RNS Number:3104Z
Teesland Plc
06 March 2006
6 March 2006
Teesland plc
Interim results
Teesland plc ("Teesland" or "the Group") (LSE: TLD), the pan-European property
fund and asset manager, announces interim results for the six months ended 31
December 2005. Highlights of the period include:
* Turnover grew 142% to #12.6 million (2004: #5.2 million)
* Profit before tax and intangible amortisation improved to #4,701,000
(2004: #237,000)
* Adjusted earnings per share were 2.47 pence (2004: 0.17 pence)
* Funds under management grew by 11% (#262 million) to #2.6 billion
(Euro3.8 billion) in the six months to 31 December 2005 (2004: #1.8 billion)
* #76 million (Euro110 million) of property acquired on behalf of the
European High Income Fund
* The Industrial Trust grew assets under management by #35 million (Euro51
million) to #395 million (Euro580 million)
* Central European Industrial Fund launched with Morley Investment
Management and an initial #48 million (Euro70 million) of assets under management
* UCT student housing fund launched with #50 million (Euro74 million) of
assets under management.
* Initial acquisitions made for Scarborough Continental Partners
creating #68 million (Euro100 million) of assets under management
* "C" share rights issue for Teesland Advantage Property Income Trust
Limited raised #71 million (Euro104 million) of equity
* Osprey, the high income mixed commercial fund was the top performer
in the 2005 APUT pooled property fund index with a 27.2% total return.
Commenting, Kevin McCabe, Teesland's chairman, said: "We have made strong
progress both financially and operationally during the period and we are now in
a position to really leverage our platform in Europe and consolidate our
position there. We are planning a Nordic fund and exploring the possibilities of
a German commercial property fund both of which will see us expanding out of our
traditional European focus on the industrial sector."
For further information:
Kevin McCabe/Mickola Wilson
Teesland plc: 020 7659 4700
Jeremy Carey/Richard Sunderland,
Tavistock Communications Limited 020 79203150
Chairman's statement
During the six months to 31 December 2005, Teesland continued to consolidate its
position as a leading pan-European property fund and asset manager; clearly
demonstrating the advantages of the merger between Teesland and iOG (the
operating company of Property Fund Management PLC ("PFM")).
The potential within the two companies is further reflected in the #262 million
growth in funds and assets under management, assisted by the launch of two
European industrial funds and the continued expansion in speciality funds in the
UK.
Our European ambitions extend far outside the industrial property sector, where
we remain the European leader, and Teesland intend to fully utilise, for the
benefit of shareholders and fund investors, our extensive Western and Central
European team across all territories.
One of our key strengths is that we are able to provide a high level of secure
and visible forward revenue streams through the mature well-established funds,
whilst at the same time being innovative and spotting an appetite in the market
for new products, such as TAP, for which we recently raised a further #71
million through a successful 'C' share issue, less than a year after raising #76
million at its launch.
The Company was approached in Autumn 2005 by third parties interested in either
merging or acquiring our business. After thorough examination, it was decided in
the best interests of shareholders and management alike, to terminate
negotiations which occurred in early January 2006.
Results
Profit before tax, share of associates' and joint ventures' tax, and
amortisation of intangibles for the six months ended 31 December 2005 was #4.70
million (2004: #0.23 million, as restated under IFRS). Adjusted earnings per
share were 2.47p (2004: 0.17p as restated under IFRS)
These results are for the whole Group, whilst the comparative figures to
December 2004 only include a nine week contribution from PFM.
These results have been prepared under IFRS. The adoption of IFRS has not had a
significant impact upon the results for the Group for the period, however it has
led to changes in presentation that make direct comparison with previous
somewhat complicated. Tables and commentary have been provided which illustrate
the conversion of past reported figures from UK GAAP to IFRS.
Dividends
In line with the previous year, the Directors do not intend to pay a dividend at
the half year, however it is expected that, once again, a dividend will be
proposed for the full year to 30 June 2006.
Achievements
During the period funds and assets under management grew by over #262 million
(Euro385 million). This was achieved through the expansion of existing funds, the
launch of new funds and through winning asset and fund management mandates from
third parties, all of which are commented on in the Chief Executive's operating
review.
2005 was a year of strong returns for the property market reflected in the
performance of all our funds, however, we are particularly proud to report that
the Osprey Fund was the top performing fund of the APUT pooled property funds
index for 2005. Additionally, Oystercatcher is once again expected to be at the
top of the IPD residential index.
Future Prospects
Teesland is now established as a top class property fund and asset manager. We
have a high quality client base, covering both the institutional and private
investor markets, access to local markets across the UK and Europe, as well as a
strong shareholder base.
In addition, market conditions remain in the Company's favour, with the property
sector continuing to match the performance of other investment classes and
interest in the sector coming from an ever widening range of investors.
These factors combine to provide a superb opportunity for Teesland to continue
exploiting its unique European platform and local property expertise by rolling
out a series of new funds across the European market.
The growth in vehicles suitable for investment by private investors and
specifically the use of listed investment trusts has also opened new
opportunities to create speciality funds tailored to that market. Teesland's
experience in launching TAP places it in a strong position to develop a range of
products in the listed sector. It has also demonstrated that it is possible to
create tax-efficient commercial property investment vehicles regardless of
legislation on the much talked about REITs whose introduction, whilst serving to
heighten awareness amongst private investors of the benefits of indirect
property investment, are not critical to the future of property fund management
businesses such as our own.
We are planning a controlled growth in funds and assets under management through
both extending the range of niche funds investing in markets where we see the
prospects for exceptional performance, as well as the expansion of existing
funds, to reach our target of #5 billion under management. Funds and assets
under management are targeted to exceed #3 billion by the end of 2006, achieved
by expanding our existing funds.
New initiatives include a potential Nordic Fund, taking advantage of the strong
economic growth occurring in that region, and investment in the German
commercial property market, which is anticipated to benefit from economic
recovery in the longer term. In the UK Teesland has the potential to create a
new opportunity fund investing in development projects. We have not ruled out
going further east in Europe following the success of the new Central European
industrial fund.
In the UK, there are also favourable prospects for funds with higher risk
profiles provided by our new development fund and we intend to continue to
improve the range of products aimed at the private investors, as these types of
funds build on our existing expertise and extend the investor client base.
Directors
I am been pleased to welcome David Seddon - formerly International Director at
Jones Lang LaSalle - to the Board. May I also congratulate Marcus Shepherd in
taking up his post as Financial Director in October and bringing his extensive
knowledge of the European regulatory environment into play as the business
expands.
Colleagues and Partners
My gratitude extends to my fellow directors, members of the Teesland management
team and all staff located at our various regional offices, including those
colleagues who have joined us in the last six months for their commitment and
contributions to the progress made.
I must, as always, record my appreciation of our professional advisers and our
business partners at HBOS for their continued help and support.
Kevin McCabe
Chairman
6 March 2006
Chief Executive's Report - Operating Review
Teesland iOG
The last six months have seen Teesland iOG continue to expand with funds and
assets under management growing by #262 million to #2.6 billion with the target
for 2006 of #3.3 billion.
Our greatest strength has been the continued success of our local teams in
securing good value investments for our funds and clients. This has been coupled
with expansion in our asset management teams to ensure we provide high quality
asset management services and are able to fulfil our ambition to provide the
best after sales service in the market.
The Property Market
The UK market has completed another year of excellent performance with total
returns in excess of 18% for 2005. Although there is an expectation of a slowing
in the rate of capital growth as yields reach an historic high, there remains
exceptional demand for property investment and prospects for rental growth in
many sectors. Forecasters anticipate another strong year for the property sector
in 2006, with some levelling of growth rates thereafter.
In the European markets there has been strong investor demand in the light of
recovering property markets, a low interest rate environment and expectations of
further downward yield shift. Occupier demand remains weak but in many areas
including France and Central Europe rents have passed their turning point and
growth is anticipated from 2006 onwards.
Trading Activities
Teesland Speciality Funds
The funds within this division have now reached a mature stage and investors are
seeing the benefit of sound acquisition policies in the early years. The star
performer for 2005 was the Osprey mixed commercial fund, which achieved a total
return of 27.2 % and is ranked top of the Association of Property Unit Trusts'
("APUT") pooled property funds index for the year. The team has also added #15
million to the fund and plans to bring it up to #330 million by the end of 2006.
Residential
The performance of the Oystercatcher Residential Fund has also been
significantly above its benchmark and is anticipated to, once again, be in the
IPD top performing funds. The University Capital Trust ("UCT") student housing
fund was launched in October and the first five acquisitions are now complete,
providing a portfolio of #50 million. A second closing is being offered which
will expand the investor base and provide resource for the continued programme
of acquisitions.
A development fund is in the process of being assembled for launch during 2006.
Over #6 million of property is in a vehicle pending the full launch and there is
already considerable interest from investors seeking the higher returns provided
by this type of opportunity fund. Part of the portfolio will be assembled via
our joint venture with iDG, specialists in industrial development, who have
continued their excellent track record by securing new developments in Reading,
Basingstoke and Watford.
iOG UK
The funds in this division have benefited from the strengthening of the
acquisition team and the "road runner" system, which enables the team to source
stock on an off-market basis. The focus at the asset management level is also
based on the iO system whereby the fund works closely with tenants to ensure
that their requirements are met whilst cash flows are maximised for the
investor.
The Industrial Trust is still in the process of assimilating the Darien
portfolio, which was acquired at the beginning of the period, and added a
further #35 million of stock in December. The Industrial Investment Partnership
fund ("IIP") has also grown by #7 million.
In addition to the main funds in this division, Teesland has acquired a range of
portfolios of industrial property held in joint ventures. These portfolios are
now being placed in funds allowing investors to benefit from the Group's buying
power and specialist expertise, in today's very competitive market.
Teesland Advantage Property Income Trust ("TAP")
TAP is a listed property investment company and forms part of a growing sector
within the stock market. The property portfolio produced exceptional performance
over the year, increasing in size to #220 million (Euro324 million) whilst
delivering over 14% capital growth and a dividend of 6.5% on the original
equity.
A second equity raising took place at the end of the year, raising over #70
million of new equity and enabling TAP to secure the Impact portfolio held by
Teesland in a joint venture with GMAC. TAP now trades at a comfortable premium
to NAV and the new share issue attracted an immediate premium of almost 5% at
launch.
Property Services Teams
The teams providing property services to the funds and third party clients as an
integral part of our business model include Teesland Asset Management, our asset
management team, Teesland Development Management, our project management team,
as well as our joint venture Ascent, which provides property insurance
brokerage. All these divisions have continued to provide a significant
contribution to the Company and are expanding with the growth in funds under
management.
iOG Europe
The iOG European funds invest in the multi occupied industrial sector, which has
experienced significant improvement in values over the year. The European High
Income ("EHI") fund has achieved a total return of 12.6% with capital values in
France growing by over 20% since June 2005. The performance of the portfolios
has been further improved by the application of the unique iOG system of active
asset management, which has been rolled out across the European offices and
enabled the teams to add value at the individual property level.
Euro110 million was added to the EHI fund portfolio during the six month period and
there is a pipeline of deals to bring the final value of the fund up to the
target of Euro750million.
The total value of the iOG Europe portfolios at the end of the period was Euro1.3
billion.
The Central European Industrial Fund ("CEIF") has been formed with Morley
Investment Management and has acquired properties with a value of over Euro70
million. The initial portfolio was held in a warehouse vehicle created by
Teesland, allowing the fund to take advantage of being invested from day one.
The current equity raising exercise is being extremely well received with
interest from a wide range of institutional investors. The portfolio is already
benefiting from the appreciation in values in the Central European markets and,
with three further properties under offer, is expected to meet its initial
target of Euro150 million before the end of 2006.
Scarborough Continental Partnership ("SCP") is a #400 million (Euro585 million)
commercial property joint venture between The Scarborough Group and The Bank of
Scotland's Corporate European division. It appointed Teesland iOG to acquire
assets in western and central Europe and the first acquisitions were made in
Denmark and Sweden, where a portfolio of property with a value of Euro100 million
has been created. There are further acquisitions in the pipeline in France and
Germany putting the fund on target for its planned Euro200 million by June 2006.
These funds provide the warehousing capacity to enable Teesland to 'seed corn'
future funds, the first of which are planned for later this year.
Summary
This has been a period of solid growth which has seen good progress made in the
expansion of existing funds, planning for new funds and undertaking of other
projects. The platform is very much in place for further growth both in Europe,
which will be overseen by David Seddon, and in the UK. We expect to launch a
number of new funds before the end of the financial year, which will reflect
Teesland's reputation of providing both secure investment vehicles and
innovation.
Mickola Wilson
Chief Executive
6 March 2006
International Financial Reporting Standards (IFRS)
The Interim Financial Statements are the first prepared by the Group under IFRS.
First time adoption of IFRS requires that prior period results and balance
sheets are restated and that a reconciliation is provided between the figures
previously reported under UK GAAP and the restated IFRS figures.
As principally an earnings based group deriving revenue from long term
contracts, the adoption of IFRS has not had a material effect on either the
Group's results or net asset value.
Those areas where changes have occurred which warrant further explanation are as
follows:
1. Accounting for the acquisition of PFM where the Group is now required to
separately value the intangible assets acquired rather than showing a single
figure for goodwill as previously reported. Intangible assets and residual
goodwill are then subject to either amortisation or annual impairment
reviews depending upon their useful lives. A deferred tax provision is set
up which is then released in parallel with the amortisation of intangibles.
2. Where the Group invests in "warehouse" structures to acquire properties prior
to the launch of a fund, it historically carried these investments at cost,
as the intention was to hold them for the short term. Under IFRS the Group
is required to account for warehouse structures as a subsidiary, associate
or joint venture depending upon the control exercised over the entity. If
the period to launch or sale is less than one year and the criteria of IFRS
5 "Non-Current Assets Held For Sale and Discontinued Operations" are met
then the share of net assets accounted for are classified as non-current
assets held for sale.
3. Joint ventures and associates, now including some "warehouse" structures, are
accounted for using the equity method and the Group recognises its share of
the results of each entity for the period of ownership. This leads to the
results of "warehouse" structures being reallocated across previously
reported accounting periods.
4. Minority interests in launched funds (i.e. co investments) are accounted for
under IAS 39 "Financial Instruments" as assets available for sale and
measured at fair value where a reliable valuation can be obtained, otherwise
at carrying amount.
5. The Group's Profit before tax is stated after the Group's share of post tax
profits from associates and joint ventures. Previously the Group's share of
associates and joint ventures tax was included in the Group's tax charge.
6. Comparable earnings have been restated for the six months to December 2004
and year to June 2005.The results for the year to June 2004 are not
restated.
7. Dividends, both payable and receivable, are accounted for when they become
contractually committed rather than in the period to which they relate.
The principal effects of the above have been as follows:
Balance Sheet
*Goodwill on the acquisition of PFM was previously shown as #38.5m under
UK GAAP. Under IFRS, Goodwill is #25m and separately identified Intangible
Assets are #19m and a Deferred Tax Provision of #5.5m is also created.
Income Statement
*For the year to June 2005, basic and diluted EPS has increased from 2.21p
to 2.73p whilst adjusted EPS pre amortisation of intangibles has reduced
from 4.02p to 3.73p.
*The final dividend of #2,123,000 relating to the year ended 30 June 2005
is accounted for in the six months to 31 December 2005.
*For the six month period to 31 December 2005 the Group's Profit before
tax is stated after accounting for the tax of #736,000 relating to the
Group's associates and joint ventures.
* The tax charge for the period includes the release of that part of the
deferred tax provision set up on the acquisition of PFM which relates to the
amortisation of intangibles expense for the period.
Independent review Report to Teesland Plc
Introduction
We have been instructed by the company to review the financial information for
the six months ended 31 December 2005, which comprises the Group Income
Statement, Group Balance Sheet, Group Cash Flow Statement, Group Statement of
Recognised Income and Expense, and the related notes 1 to 6. We have read the
other information contained in the interim report and considered whether it
contains any apparent misstatements or material inconsistencies with the
financial information.
This report is made solely to the company in accordance with guidance contained
in Bulletin 1999/4 'Review of interim financial information' issued by the
Auditing Practices Board. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company, for our work,
for this report, or for the conclusions we have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority.
As disclosed in note 5, the next annual financial statements of the group will
be prepared in accordance with those IFRSs adopted for use by the European
Union. This interim report has been prepared in accordance with the requirements
of IFRS 1, "First Time Adoption of International Financial Reporting Standards"
relevant to interim reports. There is, however, a possibility that the directors
may determine that some changes to these policies are necessary when preparing
the full annual financial statements for the first time in accordance with those
IFRSs adopted for use by the European Union. This is because, as explained in
note 6, the IFRS standards and IFRIC interpretations that will be applicable as
30 June 2006 are not known with certainty as the time of preparing this interim
financial information.
The accounting policies are consistent with those that the directors intend to
use in the next financial statements.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
'Review of interim financial information' issued by the Auditing Practices Board
for use in the United Kingdom. A review consists principally of making enquiries
of management and applying analytical procedures to the financial information
and underlying financial data, and based thereon, assessing whether the
accounting policies have been applied. A review excludes audit procedures such
as tests of controls and verification of assets, liabilities and transactions.
It is substantially less in scope than an audit performed in accordance with
International Standards on Auditing (UK and Ireland) and therefore provides a
lower level of assurance than an audit. Accordingly we do not express an audit
opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 December 2005.
Ernst & Young LLP
Leeds
6 March 2006
TEESLAND PLC
GROUP INCOME STATEMENT FOR THE SIX MONTHS
ENDED 31 DECEMBER 2005
(Unaudited) Six months As As
Restated Restated
Six months Year
to 31.12.05 to 31.12.04 to 30.06.05
Notes #000 #000 #000
Revenue 1 12,565 5,175 16,770
-------------------------------------------
Administrative expenses before
amortisation (10,917) (5,021) (14,286)
Amortisation expense (1,048) (373) (1,421)
-------------------------------------------
Total administrative expenses (11,965) (5,394) (15,707)
Other operating income 916 361 1,488
-------------------------------------------
Group operating profit 1 1,516 142 2,551
-------------------------------------------
Share of pre tax profit/(losses) from
associates and joint ventures 2,192 (428) 669
Share of associate's and joint
ventures' tax (736) 151 (270)
-------------------------------------------
Share of post tax profit / (losses)
from associates and joint ventures
accounted for using the equity
method 1,456 (277) 399
-------------------------------------------
Total operating profit/(loss) 2,972 (135) 2,950
Income from other non-current asset
investments 305 64 107
Finance costs (362) (86) (306)
Finance revenue 2 172 553
-------------------------------------------
(55) 150 354
-------------------------------------------
Profit before taxation 1 2,917 15 3,304
Tax expense (437) (95) (559)
-------------------------------------------
Profit/(loss) for the period 1 2,480 (80) 2,745
============================================================================================
Attributable to:
Equity shareholders of the parent 4 2,265 (128) 2,728
Minority interest 215 48 17
-------------------------------------------
2,480 (80) 2,745
============================================================================================
Earnings per share
Basic and diluted earnings per share 4 1.87 pence (0.16) pence 2.73 pence
Adjusted earnings per share
(pre amortisation expense) 4 2.47 pence 0.17 pence 3.73 pence
Dividend per share
Paid 1.75 pence 1.23 pence 0.967 pence
Dividends paid during the period were #2,123,000 (6 months to December 2004:
#965,000 and year to June 2005: #965,000). Dividends proposed during the period
were #nil (6 months to December 2004: #nil and year to June 2005: #2,123,000).
TEESLAND PLC
GROUP BALANCE SHEET Restated Restated
At 31 DECEMBER 2005 As at As at As at
(Unaudited) 31.12.05 31.12.04 30.06.05
Notes #000 #000 #000
ASSETS
Non-current assets
Intangible assets 3 51,188 51,664 51,961
Property, plant and equipment 982 832 784
Financial assets 9,877 4,208 8,808
Investments accounted for using
the equity method 2,712 3,028 3,082
-------------------------------
64,759 59,732 64,635
-------------------------------
Current assets
Trade and other receivables 7,667 7,957 10,655
Property developments in progress 4,243 1,300 2,932
Financial assets 12,311 5,026 3,000
Cash and cash equivalents 502 9,854 201
-------------------------------
24,723 24,137 16,788
-------------------------------
Non current assets held for sale 3,396 1,814 3,236
-------------------------------
Total assets 92,878 85,683 84,659
-------------------------------
LIABILITIES
Non-current liabilities
Financial liabilities (6,905) (7,688) (7,008)
Deferred tax (4,376) (4,574) (4,478)
-------------------------------
(11,281) (12,262) (11,486)
-------------------------------
Current liabilities
Trade and other payables (3,969) (7,687) (4,904)
Income tax (995) (396) (301)
Deferred tax (225) (628) (443)
Financial liabilities (10,051) (1,563) (1,503)
-------------------------------
(15,240) (10,274) (7,151)
-------------------------------
-------------------------------
Total liabilities (26,521) (22,536) (18,637)
-------------------------------
-------------------------------
Net assets 66,357 63,147 66,022
===============================
CAPITAL AND RESERVES
Equity share capital 1,213 1,213 1,213
Share premium account 52,454 52,389 52,395
Available for sale reserve 67 - 77
Currency translation reserve 11 9 29
Retained earnings 12,411 9,454 12,264
-------------------------------
Teesland plc group shareholders' equity 66,156 63,065 65,978
Minority interest 201 82 44
-------------------------------
Total equity 66,357 63,147 66,022
===============================
TEESLAND PLC
GROUP CASH FLOW STATEMENT FOR THE SIX MONTHS
ENDED 31 DECEMBER 2005
(Unaudited)
As
Restated As
Six Six Restated
months to months to Year to
31.12.05 31.12.04 30.06.05
#000 #000 #000
OPERATING ACTIVITIES
Group operating profit 1,516 142 2,551
Adjusted for:
Decrease/(increase) in trade and other receivables 2,485 (1,462) (5,856)
(Decrease) / increase in trade and other payables (1,720) 134 (2,500)
Depreciation of property, plant and equipment 145 108 322
Amortisation of intangible assets 1,048 373 1,421
Sale of joint ventures 2,950 - -
Purchase of non current assets held for sale - (4,663) (4,663)
Sale of non current assets held for sale - - 1,800
Purchase of developments in progress (1,312) (1,300) (3,419)
--------------------------------
Cash flows from operations 5,112 (6,668) (10,344)
Taxation paid (280) (403) (805)
--------------------------------
Net cash flow from operating activities 4,832 (7,071) (11,149)
--------------------------------
INVESTING ACTIVITIES
Investments in funds repaid - 2,069 2,069
Income from non current asset investments 308 64 107
Purchases of property, plant and equipment (343) (205) (380)
Interest received - 240 268
Payments to acquire investments (1,712) (837) (7,036)
Sale of subsidiary undertakings - - 2,544
Purchase of subsidiary undertakings (274) (7,646) (8,050)
Loans to warehouse funds (8,084) - -
--------------------------------
Net cash flow from investing activities (10,105) (6,315) (10,478)
--------------------------------
FINANCING ACTIVITIES
Proceeds from issue of share capital - 11,743 11,646
Interest paid (248) (108) (326)
Repayments of borrowings (4,179) (739) (739)
New borrowings 3,679 - -
Dividends paid (2,123) (965) (965)
--------------------------------
Net cash flow from financing activities (2,871) 9,931 9,616
--------------------------------
Net decrease in cash and cash equivalents (8,144) (3,455) (12,011)
Cash and cash equivalents at beginning of the period 201 12,212 12,212
--------------------------------
Cash and cash equivalents at end of period (7,943) 8,757 201
================================
TEESLAND PLC
GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE FOR THE
SIX MONTHS ENDED 31 DECEMBER 2005
(Unaudited)
As
Restated As
Six Six Restated
months to months to Year to
31.12.05 31.12.04 30.06.05
#000 #000 #000
Profit/ (loss) for the period 2,480 (80) 2,745
Available for sale reserve movements (15) - 110
Tax effect of the above 5 - (33)
Exchange differences on retranslation of
foreign operations (18) 9 29
--------------------------------
2,452 (71) 2,851
Attributable to:
Equity shareholders of the parent 2,237 (119) 2,834
Minority interest 215 48 17
--------------------------------
2,452 (71) 2,851
--------------------------------
TEESLAND PLC
1. Segmental information
At 31 December 2005 the Group operates in one principal area of activity, that of
integrated property, fund and asset management. The Group operates in two geographic
markets; the United Kingdom and the rest of Europe.
As
Restated As
Six Six Restated
months to months to Year to
31.12.05 31.12.04 30.06.05
#000 #000 #000
Revenue:
United Kingdom 8,701 4,363 12,531
Rest of Europe 3,864 812 4,239
--------------------------------
Revenue 12,565 5,175 16,770
--------------------------------
Group operating profit:
United Kingdom 719 345 2,177
Rest of Europe 797 (203) 374
--------------------------------
Group operating profit 1,516 142 2,551
--------------------------------
Finance (cost)/revenue (55) 150 354
Share of results of associates
and joint ventures, post tax: 1,456 (277) 399
--------------------------------
Profit before taxation 2,917 15 3,304
--------------------------------
Tax expense (437) (95) (559)
--------------------------------
Profit/(loss) for the period 2,480 (80) 2,745
--------------------------------
2. Reconciliation of opening reserves
#000
Retained earnings to June 2004 (as previously reported under UK GAAP) 9,594
IFRS adjustment - Dividends (a) 965
IFRS adjustment - Profit share (a) (3)
--------
Restated retained earnings at 30 June 2004 10,556
========
(a) Under IAS 10 "Events after the balance sheet date", dividends payable and
receivable (as profit shares from launched funds) are recognized when they are
approved. The dividend and profit share were approved and paid after 30 June
2004.
3. Intangible assets As at As at As at
31.12.05 31.12.04 30.06.05
#000 #000 #000
Brands 4,876 5,081 4,978
Database 351 365 358
Contracts to manage funds 10,619 12,496 11,557
Goodwill 35,342 33,722 35,068
--------------------------------
Net book value 51,188 51,664 51,961
================================
4. Earnings per share
The calculation of earnings per share is based on the following weighted
average number of shares:
Six months Six months Year
to 31.12.05 to 31.12.04 to 30.06.05
Number of Number of Number of
shares shares shares
----------------------------------------------
121,315,744 78,717,258 99,841,444
==============================================
Issued share capital for the above periods has been weighted to reflect the
date the shares were issued.
Reconciliation of the calculation of the basic earnings per share to the
adjusted earnings per share
Six months Six months Year
to 31.12.05 to 31.12.04 to 30.06.05
#'000 #'000 #'000
----------------------------------------------
Profit/(loss) after tax and minority
interest used to calculate basic
earnings per share 2,265 (128) 2,728
Amortisation of intangible assets 1,048 373 1,421
Deferred tax on amortisation (314) (112) (426)
----------------------------------------------
Profits before amortisation,
net of tax,used to calculate
adjusted earnings per share 2,999 133 3,723
==============================================
5. Summary of significant accounting policies
(a) Basis of preparation
The financial information in this statement does not constitute statutory
accounts within the meaning of Section 240 of the Companies Act 1985. The
statutory accounts for the year ended 30 June 2005, on which the auditors have
given an unqualified audit report, have been filed with the Registrar of
Companies.
The interim results were approved by the Board on 6 March 2006 and the interim
statement, which is available for inspection at the Company's
Registered Office, will be sent to Shareholders before the end of March 2006.
These consolidated interim financial statements of Teesland plc are for the half
year ended 31 December 2005. They have been prepared in accordance with the
accounting policies listed below, and are covered by IFRS1 'First-Time Adoption
of IFRS', because they are part of the period covered by the Group's first IFRS
financial statements for the year ending 30 June 2006. These interim financial
statements have been prepared using policies in accordance with those IFRS
standards issued and effective or issued and early adopted as at the time of
preparing these statements, except for IAS 34 'Interim Financial Reporting'.
The IFRS standards and IFRIC interpretations that will be applicable at 30 June
2006 are not known with certainty at the time of preparing these interim
financial statements.
The policies set out below have been consistently applied to all periods
presented. Teesland plc's consolidated financial statements were prepared in
accordance with UK Generally Accepted Accounting Principles (GAAP) until
30 June 2005. UK GAAP differs in some areas from IFRS. In preparing Teesland
plc's 2005 consolidated interim financial statements, management has amended
certain accounting methods applied in the UK GAAP financial statements to comply
with IFRS. The comparative figures in respect of 31 December 2004 and 30 June
2005 have been restated to reflect these adjustments. Reconciliations and
descriptions of the effect of the transition from UK GAAP to IFRS on the Group's
income statement, balance sheet and cash flow statement are provided in Note 2.
The consolidated interim financial statements are presented in sterling and all
values are rounded to the nearest thousand (#000) except where otherwise
indicated.
(b) Basis of consolidation
The consolidated financial statements comprise the financial statements of
Teesland plc and the entities it controlled as at 31 December 2005, 31 December
2004 and 30 June 2005. The results of subsidiaries prepared for the same
reporting year as the parent company are included in these consolidated
financial statements, using consistent accounting policies. Adjustments are
made to bring into line any dissimilar accounting policies that may exist.
All intercompany balances and transactions, including unrealised profits
arising from intra-group transactions, have been eliminated in full.
Subsidiaries are consolidated from the date on which control is transferred to
the Group and cease to be consolidated from the date on which control is
transferred out of the Group. Where there is a change of control of a
subsidiary, the consolidated financial statements include the results for the
part of the reporting year during which Teesland plc has control.
Control comprises the power to govern the financial and operating policies of
the investee so as to obtain benefit from its activities and is achieved through
direct or indirect ownership of voting rights; currently exercisable or
convertible potential voting rights; or by way of contractual agreement. The
Group has taken the exemption under IFRS 1 not to retrospectively apply IFRS 3
and restate business combinations prior to 1 July 2004, the Group's date of
transition to IFRS.
Minority interests represent the portion of profit or loss and net assets in
subsidiaries that is not held by the Group and is presented separately within
equity in the consolidated balance sheet, separately from the parent
shareholders' equity.
(c) Foreign currency translation
The functional and presentational currency of Teesland plc is British Pounds
Sterling. Transactions in foreign currencies are initially recorded in the
functional currency by applying the spot exchange rate ruling at the date of
the transaction. Monetary assets and liabilities denominated in foreign
currencies are retranslated at the functional currency rate of exchange ruling
at the balance sheet date. All differences are taken to the consolidated income
statement. Non-monetary items that are measured in terms of historical cost in
a foreign currency are translated using the exchange rate as at the date of the
initial transaction. Non-monetary items measured at fair value in a foreign
currency are translated using the exchange rates at the date when the fair
value was determined.
The functional currency of the overseas subsidiaries is the Euro. As at the
reporting date, the assets and liabilities of these overseas subsidiaries are
translated into sterling at the rate of exchange ruling at the balance sheet
date and their income statements are translated at the weighted average
exchange rates for the period. The exchange differences arising on the
retranslation are taken directly to a separate component of equity described
as the currency translation reserve. On disposal of an overseas subsidiary,
the cumulative amount recognised in equity relating to that particular overseas
operation is recognised in the income statement.
The Group has taken advantage of the exemption from calculating the cumulative
translation differences of net assets of foreign subsidiaries held in reserves
at the date of transition.
(d) Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation
and any impairment losses. Such costs include costs directly attributable to
making the asset capable of operating as intended. Depreciation is provided at
rates calculated to write off cost of each asset on a straight-line basis over
the estimated useful life as follows:
Computer and office equipment, fixtures and fittings 3 to 5 years
Leasehold improvements life of the lease
Useful economic lives, depreciation methods and residual values are reviewed
annually. Impairment losses are recognised in the income statement.
(e) Goodwill
Business combinations on or after 1 July 2004 are accounted for under IFRS 3
using the purchase method. Any excess of the cost of the business combinations
over the Group's interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities is recognised in the balance sheet as
goodwill and is not amortised. To the extent that the net fair value of the
acquired entity's identifiable assets, liabilities and contingent liabilities
is greater than the cost of the investment, a gain is recognised immediately
in the income statement. Goodwill recognised as an asset as at 30 June 2004 is
recorded at its carrying value amount under UK GAAP and is not amortised. Any
goodwill asset arising on the acquisition of the equity accounted entities is
included within the cost of those entities.
After initial recognition, goodwill is stated at cost less any accumulated
impairment loss with the carrying value being reviewed for impairment, at least
annually and whenever events or changes in circumstances indicate that the
carrying value may be impaired.
For the purpose of impairment testing, goodwill is allocated to the related
cash generated units monitored by management, usually at business segment level
or statutory level as the case may be. Where the recoverable amount of the cash
generating unit is less than its carrying amount, including goodwill, an
impairment loss is recognised in the income statement.
The carrying amount of goodwill allocated to a cash generating unit is taken
into account when determining the gain or loss on disposal of the unit, or of
an operation within it.
(f) Intangible assets
Intangible assets are carried at cost less accumulated amortisation and
accumulated impairment losses.
An intangible asset acquired as part of a business combination is recognised
outside goodwill if the asset is separable or arises from contractual or other
legal rights and its fair value can be measured reliably. Expenditure on
internally developed intangible assets, excluding development costs, is taken
to the income statement in the year in which it is incurred.
Intangible assets are amortised on a straight line basis over their expected
useful lives as follows:
Intangible Estimated useful life
Brands 25 years
Database 25 years
Contracts to manage funds Term of Contract
Goodwill Indefinite
(g) Impairment of assets
For intangible assets with indefinite lives, impairment tests are preformed at
least annually. For these and all other assets, the carrying values are reviewed
for impairment when events or changes in circumstances indicate the carrying
value may not be recoverable. If any such indication exists, and where the
carrying values exceed the estimated recoverable amount, the assets are written
down to their recoverable amount.
The recoverable amount is the greater of fair value less costs to sell and value
in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to
the asset.
(h) Investments
(i) Investments in launched funds
Other investments include minority investments in launched funds and are
accounted for as available for sale financial assets.
Available for sale financial assets are those non-derivative financial assets
that are designated as such or are not classified as any other type of financial
asset. After initial recognition available for sale financial assets are
measured at fair value, where it can be reliably measured, with gains or losses
being recognised as a separate component of equity (available for sale reserve)
until the investment is derecognised or until the investment is determined to
be impaired at which time the cumulative gain or loss previously reported in
equity is included in the income statement.
The fair value of quoted investments is determined by reference to bid prices
at the close of business on the balance sheet date. Where the fair value
cannot be reliably measured is held at carrying amount.
The IFRS 1 exemption from restating comparatives has not been taken by the
company. Income from these investments as profit shares are shown as "income
from non-current asset investments" within the income statement.
(ii) Investments in warehoused funds
A jointly owned "warehoused fund" is the means by which the Group acquires
stocks of properties with the intention to either sell as a portfolio or launch
these into an investment vehicle in which the company typically holds a
minority stake.
Interest income from loans to warehoused investment funds is recognised as other
operating income.
(iii) Interest in joint ventures
The Group has interests in joint ventures which are jointly controlled entities.
A joint venture is a contractual arrangement whereby two or more parties
undertake an economic activity that is subject to joint control, and a jointly
controlled entity is a joint venture that involves the establishment of a
separate entity in which each venturer has an interest. The Group recognises
its interest in the joint ventures using the equity method of accounting. Under
the equity method, the interest in the joint venture is carried in the balance
sheet at cost, plus post-acquisition changes in the Group's share of its net
assets, less distributions received and less any impairment in value of
individual investments. The group ceases to use the equity method on the date
from which it no longer has joint control over, or significant influence in,
the joint venture.
The financial statements of the joint ventures are not all prepared to the same
financial year end, however quarterly and interim accounts are prepared.
Adjustments are made to bring into line any dissimilar accounting policies
that may exist.
(iv) Interest in associates
The Group's interests in its associates being those entities over which it has
significant influence and which are neither subsidiaries nor joint ventures are
accounted for using the equity method of accounting.
Under the equity method, the investment in an associate is carried in the
balance sheet at cost plus post-acquisition changes in the Group's share of net
assets of the associate, less distributions received and less any impairment in
the value of individual investments. The Group income statement reflects the
share of the associate's results after tax. The Group statement of recognised
income and expense reflects the Group's share of any income and expense
recognised by the associate outside profit and loss.
Any goodwill arising on the acquisition of an associate, representing the
excess of the cost of the investment compared to the Group's share of the net
fair value of the associate's identifiable assets, liabilities and contingent
liabilities, is included in the carrying amount of the associate and is not
amortised. To the extent that the net fair value of the associate's
identifiable assets, liabilities and contingent liabilities is greater than the
cost of the investment, a gain is recognised and added to the Group's share of
associated profit or loss in the period in which the investment is acquired.
(i) Non current assets held for sale
Assets or disposal Group's that are classified as held for sale are carried at
the lower of carrying amount and fair value less costs to sell and are not
depreciated. The applied accounting policies are also based on the Group's
adoption of IFRS 5 'Non-current assets held for sale and discontinued
operations' retrospectively from the date of transition to IFRS.
Investments in warehoused funds are accounted for as non current assets "held
for sale" when it is available for immediate sale in its present condition and
it is highly probable that the fund will be sold or launched within 12 months
of the period end. If the warehoused fund will not be sold or launched within
12 months of the period end, they continue to be disclosed in the usual way,
as a subsidiary, associate or joint venture depending upon the level of control
exercised over the entity.
(j) Investment properties
In accordance with IAS 40 "Investment properties", both long leasehold and
freehold properties are accounted for as investment properties. The investment
properties are generally held by the warehoused funds, which are accounted for
as subsidiaries, joint ventures or associates, as appropriate.
Investment properties are initially recognised at cost, being the fair value of
the consideration given including acquisition costs associated with the
investment property.
After initial recognition, investment properties are accounted for using the
cost model in accordance with IAS 16 "Property, plant and equipment" other
than those that are accounted for as assets held for sale.
(k) Trade and other receivables
Trade and other receivables, which generally have 30 day terms, are recognised
and carried at original invoice amount less an allowance for any uncollectible
amounts. An estimate for doubtful debts is made. Bad debts are written off when
identified.
(l) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and in
hand. For the purpose of the consolidated cash flow statement, cash and cash
equivalents consist of cash and cash equivalents as defined above, net of
outstanding bank overdrafts.
(m) Interest bearing loans and borrowings
All loans and borrowings are initially recognised at fair value less directly
attributable transaction costs.
After initial recognition, interest bearing loans and borrowings are
subsequently measured at amortised cost using the effective interest method.
Gains and losses arising on the repurchase, settlement or otherwise
cancellation of such liabilities are recognised respectively in finance revenue
and finance costs.
(n) Provisions
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation. If the
effect of the time value of money is material, provisions are determined by
discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and, where appropriate,
the risks specific to the liability.
(o) Loans and receivables
Loans and receivables included in trade and other receivables in the balance
sheet are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. Such assets are carried at amortised
cost using the effective interest method. Gains and losses are recognised in
income when the loans and receivables are derecognised or impaired, as well
as through the amortisation process.
(p) Pensions
The Group operates defined contribution pension plans. Payments to defined
contribution pension plans are charged as an expense to the income statement
as incurred when the related employee service is rendered. The Group has no
further legal or constructive payment obligations once the contributions have
been made.
(q) Leases
Leases where the lessor retains substantially all the risks and benefits of
ownership of the assets are classified as operating leases. Operating lease
payments, including incentives, are recognised as an expense in the income
statement on a straight-line basis over the lease term.
(r) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the Group and the revenue can be reliably measured.
Revenue is measured at the fair value of the consideration received excluding
VAT. The following criteria must also be met before revenue is recognised:
Rendering of Services
---------------------
Commissions and fees excluding VAT arise from fund asset property and project
management. Recurring fees are recognised on an accruals basis. Additional
variable performance fees are recognised upon completion of the performance
period or in line with fulfilment of obligations under the contract.
Interest income
---------------
Interest income is recognised on an accruals basis. Interest income from loans
to warehoused investment funds is recognised as other operating income.
Dividend income
---------------
Dividend income (profit shares from investments in launched funds) is
recognised when the Group's right to receive payment is established.
Sale of property
----------------
Profits from the sale of property is recognised when the significant risks and
rewards of ownership of property have passed to the buyer, which is on legal
completion. Such profits are classified as part of other operating income.
Rental income
-------------
Rental income arising from operating leases on the investment properties,
within joint ventures and associates, is accounted for on a straight line basis
over the lease term.
(s) Segmental reporting
The Directors are of the opinion that the Group is engaged in a single segment
of business, being that of integrated, fund and asset management services. It
operates in two geographic markets the United Kingdom and the rest of Europe.
Operating profit is stated before profit share income from other non current
asset investments.
(t) Income taxes
Current tax assets and liabilities are measured at the amount expected to be
recovered from, or paid to, the taxation authorities, based on tax rates and
laws that are enacted or substantively enacted by the balance sheet date.
Deferred income tax is recognised on all temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the
financial statements, with the following exceptions:
- where the temporary difference arises from the initial recognition of
goodwill or of an asset or liability in a transaction that is not a business
combination and that at the time of the transaction affects neither accounting
nor taxable profit or loss;
- in respect of taxable temporary differences associated with investments in
subsidiaries, associates and joint ventures, where the timing of the reversal
of the temporary differences can be controlled and it is probable that the
temporary difference will not reverse in the foreseeable future; and
- deferred tax assets are recognised only to the extent that it is probable
that the taxable profit will be available against which the deductible temporary
differences, carried forward tax credits or tax losses can be utilised.
Deferred income tax assets and liabilities are measured on an undiscounted
basis at the tax rates that are expected to apply when the related asset is
realised or liability is settled, based on tax rates and laws enacted or
substantively enacted at the balance sheet date.
Income tax is charged or credited directly to equity if it relates to items
that are credited or charged to equity. Otherwise income tax is recognised in
the income statement.
(u) Dividend distributions
Final dividend distributions to the Company's shareholders is recognised as a
liability in the Group's financial statements in the period in which the
dividends are approved by the Company's shareholders. Interim dividends are
recognised in the period in which they are paid.
(v) Property developments in progress
Property developments in progress, are stated at the lower of cost and
recoverable amount. 'Cost' comprises of purchase cost, associated legal and
professional costs, and costs of improvements. Recoverable amount is based on
estimated selling price less all further costs to disposal.
6. Transition to International Financial Reporting Standards
6.1 RECONCILIATION OF THE GROUP INCOME STATEMENT FOR THE SIX MONTHS ENDED
31 DECEMBER 2004
(Unaudited)
Effect of transition to IFRS
UK GAAP IFRS
Six As Restated
Months to Six Months
31.12.04 (a) (b) (c) (d) to 31.12.04
#000 #'000 #'000 #'000 #'000 #000
Revenue 5,175 - - - - 5,175
-----------------------------------------------------------------
Administrative expenses
before amortisation (5,021) - - - - (5,021)
Amortisation expense (575) 575 (373) - - (373)
-----------------------------------------------------------------
Total administrative
expenses (5,596) 575 (373) - - (5,394)
Other operating income 358 - - - 3 361
-----------------------------------------------------------------
Group operating profit (63) 575 (373) - 3 142
Share of pre tax profits/
(losses) from associates
and joint ventures 203 - - (631) - (428)
Share of associate's and
joint ventures' tax (61) - - 212 - 151
-----------------------------------------------------------------
Share of post tax profit/
(losses) from associates
and joint ventures accounted
for using the equity method 142 - - (419) - (277)
Total operating profit/(loss) 79 575 (373) (419) 3 (135)
Income from other non-current
asset investments 64 - - - - 64
Finance costs (86) - - - - (86)
Finance revenue 172 - - - - 172
-----------------------------------------------------------------
150 - - - - 150
Profit before taxation 229 575 (373) (419) 3 15
Tax expense (207) - 112 - - (95)
-----------------------------------------------------------------
Profit/(loss) for the period 22 575 (261) (419) 3 (80)
============================================================================================
Attributable to:
Equity shareholders of
the parent (26) 575 (261) (419) 3 (128)
Minority interest 48 - - - - 48
-----------------------------------------------------------------
22 575 (261) (419) 3 (80)
============================================================================================
Basic and diluted earnings
per share (0.03) pence (0.16) pence
Adjusted earnings per
share (pre amortisation
expense) 0.7 pence 0.17 pence
(a) Goodwill - Under IFRS 3 "Business combinations", goodwill is no longer
amortised. Instead it is subject to an annual impairment review. This results in
a reversal of the #575,000 amortisation in the six months ended 31 December
2004.
(b) Amortisation - Under IFRS 3 there is a requirement to separately identify
the various intangible parts of goodwill and account for them individually. This
results in an amortisation charge of #373,000, and the tax credit thereon of
#112,000.
(c) Warehoused Vehicles - Under UK GAAP Teesland were exempt from consolidating
warehoused vehicles as they were held for the short term. This meant that
investments were carried at cost. There is no such exemption under IFRS. All
such vehicles meet the definitions of associates and joint ventures and are
accounted for using the equity method. This means Teesland recognise their share
of results and net assets.
(d) Returns from co-investments - Under IAS 18 "Revenue", dividends receivable,
being profit shares from co-investments in launched fund vehicles, may only be
accrued in the accounts once they are formally approved by the distributing
entity. This results in a reversal of #3,000.
6.2 RECONCILIATION OF THE GROUP INCOME STATEMENT FOR YEAR ENDED 30 JUNE 2005
(Unaudited)
Effect of transition to IFRS
IFRS
UK GAAP As Restated
Year to Year to
30.06.05 (a) (b) (c) (d) 30.06.05
#000 #'000 #'000 #'000 #'000 #000
Revenue 16,770 - - - - 16,770
-----------------------------------------------------------
Administrative expenses
before amortisation (14,286) - - - - (14,286)
Amortisation expense (1,801) 1,801 (1,421) - - (1,421)
-----------------------------------------------------------
Total administrative expenses (16,087) 1,801 (1,421) - - (15,707)
Other operating income 1,488 - - - - 1,488
-----------------------------------------------------------
Group operating profit 2,171 1,801 (1,421) - - 2,551
Share of pre tax profits/
(losses) from associates
and joint ventures 928 - - (259) - 669
Share of associate's and
joint ventures' tax (279) - - 9 - (270)
-----------------------------------------------------------
Share of post tax profit/
(losses) from associates
and joint ventures accounted
for using the equity method 649 - - (250) - 399
-----------------------------------------------------------
Total operating profit 2,820 1,801 (1,421) (250) - 2,950
Income from other
non-current asset investments 161 - - - (54) 107
Finance costs (306) - - - - (306)
Finance revenue 553 - - - - 553
-----------------------------------------------------------
408 - - - (54) 354
-----------------------------------------------------------
Profit before taxation 3,228 1,801 (1,421) (250) (54) 3,304
Tax expense (1,001) - 426 - 16 (559)
-----------------------------------------------------------
Profit for the year 2,227 1,801 (995) (250) (38) 2,745
=========================================================================================
Attributable to:
Equity shareholders of
the parent 2,210 1,801 (995) (250) (38) 2,728
Minority interest 17 - - - - 17
-----------------------------------------------------------
2,227 1,801 (995) (250) (38) 2,745
=========================================================================================
Basic and diluted earnings
per share 2.21 pence 2.73 pence
Adjusted earnings per share
(pre amortisation expense) 4.02 pence 3.73 pence
(a) Goodwill - Under IFRS 3 "Business combinations", goodwill is no longer
amortised. Instead it is subject to an annual impairment review. This results in
a reversal of the #1,801,000 amortisation in the year ended 30 June 2005.
(b) Amortisation - Under IFRS 3 there is a requirement to separately identify
the various intangible parts of goodwill and account for them individually. This
results in an amortisation charge of #1,421,000, and the tax credit thereon of
#426,000.
(c) Warehoused Vehicles - Under UK GAAP Teesland were exempt from consolidating
warehoused vehicles as they were held for the short term. This meant that
investments were carried at cost. There is no such exemption under IFRS. All
such vehicles meet the definitions of associates and joint ventures and are
accounted for using the equity method. This means Teesland recognise their share
of results and net assets.
(d) Returns from co-investments - Under IAS 18 "Revenue", dividends receivable,
being profit shares from co-investments in launched fund vehicles, may only be
accrued in the accounts once they are formally approved by the distributing
entity. This results in a reversal of #54,000.
6.3 RECONCILIATION OF THE 31 DECEMBER 2004 GROUP BALANCE SHEET
(Unaudited) Effect of transition to IFRS
Effect of transition to IFRS
As
UK Restated
GAAP IFRS
As at As at
31.12.04 (a) (b) (c) (d) (e) 31.12.04
#000 #'000 #'000 #'000 #'000 #'000 #000
ASSETS
Non-current assets
Intangible assets 46,185 575 (373) - 5,277 - 51,664
Property, plant and
equipment 832 - - - - - 832
Financial assets 4,208 - - - - - 4,208
Investments accounted for
using the equity method 629 - - - - 2,399 3,028
---------------------------------------------------------------
51,854 575 (373) - 5,277 2,399 59,732
---------------------------------------------------------------
Current assets
Trade and other receivables 16,302 - - - - (8,345) 7,957
Property developments in
progress 2,613 - - - - (1,313) 1,300
Financial assets - - - (419) - 5,445 5,026
Cash and cash equivalents 9,854 - - - - - 9,854
---------------------------------------------------------------
28,769 - - (419) - (4,213) 24,137
---------------------------------------------------------------
Non current assets held
for sale - - - - - 1,814 1,814
---------------------------------------------------------------
Total assets 80,623 575 (373) (419) 5,277 - 85,683
---------------------------------------------------------------
LIABILITIES
Non-current liabilities
Financial liabilities (7,688) - - - - - (7,688)
Deferred tax (37) - - - (4,537) - (4,574)
---------------------------------------------------------------
(7,725) - - - (4,537) - (12,262)
---------------------------------------------------------------
Current liabilities
Trade and other payables (7,687) - - - - - (7,687)
Income tax (396) - - - - - (396)
Deferred tax - - 112 - (740) - (628)
Financial liabilities (1,563) - - - - - (1,563)
---------------------------------------------------------------
(9,646) - 112 - (740) - (10,274)
---------------------------------------------------------------
---------------------------------------------------------------
Total liabilities (17,371) - 112 - (5,277) - (22,536)
---------------------------------------------------------------
---------------------------------------------------------------
Net assets 63,252 575 (261) (419) - - 63,147
===============================================================
CAPITAL AND RESERVES
Equity share capital 1,213 - - - - - 1,213
Share premium account 52,389 - - - - - 52,389
Currency translation reserve 9 - - - - - 9
Retained earnings 9,559 575 (261) (419) - - 9,454
---------------------------------------------------------------
63,170 575 (261) (419) - - 63,065
---------------------------------------------------------------
Teesland plc Group
shareholders' equity
Minority interest 82 - - - - - 82
---------------------------------------------------------------
Total equity 63,252 575 (261) (419) - - 63,147
===============================================================
(a) Goodwill - Under IFRS 3 "Business combinations", goodwill is no longer
amortised. Instead it is subject to an annual impairment review. This results in
a reversal of the #575,000 amortisation in the six months ended 31 December
2004.
(b) Amortisation - Under IFRS 3 there is a requirement to separately identify
the various intangible parts of goodwill and account for them individually. This
results in an amortisation charge of #373,000, and the tax credit thereon of
#112,000.
(c) Warehoused Vehicles - Under UK GAAP Teesland were exempt from consolidating
warehoused vehicles as they were held for the short term. This meant that
investments were carried at cost. There is no such exemption under IFRS. All
such vehicles meet the definitions of associates and joint ventures and are
accounted for using the equity method. This adjustment reduces Teesland's
investment to its share of results and net assets. Certain of these assets meet
the criteria for classification as non current assets held for sale.
(d) Deferred Tax - Under IAS 12 "Income taxes", deferred tax is provided on all
taxable temporary differences that includes those arising from business
combinations. A #5,495,000 adjustment to goodwill results from the recognition
of deferred tax on all intangible assets except goodwill. This is amortised
through tax expense in the income statement along with the related intangible
amortisation.
Also, unrecognised deferred tax assets arising from losses acquired in business
combinations subsequently realised, are retrospectively adjusted against
goodwill. This amounts to #218,000.
(e) Reclassification of investments in warehoused funds - Under UK GAAP
investments in warehoused vehicles were classified as current asset investments.
Certain of these assets meet the criteria for classification as non current
assets held for sale
6.4 RECONCILIATION OF THE 30 JUNE 2005 GROUP
BALANCE SHEET
(Unaudited) Effect of transition to IFRS
As
UK Restated
GAAP IFRS
30.06.05 (a) (b) (c) (d) (e) (f) (g) (h) 30.06.05
#'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000
ASSETS
Non-current assets
Intangible assets 46,304 - 1,801 (1,421) - - 5,277 - - 51,961
Property, plant and
equipment 784 - - - - - - - - 784
Financial assets 8,698 - - - - - - - 110 8,808
Investments accounted
for using the equity
method 802 - - - (250) - - 2,530 - 3,082
----------------------------------------------------------------------------
56,588 - 1,801 (1,421) (250) - 5,277 2,530 110 64,635
----------------------------------------------------------------------------
Current assets
Trade and other
receivables 22,407 - - - - (54) - (11,698) - 10,655
Property developments
in progress - - - - - - - 2,932 - 2,932
Financial assets - - - - - - - 3,000 - 3,000
Cash and cash equivalents 201 - - - - - - - - 201
----------------------------------------------------------------------------
22,608 - - - - (54) - (5,766) - 16,788
----------------------------------------------------------------------------
Non current assets held
for sale - - - - - - - 3,236 - 3,236
----------------------------------------------------------------------------
Total assets 79,196 - 1,801 (1,421) (250) (54) 5,277 - 110 84,659
----------------------------------------------------------------------------
LIABILITIES
Non-current liabilities
Financial (7,008) - - - - - - - - (7,008)
liabilities
Deferred tax (37) - - - - - (4,441) - - (4,478)
----------------------------------------------------------------------------
(7,045) - - - - - (4,441) - - (11,486)
----------------------------------------------------------------------------
Current liabilities
Trade and other
payables (7,027) 2,123 - - - - - - - (4,904)
Income tax (317) - - - - 16 - - - (301)
Deferred tax - - - 426 - - (869) - - (443)
Financial liabilities (1,503) - - - - - - - - (1,503)
----------------------------------------------------------------------------
(8,847) 2,123 - 426 - 16 (869) - - (7,151)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total liabilities (15,892) 2,123 - 426 - 16 (5,310) - - (18,637)
----------------------------------------------------------------------------
Net assets 63,304 2,123 1,801 (995) (250) (38) (33) - 110 66,022
============================================================================
CAPITAL AND
RESERVES
Equity share capital 1,213 - - - - - - - - 1,213
Share premium account 52,395 - - - - - - - - 52,395
Available for sale
reserve - - - - - - (33) - 110 77
Currency translation
reserve 29 - - - - - - - - 29
Retained earnings 9,623 2,123 1,801 (995) (250) (38) - - - 12,264
----------------------------------------------------------------------------
Teesland plc Group
shareholders'
equity 63,260 2,123 1,801 (995) (250) (38) (33) - 110 65,978
Minority Interest 44 - - - - - - - - 44
----------------------------------------------------------------------------
Total equity 63,304 2,123 1,801 (995) (250) (38) (33) - 110 66,022
============================================================================
(a) Dividends paid - IAS 10 "Events after the balance sheet date" requires the
reversal of the 30 June 2005 final dividend proposed of #2,123,000
(b) Goodwill - Under IFRS 3 "Business combinations", goodwill is no longer
amortised. Instead it is subject to an annual impairment review. This results in
a reversal of the #1,801,000 amortisation in the year ended 30 June 2005.
(c) Amortisation - Under IFRS 3 there is a requirement to separately identify
the various intangible parts of goodwill and account for them individually. This
results in an amortisation charge of #1,421,000, and the tax credit thereon of
#426,000.
(d) Warehoused Vehicles - Under UK GAAP Teesland were exempt from consolidating
warehoused vehicles as they were held for the short term. This meant that
investments were carried at cost. There is no such exemption under IFRS. All
such vehicles meet the definitions of associates and joint ventures and are
accounted for using the equity method. This means Teesland recognise their share
of results and net assets.
(e) Returns from co-investments - Under IAS 18 "Revenue", dividends receivable
being profit shares from co-investments in launched fund vehicles, may only be
accrued in the accounts once they are formally approved by the distributing
entity. This results in a reversal of #54,000.
(f) Deferred Tax - Under IAS 12 "Income taxes", deferred tax is provided on all
taxable temporary differences that includes those arising from business
combinations. A #5,495,000 adjustment to goodwill results from the recognition
of deferred tax on all intangible assets except goodwill. This is amortised
through tax expense in the income statement along with the related intangible
amortisation.
Also, unrecognised deferred tax assets arising from losses acquired in business
combinations subsequently realised, are retrospectively adjusted against
goodwill. This amounts to #218,000.
The #33,000 relates to the tax effect of the available for sale reserve detailed
under (h) below.
(g) Reclassification of investments in warehoused funds - Under UK GAAP
investments in warehoused vehicles were classified as current asset investments.
Certain of these assets meet the criteria for classification as non current
assets held for sale.
(h) Available for sale assets - Under IAS 39 "Financial instruments", available
for sale assets are remeasured to fair value if this can be reliably measured.
Teesland's investment in Teesland Advantage Property Income Trust, a listed
fund, is remeasured in accordance to share price movements.
6.5 GROUP CASHFLOW FOR THE SIX MONTHS ENDED 31 DECEMBER 2004
(Unaudited) As
restated
UK GAAP Effect of transition to IFRS IFRS
Six months Six months
to to
31.12.04 (a) (b) (c) 31.12.04
#000 #'000 #'000 #'000 #000
OPERATING ACTIVITIES
Group operating (loss)/profit (57) 575 (373) (3) 142
Adjusted for:
Increase in trade and other
receivables (1,465) - - 3 (1,462)
Increase in trade and other payables 134 - - - 134
Depreciation of property, plant and
equipment 108 - - - 108
Amortisation of intangible assets 575 (575) 373 - 373
Purchase of non current assets
held for sale (4,663) - - - (4,663)
Purchase of developments in progress (1,300) - - - (1,300)
--------------------------------------------------
Cash flows from operations (6,668) - - - (6,668)
--------------------------------------------------
Taxation paid (403) - - - (403)
--------------------------------------------------
Net cash flow from operating
activities (7,071) - - - (7,071)
--------------------------------------------------
INVESTING ACTIVITIES
Investments in funds repaid 2,069 - - - 2,069
Income from non current asset
investments 64 - - - 64
Purchases of property, plant and
equipment (205) - - - (205)
Interest received 240 - - - 240
Payments to acquire investments (837) - - - (837)
Purchase of subsidiary undertakings (7,646) - - - (7,646)
--------------------------------------------------
Net cash flow from investing
activities (6,315) - - - (6,315)
--------------------------------------------------
FINANCING ACTIVITIES
Proceeds from issue of share capital 11,743 - - - 11,743
Interest paid (108) - - - (108)
Repayments of borrowings (739) - - - (739)
Dividends paid (965) - - - (965)
--------------------------------------------------
Net cash flow from financing activities 9,931 - - - 9,931
--------------------------------------------------
Net decrease in cash and cash
equivalents (3,455) - - - (3,455)
Cash and cash equivalents at
beginning of the period 12,212 - - - 12,212
--------------------------------------------------
Cash and cash equivalents at end
of period 8,757 - - - 8,757
==================================================
(a) Goodwill - Under IFRS 3 "Business combinations", goodwill is no longer
amortised. Instead it is subject to an annual impairment review. This results in
a reversal of the #575,000 amortisation in the six months ended 31 December
2004.
(b) Amortisation - Under IFRS 3 there is a requirement to separately identify
the various intangible parts of goodwill and account for them individually. This
results in a charge of #373,000.
(c) Returns from co-investments - Under IAS 18 "Revenue", dividends receivable,
being profit shares from co-investments in warehouse fund vehicles, may only be
accrued in the account once they are formally approved by the distributing
entity. This results in a reversal of #3,000.
6.6 GROUP CASHFLOW FOR THE YEAR
ENDED 30 JUNE 2005
(Unaudited) As
restated
UK GAAP Effect of transition to IFRS IFRS
Six months Six months
to to
30.06.05 (a) (b) (c) 30.06.05
#000 #'000 #'000 #'000 #000
OPERATING ACTIVITIES
Group operating profit 2,171 - 1,801 (1,421) 2,551
Adjusted for:
Increase in trade and other
receivables (5,910) 54 - - (5,856)
Decrease in trade and other payables (2,500) - - - (2,500)
Depreciation of property, plant and
equipment 322 - - - 322
Amortisation of intangible assets 1,801 - (1,801) 1,421 1,421
Purchase of non current assets
held for sale (4,663) - - - (4,663)
Sale of non current assets held for
sale 1,800 - - - 1,800
Purchase of developments in progress (3,419) - - - (3,419)
--------------------------------------------------
Cash flows from operations (10,398) 54 - - (10,344)
Taxation paid (805) - - - (805)
--------------------------------------------------
Net cash flow from operating
activities (11,203) 54 - - (11,149)
--------------------------------------------------
INVESTING ACTIVITIES
Investments in funds repaid 2,069 - - - 2,069
Income from non current asset
investments 161 (54) - - 107
Purchases of property, plant and
equipment (380) - - - (380)
Interest received 268 - - - 268
Payments to acquire investments (7,036) - - - (7,036)
Sale of subsidiary undertakings 2,544 - - - 2,544
Purchase of subsidiary undertakings (8,050) - - - (8,050)
--------------------------------------------------
Net cash flow from investing
activities (10,424) (54) - - (10,478)
--------------------------------------------------
FINANCING ACTIVITIES
Proceeds from issue of share capital 11,646 - - - 11,646
Interest paid (326) - - - (326)
Repayments of borrowings (739) - - - (739)
Dividends paid (965) - - - (965)
--------------------------------------------------
Net cash flow from financing
activities 9,616 - - - 9,616
--------------------------------------------------
Net decrease in cash and cash
equivalents (12,011) - - - (12,011)
Cash and cash equivalents at
beginning of the period 12,212 - - - 12,212
--------------------------------------------------
Cash and cash equivalents at end
of period 201 - - - 201
==================================================
(a) Returns from co-investments - Under IAS 18 "Revenue", dividends receivable
being profit shares from co-investments in warehouse fund vehicles, may only be
accrued in the accounts once they are formally approved by the distributing
entity. This results in a reversal of #54,000.
(b) Goodwill - Under IFRS 3 "Business combinations", goodwill is no longer
amortised. Instead it is subject to an annual impairment review. This results in
a reversal of the #1,801,000 amortisation in the six months ended 31 December
2004.
(c) Amortisation - Under IFRS 3 there is a requirement to separately identify
the various intangible parts of goodwill and account for them individually. This
results in a charge of #1,421,000.
7. The interim annoucement was approved by the directors on 6 March 2006.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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