TIDMHRCO
RNS Number : 3300F
Hirco plc
14 June 2012
14 June 2012
Hirco plc
Publication of Interim Results
London - Hirco plc (AIM: HRCO), announces its Interim Results
for the period ended 31 March 2012.
The Chairman's Statement, as set out within the Interim Results,
is reproduced below. To view the full Interim Results (including
the financial statements and notes to the accounts), please paste
the following URL into the address bar of your browser.
http://www.rns-pdf.londonstockexchange.com/rns/3300F_-2012-6-13.pdf
Chairman's Statement
Dear Fellow Shareholders,
The results for the half year ended 31 March 2012 show a further
decline in net assets to GBP223.6m (30 September 2011:
GBP251.4).
This is disappointing and is primarily due to two factors:
-- the continuing deterioration in the Indian economic outlook
which has led to considerable weakening of the Indian Rupee against
the Pound (from 77.5 to 81.5 Rupees to the Pound). The restating of
the September 2011 project valuation figures at March 2012 exchange
rates has reduced the net assets by GBP16.8m.
-- the continued slow progress in terms of sales at the projects
and with construction timelines for completion of some residential
blocks being delivered up to six months later than planned. The
project companies' net asset positions per the unaudited quarterly
information packs provided by Hirco Developments Private Limited
(HDPL) have declined by GBP13.5m from 30 September 2011.
In addition the preference dividend accruing for the half year
which amounts to GBP33.3m has had to be provided against in the
amount of GBP25.8m as the investment in the projects, as measured
under the waterfall calculation in note 11, is insufficient to
cover the full amount of this obligation. At the year end the
accounting basis of the investment will be subject to a full review
to determine whether the current method of accounting is still
appropriate.
Whilst valuations of the projects were not carried out at the
half year, our advisers, CBRE, have confirmed that there are no
reasons to revise any of their valuation assumptions from those on
which their September 2011 valuation was based.
The factors cited above are reflective of the disappointing
performance of the Indian economy where growth rates have sharply
declined, and the general lack of business confidence in Government
policy and actions. A return to the growth rates of more recent
years with real progress on investments in key areas of
infrastructure will be critical to the success of those projects in
which we are invested. Progress over this half year has been modest
and we understand that no commitments have yet been made to launch
the next phase of development at either site.
We remain open to discussions with our partners that
fundamentally address the concerns we have and have been in
intermittent dialogue with them; however there appears to be little
immediate prospect of any substantial discussion. This may change
when the family arbitration is settled, but we continue to have no
visibility on the timing of a settlement and how it will translate
into an appropriate restructuring of the Company in accordance with
each party's economic interests.
About a year ago we completed a capital raise. Our objective in
raising those funds was to have the wherewithal to protect our
shareholders' interests and recover value in Hirco. We have now
begun deploying those funds by retaining appropriate advisors and
together devising a strategy that we intend will achieve our joint
goals. We would expect to report more fully in the board reports on
the full year results.
We are cognisant of the trust you have placed in the Board in
contributing additional capital to this so far disappointing
enterprise. We have undertaken substantial efforts to conserve this
capital by cutting costs with recurring operating expenditures for
the last six months less than GBP0.5m (2011: GBP2.4m) so well
within the estimates previously given. Undoubtedly overall costs
will increase as we implement our strategy, but we believe that our
running costs are now appropriate.
Project Progress
Consistent with the year end report, progress continues to be
modest. The following figures are extracted from the latest
information packs that we have received from the developers.
Total No. Sales at Sales at Sales at % sold Average
of units September March 2012 April 2012 at April Price/sqft
2011 2012 at April
2012
--------- ---------- ----------- ------------ ------------ ---------- -------------
Chennai 2,665 1,570 1,620 1,642 62% 4,295 rupees
--------- ---------- ----------- ------------ ------------ ---------- -------------
Panvel 2,956 2,414 2,503 2,527 85% 5,053 rupees
--------- ---------- ----------- ------------ ------------ ---------- -------------
In the six month reporting period a total of 50 units were sold
at Chennai (72 units to April 2012) and 89 units were sold at
Panvel (113 units to April 2012).
Projected completion of Chennai phase 1 Residential has slipped
six months to March 2015. Similarly at Panvel overall residential
completion is now projected for May 2015.
The two office buildings at Panvel totalling 1.9m sqft gross
continue are still projected to be completed in February and May
2013. No tenants have been secured for these buildings as yet.
Further to the comment made in last year's Report and Accounts,
HDPL has not provided any meaningful comment on our estimates of
the surplus likely to result at the end of the first phase of
development now scheduled for 2015.
The Board will undertake a detailed site visit and review of
progress on all aspects of the scheme at the end of September
2012.
I look forward to keeping you updated on developments over the
coming months.
David Burton
Chairman of Hirco PLC
The Interim Results will shortly be available on the Company's
website in accordance with Rule 26 of the AIM Rules for Companies
at: http://www.hircoplc.co.im/rule_26.html.
Contacts:
Nigel McGowan
Company Secretary
ir@hircoplc.co.im
Singer Capital Markets Limited
James Maxwell/Nick Donovan (Nominated Adviser)
James Waterlow (Sales)
+44 (0) 20 3205 7500
This information is provided by RNS
The company news service from the London Stock Exchange
END
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