RNS No 9970e
ORB ESTATES PLC
9th October 1997
C H A I R M A N ' S S T A T E M E N T
The year ended 30th June 1997 has seen further significant progress towards
improving the Group's financial position. The non ring fenced retained
profit for the year is #46,000 compared with a loss of #3,584,000 for 1996,
which included a charge for provisions against the value of development sites
of #1,959,000. This result also reflects the Board's emphasis on improving
operating cash flows and reducing administrative costs. It is particularly
pleasing to report that the major reductions in overheads effected during
1996 have shown through in the profit and loss account. Administrative
expenses for 1997 totalled #590,000 compared with #1,319,000 in 1996.
Further economies in operating costs are being sought.
The non ring fenced portfolio has been revalued as at 30th June 1997 by DTZ
Debenham Thorpe in accordance with the Group's established accounting policy.
The surplus on revaluation is #344,000 and the fixed asset investment
portfolio is valued at #6,725,000. The combined effect of the retained
profit and the revaluation surplus has resulted in an increase in the non
ring fenced net asset value to #5,224,000 compared with #4,842,000 for 1996.
The non ring fenced net asset value per share equates to 78.8p (1996: 73.1p),
an increase of about 8% over the year.
In the second half of the year, the disposals of two non ring fenced
investment properties, one in a joint venture company, have been completed.
These disposals have raised net cash of approximately #450,000, after
repaying associated borrowings.
The prospects for a successful development of the site at Stirchley,
Birmingham, have been enhanced by the acquisition of an option over an
adjacent area of land which increases the frontage area and enables better
access to the site. The probability of obtaining planning consent for a mixed
use scheme is being re-evaluated in the context of the current planning
guidance. At Percy Business Park the development of additional retail
warehouse and industrial space is being progressed. An encouraging level of
enquiries is being received for the proposed retail warehouse, for which a
planning application is being prepared.
Further progress has been made in disposing of ring fenced properties with
the sale in June 1997 of the two office buildings at Great Valley Parkway,
near Philadelphia, USA. The ring fenced assets now remaining on the balance
sheet comprise only one UK property, a small equity investment in an unquoted
UK company and a limited partnership investment in the USA.
The Board has recently appointed Johan Claesson and Peter Gyllenhammar as
Directors of the Company. Mr Claesson, and his family, and Mr Gyllenhammar
are beneficially interested in 13.7% and 5.4% respectively of the issued
ordinary share capital of the Company. The Board believes that the Company
will benefit from their involvement as directors.
I was appointed Chairman of the Board in December 1995 and have overseen a
period during which the Company has disposed of ring fenced properties,
substantially reduced overhead costs and bank borrowings and simplified its
capital and corporate structure. In particular, a number of important steps
have been taken during the last financial year towards returning the Group to
financial stability. The Board is now free to concentrate on the development
of the Company and on increasing shareholder value.
I believe that fresh leadership is now required to take the Company through
its next phase of development. As I wish to devote most of my energies to
the Terrace Hill Group as Chief Executive, I have decided not to seek
re-election as a Director at the forthcoming Annual General Meeting. As a
consequence of this decision, the Board has resolved to appoint Peter
Gyllenhammar as Chairman, from the conclusion of the forthcoming Annual
General Meeting. Peter has interests in property and construction in England
and Sweden, as well as general investment and corporate finance activities in
these countries. His experience and expertise will be of considerable value
to the Company.
I believe that the last year has marked a turning point in the Company's
fortunes and I look forward to further improvements in the future.
Nigel Turnbull
Chairman
C O N S O L I D A T E D P R O F I T A N D L O S S A C C O U N T
for the year ended 30th June
Notes Non
ring Ring
fenced fenced Total
1997 1997 1997
#000 #000 #000
Turnover from
continuing operations 1 1,248 1,556 2,804
Cost of sales and
property outgoings (81) (533) (614)
Gross profit/(loss) 1,167 1,023 2,190
Administrative expenses (590) (51) (641)
Operating profit/(loss)
from continuing operations 577 972 1,549
Profit/(loss) on sale
of investments and
investment properties 1 106 535 641
Amounts written off investments - - -
Share of loss in
associated undertakings (77) - (77)
Exceptional item -
financial reconstruction (5) - (5)
Profit/(loss) on
ordinary activities
before interest and taxation 601 1,507 2,108
Net interest payable
and similar charges (573) (1,172) (1,745)
Profit/(loss) on ordinary
activities before taxation 28 335 363
Taxation 18 (333) (315)
Retained profit/(loss)
for the year 46 2 48
Earnings/(loss)per share: 3 0.7p - 0.7p
C O N S O L I D A T E D P R O F I T A N D L O S S A C C O U N T
for the year ended 30th June
Notes Non
ring Ring
fenced fenced Total
1996 1996 1996
#000 #000 #000
Turnover from
continuing operations 1 1,841 2,289 4,130
Cost of sales and
property outgoings (2,926) (1,162) (4,088)
Gross profit/(loss) (1,085) 1,127 42
Administrative expenses (1,319) (60) (1,379)
Operating profit/(loss)
from continuing operations (2,404) 1,067 (1,337)
Profit/(loss) on sale
of investments and
investment properties 1 (68) (55) (123)
Amounts written off
investments (394) (287) (681)
Share of loss in
associated undertakings (65) - (65)
Exceptional item -
financial reconstruction (18) 3,276 3,258
Profit/(loss) on
ordinary activities
before interest and taxation (2,949) 4,001 1,052
Net interest payable
and similar charges (633) (1,957) (2,590)
Profit/(loss) on
ordinary activities
before taxation (3,582) 2,044 (1,538)
Taxation (2) - (2)
Retained profit/(loss)
for the year (3,584) 2,044 (1,540)
Earnings/(loss)per share: 3 (54.1)p - (23.2)p
C O N S O L I D A T E D B A L A N C E S H E E T
at 30th June Notes
1997 1996
#000 #000
Fixed assets:
Tangible assets 6,755 14,584
Investments 1,296 1,816
8,051 16,400
Current assets:
Trading properties 6,750 6,864
Debtors 1,046 580
Cash at bank and 1,759 1,390
in hand
9,555 8,834
Creditors: amounts
falling due within one year
Limited recourse loans (7,006) (6,474)
Convertible
limited recourse loans - (1,701)
Other creditors (2,387) (2,324)
(9,393) (10,499)
Net current
assets/(liabilities) 162 (1,665)
Total assets less
current liabilities 8,213 14,735
Creditors: amounts falling
due after more than one year (2,989) (11,594)
Net assets 5,224 3,141
Capital and reserves:
Called up share capital 3,313 3,313
Revaluation reserve (806) (1,925)
Special reserve 2,381 2,381
Profit and loss account (2,655) (2,591)
Limited recourse reserve 2,991 1,963
Equity shareholder's funds 5,224 3,141
N O T E S T O T H E A C C O U N T S
1. Analysis of consolidated profit and loss account
Turnover and profit
Non
for the year ring Ring
ended 30th June fenced fenced Total
1997 1997 1997
#000 #000 #000
Gross rentals 1,112 1,555 2,667
Property outgoings (125) (533) (658)
Net rental income 987 1,022 2,009
Trading turnover - - -
Cost of sales - - -
Provisions (created)/
released 44 - 44
Trading profit/(loss) 44 - 44
Other turnover 136 1 137
Gross profit/(loss) 1,167 1,023 2,190
Administrative expenses (590) (51) (641)
Operating profit/(loss) 577 972 1,549
Sale of investments:
Sale proceeds 3,200 6,407 9,607
Cost of sales (3,094) (5,872) (8,966)
Profit/(loss) on
sale of investments 106 535 641
N O T E S T O T H E A C C O U N T S
1 Analysis of consolidated profit and loss account
Turnover and profit
Non
for the year ring Ring
ended 30th June fenced fenced Total
1996 1996 1996
#000 #000 #000
Gross rentals 1,205 2,150 3,355
Property outgoings (211) (738) (949)
Net rental income 994 1,412 2,406
Trading turnover 595 90 685
Cost of sales (756) (87) (843)
Provisions (created)/
released (1,959) (337) (2,296)
Trading profit/(loss) (2,120) (334) (2,454)
Other turnover 41 49 90
Gross profit/(loss) (1,085) 1,127 42
Administrative expenses (1,319) (60) (1,379)
Operating profit/(loss) (2,404) 1,067 (1,337)
Sale of investments:
Sale proceeds 907 962 1,869
Cost of sales (975) (1,017) (1,992)
Profit/(loss) on
sale of investments (68) (55) (123)
N O T E S T O T H E A C C O U N T S
2 Analysis of consolidated balance sheet
Non
ring Ring
fenced fenced Total
at 30th June 1997 1997 1997
#000 #000 #000
Fixed assets:
Tangible assets 6,755 - 6,755
Investments 409 887 1,296
7,164 887 8,051
Current assets:
Trading properties 1,900 4,850 6,750
Debtors 235 811 1,046
Cash at bank and in hand 767 992 1,759
2,902 6,653 9,555
Creditors: amounts
falling due within one year
Limited recourse loans - (7,006) (7,006)
Convertible
limited recourse loans - - -
Other creditors (1,853) (534) (2,387)
(1,853) (7,540) (9,393)
Net current assets/
(liabilities) 1,049 (887) 162
Total assets less
current liabilities 8,213 - 8,213
Creditors: amounts
falling due after more
than one year (2,989) - (2,989)
Net assets/(liabilities) 5,224 - 5,224
Net asset value per share 78.8p 78.8p
N O T E S T O T H E A C C O U N T S
2. Analysis of consolidated balance sheet
Non
ring Ring
fenced fenced Total
at 30th June 1996 1996 1996
#000 #000 #000
Fixed assets:
Tangible assets 9,147 5,437 14,584
Investments 922 894 1,816
10,069 6,331 16,400
Current assets:
Trading properties 1,812 5,052 6,864
Debtors 402 178 580
Cash at bank and in hand 784 606 1,390
2,998 5,836 8,834
Creditors: amounts
falling due within one year
Limited recourse loans - (6,474) (6,474)
Convertible
limited recourse loans - (1,701) (1,701)
Other creditors (1,822) (502) (2,324)
(1,822) (8,677) (10,499)
Net current assets/
(liabilities) 1,176 (2,841) (1,665)
Total assets less
current liabilities 11,245 3,490 14,735
Creditors: amounts
falling due after more
than one year (6,403) (5,191) (11,594)
Net assets/(liabilities) 4,842 (1,701) 3,141
Net asset value per share 73.1p 47.4p
N O T E S T O T H E A C C O U N T S
3. Earnings/loss and net assets per share
The profit per share has been calculated on (1) a total
profit after tax of #48,000 (1996: #1,540,000 loss) and
(2) a non ring fenced profit after tax of #46,000 (1996:
#3,584,000 loss) and a weighted average number of ordinary
shares in issue during the year of 6,626,429 (1996:
6,626,429). The Directors believe that the second basis of
calculation provides a realistic view of the profit
attributable to the ordinary shares.
The assets per share values are prepared using (1) the
shareholders' funds shown in the total consolidated balance
sheet, and (2) on the basis that the uncrystallised
shortfalls are not deducted from the shareholders' funds.
The Directors believe that the second basis of calculations
provides a realistic view of the net asset value
attributable to the ordinary shares.
4. Financial information
The financial information set out in the consolidated
balance sheet, consolidated profit and loss account and
notes does not constitute statutory accounts for the
Company or the Group within the meaning of Section 204(5)
of the Companies Act 1985. The Company's auditors have not
reported on such statutory accounts for the year ended 30th
June 1997 and neither have such statutory accounts been
delivered to the Registrar of Companies, however this
preliminary statement has been agreed with the auditors for
release.
5. Presentation of accounts
The Group undertook a financial reconstruction in 1993 a
significant part of which was a Master Banking Agreement
("MBA"). Under the terms of the MBA, the repayment of the
ring fenced bank debt was limited to the realisation
proceeds and net rental receipts from the ring fenced
property assets over which those banks had security.
These arrangements are known as "ring fences" or "ring
fenced" assets and liabilities.
The profit and loss account is presented in three columns
to show the ring fenced and non ring fenced operations
separately. Note 2 to the accounts provides a three
column analysis of the balance sheet between ring fenced
and non ring fenced. The total column represents the
statutory accounts of the Group as required by the
Companies Act and UK accounting standards.
6. Dividend
There is a deficit on the profit and loss account and
accordingly the Directors do not recommend the payment of a
dividend
7. Annual Report
Copies of this announcement are available from the Company's
Registered Office at 24 Brook's Mews, London W1Y 1LF. The
Annual Report will be sent to shareholders shortly.
Enquiries to:
Orb Estates plc
Nigel Turnbull 0171 631 1666
Peter Gyllenhammar 0171 629 0041 or 00 46 8 678 7444
Philip Ridal 0171 629 0041
English Trust
Peter Ward 0171 608 0888
END
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