Interim Results

SOLITAIRE GROUP PLC 4 October 1999 SOLITAIRE GROUP Plc INTERIM RESULTS ANNOUNCEMENT Chairman's statement Results and dividend Pre-tax profits for the six months before exceptional costs were £507,000 (1998: £520,000) on turnover of £1,627,000 (1998: £1,310,000). The small decline in pre-tax profits before exceptional costs reflects the start-up costs incurred in connection with Property Investment Portfolio Services Limited referred to below. The exceptional costs relate to the abortive acquisition referred to below and amount to £461,000. Loss per share after exceptional expenses was (2.2p) (1998: earnings 7.7p). Adjusted earnings per share before exceptional costs were 7.6p. The board is recommending the payment of an increased interim dividend of 2.45p (1998: 2.4p) per share in respect of the six month period ended 30 June 1999, which will be paid on 30 November 1999 to shareholders on the register on 15 October 1999. Review of operations Residential property management The first six months of the year have seen the successful integration of Pembertons Residential Limited into the groups residential property management portfolios. At the end of June 1999, the group purchased the property management portfolio of Hazelvine Limited, an estate agency and property management business situated in West London, for a total cash consideration of £611,000. This portfolio has been merged with the that of Pembertons Residential Limited this has increased the units managed by Pembertons by 1,100 to approximately 2,400. Solitaire is continuing to develop its residential property management business and is winning instructions from both national and regional house builders that will come on stream over the next few years. Insurance services At the current time, the value of the portfolio for insurance purposes amounts to some £1.13 billion. Solitaire continues to use its buying power to obtain competitive terms when supplying insurance services to its clients. Property Investment Portfolio Services (PIPS) As reported at the AGM, PIPS commenced operations at the beginning of this year. As expected, the sales generated from this new operation have experienced a slow take up among the Independent Financial Advisor community. Costs have been kept under tight control, but with a lead time of around three months from initial enquiry to income generation and the requirement to write off start-up costs this operation has made a loss of £98,000 in the first six months, which was budgeted for. This side of the business is experiencing increasing interest and the board considers that costs should at least equal income for the remainder of the year. I am most encouraged by progress to date. Business Expansion Scheme (BES) During the period Solitaire assisted Ergotrade Limited (an associated company), through the provision of a £1.5 million loan facility, in the acquisition of Unchained Growth II, a BES company, the property portfolio of which is managed by Solitaire. Unchained Growth II has now been put into liquidation, the properties successfully disposed off by Ergotrade and the loans to Solitaire repaid. Solitaire has retained the management of the portfolio. Abortive acquisition At the beginning of the year the group was engaged in lengthy and complex negotiations to acquire a substantial London based property management operation. Unfortunately this acquisition was not completed through factors outside Solitaires control and the resultant costs have been shown as an exceptional expense. Current trading and prospects Solitaire continues to operate in a highly fragmented market and the group's national presence gives it a significant advantage in terms of economies of scale and allows it to compete effectively at the local and regional level. The group continues to be well placed to make earnings enhancing acquisitions. With the steady demand for our services from house builders, institutional and private investors, together with the prospect of increasing market activity, I am confident that your company can look forward to further growth from its core activities. George Brutton, FRICS Chairman 1 October 1999 For further information: Graham Shapiro Solitaire Group Plc Tel: 0181 364 8497 Henry Faure Walker / Tom Allison The Communication Group plc Tel: 0171 630 1411 Unaudited consolidated profit and loss account Notes Six months Six months Year to 31 30 June 1999 30 June Dec 1998 £'000 1998 £'000 £'000 Revenue 1,627 1,310 2,792 Expenses 1,117 794 1,732 Exceptional costs 3 461 - - ------ ------ ------ Operating profit 49 516 1,060 ------ ------ ------ Investment income 8 18 38 ------ ------ ------ Profit on ordinary activities before interest 57 534 1,098 ------ ------ ------ Interest payable 11 14 24 ------ ------ ------ Profit on ordinary activities after taxation 46 520 1,074 Taxation on ordinary activities 147 168 358 ------ ------ ------ (Loss)/profit on ordinary activities after taxation (101) 352 716 ------ ------ ------ Dividends 4 112 109 328 ------ ------ ------ Retained (loss)/profit for the period (213) 243 388 ------ ------ ------ Dividend per share 2.45 2.40 7.20 (Loss)/earnings per share (2.2)p 7.7 15.7 Adjusted earnings per share 7.6p - - Unaudited consolidated balance Sheet Notes 30 June 1999 30 June 1998 31 Dec £'000 £'000 1998 £'000 Assets employed Fixed Assets Intangible assets 1,020 - 440 Tangible assets 5,626 5,383 5,517 ------ ------ ------ 6,646 5,383 5,957 ------ ------ ------ Current assets Debtors 2,945 955 929 Cash at bank and in hand 197 713 463 ------ ------ ------ 3,142 1,668 1,392 Creditors: amounts falling due within one year 3,494 1,510 1,589 ------ ------ ------ Net current (liabilities) assets 6 (352) 158 (197) ------ ------ ------ Total assets less current liabilities 6,294 5,541 5,760 ------ ------ ------ Creditors: amounts falling due after more then one year 845 25 100 ------ ------ ------ 5,449 5,516 5,660 ------ ------ ------ Called-up share capital 456 456 456 Share premium 2,486 2,486 2,486 Revaluation reserve 1,731 1,731 1,731 Profit and loss account 776 843 987 ------ ------ ------ Equity shareholders funds 5,449 5,516 5,660 ------ ------ ------ Unaudited consolidated cash flow statement Notes Six months Six months Year to 31 30 June 1999 30 June 1998 Dec 1998 £'000 £'000 £'000 Cash flow from operating activities (159) 391 876 Returns on investment and servicing of finance (2) 5 14 Taxation (21) (33) (246) Capital expenditure and financial investment (132) (306) (594) Acquisition and disposals (611) - (151) Equity dividends paid (219) (59) (168) ------ ------ ------ Cash outflow before use of liquid resources and financing (1,144) (2) (269) Management of liquid resources (1,500) Financing 2,247 - - ------ ------ ------ (Decrease)/increase in cash in the period (397) (2) (269) ------ ------ ------ Reconciliation of net cash flow to movement in net funds Decrease in cash in the period (397) (2) (269) Cash inflow from increased debt (2,247) - - Cash outflow from increase in liquid resources 1,500 - - ------ ------ ------ Changes in net funds resulting from cash flows (1,144) (2) (269) Net funds at the beginning of the period 190 459 459 ------ ------ ------ Net funds at the end of the period (954) 457 190 ------ ------ ------ Reconciliation of operating profit to net cash inflow from operating activities Operating profit 49 516 1,060 Depreciation and amortisation 54 5 19 Profit on sale of fixed assets - - - Increase in debtors (506) (334) (291) Increase in creditors 244 204 88 ------ ------ ------ Net cash flow from operating activities (159) 391 876 ------ ------ ------ SOLITAIRE GROUP Plc 1. Basis of preparation The results for the six months ended 30 June 1999 have been prepared on the basis of the accounting policies set out in the consolidated financial statements at 31 December 1998. The comparatives for the year ended 31 December 1998 have been extracted from the audited consolidated financial statements for that period. 2. Annual Financial Statements The audited consolidated financial statements for the year ended 31 December 1998 have been filed with the Registrar of Companies and include an unqualified audit report. The comparatives included in this report do not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. 3. Exceptional costs The costs resulting from an abortive acquisition have been written off as an exceptional item 4. Dividend The board has declared an interim dividend of 2.45p per ordinary share, payable on 30 November 1999 to shareholders on the register on 15 October 1999. 5. Earnings per ordinary share The calculation of earnings per share for the six months ended 30 June 1999 is based upon a loss of (£101,000) (1998: £352,000) and the average number of ordinary 10p shares in issue of 4,561,831 (1998: 4,561,831). There are no dilutive potential ordinary shares. The adjusted earnings per share has been calculated after adjusting for the effects of the exceptional costs. 6. Net current liability Both current assets and current liabilities include the loans of £1.5 million relating to the Ergotrade Limited acquisition of Unchained Growth II. 7. Interim report Copies of the interim report for the six months ended 30 June 1999 will be sent to shareholders on 25 October 1999. Further copies will be available from the Company Secretary, Solitaire Group PLC, Lynwood House, 10 Victors Way, Barnet, Hertfordshire, EN5 5TZ and from the Company Announcements Office, The London Stock Exchange, Old Broad Street, London, EC2N 1HP.

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