RNS Number:0821Z
Property Fund Management plc
26 May 2004
FOR IMMEDIATE RELEASE
26TH MAY 2004
PROPERTY FUND MANAGEMENT PLC:
RESTATEMENT OF PRELIMINARY RESULTS FOR 12 MONTHS TO 31 DECEMBER 2003
HIGHLIGHTS
* Delays in closing new European Fund has depressed pre-tax profits to
#826,000 against #2m in previous period
* At year end property assets under management totalled #868m - up 4%
* Existing funds performed strongly during year:
- Principal UK funds recorded impressive returns on equity of 20.7% and
18.2%
- European property assets now total Euro483m and show 6% capital value
increase and a 9%pa income distribution on equity
* Acquired outstanding interests in Dutch and French JV's
* Since year end:
- New #150m UK property fund launched
- New European fund with total purchasing power of Euro700m launched
- Euro100m Spanish Industrial Property Development Fund launched
* On course to achieve funds under management approaching #2bn during 2005
John Sims, Chief Executive commented:
"We have successfully advanced our medium term business plan objectives of
increasing funds under management in wider geographical territories where
investors have a committed appetite for indirect investment exposure to our high
yield specialist asset class.........we remain on course to achieve funds under
management approaching #2bn during 2005."
Contact: Property Fund Management plc Tel: 020 7535 1818
John Sims, Chief Executive
Andrew Yates, Finance Director
Baron Phillips Associates Tel: 020 7920 3161 or 07050 124119
Baron Phillips
CHAIRMAN'S STATEMENT
The Board of Property Fund Management plc announces its results for the year
ended 31 December 2003.
As a result of delays in closing the Euroind High Income Fund ("EHI"), a
significant amount of income expected to be included in the 2003 financial year
will now be reported in 2004. These delays were announced in December 2003 and
they are clearly disappointing.
We had expected to close EHI before the 2003 results were announced on 30 April
2004. However, I am pleased to report the first closing of EHI which has
attracted a group of leading UK and European investors who have committed a
total Euro193m of equity, including Euro7.5m from PFM as co-investor. Unfortunately
the delay in closing EHI has meant a fall in pre-tax profits to #826,000
compared to #2m in the previous period on net turnover down from #10.05m to
#8.74m. Earnings per share are down from 7.23p to 1.96p.
The Board is not recommending a final dividend because of the impact of the late
closing of EHI, meaning virtually all our profit will be made in the second half
of this year. Therefore the total dividend for the year is 2p, which was paid at
the half-year stage. This compares to last year's total dividend of 3.5p.
Although this is disappointing it is our current intention to pay an enhanced
interim dividend in 2004.
At the year-end property assets under management were #868m (up 4% from #835m),
of which #462m (2003: #575m) were in the UK and #406m (2003: #260m) were in
Europe. In addition a further #180m of properties were under offer at the
year-end.
During the period we agreed terms with our principal European joint venture
partners so that our European management platform is now mostly owned 100%. In
addition we further expanded our network into Central Europe, which we believe
will be an area of significant fund growth in the future.
Our existing investment funds have continued to perform well and this
performance underlines the attractiveness of the asset class in which we
specialise in these uncertain times.
Our results have been adversely affected by the delay to EHI, notwithstanding
this, the performance of our existing funds has been strong. Recently we have
announced both the first closing of the Euro700m EHI fund and the launch of a Euro100m
Spanish industrial property development fund. As a result the Group will be set
to grow strongly in the current year as properties are acquired for these new
funds. We also have a number of new initiatives in the planning stage.
Glyn Hirsch
Chairman
25 May 2004
CHIEF EXECUTIVE'S REVIEW
2003 was a challenging year for PFM, and it is very disappointing that the
delayed launch of EHI depressed pre-tax profits from #2m to #826,000.
Notwithstanding the late closing of EHI, we have however successfully advanced
our medium term business plan objectives of increasing funds under management in
wider geographical territories, where investors have a committed appetite for
indirect investment exposure to our high yield specialist asset class.
UK Business
Our established UK fund business has performed strongly this year. The value of
the UK funds' investment and development portfolio at the year-end was #462m,
covering approximately 11m sq ft, and generating rental income of #32m pa.
The principal funds - Industrial Partnership II and The Industrial Trust,
recorded impressive returns on equity in the year of 20.7% and 18.2%
respectively. At the ungeared property level they achieved returns of 15.8% and
13.5%, compared to the IPD industrial index of 12.1%.
During the year we restructured our UK property management division and created
a new facility based in Birmingham to undertake further occupier related
services.
UK Development
Continued progress has been made with the UK development fund operations. We
are now in an improving occupational market; in the last quarter we achieved a
letting and sales record with over 150,000 sq ft occupied. The ability to offer
freehold/virtual freehold unit sales has helped to drive performance in
achieving early occupancy on many of the schemes where development has been
completed. Stabilisations achieved over the year (i.e. occupancy levels
exceeding 85%) and profits from land sales, have contributed gross fees of
approximately #500,000.
Our development funds provide for escrow accounts into which performance fees
are paid on completion of the overall development programme. At the year end
our estimate of the value held in these accounts is approximately #1.3m. This
has not yet been released to our profit and loss account.
We are currently investigating options for the development division to enable it
to build its next phase of developments, whilst maintaining the potential for it
to contribute to funds under management.
European Business
As forecast, the year saw the effective completion of the European Industrial
Partnership Fund (EIP) acquisition programme in France, the Netherlands and
Germany.
The portfolio, comprising 54 estates, has a value of Euro483m. Early performance
has been encouraging with a capital value increase of 6% compared to acquisition
value and, based on the last quarter of 2003, income distribution is running at
9%pa on equity.
Whilst the occupier market in mainland Europe has been weaker than in the UK,
this has provided us with acquisition opportunities with higher voids, creating
refurbishment and future letting opportunities in the strengthening occupier
markets ahead.
During the year we acquired the outstanding 50% interest in our French and Dutch
joint venture businesses, prior to the increase in funds under management due to
the launch of EHI. The initial consideration for these acquisitions was #3.9m,
rising to #7.1m based upon increases in assets under management.
Current Trading
I am pleased to report the closure of a major fund initiative for the UK. The
Industrial Investment Partnership is initially structured as an eight-year
limited partnership between PFM and the Government of Singapore Investment
Corporation. Equity commitments to this initiative are #50m from GIC RE and
#2.5m from PFM.
The Fund provides purchase capacity, with equity and debt, of #150m. The
investment programme has already acquired #6m of assets, with a further #35m
under offer. Several additional acquisitions are under advanced negotiation.
Further European Initiatives
The New European Fund - EHI
EHI recently closed with first close equity commitments of Euro193m, including
Euro7.5m from PFM as a co-investor. This will provide an initial purchase capacity
of Euro300m enabling us to complete the acquisition of approximately Euro250m of
property already at an advanced stage of legal process.
When full equity raising is complete, the total purchase capacity of EHI will be
Euro700m which, together with EIP and single client mandates in Europe, will take
total funds under management outside the UK to Euro1.35bn (#900m).
Spain - Development Fund
We have also launched the Euro100m iBERIND Spanish industrial property development
fund. iBERIND has been co-sponsored with Lar Grosvenor, a Spanish development
group, and Citigroup Property Investors, as well as PFM. The fund has raised an
initial Euro16.8m of equity with an option to increase the equity base to Euro34.9m
which would provide a development programme of circa Euro100m after gearing.
Several sites have been identified and the initiative is expected to contribute
to earnings in the second half of 2004 and in 2005.
Central Europe - Future Expansion Market
In October 2003 PFM acquired a majority interest in Celtic Asset Management, an
established property asset manager based in Warsaw with substantial long term
experience in the Central European property markets. This is part of our
continuing strategy to explore opportunities in Poland, Hungary and the Czech
Republic who have recently joined the EU.
A specific fund business plan is now complete to be known as the Central
European Industrial Fund, and discussions are currently in hand with core
investors.
In summary, whilst we are very disappointed not to have achieved our market
forecast in 2003, we remain on course to achieve funds under management of
approaching #2bn during 2005.
John Sims
Chief Executive
25 May 2004
FINANCIAL REVIEW
Turnover
Turnover for the year was #8.743m compared to #10.049m in 2002 which is
generated from the property fund management and insurance brokerage businesses
of PFM.
Assets under management within funds generate earnings and cashflows. The
principal drivers of turnover are annual fund management fees based on long-term
contracts and short-term transaction fees generated by property acquisition and
disposal programmes within funds.
Transaction fees in the year were #5.028m down from #6.619m in 2002 whilst
annual fund management fees increased from #1.71m in 2002 to #3.015m reflecting
the fulfillment of acquisition programmes in mature funds prior to the creation
of further funds.
The creation of three new funds including the recently announced Industrial
Investment Partnership and EHI will establish, when fully invested, a core of
secure recurring income based on long term contracts.
The Group operates its European business from offices in Paris, Amsterdam,
Berlin and Madrid which historically have been joint ventures with local
management having a 50% interest. During the year the Group acquired the
outstanding equity in the Amsterdam and Paris entities.
On 30 June 2003, the Group acquired 50% of a new joint venture insurance broker
by the transfer of the Group's existing wholly owned insurance broking
subsidiary.
New offices were formed in Poland and Denmark which acquired existing businesses
that also contributed to turnover during the year.
Because of the way profits are displayed in the Profit and Loss Account the
contribution arising from joint ventures is shown as one pre-tax figure. The
European offices, except Germany and Spain, will now be incorporated on a fully
consolidated basis whilst insurance broking will now be demonstrated as a joint
venture contribution having previously been fully consolidated. This reflects
the relative significance of each operation and will fully impact in 2004 but
makes current comparative analysis difficult as illustrated below.
Turnover 2003 2002
#m #m
Recurring 5.622 8.329
Former JV's 1.804 0.000
New Offices 0.617 0.000
8.043 8.329
Insurance 0.700 1.720
8.743 10.049
Operating Expenses
Operating expenses for the year were #8.608m compared to #7.249m in 2002.
The effects of the structural changes in the year referred to above are
reflected by the inclusion of #1.061m for the European joint ventures, #0.2m for
European acquisitions in the year and the exclusion of #0.707m in respect of
insurance brokerage compared with the previous year.
For the first time since 2001 the Group has been involved in the creation of
several new funds. This has been achieved without a third party fund manager
which has meant that the Group has expended considerable man hours and costs on
the creation of fund structures and an initial pipeline supply of property. The
greater part of this work was completed prior to the year-end and is reflected
in a transfer of #1.749m from Operating expenses to be carried forward as work
in progress to be matched with initial income from the funds in 2004.
The Group maintains an ongoing programme to ensure that operating expenses are
minimised commensurate with ensuring maximum returns whilst dealing with a
commercial environment of ever increasing complexity and regulation. In the UK
certain peripheral and back office activities have been outsourced which should
ensure savings of approximately #1m, year on year, whilst ensuring scalability
in resource and cost terms going forward.
The full impact of all these measures will be reflected in the year to December
2004.
Joint Ventures
Again the structural changes within the Group in the year make comparison
difficult.
The fund management activities of France and the Netherlands cover the periods 1
January to 23 December 2003 and 1 January to 12 March 2003 respectively, which
together with a complete year for Germany account for a loss of #192,000
compared to a full year profit in 2002 of #474,000 for all territories.
Insurance Brokerage was included for the first time this year but only covering
the period 1 July to 31 December 2003 and generated a profit of #491,000 during
that period.
Amortisation and Impairment of Goodwill
Goodwill amortisation costs in 2003 were #115,000 compared to #21,000 in the
previous year.
After review there has been no provision for the impairment of goodwill.
We anticipate a charge of approximately #421,000 in 2004. The application of
International Accounting Standards which becomes mandatory in 2005 does not
currently require the amortisation of goodwill, relying instead on the test of
impairment.
Taxation
The tax charge for the year was #335,000 (2002: #689,000).
The effective tax rate for the year, excluding charges for amortisation of
goodwill in respect of intangible assets, which are not allowable deductions for
tax purposes, was 35.6% (2002: 34.04%).
Goodwill
Goodwill has been generated in the year upon the acquisition of the 50% of the
joint ventures in France and Netherlands not previously owned and the
acquisition of businesses in Poland and Denmark.
The consideration in respect of the acquisitions in France and Netherlands was
by way of an initial tranche of cash and shares together with a further tranche
of deferred consideration which is geared to the level of property acquisitions
in each territory over a period of three to four years.
At the year-end an amount of #2.663m is included in creditors for this deferred
consideration.
Funding Strategy
The Group's treasury operations are designed to reduce the financial risks of
funding, liquidity, interest and currency rate exposure.
The Group has substantial short-term facilities denominated in Sterling. These
facilities are principally in place to provide working capital for the business.
The Group also has substantial medium term facilities denominated in Euros,
which have not been used in the year. These facilities are principally in place
to facilitate corporate acquisitions and co-investment in funds.
Hedging
The Group borrows from banks at floating rates of interest and the interest rate
exposure is hedged through the use of a variety of financial derivative
instruments.
The Group has a policy of minimizing exposure to exchange risk arising from
assets and liabilities denominated in Euros. To the extent that assets do not
match any liability the exposure will be hedged.
The Group does not engage in trades of a speculative nature.
Dividend
The Directors recommend that no final dividend be paid.
Post Balance Sheet Events
On 3 March 2004 the Industrial Investment Partnership was launched with equity
of #52.5m.
The first closing of the Euroind High Income Fund took place on 6 May 2004
raising new equity of Euro193m.
The iBERIND fund raised committed equity of Euro34.9m on 13 May 2004.
Andrew Yates
Finance Director
25 May 2004
CONSOLIDATED PROFIT AND LOSS ACCOUNT
2003 2002
Notes #'000 #'000
TURNOVER: 4
Turnover: Group and share of joint venture - Existing 10,131 12,014
turnover operations
- Acquisitions 617 -
--------------------- ---------------------
10,748 12,014
Less: share of joint venture turnover - Existing (2,005) (1,965)
operations
--------------------- ---------------------
8,743 10,049
Cost of sales 5 (1,394) (1,326)
--------------------- ---------------------
GROSS PROFIT 5 7,349 8,723
Other operating expenses 5 (8,608) (7,249)
Operating expenses transferred to work in 5 1,749 -
progress
--------------------- ---------------------
OPERATING PROFIT - Existing 349 1,474
operations
- Acquisitions 141 -
490 1,474
Share of operating profit in joint ventures 305 476
--------------------- ---------------------
PROFIT ON ORDINARY ACTIVITIES BEFORE FINANCE CHARGES 795 1,950
Net interest receivable
Group 37 55
Joint ventures (6) (2)
31 53
--------------------- ---------------------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 4 826 2,003
Tax on profit on ordinary activities 6 (335) (689)
--------------------- ---------------------
PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 491 1,314
Equity minority interests (79) 20
--------------------- ---------------------
PROFIT FOR THE FINANCIAL YEAR 412 1,334
Equity dividends paid and proposed 7 (422) (723)
--------------------- ---------------------
RETAINED (LOSS)/PROFIT FOR THE YEAR 12 (10) 611
========== ==========
EARNINGS PER SHARE
Basic 8 1.96p 7.23p
Diluted 8 1.95p 7.05p
========== ==========
The accompanying notes are an integral part of this consolidated profit and loss
account.
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
2003 2002
#'000 #'000
Profit for the financial year
Group 281 1,014
Joint ventures 131 320
--------------------- ---------------------
412 1,334
Gain on foreign currency 31 -
translation
--------------------- ---------------------
TOTAL RECOGNISED GAINS AND LOSSES RELATING TO THE YEAR 443 1,334
========== ==========
CONSOLIDATED BALANCE SHEET AT 31ST DECEMBER 2003
2003 2002
Notes #'000 #'000
FIXED ASSETS
Intangible assets - Goodwill 8,272 41
Tangible assets 1,040 755
Investments in joint ventures 10
Share of gross assets 2,111 1,486
Share of gross liabilities (1,841) (1,125)
270 361
------------------------ ---------------------
9,582 1,157
------------------------ ---------------------
CURRENT ASSETS
Work in progress 1,749 -
Debtors 4,695 4,519
Cash at bank and in hand 524 3,858
------------------------ ---------------------
6,968 8,377
CREDITORS: Amounts falling due within one year (7,432) (2,978)
------------------------ ---------------------
NET CURRENT (LIABILITIES)/ASSETS (464) 5,399
------------------------ ---------------------
TOTAL ASSETS LESS CURRENT LIABILITIES 9,118 6,556
PROVISIONS FOR LIABILITIES AND CHARGES (37) (34)
EQUITY MINORITY INTERESTS (141) -
------------------------ ---------------------
NET ASSETS 4 8,940 6,522
=========== ==========
CAPITAL AND RESERVES
Called-up share capital 11 1,106 1,033
Share premium account 12 4,785 4,793
Other reserves 12 2,425 93
Profit and loss account 12 624 603
------------------------ ---------------------
EQUITY SHAREHOLDERS' FUNDS 8,940 6,522
=========== ==========
CONSOLIDATED CASH FLOW STATEMENT FOR YEAR ENDED 31ST DECEMBER 2003
2003 2002
Notes #'000 #'000
Net cash (OUTFLOW)/inflow from operating activities (660) 546
Returns on investments and servicing of finance
Interest received 40 75
Interest paid (3) (22)
------------------------ ---------------------
Net cash inflow from returns on investments and servicing 37 53
of finance
=========== ==========
Taxation (238) (888)
Capital expenditure and financial investment
Purchase of intangible fixed assets (89) -
Purchase of tangible fixed assets (335) (268)
Sale of tangible fixed assets 1 9
------------------------ ---------------------
Net cash outflow from capital expenditure and financial (423) (259)
investment
=========== ==========
Acquisitions and disposals
Purchase of subsidiary undertaking (3,324) (50)
Sale of subsidiary undertaking (36) -
Net cash acquired with subsidiary undertakings 689 -
Net cash disposed of with subsidiary (797) -
undertakings
Investment in joint venture (50) (19)
------------------------ ---------------------
Net cash outflow from acquisitions and disposals (3,518) (69)
=========== ==========
Equity dividends paid (836) (587)
------------------------ ---------------------
Cash outflow before management of liquid resources and (5,638) (1,204)
financing
Management of liquid resources *
Cash withdrawn/(put) on 1 month deposit 2,000 (2,000)
Financing
Issue of ordinary share capital (8) 6,268
Repayment of loan - (55)
Flotation costs - (1,203)
------------------------ ---------------------
Net cash (outflow)/inflow from financing (8) 5,010
=========== ==========
(DECREASE)/Increase in cash in the year (3,646) 1,806
=========== ==========
* Property Fund Management plc includes term deposits as liquid resources.
RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOWS
2003 2002
#'000 #'000
Operating profit 490 1,474
Depreciation and amortisation charges 427 268
Profit on sale of tangible fixed assets (1) (5)
Increase in work in progress (1,749) -
Increase in debtors (556) (1,570)
Increase in creditors 729 379
--------------------- ---------------------
Net cash (outflow)/inflow from operating activities (660) 546
========== ==========
ANALYSIS AND RECONCILIATION OF NET FUNDS/(DEBT)
31 December 2003
1 January 2003
Cash flow
#'000 #'000 #'000
Liquid resources 2,000 (2,000) -
Cash in hand, at bank 1,857 (1,333) 524
Overdrafts - (2,313) (2,313)
--------------------- --------------------- ---------------------
Net (debt)/cash 3,857 (5,646) (1,789)
========== ========== ==========
Liquid resources consist of cash, which is not
available on demand.
2003 2002
#'000 #'000
(Decrease)/Increase in cash in the year (3,646) 1,806
Cash outflow from decrease in debt and lease financing - 55
Cash (inflow)/outflow from (decrease)/increase in (2,000) 2,000
liquid resources
--------------------- ---------------------
Movement in net debt in the year (5,646) 3,861
Net cash/(debt) at 1 January 3,857 (4)
--------------------- ---------------------
Net (debt)/cash at 31 December (1,789) 3,857
========== ==========
RECONCILIATION OF MOVEMENTS IN GROUP SHAREHOLDERS' FUNDS
2003 2002
#'000 #'000
Profit for the financial year 412 1,334
Other recognised gains and losses relating to the year (net) 31 -
Dividends paid and proposed on equity shares (422) (723)
New shares issued 2,397 5,066
--------------------- ---------------------
Net addition to shareholders' funds 2,418 5,677
Opening shareholders' funds 6,522 845
--------------------- ---------------------
Closing shareholders' funds 8,940 6,522
========== ==========
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER 2003
1. BASIS OF PREPARATION
The financial information is prepared on the historical cost
basis and in accordance with applicable UK accounting standards. It comprises
consolidated financial information on two companies under common ownership and
management control, Property Fund Management plc and The iO Group Limited. The
results and net assets of these two entities have been aggregated using merger
accounting principles.
2. BASIS OF CONSOLIDATION
Subsidiary undertakings are accounted for from the effective
date of acquisition.
Entities in which the Group holds an interest on a long-term
basis and which are jointly controlled by the Group and one, or more, other
ventures under a contractual arrangement are treated as joint ventures.
3. ACCOUNTING POLICIES
The accounting policies are as stated in the last annual
accounts of the Group unless otherwise stated below:
Intangible assets - goodwill
Goodwill arising on the acquisition of subsidiary undertakings and businesses,
representing any excess of the fair value of the consideration given over the
fair value of the identifiable assets and liabilities acquired, is capitalised
and written off on a straight line basis over its useful economic life, which is
20 years. Provision is made for any impairment.
Work in progress
Work in progress is stated at the lower of cost and net realisable value. Cost
includes direct labour and direct expenses and an attributable proportion of
overheads. Net realisable value is based on estimated proceeds, less further
costs expected to be incurred to completion.
Prior to 1 January 2003 the Group did not recognise work in progress. The change
in accounting policy has not necessitated a prior year adjustment since the
level of work in progress at 31 December 2002 was immaterial.
Revenue recognition
The Group's revenue is derived principally from management fees and performance
related fees in respect of industrial property funds.
The Group recognises revenue when, and to the extent that, it obtains the right
to consideration in exchange for services rendered.
Management fees are credited to profit and loss account as earned. Performance
related fees are credited to profit and loss account when the outcome of a
contract can be assessed with reasonable certainty, and where outstanding
included in debtors as "amounts recoverable under contracts".
4. SEGMENT INFORMATION
Classes of business: Property fund Insurance Group
management broking
2003 2002 2003 2002 2003 2002
#'000 #'000 #'000 #'000 #'000 #'000
Turnover:
Group and share of joint 9,041 10,294 1,707 1,720 10,748 12,014
venture turnover
Less: share of joint venture (998) (1,965) (1,007) - (2,005) (1,965)
turnover ------- ------ ------ ------ ------- -------
8,043 8,329 700 1,720 8,743 10,049
======= ====== ====== ====== ======= =======
Profit on ordinary activities
before taxation:
Group profit 504 1,157 23 372 527 1,529
Share of joint ventures' (192) 474 491 - 299 474
profit/(loss) ------- ------ ------ ------ ------- -------
312 1,631 514 372 826 2,003
======= ====== ====== ====== ======= =======
Net assets:
Group net 8,670 6,135 - 26 8,670 6,161
assets
Share of joint ventures' net (4) 361 274 - 270 361
assets ------- ------ ------ ------ ------- -------
8,666 6,496 274 26 8,940 6,522
======= ====== ====== ====== ======= =======
Geographical segments: United Kingdom Europe Group
2003 2002 2003 2002 2003 2002
#'000 #'000 #'000 #'000 #'000 #'000
Turnover by destination:
Group and share of joint 6,736 8,851 4,012 3,163 10,748 12,014
venture turnover
Less: share of joint venture (1,040) - (965) (1,965) (2,005) (1,965)
turnover ------- ------ ------ ------ ------- -------
5,696 8,851 3,047 1,198 8,743 10,049
======= ====== ====== ====== ======= =======
Turnover by origin:
Group and share of joint 7,329 10,049 3,419 1,965 10,748 12,014
venture turnover
Less: share of joint venture (1,007) - (998) (1,965) (2,005) (1,965)
turnover ------- ------ ------ ------ ------- -------
6,322 10,049 2,421 - 8,743 10,049
======= ====== ====== ====== ======= =======
Profit on ordinary activities
before taxation:
Group profit/(loss) (241) 1,529 768 - 527 1,529
Share of joint ventures' 491 - (192) 474 299 474
profit/(loss) ------- ------ ------ ------ ------- -------
250 1,529 576 474 826 2,003
======= ====== ====== ====== ======= =======
Net assets:
Group net assets 8,475 6,161 195 - 8,670 6,161
Share of joint ventures' net 274 - (4) 361 270 361
assets ------- ------ ------ ------ ------- -------
8,749 6,161 191 361 8,940 6,522
======= ====== ====== ====== ======= =======
4. SEGMENT INFORMATION (continued)
ACQUISITIONS
The analyses presented above include the following amounts in respect of operations acquired during the year which
were all in the European property fund management segment:
Europe
#'000
Group turnover:
- by destination 617
- by origin 617
Group profit on ordinary activities before tax 143
Group net assets 51
==========
5. COST OF SALES, GROSS PROFIT AND OTHER OPERATING EXPENSES
Existing Acquisitions Total Existing operations
operations
2003 2003 2003 2002
#'000 #'000 #'000 #'000
Cost of sales 1,117 277 1,394 1,326
====== ====== ===== ======
Gross profit 7,009 340 7,349 8,723
====== ====== ===== ======
Other operating expenses 8,410 198 8,608 7,249
====== ====== ===== ======
Operating expenses transferred to work in 1,749 - 1,749 -
progress
====== ====== ===== ======
6. TAX ON PROFIT ON ORDINARY ACTIVITIES
The tax charge comprises:
2003 2002
#'000 #'000
Current tax
UK corporation tax 214 522
UK corporation tax adjustment in respect of prior years (7) 22
Double tax relief (143) -
--------------------- ------------------
64 544
Foreign tax 116 -
--------------------- ------------------
180 544
Share of joint ventures' tax - UK corporation tax 151 154
Share of joint ventures' tax - Foreign tax 1 -
--------------------- ------------------
Total current tax 332 698
Deferred tax
Origination and reversal of timing difference (note 21) 3 (9)
--------------------- ------------------
Total tax on profit on ordinary activities 335 689
========== ==========
7. DIVIDENDS PAID AND PROPOSED ON EQUITY SHARES
2003 2002
#'000 #'000
Interim paid of 2p (2002: 1.5p) per ordinary share 422 310
Final proposed of nil (2002: 2p) per ordinary share - 413
--------------------- ---------------------
422 723
========== ==========
8. EARNINGS PER SHARE
The calculations for earnings per share are based on the following profits and numbers of shares:
2003 2002
#'000 #'000
Profit for the financial year 412 1,334
========== ==========
2003 2002
Number of shares Number of shares
Weighted average number of shares:
For basic earnings per share 21,058,689 18,451,987
Exercise of share options 73,245 480,408
--------------------- ---------------------
For diluted earnings per share 21,131,934 18,932,395
========== ==========
9. ACQUISITIONS
On 12 March 2003, the Group acquired for a consideration of up to Euro3.5m the 50% of The iO Group Netherlands
B.V. not already owned by it. The consideration consists of an initial payment of Euro1.5m, comprising a cash
payment of Euro0.5m and the issue of 459,501 ordinary shares of 5p each in the Company to the value of Euro1m and
a deferred payment of up to Euro2m dependent on the level of acquisition fees received by The iO Group
Netherlands BV during a period of 36 months from the date of the agreement. The fair value of the total
consideration was #2,405,000 and has created goodwill of #2,377,000, which is being amortised over 20 years.
On 27 May 2003, the Group acquired 75.1% of iOG Denmark AS (a Danish corporation) for cash of DKK 751,000.
The acquisition has created goodwill of #20,459, which is being amortised over 20 years.
On 30 June 2003, the Group acquired 50% of Ascent Insurance Brokers Limited for a consideration of #125,000
satisfied by the transfer of the Group's 100% interest in Thames Insurance Brokers Limited to Ascent
Insurance Brokers Limited. The acquisition created goodwill of #13,000, which is being amortised over 20
years.
On 31 October 2003, the Group acquired for a consideration of up to Euro1.25m, 51% of each of Gateshead
Investments Limited and Upperastoria Trading and Investments Limited (Cypriot corporations). The
consideration consists of an initial cash payment of Euro250,000 and a deferred payment of Euro1,000,000 payable
provided that the sellers remain employees of the Group 12 months after the date of the agreement.
Upperastoria Trading and Investments Limited owns 100% of Celtic Asset Management zo.o (a Polish
corporation). The fair value of the total consideration was #871,000 and the acquisition has created
goodwill of #909,000, which is being amortised over 20 years.
On 23 December 2003, the Group acquired for a consideration of up to Euro6.66m the 50% of GViO S.A.S not
already owned by it. The consideration consists of an initial cash payment of Euro1.7m and the issue of
1,000,000 ordinary shares of 5p each in the Company with a value at acquisition of #1.7m and a deferred
payment of up to Euro2.5m dependent on the level of acquisition fees received by GViO S.A.S up to the 31
December 2007. The fair value of the total consideration was #4,684,000 and the acquisition has created
goodwill of #4,977,000, which is being amortised over 20 years.
10. INVESTMENTS IN JOINT VENTURES
2003 2002
#'000 #'000
Fixed assets 174 165
Current assets 1,924 1,321
--------------------- ------------
Share of gross assets 2,098 1,486
Liabilities due within one year (1,841) (1,125)
--------------------- ------------
Share of net assets 257 361
========== ==========
2003
#'000
Share of net assets/Cost
At 1 January 2003 361
Additions 125
Share of retained loss for the year (229)
Disposals -
------------
At 31 December 2003 257
==========
Goodwill
At 1 January 2003 -
Additions 13
Amortised -
------------
At 31 December 2003 13
==========
Net book value 270
==========
11. CALLED-UP SHARE CAPITAL
Allotted, called-up and
fully paid
Authorised
Date Number #'000 Number #'000
31 December 2002 Ordinary shares of 5p each 30,000,000 1,500 20,665,394 1,033
12 March 2003 New ordinary shares issued - - 459,501 23
23 December 2003 New ordinary shares issued - - 1,000,000 50
--------------------- ------------- -------------- ----------------
31 December 2003 Ordinary shares of 5p each 30,000,000 1,500 22,124,895 1,106
===================== ============= ============== ================
12. RESERVES
Share Profit and loss
premium account Total
account Other reserves
Group #'000 #'000 #'000 #'000
At 31 December 2002 4,793 93 603 5,489
Share issues - 2,332 - 2,332
Expenses of equity share issues (8) - - (8)
Gain on overseas equity investment - - 31 31
Retained loss for the year - - (10) (10)
------------ ------------- ------------ ----------
At 31 December 2003 4,785 2,425 624 7,834
============ ============= ============ ==========
13. FINANCIAL INFORMATION
The financial information set out in this preliminary announcement has been extracted from the Group's
accounts, which have been approved by the Board of Directors.
The financial information set out above does not comprise the Company's statutory financial statements for
the year ended 31 December 2003 or 2002. Statutory financial statements for 2002 have been delivered to the
Registrar of Companies and those for 2003 will be delivered following the Company's Annual General Meeting.
The auditors have reported on those financial statements. Their reports were unqualified and did not contain
statements under section 237(2) or (3) of the Companies Act 1985.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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