RNS Number:9038S
Millfield Group PLC
05 December 2003
Date: 05 December 2003
On behalf of: Millfield Group plc ("Millfield")
Embargoed until: 0700hrs
Millfield Group plc
Interim Results 2003
Millfield Group plc, a leading independent financial services advisory group,
today announces its interim results for the six months ended 30 September 2003.
The main highlights are:
* Turnover up 65% to #23.5m (2002: #14.2m)
* Losses after tax reduced to #5.65m (2002: #5.92m)
* Number of advisers and accounting professionals grown to 640 (2002: 450)
* Operating losses, before goodwill amortisation and results relating to
Lifetime joint venture, reduced to #4.4m (2002: #5.6m)
* Turnover exceeded #5m in September, resulting in a small operating profit
* Completion of placing and open offer to raise #8.7m, after expenses
of #1.4m.
* Group cash balances of #8.2m with a further #3.3m in Lifetime
* Transformational deal for Lifetime - #10m investment finalised by
Norwich Union
* Delivery of economic gain, for Millfield, via investment in Lifetime
Commenting on the interim results, Richard Mansell-Jones, Chairman of Millfield,
said:
"Major progress has been made in the period, particularly in achieving funding
for Lifetime and in positioning it as an industry vehicle for the future.
"Achieving a small profit in September was an important milestone for the Group.
Our next objective is to deliver consistent profitability at operating level.
"We have built a strongly based Group and I am confident that, with the quality
of the people we have and are attracting, we can continue to deliver our plans."
Enquiries:
Millfield Group plc www.millfield-partnership.co.uk
Paul Tebbutt, Chief Executive Tel: 020 8604 2607
Mob: 07958 992812
Harry Roome, Finance & Operations Director Tel: 020 8604 2623
Mob: 07855 259148
Collins Stewart Limited Tel: 020 7523 8350
Simon Atkinson/Stephen Keys
Redleaf Communications Tel: 020 7955 1410
Emma Kane/Nick Lambert Mob: 07876 338339
Notes to Editors:
* Millfield Group plc was floated on the Alternative Investment Market of the
London Stock Exchange in March 2001.
* Millfield is a national independent financial advisory company in the UK,
offering truly independent advice, primarily in the pensions, life
insurance, investment and mortgage sectors, as well as long-term care
provision, personal wealth management and the corporate financial planning
arena. Millfield also has specialist divisions dealing with offshore
investment, insurance and employee benefits.
Chairman's Statement
In just two and a half years, Millfield has created a national independent
advisory organisation offering truly independent advice to both individuals and
businesses across the length and breadth of the UK. This has been achieved in a
period of ongoing uncertainty about regulatory changes in the financial services
industry, continuing volatility in global stockmarkets, and low levels of
confidence by businesses and individuals in the UK. However, recent improvements
in financial markets, low interest rates and inflation are starting to increase
confidence and the Group's diverse range of businesses and specialist services
enables us to react effectively to these changes.
During the period, Millfield has continued to grow the number of its high
calibre advisers and employees and to develop their businesses, utilising the
investment that has been made, since our flotation, in the Group's
infrastructure.
Results
Results for the first half of the year show turnover up 65% to #23.5m (2002:
#14.2m) and losses after tax reduced to #5.65m (2002: #5.92m).
* Operating losses, before goodwill amortisation and results relating to our
Lifetime joint venture, were reduced to #4.4m (2002: #5.6m). This reflects
the increase in turnover which was achieved through organic growth and
acquisitions made in the second half of last year, together with tight
control of costs which resulted in a 10% reduction in overheads in the
existing businesses.
* September management accounts showed the achievement for the first time of
turnover exceeding #5m, resulting in a small operating profit in the month.
September is generally a strong seasonal month for us - nevertheless this is
an important milestone in the development of the Group, achieved in line
with the timing anticipated at the time of the flotation.
* Changes in the corporate structure of our Lifetime joint venture have
resulted in a surplus of #0.8m which has been taken directly to reserves,
and more than offsets our share of the trading losses of the business
of #0.6m.
At 30 September, companies within the Group held #8.3m of cash balances with a
further #3.3m held by Lifetime.
On 9 July, we successfully completed a share issue through a placing with
institutional shareholders and an open offer to all shareholders to raise #8.7m,
after expenses of #1.4m. The primary purpose of the issue was to provide
additional working capital for the Group, particularly to fund the increasing
pipeline debtor of business submitted to product providers awaiting issue, and
to support the business plans of Group companies.
Operating Companies
Millfield Partnership - creating value in a changing marketplace
This is Millfield's core business with 400 advisers in 19 locations, up from 347
a year ago with 16 locations. This increase, together with some improvements in
productivity, has resulted in turnover of #16.4m, an increase of 39% from #11.8m
in the first half of last year. Gross margin was 30.3%.
This business continues to develop satisfactorily. Whilst productivity per
adviser during the recent economic uncertainty did drop below the levels we
anticipated, it has improved slightly in the first half of the year. We remain
confident that the increasingly high calibre of our recruits, combined with the
marketing initiatives that we are implementing to support adviser activity, will
mean that this improvement will continue.
Millfield Associate Partnership - growing the firms
Results in the first half of the year in our Associate Partnership firms have
been most encouraging, with turnover of #3.5m, up from #1.3m last year. A
number of these firms specialise in the mortgage and protection markets and they
have been particularly successful during this period.
We supported the establishment of Legacy Protect Limited which was launched in
September and we entered into agreements with Parker Group Financial Services
Limited, an existing firm with 9 advisers, on 10 September 2003. Both of these
new firms utilise our stepped acquisition model, which allows Millfield to
participate in industry consolidation and secure additional firms and groups of
advisers led by vigorous entrepreneurs, with total consideration payable being
linked to proven value.
These new firms bring the total in Millfield Associate Partnership to12, 10 of
which have stepped acquisition agreements in place. There are now 185 advisers
in these firms.
Millfield Management Services - providing the infrastructure to support growth
Most of the operational infrastructure required by the core companies is now in
place. We are currently carrying out a major upgrade of our IT with the
installation, in the early part of next year, of a new host system using the
Swift package from Sirius Financial Solutions PLC. This will support significant
improvements in operational effectiveness and management information, providing
a platform for the next stage of growth.
Millfield Moncur Jackson - Innovative Employee Benefits solutions
We have now completed the earnout from the acquisition of this business
resulting in payment of the maximum amount as the business met all its turnover
and profit targets. We continue to develop our Employee Benefits proposition
which we believe is an area which will benefit from more IFA activity.
Simply Millfield - Online term assurance direct
We have now established the operating infrastructure of this business.
Advertising levels in the first half of the year have been low whilst we have
tested the proposition and positive results mean that these are now being
increased in the second half of the year.
RST Group Limited - broadening the client offering through complementary
financial services activities
RST has traded profitably through the first half of the year with a turnover of
#1.9m.
On 1 September RST acquired the Chartered Accountants and IFA firm Freeman Rich,
based in Preston. Total consideration is a maximum of #0.98m with initial
consideration of #0.39m having been paid in cash. This acquisition brings RST
to a total of 16 offices in the north of England and Scotland with 126 staff,
including 40 accounting professionals and 13 IFAs.
Lifetime Group Limited
On 24 July, we announced that we had reached agreement in principle with Norwich
Union Life and Pensions Limited ("Norwich Union") for them to invest in and
become a full partner in developing our Lifetime joint venture. As a result, we
converted our preference shares to ordinary shares and Lifetime issued 1,024,998
new ordinary 1p shares to Norwich Union for #2.0m. Following these transactions
Millfield held 76.34% of the shares in Lifetime and Norwich Union held 7.41%.
These transactions have already delivered an economic gain in the value of
Millfield's share in the Joint Venture increasing by #0.8m and this increase in
the net assets has been included in the half year results as a movement on
reserves.
On 4 December 2003, the second stage of the agreement with Norwich Union was
concluded, resulting in a transformational deal for Millfield and the agreement
of a new business plan for the company. Lifetime allotted a further 11,736,354
shares to Norwich Union for a consideration of #8.0m taking its shareholding to
49.9%. Millfield retains a shareholding of 41.3% following these transactions.
The remaining 8.8% of the shares are held by the founders. This transaction
will result in a further economic gain for Millfield, with a surplus in the
second half of the year of #1.4m, which will also be taken directly to reserves.
During the period, the company continued its work on developing the
infrastructure and systems required to deliver its online personal portfolio and
wealth management investment service. It is now expected that the service will
be launched in the first half of the next calendar year, following regulatory
approval and live testing. The new business plan developed in conjunction with
Norwich Union aims to deliver a service which will be used across the financial
services industry. Millfield's share of losses from this activity during the
period was #0.6m.
Outlook
Millfield has continued to develop in line with its strategy and the plans we
set out at the time of our flotation and in subsequent announcements. Major
progress has been made in the period, particularly in achieving funding for
Lifetime and in positioning it as an industry vehicle for the future.
Achieving a small operating profit in September was an important milestone for
the Group. Our next objective is to deliver consistent profitability at the
operating level.
The economy and the investment markets have stabilised though there is still
considerable change to occur across the financial services market. We have
built a strongly based Group and I am confident that, with the quality of the
people we have and are attracting, we will continue to deliver our plans.
Richard Mansell-Jones
Non-Executive Chairman
4 December 2003
Consolidated Profit and Loss Account
Year
Six months ended ended
30 September 31 March
2003 2002 2003
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
TURNOVER 23,489 14,175 31,343
Cost of Sales (15,817) (9,280) (20,755)
Gross Profit 7,672 4,895 10,588
ADMINISTRATIVE EXPENSES
Goodwill amortisation (760) (316) (794)
Other (12,081) (10,484) (21,986)
(12,841) (10,800) (22,780)
OPERATING LOSS (5,169) (5,905) (12,192)
Share of operating loss
Joint venture (561) (190) (481)
Associate (7) 0 0
Interest receivable and similar income
Group 87 190 378
Joint venture 11 4 16
Interest payable and similar charges (92) (16) (61)
LOSS ON ORDINARY ACTIVITIES
BEFORE TAXATION (5,731) (5,917) (12,340)
Tax on loss on ordinary activities 2 0 (21)
LOSS ON ORDINARY ACTIVITIES
AFTER TAXATION (5,729) (5,917) (12,361)
Equity minority interests 83 (3) 145
LOSS FOR THE FINANCIAL PERIOD
ATTRIBUTABLE TO SHAREHOLDERS (5,646) (5,920) (12,216)
Deficit brought forward (20,481) (8,265) (8,265)
DEFICIT CARRIED FORWARD (26,127) (14,185) (20,481)
Loss per share (7.64p) (9.82p) (18.25p)
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Profit attributable to members of the (5,646) (5,920) (12,216)
company
Surplus arising on issue of shares by joint 841 0 0
venture
Total recognised gains and losses for the (4,805) (5,920) (12,216)
period
Consolidated Balance Sheet
30 September 31 March
2003 2002 2003
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
FIXED ASSETS
Intangible assets 17,710 11,960 17,451
Tangible assets 3,733 3,235 3,825
Investments 0 98 0
Investments in joint venture:
Share of gross assets 1,687 2,803 2,558
Share of gross liabilities (343) (121) (147)
Goodwill arising on acquisition less amortisation 1,632 282 275
Investments in associate:
Share of net liabilities (7) 0 0
Goodwill arising on acquisition less amortisation 2 0 0
24,414 18,257 23,962
CURRENT ASSETS
Stocks 966 0 706
Debtors 15,643 9,026 12,099
Investments 251 0 251
Cash at bank and in hand 8,279 14,409 6,926
25,139 23,435 19,982
CREDITORS: amounts falling due within one year (12,656) (6,183) (11,127)
NET CURRENT ASSETS 12,483 17,252 8,855
TOTAL ASSETS LESS CURRENT LIABILITIES 36,897 35,509 32,817
CREDITORS: amounts falling due after more than one year (2,501) (1,050) (2,308)
34,396 34,459 30,509
PROVISIONS FOR LIABILITIES AND CHARGES (1,491) (856) (1,440)
MINORITY INTERESTS
Equity minority interests (90) (3) (173)
NET ASSETS 32,815 33,600 28,896
CAPITAL AND RESERVES
Called-up share capital 159 123 124
Deferred consideration 1,634 325 1,656
Share premium account 44,599 35,628 35,888
Merger reserve 11,709 11,709 11,709
Capital reserve 841 0 0
Profit and loss account (26,127) (14,185) (20,481)
EQUITY SHAREHOLDERS' FUNDS 32,815 33,600 28,896
These financial statements were approved by the Board of Directors on 4 December 2003.
Signed on behalf of the Board of Directors:
Richard Mansell-Jones Harry Roome Paul Tebbutt
Consolidated Cash Flow Statement
Year
Six months ended ended
30 September 31 March
2003 2002 2003
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Operating loss (5,169) (5,905) (12,192)
Depreciation charge 541 364 853
Increase in stocks (260) 0 (94)
Goodwill amortisation charge 760 316 794
Increase in debtors (3,544) (1,385) (1,381)
Increase/(decrease) in creditors 1,356 (173) (579)
Increase in provisions 51 104 587
Net cash outflow from operating activities (6,265) (6,679) (12,012)
Returns on investments and servicing of finance
Interest received 87 190 378
Interest paid (92) (16) (61)
(5) 174 317
Taxation
UK corporation tax paid 3 0 6
Capital expenditure and financial investment
Purchase of tangible fixed assets (450) (700) (1,437)
Sale of tangible fixed assets 0 0 15
(450) (700) (1,422)
Acquisitions and disposals
Purchase of subsidiary undertakings (425) 0 (1,960)
Cash acquired with subsidiaries 0 0 243
Acquisition expenses (22) (151) (811)
Overdraft acquired with subsidiary 0 0 (143)
Purchase of fixed asset investments 0 (98) (446)
Purchase of joint venture interest 0 (3,000) (3,000)
Investment in associate (2) 0 0
(449) (3,249) (6,117)
Financing
Cash receipt from share issue 10,154 17,238 17,238
Expenses paid in connection with share issue (1,407) (1,050) (1,055)
8,747 16,188 16,183
Increase/(decrease) in cash in the period 1,581 5,734 (3,045)
Reconciliation of net cash flow to movements in funds
Increase/(decrease) in cash in the period 1,581 5,734 (3,045)
Net funds at beginning of period 5,630 8,675 8,675
Net funds at end of period 7,211 14,409 5,630
Notes
1. BASIS OF PREPARATION
The interim accounts, which are unaudited, have been prepared on the basis of
the accounting policies set out in the 2003 group accounts. The figures shown
for the full year ended 31 March 2003 represent an abridged version of the full
accounts of Millfield Group plc for that year, which have been filed with the
Registrar of Companies and on which the auditors have given an unqualified
report. The financial information contained in this interim report does not
constitute the Group's statutory accounts within the meaning of section 240 of
the Companies Act 1985.
2. LOSS PER SHARE
The calculation of loss per share on losses attributable to shareholders is
based on losses after taxation of #5,645,844 (2002: #5,919,670) and on
73,936,187 (2002: 60,303,016) ordinary shares, being the weighted average number
of shares in issue during the six months.
FRS 14 requires presentation of diluted EPS when a company could be called upon
to issue shares that would decrease net profit or increase net loss per share.
For a loss making company with outstanding share options, the exercise of
in-the-money options would reduce rather than increase the net loss per share
and thus such options are not dilutive as defined in the FRS. Similarly,
although net loss per share would be increased by the exercise of
out-of-the-money options, it seems inappropriate to assume that option holders
would act irrationally and exercise those options. Accordingly no adjustment has
been made to diluted EPS for either in-the-money or out-of-the-money share
options and, since there are no other diluting future share issues, the diluted
loss per share is the same as the basic loss per share for the year.
3. POST BALANCE SHEET EVENTS
On 4 December 2003, Lifetime Group Limited has allotted a further 11,736,354
shares to Norwich Union for a consideration of #8.0m. Following this
transaction, Millfield Group plc's shareholding reduced to 41.3%, 24.4% held as
an investment and 16.9% held for resale.
This information is provided by RNS
The company news service from the London Stock Exchange
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