City Lofts Group PLC
AIM : CTF

City Lofts Group PLC

March 21, 2006 06:33 ET

City Lofts Group PLC Preliminary Results

LONDON, UNITED KINGDON--(CCNMatthews - March 21, 2006) -

City Lofts Group PLC (AIM:CTF), a leading developer of urban mixed-use property schemes primarily focused on residential apartments, today announces its Preliminary Results for the nine month period ended 31 December 2005.

Highlights

- As previously reported, there were no new sales completions in the period from developments under construction

- Pre-tax loss of Pounds Sterling 3.864 million (31 March 2005 Pounds Sterling 5.381 million profit)

- Final dividend of 3.27p per Ordinary Share recommended for approval at the AGM on 28 June 2006

- 6 developments on site totalling 901 apartments with a Gross Development Value ("GDV") of Pounds Sterling 183 million: 65% pre-sold

- 5 new developments of 1,326 apartments with a GDV of Pounds Sterling 274 million to start on site in 2006

- Development pipeline currently has a GDV of Pounds Sterling 457 million

- Group acquired 25% interest in EcoCentroGen Limited

- Exciting opportunities with Vivacity Residential Management

Stuart Wright, Group Chief Executive of City Lofts Group PLC, commented:

"The Group has been investing in additional internal resources, especially in its management team. We have strengthened our project management, sales and marketing capabilities to lay further foundations for the significant growth and expansion of the City Lofts city centre residential development business. In addition we are progressing our plans for Vivacity, our complimentary residential management business. We continue to view the future with confidence."



For further information:

City Lofts Group PLC
Stuart Wright, Group Chief Executive Tel: +44 (0) 20 7834 2787
stuart@citylofts.co.uk

Nigel Denby, Group Finance Director Tel: +44 (0) 1423 506 262
nigel@citylofts.co.uk www.citylofts.co.uk

Media enquiries:
Abchurch
Sarah Hollins/ Henry Harrison-Topham Tel: +44 (0) 20 7398 7700
sarah.hollins@abchurch-group.com www.abchurch-group.com


Chairman's Statement

As I stated in my interim statement on 6 December 2006, there have been no new sales completions from existing developments currently under construction in this nine month period ended 31 December 2005. However, this has been a busy period for City Lofts and there continues to be considerable positive activity securing the future growth prospects of the Group.

The loss before tax in the nine month period at Pounds Sterling 3.864 million, essentially represents the cost of administrative expenses incurred in the period.

The Group currently has six development projects on site building 901 apartments with a Gross Development Value ("GDV") of Pounds Sterling 183 million. Building completions are expected to commence progressively from March 2006 through to July 2007, and therefore sales turnover for the year ending 31 December 2006 is expected to be between Pounds Sterling 100 million and Pounds Sterling 120 million, with the balance occurring in the following year.

Five new development projects will start on site in 2006, including the new-build construction of 322 apartments at St Paul's, Sheffield (GDV of Pounds Sterling 59.9 million) and 295 apartments at Park Point, Sutton Coldfield (GDV of Pounds Sterling 79.4 million) with the latter scheme including significant retail and leisure space.

In November 2005 we exchanged contracts to acquire a superb site on the Gateshead side of the Tyne river, overlooking the Tyne Bridge, to convert a 1960's office building into 168 apartments. The GDV of the scheme is anticipated at Pounds Sterling 30.4 million.

This month we exchanged contracts to acquire two further sites. The first was from Mersey Docks and Harbour Board at Half Tide Dock, Liverpool, adjacent to our existing site at Princes Dock. This scheme comprises 121 new-build apartments with a GDV of Pounds Sterling 24.3 million. The second, in a 50% owned joint venture, is at Ancoats, Manchester for a new build scheme of 420 apartments with some commercial space. The anticipated GDV is Pounds Sterling 80 million.

We are seeing many new development opportunities and currently lawyers have been instructed on six potential new development projects.

In the period, we have committed resources and evolved our future plans for the development of Vivacity, our new investor/tenant management service business. We anticipate soon being able to roll out a series of exciting new initiatives in this area.

The Group has acquired 25% of the equity of EcoCentroGen Limited ("ECG"). ECG is leading the development in the UK of an integrated combined heat, power and data solution for developers of new build projects. It provides funding to support the design and installation of low carbon and renewable energy technologies and cutting edge data service networks. Once installed ECG operate and maintain the systems, under long term contracts of in excess of 30 years, as an embedded utility. The City Lofts team is working with ECG on future development projects.

In November 2005 the Government announced the introduction of new Part L energy regulations, effective from April 2006, to ensure new buildings use more efficient heating systems. We believe these new regulations will significantly benefit ECG's future business.

In November 2005, following approval by shareholders at the Annual General Meeting on 6 July 2005, the Court sanctioned a transfer of reserves of Pounds Sterling 2,417,207 from the share premium account to the distributable profit and loss account.

Long term investor demand for our apartments remains good as evidenced by our 65% forward sales position on those developments launched for sale which are currently under construction. We continue to remain confident about meeting our expectations in 2006 and your Directors look forward to bringing current developments to completion and getting others underway.

Accordingly we are pleased to propose a final dividend of 3.27p per Ordinary share in respect of the final three month period. Together with the interim dividend of 2.61p per Ordinary share paid on 16 January 2006, this represents the total dividend paid in the previous year, increased by 5%, pro-rata for this shorter financial period. The shares will go ex-dividend on 31 May 2006 and the final dividend will be paid out of retained reserves on 30 June 2006 to those shareholders on the register on 2 June 2006, subject to shareholder approval at the Annual General Meeting to be held on 28 June 2006.

John Holt

Chairman

20 March 2006



Chief Executive's Review

Market Overview

Despite some caution from owner-occupiers and a falling away of smaller, speculative 'buy-to-let' investors during the course of 2005, we are still seeing professional investors taking a medium to long term investment view and remain active in the market. We have seen a pick-up in the market since the beginning of 2006.

Underlying market demographics and continuing interest in city centre living continue to support the City Lofts' strategy. Single person households represent 30% of all households and are forecast to grow to 40% by 2021. Employment of key professionals in the important financial and business service sectors in major cities is predicted by Business Strategies to increase from 18% to 22% by 2011.

Forward Sales Position

The current forward sales position by individual development is as follows:



---------------------------------------------------------------------
GDV (Pounds Exchanged(Pounds Reserved(Pounds
Sterling m)/ Sterling m)/ Sterling m)/
Total No. of No. of No. of
Apartments Apartments Apartments
---------------------------------------------------------------------
Quayside Lofts, Pounds Pounds Pounds
Newcastle Sterling 14.9m Sterling 8.1m Sterling 0.2m
66 46 1
---------------------------------------------------------------------
Roberts Wharf, Leeds Pounds Pounds Pounds
Sterling 38.2m Sterling 33.8m Sterling 0.5m
198 185 4
---------------------------------------------------------------------
1 Princes Dock, Pounds Pounds Pounds
Liverpool Sterling 38.7m Sterling 27.6m Sterling 2.1m
162 120 8
---------------------------------------------------------------------
Springfield Mill, Pounds Pounds Pounds
Nottingham Sterling 16.4m Sterling 15.5m -
105 95 -
---------------------------------------------------------------------
Salford Quays, Pounds Pounds Pounds
Manchester Sterling 45.6m Sterling 18.1m Sterling 8.8m
203 87 43
---------------------------------------------------------------------
Admiral House, Pounds - Pounds
Cardiff Sterling 29.2m Sterling 4.9m
167 - 28
---------------------------------------------------------------------
Total on site Pounds Pounds Pounds
being Sterling 183.0m Sterling 103.1m Sterling 16.5m
constructed 901 533 84
---------------------------------------------------------------------
St Paul's, Pounds Not yet launched -
Sheffield Sterling 59.9m for sale
322 -
---------------------------------------------------------------------
Park Point, Pounds Not yet launched -
Sutton Coldfield Sterling 79.4m for sale
295 -
---------------------------------------------------------------------
Tyne Bridge Tower, Pounds Not yet launched -
Gateshead Sterling 30.4m for sale
168 -
---------------------------------------------------------------------
Half Tide Dock, Pounds Not yet launched -
Liverpool Sterling 24.3m for sale
121 -
---------------------------------------------------------------------
Victoria Works, Pounds Not yet launched -
Manchester Sterling 80.0m for sale
420 -
---------------------------------------------------------------------
Total Developments Pounds Pounds Pounds
Sterling 457.0m Sterling 103.1m Sterling 16.5m
2,227 533 84
---------------------------------------------------------------------


Consequently 65% by value of developments launched for sale have been pre-sold.

Developments under construction

The six developments currently under construction are progressing well and building completions are expected to commence from March 2006 through to July 2007.

New development projects

St Paul's, Sheffield

Planning consent was received in October 2005 for the development of a Conran-designed new build scheme involving 322 apartments in two linked 31 and 9 storey towers with 22,000 sq ft of retail and restaurant space. The revised GDV of the scheme is around Pounds Sterling 59.9 million. It is expected to start construction in the summer of 2006.

Park Point, Sutton Coldfield

Contracts were completed in August 2005 to acquire a site in the centre of Sutton Coldfield. The site received a planning consent in March 2005 for a mixed-use 9 storey scheme involving 295 apartments, 63,500 sq ft of retail/leisure space and car parking. The forecast GDV of the scheme is around Pounds Sterling 79.4 million. It is expected to start construction in summer of 2006.

Tyne Bridge Tower, Gateshead

Contracts have been exchanged to acquire a superb site overlooking the Tyne river and Tyne Bridge in Gateshead. The scheme involves the conversion of a 14 storey 1960's office block into 168 apartments. The GDV of the scheme is anticipated at Pounds Sterling 30.4 million.

Half Tide Dock, Liverpool

Contracts have been exchanged to acquire a further site from Mersey Docks and Harbour Board at Half Tide Dock, Liverpool, adjacent to our existing site at Princes Dock. This scheme comprises 121 new-build apartments with an anticipated GDV of Pounds Sterling 24.3 million. The scheme received detailed planning consent in December 2005. Construction is expected to start in the summer of 2006.

Victoria Works, Manchester (50% Joint Venture)

Contracts have been exchanged to acquire a site in Ancoats, Manchester for a new build scheme of 420 apartments and 25,500 sq ft of commercial space. With an anticipated GDV of Pounds Sterling 80 million, the scheme has a detailed planning consent subject to a S106 agreement. The Group has a 50% interest in this development. Construction is anticipated to start before the end of 2006.

Vivacity Residential Management

In June 2005, the Group announced that it had launched Vivacity to provide a comprehensive range of residential investment and asset management services to City Lofts' investor customers and tenants.

Since then we have committed resources and evolved our future plans for the development of Vivacity. The range of Vivacity services has been well received by City Lofts' investor customers on developments currently under construction and we are anticipating a significant take-up as these developments complete. We anticipate soon being able to roll out a series of exciting new initiatives in this area.

Tim Watts, formally Chief Executive of BPT plc, and more recently Head of Residential Investment at Cordea Savills has joined us as part time Executive Chairman of Vivacity to advise and assist in the development of this business. He remains a Consultant to Cordea Savills.

Management Team

As City Lofts' future development pipeline continues to grow, the management team continues to be strengthened, especially in the area of project management. Andy Hurst, previously Sales and Marketing Director of Taylor Woodrow Developments (Bryant Homes), has joined the Group in that same role.

Outlook

The Group has been investing in additional internal resources, especially in its management team. We have strengthened our project management, sales and marketing capabilities to lay further foundations for the significant growth and expansion of the City Lofts city centre residential development business. In addition we are progressing our plans for Vivacity, our complimentary residential management business. We continue to view the future with confidence.

Stuart Wright

Group Chief Executive

20 March 2006



Financial Statements and Notes
Consolidated Profit and Loss Account (Audited)

12 months 9 months
ended ended
31 March 31 December
2005 2005
Notes Pounds Sterling 000 Pounds Sterling 000

Turnover 57,129 1,612
Cost of sales (41,923) (1,299)
Gross profit 15,206 313
Administrative
expenses (4,204) (4,242)
Other operating
income 40 67
Amortisation of
goodwill - 148
Operating profit/
(loss) 11,042 (3,714)
Profit on
disposal of
tangible fixed
assets 225 -
Profit/(loss)
before interest 11,267 (3,714)
Interest
receivable and
similar income 530 292
Interest payable
and similar
charges (6,416) (442)
Profit/(loss)
on ordinary
activities
before taxation 5,381 (3,864)
Taxation 1 (1,619) 986
Profit/(loss) on
ordinary activities
after taxation 3,762 (2,878)
Minority interests (1,316) -
Profit/(loss)
attributable to
shareholders 2,446 (2,878)


Basic earnings per
Ordinary share 3 5.16p (5.72)p
Diluted earnings
per Ordinary share 3 5.16p (5.72)p

Turnover and operating profit all derive from continuing operations.



Financial Statements and Notes
Consolidated Statement of Total Recognised Gains and Losses (Audited)


12 months 9 months
ended ended
31 March 31 December
2005 2005
Pounds Sterling 000 Pounds Sterling 000

Profit attributable to
shareholders 2,446 (2,878)
Unrealised surplus on
revaluation of investment
properties 154 463
Total recognised gains
and losses relating to
the period 2,600 (2,415)



Financial Statements and Notes
Consolidated Balance Sheet (Audited)


31 March 31 December
2005 2005
restated
Notes Pounds Sterling 000 Pounds Sterling 000
Fixed assets
Intangible assets
- Positive goodwill 181 163
- Negative goodwill (277) (111)
(96) 52
Tangible assets 2,234 4,246
Investments 3 1,014
2,141 5,312

Current assets
Stock 55,473 119,696
Debtors 5,442 7,808
Cash at bank 10,561 9,901
71,476 137,405

Creditors: amounts
falling due within
one year (10,828) (51,816)
Net current assets 60,648 85,589
Total assets less
current liabilities 62,789 90,901
Creditors: amounts
falling due after
more than one year (53,117) (86,269)
Net assets 9,672 4,632

Capital and reserves:
Called up share
capital 50 50
Share premium account 3,417 1,000
Capital redemption
reserve 50 50
Revaluation reserve 282 745
Profit and loss
account 5,746 2,780
Shareholders'
funds 4 9,545 4,625
Minority interests 127 7
9,672 4,632



Financial Statements and Notes
Consolidated Cash Flow Statement (Audited)


12 months 9 months
ended ended
31 March 31 December
2005 2005
Notes Pounds Sterling 000 Pounds Sterling 000

Net cash inflow
from operating
activities 5(a) 15,853 (46,638)

Returns on
investments and
servicing of
finance 5(b) (5,886) (150)
Taxation (1,036) (412)
Capital expenditure
and financial
investment 5(b) 2,237 (1,213)
Acquisitions and
disposals 5(b) (2,736) -
Equity dividends
paid 2 (2,082) (2,505)
Cash inflow before
use of liquid
resources and
financing 6,350 (50,918)
Financing 5(b) (3,042) 50,258
Increase/(decrease)
in cash in the
period 3,308 (660)

Reconciliation of
net cash flow to
movement in net
debt 5(c)
Increase/(decrease)
in cash in the
period 3,308 (660)
(Increase)/decrease
in debt financing 5,459 (50,258)
Movement in debt
in the period 8,767 (50,918)
Opening net debt (45,033) (36,266)
Closing net debt (36,266) (87,184)

Notes to the Financial Information


1 Taxation
12 months 9 months
ended ended
31 March 31 December
2005 2005
Pounds Sterling 000 Pounds Sterling 000

UK corporation tax at 30%
based on the profit for
the year 1,251 -
Adjustment in respect of
prior period (112) -
Deferred taxation:
Origination and reversal
of timing differences 480 (986)
1,619 (986)


Factors affecting tax charge for the period

The differences between the tax assessed for the period and the standard rate of corporation tax (30%) are explained as follows:



12 months 9 months
ended ended
31 March 31 December
2005 2005
Pounds Sterling 000 Pounds Sterling 000

Profit/(loss) on ordinary 5,381 (3,864)
activities before tax

Profit/(loss) on ordinary
activities multiplied by
the standard rate of
corporation tax (30%) 1,614 (1,159)
Effects of:
Expenses not deductible
for tax purposes 118 133
Capital allowances for
the period in excess of
depreciation (12) (16)
Effect of marginal
relief and other
adjustments (253) (3)
Tax adjustment on
unrealised profits (37) 941
Utilisation of tax losses (179) 148
Tax adjustment on
amortisation of goodwill - (44)
Current period taxation
charge 1,251 -


2 Dividends

The following dividends
were paid by the Group:

12 months 9 months
ended Ended
31 March 31 December
2005 2005
Pounds Sterling 000 Pounds Sterling 000

Dividends on equity shares
Ordinary - interim of nil
per share (31 March 2005:
2.49p) 1,170 -

- final of 4.98p
per share 912 2,505
(31 March 2005: 1.94p)
2,082 2,505


The proposed final dividend of 3.27p (31 March 2005: 4.98p) per ordinary share, which has not been recognised as a liability at the balance sheet date, will, if approved by shareholders at the Annual General Meeting on 28 June 2006, be paid on 30 June 2006 to shareholders on the register on 2 June 2006.

3 Earnings per share

The calculation of the earnings per Ordinary share for the period, on both a basic and diluted basis, is calculated on the loss for the period of Pounds Sterling 2,878,000 (2005: profit Pounds Sterling 2,446,000). The undiluted weighted average number of Ordinary shares in issue during the period was 50,300,032 (2005: 47,435,785). The diluted earnings per Ordinary share takes account of share options outstanding, however, as losses were incurred in the period, there is no adjustment to the weighted average number of Ordinary shares.



4 Reconciliation of movement in shareholders' funds

31 March 31 December
2005 2005
Restated
Pounds Sterling 000 Pounds Sterling 000

Profit for the year 2,446 (2,878)
Dividends (2,082) (2,505)
Other recognised gains and
losses 154 463
Tax on realised gain (132) -
New shares issued 2,420 -
Shares redeemed (3) -
Opening shareholders' funds 6,742 9,545
Closing shareholders' funds 9,545 4,625
Analysis of shareholders' funds
Equity 9,545 4,625
Non-equity - -
9,545 4,625


The Group has adopted the requirements of FRS21 (IAS10), Events after the Balance Sheet Date. The new standard requires dividends to be debited to the Profit and Loss account when they are paid or approved at an AGM. Comparative prior year figures have been restated. Accordingly shareholders' funds as at 31 March 2005 increased by Pounds Sterling 2,505,000.



5 Cash flow
12 months 9 months
ended ended
31 March 31 December
2005 2005
Pounds Sterling 000 Pounds Sterling 000

(a) Reconciliation of
operating profit to
net cash inflow/
(outflow) from
operating activities
Operating profit/(loss) 11,042 (3,714)
Depreciation 18 35
Amortisation of
goodwill - (148)
(Increase)/decrease
in stocks 2,828 (65,605)
(Increase)/decrease
in debtors (1,279) (1,380)
Increase/(decrease)
in creditors 3,244 24,174
Net cash inflow/
(outflow) 15,853 (46,638)
from operating
activities
(b) Returns on investments
and servicing of
finance
Interest received 530 292
Interest paid (6,416) (442)
Net cash outflow
from returns on
investments and
servicing of finance (5,886) (150)

Capital expenditure
and financial
investment
Purchase of fixed
asset investment - (1,011)
Purchase of tangible
fixed assets (88) (202)
Receipts from sales of
tangible fixed assets 2,325 -
Net cash inflow/
(outflow) from 2,237 (1,213)
capital expenditure

Acquisitions and
disposals
Purchase of minority
interests (2,736) -
Net cash outflow from (2,736) -
acquisitions and
disposals

Financing
Issue of share capital 2,648 -
Redemption of share
capital (3) -
Expenses in connection
with share issue (228) -
Loan repayments (41,698) (360)
New loans raised 36,239 50,618
Net cash inflow/
(outflow) (3,042) 50,258
from financing



(c) Analysis of change of net debt in period

1 April Cash Non- 31
2005 flow cash December
changes 2005

Cash at bank 10,561 (660) - 9,901
Debt due within one year
Bank loans and overdrafts (2,135) (22,249) - (24,384)

Debt due after one year
Bank loans (44,692) (28,009) - (72,701)

Net debt (36,266) (50,918) - (87,184)


Cash at bank at 31 December 2005 includes Pounds Sterling 6,902,000 (31 March 2005: Pounds Sterling 5,470,000) cash held by solicitors on behalf of stakeholders as sales exchange deposits.

6 The results the period ended 31 December 2005 have received an unqualified audit opinion. Copies of the Preliminary Results announcement are available from the Company's head office at The Exchange (8th Floor), Station Parade, Harrogate HG1 1TS. The Annual Report and Accounts for the period ended 31 December 2005 will be posted to shareholders on 31 March 2006 and the Annual General Meeting will be held on 28 June 2006.

Contact Information