and
Max Delta Limited. Kingweb purchased from the League Managers Association ('
LMA') for a consideration to be issued when certain earnings targets have been
reached, manages the LMA website. This is being considerably upgraded and now
carries interviews with club managers as well as current football information.
The main income will be from sponsorship and subscription services which
should start to flow strongly in the next few months.
Max Delta was acquired from Keysports Management Limited to provide
introductions to high net worth entertainers.
Kingsbridge expects to close its present office in Nottingham in November and
move to larger premises in the town centre. Benson McGarvey will join them
there as soon as lease formalities will permit. The Harrogate office has also
been expanded, taking on additional premises in the complex, to ensure
adequate space to house the additional staff required for the continuing
development of the business.
Directors and Management
We welcomed John Murray, Ross Hyett and Peter McGarvey to the Board on
completion of the acquisition of their respective companies, which they
continue to manage. Martin Greenwood, formerly a non-executive director, was
appointed Group Chief Executive in May 2001 and has already made considerable
progress towards the integration of the group and formulation of its future
We recognise that the present structure is too heavily biased towards
executive directors, with insufficient representation of independent
directors. We shall be actively addressing this issue over the forthcoming
I would like to thank all members of staff for their sterling contribution
during this year of considerable change. Their responsiveness and willingness
to accept responsibility has considerably helped your Board and we are
grateful to them all.
The Board believe that the future for the enlarged Group is exciting. We are
seeking suitable acquisition opportunities which will expand our base among
sporting and other high net worth clients. We are also recruiting quality
IFA's to assist us in servicing the new clients that we are signing on a
regular basis. Your Board is optimistic that the current year will be a year
of continuing progress and expansion.
CHIEF EXECUTIVE'S STATEMENT
I am delighted to have been appointed Chief Executive following the completion
of the acquisition of the Stafford Group Limited in April of this year and to
be able to play a part in the future growth of the Company. This growth is
taking place against a background of continuing structural change within the
financial services industry.
The period ended 31 August 2001 has been one of significant growth both
organically and through acquisition. Kingsbridge (Financial) Ltd the original
core operating company within the Group continued to focus on and expand its
client base of professional footballers. During the period profits before tax
of £0.84 million were generated on turnover of £3.35 million.
A key element of our success in the world of football is our various
appointments to the League Managers Association, the FA Premier League, the
Nationwide Football League and the Scottish Premier and Football Leagues. As
a consequence of the close relationship the company has developed with the FA,
we have been appointed as an adviser to nineteen individual football academies
providing an opportunity for the company to assist the players throughout each
stage of their career.
The Group's position as the premier provider of independent financial advice
to football has been further enhanced by the acquisition of Murray Management
and Benson McGarvey.
Murray Management based in Glasgow is ideally placed to service the needs of
our sports and other high net worth clients throughout Scotland. Generating
profits before tax of £0.35 million on turnover of £1.25 million the company
outperformed the targets set at the time of acquisition.
The addition in June 2001 of Nottingham based Benson McGarvey boosted by over
100 the number of sports related clients advised by the Group. In the three
months post acquisition, the company has performed very strongly generating
profits before tax of £0.35 million on turnover of £0.66 million. Much of the
performance directly results from product synergies with Kingsbridge
Recognising the value of our service offering and its relevance to other
sports persons who enjoy high earnings but short careers the enlarged group
has opened up new markets. Clients at the top of their sports from
horseracing, rugby, golf and cricket have all been attracted. In addition an
agreement has been signed with The Professional Cricketers' Association to
provide our services to their members.
The growing reputation of Kingsbridge will allow us to continue to grow our
client base within the above mentioned sports over the coming year.
The client base of the Group was broadened during the year by the acquisition
of the Independent Financial Partnership ('IFP') based in Harrogate. Since the
date of acquisition IFP has generated turnover of £1.83 million giving rise to
profits before tax of £0.22 million. Whilst not sports orientated, IFP's
clients are nevertheless focused towards high net worth individuals and face
many challenges which are common with the clients of other Group companies.
The combined expertise and enhanced buying power of the Group will be of
benefit to all clients.
The management of IFP are confident that changes introduced by the FSA will
directly benefit the company as many professional firms are expected to
outsource the provision of advice.
The Group now has 175 employees of which 52 are advisers and 35 are qualified
support staff. The FSA in recently published research found that clients are
attracted by large and reputable organisations with highly qualified advisers.
The enlarged Group meets the criteria both in terms of size and the quality
of our advisers, a high proportion of whom have achieved qualifications in
excess of the standard required by the regulator.
From 1 December 2001 our current regulator the Personal Investment Authority
(PIA) will be replaced by the Financial Services Authority (FSA) a date widely
referred to as N2. With the new regulator come changes to the way in which
independent financial advice will be regulated in future.
In recognition of the limited ability of the current welfare system to respond
to the needs of an ageing population the government is keen to encourage
savings for both retirement and long term care. This is being achieved by the
introduction of catmarks, decision trees and comparative tables. In addition
new products have been introduced in the form of Stakeholder Pensions and
ISAs, charges on the former being limited to 1 per cent.
An industry wide debate is also taking place regarding the differentiation
between independent financial advisers able to select their recommended
products from all those available in the market place and tied advisers who
are limited to the products provided by their host company. This
differentiation is known as polarisation.
It is against this background of uncertainty that Kingsbridge has been
successfully established as a new name ranked alongside the largest national
firms of independent financial advisers.
Recent trading has continued the trends of the last fourteen months. The
events in America of September 11 have occurred too soon after August 31 for
us to accurately assess their medium to long term effect on the Group. In
common with most businesses, we have seen some disruption in the period
immediately following the disaster. The economic climate will dictate the
level of business and this will in part
depend on how successful the measures taken by world governments are in
restoring consumer confidence. This will become clearer over the coming weeks
and months. However, we consider that it is unlikely that our sports related
clients will be materially affected.
Over the next twelve months the Group will concentrate on fully integrating
the acquisitions completed to date. To facilitate this exercise the FSA
regulated companies will be reorganised to operate under the one brand name
Kingsbridge Financial. The current branch structure will be maintained and
the service currently enjoyed by our clients will be further enhanced.
Support services, for example, compliance, training and competence, research,
accounting and information technology will be provided on a central basis.
The management, accounting and client support systems currently operated by
IFP are in the process of being adopted as the standard throughout the Group.
Clearly the key to successfully achieving the above is the establishment of a
consistent technology platform at every location. This work is already
The Group will continue to seek out complementary acquisitions whilst at the
same time stimulating organic growth by the continued penetration of parallel
sports markets and the recruitment of additional highly qualified advisers.
We anticipate that high net worth clients from both sport and other areas will
be attracted by our highly specialist service and product offerings.
Finally, the Directors believe that the structural changes facing the
industry, whilst challenging, will be the source of further opportunity.
Consolidated profit and loss account
For the period ended 31 August 2001
Acquisitions 3 7,346,793
Continuing operations 7,346,793
Cost of sales (1,539,147)
Gross profit 5,807,646
Administrative expenses (5,024,768)
Existing operations (436,691)
Continuing operations 782,878
Profit on ordinary activities before finance charges 782,878
Net interest receivable 41,369
Profit on ordinary activities before taxation 824,247
- after goodwill amortisation 824,247
- goodwill amortisation 683,619
Profit on ordinary activities before goodwill amortisation 1,507,866
Tax on profit on ordinary activities (457,221)
Profit on ordinary activities after taxation
and retained for the year 367,026
Earnings per share 4
Basic EPS excluding goodwill amortisation 1.81p
Consolidated balance sheet
31 August 2001
Intangible assets 38,831,535
Tangible assets 948,888
Loan note deposit 11,626,092
Cash at bank and in hand 681,750
Creditors: Amounts falling due within one year (10,998,710)
Net current assets 4,926,447
Total assets less current liabilities 44,718,065
Creditors: Amounts falling due after more than one year (6,663,126)
Net assets 38,054,939
Capital and reserves
Called-up share capital 970,075
Share premium account 20,112,810
Shares to be issued 5,159,155
Merger reserve 11,445,873
Profit and loss account 367,026
Equity shareholders' funds 38,054,939
Consolidated cash flow statement
For the period ended 31 August 2001
Net cash inflow from operating activities 587,961
Returns on investments and servicing of finance 151,277
Taxation paid (55,320)
Capital expenditure and financial investment (250,159)
Acquisitions and disposals (9,328,614)
Cash outflow before management of liquid resources and
Management of liquid resources (11,533,126)
Increase in cash in the period 284,244
1. Financial information
The financial information set out herein does not comprise the Company's
statutory accounts. The auditors have given an unqualified opinion on the
statutory accounts for the period ended 31 August 2001 which will be delivered
to the Registrar of Companies following the Annual General Meeting.
2. Accounting policies
The principal accounting policies are summarised below. They have all been
applied consistently throughout the period.
The accounts have been prepared in accordance with applicable accounting
standards and under the historical cost convention.
Basis of consolidation
The group accounts consolidate the accounts of Kingsbridge Holdings plc and
its subsidiary undertakings drawn up to 31 August 2001 which is the first
accounting period of the group and company. The results of subsidiaries
acquired or sold are consolidated for the periods from or to the date on which
control passed. Acquisitions are accounted for under the acquisition method.
Goodwill arising on the acquisition of subsidiary undertakings and businesses,
representing any excess of the fair value of the consideration given over the
fair value of the identifiable assets and liabilities acquired, is capitalised
and written off on a straight line basis over its useful economic life, which
is twenty years. Provision is made for any impairment.
Negative goodwill is similarly included in the balance sheet and is credited
to the profit and loss account in the periods in which the acquired
non-monetary assets are recovered through depreciation or sale.
Licenses are included at cost and depreciated in equal annual instalments over
a period of 10 years which is their estimated useful economic life. Provision
is made for any impairment.
Tangible fixed assets
Tangible fixed assets are stated at cost, net of depreciation and any
provision for impairment. Depreciation is provided on all tangible fixed
assets, other than freehold land, at rates calculated to write off the cost,
less estimated residual value, of each asset over its expected useful economic
life, as follows:
Improvements to leasehold property Over the remaining period of the lease
Motor vehicles 25% per annum on net book
Office fixtures and equipment 25% per annum on net book value
Residual value is calculated on prices prevailing at the date of acquisition.
Except as stated below, fixed asset investments are shown at cost less
provision for impairment.
In the company balance sheet, for investments in subsidiaries acquired for
consideration including the issue of shares qualifying for merger relief, cost
is measured by reference to the nominal value only of the shares issued. Any
premium is ignored.
In the group financial statements, investments in associates are accounted for
using the equity method. The consolidated profit and loss account includes
the group's share of associates' operating results made up to 30 April 2001,
while the group's share of the net assets of the associates is shown in the
consolidated balance sheet.
Current tax, including UK corporation tax is provided at amounts expected to
be paid (or recovered) using the tax rates and laws that have been enacted or
substantially enacted by the balance sheet date.
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events that result in an obligation to pay more tax in the future or a right
to pay less tax in the future have occurred at the balance sheet date. Timing
differences are differences between the group's taxable profits and its
results as stated in the financial statements that arise from the inclusion of
gains and losses in tax assessment in periods different from those in which
they are recognised in the financial statements.
Net deferred tax assets are regarded as recoverable and therefore recognised
only when, on the basis of all available evidence, in can be regarded as more
likely than not there will be suitable taxable profits from which the future
reversal of the underlying timing differings can be deducted.
Deferred tax is not recognised when fix assets are sold and it is more likely
than not that the taxable gain will be rolled over, being charged to tax only
if and when the replacement assets are sold.
Deferred is measured at the average tax rates that are expected to apply in
the periods in which the timing differences are expected to reverse, based on
tax rates and laws that have been enacted or substantively enacted by the
balance sheet date. Deferred tax is measured on a non-discounted basis.
Turnover represents commissions and fees receivable for services provided in
the normal course of business.
Commission is recognised as income on the date that the relevant policy is
placed on risk with the insurance company. Commission earned on the sale of
investments in film and property schemes is only recognised once the minimum
level of investment for a particular scheme has been reached.
Some initial commission is paid on indemnity terms and as a result commission
may subsequently be clawed back by insurance companies upon cancellation of a
policy by the policy holder. Commission clawed back by the insurance
companies is provided for when the directors consider it likely to be due.
For defined contribution schemes the amount charged to the profit and loss
account in respect of pension costs and other post-retirement benefits is the
contributions payable in the period. Differences between contributions
payable in the period and contributions actually paid are shown as either
accruals or prepayments in the balance sheet.
Assets held under finance leases and other similar contracts, which confer
rights and obligations similar to those attached to owned assets, are
capitalised as tangible fixed assets and are depreciated over the shorter of
the lease terms and their useful economic lives.
The capital elements of future lease obligations are recorded as liabilities,
while the interest elements are charged to the profit and loss account over
the period of the leases to produce a constant rate of charge on the balance of
capital repayments outstanding. Hire purchase transactions are dealt with
similarly, except that assets are depreciated over their useful economic lives.
Rentals under operating leases are charged on a straight line basis over the
lease term, even if the payments are not made on such a basis.
Derivative financial instruments
The group is not significantly exposed to the effects of exchange rate
fluctuations since all income and costs are denominated in sterling. The
group does not enter into derivatives transactions and does not trade in
3. Segment information
All turnover is derived from a single class of business, being the group's
principal activity of the provision of financial services and advice. All
turnover originates in the United Kingdom.
The analyses presented above include the following amounts in respect of
operations acquired during the period:
Kingsbridge Murray Stafford Benson
Financial Management Group McGarvey Other
Limited Group Limited Limited Limited Acquisitions
£ £ £ £ £
Sales to third 3,351,817 1,249,491 1,832,154 664,829 248,502
Segment profit 840,156 347,666 215,162 349,282 150,922
Segment net 790,574 237,956 1,450,597 3,351,238 736,015
__________ ________ ______ ________ ________
In relation to the acquisition of Kingsbridge Financial Limited, continuing
operations in the period includecost of sales of £663,655, gross profit of £
2,688,162 and administrative expenses of £1,848,006.
In relation to the acquisition of Murray Management Group Limited continuing
operations in the period include administrative expenses of £97,580.
In relation to the acquisition of Stafford Group Limited, continuing
operations in the period include cost of sales of £757,932, gross profit of £
1,074,222 and administrative expenses of £859,060.
In relation to the acquisition of Benson McGarvey Limited continuing
operations in the period include cost of sales of £112,030, gross profit of £
552,799 and administrative expenses of £203,517.
In relation to other acquisitions, continuing operations in the period include
cost of sales of £5,530 gross profit of £242,972 and administrative expenses
4. Earnings per share
The calculations of earnings per share are based on the following profits and
numbers of shares.
Profit on ordinary activities after taxation 367,026
Goodwill amortisation 683,619
Profit before goodwill amortisation 1,050,645
Weighted average number of shares:
For basic earnings per share 57,984,106
Contingently issuable shares 748,662
Exercise of share options 847,525
For diluted earnings per share 59,580,293
5. Reconcilliation of operating profit to operating cash flows
Operating profit 782,878
Depreciation charges 125,343
Amortisation of goodwill 683,619
Amortisation of licences 62,500
Increase in debtors (1,911,884)
Increase in creditors 845,505
Net cash inflow from operating activities 587,961
6. Report & Accounts
The annual report & accounts will be posted to members in due course following
which copies will be made available to the public at the Company's registered
office: 9,Weekday Cross, The Lace Market, Nottingham NG1 2GB