Half-yearly Report
FOR IMMEDIATE RELEASE
31 August 2012
LONDON & ASSOCIATED PROPERTIES PLC:
HALF YEARLY RESULTS TO 30 JUNE 2012
London & Associated Properties is a fully listed UK shopping centre and Central
London retail property specialist.
HIGHLIGHTS
* Continued progress despite challenging economic environment
* Like-for-like income broadly unchanged at £7.7m
* Strength of portfolio reflected by voids of only 2% by rental income and
completed lease renewals/new leases with a £833,000 annual rental value
* Weighted unexpired lease term extended to 8.8 years against 8.6 years in
the comparative period
* Net assets under EPRA now stands at £67.6 million with gross value of total
portfolio including joint ventures of £210 million
* Drive to reduce operating costs:
*
+ £400,000 annual savings from office move
+ Listing transferred to standard listing with consequent cost savings
* Further progress in asset management division with appointment by Lloyds
Banking Group on portfolio comprising four North-West shopping centres
* Company remains within banking covenants and continues to negotiate renewal
of £44 million revolving credit facility
"We are pleased with our continued operational progress against the background
of a challenging economic climate. The strength of our £210 million property
portfolio is reflected in the extremely low level of voids and continued new
lettings. While conditions remain difficult we believe the Company is in good
health and we are well positioned to take full advantage of the upturn when it
comes."
Michael Heller, Chairman. John Heller, Chief Executive.
-more-
Contact:
London & Associated Properties PLC Tel: 020 7415 5000
John Heller, Chief Executive or
Robert Corry, Finance Director
Baron Phillips Associates Tel: 020 7920 3161
Baron Phillips
HALF YEAR REVIEW
We are pleased to report that London & Associated Properties (LAP) has
continued to make progress although the economic environment remains
challenging.
LAP's income for the first six months was £7.7 million compared to £8.1 million
in 2011. The slightly reduced gross income arose primarily because of a
temporary reduction in rental income at Windsor (£400,000) while the former
Boots store was being redeveloped, and a temporary reduction in revenue from
Brixton Market, before taking account of significant related cost savings,
following the lease to Groupe Geraud, which was signed on 1 April 2011.
Our portfolio continues to have very few vacancies. Void units as a percentage
of our rental income are only 2%. Further, over the last 12 months, we have
completed lease renewals/new leases with a combined rental value of £833,000
per annum.
The average weighted unexpired lease term for our portfolio is 8.8 years
compared to 8.6 years 12 months ago. This reflects the quality of the
properties and is a satisfactory increase in current market conditions.
In April 2012 the Company moved offices from 7,500 square feet in St. James's,
SW1 to 4,500 square feet in Bruton Place. The previous offices had become too
large for our requirements and we have sub-let the space to a single tenant.
In the half year accounts, there is a provision of £246,000 to cover moving
costs but, by 2013, this move will deliver annual savings of over £400,000.
The Group's net assets under European Real Estate Association (EPRA), as used
by most property companies, stood at £67.6 million compared to £71.1 million at
30 June 2011.
Windsor
During the first half, following the redevelopment of the Boots unit, we have
let new units to Cotswold Outdoor and Superdry with strong interest in the
third unit. Cotswold Outdoor and Superdry are now open and trading
successfully. We are close to completing a lease to an upmarket French
boulangerie chain on a shop unit that became vacant following the
administration of Game Group. Once completed this letting will demonstrate
further rental growth at this centre.
Other Centres
At Orchard Square in Sheffield, our centre has remained effectively fully let
and continues to trade well.
We also continue to achieve successful lease renewals at Kings Square, West
Bromwich and the Centre is effectively fully let. The opening of Sandwell
College to the rear of our centre is driving higher levels of footfall through
it and our tenants are benefiting from this.
Market Row and Brixton Village are now recognised as among the most exciting
retail and restaurant destinations in the country and are receiving high levels
of positive press coverage. This has led to a much increased level of demand
for units. This in turn is driving rental growth. We benefit from this growth
through our profit share agreement with Groupe Geraud and we anticipate our
income there will continue to increase.
In addition to our traditional property investment activities we have continued
to develop our asset management business. Since the period end, we are pleased
to report that we have been appointed by Lloyds Banking Group as asset manager
on a portfolio of four shopping centres in the North West. As a part of the
transaction we have acquired a 50% interest in the company owning the centres
for a nominal amount. We do not expect to receive equity value for this
interest but will receive fees for managing these assets.
At the corporate level we have successfully transferred our Stock Exchange
listing from a premium listing to a standard one. This does not affect either
the Company's standing or shareholders ability to trade our shares. However, as
we outlined in our circular detailing this move, it will reduce the cost and
timings of any property sales or purchases above a relatively low figure as we
do not now have to issue a Class 1 Circular. We have also recently appointed
Westhouse Securities as our corporate brokers.
We are continuing to negotiate the renewal of our £44 million revolving credit
facility with the Royal Bank of Scotland and we remain within all our banking
covenants.
We are pleased with our continued operational progress against the background
of a challenging economic climate. The strength of our £210 million property
portfolio, including Bisichi Mining PLC, our associate company, and Dragon
Retail Properties, our joint venture with Bisichi is reflected in the extremely
low level of voids and in new lettings.
While market conditions remain difficult we believe the company is in good
health and we are well positioned to take full advantage of the upturn when it
comes.
We wish to conserve our cash resources in the current climate and consequently
will not be paying an interim dividend.
We would like to thank all of the Directors, staff and advisors who have
contributed to our progress in these challenging times.
Michael Heller John Heller
Chairman Chief Executive
30 August 2012
Consolidated income statement
for the six months ended 30 June 2012
6 months 6 months Year
ended ended ended
30 June 30 June 31
December
2012 2011 2011
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
Gross rental income
Group and share of joint ventures 7,702 8,083 16,047
Surrender income - 943 943
Less: joint ventures - share of rental (325) (274) (611)
income
Revenue 7,377 8,752 16,379
Direct property expenses (598) (858) (1,819)
Overheads a (1,553) (1,226) (2,700)
Property overheads (2,151) (2,084) (4,519)
Net rental income 1 5,226 6,668 11,860
Listed investments held for trading 1 102 11 24
Profit on sale of investment properties - - 310
Operating profit before financing charges 5,328 6,679 12,194
Finance income 2 13 15 34
Finance expenses 2 (5,663) (5,789) (11,344)
Operating (loss)/profit after financing 1, a (322) 905 884
charges
Revaluation and other movements,
associate and joint ventures
Net decrease on revaluation of investment - - (1,021)
properties
Net (decrease)/increase in value of (1) 21 (104)
investments held for trading
Share of profit of joint ventures after 75 56 10
tax
Share of profit/(loss) of associate after 482 (388) (189)
tax
Interest rate derivatives break costs 6 - (920) (920)
Adjustment to the net present value of 6 (294) 1,763 (17,223)
interest rate derivatives
(Loss)/profit including revaluation and a (60) 1,437 (18,563)
other movements
Income tax 3 72 (76) 3,742
Profit/(loss) for the period attributable 12 1,361 (14,821)
to the owners of the parent
Basic earnings/(loss) per share 4 0.01p 1.62p (17.63)p
Diluted earnings/(loss) per share 4 0.01p 1.62p (17.63)p
The above revenue and operating result relate to continuing operations in the
United Kingdom.
(a) Includes £246,000 provision for office moving costs.
Consolidated income statement analysis
for the six months ended 30 June 2012
30 June 201 30 June 31
2 2011 December
2011
Cash Non-cash per Cash Non-cash per Cash Non-cash per
items items income items items income items items income
statement statement statement
(unaudited) (unaudited) (audited)
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Net rental 5,226 - 5,226 6,668 - 6,668 11,860 - 11,860
income
Income and 102 - 102 11 - 11 24 - 24
gains on
investments
held for
trading
Profit on - - - - - - 310 - 310
sale of
investment
properties
Net change - - - - - - - (1,021) (1,021)
of
revaluation
of
investment
properties
Net - (1) (1) - 21 21 - (104) (104)
(decrease)/
increase in
value of
investments
held for
trading
Operating 5,328 (1) 5,327 6,679 21 6,700 12,194 (1,125) 11,069
profit/
(loss)
Share of 75 482 557 44 (376) (332) 181 (360) (179)
joint
ventures
and
associates
Interest - (294) (294) - 1,763 1,763 - (17,223) (17,223)
rate
derivatives
(valuation
movements)
Net (5,650) - (5,650) (5,774) - (5,774) (11,310) - (11,310)
interest
(Loss)/p (247) 187 (60) 949 1,408 2,357 1,065 (18,708) (17,643)
rofit
before
taxation
and
exceptional
items
Interest - - - (920) - (920) (920) - (920)
rate
derivatives
break costs
(Loss)/p (247) 187 (60) 29 1,408 1,437 145 (18,708) (18,563)
rofit
before
taxation
Consolidated statement of comprehensive income
for the six months ended 30 June 2012
30 June 30 June 31
December
2012 2011 2011
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Profit/(loss) for the period 12 1,361 (14,821)
Other comprehensive income:
Currency translation in associate (28) (66) (246)
Other comprehensive income for the period net (28) (66) (246)
of tax
Total comprehensive income for the period (16) 1,295 (15,067)
attributable to owners of the parent
Consolidated balance sheet
at 30 June 2012
30 June 30 June 31
December
2012 2011 2011
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
Non-current assets
Market value of properties attributable 194,492 194,985 193,748
to Group
Present value of head leases 28,659 28,664 28,661
Property 5 223,151 223,649 222,409
Plant and equipment 334 573 484
Investments in joint ventures 2,080 2,106 2,039
Investments in associated company 7,294 6,859 7,011
Held to maturity investments 1,912 2,077 1,998
Deferred tax 3,746 - 3,678
238,517 235,264 237,619
Current assets
Trade and other receivables 5,080 4,799 4,301
Financial assets-investments held for 14 738 635
trading
Cash and cash equivalents 8,617 7,351 6,464
13,711 12,888 11,400
Total assets 252,228 248,152 249,019
Current liabilities
Trade and other payables (13,175) (10,065) (9,453)
Financial liabilities -borrowings (48,007) (4,653) (48,012)
(61,182) (14,718) (57,465)
Non-current liabilities
Financial liabilities -borrowings (91,958) (136,389) (92,114)
Interest rate derivatives 6 (31,144) (11,864) (30,850)
Present value of head leases on (28,659) (28,664) (28,661)
properties
Deferred tax - (141) -
(151,761) (177,058) (151,625)
Total liabilities (212,943) (191,776) (209,090)
Net assets 39,285 56,376 39,929
Equity attributable to the owners of
the parent
Share capital 8,554 8,554 8,554
Share premium account 4,866 4,866 4,866
Translation reserve in associate (244) (36) (216)
Capital redemption reserve 47 47 47
Retained earnings (excluding treasury 27,483 44,307 28,099
shares)
Treasury shares (1,421) (1,362) (1,421)
Retained earnings 26,062 42,945 26,678
Total shareholders' equity 39,285 56,376 39,929
Net assets per share 7 46.77p 66.91p 47.53p
Diluted net assets per share 7 46.76p 66.88p 47.53p
Consolidated statement of changes in shareholders' equity
for the six months ended 30 June 2012
Retained Earnings
Retained
Earnings
Capital ex:
Share Share Translation redemption Treasury treasury Total
capital premium reserve reserve Shares shares equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 8,554 4,866 30 47 (2,078) 44,342 55,761
January 2011
Profit for the - - - - - 1,361 1,361
period
Other comprehensive
income:
Currency - - (66) - - - (66)
translation in
associate
Total other - - (66) - - - (66)
comprehensive
income
Total comprehensive - - (66) - - 1,361 1,295
income
Transactions with
owners:
Equity share - - - - - 3 3
options in
associate
Disposal of own - - - - 281 - 281
shares
Loss on transfer of - - - - 435 (435) -
own shares
Dividends paid - - - - - (964) (964)
Transactions with - - - - 716 (1,396) (680)
owners
Balance at 30 June 8,554 4,866 (36) 47 (1,362) 44,307 56,376
2011 (unaudited)
Balance at 1 8,554 4,866 30 47 (2,078) 44,342 55,761
January 2011
Loss for the year - - - - - (14,821) (14,821)
Other comprehensive
income:
Currency - - (246) - - - (246)
translation in
associate
Total other - - (246) - - - (246)
comprehensive
income
Total comprehensive - - (246) - - (14,821) (15,067)
income
Transactions with
owners:
Equity share - - - - - 6 6
options in
associate
Acquisition of own - - - - (101) - (101)
shares and expenses
Disposal of own - - - - 294 - 294
shares
Loss on disposal of - - - - 464 (464) -
own shares
Dividends paid - - - - - (964) (964)
Transactions with - - - - 657 (1,422) (765)
owners
Balance at 31 8,554 4,866 (216) 47 (1,421) 28,099 39,929
December 2011
(audited)
Balance at 1 8,554 4,866 (216) 47 (1,421) 28,099 39,929
January 2012
Profit for the - - - - - 12 12
period
Other comprehensive
income:
Currency - - (28) - - - (28)
translation in
associate
Total other - - (28) - - - (28)
comprehensive
income
Total comprehensive - - (28) - - 12 (16)
income
Transactions with
owners:
Equity share - - - - - 2 2
options in
associate
Dividends paid - - - - - (630) (630)
Transactions with - - - - - (628) (628)
owners
Balance at 30 June 8,554 4,866 (244) 47 (1,421) 27,483 39,285
2012 (unaudited)
All of the above are attributable to the owners of the parent.
Consolidated cash flow statement
for the six months ended 30 June 2012
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Operating activities
Operating profit before financing charges 5,328 6,679 12,194
Depreciation 93 81 158
(Profit)/loss on disposal of non-current (120) 7 9
assets
Profit on sale of investment properties - - (310)
Decrease/(increase) in net current assets 1,104 (976) (1,160)
Cash generated from operations 6,405 5,791 10,891
Income tax repaid - - -
Cash inflows from operating activities 6,405 5,791 10,891
Investing activities
Repayment/(investment) in shares and loan 86 (131) (940)
stock in joint ventures
Investment in shares in associate - (889) (131)
Property acquisitions and improvements (844) 61 (298)
Sale of properties - - 910
Purchase of office equipment and motor (16) (69) (70)
vehicles
Sale of office equipment and motor 158 23 33
vehicles
Interest received 13 15 34
Dividends received from associate and 75 44 181
joint ventures
Cash outflows from investing activities (528) (946) (281)
Financing activities
Purchase of treasury shares - - (101)
Sale of treasury shares - 281 294
Equity dividends paid (630) (627) (964)
Interest paid (4,844) (6,522) (10,926)
Interest rate derivatives break costs - - (920)
paid
Payment/(repayment) of short term loan 2,000 - (910)
(Repayment)/payment of medium term bank (117) - 943
loan
Cash outflows from financing activities (3,591) (6,868) (12,584)
Net increase/(decrease) in cash and cash 2,286 (2,023) (1,974)
equivalents
Cash and cash equivalents at beginning of 2,747 4,721 4,721
period
Cash and cash equivalents at end of 5,033 2,698 2,747
period
Cash and cash equivalents
For the purpose of the cash flow statement, cash and cash equivalents
comprise the following balance sheet amounts:
30 June 30 June 31 December
2012 2011 2011
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Cash and cash equivalents 8,617 7,351 6,464
Bank overdraft (3,584) (4,653) (3,717)
Cash and cash equivalents at end of 5,033 2,698 2,747
period
Notes to the half year report
for the six months ended 30 June 2012
1. Segmental analysis 6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Net rental income 5,226 6,668 11,860
Other income (listed investments) 102 11 24
Segment result
Property 5,226 6,668 11,860
Listed investments 101 32 (80)
5,327 6,700 11,780
2. Finance costs 6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Finance income 13 15 34
Finance expenses:
Interest on bank loans and overdrafts (1,412) (1,219) (2,518)
Other loans (1,052) (1,052) (2,103)
Interest on derivatives adjustment (2,204) (2,475) (4,743)
Interest on obligations under finance (995) (1,043) (1,980)
leases
Total finance expenses (5,663) (5,789) (11,344)
3. Income tax 6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Current tax - - -
Deferred tax (72) 76 (3,742)
(72) 76 (3,742)
Notes to the half year report continued
4. Earnings/(loss) per share 6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
(unaudited) (unaudited) (audited)
Group profit/(loss) after tax (£ 12 1,361 (14,821)
'000)
Weighted average number of shares in 84,004 84,067 84,074
issue for the period ('000)
Basic earnings/(loss) per share 0.01p 1.62p (17.63)p
Diluted number of shares in issue 84,004 84,067 84,074
('000)
Fully diluted earnings/(loss) per 0.01p 1.62p (17.63)p
share
5. Property
Properties at 30 June 2012 are included at valuation as at 31 December 2011,
plus additions in the period.
During the six months ended 30 June 2012 the group had property additions of £
0.744 million (30 June 2011: £0.039 million,
31 December 2011: £0.423 million).
No properties were sold during the six months ended 30 June 2012 (carrying
value of properties sold at 30 June 2011: £Nil, 31 December 2011: £0.6
million).
6. Interest rate derivatives
The directors have estimated the financial effect of the fair value to the
business of the hedging instruments. This has been calculated as the Net
Present Value of the difference between the 16 year interest rate, which was
2.65 per cent at 30 June 2012 against the rate payable under the specific
hedge. This has given a liability at 30 June 2012 of £31,144,000 as shown in
the balance sheet. The banks own initial quotations at 30 June 2012 to close
each of the hedges were £37,228,000.
Under IAS 39 the hedges are not deemed to be eligible for hedge accounting and
any movement in the value of the hedges is charged directly to the consolidated
income statement. The banks have an option to cancel the hedges in November
2014 and January 2015. The cost to the group to cancel the options before
November 2014 and January 2015 has been attributed a cost by the bank of £
863,000. It is not the intention of the Directors to exit these instruments and
this cost has not been recognised.
7. Net assets per share 30 June 30 June 31 December
2012 2011 2011
(unaudited) (unaudited) (audited)
Shares in issue ('000) 84,004 84,260 84,004
Net assets per balance sheet (£'000) 39,285 56,376 39,929
Basic net assets per share 46.77p 66.91p 47.53p
Shares in issue diluted by 84,074 84,330 84,074
outstanding share options ('000)
Net assets after issue of share 39,313 56,404 39,957
options (£'000)
Fully diluted net assets per share 46.76p 66.88p 47.53p
8. Related party transactions
The related parties and the nature of costs recharged are as disclosed in the
group's annual financial statements for the year ended 31 December 2011.
The group has management fees receivable of £103,000 (30 June 2011: £137,000,
31 December 2011: £275,000) from Bisichi Mining PLC, an associated company.
During the period the group repaid £86,000 for Analytical Ventures Limited's (a
joint venture) loan stock at par; decreasing the loan stock held to £1,907,000
at 30 June 2012.
Notes to the half year report continued
9. Capital commitments
The group has capital commitments of £0.2 million as at 30 June 2012 (30 June
2011: £Nil, 31 December 2011: £0.735 million).
10. Dividends
There is no interim dividend payable for the period (30 June 2011: 0.75p per
share amounts to £630,000).
11. Risks and Uncertainties
The group's principal risks and uncertainties are reported on page 18 in the
2011 Annual Report. They have been reviewed by the Directors and remain
unchanged for the current period.
The largest area of estimation and uncertainty in the interim financial
statements is in respect of the valuation of investment properties (which are
not revalued at the half year) and the valuation of interest rate derivatives.
12. Financial information
The above financial information does not constitute statutory accounts within
the meaning of section 434 of the Companies Act 2006. The figures for the year
ended 31 December 2011 are based upon the latest statutory accounts, which have
been delivered to the Registrar of Companies; the report of the auditor's on
those accounts was unqualified and did not contain a statement under Section
498(2) or (3) of the Companies Act 2006.
As required by the Disclosure and Transparency Rules of the UK's Financial
Services Authority, the interim financial statements have been prepared in
accordance with the International Financial Reporting Standards (IFRS) and in
accordance with both IAS 34 'Interim Financial Reporting' as adopted by the
European Union and the disclosure requirements of the Listing Rules.
The half year results have not been audited or subject to review by the
company's auditor.
The annual financial statements of London & Associated Properties PLC are
prepared in accordance with IFRS as adopted by the European Union. The same
accounting policies are used for the six months ended 30 June 2012 as were used
for the year ended 31 December 2011.
The assessment of new standards, amendments and interpretations issued but not
effective, is that these are not anticipated to have a material impact on the
financial statements.
There is no material seasonal impact on the group's financial performance.
Taxes on income in the interim periods are accrued using tax rates expected to
be applicable to total annual earnings.
The interim financial statements have been prepared on the going concern basis
as the Directors are satisfied the group has adequate resources to continue in
operational existence for the foreseeable future.
13. Board approval
The half year results were approved by the Board of London & Associated
Properties PLC on 30 August 2012.
Directors' responsibility statement
The Directors confirm that to the best of their knowledge:
(a) the condensed set of financial statements have been prepared in accordance
with applicable accounting standards and IAS 34 Interim Financial Reporting as
adopted by the EU;
(b) the interim management report includes a fair review of the information
required by:
(1) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of
important events that have occurred during the first six months of the
financial year and their impact on the condensed set of financial statements ;
and a description of the principal risks and uncertainties for the remaining
six months of the year; and
(2) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the entity during that period; and any changes in the related
party transactions described in the last annual report that could do so.
Signed on behalf of the Board on 30 August 2012
Michael Heller Robert Corry
Director Director
Directors and advisors
Directors
Executive directors
* Michael A Heller MA FCA (Chairman)
John A Heller LLB MBA (Chief Executive)
Robert J Corry BA FCA (Finance Director)
Non-executive directors
†Howard D Goldring BSC (ECON) ACA
#†Clive A Parritt FCA CF FIIA
* Member of the nomination committee
# Senior independent director
†Member of the audit, remuneration and
nomination
committees.
Secretary & registered office
Heather A CurtisACIS
24 Bruton Place,
London W1J 6NE
Director of property
Mike J Dignan FRICS
Registrars & transfer office
Capita Registrars
The Registry, 34 Beckenham Road
Beckenham, Kent BR3 4TU
Telephone 0871 664 0300
(Calls cost 10p per minute + network
extras)
or +44 208 639 3399 for overseas callers
Website: www.capitaregistrars.com
E-mail: ssd@capitaregistrars.com
Company registration number
341829 (England and Wales)
Website
www.lap.co.uk
E-mail
admin@lap.co.uk
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