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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Park Row Grp. | LSE:PWP | London | Ordinary Share | GB0031538480 | ORD 80P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.00 | - |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
RNS Number:8487I Park Row Group PLC 18 March 2003 Park Row Group plc Preliminary announcement of results for the period ended 31 December 2002. CHAIRMAN'S STATEMENT Introduction This is my first report to you since becoming your new Chairman in September 2002. It has been a period of considerable change, not only for Park Row Group plc (the Group) but for the retail financial services sector as a whole. Some of the reasons for this are the uncertainty of proposed regulatory change, set against a worsening economic climate and a weakening investment sentiment. Despite this background, the reverse merger of Park Row Limited with Birchin International plc in May 2002 brought about a significant change in the direction of your Company, enabling the Group to be established and to continue to grow to become one of the UK's largest financial advisory groups. Consolidated turnover reported for the fifteen months ended 31 December 2002 was #7.4 million. However, this included turnover for the Park Row financial advisory business only from the date of acquisition in May 2002. Since it was founded, the Park Row financial advisory business has achieved significant sales growth each year and indeed this calendar year is no exception with turnover reaching a record #9.9 million for the twelve months ended 31 December 2002 compared with #5.4 million for the eight months to 31st December 2001 and #4.8 million for the year to 30th April 2001. Our position as one of the UK's largest producers of protection business and our growing mortgage advisory activity has significantly helped to achieve this success. At the time of writing, the Group has increased its team of advisers from around 200 in May 2002 to in excess of 300 today, 80 of whom are operating as mortgage advisers. The Group has achieved this considerable organic growth through a successful recruitment programme, accomplished without external funding. The Group's core businesses operate on a multi-distribution platform enabling individual or corporate customers to get financial advice, on a fee or commission basis, by telephone, internet or face-to-face. This flexible structure maximises the opportunities which will arise from the Financial Services Authority's (FSA's) regulatory review on the polarisation regime in the financial services industry. This structure, coupled with the Group's growing range of national lead generation schemes, offers excellent career opportunities for advisers as well as increasing the number of new clients each month. Under the holding company of Park Row Group plc there are three main operating subsidiaries: Park Row Associates which houses the majority of self-employed advisers; Park Row Financial Advisers, the former Birchin Wealth Management company; and Park Row Independent Mortgages which houses all the self-employed mortgage advisers. Although mortgage advice is currently not regulated by the FSA, we operate this business under controls and processes consistent with our regulated business, so we are prepared for the date when the FSA does extend regulation to mortgages (scheduled for 2004). Park Row Associates is currently regulated by the Kestrel Network (a member of the MISYS group), however, over the last nine months we have invested heavily in compliance, systems and personnel with a view to becoming directly regulated by the FSA. We aim to have completed this by the end of April 2003. We are confident that this infrastructure will enable us to make a smooth transition and to maintain robust regulatory controls thereafter. It also means that we can eliminate the duplication of costs relating to both the Network services and our newly developed in-house functions. Results for the 15 months - Historical Issues The results presented are for the fifteen months ended 31 December 2002. The reverse merger of Park Row Limited with Birchin International plc was completed in May 2002, and the results presented represent the results of Birchin International plc (now renamed Park Row Group plc) to the date of the reverse merger and the consolidated results of the combined entity from the date of the reverse merger to 31 December 2002. The results for the fifteen months have to be viewed in the context of the situation that the new management team was confronted with during the early part of 2002. Birchin International plc had invested heavily in a range of assets which had been expected to yield profits on disposal in the medium term. This has not proved to be the case and the Board came to the conclusion immediately after the merger in May 2002 that to continue to retain these assets would not be in the best interests of shareholders in the medium term. Therefore the Board has pursued an aggressive policy of realising non-core assets wherever possible. In addition, the Board inherited a cost structure that was materially out of proportion to the current and projected income of the Group in terms of people, premises and other central costs. Addressing the above issues has had a material one-off impact on the results as noted below. The loss on ordinary activities before taxation for the fifteen months to 31st December 2002 was #9.3 million. Since May 2002, we have set about restructuring the Group from the investment business that was Birchin International to ensure that the central cost base is in line with the revenue potential of the growing financial advice business. As previewed in the Trading Statement for the period to 30th September 2002 management has carried through a programme of cost reduction including reduced central staff numbers, the closure of offices in London and the transfer of all administration from London to Leeds. By the time this programme is complete, approximately #1 million of operating costs will have been stripped out of the business on an annualised basis. As set out later in this statement, the Group has been actively disposing of its non-core assets with the exception of its stakes in Quay Software Solutions and Intellexis plc which are being retained for strategic reasons. This disposal programme has been conducted against a backdrop of materially declining equity markets and considerable caution on the part of potential asset acquirers. Where other assets have been retained, they have been written down to values which more fairly reflect current market conditions. Future growth through recruitment and adviser development Our business structure has been developed in such a way that it can offer a defined and valuable career path to our advisers. With the vastly improved business infrastructure, remuneration and support models, as well as the potential to generate substantial client leads for all advisers, we believe that the Group has an industry leading proposition. This has been borne out by our recruitment successes over the last twelve months. This is possible due to the simplified requirements for mortgage advisers within the separate mortgage business. This allows us to ensure new recruits can become commercially active as quickly as possible, as well as offering a home to advisers that may want to migrate through to full IFA status in the future. A key to our strategy is the substantial investment we have made in terms of resource and commitment to develop relevant and stimulating in-house training and development programmes to increase the knowledge and skills of all our advisers and their support staff. The ability to train and develop new advisers means that we can help the industry attract individuals to bring new ideas and experience. Another core benefit of this development programme will be to greatly enhance the quality of the range of services which we can provide to our clients. Acquisitions In May 2002 we acquired 75% of AdviceOnline (www.adviceonline.co.uk), one of the first online FSA regulated financial advisory companies. It offers a full range of financial services and products online backed up with access to advice from Park Row advisers either face-to-face or on the telephone. AdviceOnline has continued to improve its market share of online traffic and enquiries and has traded profitably since it joined the Group. Towards the end of 2002 Park Row GmbH was established and is receiving strong interest from German retail clients. It currently has 25 personnel and we are hopeful it will grow during 2003. Out of all European financial sectors we see the German retail financial sector as an exciting growth prospect. With our experience in the UK, and the adaptation of many of the FSA's regulatory procedures to the German market, we believe that this venture will be an attractive proposition with clients. Investments and Disposals As part of the strategy of continuing to develop our advisory services, the Board stated its intention to dispose of non-core investments and redeploy the proceeds in building a national multi-distribution platform. During 2002 the business of Global Risk Management Services Limited was sold to Core Ratings, a subsidiary of Fitch and Co, the international rating agency. Following the year end the stake in Fairplace Consulting plc has been sold and we have exchanged contracts on the sale of Bluebridge House. For the time being we wish to retain our stakes in the other two main investments, Intellexis plc and Quay Group, as both offer the prospect of good returns in the medium term. Our holding in Intellexis is 28.7% and we are confident under the new Managing Director, Ken Scott, Intellexis will continue to develop as a leading e-learning company. Towards the end of 2002 we converted our 30% investment in My Money Adviser Limited to a 10% investment in its holding company Quay Group. Quay has a unique position in the UK retail financial sector, offering software solutions to intermediaries and product providers. Its clients include Park Row, Millfield, and Berkeley Berry Birch and we believe its business model is highly scaleable. During the course of 2002, we looked at many potential investments and acquisitions in the IFA sector which, as mentioned, continues to consolidate. However, we have felt our strategy of organic growth has been more appropriate to date as we consider many of the valuations for small IFAs paid by other groups to have been expensive. This has resulted in our being able to create a homogeneous business model and common incentive schemes across the business. This, together with the comprehensive infrastructure which has been put in place over the last nine months to support our advisers, gives us a solid base from which to build the number of advisers to around 700 by the end of 2005. Board Changes Ted Gardener resigned from the Board in October 2002. Tony Minns was appointed to the Board in May 2002 as a non-executive director, and brings with him enormous experience in wealth management. Tony's other directorships include Millnet Financial, Cathedral Capital plc, Keygate Property Investments, and Pavilion Angel Investors Ltd. In August 2002 Colyn Gardner, chairman of Birchin International plc and subsequently chairman of Park Row Group plc decided to resign on completion of the integration of the merged businesses. Outlook The regulatory uncertainty surrounding the IFA sector continues to offer opportunity to the Group, particularly with our broad mix of products and our lead generation schemes which are producing in excess of 4,000 leads per month. This has meant our performance is proving to be more resilient to the current economic climate than many of our competitors. We do not see much growth coming from the investment side of our product offering in the near future, but with a strong business in mortgages and protection products, we believe that the Group is well positioned given the current weak equity markets. The strategy we are developing will position us well for the time when the investment outlook improves. As a small cap company our share price continues to suffer from illiquidity and as a result the current price does not in the view of your Board represent the fair value of the Group. We are mindful of this and are actively seeking ways to rectify this situation. Chairman 18 March 2003 CONSOLIDATED PROFIT AND LOSS ACCOUNT for the period ended 31 December 2002 15 months ended Year ended 31 December 30 September 2002 2001 #'000 #'000 TURNOVER Acquisitions 6,288 - Continuing 658 874 Discontinued 437 - 7,383 874 Cost of sales Acquisition (4,309) - Continuing (72) (480) Discontinued (231) - (4,612) (480) GROSS PROFIT 2,771 394 Administrative expenses Acquisitions (2,235) - Continuing (7,939) (4,873) Discontinued (1,301) - (11,475) (4,873) Other income 77 121 (11,398) (4,752) OPERATING LOSS Acquisitions (256) - Continuing (7,276) (4,358) Discontinued (1,095) - (8,627) (4,358) Share of operating loss of associates (237) (491) Profit on deemed disposal of interest in subsidiary 868 1,326 Profit on disposal of discontinued operations 192 - Impairment of freehold property (137) - Profit on disposal of freehold property 338 - Loss on disposal of investments (153) (123) Amounts written off investments (910) (1,846) Impairment of goodwill (577) - LOSS ON ORDINARY ACTIVITIES BEFORE INTEREST (9,243) (5,492) Interest receivable 85 440 Interest payable (125) (327) LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (9,283) (5,379) Taxation (212) - LOSS ON ORDINARY ACTIVITIES AFTER TAXATION (9,495) (5,379) Minority interest 92 645 LOSS FOR THE PERIOD (9,403) (4,734) Earnings/(losses) per share - basic (45.9p) (0.40p) - fully diluted (45.9p) (0.40p) CONSOLIDATED BALANCE SHEET 31 December 2002 31 December 30 September 2002 2001 #'000 #'000 FIXED ASSETS Intangible assets 12,203 1,446 Tangible assets 1,170 3,523 Investments 3,634 3,549 17,007 8,518 CURRENT ASSETS Stock - 64 Debtors due within one year 2,166 1,180 Debtors due after more than one year 500 200 Cash at bank and in hand 173 3,310 2,839 4,754 CREDITORS: Amounts falling due within one year (4,346) (974) NET CURRENT (LIABILITIES)/ASSETS (1,507) 3,780 TOTAL ASSETS LESS CURRENT LIABILITIES 15,500 12,298 CREDITORS: Amounts falling due after more than one year (49) (1,082) PROVISIONS FOR LIABILITIES AND CHARGES (150) - 15,301 11,216 CAPITAL AND RESERVES Called up share capital 24,587 10,539 Shares to be issued 428 - Share premium 2,467 3,069 Revaluation reserve - (258) Profit and loss account (12,195) (2,534) SHAREHOLDERS' FUNDS - Equity 14,155 9,684 - Non-equity 1,132 1,132 SHAREHOLDERS' FUNDS 15,287 10,816 Minority interest 14 400 15,301 11,216 STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES for the period ended 31 December 2002 15 months ended Year ended 31 December 30 September 2002 2001 #'000 #'000 Retained loss for the period (9,403) (4,734) Unrealised deficit on revaluation of investment properties - (424) Total recognised gains and losses relating to the period (9,403) (5,158) RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS for the period ended 31 December 2002 Group Company 31 30 31 30 December September December September 2002 2001 2002 2001 #'000 #'000 #'000 #'000 Loss for the financial year (9,403) (4,734) (9,990) (177) New share capital issued net of issue costs 13,446 - 13,446 - Deferred share issue 428 - 428 - Net addition to/(reduction in) shareholders' funds 4,471 (5,158) 3,884 (601) Opening shareholders' funds 10,816 15,974 14,000 14,601 Closing shareholders' funds 15,287 10,816 17,884 14,000 CONSOLIDATED CASH FLOW STATEMENT for the period ended 31 December 2002 15 months ended Year ended 31 December 2002 30 September 2001 #'000 #'000 Cash flow from operating activities (5,323) (5,520) Returns on investments and servicing of finance (40) 113 Taxation (106) (316) Capital expenditure and financial investment 1,394 (2,037) (4,075) (7,760) Acquisitions and disposals (827) (294) Management of liquid resources 3,310 6,961 Net cash outflow before financing (1,592) (1,093) Financing 663 230 DECREASE IN CASH IN THE PERIOD (929) (863) RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 2002 2001 #'000 #'000 Decrease in cash in the period (929) (863) Liquid resources used to increase cash (3,310) (6,961) Cash outflow from decrease in debt and finance leases 1,176 (4) New finance leases - (226) Loans acquired with subsidiaries (21) - MOVEMENT IN NET DEBT IN YEAR (3,084) (8,054) NET FUNDS AT 1 OCTOBER 2001 2,060 10,114 NET (DEBT)/FUNDS AT 31 DECEMBER 2002 (1,024) 2,060 1 BASIS OF PREPARATION The financial information included with this statement does not constitute statutory accounts as defined by section 240 of the Companies Act 1985 for the period ended 31 December 2002 and the year ended 30 September 2001. It has been extracted from the statutory accounts on which the auditors have issued an unqualified audit report and which will be delivered to the Registrar of Companies in due course. Accountancy policies are unchanged from published statutory accounts for the year ended 30 September 2001. 2 BASIS OF CONSOLIDATION The consolidated financial statements incorporate the results of the company and all of its material subsidiary undertakings as at 31 December 2002 using the acquisition method of accounting as required. Where the acquisition method is used, the results of subsidiary undertakings are included from the date of acquisition. Associated undertakings are included on the equity accounting basis. 3 TAXATION 2002 2001 #'000 #'000 Corporation tax Adjustment in respect of prior years 212 Nil 4 GOODWILL The difference between the fair value of the consideration paid and the fair value of the assets and liabilities acquired for subsidiary undertakings is capitalised as goodwill and written off over 10 years as, in the opinion of the directors, this represents the period over which the goodwill is effective. Goodwill arising on the acquisition of interests in associate undertakings is also written off over 10 years. Goodwill is written off when, in the opinion of the directors, there has been a permanent impairment of its value. 5 EARNINGS/(LOSSES) PER SHARE Basic and diluted earnings/(losses) per share have been calculated using the weighted average number of shares in issue during the period ended 31 December 2002 being #21,763,681 (2001: 1,175,848,630) and loss after taxation and minority interests of #9,403,000 (2001: loss #4,734,000). 6 ACQUISITIONS On 8 May 2002, the company acquired Park Row Group Limited, as detailed below: Net assets acquired Book Fair Value Adjusted value adjustment value #'000 #'000 #'000 Intangible fixed assets 44 - 44 Tangible fixed assets 76 - 76 Trade debtors 653 - 653 Other debtors 222 - 222 Prepayments and accrued income 85 - 85 Cash at bank and in hand 71 - 71 Bank loans (21) - (21) Trade creditors (814) - (814) Other creditors (40) - (40) Accruals and deferred income (137) - (137) Provisions (137) - (137) 2 - 2 Goodwill 12,876 12,878 Satisfied by: Shares allotted 10,747 Shares to be issued 415 Cash 780 Other pre existing commitments 334 Acquisition costs 602 12,878 The summarised consolidated profit and loss account of Park Row Group Limited for the period 1 January 2002 to 8 May 2002 is detailed below: #'000 Turnover 3,351 Operating profit 144 Loss before taxation and retained loss (99) The loss after taxation for the year ended 31 December 2001 was (143) In May 2002, the Group acquired a 75% interest in Adviceonline Limited, as detailed below: Net assets acquired Book Fair Value Adjusted value adjustment value #'000 #'000 #'000 Intangible fixed assets 56 - 56 Tangible fixed assets 1 - 1 Debtors 41 - 41 Cash at bank and in hand 11 - 11 Other creditors (84) - (84) Accruals and deferred income (12) - (12) Minority interest (3) - (3) 10 - 10 Goodwill 108 118 Satisfied by: Cash 118 7 CASHFLOWS 15 months ended Year ended a Reconciliation of operating (loss)/profit to net cash 31 December 30 September (outflow)/ inflow from operating activities 2002 2001 #'000 #'000 Operating loss (8,627) (4,358) Depreciation and amortisation 1,778 713 Decrease in stock 64 123 Increase in debtors (285) (1,055) Increase in creditors 1,577 36 Increase in provisions for liabilities and charges 13 - Loss on sale of fixed assets 157 224 Profit on dilution of investments - (1,326) Loss on sale of investments - 123 Net outflow from operating activities (5,323) (5,520) At Other At 31 b Analysis of net debt 1 October non-cash December 2001 Cash flow Acquisition changes 2002 #'000 #'000 #'000 #'000 #'000 Cash in hand, at bank - 173 - - 173 Bank overdrafts - (1,102) - - (1,102) - (929) - - (929) Debt due after 1 year (940) 940 - - - Debt due within 1 year (36) 57 (21) - - Finance leases (274) 179 - - (95) Current asset investment 3,310 (3,310) - - - 2,060 (2,134) (21) - (95) Total 2,060 (3,063) (21) - (1,024) 8 POST BALANCE SHEET EVENTS After the balance sheet date the company disposed of its stake in Fairplace Consulting plc and exchanged contracts on Bluebridge House which is due to complete by the end of April 2003. The carrying value of Bluebridge House in these financial statements has been adjusted to reflect disposal proceeds. The disposal of the stake in Fairplace Consulting plc realised a further loss of #249,000. This information is provided by RNS The company news service from the London Stock Exchange END FR UBOOROUROAUR
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