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| Date/Time | Headline | Source |
|---|---|---|
| 10-03-10 | RNS |
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This news article is displayed preformatted as it may contain results tables
RNS Number : 3362I
Terrace Hill Group PLC
10 March 2010
10 March 2010
Terrace Hill Group plc
("Terrace Hill", the "Company" or the "Group")
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 OCTOBER 2009
Terrace Hill Group plc (AIM: THG), a leading UK property development and investment group, today announces its preliminary results for the year to 31 October 2009.
Financial highlights
· Triple Net Asset Value per share of 40.8p (30 April 2009: 40.4p, 31 October 2008: 53.4p)
· Adjusted Diluted Net Asset Value per share of 44.6p (30 April 2009: 44.4p, 31 October 2008: 58.0p)
· Adjusted pre-tax profit (before property provisions) £2.6 million (31 October 2008: £1.0 million)
· £335.6 million1 of debt refinanced since October 2008
· Balance sheet loan to value gearing of 59.4%2
Operational highlights
· Completed or contracted sales of £56.1 million
· Contracted lettings with annual rent roll of £3.6 million
· Lettings and sales of 293,275 sq ft
· Forward funding and sale agreement of Sainsbury's foodstore in Bishop Auckland
· Completion of sale of Helston site to Sainsbury's
· Pre-let of 38,500 sq ft office to Middlesbrough Primary Care Trust, now under construction
· Planning consent gained for 135,000 sq ft of offices and 33 apartments in Howick Place, Victoria, SW1
Post period events
· Kean House office scheme in Covent Garden, London sold in December 2009 for £16.0 million
· Detailed planning consent obtained for 71 residential units at Carluke, Scotland
· Announcement today of exchange of contracts for the acquisition of a six acre site in Sunderland and a nine acre site in Whitchurch, Shropshire. These are intended for development into supermarkets and negotiations for pre-lets are currently underway.
Commenting, Robert Adair, Chairman of Terrace Hill, said: "We were very encouraged to see some stability and positive sentiment returning to the market in the second half of the year and, more so, by the fact that this has continued into 2010. We took advantage of this renewed confidence through the sale of Kean House and the forward funding and sale of our Bishop Auckland Sainsbury's development. This trend can be clearly seen by comparing the first half results, which show the impact of the recessionary economic environment at the time, with a more positive second half, during which yields began to harden and we were able to make a small pre-tax profit. We successfully refinanced around £335 million of debt since 31 October 2008, and have noticed a definite increase in appetite for lending from the banks, even for development.
"Our commercial focus remains firmly on pre-let developments and we are particularly strong in the foodstore sector, where we concluded three deals during the year, with a further two announced this morning. We are also making solid progress with our strategic landbank in Scotland, with planning permission for 374 units now consented and applications for around 650 more being processed. Our residential investment portfolio continues to perform ahead of its IPD benchmark and we are now actively considering the launch of a residential fund which has the potential to provide further scope to create value."
For further information:
Terrace Hill Group plc Tel: +44 (0)20 7631 1666
Robert Adair, Chairman
Philip Leech, Chief Executive
Jon Austen, Group Finance Director
Oriel Securities (Nominated Adviser) Tel: +44 (0)20 7710 7600
Tom Durie/Mark Young/Gareth Price
Financial Dynamics Tel: +44 (0)20 7831 3113
Stephanie Highett/Richard Sunderland
Rachel Drysdale/Olivia Goodhall
terracehill@fd.com
1 includes 100% of associate and joint venture undertaking debt re-financed
2 calculated by reference to adjusted NAV
Chairman's statement
I am pleased to report our financial results for the year ended 31 October 2009. The period saw some stability returning to the economy and a renewed confidence in the prime commercial property investment markets. We took advantage of this with the sale of Kean House, a completed office development in Covent Garden, where we achieved an attractive price, and with the institutional forward funding of our Sainsbury's foodstore scheme at Bishop Auckland.
The improved market has resulted in the yields of our commercial property portfolio hardening and values improving in the second half of the year. A similar stabilising of values has also been seen in our residential portfolio.
On the banking side we have also continued to be successful in re-financing our debt and extending due dates for repayment.
Notwithstanding our operational successes our results were affected by the significant falls in the market value of our assets in the first half of the year. Our adjusted diluted NAV (ADNAV, as defined by EPRA) has decreased by 22.7% to 44.6 pence per share (31 October 2008: 58.0 pence per share) and our triple NAV (TNAV, as defined by EPRA) has fallen by 23.5% to 40.8 pence per share (31 October 2008: 53.4 pence per share). The TNAV takes account of any valuation movements above book value of assets held as trading stock as well as contingent tax on prospective gains and other fair value adjustments.
Our dividend policy has been to vary the amount of our dividend in line with the movement in our TNAV. Given the fall in TNAV since 31 October 2008, the Board has decided to continue the suspension of dividend payments which was announced with our interim results. We keep this policy under review and wish to resume a progressive dividend policy when market conditions improve.
The Group's loss before tax for the year, stated after accounting for changes in the value of our investment properties and reductions in the value of our trading stock, was £26.7 million. Excluding these, we made a profit before tax in the year of £2.6 million, compared with £1.0 million in the year ended 31 October 2008, calculated on the same basis. The business review contains further analyses of our results and a reconciliation of these amounts.
All Group and joint venture and associated undertaking debt that required re-financing in the period has been agreed. The banking climate has been challenging and I am pleased with the achievements we have made and that our bank financings are on a sound footing.
We are very focused on our cash flow and have achieved a number of operational efficiencies during the last year, with reductions in headcount and salary reductions for senior staff and directors. We continue to exercise tight control over our discretionary expenditure.
Property overview
In the commercial arena our focus on new business has been on pre-let developments, in particular foodstores, where we have concluded three deals during the financial year, and offices let to strong covenants such as the Primary Care Trust pre-letting at Teesside. We have an extensive pipeline of similar developments which should provide highly profitable low-risk returns over a sustained period.
Within our existing commercial portfolio we have managed to conclude a number of lettings despite a difficult occupational market as well as selling Kean House at a price above its April 2009 valuation.
Our residential investment portfolios fell in value by 4% in the first half but recovered by 1.5% at the year end. I am pleased with the consistently high occupancy levels and with rental levels which have remained constant over the period. I now believe that there is scope for value growth. We are now actively considering launching a residential property fund.
During the course of the year we decided to focus our residential development activity on site assembly and planning gain and away from housebuilding in Scotland. As a result of this decision we were able to reduce our central overhead by £0.5 million on an annualised basis and focus investment in our core areas of commercial development and residential investment. The landbank in Scotland now extends to 175 acres with the potential to accommodate over 1,200 units. We continue to work towards obtaining planning consent for development over the remaining un-consented sites. I envisage that these will either be sold or developed in joint venture with other housebuilders.
Outlook
I view the future with considerably more confidence than I did a year ago. In particular, I am pleased our TNAV increased in the second half of the year and we have been successful in creating value through development. I look forward to further TNAV growth and am confident that we can generate strong returns for our shareholders over the medium term.
Robert F M Adair
Chairman
10 March 2010
Business review - operations
Commercial property strategy
During the second half of the year we began to see improving sentiment in the investment markets which translated fairly quickly into an increase in prices paid for well let properties in good locations. This has not been supported by increased occupier demand in most areas but there is now a feeling that the worst of rental falls may be over in some markets, allowing investors to value assets with more certainty.
This improvement has allowed us to sell some completed schemes more quickly and at better values than we had expected. It has also opened up an equity funding market for pre-let property to good covenants which is aiding our new development programme.
Our pre-let development strategy can be divided into the two defined areas of foodstores and offices.
Foodstores
Demand from the major foodstore operators has continued unabated and we have been successful in concluding three foodstore development transactions during the year:
· In September we completed the sale of our 5.25 acre site to Sainsbury's at Helston in Cornwall having obtained planning consent for a 55,750 sq ft unit.
· During the summer we obtained all the necessary outstanding approvals for our 92,333 sq ft Sainsbury's foodstore at Bishop Auckland in Co. Durham. Subsequently, we entered into a forward funding and sale agreement with Aviva Investors Pensions Limited to develop the scheme. The sale price reflects a net initial yield to the investor of 5.7%.
· At Heaton in North Manchester we acquired, in a joint venture, a retail park adjacent to an existing Sainsbury's store. Both sites will be redeveloped in their entirety by Sainsbury's with the benefit of planning and vacant possession.
Our focus on this sector means that we now have a substantial pipeline of new foodstore development opportunities which will mature over the next few years.
Offices
Although the office occupational market has been weak, there are a number of occupiers who are unable to satisfy their requirements through existing stock. This is particularly true in the regions outside London where we have seen demand for pre-lets coming from occupiers with strong covenants from a variety of sectors.
· A recent example of this has been our pre-letting of a 38,500 sq ft office building on Teesside to the Middlesbrough Primary Care Trust, where the tenant has contracted to enter into a 15-year lease without breaks.
Our network of regional offices gives us insight into these requirements and we are now working on a pipeline of similar deals across the UK.
The portfolio
Commercial property
Despite a difficult occupational market we have let and sold further space within our portfolio of completed developments and made progress with our early stage developments. In other areas we have advanced and improved planning consents.
· We sold Kean House, our multi-let office development in Covent Garden, to a UK institution for £16.0 million representing an initial yield of 6.4%.
· At Quantum 1 in Maidenhead we let 26,000 sq ft to Compuware at £25 per sq ft which, in addition to the earlier letting to Biogen, means that this scheme is now 78% let.
· AFEX took the entire fifth floor at 129 Wilton Road, Victoria, for a 10-year term at an initial rent of £45.00 per sq ft.
· Six new lettings were achieved at Brampton Business Park in Eastbourne leaving only a single unit of 3,500 sq ft available. Four units were also sold to investors.
· At Brabazon Business Park, Filton in North Bristol, Sovereign Housing completed the purchase of 8,000 sq ft for their own occupation and a further 3,000 sq ft was let to Merlin Claims Management.
· There was increased letting activity at Canningford House in Bristol city centre and this property is now 90% let.
· At Howick Place in Victoria we have now won consent for a scheme comprising 135,000 sq ft of offices and 33 apartments. It is envisaged that a development start will be made during the course of this year, with particular focus on the date of completion to maximise its impact within the wider economic recovery.
Residential investment
In the second half of the year we have seen average values stabilise across our portfolios. The actual movements in value depend very much on the geographical location of the properties, but small rises in the values of our assets in London and the South East, where we have a 50% weighting, have offset declines elsewhere. In addition, through active management, we have maintained healthy occupational rates at consistently steady rental levels.
We are cautious about the immediate outlook for the value of residential property but, over the medium-term, we foresee a steady return to capital growth and good opportunities for us to trade parts of our portfolios as well as acquire new, attractively priced properties.
Strategic land
Following our decision to suspend new housebuilding in Scotland, we have been concentrating on maximising value from the landbank through the planning process. During the period, we have obtained planning for 20 units at our three acre site at Fenwick and for 71 units at our 12 acre site in Carluke. We are expecting to win a new consent at Kilmarnock during the early part of 2010.
The total landbank in Scotland now extends to 175 acres with the potential to accommodate over 1,200 residential units and we envisage that these sites will either be sold or developed in joint venture with other housebuilders.
Business review - finance
Financial results and net asset value
The Group's NAV fell by 24.1% in the year to 31 October 2009 to £78.2 million (36.9 pence per share) from £103.0 million (48.6 pence per share) at 31 October 2008 and our adjusted NAV (equivalent to that defined by EPRA) fell by 22.7% to £94.8 million (44.6 pence per share) from £124.2 million (58.0 pence per share) at 31 October 2008.
The fall in our adjusted NAV was caused principally by the reduction in the carrying value of our properties and by the reduction in the market value of those properties held on the balance sheet at the lower of cost and market value. Other factors resulting in movements in the adjusted NAV are set out below:
· fall of 12.3 pence per share in the value of properties reflected in our balance sheet;
· fall of 1.7 pence per share in the value above cost of our trading properties;
· rise of 0.8 pence per share arising from trading activity.
The Group's NAV and adjusted NAV increased by 1% since 30 April 2009, reflecting the hardening of values in the second half of the year and increased trading activity in that period.
The Group's TNAV, which takes into account any tax payable on profits arising if all the Group's properties were sold at the values used for our adjusted NAV, the write off of goodwill and other fair value adjustments, fell by 23.5% to £86.8 million (40.8 pence per share) from the £114.3 million (53.4 pence per share) at 31 October 2008.
Calculation of ADNAV and TNAV (unaudited)
31 October 2009 31 October 2008
Number Number
of shares Pence per of shares Pence per
£'000 000s share £'000 000s share
Audited net asset value 78,156 211,971 36.9 103,047 211,971 48.6
Revaluation of property held 16,633 20,324
as current assets
Shares to be issued under the 12 595 41 2,038
LTIP
Deferred taxation in respect - 781
of investment properties
Adjusted diluted net asset 94,801 212,566 44.6 124,193 214,009 58.0
value
Decrease % (22.7)% (39.8)%
unrealised gains and (4,657) (6,472)
availability of tax losses
Goodwill (3,336) (3,456)
Triple net asset value 86,808 212,566 40.8 114,265 214,009 53.4
Decrease % (23.5)% (36.2)%
Income statement
Revenue for the year is below that recorded in 2008 due largely to lower commercial development activity as a consequence of the economic situation. Commercial property development transactions in the period include the sale of the property in Helston to Sainsbury's and part of the sale of the Bishop Auckland property to Aviva Investors. The Group earned £6.6 million in rental income (2008: £4.8 million), an increase of 37.5%, while development management fees and other income generated £1.3 million (2008: £2.6 million), a decrease of 50.0%. Sales revenue of £4.4 million on the sale of houses is also included in revenue.
The year has been characterised by a radical shift in the rate of change in the valuation of our properties, reflecting movement in the underlying property market. This is particularly evident in a comparison of the movements in our property values, wherever held, for the first half year with the same for the second half year. The income statement, as required by accounting standards, includes movements in the carrying value of our investment and trading properties, whether held directly or in joint venture and associated undertakings. The table below sets out the amounts included in the income statement, split between what was reflected in the first and second halves of the year.
Administrative expenses for the year were £5.2 million (2008: £6.5 million). Included within administrative expenses is a credit of £0.7 million in respect of the Group's share-based payment scheme (2008: £1.0 million credit). Ignoring this, underlying administrative expenses have reduced by £1.6 million. As noted in the Interim Report, we continue to seek ways of reducing costs while not affecting the operational effectiveness of the business. Executive directors and senior staff agreed to a reduction in their base salaries of 10%. In addition, no bonuses were paid and headcount has reduced by 12 (21%) since 31 October 2008.
Net finance costs amounted to £1.2 million (2008: £5.0 million) and reflect the cost of our Group debt. The figure for 2009 includes the reversal of £2.1 million in respect of a development funding agreement which was charged to the income statement in 2008. Ignoring these adjustments, net finance costs increased by £0.4 million (14%) during the period, reflecting the higher average net debt figures and funding costs during the year.
A consequence of all these facts is that the Group traded profitability in the second half of the year.
Our investment in joint venture and associated undertakings incurred a loss in the year of £5.6 million (2008: £12.4 million). Of the £5.6 million, £5.2 million reflects our share of the downward movement in property valuations which occurred during the period.
Adjusted profit
Year ended Year ended
31 October 2009 31 October 2008
£m £m
Reported loss before tax (26.7) (31.6)
Write downs in respect of trading properties 22.0 12.6
Revaluation of investment properties 2.1 3.8
Write downs in respect of development and investment properties
held in joint venture and associated undertakings 5.2 16.2
Adjusted profit before tax 2.6 1.0
Movements in the carrying value of our investment and trading properties included in the income statement
Six months ended Six months ended Year ended
30 April 2009 31 October 2009 31 October 2009
£m £m £m
Trading properties1 (19.5) (2.5) (22.0)
Investment properties2 (3.4) 1.3 (2.1)
Development and investment properties
held in joint venture and associated (6.8) 1.6 (5.2)
undertakings3
Total (29.7) 0.4 (29.3)
Notes:
1 included in direct costs;
2 included in loss on revaluation of investment properties; and
3 included in share of joint venture and associated undertakings post tax loss.
Balance sheet
The Group's total assets at 31 October 2009 were £204.2 million, a decrease of 12.1% on the amount reported at 31 October 2008 of £232.4 million. Net assets, after accounting for minority interests, were £78.2 million at 31 October 2009, a reduction of 24.1% compared to the equivalent figure in 2008 (£103.0 million).
Financial resources and capital management
The Group's financial resources are principally its cash balances, bank loans and overdrafts.
The Group continues to fund itself with retained cash and bank derived debt capital. This debt falls into two categories, loans secured on wholly owned assets and debt secured on assets owned by joint ventures and associated undertakings.
All Group and joint venture and associated undertaking debt that required re-financing in the period has been agreed.
The loans which have been re-financed during the year are characterised by higher interest rate margins, but with an overall funding cost remaining broadly similar due to reductions in both LIBOR and swap rates. Where these bank loans are in joint ventures they are arranged on an asset-by-asset basis, discrete from each other and with limited recourse to the Group. Where necessary, and where there is a common lender, some of the Group loan facilities have been cross collateralised in order to increase security to that lender and facilitate re-financings.
In addition to these re-financings, new development debt of £4.7 million was also negotiated during the year, reinforcing our view that development debt capital for the right pre-let opportunities is more readily available now than this time last year. This has been further evidenced by several banks, with whom we have had no previous relationship, approaching us to fund future developments.
Summary of debt position
October 2009 October 2008
Net debt £98.1m £85.8m
Net gearing 103.4% 69.1%
Net debt including share of joint venture and associated £235.3m £231.1m
undertaking debt
Total net gearing 248.2% 186.1%
Loan to value 59.4% 45.7%
Loan to value including share of joint venture and 73.1% 63.3%
associated undertaking debt
The net gearing and loan to value percentages shown above are in relation to our adjusted NAV. The majority of joint venture and associated undertaking debt is of limited recourse to the Group.
Debt expiry profile
On-balance Off-balance
sheet sheet*
£m £m
Bank loans and overdraft repayable in one year 11.7 117.6
Bank loans repayable after more than one year 91.7 19.6
Total 103.4 137.2
* Group share
At 31 October 2009, 39.3% of Group debt and 38.3% of debt in joint venture and associated undertakings was subject to interest rate hedging. Last year these figures were 16.8% and 74.8% respectively. The reason for the large change in joint venture and associated undertaking debt is that hedging expired during the year on a £208.1 million loan. The interest rate risk associated with this expiry has been actively managed and we have benefited from prevailing low LIBOR rates.
There are no loans in place measuring on an aggregated basis loan to value ratios. A number of loans have loan to value covenants based on the value of the assets secured against them and where required, these have been amended or removed entirely. Again, we believe this is further evidence of our relationship banks' continued desire to support the Group.
Summary of average loan to value ratios of Group property
October 2009 October 2008
% %
Commercial property 63.9 53.6
Residential property 72.4 71.4
Strategic land 46.6 34.3
All property 59.4 45.7
Cash is monitored using a 24-month rolling forecast and the Group, together with its joint venture and associated undertakings, have no unfunded commitments. The Group undertakes regular stress tests to determine the effects on our cash forecast of falls in value and potential capital calls on debt. The Group believes it has adequate resources to continue trading for the foreseeable future.
Dividends
The final 2008 dividend of 0.54 pence per share was paid to shareholders on 7 April 2009. Since then the Group has decided to conserve its cash and has therefore not paid an interim dividend in respect of the current year and will not recommend a final dividend. The Board hopes to resume its progressive dividend policy as soon as market conditions allow.
Philip Leech Jon Austen
Chief executive Group finance director
10 March 2010
Consolidated income statement
For the year ended 31 October 2009
Year ended Year ended
31 October 31 October
2009 2008
Notes £'000 £'000
Revenue 2 29,065 63,366
Direct costs (41,584) (67,134)
Gross loss (12,519) (3,768)
Administrative expenses (5,174) (6,499)
Loss on disposal of investment properties - (20)
Loss on revaluation of investment properties (2,141) (3,846)
Operating loss (19,834) (14,133)
Finance income 4 1,202 467
Finance costs 4 (2,423) (5,488)
Share of joint venture and associated undertakings (5,625) (12,448)
post tax loss
Loss before tax (26,680) (31,602)
Tax 6 3,135 4,327
Loss from continuing operations (23,545) (27,275)
Attributable to:
Equity holders of the parent (23,517) (27,253)
Minority interest (28) (22)
(23,545) (27,275)
Basic earnings per share 8 (11.15)p (12.90)p
Diluted earnings per share 8 (11.15)p (12.90)p
The notes below form part of this financial information.
Consolidated statement of changes in equity
For the year ended 31 October 2009
Capital Unrealised
Share Share Own redemption Merger gains and Retained Minority
capital premium shares reserve reserve losses earnings Total interest Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 October 2007 4,240 43,208 - 849 8,386 - 80,196 136,879 306 137,185
Loss for the year - - - - - - (27,253) (27,253) (22) (27,275)
Unrealised losses on
available-for-sale investments - - - - - (498) - (498) - (498)
Total recognised income
and expense for the year - - - - - (498) (27,253) (27,751) (22) (27,773)
Acquisition of minority - - - - - - - - (26) (26)
interest
Own shares - - (609) - - - - (609) - (609)
Share-based payment - - - - - - (997) (997) - (997)
Merger reserve release - - - - (1,298) - 1,298 - - -
Interim ordinary dividends - - - - - - (1,684) (1,684) - (1,684)
Final ordinary dividends - - - - - - (2,791) (2,791) - (2,791)
Balance at 31 October 2008 4,240 43,208 (609) 849 7,088 (498) 48,769 103,047 258 103,305
Loss for the year - - - - - - (23,517) (23,517) (28) (23,545)
Loss on investments transferred
to income statement on - - - - - 498 - 498 - 498
disposal
Total recognised income
and expense for the year - - - - - 498 (23,517) (23,019) (28) (23,047)
Share-based payment - - - - - - (718) (718) - (718)
Final ordinary dividends - - - - - - (1,154) (1,154) - (1,154)
Balance at 31 October 2009 4,240 43,208 (609) 849 7,088 - 23,380 78,156 230 78,386
Consolidated balance sheet
At 31 October 2009
31 October 31 October
2009 2008
Notes £'000 £'000
Non-current assets
Investment properties 10 46,758 49,160
Property, plant and equipment 9 350 590
Investments in equity accounted associates and joint 11 2,846 7,145
ventures
Available-for-sale investments 11 - 442
Other investments 11 147 109
Intangible assets 3,336 3,456
Deferred tax assets 17 7,439 4,327
60,876 65,229
Current assets
Development properties 12 101,719 120,488
Trade and other receivables 13 36,331 28,612
Cash and cash equivalents 5,290 18,022
143,340 167,122
Total assets 204,216 232,351
Non-current liabilities
Bank loans 16 (91,678) (40,890)
Other payables 15 (3,370) (3,370)
Deferred tax liabilities 17 (73) (782)
(95,121) (45,042)
Current liabilities
Trade and other payables 14 (17,862) (20,878)
Current tax liabilities (1,176) (153)
Bank overdrafts and loans 16 (11,671) (62,973)
(30,709) (84,004)
Total liabilities (125,830) (129,046)
Net assets 78,386 103,305
Equity
Called up share capital 19 4,240 4,240
Share premium account 20 43,208 43,208
Own shares 20 (609) (609)
Capital redemption reserve 20 849 849
Merger reserve 20 7,088 7,088
Unrealised losses 20 - (498)
Retained earnings 20 23,380 48,769
Equity attributable to equity holders of the parent 78,156 103,047
Minority interests 230 258
Total equity 78,386 103,305
The financial information was approved and authorised for issue by the board of directors on 10 March 2010 and was signed on its behalf by:
P A J Leech J M Austen
Director Director
Consolidated cash flow statement
For the year ended 31 October 2009
Year ended Year ended
31 October 31 October
2009 2008
£'000 £'000
Cash flows from operating activities
Loss before taxation (26,680) (31,602)
Adjustments for:
Finance income (1,202) (467)
Finance costs 2,423 5,488
Share of joint venture and associated undertakings post 5,625 12,448
tax loss
Depreciation and impairment charge 22,813 20,777
Loss on revaluation of investment properties 2,141 3,846
Loss on disposal of investment properties - 20
Loss on sale of tangible financial assets 26 -
Share-based payment credit (718) (997)
Cash flows from operating activities before change in 4,428 9,513
working capital
Increase in property inventories (2,054) (3,634)
(Increase)/decrease in trade and other receivables (11,101) 6,419
Decrease in trade and other payables (2,389) (22,295)
Cash absorbed by operations (11,116) (9,997)
Income from investments 1 7
Finance costs (1,669) (4,087)
Finance income 577 1,615
Tax refund/(paid) 338 (1,500)
Net cash flows from operating activities (11,869) (13,962)
Investing activities
Purchase of investment property (4) -
Sale of investment property and tangible fixed assets 289 1,137
Purchase of investments - (4,011)
Sale of investments 448 1,982
Purchase of property, plant and equipment (16) (236)
Net cash flows from investing activities 717 (1,128)
Financing activities
Borrowings drawn down 35,084 39,813
Borrowings repaid (28,982) (34,516)
Purchase of own shares - (609)
Equity dividends paid (1,154) (4,475)
Net cash flows from financing activities 4,948 213
Net decrease in cash and cash equivalents (6,204) (14,877)
Cash and cash equivalents at 1 November 2008 11,494 26,371
Cash and cash equivalents at 31 October 2009 5,290 11,494
Notes to the consolidated financial INFORMATION For the year ended 31 October 2009
1 Accounting policies
Basis of preparation
While the financial information included in the preliminary announcement has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards as endorsed for use in the European Union (IFRSs), this announcement does not contain sufficient information to comply with IFRSs. The Company expects to publish full financial statements that comply with IFRSs in March 2010.
Changes in accounting policies
The accounting policies adopted are consistent with those of the previous financial year.
New standards and interpretations not applied
IASB and IFRIC have issued the following standards and interpretations relevant to the Group. These standards and interpretations are mandatory for accounting periods beginning on or after the date of these financial statements and will become effective for future reporting periods:
International Accounting Standards (IFRSs/IAS) Effective date
IFRS 2 Amendment to IFRS 2 - Vesting Conditions and 1 January 2009
Cancellations
IFRS 3 Business Combinations (revised January 2008) 1 July 2009
IFRS 8 Operating Segments 1 January 2009
Improvements to IFRSs (2009) (2010) 1 January 2009
IAS 1 Presentation of Financial Statements: A Revised 1 January 2009
Approach
IAS 23 Borrowing Costs (revised March 2007) 1 January 2009
IAS 27 Consolidated and Separate Financial Statements 1 July 2009
(revised January 2008)
International Financial Reporting Interpretations Committee (IFRIC) Effective date
IFRIC 15 Agreements for the Construction of Real Estate 1 January 2009
IFRIC 17 Distribution of Non-cash Assets to Owners 1 January 2009
The directors currently anticipate that the adoption of certain of these standards and interpretations will have a material impact on the Group's financial statements in the period of initial application primarily in terms of presentation and disclosure. The significant changes are:
IAS 1 will introduce a single "statement of comprehensive income" incorporating both realised profits and losses currently reported in the income statement and unrealised profits and losses currently reported in the statement of changes in equity. The revised statement of changes in equity will only in future report transactions with shareholders, for example capital raised and dividends. The standard is a presentational standard and adoption will not affect reported results.
IFRS 8 introduces a management approach that will require segment disclosure based on the components of the Group that management monitors in making decisions about operating matters. No significant differences in the identification of segments is envisaged as a result of the implementation of IFRS 8.
The impact of the other standards and interpretations are not considered to be significant either because their impact is not likely to be material or that the Group already adopts the accounting policy proposed in the new or revised standard or interpretation.
Going concern
The directors are required to make an assessment of the Group's ability to continue to trade as a going concern. Due to the difficult market conditions prevailing, this assessment has been subject to more uncertainties than are usual. The directors have given this matter due consideration and have concluded that it is appropriate to prepare the Group financial statements on a going concern basis. The two main considerations were as follows:
Cash flow - the Group maintains a rolling 24 month cash forecast that takes account of all known inflows and outflows. The cash flow is regularly stress tested to ensure that the Group can withstand reasonable changes in circumstances that could adversely affect its cash flow. The key potential changes that the Group has considered include: possible falls in value of the portfolio which could result in margin calls or increased funding costs if future loan to value covenants were breached; and possible reductions in anticipated cash flows from re*financing properties after planning permission has been obtained. Having considered the headroom in the Group's forecasts and its previous success in extending finance terms when required, the Group believes that it has sufficient resources to continue trading for the foreseeable future.
Bank facilities - the Group maintains a regular dialogue with its lenders and keeps them informed of how the Group is trading. Since 31 October 2008, £88.5 million of Group debt and £247.1 million of joint venture and associated undertaking debt has been refinanced. The Group has a further £47.2 million of debt and overdraft facilities due to be re*financed in 2010, of which £11.7 million is due to be re-financed by 31 October 2010. In the normal course of business, developments will be completed and disposed of and so the actual requirement to renew financing is expected to be at a lower level than this. None of the facilities have reached their due dates for renewal but the Group has opened discussions with each lender to gauge their appetite for their renewal. In all cases the lenders concerned have been supportive and have indicated their desire to renew the facilities subject to mutually acceptable terms being agreed.
Investment and development property
In relation to the investment and development properties, the directors have relied upon the external valuations and advice provided by professionally qualified valuers in accordance with the Appraisal and Valuation Standards of the Royal Institution of Chartered Surveyors.
2 Revenue
Total Total
2009 2008
£'000 £'000
Sales of development properties 21,195 55,982
Rents receivable 6,612 4,777
Fees and other income 1,258 2,607
29,065 63,366
Sales of development properties includes £7,088,000 (2008: £Nil) of revenue recognised on the project management of the construction of a property on behalf of a third party.
3 Segmental information
The Group operates in three principal segments being commercial property development and investment, residential property investment and strategic land. The Group does not operate outside the UK.
Strategic Unallocated Strategic Unallocated
Residential Commercial land items Total Residential Commercial land items Total
2009 2009 2009 2009 2009 2008 2008 2008 2008 2008
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Income statement
Revenue 1,663 23,020 4,382 - 29,065 1,451 58,925 2,990 - 63,366
Direct costs (615) (33,137) (7,832) - (41,584) (584) (57,554) (8,996) - (67,134)
Gross profit/(loss) 1,048 (10,117) (3,450) - (12,519) 867 1,371 (6,006) - (3,768)
Administrative expenses - - - (5,174) (5,174) - - - (6,499) (6,499)
Loss on disposal of
investment properties - - - - - (20) - - - (20)
Loss on revaluation of (446) (1,695) - - (2,141) (2,182) (1,664) - - (3,846)
investment properties
Operating profit/(loss) 602 (11,812) (3,450) (5,174) (19,834) (1,335) (293) (6,006) (6,499) (14,133)
Net finance costs (1,180) (118) 48 29 (1,221) (1,580) (3,576) 115 20 (5,021)
Share of results of joint - - (72) - (72) - - (138) - (138)
venture before tax
Share of results of associated
undertakings before tax (5,137) (416) - - (5,553) (16,200) 451 - - (15,749)
Associated undertakings tax - - - - - 3,439 - - - 3,439
Loss before tax (5,715) (12,346) (3,474) (5,145) (26,680) (15,676) (3,418) (6,029) (6,479) (31,602)
Balance sheet
Investment properties 28,187 18,571 - - 46,758 28,633 20,262 265 - 49,160
Property, plant and equipment - 6 23 321 350 - 34 67 489 590
Investments - associates and 147 2,001 698 - 2,846 3,938 2,437 770 - 7,145
joint ventures
Other investments 3 45 - 99 147 3 449 - 99 551
Goodwill 860 2,476 - - 3,336 975 2,481 - - 3,456
Deferred tax assets - - - 7,439 7,439 - - - 4,327 4,327
29,197 23,099 721 7,859 60,876 33,549 25,663 1,102 4,915 65,229
Development properties - 76,824 24,895 - 101,719 - 92,372 28,116 - 120,488
Trade and other receivables 13,833 19,109 2,768 621 36,331 14,554 11,278 1,903 877 28,612
Cash 49 4,755 486 - 5,290 102 17,024 896 - 18,022
13,882 100,688 28,149 621 143,340 14,656 120,674 30,915 877 167,122
Borrowings (20,401) (70,864) (12,084) - (103,349) (20,444) (72,878) (10,541) - (103,863)
Trade and other payables (575) (18,784) (1,391) (482) (21,232) (515) (18,331) (4,282) (1,120) (24,248)
Current tax - - - (1,176) (1,176) - - - (153) (153)
Deferred tax liabilities - - - (73) (73) - - - (782) (782)
(20,976) (89,648) (13,475) (1,731) (125,830) (20,959) (91,209) (14,823) (2,055) (129,046)
Net assets 22,103 34,139 15,395 6,749 78,386 27,246 55,128 17,194 3,737 103,305
4 Finance costs and finance income
2009 2008
£'000 £'000
Interest payable on borrowings 6,233 7,558
Interest (credited)/payable under a development funding (2,050) 2,050
agreement
Interest capitalised (1,760) (4,120)
Finance costs 2,423 5,488
Interest receivable from cash deposits and other financial 1,202 467
assets
Finance income 1,202 467
Interest is capitalised at the same rate as the Group is charged on the respective borrowings. Fair value adjustments to financial liabilities totalled £962,000 (2008: £Nil), comprising losses on interest rate swaps.
5 Administrative expenses
2009 2008
£'000 £'000
Depreciation of property, plant and equipment 206 204
Loss on disposal of property, plant and equipment 26 -
Operating lease charges - rent of properties 1,332 1,311
Impairment of goodwill 120 133
Share-based payment remuneration (718) (997)
Fees paid to BDO LLP in respect of:
- audit of the Group's annual accounts 175 175
- audit of the Group's associates 16 16
- other services 30 29
6 Tax on loss on ordinary activities
(a) Analysis of charge in year
2009 2008
£'000 £'000
Current tax
UK corporation tax on loss for the year 53 376
Adjustment in respect of prior periods 633 44
Total current tax 686 420
Deferred tax
Origination and reversal of temporary differences (3,821) (4,747)
Total deferred tax credit (3,821) (4,747)
Total tax credit (3,135) (4,327)
(b) Factors affecting the tax credit for the year
The tax assessed for the year is lower than the standard rate of corporation tax in the UK of 28% (2008: 28%). The differences are explained below:
2009 2008
£'000 £'000
Loss before tax (26,680) (31,602)
Less joint ventures and associates 5,625 12,448
Loss attributable to the Group before tax (21,055) (19,154)
Loss multiplied by the average rate of UK corporation tax (5,895) (5,522)
of 28% (2008: 28.83%)
Disallowables 2,049 376
Other temporary differences 78 (397)
Utilisation of losses - 1,172
(3,768) (4,371)
Adjustments in respect of prior periods 633 44
Total tax credit (3,135) (4,327)
(c) Associates and joint ventures
The Group's share of tax on the associates is £Nil (2008: £3,439,000 credit). No tax charge arises on the results of the joint ventures.
7 Dividends
2009 2008
£'000 £'000
Ordinary shares
Final dividend of 0.54 pence (2008: final dividend for 2007 of 1.3 pence)
per share for the year ended 31 October 2008 1,139 2,756
Interim dividend paid of 0.0 pence (2008: interim dividend for 2008 of 0.8 pence) per share
for the year ended 31 October 2009 - 1,684
1,139 4,440
Final dividend after the year of 0.0 pence (2008: 0.54 - 1,139
pence) per share
8 Earnings per ordinary share
The calculation of basic earnings per ordinary share is based on a loss of £23,517,000 (2008 loss: £27,253,000) and on 210,951,299 (2008: 211,187,902) ordinary shares, being the weighted average number of shares in issue during the period.
The calculation of diluted earnings per ordinary share for 2009 and 2008 is the same as the calculation of the basic earnings per ordinary share.
9 Property, plant and equipment
Leasehold Motor Office Furniture
improvements vehicles equipment and fittings Total
£'000 £'000 £'000 £'000 £'000
Cost
At 1 November 2007 151 296 86 189 722
Additions 8 109 32 86 235
Disposals - (35) (5) (14) (54)
At 1 November 2008 159 370 113 261 903
Additions - - 4 32 36
Disposals - (78) (5) (64) (147)
At 31 October 2009 159 292 112 229 792
Depreciation
At 1 November 2007 9 43 15 61 128
Charge for period 14 84 45 61 204
Disposals - (7) (5) (7) (19)
At 1 November 2008 23 120 55 115 313
Charge for period 16 89 24 77 206
Disposals - (47) (5) (25) (77)
At 31 October 2009 39 162 74 167 442
Net book value
At 31 October 2009 120 130 38 62 350
At 31 October 2008 136 250 58 146 590
At the year end there were no assets held under finance leases.
10 Investment properties
£'000
Valuation
At 1 November 2007 53,887
Transfer from inventory 220
Disposals (1,101)
Loss on revaluation (3,846)
At 1 November 2008 49,160
Additions 4
Disposals (265)
Loss on revaluation (2,141)
At 31 October 2009 46,758
The investment properties situated in Scotland owned by the Group have been valued as at 31 October 2009 by qualified valuers from Allied Surveyors, an independent firm of Chartered Surveyors, on the basis of open market value. The valuations were carried out in accordance with guidance issued by the Royal Institution of Chartered Surveyors.
The commercial investment properties situated in England owned by the Group have been valued as at 31 October 2009 by qualified valuers from CB Richard Ellis, an independent firm of Chartered Surveyors, on the basis of open market value. The valuations were carried out in accordance with guidance issued by the Royal Institution of Chartered Surveyors.
Residential investment properties situated in England owned by the Group have been valued as at 31 October 2009 by suitably qualified valuers from Allsops LLP, an independent firm of chartered surveyors, on the basis of open market value. The valuations were carried out in accordance with guidance issued by the Royal Institution of Chartered Surveyors.
11 Investments
Associates and joint venture
Joint
Associates venture Total
£'000 £'000 £'000
Cost or valuation
At 1 November 2007 18,766 (147) 18,619
Investment write off (81) - (81)
Share of results (12,310) (138) (12,448)
Unrealised profit - 1,055 1,055
At 1 November 2008 6,375 770 7,145
Disposals (6) - (6)
Transfer to other investments (14) - (14)
Share of results (5,553) (72) (5,625)
Share of results for period applied against 1,346 - 1,346
long-term receivables forming part of net
investment
At 31 October 2009 2,148 698 2,846
The Group's interest in its principal associates which have been equity accounted in the consolidated financial statements were as follows:
Terrace Hill Residential PLC 49% Property investment
Castlegate House Partnership 30% Property development
Devcap 2 Partnership 26% Property development
Terrace Hill Development Partnership 20% Property development
Two Orchards Limited 20% Property development
Terrace Hill Residential PLC is incorporated in Scotland.
Summarised information 2009
Terrace Hill Castlegate Terrace Hill Two
Development Devcap 2 House Residential Howick Orchards
Partnership Partnership Partnership PLC Place Limited Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 5,304 1,824 605 12,515 - - 20,248
(Loss)/profit after taxation (1,023) (8,765) 83 (10,484) - (18,840) (39,029)
Total assets 39,981 40,127 9,480 236,888 - 59,982 386,458
Bank debt (25,009) (40,291) (8,568) (206,363) - (73,652) (353,883)
Other liabilities (6,034) (2,344) (2,344) (32,972) - (5,160) (48,854)
Total liabilities (31,043) (42,635) (10,912) (239,335) - (78,812) (402,737)
Net assets/(liabilities) 8,938 (2,508) (1,432) (2,447) - (18,830) (16,279)
Opening carrying amount
of interest under equity 2,416 - - 3,938 20 1 6,375
method
Disposals - - - - (6) - (6)
Transfer to other investments - - - - (14) - (14)
Share of results for period (416) - - (5,137) - - (5,553)
Share of results for period applied
against long-term receivables
forming part of net investment - - - 1,346 - - 1,346
Closing carrying amount
of interest under equity 2,000 - - 147 - 1 2,148
method
Capital commitments - - - - - 630 630
Summarised information 2008
Terrace Hill Castlegate Terrace Hill Two
Development Devcap 2 House Residential Howick Orchards
Partnership Partnership Partnership PLC Place Limited Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 7,012 308 610 12,265 1,502 - 21,697
(Loss)/profit after taxation (2,119) (1,793) 92 (26,043) (1,708) - (31,571)
Total assets 56,285 46,367 9,398 247,724 72,278 59,805 491,857
Bank debt (27,604) (38,962) (8,558) (207,502) (50,523) (52,273) (385,422)
Other liabilities (16,602) (9,190) (2,355) (32,184) (25,530) (7,531) (93,392)
Total liabilities (44,206) (48,152) (10,913) (239,686) (76,053) (59,804) (478,814)
Net assets/(liabilities) 12,079 (1,785) (1,515) 8,038 (3,775) 1 13,043
Share of results for period - - 451 (12,761) - - (12,310)
Share of net assets 2,416 - - 3,938 20 1 6,375
Capital commitments 2,424 - - - - 13,485 15,909
The Group's interest in its joint venture which has been equity accounted in the consolidated financial statements was as follows:
Achadonn Limited 50% Property development
2009 2008
Achadonn Achadonn
Limited Limited
£'000 £'000
Revenue 157 2,803
(Loss)/profit (143) 1,834
Total assets 14,337 14,332
Bank debt (8,110) (9,436)
Other liabilities (4,831) (3,356)
Total liabilities (12,941) (12,792)
Net assets 1,396 1,540
Share of results for the period (72) 917
Share of net assets 698 770
Available-for-sale investments and other investments
Available-for-sale Other
investments investments Total
£'000 £'000 £'000
Valuation
At 1 November 2007 - 147 147
Additions 3,987 1 3,988
Disposals (3,047) (15) (3,062)
Decrease in fair value (498) (24) (522)
At 1 November 2008 442 109 551
Transfer from associates - 14 14
Disposals (442) - (442)
Change in fair value - 24 24
At 31 October 2009 - 147 147
2009 2008
£'000 £'000
UK unlisted investments at fair value 59 45
UK listed investments at fair value 88 506
147 551
12 Development properties
2009 2008
£'000 £'000
At 1 November 2008 120,488 126,950
Additions 17,116 43,301
Disposals (13,852) (36,978)
Transfers to investment properties - (220)
Amounts written off the value of development properties (22,032) (12,565)
At 31 October 2009 101,719 120,488
Included in these figures is capitalised interest of 9,536 8,269
No amounts are held in development properties in respect of construction contracts and retentions on such contracts is nil.
13 Trade and other receivables
2009 2008
£'000 £'000
Trade receivables 801 1,257
Other receivables 9,608 5,404
Trade and other receivables 10,409 6,661
Amounts recoverable under construction contracts 8,000 -
Prepayments and accrued income 2,289 2,247
Share of associate's loss (see note 11) (1,346) -
Amounts due from associates and joint ventures 25,867 27,480
Provision for amounts due from associates and joint ventures (8,888) (7,776)
36,331 28,612
Included in other receivables and prepayments and accrued income is a balance due from Howick Place JV S.a.r.l. of £4.3 million that has a final maturity date of 31 December 2014.
The ageing of trade and other receivables was as follows:
2009 2008
£'000 £'000
Up to 30 days 305 1,676
31 to 60 days 175 846
61 to 90 days 6 107
Over 90 days 231 451
Total 717 3,080
Amounts not yet due 9,692 3,581
Closing balance 10,409 6,661
No amounts were overdue at the year end.
The movement in the allowance for impairment in respect of amounts due from associates and joint ventures during the year was as follows:
2009 2008
£'000 £'000
At 1 November 2008 7,776 -
Amounts written off in year - -
Increase in allowance on amounts due from associates 2,458 7,776
Closing balance 10,234 7,776
The allowance is based on falling asset values in the associates.
14 Trade and other payables
2009 2008
£'000 £'000
Trade payables 1,958 2,452
Other taxation and social security costs 702 650
Accruals and deferred income 10,088 8,168
Derivative liabilities 962 -
Other payables 4,152 9,608
17,862 20,878
15 Other payables (non-current)
2009 2008
£'000 £'000
Other payables 3,370 3,370
16 Bank overdrafts and loans
2009 2008
£'000 £'000
Bank loans 103,744 97,680
Bank overdrafts - 6,528
103,744 104,208
Unamortised loan issue costs (395) (345)
103,349 103,863
Amounts due:
Within one year 11,671 62,973
After more than one year 91,678 40,890
103,349 103,863
An analysis of interest rates and information on fair value and security is given in note 18.
17 Deferred tax
Details of the deferred tax credited to the Consolidated income statement are as follows:
2009 2008
£'000 £'000
Investment property revaluations (275) (1,515)
Trade losses (4,335) (3,084)
Share-based payments 201 279
Short-term timing differences 588 (427)
(3,821) (4,747)
The Consolidated balance sheet deferred tax assets and liabilities are as follows:
2009 2008
£'000 £'000
Deferred tax provision
Investment property revaluations - (782)
Other timing differences (73) -
(73) (782)
Deferred tax asset
Share option scheme 20 221
Investment property revaluations - 434
Trade losses 7,419 3,084
Other timing differences - 588
7,439 4,327
Under IAS 12, deferred tax is recognised for tax potentially payable on the realisation of investment properties at fair values at the balance sheet date. No deferred tax asset is recognised in respect of losses if there is uncertainty over future recoverability.
18 Financial instruments
The Group's principal financial instruments comprise loans, overdrafts, cash and short-term deposits. The main purpose of these financial instruments is to provide finance for the Group's operations. Further information on the Group's financial resources and capital management is given in the Business Review - Finance.
The Group has various other financial instruments such as trade receivables and trade payables that arise directly from its operations, listed and unlisted investments.
The main risks arising from the Group's financial instruments are interest rate risk, credit risk and liquidity risk. The board reviews and agrees policies for managing each of these risks and they are summarised below. The magnitude of the risk that has arisen over the period is detailed below.
Interest rate risk
The Group holds cash balances on short-term deposit. The Group's policy is to monitor the level of these balances to ensure that funds are available as required, recognising that interest earnings will be subject to interest rate fluctuations.
The Group borrows cash in the form of loans and overdrafts, which are subject to interest at floating rates, recognising that rates will fluctuate according to changes in libor and the bank base rate. The Group is cognisant at all times of movements in interest rates and will, as appropriate, enter into interest rate swaps to maintain a balance between borrowings that are subject to floating and fixed rates.
Credit risk
The Group's principal financial assets are cash and trade receivables. Our cash deposits are placed with a range of banks to minimise the risk to the Group. The principal risk therefore arises from trade receivables. Trade receivables from the sale of properties are secured against those properties until the proceeds are received. Rental receivables are unsecured but the Group's exposure to tenant default is limited as no tenant accounts for more than 10% of total rent. Rental cash deposits and third party guarantees are obtained as a means of mitigating financial loss from defaults.
Liquidity risk
The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of bank balances and loans. Cash flow and funding needs are regularly monitored. Further information is given in note 1.
Categories of financial assets and financial liabilities
2009 2008
£'000 £'000
Current financial assets
Available-for-sale investments - 442
Other investments 147 109
Trade and other receivables 10,409 3,792
Amounts due from associates and joint ventures 15,633 22,555
Cash and cash equivalents 5,290 18,022
31,479 44,920
Financial liabilities measured at amortised cost
2009 2008
£'000 £'000
Current financial liabilities
Trade and other payables 14,889 20,228
Loans and borrowings 11,673 63,099
Total current financial liabilities 26,562 83,327
Non-current financial liabilities
Other payables 3,370 3,370
Loans and borrowings 92,071 41,109
Total non-current financial liabilities 95,441 44,479
Total financial liabilities 122,003 127,806
The maximum exposure to credit risk in financial assets is £31,479,000 (2008: £44,920,000). The maximum amount due from any single party is £14,948,000 (2008: £14,595,000) included in amounts due from associates and joint ventures.
Financial liabilities measured at fair value amount to £962,000 (2008: £Nil) in respect of financial derivatives.
Interest rate risk profile of financial assets and liabilities
The interest rate profile of financial assets and liabilities of the Group at 31 October 2009 was as follows:
Floating rate Fixed rate Financial assets on which
Total financial assets financial assets no interest is earned
£'000 £'000 £'000 £'000
Sterling 31,479 5,290 3,480 22,709
Floating rate Fixed rate Financial liabilities on which
Total financial financial liabilities no interest is charged
liabilities
£'000 £'000 £'000 £'000
Sterling 122,003 103,744 - 18,259
Floating rate financial liabilities bear interest at LIBOR or base rate plus margins of between 1% and 4%.
Included in floating rate financial liabilities is £40,660,000 (2008: £17,517,000) subject to interest rate swaps.
The interest rate profile of financial assets and liabilities of the Group at 31 October 2008 was as follows:
Floating rate Fixed rate Financial assets on which
Total financial assets financial assets no interest is earned
£'000 £'000 £'000 £'000
Sterling 44,920 18,022 3,480 23,418
Floating rate Fixed rate Financial liabilities on which
Total financial financial liabilities no interest is charged
liabilities
£'000 £'000 £'000 £'000
Sterling 127,806 104,208 - 23,598
The floating rate financial assets comprise:
· cash on deposit.
The floating rate financial liabilities comprise:
· Sterling denominated bank loans that bear interest based on LIBOR and bank base rates; and
· Sterling denominated bank overdrafts that bear interest based on bank base rates.
The fair value of the financial assets and liabilities is equal to the book value.
Borrowings
The Group's bank borrowings and overdrafts are repayable as follows:
2009 2008
£'000 £'000
On demand or within one year 11,673 63,099
In more than one year but less than two 75,546 8,924
In more than two years but less than five 16,525 32,185
103,744 104,208
The bank overdraft is secured by way of debenture and cross guarantee from certain subsidiaries.
The bank loans are secured by legal charges over the Group's investment and development properties together with guarantees from certain subsidiary undertakings with a limited guarantee from the parent company and in one case a floating charge from the parent company.
Borrowing facilities
The Group has the following undrawn committed bank borrowing facilities available to it at the year end:
2009 2008
£'000 £'000
Expiring in one year or less 2,514 5,375
Expiring in more than one year but not more than two 8,825 12,756
Expiring in more than two years but not more than five 977 8,187
12,316 26,318
Guarantees
The Group has given a guarantee of £15.0 million as part of the security arrangements for the bank facilities of Terrace Hill Residential PLC, one of its associated undertakings.
Market rate sensitivity analysis
Financial instruments affected by market risk include borrowings, deposits and derivative financial instruments. The analysis below shows the sensitivity of the income statement and net assets to a 0.5% change in interest rates on the Group's financial instruments.
The sensitivity analysis is based on the sensitivity of interest to movements in interest rates and is calculated on net floating rate exposures on debt and deposits.
0.5% decrease 0.5% increase
in interest rates in interest rates
£'000 £'000
Impact on interest payable - gain/(loss) 472 (472)
Impact on interest receivable - (loss)/gain (58) 79
Total impact on pre-tax loss and equity 414 393
19 Called up share capital
2009 2008
£'000 £'000
Authorised:
500,000,000 (2008: 500,000,000) ordinary shares of 2 pence each 10,000 10,000
200,000 cumulative 8% redeemable preference shares of £1 each 200 200
44,859 convertible shares of 20 pence each 9 9
32,551,410 deferred shares of 2 pence each 651 651
10,860 10,860
Allotted, called up, and fully paid:
211,971,299 (2008: 211,971,299) ordinary shares of 2 pence each 4,240 4,240
20 Reserves
Capital Unrealised
Share Own redemption Merger gains and Retained
premium shares reserve reserve losses earnings
£'000 £'000 £'000 £'000 £'000 £'000
At 1 November 2007 43,208 - 849 8,386 - 80,196
Loss for the year - - - - - (27,253)
Unrealised loss on - - - - (498) -
available-for-sale investments
Own shares - (609) - - - -
Share-based payment - - - - - (997)
Merger reserve release - - - (1,298) - 1,298
Interim ordinary dividends - - - - - (1,684)
Final ordinary dividends - - - - - (2,791)
At 1 November 2008 43,208 (609) 849 7,088 (498) 48,769
Loss for the year - - - - - (23,517)
Loss on investments
transferred to income
statement on disposal - - - - 498 -
Total recognised income and - - - - 498 (23,517)
expense for the year
Share-based payment - - - - - (718)
Final ordinary dividends - - - - - (1,154)
Balance at 31 October 2009 43,208 (609) 849 7,088 - 23,380
The following describes the nature and purpose of each reserve within owners' equity:
Share premium - represents the excess of value of shares issued over their nominal amount.
Own shares - represents amount paid to purchase issued shares for the employee share-based payment plan.
Capital redemption reserve - represents amount paid to purchase issued shares for cancellation at their nominal value.
Merger reserve - the Merger reserve has arisen following acquisitions where the Group's equity has formed all or part of the consideration and represents the premium on the issued shares less costs.
Unrealised gains and losses - represents unrealised loss on available-for-sale investments.
Retained earnings - represents cumulative net gains and losses recognised in the Consolidated income statement.
21 Contingent liabilities and capital commitments
On the acquisition by Terrace Hill Group PLC of a subsidiary company, amounts were repayable in the event of:
(a) disposal of the property/ies prior to an agreed cut-off point; or
(b) the discontinuation of rental income from the property/ies.
The directors are of the opinion that neither of these contingencies will crystallise, since the principal activity of the subsidiary concerned is the letting of the properties for rental income and it is not anticipated that the properties will be disposed of within the timeframe of (a) above. In the event of crystallisation of (a) and/or (b), the subsidiary concerned will be obligated to pay an amount calculated with reference to the properties disposed of/not let out. The maximum sum repayable is £337,000 (2008: £381,000).
Capital commitments relating to development sites are as follows:
2009 2008
£'000 £'000
Contracted but not provided for 3,349 -
22 Leases
Operating lease commitments where the Group is the lessee
The future aggregate minimum lease rentals payable under non-cancellable operating leases are as follows:
Land and Land and
buildings buildings
2009 2008
£'000 £'000
In one year or less 1,374 1,373
Between two and five years 5,351 5,490
In five years or more 7,951 6,982
14,676 13,845
Operating lease commitments where the Group is the lessor
The future aggregate minimum rentals receivable under non-cancellable operating leases are as follows:
Land and Land and
buildings buildings
2009 2008
£'000 £'000
In one year or less 3,784 1,997
Between two and five years 14,589 7,746
In five years or more 11,964 8,346
30,337 18,089
Statutory information
The financial information set out in this announcement does not constitute the company's statutory accounts for 2008 or 2009. Statutory accounts for the years ended 31 October 2008 and 31 October 2009 have been reported on by the Independent Auditors. The Independent Auditors' Report on the Annual Report and Financial Statements for 2008 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 237(2) or 237(3) of the Companies Act 1985. The Independent Auditors' Report on the Annual Report and Financial Statements for 2009 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. Statutory accounts for the year ended 31 October 2008 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 October 2009 will be delivered to the Registrar in due course.
Copies of the full financial statements will be posted to those shareholders who requested them as soon as possible and will also be available on the company's website, www.terracehill.co.uk. The financial statements for the year ended 31 October 2009 will be delivered to the Registrar of Companies following the Annual General Meeting
CURRENT Schemes
Developments completed or under construction
Office Development Programme
Size Terrace Hill
Development Region (sq ft) Description Timing Share
Victoria, SW1 London 60,407 Substantial Completed 50%
129 Wilton Road mixed-use
development
comprising 60,407 sq
ft of grade A office
accommodation
part-let to Eon,
AFEX and Pret a
Manger. The
residential elements
of the scheme have
all been sold
Bracknell South East 198,691 Prominent 7.9 acre Completed 20%
site with planning
for three
Maxis I and II, buildings. Phase 1 comprising two buildings,
Western Road totalling 198,691 sq ft completed in late 2009.
Farnborough South East 36,300 Development of 15 Completed 20%
Phase 1 small office units
Aeropark Cirrus ranging in size from
1,793 - 2,975 sq ft.
Located adjacent to
Farnborough Airfield
and Aerospace
Business Park. Six
units sold
Maidenhead South East 120,000 Prime office park Completed 26%
Quantum 1 and 2 development of two
Vanwall Business Park buildings.
Quantum 2 is fully
let to Biogen Idec
and 26,000 in
Quantum 1 has been
let to Compuware
Teesside North East 32,955 Office scheme of Completed 20%
Phase 1, 3 Acre Teesdale five buildings.
Business Park Phase 1 buildings 1,
2 and 4 completed.
Building 1 part let
to HBoS.
Gateshead Baltimore House North East 23,966 The second of three Completed 100%
Baltic Business Quarter Phase 1 office
buildings, Baltimore
House, is adjacent
to the pre-sold Open
University HQ
building, Chalk Hill
Place and is being
marketed to let or
for sale.
Teeside North East 38,500 The second phase of On site completes 100%
Hudson Quay the Hudson Quay May 2010
Phase 2 scheme comprises
38,500 sq ft of
offices which are
pre- let to a
Primary Care Trust
and a further3,300
sq ft A3 unit to
let.
Filton, Bristol South West 44,909 Small unit (12 no) Phase 2 completed 20%
Phase 1 and 2 Brabazon Office office scheme for June 2009
Park owner occupation or
to let. Six
buildings let/sold
representing 48%.
Retail Development Programme
Bishop Auckland North East 92,333 Pre-let to Sainsbury's On site 100%
supermarket and forward
Phase 1, food store funded by Aviva.
Industrial Development Programme
Eastbourne Brampton Business South East 110,385 Industrial and trade counter Completed 20%
Park scheme. Industrial now fully sold
or let. One unit remains vacant on
the Trade Park.
CONSENTED SCHEMES
Sites with detailed planning permission
Office Development Programme
Size Terrace Hill
Development Region (sq ft) Description Share
Bracknell South East 78,895 Prominent 7.9 acre 20%
Maxis III site with planning
Western Road, for three buildings.
Phase 1, Maxis I and
II completed Phase
2, Maxis III,
pending
Teesside North East 60,000 Prime development site on 100%
Resolution Teesdale Business Park.
Teesdale Business Park
Teesside North East 22,828 Office scheme of five buildings 100%
Phase 2, 3 Acre Site Phase 1 completed.
Teesdale Business Park Phase 2, Buildings 3 and 5 fully serviced plots.
Gateshead North East 31,545 The third Phase 1 office building, Admiral House 100%
Admiral House is adjacent to the new Open University building,
Baltic Business Quarter Chalk Hill, and the completed Baltimore House.
Victoria, SW1 London 135,368 Substantial mixed-use development, with detailed 6%
Howick Place planning consent.
Welwyn Garden South East 15,810 Site with detailed planning for small unit office 100%
City scheme of seven units. Located close to
Broadwater Road railway station.
Croydon Chroma George Street South East 260,133 Office development site in prime location 100%
opposite East Croydon railway station.
Consent for HQ office building increased
to 258,056 sq ft, plus 2,077 sq ft of
retail on ground floor.
Bristol South West 53,143 Existing city centre office building, with 100%
detailed
Aquila planning consent secured to provide 53,141
sq ft.
138/143 Redcliff Street
Southampton South East 116,000 Mixed-use scheme, including offices, 150 100%
Mayflower bedroom hotel and a forward sold residential site
Plaza with planning for 180 flats.
Sites with detailed planning permission
Retail Development Programme
Bishop Auckland North East 65,000 Leisure complex with 100%
multiplex cinema,
ten-pin bowling and
Phase 2 bingo, together with two drive-through
restaurant facilities.
Middlesbrough North East 128,000 16.8 acre cleared 100%
site with existing
consent for a
mixed-use
Gateway, Middlehaven Scheme: non-food retail warehouse and
leisure uses.
Blyth, Northumberland Phase 2, North East 15,000 Adjacent to Phase 1.
Blyth Retail Park Detailed bulky goods
planning consent for
further 15,000 sq ft
in three units.
Sites with detailed planning permission
Industrial Development Programme
Welwyn Garden South East 42,151 Site with detailed planning for small 100%
unit industrial scheme
City of 13 units.
Broadwater Road
PENDING SCHEMES
Medium term developments held prior to detailed planning
Office Development Programme
Size Terrace Hill
Development Region (sq ft) Description Timing Share
Teesside North East 77,300 Office park with option to draw down sites 50%
Phase 3-5, Hudson Quay under preferred developer agreement with
Middlehaven English Partnerships.
Gateshead North East 34 acres Unserviced land with benefit of OPP. 100%
Whole 50 acre site
Balance of site at has planning consent for 1.5 million sq ft of business
use.
Baltic Business Quarter
Farnborough South East 273,000 Site comprising nine acres, zoned for 100%
employment use.
Aerospace Park
Medium term developments held prior to detailed planning
Retail Development Programme
Galashiels Scotland 15,000 Small parcel of land held 100%
Phase 2, for strategic ownership,
Gala Retail Park forming access to Phase 2
land. Site assembly and
planning consent required.
Manchester North West 43,000 JV with Peveril Securities. 100%
Site has unrestricted open
Heaton Retail Park A1 planning consent.
Medium term developments held prior to detailed planning
Industrial Development Programme
Christchurch South West 9.1 acres Proposed mixed-use scheme to 100%
include industrial,
Site at Grange Road care home and residential uses.
COMMERCIAL INVESTMENTS
Size Terrace Hill
Development Sector Region (sq ft) Description Share
Platts Eyot, TW12 Mixed-use London 12 acres Listed island on the 100%
Thames, at Hampton,
with residential potential.
Sheffield Mixed-use North 110,000 Vacant department 30%
Castle Gate House and store, let on long
22-22 Haymarket lease to BHS,
together with
adjacent, occupied
corner retail unit.
Redevelopment
potential for mixed-
use scheme.
Bristol Offices South West 20,500 Multi-let office 100%
building with future
Canningford House redevelopment potential.
38 Victoria Street
Teesside Offices North East 30,700 First office 100%
Phase 1, building on a
Hudson Quay planned 160,000 sq
Middlehaven ft office park.
Fully let to the
Crown Prosecution
Service and Hertel
Ltd.
Redditch Industrial Midlands 232,680 High bay 20%
distribution
warehouse.
REDD 42 Let to iForce Limited, the
e-fulfilment
Ravensbank Business Park provider for John Lewis PLC.
Total Commercial investment
Residential Investment
Property Portfolio No. of Units Description
TH "Portfolio One" 249 Mixed portfolio of residential units, principally in 100%
Scotland, with small representation in England.
TH Residential PLC 1,713 Portfolio of residential properties located across the UK. 49%
1,962
Strategic Land
Sites completed or with detailed planning permission
Size
Development (acres) Description Timing
Carnshalloch Avenue, 2 Development of 16 Completed
units.
Patna
Torbothie Road, Shotts 22 Phase 1 comprises 18 Completed
units.
Wellington Square, Ayr 0.5 Refurbishment of a Completed
former hotel into 16
flats
and three storey
office building.
Cairn Road, Cumnock 1.6 Development of 18 Completed
units.
Bertram House, Carnwath 11.5 Former country house Phase 1 Completed
and grounds.
Development comprises
Phase 1 conversion of
country house into
eleven flats and
Phase 2 construction
of 20 detached houses
in the grounds.
Kersewell Avenue, 3 Site with planning Planning consent
consent for nine
units. Revised
planning
Carnwarth consent received for granted 2009
greater density to
allow a further
6 units at a later
date.
"Dunselma", Fenwick 3 Former Church of Planning consent
Scotland home.
Planning approval granted 2009
received for 20
detached houses
Mayfield Brickworks, 10.9 Industrial brownfield Outline planning
land. Currently owned
in JV.
Carluke Potential for 90 consent granted 2009
units
Boghall Road, Carluke 12 Industrial brownfield Planning consent
land with potential
for 71 units
granted 2010
Sites held pending detailed planning consent
Irvine Road, Kilmarnock 18 Former brickwork site. Anticipated planning
Planning application
submitted
for 182 units. consent 2010
Patna Caravan Park, Patna 30 Former caravan park. Anticipated planning
Potential for 250 units.
consent 2010
Lower Bathville, Armadale 56 Industrial brownfield Anticipated planning
land. Partly owned in
JV. Potential for
500 units and a consent 2010
neighbourhood shopping
centre
This information is provided by RNS
The company news service from the London Stock Exchange
END
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| 10-03-10 | RNS |
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RNS Number : 3367I Terrace Hill Group PLC 10 March 2010 10 March 2010
TERRACE HILL GROUP PLC ("Terrace Hill", the "Company" or the "Group") Two Sites Acquired for New Food Store Developments and Planning Application Submitted for Heaton Park Redevelopment Terrace Hill Group plc (AIM: THG), a leading UK property development and investment group, has exchanged conditional contracts to acquire two new sites for supermarket developments, located in Sunderland and in Whitchurch, Shropshire, and also submitted a planning application to redevelop Heaton Park Retail Park in Manchester. Sunderland Terrace Hill has exchanged conditional contracts to acquire a six acre site in a prominent location in Sunderland and a planning application for a 60,000 sq ft supermarket will be submitted shortly. Pre-letting discussions are at an advanced stage with a major supermarket operator. Whitchurch, Shropshire The Company has also exchanged conditional contracts to acquire a nine acre site in Whitchurch, Shropshire which it intends to develop into a 40,000 sq ft supermarket. Terrace Hill is currently in negotiations with potential supermarket tenants for the site and will submit a planning application later this year. Heaton Park, Manchester Terrace Hill has submitted a planning application to redevelop Heaton Retail Park in Manchester and the adjoining existing Sainsbury's supermarket into a 80,000 sq ft Sainsbury's superstore, together with three smaller retail units. Philip Leech, Chief Executive of Terrace Hill, commented: "The acquisition of these two new sites and the planning submission at Heaton Park further demonstrates our expertise in, and successful track record of, identifying and delivering high quality supermarket developments. These follow our recent successful supermarket developments at Bishop Auckland and Helston. Large format food store development is one of our core business areas and our pipeline of new opportunities will continue to add value to the Group for our shareholders."
For further information:
Terrace Hill
Mark Young/Gareth Price
Notes to editors: Terrace Hill Group Terrace Hill Group PLC is a regionally based UK property development and investment group quoted on AIM, with three key divisions: · Commercial development and investment
Formed in 1986, the Company has four offices in London, Glasgow, Teesside and Bristol, managing a commercial development programme, commercial and residential investment portfolios and a strategic land portfolio in Scotland. This information is provided by RNS The company news service from the London Stock Exchange END
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| 01-03-10 | RNS |
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RNS Number : 8434H Terrace Hill Group PLC 01 March 2010 Terrace Hill Group plc Notice of Results Terrace Hill Group plc, the AIM-quoted property development and investment group, will announce results for the year ended 31 October 2009 on 10 March 2010. A presentation to analysts will be made on the day. Please contact Lianne Robinson at Financial Dynamics by email at lianne.robinson@fd.com, or by phone on 020 7831 3113, if you would like to attend. For further information:
This information is provided by RNS The company news service from the London Stock Exchange END
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| 19-02-10 | RNS |
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RNS Number : 3736H Terrace Hill Group PLC 19 February 2010 19 February 2010
TERRACE HILL GROUP PLC ("Terrace Hill" or the "Company")
TERRACE HILL COMPLETES FURTHER LETTINGS AT EASTBOURNE AND SECURES PLANNING FOR 105,000 SQ FT CHRISTCHURCH INDUSTRIAL PARK Terrace Hill Group plc (AIM: THG), a leading UK property development and investment group, announces that it has secured over 18,000 sq ft of lettings across five units at its Brampton Business Park, Eastbourne, producing an annual income of over £140,000, and has secured planning permission for a 22 unit industrial scheme on 5.7 acres of its 9 acre Christchurch site near Bournemouth in Dorset. Brampton Business Park Terrace Hill has let three of the five units, totalling 11,830 sq ft, to Menzies Distribution Ltd, a leading UK distributer of newspapers and magazines, who has signed a five-year lease with no breaks at a rent of approximately £89,000 per annum, equating to £7.50 per sq ft. Menzies Distribution Ltd is an existing tenant at the park, having occupied two of the units comprising 7,909 sq ft since mid-2009. Following this deal it has surrendered its existing terms on the units it originally let and now occupies three units on the park. In addition, Terrace Hill has secured East Sussex Hospital Trust as a tenant on two further units comprising 6,450 sq ft, on a five year lease, at a rent of £51,600 per annum, equating to £8 per sq ft. Brampton Business Park is a trade counter and industrial development located on the Hampden Park Industrial Estate, the prime industrial area in Eastbourne. These lettings mean that the 17 unit, c.110,000 sq ft industrial and trade park is now 96% occupied, with just one 3,600 sq ft unit remaining. Christchurch, Bournemouth, Dorset Terrace Hill has secured planning consent at its Christchurch site for 105,000 sq ft of light industrial, general industrial and warehousing space (B1/B2/B8) across 22 units, ranging in size from 2,300 sq ft to 16,000 sq ft. Terrace Hill is currently speaking to a number of owner-occupiers who are looking to take units on the scheme and expects to make a further announcement with regard to the development of the site shortly. Situated to the east of Bournemouth, the nine acre site was acquired by Terrace Hill from BAE in 2008. Forming part of a larger scheme, which includes 95 residential units totalling over 75,000 sq ft of accommodation, Terrace Hill also intends to submit a further planning application for a 60-bed care home on another part of the site later this year. Philip Leech, Chief Executive of Terrace Hill, comments: "The deals we have announced today are another good example of Terrace Hill's ability to leverage its considerable cross-sector expertise both to secure lettings in a challenging market and to add value to our sites through the planning process. The lettings at Brampton provide us with a solid and visible income stream, and leaves just one unit available. Furthermore, we are very excited by the potential at Christchurch, where we believe that the end result will be a prime industrial asset delivered at an advantageous point in the market cycle. We are now in talks with a number of owner occupiers with regards the scheme at Christchurch and a number of interested parties for the final unit at Brampton Business Park." Harold Stiles Williams acted for Terrace Hill on the lettings at Brampton Business Park, while Dixon Wright advised Menzies and East Sussex Hospital Trust represented itself. The joint agents representing Terrace Hill at Christchurch are King Sturge and Goadsby.
For further information, please visit www.terracehill.co.uk or contact:
Philip Leech/Jon Austen
Notes to editors: Terrace Hill Group Terrace Hill Group PLC is a regionally based UK property development and investment group quoted on AIM, with three key divisions: · Commercial development and investment
Formed in 1986, the Company has four offices in London, Glasgow, Teesside and Bristol, managing a commercial development programme, commercial and residential investment portfolios and a strategic land portfolio in Scotland. This information is provided by RNS The company news service from the London Stock Exchange END
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There are no loans in place measuring on an aggregated basis loan to value ratios. A number of loans have loan to value covenants based on the value of the assets secured against them and where required, these have been amended or removed entirely. Again, we believe this is further evidence of our relationship banks' continued desire to support the Group.
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The contents of the postings summarised here represents the opinions of the authors and not of Interactive Investor Trading Limited.
They have not been approved or issued by Interactive Investor Trading Limited.
They have not been approved or issued by Interactive Investor Trading Limited.
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