7th Jul 2005 07:00
Terrace Hill Group PLC07 July 2005 For embargoed release at 7am 7 July 2005 TERRACE HILL GROUP PLC HALF YEARLY REPORT FOR THE SIX MONTHS to 30 APRIL 2005 CHAIRMAN'S STATEMENT I am pleased to present the Group's Unaudited Accounts for the six months to 30April 2005 and my Report on that half year where Triple Net Asset Value hasshown an encouraging 10% increase to 44.02p per share in the period. We havecontinued to make excellent progress with our commercial development programme,acquiring a number of new sites, obtaining favourable planning consents, lettingand disposing of several mature assets. Two office buildings, which we held in our books as investments for the longterm in anticipation of rental growth, have been sold at a keen price due to thestrong demand from investors. At 11 Berkeley Street, our joint venture officerefurbishment in Mayfair, we sold the investment to clients of ING for £13.7million at a yield of 5.37%. Following the letting of our joint venture officedevelopment UB1 in Uxbridge to Hertz Corporation, investor demand was so strongthat we decided to sell the building, selling to NFU (pension fund) for £25.2million at a yield of 5.68%. New office and industrial development sites in London and the South East arealso under offer or in solicitors hands which will help to strengthen ourongoing development programme and expand our land bank. Substantial interest has also been shown in the investment sale of our completedjoint venture development at 16 Berkeley Street. Further office and industrialunits were sold to owner occupiers in new phases of our schemes in Guildford andTunbridge Wells, showing continued strong demand in this sector. We are lookingto commence similar developments at our sites near Farnborough and Wokingham. In the regions we have continued to make good progress with healthy levels ofoccupier demand for our new developments. In the North East final preparationsare underway for the construction of our 83,000 sq. ft. office development atGallowgate in Newcastle, where we are already seeing considerable tenantinterest. At Manhattan Gate in Middlehaven, Middlesbrough's 50 acre flagship regenerationproject, our first joint venture development is nearing completion with goodtenant interest being shown. At Baltic Business Quarter infrastructure works onthe first phase are nearing completion. We have recently received planningconsents for retail warehouse use on our sites in Blyth and Bishop Aucklandtotalling 116,000 sq. ft. and are now arranging pre-lets prior to commencementon site. In Galashiels, we anticipate obtaining an open A1 retail consent for45,000 sq. ft. this summer. In the South West and South Wales our developments have progressed well withTemplar House, our 90,000 sq. ft. office development in Bristol City Centre,under offer to an owner occupier. In Swansea, the Welsh Development Agency haspre-let the whole of Cyprium, our 40,000 sq. ft. office development on theSwansea waterfront. We have also been selected by the WDA to develop the nextphase of offices in the same area. The residential division continued to focus on its core holdings in Scotland,Newcastle and Manchester disposing of 48 flats and houses in the six months.There remain 371 units in the investment portfolio. The Glasgow Greendevelopment is progressing smoothly. Further land has been added improvingaccess at Shotts in Lanarkshire, where a planning application for residentialdevelopment will be made shortly. Triple Net Asset Value Our proforma Triple Net Asset Value ("TNAV") per share at 30 April 2005 was44.02p up from 39.99p at October 2004, an increase of 10.08%. The principaladjustments we make in arriving at a TNAV are to revalue currentwork-in-progress and to allow for tax that would be payable were we to realiseour assets at the revalued amounts. TNAV is the principal means by which wemeasure our performance. Our Net Asset Value, after allowing for minority interests, has risen from£70.84 million to £74.25 million, an increase of £3.41 million. Net Asset Valueper share was up from 38.12p at 31 October 2004 to 39.66p at 30 April 2005. Balance Sheet at 30 April 2005 Total Group assets at 30 April 2005 were £175.3 million compared to £180.6million at 31 October 2004, and net assets, after minority interest, were £74.2million (31 October 2004: £70.8 million) an increase of £3.4 million. Bank debt of £80.0 million net of £8.7 million cash stood at 107% of equity (31October 2004: 81.6%). Properties held as investments were £76.4 million (£36.7million residential and £39.7 million commercial) compared to £91.1 million atOctober 2004. Work in progress at £67.8 million (£63.9 million commercial and£3.9 million residential) is up from £55.7 million in October 2004. Profit & Loss Account Profit before and after tax for the period was £386,534 (6 months to April 2004:£776,000). Operating profit, at £1.186 million, (6 months to April 2004: £2.082million) reflected fewer development disposals in the period. The timing ofsales of developments impacts on realisation of profit. Corporate Acquisitions As announced on 19 April 2005 we acquired the minority interest in Terrace HillNorth East Limited from our Managing Director Philip Leech at a cost of £1.1mwith 50% payable in cash and 50% in shares. A subsidiary SERAH Properties plc("SERAH") acquired and cancelled 95,400 of its own ordinary shares at a cost of£74,787 and as a result the group's interest in the share capital of SERAH hasincreased to 86.69%. Dividend The Directors have decided to pay an interim dividend in respect of the halfyear under review of 0.5p per share (half year to 30 April 2004: 0.3p). Thiswill be paid on 26 August 2005 to shareholders on the Register at 12 August2005. This dividend increase reflects our progressive dividend policy and ourconfidence in the future. The Future We have strengthened our professional team with the appointment of newdevelopment surveyors and project coordinators in London and the South West, whoare helping to manage our existing development programme and to add to our landbank through judicious acquisitions of new opportunities. We have also appointed an experienced fund manager from Morley who will bejoining us in September with a remit to help create an asset management andco-investment business to augment our existing development activities leveragingoff the strong Terrace Hill brand. I continue to be extremely encouraged by theexpansion of our development programme and the underlying strengths of theoccupier and investment markets in our specialist sectors. Currently, we areworking on an institutional development fund which will considerably assist thebuild up of our development programme. I believe we will show a further good growth in Triple Net Asset value over therest of the year and beyond. Robert F M Adair Chairman 7 July 2005 TERRACE HILL GROUP PLC UNAUDITED CONSOLIDATED PROFIT & LOSS ACCOUNT 6 months to Year to 6 months to 30-Apr-05 31-Oct-04 30-Apr-04 £000 £000 £000 (unaudited) (audited) (unaudited) TURNOVERGroup and share of joint venture 11,924 27,495 9,290Less: share of joint venture turnover (1,256) (4) - -------- -------- --------Group turnover: continuing operations 10,668 27,491 9,290 -------- -------- --------GROUP OPERATING PROFITContinuing operations 927 5,302 2,082Share of joint venture operating profit/(loss) 259 (43) - -------- -------- --------TOTAL OPERATING PROFIT 1,186 5,259 2,082Continuing operations:Amounts written off unlisted investments - (144) 4(Loss)/gain on disposal of fixed asset investments (1) 1 -Net gain on disposal of investment property 997 3,252 456Permanent diminution in value of an investment property - (279) -Discontinued operations:(Loss)/gain on liquidation of former subsidiary (123) 143 143 Net interest payable (1,672) (4,148) (1,909) -------- -------- --------PROFIT ON ORDINARYACTIVITIES BEFORE TAX 387 4,084 776Taxation credit - 3 - -------- -------- --------PROFIT ON ORDINARYACTIVITIES AFTER TAX 387 4,087 776Minority interest 5 (256) (71) -------- -------- --------PROFIT ATTRIBUTABLE TOMEMBERS OF PARENT COMPANY 392 3,831 705Dividends (936) (1,487) (561) -------- -------- --------TRANSFER TO RESERVES (544) 2,344 144 -------- -------- --------Basic and diluted earnings per share 0.211p 2.238p 0.453p -------- -------- -------- -------- -------- -------- TERRACE HILL GROUP PLC UNAUDITED SUMMARISED CONSOLIDATED BALANCE SHEET 30-Apr-05 31-Oct-04 30-Apr-04 £000 £000 £000 (unaudited) (audited) (unaudited) FIXED ASSETSIntangible AssetsPositive goodwill 3,079 2,468 2,586Negative goodwill (1,864) (1,921) (2,857) -------- -------- -------- 1,215 547 (271)Tangible AssetsInvestment properties 76,414 91,165 103,306Other tangible assets 186 216 206 -------- -------- -------- 76,600 91,381 103,512 InvestmentsJoint venture- share of gross assets 3,573 4,033 -Joint venture-share of gross liabilities (3,243) (3,940) - -------- -------- -------- 330 93 -Investments in associates - - 528Other fixed asset investments 123 446 101 -------- -------- -------- 453 539 629 -------- -------- -------- 78,268 92,467 103,870CURRENT ASSETSWork in progress 67,752 55,687 21,972Debtors 20,601 14,627 24,491Cash at bank and in hand 8,700 17,801 5,696 -------- -------- -------- 97,053 88,115 52,159 CREDITORS: amounts falling duewithin one yearBorrowings (19,454) (30,928) (27,260)Other creditors (10,660) (33,295) (8,263) -------- -------- -------- (30,114) (64,223) (35,523) -------- -------- --------NET CURRENt ASSETS 66,939 23,892 16,636 -------- -------- --------TOTAL ASSETS LESS CURRENT LIABILITIES 145,207 116,359 120,506 CREDITORS: amounts falling due after more than one year (70,487) (44,672) (51,482)PROVISIONS FOR LIABILITIES AND CHARGES (122) (122) (477) -------- -------- --------NET ASSETS 74,598 71,565 68,547 -------- -------- -------- -------- -------- --------CAPITAL AND RESERVESCalled up share capital 3,716 3,716 3,737Shares to be issued 558 - -Share premium account 19,369 19,369 19,369Revaluation reserve 21,332 21,492 21,170Capital redemption reserve 849 849 821Merger reserve 7,875 8,115 8,686Profit and loss account 20,550 17,300 11,735 -------- -------- --------EQUITY SHAREHOLDERS FUNDS 74,249 70,841 65,518 MINORITY INTERESTS 349 724 3,029 -------- -------- -------- 74,598 71,565 68,547 -------- -------- -------- -------- -------- -------- TERRACE HILL GROUP PLC STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 6 months to Year to 6 months to 30-Apr-2005 31-Oct-04 30-Apr-04 £000 £000 £000 (unaudited) (audited) (unaudited) Profit attributable to members ofthe parent company excluding share of profit/(loss) of joint venture company 155 3,888 705Share of joint venture profit/ (loss) for period 237 (57) - -------- -------- --------Profit attributable to members of the parent company 392 3,831 705 Unrealised surplus on revaluation of properties 3,391 13,161 9,737 Unrealised surplus on revaluation of unlisted investments 3 11 11 -------- -------- --------Total recognised gains and losses relating to period 3,786 17,003 10,453 -------- -------- -------- -------- -------- -------- GROUP STATEMENT OF CASH FLOWS 6 months to Year to 6 months to 30-Apr-05 31-Oct-04 30-Apr-04 £000 £000 £000 (unaudited) (audited) (unaudited) Cash (outflow) from operating activities (50,788) (7,086) (7,042)Returns on investments and servicing of finance (1,806) (3,987) (1,965)Taxation (769) (7) -Capital expenditure and financial investment 32,363 20,306 8,162Acquisitions and disposals (216) (9,682) (8,002)Equity dividends paid (929) (788) (231) -------- -------- --------Cash (outflow) before liquid resources and financing (22,145) (1,244) (9,078)Financing 13,168 5,093 2,231 -------- -------- --------(Decrease)/increase in cash (8,977) 3,849 (6,847) -------- -------- -------- -------- -------- -------- Reconciliation of group operating profit to net cash (outflow) from operatingactivities £000 £000 £000 Operating profit 927 5,302 2,082Depreciation 47 81 17Loss on sale of other tangible fixed assets 12 - -Positive goodwill amortisation and impairment losses 69 169 81(Increase) in stock (22,854) (36,758) (3,136)(Increase)/decrease in debtors (7,925) 1,805 (4,306)(Decrease)/increase in creditors (21,064) 22,315 (1,780) -------- -------- --------Net cash (outflow) from operating activities (50,788) (7,086) (7,042) -------- -------- -------- GROUP RECONCILIATION OF SHAREHOLDERS' FUNDS 6 months to Year to 6 months to 30-Apr-05 31-Oct-04 30-Apr-04 £000 £000 £000 (unaudited) (audited) (unaudited) Total recognised gains and losses 3,786 17,003 10,453New shares issued - 665 657Shares to be issued 558 (193) (193)Share premium arising on new shares issued - 7,546 7,546Merger reserve arising on new shares issued - 1,184 1,084Purchase of ordinary shares - (409) -Dividend paid to ordinary shareholders (936) (1,487) (561) -------- -------- --------Total movements during the year 3,408 24,309 18,986Opening shareholders' funds 70,841 46,532 46,532 -------- -------- --------Closing shareholders' funds 74,249 70,841 65,518 -------- -------- -------- -------- -------- -------- NOTES BASIS OF PREPARATION These interim accounts are unaudited but have been reviewed by the auditorswhose review report is set out in the half-yearly report. The abridgedfinancial information relating to the year ended 31 October 2004 is based on anextract from the latest financial statements, which have been filed with theRegistrar of Companies. The report of the auditors on these financialstatements was unqualified and did not contain a statement under section 237(2)or (3) of the Companies Act 1985. The financial information summarised abovedoes not constitute statutory accounts within the meaning of section 240 of theCompanies Act 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-05 31-Oct-04 30-Apr-04 £000 £000 £000 Surplus 392 3,831 705 ----------- ----------- ----------- ----------- ----------- -----------The weighted average number ofordinary shares in issue during the period:Basic and diluted 185,923,602 171,192,098 155,704,845 ----------- ----------- ----------- ----------- ----------- -----------DIVIDEND The company intends to pay an interim dividend of 0.50p per share. HALF-YEARLY REPORT 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, Terrace Hill Group PLC Tel: 01845 537 037 Philip Leech, Group Managing Director, Terrace Hill Group PLC Tel: 01642 243 444 Alasdair Robinson, Noble & Company Limited Tel: 0131 225 9677 Hugo de Salis, 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:
Thg