Griffin Share Discussion Threads

[grevis] 17/1/2005 16:17

Griffin is off today's high, but is still ahead 18.18%

Top % Gainers
# EPIC Name Price Chg %
9 GFF Griffin Grp. Ord 5p 6.5 1.0 18.18

[grevis] 17/1/2005 16:13

Total assets and shareholder funds of Griffin Group Plc as at autumn 2004 were valued at £1,700, 375 (up 78.7% year on year). Current assets of £2,299,609 comprised 31% cash; 41% investments (approximately two thirds US listed shares and one third UK listed shares) and the balance in the form of debtor accounts. There was short term debt comprising £225,000 of convertible loan notes repayable 15 March 2005, and no bank overdraft. The balance were trade and government agency creditors of the usual kinds. The ratio short term assets over short term liabilities was 2.1. The ratio of cash and near cash over short creditors was 1.7. There were no long term creditor accounts or items payable beyond one year.

[grevis] 17/1/2005 14:23

Top % Gainers
# EPIC Name Price Chg %
1 BGY Brit.eng.gp Ord 10p 266.0 251.75 1766.67
2 IPH Interactve Pros Ord 0.4p 130.0 27.0 26.21
3 WNN Win Ord 10p 272.5 54.0 24.71
4 GFF Griffin Grp. Ord 5p 6.75 1.25 22.73

[grevis] 17/1/2005 14:23

Top % Gainers
# EPIC Name Price Chg %
1 BGY Brit.eng.gp Ord 10p 266.0 251.75 1766.67
2 IPH Interactve Pros Ord 0.4p 130.0 27.0 26.21
3 WNN Win Ord 10p 272.5 54.0 24.71
4 GFF Griffin Grp. Ord 5p 6.75 1.25 22.73

[grevis] 17/1/2005 14:20

andysand: You're welcome!

[andysand] 17/1/2005 14:18

Very useful stuff. Thanks Grevis


Andy

[grevis] 17/1/2005 14:17

17 January 2005

Griffin Group is a broking and smaller company corporate advisory group with a difference. That difference is, that it is not exclusively engaged with the UK small cap sector. It also has an established and growing, research based, broking and small cap. corporate advisory subsidiary based in New York.

The UK subsidiary under the unified management direction of Adrian Stecyk, who is familiar with both the US and UK small cap markets, will be grown not only in relation to natural domestic opportunities in the UK but also in relation to "cross border" opportunities as and when they arise.

The US and UK small cap. investment and corporate advisory markets are institutionally different and present Griffin's management with the opportunity of perceiving new possibilities and insights.

The company plans to grow its organic net profit this year and next, by holding administration under firm control and thus increasing net profit margins. But it also has plans for taking advantage of any UK acquisition opportunity that may present itself.

Assuming that our forecasts for the group are correct the shares trade on a September 2006 PE of just 4.3 which does not appear to be demanding. Investors may have concerns that the management of this venture is yet to prove itself sufficiently or not understand the acquisition strategy. A change in perception could prompt a re-rating.
Key Data
EPIC GFF
Share Price 5.5p
Spread 5 - 6p
NMS 5000
Market Cap. 2.23 million
12 Month Range 3-7.5p
Shares Issued 40.5 million
Market AIM
Website GriffinSecurities.com
Sector Financial
Services
NAV Per Share 4.3p
Net Cash 560,000 pounds
Gearing NA
Interest Cover NA
Contact FD: Vince Nicholls
01732 838877
Background

Griffin Group was admitted to an AIM listing in December 2003 when it changed its name from Cater Barnard USA to Griffin Group plc, (derived from the name of the company's US subsidiary Griffin Securities Inc.) Cater Barnard USA, previously listed on Ofex, was the direct business predecessor of Griffin, undertaking comparable business under the same management.

The trans-Atlantic span of the Griffin Group business model is reminiscent in its own way of the memorable corporate motto and logo " a company from over here doing rather well over there". Griffin is a UK registered Company, listed on AIM: with a growing early stage one hundred per cent owned New York investment banking subsidiary known as Griffin Securities Inc. (www.griffinsecurities.com). Griffin Group Plc is largely the creation of an enterprising individual with a background of UK industrial business experience. In this case Stephen Dean who is now Chairman of Griffin Group. He has worked with the CEO Adrian Stecyk and Vince Nicholls in building up the business over recent years. Central and crucial to that development has been the building of the firm's investment research capacity and reputation, under its Director of Investment Research, Chrystyna Bedrij.

Dean, aged 54, attracts his fair share of criticism as well as admiration. His critics will point to things that have not performed as well as expected but his admirers will point to his energy, creativity and spirit of enterprise. He started his business life in contract building, founding Deane & Bowes Group in 1977 and serving as an executive director of the company 1991 -1995. In 1993 he extended his business interests into property development and property maintenance with the foundation of a new business, the Dean Corporation, admitted to the Official List of the London Stock Exchange in 1997 and in 1998, de-merged its housebuilding business into Artisan (UK) plc, an AIM listed company which he chaired until 2002. He has held non-executive directorships of companies engaged in telephony service, leisure, software consultancy and financial services. In 2000 he acquired in a personal capacity eighty per cent of the equity of the small investment banking business of Griffin Securities in New York under the management of the equally enterprising 44 year old Adrian Stecyk. It is Steyck who is now the driving force behind this business and as the market takes that on board, some of Dean's critics may look at the business more objectively.

In 2002 that ownership was increased to one hundred per cent of the equity. Griffin Securities inc was reversed into Griffin Group plc as its one and only operating company. In a manoeuvre that has become a hallmark of the group's business style, Griffin Group (then known as Cater Barnard USA) was in turn reversed into an Ofex company which in due time migrated to an AIM listing in December 2003.

That AIM listing was accompanied by a 300,000 pounds (net) fundraising. The cash was used to expand Griffin Securities Inc. The company had some months previously set up a UK investment banking subsidiary known as Griffin Securities (UK) Limited. In March 2004 a further 225,000 pounds was raised by the issue of convertible loan notes to finance the growth of the UK arm.

Operations/Products

Griffin Securities Inc. provides the following client services from its offices at 17 State Street New York, NY: investment research; investment banking; corporate finance and stock broking. The firm specialises in providing equity capital and financial advice and services to small cap public and private companies; investment research of small cap. public companies; share dealing and asset management. It has a client network of institutional and accredited investors. On its own behalf its also conducts proprietary share trading activities.

As an early stage small investment banking enterprise with limited physical resources (a total of eleven employees) Griffin Securities operates under a clearly defined business plan and philosophy which dictates the model of business pursued by the company. A small balance sheet (reviewed below) and limited staff numbers dictate that capital and regulatory intensive activities like market making (as opposed to proprietary trading which is more lightly supervised) are both impractical and inappropriate activities for Griffin in New York - and indeed anywhere. Success in market making requires considerable liquid financial assets and staff to fulfil numerous regulatory functions. The company needs to concentrate as much of its resources as possible on front line commercial revenue accruing objectives. Consequently, there are three defined revenue streams: fee income and brokerage and proprietary trading profits, reflecting the realities and resources available.

In its market segment choices, Griffin Securities Inc. has understandably chosen to provide service to and in connection with small companies; a market segment which has given Griffin enough elbow room to enter the investment market. The sub $100 million market cap sector provides plenty of good companies with attractive products and prospects capable of discovery through penetrating, value driven, sensible analysis. Griffin Securities Inc has narrowed and increased its chances of success by focussing its research and analysis on biotechnology and technology markets; sectors perceived as difficult and to which a successful research department can win clients by adding value.

CEO Adrian Stecyk has made the role of company research more than a product and the means by which the company earns its reputation and as the route to the small market cap. corporate services sector as well. Investment research is in short both a mainline product service for investors and also, with quality and success in identifying companies as investments, a marketing tool in the corporate and asset management segments as well. It is not used as a primary fee earner by charges per copy as has become the convention in the last few years. Its value is instead seen as a "calling card" with which it can demonstrate Griffin's ability to bring value to potential corporate clients. By way of illustration, it has recently produced telling research on Auto Data Network (OTCBB: ADNW) a software business; Hemispherix Biopharma (AMEX:HEB) a drug development company and Point Therapeutics (NASDAQSC:POTP) etc. Griffin Securities has a well qualified (MBA and first degree in economics) and experienced (twenty years) Director of research by the name of Chrystyna Bedrij. Her department is budgeted for growth.

Griffin Securities UK was established in April 2004 and is still largely, but not wholly, in the early stages of its development. The objective is to establish an indigenous UK private client broking/investment banking firm in the UK. It will broadly offer in the UK the kinds of services now offered from New York by Griffin Securities inc. to a comparable UK client base of private investors and small cap. corporate customers. These will focus largely on the AIM market and its regulatory framework which will make operations to that extent, distinct from those in the US. The difference in small cap market culture is expected will give Griffin Group something of a creative edge to its operations.

The UK and US operations come under the overall management direction of Adrian Stecyk who will seek to develop each centre in relation to local resources and market opportunities but leveraging that when and where possible with trans New York/London insight and deal making opportunities as they arise. Ideally, Griffin would like to acquire an established UK private broker. Meantime the company will build its own brokerage base recruiting staff with the right kind of skills and experience.

To date, Griffin Securities UK has actively pursued a policy of acquiring AIM shell companies into which selected private businesses have been reversed. It is a style of small cap corporate business that appears to make the best economic use of the AIM market. Griffin Securities UK takes significant investment in AIM listed shells and builds capital and shareholder funds by taking profits when the opportunity arises. Stephen Dean and Griffin Finance Director Vincent Nicholls FCA are the authors of these operations in the UK. Our estimate of such investments and the number of shares held in each are supplied as an addendum after the balance sheet summary at the bottom of this report.

Management

Arian Stecyk, established Griffin Securities Inc. in 1997. He is now the Chief Executive of the entire group with responsibility for also building up the UK company with the support of Finance Director Vincent Nicholls, a qualified and practicing UK Chartered Accountant, and the UK Chairman Stephen Dean. With a first degree in aero engineering and an MBA from Boston University, Stecyk has both US NASD approval and UK FSA recognition as an approved person.

Opportunities/Threats

Until now, small cap. investment banking has been a strictly local market affair. Realistically, it will largely remain that way. Nevertheless, Griffin Group is injecting a new trans-Atlantic dimension into capital raising and merger and acquisition advice for small cap companies. Griffin seeks to bring to the small cap. market something of the scope to be found in the international big corporate deals. For example, market equity capitalizations in the US are generally higher than in the UK and for the right kind of UK company, selected in relation to local investor criteria and presented in accordance with local market expectations, there is the possibility of achieving a higher valuation of its business.

There will no doubt, also be deal opportunities of the reverse kind in both capital raising and in mergers and advisory business. They will also create an interesting small cap investment banking culture which should promote a cross fertilization of information, ideas and techniques. The US does not possess an equivalent of the UK AIM market where small cap. companies can begin their existence as publicly quoted companies with a clean new balance sheet. It the US, for reasons of regulation, cost and convention, private companies seeking publicly quoted status cannot reach that objective by being reversed into a quoted shell.

Asset management activities are at this stage for proprietary purposes only and not a client based fee earning business of the familiar kind. That may come but not at this early stage of the group's development.

Griffin has managed financial threats to its business model by firmly sticking to fee earning and brokerage commission business reducing capital and regulatory demands. It operates in a client and potential client segment defined as companies with a market cap. of about $100 million where there is considerable demand but less competition from larger investment banking competitors. Clearly, part of future profits will depend not only on profits from trading investments but also on the timing and availability of such profits: things over which the company has less control.

Most Recent Results

Griffin Group Plc has just published its first annual results as an AIM listed company. The company year ended 30 September 2004. Below, we present that giving a break down for each half year. (In pounds sterling except where otherwise stated).

Accounting period 6 months to March 04 6 months to Sept .04 Year to 30 Sept 2004
Turnover 1,149,615 2,216,509 3,366,124
Gross profit 629,632 1,430,286 2,059,918
Administration costs (436,306) (1,059,046) (1,495,352)
Group operating profit 140,452 318,366 458,818
Group operating margin 12.21% 14.36%
Net interest (1,256) (3,920)
Pre tax profit 139, 196 314,446 458,818
Taxation (696) (120,931) (121,627)
Attributable profit 138,500 193,515 332,015
Basic EPS (p) 0.45 0.48 0.93
Diluted EPS (p) 0.45 0.48 0.93

Turnover for the year of £3,366,124 was reported as being 412% higher than in 2003. Second half turnover rose 92.8 % over first half. On the same bases of comparison, annual operating profit rose tenfold over 2003 and the second half rose 126.7% over the first half; Net attributable profit rose eightfold over 2003 and the second half rose 40 % over the first half attributable profit. During the year the Group raised £78 million of new equity for its clients either directly or by participation in syndicates. In relation to the latter £41 million was raised with Deutsche Bank for Cypress Biosciences and in conjunction US brokers A.G. Edwards £13 million for company 8x8.

To its broking business Griffin added high margin placing transactions in relation to shares where dealing is restricted by regulation. £10 million of such equity was placed. In the second half of the year, founder share capital was found for five AIM flotations and board control obtained in connection with a sixth Aim company. Advisory fees of £5 million were earned. New AIM admissions included: Metrocapital; Techreation; Euro Capital Projects; Tower and Pearl Street Holdings.

During the year, in August, Griffin Investment Management LLC was established in the US. It will manage a newly formed "crossover" fund where investments are selected at what is perceived to be a take off stage. That is the purchase of equity in public companies at an observed inflexion point that is foreseen to be a catalyst for growth.

Balance Sheet & Cashflow

Total assets and shareholder funds of Griffin Group Plc as at autumn 2004 were valued at £1,700, 375 (up 78.7% year on year). Current assets of £2,299,609 comprised 31% cash; 41% investments (approximately two thirds US listed shares and one third UK listed shares) and the balance in the form of debtor accounts. There was short term debt comprising £225,000 of convertible loan notes repayable 15 March 2005, and no bank overdraft. The balance were trade and government agency creditors of the usual kinds. The ratio short term assets over short term liabilities was 2.1. The ratio of cash and near cash over short creditors was 1.7. There were no long term creditor accounts or items payable beyond one year.

Shareholder funds of £1,700,375 was net a profit and loss account deficit of £831,778 - down 28.5% from the previous year's deficit of £1,162,637. Balance sheet assets attributable to shareholders were worth 4.3p a share over the 39,483,629 (5p nominal) shares in issue as at 30 September 2004.

During the year to 30 September 2004 net cash inflow from operating activities was £35,374. Net cash flow before financial activities was £23,316. Finance brought in £642,962 net and there was a post finance cash inflow of £666,278. Cash in the balance sheet stood at £711,500.

Since the year end, on January 5th, the company has raised another 77,000 by issuing 1.19 million shares at 5p.

Profits - Forecasts
Period Year to Sept 30 04 (A) Year to Sept 30 05(E) Year to Sept 30 06(E)
Revenue 3,310,000 7,500,000 8,000,000
Gross margin 62% 60% 60%
Gross profit 2,060,000 4,500,000 4,800,000
Administration costs 1,607,000 3,850,000 3,950,000
Operating profit 453,000 650,000 850,000
Net interest - - -
Pre tax profit 453,000 650,000 850,000
Taxation at 40% 122,000 260,000 340,000
Attributable net profit 333,000 390,000 510,000
EPS 0.93p 0.96p* 1.27p*

*Based on shares in issue of 40.5 million

Shareholders

As at 1 December 2004 the three largest holders of Griffin Group equity were:

Shareholder. Number of shares Percentage of total
Adrian Steyck 9,862,349 24.35%
Global Investments (Stephen Dean) 6,460,294 15.95%
Vincent Nicholls 1,100,000 2.72%

Valuation

Our profit forecasts are based on organic growth of the existing business. Any acquisition in the UK will of course alter prospects.

A key assumption underpinning our earnings estimates is that as Griffin Group expands revenue it will be able to fulfil its stated intention to hold administration costs under firm control in both absolute terms and in relation to revenue. Consequently, our forecasts reflect that, allowing for only a small increase in administration costs next year in relation to this current year. We also assume a continuation of a 60% gross margin throughout the forecast period and a tax charge of 40%. We think that the assumed gross margin and tax charge are a little on the conservative side.

At the current market share price of 5.5p the shares sell on 5.7 times our estimated earnings for this year and 4.3 times our estimates for next. Griffin is a small company operating on a large international stage in cyclical markets which offer both dangers as well as opportunities. A prospective price to earnings ratio of 5.7 falling to 4.3 allows scope for share price appreciation from this level as the company demonstrates that it is able to achieve its strategic and financial goals over the next twenty one months to 30 September 2006.

We show the last balance sheet as at 30 September 2004, below. That gives shareholder funds valued at £1.7 million and includes UK investments valued at £323,983. The market value of those same holdings as at 30 December 2004 appears to be close to £560,000. Except that Pearl Street Holdings was sold for a trading profit, at 4p a share. Making an adjustment for that fact, increases the notional value of those balance sheet investments by £119,000 to an adjusted value of £679,000. Investments as we estimate them to be at year end 2004, are included at an addendum to the balance sheet summary below.

Detailed Financials

Profit & Loss Account

Year to 30 September 2002(A) 2003(A) 2004(A)
Turnover 383,829 657,535 3,310569
Operating profit (186,752) 41,574 458,818
Profit (loss) on ordinary activities (1,619,.082) 41,737 453,642
Taxation 21,709 nil (121,627)
Net retained profits (1,597,373) 41,737 332,015

Cashflow Statement

Year to 30 Sept 2002(A) 2003(A) 2004(A)
Cash from operations 311,708 59,852 35,374
After investment and finance costs 298,835 60,015 30,198
Capital expenditure and investment (10,782) (2,057) (6,882)
Acquisitions/disposals (303,285) (362,972) -
Net cash inflow/(outflow) before financing (16,232) (305,014) 23,316
Net cash from financing 2,500 332,412 642,962
Increase in cash (13,732) 27,398 666,278

Balance Sheet

Year to 30 Sept 2002(A) 2003(A) 2004(A)
Intangible fixed assets 789,952 684,204 578,456
Tangible fixed assets 13,456 11,183 6,281
Total fixed assets 803,408 695,387 584,737
Investments - 365,245 946,428*
Debtors 136,370 82,059 641,681
Cash at bank and in hand 17,824 48,673 711,500
Total current assets 154,194 495,977 2,299,609
Amounts due within one year:
a) Convertible loans - - (225.000)
b) Other (380,197) (239,810) (958,971)
Net assets 577,405 951,554 1,700,375
CAPITAL & RESERVES
a) Called up share capital 966,769 1,299,181 1,974,181
b) Share premium account 815,010 815,010 557,972
c) Profit & loss (1,204,374) (1,162,637) (831,778)
SHAREHOLDER FUNDS 577,405 951,554 1,700,375

*UK investments, itemized, as we believed them to be 30 December 2004.
Investment by name. Number of ordinary shares held by Griffin Group.
Elite Strategies (ETS) AIM 170,000,000
Euro Capital Project (ECR) AIM 363,000
Libertas Capital Group (LBR) AIM 290,000
Interbulk Investments 5,000,000
City Financial Associates (CFA) AIM 60,000,000

[grevis] 17/1/2005 14:11

17 January 2005

Griffin Group is a broking and smaller company corporate advisory group with a difference. That difference is, that it is not exclusively engaged with the UK small cap sector. It also has an established and growing, research based, broking and small cap. corporate advisory subsidiary based in New York.

The UK subsidiary under the unified management direction of Adrian Stecyk, who is familiar with both the US and UK small cap markets, will be grown not only in relation to natural domestic opportunities in the UK but also in relation to "cross border" opportunities as and when they arise.

The US and UK small cap. investment and corporate advisory markets are institutionally different and present Griffin's management with the opportunity of perceiving new possibilities and insights.

The company plans to grow its organic net profit this year and next, by holding administration under firm control and thus increasing net profit margins. But it also has plans for taking advantage of any UK acquisition opportunity that may present itself.

Assuming that our forecasts for the group are correct the shares trade on a September 2006 PE of just 4.3 which does not appear to be demanding. Investors may have concerns that the management of this venture is yet to prove itself sufficiently or not understand the acquisition strategy. A change in perception could prompt a re-rating.
Key Data
EPIC GFF
Share Price 5.5p
Spread 5 - 6p
NMS 5000
Market Cap. 2.23 million
12 Month Range 3-7.5p
Shares Issued 40.5 million
Market AIM
Website GriffinSecurities.com
Sector Financial
Services
NAV Per Share 4.3p
Net Cash 560,000 pounds
Gearing NA
Interest Cover NA
Contact FD: Vince Nicholls
01732 838877
Background

Griffin Group was admitted to an AIM listing in December 2003 when it changed its name from Cater Barnard USA to Griffin Group plc, (derived from the name of the company's US subsidiary Griffin Securities Inc.) Cater Barnard USA, previously listed on Ofex, was the direct business predecessor of Griffin, undertaking comparable business under the same management.

The trans-Atlantic span of the Griffin Group business model is reminiscent in its own way of the memorable corporate motto and logo " a company from over here doing rather well over there". Griffin is a UK registered Company, listed on AIM: with a growing early stage one hundred per cent owned New York investment banking subsidiary known as Griffin Securities Inc. (www.griffinsecurities.com). Griffin Group Plc is largely the creation of an enterprising individual with a background of UK industrial business experience. In this case Stephen Dean who is now Chairman of Griffin Group. He has worked with the CEO Adrian Stecyk and Vince Nicholls in building up the business over recent years. Central and crucial to that development has been the building of the firm's investment research capacity and reputation, under its Director of Investment Research, Chrystyna Bedrij.

Dean, aged 54, attracts his fair share of criticism as well as admiration. His critics will point to things that have not performed as well as expected but his admirers will point to his energy, creativity and spirit of enterprise. He started his business life in contract building, founding Deane & Bowes Group in 1977 and serving as an executive director of the company 1991 -1995. In 1993 he extended his business interests into property development and property maintenance with the foundation of a new business, the Dean Corporation, admitted to the Official List of the London Stock Exchange in 1997 and in 1998, de-merged its housebuilding business into Artisan (UK) plc, an AIM listed company which he chaired until 2002. He has held non-executive directorships of companies engaged in telephony service, leisure, software consultancy and financial services. In 2000 he acquired in a personal capacity eighty per cent of the equity of the small investment banking business of Griffin Securities in New York under the management of the equally enterprising 44 year old Adrian Stecyk. It is Steyck who is now the driving force behind this business and as the market takes that on board, some of Dean's critics may look at the business more objectively.

In 2002 that ownership was increased to one hundred per cent of the equity. Griffin Securities inc was reversed into Griffin Group plc as its one and only operating company. In a manoeuvre that has become a hallmark of the group's business style, Griffin Group (then known as Cater Barnard USA) was in turn reversed into an Ofex company which in due time migrated to an AIM listing in December 2003.

That AIM listing was accompanied by a 300,000 pounds (net) fundraising. The cash was used to expand Griffin Securities Inc. The company had some months previously set up a UK investment banking subsidiary known as Griffin Securities (UK) Limited. In March 2004 a further 225,000 pounds was raised by the issue of convertible loan notes to finance the growth of the UK arm.

Operations/Products

Griffin Securities Inc. provides the following client services from its offices at 17 State Street New York, NY: investment research; investment banking; corporate finance and stock broking. The firm specialises in providing equity capital and financial advice and services to small cap public and private companies; investment research of small cap. public companies; share dealing and asset management. It has a client network of institutional and accredited investors. On its own behalf its also conducts proprietary share trading activities.

As an early stage small investment banking enterprise with limited physical resources (a total of eleven employees) Griffin Securities operates under a clearly defined business plan and philosophy which dictates the model of business pursued by the company. A small balance sheet (reviewed below) and limited staff numbers dictate that capital and regulatory intensive activities like market making (as opposed to proprietary trading which is more lightly supervised) are both impractical and inappropriate activities for Griffin in New York - and indeed anywhere. Success in market making requires considerable liquid financial assets and staff to fulfil numerous regulatory functions. The company needs to concentrate as much of its resources as possible on front line commercial revenue accruing objectives. Consequently, there are three defined revenue streams: fee income and brokerage and proprietary trading profits, reflecting the realities and resources available.

In its market segment choices, Griffin Securities Inc. has understandably chosen to provide service to and in connection with small companies; a market segment which has given Griffin enough elbow room to enter the investment market. The sub $100 million market cap sector provides plenty of good companies with attractive products and prospects capable of discovery through penetrating, value driven, sensible analysis. Griffin Securities Inc has narrowed and increased its chances of success by focussing its research and analysis on biotechnology and technology markets; sectors perceived as difficult and to which a successful research department can win clients by adding value.

CEO Adrian Stecyk has made the role of company research more than a product and the means by which the company earns its reputation and as the route to the small market cap. corporate services sector as well. Investment research is in short both a mainline product service for investors and also, with quality and success in identifying companies as investments, a marketing tool in the corporate and asset management segments as well. It is not used as a primary fee earner by charges per copy as has become the convention in the last few years. Its value is instead seen as a "calling card" with which it can demonstrate Griffin's ability to bring value to potential corporate clients. By way of illustration, it has recently produced telling research on Auto Data Network (OTCBB: ADNW) a software business; Hemispherix Biopharma (AMEX:HEB) a drug development company and Point Therapeutics (NASDAQSC:POTP) etc. Griffin Securities has a well qualified (MBA and first degree in economics) and experienced (twenty years) Director of research by the name of Chrystyna Bedrij. Her department is budgeted for growth.

Griffin Securities UK was established in April 2004 and is still largely, but not wholly, in the early stages of its development. The objective is to establish an indigenous UK private client broking/investment banking firm in the UK. It will broadly offer in the UK the kinds of services now offered from New York by Griffin Securities inc. to a comparable UK client base of private investors and small cap. corporate customers. These will focus largely on the AIM market and its regulatory framework which will make operations to that extent, distinct from those in the US. The difference in small cap market culture is expected will give Griffin Group something of a creative edge to its operations.

The UK and US operations come under the overall management direction of Adrian Stecyk who will seek to develop each centre in relation to local resources and market opportunities but leveraging that when and where possible with trans New York/London insight and deal making opportunities as they arise. Ideally, Griffin would like to acquire an established UK private broker. Meantime the company will build its own brokerage base recruiting staff with the right kind of skills and experience.

To date, Griffin Securities UK has actively pursued a policy of acquiring AIM shell companies into which selected private businesses have been reversed. It is a style of small cap corporate business that appears to make the best economic use of the AIM market. Griffin Securities UK takes significant investment in AIM listed shells and builds capital and shareholder funds by taking profits when the opportunity arises. Stephen Dean and Griffin Finance Director Vincent Nicholls FCA are the authors of these operations in the UK. Our estimate of such investments and the number of shares held in each are supplied as an addendum after the balance sheet summary at the bottom of this report.

Management

Arian Stecyk, established Griffin Securities Inc. in 1997. He is now the Chief Executive of the entire group with responsibility for also building up the UK company with the support of Finance Director Vincent Nicholls, a qualified and practicing UK Chartered Accountant, and the UK Chairman Stephen Dean. With a first degree in aero engineering and an MBA from Boston University, Stecyk has both US NASD approval and UK FSA recognition as an approved person.

Opportunities/Threats

Until now, small cap. investment banking has been a strictly local market affair. Realistically, it will largely remain that way. Nevertheless, Griffin Group is injecting a new trans-Atlantic dimension into capital raising and merger and acquisition advice for small cap companies. Griffin seeks to bring to the small cap. market something of the scope to be found in the international big corporate deals. For example, market equity capitalizations in the US are generally higher than in the UK and for the right kind of UK company, selected in relation to local investor criteria and presented in accordance with local market expectations, there is the possibility of achieving a higher valuation of its business.

There will no doubt, also be deal opportunities of the reverse kind in both capital raising and in mergers and advisory business. They will also create an interesting small cap investment banking culture which should promote a cross fertilization of information, ideas and techniques. The US does not possess an equivalent of the UK AIM market where small cap. companies can begin their existence as publicly quoted companies with a clean new balance sheet. It the US, for reasons of regulation, cost and convention, private companies seeking publicly quoted status cannot reach that objective by being reversed into a quoted shell.

Asset management activities are at this stage for proprietary purposes only and not a client based fee earning business of the familiar kind. That may come but not at this early stage of the group's development.

Griffin has managed financial threats to its business model by firmly sticking to fee earning and brokerage commission business reducing capital and regulatory demands. It operates in a client and potential client segment defined as companies with a market cap. of about $100 million where there is considerable demand but less competition from larger investment banking competitors. Clearly, part of future profits will depend not only on profits from trading investments but also on the timing and availability of such profits: things over which the company has less control.

Most Recent Results

Griffin Group Plc has just published its first annual results as an AIM listed company. The company year ended 30 September 2004. Below, we present that giving a break down for each half year. (In pounds sterling except where otherwise stated).

Accounting period 6 months to March 04 6 months to Sept .04 Year to 30 Sept 2004
Turnover 1,149,615 2,216,509 3,366,124
Gross profit 629,632 1,430,286 2,059,918
Administration costs (436,306) (1,059,046) (1,495,352)
Group operating profit 140,452 318,366 458,818
Group operating margin 12.21% 14.36%
Net interest (1,256) (3,920)
Pre tax profit 139, 196 314,446 458,818
Taxation (696) (120,931) (121,627)
Attributable profit 138,500 193,515 332,015
Basic EPS (p) 0.45 0.48 0.93
Diluted EPS (p) 0.45 0.48 0.93

Turnover for the year of £3,366,124 was reported as being 412% higher than in 2003. Second half turnover rose 92.8 % over first half. On the same bases of comparison, annual operating profit rose tenfold over 2003 and the second half rose 126.7% over the first half; Net attributable profit rose eightfold over 2003 and the second half rose 40 % over the first half attributable profit. During the year the Group raised £78 million of new equity for its clients either directly or by participation in syndicates. In relation to the latter £41 million was raised with Deutsche Bank for Cypress Biosciences and in conjunction US brokers A.G. Edwards £13 million for company 8x8.

To its broking business Griffin added high margin placing transactions in relation to shares where dealing is restricted by regulation. £10 million of such equity was placed. In the second half of the year, founder share capital was found for five AIM flotations and board control obtained in connection with a sixth Aim company. Advisory fees of £5 million were earned. New AIM admissions included: Metrocapital; Techreation; Euro Capital Projects; Tower and Pearl Street Holdings.

During the year, in August, Griffin Investment Management LLC was established in the US. It will manage a newly formed "crossover" fund where investments are selected at what is perceived to be a take off stage. That is the purchase of equity in public companies at an observed inflexion point that is foreseen to be a catalyst for growth.

Balance Sheet & Cashflow

Total assets and shareholder funds of Griffin Group Plc as at autumn 2004 were valued at £1,700, 375 (up 78.7% year on year). Current assets of £2,299,609 comprised 31% cash; 41% investments (approximately two thirds US listed shares and one third UK listed shares) and the balance in the form of debtor accounts. There was short term debt comprising £225,000 of convertible loan notes repayable 15 March 2005, and no bank overdraft. The balance were trade and government agency creditors of the usual kinds. The ratio short term assets over short term liabilities was 2.1. The ratio of cash and near cash over short creditors was 1.7. There were no long term creditor accounts or items payable beyond one year.

Shareholder funds of £1,700,375 was net a profit and loss account deficit of £831,778 - down 28.5% from the previous year's deficit of £1,162,637. Balance sheet assets attributable to shareholders were worth 4.3p a share over the 39,483,629 (5p nominal) shares in issue as at 30 September 2004.

During the year to 30 September 2004 net cash inflow from operating activities was £35,374. Net cash flow before financial activities was £23,316. Finance brought in £642,962 net and there was a post finance cash inflow of £666,278. Cash in the balance sheet stood at £711,500.

Since the year end, on January 5th, the company has raised another 77,000 by issuing 1.19 million shares at 5p.

Profits - Forecasts
Period Year to Sept 30 04 (A) Year to Sept 30 05(E) Year to Sept 30 06(E)
Revenue 3,310,000 7,500,000 8,000,000
Gross margin 62% 60% 60%
Gross profit 2,060,000 4,500,000 4,800,000
Administration costs 1,607,000 3,850,000 3,950,000
Operating profit 453,000 650,000 850,000
Net interest - - -
Pre tax profit 453,000 650,000 850,000
Taxation at 40% 122,000 260,000 340,000
Attributable net profit 333,000 390,000 510,000
EPS 0.93p 0.96p* 1.27p*

*Based on shares in issue of 40.5 million

Shareholders

As at 1 December 2004 the three largest holders of Griffin Group equity were:

Shareholder. Number of shares Percentage of total
Adrian Steyck 9,862,349 24.35%
Global Investments (Stephen Dean) 6,460,294 15.95%
Vincent Nicholls 1,100,000 2.72%

Valuation

Our profit forecasts are based on organic growth of the existing business. Any acquisition in the UK will of course alter prospects.

A key assumption underpinning our earnings estimates is that as Griffin Group expands revenue it will be able to fulfil its stated intention to hold administration costs under firm control in both absolute terms and in relation to revenue. Consequently, our forecasts reflect that, allowing for only a small increase in administration costs next year in relation to this current year. We also assume a continuation of a 60% gross margin throughout the forecast period and a tax charge of 40%. We think that the assumed gross margin and tax charge are a little on the conservative side.

At the current market share price of 5.5p the shares sell on 5.7 times our estimated earnings for this year and 4.3 times our estimates for next. Griffin is a small company operating on a large international stage in cyclical markets which offer both dangers as well as opportunities. A prospective price to earnings ratio of 5.7 falling to 4.3 allows scope for share price appreciation from this level as the company demonstrates that it is able to achieve its strategic and financial goals over the next twenty one months to 30 September 2006.

We show the last balance sheet as at 30 September 2004, below. That gives shareholder funds valued at £1.7 million and includes UK investments valued at £323,983. The market value of those same holdings as at 30 December 2004 appears to be close to £560,000. Except that Pearl Street Holdings was sold for a trading profit, at 4p a share. Making an adjustment for that fact, increases the notional value of those balance sheet investments by £119,000 to an adjusted value of £679,000. Investments as we estimate them to be at year end 2004, are included at an addendum to the balance sheet summary below.

Detailed Financials

Profit & Loss Account

Year to 30 September 2002(A) 2003(A) 2004(A)
Turnover 383,829 657,535 3,310569
Operating profit (186,752) 41,574 458,818
Profit (loss) on ordinary activities (1,619,.082) 41,737 453,642
Taxation 21,709 nil (121,627)
Net retained profits (1,597,373) 41,737 332,015

Cashflow Statement

Year to 30 Sept 2002(A) 2003(A) 2004(A)
Cash from operations 311,708 59,852 35,374
After investment and finance costs 298,835 60,015 30,198
Capital expenditure and investment (10,782) (2,057) (6,882)
Acquisitions/disposals (303,285) (362,972) -
Net cash inflow/(outflow) before financing (16,232) (305,014) 23,316
Net cash from financing 2,500 332,412 642,962
Increase in cash (13,732) 27,398 666,278

Balance Sheet

Year to 30 Sept 2002(A) 2003(A) 2004(A)
Intangible fixed assets 789,952 684,204 578,456
Tangible fixed assets 13,456 11,183 6,281
Total fixed assets 803,408 695,387 584,737
Investments - 365,245 946,428*
Debtors 136,370 82,059 641,681
Cash at bank and in hand 17,824 48,673 711,500
Total current assets 154,194 495,977 2,299,609
Amounts due within one year:
a) Convertible loans - - (225.000)
b) Other (380,197) (239,810) (958,971)
Net assets 577,405 951,554 1,700,375
CAPITAL & RESERVES
a) Called up share capital 966,769 1,299,181 1,974,181
b) Share premium account 815,010 815,010 557,972
c) Profit & loss (1,204,374) (1,162,637) (831,778)
SHAREHOLDER FUNDS 577,405 951,554 1,700,375

*UK investments, itemized, as we believed them to be 30 December 2004.
Investment by name. Number of ordinary shares held by Griffin Group.
Elite Strategies (ETS) AIM 170,000,000
Euro Capital Project (ECR) AIM 363,000
Libertas Capital Group (LBR) AIM 290,000
Interbulk Investments 5,000,000
City Financial Associates (CFA) AIM 60,000,000

[grevis] 17/1/2005 14:09

andysand: Today's UK Analyst article.

[andysand] 17/1/2005 14:07

Thanks Grevis. I doubt the accuracy of these though. 0.96p for this year seems on the low side to me given last years growth. How old are these? They are not showing on Sharescope. Also, what is your source?




Andy

[grevis] 17/1/2005 13:42

Profits - Forecasts

(In £'s except where stated)

Period Year to Sept 30 04 (A) Year to Sept 30 05(E) Year to Sept 30 06(E)
Revenue 3,310,000 7,500,000 8,000,000
Gross margin 62% 60% 60%
Gross profit 2,060,000 4,500,000 4,800,000
Administration costs 1,607,000 3,850,000 3,950,000
Operating profit 453,000 650,000 850,000
Net interest - - -
Pre tax profit 453,000 650,000 850,000
Taxation at 40% 122,000 260,000 340,000
Attributable net profit 333,000 390,000 510,000
EPS 0.93p 0.96p* 1.27p*

*Based on shares in issue of 40.5 million

[grevis] 17/1/2005 13:41

Top % Gainers
# EPIC Name Price Chg %

9 GFF Griffin Grp. Ord 5p 6.5 1.0 18.18

[grevis] 17/1/2005 13:36

Profits - Forecasts

(In £'s except where stated)

Period Year to Sept 30 04 (A) Year to Sept 30 05(E) Year to Sept 30 06(E)
Revenue 3,310,000 7,500,000 8,000,000
Gross margin 62% 60% 60%
Gross profit 2,060,000 4,500,000 4,800,000
Administration costs 1,607,000 3,850,000 3,950,000
Operating profit 453,000 650,000 850,000
Net interest - - -
Pre tax profit 453,000 650,000 850,000
Taxation at 40% 122,000 260,000 340,000
Attributable net profit 333,000 390,000 510,000
EPS 0.93p 0.96p* 1.27p*

*Based on shares in issue of 40.5 million

[andysand] 17/1/2005 13:30

I wouldn't be suprised if new forcasts are being released to a select few. EPS of 2p is very possible for this year giving a price target of 16p.


Andy

[grevis] 17/1/2005 13:25

Turnover for the year of £3,366,124 was reported as being 412% higher than in 2003. Second half turnover rose 92.8 % over first half. On the same bases of comparison, annual operating profit rose tenfold over 2003 and the second half rose 126.7% over the first half; Net attributable profit rose eightfold over 2003 and the second half rose 40 % over the first half attributable profit. During the year the Group raised £78 million of new equity for its clients either directly or by participation in syndicates. In relation to the latter £41 million was raised with Deutsche Bank for Cypress Biosciences and in conjunction US brokers A.G. Edwards £13 million for company 8x8.

[grevis] 17/1/2005 13:08

*UK investments, itemized, as we believed them to be 30 December 2004.
Investment by name. Number of ordinary shares held by Griffin Group.
Elite Strategies (ETS) AIM 170,000,000
Euro Capital Project (ECR) AIM 363,000
Libertas Capital Group (LBR) AIM 290,000
Interbulk Investments 5,000,000
City Financial Associates (CFA) AIM 60,000,000

[grevis] 17/1/2005 13:02

griffin group is the latest tip from growth equities

[hugepants] 17/1/2005 13:01

Its been flagged up in one of the tip sheets today.

[grevis] 17/1/2005 13:00

Top % Gainers
# EPIC Name Price Chg %

8 GFF Griffin Grp. Ord 5p 6.5 1.0 18.18

[pricemilne5] 21/12/2004 23:41

I cannot believe that todays news has not attrcted any attention on here??????????????????????? strange or what!

[marnewton] 21/12/2004 16:30

How do you like them eggs?

[marnewton] 21/12/2004 16:29

RNS Number:6992G
Griffin Group PLC
21 December 2004




FOR IMMEDIATE RELEASE 21 December 2004




GRIFFIN GROUP plc

("Griffin Group" or "the Company")


Acquisition of shares in CFA Capital Group PLC ("CFA")


The Board of Griffin announces that on 20 December the Company bought 60,000,000
ordinary shares of 0.25p each in the capital of CFA (the "CFA Ordinary Shares")
at 0.25p per CFA Ordinary Share for a total consideration of £150,000. Following
this purchase, Griffin is interested in 60,000,000 CFA Ordinary Shares
representing 9.7 per cent. of CFA's issued share capital. CFA is an AIM-traded
company, the business of which is the provision of corporate finance advisory
services to AIM-traded companies.

Stephen Dean, Chairman of Griffin said:

"Griffin has been active this year launching new AIM-traded investing companies
and we are pleased to take the advantage of this opportunity to extend our
current working relationship with CFA by acquiring this investment in them."

ENDS

Enquiries:

Griffin Group plc
Stephen Dean, Chairman 0034 605 282 211

Beaumont Cornish Limited
Roland Cornish 020 7628 3396