Trust Property Management Group plc (`Trust' or `the Company')
Final Results to 31 March 2007
Trust Property Management Group plc, the AIM listed property management and
chartered surveying services group, announces its results for the period ended
31 March 2007.
Overview
* Good progress made towards creating a leading property management and
chartered surveying services group since listing on AIM in March 2007
* All divisions enjoying strong growth with new contract wins and a good
pipeline of new business opportunities
* First strategic acquisition completed in June 2007, which complement core
offering and helps expansion into South West London
* Board strengthened with appointment of Larry Lipman as a Non-Executive
Director
Chairman's Statement
I am delighted to report your Company's inaugural results for the period ended
31 March 2007. Since listing on AIM in March 2007, we have driven the business
forward aggressively as we implement a two-pronged growth strategy, combining
selective acquisitions of other property management and chartered surveying
groups with organic growth.
Review of Operations
Trust Property Management Group was formed to act as a holding company for a
group of property management and chartered surveying companies. On 5 March
2007, the Company made the following acquisitions prior to its flotation on AIM
(further details can be found in the Admission Document on the Company's
website - www.tpmgroupplc.co.uk):
* Trust Property Management Limited, a residential and commercial property
management services business;
* Skylon Limited, a chartered surveying business; and
* Trust Credit Services Limited, a business which provides credit services to
tenants.
Trust Property Management Limited (TPM), which undertakes residential and
commercial property management activities now manages over 13,000 residential
and commercial units showing a 30% growth rate since the flotation. The
business enjoys long-term agreements providing solid and sustained annual fees.
As the Directors predicted at the time of listing on AIM, numerous
opportunities have arisen allowing for organic growth to prosper in both the
Edgware and Richmond centres.
Our chartered surveyor business, Skylon Limited (Skylon), which trades under
Benjamin Mire Chartered Surveyors, continues to win new business including the
extension of a prominent office building in Finchley, north London and various
domestic extension projects throughout the south-east. It has further developed
its client base amongst specialist residential development funding institutions
and continues to act not only for TPML but other residential managing agents
providing specialist block of flats repair and maintenance expertise. The
practice's advice in Leasehold Valuation Tribunal matters is often sought by
other chartered surveyors and instructing solicitors.
Trust Credit Services Limited (TCS) is a newly formed subsidiary established to
provide credit facilities enabling tenants to spread the cost of ground rents
and service charges over a period of up to one year. It was dormant in the
period to 31 March 2007 but has now launched its services and take up is in
line with our expectations and is encouraging.
Post Balance Sheet Acquisitions
We made our first acquisition in June 2007, acquiring the trade and assets of
Nightingale Chancellors, a property services business based in Richmond, for a
total cash consideration of �710,000.
Nightingale Chancellors provides similar services to TPM and Skylon including
professional residential and commercial property management as well as
chartered surveying services. This long established profitable business will
both add significant turnover to the Company and help our expansion into South
West London.
Board Appointments
I am delighted that Larry Lipman agreed to join the Board as a Non-Executive
Director. He is extremely well known in the industry and has an in-depth
understanding of AIM, which I believe will be invaluable as the Company
executes its growth strategy.
Financial Review
The accounts of Trust are for the period ended 31 March 2007 and therefore only
reflect trading since the acquisitions were completed on 5 March 2007.
Our cash position remains healthy after raising �600,000 at the time of our
flotation and a further �250,000 shortly after it when Thesis Asset Management
plc, an asset manager used by the Goldstein family, took a 7.6% interest in the
Company.
Outlook
We are concentrating on creating a leading property management and chartered
surveying services group, utilising our strong management team and considerable
experience in the sector.
Whilst I believe that our business has the potential to grow at a considerable
pace organically, there are a number of other acquisition opportunities in the
highly fragmented market in which we operate that we are very excited about. A
number of targets are currently under review and I look forward to updating
shareholders on our progress in this respect in the near future.
We believe the strength of our service offering coupled with the recurring
income stream as a result of our business model, will stand us in good stead
and hope to report further progress in our year-end statement.
David Glass
Chairman
28 September 2007
* * ENDS * *
For further information visit www.tpmgroupplc.co.uk or contact:
Julian Finegold Trust Tel: 0845 260 1515
Liam Murray CFA Tel: 020 7492 4777
Isabel Crossley St Brides Media and Finance Tel: 0207 242 4477
CONSOLIDATED BALANCE SHEET AS AT 31 MARCH 2007
2007
�
ASSETS
Non-current assets
Property, plant and equipment 139,294
Goodwill 1,081,252
Intangible assets 561,412
_________
1,781,958
_________
Current assets
Trade and other receivables 391,832
Cash and cash equivalents 598,186
_________
990,018
_________
Total assets 2,771,976
_________
LIABILITIES
Current liabilities
Trade and other payables 266,110
Borrowings 32,100
Tax liabilities 34,428
_________
332,638
_________
Non-current liabilities
Borrowings 315,400
Deferred tax liabilities 60,250
_________
375,650
_________
Total liabilities 708,288
_________
Net assets 2,063,688
_________
2007
�
EQUITY
Share capital 293,984
Share premium 1,808,930
Share based payment reserve 5,703
Retained earnings (44,929)
_________
Total equity 2,063,688
_________
CONSOLIDATED INCOME STATEMENT FOR THE PERIOD ENDED 31 MARCH 2007
4 months ended
31 March
2007
�
Continuing Operations
Revenue 96,637
Cost of sales (21,949)
________
Gross profit 74,688
Other operating income 998
Administrative expenses (114,830)
________
Operating loss (39,144)
Finance costs (3,520)
________
Loss before tax (42,664)
Income tax (2,265)
_________
Loss for the period (44,929)
________
Loss per share
Basic and diluted (0.01)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED 31 MARCH 2007
Attributable to equity holders of
the Company
Share Share Share Retained Total
based
capital premium payment Earnings equity
reserve
� � � � �
Balance at 29 - - - - -
November 2006
Shares issued in 293,984 2,128,224 - - 2,422,208
period
Cost of issue of - (319,294) - - (319,294)
shares
Employee share based - - 5,703 - 5,703
payment
Loss for the period - - - (44,929) (44,929)
________ ________ ________ ________ ________
Balance at 31 March 293,984 1,808,930 5,703 (44,929) 2,063,688
2007
________ ________ ________ ________ ________
4 months
ended
31 March
2007
�
OPERATING ACTIVITIES
Cash generated from operations (49,154)
Income taxes paid (7,087)
Interest paid (1,230)
_________
NET CASH USED IN OPERATING ACTIVITIES (57,471)
_________
INVESTING ACTIVITIES
Purchases of property, plant and equipment (9,902)
Acquisition of subsidiary 37,337
_________
NET CASH FROM INVESTING ACTIVITIES 27,435
_________
FINANCING ACTIVITIES
Proceeds from issuance of ordinary shares 628,222
_________
NET CASH FROM FINANCING ACTIVITIES 628,222
_________
NET INCREASE IN CASH AND CASH EQUIVALENTS 598,186
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD -
_________
CASH AND CASH EQUIVALENTS AT END OF PERIOD 598,186
Bank balances and cash
_________
This format represents the indirect method of determining operating cash flow.
4 months ended
31 March
2007
�
OPERATING ACTIVITIES
Cash generated from operations (66,039)
Income taxes paid -
Interest paid -
_________
NET CASH FROM/(USED IN) OPERATING ACTIVITIES (66,039)
_________
INVESTING ACTIVITIES
Interest received -
Acquisition of subsidiaries (61,711)
_________
NET CASH USED IN INVESTING ACTIVITIES (61,711)
_________
FINANCING ACTIVITIES
Proceeds on issued ordinary shares 628,222
New bank loans raised -
_________
NET CASH (USED IN)/FROM FINANCING ACTIVITIES 628,222
_________
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 500,472
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD -
_________
CASH AND CASH EQUIVALENTS AT END OF PERIOD 500,472
Bank balances and cash
_________
RECONCILIATION OF LOSS FROM OPERATIONS TO NET CASH FROM / (USED IN) OPERATING
ACTIVITIES
4 months
ended
31 March
2007
�
Loss before tax (42,664)
Adjustments for:
Depreciation of property, plant & equipment 4,462
Amortisation of intangible assets 840
Finance costs 3,520
Fair values of share based compensation 5,703
________
(28,139)
Operating cash flows before movements in working
capital
Increase in receivables (24,395)
Increase in payables 3,380
________
Cash generated from operations (49,154)
________
Notes to the Accounts
The financial statements have been prepared in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European Union and the
Companies Act 1985 as applicable to companies reporting under IFRS (and
International Financial Reporting Interpretations Committee ("IFRIC")
interpretations).
The financial statements have been prepared on the historical cost basis. The
principal accounting policies adopted are set out below.
The preparation of the financial statements require the use of estimates and
assumptions that affect the reported amount of assets and liabilities at the
balance sheet date and the reported amounts of revenues and expenses during the
reporting period. Although these estimates are based on management's best
knowledge of the amount, events or actions, actual results may differ from
those estimates.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and enterprises controlled by the Company (and its subsidiaries)
made up to 31 March each year. Subsidiaries are all entities over which the
company has the power to govern the financial and operating policies as to
benefit from its activities. The excess of cost of acquisition over the fair
values of the Group's share of identifiable net assets acquired is recognised
as goodwill. Any deficiency of the cost of acquisition below the fair value of
identifiable net assets acquired (i.e. discount on acquisition) is recognised
directly in the income statement.
The purchase method of accounting is used to account for the acquisition of
subsidiaries by the Group. The cost of an acquisition is measured as the fair
value of the assets given and liabilities incurred or assumed at the date of
exchange, plus costs directly attributable to the acquisition.
The results of subsidiaries acquired or disposed of during the period are
included in the consolidated income statement from the effective date of
acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with those used by
other members of the Group.
All intra-group transactions, balances, and unrealised gains on transactions
between group companies are eliminated on consolidation. Unrealised losses are
also eliminated unless the transaction provides evidence of an impairment of
the asset transferred.
Standards and interpretations not yet effective
At the date of authorisation of this report the following Standards and
Interpretations which have not been applied in these financial statements were
in use but not yet effective:
IFRS 7 Financial Instruments: Disclosures; and the related amendments to;
IAS 1 on Capital Disclosures;
IAS 1 on Presentation Costs*and;
IAS 23 Borrowing Costs
IFRS 8 Operating Segments
IFRIC 12* Service Concession Arrangements
IFRIC 13* Customer Loyalty Programmes
IFRIC 14* IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction.
* Not yet endorsed by the EU
The directors anticipate that the adoption of these Standards and
Interpretations in future period will have no material impact on the financial
statements of the Group, when the relevant standards come into effect on or
after 1 January 2007.
Goodwill
Goodwill arising on consolidation represents the excess of the cost of
acquisition over the Group's interest in the fair value of the identifiable
assets and liabilities of a subsidiary, associate or jointly controlled entity
at the date of acquisition.
Goodwill on acquisition of subsidiaries is separately disclosed.
Goodwill is recognised as an asset and reviewed for impairment at least
annually. Any impairment is recognised immediately in the income statement and
is not subsequently reversed.
Goodwill is allocated to cash generating units for the purpose of impairment
testing. On disposal of a subsidiary, associate or jointly controlled entity,
the attributable amount of goodwill is included in the determination of the
profit or loss on disposal.
Investments in subsidiary companies
Investments are stated at cost less any provision for impairment in the value
of the investment.
Revenue recognition
Revenue is measured at the fair value of the consideration received or
receivable and represents amounts receivable for services provided in the
normal course of business, net of discounts, VAT and other sales related taxes.
Revenue in the property management division comprises fees for residential and
commercial property management which are usually charged on a per-unit basis,
and other fees and income typically receivable by managing agents to whom
freehold landlords or residents of blocks of flats have delegated their
obligations under the terms of each lease.
Revenue in the professional services division comprises fees for chartered
surveying services typically provided by chartered surveyors including building
repair specifications and supervision structural surveys, valuations,
dilapidation claims and acting as expert witnesses.
All revenues are recorded on an accruals basis. Revenue is recognised for
services provided by the accounting date but not invoiced and deferred if
services are invoiced but not fully provided by the accounting date. Revenue
from ongoing property management is spread over the period in which the
services are being provided.
Revenue from insurance commissions is recognised on the date the policy
commences.
Revenues from ongoing professional services activities are recognised when they
are earned.
Operating leases
Rentals payable under operating leases are charged to income on a straight-line
basis over the term of the relevant lease.
Taxation
The tax expense represents the sum of the tax currently payable and movement in
deferred tax.
The tax currently payable is based on taxable profit for the period. Taxable
profit differs from net profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated by using tax rates that have
been enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amount of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method. Deferred
tax liabilities are recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from the initial recognition of goodwill or
from the initial recognition (other than in a business combination) of other
assets and liabilities in a transaction which affects neither the tax profit
nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
Deferred tax is calculated at the tax rates enacted or substantially enacted at
the balance sheet date. Deferred tax is charged or credited in the income
statement, except when it relates to items credited or charged directly to
equity, in which case the deferred tax is also dealt with in equity.
Retirement benefit costs
Payments to defined contribution retirement benefit plans are charged as an
expense as they fall due.
Property, plant and equipment
Fixtures and equipment are stated at cost less accumulated depreciation and any
recognised impairment loss.
Depreciation is charged so as to write off the cost or valuation of assets,
over their estimated useful lives, using the straight-line method, on the
following bases:
Computer equipment over 3 years
Plant and machinery over 5 years
The gain or loss arising on the disposal or retirement of an asset is
determined as the difference between the sales proceeds and the carrying amount
of the asset and is recognised in the income statement.
Other intangible fixed assets
Intangible assets comprise acquired separable customer relationships.
Intangible assets acquired in respect of business combinations are capitalised
at fair value at the date of acquisition provided they are separable or arise
from contractual or other legal rights and their fair value can be measured
reliably.
Where the intangible assets are assessed to have finite lives, their fair
values are amortised on a straight line basis over their contractual terms/
average useful life of customer contracts or relationships.
The average useful life of customer contracts and customer relationships have
been estimated by the directors to be 35 years.
Impairment of property, plant and equipment and intangible assets excluding
goodwill
At each balance sheet date, the Group reviews the carrying amounts of its
property, plant and equipment and intangible assets to determine whether there
is any indication that those assets have suffered an impairment loss. If any
such indication exists, the recoverable amount of the asset is estimated in
order to determine the extent of the impairment loss (if any). Where the asset
does not generate cash flows that are independent from other assets, the Group
estimates the recoverable amount of the cash-generating unit to which the asset
belongs. An intangible asset with an indefinite useful life is tested for
impairment annually and whenever there is an indication that the asset may be
impaired.
Recoverable amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the
asset for which the estimates of future cash flows have been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to
be less than its carrying amount, the carrying amount of the asset
(cash-generating unit) is reduced to its recoverable amount. An impairment loss
is recognised as an expense immediately, unless the relevant asset is carried
at a revalued amount, in which case the impairment loss is treated as a
revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the
asset (cash-generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss been
recognised for the asset (cash-generating unit) in prior years. A reversal of
an impairment loss is recognised as income immediately, unless the relevant
asset is carried at a revalued amount, in which case the reversal of the
impairment loss is treated as a revaluation increase.
Financial instruments
Financial assets and financial liabilities are recognised on the Group's
balance sheet when the Group has become a party to the contractual provisions
of the instrument.
The Group classifies financial assets or liabilities depending on the purpose
for which they were acquired and is determined by management at initial
recognition and subsequently re-evaluated at each reporting date. The
accounting policy for each financial asset or liability is as follows:
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other
short-term highly liquid investments, that are readily convertible to a known
amount of cash with three months or less remaining to maturity and are subject
to an insignificant risk of changes in value.
Trade receivables
Trade receivables do not carry any interest and are stated at their amortised
cost as reduced by appropriate allowances for estimated irrecoverable amounts.
Financial liability and equity
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument is
any contract that evidences a residual interest in the assets of the Group
after deducting all of its liabilities.
Borrowings
Interest-bearing bank loans and overdrafts are recorded at the proceeds
received, net of direct issue costs. Finance charges, including premiums
payable on settlement or redemption, are accounted for on an accrual basis and
are added to the carrying amount of the instrument to the extent that they are
not settled in the period in which they arise. Borrowings are classified as
current liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after the balance sheet
date.
Trade payables
Trade payables are not interest bearing and are stated at their amortised cost.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received,
net of direct issue costs.
Provisions
Provisions are recognised when the Group has a present obligation as a result
of a past event which it is probable will result in an outflow of economic
benefits that can be reliably estimated.
Share-based payments
The Group has applied the requirements of IFRS 2 Share-based Payments.
The Group issues equity-settled share-based payments to certain employees.
Equity-settled share-based payments are measured at fair value at the date of
grant. The fair value determined at the grant date of equity-settled
share-based payments is expensed on a straight-line basis over the vesting
period, based on the Group's estimate of shares that will eventually vest.
Fair value is measured by use of a Black-Scholes model. The expected life used
in the model has been adjusted, based on management's best estimate, for the
effect of non-transferability, exercise restrictions, and behavioural
considerations.
Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. The resulting accounting
estimates and assumptions will, by definition, seldom equal the related actual
results. The estimates and assumptions that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value in
use of the cash-generating units to which goodwill has been allocated. The
value in use calculation requires the entity to estimate the future cash flows
expected to arise from the cash generation unit and a suitable discount rate in
order to calculate present value. Further details of impairment reviews are set
out in note 11.
Share based payments
The charge for share based payments is calculated in accordance with the
analysis described in note 25. The model requires highly subjective assumptions
to be made including the future volatility of the Company's share price,
expected dividend yield and risk-free interest rates. The directors draw upon a
variety of external sources to aid in the determination of the appropriate data
to use in such calculations.
EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share is based on the
following data:
Earnings 4 months
ended
31 March
2007
�
Earnings for the purposes of basic earnings per (44,929)
share (loss for the period attributable to equity
holders of the parent)
______
Number of shares 4 months
ended
31 March
2007
�
Weighted average number of ordinary shares for 5,919,824
the purposes of basic earnings per share
______
An additional 3,500,000 ordinary shares, representing 11.90% of the issued
ordinary shares at the balance sheet date, were issued on 12 April 2007 for
cash.
END
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