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RNS Number:8819M
Seymour Pierce Group PLC
27 June 2003
The following replaces the Interim Results announcement released today 27 June
2003 at 12:14 pm under RNS number 8784M. Please be advised that the date on page
one of the announcement should read 27 June 2003 and not 27 June 2002 as
previously stated.
All other details remain unchanged, and the full amended text appears below.
Date 27 June 2003
Contact Keith Harris, Executive Chairman 020 7107 8000
Patrick Ingram, Finance Director 020 7107 8000
Seymour Pierce Group Plc
Chris Steele 020 7929 5599
Holborn Public Relations chris.steele@holbornpr.co.uk
SEYMOUR PIERCE GROUP Plc
INTERIM RESULTS
for the six months ended
31 March 2003
Chairman's Statement
In the six months to 31 March 2003 the Group's operating performance reflected
stock market conditions, which suffered falls in the build up to the conflict in
Iraq. Turnover for the period was #9.7m against #10.3m for the same period in
2002. The operating loss on continuing operations before goodwill and
exceptional items was #0.9m (2002: #2.3m). The loss on ordinary activities
before tax was #8.6m (2002: #19.9m).
Restructuring
As a result of the Group's strategic review, all the business lines which were
operating at a loss have either been sold or closed. This restructuring has
involved a significant reduction in staff numbers, notably executive directors.
The central Group overhead, largely comprised of the personnel costs of
executive directors and support departments, has accordingly been radically
reduced and is continuing to fall on a monthly basis. The process of reducing
the Group's head count from over 250 to under 100, on completion of transactions
signed to date, has been a complex one and the costs are fully expensed in these
results. The results also include the legal and professional costs of selling
businesses and prudent provisions in respect of leased properties, now vacated
by operations which have been eliminated.
Asset Management
The Group's asset management platform has been scaled back to its core business,
Pavilion Asset Management. This follows a withdrawal from the hedge fund arena.
For a group of our size the costs of participation were unacceptably high given
the difficulty in attracting funds under management.
Pavilion is operated as a discrete entity within the Group. It remains the focus
of the Board to ensure that this business continues to be fully resourced. Our
review of the alternative options for maximising shareholder value within this
division continues, naturally affected by the recent return of positive
sentiments within equity markets.
Private Clients
The Group's private client businesses presented a mixed picture, with the
regional stockbroking offices sustaining significant losses, while our ongoing
financial advisory and discretionary management business, Rowan & Co., increased
turnover and remains profitable. The regional stockbroking operation, Seymour
Pierce Bell, has been sold as have our private wealth management operations. The
former transaction completed on 4 June 2003 and the latter, contracts having
been exchanged on 16 April 2003, awaits regulatory approval.
Investment Banking
The Group's investment banking operations strove successfully to maintain their
record of continuous profitability in the face of an extremely adverse operating
environment. On 11 April 2003, the Board announced the disposal of the
investment banking business to its management team, supported by Alchemy
Partners, for a cash consideration of #7.35m. This transaction awaits regulatory
approval.
Current Trading and Outlook
The Group retains two operating businesses at the date of this report, Pavilion
Asset Management and Rowan & Co., which are trading profitably. We continue to
assess the potential benefit of retaining these businesses against their current
sale value and this assessment can now be made in the light of an improved
trading environment.
It remains the intention of your Board to return surplus cash to shareholders as
soon as possible. This will require inter alia the approval of shareholders at
an EGM, an application to the High Court to approve a reduction of capital in
order to achieve a reconstruction of the Company's distributable reserves and
completion of those transactions (and therefore receipt of cash proceeds) which
are awaiting regulatory approval. I look forward to announcing further details
in this respect at the earliest opportunity.
Keith Harris
Executive Chairman
27 June 2003
Independent Review Report to Seymour Pierce Group Plc
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 31 March 2003 which comprises the profit and loss account,
the statement of total recognised gains and losses, the balance sheet, the cash
flow statement and related notes 1 to 16. We have read the other information
contained in the interim report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial information.
This report is made solely to the Company, in accordance with Bulletin 1999/4
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the Company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the Company, for our review work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the Directors. The Directors
are also responsible for ensuring that the accounting policies and presentation
applied to the interim figures are consistent with those applied in preparing
the preceding annual accounts except where any changes, and reasons for them,
are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of Group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom auditing standards and therefore
provides a lower level of assurance than an audit. Accordingly, we do not
express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 March 2003.
Deloitte & Touche
Chartered Accountants
London
27 June 2003
Consolidated Profit And Loss Account
Unaudited Unaudited Audited
accounts for accounts for accounts for
the six months the six the year
ended months ended ended
31 March 31 March 30 September
2003 2002 2002
#'000 #'000 #'000
Notes
Turnover 2
Continuing operations 9,344 10,275 20,435
Discontinued operations 359 - -
9,703 10,275 20,435
Operating costs (11,677) (12,544) (29,449)
Goodwill amortisation 8 (299) (908) (1,208)
Goodwill write off (exceptional) 8 (1,314) (17,214) (17,957)
Revaluation and write down of 4 (935) (5,209) (6,605)
investments (exceptional)
Restructuring and other charges 5 (4,318) - (5,673)
(exceptional)
Operating loss (8,840) (25,600) (40,457)
Continuing operations (7,789) (25,600) (40,457)
Discontinued operations (1,051) - -
(Loss) / profit on disposal of fixed
asset investments (183) 5,537 8,618
Other income 62 - -
Share of associate's results - - (382)
Interest receivable 319 306 720
Interest payable (1) (191) (241)
2 (8,643) (19,948) (31,742)
Loss on ordinary activities before
taxation
Tax on loss on ordinary activities 6 (230) 466 699
Loss on ordinary activities after
taxation
(8,873) (19,482) (31,043)
Minority interest (11) 89 1,362
(8,884) (19,393) (29,681)
Retained loss attributable to
shareholders
Loss per share 7 (1.23p) (5.90p) (5.35p)
Diluted loss per share (1.06p) (5.49p) (5.05p)
Statement of Total Recognised Gains and Losses
Unaudited Unaudited Audited
accounts for accounts for accounts for
the six months the six the year
ended months ended ended
31 March 31 March 30 September
2003 2002 2002
#'000 #'000 #'000
Loss attributable to shareholders before dividends (8,884) (19,393) (29,681)
Foreign currency translation (7) 7 (8)
Total recognised losses for the period (8,891) (19,386) (29,689)
Consolidated Balance Sheet
Unaudited Unaudited Audited
accounts at accounts at accounts at
31 March 31 March 30 September
2003 2002 2002
#'000 #'000 #'000
Notes
Fixed assets
Intangible assets 8 7,064 4,763 4,193
Tangible assets 557 915 789
Investments 1,149 4,273 1,645
8,770 9,951 6,627
Current assets
Investments 2,880 2,381 2,816
Debtors 4,931 10,056 6,358
Cash at bank and in hand 14,999 28,087 22,544
22,810 40,524 31,718
Creditors: amounts falling due within one year 9,10 (7,699) (12,641) (8,601)
Net current assets 15,111 27,883 23,117
Creditors: amounts falling due after more than one year
Convertible redeemable loan stock 10 (1,289) - -
Other long term creditors (114) (1,548) (457)
Minority interest - (206) (308)
(1,403) (1,754) (765)
Provision for liabilities and charges
Provision for restructuring 5 (3,575) - (1,639)
Deferred taxation (191) (191) (191)
Share of deficit in associate
- - (382)
Net assets 18,712 35,889 26,767
Capital and reserves
Called up share capital 12 7,466 7,199 7,308
Share premium 46,370 44,620 45,692
Revaluation reserve 446 446 446
Profit and loss account (35,570) (16,376) (26,679)
Equity shareholders' funds 13 18,712 35,889 26,767
Consolidated Cash Flow Statement
Unaudited Audited
Unaudited accounts to accounts
accounts to 31 March To 30
31 March 2002 September
2003 2002
#'000 #'000 #'000
Notes
Net cash outflow from operating activities 14 (5,133) (3,582) (10,676)
Returns on investments and servicing of finance
Interest received 318 317 720
Interest payable (1) (191) (241)
317 126 479
Tax received/(paid) 94 (1,081) (742)
Capital expenditure and financial investment
Purchase of tangible fixed assets (17) (167) (382)
Purchase of investments 15 (1,448) (486) (2,911)
Sale of investments 162 2,817 11,833
(1,303) 2,164 8,540
Acquisitions and disposals
Purchase of subsidiary undertakings 8 (1,655) (2,786) (2,776)
Cash acquired with subsidiary undertakings - 23,832 24,227
(1,655) 21,046 21,451
Equity dividends paid - (500) (500)
Financing
Issue of ordinary share capital 138 346 389
Share capital subscribed by minority interest - - 1,375
Repayment of loan notes - - (2,813)
Finance lease repayments (4) (2) (7)
Bank loan received net of loan repayments - (925) (4,309)
134 (581) (5,365)
(Decrease)/increase in cash in the period (7,546) 17,592 13,187
Notes to the Financial Statements
1. Financial information
The interim results for the six months ended 31 March 2003 are unaudited and do
not constitute accounts within the meaning of section 240 of the Companies Act
1985, but a review of this information has been carried out by the Company's
Auditors, Deloitte & Touche and their report is set out on page 3. The interim
results have been drawn up using accounting policies and presentation consistent
with those applied in the audited accounts for the year ended 30 September 2002.
The comparative information contained in this report for the year ended 30
September 2002 does not constitute the statutory accounts for that financial
period. Those accounts have been reported on by the Company's Auditors,
Deloitte & Touche and delivered to the Registrar of Companies. The report of
the Auditors was unqualified and did not contain a statement under section 237
(2) or (3) of the Companies Act 1985.
2. Segmental analysis
Analysis by class of business of turnover, profit or loss before taxation and
net assets are as follows:
Turnover Profit/loss Net Assets
31 March 31 March 31 March 31 March 31 March 31 March
2003 2002 2003 2002 2003 2002
#'000 #'000 #'000 #'000 #'000 #'000
Investment banking 4,089 5,497 327 333 4,983 5,168
Asset management 5,614 4,778 (902) (974) 4,686 4,515
9,703 10,275 (575) (641) 9,669 9,683
Group administration costs - - (1,132) (1,185) 9,043 26,206
Revaluation and disposal of (1,118) 328 - -
investments
Exceptional items and goodwill - - (5,818) (18,450) - -
9,703 10,275 (8,643) (19,948) 18,712 35,889
3. Directors' remuneration
Directors' remuneration during the period to 31 March 2003 was as follows:
31 March 31 March 30 September
Salary/ 2003 2002 2002
fee Bonus Benefits Pension Total Total Total
#'000 #'000 #'000 #'000 #'000 #'000 #'000
K.R. Harris 75 - 59 8 142 83 166
H.S. Randhawa 70 - - - 70 70 97
R. Feigen 63 - 3 6 72 73 145
R. Drake (resigned 7 March 2003) 56 - - 5 61 69 138
P.D.W. Ingram 45 - - 4 49 49 99
B.H. Asher 10 - - - 10 10 20
P.J. Murrin 10 - - - 10 10 20
N.W. Wray 10 - - - 10 10 20
J.D.C. Pitt (resigned 19 9 - - - 9 8 8
March 2003)
348 - 62 23 433 382 713
Patrick Murrin's fees were paid to Harbour Group Limited, and Nigel Wray's fees
were paid to Brendon Street Investments Limited. These Directors are both
shareholder and director of those respective companies and are responsible for
their own social security, life insurance and pension contributions.
Robert Drake, having resigned on 7 March 2003, has been awarded #225,000 in
respect of termination payments in addition to the remuneration disclosed above.
This has been provided for in these financial statements.
Following the resignation of Harpal Randhawa as an executive director on 30
April 2003, a termination payment of #30,000 was made, in addition to the
remuneration disclosed above. Harpal Randhawa continues to serve on the Board as
a non-executive director. (See also note 11)
A provision of #263,000 is included in these results representing an estimate of
potential termination payments in respect of the remaining executive directors.
4. Revaluation and write down of investments (exceptional)
Revaluation and write down of fixed asset investments may be analysed as
follows:
31 March 2003 31 March 30 September
#'000 2002 2002
#'000 #'000
Isle of Wight Cable & Telecom Company 12 3,300 4,556
Investment in own shares 347 52 499
Other investments 576 1,857 1,550
935 5,209 6,605
5. Exceptional items
Exceptional charges have been incurred in relation to the restructuring of the
Group. The exceptional restructuring charges in the profit and loss account of
#4,318,394, reflect costs of redundancies and termination payments, professional
costs and lease buyout costs, of which #3,574,875 remains provided within
provisions for liabilities and charges, to cover part of these restructuring and
redundancy costs.
6. Taxation
The tax charge relates to an under provision of prior year charges. There is no
current year charge due to losses available for relief throughout the Group.
7. Earnings/losses per share
Basic earnings per share is calculated by dividing the earnings attributable to
ordinary shareholders by the weighted average number of 722,664,369 ordinary
shares in issue during the period (2002: 328,862,645). Diluted earnings per
share are calculated by adjusting the weighted average number of 834,599,702
ordinary shares in issue assuming conversion of all potential dilutive ordinary
shares (2002: 351,677,041). The potential ordinary shares consist of those share
options and warrants where the exercise price is less than the average price of
the company's ordinary shares during the period, and shares issuable on
conversion of loan notes.
8. Intangible assets
Goodwill
#'000
Cost
At 1 October 2002 84,671
Acquisitions 4,484
At 31 March 2003 89,155
Amortisation
At 1 October 2002 80,478
Charge for the period 299
Goodwill write down (exceptional) 1,314
At 31 March 2003 82,091
Net Book Value
At 31 March 2003 7,064
At 30 September 2002 4,193
On 23 January 2003 Family Friendly Assurance Society Limited exercised their
option to sell their 25% minority interest in Pavilion Asset Management Limited.
The exercise price was #4.9m plus additional costs of #28,976. This was
satisfied by the issue of 12,847,105 ordinary shares at 5.4p, #2,577,244 in
convertible redeemable loan notes and #1,654,905 in cash. Goodwill of #4,484,041
has arisen on this transaction.
Included within the goodwill write down for the year is #75,000 in respect of
the purchase of Seymour Pierce Financial Services Limited and #1,239,000 in
respect of the purchase of Drake Asset Management Limited.
9. Creditors: amounts falling due within one year
31 31 30
March March September
2003 2002 2002
#'000 #'000 #'000
Bank loans - 1,850 -
Trade creditors 597 655 593
Finance lease obligations 24 29 8
Other taxes and social security costs 505 566 300
Corporation tax 847 1,994 958
Other creditors 953 1,652 2,079
Accruals and deferred income 2,924 2,743 4,530
Convertible redeemable loan stock (note 10) 1,289 3,152 -
Deferred consideration 560 - 133
7,699 12,641 8,601
Deferred consideration in respect of the acquisition of Stocks Financial
Management Limited is included at #400,000 payable in cash and #160,000 in
shares, payable over six years from 20 May 2002, subject to the achievement of a
pre-determined level of revenue and discretionary funds under management.
10. Convertible redeemable loan stock
Convertible redeemable loan stock, issued to Family Assurance Friendly Society,
totalling #2,577,244 is included as #1,288,622 within creditors falling due
within one year and #1,288,622 within creditors falling due after more than one
year.
11. Disposals/discontinued activities
Seymour Pierce Bell Limited
On 7 March 2003 the Company signed a conditional sale agreement for the disposal
of Seymour Pierce Bell Limited to Wayander Limited for consideration of #1. In
addition, Wayander Limited agreed to reimburse the Company for all Seymour
Pierce Bell Limited's losses (#183,169) arising between exchange of contracts on
7 March 2003 and the date regulatory clearance was obtained on 20 May 2003. Net
assets at completion were #570,000, including #339,000 cash. In the six months
to 31 March 2003 the company lost #0.5m on turnover of #0.7m. The estimated
costs of closure of the business, none of its branches being profitable, were
#1.4m, including #200,000 in relation to the unexpired term of property lease
contracts. Completion of the disposal of Seymour Pierce Bell Limited took place
on 4 June 2003.
Seymour Pierce Limited and Seymour Pierce Ellis Limited
On 11 April 2003 the Board exchanged contracts for the disposal, subject to
regulatory approval, of Seymour Pierce Limited and Seymour Pierce Ellis Limited,
the investment banking division of the Group, to SPIN SPG Limited representing
the interests of Alchemy Partners and management, for consideration of #7.35m.
Net assets at 31 March 2003 were #4.5m, including cash of #3.3m. In the six
months to that date the division made profits of #13,000 on turnover of #4m. On
receipt of regulatory approval for the sale, Richard Feigen, Managing Director
of the investment banking division will step down from the Board of the Company.
Private Banking
The Group's private banking interests comprise two UK and eight overseas
companies operating as a single division. Contracts were exchanged for the sale
of all these companies except one, SP Trustees BVI, on 16 April 2003 to Peter
Green, Managing Director of the division, for a consideration of #302,462
payable in cash on completion, representing a payment of #252,462 for net assets
as at 31 March 2003 and #50,000 for goodwill. In the six months to 31 March 2003
the division returned losses of #300,000 on turnover of #691,000.
antfactory Investment portfolio
On 30 April 2003 agreement was completed for the sale of antfactory Investments
BV to Antfactory Investment Holdings BV, an unconnected company, for a nominal
sum. In the six months to 31 March 2003 no disposals were made from the
portfolio of early stage investments. Agreement has been reached for the
termination of the investment management agreement relating to these investments
between the Company, antfactory Investments BV and Gem Investment Management
Limited, a company ultimately controlled by a trust whose beneficiaries include
members of Mr Randhawa's family. Annual costs associated with the oversight of
this portfolio were #300,000 including #170,000 in respect of the remuneration
of Harpal Randhawa, the executive director responsible. With effect from 1 May
2003 Harpal Randhawa serves as a non-executive director on the board of Seymour
Pierce Group.
12. Issue of ordinary shares, share options and warrants
On 23 January 2003 the Company issued 12,847,105 ordinary shares in
consideration for the acquisition of the 25% minority interest held by Family
Assurance Friendly Society in Pavilion Asset Management Limited.
On 9 April 2003 3,825,120 ordinary shares were issued in respect of obligations
of Farlake Group Plc, a subsidiary company, to vendors of the business of MDA
Investment Management Ltd.
On the following dates ordinary shares were issued in the amounts shown on the
exercise of warrants and options.
Warrants
Exercise Price Number of shares
15 January 2003 5p 2,213,731
Options
Exercise Price Number of shares
10 December 2002 3.5p 150,000
18 December 2002 4p 193,750
16 January 2003 3.5p 150,000
16 January 2003 4p 242,187
13. Reconciliation of movements in shareholders' funds
Unaudited Unaudited Audited
accounts to accounts to Accounts to
31 March 31 March 30 September
2003 2002 2002
#'000 #'000 #'000
Loss on ordinary activities after taxation (8,873) (19,482) (31,043)
Minority interest (11) 89 1,362
New ordinary share capital subscribed and issued 836 32,692 33,873
Foreign currency translation (7) 7 (8)
(8,055) 13,306 4,184
Opening shareholders' funds 26,767 22,583 22,583
Closing shareholders' funds 18,712 35,889 26,767
14. Reconciliation of operating profit/(loss) to net cash outflow from
operating activities
Unaudited Unaudited Audited
accounts to accounts to Accounts to
31 March 31 March 30 September
2003 2002 2002
#'000 #'000 #'000
#'000
Operating loss (8,840) (25,600) (40,457)
Depreciation and amortisation 1,861 18,425 20,024
Restructuring charges - exceptional 4,318 - 5,673
Write down of fixed asset investments 935 5,209 6,605
(Increase)/decrease in investments (297) - 242
Decrease/(increase) in debtors 2,854 1,762 (530)
(Decrease)/increase in creditors (5,964) (3,378) (2,233)
Net cash outflow from operating activities (5,133) (3,582) (10,676)
15. Cash outflow from purchase of investments
In October 2002 Seymour Pierce Group paid #0.5m for its own shares held by the
ESOP. This amount was accrued in September 2002. Other investment purchases of
#0.9m relate to trading book stock held within current asset investments.
16. Responsibility
The Directors of the Company accept responsibility for the information contained
in this document and to the best of their knowledge and belief (having taken all
reasonable care to ensure that such is the case) the information contained in
this document is in accordance with the facts and does not omit anything likely
to affect the import of such information.
Copies of this report are available to the public at the registered office of
Seymour Pierce Group Plc, 1st Floor, 31 Southampton Row, London, WC1B 5HT and on
the Group's website: www.seymourpierce.com.
DIRECTORS AND ADVISERS
DIRECTORS Keith Harris, Executive Chairman
Richard Feigen, Executive Director
Patrick Ingram, Finance Director
Bernard Asher, Non-executive Director and Chairman
of the Remuneration Committee
Patrick Murrin, Non-executive Director and Chairman
of the Audit Committee
Harpal Randhawa, Non-executive Director
Nigel Wray, Non-executive Director
COMPANY SECRETARY Ingrid Blumberg
REGISTERED OFFICE 1st Floor, 31 Southampton Row, London WC1B 5HT
REGISTERED NUMBER 2070211
NOMINATED ADVISER AND ING Bank N.V. (London Branch)
BROKER 60 London Wall, London EC2M 5TQ
AUDITORS Deloitte & Touche, London
SOLICITORS Memery Crystal
31 Southampton Row, London WC1B 5HT
Norton Rose
Kempson House, Camomile Street, London EC3A 7AN
BANKERS Barclays Bank PLC, London Corporate Banking
P O Box 544, 54 Lombard Street, London EC3V 9EX
REGISTRARS Capita Registrars
Bourne House, 34
Beckenham Road, Beckenham,
Kent BR3 4TU
This information is provided by RNS
The company news service from the London Stock Exchange
END
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