Press Releases

30 June 2004
Inter-Alliance makes significant progress in 2003

Inter-Alliance Group PLC ("Inter-Alliance" or the "Group")
Full year results ended 31 December 2003

Inter-Alliance makes significant progress in 2003
and Reports encouraging trading in 2004

"Inter-Alliance Group made significant progress in 2003. Gross revenue increased 22.5% during the year and, since the start of the restructuring programme in January 2002, we have seen encouraging growth in the number of Advisers as well as improvements in productivity. This is an exceptional achievement especially given the scale of restructuring when retention, never mind recruitment, is more challenging. As I was delighted to announce earlier this month, Inter-Alliance is in merger talks with Millfield Group Plc. I believe that a successful conclusion to these discussions can only augment our position in a consolidating marketplace and I look forward to updating shareholders on progress shortly."

Keith Carby, Chairman and Chief Executive Inter-Alliance Group PLC

Financial Highlights

Year ended 31 December 2003:

• Gross revenue up 22.5% at £63.6 million (2002: £51.9 million)
• Gross profit £16.0 million (2002: £10.2 million)
• Operating loss before exceptional items £20.0 million (2002: loss £11.0 million)
• 
  Loss per share of 7.8 pence (2002: loss 21.3 pence)

Growth in the number and productivity of Advisers

At the start of the restructuring programme in January 2002, the Group's UK operations had 1,088 Advisers. At the end of 2003, the Group had 1,208 Advisers, an 11% increase over January 2002.

The annualised increase in new business productivity since completing most of the restructuring (in Q4 2003 and Q1 2004) was 25.9% higher than the equivalent figure for 2002 (£55,000 over £43,700).

Significant cost saving actions taken

Since January 2003, staff numbers have halved, down 297 to 298 at the present time. The number of operating premises have reduced from 59 to 39 at the year end and 26 at the present time.

These actions have led to a substantially reduced annualised cash overhead run rate of approximately £24 million at the year end. Further cost reductions amounting to approximately £2 million scheduled for implementation around the year-end have been deferred, given merger discussions.

Current trading

The directors were pleased with trading performance in the first quarter and to date.

By the end of March, the number of UK Advisers had increased to 1,214, the volumes of both submitted and issued business were significantly up by 23% on the comparable period last year and the gross margin rates are marginally ahead of last year, in line with management's expectations. The directors believe these results are to some extent a consequence of an improving market but are also derived from the actions taken in the second half of 2003 to restructure the Group.

Merger discussions and going concern

Merger discussions between Inter-Alliance and Millfield Group Plc are proceeding. Written commitments to make available the necessary funds for the merger have been obtained and the directors are now awaiting the FSA's decision, which needs to be taken through a series of processes to enable the merger to be concluded and the funds released. Obviously, Inter-Alliance has not been able to provide its auditors with sufficient evidence surrounding the likely outcome of these processes. Accordingly, in the circumstances, the auditors have no option but to qualify this aspect of Inter-Alliance's accounts in advance of the FSA's decision.

Hard copies of the annual report and financial statements year ended 31 December 2003 may be obtained from Inter-Alliance's office at Tuition House, 27 - 37 St. George's Road, Wimbledon, London SW19 4DS. The annual report and financial statements can also be viewed on the Group's web site www.inter-alliance.co.uk. The financial statements are in the process of being sent to shareholders.