Interim Results (3300F)

TIDMHRCO

RNS Number : 3300F

Hirco plc

14 June 2012

14 June 2012

Hirco plc

Publication of Interim Results

London - Hirco plc (AIM: HRCO), announces its Interim Results for the period ended 31 March 2012.

The Chairman's Statement, as set out within the Interim Results, is reproduced below. To view the full Interim Results (including the financial statements and notes to the accounts), please paste the following URL into the address bar of your browser.

http://www.rns-pdf.londonstockexchange.com/rns/3300F_-2012-6-13.pdf

Chairman's Statement

Dear Fellow Shareholders,

The results for the half year ended 31 March 2012 show a further decline in net assets to GBP223.6m (30 September 2011: GBP251.4).

This is disappointing and is primarily due to two factors:

-- the continuing deterioration in the Indian economic outlook which has led to considerable weakening of the Indian Rupee against the Pound (from 77.5 to 81.5 Rupees to the Pound). The restating of the September 2011 project valuation figures at March 2012 exchange rates has reduced the net assets by GBP16.8m.

-- the continued slow progress in terms of sales at the projects and with construction timelines for completion of some residential blocks being delivered up to six months later than planned. The project companies' net asset positions per the unaudited quarterly information packs provided by Hirco Developments Private Limited (HDPL) have declined by GBP13.5m from 30 September 2011.

In addition the preference dividend accruing for the half year which amounts to GBP33.3m has had to be provided against in the amount of GBP25.8m as the investment in the projects, as measured under the waterfall calculation in note 11, is insufficient to cover the full amount of this obligation. At the year end the accounting basis of the investment will be subject to a full review to determine whether the current method of accounting is still appropriate.

Whilst valuations of the projects were not carried out at the half year, our advisers, CBRE, have confirmed that there are no reasons to revise any of their valuation assumptions from those on which their September 2011 valuation was based.

The factors cited above are reflective of the disappointing performance of the Indian economy where growth rates have sharply declined, and the general lack of business confidence in Government policy and actions. A return to the growth rates of more recent years with real progress on investments in key areas of infrastructure will be critical to the success of those projects in which we are invested. Progress over this half year has been modest and we understand that no commitments have yet been made to launch the next phase of development at either site.

We remain open to discussions with our partners that fundamentally address the concerns we have and have been in intermittent dialogue with them; however there appears to be little immediate prospect of any substantial discussion. This may change when the family arbitration is settled, but we continue to have no visibility on the timing of a settlement and how it will translate into an appropriate restructuring of the Company in accordance with each party's economic interests.

About a year ago we completed a capital raise. Our objective in raising those funds was to have the wherewithal to protect our shareholders' interests and recover value in Hirco. We have now begun deploying those funds by retaining appropriate advisors and together devising a strategy that we intend will achieve our joint goals. We would expect to report more fully in the board reports on the full year results.

We are cognisant of the trust you have placed in the Board in contributing additional capital to this so far disappointing enterprise. We have undertaken substantial efforts to conserve this capital by cutting costs with recurring operating expenditures for the last six months less than GBP0.5m (2011: GBP2.4m) so well within the estimates previously given. Undoubtedly overall costs will increase as we implement our strategy, but we believe that our running costs are now appropriate.

Project Progress

Consistent with the year end report, progress continues to be modest. The following figures are extracted from the latest information packs that we have received from the developers.

 
            Total No.   Sales at     Sales at      Sales at      % sold      Average 
             of units    September    March 2012    April 2012    at April    Price/sqft 
                         2011                                     2012        at April 
                                                                              2012 
---------  ----------  -----------  ------------  ------------  ----------  ------------- 
 Chennai    2,665       1,570        1,620         1,642         62%         4,295 rupees 
---------  ----------  -----------  ------------  ------------  ----------  ------------- 
 Panvel     2,956       2,414        2,503         2,527         85%         5,053 rupees 
---------  ----------  -----------  ------------  ------------  ----------  ------------- 
 

In the six month reporting period a total of 50 units were sold at Chennai (72 units to April 2012) and 89 units were sold at Panvel (113 units to April 2012).

Projected completion of Chennai phase 1 Residential has slipped six months to March 2015. Similarly at Panvel overall residential completion is now projected for May 2015.

The two office buildings at Panvel totalling 1.9m sqft gross continue are still projected to be completed in February and May 2013. No tenants have been secured for these buildings as yet.

Further to the comment made in last year's Report and Accounts, HDPL has not provided any meaningful comment on our estimates of the surplus likely to result at the end of the first phase of development now scheduled for 2015.

The Board will undertake a detailed site visit and review of progress on all aspects of the scheme at the end of September 2012.

I look forward to keeping you updated on developments over the coming months.

David Burton

Chairman of Hirco PLC

The Interim Results will shortly be available on the Company's website in accordance with Rule 26 of the AIM Rules for Companies at: http://www.hircoplc.co.im/rule_26.html.

Contacts:

Nigel McGowan

Company Secretary

[e-mail]

Singer Capital Markets Limited

James Maxwell/Nick Donovan (Nominated Adviser)

James Waterlow (Sales)

[phone]

This information is provided by RNS

The company news service from the London Stock Exchange

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