RNS Number:9742M
Terrace Hill Group PLC
1 July 2003
For Embargoed Release at 7am 1 July 2003
Terrace Hill Group PLC ("the Group")
Half Yearly Report for the six months to 30 April 2003
CHAIRMAN'S STATEMENT
I am pleased to present the Group's Unaudited Accounts for the 12 months to 30
April 2003, and in this statement my report on the half year to 30 April 2003.
As a result of the merger with Westview Group Limited ("Westview Group") we have
extended our current accounting period to 31 October 2003, as at which date
audited results will be provided for the full 18 month period; this will make
our accounting date coterminous with that of Westview Group.
Results
It has been a good year and I am pleased to report that during the 12 months to
30 April 2003 the Group earned a pre-tax profit of #2,220,000 (year to 30 April
2002: #54,000). Net assets, after allowing for minority interests, at 30 April
2003 stood at #43,123,000 (31 October 2002: #40,824,000). The Directors have
considered that, with the exception of Scottish residential property, the
carrying values of our investment properties have not significantly changed from
31 October 2002, and have continued to hold at these values. In respect of
Scottish residential property we have included an upward revaluation of
#1,640,000.
Borrowings, net of cash, stood at 58.58% of gross assets (31 October 2002:
65.38%).
The Group operates through two divisions, commercial and residential, which work
with the corporate objective of growing shareholder funds by revenue profit or
capital growth. The commercial division, being the former Westview Group
operations, referred to in the Accounts as "acquisitions", operates out of
offices in London, Teesside and Marlborough. At 30 April 2003 the commercial
division had on hand a commercial property development programme with a
completion value in excess of #200 million, and additionally held a number of
commercial property investments valued at some #19 million.
The residential division, being the former CapitalTech operations and referred
to in the accounts as "continuing operations" is run from Glasgow. On 30 April
2003 the division held 672 flats and houses with an aggregate value of #47
million (31 October 2002: 1,088 units, value #73 million); this reduction
reflects realisations after achieving growth in value, and the average unit
value of #69,918 is below the market level at most risk from economic slowdown.
In the numbers, we need, in the current accounting period, to provide separate
figures for the residential and commercial divisions. Turnover attributable to
the residential division is predominantly rental income, and a further
#2,219,000 rental income is included within the turnover of the commercial
division. At operating profit level, both the residential division (#1.487
million) and the commercial division (#1.058 million), for the 12 month period
(which is 7.5 months of commercial division figures) performed satisfactorily,
despite there being no major sales of development projects scheduled in the
commercial division in the 18 month period to 31 October 2003.
Activities in the 6 Months to 30 April 2003
In the commercial division, the only sale of note was of the "Advance" office
building at Teesdale Business Park near Middlesbrough for #2.4 million. We also
obtained planning permission for our mixed development at Queen Elizabeth Park,
Guildford, where we commenced construction of a fitness club being leased to
Esporta, a food store sold to Budgens and a nursery sold to Academy Nursery.
Also at Guildford construction commenced on the first phase of development of
small office buildings aimed at the owner occupier market which will ultimately
total 42,500 sq.ft.. The commercial division further saw potentially major
progress in being appointed as preferred developer for the first phase of the
Middlehaven project in Middlesbrough by Tees Valley Regeneration and its
partners.
In the residential division, we decided to sell 223 flats in East and North East
Scotland which has resulted in a substantial release of negative goodwill to the
profit and loss account. In addition, the residential division continued to
make other strategic disposals of scattered properties in England and Wales.
Current Trading
We continue to implement the strategy outlined in our circular relating to the
merger with Westview Group. We are successfully combining the asset base of
CapitalTech with the profit stream of Westview Group and the enlarged Group
continues to find new development and investment opportunities. We have been
pleased with how well the merger of the divisions is working.
One of our large developments, at 11 Berkeley Street, London, which we believe
has few competing properties, has achieved practical completion, and we continue
to increase our development focus in the North East and Bristol areas where we
believe there is good potential long term demand.
The residential division recently acquired a modern block of 43 flats in
Newcastle upon Tyne, at a cost of #4.7 million which is some #970,000 below our
surveyors' valuation.
Dividend
Your Directors have decided to pay a further interim dividend, in respect of the
half year under consideration, of 0.13p per share. This will be paid on 27
August 2003 to shareholders on the register at 15 August 2003. Added to the
0.125p per share paid in respect of the six months to 31 October 2002 this
represents a total of 0.255p per share for the 12 months to 30 April 2003. This
continues to illustrate our confidence in the future and maintenance of a
progressive dividend policy.
Repurchase of Shares
We also propose a repurchase by the Company, announced today, of up to 1,250,000
shares at a price of 17.25p. This again provides an opportunity for small
shareholders to realise without costs, and may assist in further strengthening
the share price. The share price of 18p as at 24 June 2003 stood at a discount
of 35.41% to the net asset value of 27.87p per ordinary share at 30 April 2003.
Future
We shall continue to seek to progress all aspects of our strategy, having the
necessary resources in place. While our residential division is not currently
planning any large portfolio disposals, we shall continue to sell some
individual units as they become vacant. We are looking to see some of our major
commercial development projects coming to fruition in 2004. If appropriate, we
shall also seek further opportunities for expansion by acquisition using cash or
our shares.
Robert F M Adair
Chairman
1 July 2003
UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT
12 months to 6 months to Year to
30-Apr 03 31-Oct-02 30-Apr-02
#000 #000 #000
(unaudited) (unaudited) (audited)
TURNOVER
Continuing operations 5,047 2,834 4,843
Acquisitions 8,914 1,854 -
Share of joint venture - - 4
----- ----- -----
13,961 4,688 4,847
----- ----- -----
GROUP OPERATING PROFIT
Continuing operations 1,487 1,071 1,890
Acquisitions 1,058 237 -
----- ----- -----
2,545 1,308 1,890
Share of operating profit of joint venture - - 1
----- ----- -----
TOTAL OPERATING PROFIT 2,545 1,308 1,891
Continuing operations:
Provision for unlisted investments (202) (21) (102)
Loss on disposal of other fixed asset investment (2) - (7)
Net gain on disposal of investment properties 3,202 382 1,090
Discontinued operations (4) 5 3
Net interest payable (3,319) (1,599) (2,821)
----- ----- -----
PROFIT ON ORDINARY
ACTIVITIES BEFORE TAX 2,220 75 54
Taxation (144) 45 (28)
----- ----- -----
PROFIT ON ORDINARY
ACTIVITIES AFTER TAX 2,076 120 26
Minority interest (93) (13) -
----- ----- -----
PROFIT ATTRIBUTABLE TO 1,983 107 26
MEMBERS OF PARENT COMPANY
Dividends (193) - -
----- ----- -----
1,790 107 26
----- ----- -----
Profit per share - basic and diluted 1.599p 0.115p 0.038p
----- ----- -----
UNAUDITED SUMMARISED CONSOLIDATED BALANCE SHEET
30-Apr-03 31-Oct-02 30-Apr-02
#000 #000 #000
FIXED ASSETS (unaudited) (unaudited) (audited)
Intangible assets
Positive goodwill 2,691 2,707 371
Negative goodwill (1,509) (3,767) (4,167)
----- ----- -----
1,182 (1,060) (3,796)
Tangible assets
Investment properties 83,732 106,562 74,931
Other 180 223 12
----- ----- -----
83,912 106,785 74,943
Investments
Joint venture - share of gross assets - - 47
- share of gross liabilities - - (40)
----- ----- -----
- - 7
Other 1,245 1,434 279
----- ----- -----
1,245 1,434 286
----- ----- -----
86,339 107,159 71,433
CURRENT ASSETS
Work in Progress 44,875 36,965 -
Debtors 15,776 15,526 7,038
Cash at bank and in hand 3,000 1,627 1,905
----- ----- -----
63,651 54,118 8,943
CREDITORS: amounts falling due
within one year
Borrowings (34,150) (26,107) (2,675)
Other creditors (17,701) (13,995) (1,507)
----- ----- -----
(51,851) (40,102) (4,182)
----- ----- -----
NET CURRENT ASSETS 11,800 14,016 4,761
----- ----- -----
TOTAL ASSETS LESS CURRENT 98,139 121,175 76,194
LIABILITIES
CREDITORS: amounts falling due after more (54,971) (79,893) (51,035)
than one year
----- ----- -----
43,168 41,282 25,159
----- ----- -----
CAPITAL AND RESERVES
Called up share capital 3,094 3,109 1,487
Deferred consideration 193 193 193
Share premium account 11,807 11,823 9,908
Revaluation reserve - investment properties 12,951 13,993 9,487
other 3 4 4
Capital redemption reserve 807 792 792
Merger reserve 15,801 15,800 9,282
Profit and loss account (1,533) (4,890) (5,994)
----- ----- -----
43,123 40,824 25,159
Minority interests 45 458 -
----- ----- -----
43,168 41,282 25,159
----- ----- -----
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
12 months to 6 months to 12 months to
30-Apr-03 31-Oct-02 30-Apr-02
#000 #000 #000
(unaudited) (unaudited) (audited)
Profit attributable to members of the parent company 1,983 107 26
Unrealised surplus on revaluation of properties 6,258 5,504 5,282
Unrealised deficit on revaluation of unlisted investments (1) - (34)
----- ----- -----
Total recognised gains and losses relating to period 8,240 5,611 5,274
----- ----- -----
GROUP STATEMENT OF CASH FLOWS
for the 12 months ended 30th April 2003
April 2003 April 2002
#'000 #'000
(Unaudited) (Audited)
Cash (outflow) from operating activities (10,665) (599)
Returns on investments and servicing of finance (4,269) (4,053)
Taxation (36) (1)
Capital expenditure and financial investment 40,465 17,102
Acquisitions and disposals 371 (5,191)
----- -----
Cash inflow before liquid resources and financing 25,866 7,258
Management of liquid resources
Financing (25,003) 730
----- -----
Increase in cash 863 7,988
----- -----
Reconciliation of group operating profit to net cash (outflow) from operating activities
#'000 #'000
Operating profit 2,545 1,891
Depreciation 50 26
Positive goodwill amortisation and impairment losses 185 127
(Increase)/Decrease in operating debtors (1,898) 30
(Decrease) in operating creditors (3,636) (2,673)
(Increase) in stocks (7,911) -
----- -----
Net cash (outflow) from operating activities (10,665) (599)
----- -----
GROUP RECONCILIATION OF SHAREHOLDERS' FUNDS
12 months to 6 months to 12 months to
30-Apr-03 31-Oct-02 30-Apr-02
#000 #000 #000
(unaudited) (unaudited) (audited)
Total recognised gains and losses 8,240 5,611 5,274
New shares issued 1,658 1,658 340
Share premium arising on new shares issued 2,111 2,111 1,515
Merger reserve arising on new shares issued 6,519 6,519 -
Purchase of ordinary shares (371) (234) (238)
Dividend paid to ordinary shareholders (193) - -
----- ----- -----
Total movements during the period 17,964 15,665 6,891
Opening shareholders' funds 25,159 25,159 18,268
----- ----- -----
Closing shareholders' funds 43,123 40,824 25,159
----- ----- -----
NOTES
BASIS OF PREPARATION
The interim financial statements are unaudited and do not constitute statutory
accounts as defined in Section 240 of the Companies Act 1985. These statements
have been prepared on the basis of the accounting policies set out in the
Group's 2002 Annual Report and Accounts and were approved by the board of
directors on 1 July 2003. Financial statements for the year ended 30 April 2002
are abridged statements; full accounts with an unqualified audit report have
been lodged with the Registrar of Companies.
PROFIT PER ORDINARY SHARE
The calculation of basic and diluted profit per ordinary share is based on the
following:
12 months to 6 months to 12 months to
30-Apr-03 31-Oct-02 30-Apr-02
#000 #000 #000
Surplus 1,983 107 26
----- ----- -----
The weighted average number of ordinary shares
in issue during the period:
Basic 124,015,370 93,303,027 66,637,201
Dilutive potential ordinary shares arising from
share option schemes - - -
----- ----- -----
124,015,370 93,303,027 66,637,201
----- ----- -----
DIVIDEND
The company intends to pay an interim dividend of 0.13p per share.
HALF-YEARLY REPORT
The half-yearly report will be posted to shareholders shortly and copies will be
available, free of charge for one month, from the Company Secretary, Terrace
Hill Group PLC, James Sellars House, 144 West George Street, Glasgow, G2 2HG.
For further information please contact:
Ross MacDonald, Joint Managing Director, Terrace Hill Group PLC 0141 332 2014
Alasdair Robinson, Noble & Company Limited 0131 225 9677
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