4th Jul 2006 07:01
Terrace Hill Group PLC04 July 2006 For embargoed release at 7am 4 July 2006 TERRACE HILL GROUP PLC ('Terrace Hill' or 'the Group') INTERIM RESULTS Terrace Hill Group Plc, the AIM listed property group, announces its results forthe six months ended 30 April 2006. Overview • Triple Net Asset Value up 9.55% to 52.65p per share (October 2005: 48.06p per share) • Interim dividend of 0.7p per share (six months to the 30th April 2005: 0.5p) • Committed to leveraging capital through co-investment providing enhanced performance related returns • Established £90 million commercial development fund • Continue to work towards de-merging house building division • Acquiring in joint venture a 49% interest in Nationwide's at.home portfolio of 2,253 flats and houses • Assessing the potential to form residential fund or REIT • First involvement in the healthcare sector - acquired in joint venture a five acre site in Hereford and planning a retirement village • Strengthened management team with appointment of corporate finance director CHAIRMAN'S STATEMENT I am delighted to present the Group's Unaudited Results for the six months to30th April 2006 and my report on the half year where the Triple Net Asset Valueper share has risen by 9.55% to 52.65p. Good progress has been made by the commercial and residential divisions with theletting and sale of commercial investments at record yields, the purchase of newdevelopment sites and the establishment of our first commercial developmentfund. The Terrace Hill Development Partnership closed in April having raised £10million of new equity to invest in a number of the Group's commercialdevelopments with an estimated aggregate sales price of over £90 million. The fund offers exposure to Terrace Hill's diversified commercial developmentprogramme and includes office, prelet retail and industrial schemes across theU.K. with a completed development value of between £5 million and £20 million.The fund has a minimum life of four years during which time we expect toreinvest most of the original equity in new schemes. The Group has contributed£2 million to the fund which demonstrates our commitment to leverage our capitalthrough co-investment providing enhanced performance related returns. Inaddition the fund generates development management fees for Terrace Hill. We have continued to take advantage of a very strong market for commercialinvestments with the sale of our office development at 34 Clarendon Road,Watford, industrial investments at Decimus Park, Tunbridge Wells and ThanetReach Business Park, and a mixed use retail and residential scheme at JamesonStreet, Hull. Since the period end we have exchanged contracts to sell Cyprium,a 70,000 sq ft office development which is prelet to the Welsh DevelopmentAgency at Swansea Waterfront for £16.65 million reflecting a yield of 4.89%,greatly exceeding our initial expectations. Also since the end of April we haveagreed terms to sell 12 of the 20 industrial units at Cirrus, Farnborough andhave agreed the sale of a mixed industrial development in Crawley for £5.95million. Further progress has been made on our retail warehouse developments at Blyth andGalashiels where 10 units out of a total of 11 have either been prelet or havepre-lettings in solicitor's hands. Both of the retail warehouse schemes and the Cirrus development at Farnboroughare now within the Terrace Hill Development Partnership. On the residential development front we have sold or exchanged on 38 of 64 unitsat Glasgow Green and we are confident of having all sold by the end of the year. Advances are also being made with the land development portfolio. Since the30th April an adjoining site has been purchased at Kilmarnock which improvesaccess and we are now ready to submit a detailed planning application for 165units. At Shotts the planning process has taken longer than expected but is nowat an advanced stage and we are now confident of obtaining consent for 174 unitsin the autumn. As reported in my statement at the year end we continue to worktowards demerging the house building division into a separate AIM listed companywhich we expect to generate greater value for Terrace Hill shareholders thanretaining the operation within the Group. Our projections show that thede-merged house building company should be building at least 200 units per yearfrom 2008 onwards. We continue to seek new sites throughout Scotland forresidential development to build the land bank and volume growth. Since the end of the period we have contracted to acquire, a 49% interest inNationwide's at.home portfolio of 2,253 flats and houses spread throughout majorcities in England and Scotland. The £272 million portfolio is generally let onassured shorthold tenancies and has been purchased at a discount to the vacantpossession value of the individual properties. We are assessing the potential tomerge much of the at.home portfolio with our existing portfolio of 331 units andforming a residential fund or a REIT. The continuing growth of residentialvalues across the U.K. makes us confident that the purchase will addconsiderable value to Terrace Hill's TNAV at our financial year end. Finally, we are further diversifying our interests with our first involvement inthe healthcare sector. In joint venture with an established healthcare operatorwe have entered into a conditional contract to acquire a 5 acre site in Herefordand have recently submitted a planning application for a retirement villagecomprising 100 residential units, a retirement hotel and a care home. Weforesee substantial growth in the healthcare sector in coming years and weintend to use our development and fund management skills to build a presence inthis market. Triple Net Asset Value Our proforma Triple Net Asset Value ("TNAV") per share at 30th April 2006 was52.65p up from 48.06p per share at October 2005 an increase of 9.55%. TNAV revalues our trading assets to current value and deducts tax that wouldarise on their disposal. TNAV is the principal means by which we measure ourperformance. Balance Sheet Total Group assets at 30th April 2006 were £197.9 million compared to £173.4million at October 2005 and net assets after minority interests, were £80.2million (£77.6 million at October 2005) an increase of 3.4%. Bank debt of £75.6 million net of £8.3 million cash stood at 94.2% of equity(85.0% October 2005). Of the bank debt 61.4% was with limited or no recourse tothe parent company. Properties held as investments were £57.4 millioncomprising £41.6 million residential and £15.8 million commercial compared with£52.9 million at October 2005. Work in progress was £97.5 million (£89.2million October 2005). Profit and Loss Account Profit before tax for the period was £3.7 million (6 months to April 2005 £0.4million). Operating profit at £4.5 million (6 months to April 2005 £1.2 million)reflected a higher number of disposals of completed developments in the period. Dividend The directors have decided to pay an interim dividend in respect of the halfyear under review of 0.7p per share (6 months to April 2005: 0.5p). This willbe paid on 25th August 2006 to shareholders on the Register at 11th August 2006.The dividend increase reflects our progressive dividend policy and confidence inthe future. The Future The purchase of Nationwide's at.home portfolio has seen us rebuild our presencein the residential investment market. The high quality of the properties linkedto the growth in residential values since the deal was agreed early in the yearis likely to have significant impact on our TNAV at the year end. In the pastwe have sold much of our residential investment and realised the increase invalue and whilst this remains an option we are investigating the potential ofcreating a residential fund or REIT which might allow us to benefit from theperformance of the portfolio in the future whilst capturing any immediate upliftin value today. Our plans to de-merge a house building company from the main Group are advancingwell and we expect this to have a significant impact on existing shareholdervalue in the future. The commercial development programme continues to mature well and the prospectfor substantial schemes in the fast moving south east market at our sites atMaidenhead, Pinewood Wokingham and Croydon promise excellent returns. Our management team has been further strengthened by the recruitment of MissNicky Wilden as Corporate Finance Director who will be joining us in September.Nicky, a qualified accountant and FSA registered has extensive experience overmany years of corporate finance in the property sector. In summary, I am confident that we will show excellent further growth in TNAVover the rest of the year and beyond. Robert F M AdairChairman 4 July 2006 TERRACE HILL GROUP PLC UNAUDITED CONSOLIDATED PROFIT & lOSS ACCOUNT 6 months to Year to 6 months to 30-Apr-06 31-Oct-05 30-Apr-05 £000 £000 £000 (unaudited) (unaudited) (unaudited) ____________ ____________ ____________TURNOVERGroup and share of joint venture 23,377 28,119 11,924Less: Share of jointventure turnover (34) (1,269) (1,256) ____________ ____________ ____________Group turnover:continuing operations 23,343 26,850 10,668 GROUP OPERATING PROFITContinuing operations 4,485 3,966 927Share of joint ventureoperating (loss)/profit (29) 202 259 ____________ ____________ ____________TOTAL OPERATING PROFIT 4,456 4,168 1,186 Continuing operations:Amounts written off unlisted investments - (12) -Gain/(loss) on disposal of other fixed asset investments 30 (1) (1)Net gain on disposalof investment property 36 3,495 997Gain/(loss) on disposal of subsidiary undertakings 575 (108) (123)Income from other fixed asset investments 89 15 - Net interest payable (1,444) (3,320) (1,672) ____________ ____________ ____________PROFIT ON ORDINARYACTIVITIES BEFORE TAX 3,742 4,237 387Taxation charge (955) (763) - ____________ ____________ ____________PROFIT ON ORDINARYACTIVITIES AFTER TAX 2,787 3,474 387Minority interest 2 4 5 ____________ ____________ ____________PROFIT ATTRIBUTABLE TOMEMBERS OF PARENT COMPANY 2,789 3,478 392 ____________ ____________ ____________Basic and diluted 1.490p 1.864p 0.211pearnings per share ____________ ____________ ____________ TERRACE HILL GROUP PLC UNAUDITED SUMMARISED CONSOLIDATED BALANCE SHEET 30-Apr-06 31-Oct-05 30-Apr-05 £000 £000 £000 (unaudited) (unaudited) (unaudited) (restated) (restated) ____________ ____________ ____________FIXED ASSETSIntangible Assets: Positive goodwill 4,486 4,465 3,079Negative goodwill (1,070) (1,178) (1,864) ____________ ____________ ____________ 3,416 3,287 1,215Tangible AssetsInvestment properties 57,359 52,899 76,414Other 43 59 186 ____________ ____________ ____________ 57,402 52,958 76,600InvestmentsJoint venture- share of gross assets 5,019 4,958 3,573Joint venture-share of grossliabilities (4,982) (4,802) (3,243) ____________ ____________ ____________ 37 156 330 Other fixed asset investments 3,991 2,599 123 ____________ ____________ ____________ 4,028 2,755 453 ____________ ____________ ____________ 64,846 59,000 78,268CURRENT ASSETSWork in progress 97,518 89,162 67,752Debtors 27,343 13,207 20,601Cash at bank and in hand 8,289 12,052 8,700 ____________ ____________ ____________ 133,150 114,421 97,053CREDITORS: amounts falling duewithin one yearBorrowings (6,476) (11,325) (19,454)Other creditors (28,072) (17,342) (9,724) ____________ ____________ ____________ (34,548) (28,667) (29,178) ____________ ____________ ____________NET CURRENT ASSETS 98,602 85,754 67,875 ____________ ____________ ____________TOTAL ASSETS LESS CURRENT LIABILITIES 163,448 144,754 146,143 CREDITORS: amounts falling dueafter more than one year (82,874) (66,758) (70,487))PROVISIONS FOR LIABILITIES ANDCHARGES - - (122) ____________ ____________ ____________NET ASSETS 80,574 77,996 75,534 ____________ ____________ ____________CAPITAL AND RESERVESCalled up share capital 3,744 3,744 3,716Shares to be issued - - 558Share premium account 19,369 19,369 19,369Revaluation reserves: Investment properties 17,973 17,268 21,308 Other 375 23 24Capital redemption reserve 849 849 849Merger reserve 8,386 8,386 7,875Profit and loss account 29,529 28,007 21,486 ____________ ____________ ____________SHAREHOLDERS FUNDS 80,225 77,646 75,185MINORITY INTERESTS 349 350 349 ____________ ____________ ____________ 80,574 77,996 75,534 ____________ ____________ ____________ TERRACE HILL GROUP PLC STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 6 months to Year to 6 months to 30-Apr-2006 31-Oct-05 30-Apr-05 £000 £000 £000 (unaudited) (unaudited) (unaudited) ____________ ____________ ____________Profit attributable to members of theparent company excluding share ofprofit/(loss) of joint venture company 2,908 3,415 155Share of joint venture profit/(loss) for period (119) 63 237 ____________ ____________ ____________Profit attributable to members of the parent company 2,789 3,478 392 Unrealised surplus on revaluation of properties 749 3,735 3,391 Unrealised surpluson revaluation of unlisted investments 352 6 3 ____________ ____________ ____________Total recognised gains and losses relating to period 3,890 7,219 3,786 ____________ ____________ ____________ GROUP STATEMENT OF CASH FLOWS 6 months to Year to 6 months to 30-Apr-06 31-Oct-05 30-Apr-05 (unaudited) (unaudited) (unaudited) £000 £000 £000 ____________ ____________ ____________Cash (outflow) from operatingactivities (13,234) (48,931) (50,788)Returns on investments andservicing of finance (2,194) (6,138) (1,806)Taxation (255) (992) (769)Capital expenditure andfinancial investment 1,217 54,102 32,363Acquisitions and disposals 6,158 (4,903) (216)Equity dividends paid (1,311) (1,865) (929) ____________ ____________ ____________Cash (outflow) before liquidresources and financing (9,619) (8,727) (22,145)Financing 5,606 2,735 13,168 ____________ ____________ ____________(Decrease) in cash (4,013) (5,992) (8,977) ____________ ____________ ____________ Reconciliation of group operating profit to net cash (outflow) from operating activities £000 £000 £000 Operating profit 4,485 3,966 927Depreciation 41 84 47Loss on sale of other tangible fixed assets - 128 12Positive goodwill amortisation and impairment losses 186 469 69(Increase) in stock (24,217) (41,893) (22,854)(Increase)/decrease in debtors (14,290) 3,591 (7,925)(Increase)/decrease in creditors 20,561 (15,276) (21,064) ____________ ____________ ____________Net cash (outflow) fromoperating activities (13,234) (48,931) (50,788) ____________ ____________ ____________ TERRACE HILL GROUP PLC GROUP RECONCILIATION OF SHAREHOLDERS' FUNDS 6 months to Year to 6 months to 30-Apr-06 31-Oct-05 30-Apr-05 £000 £000 £000 (unaudited) (unaudited) (unaudited) (restated) (restated) Total recognised gains and losses 3,890 7,219 3,786New shares issued - 28 -Shares to be issued - - 558Merger reserve arising on new shares issued - 530 -Purchase of own shares by subsidiary - (36) -Dividend paid toordinary shareholders (1,311) (1,865) (929) ____________ ____________ ____________Total movements during the year 2,579 5,876 3,415Opening shareholders' funds - as restated 77,646 71,770 71,770 ____________ ____________ ____________Closing shareholders' funds 80,225 77,646 75,185 ____________ ____________ ____________ Note: Comparative figures for prior periods have been restated in line with the requirements of Financial Reporting Standards 21 and 25. Otherwise the accounting policies adopted are consistent with those applied in year ended 31 October 2005. The effect of the restatement on the balance sheet is to increase the net assets at 31 October 2005 by £1,310,532 (April 2005 - £936,094, October 2004 - £929,117) due to the write back of the proposed dividends at 31 October 2005 (and 30 April 2005 and 31 October 2004.) NOTES BASIS OF PREPARATION These interim accounts are unaudited but have been reviewed by the auditorswhose review report is set out on page 8. The abridged financial informationrelating to the year ended 31 October 2005 is based on an extract from thelatest financial statements, which have been filed with the Registrar ofCompanies. The report of the auditors on these financial statements wasunqualified and did not contain a statement under section 237(2) or (3) of theCompanies Act 1985. The financial information summarised above does notconstitute statutory accounts within the meaning of section 240 of the CompaniesAct 1985. EARNINGS PER ORDINARY SHARE The calculation of basic and diluted earnings per ordinary share is based on thefollowing: 6 months to Year to 6 months to 30-Apr-06 31-Oct-05 30-Apr-05 £000 £000 £000 Profit 2,789 3,478 392 ____________ ___________ ____________The weighted average number of ordinary shares in issue during the period: Basic and diluted half-yearly report 187,218,824 186,576,536 185,923,602 ____________ ___________ ____________ The half-yearly report will be posted to shareholders shortly and copies will beavailable, free of charge for one month, from the Company Secretary, TerraceHill Group PLC, James Sellars House, 144 West George Street, Glasgow, G2 2HG. For further information please contact: Robert Adair, Chairman Tel: 01845 537 037Philip Leech, Group Managing Director Tel: 01642 243 444Alasdair Robinson, Noble & Company Limited Tel: 0131 225 9677Isabel Crossley, St Brides Media & Finance Ltd Tel: 020 7242 4477 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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