Final Results
For immediate release 29 July 2011
Worthington Group plc ("the Company")
Annual Report
Results for the Year Ended 31 March 2011
Chairman's Statement
I am pleased to report that there has been much progress made since my appointment and that of Peter Townsend, as Chief Executive, last July. The Company recorded a profit after taxation of £2,077,000 (2010: loss of £316,000) which included a number of non cash items relating principally to the Company's investment property in Keighley and the pension scheme. These and other developments are discussed more fully below.
Cash balances in the year reduced from £831,000 to £247,000 at the year end point. This was partly due to a loan of £350,000 made by the Company in November 2010, which has been repaid since the year end, together with payments to the pension scheme and substantial costs in relation to a scheme for the redevelopment of the Keighley property.
Our change to a standard listing during the year received over 99% support from shareholders and we remain confident that the work and expense that was brought about preparing for this change will ultimately produce significant advantage and savings for the Company's future prospects.
The pension scheme deficit reduced by £398,000 to £2,842,000 (2010: £3,240,000) in the year after the inclusion in the income statement of an interest expense of £110,000 (2010: £242,000). I am pleased to confirm, as previously announced, that the Company and Trustees reached agreement on future contributions to the Scheme following the full triennial actuarial review of the scheme to April 2010. It has been agreed that the employer will now contribute £110,000 per annum plus a 20% share of profits made in the financial year. The annual PPF levy previously borne by the Scheme will now be paid by the Company. During the process the Company received a rebate of £120,000 with regard to the release of over provisions made in the Scheme with respect to PPF levies previously reserved by the Actuary.
The pension scheme funding risk continues to represent the principal risk factor faced by the Company. We continue, in conjunction with the Trustees to closely monitor the performance of the Scheme's investments which total £8.26m (2010:£8.20m) together with the schemes liabilities. During the year the Trustees took the decision to change the investment manager of the equity and bond portion of the portfolio and at the same time to liquidate the Scheme's bond holdings of some £3m. At the year end the scheme was holding £3.3m of cash (2010:£106,000) although a significant portion of this has been earmarked for a specific investment.
We have worked closely with Trimmings by Design our associated company, in which we have a 44% interest. Having considered various proposals we feel that the existing agreement, properly administered and controlled, continues to be in the best interests of both companies. Draft accounts for the year ended 31 December 2010 show Trimmings has returned to profitability following increased activity and they have in the last few weeks, paid Worthington a dividend of £44,000 which will be reflected in the next financial year.
Turning to the Keighley property we have taken the opportunity to demolish buildings as tenants have left to save on rates and prepare the site for redevelopment. Our main tenant has given notice to vacate the property at the end of July and we hope to start on Phase 2 of the demolition works in early August with an anticipated 12 week demolition schedule. Significantly we were originally quoted £300,000 for the demolition works but we have managed to alter our timings and avail ourselves of significant saving by reclaiming a considerable amount of the stone and metal work within the buildings and now expect the demolition cost to be negligible or potentially produce a small profit.
As is normal with a redevelopment on this scale, we have, in preparation for the application and in conjunction with our consultants, worked closely with the planners to draw up what we hope will be an acceptable scheme. As we reported earlier planning permission has now been submitted for a multi use development to include; Residential, a Hotel, a Cinema, Retail outlets and Industrial use.
During the process the council rezoned part of our site to allow residential use and they have provided some additional land adjacent to our site allowing better access and taking up the Industrial use previously covering our existing site which could have restricted our plans. The Directors believe, having consulted with their professional advisers, that the anticipated development costs will be approximately £30 Million and produce a significant return for the Company.
We have posted a copy of the block plan of the proposed development on our website www.worthingtongroupplc.co.uk for shareholders to view. Our consultants lead us to believe that our plan will receive planning permission within 12 weeks although this is a process over which we have no influence and it is always possible that we will yet be asked to make further amendments to the plans. For the development to be in a position to proceed we will have to invest further funds, from our own resources, to comply with all the likely planning requirements.
We remain confident that we will receive significant planning permission and the Board has therefore reassessed the fair value of the property to £4m which we feel better represents the value of the land at this time. This has produced an accounting profit of £2.2m which has been included in the income statement in the current year. The pension fund Trustees have acknowledged that as this is purely an accounting profit at this time, none of the increased profit will attract an additional contribution to the pension fund. We would potentially anticipate a further revaluation once the planning permission is received and the Company is on track to significantly benefit from the potential value within the development. We are currently in discussions with various potential tenants and occupiers and hope that these discussions will lead to formal Heads of Terms and ultimately Agreements to Lease - which, we believe, could effectively underwrite the development costs.
Once we have secured planning permission we will be better placed to determine how we should proceed. We will consider seeking funding to undertake the development ourselves in its entirety or in stages, each phase potentially funding the next part of the development or consider if we should seek an experienced joint venture partner to take the project forward. We may also seek to sell the site outright with the benefit of planning permission and potentially funding and use the funds to pursue other opportunities.
We have also investigated a number of potential mergers and acquisitions which have involved considerable due diligence but we have managed to keep the professional costs associated with this activity to no more that £35,000. These costs will be reflected within next year's accounts, but as yet we have not found an opportunity that we could confidently put to shareholders that properly reflects the current position of the Company or the significant potential we have from the development.
As Chairman I am aware that as Chief Executive Peter Townsend should be significantly incentivised to continue the work he is undertaking for the Company and as is normal in such circumstances, as soon as it is appropriate to do so, I intend to take steps to put in place a substantial options package for him so that his interests are properly aligned with those of the shareholders.
The Board is extremely confident as to the Company's current position and we remain enthusiastic and ready to take the Company forward.
Tony Cooke
Chairman
29 July 2011
Worthington Group plc
Income Statement
for the year ended 31 March 2011
Total Total
2011 2010
Note £'000 £'000
Revenue 2 140 147
Cost of sales (154) (12)
_________ _________
Gross profit (14) 135
Administrative expenses (151) (7)
Pension expenses 32 (67)
_________ _________
Operating (loss) / profit (133) 61
Investment revenues 3 88 169
Fair value gain on investment property 4 2,200 -
Pension Finance costs 5 (110) (242)
Share of results of associate 6 32 (79)
Provision for impairment losses 6 - (225)
_________ _________
Profit/ (loss) before taxation 2,077 (316)
Taxation 7 - -
_________ _________
Profit/ (loss) after taxation for year 2,077 (316)
_________ _________
Earnings per ordinary share from continuing operations
- Basic 8 17.6 p (2.7p)
- Fully diluted 8 N/A N/A
All items are derived from continuing operations.
Worthington Group plc
Statement of Comprehensive Income
For the year ended 31 March 2011
2011 2010
£ £
Profit / (loss) for the year 2,077 (316)
Actuarial profit/ (loss) on retirement benefit obligation 328 (539)
_______ _______
Total comprehensive income/ (loss) for the year 2,405 (855)
_______ _______
Attributable to:
Owners of the parent 2,405 (855)
_______ _______
Worthington Group plc
Statement of Financial Position
For the year ended 31 March 2011
2011 2011 2010 2010
£'000 £'000 £'000 £'000
Non-current assets
Investment property 4,000 1,800
Interests in associates 157 125
Other financial assets 800 800
_____ ____
4,957 2,725
Current assets
Trade and other receivables 483 15
Cash and bank balances 247 831
_____ ____
730 846
_____ _____
Total assets 5,687 3,571
Current liabilities
Trade and other payables 208 99
_____ _____
208 99
_____ _____
Non-current liabilities
Retirement benefit obligation 2,842 3,240
_____ _____
2,842 3,240
_____ _____
Total liabilities (3,050) (3,339)
_____ _____
Net assets 2,637 232
_____ _____
Equity
Called-up share capital 1,181 11,807
Share premium account 9,836 9,836
Other reserve 10,626 -
Retained earnings (19,006) (21,411)
_____ _____
Total equity 2,637 232
_____ _____
Worthington Group plc
Changes in Equity
For the year ended 31 March 2011
Share Share Other Retained
Capital Premium Reserve Earnings Total
£'000 £'000 £'000 £'000 £'000
At 1 April 2009 11,807 9,836 - (20,556) 1,087
Total comprehensive income for the year - - - (855) (855)
_____ _____ _____ _____ _____
At 31 March 2010 11,807 9,836 - (21,411) 232
Purchase and cancellation
of deferred shares (10,626) - 10,626 - -
Total comprehensive income for the year - - - 2,405 2,405
_____ _____ _____ _____ _____
Balance as at 31 March 2011 1,181 9,836 10,626 (19,006) 2,637
_____ _____ _____ _____ _____
On 31 March 2011 the company issued 1 new ordinary share for £1 and repurchased for £1 all of the Deferred Ordinary shares in issue for cancellation. A capital reserve has been created in respect of the cancelled shares.
Worthington Group plc
Cash Flow Statement
for the year ended 31 March 2011
2011 2010
£'000 £'000
Cash flow from operating activities
Operating (loss)/profit (133) 61
Movement in trade and other receivables (71) 70
Movement in trade and other payables 109 (83)
Payments to pension scheme (180) (182)
_____ _____
Net cash outflow from operating activities (275) (134)
Cash flows from investing activities
Interest received 41 169
Loans advanced (350) -
_____ _____
Net cash (used)/generated by investing activities (309) 169
(Decrease)/increase in cash and cash equivalents (584) 35
Opening cash and cash equivalents 831 796
_____ _____
Closing cash and cash equivalents 247 831
_____ _____
Worthington Group plc
Notes forming part of the preliminary announcement for the year ended 31 March 2011
1. Basis of preparation
Worthington Group plc is a company incorporated in the United Kingdom. The Company has its primary listing on the London Stock Exchange.
The financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.
The financial information in this announcement, which was approved by the Board of Directors on 29 July 2011, does not constitute the Company's statutory accounts for the years ended 31 March 2011 or 2010, but is derived from these accounts.
Statutory accounts to 31 March 2010 have been delivered to the Registrar of Companies and those for 2011 will be delivered following the Company's annual general meeting. The auditors have reported on these accounts; their reports were unqualified and did not contain statements under S498 of the Companies Act 2006.
The financial information has been prepared on the historical cost basis, except for the revaluation of certain properties and assets. The principle accounting policies applied in the preparation of the consolidated financial statements are consistent with those set out in the statutory accounts for 2010.
2. Segmental Analysis
The Company only has one operating segment relating to property rental and management. Disclosure is in accordance with IAS 34. All operations are continuing and in the UK.
Included in revenues arising from the Company's only operating segment are revenues of approximately £140,000 which arose from the Company's three largest customers being £98,000, £22,000 and £20,000 respectively.
3. Investment Revenues
2011 2010
£'000 £'000
Loan note interest 52 52
Interest and arrangement fees on bridging loans 35 116
Interest on bank deposits 1 1
_____ _____
88 169
_____ _____
4. Investment property
2011 2010
£'000 £'000
Fair value at 31 March 4,000 1,800
_____ _____
A detailed planning application was submitted on 22 July 2011 to redevelop the investment property in Keighley. The directors have revalued the property to £4m (2010:£1.8m), having regard to the stage of the planning process and their view as to the eventual worth of the property upon receipt of planning permission. This has produced an accounting gain on the fair value of the investment property of £2.2m in the year but does not reflect any increase in the cash position at this time.
Revenues receivable in respect of the property amounted to £140,000 (2010:£147,000). Operating costs in respect of the property amounted to £154,000 (2010: £12,000). The operating costs in 2011 included some £20,000 in respect of business rates, which related to prior years following the determination of a rating appeal, as well as some £110,000 of costs related to the planning application including architects and legal fees and monies paid to Corporate Services Associates Ltd for consultancy services.
The main tenant of the property has given notice to quit in July and accordingly the rental income will effectively cease as the final small tenant leaves at the end of August. As tenants vacate the property the directors plan to continue to demolish the vacant areas to avoid business rates and also prepare the land for eventual redevelopment
5. Pension Finance Costs
2011 2010
£'000 £'000
Pension scheme net finance charge 110 242
_____ _____
6. Share of results of associates
2011 2010
£'000 £'000
Share of profits/ (losses) 57 (60)
Associates' net finance costs (25) (23)
Taxation of profits less losses of associates - 4
_____ _____
32 (79)
_____ _____
In 2010 a provision of £225,000 was made against the carrying value of the investment in Trimmings by Design Limited following continued losses and a budgeted loss forecast for the current financial year.
7. Taxation
No corporation charge has been provided for 2011 or 2010 as a result of the availability of various reliefs.
8. Earnings per share
The earnings per share has been calculated using the weighted average number of ordinary shares in issue during the relevant financial periods. The weighted average number of shares in issue during the year was 11,807,013 (2010:11,807,013) and the profit after taxation was £2,077,000 (2010: loss £316,000). There is no difference between the basic and diluted losses per share in either year.
9. Related party transactions
During the year the sum of £88,000 (2010: nil) was paid to Corporate Services Associates Ltd for services in respect of Anthony Cooke and Peter Townsend. Peter Townsend is a director and shareholder of Corporate Services Associates Ltd.
Included in other financial assets are loan notes of £800,000 (2010 - £800,000) due from Trimmings by Design Limited an associated company in which the Company has a 44% interest. The loan notes are subject to interest at 6.5% amounting to an interest revenue for the period of £52,000 (2010 - £52,000) and as at the period end there was £13,000 (2010 - £13,000) of unpaid interest within Trade and other receivables.
10. Statement of Directors' responsibilities
Each of the Directors confirms that to the best of their knowledge:
1. The financial statements within the full Annual Report and Accounts from which the financial information within this Final Results announcement has been extracted, have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Company; and
2. The management report, which is incorporated into the Directors' Report, includes a fair review of the development and performance of the business and the position of the Company taken as a whole, together with a description of the principal risks and uncertainties
11. Copies of the Annual Report
Copies of the Annual Report will be available from the Company Secretary at the registered office which is situated at 1 The Green, Richmond, Surrey TW9 1PL. The Annual Report will also be available for download on the Company's website www.worthingtongroupplc.co.uk and has been uploaded to the National Storage Mechanism and will be available for viewing shortly at www.hemscott.com/nsm.do
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Enquiries: |
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Anne Aylesbury, PD Cosec Ltd - Company Secretary Roland Cornish, Beaumont Cornish |
Tel: 0208 940 0963
Te: 0207 628 3396 |
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Website: www.worthingtongroupplc.co.uk
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