TIDMHWG
RNS Number : 0119J
Harworth Group PLC
06 September 2016
HARWORTH GROUP PLC
UNAUDITED INTERIM RESULTS FOR THE HALF YEARED 30 JUNE 2016
Harworth Group plc ("Harworth" or the "Group"), the property
regeneration and investment specialist, announces its interim
results for the half year ended 30 June 2016.
Financial Highlights(1)
-- Full year financial forecasts are in line with the Board's expectations
but, as usual, weighted towards the second half
Net asset value ("NAV") of GBP303.0m (GBP1.04 per share), a 10.4% increase
from H1 2015 NAV GBP274.5m (93.9p) and 1.8% increase from 2015 full year
NAV GBP297.7m (GBP1.02)
EPRA net asset value per share rose to GBP1.08 per share (H1 2015: 96.8p)
Operating profit of GBP8.3m (H1 2015: GBP9.2m, underlying GBP14.8m),
which reflects a GBP2.9m impact from 2016 stamp duty changes
Earnings per share of 0.3p (H1 2015: 2.7p, adjusted 0.5p)
-- Planned financing extension completed reflecting confidence in the future
and to accelerate strategy delivery
Existing RCF limit increased from GBP65m to GBP75m. No need to refinance
until February 2021 and infrastructure bonding secured with new surety
provider
Portfolio remains prudently geared with gross loan to value 20.0% (net
LTV 13.4%)
First interim dividend of 0.23p per share (GBP0.66m in total)
Strategic and Operating Highlights
-- Clear strategic focus on Northern regeneration market with balanced portfolio
of geographies and sectors
Four acquisitions (GBP12.8m cost) made in the first half including 50%
purchase of The Aire Valley Land LLP, which owns Temple Green, Leeds'
largest live logistics development
Sold GBP13.3m of property as part of ongoing programme to increase our
focus on sites with higher value-add potential. The portfolio now comprises
the ownership or management of 22,295 acres across 144 sites
To address current market caution, future infrastructure spend will be
directly linked to anticipated sales
-- Good ongoing operational performance with selective moves to develop and
hold sites to grow income and drive NAV growth
Three small, direct build commercial developments now being taken forward
across three different sites, totalling c.180,000 sq. ft
Excellent progress with the construction and letting of 2 units, totalling
400,000 sq. ft, at Logistics North in Bolton forward funded by M&G. These
will reach practical completion before year end
On residential: 335 plot sales, including Harron Homes and Avant Homes
at North Gawber; consent secured for 65 new units; applications submitted
for c.400 units since the end of the period; and applications progressing
for a further c.900 units for submission prior to the year end
Harworth's Chief Executive, Owen Michaelson, said:
"We have progressed well during the first half, seeing continued
momentum in the business, which is reflective of the underlying
strength of the Group. We selectively grew our direct commercial
development capabilities, through schemes at Logistics North, the
Advanced Manufacturing Park and Gateway 36, as well as making
excellent progress with the forward funded M&G development.
"We have continued confidence in the economic potential of the
regions in which we operate and the long term market fundamentals
remains in place. Our strategy affords us flexibility to manage
potential periods of uncertainty. Together with our strong balance
sheet, we are robustly positioned to capitalise on new
opportunities, both for development and income generation. Based on
current market conditions, we expect our full-year performance to
be in line with our expectations."
Notes: (1.) 2015 NAV figures assume 2016's 1 for 10 share
consolidation had occurred in 2015 and 2015 underlying figures
assume that Harworth Estates Property Group Limited had been owned
from the start of the year.
Enquiries:
Harworth Group plc Tel +44 (0) 114 349 3131
Owen Michaelson, Chief
Executive
Andrew Kirkman, Finance
Director
Cardew Group Tel: +44 (0)20 7930 0777
Emma Crawshaw Tel: + 44 (0)7971 468
308
Notes to Editors:
Harworth Group plc is a leading property and development company
which owns and manages a portfolio of some 23,000 acres of land
across approximately 150 sites located throughout the Midlands and
North of England. The Company specialises in the regeneration of
former coalfield sites and other brownfield land into employment
areas, new residential properties and low carbon energy
projects.
http://www.harworthgroup.com
Chairman's Statement
Overview
I am pleased to present our interim report for the half year
ended 30 June 2016. It demonstrates that the Group has maintained
the momentum it established in 2015 and represents a firm platform
for the second half of the year towards which development activity
and sales will, as usual, be weighted.
Performance and Results
In the first half of 2016, the Group grew its net asset value to
GBP303.0m, a 10.4% increase on last June's value of GBP274.5m. We
continue to meet our ambition of increasing the net asset value of
the business throughout the property cycle.
This growth is partly attributable to the recycling of capital
through the business. In the first half we achieved sales of
GBP13.3m. This included both serviced plots and agricultural land
with limited development potential. The proceeds covered
development spend of GBP10.1m elsewhere in the portfolio. We expect
significantly increased levels of disposals in the second half and
that cash flow will more than cover the four acquisitions, totaling
GBP12.8m, which were made in the first half to replenish the
portfolio.
Operating profit was GBP8.3m compared to an underlying level of
GBP14.8m in the first half of 2015. This reflects a GBP2.9m
reduction in the value of the portfolio during this first half on
account of stamp duty changes. We continue to seek to grow and
improve the quality of our recurring income.
The Group's business model is evolving to include selective
property development where this unlocks additional value from
existing and new sites and builds income. The Board believes its
forecast full year expectations remain realistic, provided current
supportive market conditions persist.
Strategic Review
In June 2016, the Board carried out its annual, comprehensive
review of the Group's strategy for the next three to five years.
That review re-affirmed the fundamentals of the Group's long-term
strategy: promoting and developing our existing portfolio to
extract maximum value and income, whilst replenishing our asset
base with attractive investment opportunities to secure a
development pipeline and further income growth. The Group continues
to achieve this by:
-- maintaining a diverse portfolio, operating across different sectors of the
market: residential, commercial and energy;
-- building recurring income to cover operating costs, bank interest and dividends;
-- selectively undertaking direct commercial development where the balance
of capital deployed and forecast return adds value to the portfolio; and
-- continuing to grow our presence in existing regions, while looking to expand
our geographic reach through new acquisitions in adjacent regions of the
UK where there is a strong and stable market.
The Group's strategy affords it flexibility to manage periods of
uncertainty, including potential volatility following the EU
referendum result. The Group is robustly positioned to capitalise
on new opportunities, both for development and to grow income, and
address any challenges that may present themselves in the current
environment.
Share Consolidation and Dividend
I am pleased to report that the consolidation of the Company's
1p shares into 10p shares and the capital reduction approved by
shareholders at the Company's last AGM, in April 2016, have been
implemented, the latter following court approval. The capital
reduction enables the Company to pay the 2015 year-end dividend,
also approved at the AGM, in the aggregate sum of GBP1.5m (0.51p
per share following the share consolidation). The 2015 final
dividend will be paid on 9 September 2016 to shareholders on the
Company's register of members on 19 August 2016.
I am also pleased to announce that the Company will pay its
first interim dividend of 0.23p per share. This dividend will be
paid on 1 December 2016 to shareholders on the register at the
close of business on 4 November 2016. The ex-dividend date will be
3 November 2016.
Board and Committee Membership
As announced in last year's results, Peter Hickson stepped down
as senior independent director of the Company immediately following
the AGM. Lisa Clement succeeds Peter as senior independent director
and, from 1 October 2016, as chair of the Remuneration
Committee.
Andrew Cunningham was appointed as a non-executive director of
the Company with effect from 1 May 2016. From 1 October 2016, he
will also chair the Audit Committee, filling the position vacated
by Lisa.
The Group's workforce has grown from 43 to 51 in the first half
of the year, reflecting continued momentum in the business. I
welcome all new employees and would like to thank all the Group's
staff for their support and commitment during the first half. The
Board looks forward to further growth in the business in the second
half of 2016.
Jonson Cox
Chairman
6 September 2016
Chief Executive's Statement
We have made good progress in the first half of 2016 in both the
Capital Growth and Income Generation business segments, building on
the underlying strength of our business and reflecting the
long-term fundamentals of the markets in which we operate. As in
previous years, we anticipate performance to be second half
weighted, as remedial work is most easily achieved over the summer
months, resulting in a greater amount of sales in the second half
of our financial year.
Operational Performance
As at 30 June 2016, the total number of consented residential
plots in the portfolio was 10,029, alongside 10,482,221 sq. ft of
consented employment space. During the six-month period, outline
planning consents were granted for 65 residential plots, together
with 120,875 sq. ft. of commercial space. We have submitted
planning applications for 400 residential plots since the end of
the period and are planning to submit further planning applications
for 700 residential plots and in excess of 1.5m sq. ft of
commercial space by the end of the current financial year.
We continue to plan carefully the disposal of properties to
extract the maximum value from our land portfolio, with the aim of
achieving gains against book value to realise cash for
reinvestment. In the first half we sold 335 residential plots
across three development parcels to regional housebuilders. At 30
June 2016, a number of additional sales to housebuilders were in
negotiation, for completion during the second half of the year.
We have begun to deliver on our stated aim of selling sites with
limited development potential in order to concentrate on a smaller
number of brownfield sites with greater potential for value
enhancement. We sold over GBP13.3m of property in the first half,
with the portfolio now comprising the ownership or management of
22,295 acres across 144 sites.
We have made selected moves up the development curve during the
period to generate increased value for our shareholders. Good
progress is being made on direct build, commercial developments
totalling c.180,000 sq. ft on three of our sites: the Advanced
Manufacturing Park in Rotherham, Logistics North in Bolton and
Gateway 36 in Barnsley. This responds to a continued undersupply of
smaller commercial units in the North of England. This supports our
efforts to build income and drive net asset value growth.
Excellent progress has been made on the construction of two
commercial units, totalling 400,000 sq. ft, which were forward
funded by M&G. We expect both units to be completed and ready
for occupation before the year end.
Going forwards, given current market caution, strategic
infrastructure investment in our sites will continue to be
monitored closely and expenditure will be directly linked to
anticipated sales.
We have made further progress with income generation from our
Business Parks. We have signed 16 new commercial lettings or
renewals in the six months to 30 June 2016, with an annualised rent
roll of over GBP240,000.
Our income stream was also supplemented by the installation of
18.9MW of additional capacity from renewable energy schemes,
bringing total capacity in our portfolio to 138.3MW. Finally,
although the market for coal fines has continued to reduce, owing
to plant closures and the Government's decision to close all
coal-fired power stations by 2025, we have continued to sell coal
fines from former colliery sites to energy companies, albeit at a
reduced level.
Acquisitions
Replenishing our strategic landbank with new sites is an
important part of our strategy. We remain confident in the economic
potential of the regions in which we operate and our acquisitions
in the first half of 2016 reflect this.
We made four acquisitions during the period, totalling GBP12.8m.
The largest was our acquisition of a 50% stake in The Aire Valley
Land LLP for GBP9.0 million. It owns Temple Green, the largest live
logistics development in the Leeds City Region. It has an outline
consent for 2.64m sq. ft of employment space adjacent to Junction
45 of the M1. We believe we can use our experience from similar
sites, including Logistics North in Bolton, to work with our new
joint venture partner, Evans Property Group, to maximise the value
enhancement potential in both this site and our adjacent, 162 acre,
Skelton Grange site.
Our other key acquisition was that of Sanderson (Advantage)
House in Rotherham for GBP2.3 million (with a net initial yield of
13.3%). This multi-let 20,000 sq. ft office scheme, at the gateway
to our flagship Waverley development, provides asset management
opportunities to re-gear leases and drive yield compression.
Market Outlook
The European referendum vote on 23 June 2016 led to an initial
hiatus by some housebuilders and investment funds. Activity now
seems to be back to previous levels however and long-term market
fundamentals remain strong. In particular, the UK still needs land
for new housing to meet increasing demand and there remains an
under-supply of good quality, employment space in the North of
England and the Midlands. We will continue to monitor market trends
with our strategy and portfolio affording us flexibility to manage
periods of uncertainty.
Overall, trading remains in line with our expectations, with a
healthy pipeline of anticipated sales.
Owen Michaelson
Chief Executive Officer
6 September 2016
Financial Review
Overview
The Group achieved good results in the first half of 2016 with
both segments of the business, Capital Growth and Income
Generation, making progress. Net asset value increased to GBP303.0m
as at 30 June 2016, representing a 10.4% increase from 30 June 2015
(GBP274.5m) and a 1.8% increase since 31 December 2015
(GBP297.7m).
Revenue from operations rose to GBP17.4m (H1 2015: GBP4.2m),
largely as a result of the recognition of pass-through construction
costs and development fee income arising from the construction of
two industrial units at Logistics North being forward funded by
M&G. Revenue also increased as a result of increased rent from
business parks and low-carbon energy sites, albeit somewhat offset
by a decline in coal fines revenues.
Profit before tax was GBP7.4m (H1 2015: GBP51.3m) with
revaluation gains impacted by GBP2.9m on account of the recent
stamp duty changes. The 2015 profit on disposal included a GBP3.3m
one-off gain from the surrender of an option on the Chevington wind
farm project. Exceptional items in the first half netted to GBPnil
(H1 2015: GBP(2.4m)) largely relating to the Group's legacy
activities.
The comparative statutory results for H1 2015 are complicated by
the acquisition and fundraising of March 2015 associated with the
re-acquisition of 75.1% of the shares in Harworth Estates Property
Group Limited ("HEPGL"). The 2015 results included a gain on
bargain purchase of GBP44.2m. In addition, a 1 for 10 share
consolidation occurred in the first half of 2016. Consequently, our
results are set-out below on both a statutory and underlying
basis.
Operating results
The Group's operating profit, excluding exceptional items, was
GBP8.3m (H1 2015: GBP9.2m). This included valuation gains of
GBP7.9m (H1 2015: GBP3.4m) and a loss from disposals of investment
properties and options of GBP0.5m (H1 2015: profit of GBP5.4m). The
Group's comparative operating profit, before exceptional items, for
the first half of 2015 is reconciled to the underlying operating
performance for the half year 2015, and set against the first half
of 2016.
2016 2015 Harworth
Harworth 2015 Harworth Group plc 2015 Fair
Group Group plc Underlying value 2015 Harworth
Six months to plc Underlying Pre-acquisition adjustments Group plc
June GBPm GBPm GBPm GBPm GBPm
----------------------- --------- ------------- ---------------- ------------ -------------
Revenue 17.4 7.7 (3.2) (0.3) 4.2
Cost of sales (11.9) (3.4) 1.6 - (1.8)
Overheads (4.7) (3.3) 1.4 - (1.9)
Profit from operations 0.9 1.1 (0.3) (0.3) 0.5
----------------------- --------- ------------- ---------------- ------------ -------------
Valuation gain 7.9 8.2 (4.8) - 3.4
Profit from disposals (0.5) 5.5 (0.1) - 5.4
Pension credit 0.1 0.1 - - 0.1
----------------------- --------- ------------- ---------------- ------------ -------------
Operating profit,
before exceptionals 8.3 14.8 (5.3) (0.3) 9.2
----------------------- --------- ------------- ---------------- ------------ -------------
Note: There are minor differences on some totals due to
rounding
Underlying performance
The underlying profit from operations was GBP0.9m (H1 2015:
GBP1.1m). The Group recorded revenues of GBP17.4m (H1 2015:
GBP7.7m) comprising rental and royalty income together with sales
of coal fines and salvage. The significant increase in revenues and
cost of sales reflected GBP9.5m in respect of contract work on the
construction of units at Logistics North which have been forward
funded by M&G. Further amounts for revenue and cost of sales
will be recognised over the remainder of 2016. Only a small amount
of pro-rata development fee profit on these construction works has
been recognised to date, with potentially more significant amounts
to be recognised in the future if certain milestones are
achieved.
Capital Income Central H1 2016 H1 2015
Growth Generation overheads Total Total
GBPm GBPm GBPm GBPm GBPm
----------------------- ------- ----------- ---------- ------- -------
Revenue 9.6 7.8 - 17.4 7.7
Cost of sales (9.4) (2.3) - (11.9) (3.4)
Overheads (0.8) (0.7) (3.2) (4.7) (3.3)
----------------------- ------- ----------- ---------- ------- -------
Profit from operations (0.7) 4.8 (3.2) 0.9 1.0
Valuation gain 3.5 4.4 - 7.9 8.2
Profit from disposals (0.1) (0.4) - (0.5) 5.5
Pension credit - - 0.1 0.1 0.1
----------------------- ------- ----------- ---------- ------- -------
Operating profit,
before exceptionals 2.7 8.8 (3.1) 8.3 14.8
----------------------- ------- ----------- ---------- ------- -------
Total overheads, which include the overhead costs of the Capital
Growth and Income Generation segments and central costs, amounted
to GBP4.7m (H1 2015: GBP3.3m). The increase in costs reflected a
number of one-off costs associated with the share consolidation,
capital reduction and recruitment, as well as greater operational
activity.
Valuation gains for the first half of 2015 and 2016 are set out
below:
Underlying
H1 2016 H1 2015
GBPm GBPm
------------------- ------- ----------
Major developments 2.0 2.3
Strategic land 1.5 3.6
Business parks 1.0 1.9
Agricultural land 0.0 0.0
Natural resources 3.4 0.4
-------------------- ------- ----------
Total 7.9 8.2
-------------------- ------- ----------
The valuation gains in the first half of 2016 across the
divisions were as follows:
Capital Growth segment
Major Developments - strong occupier interest at Logistic North,
progress made in the regeneration proposal of Chatterley Valley and
savings on the cost plan at Harworth; and
Strategic Land - the delivery risk has reduced at Coalville and
there is also planning progress, good tenant interest and cost plan
savings at Wheatley Hall Road, which was acquired in December
2015.
Income Generation segment
Business Parks - direct development of the Helix industrial unit
and the fast-food outlets advancing at Gateway 36 (Rockingham);
Natural Resources - improved lettings at Meriden, commissioning
of the wind farm at Chevington and coal mine methane revenue has
started at Kellingley; and
Agricultural Land - market valuations of agricultural land did
not move during the period, therefore no movements were
recorded.
The valuation gain of GBP7.9m for the first half of 2016 is
after the recognition of a GBP2.9m reduction in the value of the
portfolio resulting from the recent changes to stamp duty albeit
similar levels of cost savings have also been identified across our
properties.
The Group made sales of GBP13.3m (H1 2015: GBP21.0m), including
GBP3.4m of deferred consideration. The proceeds were split between
residential serviced plots (GBP9.6m) and other, essentially
agricultural, land (GBP3.7m). The Group made an aggregate loss of
GBP0.5m (H1 2015: GBP5.5m profit) on those sales as a result of the
remediation works at North Gawber proving more difficult than
expected in advance of sales. In the first half of 2015, GBP3.3m of
the profit on disposal was attributable to the surrender of the
option at Chevington wind farm.
The resulting underlying operating profit for the Group, before
exceptional items, was GBP8.3m (H1 2015: GBP14.8m)
Exceptional items
Exceptional items comprise four separate items, all of which
largely relate to the Group's legacy activities. With regard to
Harworth Insurance Company Limited, the administrator has confirmed
that Harworth will be receiving GBP0.5m. A further amount of
GBP0.2m is expected from the administrator of Ocanti Opco Limited
which relates to the reimbursement of management expenses incurred
by Harworth (then known as Coalfield Resources plc). In respect of
coal fines activities, an exceptional charge of GBP0.7m has been
taken to reflect the under recovery of amounts relating to the
cessation of activities at Rugeley and a provision taken against
the value of coal fines stocks to reflect reduced demand.
Net assets
As set out below, net assets increased to GBP303.0m as at 30
June 2016 from GBP297.7m as at 31 December 2015 (GBP274.5m as at 30
June 2015). This increase was as a result of movements in the half
year, being operating profit of GBP8.3m less interest costs of
GBP1.0m, tax of GBP1.4m and other movements of GBP0.6m.
30 June 30 June 31 December
2016 2015 2015
GBPm GBPm GBPm
-------------------------------- ----------- ------------- -------------
Investment properties
(including assets held for
sale and investments in joint
ventures) 363.9 308.2 344.5
Cash 23.7 30.1 27.6
Other assets 21.8 26.5 21.6
-------------------------------- ----------- ------------- -------------
Total assets 409.4 364.8 393.7
Gross borrowings 72.6 60.0 64.5
Other liabilities 33.8 30.3 31.5
-------------------------------- ----------- ------------- -------------
Net assets 303.0 274.5 297.7
-------------------------------- ----------- ------------- -------------
Number of shares in issue 292,269,786 2,922,697,857 2,922,697,857
-------------------------------- ----------- ------------- -------------
Net assets per share 103.6p 9.4p 10.2p
-------------------------------- ----------- ------------- -------------
Underlying net assets per share 103.6p 93.9p 101.8p
Funding strategy
On 13 February 2015, HEPGL entered into a GBP65m, five year
term, non-amortising, Revolving Credit Facility ("RCF") with The
Royal Bank of Scotland ("RBS"), replacing amortising facilities
with the Lloyds Banking Group and Barclays Bank. On 19 August 2016,
HEPGL completed a planned extension to its RCF with RBS, increasing
the limit to GBP75m and extending the term by a further year such
that it now expires in February 2021, on substantially the same
terms (including pricing) as the existing facility. This enhanced
facility reflects confidence in the business and provides either
additional headroom and/or additional funds to accelerate the
strategic growth of the Group.
Infrastructure funding, provided by public bodies to promote the
development of major sites for employment and housing needs,
continues to feature in our funding strategy. At 30 June 2016, the
Group had four infrastructure facilities with all-in funding rates
of between 2.5% and 4.0%. Despite the EU referendum vote, we expect
public infrastructure funding to continue and, since the vote, we
have signed a facility agreement to fund a small direct build
scheme at the AMP.
On 21 June 2016, HEPGL entered into a four-year swap to fix
GBP30m of borrowings at an all-in rate of 2.955%, including fees.
The Group's hedging strategy is to have roughly half of its debt at
a fixed rate and half of its debt exposed to floating rates. The
weighted average cost of debt, using 30 June 2016 balances and
rates, and including fees, was 2.8%.
The Group is continuing to maintain positive momentum created by
using disposal proceeds to fund investment spend on developments
and further acquisitions to replenish the portfolio, with
particular focus on brownfield sites with greater value enhancement
potential. At 30 June 2016, the Group is prudently geared at 20.0%
gross loan to value (net loan to value 13.4%), which also gives
flexibility to invest for the future.
Cash and net debt
The Group's cash and cash equivalents at 30 June 2016 were
GBP23.7m (H1 2015: GBP30.1m). The Group had borrowing and loans of
GBP72.6m at 30 June 2016 (H1 2015: GBP60.0m), being the RBS RCF of
GBP58.1m and infrastructure loans of GBP14.5m. The resulting net
debt was GBP48.9m (H1 2015: GBP29.9m).
The Group seeks to utilise disposal proceeds to provide the
capital for infrastructure spend, to bring sites forward, and for
acquisitions, to replenish the portfolio. Disposals tend to be
second half weighted and thus net debt is usually higher in the
middle of the year than at the year end.
Taxation
The charge for taxation in the half year was GBP1.4m (H1 2015:
GBP0.6m) comprising the deferred tax charge on forecast future
capital gains arising on the investment property portfolio.
At 30 June 2016, the Group had deferred tax liabilities of
GBP12.8m (2015 year end: GBP11.4m), related to unrealised gains on
investment properties, and no deferred tax assets (2015:
GBPnil).
Dividends
At the AGM on 26 April 2016, the full year proposed dividend of
GBP1.5m (0.051p per share), the reduction of capital and the 1 for
10 share consolidation were approved. The capital reduction was
approved by the court and the share consolidation was effected on 3
May 2016. As a result, the 2015 full year dividend of GBP1.5m (now
0.51p per share) will be paid on 9 September 2016 to those
shareholders on the Company's register of members on 19 August
2016.
Reflecting confidence in the business and its prospects, a first
interim dividend of GBP0.66m (0.23p per share) is proposed.
Principal risks and uncertainties
In the first half, the Executive Team and the Audit Committee
carried out separate reviews of the principal risks and
uncertainties which could have a material impact on the Group's
performance. Those risks and uncertainties, together with
corresponding controls, mitigation and actions remain as set out on
pages 22 and 23 of the Annual Report for the year ended 31 December
2015, which is available at www.harworthgroup.com. A further formal
review, together with ongoing risk monitoring, will be carried out
by the Executive Team and Audit Committee before the end of this
financial year.
The principal risks and uncertainties comprise: fluctuations in
the property market; potential volatility in the Group's recurring
income stream from operations; the veracity of and potential impact
of economic cycles on the Group's strategy; the size and
availability of requisite resource in the Group's workforce; and
the development of requisite and appropriate business
processes.
These risks and uncertainties are expected to continue to remain
relevant for the second half of the financial year. In some cases,
there have been external developments and/or steps taken by the
Group during the first six months of the financial year, which may
affect the level of those risks in the second half of the financial
year. The most significant changes that occurred in the first half
are set out below.
Potential volatility of income generation
Potential volatility in the Group's income stream has increased
as a result of an increasing decline in the market for coal fines,
as the country's coal-fired power stations begin to decommission.
The Group has addressed that decline by (i) monitoring the market
closely and reducing costs in its operations division, (ii)
securing new contracts for the sale of coal fines and (iii) giving
income generation a high priority, following the Board's annual
review of the Group's strategy, and focusing resources to increase
the amount and quality of the Group's income.
Strategy
The Board carried out a comprehensive review of the Group's
strategy in June and re-appraised the strategy following the EU
Referendum result. The review reconfirmed the business' focus and
the appropriateness of current risks and mitigations.
EU Referendum result
The EU Referendum result and, specifically, its impact on the
economic outlook for the United Kingdom, could increase the risks
of fluctuations in the commercial and residential property markets
for the price of land.
Following the EU referendum result, the Group (i) has carried
out a detailed review of forecast sales, development expenditure
and cashflow for the second half of the financial year and the
financial year ending 31 December 2017 and (ii) is monitoring
closely sales and sentiment in the commercial and residential
property markets in which the Group operates and the progress of
the Group's pipeline sales.
Whilst the Group is yet to reach any final conclusion as to the
likely effect of the EU referendum result on the property markets
in which the Company operates, indications in the period following
the result suggest that (a) any effect on the Group should be
mitigated by the diversity in the Group's property portfolio, (b)
the effect on markets in London and the South East appears to have
been more marked than on the regional markets in which the Group
operates, (c) housebuilders are adopting a cautious approach to
acquisitions of development land but the Group has continued to
agree residential land sales since 23(rd) June 2016, and (d) the
result has had little impact on the regional, commercial property
market. That said, the Group has revised its development
expenditure plans to ensure future infrastructure spend is directly
linked to anticipated land sales.
Human resources
A number of internal promotions and external appointments have
been made in the first half of the financial year, thereby helping
to mitigate the risks connected with human resources.
Andrew Kirkman
Finance Director
6 September 2016
Statement of the Directors' responsibilities
The Directors confirm that to the best of their knowledge:
- the condensed consolidated interim financial information has
been prepared in accordance with IAS 34 'Interim Management
Reporting' as adopted by the European Union; and
- the condensed consolidated interim financial information
includes a fair review of:
(a) the information required by DTR 4.2.7R of the Disclosure and
Transparency Rules, being an indication of important events that
have occurred during the first six months of the financial year and
their impact on the condensed set of financial statements, and a
description of the principal risks and uncertainties for the
remaining six months of the financial year; and
(b) the information required by DTR 4.2.8R of the Disclosure and
Transparency Rules, being related parties transactions that have
taken place in the first six months of the current financial year
and that have materially affected the financial position or the
performance of the company during that period, and any changes in
the related parties transactions described in the last annual
report that could have a material effect on the financial position
or performance of the company in the first six months of the
current financial year.
The Directors of Harworth Group plc are as listed below:
Jonson Cox, Chairman
Owen Michaelson, Chief Executive
Andrew Kirkman, Finance Director
Lisa Clement, Senior Independent Non-Executive Director
Martyn Bowes, Non-Executive Director
Andrew Cunningham, Independent Non-Executive Director
Anthony Donnelly, Independent Non-Executive Director
Steven Underwood, Non-Executive Director
A list of current Directors is also maintained on the Harworth
Group plc website: www.harworthgroup.com.
By order of the Board
Christopher Birch
Company Secretary
6 September 2016
Consolidated income statement
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Note GBP000 GBP000 GBP000
------------------------------------- ---- --------- --------- ------------
Revenue 17,405 4,171 13,172
Cost of sales (11,864) (1,789) (6,013)
------------------------------------- ---- --------- --------- ------------
Gross profit 5,541 2,382 7,159
Administrative expenses (4,802) (1,973) (5,731)
Increase in fair value of investment
properties 7,900 3,356 24,060
(Loss)/profit on sale of investment
properties (307) 2,200 8,180
Loss on sale of assets classified
as held for resale (192) - -
Other gains 56 3,265 3,208
Other operating income 137 - 176
------------------------------------- ---- --------- --------- ------------
Operating profit before exceptional
items 8,333 9,230 37,052
Exceptional items 2 7 (2,394) (2,859)
------------------------------------- ---- --------- --------- ------------
Operating profit 8,340 6,836 34,193
Finance income 5 242 27 62
Finance costs 5 (1,196) (631) (1,803)
Share of profit of associates - 856 856
Gain on bargain purchase 3 - 44,244 44,244
------------------------------------- ---- --------- --------- ------------
Profit before tax 7,386 51,332 77,552
Tax 6 (1,422) (571) (3,508)
------------------------------------- ---- --------- --------- ------------
Profit for the period/year 5,964 50,761 74,044
------------------------------------- ---- --------- --------- ------------
Earnings per share from operations pence pence pence
------------------------------------- ---- --------- --------- ------------
Basic and diluted 8 0.30 2.73 3.10
------------------------------------- ---- --------- --------- ------------
Adjusted 0.30 0.50 1.10
------------------------------------- ---- --------- --------- ------------
The notes below are an integral part of these condensed
consolidated interim financial statements.
All activities in the current period are derived from continuing
operations.
Consolidated statement of comprehensive income
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP000 GBP000 GBP000
----------------------------------------- --------- --------- ------------
Profit for the period/year 5,964 50,761 74,044
Other comprehensive income - items
that will not be reclassified to
profit or loss:
Re-measurements of Blenkinsopp Pension
Scheme (25) (12) (3)
Fair value of financial instruments
18 (658) - -
----------------------------------------- --------- --------- ------------
Total other comprehensive income (683) (12) (3)
----------------------------------------- --------- --------- ------------
Total other comprehensive income
for the period/year 5,281 50,749 74,041
----------------------------------------- --------- --------- ------------
Consolidated balance sheet
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Note GBP000 GBP000 GBP000
----------------------------------- ---- --------- --------- ------------
ASSETS
Non-current assets
Other receivables 650 650 650
Investment in associates 9 - - -
Investment properties 10 346,521 306,993 334,617
Investments in joint ventures 11 9,798 1,233 768
----------------------------------- ---- --------- --------- ------------
356,969 308,876 336,035
----------------------------------- ---- --------- --------- ------------
Current assets
Inventories 1,062 239 1,092
Trade and other receivables 20,057 20,809 19,906
Cash and cash equivalents 12 23,692 30,065 27,564
Assets classified as held for sale 13 7,606 4,822 9,128
----------------------------------- ---- --------- --------- ------------
52,417 55,935 57,690
----------------------------------- ---- --------- --------- ------------
Total assets 409,386 364,811 393,725
----------------------------------- ---- --------- --------- ------------
LIABILITIES
Current liabilities
Borrowings 14 (1,938) (716) (400)
Trade and other payables (17,612) (21,207) (17,369)
Liabilities classified as held
for sale 13 - (172) -
----------------------------------- ---- --------- --------- ------------
(19,550) (22,095) (17,769)
----------------------------------- ---- --------- --------- ------------
Net current assets 32,867 33,840 39,921
----------------------------------- ---- --------- --------- ------------
Non-current liabilities
Borrowings 14 (70,669) (59,316) (64,119)
Trade and other payables (2,280) - (2,280)
Derivative financial instruments (658) - -
Deferred income tax liabilities (12,801) (8,442) (11,379)
Retirement benefit obligations 15 (404) (507) (435)
----------------------------------- ---- --------- --------- ------------
(86,812) (68,265) (78,213)
----------------------------------- ---- --------- --------- ------------
Total liabilities (106,362) (90,360) (95,982)
----------------------------------- ---- --------- --------- ------------
Net assets 303,024 274,451 297,743
----------------------------------- ---- --------- --------- ------------
SHAREHOLDERS' EQUITY
Called up share capital 16 29,227 29,227 29,227
Share premium account 17 - 129,121 129,121
Fair value reserve 31,960 3,356 24,060
Capital redemption reserve 257 257 257
Merger reserve 45,667 45,667 45,667
Retained earnings 66,792 66,823 69,411
Other reserves 17 129,121 - -
----------------------------------- ---- --------- --------- ------------
Total shareholders' equity 303,024 274,451 297,743
----------------------------------- ---- --------- --------- ------------
Consolidated statement of cash flows
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP000 GBP000 GBP000
------------------------------------------ --------- --------- ------------
Cash flows from operating activities
Profit for the period/year 5,964 50,761 77,552
Net interest payable 954 604 1,741
Share of post-tax profit from associates - (856) (856)
Gain on bargain purchase - (44,244) (44,244)
Net fair value increase in investment
properties (7,900) (3,356) (24,060)
Loss/(profit) on disposal of investment
properties, assets held for sale
and option 499 (5,408) (11,388)
Pension contributions in excess of
charge and other gains (63) (57) (132)
Impairment of investment in joint
venture - - 465
------------------------------------------ --------- --------- ------------
Operating cash outflow before movements
in working capital (546) (2,556) (922)
Decrease / (increase) in inventories 30 72 (781)
(Increase) / decrease in receivables (151) 4,228 9,881
Increase / (decrease) in payables 3,428 (946) (10,512)
------------------------------------------ --------- --------- ------------
Cash generated from/ (used in) operations 2,761 798 (2,334)
Loan arrangement fees paid (47) (96) (170)
Interest paid (742) (364) (1,101)
Cash from discontinued operations - 328 228
------------------------------------------ --------- --------- ------------
Cash generated from/(used in) operating
activities 1,972 666 (3,377)
------------------------------------------ --------- --------- ------------
Cash flows from investing activities
Interest received 242 28 62
Investment in joint venture (9,030) - -
Acquisition of a subsidiary, net
of cash acquired - (87,823) (87,823)
Proceeds from disposal of investment
properties and option 10,894 14,257 42,302
Expenditure on investment properties (15,753) (10,349) (41,215)
Cash generated from discontinued
operations - (1,068) (1,068)
------------------------------------------ --------- --------- ------------
Cash used in investing activities (13,647) (84,955) (87,742)
------------------------------------------ --------- --------- ------------
Cash flows from financing activities
Net proceeds from issue of ordinary
shares - 112,075 112,075
Proceeds/(repayment) from/(of) bank
loan 9,000 (400) (400)
Proceeds from other loans 2,905 3,528 13,455
Repayment of other loan (4,102) (3,078) (8,776)
Cash generated from financing activities 7,803 112,125 116,354
------------------------------------------ --------- --------- ------------
(Decrease) / Increase in cash (3,872) 27,836 25,235
------------------------------------------ --------- --------- ------------
At 1 January
Cash 27,564 1,489 1,489
Cash equivalents classified as held
for sale - 840 840
------------------------------------------ --------- --------- ------------
27,564 2,329 2,329
(Decrease) / increase in cash (3,872) 27,836 26,075
Cash equivalents classified as held
for sale - - (840)
------------------------------------------ --------- --------- ------------
23,692 30,165 27,564
------------------------------------------ --------- --------- ------------
At period/year end
Cash 23,692 30,065 27,564
Cash equivalents classified as held
for sale - 100 -
------------------------------------------ --------- --------- ------------
Cash and cash equivalents 23,692 30,165 27,564
------------------------------------------ --------- --------- ------------
Consolidated statement of changes in shareholders' equity
Note Share Fair
Ordinary premium Merger value Other Retained Total
shares account reserve reserve reserves earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------------- ------- -------- --------- --------- --------- --------- --------- -------
Balance at January 2015
(audited) 6,055 32,911 - - 257 19,430 58,653
Transactions with owners:
Shares issued 16 15,865 99,160 - - - - 115,025
Costs relating to share
Issues 17 - (2,950) - - - - (2,950)
Shares issued in lieu
of consideration 16 7,307 - 45,667 - - - 52,974
Profit for the six months
to 30 June 2015 - - - - - 50,761 50,761
Fair value gain on revaluation
of investment properties - - - 3,356 - (3,356) -
----------------------------------- ------- -------- --------- --------- --------- --------- --------- -------
Other comprehensive
income:
----------------------------------- ------- -------- --------- --------- --------- --------- --------- -------
Re-measurements of
post-retirement
benefits - - - - - (12) (12)
----------------------------------- ------- -------- --------- --------- --------- --------- --------- -------
Balance at 30 June 2015
(unaudited) 29,227 129,121 45,667 3,356 257 66,823 274,451
Profit for the six months
to 31 December 2015 - - - - - 26,639 26,639
Fair value gain on revaluation
of investment properties - - - 20,704 - (24,060) (3,356)
Other comprehensive
income:
Re-measurements of
post-retirement
benefits - - - - - 9 9
----------------------------------- ------- -------- --------- --------- --------- --------- --------- -------
Balance at 31 December
2015 (audited) 29,227 129,121 45,667 24,060 257 69,411 297,743
Transactions with owners:
Profit for the six months
to 30 June 2016 - - - - - 5,964 5,964
Fair value gain on revaluation
of investment properties - - - 7,900 - (7,900) -
Transfer of share premium
to other distributable
reserves 17 - (129,121) - - 129,121 - -
Other comprehensive
income:
Re-measurements of
post-retirement
benefits - - - - - (25) (25)
Fair value of financial
instruments 18 - - - - - (658) (658)
----------------------------------- ------- -------- --------- --------- --------- --------- --------- -------
Balance at 30 June 2016
(unaudited) 29,227 - 45,667 31,960 129,378 66,792 303,024
----------------------------------- ------- -------- --------- --------- --------- --------- --------- -------
Notes to the condensed consolidated interim financial
statements
for the six months ended 30 June 2016
1. Basis of preparation of the condensed consolidated interim
financial statements
General information
Harworth Group plc (formerly Coalfield Resources plc) (the
"Company") is a public limited company incorporated and domiciled
in the UK. The address of its registered office is Advantage House,
Popular Way, Rotherham, South Yorkshire, S60 5TR. Coalfield
Resources plc changed its name to Harworth Group plc on 24 March
2015.
The Company is listed on the London Stock Exchange.
The condensed consolidated interim financial statements for the
six months ended 30 June 2016 comprise the Company and its
subsidiaries (together referred to as the "Group").
These condensed consolidated interim financial statements do not
comprise statutory accounts within the meaning of section 434 of
the Companies Act 2006. The Group financial statements for the year
ended 31 December 2015 were approved by the Board of Directors on
31 March 2016 and delivered to the Registrar of Companies. The
report of the auditor on those accounts was unqualified, did not
contain an emphasis of matter paragraph and did not contain any
statement under section 498 of the Companies Act 2006.
The condensed consolidated interim financial statements have
neither been reviewed nor audited.
The condensed consolidated interim financial statements for the
period ended 30 June 2016 were approved by the Board on 6 September
2016.
Basis of preparation
These condensed consolidated interim financial statements for
the six months ended 30 June 2016 have been prepared in accordance
with the Disclosure and Transparency Rules of the Financial Conduct
Authority (previously the Financial Services Authority) and with
IAS 34 'Interim financial reporting' as adopted by the European
Union ('EU'). The condensed consolidated interim financial
statements should be read in conjunction with the Group financial
statements for the year ended 31 December 2015 which have been
prepared in accordance with IFRSs as adopted by the EU.
Going-concern basis
These financial statements are prepared on the basis that the
Group is a going concern. In forming its opinion as to going
concern, the Board prepares cash flow forecasts based upon its
assumptions with particular consideration to the key risks and
uncertainties as summarised in 'Key risks and uncertainties'
section of our 2015 Annual Report, as well as taking into account
the funding strategy and available borrowing facilities disclosed
on page 11.
The key factor that has been considered in this regard is:
Following the acquisition of Harworth Estates Property Group
Limited (Harworth Estates), the Group has a GBP65m revolving credit
facility with The Royal Bank of Scotland, for a term of five years,
on a non-amortising basis. The facility is in the form of a
debenture security whereby there is no charge on the individual
assets of the Group. The facility is subject to financial and other
covenants.
The covenants are based upon gearing, tangible net worth, loan
to property values and interest cover. Property valuations affect
the loan to value covenants. Breach of covenants could result in
the need to pay down in part some of these loans, additional costs,
or a renegotiation of terms or, in extremis, a reduction or
withdrawal of facilities by the banks concerned.
Subsequent to the period end, the revolving credit facility with
The Royal Bank of Scotland has been increased by GBP10m to GBP75m
and the term has been extended by one year to 2021.
The Directors confirm their belief that it is appropriate to use
the going concern basis of preparation for these financial
statements.
Accounting policies
Except as described below, the accounting policies applied are
consistent with those of the Group financial statements for the
year ended 31 December 2015, as described in those annual financial
statements.
Taxes on income in the interim periods are accrued using the tax
rate that would be applicable to expected annual earnings.
New standards and interpretations not yet adopted
A number of new standards and amendments to standards and
interpretations are effective for annual years beginning after 1
January 2016, and have not been applied in preparing these
consolidated financial statements. These have been set out
below:
Amendment to IFRS 11, 'Joint arrangements' on acquisition of an
interest in a joint operation.
This amendment adds new guidance on how to account for the
acquisition of an interest in a joint operation that constitutes a
business. The amendments specify the appropriate accounting
treatment for such acquisitions. The amendment was published in May
2014 and is effective for annual periods on or after 1 January
2016.
Amendments to IAS 27, 'Separate financial statements' on the
equity method. These amendments allow entities to use the equity
method to account for investments in subsidiaries, joint ventures
and associates in their separate financial statements. The
amendment was published in August 2014 and is effective for annual
periods on or after 1 January 2016.
Annual improvements 2014. These set of amendments impacts 4
standards:
-- IFRS 5, 'Non-current assets held for sale and discontinued
operations' regarding methods of disposal.
-- IFRS 7, 'Financial instruments: Disclosures', (with
consequential amendments to IFRS 1) regarding
servicing contracts.
-- IAS 19, 'Employee benefits' regarding discount rates.
-- IAS 34, 'Interim financial reporting' regarding disclosure of information.
The amendment was published in September 2014 and is effective
for annual periods on or after 1 January 2016.
Amendment to IAS 1, 'Presentation of financial statements' on
the disclosure initiative. These amendments are as part of the IASB
initiative to improve presentation and disclosure in financial
reports. Effective for annual periods beginning on or after 1
January 2016, subject to EU endorsement.
Amendment to IFRS 10 and IAS 28 on investment entities applying
the consolidation exception. These amendments clarify the
application of the consolidation exception for investment entities
and their subsidiaries. The amendment was published in December
2014 and is effective for annual periods on or after 1 January
2016.
IAS Amendments to IAS 7, Statement of cash flows on disclosure
initiative. These amendments to IAS 7 introduce an additional
disclosure that will enable users of financial statements to
evaluate changes in liabilities arising from financing activities.
The amendment is part of the IASB's Disclosure Initiative, which
continues to explore how financial statement disclosure can be
improved. The amendment was published in February 2016 and is
effective for annual periods on or after 1 January 2017.
Amendments to IAS 12, 'Income taxes' on Recognition of deferred
tax assets for unrealised losses (effective 1 January 2017). These
amendments on the recognition of deferred tax assets for unrealised
losses clarify how to account for deferred tax assets related to
debt instruments measured at fair value. The amendment was
published in February 2016 and is effective for annual periods on
or after 1 January 2017.
Amendments to IFRS 2, 'Share based payments', on clarifying how
to account for certain types of share-based payment transactions.
This amendment clarifies the measurement basis for cash-settled,
share-based payments and the accounting for modifications that
change an award from cash-settled to equity-settled. It also
introduces an exception to the principles in IFRS 2 that will
require an award to be treated as if it was wholly equity-settled,
where an employer is obliged to withhold an amount for the
employee's tax obligation associated with a share-based payment and
pay that amount to the tax authority. The amendment was published
in June 2016 and is effective for annual periods on or after 1
January 2018.
IFRS 9 'Financial instruments'. This standard replaces the
guidance in IAS 39. It includes requirements on the classification
and measurement of financial assets and liabilities; it also
includes an expected credit losses model that replaces the current
incurred loss impairment model. The amendment was published in July
2014 and is effective for annual periods on or after 1 January
2018.
IFRS 15 'Revenue from contracts with customers'. IFRS 15,
'Revenue from contracts with customers' is a converged standard
from the IASB and FASB on revenue recognition. The standard will
improve the financial reporting of revenue and improve
comparability of the top line in financial statements globally. The
amendment was published in May 2014 and is effective for annual
periods on or after 1 January 2018.
Estimates and judgements
The preparation of the condensed consolidated interim financial
statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates.
In preparing these condensed consolidated interim financial
statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the
consolidated financial statements for the year ended 31 December
2015, with the exception of changes in estimates that are required
in determining the provision for income taxes.
2. Exceptional items
Audited
Unaudited Unaudited year ended
6 months ended 30 June 6 months ended 30 June 31 December
2016 2015 2015
GBP000 GBP000 GBP000
--------------------------------------------------- ----------------------- ----------------------- ------------
Settlement relating to Harworth Insurance Company
Limited 500 - -
Settlement relating to Ocanti Opco Limited 189 - -
Coal fines stock provision (339) - -
Under recovery relating to the cessation of coal
fine activities at Rugeley (343) - -
Transaction costs (note 3) - (2,394) (2,859)
---------------------------------------------------- ----------------------- ----------------------- ------------
Total exceptional items 7 (2,394) (2,859)
---------------------------------------------------- ----------------------- ----------------------- ------------
Exceptional items for 2016 comprise four separate items, all of
which largely relate to Harworth's legacy activities. GBP0.5m
relates to a settlement from the administrators of Harworth
Insurance Company Limited and GBP0.2m is expected from the
administrator of Ocanti Opco Limited which relates to the
reimbursement of management expenses incurred by Coalfield
Resources plc (the former name of Harworth Group plc). In respect
of coal fines activity, an exceptional charge has been taken to
reflect the under recovery of amounts relating to the cessation of
activities at Rugeley of GBP0.3m and a provision of GBP0.3m has
been taken against the value of coal fines stocks reflecting
reduced demand.
The exceptional items in 2015 relate to the transaction costs
incurred on the acquisition of Harworth Estates of GBP2.4m and the
write down of a joint venture investment held by the Group of
GBP0.5m.
3. Business combinations
Acquisition of Harworth Estates
On 24 March 2015, the Group acquired 75.1% of the issued share
capital of Harworth Estates, a company incorporated in United
Kingdom who headed up a group which was engaged in the regeneration
of former coalfield sites and other brownfield land into employment
areas, new residential development and low carbon energy
projects.
The following table summarises the consideration paid for the
Harworth Estates group, the fair value of assets acquired,
liabilities assumed and the non-controlling interest held at the
acquisition date.
Consideration at 24 March 2015
GBP000
------------------------------------------ -------
Cash 97,026
Equity instruments (730m ordinary shares) 52,974
------------------------------------------ -------
Total consideration transferred 150,000
------------------------------------------ -------
Fair value of associate interest 57,746
------------------------------------------ -------
Total consideration 207,746
------------------------------------------ -------
Recognised amounts of identifiable assets acquired and
liabilities assumed:
Attributed
Fair
Value
GBP000
---------------------------------------------- ----------
Investment property (Note 10) 299,355
Investments and other non-current receivables 1,883
Cash and cash equivalents 9,203
Inventory 311
Trade and other current receivables 23,054
Financial asset 1,200
Borrowings (60,407)
Deferred tax liability (7,871)
Trade and other payables (14,738)
---------------------------------------------- ----------
Fair value of acquired interest in net assets
of subsidiary 251,990
Gain on bargain purchase (44,244)
---------------------------------------------- ----------
Total consideration 207,746
---------------------------------------------- ----------
The purchase consideration disclosed above comprises cash and
cash equivalents paid to acquire the previous majority shareholder
of GBP150.0m which was satisfied by the payment of GBP97m and the
allotment and issue of 730,674,465 ordinary shares of GBP0.01 each
in the capital of Harworth Group plc. The share premium arising
from the shares issued to the PPF is held within the merger reserve
shown in the consolidated balance sheet.
Acquisition related costs of GBP2.4m have been recognised in the
consolidated income statement for the period ended 30 June 2015 and
GBP2.9m for the year ended 31 December 2015. The fair value of the
730m ordinary shares issued as part of the consideration paid for
Harworth Estates (GBP53.0m) was based upon the price the shares
were placed at 7.25 pence. Issuance costs of GBP2.9m have been
netted against the deemed proceeds.
During the period ended 31 December 2015, the revenue included
in the consolidated income statement since 24 March 2015
contributed by Harworth Estates was GBP12.9m (H1 2015: GBP3.9m) and
profit before tax was GBP40.7m (H1 2015: GBP8.5m). Had the Harworth
Estates group been consolidated from 1 January 2015, the
consolidated income statement would show pro-forma revenue of
GBP16.7m (H1 2015: GBP7.7m) and profit before tax of GBP39.2m (H1
2015: GBP10.6m).
The net cash outflow associated with the acquisition was as
follows:
GBP000
-------------------------------------------------------- ---------
Fair value of acquired interest in net assets
of subsidiary 251,990
Fair value of associate interest already held (57,746)
Gain on bargain purchase (44,244)
-------------------------------------------------------- ---------
Total purchase consideration 150,000
-------------------------------------------------------- ---------
Less: cash and cash equivalents of subsidiary
acquired (9,203)
Less: equity instruments issued (52,974)
-------------------------------------------------------- ---------
Net outflow of cash and cash equivalents on acquisition 87,823
-------------------------------------------------------- ---------
4. Segment information
30 June 2016 Capital Income Unallocated Total
Group growth generation costs GBP000
GBP000 GBP000 GBP000
-------------------------------- -------- ------------ ------------ --------
Revenue 9,580 7,825 - 17,405
Operating (loss)/profit before
other income and expenses
and
exceptional items (690) 4,626 (3,197) 739
Increase in fair value of
investment properties 3,500 4,400 - 7,900
Loss on sale of investment
properties and assets held
for sale (137) (362) - (499)
Other gains and operating
income - 137 56 193
Exceptional items - (682) (689) 7
-------------------------------- -------- ------------ ------------ --------
Operating profit/(loss) after
exceptional items 2,673 8,119 (2,452) 8,340
-------------------------------- -------- ------------ ------------ --------
Finance income 242
Finance costs (1,196)
Profit before tax 7,386
Other information
Investment property additions:
- Direct acquisitions 903 2,822 - 3,725
- Subsequent expenditure 5,002 5,059 - 10,061
-------------------------------- ------ ------ -------
Segmental Assets Total
GBP000
-------------------------------- --------
Capital growth 211,546
Income generation 134,975
----------------------------------- --------
Total investment properties 346,521
----------------------------------- --------
Unallocated assets
Inventories 1,062
Other receivables 650
Investments in joint ventures 9,798
Trade and other receivables 20,057
Cash and cash equivalents 23,692
Current assets held for resale 7,606
----------------------------------- --------
Total assets 409,386
----------------------------------- --------
Financial liabilities are not allocated to the reporting
segments as they are managed and measured on a group basis.
30 June 2015 Capital Income Unallocated Total
Group growth generation costs GBP000
GBP000 GBP000 GBP000
-------------------------------- -------- ------------ ------------ --------
Revenue 18 3,833 320* 4,171
Operating (loss)/profit before
other income and expenses
and
exceptional items (454) 2,260 (1,397) 409
Transaction costs - - (2,394) (2,394)
Increase in fair value of
investment properties 2,000 1,356 - 3,356
Profit on sale of investment
properties 2,144 56 - 2,200
Other gains - 3,208 57 3,265
-------------------------------- -------- ------------ ------------ --------
Operating profit/(loss) 3,690 6,880 (3,734) 6,836
-------------------------------- -------- ------------ ------------ --------
Finance income 27
Finance costs (631)
Share of profit of associates 856
Gain on bargain purchase 44,244
Profit before tax 51,332
*Unallocated revenues relate to recharges to Harworth Estates
prior to its acquisition by the Group.
Other information
Investment property additions:
- Direct acquisitions 173 978 - 1,151
- Subsequent expenditure 9,962 2,378 - 12,340
-------------------------------- ------ ------ -------
Segmental Assets Total
GBP000
------------------------------- --------
Capital growth 190,900
Income generation 116,093
---------------------------------- --------
Total investment properties 306,993
---------------------------------- --------
Unallocated assets
Inventories 239
Other receivables 650
Investments in joint ventures 1,233
Trade and other receivables 20,809
Cash and cash equivalents 30,065
Non-current assets held for
resale 4,822
---------------------------------- --------
Total assets 364,811
---------------------------------- --------
31 December 2015 Capital Income Unallocated Total
Growth Generation Costs GBP000
Group GBP000 GBP000 GBP000
Revenue 1,319 11,533 320* 13,172
-------------------------------- ------- ----------- ----------- -------
Operating (loss)/profit
before other income and
expenses and exceptional
items (1,471) 6,579 (3,680) 1,428
Transaction costs - - (2,394) (2,394)
Impairment of investment (465) - - (465)
Increase in fair value
of investment properties 14,503 9,557 - 24,060
Profit on sale of investment
properties 7,111 1,069 - 8,180
Other gains - 3,208 - 3,208
Other operating income - 47 129 176
Operating Profit/(Loss) 19,678 20,460 (5,945) 34,193
-------------------------------- ------- ----------- ----------- -------
Finance income 62
Finance costs (1,803)
Share of profit of associates 856
Gain on bargain purchase 44,244
-------------------------------- ------- ----------- ----------- -------
Profit before tax 77,552
-------------------------------- ------- ----------- ----------- -------
* Unallocated revenues relate to recharges to HEPGL prior to its
acquisition by the Group.
Other information
Investment property additions:
Direct acquisitions 14,578 8,255 - 22,833
Subsequent expenditure 17,603 6,360 - 23,963
------------------------------------ ------- ----------- ----------- -------
Segmental Assets Capital Income Unallocated Total
Growth Generation Assets GBP000
GBP000 GBP000 GBP000
Total Investment Properties 210,004 124,613 - 334,617
Assets held for sale 30 9,098 - 9,128
Inventories - 1,092 - 1,092
Other receivables 650 - - 650
Investments in joint ventures 768 - - 768
------------------------------------ ------- ----------- ----------- -------
211,452 134,803 - 346,255
---------------------------------- ------- ----------- ----------- -------
Unallocated Assets
Trade & other receivables - - 19,906 19,902
Cash & cash equivalents - - 27,564 27,564
Total assets 211,452 134,803 47,470 393,725
------------------------------------ ------- ----------- ----------- -------
5. Finance income/(cost)
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP000 GBP000 GBP000
------------------ --------- --------- ------------
Interest expense
- Bank interest (742) (347) (977)
- Facility fees (249) (190) (485)
- Other interest (205) (94) (341)
------------------ --------- --------- ------------
(1,196) (631) (1,803)
------------------ --------- --------- ------------
Interest received 242 27 62
------------------ --------- --------- ------------
Net finance costs (954) (604) (1,741)
------------------ --------- --------- ------------
6. Tax
The current tax in the period is GBPnil (H1 2015: GBPnil; FY
2015: GBPnil).
The Group recognised deferred tax liabilities of GBP1.4m using
the liability method and a tax rate of 18% (H1 2015: 20%; FY 2015
18%) at the period end covered by this condensed consolidated
interim statement.
The Group recognised a deferred tax liability of GBP12.8m in
respect of property revaluation gains where tax is expected to
arise when the property is sold (H1 2015: GBP8.4m; FY 2015:
GBP11.4m). The Group did not recognise any deferred tax assets at
the period end covered by this interim statement (H1 2015: GBPnil;
FY 2015: GBPnil).
7. Dividends
An interim dividend of GBP0.66m is proposed for the six months
ended 30 June 2016 and will be paid on 1 December 2016. The Board
recommended and shareholders approved a full year dividend for 2015
of GBP1.5m which will be paid on 9th September 2016.
8. Earnings per share
Earnings per share has been calculated by dividing the profit
attributable to ordinary shareholders by the weighted average
number of shares in issue and ranking for dividend during the
period. The weighted average number of shares for 30 June 2015
includes the adjustments necessary to reflect the new shares issued
on 24 March 2015 and for 30 June 2016 the share consolidation which
took place on 3 May 2016. See note 16.
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP000 GBP000 GBP000
------------------------------------- ------------- ------------- -------------
Profit for the period/year 5,964 50,761 74,044
------------------------------------- ------------- ------------- -------------
Weighted average number of shares
used
for basic and diluted profit per
share calculations 1,983,259,260 1,860,095,458 2,395,763,516
------------------------------------- ------------- ------------- -------------
Basic and diluted earnings per share
(pence) 0.30 2.73 3.10
------------------------------------- ------------- ------------- -------------
Adjusted earnings per share (pence) 0.30 0.50 1.10
------------------------------------- ------------- ------------- -------------
Adjusted, basic and diluted earnings per share for the six
months to 30 June 2016 was 0.3 pence. For the period to 30 June
2015 adjusted earnings per share was 0.5 pence, being based on
profit before tax adjusted for the exceptional gain on bargain
purchase of GBP44.2m and acquisition fees of GBP2.4m. For the year
ended 31 December 2015 the adjusted basic and diluted earnings per
share were 1.1 pence, being based on profit before tax adjusted for
the exceptional gain on bargain purchase of GBP44.2m, acquisition
fees of GBP2.4m and write down of investments of GBP0.5m.
9. Investment in associates
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Cost GBP000 GBP000 GBP000
----------------------------------- --------- --------- ------------
At start of period/year - 56,890 -
Share of profit - 856 -
Purchase of share capital not held - (57,746) -
----------------------------------- --------- --------- ------------
At end of period/year - - -
----------------------------------- --------- --------- ------------
The Group accounted for its investment in Harworth Estates, a
private company incorporated in England and Wales, as an associate
up to and including 24 March 2015 because it considered that it had
significant influence over that entity due to its 24.9%
shareholding and representation on the Harworth Estates board.
On 24 March 2015 Harworth Group PLC acquired the remaining 75.1%
of Harworth Estates that it did not own from the Pension Protection
Fund ("PPF"). Harworth Estates therefore ceased to be accounted for
as an associate at that date and has been fully consolidated in
these accounts.
10. Investment properties
Investment property at 30 June 2016 has been measured at fair
value based upon a management estimate. The Group holds five
categories of investment property being agricultural land, natural
resources, business parks, major developments and strategic land,
all situated in the UK, which sit within the operating segments of
income generation and capital growth.
Agricultural Natural Business Major Strategic
Land Resources Parks Developments Land
Income Income Income Capital Capital
Generation Generation Generation Growth Growth Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------- ------------ ------------ ------------ ------------- --------- --------
At 31 December
2014 - - - - - -
Acquisition of
subsidiaries 22,070 18,574 72,724 139,842 46,145 299,355
Direct acquisitions - 978 - 120 53 1,151
Subsequent expenditure 202 309 1,867 9,308 654 12,340
Increase in fair
value - 386 970 2,000 - 3,356
Disposals (787) (1,200) - (6,222) (1,000) (9,209)
----------------------- ------------ ------------ ------------ ------------- --------- --------
At 30 June 2015 21,485 19,047 75,561 145,048 45,852 306,993
----------------------- ------------ ------------ ------------ ------------- --------- --------
Direct acquisitions - - 7,277 1,246 13,159 21,682
Subsequent expenditure 402 3 3,577 6,254 1,387 11,623
Increase/(decrease)
in fair value 2,477 989 4,735 13,075 (572) 20,704
Transfer to assets
held for sale (6,013) (3,085) - - (30) (9,128)
Disposals (1,588) - (254) (8,034) (7,381) (17,257)
----------------------- ------------ ------------ ------------ ------------- --------- --------
At 31 December
2015 16,763 16,954 90,896 157,589 52,415 334,617
----------------------- ------------ ------------ ------------ ------------- --------- --------
Direct acquisitions 493 - 2,329 - 903 3,725
Subsequent expenditure 141 389 4,529 3,649 1,353 10,061
Increase in fair
value - 3,400 1,000 2,000 1,500 7,900
Transfer to assets
held for sale (1,531) - - - - (1,531)
Disposals (388) - - (7,500) (363) (8,251)
----------------------- ------------ ------------ ------------ ------------- --------- --------
At 30 June 2016 15,478 20,743 98,754 155,738 55,808 346,521
----------------------- ------------ ------------ ------------ ------------- --------- --------
Valuation process
The properties have been valued by the management who have
exercised their experience and judgement in arriving at the
increase in fair value at June 2016 and June 2015. At 31 December
2015 these properties were valued in accordance with the Royal
Institute of Charted Surveyors (RICS) Valuation - Professional
Standards (the 'Red Book'), by BNP Paribas Real Estates and
Savills, both independent firms acting in capacity of external
valuers with relevant experience of valuations of this nature.
11. Investments in joint ventures
GBP000
------------------------------------------ ------
At June 2015 1,233
Impairment of investment in joint venture (465)
------------------------------------------ ------
At 31 December 2015 768
------------------------------------------ ------
Acquisition 9,030
------------------------------------------ ------
At 30 June 2016 9,798
------------------------------------------ ------
As a result of the acquisition of Harworth Estates the Group
holds 50% of the issued ordinary shares of Bates Regeneration
Limited, a joint venture with Banks Property Limited for the
development of an investment property at Blyth, Northumberland. In
addition the Group purchased a 50% share of Aire Valley Land LLP
from Keyland Developments Limited for a consideration of GBP8.5m
plus costs on 14 March 2016. Aire Valley Land LLP is a joint
venture company. It controls 165 acres of land in Leeds that abuts
existing landholding of the Group on the former Skelton Grange
power station site.
The Group's share of the assets and liabilities are:
Interest
Country Assets Liabilities held
June 2016 of incorporation GBP000 GBP000 %
--------------------------- ------------------ ------- ----------- --------
England
Bates Regeneration Limited and Wales 1,213 (445) 50
--------------------------- ------------------ ------- ----------- --------
England
The Aire Valley Land LLP and Wales 7,798 (3,900) 50
--------------------------- ------------------ ------- ----------- --------
Interest
Country Assets Liabilities held
June 2015 of incorporation GBP000 GBP000 %
--------------------------- ------------------ ------- ----------- --------
England
Bates Regeneration Limited and Wales 2,050 (827) 50
--------------------------- ------------------ ------- ----------- --------
Interest
Country Assets Liabilities held
December 2015 of incorporation GBP000 GBP000 %
--------------------------- ------------------ ------- ----------- --------
England
Bates Regeneration Limited and Wales 1,213 (445) 50
--------------------------- ------------------ ------- ----------- --------
The risks associated with these investments are as follows:
-- Decline in the availability and or an increase in the cost of
credit for residential and commercial buyers
-- Decline in market conditions and values.
The Group also owns a number of other joint ventures whose value
is minimal. A full list of joint ventures can be obtained from the
Company's registered office.
12. Cash and cash equivalents
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP000 GBP000 GBP000
---------------------------------- --------- --------- ------------
Cash held and other cash balances 23,692 30,065 27,564
---------------------------------- --------- --------- ------------
13. Assets and liabilities classified as held for sale
The assets classified for sale at 30 June 2016 and 31 December
2015 relate to investment properties expected to be sold within
twelve months.
The assets and liabilities of the disposal group held for sale
at 30 June 2015 related to Harworth Insurance Company Limited
(HICL). Agreement was reached with the administrators of the former
UK Coal Mine Holdings Limited (Ocanti No 1 Limited) over the
exercise of their option to acquire the shares of Harworth
Insurance Company Limited. The agreement was to reflect the efforts
of the Company securing the restructure of the former insurance
company to permit the transfer of the shareholding to a company in
administration. The value to the Company reflects the value
realised by the administrators in the liquidation of the assets of
HICL after the cost of the liquidation. This is capped at GBP0.5m
based on the value of the balance sheet of HICL at 30 September
2015. The share transfer completed on 8 December 2015 and the Group
has now recognised the value in the Consolidated Income Statement
in other gains.
(a) Assets classified as held for sale
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP000 GBP000 GBP000
------------------------------------ --------- --------- ------------
Investment properties 7,606 - 9,128
Trade and other receivables - 28 -
Available for sale financial assets - 4,694 -
Cash and cash equivalents - 100 -
------------------------------------ --------- --------- ------------
Assets classified as held for sale 7,606 4,822 9,128
------------------------------------ --------- --------- ------------
(b) Liabilities classified as held for sale
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP000 GBP000 GBP000
--------------------------------------- --------- --------- ------------
Trade and other payables - 53 -
Provisions
Re-measurement loss on carrying value
of Harworth Insurance Company Limited - 119 -
--------------------------------------- --------- --------- ------------
Liabilities classified as held for
sale - 172 -
--------------------------------------- --------- --------- ------------
The assets and liabilities held for sale excluding investment
properties relate to Harworth Insurance Company Limited.
14. Borrowings and loans
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP000 GBP000 GBP000
------------------------------------ --------- --------- ------------
Bank loans
Current:
Secured - bank loans and overdrafts - - -
Secured - other loans (1,938) (716) (400)
------------------------------------ --------- --------- ------------
(1,938) (716) (400)
------------------------------------ --------- --------- ------------
Non-current:
Secured - bank loans (58,100) (48,850) (48,968)
Secured - other loans (12,569) (10,466) (15,151)
------------------------------------ --------- --------- ------------
(70,669) (59,316) (64,119)
------------------------------------ --------- --------- ------------
Details of the borrowings acquired as part of the acquisition of
Harworth Estates on 24 March 2015 are provided in Note 3.
At 30 June 2016, the Group had bank borrowings of GBP58.1m (H1
2015: GBP48.9m) and a further GBP14.4m (H1 2015: GBP11.2m) of
infrastructure loans, which resulted in total borrowings of
GBP72.6m (H1 2015: GBP60.0m). The bank borrowings are part of a
GBP65.0m revolving credit facility from The Royal Bank of Scotland.
The facility is repayable on 13 February 2020 (five year term) on a
non-amortising basis and is subject to financial and other
covenants. Subsequent to the period end this facility has been
increased to GBP75m and the term has been extended by one year.
The infrastructure loans of GBP14.5m are provided by public
bodies in order to promote the development of major sites. They
comprise a GBP1.0m loan from Leeds City Region Enterprise
Partnership (H1 2015: GBP1.4m) in respect of the Prince of Wales
site, GBP11.4m from the Homes and Community Agency in respect of
Waverley (H1 2015: GBP8.5m), GBP0.6m from Sheffield City Region
Joint European Support for Sustainable Investment In City Areas
(JESSICA) Fund for Rockingham (H1 2015: GBP1.0m) and GBP1.5m from
Greater Manchester Investment Fund in respect of Logistics North
(H1 2015: GBP0.3m). The loans are drawn as work on the respective
sites is progressed and they are repaid on agreed dates or when
disposals are made from the sites.
Current loans are stated after deduction of unamortised
borrowing cost of GBPnil (H1 2015: GBP0.09m). Non-current bank and
other loans are stated after deduction of unamortised borrowing
costs of GBP1.1m (H1 2015: GBP1.3m). The bank loans and overdrafts
are secured by way of fixed charges over certain assets of the
Group.
15. Retirement benefit obligations
The Group's only defined benefit pension liability was for the
Blenkinsopp Section of the Industry-Wide Mineworkers Pension
Scheme. The liability of the Group to make contributions was
indemnified by UK Coal Production Limited. During the six months to
30 June 2015 and the year to 31 December 2015 all contributions
were paid to the pension fund by UK Coal Production Limited. From 1
January 2016 to 30 June 2016 all contributions have been made by
Harworth Group plc.
The pension scheme has been valued by a qualified independent
actuary for the purposes of IAS19 (revised) and the preparation of
these financial statements. The assumptions used are consistent
with those derived at 31 December 2015, but updated for current
market conditions. The main assumptions underlying the valuation of
the Blenkinsopp scheme are:
As at As at As at
30 June 30 June 31 December
2016 2015 2015
------------------------------ -------- -------- ------------
Discount rate 3.00% 3.75% 3.80%
Rate of pension increases 2.00% 2.30% 2.2%
Rate of price inflation (RPI) 2.95% 3.30% 3.2%
Rate of cost inflation (CPI) 1.95% 2.30% 2.2%
Rate of cash commutation 20.0% 20.0% 20.0%
------------------------------ -------- -------- ------------
The amounts recognised in the consolidated balance sheet are as
follows:
As at As at As at
30 June 30 June 31 December
2016 2015 2015
---------------------------------------- -------- -------- ------------
Fair value of plan assets 2,023 1,705 1,727
Present value of funding obligations (2,427) (2,212) (2,162)
---------------------------------------- -------- -------- ------------
Net liability recognised in the balance
sheet (404) (507) (435)
---------------------------------------- -------- -------- ------------
The amounts recognised in the consolidated income statement
are:
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2016 2015 2015
GBP000 GBP000 GBP000
--------------- -------- -------- ------------
Expenses (33) (18) (36)
Interest costs (6) (9) (21)
--------------- -------- -------- ------------
(39) (27) (57)
--------------- -------- -------- ------------
The net effect of re-measurements on the Blenkinsopp scheme
charged to the statement of comprehensive income is a loss of
GBP0.03m (H1 2015: loss of GBP12,000, FY 2015: loss of
GBP3,000).
The fair value of plan assets have increased by GBP0.1m through
contributions paid in to the scheme in 1H 2016.
16. Called up share capital
On 24 March 2015 the Company issued 2,317,241,377 ordinary
shares at 7.25 pence each as part of a placing and open offer of
which 730,674,465 ordinary shares were issued to the PPF as part of
the purchase consideration for the acquisition of 75.1% of the
issued share capital of Harworth Estates. On 26 April 2016 3
ordinary shares were issued at 1 pence each and all shares in issue
were consolidated from 1 pence shares into 10 pence shares.
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2016 2015 2015
Issued and fully paid - GBP000 GBP000 GBP000 GBP000
------------------------------- -------- -------- ------------
At start of period/year 29,227 6,055 6,055
Shares issued - 23,172 23,172
------------------------------- -------- -------- ------------
At end of period/year 29,227 29,227 29,227
------------------------------- -------- -------- ------------
6 months 6 months
ended ended Year ended
Issued and fully paid - Number of 30 June 30 June 31 December
shares 2016 2015 2015
---------------------------------- --------------- ------------- -------------
At start of period/year 2,922,697,857 605,456,480 605,456,480
Shares issued 3 2,317,241,377 2,317,241,377
Share consolidation (10 for 1) (2,630,428,074) - -
---------------------------------- --------------- ------------- -------------
At end of period/year 292,269,786 2,922,697,857 2,922,697,857
---------------------------------- --------------- ------------- -------------
17. Share premium account
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2016 2015 2015
Issued and fully paid GBP000 GBP000 GBP000
---------------------------------------- --------- -------- ------------
At start of period/year 129,121 32,911 32,911
Premium on shares issued - 99,160 99,160
Costs relating to issue - (2,950) (2,950)
Transfer to other distributable reserve (129,121) - -
---------------------------------------- --------- -------- ------------
At end of period/year - 129,121 129,121
---------------------------------------- --------- -------- ------------
On 18 May 2016 approval was granted from the high court to
cancel the GBP129m share premium account of the Company and for it
to be re-designated as distributable reserves.
18. Derivative financial instruments
On 21 June 2016, HEPGL entered into a four-year swap to fix
GBP30m of borrowings at an all-in rate of 2.955%, including fees.
The interest rate swap has been measured at fair value which is
determined using forward interest rates extracted from observable
yield curves. The fair value of the interest rate swap at 30 June
2016 was a loss of GBP0.7m (H1 2015: GBPnil, FY 2015: GBPnil).
During the period the following loss was recognised in the other
comprehensive income statement in relation to the interest rate
swap:
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2016 2015 2015
GBP000 GBP000 GBP000
------------------------------------ -------- -------- ------------
Losses on Interest rate swap - cash
flow hedge 658 - -
------------------------------------ -------- -------- ------------
19. Related party transactions
Peel Group
The Peel Group charged GBP21,250 (H1 2015: GBP20,625; FY 2015:
GBP41,875) in respect of fees for Steven Underwood and GBPnil (H1
2015: GBP8,128; FY 2015: GBP8,202) for the rental of office
space.
During H1 of 2015 the Group relinquished an option to purchase
50% of the share capital of Peel Wind Farms (Blue Sky Forest)
Limited in return for GBP4.4m from Peel Holdings Wind Farms (IOM)
Limited. This resulted in a gain of GBP3.2m shown in the
consolidated income statement as other gains.
Harworth Estates
Revenue includes GBP0.3m for the period up to 24 March 2015 in
respect of recharges to Harworth Estates for on-going costs of the
Company.
Scratching Cat
Geoff Mason, our former Company Secretary, supplied his services
through Scratching Cat Limited, a company of which he is a
director. During the period charges were made in relation to
company secretarial duties of GBP0.07m (H1 2015: GBP0.07m; FY 2015:
GBP0.1m).
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFFTAVIEIIR
(END) Dow Jones Newswires
September 06, 2016 02:00 ET (06:00 GMT)
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