Half-yearly Report
25 August 2007 - 2:40AM
UK Regulatory
HIGHLAND TIMBER P.L.C.
ANNOUNCEMENT OF INTERIM RESULTS
The Directors announce the unaudited statement of results for the six months
ended 30 June 2007 as follows:
CHAIRMAN'S STATEMENT
Operating Review
During the first six months of 2007 we continued to work to improve the quality
and value of our forests. No commercial felling was carried out and the planned
restocking programme for 2007 was completed. In accordance with existing
maintenance plans, we are scheduled to complete the restocking of all our
forests during the first half of 2008.
Forest Sale Process
In March 2007, an unsolicited approach was made for all of the Company's five
forests significantly in excess of the balance sheet valuation of the forests
as at 31 December 2006, following which a private auction was conducted.
In May 2007 we reached an agreement for the sale of the five United Kingdom
forest assets (the "Forest Assets") to FIM Timber Growth Fund IV ("FIM TGF IV")
for a cash consideration of �9.9 million.
FIM TGF IV offered the most certainty for shareholders at that time and were
the only party to complete the necessary due diligence within the timescales
set by the Company. The FIM TGF IV offer was put to Shareholders in a circular,
dated 4 June 2007 and convening an Extraordinary General Meeting for 26 June
2007 ("EGM") to approve the FIM TGF IV offer.
Following the posting of the circular and prior to the EGM, Louis Dreyfus
Energy Holdings Limited ("LDEH") made direct representations to Shareholders
indicating that they had made an offer of �11.1 million for the forests and
would consider making an offer for the Company should the FIM TGF IV offer be
turned down. Subsequently, at the EGM, the FIM TGF IV offer was not approved by
Shareholders.
The work involved in holding the EGM and obtaining the legal and financial
advice necessary to progress these events and to properly communicate with
Shareholders has given rise to additional re-organisation costs which to date
amount to �150,000 (2006: nil).
Following the expiry of the FIM TGF IV exclusivity period, discussions were
progressed with interested parties. Consequently, the Board is pleased to
announce today that it has reached agreement for the sale of the Forest Assets
to FIM TGF IV for a total consideration of �12.5 million in cash subject only
to shareholder approval.
Forest Valuation and Results
We reported last year that we were considering adopting new IFRS accounting
standards during 2007. We have now decided to defer this decision to limit any
chance of confusion, particularly during the forest sale process.
The difficulty in placing a precise value on the forests during the sale
process is clear. However, all of the offers received during the period under
review exceeded the original costs of the individual forests, less their
accumulated depletion.
Therefore, under existing UK GAAP accounting standards, the value of the
forests has been increased by �330,463 to �6,263,414 which is the maximum value
we can place on the forests under these standards. This represents a full
reversal of impairment amounts written off in the past.
The operating profit for the six months ended 30 June 2007 totalled �79,000
(2006 loss: �21,000). After re-organisation costs of �150,000 and net interest
income of �72,000 (2006: �56,000) the Company made a profit before tax of �
1,000 (2006: �35,000). The net loss after taxation was �12,000 (2006: profit �
25,000) which represented a loss per share of 0.10 pence (2006: profit 0.21
pence). At the period end the Company held cash on deposit totalling �2,523,000
following a cash outflow of �200,000 in the six months ended 30 June 2007.
Outlook
We will continue to maintain our forests to a good standard.
Our discussions with interested parties have progressed well, culminating in
today's announcement by the Company of the proposed sale of the Forest Assets
to FIM TGF IV for a total consideration of �12.5 million in cash. On completion
of the disposal of the Forest Assets, the Company will have no trading
activities and will be an investing company pursuant to Rule 15 of the AIM
Rules.
Ron Williams, Chairman
24 August 2007
PROFIT AND LOSS ACCOUNT
Six months ended Six months ended Year ended
30 June 2007 30 June 2006 31 December 2006
(unaudited) (unaudited) (audited)
�'000 �'000 �'000
Turnover 6 259 273
6 259 273
Cost of sales - (31) (31)
Gross profit 6 228 242
Operating expenses (257) (249) (393)
Reversal of previous 330 - 728
impairment of forests
Operating profit/(loss) 79 (21) 577
Re-organisation costs (150) - -
Profit on disposal of - - 70
fixed assets
Interest receivable 72 57 124
Interest payable - (1) (1)
Profit before 1 35 770
taxation
Taxation (13) (10) (22)
(Loss)/profit for the (12) 25 748
period
Pence Pence Pence
(Loss)/earnings per
share
Basic (0.10) 0.21 6.35
Diluted (0.10) 0.20 6.05
BALANCE SHEET
As at As at As at
30 June 2007 30 June 31 Dec 2006
2006
(unaudited) (audited)
(unaudited)
�'000 �'000 �'000
Fixed assets
Tangible fixed assets 6,264 5,316 5,933
Current assets
Debtors 30 48 23
Cash at bank and in hand 2,523 2,647 2,723
2,553 2,695 2,746
Current liabilities
Creditors: amounts falling due (186) (119) (50)
within one year
Net current assets 2,367 2,576 2,696
Total assets less current 8,631 7,892 8,629
liabilities
Capital and reserves
Called-up share capital 5,886 5,886 5,886
Share premium account 5,373 5,373 5,373
Share option reserve 42 14 28
Profit and loss account (2,670) (3,381) (2,658)
8,631 7,892 8,629
CASH FLOW STATEMENT
Six months Six months Year ended
ended ended
31 Dec 2006
30 June 30 June
2007 2006 (audited)
(unaudited) (unaudited)
�'000 �'000 �'000
Net cash outflow from operating activities (272) (683) (807)
Servicing of finance
Interest received 72 57 124
Interest paid - (1) (1)
Taxation - - (48)
Proceeds from sale of fixed assets - - 181
Financing - - -
Decrease in cash for the period (200) (627) (551)
Reconciliation of operating profit/(loss)
to net cash
outflow from operating activities
Operating profit/(loss) 79 (21) 577
Re-organisation costs (150) - -
Cost of timber sold - 31 31
Increase in debtors (7) (31) (6)
Increase/(decrease) in creditors 122 (676) (709)
Share-based payment charge 14 14 28
Reversal of previous impairments (330) - (728)
(272) (683) (807)
Reconciliation of net cash movement to net
cash
Decrease in cash in the period (200) (627) (551)
(200) (627) (551)
Net cash brought forward 2,723 3,274 3,274
Net cash carried forward 2,523 2,647 2,723
Analysis of net cash
Cash at bank 2,523 2,647 2,723
Net cash carried forward 2,523 2,647 2,723
NOTES TO THE ACCOUNTS
At 30 June 2007
Notes
1. Basis of preparation
The interim financial information has been prepared on the basis of the
accounting policies set out in the Company's annual financial statements for
the year ended 31 December 2006.
The interim financial information does not comprise full financial statements
within the meaning of Section 240 of the Companies Act 1985. The results for
the year ended 31 December 2006 have been extracted from the statutory
Financial Statements which have been delivered to the Registrar of Companies
and upon which the auditors gave an unqualified report.
2. Earnings per share
The calculation of earnings per share is based on the weighted average of
ordinary shares in issue during the six months to 30 June 2007 of 11,772,267
(2006: 11,772,267) and the loss after taxation of �12,000 (2006: profit after
taxation of �25,000). In accordance with FRS 22, no adjustment is made in the
calculation of diluted earnings per share for the six months ended 30 June 2007
for the potential conversion of the 588,613 share options granted on 15
December 2005 due to the loss for the period. However, the comparative figures
for diluted earnings per share assume that the options have been exercised
during the relevant period, such that the fully diluted weighted average number
of shares in issue is 12,360,880, due to the profit for the period.
3. Reconciliation of movements in equity shareholders' funds
30 June 30 June 31 December
2007 2006 2006
� � �
(Loss)/profit for the (12) 25 748
period
Share-based payment 14 14 28
charge
Opening shareholders' 8,629 7,853 7,853
funds
Closing shareholders' 8,631 7,892 8,629
funds
Enquiries:
Oliver Waring 020 7937 0755
Chief Executive Officer
END
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