RNS Number:1316R
Basepoint PLC
23 October 2003
Basepoint Plc
Interim Results 2003
Interim Statement
Enterprise, Innovation, Opportunity
Highlights - Interim Statement
*Operating profit increased by 89% to #0.96m (2002 - #0.51m)
*Profit for the period increased by 110% to #0.6m (2002 - #0.28m)
*Earnings per share increased by 43%
*Maiden interim dividend of 0.5p per share - payable on 28 November 2003
*Net assets per share - #1.82
*Limited Partnership formed with Trustees of Kodak Pension Plan and first
two MBECs financed by Partnership opening at Andover and Crawley this month
*Development work on a new MBEC starting on site at Bournemouth
International Airport this month*
*Contracts for site acquisition at Swindon exchanged this month with
expected start on site in January 2004*
*New MBEC developed for SEEDA and managed by Basepoint scheduled to open
in Gosport in April 2004
* Basepoint Limited Partnership projects
Dividend timetable - Interim
Ex dividend 29 October 2003
Record date 31 October 2003
Payment date 28 November 2003
"The UK now boasts the highest number of individual businesses since official
figures were first compiled in 1994. In total 3.8m businesses were up and
running in 2002. Companies with fewer than 50 employees and sole traders
dominate, representing 99.1pc of the total.... Small companies increased their
share of total employment, providing jobs for 43.7% of the total workforce...."
Daily Telegraph report on National Statistics 1st September 2003.
Basepoint has been dedicated to the development and operation of Managed
Business, Innovation and Enterprise Centres (MBECs) for many years and has been
meeting the increased demand from the smaller SME (small and medium enterprises)
for high quality business units available on short-term licence agreements. The
statistics quoted above give an indication of the scale of the potential market
for the Company's product.
Basepoint has gained a strong reputation for delivering high quality
accommodation through its focused specialisation in this niche sector. The
Company provides a supportive environment which encourages small businesses to
flourish and grow. The combination of product reputation and active management
provides a solid platform to deliver improving returns to our investors and a
socially important facility for the community of smaller SMEs.
The Basepoint strategy is to maximise profits from the use of core skills that
exist within the Group - that is to develop new MBECs and then to bring them to
high levels of operational performance. These profits are delivered by:
*Managing our existing owned centres, maintaining high service levels and
occupancy rates to produce an attractive return on the capital employed
within them.
*Procuring new MBECs for ourselves and/or in partnership with others
providing project management and procurement fees.
*Applying our management skills to the same high level in operating MBECs
owned wholly or partly by others to produce an enduring and increasing
income stream with a much reduced demand on our own capital.
Financial Results
The first half of the current financial year bears good testimony to the
strategy. Turnover increased by 64% to a total of #2.6m, with fee income from an
increase in development activity accounting for #0.6m of that total. Turnover
from MBEC and other activities, at #2m, showed an increase of 25% over the
corresponding period in the previous year. These enhanced levels of business
activity have been achieved by strengthening the central management team and
this, in turn, has been reflected in an increase in administrative costs.
Nevertheless those costs have been controlled relative to increased turnover so
that the profits before tax have more than doubled when compared to the
corresponding period in the previous year. The directors anticipate that there
will be a period of consolidation following this steep rise in reported profits
before the new initiatives, discussed in the 'Operations' paragraph below, begin
to contribute to results.
Investment properties are valued on an annual basis at the end of each year. At
the interim stage there is therefore no revaluation movement to report. The only
change in net assets comes through retained profits which, in this period, have
lifted net assets per share to #1.82 at 31 August.
Dividend
Although profit for the period increased by 110% the effect of last year's fund
raising, when issued share capital increased by 46%, has resulted in an
improvement in earnings per share of 43%. The improved profit reported in this
period together with the expectations for the foreseeable future provide
confidence to declare, for the first time, an interim dividend at the rate of
0.5p per share which will be paid on 28 November 2003. This is a further step in
the progressive dividend policy which has seen dividends increased every year
since the Company's admission to the Alternative Investment Market.
Operations
The period to date has been one of great activity.
On the new development side of the business the Basepoint Limited Partnership
has been formed with the Trustees of the Kodak Pension Plan (a client of LaSalle
Investment Management). This partnership is now involved with the new MBECs at
Andover and Crawley. It will shortly commence work on site at Bournemouth
International Airport and has exchanged contracts on a site for a new MBEC to be
built in Swindon. At the same time an agreement was concluded with SEEDA (South
East England Development Agency) to supervise the development of the Gosport
Enterprise Centre and then to operate it on their behalf over a fifteen year
period. These development activities have given rise to the additional income
stream mentioned above.
Activity has also been high on the operational side of the business. The 'area
manager' positions in the MBEC management structure, which were created by
promotion in January, are showing a valuable strengthening of the operational
team. That team has had to contend with quite a difficult summer with some
pressure appearing on occupancy levels. However, despite local areas of
weakness, the overall average occupancy of our mature centres over the six month
period exceeded 90%. Folkestone and Southampton Centres have continued to build
occupancy ahead of budget.
Preparations have been ongoing during the summer for the opening of the Andover
and Crawley centres this month. Good quality staff have been recruited and
reservations are now being taken at these centres. Both centres enjoy the
benefit of income support packages from their respective local authorities, so
it is therefore anticipated by the directors that they will become profitable
before the end of the current financial year. With the addition of these centres
the total number of units under management now stands at 591 providing
24,340sq.m. of space. Developments in the pipeline at Gosport, Bournemouth and
Swindon will take the total of units under management to 819 in 32,800sq.m. of
space.
Strategy
The new corporate strategy was developed last year and is already delivering
results. The strategic objectives are set out above and the Company will focus
on those objectives for the foreseeable future.
Prospects
Basepoint is moving forward with confidence in the knowledge that it has a good
product, a substantial target market and a clearly defined strategy to achieve
controlled growth. The enthusiasm and energy of all of our staff will continue
to play a most significant part in obtaining success. The directors believe that
these factors and a wider recognition of the success of the Company's product
will be of continuing benefit to shareholders.
Robert Cleaver
Chief Executive
David Boakes
Director of Finance & Operations
23 October 2003
Basepoint Plc
and its subsidiary companies
Interim Unaudited Results
Six months to 31 August 2003
Consolidated Profit and Loss Account
6 months to 6 months to Full year to
31 August 31 August 28 February
2003 2002 2003
#'000 #'000 #'000
Turnover 2,618 1,594 3,691
Operating Expenses 888 723 1,695
---------- ---------- ----------
Gross profit 1,730 871 1,996
Administration expenses 767 363 771
---------- ---------- ----------
Operating profit 963 508 1,225
Profit on sale of investment
properties
40 66 127
---------- ---------- ----------
Profit on ordinary
activities before interest
1,003 574 1,352
Interest receivable 92 50 113
Interest payable (335) (256) (589)
---------- ---------- ----------
Profit on ordinary
activities before taxation
760 368 876
Tax on profit on ordinary (160) (81) (173)
activities
---------- ---------- ----------
Profit on ordinary
activities after tax
600 287 703
Minority Interests (2) (3) (7)
---------- ---------- ----------
Profit for the financial 598 284 696
period
Dividends 56 - 246
---------- ---------- ----------
Retained profit 542 284 450
====== ====== ======
Earnings per share (pence)
Basic 5.37 3.75 8.62
Fully diluted 5.28 3.66 8.45
Basepoint Plc
and its subsidiary companies
Interim Unaudited Results
Six months to 31 August 2003
Consolidated Balance Sheet
31 August 31 August 28 February
2003 2002 2003
#'000 #'000 #'000
Fixed assets
Investment properties 28,252 22,322 26,775
Fixtures and fittings 225 158 208
---------- --------- ----------
28,477 22,480 26,983
Current assets
Developments in progress 180 359 2,462
Debtors 1,152 375 733
Investments 90 180 90
Cash at bank 4,704 1,835 5,296
---------- --------- ----------
6,126 2,749 8,581
---------- ---------- ----------
Current liabilities
Amounts falling due within
one year
Mortgages and loans 511 342 2,190
Other creditors, accruals
and deferred income
2,249 1,463 2,487
---------- --------- ----------
2,760 1,805 4,677
---------- ---------- ----------
Net current assets 3,366 944 3,904
---------- ---------- ----------
Total assets less current 31,843 23,424 30,887
liabilities
Creditors
Amounts falling due after
more than one year
(10,845) (10,109) (10,461)
Provisions for liabilities
and charges
(430) (288) (406)
Minority interests (196) (198) (200)
---------- --------- ----------
20,372 12,829 19,820
====== ====== ======
Represented By
Capital and Reserves
Called up share capital 1,117 766 1,117
Share Premium account 5,785 3,207 5,785
Reserves
Revaluation reserve 9,790 5,923 9,781
Special Reserve 1,535 1,535 1,535
account
Profit and Loss 2,145 1,398 1,602
---------- --------- ----------
Shareholders' funds 20,372 12,829 19,820
====== ====== ======
Basepoint Plc
and its subsidiary companies
Interim Unaudited Results
Six months to 31 August 2003
Consolidated Cash Flow
6 months to 6 months to Full year to
31 August 31 August 28 February
2003 2002 2003
#'000 #'000 #'000
Cash flow statement
Net cash inflow/(outflow)
from operating
activities
2,268 291 (626)
Returns on investment &
servicing of finance
(243) (206) (476)
Taxation - 2 3
Acquisitions (6) - -
Capital expenditure (1,494) (1,903) (2,384)
---------- --------- ----------
525 (1,816) (3,483)
Equity dividends paid (246) (153) (153)
---------- --------- ----------
279 (1,969) (3,636)
Financing (163) 1,630 5,626
---------- ---------- ----------
Increase /(decrease) in
cash in period
116 (339) 1,990
====== ====== ======
Reconcilition of net cash
flow to movement in net
debt
Increase /(decrease) in 116 (339) 1,990
cash in period
Cash repaying mortgage and
bank loan
672 200 300
Cash received from
mortgage and bank loan
(509) (1,830) (2,998)
---------- --------- ----------
279 (1,969) (708)
Net debt at start of period (7,355) (6,647) (6,647)
---------- --------- ----------
Net debt at end of period (7,076) (8,616) (7,355)
====== ====== ======
Reconciliation of operating
profit to net cash inflow/
(outflow) from operating
activities
Operating profit 963 508 1,225
Depreciation 53 20 42
Decrease /(increase) in
development work in progress
2,279 (320) (2,424)
(Increase) /decrease in (419) (130) (486)
debtors
(Decrease)/ increase in (608) 213 1,017
creditors
---------- --------- ----------
Net cash inflow from operating
activities
2,268 291 (626)
====== ====== ======
Analysis of
changes in net
debt At Cash Other At
1 March Flows Changes 31 August
2003 2003
#'000 #'000 #'000 #'000
Cash on hand 5,296 (592) - 4,704
Bank overdraft (1,132) 708 - (424)
Debt due within (1,058) 547 - (511)
one year
Debt due after (10,461) (384) - (10,845)
one year
---------- ---------- ---------- ----------
(7,355) 279 - (7,076)
====== ====== ====== ======
Basepoint plc
Interim Report 2003
Notes
1. *The interim accounts, which have not been audited, have been prepared on the
basis of the accounting policies set out in the Group's statutory accounts
for the year ended 28 February 2003.
2. *During the period covered by this Report, Basepoint plc has entered into the
Basepoint Limited Partnership. The assets, liabilities and cash flows
attributable to the interests of Basepoint plc in the Limited Partnership
are included in the amounts and figures in this Report.
3. *The interim results, which were approved by the Board on 23 October 2003,
are unaudited but have been reviewed in accordance with Auditing Practices
Board bulletin 'Review of Interim Financial Information' by the auditors.
4. *The financial information contained in this interim statement does not
constitute accounts as defined by section 240 of the Companies Act 1985. The
financial information for the full preceding year is based on the statutory
accounts for the financial year ended on 28 February 2003. These accounts,
upon which the auditors issued an unqualified opinion, have been delivered
to the Registrar of Companies
5. *The Company obtains valuations of its properties on an annual basis and
accordingly there is no information to report on unrealised gains or losses
on revaluation. Unrealised gains on revaluations reported in the Financial
Statements for the year ended 28 February 2003 amounted to #3.89m.
6. *Basic earnings per share are calculated on the profits after tax as shown in
the annexed Profit and Loss Account and on the basis of weighted average
shares in issue of 11,169,588 during the six months to August 2003,
8,078,410 in the year to February 2003 and 7,662,207 in the six months to
August 2002. Fully diluted earnings per share are calculated on the profits
after tax on the basis of weighted average fully diluted shares in issue of
11,357,868 in the six months to August 2003, 8,241,356 in the year to
February 2003 and 7,838,865 in the six months to August 2002.
7. *Directors and professional advisers who have served during the period
covered by this interim report are all as stated in the statutory accounts
for the year ended 28 February 2003.
8. *Copies of the interim statement will be sent to shareholders. Further copies
will be available from Smith & Williamson Corporate Finance Limited, No 1
Riding House Street, London, W1A 3AS.
9. *A copy of this announcement will be available from the nominated adviser,
Smith & Williamson Corporate Finance Limited, No 1 Riding House Street,
London, W1A 3AS for one month from the date of this announcement.
Registered Office
9 Charlecote Mews
Staple Gardens
Winchester
Hampshire
SO23 8SR
Tel: 01962 842244
e-mail: hq@basepoint.co.uk
www.basepoint.co.uk
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