8 Months Results to 31 December 1999
Property & Capital Group PLC
29 February 2000
Property & Capital Group Plc (the 'Group') Interim Results
In the course of a transaction under advanced discussion, the Group expects
shortly to be required to circulate results to 31st December 1999.
Accordingly, the Group now publishes interim results for the eight month
period to 31st December 1999.
Profit (before and after tax) for the period amounted to £931,000.
The results for the period do not incorporate the subsequent acquisition on
8th February 2000 of PCG Residential Lettings Holdings PLC which added some
£60 million gross assets and £11 million net assets to the balance sheet.
Unaudited Audited
8 months to 12 months to
31-Dec-99 30-Apr-99
£000 £000
TURNOVER
Continuing operations 1,704 1,814
Acquisitions 667 -
Discontinued operations - 899
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2,371 2,713
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OPERATING PROFIT/(LOSS)
Continuing operations:
Trading profit 469 (536)
Goodwill amortisation (8) (12)
Acquisitions:
Trading profit 319 -
Discontinued operations:
Trading loss - (668)
Goodwill amortisation - (352)
Share of operating loss on joint venture (39) -
------ ------
Operating profit/(loss) 741 (1,568)
Continuing operations:
Write down of investments - (50)
Discontinued operations:
Loss on disposal of subsidiary - (374)
Loss on liquidation of subsidiary - (2,100)
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741 (4,092)
(Loss)/gain on disposal of investment properties (251) -
Negative goodwill release 1,141 -
Net interest (payable)/receivable (700) 89
------ ------
PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAX 931 (4,003)
Taxation - (53)
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PROFIT/(LOSS) ATTRIBUTABLE TO MEMBERS
OF PARENT COMPANY 931 (4,056)
Preference share dividend (7) (10)
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RESULT FOR PERIOD 924 (4,066)
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Earnings/(loss) per share - basic and diluted 24.09p (115.02)p
------ ------
31-Dec-99 30-Apr-99
£000 £000
FIXED ASSETS
Intangible assets
Positive goodwill 214 221
Negative goodwill (297) -
------ ------
(83) 221
Tangible assets
Investment properties 6,893 -
Other 168 111
Investments
Joint venture - share of gross assets 91 126
- share of gross liabilities (79) (75)
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12 51
Other 101 91
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113 142
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7,091 474
CURRENT ASSETS
Debtors 12,073 565
Cash at bank and in hand 141 25
------ ------
12,214 590
CREDITORS: amounts falling due within one year
Borrowings 420 826
Preference dividends payable 24 -
Other creditors 3,032 746
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3,476 1,572
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NET CURRENT ASSETS/(LIABILITIES) 8,738 (982)
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TOTAL ASSETS LESS CURRENT LIABILITIES 15,829 (508)
CREDITORS: amounts falling due after
more than one year 14,916 (710)
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913 (1,218)
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CAPITAL AND RESERVES
Called up share capital 229 221
Deferred consideration 268 193
Share premium account 653 653
Merger reserve 343 -
Preference dividend reserve - 17
Revaluation reserve 248 -
Profit and loss account (828) (2,302)
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913 (1,218)
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31-Dec-99 30-Apr-99
£000 £000
Profit/(loss) attributable to members
of the parent company 931 (4,056)
Unrealised surplus on revaluation of properties 248 -
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Total recognised gains and losses
relating to period 1,179 (4,056)
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GROUP RECONCILIATION OF SHAREHOLDERS' FUNDS
8 months to 12 months to
31-Dec-99 30-Apr-99
£000 £000
Total recognised gains and losses 1,179 (4,056)
Dividends (7) (10)
New shares issued 901 -
Deferred consideration 75 (132)
Goodwill reinstated on disposal - 156
Dividend creditor reclassified (17) 17
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Total movements during the period 2,131 (4,025)
Opening shareholders' funds (1,218) 2,807
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Closing shareholders' funds 913 (1,218)
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BASIS OF PREPARATION
The interim financial statements are unaudited and do not constitute statutory
accounts as defined in Section 240 of the Companies Act 1985. These
statements have been prepared on the basis of the accounting policies set out
in the Group's 1999 Annual Report and Accounts with the addition of accounting
policies for investment properties and negative goodwill as set out below and
were approved by the board of directors on 28 February 2000. Financial
statements for the year ended 30 April 1999 are abridged statements; full
accounts with an unqualified audit report have been lodged with the Registrar
of Companies.
CHANGES IN COMPOSITION OF THE GROUP
The results reflect the acquisition during the period of Norcity III PLC,
Norcity IV PLC and Borders Assured Properties PLC for a total aggregate
consideration of £1,535,266, comprising cash of £1,425,019 and shares to the
value of £111,248.
INVESTMENT PROPERTIES
Certain of the Group's properties are held for long-term investment.
Investment properties are accounted for in accordance with SSAP 19, as
follows:
(i) investment properties are revalued at least annually. The surplus or
deficit on revaluation is transferred to the revaluation reserve unless a
deficit below original cost, or its reversal, on an individual investment
property is expected to be permanent, in which case it is recognised in the
profit and loss account for the year;
(ii) net gains or losses on disposal of investment properties are calculated
by reference to book value and included as non operating exceptional items;
and
(iii)no depreciation is provided in respect of freehold investment properties.
Although the Companies Act would normally require the systematic annual
depreciation of fixed assets, the directors believe that the policy of not
providing depreciation is necessary in order for the accounts to give a true
and fair view, since the current value of investment properties, and changes
to that current value, are of prime importance rather than a calculation of
systematic annual depreciation. Depreciation is only one of the many factors
reflected in the annual valuation, and the amount which might otherwise have
been included cannot be separately identified or quantified.
NEGATIVE GOODWILL
Negative goodwill arising on acquisitions is capitalised, classified as a
negative asset on the balance sheet and released to profit and loss account as
the related investment property assets are disposed of.
EARNINGS/(LOSS) PER ORDINARY SHARE
The calculation of basic and diluted earnings/(loss) per ordinary share is
based on the following:
8 months to 12 months to
31-Dec-99 30-Apr-99
£000 £000
Profit/(deficit) 931 (4,056)
Preference dividend (7) (10)
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924 (4,066)
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The weighted average number of ordinary shares
in issue during the period:
Basic 3,823,194 3,534,395
Fully diluted ordinary shares from
share option schemes 12,380 -
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3,835,574 3,534,395
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REVALUATION OF INVESTMENT PROPERTIES
Investment properties are included in the accounts at valuation. During the
period the investment properties were revalued on an open market basis as at
31 October 1999 by FPD Savills. The surplus on revaluation at that date was
£320,000, £72,000 having been realised on the disposal of properties as at 31
December 1999.
POST BALANCE SHEET EVENTS
On 17 December 1999 the Group made a Recommended Cash Offer with Share
Alternative for the whole of the issued share capital of Paragon Protected
Growth PLC ('Paragon') for a total consideration of £3,473,581. On 11
February 2000 the offer closed wholly unconditionally with acceptances having
been received in respect of 97.92% of the shares in Paragon. On 11 February
2000 58,803 new Property & Capital Group plc ordinary shares of 2p each
nominal value were issued in connection with the offer.
On 8 February 2000 the Group acquired the whole of the issued share capital of
PCG Residential Lettings Holdings PLC in consideration of the issue of
28,656,876 new Property & Capital Group plc ordinary shares of 2p each nominal
value. The transaction added approximately £60M of gross assets and
approximately £11M of net assets to the Group's balance sheet.
INDEPENDENT REVIEW REPORT TO PROPERTY & CAPITAL GROUP PLC
Introduction
We have been instructed by the company to review the financial information set
out on pages 2 to 6 and we have read the other information contained in the
interim report and considered whether it contains any apparent misstatements
or material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board. A review consists principally
of making enquiries of management and applying analytical procedures to the
financial information and underlying financial data and based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities
and transactions. It is substantially less in scope than an audit performed
in accordance with Auditing Standards and therefore provides a lower level of
assurance than an audit. Accordingly we do not express an audit opinion on
the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the eight months
ended 31 December 1999.
Ernst & Young
Glasgow
28 February 2000
Copies of this document will be mailed to shareholders on 1 March 2000 and
will be available, free of charge, from the Company's registered office at
James Sellars House, 144 West George Street, Glasgow, G2 2HG.
29th February 2000