Interim Results
Pathfinder Properties PLC
28 September 2001
Pathfinder Properties PLC
RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2001
Highlights
- Planning achieved on Merchant Village, Glasgow
- Planning achieved on River Quarter, Manchester
- Pathfinder Recovery 1 PLC acquired
Operations
The Group's joint venture development at 25 Church Street Manchester has
provided the sales income and profits for the first half of the year with all
units in that building, together with the adjacent site at 38 High Street
Manchester, now exchanged. Our share of sales proceeds on these properties
amounted to £2,553,000 and profits taken in the period, which are included in
the profit and loss account as 'share of profits in joint ventures' rather
than 'gross profit', were £325,000. We are currently marketing the freehold
interest in 25 Church Street and with the sale of that, this development will
be complete. We have been very pleased with both the results and with the
reception of our first development in Manchester from the City Council and
residents alike.
Equally pleasing has been the response of Manchester and Glasgow Councils to
the two major £100 million flagship schemes which we are carrying out in
conjunction with other Pathfinder companies. As we reported in March, during
the first quarter of the year planning permission has been received on the
Merchant Village development in the heart of Glasgow's Merchant City area.
This scheme for 343 apartments, 207,000 sq ft of retail and leisure and 30,000
sq ft of office space is attracting considerable interest from retailers
particularly in the fashion market and should redefine the eastern boundary of
Glasgow's shopping district.
In the second quarter, planning committee approval was obtained from
Manchester City Council for phase 1 of River Quay, Castlefield, Manchester.
This scheme, being marketed under the River Quarter name, fronts the River
Medlock and will comprise 201 apartments, a bar/restaurant and health club.
Three other similarly sized phases are proposed to be developed on the site
under the masterplan and a planning application has recently been submitted
for the second of these phases.
Acquisitions
In April this year, we made offers to acquire Pathfinder Recovery 1 PLC and
Pathfinder Recovery 2 PLC on the basis of a like-for-like share transaction,
with a limited cash alternative. It was, and still is, our belief that it
would have been in all shareholders' interests to pool resources to develop
the sites we jointly own. The Boards of both the Recovery companies
recommended the offers.
The acquisition of Pathfinder Recovery 1 PLC became unconditional on 6 June
2001 and at 30 June had received acceptances from 88% of shareholders. We
could not however meet the cash expectations of both sets of Recovery company
shareholders and the offer for Pathfinder Recovery 2 PLC was therefore allowed
to lapse. It is fair to say that the offer process proved more protracted
and expensive than we expected. However, the real, and very positive,
advantage is that your Group now has a 65% interest, and therefore controls,
both the Merchant Village and River Quay developments.
These assets, together with associated borrowings, have been brought on
balance sheet and have transformed the 'look and feel' of the Group.
As a result of the acquisition of Pathfinder Recovery 1 PLC, we also now have
a 50% stake in Pathfinder Recovery Ventures Limited. The major assets of this
company are developments in Clyde Street, Glasgow, and Tib Street, Manchester.
Planning for 52 flats and ground floor shopping was obtained on the Clyde
Street, Glasgow, property in April 2001 and refinancing and construction
tenders are currently in progress with the possibility of starting on site in
early 2002. A planning application on the Tib Street, Manchester, scheme,
which is almost immediately opposite our 25 Church Street, Manchester,
development was submitted in July 2001 for a 118,000 sq ft commercial
development including both office and retail space.
Pathfinder Recovery Ventures Limited also owns 18% of the issued share capital
of your Group and a 50% interest in Loch Lomond Factory Outlets, where your
Group is already the owner of the remaining interests.
Results
Group Turnover, including that of Joint Ventures, and Share of Operating
Profits in Joint Ventures mainly relates to the sale of units in 25 Church
Street, Manchester, and the sale of the freehold of 38 High Street, Manchester
during the period. Group Turnover also includes fees received for management
services charged to certain joint ventures.
The administration expenses for the period include the full costs of managing
the Group and its share of managing the joint venture projects. In previous
periods, until 4 August 2000, the Group's administration was carried out
through Blenheim Asset Management Limited with a significant element of
administration costs treated as cost of sales or capitalised into the value of
stock or fixed assets. Additionally, administration expenses for the period
include £176,000 written off in the period in connection with the lapsed offer
for Pathfinder Recovery 2 PLC.
Profit on ordinary activities before taxation for the period amounted to
£100,000.
Accounting rules require that development assets are stated at cost. The
financial statements therefore do not reflect either the value of planning
permissions obtained during the period nor the elimination of the minority
discount which we could have suffered in our major joint ventures without the
acquisition of Pathfinder Recovery 1 PLC. To that extent, the majority of the
benefits gained by shareholders during the period are not yet reflected in the
financial statements. These benefits will be recognised when the underlying
assets are sold.
Dividends
The company will pay an interim dividend for the period of 0.15p to
shareholders on the register at 12 October 2001. It is anticipated that
dividend cheques will be dispatched on 31 October 2001.
Outlook
We are pleased with the rationalisation of the Group that has taken place over
the last six months, although we are of course disappointed that the
Pathfinder Recovery 2 shareholders did not join us. Shareholders should not
view the results of the period as indicative of any downturn in underlying
profitability or prospects, but as the effect of property development cycles
in a small but growing company. The developments we have in place will take
time to come to fruition and in the intervening period profits should be
expected to reduce. Property development is not a short-term investment but,
with planning on our major schemes being achieved, we have established a
strong development base for the future.
Sir Christopher Leaver
Chairman
28 September 2001
PROFIT AND LOSS ACCOUNT
for the six months ended 30 June 2001
Notes 6 12 6 months to
months months
to to
30 31 30 June
June Dec 2000
2001 2000
£'000 £'000 £'000
TURNOVER
Group and share of joint ventures 4 3,079 8,709 8,500
less share of joint ventures (2,553) (4,115) (3,996)
Group turnover 526 4,594 4,504
Cost of sales (142) (3,567) (3,564)
Gross profit 384 1,027 940
Administrative expenses 5 (591) (518) (209)
(207) 509 731
Other operating income 15 227 152
Share of profits in joint ventures 407 704 367
OPERATING PROFIT 4 215 1,440 1,250
(Loss)/Profit on sale of investment (83) (10) 1
properties
132 1,430 1,251
Interest receivable 156 138 55
Interest payable (188) (202) (96)
PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION 5 100 1,366 1,210
Taxation Group 24 (218) (264)
Associates (89) (175) (98)
PROFIT ON ORDINARY ACTIVITIES
AFTER TAXATION 35 973 848
Minority interests 3 (221) (233)
PROFIT ON ORDINARY ACTIVITIES
ATTRIBUTABLE TO MEMBERS 38 752 615
Ordinary dividends 6 (116) (457) (106)
Retained for the period 10 (78) 295 509
Earnings per share 14 0.05p 1.07p 0.87P
The operating profit arises from the Group's continuing operations.
A note of profits and losses on a historical cost basis is given in note 7.
A statement of total recognised gains and losses for the period is given in
note 12.
BALANCE SHEET
30 June 2001
Notes 30 June 31 Dec 30 June
2001 2000 2000
£'000 £'000 £'000
FIXED ASSETS
Investment properties 474 1,575 2,800
Investment in joint 8
ventures
Share of gross assets 9,995 10,545 12,708
Share of gross liabilities (5,587) (1,567) (4,477)
4,408 8,978 8,231
Other Investments 209 - -
5,091 10,553 11,031
CURRENT ASSETS
Work-in-progress 19,253 595 573
Debtors 1,653 924 5,218
Cash at bank 6,207 6,142 2,730
27,113 7,661 8,521
CREDITORS: Amounts falling due within one 9 (15,588) (3,347) (3,172)
year
NET CURRENT ASSETS 11,525 4,314 5,349
TOTAL ASSETS LESS CURRENT LIABILITIES 16,616 14,867 16,380
CREDITORS: Amounts falling due after more than
one year
Bank and other - - (1,000)
loans
PROVISIONS: Deferred taxation (213) (140) (315)
16,403 14,727 15,065
MINORITY INTERESTS (911) (102) (261)
15,492 14,625 14,804
CAPITAL AND RESERVES
Called up share capital 7,734 7,034 7,034
Share premium account 1,862 1,617 1,617
Capital reserve 2,494 2,494 2,494
Revaluation reserve 97 501 785
Profit and loss account 10 3,305 2,979 2,874
11 15,492 14,625 14,804
Net assets per share attributable to ordinary 20.03p 20.79p 21.05p
shareholders
CASHFLOW STATEMENT
for the six months ended 30 June 2001
Notes 6 months 12 months 6 months
to to to
30 June 31 Dec 30 June
2001 2000 2000
£'000 £'000 £'000
NET CASH (OUTFLOW)/ INFLOW
FROM OPERATING ACTIVITIES 13 (711) 4,376 298
RETURNS ON INVESTMENTS AND SERVICING
OF FINANCE
Interest received 131 168 82
Interest paid (21) (88) (60)
Net cash inflow from returns on
investments and
servicing of finance 110 80 22
TAXATION
Corporation tax paid (4) (1,136) (455)
CAPITAL EXPENDITURE AND FINANCIAL
INVESTMENT
Receipts from sales of investment 1,477 1,460 330
properties
Receipt from sale of shares - 107 107
Purchase of investment properties - (200) (200)
Net cash inflow from capital expenditure
and financial investment 1,477 1,367 237
ACQUISITIONS AND DISPOSALS
Purchase of subsidiary (5,997) - -
undertaking
Net cash acquired with subsidiary 3,860 - -
undertaking
Investments in joint ventures 1,295 (839) (271)
(842) (839) (271)
EQUITY DIVIDENDS PAID (352) (369) (264)
FINANCING
Debt due within a year:
Bank loans drawn down 807 - -
Bank loans repaid (420) - -
Debt due in more than one year:
Loans repaid - (900) (400)
387 (900) (400)
INCREASE/(DECREASE) IN CASH 65 2,579 (833)
NOTES
1 BASIS
The figures shown for the six months to 30 June 2001 and 30 June 2000 are
unaudited and do not constitute statutory financial statements within the
meaning of the Companies Act 1985. The financial statements for the year
ended 31 December 2000 have been reported on by the Company's auditors and
delivered to the Registrar of Companies. The report of the auditors was
unqualified and did not contain a statement under s.237(2) or (3) of the
Companies Act 1985.
2 ACCOUNTING POLICIES
The accounting policies adopted are consistent with those applied in previous
periods. Investment properties are stated at valuation on 31 December 2000 or
cost at the date of acquisition, if later, together with the addition of costs
of enhancement works since that date where appropriate. Investment properties
have not been revalued at 30 June 2001.
3 ACQUISITION OF PATHFINDER RECOVERY 1 PLC
On 6 June 2001 Pathfinder Properties PLC acquired Pathfinder Recovery 1 PLC
pursuant to an Offer dated 9 April 2001. At 30 June 2001 88% of the ordinary
share capital of Pathfinder Recovery 1 PLC had been so acquired. 6,995,698
ordinary shares in Pathfinder Properties PLC shares had been allotted and £
6,059,000 was paid or payable in cash in respect of this acquisition at that
date. Assets and liabilities acquired were revalued on acquisition.
4 SEGMENTAL ANALYSIS
6 months 12 6 months
to months to
to
30 June 31 Dec 30 June
2001 2000 2000
£'000 £'000 £'000
Turnover:
Development 3,053 8,613 8,453
Investment 26 96 47
3,079 8,709 8,500
Operating profit
Development 757 1,992 1,477
Investment (3) (95) (58)
754 1,897 1,419
Common (539) (457) (169)
costs
215 1,440 1,250
5 PROFIT BEFORE TAXATION
Administration costs include, and profit before tax is after deducting,
costs of £176,000 relating to the lapsed offer for Pathfinder Recovery 2 PLC
in the period.
6 DIVIDENDS ON ORDINARY SHARES
6 months 12 6 months
to months to
to
30 June 31 Dec 30 June
2001 2000 2000
£'000 £'000 £'000
Interim dividend - 116 106 106
0.15p (2000 - 0.15p)
per share
Final dividend (2000 - 351 -
- 0.5p) per share
116 457 106
7 NOTE OF HISTORICAL COST PROFIT AND LOSSES
6 months 12 6 months
to months to
to
30 June 31 Dec 30 June
2001 2000 2000
£'000 £'000 £'000
Profit on ordinary activities 100 1,366 1,210
before taxation
Realisation of revaluation gains of 516 724 292
previous periods
616 2,090 1,502
8 INVESTMENT IN ASSOCIATES AND JOINT VENTURES
The Investment in Associates and Joint Ventures at 30 June 2001 comprises the
Group's 50% interests in Excelmode Limited and Pathfinder Recovery Ventures
Limited which are developing properties at 25 Church Street, Manchester, Tib
Street, Manchester and Clyde Street Glasgow. Pathfinder (River Quay) Limited
and Pathfinder (Scotland) Limited, which were previously shown as associates
and joint ventures, became subsidiary companies during the period as a result
of the acquisition of Pathfinder Recovery 1 PLC. The interest in Pathfinder
Recovery Ventures Limited was acquired as a result of the same acquisition.
9 CREDITORS DUE WITHIN ONE YEAR 30 June 31 Dec 30 June
2001 2000 2000
£'000 £'000 £'000
Bank loans and overdrafts 6,918 500 1,000
Other development loans 6,596 - 1,410
Other creditors and accruals 2,074 2,847 762
15,588 3,347 3,172
Other development loans comprise loans from third parties for property
development. These loans are repayable on or after the sale or refinancing of
the property developments to which they relate.
10 PROFIT AND LOSS ACCOUNT
6 months 12 6 months
to months to
to
30 June 31 Dec 30 June
2001 2000 2000
£'000 £'000 £'000
Brought forward 2,979 2,165 2,165
Transfer from revaluation reserve 404 519 200
Retained (loss)/profit for the (78) 295 509
period
Carried forward at end of period 3,305 2,979 2,874
11 SHAREHOLDERS' FUNDS
6 months 12 6 months
to months to
to
30 June 31 Dec 30 June
2001 2000 2000
£'000 £'000 £'000
Brought forward 14,625 14,295 14,295
Shares issued in period 945 - -
Retained (loss)/profit for the (78) 295 509
period
Other recognised gains relating - 35 -
to the period
Carried forward at end of period 15,492 14,625 14,804
12 STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
6 months 12 6 months
to months to
to
30 June 31 Dec 30 June
2001 2000 2000
£'000 £'000 £'000
Profit for the period 38 752 615
attributable to members
Deferred taxation on revaluation of - 35 -
investment properties
Total recognised gains and losses relating 38 787 615
to the period
13 RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOWS
6 months 12 6 months
to months to
to
30 June 31 Dec 30 June
2001 2000 2000
£'000 £'000 £'000
Operating profit 215 1,440 1,250
Depreciation - 29 29
Share of profits in joint (407) (704) (367)
ventures
Other income - (79) (79)
(Increase)/decrease in (165) 2,184 2,206
work-in-progress
Decrease/(increase) in debtors 940 411 (3,967)
(Decrease)/increase in creditors (1,294) 1,095 1,226
(711) 4,376 298
14 EARNINGS PER SHARE
The earnings per ordinary share are based on the profit after taxation and on
70,570,343 (31 December 2000: 70,339,716) ordinary shares, being the weighted
average number of ordinary shares in issue during the period.
A copy of this statement is being sent to all shareholders and further copies
may be obtained from the company by writing to Pathfinder Properties PLC,
Capital House, Michael Road, London SW6 2YH or from the FT Free Annual Reports
Service, details of which can be found in the Financial Times.
For further information, contact:
Malcolm Bacchus, Director Tel: (020) 7736 9669
Andrew Marshall, Marshall Robinson Roe Tel: (020) 7489 2033
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