RNS Number:2325B
Property Acquisition & ManagementLd
16 September 2002
PROPERTY ACQUISITION AND MANAGEMENT LIMITED
Results for the period ended 30 June 2002
CHAIRMAN'S STATEMENT
The first half of 2002 proved to be a difficult period for the Group. Bond prices continued to fall and the property
market experienced uncertain conditions, with reduced tenant activity being offset by strong investor demand for
certain types of higher yielding property.
Ordinary Share and Convertible Redeemable Preference Share dividends of 2.0p (30 June 2001: 3.20p) and 2.85p (30 June
2001: 2.85p) per share respectively were declared and paid during the period ended 30 June 2002. The Group suffered a
loss on ordinary activities after tax of #2,473,000 for the period (30 June 2001: profit of #3,510,000). After
non-equity minority interests and equity and non-equity dividends, #4,590,000 was transferred from reserves (30 June
2001: #749,000 transferred to reserves).
FUNDRAISING
At the time of the announcement of the preliminary results of the Group for the year ended 31 December 2001, I advised
shareholders that the Board, in conjunction with Collins Stewart Limited, was actively considering proposals to raise
further funds to replace the losses incurred by the bond portfolio. As announced on 12 August 2002, due to the extreme
market volatility since May 2002, and for reasons outlined below, the fundraising was not successfully concluded and,
accordingly, further funds were not raised. The Group does not expect to be able to raise further funds at this time.
The costs of the aborted fundraising totalled #400,000 and have been included in other expenses in the consolidated
statement of total return.
The market conditions referred to above resulted in a substantial fall in the price of the Group's Ordinary Shares from
79.00p at 31 December 2001 to 36.00p as at close of business on 13 September 2002. As at 30 June 2002, the net asset
value per Ordinary Share was 71.20p (basic) and 74.34p (pro forma). The Board concluded that a new issue of share
capital by the Group was unlikely to be supported by the majority of shareholders unless it could be carried out at or
around the Group's net asset value per Ordinary Share, and this would not be possible given the extent to which the
Group's Ordinary Share price had fallen.
CNC PROPERTIES LIMITED ("CNC")
For the six months ended 30 June 2002, CNC contributed profits before tax of #3,319,000 (30 June 2001: #2,210,000).
After provision for United Kingdom Corporation and deferred tax, distributable profits for the period totalled
#2,338,000 (30 June 2001; #1,731,000). Dividends of #2,844,000 (2001; #2,024,000) were paid to Property Acquisition and
Management Limited leaving a loss of #506,000 (30 June 2001; #293,000) being transferred from reserves in the CNC
accounts.
As referred to in the 2001 Report and Accounts, tenant activity has reduced in 2002, particularly in London and the
South-East. With recent market commentary also indicating that the general outlook for commercial property remains
uncertain in the context of the state of the world economy, the opportunity has been taken to sell over #3 million of
the lower yielding Roadside Retail schemes developed by CNC, and the results for the six months ended 30 June 2002
include #854,000 profit from such disposals (30 June 2001; #11,000).
Following the significant property acquisition programme in 2001 and consequent increase in gearing of CNC and, in the
absence of any availability of any other funds for investment, no acquisitions were made in the period ended 30 June
2002. Considerable financial management and property management time was expended during the half year in the
subsequently aborted efforts to raise additional funds by the Group. Efforts for the second half of the year will be
concentrated on continuing the gradual refurbishment programmes across CNC's property portfolio to reduce voids and
maximise income within the differing constraints of CNC's loan covenants and requirements from Property Acquisition and
Management Limited for the buy back of shares.
The valuation of CNC's property portfolio was undertaken at 30 June 2002 by DTZ Debenham Tie Leung and totals
#182,434,000, compared to #186,900,000 at 31 December 2001. The reduction in the gross property portfolio reflects the
disposal of the Roadside Retail properties and a revaluation deficit, in CNC's accounts, of #3.5 million. This further
reflects the general concern as to the uncertainty of the market, but more particularly, some specific write downs in
respect of a property in Slough, where Albert Fisher had previously been a tenant; in Newcastle where Eversheds vacated
after a prolonged intention to take additional space; and in Ashington where our greenfield land holdings have to be
considered in the context of recent government comment in favour of brownfield sites. While we continue to work closely
with Wansbeck District Council who have provided all possible assistance and are fully in favour of our proposals for
the regeneration of East Ashington, uncertainty remains over the development of any greenfield site.
PROPERTY ACQUISITION AND MANAGEMENT HIGH INCOME LIMITED ("PAM HIGH")
The declines in value of the bond portfolio led the Board, after discussions with The Royal Bank of Scotland
International Limited ("the Bank"), Collins Stewart Fund Management Limited ("the Manager") and Aberdeen Asset
Managers, to conclude that the risks of continuing to hold a significant amount of PAM High's assets in the bond
portfolio outweighed the potential rewards. Accordingly, the Directors instigated the liquidation of the bond portfolio
during the period and repaid both the Sterling and Euro loans in full on 14 June 2002. On 6 August 2002, the Group
announced that the shareholders had approved the change to the investment policy of the Group, such that investment in
bonds be discontinued and instead an emphasis be placed on property.
As the losses (excluding foreign exchange movements) on the bond portfolio from 1 January 2002 to 29 April 2002 were
provided for in the 31 December 2001 accounts of the Group, the loss on the bond portfolio for the period ended 30 June
2002 was limited to #58,000 excluding foreign exchange movements and #459,000 including foreign exchange movements.
With effect from 31 July 2002, Aberdeen Asset Managers Limited ceased to operate as Investment Managers and control
over the liquidation of the remainder of the bond portfolio passed to the Manager. It is the intention of the Manager
to sell the remaining investments when a reasonable price can be obtained for them and this process is expected to take
approximately 12 months. As at 30 June 2002, the bond portfolio was valued at #2,408,000 and represented 1.20% of the
Group's total assets.
DIVIDENDS
On 12 August 2002 the Group announced that the dividends on the Convertible Redeemable Preference Shares would continue
to be paid in accordance with the Company's articles of association and Guernsey Company Law. In addition, the Board
declared a Convertible Redeemable Preference Share dividend of 2.85p per share in respect of the four month period
ending 31 August 2002. The convertible Redeemable Preference Shares were marked ex dividend on 11 September 2002 and
the dividend will be paid on 31 October 2002.
On 12 August 2002 the Board also declared its intention to buy back the Group's securities to try to redress the
imbalance between the share prices and the underlying net asset values of the securities, as opposed to distributing
such reserves by way of a dividend. The Board does not expect to declare any further dividends on the Ordinary Shares
in respect of the financial periods ending 31 December 2002 and 31 December 2003. The Board also believes that using
available resources to buy back shares at a discount to net asset value will enhance the asset value for the remaining
holders of the Group's securities. A circular dated 16 September is being sent to shareholders requesting authority to
implement this policy.
REDUCTION OF SHARE PREMIUM ACCOUNT
On 30 August 2002 the Court approved a reduction of the Company's share premium account by transferring #25 million
from the share premium account to a distributable reserve. The Board has not designated any specific purpose for this
reserve as yet but anticipates that most of it will be used to offset the capital reserve deficit, which has arisen by
virtue of the significant losses from the bond portfolio. The Board believes that it will have greater flexibility to
act in the future in circumstances where the Company does not have deficits in its reserves. In particular, the Board
plan to use a portion of this #25 million to buy back the Company's Convertible Redeemable Preference Shares.
NET ASSET VALUE
On 12 August 2002, the Group announced that the net asset value per Ordinary Share was 73.66p (basic) and 76.80p (pro
forma basic). Since then, the Group has changed its accounting policies in order to comply with Financial Reporting
Standard 19 "Deferred Tax". Broadly the effect of this change is to make full provision for deferred taxation on all
material timing differences, but to make no provision when investments are revalued. This change of policy has
decreased net assets at 30 June 2002 and 31 December 2001 by #1,415,000. Hence the net asset values at 30 June 2002
have decreased by 2.46p per Ordinary Share to 71.20p (basic) and 74.34p (pro forma basic).
The net asset value per Convertible Redeemable Preference Share at 30 June 2002 remained at 100.00p. The net asset
value per Zero Dividend Preference Share ("ZDP Share") continued to increase daily and as at 30 June 2002, stood at
118.84p.
FEES
The Manager accepted that the basis of a fixed fee of #3.5 million per annum was no longer appropriate due to the
liquidation of the bond portfolio and the corresponding reduction in gross assets. Accordingly, the Manager agreed to
rebate part of its fee with effect from 1 July 2002 with the amount being paid to the Manager being calculated on an ad
valorem basis of 1.5% based on total assets under management.
CURRENT TRADING AND PROSPECTS
The Board remains cautiously optimistic that the return from the Group's property portfolio will improve now that
Collins Stewart Property Fund Management Limited is able to concentrate fully on the performance of the property
portfolio. However, the property market is expected to encounter difficult trading conditions for the remainder of 2002
and thus any improvement in the return on the property portfolio is unlikely to materialise in the short-term. The
Board remains committed to enhancing the asset values of shares for the holders of the Group's securities and it is the
Board's core objective to reduce the discount of the Group's share prices to net asset values over the coming months.
R E Alcock
16 September 2002
CONSOLIDATED STATEMENT OF TOTAL RETURN
(Incorporating the revenue account) for the six months ended 30 June 2002 (unaudited)
Six months ended 30 June 2002 Six months Year ended 31
ended 30 June December 2001
(unaudited) 2001 (as restated)
(as restated)
Notes Revenue Capital Total (unaudited) (audited)
#'000 #'000 #'000 #'000 #'000
(Losses)/gains on investment properties/ - (3,093) (3,093) 1,873 (737)
investments
Income 4 8,635 - 8,635 8,662 18,869
Management fees 5 (1,541) (298) (1,839) (1,643) (2,962)
Other expenses 6 (746) - (746) (282) (1,931)
Net return/(loss) on ordinary activities before
finance costs and taxation 6,348 (3,391) 2,957 8,610 13,239
Interest receivable and similar income 383 - 383 108 250
Interest payable and similar charges (4,158) (493) (4,651) (4,729) (12,084)
Tax on ordinary activities 7 (1,162) - (1,162) (479) (1,790)
Return/(loss) on ordinary activities after tax
for the period 1,411 (3,884) (2,473) 3,510 (385)
Minority interests - non-equity 8 - (497) (497) (456) (940)
Return/(loss) on ordinary activities after
minority interests 1,411 (4,381) (2,970) 3,054 (1,325)
Dividends in respect of non-equity shares 9 (468) - (468) (465) (933)
Return/(loss) attributable to equity shareholders 943 (4,381) (3,438) 2,589 (2,258)
Dividends in respect of equity shares 9 (1,152) - (1,152) (1,840) (5,526)
Transfer (from)/to reserves 15 (209) (4,381) (4,590) 749 (7,784)
Return/(loss) per Ordinary Share - basic 10 1.64p (7.61)p (5.97)p 4.50p (3.92)p
Return/(loss) per Ordinary Share - fully diluted 10 2.13p (6.60)p (4.48)p 4.62p (2.00)p
The revenue column of this statement represents the revenue account of the Group.
These accounts are unaudited and are not the Group's statutory accounts.
The accompanying notes form an integral part of the interim accounts.
CONSOLIDATED BALANCE SHEET
as at 30 June 2002 (unaudited)
Notes 30 June 2002 30 June 2001 31 December 2001
(unaudited) (as restated) (as restated)
(unaudited) (audited)
#'000 #'000 #'000
Fixed assets
Intangible Fixed Assets
Goodwill 1,319 1,392 1,356
Tangible Fixed Assets
Investment properties 11 168,763 145,443 170,929
Other tangible assets 11 4 8 6
Investment in joint ventures 528 1,362 526
Listed investments 12 - 46,925 -
170,614 195,130 172,817
Current assets
Listed investments 12 2,408 - 38,607
Property assets 13 11,864 13,921 13,965
Debtors due within one year 5,739 6,366 5,515
Debtors due in more than one year 1,919 1,342 1,809
Cash at bank and in hand 8,396 7,259 21,873
30,326 28,888 81,769
Creditors: amounts falling due within one year (21,157) (20,714) (71,120)
Net current assets 9,169 8,174 10,649
Total assets less current liabilities 179,783 203,304 183,466
Creditors: amounts falling due after more than one year (114,112) (126,648) (114,080)
Provisions for liabilities and charges (1,840) - (1,472)
Minority interests - non-equity shares 8 (11,884) (10,903) (11,387)
Net assets 51,947 65,753 56,527
Capital and reserves
Called up share capital 14 16,704 16,704 16,704
Share premium account 15 47,520 47,497 47,509
Capital reserve - realised 15 (9,399) (1,828) (6,218)
Capital reserve - unrealised 15 (12,116) (8,381) (13,550)
Property revaluation reserve 15 7,105 8,686 9,740
Revenue reserve 15 2,133 3,075 2,342
Total Shareholders' funds 16 51,947 65,753 56,527
Attributable to equity shareholders 16 41,002 54,808 45,582
Attributable to non-equity shareholders 16 10,945 10,945 10,945
Net asset value per Ordinary Share - basic 17 71.20p 95.18p 79.16p
Pro forma net asset value per Ordinary Share - basic 17 74.34p 98.85p 82.64p
Net asset value per Ordinary Share - fully diluted 17 78.30p 99.12p 85.34p
Net asset value per Convertible Redeemable Preference 17 100.00p 100.00p 100.00p
Share
Net asset value per ZDP Share 17 118.84p 109.03p 113.87p
These accounts are unaudited and are not the Group's statutory accounts.
The accompanying notes form an integral part of the interim accounts.
CONSOLIDATED CASHFLOW STATEMENT
for the six months ended 30 June 2002 (unaudited)
Six months Six months ended 30
ended 30 June June 2001 Year ended 31
2002 December 2001
(unaudited) (as restated) (as restated)
(unaudited) (audited)
Note #'000 #'000 #'000
Net cash inflow from operating activities 19 5,924 2,884 12,009
Returns on investments and servicing of finance
Interest received 384 - 13
Interest paid (7,671) (4,729) (11,266)
Dividends paid on Ordinary Shares (2,984) (1,831) (4,872)
Dividends paid on Convertible Redeemable Preference Shares (624) (70) (685)
Net cash outflow from returns on investments and servicing (6,630) (16,810)
of finance (10,895)
Taxation
United Kingdom corporation tax paid (333) (479) -
Net cash outflow from taxation (333) (479) -
Capital expenditure and financial investment
Purchase of investments - (4,101) (5,007)
Sale of investments 36,141 5,907 10,166
Proceeds from sale of investment properties - 1,341 3,774
Investment property additions (415) (5,469) (666)
Purchase of tangible fixed assets - - (7)
Proceeds from disposal of tangible fixed assets - 129 118
Net cash inflow/(outflow) from capital expenditure and
financial investment 35,726 (2,193) 8,378
Acquisitions and disposals
Purchase of subsidiary undertakings - (374) (3,213)
Net overdraft acquired with subsidiary undertakings - - (286)
Net cash outflow from acquisitions and disposals - (374) (3,499)
Net cash inflow/(outflow) before financing 30,422 (6,792) 78
Financing
Repayment of loan notes (741) - (313)
Repayment of bank loans (38,074) - -
New borrowings 1,262 3,660 3,905
Net cash (outflow)/inflow from financing (37,553) 3,660 3,592
(Decrease)/increase in cash in the period 18 (7,131) (3,132) 3,670
These accounts are unaudited and are not the Group's statutory accounts.
The accompanying notes form an integral part of the interim accounts.
NOTES TO THE ACCOUNTS
for the six months ended 30 June 2002 (unaudited)
1. ACCOUNTING POLICIES
A summary of the principal accounting policies, all of which have been applied consistently throughout the period, is
set out below.
Basis of accounting
The accounts are prepared under the historical cost convention, modified to include the revaluation of investments and
investment properties. The accounts have been prepared in accordance with applicable United Kingdom accounting
standards and with the Statement of Recommended Practice ("SORP") "Financial Statements of Investment Trust Companies"
as it is considered best practice to do so, although the Company, as an overseas company, does not meet all the
criteria set out in the SORP.
Basis of consolidation
The consolidated statement of total return and consolidated balance sheet include the financial statements of the
Company and its subsidiary undertakings for the period.
The results of subsidiaries acquired are included in the consolidated statement of total return from the date control
passes. Goodwill arising on consolidation is capitalised and amortised over a period of 20 years.
Valuation of investments
Quoted investments are valued at mid-market prices.
Realised surpluses or deficits on the disposal of investments, impairments in the value of investments and unrealised
surpluses or deficits on the revaluation of investments are taken to the consolidated statement of total return as
capital-realised or unrealised as applicable.
Period-end exchange rates are used to translate the value of investments, which are denominated in foreign currencies.
Investment properties
Investment properties are revalued quarterly at open market value in accordance with Statement of Standard Accounting
Practice 19 "Investment Properties". As such, no depreciation is provided on investment properties. The surplus or
deficit is included in the consolidated statement of total return and the property revaluation reserve (to the extent
that any deficit is temporary). Permanent deficits are written off to the revenue reserve via the consolidated
statement of total return.
Properties held for resale, land and developments in progress
Properties held for resale, land and developments in progress are valued at the lower of cost and net realisable value.
Interest
Interest on loans specifically granted for the purchase and development of new development sites is capitalised up to
the date of completion of the property.
Joint ventures
The consolidated statement of total return includes the Group's share of operating profit, interest and attributable
taxation of joint ventures. The investment in joint ventures disclosed in the consolidated balance sheet reflects the
Group's share of net assets of those companies.
Depreciation
No depreciation is provided on investment properties. The Directors consider that these properties should be included
in the financial statements at their open market values in order to give a true and fair view and therefore consider it
necessary to adopt Statement of Standard Accounting Practice 19 "Investment Properties". It would be neither practical
nor of real value to determine the depreciation charge taken into account in arriving at open market values.
Plant, machinery and motor vehicles are depreciated by the straight line method over periods of between four and five
years.
Investment income
Fixed returns on debt securities are recognised on a time apportionment basis so as to reflect the effective yield on
the debt security. Interest on overseas debt securities is shown gross of any overseas withholding tax. Interest on
United Kingdom securities is shown net of the tax credit in accordance with Financial Reporting Standard 16 "Current
Taxation". The debt securities are accounted for on a clean basis. Bank interest is accounted for on an accruals basis.
Expenses
All expenses are accounted for on an accruals basis. Expenses are charged through the revenue account except as
follows:
- expenses which are incidental to the acquisition of an investment are included within the cost of the investment;
- expenses which are incidental to the disposal of an investment are deducted from the disposal proceeds of the
investment; and
- expenses are charged to the capital reserve - realised where a connection with the maintenance or enhancement of
the value of the investments can be demonstrated. In this respect, part of the management fee, insofar as it
relates to the property, has been allocated 30% to the capital reserve - realised and 70% to the revenue account,
in line with the Board's expected long-term split of returns, in the form of capital gains and income respectively,
from the property portfolio (see note 2).
Finance costs
Finance costs, including dividends and other finance costs of non-equity shares, are accounted for on an accruals
basis, and in accordance with the provisions of Financial Reporting Standard 4 "Capital Instruments".
Finance costs of debt, insofar as they relate to the financing of the Group's property portfolio, are allocated 30% to
capital and 70% to revenue, in line with the Board's expected long-term split of returns, in the form of capital gains
and income respectively, from the property portfolio (see note 2).
Pension costs
The expected cost of providing pensions, as calculated periodically by professional qualified actuaries, is charged to
the revenue account so as to spread the cost over the service lives of the employees in the scheme, in such a way that
the pension cost is a substantially level percentage of current and expected future pensionable payroll. Contributions
to money purchase pension schemes are charged to the revenue reserve immediately upon payment to the scheme trustees.
Since 20 April 2001, any deficits arising from actuarial valuations of the defined benefit scheme are provided for in
full.
Financial instruments
Derivative financial instruments utilised by the Group are interest rate swaps, caps and floors. The Group does not
enter into speculative derivative contracts. All such instruments are used for hedging purposes to alter the risk
profile of an existing underlying exposure of the Group in line with the Group's risk management policies. Amounts
payable or receivable in respect of interest rate swaps are recognised as adjustments to interest expenses over the
period of the contracts.
Termination payments made or received are spread over the life of the underlying exposure in cases where the underlying
exposure continues to exist. In other cases, termination payments are taken to the capital account. In the first
quarter of 2002, a decision was taken that the prospective returns from continuing to hold a significant amount of the
Group's assets in the current bond portfolio was outweighed by the risks. Accordingly the Directors instigated a
substantial liquidation of the bond portfolio held by PAM High. In order to minimise further interest costs, the Euro52.3
million and #3 million loans were repaid on 14 June 2002. The costs of breakage were provided for in the financial
statements for the year ended 31 December 2001, as these loans effectively became repayable on breach of the loan
covenants.
Deferred taxation
The Group has adopted Financial Reporting Standard 19 "Deferred Tax". In accordance with this accounting standard,
deferred tax is provided in full on timing differences that result in an obligation at the balance sheet date to pay
more tax, or a right to pay less tax, at a future date, at rates expected to apply when they crystallise, based on
current tax rates and on law. Timing differences arise from the inclusion of items of income and expenditure in
taxation computations in periods different from those in which they are included in financial statements. Deferred tax
is not provided on timing differences arising from the revaluation of fixed assets where there is no commitment to sell
the asset, or on unremitted earnings of subsidiaries and associates where there is no commitment to remit these
earnings. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will
be recovered. Deferred tax assets and liabilities are not discounted.
Operating leases
Annual rentals under operating leases are charged to the revenue account as incurred.
Foreign currency
Transactions denominated in foreign currencies are recorded in the local currency at actual exchange rates as at the
date of the transaction or, where appropriate, at the rate of exchange in a related forward exchange contract. Monetary
assets and liabilities denominated in foreign currencies at the period end are reported at the rates of exchange
prevailing at the period end or, where appropriate, at the rate of exchange in a related forward exchange contract. Any
gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an
exchange gain or loss in the consolidated statement of total return as capital or revenue depending on whether the gain
or loss is of a capital or revenue nature respectively.
Capital reserves
Capital reserve - realised
The following are accounted for in this reserve:
- gains and losses on the realisation of investments;
- realised exchange differences of a capital nature; and
- expenses and finance, together with the relaxed taxation effect, charged to this reserve in accordance with the
above policies.
Capital reserve - unrealised
The following are accounted for in this reserve:
- increases and decreases in the valuation of investments held at the period-end; and
- unrealised exchange differences of a capital nature.
2. CHANGE OF ACCOUNTING POLICY - allocation of management fees and finance costs to the capital reserve
The management fees and finance costs of debt, in so far as they related to the management and financing of the Group's
listed investments, had previously been allocated 80% to capital and 20% to revenue in the preparation of the interim
accounts for the period ended 30 June 2001, in line with the Board's expected long-term split of returns, in the form
of capital gains and income respectively, from the bond portfolio. However, this was amended in the 31 December 2001
financial statements so that 100% of the finance costs relating to the Group's listed investments have been allocated
to revenue as the Board believes that this better reflects the cost of holding these assets.
In addition, the management fees and finance costs of debt, insofar as they relate to the management and financing of
the Group's property, had been allocated 100% to revenue in the preparation of the interim accounts for the period
ended 30 June 2001. However, this was amended in the 31 December 2001 financial statements as the Board consider it to
be more appropriate to allocate 30% of these costs to the capital reserve, in line with the Board's expected long-term
split of returns, in the form of capital gains and income respectively from the property portfolio.
The comparative figures for the period ended 30 June 2001 have been amended to reflect the changes to the accounting
policy noted above. The impact on the 30 June 2001 figures due to the change in the accounting policy is as noted
below:
Six months ended 30 June 2001 (unaudited)
Revenue Capital Total
#'000 #'000 #'000
Transfer to reserves as previously stated 644 105 749
Adjustment as a result of now allocating 100% of finance costs
and management fees relating to the bond portfolio to the revenue (1,834) 1,834 -
account
Adjustment as a result of now allocating 30% of finance costs and
management fees relating to the property portfolio to the capital 1,136 (1,136) -
account
Transfer (from)/to reserves under the current accounting policy (54) 803 749
3. CHANGE OF ACCOUNTING POLICY - deferred taxation
The Group has changed its accounting policy in order to comply with Financial Reporting Standard 19 "Deferred Tax".
Broadly the effect of this change is to make full provision for deferred taxation on all material timing differences,
but to make no provision when investments are revalued. This change of policy has reduced the net asset values as at 31
December 2001 and 30 June 2002 by #1,415,000 and reduced the transfer to the revenue reserve for the year ended 31
December 2001 by #705,000.
The change of policy has not been implemented for the comparative period ended 30 June 2001 due to the additional cost
involved in recalculating the tax liability as at 30 June 2001.
4. INCOME
Six months ended Six months ended 30
June 2001 Year ended 31
30 June 2002 December 2001
(unaudited)
(unaudited) (audited)
#'000 #'000 #'000
Interest on fixed interest securities (gross) 946 2,542 4,888
Sale of properties 3,199 400 2,230
Rental income 8,519 7,231 15,524
Share of joint ventures 113 211 379
Management fees 218 369 658
Group income 12,995 10,753 23,679
Cost of sales (4,360) (2,091) (4,810)
Income 8,635 8,662 18,869
5. MANAGEMENT FEES
Collins Stewart Fund Management Limited ("the Manager"), was entitled under its Management Agreement to receive a fee
of #3,500,000 per annum from the Group. #900,000 per annum was charged to PAM High, out of which the Investment Adviser
to PAM High was paid a fee equal to 1.0% per annum of the value of the investments managed. Of the balance of
#2,600,000 per annum, #800,000 per annum was charged by the Manager to CNC and, until the conclusion of the CNC
"hive-out" on 19 April 2001, the balance of #1,800,000 per annum was offset against the continuing administration costs
of CNC. Following the conclusion of the hive-out, Collins Stewart Property Fund Management Limited charged CNC a
management fee at a rate of #1,800,000 per annum, pro rated for the period to 31 December 2001.
With effect from 1 July 2002, the basis of calculating the management fee changed with the amount being paid to the
Manager being calculated on an ad valorem basis of 1.5% based on total assets under management.
6. OTHER EXPENSES
Six months ended 30
Six months ended June 2001 Year ended 31
30 June 2002 December 2001
(as restated)
(unaudited) (as restated)
(unaudited)
(audited)
#'000 #'000 #'000
Administration expenses 137 87 1,235
Depreciation of tangible fixed assets 2 2 22
Amortisation of goodwill 37 37 73
Auditors' remuneration 32 30 205
Directors' remuneration 28 28 195
Loss on foreign exchange 15 15 39
Costs of aborted fundraising 400 - -
Sundry expenses 95 83 162
746 282 1,931
7. TAX ON PROFIT ON ORDINARY ACTIVITIES
Six months ended 30
Six months ended June 2001 Year ended 31
30 June 2002 December 2001
(as restated)
(unaudited) (as restated)
(unaudited)
(audited)
#'000 #'000 #'000
United Kingdom corporation tax 794 479 1,023
Recognition of deferred tax liability 368 - 767
1,162 479 1,790
The Company and its Guernsey based subsidiaries PAM High and Property Acquisition and Management Securities Limited
("PAM Securities) are exempt from Guernsey Income Tax under the Income Tax (Exempt Bodies) (Guernsey) Ordinances 1989
and 1992 and are charged an annual exemption fee of #600. CNC, a subsidiary company registered in England and Wales, is
subject to United Kingdom corporation tax.
The Group has changed its accounting policy in order to comply with Financial Reporting Standard 19 "Deferred Tax", the
impact of which is detailed in note 3.
8. MINORITY INTERESTS
(Zero Dividend Preference Shares issued by Property Acquisition and Management Securities Limited)
Rights attached to shares
Zero Dividend Preference ("ZDP") Shareholders shall not be entitled to receive and shall not participate in any
dividends or other distributions out of the profits of PAM Securities, a wholly owned subsidiary of the Company,
available for dividend and resolved to be distributed in respect of any accounting period or any other income or right
to participate therein.
On a return of assets on liquidation, after payment of all debts and satisfaction of all creditors of PAM Securities,
there shall be paid to ZDP Shareholders from the surplus assets of PAM Securities an amount equal to 100p per ZDP Share
as increased daily at a compound rate as will give an entitlement to 153.86p on the ZDP Redemption Date (five years
after admission to trading), the first increase occurring on the date the ZDP Shares are first admitted to the Official
List of the United Kingdom Listing Authority and the last on the actual date of payment.
ZDP Shareholders will not have the right to receive notice of any general meeting of PAM Securities or to attend or
vote at any such meeting except in respect of any resolution altering, modifying or abrogating any of the rights and
privileges attached to the ZDP Shares or to wind up PAM Securities.
9. DIVIDENDS
Six months ended Six months ended 30
30 June 2002 June 2001 Year ended 31
December 2001
(unaudited) (unaudited)
(audited)
#'000 #'000 #'000
#0.10 Ordinary Shares
First interim - 2.00p per share (2001: 3.20p per share) 1,152 1,840 1,840
Second interim - n/a (2001: 3.20p per share) - - 1,843
Third interim - n/a (2001: 3.20p per share) - - 1,843
1,152 1,840 5,526
#1 Convertible Redeemable Preference Shares
Four months ended 30 April 2002 - 2.85p per share (2001: 2.85p
per share) 312 309 309
Four months ended 31 August 2001 - 2.85p per share (2001: 2.85p
per share) pro rated for 2 months 156 156 312
Four months ended 31 December 2002 - n/a (2001: 2.85p per - - 312
share)
468 465 933
Total dividends 1,620 2,305 6,459
On 12 August 2002, the Company declared a dividend of 2.85p per Convertible Redeemable Preference Share for the four
month period ended 31 August 2002. On the same day, the Board announced that it did not expect to declare any further
dividends on the Company's Ordinary Shares in respect of the financial periods ending 31 December 2002 and 31 December
2003 as the Board believes that using available resources to buy back shares at a discount to asset value will enhance
the asset value for the remaining holders of the Group's securities.
10. RETURN PER ORDINARY SHARE AND DILUTED RETURN PER ORDINARY SHARE
The revenue return per Ordinary Share is based on the net revenue after non-equity dividends of #943,000 and on
57,583,795 Ordinary Shares, being the weighted average number of shares in issue.
The capital return per Ordinary Share is based on a net capital loss of #4,381,000 and on 57,583,795 Ordinary Shares,
being the weighted average number of shares in issue.
The fully-diluted returns per Ordinary Share have been calculated on the assumption that the Convertible Redeemable
Preference Shares were fully converted on the first day of the period and on each subsequent issue at a rate of 8
Ordinary Shares for every 10 Convertible Redeemable Preference Shares, giving a weighted average of 66,340,005 shares.
The revenue return of 2.13p per Ordinary Share includes the savings of the finance costs on the Convertible Redeemable
Preference Shares.
11. TANGIBLE FIXED ASSETS
Investment Other tangible Total
properties assets
(unaudited)
(unaudited) (unaudited)
#'000 #'000 #'000
Cost or valuation:
As at 1 January 2002 170,929 15 170,944
Additions 468 - 468
Movement on revaluation (2,634) - (2,634)
As at 30 June 2002 168,763 15 168,778
Depreciation
As at 1 January 2002 - 9 9
Charge for the year - 2 2
As at 30 June 2002 - 11 11
Net book value:
At 30 June 2002 168,763 4 168,767
At 30 June 2001 145,443 8 145,451
At 31 December 2001 170,929 6 170,935
Other tangible assets consist of equipment and motor vehicles.
The investment properties were valued on the basis of open market value as at 30 June 2002 by DTZ Debenham Tie Leung,
international property advisers, based on the Royal Institute of Chartered Surveyors, Practice Statement 20.
12. LISTED INVESTMENTS
30 June 2002 30 June 2001 31 December 2001
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Opening valuation 38,607 52,545 52,545
Purchases at cost - 4,101 5,007
Proceeds on sale of investments (36,140) (5,907) (10,166)
Realised losses on sales (1,935) (1,070) (4,151)
Movement in unrealised loss on foreign exchange - - (162)
Movement in unrealised loss on investments 1,876 (2,744) (4,466)
Closing valuation 2,408 46,925 38,607
Opening book cost 8,793 53,468 46,871
Unrealised loss (6,385) (6,543) (8,264)
Closing valuation 2,408 46,925 38,607
13. PROPERTY ASSETS
30 June 2002 30 June 2001 31 December 2001
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Land and properties held for resale 8,750 7,725 11,482
Developments in progress 3,114 6,196 2,483
11,864 13,921 13,965
Land and properties held for resale have been valued at 30 June 2002 by DTZ Debenham Tie Leung, international property
advisers. The effect of this valuation increases the carrying value of property assets by #1,807,000 (30 June 2001:
#2,116,000, 31 December 2001: #2,007,000) to #13,671,000 (30 June 2001: #16,037,000, 31 December 2001: #15,972,000).
14. CALLED UP SHARE CAPITAL
30 June 2002 30 June 2001 31 December 2001
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Authorised:
200,000,000 Ordinary Shares of #0.10 each 20,000 20,000 20,000
50,000,000 Convertible Redeemable Preference Shares of #1each 50,000 50,000 50,000
70,000 70,000 70,000
Allotted and fully paid:
57,583,795 Ordinary Shares of #0.10 each 5,759 5,759 5,759
10,945,262 Convertible Redeemable Preference Shares of #1 each 10,945 10,945 10,945
16,704 16,704 16,704
15. RESERVES
Share premium Capital Capital Property Revenue reserve Total
reserve - reserve - revaluation
(unaudited) realised unrealised reserve (unaudited) (unaudited)
(unaudited) (unaudited) (unaudited)
#'000 #'000 #'000 #'000 #'000 #'000
As at 1 January 2002 as 47,509 (6,218) (13,550) 9,740 3,757 41,238
previously stated
Prior year adjustment (note 3) - - - - (1,415) (1,415)
At 1 January 2002 as restated 47,509 (6,218) (13,550) 9,740 2,342 39,823
Return for the period - (3,181) 1,434 (2,634) (209) (4,590)
Purchase of scrip shares in the 11 - - - - 11
market
As at 30 June 2002 47,520 (9,399) (12,116) 7,106 2,133 35,244
16. TOTAL SHAREHOLDERS' FUNDS
30 June 2001 31 December 2001
30 June 2002
(as restated) (as restated)
(unaudited)
(unaudited) (audited)
#'000 #'000 #'000
Equity 41,002 54,808 45,582
Non-equity - Convertible Redeemable Preference Shares 10,945 10,945 10,945
51,947 65,753 56,527
Total shareholders' funds have been apportioned between equity and non-equity shareholders in accordance with Financial
Reporting Standard 4 "Capital Instruments". However, the net asset value per share figures in note 17 have been
calculated on the basis of shareholders' rights to reserves as specified in the Articles of Association of the Company.
17. NET ASSET VALUE PER SHARE
The net asset value per share and the net asset values attributable to each class of share at the period end calculated
in accordance with the Articles of Association of the Company:
30 June 2001 31 December 2001
30 June 2002
(as restated) (as restated)
(unaudited)
(unaudited) (audited)
Ordinary - basic 71.20p 95.18p 79.16p
Shares:
- pro forma basic 74.34p 98.85p 82.64p
- fully diluted 78.30p 99.12p 85.34p
Convertible Redeemable Preference Shares 100.00p 100.00p 100.00p
Net asset value per ZDP Share 118.84p 109.03p 113.87p
Basic net asset value per Ordinary Share is based on net assets less the nominal value of Convertible Redeemable
Preference Shares outstanding at the period end and on 57,583,795 Ordinary Shares, being the number of Ordinary Shares
in issue at the period end. The analysis of shareholders' funds used on the face of the balance sheet has been computed
in accordance with the provisions of Financial Reporting Standard 4 "Capital Instruments".
If the current property assets were included in the accounts at 30 June 2002 at open market value (as valued by DTZ
Debenham Tie Leung) referred to in note 13, the net asset value per Ordinary Share would increase from 71.20p to a pro
forma basic net asset value per Ordinary Share of 74.34p.
Fully diluted net asset value per Ordinary Share at 30 June 2002 was 78.30p. This has been calculated on the assumption
that the Convertible Redeemable Preference Shares were fully converted on the day of issue on the basis of 8 Ordinary
Shares for every 10 Convertible Redeemable Preference Shares held, giving a weighted average of 66,340,005 shares.
18. ANALYSIS OF CHANGES IN NET FUNDS/DEBT
Cashflows Acquisitions and Exchange 30 June 2002
disposals difference
1 January 2002
#'000 #'000 #'000 #'000 #'000
Cash at bank and in hand 21,873 (15,327) - 1,850 8,396
Overdraft (8,738) 8,196 - - (542)
Net cash at bank and in hand 13,135 (7,131) - 1,850 7,854
Debt due within one year (36,134) 36,812 - (1,700) (1,022)
Debt due after more than one year (113,402) - - - (113,402)
Loan notes within one year (2,740) 741 - - (1,999)
Total (139,141) 30,422 - 150 (108,569)
19. RECONCILIATION OF NET REVENUE BEFORE FINANCE COSTS AND TAXATION TO NET CASH
INFLOW FROM OPERATING ACTIVITIES
Six months ended 30
Six months ended June 2001 Year ended 31
30 June 2002 December 2001
(as restated)
(unaudited) (as restated)
(unaudited)
(audited)
#'000 #'000 #'000
Net revenue before finance costs and taxation 6,348 7,075 15,501
Profit on joint ventures - (697) -
Loss on sale of investment properties - 99 -
Management fee charged to capital (298) (238) (619)
Amortisation of goodwill 37 37 73
Depreciation 2 2 22
(Increase)/decrease in accrued income (1,173) (1,070) 426
Decrease/(increase) in property assets 2,101 1,953 (2,049)
Profit on sale of fixed assets - - (7)
Reclassification of property assets to investment property - (3,032) -
Decrease in creditors (721) (2,295) (3,213)
(Increase)/decrease in other debtors (372) 1,050 1,875
Net cash inflow from operating activities 5,924 2,884 12,009
If you have any queries please contact:
Andrew Duquemin
Collins Stewart Fund Management Limited
2nd Floor
TSB House
Le Truchot
St Peter Port
Guernsey
GY1 4AE
Tel: 01481 731987
Fax: 01481 720018
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SFLFIMSESEDU
Paq Intl (LSE:PAQ)
Historical Stock Chart
From Jul 2024 to Jul 2024
Paq Intl (LSE:PAQ)
Historical Stock Chart
From Jul 2023 to Jul 2024
