RNS Number:4858H
Merivale Moore PLC
14 February 2003
MERIVALE MOORE PLC - INTERIM ANNOUNCEMENT
* Merivale Moore, the property investor specialising in Central London
offices and South East Industrials, announces a fall in NAV per share, with
pro forma NAV per share declining to 225.7p from 263.3p at 30 June 2002.
The triple net asset value per share is 190.3p as compared to 184.2p at 31
December 2001.
* The decline in NAV per share has been increased by Merivale Moore's
relatively high gearing, although this decreased in the period, net debt/
gearing at 31 December 2002 of #55.0 m/126% comparing with #64.9m/133% at 30
June 2002.
* In the past eight months, Merivale Moore has not added to its investments
but has sold 8 properties to the value of #15.8m.
* Pre-tax profit amounted to #1.58 m (2001: #2.06 m), although, excluding
exceptional and other one-off items, profits increased.
* Revenue profits (the excess of net rents over administrative expenses and
interest charges) improved to #0.68 m from #0.41 m.
* A maintained dividend per share of 2.5p has been declared.
* Grenville Dean, Chairman, stated "Rents for central London offices, which
comprise some 75% of Merivale Moore's portfolio, have fallen and the market
is in decline. No doubt the current malaise is exacerbated by the Stock
Exchange slump and the threat of war against Iraq. The fundamentals,
however, are not sound. In our view, rents and capital values will remain
subdued for at least two years."
* Grenville Dean, Chairman, has today indicated to his co-Directors that he
is in the preliminary process of formulating a proposal to put to the Board
which could lead to an offer being made by him for the balance of the shares
in Merivale Moore not already owned by him and his family.
Enquiries:
Merivale Moore plc 020-7399 2300
Grenville Dean (Chairman)
Mike Probert (Chief Executive)
Bill Arnold (Finance Director)
Bankside Consultants Limited
Charles Ponsonby 020-7444 4166
CHAIRMAN'S STATEMENT
The pre-tax profit for the half year ended 31st December, 2002 amounted to #1.58
million as compared with #2.06 million for the same period last year. On the
positive side, revenue profits (the excess of net rents over administrative
expenses and interest charges) improved from #412,000 to #681,000 (65%). The
pro forma net assets per share, on the other hand, fell 14.3% from 263.3p, as at
30th June, 2002, to 225.7p at 31st December, 2002. The triple net asset value
per share is 190.3p, as compared to 184.2p at 31st December, 2001.
A year ago in my Interim Statement I stated that the commercial property market
in which Merivale Moore operates, and to which it is financially and
geographically committed, had "lost its bounce". In September last year I
described our market as "uncertain and becalmed". In the event central London
office rents have fallen and the market is in decline. No doubt the current
malaise is exacerbated by the Stock Exchange slump and by the threat of a war
against Iraq. The fundamentals, however, are not sound. There is frail demand
for office space and there is a considerable excess of space in central London
to satisfy what demand there might be. In our view rents and capital values
will remain subdued for at least two years.
A consolation is that we have not added to our investments over the last 8
months, but rather have sold properties to the value of #15.8 million over that
period.
The weak state of the central London office market, therefore, has led to
declining capital values and realistically the Company is unable, in this
market, to arrest that decline. And net asset growth, as is well known, is the
principal objective of Merivale Moore's business.
For my part, against the above background, I have reviewed the strategic options
for the future and I have considered various ways in which shareholder value can
be maintained. There are a number of possibilities including returning value to
shareholders through a capital restructuring, through seeking an offer for the
Company or through promoting a management buy-out.
As a consequence, I have today indicated to my co-Directors that I am in the
process of formulating a proposal to put to the Board. That proposal could lead
to an offer being made by me for the balance of the shares in Merivale Moore not
already owned by me and my family.
The Board would like to emphasise that this process is, so far, preliminary and
that there can be no certainty that a firm proposal or offer will follow.
Naturally, a further announcement will be made as soon as possible.
The interim dividend will be the same as last year, namely 2.5p per share, and
will be paid on 22nd April, 2003 to shareholders on the register of members at
the close of business on 28th March, 2003.
Grenville Dean
Chairman 14th February 2003
PRO FORMA STATEMENT OF NET ASSETS
at 31 December 2002 (unaudited)
31 31 December 30 June
December 2001 2002
2002
#'000 #'000 #'000
Fixed assets
Investment properties 77,741 73,463 89,040
Other tangible assets 71 114 88
Investments - 1,400 1,400
_______ _______ _______
77,812 74,977 90,528
_______ _______ _______
Current assets
Stocks 25,342 24,893 27,724
Investments 34 34 34
Debtors 1,969 6,814 1,877
Bank balances and cash 11,102 12,563 12,017
_______ _______ _______
38,447 44,304 41,652
Creditors due within one year 40,162 41,618 51,365
_______ _______ _______
Net current (liabilities)/assets (1,715) 2,686 (9,713)
_______ _______ _______
Total assets less current liabilities 76,097 77,663 80,815
Creditors due after more than one year 32,271 32,508 32,131
_______ _______ _______
Pro forma net assets attributable to shareholders 43,826 45,155 48,684
_______ _______ _______
Pro forma net assets per share 225.7p 225.9p 263.3p
_______ _______ _______
Notes:
i. The pro forma statement of net assets is based on the unaudited
consolidated balance sheet at the period end, as adjusted to reflect the uplift
from cost to professional valuation at 31 December 2002 of properties held as
current assets (stocks) and to add back negative goodwill to be released to the
profit and loss account on realisation of the assets to which it relates.
ii. The properties have been included at valuation by Chesterton plc. No
professional valuation was carried out at 31 December 2001.
iii. If all the properties and investments were realised at the values at which
they are stated in the pro forma statement, a total tax liability of #3,831,000
would arise (being #2,086,000 for investment properties and #1,745,000 for
stocks), of which #nil has been provided in the accounts.
iv. Pro forma net assets per share is calculated on the basis of the pro forma
net assets of #43,826,000 and of 19,419,840 ordinary shares in issue.
v. Having allowed for the tax liability disclosed in note iii above, and the
fair value adjustments to financial instruments disclosed in note 6 of this
statement, the triple net asset value per share is 190.3p (30 June, 2002 -
211.9p; 31 December, 2001 - 184.2p).
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the half year ended 31 December 2002 (unaudited)
Half year to Half year to Year to
31 December 31 December 30 June
2002 2001 2002
Notes #'000 #'000 #'000
Rents receivable 3,785 3,731 7,445
Property expenses 462 393 898
_______ _______ _______
Net rental income 3,323 3,338 6,547
(Loss)/profit on sales of trading (210) 38 18
properties
Other operating income 208 85 119
________ _______ _______
Total income 3,321 3,461 6,684
________ _______ _______
Less:
Administrative expenses 700 676 1,649
Exceptional items:
- release of negative (244) (87) (316)
goodwill
- fees on aborted - 109 109
transaction
_______ _______ _______
456 698 1,442
_______ _______ _______
Operating profit 2,865 2,763 5,242
Profit on sale of investment properties 470 1,548 2,305
_______ _______ _______
3,335 4,311 7,547
Exceptional items 2 183 - -
_______ _______ _______
3,518 4,311 7,547
Net interest payable 1,942 2,250 4,163
_______ _______ _______
Profit on ordinary activities before tax 1,576 2,061 3,384
Tax 3 912 676 1,003
_______ _______ _______
Profit on ordinary activities after tax 664 1,385 2,381
Dividends 4 485 500 1,377
_______ _______ _______
Retained profit 179 885 1,004
_______ _______ _______
Dividends per share 4 2.5p 2.5p 7.0p
_______ _______ _______
Earnings per share - basic and diluted 5 3.41p 6.93p 12.06p
_______ _______ _______
All profit and loss items relate to continuing activities
CONSOLIDATED BALANCE SHEET
at 31 December 2002 (unaudited)
31 December 31 December 30 June
2002 2001 2002
#'000 #'000 #'000
Fixed assets
Intangible assets:
Negative goodwill (168) (641) (412)
Tangible assets:
Investment properties 77,741 73,463 89,040
Other tangible assets 71 114 88
Investments - 1,400 1,400
_______ _______ _______
77,644 74,336 90,116
_______ _______ _______
Current assets
Stocks 20,036 19,238 20,098
Investments 34 34 34
Debtors 1,969 6,814 1,877
Bank balances and cash 11,102 12,563 12,017
_______ _______ _______
33,141 38,649 34,026
Creditors due within one year 40,162 41,618 51,365
_______ _______ _______
Net current liabilities (7,021) (2,969) (17,339)
_______ _______ _______
Total assets less current liabilities 70,623 71,367 72,777
32,271 32,508 32,131
_______ _______ _______
Net assets 38,352 38,859 40,646
_______ _______ _______
Capital and reserves
Called up share capital 971 1,000 925
Share premium account 5,805 4,156 4,156
Capital redemption reserve 182 104 179
Investment revaluation reserve 9,007 10,749 14,599
Merger reserve (5,553) (5,553) (5,553)
Capital reserve 3,113 3,127 2,498
Profit and loss account 24,827 25,276 23,842
_______ _______ _______
Shareholders' equity funds 38,352 38,859 40,646
_______ _______ _______
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the half year ended 31 December, 2002 (unaudited)
Half year to Half year to Year to
31 December 31 December 30 June
2002 2001 2002
#'000 #'000 #'000
Profit for the period 664 1,385 2,381
Unrealised (deficit)/surplus on revaluation of
properties (3,808) - 4,198
Deferred tax on unrealised revaluation surplus - (77) -
Tax on realised surpluses previously recognised in
this statement (224) (556) (618)
_______ _______ _______
Total recognised gains and losses (3,368) 752 5,961
______ ______ ______
HISTORICAL COST PROFITS AND LOSSES
for the half year ended 31 December 2002 (unaudited)
Half year to Half year to Year to
31 December 31 December 30 June
2002 2001 2002
#'000 #'000 #'000
Reported profit on ordinary activities before tax 1,576 2,061 3,384
Add: realisation of property revaluation surpluses of
previous years 1,783 2,135 2,558
________ _______ _______
Historical cost profit on ordinary activities before
tax 3,359 4,196 5,942
________ _______ _______
Historical cost profit retained after tax and
dividends 1,738 2,464 2,944
_______ _______ _______
CONSOLIDATED CASH FLOW STATEMENT
for the half year ended 31 December, 2002 (unaudited)
Half year to Half year to Year to
31 December 31 December 30 June
2002 2001 2002
Notes #'000 #'000 #'000
Net cash inflow from operating 7(a) 2,018 1,879 4,594
activities
_______ _______ _______
Returns on investments and servicing of finance
Interest received 302 60 232
Interest paid (2,707) (2,141) (4,199)
_______ _______ ______
(2,405) (2,081) (3,967)
_______ _______ _______
Tax received/(paid) 60 36 (484)
_______ _______ _______
Capital expenditure and financial investment
Receipts from sales of investment 7,874 9,360 20,974
properties
Additions to investment properties (1,413) (3,102) (25,842)
Receipts from sales of fixed asset 1,753 - -
investments
Receipts from sales of sundry fixed - 19 27
assets
Payments to acquire sundry fixed assets - (41) (42)
_______ _______ _______
8,214 6,236 (4,883)
_______ _______ _______
Acquisitions and disposals
Disposal of subsidiary undertaking
Cash consideration 7(b) 1,321 - -
_______ _______ _______
Equity dividends paid (876) (650) (1,150)
_______ _______ _______
Cash inflow/(outflow) before use of
liquid resources and financing 8,332 5,420 (5,890)
_______ _______ _______
Financing
Repurchase of ordinary shares (124) - (2,543)
Issue of ordinary shares 1,699 5 6
(Decrease)/increase in debt (10,822) (7,161) 6,145
_______ _______ _______
(9,247) (7,156) 3,608
_______ _______ _______
Decrease in cash (915) (1,736) (2,282)
_______ _______ _______
Reconciliation of net cash flow to movement in net debt
Decrease in cash (915) (1,736) (2,282)
Cash outflow/(inflow) from decrease/
(increase) in debt 10,822 7,161 (6,145)
_______ _______ _______
Movement in net debt 9,907 5,425 (8,427)
Net debt at 1 July 2002 (64,891) (56,464) (56,464)
_______ _______ _______
Net debt at 31 December 2002 (54,984) (51,039) (64,891)
NOTES ON THE INTERIM STATEMENT
1. Basis of preparation
The interim statement has been prepared on a basis consistent with the
statutory accounts for the year ended 30 June, 2002.
The financial information contained in this statement does not constitute
statutory accounts within the meaning of Section 240 of the Companies Act 1985
and is unaudited. The abridged results for the year ended 30 June, 2002 are an
extract from the financial statements for that period which, together with an
unqualified auditors' report thereon, have been delivered to the Registrar of
Companies.
2. Exceptional items
Half year to Half year to Year to
31 December 31 December 30 June
2002 2001 2002
#'000 #'000 #'000
Profit on sale of fixed asset investment 353 - -
Loss on sale of subsidiary undertaking (170) - -
_______ _______ ______
183 - -
_______ _______ ______
3. Tax
Half year to Half year to Year to
31 December 31 December 30 June
2002 2001 2002
#'000 #'000 #'000
Current tax:
UK corporation tax on profits 916 693 999
Prior years' adjustments - (19) (50)
_______ _______ _______
Total current tax 916 674 949
Deferred tax:
Origination and reversal of timing differences (4) 2 54
_______ _______ _______
Tax on profit on ordinary activities 912 676 1,003
_______ _______ _______
The effective rate of tax payable for the current period is higher than
the standard rate of corporation tax in the UK. The differences are explained
below:
NOTES ON THE INTERIM STATEMENT continued
Half year to Half year to Year to
31 December 31 December 30 June
2002 2001 2002
#'000 #'000 #'000
Profit on ordinary activities before tax 1,576 2,061 3,384
_______ _______ ______
Profit on ordinary activities multiplied by standard
rate of corporation tax in the UK of 30% 473 618 1,015
Effects of:
Utilisation of tax losses - (46) (249)
Items not allowable for tax purposes 55 16 30
Non-taxable items - release of negative goodwill (73) (26) (95)
Additional tax on investment property sales 461 131 299
Tax charged at less than standard rate - - (1)
Prior years' adjustments - (19) (50)
_______ _______ ______
Current tax charge 916 674 949
_______ _______ ______
The majority of the additional tax on investment property sales reflects
crystallisation of unprovided deferred tax liabilities on the sale of properties
which formed part of the Dunsterville Allen portfolio acquired in March 2001.
Subject to the final agreement of the Inland Revenue, there are tax losses
of approximately #680,000 within certain group companies that are available to
be carried forward and set off against future profits.
4. Dividends
An interim dividend of 2.5p per share (2002 - 2.5p) will be paid on 22 April,
2003 to ordinary shareholders on the register at the close of business on 28
March, 2003. A dividend of 7.0p per share was paid for the year ended 30 June,
2002.
5. Earnings per share
Half year to Half year to Year to
31 December 31 December 30 June
2002 2001 2002
Earnings: profit after taxation #664,000 #1,385,000 #2,381,000
_______ _______ _______
Weighted average number of shares in issue
- basic 19,465,922 19,987,838 19,734,941
- adjusted in respect of shares issuable
under share option schemes - 6,413 1,168
_________ _________ _________
Weighted average number of shares in issue
- diluted
19,465,922 19,994,251 19,736,109
_________ _________ _________
Earnings per share - basic 3.41p 6.93p 12.06p
- diluted 3.41p 6.93p 12.06p
_________ _________ _________
NOTES ON THE INTERIM STATEMENT continued
6. Net group borrowings
31 December 31 December 30 June
2002 2001 2002
#'000 #'000 #'000
Due within one year or on demand:
Bank overdraft, loans and other loans 28,260 22,538 36,269
Floating rate guaranteed unsecured loan notes
2010 5,706 8,646 8,646
Bank balances and cash (11,102) (12,563) (12,017)
_______ _______ _______
22,864 18,621 32,898
Due after more than one year:
10.5% First mortgage debenture stock 2020 10,200 10,200 10,200
Loans - repayable in two years 11,470 1,000 10,150
Loans - repayable in five years 5,350 15,268 6,118
Loans - repayable after five years by
instalments 5,100 5,950 5,525
_______ _______ _______
54,984 51,039 64,891
_______ _______ _______
The borrowings are secured by charges on properties and cash deposits of
#2,552,000. Bank balances and cash includes a bank deposit of #5,706,000 which
is charged to one of the Group's lenders in connection with its guarantee of the
floating rate guaranteed unsecured loan notes 2010.
The floating rate guaranteed unsecured loan notes are redeemable by the
Company in 2010 but are included in short term creditors as the holders may
request repayment each six months.
Of the loans repayable in instalments after five years, #1,950,000 has a
mortgage rate of 7.3% fixed until August 2008. Interest on the balance of
#3,150,000 is payable at variable rates. The Group has entered into interest
rate arrangements which have limited its short term interest rate exposure at 31
December, 2002 on #9,800,000 of bank overdrafts and loans.
The effect of the fair value adjustments (FRS 13) of restating the
Debenture Stock, the interest rate instruments and other financial liabilities
at their perceived market values would be to produce a notional liability after
tax of #3,050,000.
NOTES ON THE INTERIM STATEMENT continued
7. Notes to the cash flow statement
(a) Reconciliation of operating profit to operating cash flows
Half year to Half year to Year to
31 December 31 December 30 June
2002 2001 2002
#'000 #'000 #'000
Operating profit before exceptional items 2,865 2,763 5,242
Depreciation 17 22 39
Loss on sale of sundry fixed assets - - 2
Release of negative goodwill (244) (87) (316)
Provisions for notional amounts due under shadow
share option schemes 14 (8) (178)
Decrease in stocks 67 408 398
Increase in debtors (316) (112) (501)
Decrease in creditors (385) (1,107) (92)
_______ _______ _______
Net cash inflow from operating activities 2,018 1,879 4,594
_______ _______ _______
(b) Disposal of subsidiary
Half year to Half year to Year to
31 December 31 December 30 June
2002 2001 2002
#'000 #'000 #'000
Investment properties 1,500 - -
Stocks 5 - -
_______ _______ _______
1,505 - -
Loss on disposal (170) - -
Goodwill (14) - -
_______ _______ _______
1,321 - -
_______ _______ _______
8. Other information
This statement was approved by the Directors on 14 February, 2003 and is being
sent to all shareholders on the register today. A copy can be obtained by the
public from the Company Secretary at 43/44 New Bond Street, London W1S 2SG.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SFAFWDSDSEIE