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Kingsbridge Hldgs (PNC)

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Friday 30 May, 2003

Kingsbridge Hldgs

Interim Results

Kingsbridge Holdings PLC
30 May 2003


30 May 2003

Interim Statement for the six months ended 28 February 2003

Chairman's statement

This is my first report to shareholders, having succeeded Charles Green as
Chairman in January this year. I have to report that the last six months have
been a particularly difficult time for the Company. This is reflected in the
very disappointing results for the half year to 28th February 2003.

Turnover in the period was £3,945,000 compared to £6,914,000 in the same period
last year, while the loss before taxation, goodwill amortisation and exceptional
items of £1,397,000 compares to a profit of £1,503,000. In the light of the
Company's results, the directors do not propose to pay a dividend (2002 - £Nil).

As shareholders will be aware, trading conditions have been particularly
difficult. Almost all those involved in the investment market have suffered and
we have not been spared. The Company's divisions are primarily focused on
investment products targeted at high net worth clients, whether in sport or
elsewhere. With the background of the continuing fall in stock markets around
the world, the stalling of the commercial property market and low interest
rates, the confidence of investors has fallen from already low levels and
investment flows have almost dried up. Our financial advisers, as always, have
had to focus on the best interests of our clients and have not felt it
appropriate to promote some of the investment products directly linked to stock
market performance. Allied to this has been the prominence given to mis-selling
by the Financial Services Authority and even the most dedicated and careful
advisers have been accused of mis-selling products and have had to defend
themselves at high cost, both in terms of cash and time. Product providers have
caused some problems too, with rumour about insurance companies solvency adding
to the well publicised issues surrounding split-capital investment trusts,
endowments and Equitable Life further sapping investor confidence.

A particular victim of product provider's probity was our Harrogate subsidiary,
formerly IFP Ltd. In the period prior to our acquisition of this company, it had
sold investment products in Imperial Consolidated Mutual, whose problems have
been well publicised. We have spent over £300,000 on legal bills alone in
attempting to ascertain the facts of this case, in trying to protect our
investors and obtain a return of their funds. An inevitable consequence of the
immense effort put into this was that senior executives spent considerably less
time than was desirable in dealing with clients. The result was that the
Harrogate division showed a negative contribution of £496,000 in the half year
ended 28th February 2003, which after costs of administration, compliance,
technical and information technology, increased to a loss before taxation of
£1.052m on a turnover of £1,618,000.

Whilst in the long-term the directors considered that there was a good prospect
of recovery from professional indemnity and warranty claims that were available,
in the short-term the impact of these issues posed a serious threat to the
group's cash flow. This meant that the sale of the business was by far the best
solution available. After negotiation Ross Hyett, the managing director of IFP
Ltd, agreed with others to buy back the division and a deal, which was announced
on 4th March 2003, was finally completed on 19th March 2003.

As a consequence of the sale, the much smaller group could no longer afford the
services of Martin Greenwood as Chief Executive and he agreed to depart on
sensible terms. I am grateful to Martin for his efforts. I have assumed
executive responsibility for a short period to try to resolve the group's
future. In keeping with the group's reduced size, other cuts to central costs
have been made.

The Sports division fared rather better in the period under review and provided
a contribution to central overhead of £239,000. They too suffered the market
problems I mentioned above, and giving proper advice to our clients has meant a
much restricted sales opportunity.

The cash constraints caused by the IFP problems were only partially relieved by
the sale of that division, and a continuing problem for the Sports division has
been the debt owed to the League Managers Association (LMA). This arose in the
heady days of fever in mid 2001 when a licence to manage the LMA website
was granted at a cost of £1.5 million payable in annual instalments of £200,000
together with interest costs.  Two years' payments are now overdue and no income
is being received from the site, contrary to the original expectations of high
returns on this investment. The LMA have been very understanding and shown great
forbearance, but a solution to the problem needed to be found, as they are
contractually due to be paid.

As recently announced, David McKee and Kevin McMenamin, the original founders of
Kingsbridge's business in Nottingham, have agreed to re-purchase their original
business unit, taking with it the LMA liability as well as any liability that
might arise in the future on mis-selling or related issues. Some potential
problems have been identified which could incur considerable cost to resolve.
Certain other liabilities are also being taken on and we therefore estimate the
value of the sale to be around £3million.

If this sale is successfully completed, which is conditional on FSA compliant
professional indemnity insurance being obtained on satisfactory financial terms,
the group will then comprise Benson McGarvey and Kingsbridge Advisors, our
Scottish subsidiary. While Benson McGarvey is trading as well as can be expected
in this difficult market, Kingsbridge Advisors has recently lost some senior
sales staff and business loss is inevitable. We are working to improve the
subsidiaries' prospects, but it is too early to predict the outcome.

I can also advise that the Company has received notification from the original
Vendors of the Benson McGarvey business that they intend to exercise their
rights in respect of £3 million of Fixed Rate Unsecured Convertible Loan Notes.
As it seems unlikely that the company will be in a position to satisfy the Loan
Notes in cash, the Benson McGarvey Vendors will be entitled under the provisions
of the Notes to the issue of new shares to the value of £3 million at the
average mid market closing price on the 30 days prior to the date of the
announcement of the preliminary results for the year ending 31st August 2003.

In conclusion, I am not content to allow the company to continue in this way and
I am exploring several alternative strategies to return some value to
shareholders. I hope to be able to report progress in the near future. I would
like to take this opportunity to offer my thanks to all our employees for their
efforts and commitment in what has been a difficult time.

Eric Cater

Executive Chairman

Consolidated profit and loss account

For the six months ended 28 February 2003

                                                                              Unaudited     Unaudited     Audited
                                                                                                            to 31
                                                                                  to 28         to 28      August
                                                                               February      February        2002
                                             Contin-uing   Discont-inuing
                                                                                   2003          2002
                                                    £000             £000          £000          £000        £000

TURNOVER                                           2,327            1,618         3,945         6,914      11,987

                                                  ------          -------      --------     ---------   ---------
OPERATING (LOSS) PROFIT                            (670)          (1,052)       (1,722)           560    (25,679)
                                                 -------         --------
Net interest (payable) receivable                                                  (15)             5        (12)
                                                                                -------      --------   ---------
(LOSS) PROFIT ON ORDINARY ACTIVITIES                                            (1,737)           565    (25,691)
 - after goodwill amortisation and                                              (1,737)           565    (25,691)
exceptional      items
- goodwill amortisation                                                             340           938       1,915

Exceptional items

- goodwill impairment                                                                 -             -      23,696

- licence impairment                                                                  -             -       1,438

- other exceptional items                                                             -             -         159

EXCEPTIONAL ITEMS                                                               (1,397)         1,503       1,517
                                                                               ========     =========    ========
Tax on (loss) profit on ordinary                                                   (51)         (452)       (429)
                                                                                -------      --------    --------
(LOSS) PROFIT ON ORDINARY ACTIVITIES AFTER                                      (1,788)           113    (26,120)
                                                                               ========      ========    ========
(Loss) earnings per share
Basic                                                                           (1.82p)         0.12p    (26.75p)
Basic EPS excluding goodwill amortisation                                       (1.48p)         1.08p       1.11p
and exceptional items
Diluted                                                                         (1.82p)         0.11p    (26.75p)
                                                                               ========      ========   =========

There are no other recognised gains or losses other than the (loss) profit for
the period.

Consolidated balance sheet

28 February 2003

                                                                         Unaudited       Unaudited       Audited
                                                                                                    to 31 August
                                                                                to              to          2002
                                                                       28 February
                                                                              2003 28 February
                                                                              £000            £000          £000
Licences                                                                         -           1,438             -
Goodwill                                                                    11,903          36,224        12,243
                                                                        ----------       ---------     ---------
Intangible assets                                                           11,903          37,662        12,243
Tangible assets                                                              1,107           1,354         1,398
Investments                                                                     11              11            11
                                                                        ----------       ---------     ---------
                                                                            13,021          39,027        13,652
                                                                        ----------       ---------     ---------
Debtors                                                                      1,901           4,298         1,933
Loan note deposit                                                            3,734          11,563        10,213
Cash at bank and in hand                                                         -             193           602
                                                                         ---------        --------     ---------
                                                                             5,635          16,054        12,748
CREDITORS: Amounts falling due within one year                             (9,284)        (14,417)      (12,232)
                                                                         ---------       ---------     ---------
NET CURRENT (LIABILITIES) ASSETS                                           (3,649)           1,637           516
                                                                         ---------       ---------     ---------
TOTAL ASSETS LESS CURRENT LIABILITIES                                        9,372          40,664        14,168
CREDITORS: Amounts falling due after more than one year                    (2,200)         (2,707)       (2,200)
PROVISION FOR LIABILITIES AND CHARGES                                         (25)               -          (33)
                                                                        ----------      ----------    ----------
NET ASSETS                                                                   7,147          37,957        11,935
                                                                        ==========      ==========    ==========
Called-up share capital                                                        981             981           981
Share premium account                                                       20,113          20,113        20,113
Shares to be issued                                                          1,350           4,350         4,350
Merger reserve                                                              12,244          12,033        12,244
Profit and loss account                                                   (27,541)             480      (25,753)
                                                                        ----------      ----------    ----------
EQUITY SHAREHOLDERS' FUNDS                                                   7,147          37,957        11,935
                                                                        ==========      ==========    ==========

Consolidated cash flow statement

For the six months ended 28 February 2003

                                                                         Unaudited       Unaudited       Audited
                                                                    to 28 February                  to 31 August
                                                                              2003           to 28          2002
                                                                              £000            £000          £000

                                                                           (1,246)             763         1,871
Returns on investments and servicing of finance                               (15)            (29)          (12)
Taxation paid                                                                 (82)           (230)         (914)
Capital expenditure and financial investment                                   173           (522)         (710)
Acquisitions and disposals                                                       -           (136)            88
                                                                        ----------      ----------     ---------
FINANCING                                                                  (1,170)           (154)           323
Management of liquid resources                                                   -              63             -
Financing                                                                        -               -           (5)
                                                                        ----------      ----------     ---------
(DECREASE) INCREASE IN CASH IN THE PERIOD                                  (1,170)            (91)           318
                                                                        ==========      ==========     =========

Reconciliation of movements in group equity shareholders' funds
For the six months ended 28 February 2003

                                                                        Six months      Six months
                                                                                                    months ended
                                                                             ended           ended
                                                                                                       31 August
                                                                       28 February     28 February          2002

                                                                              2003            2002
                                                                              £000            £000          £000

(Loss) profit for the period                                               (1,788)             113      (26,120)
New shares issued                                                                -             598             -
Shares to be issued                                                        (3,000)           (809)             -
                                                                         ---------      ----------     ---------
Net reduction in equity shareholders' funds                                (4,788)            (98)      (26,120)
                                                                         ---------       ---------     ---------
Opening equity shareholders' funds                                          11,935          38,055        38,055
                                                                         ---------       ---------     ---------
Closing equity shareholders' funds                                           7,147          37,957        11,935
                                                                         =========      ==========     =========

Notes to financial statements

28 February 2003


The tax charge is based on UK Corporation Tax payable at the current rate.


The directors do not propose to pay a dividend.


The calculations of earnings per share are based on the following losses or
profits and numbers of shares:

                                                                        Six months      Six months        Twelve

                                                                             ended           ended  months ended

                                                                       28 February     28 February     31 August
                                                                              2003            2002
                                                                              £000            £000          £000

(Loss) profit on ordinary activities after taxation                        (1,788)             113      (26,120)
Goodwill amortisation                                                          340             938         1,915

Exceptional items

- goodwill impairment                                                            -               -        23,696

- licence impairment                                                             -               -         1,438

- other exceptional items                                                        -               -           159
                                                                        ----------       ---------     ---------
(Loss) profit before goodwill amortisation and exceptional items           (1,448)           1,051         1,088
                                                                         =========      ==========     =========

                                                                            Number          Number        Number

                                                                         of shares       of shares     of shares

                                                                               000             000           000
Weighted average number of shares:
For basic (loss) earnings per share                                         98,147          97,115        97,629
Contingently issuable shares                                                     -           1,849             -
Exercise of share options                                                        -           1,024             -
                                                                         ---------       ---------     ---------
For diluted (loss) earnings per share                                       98,147          99,988        97,629
                                                                        ==========      ==========     =========
Basic                                                                      (1.82p)           0.12p      (26.75p)
Basic EPS excluding goodwill amortisation and impairment,
exceptional items and licence impairment                                   (1.48p)           1.08p         1.11p
Diluted                                                                    (1.82p)           0.11p      (26.75p)
                                                                        ==========       =========     =========

The directors have presented an alternative earnings per share figure to give a
better indication of the long term results of the business. FRS14 requires
presentation of diluted EPS when a company could be called upon to issue shares
that would decrease net profit or increase net loss per share. For a loss making
company with outstanding share options, net loss per share would only be
increased by the exercise of out-of-the-money options and warrants. Since it
seems inappropriate to assume that option and warrant holders would act
irrationally, no adjustment has been made to diluted EPS for out-of-the-money-
share options and warrants.


                                                                        Six months      Six months        Twelve

                                                                             ended           ended  months ended

                                                                       28 February     28 February     31 August
                                                                              2003            2002
                                                                              £000            £000          £000

Operating (loss) profit                                                    (1,722)             560      (25,679)
Depreciation charges                                                           172             117           247
Goodwill amortisation and impairment                                           340             938        25,611
Licence amortisation and impairment                                              -               -         1,438
Profit on disposal of tangible fixed assets                                   (54)               -          (12)
Decrease (increase) in debtors                                                  32           (680)         1,685
Decrease in creditors                                                         (14)           (172)         (871)
Adjustments to prior year goodwill                                               -               -         (548)
                                                                         ---------       ---------     ---------
NET CASH (OUTFLOW) INFLOW FROM OPERATING ACTIVITIES                        (1,246)             763         1,871
                                                                          ========        ========     =========


                                                                        Six months      Six months        Twelve

                                                                             ended           ended  months ended

                                                                       28 February     28 February     31 August
                                                                              2003            2002
                                                                              £000            £000          £000
Returns on investments and servicing of finance
Interest received                                                                -             249           479
Interest paid                                                                 (15)           (260)         (491)
Interest element of finance lease rentals                                        -            (18)             -
                                                                         ---------       ---------     ---------
NET CASH OUTFLOW                                                              (15)            (29)          (12)
                                                                        ==========       =========     =========
UK corporation tax paid                                                       (82)           (230)         (914)
                                                                         =========      ==========     =========
Capital expenditure and financial investment
Purchase of tangible fixed assets                                              (6)           (543)         (737)
Sale of tangible fixed assets                                                  179              21            27
                                                                          ---------       ---------    ---------
NET CASH INFLOW (OUTFLOW)                                                      173           (522)         (710)
                                                                         =========        ========      ========

                                                                        Six months      Six months
                                                                             ended           ended  months ended
                                                                       28 February     28 February
                                                                              2003                     31 August
                                                                                              2002          2002
                                                                              £000            £000          £000
Acquisitions and disposals
Purchase of subsidiary undertaking                                               -           (136)            88
                                                                         =========       =========     =========
Management of liquid resources
Receipts for loan note deposit account                                           -              63             -
                                                                         =========       =========     =========
Capital element of finance lease rentals                                         -               -           (5)
                                                                         =========       =========     =========


                                                       1 September                           Other   28 February
                                                              2002                                          2003
                                                                         Cash flow        non-cash
                                                              £000            £000            £000          £000
Cash in hand, at bank                                          602           (602)               -             -
Overdrafts                                                       -           (568)               -         (568)
                                                          --------        --------        --------     ---------
                                                               602         (1,170)               -         (568)
                                                          --------        --------        --------     ---------
Investment - Loan note deposit                              10,213         (6,479)               -         3,734

Loan notes due within one year                            (10,213)           6,479         (3,000)       (6,734)

Unsecured convertible loan notes                                 -               -           3,000         3,300

Finance leases                                             (1,300)               -               -       (1,300)
                                                          --------        --------        --------     ---------
Net debt                                                     (698)         (1,170)               -       (1,868)
                                                          ========        ========        ========      ========

The Benson McGarvey earn out was achieved but issue of the relevant shares was
deferred and Unsecured Convertible loan notes to the value of the Shares to be
issued were created.


                                                                        Six months      Six months
                                                                                                   Months ended
                                                                             ended           ended           31

                                                                       28 February     28 February       August
                                                                              2003            2002
                                                                              £000            £000         £000
(Decrease) increase in cash in the period                                  (1,170)            (91)          318
Cash outflow from finance lease                                                  -               -            5
                                                                          --------        --------     --------
Change in net debt resulting from cash flows                               (1,170)            (91)          323
Surrender of finance lease                                                       -               -           26
                                                                          --------        --------     --------
Movement in net debt in period                                             (1,170)            (91)          349
Net debt at 1 September 2002                                                 (698)         (1,047)      (1,047)
                                                                          --------        --------     --------
Net debt at 28 February 2003                                               (1,868)         (1,138)        (698)
                                                                          ========       =========     ========


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 unaudited interim statements have been prepared under the historical cost
convention and in accordance with applicable accounting standards using the
accounting policies set out in the report and accounts for the period ended 31
August 2002.


The financial information set out above does not constitute full accounts within
the meaning of Section 240 of the Companies Act 1985.  The amounts shown in
respect of the period ended 31 August 2002 have been extracted from the full
statutory accounts, on which the auditors have made an unqualified report.  The
statutory accounts have been filed with the Registrar of Companies.

Copies of this announcement will be posted to shareholders and are available to
members of the general public from the company's registered office: Kingsbridge
House, Castle Gate, Nottingham NG1 7AQ.

                      This information is provided by RNS
            The company news service from the London Stock Exchange