27th May 2005 10:48
Farley Group PLC27 May 2005 Farley Group Plc ("Farley" or the "Company") Interim Statement for the 6 months to 31 March 2005 and placing of new ordinary shares to Pendana Limited Chairman's Statement It is my pleasure to report interim figures for Farley Group plc for the periodended 31 March 2005. Whilst the comparative figures only cover the three monthperiod during which Farley & Co Ltd, the principal trading subsidiary, was inthe ownership of the Company, we are nevertheless beginning to get closer toreal comparisons. The sales department, the principal division in the business, achieved acommendable result in difficult conditions thanks in part to a large sale at theend of the half year. I am pleased to report that since the beginning of thesecond half there has been an increase in sales activity. Our lettings division is altogether a more stable and dependable entity; theopening period benefiting from the new lets season which is strongest in themonths of August, September and October. We have a flow of renewals throughoutthe year but overall this is a second half weighted business which we expect toperform well in the next six months as rental levels have stabilised. Block management has continued the pattern established in the second half oflast year with further increases in its portfolio of properties undermanagement. Profits before taxation and amortisation of goodwill for the 6 months to 31March 2005 were £161,000 and your Board is cautiously confident that full yearfigures will be in line with expectations. The Board will consider a dividend atthe time it announces its preliminary statement for the twelve months to 30September 2005. Farley continues to maintain healthy cash balances of some £2.3 million whichare placed on treasury deposit and our reversionary portfolio continues toincrease in value. This strength has enabled the Company to participate in theacquisition activity that has been occurring in the sector, albeit incurringsmall costs in respect of an abortive effort to buy a high profile competitor.The Directors continue to believe that acquisition opportunities exist withinthe sector and continue to pursue a number of different avenues to grow thebusiness always wishing to be prudent and to protect the Company's existingposition. In order to further strengthen Farley's ability to acquire businesses operatingwithin its sector, the Company is pleased to announce it has, conditional, interalia, on shareholder approval, raised £2 million before expenses through theissue of 6,060,606 new ordinary shares at 33p per ordinary share (the "Placing")to Pendana Limited (a company which is ultimately owned by the Investec Trust(Guernsey) Limited as trustees of the Tchenguiz Family Trust). The placing priceof 33p per ordinary share represents a discount of 9.6 per cent. to the closingmid-market price of 36.5p on AIM as at 26 May 2005, the last practicable dateprior to this announcement. Application will be made for admission of the newordinary shares issued pursuant to the Placing (which will represent 25.8 percent. of the enlarged issued share capital) to trading on AIM and it is expectedthat admission of the new ordinary shares will occur on 21 June 2005. The Company believes that having an association with the Consensus BusinessGroup, which manages various investments on behalf of Investec Trust (Guernsey)Limited as trustees of the Tchenguiz Family Trust, (the "Trust") will assistFarley in finding suitable acquisition targets. Consensus Business Group whichis managed by Vincent Tchenguiz, as agent for the Trust, is responsible for anumber of residential and commercial property interests including approximately200,000 ground rents situated throughout the United Kingdom, a 50 per cent.interest in the estate agent Chestertons Global Limited and a commercialproperty portfolio with gross assets of approximately £4 billion, as well ashaving strong relationships with a number of the United Kingdom's leading housebuilders. Following the Placing the Company will have cash reserves of approximately £4.3million. Pendana Limited has entered into an agreement with the Company pursuant to whichit has agreed that any transactions between Pendana and Farley will be at armslength and on a normal commercial basis. The agreement also allows for Pendanato nominate two directors to the board of Farley while its interest in theissued share capital of Farley remains over ten per cent. The Company is today sending to shareholders a circular which includes a noticeof an extraordinary general meeting convened to seek their approval of thePlacing. Copies of the circular to shareholders will be available at StringerSaul LLP, Fifth Floor, 17 Hanover Square, London W1S 1HU. Contacts: Tim James, the Company: 07768 833 029John Prior, Corporate Synergy Plc: 0207 626 2244 Consolidated Profit and Loss Account for the six months ended 31 March 2005 Notes 31 March 2005 31 March 2004 £'000 £'000Turnover 1,137 751 Direct expenses (700) (375) Gross profit 437 376 Overheads (356) (257) Operating profit 81 119 Net interest receivable 80 13 Profit on ordinary activities before taxation and 161 132goodwill Taxation (48) (47) Profit after taxation 113 85 Amortisation of goodwill 48 24Profit after taxation and goodwill 65 61Retained loss Brought forward (16) (23) Retained profit at 31 March 2005 49 38 Earnings per Share (pence) - basic and diluted 2 0.37 0.72 Consolidated Balance Sheet as at 31 March 2005 Notes 31 March 2005 31 March 2004 £'000 £'000Fixed assets:Intangible assets 3 1,804 1,900Investments 375 330Tangible assets 161 170 2,340 2,400Current assets:Debtors 489 404Other debtors-share issue - 1,970Cash at bank 2,204 286 2,693 2,660 Creditors: Amounts falling due within one year (423) (504) Net current assets 2,270 2,156 Total assets less current liabilities 4,610 4,556 Creditors: Amounts falling due after one year (30) (32) Net Assets 4,580 4,524 Capital and Reserves:Called Up Share Capital 1,813 1,813Share Premium Account 2,668 2,673Revaluation Reserve 50 -Profit and Loss Account 49 38 4,580 4,524 Consolidated Cash Flow Statement for the period ended 31 March 2005 Notes 31 March 2005 31 March 2004 £'000 £'000Net cash (outflow) inflow from operating activities 4 (23) 209 Returns on investment and servicing of finance:Net interest received 80 13 Capital expenditure:Purchase of tangible fixed assets (6) (6) Acquisitions:Purchase of loan notes in subsidiary - (500)Net overdraft acquired with subsidiary - (344)Net cash outflow from acquisitions - (844) Dividend paid (174) -Financing:Called up on partly paid shares - 750Expenses paid on share issues - (341)Capital element of hire purchase and finance leases (2) (4) Net cash (outflow) inflow from financing (2) 405 Decrease in cash (125) (223) Notes to the Financial Statements for the Period ended 31 March 2005 1. Accounting policies (a) Basis of preparation The interim financial statements have been prepared under the historical costconvention and in accordance with applicable UK accounting standards. Theinterim statements do not constitute statutory accounts within the meaning ofSection 240 of the Companies Act 1985. (b) Basis of Consolidation The Group interim financial statements consolidate those of the Company and ofits subsidiary undertakings. (c) Goodwill Goodwill arising on consolidation, representing the excess of the fair value ofthe consideration given over the fair value of the identifiable net assetsacquired, is capitalised and amortised on a straight line basis over itsestimated useful economic life of 20 years. 2. Earnings per Share The calculation of basic earnings per share is based on the results for theperiod and 17,465,608 ordinary shares of 5p each being the weighted averagenumber of shares in issue during the period (2004: 8,438,963 ordinary shares of5p each). 3. Intangible assets - Goodwill On 23 December 2003 the Company acquired the entire issued share and loancapital of Farley Services Ltd for a total consideration of £2,150,000.Goodwill arising on the acquisition of Farley Services Ltd and its subsidiaryundertakings has been capitalised and is being amortised over its estimateduseful economic life. 4. Net cash (outflow)/inflow from operating activities 6 Months ended 6 Months ended 31 March 2004 31 March 2005 £'000 £'000 Operating profit 33 95(Increase)/decrease in debtors (101) 1(Decrease)/increase in creditors (20) 70Depreciation 17 19Amortisation 48 24 Net cash (outflow)/inflow from operating (23) 209activities 5. Additional Information The interim statement for the period ended 31 March 2005 is unaudited and wasapproved by the Board on 26 May 2005. Copies of this interim statement will be available to members of the public fromthe offices of Stringer Saul LLP, 5th Floor, 17 Hanover Square, London W1S 1HU. 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