30th Nov 2006 07:01
Cardiff Property PLC30 November 2006 THE CARDIFF PROPERTY PUBLIC LIMITED COMPANY AND ITS SUBSIDIARIES FOR RELEASE 7.00 AM 30 NOVEMBER 2006 THE CARDIFF PROPERTY PLC (The group, including Campmoss, specialises in property investment and development in the Thames Valley. The portfolio, valued in excess of £34m, isprimarily located to the west of London, close to Heathrow Airport and in Surrey and Berkshire.) PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2006 Highlights: 2006 2005 Revenue £'000 2,442 1,672Property sales £'000 1,927 1,113Net assets per share pence 1,123 990Profit before tax £'000 2,549 3,201Earnings per share pence 137.6 193.6Dividend per share - paid and proposed pence 10.05 9.0Gearing % nil nil Richard Wollenberg, Chairman, commented: "The group has reported another successful year. The air of optimism regardingthe Thames Valley commercial property market remains evident. Certainly newletting enquires have improved and the fundamentals for rental growth remainpositive. The real question is whether these will be translated into completedtransactions which, if evident, will encourage new development to take place." For further information: The Cardiff Property plc Richard Wollenberg 01784 437444Arbuthnot Securities Richard Wood 020 7012 2000 THE CARDIFF PROPERTY PUBLIC LIMITED COMPANYAND ITS SUBSIDIARIES (The group, including Campmoss, specialises in property investment anddevelopment in the Thames Valley. The portfolio, valued in excess of £34m, isprimarily located to the west of London, close to Heathrow Airport and in Surreyand Berkshire.) PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2006 Chairman's statement Dear shareholder During the early part of the year, an increase in tenant demand, reducing supplyof new Grade A office space and positive attitude towards rental growthsustained optimism within the western M4 corridor and surrounding areas. Thisencouraged investment deals to be transacted, as evidenced by our sales lastyear, yet I have to report that whilst the fundamentals remain positive, themarket still awaits the anticipated upturn in take up of new office space neededto sustain speculative development and rental growth. Within the Thames Valley some benchmark lettings have been completed during thelast six months and the gradual take up of second hand stock is evident butthere is still an imbalance between supply and demand, although locations suchas Maidenhead are experiencing an upturn in rental levels where the availabilityof new high grade office space is at a low point. The investment market remains firm reflecting the volume of money available toboth UK and overseas institutions to acquire commercial property. Investorconfidence in the expectation of rental growth continues to support currentyields. New grade A office buildings let to leading covenants on medium termleases remain highly sought after thus maintaining the downward pressure onyields. Twelve months ago investors were focusing their attention towardscommercial property with 10 to 15 years of the tenancy term remaining, howeverthere is now growing interest in those buildings where the lease term is lessthan 5 years. A number of leading economists have recently voiced their concern over thefuture performance of the commercial property market, arguing that the relativereturns currently available on equities or bonds would appear to offer a betteroption. The expectation of rental growth, however, continues to underlineinvestors' confidence. The likelihood of higher interest rates remains a concernalthough counterbalanced by inflationary pressures continuing to exceed targets. Activity within the commercial property market may well slow down in the shortterm which will place greater emphasis on the quality of buildings, theirlocation, availability of general facilities and the local labour market and, asalways, transport access and car parking facilities, despite the efforts oflocal authorities to reduce the latter. In Surrey and Berkshire residential and land values have seen a small increaseover the year although the actual number of transactions have reduced. Planningpermissions continue to be difficult to achieve and therefore restrict theavailability of new high quality stock. Many factors affect the level of supply and more recently the increasing overallcost of moving has become prominent in individuals' decisions to move home.Residential values are unlikely to suffer a major fall as suggested in somequarters. FinancialThe consolidated results for the year to 30 September 2006 are the first fullyear results to be prepared by the group under applicable InternationalFinancial Reporting Standards ("IFRS" as adopted by the EU). The key changesresulting from the introduction of IFRS are set out in the report which isavailable in full from the company's website at www.cardiff-property.com. Theprincipal one affecting the group is the inclusion in profit before tax of anysurplus on revaluation of investment properties during the year, less a relatedcharge for deferred tax which was previously shown by way of a note to theaccounts. For the year to 30 September 2006, under IFRS, profit before tax amounted to£2.55m (2005: £3.20m) which included an after tax contribution from CampmossProperty Company Limited, our 47.62% jointly controlled entity, of £0.96m (2005:£2.12m). Revenue totalled £2.44m (2005: £1.67m) representing gross rental incomeof £0.52m (2005: £0.56m) and sales of development property of £1.92m (2005:£1.11m). Shareholders should note that under UK GAAP, results for Campmoss wereidentified under all the component parts of the income statement (formerly theprofit and loss account). Under IFRS, however, profit before tax includes asingle line item "share of jointly controlled entity". The net effect is thesame but the presentation is significantly different. Profit after taxattributable to shareholders for the financial year amounted to £2.43m (2005:£3.43m). Earnings per share was 137.6p (2005: 193.6p). The company's commercial and residential portfolio valued annually by Cushman &Wakefield and Aitchison Rafferty respectively totalled £5.73m. The portfolioexcludes property under development or refurbishment and held for resale whichis held as stock or work in progress in the balance sheet at the lower of costor market value. At the year end these included 2 houses at Rusham Road, Eghamand The Windsor Business Centre, Windsor. Total assets of the group at the year end were £20.71m (2005: £19.13m) includingthe company's share of the net assets of Campmoss of £7.96m (2005: £7.00m). Net assets under IFRS at 30 September 2006, including the share of Campmoss,totalled £19.56m (2005: £17.58m) equivalent to 1,123p per share (2005: 990p), anincrease of 13.43% over the year. The total property portfolio under management at the year end, including theCampmoss portfolio was valued at £34.46m (2005: £33.93m). The group has renewed its bank borrowing facilities of up to £3.27m which werenot utilised during the year. Cash balances are placed on short term deposit andtogether with bank borrowing facilities remain available to increase the group'sproperty portfolio or pursue other suitable acquisitions. During the year the company purchased for cancellation 34,000 ordinary sharesfor a total consideration of £335,704. The directors are proposing the annualrenewal of their authority to acquire shares and to renew the Rule 9 authorityboth of which will be included in the resolutions to be placed beforeshareholders at the Annual General Meeting and Extraordinary General Meetingrespectively to be held on 11 January 2007. A copy of the Rule 9 waiver documentis also available from the company's website. DividendThe directors recommend a final dividend of 7.3p per share (2005: 6.5p), makinga total dividend paid and proposed for the year of 10.05p an increase of 11.7%.The final dividend will be payable on 8 February 2007 to shareholders on theregister on 19 January 2007. Commercial portfolioThe investment portfolio continues to be primarily located in the M4 westerncorridor and close to Heathrow Airport. At Egham, two separate buildings known as The White House and Heritage Court,which include office and retail units, are all let on medium term leases. Theletting of a vacant retail unit at Heritage Court was completed during the year. At The Maidenhead Enterprise Centre, building works were completed early in theyear, and a number of lettings are under negotiation. This property comprises 5individual business units totalling 14,000 sq ft which have been rebuilt to ahigh standard. At The Windsor Business Centre, 4 similar type business units are let on mediumterm leases. One unit is vacant and currently undergoing refurbishment. The unitis being marketed either for reletting or freehold sale. At Cowbridge Road, Cardiff we are investigating the possibility of submitting aresidential planning permission. The 14,650 sq ft property is let on a mediumterm lease to The Royal Mail as a sorting centre. The year end valuation for the investment properties excluding stock showed anincrease of 7.3% over the year. ResidentialAt Egham the company retains 2 houses, 1 of which is let on a short term lease,the other is currently being refurbished for reletting. The sale of Ashleigh House, Virginia Water was completed during the first halfof the year and achieved a figure of £1.72m. An ongoing planning interest hasbeen retained over adjacent land which was sold with the property. The freehold sale of a property in Egham was completed after the year end. Campmoss PropertyAs reported at the half year, freehold property at Market Street, Bracknell,Tangley Place, Worplesdon, Highway House, Maidenhead and Datchet Meadows(formerly Jubilee Court), Datchet, are all subject to planning applications. Inthe case of Datchet Meadows planning permission for 24 residential units wasgranted last year and a revised application for 35 units has been lodged. In theevent this application is unsuccessful the Campmoss directors' current intentionis to commence construction of the smaller scheme in the New Year. At Highway House, Maidenhead post the year end, the local authority indicatedtheir intention to grant planning permission for demolition of the existing10,000 sq ft office building to be replaced with a new 40,000 sq ft officescheme, subject to agreeing certain minor details. Ongoing discussions aretaking place with a view to obtaining full planning permission. At Clivemont House, Maidenhead plans to demolish the existing 30,000 sq ftbuilding and replace with a new 40,000 sq ft office building are currently beingprepared. The building is currently let to 3 tenants on short term leases and adecision will be made next year as to a development timetable. At the year end the portfolio, which includes the above properties plusinvestment properties in Woking, Bracknell and Burnham, has been valued by thedirectors, taking account of external advice where available and assessed at acurrent market value of £27.53m (2005: £25.71). The rental income from over 20individual tenants totalled £1.95m (2005: £2.20m). The reduction in rentalincome results from sales of property. At the year end Campmoss had net borrowings of £7.00m (2005: £7.07m). Gearingwas 40% (2005: 47%). Quoted investmentsThe group has retained its small equity portfolio which includes Tribal GroupPlc, ImmuPharma Plc, Wadharma Investments Plc and General Industries Plc. Duringthe year the holding of IFX Group was sold following a successful cash takeoveroffer. I remain a director of Wadharma and General Industries, quoted on AIM andPlus Markets respectively. Management and staffThe group has reported another successful year and on behalf of shareholders Iwish to thank my fellow board members, joint venture partners and our smallmanagement team based in Egham for their support and achievements during theyear. Shareholders telephone dealing serviceA number of shareholders have taken advantage of the company's low commissionshare dealing facility provided by our registrars, Computershare InvestorServices Plc, and therefore these services have been renewed. The company iscontinuing to offer its free share sale service to those shareholders who wishto dispose of holdings of 500 shares or less. Shareholders should be aware thatthis service should not be construed as an encouragement to buy or sell thecompany's shares. If in any doubt shareholders should contact their ownfinancial advisors. Computershare can be contacted on 0870 703 0084. OutlookThe air of optimism regarding the Thames Valley commercial property marketremains evident. Certainly new letting enquires have improved and thefundamentals for rental growth remain positive. The real question is whetherthese will be translated into completed transactions which, if evident, willencourage new development to take place. The group's portfolio of investment property and development schemes all locatedin the important M4 corridor is well placed to benefit from further recovery. Planning permissions and new lettings are important to the future growth of thegroup and, although the planning process is a long and arduous process, I remainconfident that progress is being made. J Richard WollenbergChairman29 November 2006 Consolidated Income StatementFOR THE YEAR ENDED 30 SEPTEMBER 2006 2006 2005 £'000 £'000 Revenue 2,442 1,672Cost of sales (1,467) (722) ______ ______Gross profit 975 950Administrative expenses (493) (573)Other operating income 337 282 ______ ______ Operating profit before gains on investment properties and other investments 819 659Profit on sale of investment property 139 -Profit on sale of other investments 34 1Surplus on revaluation of investment properties 391 225 ______ ______Operating profit 1,383 885Financing: Interest receivable and similar income 203 197 Interest payable - (5)Share of results of jointly controlled entity 963 2,124 ______ ______Profit before taxation 2,549 3,201Taxation (121) 233 ______ ______Profit for the financial year attributable to 2,428 3,434 equity holders ______ ______ Earnings per share on profit for the financial year - penceBasic 137.6 193.6Diluted 136.4 192.0 ______ ______ DividendsFinal 2005 paid 6.5p (2004: 5.8p) 115 104Interim 2006 paid 2.75p (2005 2.5p) 48 45 ______ ______ 163 149 ______ ______ Final 2006 proposed 7.5p (2005: 6.5p) 127 115 ______ ______ The above results relate entirely to continuing activities. There were noacquisitions or disposals of businesses during the period. Consolidated Balance SheetAT 3O SEPTEMBER 2006 2006 2005 £'000 £'000Non-current assetsInvestment properties 5,730 5,444Investment in jointly controlled entity 7,959 6,996Property, plant and equipment 4 4Other financial assets 357 303Deferred tax asset 37 112 ______ _______Total non-current assets 14,087 12,859 ______ _______Current assetsStock and work in progress 1,132 2,701Trade and other receivables 1,497 216Cash and cash equivalents 3,990 3,356 ______ ______ 6,619 6,273 ______ ______ Total assets 20,706 19,132 ______ ______ Current liabilitiesCorporation tax (316) (118)Trade and other payables (447) (657) ______ ______ (763) (775) ______ ______Non-current liabilitiesProvisions (115) (277)Deferred tax liability (272) (504) ______ ______ (387) (781) ______ ______Total liabilities (1,150) (1,556) ______ ______Net assets 19,556 17,576 ______ ______Capital and reservesCalled up share capital 348 355Share premium account 4,946 4,946Other reserves 2,299 2,292Revaluation reserv 4,892 3,990Retained earnings 7,071 5,993 ______ _______Shareholders' funds attributable to 19,556 17,576 equity holders ______ _______ Net assets per share 1,123p 990p ______ ______ Consolidated Cash Flow StatementFOR THE YEAR ENDED 30 SEPTEMBER 2006 2006 2005 £'000 £'000 Cash flows from operating activities Profit for the year 2,428 3,434 Adjustments for: Depreciation, amortisation and impairment 3 3 Financial income (203) (197) Financial expense - 5 Share of profit of jointly controlled entity (963) (2,124) Profit on sale of investment property (139) - Profit on sale of other investments (34) (1) Surplus on revaluation of investment properties (391) (225) Equity settled share based payment expenses 50 50 Taxation 121 (233) Decrease in provisions (162) (136) ______ ______Cash flows from operations before changes in working capital 710 576 Decrease in stock 1,569 722 (Increase)/decrease in trade and other receivables (1,283) 1,986 (Decrease)/increase in trade and other payables (212) 139 ______ ______ Cash generated from operations 784 3,423 Tax paid (81) (132) ______ ______Net cash flows from operating activities 703 3,291 ______ ______ Cash flows from investing activities Interest received 209 155 Interest paid - (5) Acquisition of property, investments and plant and equipment (238) (1,286) Proceeds of disposal of property, investments and plant and equipment 458 9 ______ ______Net cash flows from investing activities 429 (1,127) ______ ______ Cash flows from financing activities Proceeds from the issue of share capital - 105 Purchase of own shares (335) (76)Dividends paid (163) (149) ______ ______ Net cash flows from financing activities (498) (120) ______ ______ Net increase in cash and cash equivalents 634 2,044 Cash and cash equivalents brought forward 3,356 1,312 ______ ______ Cash and cash equivalents at year end 3,990 3,356 ______ ______ Other Primary StatementsFOR THE YEAR ENDED 30 SEPTEMBER 2006 Consolidated statement of changes in equity 2006 2005 £'000 £'000 Opening shareholders' funds 17,576 14,213Share capital on options exercised - 9Share premium on options exercised - 95Own shares purchased (335) (76)Fair value of share options granted 50 50Profit for the financial year 2,428 3,434Dividends (163) (149) ______ ______ Closing shareholders' funds 19,556 17,576 ______ ______ Notes to the Financial StatementsFOR THE YEAR ENDED 30 SEPTEMBER 2006 1. International Financial Reporting Standards The consolidated results for the year ended 30 September 2006 are the first fullyear results to be prepared by the group under applicable InternationalFinancial Reporting Standards adopted by the European Union (adopted "IFRS")which have been adopted and incorporated into the principal accounting policies. The comparative figures for the financial year ended 30 September 2005 are notthe group's statutory accounts for that financial year. The statutory accountsfor the year ended 30 September 2005, prepared in accordance with UK GAAP, havebeen filed with the Registrar of Companies. The auditor gave an unqualifiedreport, without any statement under section 237(2) or (3) of the Companies Act1985. The auditor has audited the transition to IFRS in respect of the yearended 30 September 2005. The transition reconciliations of UK GAAP to IFRS were included in the interimreport and are repeated in the annual report. Copies can be obtained from thecompany's website at www.cardiff-property.com. Key changesThe main differences from UK GAAP are: • annual revaluation surpluses or deficits on investment properties are included in the income statement, whereas previously this was reported as a movement on the balance sheet through the revaluation reserve; • capital gains tax payable in the event that all the group's investment properties were sold at the balance sheet date is included as an additional deferred tax liability in the balance sheet, having previously been disclosed as a note to the accounts. The movement in valuation of the investment properties during the year will affect the tax charge in the income statement; • the value of lease incentives is spread over the life of a lease rather than to the first rent review; • no provision is made for proposed dividends; and • the fair value of options granted is recognised as an employee expense with a corresponding increase in equity. 2. Analysis of revenue, profit before taxation and net operating assets 2006 2005 £'000 £'000 Revenue (wholly in the United Kingdom): Property and other investment being 515 559 gross rents receivable Property development being sale of 1,927 1,113 development properties ______ ______ 2,442 1,672 ______ ______Profit before taxation: Property and other investment 1,886 2,666 Property development 663 535 ______ ______ 2,549 3,201 ______ ______Net operating assets: Assets Property and other investment 19,845 17,466 Property development 2,869 3,656 Eliminations (2,008) (1,990) ______ ______ Total assets 20,706 19,132 ______ ______ Liabilities Property and other investment 2,111 1,124 Property development 483 1,735 Eliminations (1,444) (1,303) ______ ______ Total liabilities 1,150 1,556 ______ ______ Net operating assets 19,556 17,576 ______ ______ 3. Earnings per share Earnings per share has been calculated in accordance with IAS 23 - Earnings PerShare using the profit after tax for the financial year of £2,428,000 (2005:£3,434,000) and the weighted average number of shares as follows: Weighted average number of shares 2006 2005Basic 1,763,962 1,773,706Adjustment to basic for bonus element of shares to be issued on exercise of options 16,046 14,690 _________ _________Diluted 1,780,008 1,788,396 _________ _________ The Group's Annual Report and Accounts for the year ended 30 September 2006 areexpected to be sent to shareholders on 8 December 2006, and will contain noticesconvening the Company's Annual General Meeting and an Extraordinary GeneralMeeting to approve the renewal of waiver under Rule 9 of the City Code onTakeoves and Mergers, both to be held on 11 January 2007. Financial Calendar 2006 30 November Final results for 2006 announced2007 11 January Annual General Meeting 17 January Ex dividend date for final dividend 19 January Record date for final dividend 8 February Final dividend to be paid May Interim results for 2007 announced 30 September End of accounting year Directors and Advisers Directors AuditorJ Richard Wollenberg, KPMG Audit PlcChairman and chief executiveDavid A Whitaker FCAFinance director Stockbrokers and financial advisersNigel D Jamieson BSc, MRICS, FSI, Arbuthnot Securities LtdIndependent non-executive director Secretary BankersDavid A Whitaker FCA HSBC Bank plc Non-executive director of wholly owned SolicitorssubsidiaryFirst Choice Estates plc Charles RussellDerek M Joseph BCom, FCIS, MSII Morgan Cole Head office Registrar and transfer office56 Station Road Computershare Investor Services PLCEgham PO Box 82Surrey TW20 9LF The PavilionsTelephone: 01784 437444 Bridgwater RoadFax: 01784 439157 Bristol BS99 7NHE-mail: [email protected] Telephone: 0870 702 0001Web: www.cardiff-property.com Dealing line: 0870 703 0084 Registered office Registered numberMarlborough House 22705Fitzalan CourtFitzalan RoadCardiff CF24 0TE This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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