Final Results

Solitaire Group PLC 25 April 2006 25 April 2006 Solitaire Group Plc Preliminary results for the year ended 31 December 2005 • Turnover - increased by 16.5 per cent to £10.6 million (2004: £9.1 million) • Profit before tax, goodwill amortisation, profit on disposal of reversions, exceptional costs and interest - up 10.6 per cent to £3.4 million (2004: £3.1 million) • Profit before tax - up 24.5 per cent to £2.7 million (2004: £2.2 million) • Earnings per share before goodwill amortisation and exceptional costs - up 18.3 per cent to 45.3p (2004: 38.3p) • Dividend per share - up 8.1 per cent to 13.3 pence per share (2004: 12.3 pence) • Organic growth - continues strongly, underpinned by increased instructions to manage new-build residential properties • Forward visibility - the number of new developments where the group has contracts to manage, and will receive income in future years, continues to grow at an increasing pace George Brutton, Chairman of Solitaire Group Plc, commented: '2005 has been a year of significant development and investment for Solitaire in preparation for the substantial increase in residential property management emanating from our pipeline of contracts, which the group's profits are expected to benefit from over the next few years. The strong growth and financial results announced today need to be set against the background of a residential housing market which slowed in 2005, but is now more buoyant. Solitaire's strong performance is testimony to the robustness of the group's business model. ' For further information: Solitaire Group Plc Tel: 020 8364 8497 Graham Shapiro, Joint Managing Director Binns & Co PR Tel: 020 7786 9600 Tarquin Edwards Tel: 07879 458 364 Chris Steele Tel: 07979 604 687 KBC Peel Hunt Ltd Tel: 020 7418 8900 David Anderson Julian Blunt Chairman's statement 2005 has been a year of significant development and investment for Solitaire in preparation for the substantial increase in residential property management emanating from our pipeline of contracts, which the group's profits are expected to benefit from over the next few years. The strong growth and financial results announced today need to be set against the background of a residential housing market which slowed in 2005, but is now more buoyant. Solitaire's strong performance is testimony to the strength of the group's business model. We are continuing the development of Solitaire as a significant residential property management company and have continued to add new developments to our pipeline of management contracts, many of which are large, particularly in Kent, Essex, London and the South East of England. These should make a substantial contribution to group revenue in future years. During 2005, we have reviewed our ability to deal with the major growth in our property management business which is expected to occur over the next few years. This review has led to a number of significant changes and enhancements to our management and administration infrastructure. These have included the recruitment of a new Chief Operating Officer for Solitaire Property Management, the expansion of office space at our head office in Barnet and at our regional office in Leicester and also the creation of a new regional office in Southampton. In addition, we have continued the development and improvement of our IT support and processing functions and have recruited new staff in the property management and administration functions. Due to this internal investment programme our costs have increased short-term at a proportionally higher rate than our increase in revenue. This investment is, however, a necessity to ensure that we have the capacity to handle our pipeline of work and maintain our service levels to clients, being both developers and residents. This investment in staff, infrastructure and systems will provide a solid foundation for the future contracted growth in the group's business. Nevertheless, we remain committed to stringent budgetary control to ensure that our costs are contained as we go forward. Results Turnover increased by 16.5% to £10,607,000 (2004: £9,105,000). The operating profit for the year ended 31 December 2005, before writing off exceptional costs, goodwill amortisation, profit on disposal of reversions and interest, increased by 10.6% to £3,429,000 (2004: £3,100,000). Exceptional costs relate to the write off of the remaining goodwill in respect of our previous Business Expansion Scheme operation. Accordingly, after exceptional costs, profit on disposal of reversions, interest and goodwill amortisation, pre-tax profits were up by £536,000 or 24.5% to £2,721,000 (2004: £2,185,000) and earnings per share under FRS 22 were up by 24.9% to 35.6p (2004: 28.5p). Adjusted earnings per share, before exceptional costs, goodwill amortisation and after interest were 45.3p (2004: 38.3p) up 18.3%. The board is recommending the payment of an increased final dividend of 9.4p (2004: 8.7p) per share making a total for the year of 13.3p (2004: 12.3p), an increase of 8.1% over 2004. The final dividend will be paid on 27 June 2006 to shareholders on the register on 19 May 2006. Business development Solitaire has continued the steady development of its core property management business during 2005. At the half year we reported a pipeline of over 9,000 units and we have since added approximately 3,200 units to this pipeline and have taken 2,800 units into management. Our current pipeline is currently in excess of 9,400 units and this represents over £1.5 million in future revenue. The group is also in discussion with a number of major house builders regarding some substantial developments in London and the South East of England, that could lead to another significant jump in the pipeline of properties contracted for management during 2006. Our regional offices in Leicester and Southampton are continuing to grow. The Leicester office has begun to contribute to group profits in the latter part of the period under review. The Southampton office's costs however, will continue to represent an investment in our future until new developments in the South and West of England come on stream. We are pleased with the growth shown during the year by Freehold Managers PLC, the company acquired by the group in 2003 and it continues to perform in line with our expectations. People The group has continued to recruit staff to meet the future needs of the business and we have increased our investment in training so as to develop staff from within the company to meet the demands of future growth. We continue to ensure that all staff recruited are of the highest quality and engaged when needed to ensure cost effectiveness. Current trading and prospects Current trading is in line with expectations, and the significant number of properties contracted to come on stream over the next few years taken together with the investment in our infrastructure during 2005, lead your board to look forward to the future with enthusiasm and continued confidence. George Brutton FRICS Chairman 25 April 2006 Consolidated profit and loss account Year ended 31 December 2005 2004 Notes £'000 £'000 --------------------------------------------- Turnover 10,607 9,105 Operating expenses External fees and commissions (262) (325) Other administration expenses (6,916) (5,680) --------------------------------------------- 3,429 3,100 Amortisation of goodwill (425) (410) Exceptional costs 2 (53) (73) --------------------------------------------- Operating profit 2,951 2,617 Profit on disposal of reversions 392 - Net interest paid (622) (432) --------------------------------------------- Profit on ordinary activities before taxation 2,721 2,185 Taxation on ordinary activities (954) (784) --------------------------------------------- Profit on ordinary activities after taxation 1,767 1,401 --------------------------------------------- Basic and diluted earnings per share 4 35.6p 28.5p Adjustment for amortisation 8.6p 8.3p Adjustment for exceptional costs 1.1p 1.5p --------------------------------------------- Adjusted earnings per share 45.3p 38.3p --------------------------------------------- Dividend per share 13.3p 12.3p --------------------------------------------- Consolidated note of historical cost profits and losses 2005 2004 £'000 £'000 ---------------------------------------------- Profit on ordinary activities before taxation 2,721 2,185 Realisation of gains recognised in previous 150 - periods ---------------------------------------------- Historical cost profits on ordinary activities 2,871 2,185 before taxation ---------------------------------------------- Historical cost profits for the year retained 1,291 981 after taxation and dividends ---------------------------------------------- Consolidated statement of total recognised gains and losses 2005 2004 £'000 £'000 ---------------------------------------------- Profit for the year 1,767 1,401 Unrealised profit on revaluation of freehold 1,150 2,000 reversions ---------------------------------------------- Total recognised gains for the year 2,917 3,401 ---------------------------------------------- All amounts relate to continuing activities. Consolidated balance sheet 31 December Group Company 2005 2004 2005 2004 £'000 £'000 £'000 £'000 --------------------------- Fixed assets Intangible assets 6,876 7,149 - - Tangible assets Office equipment 601 485 - - Freehold land and buildings 261 261 - - Freehold reversions 19,689 16,014 - - Long leasehold properties 198 - - - Investments 490 - 9,732 9,527 21,239 16,760 9,732 9,527 --------------------------- 28,115 23,909 9,732 9,527 --------------------------- Current assets Debtors 5,021 4,051 10,268 5,803 Cash and deposits 897 391 - - --------------------------- 5,918 4,442 10,268 5,803 Creditors: amounts falling due within one year Borrowings 3,093 2,299 2,416 1,968 Other liabilities 2,201 1,905 2,040 552 --------------------------- 5,294 4,204 4,456 2,520 Net current assets 624 238 5,812 3,283 --------------------------- Total assets less current 28,739 24,147 15,544 12,810 liabilities --------------------------- Creditors: amounts falling due after more than one year Borrowings 9,224 6,460 8,315 5,462 Other liabilities - 610 - 610 --------------------------- 9,224 7,070 8,315 6,072 Provisions for liabilities and charges Deferred taxation 2 20 - - --------------------------- Net Assets 19,513 17,057 7,229 6,738 --------------------------- Capital and reserves Called-up share capital 500 495 500 495 Share premium account 3,985 3,825 3,985 3,825 Revaluation reserve 9,731 8,731 - - Profit and loss account 5,297 4,006 2,744 2,418 --------------------------- Equity shareholders' funds 19,513 17,057 7,229 6,738 --------------------------- Consolidated cash flow statement Year ended 31 December 2005 2004 £'000 £'000 ------------------------------------------------ Cash flow from operating activities 2,480 2,033 Returns on investments and servicing of finance Interest received 43 21 Interest paid (665) (453) ------------------------------------------------ Net cash outflow from returns on investment and (622) (432) servicing of finance ------------------------------------------------ UK corporation tax Corporation tax paid (794) (801) Refund of overpaid tax 44 - ------------------------------------------------ Net cash outflow from taxation (750) (801) ------------------------------------------------ Capital expenditure and financial investment Office equipment (416) (239) Purchase of freehold reversions (3,000) (1,303) Disposal of freehold reversions 668 32 ------------------------------------------------ Net cash outflow from capital expenditure and (2,748) (1,510) financial investment ------------------------------------------------ Deferred consideration of acquisition of (786) (779) subsidiary Equity dividends paid (626) (570) ------------------------------------------------ Cash outflow before use of liquid resources and (3,052) (2,059) financing ------------------------------------------------ Management of liquid resources and financing Financing 3,021 1,128 ------------------------------------------------ Decrease in cash in the year (31) (931) ------------------------------------------------ 2005 2004 Reconciliation of net cash flow to movement in £'000 £'000 net debt ------------------------------------------------ Decrease in cash in the year (31) (931) Cash inflow from increased debt (3,021) (1,078) ------------------------------------------------ Movement in net debt (3,052) (2,009) Non cash deferred taxation provision 18 (20) Opening net debt (8,388) (6,359) ------------------------------------------------ Closing net debt (11,422) (8,388) ------------------------------------------------ SOLITAIRE GROUP Plc Notes 1 Basis of preparation The results and balance sheet incorporate the audited results of Solitaire Group Plc and all its subsidiaries made up to 31 December 2005 and have been prepared on a basis consistent with the audited financial statements for the year ended 31 December 2004. 2 Exceptional costs Exceptional costs relate to the write off of the remaining goodwill in respect of our previous Business Expansion Scheme operation. 3 Dividends During the year the company paid an interim dividend of 3.9p (2004: 3.6p) per share. The company has proposed a final dividend of 9.4p (2004: 8.7p) per share making a total of 13.3p (2004: 12.3p) for the year. 4 Earnings per share The calculation of earnings per share for the year ended 31 December 2005 is based on earnings of £1,767,000 (2004: £1,401,000) and a weighted average number of shares in issue of 4,964,753 (2004: 4,913,523). There is no significant difference between basic and diluted earnings per share in 2005 and 2004. The adjusted earnings per share are based on the profits for the year after tax adjusted for amortisation of goodwill and exceptional costs. 5 Results The results for the year ended 31 December 2005 have been extracted from the audited financial statements, which will shortly be sent to shareholders and filed with the Registrar of Companies. The auditor's report on these accounts is unqualified. This information is provided by RNS The company news service from the London Stock Exchange

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