RNS No 9070k
MOORFIELD GROUP PLC
23 September 1999
Interim Results for the six months to 30 June 1999
Highlights
- Pre-Tax Profit up 161% to #2,919,000 (1998 - #1,119,000)
- Earnings per Share up 169% to 1.48p (1998 - 0.55p)
- Interim Dividend up 10% to 0.3025p (1998 - 0.275p)
- Conclusion of the largest transaction to date, #392m
portfolio purchase from Royal & Sun Alliance through
Moorfield Capital Partners
- Moorstone Arundel Partners successfully restructured the
occupational leases with Arthur Andersen in Arundel Great
Court
Sir Brian Corby, Chairman of Moorfield Group, commented:
"The first half of the year has seen further success for
the Moorfield Group PLC, in accordance with its stated
strategy. Both the acquisition of the Royal & Sun Alliance
portfolio through Moorfield Capital Partners and the
restructuring of the occupational leases at Arundel Great
Court have had a marked effect on the results and the
financial strengths of the Company during the period.
These transactions, along with active management of our
investment and trading portfolio, will ensure that
Moorfield continues to progress."
Marc Gilbard, Managing Director, said:
"The Moorfield strategy is to combine the benefits of being
a listed public company with the key structural advantages
available to private equity funds. This gives the Company
considerable freedom in the scale and range of its
investment activity. Shareholders' returns will be derived
from a combination of returns on existing assets, returns
on new investments, income from management fees and income
from profit sharing arrangements negotiated with co-
investors in joint ventures. The last six months have been
amongst our busiest and we are confident that Moorfield now
has the reputation and initiative to take advantage of any
opportunities that may arise."
Press Enquiries:
Marc Gilbard Moorfield Group PLC Tel: 0171 399 1900
Graham Stanley
Jonathon Brill Bell Pottinger Financial Tel: 0171 353 9203
Charlotte Lambkin
Results Summary
The results for the six months to 30 June 1999 principally reflect
the successful conclusion of our largest transaction to date, a
#392m portfolio purchase from Royal and Sun Alliance (RSA) through
Moorfield Capital Partners (MCP). Also during this period,
Moorstone Arundel LP (a partnership vehicle with Blackstone Real
Estate Advisors) successfully restructured the occupational
leases, with Arthur Andersen, on 315,000 sq. ft. of office space
in Arundel Great Court.
These two transactions have had a marked effect on the results and
financial strengths of the company during the period and on its
prospects going forward. The headline profit before tax of #2.919m
is up from #1.119m on the same period last year and reflects the
profitable investment of the enlarged equity base of the Company
following the 1 for 3 placing in April this year. The majority of
the proceeds of this fund raising were used to purchase a 24%
stake in MCP. As part of the transaction, the Company was paid an
introductory fee of #1.5m and has subsequently benefited from both
management fees of #196,000 and residual rental profit of #393,000
for the period up to the end of June.
The Board is recommending that the interim dividend be increased
by 10% to 0.3025p per share.
Moorfield Capital Partners
MCP, the investment and trading partnerships, were formed with
Ellerman Investments in March of this year and have completed the
purchase of the portfolio from RSA. The strategy since
acquisition has been to actively manage the assets and to dispose
of those where, over the life of the partnerships, there was
little opportunity to add value, or where value to the
partnerships had been maximised. Since acquiring the portfolio
the Company has disposed of #27m of properties, exchanged
contracts on a further #81m and accepted offers on another #59m.
The largest disposal has been a #70m Central London portfolio to
Derwent Valley Holdings, where contracts were exchanged at the end
of July and are scheduled to complete before the year-end.
The scale and success of the disposals to date has given the
partnerships considerable financial flexibility, allowing them to
begin to renegotiate the existing banking facility into a more
advantageous and flexible loan. This will enable the ongoing
management and disposal programme to take place as and when
appropriate over the next three to five years as individual
assets, or portfolios of assets, attain their maximum value to the
partnerships.
Arundel Great Court
Since the beginning of the year Arthur Andersen have signed five
new 20 year leases on the existing buildings and an agreement to
lease, subject to planning, on a development in the courtyard.
Planning consent has now been granted on the development and
construction should begin early next year.
Although the asset was purchased with some two thirds of the
income expiring by the end of 2002, the Moorstone Arundel
partnership has now stabilised and considerably lengthened the
duration of the income from the property and added value from the
under-utilised courtyard area.
The residual rental profit from our investment in the Moorstone
Arundel partnership has currently reduced as a result of
additional bank debt taken into the partnership to fund the
capital contribution paid to Arthur Andersen. The agreed level of
rental income does not take effect for the first twelve months of
the leases and the lower level of operating profit will therefore
continue until the end of the first quarter of next year.
Investment and Trading Portfolio
The reduction in financing costs during the fourth quarter of last
year and the slight weakening of property yields led us to shift
our stance from net seller during 1998 to net purchaser during the
first half of 1999. However, the property market has strengthened
considerably during the second quarter of this year and the
Company is currently taking advantage of this to sell additional
non-core assets or those that have attained their maximum value.
Moorfield hope to be able to report on these disposals at the year-
end.
Further progress has been made in establishing a low income
housing business targeted particularly at students and nurses.
The project in Liverpool was given detailed planning permission in
April and construction commenced in May. It is estimated that
this development will cost #13.5m to construct and will be
complete for the September 2000 student intake. Additional sites
are being actively sought and negotiations are taking place with a
number of potential partners to build a nationwide business
focused on this low income housing market.
Teesside
Progress on the 'Southside Development' at Teesside International
Airport is slow but positive. The partnership between Moorfield,
the airport owners and airport management remains strong and there
is a commitment from all concerned to see the development realised
alongside an expansion of the operational facilities. In March of
this year, The Secretary of State for the Department of
Environment, Transport and Regions announced his support for the
development, subject to clarification of certain matters relating
to the detail of the planning conditions and control. These
matters have now been dealt with and the Company awaits the
outcome of the Government's final deliberations.
Xanadu
In December 1998, the Company were informed of the 'Call In' to a
Public Inquiry to be held in April 1999. Our partners did not
share our tactical strategy and as a result of the strategic
divergence in the partnership, Moorfield decided to withdraw its
financial support for the project and take a much lesser role.
There remain, in our view, substantial hurdles to be overcome
prior to a successful planning conclusion and, as such, Moorfield
will continue to reduce its role unless a new strategy can be
implemented. The cost of this project to Moorfield has been some
#150,000, all of which has been provided for in results for the
first half of the year.
Darlington and Drighlington
There has been very little progress on either of these projects in
the period under review. The Company has explored many and varied
ways of creating value from these opportunities. However, subject
to some current initiatives that have yet to mature, unless the
option periods can be extended alongside a fundamental change in
the terms of the agreements, the Company will not pursue them
after the end of this year.
Welbeck
Although the sales rate on both the Upwood and Linton projects has
outperformed our original expectations, both projects have been
burdened with additional costs incurred in putting the properties
into a saleable condition. As such there is no additional profit
contribution from either project in the first half and the amount
of future profits will depend upon the level of success in
securing planning consents and disposing of surplus land.
The Company
The scale and nature of the progression has placed increased
pressure and responsibility on the management of the Company, and
there have inevitably been changes. Whilst property assets under
management have increased to over #600m, staff numbers have only
increased by three to cater for the enlarged property portfolio.
Two of these additions have moved into and compliment the already
highly competent property team now totalling five, and one has
joined the finance team.
On 6 August 1999, Moorfield announced the resignation of Alexander
MacLachlan, as executive director. We wish him every success in
his future career.
The Company announces the resignation of Mr Paul Brooks, with
effect from today, from his position of non-executive director.
Paul's experience and background in venture capital has proven
enormously helpful over the past two years. However, he has
recently been appointed as Chairman of Gresham plc and because of
the additional responsibilities and commitments of this
appointment he has decided to step-down as a non-executive
director of Moorfield. Moorfield wish him well and are very
pleased that he has agreed to remain close to the Company,
allowing Moorfield to call on him for ad hoc advice.
Financial
The financial position of the Company has strengthened
considerably during the first half of the year as a result of the
new equity issue and the letting at Arundel Great Court.
Excluding any property revaluation, net assets increased by over
#13m to #61.5m. The net asset value per share was reduced in
April from 39p at the end of 1998, as a result of the dilutive
effect of the new shares issued at 28p, but by the end of the
first half of the year, the impact of the improved earnings had
seen a recovery in the net asset value to 37p.
Balance sheet net gearing fell from 66% at the year-end to 61%,
with property gearing at 43%. At the period end the Company had
cash available of over #9m and, through its partnerships, has
significant further resources available to make acquisitions
should the right opportunities present themselves.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the six months to 30 June 1999
Six Six Year
months months ended
to 30 June to 30 June 31 December
1999 1998 1998
(unaudited) (unaudited) (audited)
Note #'000 #'000 #'000
Turnover - group and share of
associates 13,903 6,146 12,957
Less - share of associates
turnover (3,101) (1,275) (2,407)
-------- -------- --------
Group turnover - continuing
operations 2 10,802 4,871 10,550
======== ======== ========
Gross rental income 3,262 3,119 6,742
Property outgoings 3 (399) (406) (650)
-------- -------- --------
Net rental income 2,863 2,713 6,092
Administration expenses 4 (1,433) (975) (2,213)
Profit on sale of trading
properties 688 96 181
Profit/(loss) on sale of
investment properties 4 (11) 226
Other operating income 5 1,696 553 553
-------- -------- --------
Operating profit - continuing
operations 3,818 2,376 4,839
Group share of operating
profit of associated
undertakings 2,496 1,337 2,460
-------- -------- --------
Profit on ordinary activities
before interest and taxation 6,314 3,713 7,299
Net interest payable - Group (1,401) (1,571) (3,106)
Net interest payable
- Associated undertakings (1,994) (1,023) (1,984)
-------- -------- --------
Profit on ordinary activities
before taxation 2,919 1,119 2,209
Taxation (737) (330) (663)
-------- --------- --------
Profit on ordinary activities
after taxation 2,182 789 1,546
Dividends paid and proposed (533) (395) (831)
-------- --------- --------
Retained profit for the
period 1,649 394 715
======= ======== =======
Basic and diluted earnings 6
per ordinary share 1.48p 0.55p 1.08p
======= ======== =======
CONSOLIDATED BALANCE SHEET
for the six months to 30 June 1999
Six months Six months Year ended
At At At
30 June 30 June 31 December
1999 1998 1998
(unaudited) (unaudited) (audited)
Note #'000 #'000 #'000
Fixed assets
Investment properties 58,918 52,119 45,540
Other tangible assets 303 299 302
Investment in associated
undertakings 7 17,245 3,783 6,093
-------- --------- ----------
76,466 56,201 51,935
-------- --------- --------
Current assets
Trading properties 24,779 27,629 31,498
Debtors 3,315 2,154 1,896
Other investments 62 62 62
Cash at bank and in hand 8,097 6,008 8,273
-------- --------- --------
36,253 35,853 41,729
Creditors
Amounts falling due
within one year (6,343) (6,610) (5,662)
-------- --------- --------
Net current assets 29,910 29,243 36,067
-------- --------- --------
Total assets less
current liabilities 106,376 85,444 88,002
Creditors
Amounts falling due
after more than one year (44,923) (38,260) (39,589)
-------- -------- ---------
Net assets 61,453 47,184 48,413
======= ======= ======
Capital and reserves
Called up share capital 17,623 14,365 13,217
Share premium account 36,778 29,793 29,793
Investment revaluation
reserve 6,606 4,995 6,606
Capital reserve 648 919 648
Capital redemption
reserve 1,148 - 1,148
Profit and loss account (1,350) (2,888) (2,999)
-------- -------- --------
Shareholders' funds -
equity interests 61,453 47,184 48,413
======= ======= =======
CONSOLIDATED CASH FLOW STATEMENT
for the six months to 30 June 1999
Six Six Year
months months ended
to 30 June to 30 June 31 Dec
1999 1998 1998
(unaudited) (unaudited) (audited)
Note #'000 #'000 #'000
Net cash inflow from
operating activities 8 8,456 3,045 1,819
Dividends from associated
undertakings
Dividend received from
Moorstone associates - 544 544
Returns on investment and
servicing of finance
Interest received 305 166 363
Interest and finance fees paid (1,625) (1,679) (3,461)
-------- -------- --------
Net cash outflow from returns
on investment and servicing
of finance (1,320) (1,513) (3,098)
-------- -------- --------
Taxation - UK corporation tax
received/(paid) 6 (86) (334)
Capital expenditure and
financial investment
Additions to investment
properties (2,478) (198) (723)
Additions to tangible fixed
assets (97) (56) (109)
Sale of investment properties 104 113 7,141
Sale of tangible fixed assets 40 22 24
-------- -------- --------
(2,431) (119) 6,333
-------- -------- --------
Acquisition and disposals
Investment in MCP associated
undertakings (9,720) - -
Investments in Moorstone
associated undertakings (930) 1,366 2,222
Acquisition of subsidiary
(Firmwalk Ltd) (633) - -
-------- -------- --------
(11,283) 1,366 2,222
-------- -------- --------
Equity dividends paid (436) (431) (826)
-------- -------- --------
Cash (outflow)/inflow before
use of liquid resources and
financing (7,008) 2,806 6,660
Financing
Share issue proceeds 12,336 - -
Share issue expenses (945) - -
Consideration for acquisition
of own shares - - (1,750)
Increase/(decrease) in debt:
Capital element of finance
lease payments (4) (4) (7)
Loans advanced in the year - - 20,685
Loan repayments in the year (4,555) (1,462) (21,983)
-------- -------- --------
Net cash inflow/(outflow) from
financing 6,832 (1,466) (3,055)
-------- -------- --------
(Decrease)/increase in cash in
the period (176) 1,340 3,605
======== ======== ========
NOTES TO THE ACCOUNTS
for the six months to 30 June 1999
1. Interim Report
This interim report was approved by the Board on 22 September
1999. It has been prepared using accounting policies that are
consistent with those adopted in the statutory accounts for the
year ended 31 December 1998. FRS 15 has no material effect on this
interim report and valuations have been brought forward without
amendment from the previous annual accounts.
The figures for the year ended 31 December 1998 have been derived
from the statutory accounts for that year. The statutory accounts
have been delivered to the Registrar of Companies and received an
audit report which was unqualified and did not contain statements
under s237(2) or (3) of the Companies Act 1985.
2. Turnover
Six months Six months Year ended
to 30 June to 30 June 31 December
1999 1998 1998
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Rental income 3,262 3,119 6,742
Trading income
(commercial property) 6,535 - -
Trading income
(residential property) 1,005 1,752 3,808
-------- -------- --------
10,802 4,871 10,550
======== ======== ========
3. Rents Payable and Other Property Outgoings
Ground rent payable 10 10 21
Rates 27 74 159
Other non-recoverable outgoings 362 322 470
-------- -------- --------
399 406 650
======== ======== ========
4. Administration expenses
Mr MacLachlan resigned as a director of the Company on 20 August
1999. Administration expenses for the six months to 30 June 1999
include an amount of #147,000 in respect of compensation for his
loss of office.
5. Other operating income
Six months Six months Year ended
to 30 June to 30 June 31 December
1999 1998 1998
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Founders fee receivable 1,500 - -
Fee for managing MCP
portfolio 196 - -
Performance related fee - 553 553
-------- ------- --------
1,696 553 553
======== ======= ========
6. Basic and diluted earnings per ordinary share
The earnings per share are calculated using profit after tax of
#2,182,000 (1998 - #789,000) and the weighted average number of
shares in issue during the period of 147,260,149 (1998 -
143,650,812).
7. Investments in associated undertakings
Six months Six months Year ended
to 30 June to 30 June 31 December
1999 1998 1998
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Share of net assets brought
forward 6,093 5,377 5,377
Investment in MCP associates 9,720 -
Investment in Moorstone
associates 930 (1,365) (1,741)
Share of Moorstone retained
profit/(loss) 109 (229) (68)
Share of MCP retained profit 393 - -
Share of Moorstone unrealised
revaluation surplus - - 2,525
-------- -------- --------
Share of net assets carried
forward 17,245 3,783 6,093
====== ======= ======
8. Reconciliation of Operating Profit to Cash Flow From
Operating Activities
Six months Six months Year ended
to 30 June to 30 June 31 December
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Operating profit 3,818 2,376 4,839
Depreciation of tangible
fixed assets 49 52 100
(Profit)/loss on sale of
investment properties (4) 11 (226)
Loss/(profit) on sale of
other fixed assets 7 (7) (8)
-------- -------- ---------
3,870 2,432 4,705
======== ======== =========
Working capital movements
Stocks 6,719 871 (2,998)
Debtors (952) (350) (154)
Creditors (1,181) 92 266
-------- -------- --------
4,586 613 (2,886)
======== ======== ========
Net cash inflow from
operating activities 8,456 3,045 1,819
======== ======== ========
9. Acquisition of subsidiary undertaking
On 26 March 1999 the Group acquired the entire issued share
capital of Firmwalk Limited for an amount of #633,000, which was
satisfied in cash. In addition, the Group provided working capital
funding to Firmwalk Ltd in the sum of #1,357,000.
No goodwill arose on this acquisition and the effect on the
results of the Group for the six months ended 30 June 1999 is not
considered to be material.
The comparative figures for the financial year ended 31 December
1998 are an extract from the Group's statutory accounts for that
financial year. Those accounts have been reported on by the
Group's auditors and delivered to the Registrar of Companies. The
report of the auditors was unqualified and did not contain a
statement under section 237 (2) or (3) of the Companies Act 1986.
A copy of this statement is being sent to all shareholders and
will be available for inspection at the Company's registered
office.
END
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