RNS Number:4125P
Swan Hill Group PLC
05 September 2003
INTERIM STATEMENT OF RESULTS
FOR THE SIX MONTHS ENDED 30 JUNE 2003
5 September 2003
HIGHLIGHTS
* Group profit before tax was #1.9 million compared with #3.7 million for
2002.
* Interim dividend maintained at 1.75p.
* Difficult housing market in the South East with turnover of the Housing
division consequently falling to #27.3 million (2002 : #39.0 million) and
operating profit reduced to #3.1 million (2002 : #4.9 million).
* Sales of 80 units during the period (2002 : 148) at an average selling
price of #286,000 (2002 : #246,000).
* Net assets per Ordinary share of 130p.
Commenting on today's announcement, Ian Maclellan, the Chairman of Swan Hill
Group PLC said: "There are signs that the decline has been arrested in those
segments of the housing market in which we operate. However, profits for the
full year are expected to be significantly below 2002 results, not least because
the second half will not benefit from a further land sale. We believe that the
strategy of concentrating on premium quality homes remains the right strategy
for the future of the Group, and that profits will recover as the market in the
south picks up again."
Enquiries to:
Swan Hill Group PLC
John Theakston, Group Chief Executive Colin 01784 464351
Archer, Group Finance Director
Weber Shandwick Square Mile
Terry Garrett 020 7067 0717
CHAIRMAN'S STATEMENT
Results
In the preliminary statement of results for 2002 and at the Annual General
Meeting, the Board cautioned that activity was slowing, particularly at the
premium end of the housing market and in the South East.
As a result of the difficult market, turnover of the Housing division reduced
from #39.0 million to #27.3 million with operating profits from this division
declining from #4.9 million to #3.1 million. The Property division made a small
operating profit. Group profit before tax was, consequently, #1.9 million
compared to #3.7 million last year.
Net assets were #77.7 million (130p per Ordinary share) as at 30 June 2003. Net
borrowings increased from #11.4 million at the end of 2002 to #15.9 million,
still leaving considerable flexibility to invest within the Housing division.
The interim dividend has been maintained at 1.75p per Ordinary share.
Housing Division
During the first half, the housing market proved to be very difficult at the
upper end, particularly in the South East. Prices came under pressure in order
to secure sales, and buyers had little incentive to commit quickly as the market
slowed. Certain key sites, critical to the earnings performance of the
division, suffered with rates of sales well below those previously achieved. For
example, the Weybridge development, which sold well following its opening last
year, performed below budget during 2003. However, the land sale of one of our
two sites at Peterborough contributed significantly to the first half results.
The division sold 80 units (2002: 148 units) at an average selling price of
#286,000 (2002 : #246,000). The land bank is currently 648 plots spread over 25
sites. Land purchases during the first half included sites at Hampton and
Haslemere in the South East and near Sherborne in the Western region. These are
all sites with detailed planning permission and are now under construction. A
further four sites have been acquired subsequently, two of which are subject to
planning.
The Staines region had a disappointing first half with lower than expected sales
at its key sites at Andover and Weybridge. The sales performance of these sites
remains critical to the overall performance of the region during the second
half. The region completed a smaller development at Weston-on-the-Green and is
well advanced at another small site at Fleet. The new development at Sibford
Ferris has recently opened and six reservations have been taken so far.
The Horsham region was similarly impacted by the market, achieving lower than
anticipated rates of sale at its new scheme in Horsham. It completed three
smaller schemes and has opened for sale at sites at Wadhurst and Ardingly in
Sussex and an apartment development at Chislehurst. A further two sites at
Eastergate and Selsey will also be opening during the second half.
The housing market held up better in the West Country with the Bristol region
trading at more normal levels. The region is close to completing the first
phase of its apartment scheme at Clifton and made strong progress at the
Portishead development. Three smaller sites were completed. A site has opened
just outside the main entrance to the racecourse at Cheltenham and the building
of a further site in Clifton is well advanced. During the summer planning
consent was granted on schemes at Cheltenham and Whitminster.
Property Division
The city centre retail development at Stockton-on-Tees is 82% let (up from 69%
as previously reported earlier this year), including a recent letting to H&M
Hennes. This will now enable us to advance the marketing of the investment sale
of the scheme. Progress also continues to be made towards the disposal of the
Cagnes business and retail park in the south of France.
The financial performance of the Group will benefit once the residual investment
in commercial property is realised and reinvested into the Group's housing
activities. This investment is yielding little return with a continuing
overhead cost also being incurred in both the UK and France.
Board changes
Both George Duncan, the previous Chairman, and Maurice Dixson, one of our
non-executive directors, retired at the last Annual General Meeting. We have
benefited tremendously from their valuable input and advice over the many years
that they were on the Board.
I am pleased to report that Jim Harding, who has considerable experience as a
chief executive as well as in financial roles, has joined the Board as a
non-executive director.
Prospects
There are signs that the decline has been arrested in those segments of the
housing market in which we operate. However, profits for the full year are
expected to be significantly below 2002 results, not least because the second
half will not benefit from a further land sale. We believe that the strategy of
concentrating on premium quality homes remains the right strategy for the future
of the Group, and that profits will recover as the market in the south picks up
again.
Ian Maclellan
Chairman
5th September 2003
SWAN HILL GROUP PLC
CONSOLIDATED RESULTS
The unaudited results for the half year ended 30 June 2003 are shown below:
Half Year Half Year Full
30 June 30 June Year
2003 2002 2002
Notes #'000 #'000 #'000
Turnover including share of joint ventures 28,187 39,747 77,278
Less share of turnover of joint ventures continuing (508) (370) (778)
Group turnover continuing 27,679 39,377 76,500
Group operating profit continuing 2,135 4,015 6,613
Share of operating profit in joint ventures 404 333 539
Total operating profit : group and share of joint ventures 2,539 4,348 7,152
Profit on disposal of property and other fixed assets 0 0 145
Loss on disposal of discontinued operations 2 0 0 (72)
Profit on ordinary activities before interest 2,539 4,348 7,225
Net interest payable and amounts - Group 3 (304) (424) (751)
written-off investments - joint ventures 3 (309) (262) (558)
Profit on ordinary activities before taxation 1,926 3,662 5,916
Tax on ordinary activities 4 (577) (1,099) (1,425)
Profit on ordinary activities after taxation 1,349 2,563 4,491
Dividends 7 (1,041) (1,035) (2,605)
Retained profit for the period 308 1,528 1,886
Basic earnings per Ordinary share 6 2.3p 4.3p 7.6p
Diluted earnings per Ordinary share 6 2.3p 4.3p 7.6p
Basic earnings per Ordinary share excluding discontinued 6 2.3p 4.3p 7.7p
operations
Interim dividend per Ordinary share 1.75p 1.75p 4.4p
Net assets per Ordinary share 130p 129p 130p
30 June 30 June 31 Dec
2003 2002 2002
#'000 #'000 #'000
Summarised Consolidated Balance Sheet
Notes
Fixed assets
Tangible assets 704 1,928 784
Investments in joint ventures: 5
Share of gross assets 0 18,128 0
Less: Share of gross liabilities 0 (18,045) 0
0 83 0
Own shares 150 419 292
854 2,430 1,076
Current assets
Stocks 86,281 84,742 79,415
Debtors: Amounts falling due within one year 16,080 9,310 19,804
Debtors: Amounts falling due after one year 5 5,595 7,996 5,655
Cash at bank 377 1,445 397
108,333 103,493 105,271
Current liabilities (30,984) (28,444) (28,507)
Net current assets 77,349 75,049 76,764
Total assets less current liabilities 78,203 77,479 77,840
Provision for joint venture deficit: 5
Share of gross assets 18,668 0 18,390
Less: Share of gross liabilities (18,683) 0 (18,470)
(15) 0 (80)
Provision for liabilities and charges (443) (465) (381)
Net assets 77,745 77,014 77,379
Capital and reserves
Called up share capital 14,917 14,911 14,912
Share premium account 42,898 43,085 42,887
Capital redemption reserve 2,432 2,432 2,432
Other reserves 220 21 220
Profit and loss account 17,278 16,565 16,928
Equity shareholders' funds 77,745 77,014 77,379
Half Year Half Year Full
30 June 30 June Year
2003 2002 2002
#'000 #'000 #'000
Summarised Consolidated Cash Flow Statement
Operating profit 2,539 4,348 7,152
Share of the results of associated undertakings (404) (333) (539)
Depreciation charge 148 132 269
Working capital movements (4,735) 16,158 10,508
Net cash (outflow)/inflow from operating activities (2,452) 20,305 17,390
Amounts received from joint ventures and associates 0 0 0
Returns on investments and servicing of finance (257) (468) (729)
Taxation (17) (530) (1,136)
Capital expenditure and financial investment 74 (30) 1,105
Acquisitions and disposals 0 0 (129)
Equity dividends paid to shareholders (1,569) (1,420) (2,455)
Cash (outflow)/inflow before financing (4,221) 17,857 14,046
Issue of shares 16 1 3
Increase/(decrease) in debt due within one year 849 0 (4,286)
(Decrease)/increase in net cash (3,356) 17,858 9,763
Opening net overdraft (6,715) (16,478) (16,478)
Closing (overdraft)/net balance (10,071) 1,380 (6,715)
Net (overdraft)/balance (10,071) 1,380 (6,715)
Debt due within one year (5,835) (8,920) (4,668)
Total net borrowings (15,906) (7,540) (11,383)
Segmental Analysis of turnover and trading profit by principal activity
Half Year Half Year Full
30 June 30 June Year
2003 2002 2002
#'000 #'000 #'000
Turnover - by principal activity
Housing 27,267 38,996 75,695
Property including share of joint ventures 920 751 1,583
Continuing operations 28,187 39,747 77,278
Operating profit - by principal activity
Housing 3,055 4,855 8,487
Property including share of joint ventures 132 (111) (332)
Group costs (648) (396) (1,003)
Total operating profit : group and share of joint ventures 2,539 4,348 7,152
Profit on disposal of property and other fixed assets 0 0 145
Continuing operations 2,539 4,348 7,297
Loss on disposal of discontinued operations 0 0 (72)
Profit on ordinary activities before interest 2,539 4,348 7,225
Reconciliation of movements in shareholders' funds
Half Year Half Year Full
30 June 30 June Year
2003 2002 2002
#'000 #'000 #'000
Profit on ordinary activities after taxation 1,349 2,563 4,491
Dividends (1,041) (1,035) (2,605)
Retained profit 308 1,528 1,886
Proceeds from the issue of new shares 16 0 3
Translation difference on foreign currency investments 42 18 22
Net addition to shareholders' funds 366 1,546 1,911
Opening shareholders' funds as previously reported 77,379 77,095 77,095
Prior period adjustments 0 (1,627) (1,627)
Closing shareholders' funds 77,745 77,014 77,379
NOTES
1 The results for the half year have been prepared on a basis consistent with
the accounting policies adopted for the year ended 31 December 2002.
2 The loss on disposal of discontinued operations relates to residual costs
in respect of the disposal of the Group's construction activities.
3 Net interest payable and amounts written-off investments are as follows:
Half Year Half Year Full Year
30 June 30 June 2002
2003 #'000 2002 #'000 #'000
Group
Interest payable (289) (409) (667)
Interest receivable 3 11 28
Net interest payable (286) (398) (639)
Unwinding of discount in lease provision (18) (26) (48)
Amounts written-off own shares held 0 0 (64)
(304) (424) (751)
Joint ventures
Interest payable (322) (284) (610)
Interest receivable 13 22 52
(309) (262) (558)
4 The taxation charge has been calculated at 30% of the profit on ordinary
activities before tax, based on the current estimate of the tax rate for
the full year as determined under Financial Reporting Standard 19.
5 The joint venture relates to the development of the retail town centre
scheme in Stockton-on-Tees which is being funded by loans from the partners
and bank debt. The loans from each partner amounted to #5.3 million at the
end of June 2003 which is included within debtors falling due after one
year.
6 The weighted average number of shares in issue excluding those owned by the
Employee Share Trust used in the calculation of basic earnings per share
was 59.3 million (half year 2002 - 59.1 million; 2002 - 59.2 million). The
calculation of diluted earnings per share is based on a weighted average
of 59.3 million shares (half year 2002 - 59.4 million; 2002 - 59.3
million).
7 The interim dividend will be paid on 14 November 2003 to those shareholders
whose names appear on the Register of Members on 10 October 2003.
8 The interim statement has been neither audited nor reviewed by the Group's
auditors. The results for the year 2002 are abridged and do not constitute
statutory accounts within the meaning of Section 240 of the Companies Act
1985. The auditors gave an unqualified report upon the full accounts for
2002 which were filed with the Registrar of Companies.
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IR ILFFEASISIIV