TIDMCNN
RNS Number : 0444B
Caledonian Trust PLC
27 March 2013
27 March 2013
Caledonian Trust PLC
Unaudited Interim Results
for the six months ended 31 December 2012
Caledonian Trust PLC, the Edinburgh-based property investment
holding and development company, announces its unaudited interim
results for the six months ended 31 December 2012.
CHAIRMAN'S STATEMENT
Introduction
The Group made a pre-tax loss of GBP308,000 in the six months to
31 December 2012, compared with a loss of GBP633,000 for the same
period last year.
The loss per share was 2.60p compared with a loss of 5.33p last
year and the NAV per share was 143.7p compared with 152.3p last
year. For the year to 30 June 2012 the comparable figures were a
loss of 11.98p and NAV of 1.45.6p.
Investment property values were unchanged. Property revenues
were similar to the equivalent period from last year and property
costs fell in the period as a consequence of cost savings on
properties sold in the same period last year. Administrative
expenses decreased slightly by GBP19,000 due to the lower level of
some overheads. Financing costs were reduced as the Bank Loans were
repaid and debt reduced.
No dividend will be paid for the period.
Review of Activities
The group has continued to invest in enhancing the value of its
development properties by working towards, or gaining, planning
consents and by maintaining, improving or expanding existing
consents.
Last year we started the extensive alterations to three Georgian
cottages at Brunstane Home Farm together with the initial
infrastructure necessary for the next three stages of the
development. The cottages will be marketed very shortly. An
original Georgian cottage, south facing with French doors to the
garden, near a railway station and within the City but with a
country "feel" will be a desirable property. The next two phases
comprise ten houses and a cottage over 14,828ft(2) for which
consent was obtained in October 2012 for an extensive redesign
incorporating larger dining/living spaces more en-suite bathrooms,
improved fenestration and lower construction costs. The Horsemill
phase is of four stone houses and a further stone built cottage
over some 7,000ft(2). The Stackyard phase comprises five further
houses over 7,758ft(2) and the final phase is a 3,326ft(2) detached
house. Additionally, we have a strategic holding of c.2 acres of
land previously used in conjunction with the farmyard for livestock
housing and handling which we are continuing to promote for
extraction from the Green Belt for housing.
We have realised the Group's New Town investment portfolio when
development opportunities were achieved or when investment value
had been optimised, and the only remaining property is the basement
at 61 North Castle Street for which planning and listed building
consent have been granted for its reconversion to the more valuable
residential use. Plans for reconfiguring the adjacent 27 Hill
Street are well advanced and when these are finalised the re
development can proceed.
St Margaret's House, London Road, a 92,000ft(2) multi-storey
building situated on the A1 about one mile east of the Parliament
and Princes Street, is our largest individual property let at a
very modest rent to a charity, Art's Complex, who have reconfigured
and sub-let all the space to over 250 "artists" and "artisans" and
"galleries" for which there is a lengthy waiting list. One hundred
and twenty parking spaces are let to our neighbours, the Registers
of Scotland. We hold a Planning Permission in Principle for a
231,000ft(2) mixed-use development of residential and/or student
accommodations, an hotel and offices and other commercial space,
together with parking for 225 cars. Two outline proposals have been
considered for utilising the consent by adding to the existing
building but these appear less attractive than the longer term
potential. We have had two unacceptable unsolicited approaches for
the property.
We continue to receive interest in our development project at
Belford Road, Edinburgh, a quiet cul-de-sac less than 500m from
Charlotte Square and the West End of Princes Street, for which we
have an implemented office consent for 22,500ft(2) and fourteen
cars. We also hold a planning consent for a residential development
of twenty flats, with car parking, over 21,000ft(2). Improving
market conditions for this type of property make development more
attractive, but the risks inherent in present conditions so
discount the returns that the likelihood of higher returns within a
reasonable period is more attractive.
We have implemented a consent for eight detached houses at
Musselburgh at a site in Wallyford which is within 400m of the East
Coast mainline station, and near the A1/A720 City Bypass junction.
To suit market conditions we have obtained consent to replace the
two largest detached houses with a terrace of four, providing ten
houses with a larger saleable area of 12,496ft(2). The environment
at Wallyford, formerly a mining village but located on the fertile
East Lothian coastal strip, continues to improve as a result of the
recent development of 250 houses nearby and a new development by
Taylor Wimpey of 200/400 houses north of the railway.
At Chance Inn near Kinross we hold a consent for ten houses over
21,836ft(2) in the farm steading. An improved consent has been
granted to increase the size of the consented detached houses
adjacent to the modern farmhouse from 3,366ft(2) to 4,118ft(2). We
have converted the integral farmhouse garage into a self-contained
"guest suite" and upgraded the house, including adding an en-suite
bathroom. The upgraded farmhouse and the two separate house plots
will be marketed shortly.
At Myreside Farm, in the Carse of Gowrie between Perth and
Dundee, we have previously made two unsuccessful applications.
Using further guidance from the planning department we submitted
new proposals for one new "farmhouse" and four houses on the site
of the existing buildings for which consent was granted in February
2013. Two further developments await planning outcomes. In
Perthshire at Tomperran, a smallholding in Comrie on the River
Earn, we hold consent for twelve detached houses over 19,260ft(2).
Approximately one acre of Tomperran adjacent to the settlement
zoned for industrial use is being promoted for housing for which we
await the Reporter's decision on the Local Plan, and a further
large area is being promoted for housing. Nearby at Carnbo we
expect the emerging Local Plan to retain the paddock of the former
farmhouse in the village settlement and so gain a presumption for a
development of four detached houses.
At Strathtay we hold consents for two large detached houses over
6,040ft(2) and a further consent for a mansionhouse, two ancillary
dwellings and a service block over about 10,811ft(2) in a secluded
garden and paddock near the River Tay. This mansionhouse site and
the two individual houses will be marketed in the summer as plots
or as completed bespoke houses.
At Ardpatrick we have applied for an improved consent for "Bay
Cottage", a new three-bedroom house extended from the former
stone-built Keepers bothy situated among the Achadh-Chaorann
cottages. This is being marketed at present with the existing
consent. Nearby, also on the UC33 Ardpatrick Road, there are
attractive secluded sites within the areas designated by the
Landscape Capacity Study for which we are applying for consent.
Unlike most other areas the infrastructural requirements of these
developments are moderate.
Currently we are marketing two attractive sites on the shore by
Ardpatrick. South Lodge is a stone built cottage overlooking West
Loch Tarbert with consent for a 634ft(2) extension and a double
garage. Oak Lodge is a plot nearby with a similar view with consent
to build a 1,670ft(2) house and a double garage. In the summer we
will also market two one-and-a-half storey house plots of
2,200ft(2) each at the north end of the Estate on the B8024
Kilberry Road.
We will market five properties at Ardpatrick this year.
Unfortunately other potential new sites and many of the conversion
sites are commercially difficult to realise. Current market
conditions are unhelpful, but major continuing constraints are the
high costs of conversion and the overall cost of upgrading the
inadequate infrastructure, partially due to the required
enhancement of the public services. Considerable effort has been
expended on minimising the costs of reinstatement and development
by operational efficiencies, but the current burdens and
restrictions will curtail earlier plans, unless some relaxations
become available or other development opportunities emerge.
Economic Prospects
The "Irish" joke, paraphrased, goes: "You know, sir, if I was
going to Balbriggen I wudnae be starting from here at all". So it
is with the UK economy. The fictional Irish yokel might not have
rephrased his directions quite so enigmatically, but the
adjustments necessary to improve the UK economy can be discerned
within the following quotations: "the questions in the Cambridge
Economics Tripos examination are often the same, but the answers
vary" (anon). During the Bay of Pigs crisis Kennedy opined it was
necessary "to avoid feeling that just because they were military
men their opinions on military matters were worth a damn" (Michael
Burlington); "if we want things to stay as they are, things will
have to change" (Giuseppe di Lampedusa); "the greatest danger in
times of turbulence is to act with yesterday's logic" (Peter F
Drucker).
The context of the need to consider change is that the current
economic policies are not leading to a similar recovery in output
as has occurred following previous major economic shocks. In the
19th century the "Panic of 1857", originating in the US following
the railroad boom after the failure of the Ohio Life Insurance and
Trust Company, quickly spread to the UK bankrupting exporters and
Banks. In the 20th century the post WWI and 1930s Great Depression
caused falls in output of 9% and 7% respectively, and shallower
falls in output resulted from the mainly inflationary bubbles in
1973-1976, 1979-1983 and 1990-1993, but in all these circumstances
output had recovered to the pre-crisis levels within four years and
often earlier and further growth followed. In the sixteen UK
recessions since 1847 consumer spending was 2% or more above the
pre-recessionary peak within three years except on three occasions
of which the current instance is by far the worst.
The current economic depression commenced sixty months ago, but
output is still about 3.5% below the pre-recession level.
Unsurprisingly 12% of Britons expect their "household finances" to
improve next year, but 52% think they will worsen, a finding
probably influenced by a 4% fall in consumer spending during the
depression, low wage rises of 2%, more than offset by price rises
of 3%, and a saving rate of 6% to 7% compared to 0% in 2007.
If the NIESR forecasts of growth at 0.7% in 2013 and of 1.5% in
2014 are correct, the pre-recession output level will not be
attained for at least eight years - apparent Cassandras who
forecast a "lost decade" may, unfortunately, be proved correct! The
current UK recession, based on three-month moving averages, was no
deeper than the Great Depression and shallower than the post WWI
recession, but these regained previous output levels about 48
months from the onset of recession and the economy grew strongly
thereafter. Unlike the UK, other economies, apart from the
aggregate of the Eurozone economies, recovered quickly from the
2008/09 downturn. The US economy grew 2.2% in 2012, the "Transition
economies" 2.6%, Asia and Australasia 4.0%, Latin America 3.0%,
Middle East 3.6% and Sub-Saharan Africa 4.5%, and all these
economies are expected to maintain or increase their growth rate in
2013 and 2014.
In most recessions, once recovery starts, growth is above
average, a "catch-up". In the 1990-93 recession growth was 12% in
the three years after recovery commenced and in the Great
Depression of 1930-34 it was 11% in the two-and-a-half years
following recovery. In the current depression growth is forecast at
about 1% pa for 2013 to 2017. Thus there is no projected
"catch-up", or recovery when growth returns. Before the recession
the economy was growing at over 2.25% pa and, had this been
continued, output now would have been about 10% higher than in
2007. Output is currently about 3.5% lower than before the
recession and the margin between expected output with normal growth
of 2.25% and the current position is 14.4%. Unfortunately if growth
remains below the historic 2.25%, as is forecast, this gap will
continue to widen.
Unfortunately there may not only be no "catch-up", but there may
be no return to the growth rate achieved before the current
depression. Between Q3 1999 and the start of the recession in Q1
2008 labour productivity rose at about 2.25%. However productivity
is currently at 95% of the pre-recession level and at 86% of the
level that would have been achieved had productivity growth
continued the pre-recession trend. This fall in productivity
largely explains the low current unemployment figures as,
simplistically, more hours are required per unit of output and as
output falls employment does not fall proportionately. It is likely
that the long depression will so impair the economy that not only
will there be a permanent and continuing loss of output, but there
will also be a reduction in the rate at which that reduced output
is increased.
A return to a pre-depression economic growth rate is proving
like the Holy Grail - as ephemeral as it is valued and still
undiscovered, though often heralded. In June 2010, soon after
taking office, the coalition Government announced its economic
strategy, principally one of fiscal tightening. However, when the
OBR produced its Economic and fiscal outlook in December 2012 its
forecast for GNP in the fiscal year 2013-14 was 6.3% lower than it
had expected in 2010. Largely because of this poor growth the 2010
Treasury forecast for public sector net borrowing for 2011-12 to
2015-2016 inclusive, has risen from GBP322bn to GBP462bn and,
according to the Institute of Fiscal Studies, borrowing may be even
higher, as the 2012-13 outturn will exceed that forecast level.
Like the Scarlet Pimpernel economic growth is elusive. This
bright red flower closes up when overcast, reopening when
conditions improve, but, on cutting, subsequent flowering only
follows morphological change. Reinhart and Rogoff in their seminal
analysis "This Time is Different" distinguish two main categories
of downturn, cyclical or inflationary crises and Great Depression
Crises, the latter including the current Second Great Depression.
For the first category, regaining the pre-recession level of output
took two to eight years with an average of four years, but in the
Great Depression crises the pre-recession level of output was
regained only after four to twelve years with an average of ten
years.
The UK economy is already five years into this Great Depression
which may well last a full ten years. The Government's view is that
the policies are working and that "there is no alternative".
Unfortunately, they are not working very well as evidenced by the
results and there are indeed several other policy options which
would provide better results. The kernel of the Government's policy
seems to be to utilise monetary policy to control the economy and
fiscal policy to achieve a balanced cyclically adjusted budget i.e.
fiscal policy is not an appropriate tool for economic management.
The emphasis on monetary policy is reinforced by the appointment of
Mark Carney as the new Governor of the Bank of England, who seems
to favour further expansion and relaxation of monetary policy and
by independent reports of a more flexible mandate. This further
emphasis on monetary policy, given that the economy has already
been boosted by four years of interest rates at an unprecedented
0.5%, and by GBP375bn of unprecedented Quantitative Easing which
has certainly ameliorated conditions but has not gained a recovery,
is reminiscent of the aphorism that "the Generals always fight the
last war". The Government may be influenced by Margaret Thatcher's
handling of the 1979-83 recession whose words Mr Cameron used,
"there is no alternative", when she eschewed the Keynesian
expansionism then recommended to her in favour of monetary control.
In that instance however a peak bank rate of 19% was used to reduce
demand (and control inflation), but as inflation fell, rates were
slashed to 8.5%, fuelling a massive growth in credit and money, an
expansion already occurring due to deregulation, and with such a
monetary stimulus the economy recovered rapidly.
In contrast, monetary policy has already been exhaustively
developed and alone cannot now achieve dramatic results or even
sufficient stimulus to increase growth. Even the current stimuli,
the lowest official bank rate in history in place for four years
and GBP375bn in asset purchases has not prevented the broad money
supply - equivalent to lending - falling by 12 per cent between
March 2009 and December 2012. The contraction in credit is a clear
indication that existing monetary policy is insufficient to effect
a recovery.
The policy makers have used several techniques to expand credit
starting with exhortation, then moving to "Project Merlin" and now
to LFS, as the previous "processes" proved inadequate. The Bank of
England Inflation Report confirms that the stock of loans to
Private Non-Financial Corporations has fallen 3% to 4% each year
since 2009. New loans to small businesses in Q4 2012 fell 6.25% and
to medium-sized companies 12.2%. The FLS launched in June 2012 is
still in the early stages, but has made little impact. Of the
GBP68bn potentially available, the 39 banks responsible for 80% of
lending have drawn only GBP14bn. However, in the last three months
of 2012 net lending by all FLS eligible banks was reduced - not
increased - by GBP2.4bn. Of the major UK retail banks only Barclays
- and Nationwide, the Building Society - expanded lending in Q4.
The "state" banks, RBS and Lloyds, drew funds under FLS but reduced
lending to UK businesses and householders. The Bank says that
reduced lending was caused by "The combination of the tight supply
of, and the weak demand for, credit .. .." and the BBA says that
eight out of ten loan applications for medium-sized businesses are
approved. The Federation of Small Business says more loan
applications are rejected than are approved!
The Chairman of the Fed, Ben Bernanke, in his seminal paper on
causes of the Great Depression included this quotation:
"We see money accumulating at the centers (sic!), with
difficulty of finding safe investment for it; interest rates
dropping down lower than ever before; money available in great
plenty for things that are obviously safe, but not available for
things that are in fact safe, and which under normal conditions
would be entirely safe (and there are a great many such), but which
are now viewed with suspicion by lenders".
(Frederiksen D M 1931 Harvard Business Review)
To Frederiksen's "suspicion" may be added "outwith policy".
Policy restraints operating on many banks include an overriding
need to reduce lending in order to ensure that the lending: capital
ratio complies with regulation. If the ratio is, say, ten then any
change in the capital requires a tenfold or larger drop in lending.
Unfortunately the capital denominator of some banks has been
shrinking fast due to past losses and technical changes in its
computation, and, in some cases, has not yet taken account of
actual but unaccounted losses, all of which require the affected
banks to reduce lending, or to raise equity, an option either
excessively dilutive or impractical. To attain the appropriate
ratio the RBS, Lloyds and Santander UK are all dispensing with
"non-core" parts of their businesses. Indeed, some commentators,
including John Kay, consider that many central banks' monetary
operations, such as the Bank of England's Quantitative Easing from
which the public have gained little directly and which have
provided little economic stimulus, because in reality a major
objective of such monetisation has not been to put money in the
hands of consumers and businesses, but to put money in the vaults
of the banks. Certainly, the central bankers who disbursed it hoped
it might work through to the real economy, but their primary
objectives were to underwrite the losses of the banking system and
to strengthen banks' balance sheets.
A relaxation of fiscal policy would add additional stimulus to
the economy. Indeed, a forced relaxation has already taken place as
evidenced by the failure of the present monetary-based strategy to
meet the target for reducing the structural deficit. For instance
the IFS concludes that by 2014-2015 the fiscal deficit will be
GBP64bn more than planned two years ago.
There are cogent arguments for a measured further relaxation but
a main obstacle is that such fiscal changes may conflict with
ideology. The Government argues that there is no "magic money tree"
and that increased borrowing will threaten the UK's credit rating
and increase borrowing costs. However ample lending is available to
the UK and at the lowest cost in UK history. The recent Moody's
downgrade was due to poor economic growth which austerity has made
worse and in practice it has not changed the UK's costs, as indeed
it has not for the US. The Government argues further that the
deficit reduction plan is not responsible for a reduction in growth
but the OBR note that "every forecast .. .. published but the OBR
since June 2010 budget has incorporated the widely held view that
tax increases and spending cuts reduce economic growth in the short
term". Indeed the extent of any such reduction in the current
depressed economy may, according to the IMF, be much greater than
previously thought. The ratio between tax changes and output,
technically the "fiscal multiplier", may now be greater than 1.0
and fiscal tightening could raise the debt ratio as losses in
output exceed fiscal gains.
The Government's apparent reluctance to accept further fiscal
flexibility is perverse as the UK's net debt as a percentage of GDP
compares favourably with other members of the G7, being equal to
that of the US and France, but below that of Japan and Italy.
Moreover, debt rises in current circumstances are normal as
Reinhart and Rogoff show that on average during a banking crisis
government debt rises 86%. UK debt was about 30% of GDP in 2008 and
is estimated to rise to 76% in 2018 which compares well with 150%
after WWI and the 1930s and over 200% after the Napoleonic War and
after WWII. The rise in debt is accentuated by the gearing effect
on debt of a downturn in GDP. Forecasts for 2012-13 made in 2008
compared with those in 2012 showed that a drop in nominal GDP of
13.6% reduced current receipts by 17.6% but increased public sector
borrowing by 372%. However if growth could be restored then there
would be an equivalent improvement in the figures. In these
circumstances an appropriate fiscal stimulus could contribute to a
recovery provided the correct sectors were targeted and such
stimulus was accompanied by appropriate reforms.
I write before the 2013 Budget statement and on the presumption
that the Eurozone continues its stable unstable condition! It seems
unlikely that there will be an appreciable fiscal relaxation and
also unlikely that investment will be redirected from the current
"sacred cows" but likely that over the next few months further
changes to monetary policy will take place, probably allowing a
further devaluation of Sterling. I consider that in these far from
optimal policy circumstances a good outcome would be economic
growth of approximately 1% this year with a rise in 2014 as the
election nears! What is certain is that there will be no swift
recovery, no return to pre-crisis growth levels. I wrote in 2008
"Fortunately the recession (depression) will pass, but it will not
leave its passage unmarked".
Property Prospects
The IPD Index commercial property returns were 2.7% in 2012,
8.1% in 2011, 14.5% in 2010, 2.1% in 2009 and - 22.5% in the
disaster year of 2008. The 2012 return comprised 6.0% "Income"
return and -3.1% "Capital" return. Equities returned 17.2%,
Property Equities 19% and Gilts 8.8%. Values rose in Central London
by 5% but fell 5.8% outside London.
The CBRE All Property Yield in December 2012 was 6.3%, a nominal
0.2 percentage point yield increase in the year. However the 10
year Gilt Yield fell 0.2 percentage points in December 2012 to
1.8%, 4.5 percentage points lower than the All Property Yield. At
the market peak in May 2007 the All Property Yield was 4.8%
compared to the current 6.3%, or equivalent to a fall in property
value of 23.8%, assuming unchanged rents. The All Property Rent
Index was 188 in May 2007 compared with 169 in December 2012 which,
with the yield change, is equivalent to a fall of 31.5% in value
since the peak. Over the year yields of all sectors in all
geographical areas without exception were similar or higher,
notably for shops outside London and for offices outside London and
the South East. The Rental indices for all sectors were unchanged
over the year but within shops there were some falls of around 5%
in England outwith the South east, but not in Scotland.
The immediate prospects for commercial property continue to be
unfavourable, particularly as shown by forecasts derived from
derivatives. The All Property contract implies a return of 1.5% in
2013, 3.00% in 2014 and 3.0% in 2015. The expired 2012 contract
implied a return of 2.0%, an improvement over the nil return for
2012 implied exactly a year ago. The February 2013 IPF UK Consensus
Forecast, which reported that its forecast for 2012 of a 2.0%
return compared with the IPD reported return of 2.7%, forecasts
total returns of 5.2% in 2013, 7.4% in 2014, 8.4% in 2015 and 7.8%
in 2017. The 2013 return reflects minimal rental growth and a
further small fall in capital values, but from 2014 onwards both
rental growth and capital growth are forecast. Forecasts by
individual surveyors of the All Property returns show a similar
expected recovery from the poor results of 2012. In 2013 the retail
sector is forecast to generate poorer returns than any other
sector.
I repeat my previous statement "I see no recovery in the
investment property market except in certain specialised areas
until 'normal' economic growth returns. In due course there will be
a recovery, but the investment market will continue to suffer a
secular erosion caused by technical obsolescence, loss of
locational primacy and competition from new formats".
House prices changed little in 2012 following little change both
in 2011 and in 2010. In 2012 Nationwide reported a fall of 1% (rise
of 1%), Halifax a fall of 0.3% (fall of 1.3%) and LSL Acadametrics
a rise of 3.2% in England and Wales. LSL observes that the England
& Wales market is strongly influenced by London prices which
rose 9.9% in the year (2% rise) but only 1.4% outside London (fall
of 2%) with some outlying areas falling slightly, notably Wales
by1.3% (North 4.0%).
Figures for Scotland are varied, LSL report house prices fell in
23 of the 31 local authority areas in 2012 and by 4.2% overall
(1.9% fall) probably caused by falls of over 10% in three Ayrshire
council areas, by 17.5% in Clackmannanshire and by 7% falls in
Edinburgh and Glasgow. Argyll and Bute prices rose 5.3% the second
largest increase. The average price was GBP140,846 in December 2012
and price falls in the 16 higher priced local authority areas were
0.9% compared with 6.3% falls in the 16 lower priced local
authority areas. The two mortgage providers publish contrasting
figures for 2012 the Nationwide report a 3.3% fall but Halifax a
5.4% rise (sic).
Independent forecasts published by HMT show an average increase
of 0.5% in 2013 with Capital Economics, a long standing bear of the
housing market, forecasting a fall of 5.0%. Further increases are
forecast by HMT for 2014 (1.7%) for 2015 (3.0%) and for 2016
(3.6%). Interestingly the forecasts for these three years made last
year were: 2014 3.2%, 2015 5.0% and 2016 6.4%.
Savills distinguish between "Mainstream" and "Prime" housing
markets. UK Mainstream prices are expected to rise by 0.5%, 1.5%,
2.0% and 3.5% from 2013 onwards rising 11.5% in five years, but
London prices are expected to rise by 21% over five years and
Scotland, like the Midlands and North of England, by around 6.0%.
"Prime" housing markets are expected to rise more quickly.
The performance of the economy will be the main determinant of
the housing market. Supply from repossessions will be limited by
the surprisingly high employment figures and by the continuing low
interest rates. Supply of new houses is curtailed primarily by the
existing and expected price levels but also by the risk of price
falls and protracted selling times. Demand will be increased by
existing Government schemes, which may be extended, including
"Newbuy" "Firstbuy" and the Funds for Lending which are reported to
have increased sales, particularly for "First Time buyers". Demand
will continue to be constrained by rationed mortgage finance,
shortage of equity capital and lack of confidence.
Conclusion
We are continuing to endure the longest documented depression in
history, already extending much longer than the "Great Depression"
of the 1930s which is likely to persist for at least another two
years. The depth of the recessions has been limited by the
intervention of the authorities and, barring exogenous shocks, such
as a "major" Eurozone crisis, the main variables likely to
determine the length of the depression are the supply of credit,
the extent of any fiscal stimulus and the rate of removal of
industrial, social and institutional barriers to growth. Scotland
traditionally has a large state sector which will expand with any
further transfers of powers, and, while this may provide desired
social benefits, will be at the expense of economic growth.
The housing market will improve only slowly, but the continuing
reduced level of house construction will reduce the supply,
particularly of family homes, while unfulfilled demand continues to
increase. We have an increasing number of sites tailored to this
market which have gained consent or are likely to do which we
propose to develop or to sell.
We continue to promote our strategic land sites and expect that
over the next few years some of them will be ready for development
by which time the market will be significantly better. In our
existing portfolio most development properties are valued at cost,
usually based on existing use, and, when these sites obtain consent
and are then developed or sold, the considerable upside value will
be realised. Over the next twelve months we expect to market
fourteen completed houses or house plots with a sales value,
excluding the Mansionhouse and staff building plots at Strathtay,
of over GBP2.0m.
I D Lowe
Chairman 21 March 2013
2013 Consolidated income statement for the six months ended 31
December 2012
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 Dec 31 Dec 30 June
2012 2011 2012
Note GBP000 GBP000 GBP000
Revenue from properties 197 194 371
Property charges (111) (179) (310)
____ ____ _____
Net rental and related income 86 15 61
____ ____ _____
Other income 25 79 85
Other expenses (8) - -
____ ____ _____
Net other income 17 79 85
____ ____ _____
Administrative expenses (365) (384) (821)
____ ____ _____
Operating loss before investment
property disposals and valuation
movements (262) (290) (675)
Profit/(loss) on disposal of
investment properties - 10 (362)
Valuation gains on investment - - -
properties
Valuation losses on investment
properties - (250) (225)
____ ____ ____
Operating loss before net financing
costs (262) (530) (1,262)
Finance income 1 1 22
Finance expenses (47) (104) (184)
____ ____ ____
Loss before taxation (308) (633) (1,424)
Income Taxes 5 - - -
____ ____ ____
Loss for the financial period
attributable to equity holders
of the company (308) (633) (1,424)
=== === ===
Loss per share
Basic loss per share (pence) 4 2.60p 5.33p 11.98p
Diluted loss per share (pence) 4 2.60p 5.33p 11.98p
Consolidated statement of recognised income and expenditure for
the six months ended 31 December 2012
Unaudited Unaudited Audited
6 months 6 months Year ended
ended ended
31 Dec 31 Dec 30 June
2012 2011 2012
GBP000 GBP000 GBP000
Loss for the period (308) (633) (1,424)
____ ____ _____
Total recognised income
and expense for the period
attributable to equity holders
of the company (308) (633) (1,424)
==== ==== ====
Consolidated balance sheet as at 31 December 2012
Unaudited Unaudited Audited
31 Dec 31 Dec 30 June
2012 2011 2012
Note GBP000 GBP000 GBP000
Non current assets
Investment properties 8,125 11,100 8,125
Plant and equipment 30 36 28
Investments - 4 4
______ ______ ______
Total non-current assets 8,155 11,140 8,157
Current assets
Trading properties 11,631 11,215 11,365
Trade and other receivables 159 123 140
Cash and cash equivalents 171 444 691
______ ______ ______
Total current assets 11,961 11,782 12,196
______ ______ ______
Total assets 20,116 22,922 20,353
______ ______ ______
Current liabilities
Trade and other payables (456) (604) (324)
Interest bearing loans and
borrowings (2,725) (4,223) (2,725)
______ ______ ______
(3,181) (4,827) (3,049)
Total liabilities (3,181) (4,827) (3,049)
______ ______ ______
Net assets 6 16,935 18,095 17,304
===== ===== =====
Equity
Issued share capital 7 2,357 2,377 2,377
Other reserves 2,897 2,920 2,920
Retained earnings 6 11,681 12,798 12,007
______ ______ ______
Total equity attributable
to equity holders of the
parent 6 16,935 18,095 17,304
===== ===== =====
Consolidated cash flow statement for the six months ended 31
December 2012
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 Dec 31 Dec 30 June
2012 2011 2012
GBP000 GBP000 GBP000
Loss for the period (308) (633) (1,424)
Adjustments
(Profit)/loss on sale of investment
property - (10) 362
Investment property valuation
movements - 250 225
Depreciation - - 12
Net finance expense 46 103 162
____ ____ ___
Operating cash flows before
movements
in working capital (262) (290) (663)
Increase in trading properties (266) (84) (234)
Increase in trade and other
receivables (19) (58) (70)
Increase/(decrease) in trade
and other payables 85 72 (170)
_____ _____ _____
Cash flows from operating activities (462) (360) (1,137)
Interest paid - (83) (207)
Interest received 1 1 22
_____ _____ _____
Cash flows from operating activities (461) (442) (1,322)
_____ _____ _____
Investing activities
Proceeds from sale of investment
property - 310 2,938
Purchases of plant and equipment (2) (1) (5)
_____ _____ _____
Cash flows from investing activities (2) 309 2,933
_____ _____ _____
Financing activities
Repayments of long term - - (1,497)
borrowings
Sale of trade investment 4 - -
Purchase of own shares (61) - -
_____ _____ _____
Cash flows from financing activities (57) - (1,497)
_____ _____ _____
Net (decrease)/increase in cash
and
cash equivalents (520) (133) 114
Cash and cash equivalents at
beginning
of period 691 577 577
_____ _____ _____
Cash and cash equivalents at
end of period 171 444 691
==== ==== ====
Notes to the accounts
1 This interim statement for the six month period to 31 December
2012 is unaudited and was approved by the directors on 21 March
2013. Caledonian Trust PLC (the "company") is a company domiciled
in the United Kingdom. The information set out does not constitute
statutory accounts within the meaning of Section 434 of the
Companies Act 2006.
2 Going concern basis
After making enquiries, the Directors have a reasonable
expectation that the company and the group have adequate resources
to continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in
preparing this interim statement.
3 Accounting policies
Basis of preparation
The interim statement is prepared applying the recognition and
measurement requirements of IFRSs as adopted by the EU. The company
has elected not to prepare the interim statement in accordance with
IAS 34 as adopted by the EU.
The financial information set out in this announcement for the
year ended 30 June 2012 does not constitute the Company's statutory
accounts for that period within the meaning of Section 434 of the
Companies Act 2006. Statutory accounts for the year ended 30 June
2012 are available on the Company's website at
www.caledoniantrust.com and have been delivered to the Registrar of
Companies. These accounts have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by
the European Union. The auditors have reported on those financial
statements; their reports were (i) unqualified, (ii) did not
include references to any matters to which the auditors drew
attention by way of emphasis without qualifying their reports and
(iii) did not contain statements under section 498 (2) or (3) of
the Companies Act 2006.
The financial information set out in this announcement has been
prepared in accordance with International Financial Reporting
Standards as adopted by the European Union ("adopted IFRS"). The
financial information is presented in sterling and rounded to the
nearest thousand.
The financial information has been prepared applying the
accounting policies and presentation that were applied in the
preparation of the company's published consolidated financial
statements for the year ended 30 June 2012.
In the process of applying the Group's accounting policies,
management necessarily makes judgements and estimates that have a
significant effect on the amounts recognised in the interim
statement. Changes in the assumptions underlying the estimates
could result in a significant impact to the financial information.
The most critical of these accounting judgement and estimation
areas are included in the Group's 2012 consolidated financial
statements and the main areas of judgement and estimation are
similar to those disclosed in the financial statements for the year
ended 30 June 2012.
4 Loss per share
Basic loss per share is calculated by dividing the loss
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the period as
follows:
6 months 6 months
ended ended Year ended
31 Dec 31 Dec 30 June
2012 2011 2012
GBP000 GBP000 GBP000
Loss for financial period (308) (633) (1,424)
=== === ===
No. No. No.
Weighted average no. of shares:
For basic loss per share and
for diluted
loss per share 11,844,016 11,882,923 11,882,923
======== ======== ========
Basic loss per share 2.60p 5.33p 11.98p
Diluted loss per share 2.60p 5.33p 11.98p
5 Income tax
Taxation for the 6 months ended 31 December 2012 is based on the
effective rate of taxation which is estimated to apply to the year
ending 30 June 2013. Due to the tax losses incurred there is no tax
charge for the period.
In the case of deferred tax in relation to investment property
revaluation surpluses, the base cost used is historical book cost
and includes allowances or deductions which may be available to
reduce the actual tax liability which would crystallise in the
event of a disposal of the asset. At 31 December 2012 there is a
deferred tax asset which is not recognised in these accounts.
6 Capital and reserves Share Other Retained
capital reserves earnings Total
GBP000 GBP000 GBP000 GBP000
At 1 July 2012 2,377 2,920 12,007 17,304
Total recognised income
and expense - - (308) (308)
Purchase of own shares (20) (23) (18) (61)
_____ _____ ______ ______
At 31 December 2012 2,357 2,897 11,681 16,935
==== ==== ===== =====
At 1 July 2011 2,377 2,920 13,431 18,728
Total recognised income
and expense - - (633) (633)
_____ _____ ______ ______
At 31 December 2011 2,377 2,920 12,798 18,095
==== ==== ===== =====
At 1 July 2011 2,377 2,920 13,431 18,728
Total recognised income
and expense - - (1,424) (1,424)
_____ _____ ______ ______
At 30 June 2012 2,377 2,920 12,007 17,304
==== ==== ===== =====
The other reserves consist of the share premium account and
the capital redemption reserve.
7 Issued share capital
31 December 31 December 30 June 2012
2012 2011
No GBP000 No. GBP000 No. GBP000
000 000 000
Authorised
Ordinary shares
of 20p each 20,000 4,000 20,000 4,000 20,000 4,000
===== ==== ===== ==== ===== ====
Issued and
fully paid
Ordinary shares
of 20p each 11,784 2,357 11,883 2,377 11,883 2,377
===== ==== ===== ==== ===== ====
For further information please contact:
Caledonian Trust plc
Douglas Lowe, Chairman and Chief Executive Officer Tel: 0131 220 0416
Mike Baynham, Finance Director Tel: 0131 220 0416
Execution Noble & Co Limited
John Riddell Tel: 0207 456 9191
Harry Stockdale
This information is provided by RNS
The company news service from the London Stock Exchange
END
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