RNS Number:0842J
Collins Stewart Holdings PLC
24 March 2003
COLLINS STEWART HOLDINGS PLC
Highlights - (NB 2001 comparative figures restated)
UNAUDITED PRELIMINARY RESULTS - for the year ended 31 December 2002
Highlights
Collins Stewart, the financial services group, today announced its Preliminary
results for the year ended 31 December 2002, the highlights of which were:
Total revenues of #98.7m (2001: #104.3m);
Operating profit before goodwill amortisation was #32.2m (2001: #32.9m);
Profit before tax of #25.5m (2001: #32.8m, including exceptional gain of #6.7m);
Basic earnings per share of 13.02p (2001: 19.18p including exceptional gain of
#6.7m) and before goodwill amortisation and exceptional items of 19.48p (2001:
19.64p);
Return on capital employed of 26% (2001: 30%);
Recommended final dividend of 4.5p (2001: 4.5p) bringing the total dividend for
the year to 6.75p (2001: 6.75p);
Despite difficult market conditions, the Company's diversified revenue stream
produced a reasonable trading performance overall and progress was made in a
number of areas including the completion of QUESTTM project with stock coverage
widened to include Northern American and Asian equities. Smaller Companies
revenues increased by 66% on 2001 to #32m, with 81 clients, up from 73 last
year;
Offer for Tullett plc, a leading IDB, valuing the business at approximately
#250m, completed on 10 March 2003. This represents the single most important
strategic development since flotation in October 2000 and will enable the
Company to service the whole range of potential clients in the financial markets
and further diversify its revenue streams;
Placing and open offer to raise #148m, more than twice subscribed, to fund
redemption of Collins Stewart's preference shares and part funding of
acquisition of Tullett; and
Andy Stewart has resigned as a director of the Company and has been appointed as
President of the Company with immediate effect. The Board is pleased that
despite no longer being a director, he will continue to take an interest in the
Company's future.
Commenting on the results, Keith Hamill, Chairman of Collins Stewart Holdings
plc, said:
"Despite the worst trading conditions since the 1970s, the Company once again
produced what we regard as a respectable result. Even if the present difficult
conditions continue in the equity markets, many of the other financial markets
in which the Company now operates are thriving. The Board believes that the
prospects for the enlarged Group are very promising."
Enquiries to:
Emma Kane, Chief Executive Tel: 020 7955 1410
Redleaf Communications Mob: 07876 38339
Notes to Editors:
* For details about the analysts' briefings, please contact Emma Kane on the
numbers shown above.
* Further information on Collins Stewart is available on the Company's
website at www.collins-stewart.com.
* Further information on Tullett is available in Tullett's website at
www.tullib.com.
CHAIRMAN'S STATEMENT
Equity markets conditions continued to be poor throughout 2002. At the interim
stage we said that the trading environment had been the worst since the 1970s
and this adverse trend continued throughout the whole of the second half and
presently shows no sign of abating.
Despite these conditions the Company once again produced what we regard as a
respectable result with operating profits before goodwill amortisation of #32.2m
compared to #32.9m in 2001 on total revenues of #98.7m against last year's
#104.3m.
On 10 March 2003 we completed the offer for Tullett plc, one of the leading
international inter-dealer brokers. This acquisition is the most important
strategic development for Collins Stewart since its flotation in October 2000
and represents a major step towards the goal of diversifying its sources of
revenues. The enlarged business has pro forma revenues of some #0.5bn and
employs over 2,000 staff in 19 countries around the world. It services a whole
range of clients in the financial markets and its products include equities,
fixed interest securities, treasury products, interest rate and credit
derivatives, energy and oil and gas broking.
At the same time as the funding of the offer for Tullett, we also carried out a
placing and open offer to fund the redemption of the Company's preference
shares. The combined fundraising of #148m was more than twice subscribed, a
notable achievement in the current depressed equity markets. The Board is
pleased to acknowledge the support for Collins Stewart which investors have
demonstrated.
This support continued at the EGM to approve the acquisition of Tullett and the
placing and open offer. At the time there was adverse comment in the media about
the single resolution to approve the acquisition of Tullett, which included the
adoption of a new share option scheme for Tullett staff. I am pleased to report
that shareholders focused on the merits of the transaction and the resolution to
approve the acquisition of Tullett was passed by a majority of over 98% of the
shares voted at the EGM. We comment on this further in the Operating and
Financial Review.
To reflect the change in emphasis in the activities of the enlarged business, it
is proposed that the Company should change its name to Collins Stewart Tullett
plc at the forthcoming AGM. However, Collins Stewart and Tullett will be
retained as the principal trading names of the respective broking businesses.
We also announce that Andy Stewart has resigned as a director of the Company
with effect from 24 March 2003 and has been appointed as President of the
Company with effect from the same date. In the role of President he will
continue to be involved in client relationship management and in promoting the
Company's interests.
Andy was one of the co-founders of Collins Stewart Limited and was instrumental
in negotiating its MBO from Singer & Friedlander Group plc in 2000. He has made
a major contribution to the development of the Company since its formation and
the Board is pleased that despite no longer being a director, he will continue
to take an interest in the Company's future. Andy will retain the shareholding
which he acquired through the MBO; the selling restrictions relating to this
shareholding will continue to apply.
Even if the present difficult conditions continue in the equity markets, many of
the other financial markets in which we now operate are thriving. The
Board believes that the prospects for the Company are extremely promising.
Keith Hamill
OPERATING AND FINANCIAL REVIEW
Last year was the third in succession that stock markets have fallen and this is
proving to be one of the worst bear markets since WWII. Stock market trading
volumes and equity new issuance were again significantly lower and revenue
levels across the market have naturally been affected.
Despite these conditions, the Group produced a reasonable trading performance
overall. This demonstrates the benefits of having a diversified revenue stream
which has long been a cornerstone of the Board's strategy.
Despite the fact that revenues fell by some 5%, the Group operating profit
before goodwill amortisation fell by only 2%. This is because the Group was able
to control its costs, which are highly geared to performance. Producing an
earnings stream, which is reasonable for shareholders even in difficult market
conditions also forms an important part of Group strategy.
The following table shows the results for the year together with those for 2001:
Year ended
Year ended 31 December
31 December 2001
2002 (restated)*
#'000 #'000
Total revenues
Turnover 96,001 103,216
Other operating income 2,713 1,075
98,714 104,291
Operating profit before
goodwill amortisation 32,201 32,925
Operating profit after
goodwill amortisation 25,620 26,775
Exceptional item - 6,684
Profit before tax 25,511 32,779
Profit attributable to ordinary shareholders 13,263 19,776
Earnings per share:
Basic 13.02p 19.18p
Diluted 12.86p 19.00p
Basic before goodwill and exceptional items 19.48p 19.64p
* restated for FRS 19: Deferred Taxation as detailed in note 1.
In addition to dealing with very difficult trading markets, the Group worked on
achieving a number of key objectives during the year. The first and foremost was
to acquire Tullett. This was described in detail in the prospectus which was
sent to shareholders in connection with the fundraising to finance the
acquisition. This acquisition was eventually completed on 10 March 2003 having
taken many months to negotiate. Tullett will also today be releasing its
preliminary results for the year ended 31 December 2002 on RNS. A copy will be
posted on its website, www.tullib.com.
The key factors that affected each of the Group's major areas of activity are
summarised in Performance of Divisions and Subsidiaries below. The financial
performance of the Group follows in Finance and Administration.
PERFORMANCE OF DIVISIONS AND SUBSIDIARIES
The following table indicates the contributions made by each of our divisions/
subsidiaries:
Turnover 2002 2002 2002 2002
#'000 % #'000 %
Larger Companies & QUESTTM 20,231 21.1 25,208 24.4
Smaller Companies 32,210 33.5 19,397 18.8
Investment Trusts 6,202 6.5 23,929 23.2
Fixed Interest 4,100 4.3 3,817 3.7
UK Private Clients 6,101 6.3 2,656 2.6
Collins Stewart Inc 8,130 8.5 8,927 8.6
Collins Stewart (CI) 19,027 19.8 19,282 18.7
96,001 100.0 103,216 100.0
Collins Stewart Limited
Larger Companies
Turnover was down by 20% in 2002. Market conditions were poor throughout the
whole year, with the relentless bear market being exacerbated by high levels of
volatility. 2003 has begun in similar fashion to 2002 and we expect sentiment to
remain bearish driven by most world economies falling further into the doldrums.
We are continuing to recruit from the large number of people who are now
available in the larger companies arena in order to expand our research
capabilities, and in sales in order to match the development of QUEST(TM) .
QUEST(TM)
QUESTTM Plus was launched in early 2003. Stock coverage has been widened to
include North American and Asian equities and QUEST(TM) has been redeveloped to
integrate all the various QUEST(TM) products and make the interface more
user-friendly.
Our continued aim is to make QUEST(TM) the product of choice for international
equity portfolio managers for the evaluation of corporate performance and share
valuation.
Smaller Companies
Smaller Companies revenues were up 66% on 2001 to #32.2m, primarily from
corporate fees. This was a record year for Smaller Companies corporate finance,
with total fees booked of some #24.8m (2001: #14.2m). We advised on 29
transactions, raising #518m (2001: #260m). We ended the year with 81 clients, up
from 73 at last year-end. This is a strong and growing client base, which we
intend to develop further in 2003, with the likelihood that we will develop more
corporate relationships as competitors withdraw from this area.
The results from secondary market trading reflected the very difficult
conditions being experienced throughout the small cap arena.
Investment Trusts
2002 was a difficult year which, in secondary trading, was characterised by
clients selling and liquidity vanishing, particularly in split capital
investment trusts. Corporate fees of #4.7m (compared to #19.8m in 2001) were
also affected by adverse sector sentiment.
As we stated in the prospectus issued on 23 January 2003 the activities of the
Investment Trust division in connection with split capital investment trusts are
being investigated by the FSA. Further information is set out in the Compliance
section below.
Fixed Interest
2002 was another successful year for the division. Income from market making and
commission increased to #4.1m in 2002, a 7% increase on the previous year, which
itself represented a 27% increase on the previous year. The division has
benefited from the continued strength of institutional business and good demand
from retail brokers.
UK Private Clients
The first full year of ownership of the UK private client division has been
devoted to initiatives to integrate the business. There have been significant
changes to improve client service. A large number of clients have moved from
advisory to discretionary arrangements and more clients are taking advantage of
the nominee services. We have also created two new "fund of fund" products as a
way of servicing smaller clients in a more efficient way.
Funds under management decreased by only #90m in 2002 to just over #1 billion.
Given the considerable falls in value in the equity markets over the year, this
represents a significant achievement for the division. During the year
discretionary managed funds increased from #198m to #299m. This is in line with
Group strategy to move more funds into discretionary arrangements.
Collins Stewart (CI) Limited
2002 was a reasonable year for the Channel Islands operation, with pre-tax
profits of some #6.8m, down from #7.5m in 2001. Funds under management at the
end of 2002 totalled #1.2bn, compared to #1.27bn at the end of 2001. The
decrease of 5% is a significant achievement against the backdrop of the equity
markets.
In January 2002 we launched two hedge funds whose investment methodology is
based on QUEST(TM) triAngle(TM) methodology. The UK fund produced a return of 8.2%
since its launch and outperformed the FTSE 350 index by 32% and the CSFB/
Tremont Index by 21.3% in that time. The Euro fund in the same period produced a
loss of 0.8% but outperformed the Eurotop 300 Index by 29% and the CSFB/ Tremont
Index by 18%. These funds remain small, but we intend to extend our marketing of
them, once they have established a longer track record.
Two new divisions were established in January 2003: Guernsey Investment
Management - offering portfolio management via direct equities (based on
QUEST(TM)), and the addition of stockbroking services in the Isle of Man.
Collins Stewart Inc
Gross revenues for 2002 were #8.1m down from #8.9m in 2001. Despite this, the
business developed during 2002, dealing for 79 institutions compared to 62 in
2001. Although commission income generated in UK stocks was down for the year,
income from other European equities increased. During 2002 a facility to trade
in ADRs was added to our product offering.
FINANCE AND ADMINISTRATION
Turnover
The following table indicates the contributions made by each of the major areas
of activity. As can be seen, Group turnover was down on the previous year by
some 7%.
2002 2002 2001 2001
#'000 % #'000 %
Market making/ principal turns 8,025 8.4 10,667 10.3
Agency commissions 48,808 50.8 49,999 48.4
Corporate fees 29,676 30.9 35,264 34.2
Management fees 8,858 9.2 7,108 6.9
Other 634 0.7 178 0.2
96,001 100.0 103,216 100.0
All areas of the Group's operations were affected by the continuing adverse
market conditions. Although management fees increased in 2002, this was largely
as a result of the first full year's contribution of the UK private client
division and Collins Stewart Property Fund Management. A full year's
contribution from the UK private client division also offset some of the lower
commissions generated by the Larger Companies division.
Corporate fees generated by Smaller Companies were considerably higher than the
previous year. However, this was unable to offset the shortfall in fees from the
investment trust division. Similarly market making suffered from losses on the
investment trust books sustained because of the major loss of liquidity in split
capital investment trust stocks.
Expenditure
Overall, in light of the lower turnover achieved by the Group, we reduced our
administrative expenditure by #4.8m during the year to #66.5m. The key costs for
the Group relate to staff and premises and the main changes in expenditure are
explained below:
Staff Costs
Staff costs decreased by 13% from #51.5m to #44.9m 2002. As in previous years
remuneration remains highly geared towards incentive payments and these were
considerably reduced in light of the lower revenues generated by the Group.
Bonuses were reduced by 31% to #22.9m, #2.4m of which came from directors'
bonuses which were down 50% on the previous year. As a result salaries formed
48% of total pay compared to 33% in the previous year. Staff salaries increased
overall by #4.5m, largely as a result of the inclusion of the UK private client
division and Collins Stewart Property Fund Management for a full year. Staff
numbers employed by the Group rose from 385 at the start of the year to 416 at
the year-end. Staff costs as a percentage of revenues amounted to 46% (2001:
49%).
Establishment Costs
The new offices at 9th Floor, 88 Wood Street were occupied for the first full
year in 2002. Additionally new leases were taken on over space on the 8th floor
of 88 Wood Street to accommodate the new UK private client division in May 2001
and February 2002.
Operating profit
The Group's operating profit before goodwill amortisation fell by 2% from #32.9m
in 2001 to #32.2m on revenues down 5% from #104.3m to #98.7m. The operating
margin increased from 31.6% in 2001 to 32.6% in 2002, as cost savings largely
compensated for the lower income and through improved contributions from the UK
private client division and Collins Stewart Property Fund Management. The main
area of saving was in lower staff costs, primarily lower bonuses, as explained
in Staff Costs above.
Amortisation
All goodwill arising on significant acquisitions made to date by Collins Stewart
Holdings is being amortised over a 20 year period. The appropriateness of this
amortisation period is reviewed annually. The amortisation charge of #6.6m in
2002 compared to #6.2m in 2001 reflects the impact of the first full year of
ownership of the UK private client division. The goodwill amortisation charge
will substantially increase in 2003 when Tullett's results are consolidated into
the Group accounts.
Interest
In the year ended 31 December 2002 the Group had a net interest expense of #0.1m
(2001: #0.7m). The reduction is largely due to the lower amortisation of
capitalised debt costs in 2002.
Taxation
The Group has a taxation rate of approximately 30% in the UK, 20% in the Channel
Islands and 46% in the USA. The tax charge for 2001 has been restated to take
account of FRS 19: Deferred Taxation. This led to a release of #1.2m of tax
provided in connection with future dividend remittances from Collins Stewart
(CI) to the UK.
Dividends
The Board is proposing a final dividend for 2002 of 4.5p (2001: 4.5p), bringing
the total dividend for the year to 6.75p (2001: 6.75p). This implies a dividend
cover of 1.9 based on basic earnings, and 2.9 based on earnings before goodwill
amortisation.
The ordinary shares allotted pursuant to the placing and open offer and offers
for Tullett are also entitled to receive the final dividend. Since these shares
were allotted after the year end, these dividends, which total some #3.7m, will
be treated as an interim dividend in respect of the year to 31 December 2003.
On 6 March 2003, the Company paid the final dividend on its preference shares.
This amounted to #0.16m in respect of the "B" preference shares for the period
from 1 January 2002 to 6 March 2003 (calculated at a rate of 4p per share per
annum) and #3.14m in respect of the "A" preference shares for the same period,
(calculated at a rate of 6p per share for 2002 and 9p per share per annum in the
period to 6 March 2003). No further preference dividends will be payable.
Return on Capital Employed
The average return on capital employed for the year, measured by dividing the
operating profit before goodwill amortisation by average shareholders funds
(including cumulative goodwill written off) and average long term debt less
average cash balances, was 26% for the year (2001: 30%). The main reason for the
fall in ROCE is that the Group retained greater capital during the year in
preparation for the redemption of the preference shares.
Cashflow
Cash generated by operations (excluding the reduction in client settlement
moneys of #1.7m (2001: reduction of #5.1m)) after servicing of finance and
taxation during 2002 was #10.1m (2001: #19.1m). After investment of #2.1m in
fixed assets and acquisition of subsidiaries, repayment of #4.5m of borrowings
and distribution of #6.9m in dividends to ordinary shareholders, the Group
reduced its cash position (excluding client moneys) by #3.4m (2001: cash inflow
of #0.8m). Client settlement moneys are detailed in note 9.
Funding Structure
On 23 January 2003 the Company announced the proposed acquisition of Tullett and
the redemption of its preference share capital, accompanied by an equity
fundraising of #148m and an increase in the Group's borrowing facility of #50m.
The preference shares had been issued as part of the funding of the MBO of
Collins Stewart Limited. The coupon on the "A" preference shares increased to 9%
(calculated on #1 nominal value plus share premium) on 1 January 2003 and the
"B" preference shares carried a coupon of 4% (calculated on #1 nominal value
plus share premium). Both classes of preference share were redeemable pari
passu.
The preference shares were redeemed on 6 March 2003 out of the proceeds of the
placing and open offer which was completed in February. The redemption allowed
the Company to save the increased coupon on the preference share capital whilst
still retaining a capital base to allow borrowings to be taken on as part of the
funding of the acquisition of Tullett.
The borrowing facility with Bank of Scotland has been increased from #14.75m at
the end of December 2002 to #64.75m in March 2003. In addition, Tullett has $15m
borrowings with Royal Bank of Scotland. Despite the increased borrowings, the
enlarged Group will continue to maintain substantial net liquid resources to
meet its settlement requirements. In addition to net cash, the Group will
continue to have the benefit of a #10m revolving credit facility from Bank of
Scotland.
Of the additional borrowings, #45m was in the form of subordinated debt, which
is treated as capital by the Financial Services Authority. These subordinated
loans can only be repaid other than in accordance with their repayment schedule
if at the time of repayment Collins Stewart meets certain capital adequacy
guidelines. The new loan was redenominated into US dollar loans on 18 March 2003
as part of the Group's policy to hedge its investment in its new US and Hong
Kong subsidiaries.
Throughout 2002 Collins Stewart remained comfortably within the capital adequacy
guidelines set by the Financial Services Authority. At the year end the Group
still had capital in excess of 200% of its regulatory requirement. Net cash at
the end of 2002 amounted to #41.5m compared to #43.7m at the end of 2001. This
represents some 28% of the Group's net assets (2001: 30%).
Compliance
During 2002 Collins Stewart filed all its regulatory returns on a timely basis
and maintained regular contact with its regulators.
As we stated in the prospectus accompanying the share issue in January 2003, the
split capital investment trust sector has been subject to review by the House of
Commons Select Committee and the FSA. Collins Stewart, as an active participant
within the investment trust sector acts as corporate broker and/or financial
adviser to a large number of split capital investment trusts, has sponsored
fundraisings by these trusts and in some cases acts as fund manager.
On 20 January 2003 Collins Stewart received a notification from the FSA that it
was being investigated in connection with its activities in the split capital
investment trust sector. Collins Stewart has supplied information to the
regulator and has co-operated with all its requests.
Collins Stewart has conducted a review of its activities in the split capital
investment trust sector. The Board of Collins Stewart believes that the Group
has no material liability in relation to involvement in split capital investment
trusts.
Corporate Governance
The firm's corporate governance policies are set out in the Report on Corporate
Governance in the Annual Report. However, given the attention focused on our
recent EGM, we deal below specifically with the matters raised with us by
shareholders and proxy voting agencies concerning our EGM.
As mentioned in the Chairman's report, considerable comment was made by proxy
voting agencies and the media at the time of the EGM to approve the Tullett deal
about "bundling" of the proposal to introduce a new share option scheme with the
resolution to approve the acquisition. There was much wringing of hands in the
Corporate Governance departments of the proxy voting agencies, in some cases
leading to recommendations to shareholders not to vote in favour of the Tullett
acquisition.
The background was that in order to obtain the support of the Tullett Board for
the offer and to secure acceptance from its shareholders, we had to agree on an
appropriate share option scheme for key Tullett staff. The Tullett shareholders
were particularly concerned to ensure this since they would become significant
shareholders in Collins Stewart. We are satisfied that the offer for Tullett
could not have proceeded without meeting this requirement. Hence the need to
"bundle" the resolutions in order to reflect the reality of the situation.
In the event, the Company received the support of its shareholders with over 98%
of the 84m shares being voted (79% of the issued ordinary share capital) being
cast in favour of the acquisition of Tullett.
Whilst the Board is committed to adopting prudent corporate governance
procedures, it is not always in shareholders' interests to adhere to rigid
guidelines. We would welcome a more reasoned and sensible approach from proxy
voting agencies and some corporate governance commentators.
A number of our shareholders have asked for further information on the new
Tullett share option scheme and we set this out in the Report on Directors'
Remuneration in the Annual Report.
FUTURE DEVELOPMENTS AND OUTLOOK
One of the key projects for the Company in the coming year is the integration of
the Tullett business into the group. This process has already commenced, with
each party seeing scope for benefiting from the other's resources.
Although Collins Stewart's equity business continues to be challenged by the
difficult equity markets, Tullett has benefited from volatility in some of its
core markets and has enjoyed a strong start to 2003.
We will consider making further acquisitions in the future to develop Tullett's
business, taking advantage of the consolidation that is taking place in the
inter-dealer broker sector. As with all our acquisitions, our focus will be on
generating shareholder value and no acquisitions will be considered unless they
meet this criterion.
Terry Smith
Chief Executive
consolidated profit and loss account
for the year ended 31 december 2002
Notes 2002 2001
#'000 #'000
(restated)*
Turnover 5 96,001 103,216
Administrative expenses
Goodwill amortisation (6,581) (6,150)
Other expenses (66,513) (71,366)
(73,094) (77,516)
Other operating income 2,713 1,075
Operating profit 5 25,620 26,775
Exceptional item: profit on sale of fixed asset
investments in continuing operations - 6,684
Profit on ordinary activities before interest 25,620 33,459
Interest receivable and similar income 2,495 3,523
Interest payable and similar charges (2,604) (4,203)
Profit on ordinary activities before taxation 25,511 32,779
Taxation on profit on ordinary activities (9,503) (10,406)
Profit on ordinary activities after taxation 16,008 22,373
Equity minority interests (143) 5
Profit for the year attributable to shareholders of
Collins Stewart Holdings plc 15,865 22,378
Dividends
Ordinary dividend on equity shares (6,872) (6,875)
Preference dividend on non-equity shares (2,602) (2,602)
Retained profit for the year 6,391 12,901
Earnings per share
Basic 6 13.02p 19.18p
Diluted 6 12.86p 19.0p
Basic before goodwill amortisation and exceptional item
6 19.48p 19.64p
All of the Group's profits and losses were from continuing activities.
* The consolidated profit and loss account for the year ended 31 December 2001
has been restated for the adoption of FRS 19: Deferred Taxation as detailed in
note 1.
consolidated statement of total recognised gains and losses
for the year ended 31 december 2002
2002 2001
#'000 #'000
(restated)*
Profit for the year attributable to shareholders of Collins
Stewart Holdings plc 22,378
15,865
Currency translation differences (110) 11
Total recognised gains and losses for the year 15,755 22,389
Prior year adjustment* 1,220
Total recognised gains and losses since last annual report and
financial statements 16,975
*The statement of total recognised gains and losses for the year ended 31
December 2001 has been restated for the adoption of FRS 19: Deferred Taxation as
detailed in note 1.
consolidated balance sheet
At 31 december 2002
Notes 2002 2001
#'000 #'000
(restated)*
Fixed assets
Intangible assets 114,380 120,891
Tangible assets 6,441 6,866
Investments 104 103
120,925 127,860
Current assets
Investments 9,470 14,625
Debtors 84,426 103,323
Cash at bank and in hand 61,860 66,299
155,756 184,247
Creditors: amounts falling due within one year (119,627) (158,170)
Net current assets 36,129 26,077
Total assets less current liabilities 157,054 153,937
Creditors: amounts falling due after more than one year (6,356) (9,595)
Provisions for liabilities and charges (445) (368)
Equity minority interests (150) (158)
Net assets 150,103 143,816
Capital and reserves
Called up share capital 7 27,003 27,003
Share premium account 7 98,316 98,310
Profit and loss account 7 24,784 18,503
150,103 143,816
Shareholders' funds
Equity 105,503 99,216
Non equity 44,600 44,600
150,103 143,816
* The consolidated balance sheet as of 31 December 2001 has been restated for
the adoption of FRS 19: Deferred Taxation and the reclassification of bank loan
maturity dates as detailed in note 1.
consolidated statement of cash flows
for the year ended 31 december 2002
Notes 2002 2001
#'000 #'000
Net cash inflow from operating activities 2 21,404 25,875
Returns on investments & servicing of finance:
Interest received 2,658 3,434
Interest paid (2,047) (2,629)
Preference dividends paid (2,602) (1,573)
Dividends paid to minorities - (34)
(1,991) (802)
Taxation:
Corporation tax paid (9,076) (8,843)
Overseas tax paid (1,925) (2,213)
(11,001) (11,056)
Capital expenditure and financial investments:
Purchase of tangible fixed assets (1,823) (6,346)
Proceeds from sale of tangible fixed assets - 7
Sale of fixed asset investments - 6,684
(1,823) 345
Acquisitions and disposals:
Purchase of subsidiary undertakings (220) (17,408)
Equity dividends paid (6,877) (3,581)
Net cash outflow before financing (508) (6,627)
Financing:
Issue of ordinary share capital 6 12,500
Share issue costs - (242)
Repayment of bank debt net of issue costs (4,050) (9,868)
Repayment of secured loan notes (488) (13)
(4,532)
2,377
Decrease in cash 3,4 (5,040) (4,250)
Notes
1. Basis of Preparation
The preliminary announcement has been prepared using the same accounting
policies as those applied in the accounts for the year ended 31 December 2001
other than in respect of deferred tax. The Group has adopted Financial Reporting
Standard: 19: Deferred Taxation for the year ended 31 December 2002. This has
led to a restatement of the comparatives for the year ended 31 December 2001:
the deferred tax charge has been reduced by #995,000. A further #225,000 has
been credited to opening reserves. The creditor balance at 31 December 2001 has
been reduced by #1,220,000.
The Group has also restated the balance sheet comparatives for the year ended 31
December 2001 for the reclassification of bank debt by its maturity date. This
has led to creditors greater than one year to be decreased by #7,330,000 and
creditors less than one year to be increased by this amount.
The financial information set out in the announcement does not constitute the
Company's statutory accounts for the years ended 31 December 2002 or December
2001. The financial information for the year ended 31 December 2001 is derived
from the statutory accounts for that year which have been delivered to the
Registrar of Companies. The auditors reported on these accounts; their report
was unqualified and did not contain a statement under s237(2) or (3) Companies
Act 1985. The statutory accounts for the year ended 31 December 2002 will be
finalised on the basis of the financial information presented by the directors
in this preliminary announcement and will be delivered to the Registrar of
Companies following the Company's Annual General Meeting.
2. Reconciliation of Operating Profit to Net Cash Inflow from Operating
Activities
2002 2001
#'000 #'000
Operating profit 25,620 26,775
Depreciation of tangible assets 2,223 1,550
Goodwill amortisation 6,581 6,150
Loss on sale of fixed assets - 83
Movement in deferred income (139) 335
Increase in net market and client balances (8,569) (3,242)
Decrease/(increase) in net investment positions 3,272 (2,205)
Increase in other debtors (444) (2,081)
Decrease in other creditors (7,314) (1,490)
Currency translation differences 174 -
Net cash inflow from operating activities 21,404 25,875
3. Reconciliation of Net Cash Flow to Movements in Net Funds
2002 2001
#'000 #'000
Decrease in cash during the year (5,040) (4,250)
Cash outflow from repayment of loans & loan notes 4,538 9,861
Debt issue costs - 20
Amortisation of debt costs (1,309) (1,736)
Translation difference (386) -
(Decrease)/increase in net funds resulting from cash flows (2,197) 3,895
Net funds at 1 January 2002 43,656 39,761
Net funds at 31 December 2002 41,459 43,656
4. Analysis of Net Funds
At 1 Non Exchange At 31
diffe-rences
January Cash flow - cash items December
2002 2002
#'000 #'000 #'000 #'000 #'000
(restated)*
Cash in hand and at bank 58,630 (2,407) - (386) 55,837
Client settlement monies 7,669 (1,646) - - 6,023
Overdraft (1,023) (987) - - (2,010)
65,276 (5,040) - (386) 59,850
Loan notes due within one year (5,030) 488 - - (4,542)
Loans due within one year (7,330) 50 (409) - (7,689)
Loans due after one year (9,260) 4,000 (900) - (6,160)
Total net funds 43,656 (502) (1,309) (386) 41,459
* restated for reclassification of bank loan maturity as detailed in note 1.
5. Segmental Analysis of Turnover, Operating Profits and Net Assets
The Group operated within three main geographical markets: the United Kingdom,
the Channel Islands and the United States.
The geographical split of the Group's activities for the year ended 31 December
2002, together with comparatives for the period to 31 December 2001, was as
follows:
Channel Islands
#'000 USA Total
UK #'000 #'000
#'000
2002
Turnover 71,709 16,162 8,130 96,001
Operating profit 17,823 4,928 2,869 25,620
Net assets 127,385 22,000 718 150,103
2001
Turnover 76,376 17,913 8,927 103,216
Operating profit 16,582 6,570 3,623 26,775
Net assets 121,476 21,890 450 143,816
The following table indicates the contributions to turnover made by each major
category of activity. Some of these activities are carried out across a number
of different divisions/subsidiaries:
Manage-
Market making/ ment
principal turns Agency Corporate fees Other income
#'000 commissions fees #'000 #'000 Total
#'000 #'000 #'000
2002 8,025 48,808 29,676 8,858 634 96,001
2001 10,667 49,999 35,264 7,108 178 103,216
6. Earnings Per Share
Year ended 31 Year ended 31
December 2002 December 2001
#'000 #'000
(restated)*
Earnings for the purposes of the basic and diluted earnings per
share 13,263 19,776
Goodwill amortisation 6,581 6,150
Exceptional item - (6,684)
Taxation on exceptional item - 1,010
Earnings for the purposes of basic earnings before goodwill and
exceptional items 19,844 20,252
Weighted average 2002 2001
No. '000 No. '000
Number of ordinary shares at start of period 101,893 103,101
Shares acquired by the ESOTs from staff leaving the Group
(6) (1,773)
Share issues 1 1,789
Basic earnings per share denominator 101,888 103,117
Issuable on exercise of options 1,224 944
Diluted earnings per share denominator 103,112 104,061
*restated for the adoption of FRS 19 as detailed in note 1.
7. Group Share Capital and Reserves
Share Capital Share Premium Profit & Loss
Account Account Account Total
#'000 #'000 #'000 #'000
At 1 January 2001 restated re FRS 19
26,221 86,834 5,591 118,646
Retained profit for the year
as previously reported - - 11,906 11,906
Prior year adjustment in respect of FRS 19
- - 995 995
Ordinary share capital placed 782 11,718 - 12,500
Costs of share issue - (242) - (242)
Foreign currency translation - - 11 11
At 31 December 2001 27,003 98,310 18,503 143,816
Retained profit for the year - - 6,391 6,391
Issue of shares - 6 - 6
Foreign currency translation - - (110) (110)
At 31 December 2002 27,003 98,316 24,784 150,103
8. Post Balance Sheet Events
On 23 January 2003 the Company announced offers for the entire issued and to be
issued share capital of Tullett plc. The offers valued Tullett plc at
approximately #250m. The acquisition of Tullett was completed on 10 March 2003
at which time the Company had received acceptances in respect of the entire
issued ordinary share capital. Pursuant to the offers, 68m new ordinary shares
were issued.
On 23 January 2003 the Company also announced a placing and open offer of 14.65m
new ordinary shares at 308p per share to raise approximately #44.6m net of
expenses to fund the redemption of all the Company's issued preference shares.
On 6 March 2003 the Company redeemed all the issued "A" and "B" preference
shares at par.
The combined fund raising associated with the Tullett offers and the placing and
open offer totalled #148m. In addition the Company increased its borrowing
facilities with Bank of Scotland by #50m to #64.75m. The existing loan
agreements were amended and restated, thus the existing security structure
remained in place. The restated borrowings comprise #58.75m subordinated debt
and #6m secured loans which are repayable over the 5 years to the end of
December 2007. In addition, Bank of Scotland provided a #1.1m secured loan note
facility to enable the Company to issue loan notes pursuant to the Tullett
offers.
On 18 March 2003 #45m subordinated loan was redenominated into US dollars as
part of the Company's strategy to hedge its investment in its US subsidiaries.
9. Client Settlement Monyes
At 31 December 2002, client settlement moneys held by the Group on behalf of
clients to settle outstanding bargains totalled #6,023,000 (2001: #7,669,000).
10. Dividends
The directors recommend payment of a final dividend of 4.5p per ordinary share.
Subject to shareholders approval at the forthcoming Annual General Meeting , the
dividend will be paid on 5 June 2003, to ordinary shareholders whose names are
on the register on 9 May 2003.
OTHER INFORMATION
Annual General Meeting
The Annual General Meeting of Collins Stewart Holdings plc will be held at 9th
Floor, 88 Wood Street, London, EC2V 7QR at 3.00pm on 29 May 2003.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SEMFAFSDSEDD