RNS Number:2287R
Hurlingham PLC
11 February 2002
HURLINGHAM PLC
PRELIMINARY RESULTS FOR THE SIXTEEN MONTHS ENDED 30 SEPTEMBER 2001
Chairman's statement
Further to my letter of 16th October 2001, I am pleased to present the
preliminary results of the Group for the sixteen-month period ended 30th
September 2001.
The period was an eventful one, during which the Group acquired the balance of
the shares in Bettagrade Limited, making it a 100% owned subsidiary; expanded
the operating business of Custom Tours Limited, both by acquiring the business
of Travel With Us, and by extending that company's operations into Europe and
the Far East; and sold two properties, reducing debt within Hurlingham plc.
These steps continue our policy of expanding the Group's operations in trading
hotel activities and reducing our property investment activities.
As you know from my statement accompanying the Second Interim Results for the
twelve months ended 31st May 2001 and from my letter of 16th October 2001,
trading conditions for the Group during the period have been difficult, as a
consequence of a number of unforeseeable events. The impact of Foot and Mouth
disease significantly affected occupancy levels at the Group's hotel in Perth,
and the sharp fall in the value of the pound against the dollar caused exchange
rate losses and adversely affected trading at the Group's subsidiary, Custom
Tours Limited. Subsequently, the terrorist attacks in America on September 11th
further damaged Custom Tours' trading performance. Shareholders should note
however that the Group trading results have shown an improvement since May 2001,
as reflected in these results.
Direct comparison with the preceding period is difficult, since the results of
Bettagrade Limited are consolidated as a subsidiary from the date of
acquisition, and the expenses associated with the Group's acquisitions resulted
in increased operating costs during the period.
In summary, Group turnover increased significantly to £2,824,000 (year to 31st
May 2000: £767,000). As a result of the factors referred to above however,
while headline profitability fell, resulting in an after tax loss for the period
attributable to shareholders of £127,000 (2000: Profit £44,000), net assets
increased significantly to £2,616,000 (2000: £2,163,000). Shareholders will
note particularly that fixed assets increased to £5,334,000 (2000: £2,119,000).
These bald figures do not however give the full picture:
Since Bettagrade Limited was acquired at less than its net worth and the
consideration was paid largely in shares, the acquisition resulted in an
increase in share premium account of £136,000, the creation of net negative
goodwill of £31,000 and a write back of £72,000 in respect of pre-acquisition
losses. The write-back however is not shown in the Profit and Loss account but
in the movement in reserves in the Balance Sheet.
Furthermore, the full surplus on disposal of previously revalued properties is
not taken to the Profit and Loss account, but only that amount which exceeds the
revaluation. The historical cost profit on disposals in the period amounted to
£125,000. Of this, £35,000 was included in the Profit and Loss account with the
balance released to distributable reserves.
As a consequence of these accounting treatments, whereas the Group's Profit and
Loss account shows a loss after tax attributable to shareholders for the period
of £127,000, there was a distributable profit before dividends of £24,000
reflected in the movement in retained reserves in the Balance Sheet. It is for
this reason that the Directors consider it appropriate to maintain the total
dividends for the period of 1p per ordinary share. Shareholders will note that
distributable reserves at the period end were £205,000.
Custom Tours Limited
The company has weathered a turbulent period, in which external events have
buffeted the travel industry. In the early part of the period, the sharp fall
in the value of the pound against the dollar resulted in significant exchange
rate losses and a decline in bookings. This weakness was exacerbated by an
increase in North American hotel rates. At the end of the period, the terrorist
attacks in America caused a further set-back to the company's business. These
events over-shadowed the significant progress which had occurred during the
period with the installation of a computer-based booking system, the acquisition
of the business of Travel With Us, and the launch of the company's first
European and Far Eastern brochure.
As a result, although the contribution from Travel With Us enabled turnover to
remain steady for the full 16 month period at £2,143,000 (9 months to 31st May
2000: £1,260,000), the impact of the factors mentioned above resulted in a loss
for the period before tax of £40,000.
Since September 11th, the industry has undergone a period of adjustment, in
which our American suppliers in particular have offered large price reductions
and attractive special offers. We believe that this has contributed to customer
confidence. In the meantime, we are using this period of adjustment in the
market place to negotiate increased representation of hotels in America, Europe
and the Far East. At the same time, we are investing in on-line capacity, which
should enable us to broaden our customer base very significantly. As a result,
we believe that we will see an improvement in both sales and profits once the
market improves.
Bettagrade Limited
The performance of the company's hotel at Perth was affected by the impact of
Foot and Mouth disease on the tourist industry and the week-end trade. Despite
this, the management team has made significant progress in developing the
regular business trade to the extent that turnover, occupancy and room rates
have continued to improve. Turnover for the period was £977,000 (2000:
£477,000), the occupancy rate was 61.76% (2000: 48.06%) and the average room
rate was £36.68 (2000: £34.51).
Despite these improvements, the company recorded a loss of £171,000 after
interest charges of £324,000 (2000: loss £122,000 after interest charges of
£152,000). There was however a significant improvement in the trading
performance in the last 4 months of the period ended 30th September 2001.
During this period, Bettagrade Limited contributed some £15,000 to group
profits. The interest cost incurred by the Company will be reduced in the
current year, both by the restructuring which has been effected and by the
reduction in interest rates.
The company's hotel was valued at 30th September 2001 by a firm of independent
Chartered Surveyors at a value of £3,475,000, giving rise to a surplus over cost
of £344,000.
Residential Property
Two properties were sold in the period for a profit of £35,000 over their
carrying values (£125,000 above cost). Prior to September 11th, the residential
properties had increased in value by some 10% since the previous year-end.
Since that date, the market has been less certain and the Board has been advised
not to adjust the carrying values of the properties at the present time as a
matter of prudence. The properties are however in good condition and well
located and should benefit from any future upturns in the market.
Outlook
The exceptional events of the period have been challenging but the group has
used the downturn in its markets to expand its international representation and
to develop its internal systems at Custom Tours and to improve commercial
business, occupancy and room rates at its Perth hotel. The Board is confident
that these measures will contribute significantly as more normal trading
conditions return. Trading at the hotel since the period end has been
particularly encouraging with hotel occupancy some 15% better than the same
period last year. The Board is reviewing further investments in line with the
Group's business plan. In the meantime, the Group has sufficient cash resources
for its foreseeable needs and the balance sheet is strong. This is reflected in
the value of net assets per share of 130p. The Directors therefore propose to
pay a final dividend of 0.5p per Ordinary share, which together with the interim
dividend of 0.5p paid on 8th January 2002 will bring the total for the period to
1 pence per Ordinary share.
Charles Llewellyn
Chairman
11 February 2002
Consolidated profit and loss account
for the period ended 30 September 2001
16 months ended Year
30 September 2001 ended
31 May 2000
£ £
Turnover:
Continuing operations 1,972,668 117,591
Acquisitions 851,628 649,097
--------- --------
2,824,296 766,688
Cost of sales before goodwill amortisation (2,208,606) (599,735)
Goodwill amortisation (27,499) -
--------- --------
Cost of sales (2,236,105) (599,735)
--------- --------
Gross Profit 588,191 166,953
Administrative expenses (638,371) (148,601)
--------- ---------
Operating (loss)/profit:
Continuing operations (103,453) (12,119)
Acquisitions 53,273 30,471
--------- ---------
(50,180) 18,352
Share of profit from associated undertaking 43,825 12,015
--------- ---------
Total operating (loss)/profit (6,355) 30,367
Profit on sale of properties in continuing operations 34,599 80,848
--------- ---------
Profit on ordinary activities before interest and taxation 28,244 111,215
Interest receivable:
Group 35,205 44,052
Associate 994 1,645
--------- ---------
36,199 45,697
Interest payable:
Group (179,865) (30,167)
Associate (61,598) (68,445)
--------- ---------
(241,463) (98,612)
--------- ---------
(Loss)/profit on ordinary activities before taxation (177,020) 58,300
Taxation 7,220 (14,090)
--------- ---------
(Loss)/profit on ordinary activities after taxation (169,800) 44,210
Minority interests 42,618 -
--------- ---------
(Loss)/profit for the financial period (127,182) 44,210
Dividends (23,712) (18,266)
--------- ---------
Retained (loss)/profit for the period (150,894) 25,944
--------- -------
(Loss)/earnings per share (7.08)p. 2.85p.
CONSOLIDATED BALANCE SHEETS
At At
30 September 31 May
2001 2000
£ £
FIXED ASSETS
Intangible assets:
Goodwill 486,160 412,481
Negative goodwill (37,084) -
---------- -----------
449,076 412,481
Tangible assets 4,884,355 1,645,317
Investments 250 60,840
---------- -----------
5,333,681 2,118,638
---------- -----------
CURRENT ASSETS
Stock 5,173 -
Debtors 104,751 803,635
Cash at bank and in hand 548,488 303,066
---------- -----------
658,412 1,106,701
---------- -----------
CREDITORS: amounts falling due within one year (598,579) (443,421)
---------- -----------
NET CURRENT ASSETS 59,833 663,280
---------- -----------
TOTAL ASSETS LESS CURRENT LIABILITIES 5,393,514 2,781,918
CREDITORS: amounts falling due after one year (2,701,921) (528,360)
Provisions for liabilities and charges (75,650) (91,000)
---------- -----------
NET ASSETS 2,615,943 2,162,558
---------- ---------
CAPITAL AND RESERVES
Called up share capital 1,511,697 1,164,450
Share premium account 350,454 214,854
Revaluation reserve 548,843 578,189
Profit and loss account 204,949 205,065
---------- -----------
EQUITY SHAREHOLDERS' FUNDS 2,615,943 2,162,558
---------- -----------
CONSOLIDATED CASH FLOW STATEMENT
Sixteen months ended Year
30 September 2001 Ended
31 May
2000
£ £
NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES (37,610) 161,770
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 12,579 40,874
Interest paid (230,250) (23,443)
Interest element of finance lease rental payments (1,170) -
---------- ----------
NET CASH INFLOW/(OUTFLOW) FROM RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE (218,841) 17,431
TAXATION
UK corporation tax paid (27,172) (7,826)
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENTS
Purchase of operating assets (64,449) (25,787)
Sale of investment properties (net) 483,238 333,191
---------- ----------
NET CASH INFLOW/(OUTFLOW) FOR CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT 418,789 307,404
ACQUISITIONS AND DISPOSALS
Acquisition of subsidiary (94,189) (506,452)
Net cash acquired with subsidiaries 153,221 27,343
---------- ----------
NET CASH OUTFLOW FROM ACQUISITIONS AND DISPOSALS 59,032 (479,109)
---------- ----------
194,198 (330)
EQUITY DIVIDENDS PAID (17,728) (15,225)
NET CASH INFLOW/(OUTFLOW) BEFORE FINANCING 176,470 (15,555)
Management of liquid resources
Cash transferred to treasury operations (200,312) -
Cash transferred from treasury operations 150,000 -
---------- ----------
NET CASH OUTFLOW FROM MANAGEMENT OF LIQUID RESOURCES (50,312) -
FINANCING
New bank loans 177,900 465,000
Bank loan repayments (95,773) (302,864)
Capital element of finance lease rental payments (13,175) -
---------- ----------
NET CASH INFLOW FROM FINANCING 68,952 162,136
---------- ----------
INCREASE IN CASH 195,110 146,581
---------- ----------
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Sixteen months Year
ended 30 Ended
September 2001 31 May
2000
£ £
Group (loss)/profit on ordinary activities after taxation (110,403) 98,995
Share of associated company's loss on ordinary activities after taxation (16,779) (54,785)
Group's share of pre-acquisition losses added back on acquisition of subsidiary 71,564 -
Increase in revaluation reserve 61,168 449,389
Taxation charge on realised property revaluation gains (11,300) -
--------
Total recognised gains and losses since last annual report (5,750) 493,599
NOTE OF HISTORICAL COST PROFITS AND LOSSES
for the period ended 30 September 2001
Sixteen months Year
ended 30 Ended
September 2001 31 May
2000
£ £
Reported (loss)/profit on ordinary activities before taxation (177,020) 58,300
Realisation of property revaluation gains 90,514 32,925
-------- --------
Historical cost (loss)/profit on ordinary activities before taxation (86,506) 91,225
======== ========
Transfer to reserves after taxation, minority interests and dividends (116) 54,869
======== ========
NOTES TO THE PRELIMINARY RESULTS ANNOUNCEMENT
The financial information contained in this statement does not constitute full
accounts within the meaning of section 240 Companies Act 1985 (the "Act"). Full
accounts for the year ended 31 May 2000 have been filed with the registrar of
companies which contained an unqualified auditors' report and no statement under
section 237(2) or (3) of the Act. Full accounts for the sixteen months ended 30
September 2001 are expected to be posted to shareholders shortly. Copies will
be available to the public for at least 14 days thereafter from the Company's
secretary at 90 Babbacombe Road, Bromley, Kent BR1 3LS.
The calculation of (loss)/earnings per share on the net basis is based on the
loss on ordinary activities after taxation namely £(127,182) (2000: Profit
£44,210) and the weighted average number of Ordinary shares in issue during the
year of 1,795,241 (2000: 1,552,600 ordinary shares) and ranking for dividend
during the year.
A final dividend of 0.5p per ordinary share (2000: 1.0p) and £17.78 per 'A'
ordinary share (2000: £27.40) is proposed to be paid on 10 April 2002 to
shareholders on the register at the close of business on 22 March 2002.
END
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