Interim Results

Solitaire Group PLC 24 September 2003 24 September 2003 SOLITAIRE GROUP Plc Solitaire is a leading national provider of property management services INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2003 Highlights Change Six months ended Six months ended per cent 30 June 2003 30 June 2002 £'000 £'000 Turnover +5.2 £3,032 £2,882 Profit before tax +7.3 £782 £729 Profit before tax, amortisation and +6.1 £909 £857 interest Earnings per share +9.3 11.7p 10.7p Earnings per share before amortisation +8.4 12.9p 11.9p Interim dividend +10.0 3.3p 3.0p • Acquisition of Freehold Managers PLC ('FMP') for an initial consideration of £3.9 million (£0.7 million in shares and £3.2 million in cash plus an estimated £2million earn out, announced today. This acquisition, which is substantially earnings enhancing, represents an exciting new opportunity for Solitaire • Growth in instructions from both existing and new housebuilder clients continues. We have been appointed as property managers to a number of significant residential development schemes and our ground rent portfolio continues to grow • As a result of our extensive management responsibilities in southern England, we are considering opening a second branch office on or near the south coast George Brutton, Chairman of Solitaire Group Plc, commented: 'I am delighted that FMP is joining the Solitaire Group. This acquisition complements and extends Solitaire's core range of activities and will provide significant earnings enhancement for the group. We look forward to working with the FMP team to develop and grow our business. 'The continuing growth of our core property management business has been very satisfactory and we have a substantial pipeline of developments which will come on-stream for management during the next 12-18 months.' For further information: Graham Shapiro, Joint Managing Director Tel: 0208 449 6125 Solitaire Group Plc Tarquin Edwards / Chris Steele Tel: 0207 929 5599 Holborn Public Relations Limited Chairman's Statement I am pleased to report another satisfactory first half for Solitaire showing a 5.2 per cent increase in turnover and a 7.3 per cent increase in profit before tax. The results show the continuing strength of our core property management business. We have today announced the acquisition of Freehold Managers PLC for an initial consideration of £3.9 million (£0.7 million in shares and £3.2 million in cash) plus an estimated £2 million earn out. This is a substantially earnings enhancing acquisition and represents an exciting new opportunity for Solitaire. Results and dividend Turnover increased by 5.2 per cent to £3,032,000 (2002: £2,882,000). The operating profit for the six months to 30 June 2003 after writing off goodwill amortisation but before interest, increased by 6.5 per cent to £852,000 (2002: £800,000). Accordingly, after interest and goodwill amortisation, pre-tax profits were up by £53,000 or 7.3 per cent to £782,000 (2002: £729,000) and basic earnings per share were up by 9.3 per cent to 11.70p (2002: 10.70p). Adjusted earnings per share, before goodwill amortisation and after interest were up by 8.4 per cent to 12.90p (2002: 11.90p). The board is recommending the payment of an increased interim dividend of 3.30p (2002: 3.00p) per share, an increase of 10.0 per cent over 2002, reflecting the board's confidence in the future prospects of the group. This will be paid on 21 November 2003 to shareholders on the register on 10 October 2003. Review of operations Residential property management The growth in instructions from our existing housebuilder clients has shown no signs of slowing down. In addition we are seeing a growing number of instructions from housebuilders we have not worked with before. Furthermore, the instructions that we are receiving are substantial in size, which will lead to greater operational efficiency. We have started a phased introduction of our new property management computer system. The main reason for its introduction is the significant extra compliance requirements for property managers contained in the Commonhold and Leasehold Reform Act 2002. The new system will however enable us to further improve our mainstream service to clients. The success of our Leicester office in attracting business from new and existing clients has necessitated increased local staffing. In addition we are considering opening a further office in or near the south coast to better serve our large and growing management responsibilities in that area. Professional and commercial services Management fees and professional services income derived from Moss Kaye Pembertons remains at a satisfactory level, but the commissions from selling and letting commercial premises have experienced a temporary slow down in common with the rest of the market. However we continue to see benefits from the cross-referral of business. Insurance services The number of properties in our insurance portfolio continues to rise. The value of properties managed by the group for insurance purposes amounts to approximately £1.6 billion. Management of residential rented property This business continues to make a positive contribution to group profits and we are seeking further opportunities for expansion in this area. Current trading and prospects The continuing growth of our core property management business has been very satisfactory and we have a substantial pipeline of developments which will come on-stream for management during the next 12-18 months. The increase in capital expenditure this half year reflects the growth of the group's ground rent portfolio. Our announcement of the acquisition of Freehold Managers PLC represents an exciting new opportunity for Solitaire and I look forward to the future of the group with confidence. George Brutton, FRICS Chairman 24 September 2003 Unaudited consolidated profit and loss account Six months Six months Year to to 30 June to 30 June 31 Dec 2003 2002 2002 Notes £'000 £'000 £'000 _______ _______ _______ Revenue 3,032 2,882 5,911 Operating expenses External fees and commissions 94 158 276 Other administration expenses 2,029 1,867 3,830 _______ _______ _______ 909 857 1,805 Amortisation of goodwill and development costs 57 57 115 Exceptional costs - - 95 _______ _______ _______ Operating profit 852 800 1,595 Net interest paid (70) (71) (148) _______ _______ _______ Profit on ordinary activities before taxation 782 729 1,447 Taxation on ordinary activities 241 233 450 _______ _______ _______ Profit on ordinary activities after taxation 541 496 997 Dividends 2 153 138 475 _______ _______ _______ Retained profit for the period 388 358 522 _______ _______ _______ Basic and diluted earnings per share 3 11.7p 10.7p 21.6p Adjustment for amortisation 1.2p 1.2p 2.5p Adjustment for exceptional costs - - 2.1p _______ _______ _______ Adjusted earnings per share 3 12.9p 11.9p 26.2p _______ _______ _______ Dividend per share 3.30p 3.00p 10.3p _______ _______ _______ Unaudited consolidated balance sheet 30 June 30 June 31 Dec 2003 2002 2002 £'000 £'000 £'000 _______ _______ _______ Fixed assets Intangible assets 1,734 1,840 1,793 Tangible assets Office equipment 298 163 184 Freehold land and buildings 261 181 261 Freehold investment reversions 12,604 9,498 11,739 13,163 9,842 12,184 _______ _______ _______ 14,897 11,682 13,977 _______ _______ _______ Current assets Debtors 2,243 1,946 1,888 Cash and deposits 112 301 101 _______ _______ _______ 2,355 2,247 1,989 Creditors: amounts falling due within one year Borrowings 1,099 769 790 Other liabilities 1,511 1,681 1,337 _______ _______ _______ 2,610 2,450 2,127 Net current (liabilities) / assets (255) (203) (138) _______ _______ _______ Total assets less current liabilities 14,642 11,479 13,839 _______ _______ _______ Creditors: amounts falling due after more than one year Borrowings 2,167 1,583 1,779 _______ _______ _______ Net Assets 12,475 9,896 12,060 _______ _______ _______ Capital and reserves Called-up share capital 464 462 462 Share premium account 2,671 2,647 2,647 Revaluation reserve 6,731 4,731 6,731 Profit and loss account 2,609 2,056 2,220 _______ _______ _______ Equity shareholders' funds 12,475 9,896 12,060 _______ _______ _______ Consolidated cash flow statement Six months Six months Year to to 30 June to 30 June 31 Dec 2003 2002 2002 £'000 £'000 £'000 _______ _______ _______ Cash flow from operating activities 1,076 1,401 1,752 Returns on investments and servicing of finance Interest received 5 4 18 Interest paid (75) (75) (166) _______ _______ _______ Net cash outflow from returns on investment and (70) (71) (148) servicing of finance _______ _______ _______ UK corporation tax (355) (346) (509) _______ _______ _______ Capital expenditure and financial investment Office equipment (163) (33) (92) Purchase of freehold reversions (865) (263) (584) Disposal of fixed assets - 55 55 _______ _______ _______ Net cash outflow from capital expenditure and (1,028) (241) (621) financial investment _______ _______ _______ Acquisition of subsidiary - (17) (28) Equity dividends paid (338) (308) (446) _______ _______ _______ Cash (outflow) / inflow before use of liquid (715) 418 0 resources and financing _______ _______ _______ Management of liquid resources and financing Financing 409 (76) 153 Equity 29 - _______ _______ _______ (Decrease) / Increase in cash in the year (277) 342 153 _______ _______ _______ Six months Six months Year to to 30 June to 30 June 31 Dec 2003 2002 2002 £'000 £'000 £'000 _______ _______ _______ Reconciliation of net cash flow to movement in net debt (Decrease) / Increase in cash in the year (277) 342 153 Cash (inflow) / outflow from movement in debt (409) 76 (153) _______ _______ _______ Movement in net debt (686) 418 0 Opening net debt (2,468) (2,467) (2,468) _______ _______ _______ Closing net debt (3,154) (2,049) (2,468) _______ _______ _______ Notes 1. Basis of preparation of unaudited interim information The results for the six months ended 30 June 2003 have been reviewed by MacIntyre Hudson and have been prepared on the basis of the accounting policies set out in the consolidated financial statements at 31 December 2002. The comparatives for the year ended 31 December 2002 have been extracted from the audited consolidated financial statements for that period. The audited consolidated financial statements for the year ended 31 December 2002 have been filed with the Registrar of Companies and include an unqualified audit report. The comparatives included in this report do not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. 2. Dividends The board has declared an interim dividend of 3.30p (2002: 3.00p) per ordinary share, payable on 21 November 2003 to shareholders on the register on 10 October 2003. 3. Earnings per ordinary share The calculation of earnings per share for the six months ended 30 June 2003 is based upon a profit of £541,000 (2002: £496,000) and the average number of ordinary 10p shares in issue of 4,636,831 (2002: 4,623,581). The group considers that the additional disclosure of the adjusted earnings per share before the effect of amortisation more truly reflects its operational performance. 4. Interim report Copies of the interim report for the six months ended 30 June 2003 will be sent to shareholders on 22 October 2003. Further copies will be available from the Company Secretary, Solitaire Group Plc, Lynwood House, 10 Victors Way, Barnet, Hertfordshire, EN5 5TZ and at the group's website, www.solitairegroup.com. This information is provided by RNS The company news service from the London Stock Exchange

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