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RNS Number:0425Q
Teesland Plc
23 September 2003
23 September 2003
PRELIMINARY RESULTS
for the period to 30 June 2003
Teesland plc ("Teesland"), the fully listed earnings based property services
company, announces preliminary results for the period from 7 August 2002 to 30
June 2003.
On 7 August 2002, Teesland merged with Semple Cochrane PLC ("Semple") and
acquired Teesland Holdings plc, a property fund and asset management business.
Immediately upon the merger with Semple, Semple was sold to a third party.
As the current and prior year results come from different companies in different
industries, they cannot be meaningfully compared and no attempt has been made to
do so.
Financial Highlights
* Turnover #5.878m *
* Group profit before tax and goodwill amortisation #2.276m *
* Pre-tax profits #1.789m *
* Adjusted earnings per share 4.91p *
* Basic earnings per share 3.44p *
* Interim dividend for 2003/04 in lieu of an interim and final dividend
for 2002/03 (subject to court approval)
* for the period from 7 August 2002 to 30 June 2003
Corporate Highlights
* Outstanding fund performance
* Acquisition of over #80m assets for funds
* Formation of Thorpe Park Limited Partnership
* Development management of 800,000 sq ft shopping centre at Frenchgate
Interchange, Doncaster
* Secured new HBOS contract for 650 tenanted properties
* Project management of 20 major schemes
Teesland provides integrated property fund and asset management services through
the:
* Creation and management of specialist property funds
* Formation of joint ventures and project based developments
* Asset management services direct to clients
* Development and project management for clients
Kevin McCabe, Chairman, commented: "Significant progress has been made towards
our aim of becoming a leading independent property fund and asset manager."
For further information, please contact:
Mickola Wilson Jeremy Carey/Marylene Guernier
Teesland plc Tavistock Communications
Tel: 020 7493 4636 Tel: 020 7920 3150
Chairman's Statement
The company's principal activity is that of integrated property fund and asset
management services.
Whilst our company is new to the London Stock Exchange, its roots stretch back
to the mid 1960s when the original Teesland Development Company Limited was
formed, initially embarking upon commercial projects in the North East of
England. Now in its fifth decade of business, Teesland is a name synonymous with
property expertise within the majority of regions throughout the United Kingdom.
Under a Court sanctioned Scheme of Arrangement dated 7th August 2002, Semple
Cochrane Plc merged with Teesland plc, a newly incorporated company, which
purchased the Fund and Asset Management business of Teesland Holdings plc,
thereafter selling all of its former interests in Semple Cochrane plc to a new
company - Semple Holdings Limited.
Results & Dividends
In this first period of trading as a publicly quoted company we realised profits
before tax and amortisation of #2.276m (in respect of the Teesland business).
Our results were in line with the forecasts made at the time of flotation.
Maiden earnings per share amount to 4.91p on an adjusted basis and 3.44p on a
basic and diluted basis.
Subject to Court approval and the availability of distributable resources an
interim dividend for 2003/04 in lieu of an interim and a final dividend for 2002
/03 is proposed. It is our aim to maintain a progressive dividend policy but
this will be dependent upon market conditions and the need in certain years to
retain capital to support co-investment in the fund and asset management
business.
Review
It is encouraging that many of the transactions referred to at the time of our
listing have made good progress.
Investment Funds managed by Teesland returned good performance for their
investors, exceeding their benchmarks and providing high returns.
During the year the Osprey Limited Partnership (Osprey) was launched as an
investment fund and successfully raised equity on two separate occasions. Osprey
now has gross assets of #129m and is targeting a total of #300m. The 53
properties currently within the Osprey portfolio consist of institutional grade
commercial assets in all sectors and across the UK market.
Thorpe Park Limited Partnership (Thorpe Park) has also been formed and is
currently in its pre-launch phase. Thorpe Park, Leeds is one of the premier
business parks for the North of England and it is our intention to market the
partnership in 2004 to raise further funds for this exceptional investment
opportunity.
Initial marketing of Frenchgate Interchange Limited Partnership (Frenchgate) has
received very positive interest from the investment market. We are seeking
investors to form a Partnership to forward purchase the Frenchgate Interchange
at Doncaster, an 800,000 sq ft regional shopping mall with a target investment
value of over #200m, which will be one of the 20 largest shopping centres in the
UK. On completion in 2006 it is intended that Teesland will manage the fund and
provide full asset management services.
The Residential fund, Oystercatcher Limited Partnership (Oystercatcher),
achieved a 26% return for 2002 on the assured tenancy portfolio as top performer
of the 12 residential funds measured by Investment Property Databank. This
performance was greatly enhanced by an investment strategy of wide geographical
spread predominantly outside the South East and London. New investment is
currently focused on the growing student accommodation sector.
The Teesland Development Management team had a busy year organising some twenty
projects from the regional offices in Edinburgh, Leeds and London. Our principal
customer remains Scarborough Property Group plc (SPG), and its various
subsidiaries and associates, which has one of the most active development
programmes in the UK. The continued expansion and volume of work being
undertaken for SPG has assisted in strengthening future cash flows for this
division of the business.
Teesland's Property Management Team, which plays an active role in the operation
and administration of much of HBOS plc's property portfolio, has recently been
expanded to include the use of our asset management skills in improving income
for the client. HBOS and Teesland have entered into a new agreement to manage
HBOS's tenanted portfolio providing a secure five year contract, good base fees
and with incentivisation arrangements permitting us to benefit from growth in
the client's income.
Teesland's inaugural year is more comprehensively described within the Joint
Chief Executives' Report.
Strategy
Teesland uses its real estate knowledge and skills in the formation and
management of indirect property investment vehicles and the provision of
specialist services for its clients. Our principal strategy is to develop and
launch investment funds and joint ventures into the property investment market.
This enables the company to earn revenue from all stages of the indirect
investment process, on launching funds, managing funds and assets, property
management and project management.
Our business plan focuses on the combination of fund and asset management skills
for the provision of long term, recurring income and the more immediate revenues
derived from development management and individual asset management.
We recognise that the build-up of fund management will take time and in the
early stages of preparing the launch of funds, costs can initially outweigh
income. However our cash flow is presently supported by asset and development
management contracts.
Board, Management and Staff
An experienced and dynamic Executive Team with specialist expertise in the fund
and asset management fields is in place including colleagues who have been with
the company for some years and more recent recruits. New board appointments -
since the establishment of Teesland plc - are Mickola Wilson as Joint Chief
Executive and David Pickard as Non Executive Director. Both individuals are well
known and respected within the property community.
Finally may I thank Co-directors, Executives and personnel at all of the
regional bases, together with our professional advisers for the efforts applied
in this inaugural year. Additionally I express my gratitude to colleagues at
HBOS for their unstinting support in assisting us to achieve our aims.
Kevin McCabe, Chairman
23 September 2003
Joint Chief Executives' Report
During the period, subsequent to Teesland becoming listed on the London Stock
Exchange in August 2002, the focus has been on delivering the programme of
existing projects and realising the business plan objectives.
The year has seen the strengthening of the in-house expertise with the newly
constituted team focused on delivering value for our clients and shareholders.
Thus, Teesland continues to be well placed to provide national coverage and
in-depth knowledge of individual markets from our three offices located in
London, Edinburgh and Leeds.
Our fundamental aim is to build the business through expanding both the funds
under management and the provision of specialist property skills for our
clients.
Property Investment - an era of change
The property investment markets have undergone major structural changes
following the weak performance of the equity markets. Property, previously the
poor relation to the other major asset classes, has provided strong returns
throughout the downturn in the performance of other assets. In future, property
is expected to take its place as part of any balanced investment portfolio.
The UK property investment market was formerly dominated by institutional direct
investment and listed property companies, today indirect property investment
vehicles, such as pooled funds and limited partnerships form a significant part
of the market.
A recent report by ABN AMRO / IPD (Investment Property Databank) records that
there are now over 118 UK limited partnerships with an estimated asset value of
#14 billion. Allowing for the new generation of specialist property unit trusts,
the report estimates the value of the indirect sector at over #20 billion or 6%
of the total UK property investment market and 15% of the conventional
institutional market.
Furthermore, the low interest rate environment combined with the relatively high
income from property has led to a rapid growth in demand for property from
private investors. However, there are major barriers to entry for investors into
the commercial property sector, other than through property company shares,
because of the size of individual investments and the expertise needed to
acquire and manage property. These factors make indirect investment vehicles the
ideal medium for the private investor and the last year has seen the launch of
over 20 new funds, a number of which are aimed specifically at this market.
Similarly, institutional investors have been changing their approach to
investing in the property sector by using third parties for property and
specialist asset management.
Teesland has a major competitive advantage in this field because of its
experience in creating and managing independent vehicles and the strength of our
team's specialist property skills.
Fund Management
Teesland was established by combining Equity Partnerships with specialist
property teams of the former Teesland Group. Equity Partnerships was founded by
Paul Oliver in 1996 specialising in the launch and management of indirect
property vehicles. Earlier in the year Mickola Wilson was recruited from MWB to
strengthen the Board and bring her longstanding fund management skills to the
team.
To date the executive of Teesland and its subsidiary, Equity Partnerships, have
been responsible for launching and managing over #1.75 billion of Limited
Partnerships in the UK, representing over 10% of the market.
The aim of the company is to exploit the opportunity to create new indirect
property investment vehicles, targeted at both the institutional and private
investors. Teesland has an early advantage in the current market with an
established reputation for the development of indirect vehicles and a proven
track record in fund performance.
Over the last twelve months the foundations have been laid for the company's
future expansion with the launch of the Osprey Fund and the excellent
performance for the year by funds managed in-house, as shown below.
Funds Under Total Return
Management Year to Dec 02
Jun 03
Osprey #128m 17.5%* Geared
Oystercatcher #35m 26% Ungeared
Frenchgate #72m 19% Ungeared
* Total return relates to period of ownership.
Co-investment
Equity Partnerships Capital Ventures was set up so that,Teesland could be a
co-investor in the in-house funds. At present the company invests in Osprey and
Thorpe Park and has participated in the attractive collective returns for these
investments. Further capital for co-investment will be required with the
expansion of the number of funds, which will be partially sourced from recycling
of existing capital and retained profits.
Property and Asset Management Team
Teesland provides property and asset management services for its in-house funds
and external clients and has recently been awarded a new contract by HBOS to
manage its 650 property tenanted portfolio. This innovative form of contract
enables Teesland to apply its asset management skills to improve the income from
this portfolio. The fees for this contract are based on an annual fee plus
participation in the growth in net income.
Our asset management team has specific expertise in retail and leisure property.
For six years we have applied our skills to Princes Square, Glasgow, refocusing
the tenant profile from speciality to lifestyle, remodelling the catering and
undertaking a first phase extension to the centre. Similarly for our investors
in Frenchgate, Doncaster, we have substantially improved income returns and are
now embarking on a major refurbishment and extension programme. We earn annual
base asset management fees from these specialist services enhancing our return
by additional earnings from participation in development and project management
profits.
Teesland Development Management
This activity incorporates both development management and project management
services. The current workload has expanded over the last year and the team is
now involved in over 20 major projects with aggregated construction contract
values of in excess of #200 million. The majority of the projects are for the
Scarborough Group or joint ventures with either Bank of Scotland or Scarborough
as partners, but the client base is now being expanded to run projects for new
clients (eg City Point, Leeds, a development management project for Insight
Investment).
Equity Partnership Fund Management Ltd (EPFM) - Fund Operator
It has been a year of significant growth for EPFM with annual fees for operator
business rising by #161,000 to #215,000 pa. These fees derived mainly from the
launch of Osprey and transfer of FairBriar Residential Investment Partnership to
EPFM, three external funds were also added, and overall funds under management
rose by #125 million to #333 million.
The Future
It is our aim to increase funds and assets under management and to reach a
target of #500 million by 2005 by launching new funds for the existing
institutional client market and expanding the investor base by introducing
property vehicles targeted at private investors. The plans include further
closings for Osprey to bring the total assets under management up to #300
million and the growth of Oystercatcher to include investment in the student
housing market increasing the size of the fund to its target of over #100
million.
The proposed launch of the Frenchgate Interchange Limited Partnership will
provide a vehicle which will pre-commit to purchase the scheme in 2006 and will
be the foundation of a major shopping centre and leisure fund.
The acquisition of six buildings at Thorpe Park Leeds provides us with the basis
of a new fund investing in this premier park with scope for expansion in the
future.
The development management and project management team already has a major
programme of developments underway including the construction phase of
Frenchgate Interchange and schemes in Leeds, Liverpool and London.
The property and asset management team will be largely engaged in taking on the
new HBOS portfolio and the implementation of the individual asset plans aimed at
increasing the client's cash flows.
In conclusion we believe the current market provides Teesland with a full range
of exciting opportunities to create new products for investors and establish the
basis for future growth.
Paul Oliver and Mickola Wilson, Joint Chief Executives
Financial Review
Results for the year
The results for the year derive from two separate businesses, Teesland and
Semple Cochrane. The property fund and asset management business of Teesland
Holdings plc and its subsidiary companies was acquired on 7 August 2002. The
results to 7 August 2002, and those shown as comparatives from the previous year
arise from the activities of Semple Cochrane plc, who were principally
electrical engineers. These were sold at the same time as Teesland Holdings was
acquired.
As the current and prior year results come from different companies in different
industries they cannot be meaningfully compared and no attempt has been made to
do so.
Group turnover from acquired operations for the period from 7 August 2002 to 30
June 2003 was #5.878 million.
Turnover derived equally from fund and asset management and development and
project management services, with a useful proportion of this year's turnover
derived from the development management fees for the Frenchgate Interchange
shopping centre project in Doncaster. Further significant fees are due on this
project in 2003/2004 (and 2004/05), providing a strong base for next year's
turnover.
Earnings and cash flows are the principal drivers of the business and this year
has seen the Group establish a core of secure income - with over 30% of total
turnover derived from activities based on long term or recurring contracts. The
proportion of the turnover arising from contracts related to the Scarborough
Group, of which the Group Chairman Kevin McCabe is also Chairman, is currently
reducing and the business plan for next year will see it falling still further.
For the period from 7 August 2002 to 30 June 2003, profit before tax and
amortisation from the acquired operations was #2.276 million. Goodwill
amortisation was #0.487 million. After a tax charge of #0.653 million, earnings
per share were 3.44p per share, 4.91p per share before goodwill amortisation.
The taxation charge on the acquired operations was 36.5% of the profit before
tax. The high rate of taxation was a result of the goodwill amortisation charged
to the profit and loss account, which is not tax deductable.
The implementation of last year's reorganisation, as described below, created a
profit and loss account deficit on the balance sheet. We intend, subject to
shareholders approval, to apply to the court for approval to cancel the share
premium account. If this application is successful, we are proposing to pay an
interim dividend for 2003/04 in lieu of an interim and final dividend for 2002/
2003.
Acquisitions and Disposals
On 7 August 2002, by virtue of a court sanctioned scheme of arrangement, the
Company became the new holding company of Semple Cochrane plc (Semple) and
acquired Teesland Holdings plc, a property fund and asset management business.
The consideration for Teesland Holdings plc was #10 million, satisfied by the
issue of new shares in Teesland plc in exchange for the shares in Semple.
Immediately upon the acquisition of Semple, its entire business with net
liabilities of #25.009m was sold to a third party for #1, producing a 'book'
gain on sale of #25.009 million.
Teesland invested #7.75 million in Semple from debt provided by Bank of Scotland
of this debt #2.75 million was converted by the Bank into ordinary share capital
of Teesland and #5.0m remains outstanding as a long term loan.
At the same time as the reorganisation, #4 million less expenses was raised by
way of a placing and offer for subscription of shares to provide Teesland with
funds for co - investment in limited partnerships and to repay a facility drawn
to fund an existing co-investment.
Treasury Activities and Policies
The Group's treasury operations are co-ordinated and managed in accordance with
policies and procedures approved by the Board. They are designed to reduce the
financial risks faced by the Group, which primarily relate to funding and
liquidity, and interest rate exposure.
The Group's financial instruments comprise borrowings, cash and liquid
resources, and other items including trade debtors and trade creditors that
arise directly from its operations. The Group does not engage in trades of a
speculative nature.
Further details of financial instruments are provided in note 18 to the
accounts. The Board reviews and agrees policies for managing each of the
above-mentioned risks, which are summarised below.
Interest rate risk
The Group finances its operations through retained profits. The only Group
borrowings relate to the #5 million loan created from the Semple Cochrane
transaction. This loan is repayable in ten equal annual instalments commencing
30 June 2005. The loan carries interest at 0% until 30 June 2004 and at 2% per
annum thereafter.
Liquidity risk
The Group prepares a 2 year funding plan annually, for approval by the Board
which sets out the Group's expected financing requirements for the next 2 years.
Borrowing
The Group retains substantial short term facilities with its bankers which have
not been utilised. These facilities are in place in order to provide additional
working capital for the core business of the group if it is required.
Stephen McBride, Group Financial Director
Group Profit and loss account
for the year ended 30 June 2003
Acquired Discontinued
Businesses Businesses
Teesland Semple
Holdings plc Cochrane plc
period from period Total Total
07.08.02 from 01.07.02 year ended year ended
to 30.06.03 to 07.08.02 30.06.03 30.06.02
Notes #'000 #'000 #'000 #'000
Turnover
Group and share of
Joint Venture
turnover 5,878 2,216 8,094 41,017
Less: Share of Joint
Venture Turnover (107) - (107) -
--------------------------------------------------------------------------------------
Turnover - group
Acquisitions 5,771 - 5,771 -
Discontinued
operations - 2,216 2,216 41,017
--------------------------------------------------------------------------------------
Total group turnover 5,771 2,216 7,987 41,017
Administrative
Expenses - group (3,550) (3,087) (6,637) (55,050)
--------------------------------------------------------------------------------------
Operating Profit /
(Loss)
Acquisitions 2,221 - 2,221 -
Discontinued
operations - (871) (871) (14,033)
--------------------------------------------------------------------------------------
Group operating
profit
/ (loss)
before goodwill
amortisation 2,221 (871) 1,350 (14,033)
Goodwill amortisation (487) - (487) (434)
--------------------------------------------------------------------------------------
Group operating
profit
/ (loss)
after goodwill
amortisation 1,734 (871) 863 (14,467)
Share of operating
profit in Joint
Venture 1 - 1 -
-------------------------------------------------------------------------------------
Total operating
profit
/ (loss)
after goodwill
amortisation 1,735 (871) 864 (14,467)
Reorganisation costs - - - (1,959)
--------------------------------------------------------------------------------------
Operating profit /
(loss) 1,735 (871) 864 (16,426)
Profit/(loss) on
disposal of
subsidiary
undertakings - 25,009 25,009 (446)
--------------------------------------------------------------------------------------
Profit / (Loss) on
ordinary
activities before
interest & tax 1,735 24,138 25,873 (16,872)
Interest payable
and similar
charges
Group 2 54 (207) (153) (2,078)
-----------------------------------------------------------------------------------
Profit / (Loss) on
ordinary activities
before taxation 1,789 23,931 25,720 (18,950)
Taxation on profit
on
ordinary activities 3 (653) - (653) 154
------------------------------------------------------------------------------------
Profit / (Loss) for
the financial
period
transferred to /
(from) reserves 1,136 23,931 25,067 (18,796)
===================================================================================
Basic & diluted
earnings per share
/(loss per share) 4 3.44 p 72.49 p 75.93 p (#13.74)
Adjusted earnings
per
share (pre
goodwill) 4 4.91 p 72.49 p 77.40 p (#13.42)
====================================================================================
Group Statement of Total Recognised Gains & Losses
Year ended Year ended
30.06.03 30.06.02
#'000 #'000
--------------------------------------------------------------------------------
Profit / (Loss) for the financial period
Group 25,067 (18,796)
Currency translation differences on
foreign currency net investments - (29)
--------------------------------------------------------------------------------
Total recognised gains & (losses) 25,067 (18,825)
================================================================================
Group Balance Sheet
As at 30 June 2003
As at As at
30.06.03 30.06.02
Notes #'000 #'000 #'000 #'000
---------------------------------------------------------------------------------------
Fixed assets
Intangible assets 10,136 -
Tangible assets 94 634
Investments 2,000 -
Investments in joint ventures:
Share of Gross Assets 2
Share of Gross Liabilities (1)
---------
1 -
-------- --------
Total fixed assets 12,231 634
-------- --------
Current assets
Stocks - 2,579
Debtors 2,902 4,878
Cash at bank 1,710 -
--------- ---------
4,612 7,457
--------- ---------
Creditors - amounts falling due
within one year (1,840) (23,760)
--------- ---------
Net current assets / (liabilities) 2,772 (16,303)
-------- --------
Total assets less current liabilities 15,003 (15,669)
-------- --------
Creditors - amounts falling due
after more than one year (5,000) (8,239)
-------- --------
Net assets / (liabilities) 10,003 (23,908)
======== ========
Capital & reserves
Called up equity share capital 355 137
Share premium account 16,460 -
Capital reserve - 257
Merger reserve - 8,533
Profit & loss account (6,812) (44,492)
-------- --------
Equity Shareholders' funds / (deficit) 10,003 (35,565)
Non equity minority interest - 11,657
-------- --------
10,003 (23,908)
======== ========
Group Cash Flow Statement
for the year ended 30 June 2003
Teesland Semple
Holdings plc Cochrane plc
period from period from Total Year
07.08.02 01.07.02
to 30.06.03 to 07.08.02 to 30.06.03 to 31.06.02
Notes #'000 #'000 #'000 #000
Net cash inflow /
(outflow) from
operating
activities 834 (1,187) (353) (8,551)
Net cash inflow /
(outflow) from
returns on
investments &
servicing
of finance
Bank interest paid (85) (207) (292)
Interest received 138 138
---------- ---------- --------
53 (207) (154) (1,360)
---------- ---------- --------
Tax (paid) /
received (304) - (304) 154
Net cash (outflow)
from capital
expenditure &
financial
investment
Payments to acquire
fixed assets (97) - (97)
Purchase of fixed
asset investments (1,000) - (1,000)
---------- ---------- --------
(1,097) - (1,097) 84
---------- ---------- --------
Net cash (outflow) /
inflow from
acquisitions &
disposals
Net overdraft
disposed - 13,684 13,684
Cost of acquisition (50) - (50)
Net cash acquired (1,545) - (1,545)
---------- ---------- --------
(1,595) 13,684 12,089 (40)
---------- ---------- --------
Cash (outflow) /
inflow before
financing (2,109) 12,290 10,181 (9,713)
Financing
Issue of ordinary
share capital 3,819 - 3,819
New borrowings 7,750 - 7,750
Purchase of
preference shares (7,750) - (7,750)
---------- ---------- --------
3,819 - 3,819 (160)
---------- ---------- -------- --------
Increase /
(decrease) in cash
for 1,710 12,290 14,000 (9,873)
the period
---------- ---------- -------- --------
Notes to the Accounts
1. Accounting Policies
The principal accounting policies are summarised below. They have all been
applied consistently throughout the current year.
Basis of Preparation
The audited accounts for the year ended 30 June 2003 have been prepared under
the historical cost convention, and in accordance with applicable United Kingdom
accounting standards.
Financial Reporting Standard No. 19 - 'Deferred Tax' (FRS 19) has been adopted
for the first time by the Group in this report. It has had no material effect on
the prior year results.
Under Court approval dated 7th August 2002 Semple Cochrane plc, implemented a
scheme of arrangement under Section 425 of the Companies Act 1985 which inter
alia introduced Teesland plc as a new holding company for the Group; acquired
Teesland Holdings plc via an Offer for Subscription of new shares; and approved
the disposal by Teesland plc of Semple Cochrane plc. Details of the scheme
arrangement are contained in the circulars to shareholders dated 31 May 2002.
Although Teesland plc was incorporated on 30 April 2002, merger accounting has
been adopted, in accordance with Financial Reporting Standard No.6 -
'Acquisitions and Mergers', to account for the transaction as if Teesland plc
owned Semple Cochrane plc from 1 July 2001. Teesland plc acquired Teesland
Holdings plc on 7 August 2002 via an issue of shares and disposed of Semple
Cochrane plc and its subsidiaries on that date, and this transaction was
accounted for under the acquisition accounting method.
Consequently these results contain the trading results of Teesland Holdings plc,
and subsidiaries from 7 August 2002 until 30 June 2003 and the results of Semple
Cochrane plc from 1 July 2002 until 7 August 2002. The comparative results
contain the trading of Semple Cochrane plc from 1 July 2001 to 30 June 2002.
Teesland plc did not have any transactions from incorporation on 30 April 2002
to 30 June 2002.
Basis of Consolidation
The group financial statements consolidate the financial statements of the
company and its subsidiary undertakings drawn up to 30 June each year. The
results of subsidiaries acquired or soldare consolidated for the periods from or
to the date on which control passed. Acquisitions are accounted for under the
acquisition method.
Joint Ventures
Entities in which the group holds an interest on a long term basis and are
jointly controlled by the group, and one or more other ventures under a
contractual agreement are treated as Joint Ventures.In the group financial
statements, joint ventures are accounted for using gross equity method.
Intangible Assets - Goodwill
Goodwill arising on the acquisition of subsidiary undertakings and businesses,
representing any excess of the fair value of the consideration given over the
fair value of the identifiable assets and liabilities acquired, is capitalised
and written off on a straight line basis over its useful economic life, which is
20 years. Goodwill is reviewed for impairment at the end of the first financial
year following the acquisition, and in other periods if events or changes in
circumstances indicate that the carrying value may not be recoverable.
Tangible Fixed Assets
Tangible Fixed Assets are stated at cost or valuation, net of depreciation and
any provision for impairment. Depreciation is provided on all tangible fixed
assets, other than investment properties and freehold land, at rates calculated
to write off the cost or valuation, less estimated residual value or each asset
on a straight line basis over its expected useful life, as follows:
Computer and office equipment, fixtures and fittings 33%
Investments
Except as stated below, fixed asset investments are shown at cost less provision
for impairment. Current asset investments are stated at the lower of cost and
net realisable value.
Taxation
Current tax, including UK corporation tax and foreign tax, is provided at
amounts expected to be paid (or recovered) using the tax rates and laws that
have been enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events that result in an obligation to pay more tax in the future or a right to
pay less tax in the future have occurred at the balance sheet date. Timing
differences are differences between the group's taxable profits and its results
as stated in the financial statements that arise from the inclusion of gains and
losses in tax assessments in periods different from those in which they are
recognised in the financial statements.
A net deferred tax asset is regarded as recoverable and therefore recognised
only when, on the basis of all available evidence, it can be regarded as more
likely than not that there will be suitable taxable profits from which the
future reversal of the underlying timing differences can be deducted.
Deferred tax is measured at the average tax rates that are expected to apply in
the periods in which the timing differences are expected to reverse, based on
tax rates and laws that have been enacted or substantially enacted by the
balance sheet date. Deferred tax is measured on a non-discounted basis.
Turnover
Turnover represents commission, fees, and profit shares receivable, excluding
VAT. Turnover is recognised when services have been provided and customer
acceptance is obtained.
Pensions
The group pays pension contributions into a stakeholder pension scheme
administered by a third party and into private pension schemes. For defined
contribution schemes the amount charged to the profit and loss account in
respect of pension costs and other post-retirement benefits is the contributions
payable in the year. Differences between contributions payable in the year and
contributions actually paid are shown as either accruals or prepayments in the
balance sheet.
Leases
Rentals under operating leases are charged on a straight-line basis over the
lease term, even if the payments are not made on such a basis. Benefits received
and receivable as an incentive to sign an operating lease are similarly spread
on a straight-line basis over the lease term, except where the period to the
review date on which the rent is first expected to be adjusted to the prevailing
market rate is shorter than the full lease term, in which case the shorter
period is used.
2. Finance charges (net)
Interest payable and receivable 2003 2002
Acquired Discontinued Total
#000 #000 #000 #000
Bank loans and overdrafts (84) (211) (295) (1,410)
Finance leases and hire purchase
contracts - - - (1)
Other interest - - - (718)
--------- --------- -------- --------
(84) (211) (295) (2,129)
Interest receivable 138 4 142 51
Interest relating to Joint - - - -
Ventures --------- --------- -------- --------
54 (207) (153) (2,078)
--------- --------- -------- --------
3. Tax on profit on ordinary activities
The tax charge comprises:
2003 2002
#000 #000
Current tax
UK corporation tax 651 (154)
---------- -----------
Prior year under provision 2 -
Amount relating to Joint Venture - -
---------- -----------
Total deferred tax - -
---------- -----------
Total tax on profit on ordinary activities 653 (154)
---------- -----------
The differences between the total current tax shown above and the amount
calculated by applying the standard rate of UK corporation tax to the profit
before tax is as follows:
2003 2002
#000 #000
Profit / (loss) on ordinary activities before tax 25,720 (18,950)
Less: share of associates' profit before tax (1) -
----------- -----------
Group profit on ordinary activities before tax 25,719 (18,950)
----------- -----------
Tax on group profit on ordinary activities at standard
UK corporation tax rate of 30% 7,716 (5,685)
Effects of:
Disposal of discontinued business (7,179) -
Goodwill 145 -
Movement in deferred tax not recognised (87) -
Potential future benefits not recognised - 3,704
Permanent differences 56 1,981
Adjustments to tax charge in respect of previous periods 2 (154)
----------- -----------
Group current tax charge / (credit) for period 653 (154)
----------- -----------
Factors which may affect future tax charges
Future tax charges may be reduced by the recognition of a deferred tax asset of
#40,000 (2002: #127,000), which has not been recognised in the accounts on the
basis that the criteria for recognition are not met.
4. Earnings per share
The calculations of earnings per share are based on the following profits and
numbers of shares.
Basic
--------------------------------------------------------------------------------
2003 2003 2002
Acquired Discontinued
#000 #000 #000
Profit / (loss) after tax used to
calculate basic EPS 1,136 23,931 (18,796)
Amortisation of goodwill 487 - 434
---------- ---------- ---------
Profit / (loss) before amortisation,
after tax used
to calculate adjusted EPS 1,623 23,931 (18,362)
---------- ---------- ---------
Number of shares 2003 2003 2002
Weighted average number of shares:
For basic and diluted earnings
per share 33,010,342 33,010,342 1,368,000
---------- ---------- ---------
5. Notes to consolidated cash flow statement
(a) Reconciliation of operating profit to net cash inflow from operating
activities
Teesland
Holdings plc Semple
period from Cochrane plc
07.08.02 period Year ended
to 30.06.03 to 07.08.02 Total 30.06.02
#000 #000 #000 #000
Operating Profit / (loss) 1,735 (871) 864 (14,467)
Cost of fundamental
restructure - - - (1,959)
Depreciation charges 26 35 61 537
Impairment of tangible fixed
assets - - - 841
Amortisation of goodwill 487 - 487 434
Impairment of goodwill - - - 6,703
Profit on the sale of fixed
assets - - - (96)
(Increase)/decrease in work
in progress - 445 445 5,607
(Increase)/decrease in
debtors (541) 10 (531) (2,135)
Increase /(decrease) in
creditors (873) (806) (1,679) (4,016)
---------------------------------------------------------------------------------
Net cash inflow/(outflow)
from
operating
activities 834 (1,187) (353) (8,551)
=================================================================================
(b) Reconciliation of net cash flows to net debt
Year ended Year ended
30 June 2003 30 June 2002
#000 #000
Increase/(Decrease) in cash 14,000 (9,873)
Cash inflow from increase in debt (7,750) 160
Conversion of debt to ordinary shares 2,750 -
Write off of capitalised professional fees - (718)
Loans dispensed with subsidiaries 11,997 559
Exchange movements - 124
--------- ---------
20,997 (9,748)
Net debt at beginning of period (24,287) (14,539)
--------- ---------
Net debt at end of period (3,290) (24,287)
========= =========
(c) Analysis of changes in net debt
At 01.07.02 Movement Disposals At 30.06.03
#000 #000 (excluding cash #000
& overdraft)
#000
Net cash (12,290) 14,000 - 1,710
Debt
Due within one year - - - -
Due after one year (8,233) (5,000) 8,233 (5,000)
Deferred loan (3,692) - 3,692 -
Finance Leases (72) - 72 -
--------- ---------- ---------- ----------
Net debt (24,287) 9,000 11,997 (3,290)
========= ========== ========== ==========
Debt due after one year comprises a term loan of #5.0m repayable in ten equal
annual instalments commencing 30 June 2005. The loan carries interest at 0%
until 30 June 2004 and at 2% per annum thereafter.
6. Annual report
These are not the group's statutory accounts. An unqualified audit report on the
full financial statements has been signed.
The annual report will be sent to shareholders on or before the 3 October 2003,
and will be available from the company registered office: Forsyth House, 93
George Street, Edinburgh EH2 3ES.
7. Announcement
The Preliminary Announcement was approved by the Directors on 22 September 2003.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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