White Star Property Holdings Plc (the "Company")
Results for the year to 30 September 2006
Operational Review
In March 2006, the first two members of the new board of White Star, Messrs
Luca Tenuta and John Hemingway, joined the Company. Messrs David Risbey and
Michael Garvin were appointed in June 2006. Finally the new board was completed
by the appointment of Mr.Brian Basham as Chairman in September 2006.
During the year the Company raised approximately �1.5 million from new
shareholders by the issue of 254,750,000 new ordinary shares at 1p per share.
In order to focus on its UK base and because the directors were very nervous
about what they saw as the precarious state of the Cyprus property market, in
June 2006 the Company decided to dispose of its Cyprus assets at a loss of �
205,663. The previous management had acquired these assets. This realised
approximately �450,000 which has been used to invest in UK property.
On the property investment and trading front, the Company was active and
exchanged contracts on a number of properties, all located in the UK. The
Company has either subsequently disposed of the properties or is awaiting
planning consent.
In June 2006 the Company exchanged on a property in Burnham Beeches with
completion due in September 2007.
In July 2006 the Company entered into an agreement to buy a property in
Oxfordshire for �1.1m paying a deposit of �125,000 with completion expected by
31 January 2008 and a property in Norwich for �450,000, paying a deposit of �
250,000 and completion expected by 31 January 2008. Both properties are
currently producing a yield of 5 per cent and 6 per cent respectively.
In August 2006 the Company exchanged on a property in Hackbridge paying a
deposit of �32,500 with a completion date for 24 June 2007. The directors
expect planning consents to be forthcoming. Expressions of interest have
already been received.
Mercury Group Plc: Investment
In September 2006 the Company acquired 11,600,714 ordinary shares of The
Mercury Group Plc ("Mercury"), representing a strategic and key10.4 per cent
holding. This is recorded as a fixed asset investment in the Company's balance
sheet.
The price of 4p per share paid for the Mercury shareholding reflected a premium
of 2.85pence per share against Mercury's then share price of 1.15pence, or
approximately �330,600. However, the Mercury vendors invested �381,000 of their
proceeds in new White Star shares. Consequently White Star paid total cash of �
82,800 - a price of 0.17p per share. Mercury's current mid-price is 1.38p.
In accordance with UK accounting standards, the Company has recognised an
impairment charge of �400,000 against the total investment cost to reduce the
carrying value of the shares to their market value of �158,000.
The directors believe that the Company will benefit strategically from its
investment in Mercury through the potential for the respected Smith Melzack
Pepper Angliss (SMPA) business that is owned by Mercury to grow and to develop.
It also expects to benefit from its close relationship in respect of the
property services aspect of the Mercury business and, in particular, from the
relationships that have been developed with a group of Mercury's shareholders
as an effect of Mercury's recent refinancing. These shareholders include some
of the most powerful private players in the UK property market.
Following the acquisition of its key 10.4 per cent shareholding, White Star
lead these shareholders in opposition to refinancing plans that had been put
forward by Mercury and that would have resulted in significant dilution for
shareholders. As a consequence of White Star's actions, the Mercury board has
been reformed under the independent chairmanship of Mr George Kynoch, with our
Chairman, Mr Brian Basham, representing White Star's interests, Mr Andrew
Lovelady representing the interests of Ethel Austin Investments, and Messrs
Walter Goldsmith and James Lugg representing the interests of Paradene Ltd, an
investment vehicle associated with Mr. Vincent Tchenguiz.
Financial Review
The Company recorded a turnover of �650,000 (2005: �nil) represented by the
sale of properties. In the year under review the Company recorded a gross
profit of �56,875 (2005: �nil)
Administrative expenses amounted to �939,691 (2005: �246,894) the increase in
the administrative expenses relate to the readmission of the Company to AIM
following the reverse transaction, consultancy fees and bad debts.
As set out above an impairment of �400,000 has been made against the investment
in Mercury Group Plc in order to reflect Mercury's market value at the year
end.
The loss for the financial year amounted to �1,455,394 (2005: loss: �464,589)
resulting in a loss per share of 0.91 pence (2005: loss 1.43 pence per share)
Profit and Loss Account for the year to 30 September 2006
Notes 2006 2005
� �
Turnover 650,000 -
Cost of sales (593,125) -
Gross profit 56,875 -
Administrative expenses (939,691) (246,894)
Impairment of listed fixed asset (400,000) (228,435)
investment
Operating loss (1,282,816) (475,329)
Exceptional items:
Loss on the disposal of tangible (205,663) -
fixed assets
Profit of the disposal of 30,130 -
investments
(175,533) -
(1,458,349) (475,329)
Interest receivable 2,955 10,740
Loss on ordinary activities before (1,455,394) (464,589)
taxation
Tax on loss on ordinary activities
Loss for the financial year (1,455,394) (464,589)
Basic earnings per share (0.91p) (1.43p)
Diluted earnings per share (0.91p) (1.43p)
Balance Sheet as at 30 September 2006
2006 2005
� �
Fixed Assets
Investments 322,200 242,625
Current Assets
Stocks 1,772,500 -
Debtors 928,016 18,724
Cash at bank and in hand 353,517 185,181
3,054,033 203,905
Creditors: amounts falling due (1,892,037) (9,583)
within one year
Net current assets 1,161,996 194,322
Net assets 1,484,196 436,947
Capital and reserves
Called up share capital - equity 2,808,095 535,595
Share premium 267,583 418,640
Other reserves 381,200
Profit and loss account (1,972,682) (517,288)
Equity shareholders' funds 1,484,196 436,947
CASH FLOW STATEMENT
2006 2005
� �
Net cash outflow from operating (1,682,154) (78,831)
activities
Returns on investments and servicing 2,955 10,740
of finance
Capital expenditure (655,108) (471,060)
(2,334,307) (539,151)
Financing 2,502,643 364,407
Increase/(decrease) in cash 168,336 (174,744)
Reconciliation of net cash flow to
movement in debt
Increase/(decrease) in period 168,336 (174,744)
Change in net debt 168,336 (174,744)
Net funds at 1 October 185,181 359,925
Net funds at 30 September 353,517 185,181
Reconciliation of operating profits to net cash inflow from operating
activities
2006 2005
� �
Operating loss (1,282,816) (475,329)
Increase in stocks (1,772,500) -
Increase in debtors (909,292) 329,623
Increase in creditors 1,882,454 (161,560)
Impairment charge 400,000 228,435
Net cash outflow from operating activities (1,682,154) (78,831)
The board of directors approved the financial statements on 30 March 2007
NOTES TO THE ACCOUNTS FOR THE PERIOD
ACCOUNTING POLICIES
Accounting convention
The accounts have been prepared under the historical cost convention and in
accordance with applicable United Kingdom Accounting Standards.
GOING CONCERN
`Due to the nature of the business which involves large one-off transactions
the timing of cashflows is unpredictable. The Company has therefore arranged a
bank overdraft facility of �150,000 to meet its day-to-day working capital
requirements. The bank overdraft facility is subject to the usual conditions
and has a review date of 31 August 2007.
The directors consider that this is sufficient in order to allow the company to
meet its normal operating expenses as they fall due. They have also undertaken
not to enter into any significant transactions without arranging additional
financing.
On this basis the directors consider it appropriate to prepare the accounts on
a going concern basis
TURNOVER
Turnover comprises proceeds of sales of trading properties and is recognised
when the significant risks and returns have been transferred to the buyer. This
is generally on unconditional exchange. In some instances payment or completion
may occur significantly after exchange. Sales of investments or investment
properties, which are not included in turnover, are recognised on the same
basis.
EARNINGS PER SHARE
The basic earnings per share is calculated by dividing the profit for the
financial year attributable to shareholders by the weighted average number of
shares in issue.
The weighted average number 2006 2005
of shares were:
Number Number
Weighted average number of 160,101,167 32,583,878
shares
Basic earnings per share (0.91p) (1.43p)
Diluted earnings per share (0.91p) (1.43p)
Financial information
The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985.
The summarised balance sheet at 30 September 2006 and the summarised profit and
loss account, summarised cash flow statement and associated notes for the year
then ended have been extracted from the Company's 2006 statutory financial
statements upon which the auditors opinion is unqualified and does not include
any statement under Section 237 of the Companies Act 1985.
Those financial statements have not yet been delivered to the Registrar of
Companies
Annual General Meeting
Notice of the Annual General Meeting of the Company will be sent to
shareholders shortly.
Report and Accounts
Copies of the Report and Accounts for the year ended 30 September 2006 are
being sent to shareholders in due course. Further copies will be available from
the Company's registered office.
End
Contact
Luca Tenuta
White Star Property Holdings Plc
Tel 020 7495 1387
Liam Murray, Nominated Adviser
City Financial Associates Limited
Tel 020 7090 7800
END
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