TIDMHTI
RNS Number : 5597T
Hawtin PLC
30 September 2010
?
HawTIN PLC ("Hawtin" or the "company")
INTERIM results
for the SIX MONTHS ended 30 jUNE 2010
CHAIRMAN'S STATEMENT:
The difficulties I spoke of in my last statement to you dated the 28th May
continue to adversely affect the sector in the regions we serve. I am pleased to
advise you however that our projection, as previously announced in my Chairman's
Statement in our preliminary announcement issued on the 7th June, 2010, that our
void space would fall to below 10% levels by the year end is almost achieved. In
a difficult letting market we now stand at some 10% of void by square footage,
as against 41% as reported in our June 2009 interim results last year. The
remaining void space is mainly in our empty office and factory site at Abercynon
and within the Millennium Plaza building in Cardiff. Potential tenants continue
to have considerable difficulty in obtaining bank funding for their development
and expansion. A good example of this is the negotiations we have had both in
respect of the now sold Portsmouth site and at Abercynon. In respect of
Portsmouth it took a year of false starts on lettings, or sale, until we found a
company that had secured funding and was able to complete a purchase for
GBP4.35m, a premium of 9% to book value. At Abercynon we have worked hard with a
potential US based tenant for over six months. This company, although supported
with a grant offer from the Welsh Assembly has still been unable to obtain
sufficient funding for working capital purposes. We therefore continue to
actively market this site.
On the 3rd September we resigned from our joint venture, Hawtin Developments LLP
(Hawtin Developments), receiving GBP275,000 in compensation from our joint
venture partner who has assumed all responsibilities for the existing debts
which total GBP3.45m. Hawtin Developments owns the former Champion Spark Plug
site on the Wirral, which has had difficulties in obtaining full occupancy. The
most recent valuation of this site, undertaken in April 2010, resulted in a
reduction in the book value from GBP4.4m to GBP3.8m in these interim results.
This leaves our 50% share of net book value, net of debt at GBP175,000.
The leisure sector continues to suffer from the recession. Whilst our anchor
tenant at Millennium Plaza, VUE Cinemas, remains robust, the club and bar
tenant, Retro Bars, which we secured for the former Regents Inns plc space has
entered into administration and we have therefore written off GBP72,000 of
unpaid rent and charges in the period. This tenant loss has been a great
disappointment.
Results:
Gross profit for the six months was GBP1.8m but this did not fully reflect the
increased lettings income which we anticipate will build up in the second half
of the year, but after a negative movement on the interest rate swaps
instruments of GBP3.1m and an increased rate of interest and charges by Lloyds
Banking Group (LBG) particularly, we show a loss before tax and revaluation
deficit of GBP3.8m. In respect of current property valuation the board has
decided to make a further provision of GBP5.2m against the book value of Crown
Investment Limited (Crown Investments) which owns Millennium Plaza, an interim
adjustment to reflect the valuation of the property held by Hawtin Developments
(now disposed of) of GBP0.3m and a further provision on its main portfolio of
GBP2.6m - a total negative provision of GBP8.1m. In total a loss before tax of
GBP11.9m was made in the period.
You may recall that on the 31st December 2009 there was a GBP1.9m positive swing
in the value of the swaps and it is because market interest rates over the
comparative length of the swaps contract had reduced as at the 30th June that a
loss of GBP3.1m now arises. The fact that this impacts the Income Statement is
due to the requirements of IFRS, and these significant swings are in my opinion
misleading to shareholders as such gains or losses would only actually arise if
the instruments were cancelled or sold, but as they are a condition of our bank
arrangements any crystallisation would only follow a withdrawal of existing
loans. These are not a set of results that your board is at all comfortable
with, particularly as the efforts of increasing lettings and cost reduction are
totally masked by higher finance costs and provisions. Trading our way out of
what has been and continues to be an extremely difficult market has been
draining and dispiriting with pressures on funding, tenant defaults and very
little comparative data in the regions on which to base fair valuations.
As you are aware we have not paid an interim or final dividend for some years
and at this time we are also in arrears with dividends due on the preference
shares as well. Obviously until we have progressed the key issues touched upon
in this statement there will be no ability to consider a dividend policy. Your
directors hold some 42% of the issued share capital with each of Richard Hayward
and Martin Warner having interests or deemed interests in some 20% each.
Funding:
We continue to have a satisfactory working relationship with both Lloyds Banking
Group (LBG) and Anglo Irish Banking Corporation (AIBC). Our GBP1,400,000 loan
from Principality Building Society secured on the C1 Trading Estate at Aberaman
was renewed on the 31st March 2010 for a further five years and is due to expire
on the 31st March, 2015.Specifically, in respect of our subsidiary Crown
Investments Limited based in Jersey, we do have a backlog of unpaid interest
amounting to GBP1.4m and the loan to value covenant was breached even before the
additional impairment of GBP5.2m (see further details below).
Our facilities with LBG lapsed on the 20th July 2010. As we have been in
discussions with LBG both prior to and since the lapse in relation to the
potential provision of new facilities, no extension to the lapsed facilities has
been sought or given by LBG. We have reduced our loans from LBG during 2010 from
GBP34.1m to GBP28.1m, which included the disposal proceeds from the Walton Road,
Portsmouth sale. We remain in breach of the loan to value covenant of 80% with
LBG but all interest has been paid in accordance with the loan agreement.
Increased rental income from lettings in the first half of this year will
improve cash flow in the second half, but cash remains very tight and no
unnecessary expenditure is being incurred. Whilst AIBC continues to work with
ourselves, Crown Investments is continuing to meet its third party expenses
which mainly comprise empty rates costs, security and insurances but it will
continue to be unable to satisfy the interest payments due in full. Crown
Investments remains in breach of various financial covenants contained within
the original loan agreements, but AIBC has not taken any enforcement action
against the company to date in relation to these various breaches, although AIBC
reserves the right to do so at any time in the future. Your board is cautiously
optimistic that AIBC will take no further action whilst it is demonstrable that
disposal negotiations are being actively pursued.
Strategy:
In my statement of the 28th May I commented that your board is constantly
reviewing how best to progress the Group going forward and that we were
contemplating a number of options to move away from being a dedicated property
investment company in favour of a less leverage intensive business. Your board
has now decided to fully adopt this strategy. It is clear that finance for
growth is not going to be forthcoming as banks improve their own balance sheet
ratios and reduce their exposure to the property sector. Having tried last year
to raise equity funding we have concluded that there is little appetite
currently for investment in property companies on AIM. Coupling these views with
the general negative economic forecasts for the next three years, increasing
bank finance costs and the expectation that LIBOR based interest rates will
rise, and that growth in rentals will be flat for at least the next couple of
years has led us to take a decision to exit the property investment market. We
believe that your Company as a shell after such disposals will be attractive to
businesses wanting to enter the listed market and we can hopefully achieve
better shareholder value through that route. Hawtin has in its 137 years
successfully reinvented itself many times and can do so again.
We are considering with Seymour Pierce, our nominated adviser and brokers an
approach by a company in which our Chief Executive has an interest to buy all
our properties except the Millennium Plaza. Your non-executive directors are
awaiting confirmation that this company has confirmed funding with credit
approval before proceeding. This potential transaction will be subject to the
AIM Rules for Companies and in particular AIM Rule 13 'Related Party
Transactions' which requires that its directors, with the exception of any
director who is involved in the transaction as a related party, have consulted
with its nominated adviser and have determined that the terms of the transaction
are fair and reasonable insofar as its shareholders are concerned. You may
recall that permission was sought and given to consider approaches from
connected parties, namely a party connected to Richard Hayward at our recent
Annual General Meeting on the
30th June 2010. Should a transaction be negotiated with the connected party a
general meeting will be held to seek shareholder approval for the transaction.
Your board is aware that there may be other parties interested in acquiring
either the whole or parts of our portfolio and we will of course consider any
reasonable offers received.
The directors of Crown Investments have appointed CB Richard Ellis as agents to
market the Millennium Plaza building. This will establish the level of interest
in the market and will as a result provide a basis on which the company can make
a decision on its future. It is a landmark building and we are collectively
confident that there will be considerable interest. CB Richard Ellis have
recommended that they seek offers in excess of GBP8m which is below what the
book value stood at 30th June in these interim statements of GBP11m. We have to
accept the professional opinion of CB Richard Ellis at this time and will report
further when they have completed their marketing exercise.
Conclusion:
It is a fact that the company has been struggling since the start of the
recession therefore I feel my statement is pragmatic and should be viewed in a
strategically positive light. We were unfortunate that we entered the property
investment market in 2006 and therefore only had one year of good progress
before the funding and property recession hit in 2007. We have battled through
the past three years in a positive and progressive manner and I thank all
involved with the Group for their hard work over this period. Any disposals will
have a significant impact upon leverage and following this we anticipate being
in a position to develop our embryonic plans to enter into a different sphere of
activity.
27 September 2010
+------------------------------------+------+----------+---------+
| HAWTIN PLC | | | |
| Consolidated Income Statement | | | |
| for the six months ended 30 June | | | |
| 2010 | | | |
| | | | |
| | | | |
+------------------------------------+------+----------+---------+
| | | Six | Six |
| | | months | months |
| | | 30 | 30 |
| | note | June | June |
| | | 2010 | 2009 |
| | | GBP'000 | GBP'000 |
+------------------------------------+------+----------+---------+
| Continuing operations | | | |
+------------------------------------+------+----------+---------+
| Revenue | | 1,778 | 2,181 |
+------------------------------------+------+----------+---------+
| Cost of sales | | - | - |
+------------------------------------+------+----------+---------+
| Gross profit | | 1,778 | 2,181 |
+------------------------------------+------+----------+---------+
| | | | |
+------------------------------------+------+----------+---------+
| Other operating income | | 284 | 1,061 |
+------------------------------------+------+----------+---------+
| Revaluation (loss)/gain | 3 | (8,127) | 756 |
+------------------------------------+------+----------+---------+
| Administrative expenses | | (883) | (1,281) |
+------------------------------------+------+----------+---------+
| | | | |
+------------------------------------+------+----------+---------+
| (Loss)/profit from operations | | (6,948) | 2,717 |
+------------------------------------+------+----------+---------+
| | | | |
+------------------------------------+------+----------+---------+
| Financial income | 4 | 24 | 2,093 |
+------------------------------------+------+----------+---------+
| Financial expenses | 4 | (5,016) | (1,772) |
+------------------------------------+------+----------+---------+
| | | | |
+------------------------------------+------+----------+---------+
| (Loss)/profit before taxation | | (11,940) | 3,038 |
+------------------------------------+------+----------+---------+
| | | | |
+------------------------------------+------+----------+---------+
| Taxation | 5 | 877 | (511) |
+------------------------------------+------+----------+---------+
| | | | |
+------------------------------------+------+----------+---------+
| (Loss)/profit for the year | | (11,063) | 2,527 |
+------------------------------------+------+----------+---------+
| | | | |
+------------------------------------+------+----------+---------+
| Attributable to: | | | |
+------------------------------------+------+----------+---------+
| Ordinary shareholders | | (11,063) | 2,527 |
+------------------------------------+------+----------+---------+
| | | | |
+------------------------------------+------+----------+---------+
| Net (loss)/profit | | (11,063) | 2,527 |
+------------------------------------+------+----------+---------+
| | | | |
+------------------------------------+------+----------+---------+
| Basic and diluted (loss)/profit | 6 | (11.03)p | 2.65p |
| per ordinary share | | | |
+------------------------------------+------+----------+---------+
| | | | |
+------------------------------------+------+----------+---------+
+--------------------------------+----------+----------+----------+
| HAWTIN PLC | | | |
| Consolidated Balance Sheet | | | |
| At 30 June 2010 | | | |
| | | | |
+--------------------------------+----------+----------+----------+
| | 30 | 30 | 31 |
| | June | June | December |
| | 2010 | 2009 | 2009 |
| | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------+----------+----------+----------+
| Non-current assets | | | |
+--------------------------------+----------+----------+----------+
| Investment properties | 44,067 | 64,096 | 56,123 |
+--------------------------------+----------+----------+----------+
| Deferred tax asset | 509 | - | - |
+--------------------------------+----------+----------+----------+
| | 44,576 | 64,096 | 56,123 |
+--------------------------------+----------+----------+----------+
| | | | |
+--------------------------------+----------+----------+----------+
| Current assets | | | |
+--------------------------------+----------+----------+----------+
| Trade and other receivables | 1,061 | 1,093 | 843 |
+--------------------------------+----------+----------+----------+
| Cash and cash equivalents | 1,818 | 2,157 | 3,579 |
+--------------------------------+----------+----------+----------+
| | 2,879 | 3,250 | 4,422 |
+--------------------------------+----------+----------+----------+
| | | | |
+--------------------------------+----------+----------+----------+
| Current liabilities | | | |
+--------------------------------+----------+----------+----------+
| Trade and other payables | (4,685) | (3,047) | (3,655) |
+--------------------------------+----------+----------+----------+
| Derivative financial | (6,636) | (3,425) | (3,561) |
| instruments | | | |
+--------------------------------+----------+----------+----------+
| Short-term borrowings and | (53,356) | (59,590) | (60,614) |
| overdrafts | | | |
+--------------------------------+----------+----------+----------+
| | (64,677) | (66,062) | (67,830) |
+--------------------------------+----------+----------+----------+
| | | | |
+--------------------------------+----------+----------+----------+
| Net current liabilities | (61,798) | (62,812) | (63,408) |
+--------------------------------+----------+----------+----------+
| | | | |
+--------------------------------+----------+----------+----------+
| Non-current liabilities | | | |
+--------------------------------+----------+----------+----------+
| Long-term borrowings | (3,642) | (3,088) | (2,130) |
+--------------------------------+----------+----------+----------+
| Cumulative preference shares | (549) | (549) | (549) |
+--------------------------------+----------+----------+----------+
| Deferred tax liability | - | - | (386) |
+--------------------------------+----------+----------+----------+
| | (4,191) | (3,637) | (3,065) |
+--------------------------------+----------+----------+----------+
| | | | |
+--------------------------------+----------+----------+----------+
| Net liabilities | (21,413) | (2,353) | (10,350) |
+--------------------------------+----------+----------+----------+
| | | | |
| | | | |
+--------------------------------+----------+----------+----------+
| Capital & reserves | | | |
+--------------------------------+----------+----------+----------+
| Equity share capital | 5,017 | 5,017 | 5,017 |
+--------------------------------+----------+----------+----------+
| Equity reserve | 900 | 900 | 900 |
+--------------------------------+----------+----------+----------+
| Reserve arising on acquisition | (100) | - | (100) |
+--------------------------------+----------+----------+----------+
| Other reserves | 3,318 | 3,283 | 3,301 |
+--------------------------------+----------+----------+----------+
| Retained losses | (30,548) | (11,553) | (19,468) |
+--------------------------------+----------+----------+----------+
| Total equity | (21,413) | (2,353) | (10,350) |
+--------------------------------+----------+----------+----------+
| | | | |
+--------------------------------+----------+----------+----------+
| | | | |
+--------------------------------+----------+----------+----------+
+--------------------------------+----------------+------------------+----------+
| HAWTIN PLC | | | |
| Consolidated Cash Flow | | | |
| Statement | | | |
| for the six months ended 30 | | | |
| June 2010 | Six | Six | Year |
| | months | months | ended |
+--------------------------------+----------------+------------------+----------+
| | 30 | 30 | 31 |
| | June | June | December |
| | 2010 | 2009 | 2009 |
| | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------+----------------+------------------+----------+
| | | | |
+--------------------------------+----------------+------------------+----------+
| Net cash inflow from operating | 1,240 | 578 | 1,313 |
| activities | | | |
+--------------------------------+----------------+------------------+----------+
| | | | |
+--------------------------------+----------------+------------------+----------+
| Investing activities | | | |
+--------------------------------+----------------+------------------+----------+
| Interest received | 24 | 7 | 25 |
+--------------------------------+----------------+------------------+----------+
| Acquisition of subsidiary | - | (2,116) | (2117) |
| undertaking | | | |
+--------------------------------+----------------+------------------+----------+
| Cash acquired with subsidiary | - | 65 | 65 |
| undertaking | | | |
+--------------------------------+----------------+------------------+----------+
| Purchase of property and | (71) | (4,639) | (4,732) |
| equipment | | | |
+--------------------------------+----------------+------------------+----------+
| Proceeds from disposal of | 4,247 | 421 | 2,238 |
| property | | | |
+--------------------------------+----------------+------------------+----------+
| Net cash inflow/(outflow) from | 4,200 | (6,262) | (4,521) |
| investing activities | | | |
+--------------------------------+----------------+------------------+----------+
| | | | |
+--------------------------------+----------------+------------------+----------+
| Financing activities | | | |
+--------------------------------+----------------+------------------+----------+
| Interest paid | (1,509) | (1,388) | (2,283) |
+--------------------------------+----------------+------------------+----------+
| New bank loans raised | - | 11,780 | 11,780 |
+--------------------------------+----------------+------------------+----------+
| Bank loans repaid | (5,846) | (4,347) | (4,717) |
+--------------------------------+----------------+------------------+----------+
| Tax | 53 | - | - |
+--------------------------------+----------------+------------------+----------+
| Increase/(decrease) in bank | 101 | (13) | 198 |
| overdrafts | | | |
+--------------------------------+----------------+------------------+----------+
| Net cash (outflow)/inflow from | (7,201) | 6,032 | 4,978 |
| financing activities | | | |
+--------------------------------+----------------+------------------+----------+
| | | | |
+--------------------------------+----------------+------------------+----------+
| Net (decrease)/increase in | | | |
| cash and cash equivalents | (1,761) | 348 | 1,770 |
+--------------------------------+----------------+------------------+----------+
| Cash and cash equivalents at | | | |
| the beginning of the period | 3,579 | 1,809 | 1,809 |
+--------------------------------+----------------+------------------+----------+
| Cash and cash equivalents at | 1,818 | 2,157 | 3,579 |
| the end of the period | | | |
+--------------------------------+----------------+------------------+----------+
| | | | |
+--------------------------------+----------------+------------------+----------+
| | | | |
+--------------------------------+----------------+------------------+----------+
+-------------------------+----------+-----+---+----------+--+----------+----------+----------------+
| HAWTIN PLC | | |
| Consolidated Statement of Changes | | |
| in Equity for the six months ended | | |
| 30 June 2010 | | |
+------------------------------------------+--------------+-----------------------------------------+
| | Equity | Equity | Reserve | Other |Retained | Total |
| | share |Reserve | on |reserves |earnings | attributable |
| | capital | |Acquisition | | | to equity |
| | | | | | | shareholders |
| | GBP'000 |GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------------+----------+---------+-------------+----------+----------+----------------+
| At 1 January 2010 | 5,017 | 900 | (100) | 3,301 | (19,468) | (10,350) |
+-------------------------+----------+---------+-------------+----------+----------+----------------+
| Transfer to preference | - | | - | 17 | (17) | - |
| dividend reserve | | | | | | |
+-------------------------+----------+---------+-------------+----------+----------+----------------+
| Loss for the financial | - | - | - | - | (11,063) | (11,063) |
| period | | | | | | |
+-------------------------+----------+---------+-------------+----------+----------+----------------+
| | | | | | | |
| At 30 June 2010 | 5,017 | 900 | (100) | 3,318 | (30,548) | (21,413) |
+-------------------------+----------+---------+-------------+----------+----------+----------------+
| | | | | | | | | |
+-------------------------+----------+-----+---+----------+--+----------+----------+----------------+
NOTES
1. The interim statement was approved by the Board of Directors on 27th
September, 2010 and is neither audited nor reviewed.
2. The information for the year ended 31 December 2009 does not constitute
statutory financial statements as defined in section 435 of the Companies Act
2006. A copy of those statutory financial statements for that year has been
delivered to the Registrar of Companies. The auditors' report on those
financial statements was unqualified and did not contain a statement under
section 498(2) or (3) of the Companies Act 2006. The auditors' report did
however draw attention to disclosures concerning the group's ability to continue
as a going concern by way of an emphasis of matter.
In the Annual Report for the year ended 31st December, 2009, the Directors
described at length the impact of the general economic conditions arising since
2007. The comments included detailed summaries of Loan to Value and Income
Covenants associated with borrowings from the Group's bankers. The banks
referred to are Bank of Scotland (now part of Lloyds Banking Group - LBG),
Principality Building Society(PBS) in respect of the main portfolio of
properties and Anglo Irish Banking Corporation (AIBC) who are bankers for Crown
Investments Limited. In the period since the Preliminary Announcement of the
results for the year ended 31st December, 2009, the Group has met all interest
payments to LBG and PBS although in respect of the former it remains in breach
of the Loan to Value covenant. The Group remains in discussions with LBG as to
the provision of facilities as the current facilities lapsed on the 20th July,
2010. The facilities with PBS have been renewed for a further five years to
expire on the 31st March, 2015. In respect of Crown Investments it has not met
all interest payments as due to AIBC but discussions are ongoing as to the
future of the building known at Millenium Plaza, Cardiff which has been placed
onto the market for sale.
The financial statements do not include any adjustments that would result if the
going concern assumption
were not applicable.
The annual financial statements of Hawtin PLC are prepared in accordance with
IFRS adopted by the European Union. The same accounting policies, presentation
and methods of computation are followed in the condensed set of financial
statements as applied in the Group's latest annual audited financial statements.
3. The group has reported GBP8.1 million of revaluation impairments to its
property portfolio during the 6 month period to June 2010 of which GBP5.2
million was attributable to the Millenium Plaza held by Crown Investments
Limited.
4.
+------------------------+----------+-----------+-------------+
| | 6 months | 6 months | Year ended |
| | ended 30 | ended 30 | |
| | June | June 2009 | 31 December |
| | 2010 | | 2009 |
+------------------------+----------+-----------+-------------+
| Financial income | GBP'000 | GBP'000 | GBP'000 |
+------------------------+----------+-----------+-------------+
| Interest earned | 24 | 7 | 25 |
+------------------------+----------+-----------+-------------+
| Movement in the value | | | |
| of financial | - | 2,086 | 1,949 |
| instruments* | | | |
+------------------------+----------+-----------+-------------+
| | 24 | 2,093 | 1,974 |
+------------------------+----------+-----------+-------------+
| Financial expenses | | | |
+------------------------+----------+-----------+-------------+
| Interest on bank | | | |
| loans, overdrafts and | 1,942 | 1,772 | 3,620 |
| other borrowings | | | |
+------------------------+----------+-----------+-------------+
| Movement in the value | | | |
| of financial | 3074 | - | - |
| instruments* | | | |
+------------------------+----------+-----------+-------------+
| Interest on preference | - | - | - |
| shares | | | |
+------------------------+----------+-----------+-------------+
| | 5016 | 1,772 | 3,620 |
+------------------------+----------+-----------+-------------+
| *classed as fair value | | | |
| through profit and | | | |
| loss | | | |
+------------------------+----------+-----------+-------------+
5. Taxation has been calculated at 28% of loss before taxation and adjusted
for group losses brought forward, and movements on deferred taxation.
6. Basic loss per Ordinary Share of 11.03 pence is based on the loss after
taxation of GBP11,063,000 (2009 - profit GBP2,527,000) on an average number of
shares in issue of 100,339,798 (2009 95,477,920).
7. The Directors do not propose an interim dividend on the Ordinary Shares.
The half year dividend on the 6.5% Cumulative Preference Shares was not paid on
30 June 2010 as there were no distributable reserves.
Enquiries:
+------------------------------------------+---------------+
| Hawtin PLC | 01633 682130 |
+------------------------------------------+---------------+
| Bob Carlton-Porter, Chairman | |
+------------------------------------------+---------------+
| Nicola Crickmore, Company Secretary | |
+------------------------------------------+---------------+
| | |
+------------------------------------------+---------------+
| Seymour Pierce Limited | 020 7107 8000 |
+------------------------------------------+---------------+
| Guy Peters / David Foreman (Corporate | |
| Finance) | |
+------------------------------------------+---------------+
| Richard Redmayne (Corporate Broking) | |
+------------------------------------------+---------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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