RNS No 8083r
CRESTON PLC
29 March 1999
Interim Report 1998/9
Highlights
Half year profit on ordinary activities before taxation of #745,000
compared with #404,000 for the corresponding period of last year.
Net assets per share rose from #1.29 to #1.38, an increase of 7% since
30 June 1998.
Annual dividend to be proposed of 3p per ordinary share.
Chairman's Statement
It is with pleasure that I am able to report that for the six months ended 31
December 1998 a profit on ordinary activities before taxation of #745,000 was
achieved. This represented an increase of 84% over the profit of #404,000
recorded for the corresponding period of last year. There was no charge for
taxation due to the availability of tax losses and allowances. Consequently,
profit for the financial period amounted to #745,000 and earnings per share
were 8.3p compared with 4.3p last time. Net assets per share rose by 7% to
#1.38 per share.
Prior to exceptional items the improvement was even more marked. Profit on
ordinary activities before exceptional items and taxation amounted to
#1,143,000 compared with #259,000 last year. An exceptional charge of
#398,000 was made in respect of the executive directors' triennial bonus
scheme, which becomes payable in the year 2000.
The Board's strategy is to maintain a portfolio of high yielding
property producing recurring income whilst investing the balance of the
group's financial resources in property that provides the potential for
significant profits. For the half year, recurring income covered all but a
small proportion of the group's cost base excluding the exceptional charge,
and property disposals contributed a profit of #1,259,000. The majority of
this profit arose on the disposal of a retail warehouse at Shirley Road,
Southampton.
The refurbishment of Premier House, Woking has now begun and is expected to be
completed by the late Autumn of this year. Tenant demand is strong and rental
expectations are rising. The prospects for this property continue to be
good with considerable profit potential and containable risk. Following
the completion of the comprehensive refurbishment of 26 Grosvenor Gardens,
London, SW1, the property was let to a single tenant at a rent of #180,000
per annum and has now been sold subject to contract. A decision was taken
not to refurbish the adjoining mews property, which has also been sold
subject to contract. The disposal of the property together with the mews is
expected to show a significant profit in the second half of the year.
Other activity of note included the acquisition for #1,060,000 of 11 & 12
Bunting Close, comprising industrial units totalling 31,139 square feet.
Subsequently, half of the property was sold for #845,000 to produce an
attractive profit in the second half. The Albion Complex, Glasgow was
recently acquired for #1,812,500. The property is an industrial complex
comprising 119,381 square feet and is let to a variety of tenants at rents
totalling #237,396 to produce an initial yield of 12.4%. There is one vacant
unit with an estimated rental value of #30,000, which when let will push the
yield up to 14.1%. The consideration was satisfied by #1,012,500 in cash and
the balance of #800,000 by a Redeemable Unsecured Convertible 6.5% Loan Note
2004. The loan note is convertible into ordinary shares at #1.45 per share
during the first three years and for the final two years at the market price
of the company's shares.
Other steps taken to re-focus the company's portfolio include the recent
disposals of the Bell Centre for #1,960,000 to show a modest profit in the
second half and the sale of the Redlands Centre at its book value of
#2,050,000. These disposals will provide additional resources for investment
in higher yielding property. Planning consent was not received at St George's
Court for the proposed extension to the premises and use as a Bar Med
restaurant. After receiving planning consent for Middleton Towers to be
used as a short term prison, HM Prison Service have indicated that the
facility will not be required. Alternative uses for the site are under
consideration.
Agreement has been concluded with Bank of Scotland in relation to an increase
in the company's revolving credit facility limit to #20 million together with
an increase in overdraft facilities to #2.5 million. The pricing and certain
other terms of these facilities have been favourably adjusted to reflect the
continuing strengthening of the group's financial position. As a consequence
of the increased facilities, the company has substantial undrawn facilities
available for investment in suitable projects.
A circular was issued on 2 March 1999 to the holders of the 6% Convertible
Redeemable Unsecured Loan Stock notifying them of the company's intention to
redeem the stock on 30 April 1999. The amount outstanding of #2,425,000
nominal will be redeemed out of existing bank facilities. Further repurchases
of the company's ordinary shares have been made with a total of 305,000 shares
repurchased since 1 July 1998 at an average price of 82p. This price
represents a substantial discount to the current net asset value per share of
#1.38.
As noted in my last report it is the Board's intention to pay a dividend when
it is prudent to do so and, in particular, not until the remaining #2,425,000
of the 6% Convertible Redeemable Unsecured Loan Stock has been redeemed. As
that loan stock will have been repaid by the year end and in light of these
good interim results and the positive outlook for the year, the Board intends
to pursue a progressive dividend policy commencing with an annual dividend
for the current year of 3p per ordinary share.
Ronald G Hooker CBE FEng
Chairman
Unaudited Consolidated Profit and Loss Account
for the six months ended 31 December 1998
Six months Six months Year
ended ended ended
31 December 31 December 30 June
1998 1997 1998
Note #000 #000 #000
Turnover 2 2,107 2,882 11,348
Cost of sales (440) (374) (6,119)
Gross profit 1,667 2,508 5,229
Administrative expenses 3 (1,039) (646) (1,363)
Operating profit 628 1,862 3,866
Profit on disposal of
investment properties 1,259 - 873
Profit on ordinary activities
before interest 1,887 1,862 4,739
Net interest payable (1,142) (1,603) (3,101)
Gain arising on repurchase of
6% convertible redeemable
unsecured loan stock - 145 165
Profit on ordinary activities
before taxation 745 404 1,803
Tax on profit on
ordinary activities - - -
Profit for the
financial period #745 #404 #1,803
Earnings per share 4 8.3p 4.3p 19.5p
Diluted earnings
per share 4 7.5p 4.2p 17.9p
Unaudited Consolidated Balance Sheet
at 31 December 1998
31 December 31 December 30 June
1998 1997 1998
Notes #000 #000 #000
Fixed assets
Investment properties 5 27,457 32,459 27,733
Other tangible fixed assets 47 74 47
27,504 32,533 27,780
Current assets
Property stocks 10,407 11,722 10,339
Debtors 6 3,816 1,846 1,884
Cash at bank 215 390 892
14,438 13,958 13,115
Creditors: amounts
falling due within
one year including
convertible debt 7 (6,622) (4,957) (6,408)
Net current assets 7,816 9,001 6,707
Total assets less
current liabilities 35,320 41,534 34,487
Creditors: amounts
falling due after more
than one year including
convertible debt 8 (22,793) (31,514) (22,479)
Provisions for
liabilities and charges (219) (153) (219)
Net assets #12,308 #9,867 #11,789
Capital and reserves
Called up share capital 889 916 916
Share premium account 2,541 2,541 2,541
Capital redemption reserve 51 24 24
Revaluation reserve 1,478 1,420 1,181
Special reserve 1,386 1,386 1,386
Other reserve 1,562 1,046 1,562
Profit and loss account 4,401 2,534 4,179
Total equity
shareholders' funds #12,308 #9,867 #11,789
Net asset value per share #1.38 #1.08 #1.29
Unaudited Statement of Total Recognised Gains and Losses
for the six months ended 31 December 1998
Six months Six months Year
ended ended ended
31 December 31 December 30 June
1998 1997 1998
#000 #000 #000
Profit for the
financial period 745 404 1,803
Unrealised surplus on
revaluation of properties - - 7
Total recognised gains and
losses for the period #745 #404 #1,810
Unaudited Reconciliation of Movements in Shareholders' Funds
for the six months ended 31 December 1998
Six months Six months Year
ended ended ended
31 December 31 December 30 June
1998 1997 1998
#000 #000 #000
Total recognised gains and
losses for the period 745 404 1,810
Issue of new ordinary shares - 1 1
Repurchase of ordinary shares (226) (189) (189)
Negative goodwill on acquisition - - 516
Net addition to
shareholders' funds 519 216 2,138
Opening total equity
shareholders' funds 11,789 9,651 9,651
Closing total equity
shareholders' funds #12,308 #9,867 #11,789
Unaudited Consolidated Cash Flow Statement
for the six months ended 31 December 1998
Six months Six months Year
ended ended ended
31 December 31 December 30 June
1998 1997 1998
#000 #000 #000
Operating activities
Operating profit 628 1,862 3,866
Depreciation 11 16 34
Profit on disposal of plant,
vehicles and equipment (2) - (2)
(Increase) decrease in
property stocks (68) 55 1,968
(Increase) decrease in
debtors (2,218) 1,467 1,585
Increase in creditors 755 180 326
Net cash (outflow) inflow
from operating activities (894) 3,580 7,777
Net cash outflow from returns
on investments
and servicing of finance (1,105) (1,635) (3,166)
Taxation refund 274 - -
Net cash inflow (outflow)
from capital expenditure and
financial investment 1,526 (560) 6,896
Net cash outflow from
acquisitions and disposals - - (8)
Net cash (outflow) inflow
before financing (199) 1,385 11,499
Net cash outflow from
financing (478) (1,350) (10,962)
(Decrease) increase in cash #(677) #35 #537
Reconciliation of net cash flow
to movement in net debt
(Decrease) increase in cash (677) 35 537
Cash outflow from
reduction in debt 252 1,162 10,774
Change in net debt resulting
from cash flows (425) 1,197 11,311
Loans acquired with a
subsidiary - - (5,672)
Loans disposed of with
a subsidiary - - 3,732
Other non-cash changes (4) 145 285
Movement in net debt during
the period (429) 1,342 9,656
Net debt at the beginning of
the period (24,479) (34,135) (34,135)
Net debt at the end of the
period (24,908) (32,793) (24,479)
Notes to the Unaudited Interim Accounts
for the six months ended 31 December 1998
1. Accounting policies
The accounting policies used in the preparation of this
interim report are the same as those used in the preparation
of the statutory accounts for the year ended 30 June 1998.
2. Turnover
Six months Six months Year
ended ended ended
31 December 31 December 30 June
1998 1997 1998
#000 #000 #000
Rental income 1,782 2,366 4,613
Property trading 212 103 6,048
Other income 113 413 687
Total 2,107 2,882 11,348
3. Administrative expenses
Administrative expenses include exceptional costs of #398,000 in relation to
the executive directors' triennial bonus scheme which becomes payable in the
year 2000. At 31 December 1998 a further one and a half years remained to run
under the scheme. No charge was made during the first year of the scheme as
no bonus was expected to become payable and so the charge for the current year
will be in respect of the first two years of the scheme. The amount charged to
the profit and loss account for the half year is equal to half of the amount
expected to be charged for the current year.
4. Earnings per share and diluted earnings per share
Earnings per share is based on the profit for the financial period of
#745,000 (1997/8 interim: #404,000; 1997/8 final: #1,803,000) divided by
the weighted average number of ordinary shares in issue during the
period of 8,961,933 (1997/8 interim: 9,355,087; 1997/8 final: 9,259,465).
Diluted earnings per share has been calculated by adjusting the profit for the
financial period and the weighted average number of ordinary shares in issue
for the effects of the potential exercise of ordinary shares under option, the
executive directors' triennial bonus scheme and conversion rights attaching to
convertible debt.
5. Investment properties
Long Short
Freehold leasehold leasehold Total
#000 #000 #000 #000
Cost or valuation:
At 1 July 1998 25,431 1,490 812 27,733
Additions 1,444 - 130 1,574
Disposals (1,850) - - (1,850)
At 31 December 1998 25,025 1,490 942 27,457
Net book value at 31 December 1998 comprises:
Historical net
book value 23,337 1,700 942 25,979
Unrealised valuation
surpluses (deficits) 1,688 (210) - 1,478
25,025 1,490 942 27,457
6. Debtors
31 December 31 December 30 June
1998 1997 1998
#000 #000 #000
Trade debtors 3,604 1,367 1,396
Prepayments and accrued income 212 271 202
Corporation tax - 208 286
3,816 1,846 1,884
7. Creditors: amounts falling due within one year including
convertible debt
31 December 31 December 30 June
1998 1997 1998
#000 #000 #000
Bank and other loans (secured) 222 1,409 213
6% Convertible redeemable
unsecured loan stock 2,423 - 2,419
Convertible loan stock 2000 83 83 83
Convertible redeemable
unsecured loan note - 177 177
Trade creditors 2,079 1,059 1,329
Rent in advance 854 1,041 836
Social security and other taxes 325 539 702
Accruals and deferred income 636 649 649
6,622 4,957 6,408
8. Creditors: amounts falling due after more than one year
including convertible debt
31 December 31 December 30 June
1998 1997 1998
#000 #000 #000
Repayable between one and two years:
Bank and other loans (secured) 231 830 221
6% Convertible redeemable
unsecured loan stock - 2,489 -
Accruals and deferred income 398 - -
Repayable between two and five years:
Bank and other loans (secured) 5,766 8,720 6,781
Repayable after five years:
Bank and other loans (secured) 16,398 19,475 15,477
22,793 31,514 22,479
The financial information contained in this Interim Report does not constitute
statutory accounts within the meaning of section 240 of the Companies Act 1985
and has been neither audited nor reviewed. The statutory accounts for the
year ended 30 June 1998 have been reported on by the auditors and delivered to
the Registrar of Companies. The auditors' report was unqualified and did not
contain a statement under section 237(2) or 237(3) of the Companies Act 1985.
A copy of this report has been sent to the holders of ordinary shares and 6%
convertible redeemable unsecured loan stock and, for information only, to the
holders of options under the share option scheme. Members of the public may
obtain a copy from the company's registered office, 199 Piccadilly, London W1V
9LE.
Enquiries: Tom King, Creston plc
Carl Fry, Creston plc
Tel: 0171 823 6766
Fax: 0171 629 0005
END
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