4th Jan 2005 16:30
Pathfinder Properties PLC04 January 2005 FOR IMMEDIATE RELEASE 4 January 2005 The folowing replaces the preliminary results announcement released on 30 July2004 under RNS number 4255B. Under the heading "Lomond Galleries, Loch Lomond" in the Chairman's Statement,it should have read that it was "the directors of Pathfinder (Loch Lomond)Limited" not "the Bank" who appointed "an administrator over the property". The full amended version appears below. FOR IMMEDIATE RELEASE Pathfinder Properties PLC Results for the year ended 31 December 2003 The Board of Pathfinder announces the results of the Company for the year ended31 December 2003, which are set out below. The audited financial statements forthe year ended 31 December 2003 are being sent to all shareholders. Copies maybe obtained from the Company by writing to Pathfinder Properties PLC, 1001Finchley Road, London NW11 7HB. CHAIRMAN'S STATEMENT The year under review This is my first report to you since being elected as chairman of the company atthe Extraordinary General Meeting in January this year. Unfortunately, the year to December 2003 was not a good one for Pathfinder and,as you will see from the accounts, the company made a loss of £4,426,000. I muststress that none of the present members of your Board of Directors were involvedwith the management of the company during that period and it was preciselybecause of our concerns over the way that the company was being run thatSunnyview Limited requisitioned the Extraordinary General Meeting at whichshareholders voted to remove all the then directors and to appoint JeffreyAzouz, Dr John Guy Davies and myself in their place. As you can see from theaccounts, our concerns proved to be well founded. The accounts reveal that the previous Board managed to spend £1,818,000 inadministrative expenses whilst not receiving any net operating income. This isin spite of a statement made by the previous chairman at the company's last AGMthat he intended to reduce administrative expenses from the previous year'slevel of £1,450,000. Notwithstanding these losses and complaints from shareholders about salaries andfees paid to certain directors for the year ended 31 December 2002, theadministrative expenses for the year also include £167,405 paid to ClaireO'Connor or a company with which she was connected. £85,418 was paid to MarcGreen or a company with which he was connected. Mr Green has since resigned. In light of the earlier concerns voiced by shareholders over the levels ofremuneration of previous Board members, your current Board is surprised anddisappointed at the sums paid. You may recall that in the weeks leading up to the Extraordinary GeneralMeeting, the previous board had effectively put the company up for sale andannounced that they had received expressions of interest from various partiesand that the company was in an offer period. Following my appointment to theBoard, I immediately sought clarification from the company's professionaladvisors in order to establish the seriousness of the expressions of interest.My enquiries revealed that none of the parties had really shown any genuineinterest and, in light of this, and the considerable costs involved with theexercise, I brought the offer period to an end. The new Board's immediate priorities were to reduce the outrageously high levelsof administrative expenditure and to deal with the company's outstanding debts. We have cut administrative expenses drastically by reducing staff levels fromseven to two and by the directors having taken over many of the functions thatwere previously carried out by the staff. We have made substantial savings byrelocating the offices to lower cost premises and by substantially reducing thedirectors' remuneration. Taking account of these and other cost saving measures,we believe that we will cut administrative expenses substantially. The largest of the company's debt, apart from bank loans, was an outstandingdebt of approximately £409,000 plus interest that was due under the settlementagreement with Amicrest Holdings PLC (formerly Pathfinder Recovery 2 PLC). Thissum was due to be paid in May 2004 and, as far as I could ascertain, theprevious Board had not made any arrangements for the sum to be paid. Inegotiated an option with Amicrest Holdings PLC allowing the debt to be paid byway of a transfer of shares in the company valued at 16 pence per share. As acondition of this option, I agreed that Amicrest Holdings PLC would be entitledto nominate a director to the Board of the company. I am pleased to say thatpursuant to the agreement of the option, Gerard Lee was elected to the Board andsubsequently appointed Chief Executive of the company. His considerable skilland experience in the property arena has proved invaluable. To enable shareholders to get a full insight into the company, I set out belowdetails of the main properties held by the Pathfinder Group. Back Turner Street, Manchester This is a site on which there are a number of derelict buildings, some of whichare listed. Approximately 18 months ago, a planning application was submittedfor 20 residential units. The application was stayed due to a threat thatEnglish Heritage was going to list the entire site. The previous Board failed toresolve this issue. However, I am pleased to confirm that we have managed toobtain confirmation from English Heritage that they do not intend to list theremaining buildings on the site. We have revived the planning application andhope to sell the property in due course. The Old Cattle Market, Wetherby, Leeds Planning application was submitted for 24 new build apartments together with10,000 sq ft of retail. Planning permission was granted subject to a Section 106agreement being entered into with the local authority. For some reason, theprevious board entered into a joint venture agreement with a third party whenthe property was acquired by the Group. Under this arrangement, the jointventure partner does not put any money into the venture yet receives 50% of theprofit. The current Board considers this arrangement to be disadvantageous. Ifthe Group were to develop the site, it would result in the joint venture partnerreceiving 50% of the profit having put in no money and no effort. As a result,the Board has decided to sell the property. North Gate, Newark This is an excellent site on the edge of Newark town centre, fronting the river.The site consists of an old listed brewery and a cleared area. We have appliedfor planning permission to convert the listed building into 52 residentialunits, to develop 98 residential units fronting the river and to develop 55houses on the remainder of the site. The previous board also entered into ajoint venture agreement in respect of this site, although in this case, thejoint venture partner put £850,000 into the deal. The Board decided that itwould be in the best interests of the company to take full control of this siteand I am pleased to say we have bought out the joint venture partner for£860,000 and the Group now owns 100% of this development. The company hasexchanged contracts to sell the part of the site on which the 55 houses are tobe built for £2,450,000 subject to planning permission being granted. It ishoped that planning permission will be obtained within the next six months andit is the Board's intention to develop the rest of the site. Lomond Galleries, Loch Lomond, Scotland This is the most problematical property. When we first started to investigatethis situation, we found that the management expenses and the bank interestbeing paid exceeded the income by approximately £400,000 per annum. The property consists of a listed building (the old Argyll Motors head office)which has been sub-divided into retail units. The building does not lend itselfto retail use and the company had found it extremely difficult to find tenants.Furthermore, it is situated very close to a brand new shopping centre known asLoch Lomond Shores. Therefore, we considered that there was no realisticprospect of reducing the income shortfall and, in order to minimise losses toPathfinder Properties PLC, your Board decided to allow the directors ofPathfinder (Loch Lomond) Limited to appoint an administrator over the property.This has a dramatic effect on the accounts as provision of £1,839,000 has beenmade against the value of the property. As the company was put intoadministration in May 2004, dependent on the disposal values of the propertyachieved by the administrator, the Group's investment of £2,000,000 in thisproperty will become irrecoverable. River Quay, Manchester I now turn to River Quay, which is a large cleared site on the border ofManchester City Centre. From a planning viewpoint, the site has been dividedinto 4 phases. Phase 1 has planning permission for 199 residential apartments,9,500 sq ft of commercial space and 144 car parking spaces. Phase 2 has planningpermission for 191 residential apartments, 9,500 sq ft of commercial space and191 car parking spaces. Planning permission has not been granted in respect ofPhases 3 and 4. The previous Board had the intention of developing Phase 1, even though they hadvery little experience in this size of development. In order to finance theproject, they had arranged mezzanine finance with Lehman Brothers at aridiculously high interest rate of 18% per annum. Had they commenced thedevelopment reliant on such finance, I have little doubt that it could well haveled to disaster. Fortunately, the Lehman Brothers funds had not been drawn down,although the company had already paid a commitment fee of £50,000 in readiness.The current Board cancelled this facility. In order to fund the Group's administrative costs, the previous board hadborrowed heavily against the assets of the company. The current Board considerthat the development of the entire site is too big to be undertaken by a companyof Pathfinder's resources and therefore, our initial thoughts were to sell allfour Phases. However this would deprive the company of potential developmentprofit and the Board considered a sale of part of the site. The Board does nothowever believe that it would be in the best interests of the company to sellpart of the site to an unconnected party as we consider that this could impedethe development of the retained part. Problems can arise with having more thanone contractor on site and, furthermore, the company would find itself sellingproperties on site in direct competition with a third party. The Board has considered an alternative solution whereby a company controlled byGerard Lee and myself acquire phases 2, 3 and 4 at open market value (inaccordance with a professional valuation) on condition that it will not placeits units for sale until 75% of the Phase 1 units have been sold. This willprovide the company with the necessary cash to develop Phase 1 without resortingto mezzanine funding at exorbitant interest rates. If and when the Group decides to undertake such a disposal, it will be a"related party" transaction under the AIM Rules and will require at that stageJohn Davies, being the independent director, to consult with the Company'sNominated Advisor with a view to stating that the terms of the transaction arefair and reasonable insofar as its shareholders are concernec. When I was first appointed to the Board of the company, I was very disappointedwith the company's financial state, but I am now cautiously optimistic, as Ibelieve that substantial profits can be generated by the development of Newarkand Phase 1, River Quay. Finally, I would like to thank my fellow directors and staff for all the hardwork they have put in to place our company on a better financial footing. Edward AzouzChairman 23 July 2003 CONSOLIDATED PROFIT AND LOSS ACCOUNTfor the year ended 31 December 2003 Notes Year ended Year ended 31 Dec 2003 31 Dec 2002 £'000 £'000TURNOVER Group and share of joint 6 17,490 ventures less share of joint (6) (2,100) ventures -------- -------Group turnover 4 - 15,390 Cost of sales (2,115) (13,980) -------- -------Gross (loss)/profit (2,115) 1,410Administrativeexpenses (1,818) (1,451) -------- ------- (3,933) (41) Other operatingincome (120) 158 -------- -------OPERATING(LOSS)/PROFITBEFORE SHARE OFJOINT VENTURES (4,053) 117 Share of operatingprofits in jointventures - 352 -------- -------OPERATING(LOSS)/PROFIT 4 (4,053) 469 (Loss)/profit onsale of investmentproperties (8) 66 -------- ------- (4,061) 535Interest receivable 177 263Interest payable (736) (910) -------- -------LOSS ON ORDINARYACTIVITIES BEFORETAXATION 4 (4,620) (112) Taxation 72 (84) -------- -------LOSS ON ORDINARYACTIVITIES AFTERTAXATION (4,548) (196)Equity minorityinterests 122 93 -------- -------LOSS ON ORDINARY ACTIVITIESATTRIBUTABLE TOMEMBERS (4,426) (103)Ordinary dividends 5 - (173) -------- -------Loss for the yeartransferred toreserves 8 (4,426) (276) -------- ------- Loss per share 12 (5.54p) (0.13p) The operating (loss)/profit arises from the Group's continuing operations.A statement of total recognised gains and losses for the year is given in note10. CONSOLIDATED BALANCE SHEET31 December 2003 Notes 31 Dec 31 Dec 2003 2002 as restated £'000 £'000 FIXED ASSETS Intangible fixed assets - - 142 Goodwill Tangible assets 11 32 Investment in joint ventures -------- ------- Share of gross assets 3,517 3,274 Share of gross (2,259) (1,839) liabilities Goodwill 51 51 -------- ------- 1,309 1,486 Other investments 152 152 -------- ------- 1,472 1,812 -------- ------- CURRENT ASSETS Work-in-progress 15,886 15,365 Debtors 814 913 Cash at bank 6 2,012 6,474 -------- ------- 18,712 22,752CREDITORS:amountsfalling duewithin oneyear 7 (11,269) (3,926) -------- ------- -------- -------NET CURRENTASSETS 7,443 18,826 -------- -------TOTAL ASSETSLESS CURRENTLIABILITIES 8,915 20,638CREDITORS: amounts falling due after morethan one year Bank and other - (7,330) loansPROVISIONS FOR LIABILITIES AND CHARGES - - -------- ------- 8,915 13,308EQUITYMINORITY INTERESTS (283) (1,079) -------- -------NET ASSETS 8,632 12,229 -------- ------- CAPITAL AND RESERVESCalled upshare capital 7,997 7,975Share premiumaccount 1,970 1,946Merger reserve 2,494 2,494Capitalreserve 153 -Share Capitalreacquired (1,668) (2,298)Profit andloss account 8 (2,314) 2,112 -------- -------- -------EQUITYSHAREHOLDERS' FUNDS 8,632 14,958 -------- ------- Net assets per shareattributableto ordinaryshareholders 10.79p 15.34p CASH FLOW STATEMENTfor the year ended 31 December 2003 Notes Year Year ended ended 31 Dec 31 Dec 2003 2002 £'000 £'000NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES 11 (3,853) 10,804 -------- ------- RETURNS ON INVESTMENTS AND SERVICING OFFINANCEInterestreceived 173 238Interest paid (291) (545) -------- -------Net cashoutflow fromreturns oninvestmentsand servicingof finance (118) (307) TAXATION -------- -------Corporationtax paid (388) (57) -------- ------- CAPITAL EXPENDITURE AND FINANCIAL INVESTMENTReceipts fromsales ofinvestmentproperties 18 81Receipts fromjoint ventures 37 730Payments toacquireinvestments (1,045) -Acquisition ofother tangiblefixed assets (26) - -------- -------Net cash(outflow)/inflow fromcapitalexpenditureand financialinvestment (1,016) 811 -------- ------- ACQUISITIONS AND DISPOSALSPurchase ofsubsidiaryundertaking - (1,069)Net cashacquired withsubsidiaryundertaking - 1,702 -------- -------Net cash(outflow)/inflow fromacquisitionsand disposals - 633 -------- ------- -------- -------EQUITYDIVIDENDS PAID (353) - -------- ------- MANAGEMENT OF LIQUID RESOURCES -------- -------Decrease/(increase) intreasurydeposits 1,326 (1,866) -------- ------- FINANCINGDebt due within one year: Loans drawn down 1,266 726 Loans repaid - (8,309)Debt due in more than one year: Loans drawn down - 2,800 Loans repaid - (3,146) -------- -------Net cashinflow/(outflow) fromfinancing 1,266 (7,929) -------- ------- (DECREASE)/INCREASE IN CASH (3,136) 2,089 -------- ------- NOTES 1 BASISThe figures shown for the year ended 31 December 2003 are unaudited and do notconstitute statutory financial statements within the meaning of the CompaniesAct 1985. The financial statements for the year ended 31 December 2002 have beenreported on by the Company's auditors and delivered to the Registrar ofCompanies. The report of the auditors was unqualified and did not contain astatement under s.237(2) or (3) of the Companies Act 1985. 2 ACCOUNTING POLICIESThe accounting policies are consistent with those used in the previous yearexcept with regard to the investment by a subsidiary in the shares of PathfinderProperties PLC. This change has been made to comply with The Urgent Issues TaskForce (UITF) abstract 37, the new guidance for the accounting treatment has beenapplied to the financial statements for the first time. The comparative figuresfor the year ended 31 December 2002 have been restated as the adoption of UITF37 gives rise to a net adjustment of £431,000 to the investment in own sharesfor that year. 3 ACQUISITIONS DURING THE YEARThe Group acquired the remaining 20% interest in Pathfinder (River Quay) Limitedon 14 March 2003. 4 RESULTS FOR THE YEARThe Group's turnover and results for the year arise principally fromproperty development activities. 5 DIVIDENDS Year ended Year ended 31 Dec 2003 31 Dec 2002 £'000 £'000 Final dividend 0.00p (2002 -0.25p) per share - 173 -------- ------- - 173 -------- ------- No interim dividend was paid. The final dividend for the year ended 31 December2002 is shown net of the amounts receivable by the Group on the shares held by asubsidiary company. 6 ANALYSIS OF CASH AND CASH EQUIVALENTS 31 Dec 2003 31 Dec 2002 £'000 £'000 Short term bank deposits 540 1,866Other cash at bank 1,472 4,608 -------- ------- 2,012 6,474 -------- ------- 7 CREDITORS DUE WITHIN ONE YEAR 31 Dec 2003 31 Dec 2002 £'000 £'000 Bank loans and overdrafts 8,565 -Other loans 576 1,328Trade creditors 183 -Other creditors and accruals 1,945 2,598 -------- ------- 11,269 3,926 -------- ------- Other loans comprise loans from minority shareholders in certain subsidiaryundertakings to fund their proportionate share of developments. These loans arerepayable on or after the sale or refinancing of the relevant developments. 8 PROFIT AND LOSS ACCOUNT Year ended Year ended 31 Dec 2003 31 Dec 2002 £'000 £'000 At 1 January 2,112 2,388Transfer from revaluation reserve - -Loss for the year (4,426) (276) --------- --------At 31 December (2,314) 2,112 --------- -------- 9 SHAREHOLDERS' FUNDS Year ended Year ended 31 Dec 2003 31 Dec 2002 £'000 £'000 Retained loss for the year (4,426) (276)Other recognised gainsrelating to the year 153 -Own sharesdisposed/(acquired) 630 (2,298)Shares issued in year 46 - --------- -------- (3,597) (2,574)At 1 January 12,229 14,803 --------- --------At 31 December 8,632 12,229 --------- -------- 10 STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Year ended Year ended 31 Dec 2003 31 Dec 2002 £'000 £'000 Loss for the financial yearattributable to members (4,426) (103)Prior year adjustment (2,729) -Reduction of investment inown shares 630 -Capital reserve 153 - --------- --------Total recognised gains andlosses since last financialstatements (6,372) (103) --------- -------- 11 RECONCILATION OF OPERATING PROFIT TO OPERATING CASH FLOWS Year ended Year ended 31 Dec 2003 31 Dec 2002 £'000 £'000 Operating (loss)/profit (4,053) 469Amortisation of goodwill 18 145Depreciation on fixed assets 21 -Share of profits in jointventures - (352)(Increase)/decrease inwork-in-progress (150) 10,356Decrease in debtors 188 217Increase in creditors 123 63Decrease in generalprovisions - (94) --------- -------- (3,853) 10,804 --------- -------- 12 EARNINGS PER SHAREThe loss per ordinary share is based on the loss after taxation and minorityinterests and on 79,874,286 (31 December 2002: 74,745,428 ordinary shares) beingthe weighted average number of ordinary shares in issue during the year. Thereis no difference between earnings and fully diluted earnings per share. For further information, contact: Gerry Lee or Edward Azouz, Directors Tel: (020) 8731 0110 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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