Interim Results
FOR IMMEDIATE RELEASE
24th September 2002
LONDON & ASSOCIATED PROPERTIES PLC:
INTERIM RESULTS FOR THE SIX MONTHS TO 30TH JUNE 2002
London & Associated Properties is a focused retail property investment company
with more than two-thirds of its £100m portfolio comprising five strategic
shopping centres located in town + city centres offering considerable scope for
growth. Approximately 80% of LAP's annual rent roll is derived from multiple
tenants.
HIGHLIGHTS
Pre-tax profits increase to £1.35 + 19%
million
Earnings per share rise to 1.27p + 23%
Net assets advance to £51.75 million + 2.3%
£5.4m sales of smaller mature properties generates net profits of £567,000
Interest charges fell 15% and gearing reduced to 80%
Annualised rent roll currently running at £7.9m
Estimated rental value is now £9.7 million per annum rising to £11.0 million
when income from associates is included
Total gross assets currently stand at £123 million
'We have considerable cash and undrawn facilities as a result of our programme
of disposals and we continue to examine opportunities to acquire new shopping
centre investments both on our own and with joint venture partners,' Michael
Heller, Chairman.
-more-
Contact: London & Associated Properties PLC Tel: 020 7415 5000
Michael Heller, Chairman
John Heller, Chief Executive
Robert Corry, Finance Director
Baron Phillips Associates Tel: 020 7397 8932
Baron Phillips
CHAIRMAN'S STATEMENT
For the six months to 30th June 2002 I am pleased to report a 19% increase in
pre-tax profits to £1.35 million and a 23% rise in diluted earnings per share
to 1.27p compared to the same period last year. Net assets advanced by 2.3%
since 31st December 2001 to £51.75 million, including the portfolio of listed
investments at market value.
This is a particularly pleasing performance when considered against the
backdrop of an uncertain economic environment and a perception in some quarters
that, as a result, retailers are operating in a tougher marketplace. Our
experience would indicate that this is not the case in our town and city centre
shopping centres. We continue to experience strong demand for space in our
shopping centres, particularly from value-orientated retailers.
In addition, investors' enthusiasm for well-let retail property appears
undiminished. We have taken full advantage of this demand to sell some smaller
and mature properties at excellent prices. During the first half of the year we
sold or contracted to sell £5.4 million of this type of property. This is as
per our stated policy of concentrating our portfolio into fewer larger shopping
centres.
These sales have generated a net profit of £567,000. Since the end of the
period contracts have also been exchanged on the sale of a further property for
£1.075 million, reflecting a profit (before costs and tax) of £225,000.
Proceeds of these sales have been used to reduce borrowings while we continue
to look for suitable acquisitions. As a result interest charges over the period
fell by 15% from £2.23 million to £1.90 million while gearing, at the balance
sheet date, was 80% compared to 97% at 30th June 2001.
These disposals have, naturally, had a modest impact on the Group rent roll.
Over the period rental income declined from £4.4 million to £4.1 million
although a number of rent reviews have been concluded which, together with new
lettings, mean that our annualised rent roll is currently running at £7.9
million.
On a like-for-like basis, the rent roll has actually increased by around £
200,000 per annum and our estimated rental value is now £9.7 million. At the
Group level, which includes the rental income of Bisichi Mining plc, our 42%
owned associate, and Dragon Retail Properties, our 50% owned joint venture with
Bisichi, estimated rental income is currently around £11.0 million per annum
and gross assets are approximately £123 million.
Our shopping centres continue to perform well as we actively look for
opportunities to maximise returns from each centre, either by unit extension or
amalgamation, refurbishment, improving tenant mix or rebranding.
Our programme of improvements at Orchard Square, Sheffield has again delivered
a solid performance. We obtained consent in the first half of 2002 to combine
five small units to create a single larger unit which could accommodate a
modern retailer. We have now signed Clarks', the national chain of shoe shops,
and the amalgamation works should begin in early 2003. Although we are still
negotiating the contract price, the return on the projected cost of these works
should be satisfactory. In addition, Clarks' are re-locating from a different
shop in Sheffield, which again provides evidence of how Orchard Square has
become a stronger retail destination under our ownership.
We have also obtained planning consent to extend units on the opposite side of
the square, again to create the larger units that retailers demand. Talks with
the existing occupational tenants are progressing well, and I anticipate that
we should be able to provide further details in the near future.
The Clarks' letting is at well over £70 per square foot, which will help the
current round of rent reviews. These are underway, and should add a further £
200,000 per annum to the rent roll.
At King's Square, West Bromwich, the town's principal bus station has been
relocated to just outside the back of our shopping centre. Now that it has
opened, footfall, which we monitor daily, has doubled to 160,000 customers per
week. We have let the one vacant shop, at £68,500 per annum compared to £57,000
previously, and the centre is now effectively fully let.
At the Brunel Centre, Bletchley, we have obtained a planning consent for 35,000
sq ft of retail and leisure on the former Wetherburn Court site. The entire
ground floor and half the first floor has been pre-let to household goods
retailer Wilkinson at a rent of £162,500 per annum and the remaining space is
now being marketed. Estimated building costs for the whole building is
approximately £1.45 million, and works will commence imminently.
The Mall, Dagenham, continues to benefit from the Wilkinson store that opened
in March of this year. As at King's Square, footfall has doubled and feedback
from other retailers is extremely positive. As a result, a sub-divided larger
store that has never lived up to its full rental potential because of its poor
configuration is now being split into two and these units are each under offer
to national retailers. In addition, fashion retailer Peacocks has taken a new
lease at £62,500 per annum on its existing store and a small adjacent unit, and
is extending and refurbishing its shop.
At Saxon Square, Christchurch, we continue negotiations with the planning
department of the local authority to redevelop part of the shopping centre to
create a 6,000 sq ft retail unit with residential units above. There is strong
interest in the retail unit and we have three offers already to pre-let the
store.
Bisichi Mining plc, our 42% owned associate, has again performed satisfactorily
with profits before tax, amortisation and goodwill at £362,000 for the first
six months against £169,000 in 2001. Bisichi has also acquired further
substantial coal reserves adjacent to its mine in South Africa, which should,
at current levels of production, extend the profitable life of the mine by 15
years.
We took the opportunity in the first half of this year to write down LAP's
portfolio of listed shares by £407,000 following the poor performance of
certain of the investments such as Marconi.
We are obliged under the accounting requirement of FRS19 to provide for the
deferred taxation on the accelerated capital allowances claimed on our
properties over the years. This has had the effect of reducing our net assets
by £1.5 million (2001: £1.4 million). Last year's figures have been restated to
reflect this change. However, whilst having to provide for this tax, we do not
anticipate having to pay it on the sale of any of the properties.
We have considerable cash and undrawn facilities as a result of our programme
of disposals and we continue to examine opportunities to acquire new shopping
centre investments both on our own and with joint venture partners. We are
currently under offer to acquire a substantial shopping centre into our first
joint venture and, if successful, I look forward to making a full announcement
in the near future.
The Group continues to trade well, and I remain confident of a satisfactory
result for the full year.
Michael Heller
Chairman
24th September 2002
London & Associated Properties PLC
Consolidated profit and loss account
Six months ended 30 June 2002
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2002 2001 2001
Note £'000 £'000 £'000
Revenue
Property:
Income 4,091 4,397 8,692
Less - ground rents (214) (222) (458)
- direct property expenses (394) (429) (927)
- attributable overheads (833) (780) (1,576)
2,650 2,966 5,731
Listed investments:
Investment sales 229 210 249
Cost of sales (636) (97) (134)
(407) 113 115
Dividends receivable 42 45 81
Less - attributable overheads (7) (7) (15)
(372) 151 181
Operating profit 2,278 3,117 5,912
Share of operating profit of associate 177 127 231
Share of operating profit of joint venture 75 100 186
2,530 3,344 6,329
Interest receivable 134 33 90
Interest payable (1,896) (2,233) (4,311)
Cost of redemption of debentures - (718)
Exceptional items: 2
Profit on sale of investment properties:
Company 567 (6) 47
Associate and joint venture 19 2 2
Early surrender of lease - - 885
586 (4) 934
Profit on ordinary activities before 1,354 1,140 2,324
taxation
Taxation of profit on ordinary activities 3 341 312 18
Profit for the period 1,013 828 2,306
Earnings per share - basic 4 1.28p 1.07p 2.95p
Earnings per share - diluted 4 1.27p 1.03p 2.91p
Dividend per share - - 1.30p
The revenue and operating profit derives from continuing
operations.
The comparative figures have been restated - see Note 1.
Consolidated balance sheet
at 30 June 2002
30 June 30 June 31 December
2002 2001 2001
Note £'000 £'000 £'000
Fixed assets
Properties and other tangible assets 5 95,450 100,358 98,132
Investments 3,938 3,624 3,724
Total fixed assets 99,388 103,982 101,856
Current assets
Debtors 2,300 2,114 1,819
Investments (Market value - £2,744,000) 6 2,070 2,434 2,505
Bank balances 6,808 115 3,840
11,178 4,663 8,164
Creditors due within one year
Creditors and accruals (7,005) (7,975) (8,142)
Bank borrowings (4,617) (3,132) (3,848)
(11,622) (11,107) (11,990)
Net current liabilities (444) (6,444) (3,826)
Total assets less current liabilities 98,944 97,538 98,030
Creditors due after more than one year (46,338) (47,696) (46,555)
Provisions for liabilities and charges (1,532) (1,485) (1,549)
Net assets 51,074 48,357 49,926
Equity shareholders' funds 51,074 48,357 49,926
Net assets per share* (pence)
Basic 65.49 63.25 63.92
Diluted 64.78 59.72 63.15
*Including current asset investments at market
value.
This interim statement was approved by the board of directors on 23 September
2002.
Consolidated statement of total
recognised gains and losses
Six months ended 30 June 2002
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2002 2001 2001
£'000 £'000 £'000
Profit for the financial period 1,013 828 2,306
Currency translation difference on foreign
currency net investments 31 (1) (120)
Increase on revaluation of investment properties
Company - - 663
Associate and joint venture - - 254
Total gains and losses recognised in
the period 1,044 827 3,103
Consolidated cash flow statement
Six months ended 30 June 2002
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2002 2001 2001
£'000 £'000 £'000
Operating profit 2,278 3,117 5,912
Depreciation 47 50 100
Profit on disposal of fixed assets - (4) (10)
Inflow from compensation for early surrender of - - 1,329
lease
Dividend from associated company - - 44
Dividend from joint venture - - 40
(Increase)decrease in current assets (706) (175) 497
Net cash flow from operating activities 1,619 2,988 7,912
Returns on investments and servicing
of finance (1,681) (1,680) (3,980)
Taxation 195 142 (145)
Capital expenditure and financial
investment 2,973 (375) 2,782
Equity dividends paid - - (609)
Cash inflow before use of liquid resources
and financing 3,106 1,075 5,960
Management of liquid resources (727) - (3)
Cash inflow (outflow) from financing (105) (150) (2,023)
Increase (decrease) in cash in the period 2,274 925 3,934
Reconciliation of net cash flow to
movement on net debt
Increase in cash in the period 2,274 925 3,934
Net cash outflow from
reduction in debt 150 150 1,300
2,424 1,075 5,234
Movements on current asset investments (435) 29 100
1,989 1,104 5,334
Net debt at beginning of period (44,403) (49,737) (49,737)
Net debt at end of period (42,414) (48,633) (44,403)
Analysis of net debt
Bank balances in hand 6,808 115 3,840
Bank overdrafts (4,242) (2,832) (3,548)
Debt due within one year (375) (300) (300)
Debt due after one year (46,675) (48,050) (46,900)
Current asset investments 2,070 2,434 2,505
(42,414) (48,633) (44,403)
Notes to the interim results
1 FRS 19
Financial Reporting Standard 19 (FRS 19) relating to Deferred Tax
has been
adopted for these results, and comparative figures have been restated. The
effects are:-
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2002 2001 2001
Taxation (£000)
- before adjustment 294 265 (77)
- after adjustment 341 312 18
Profit after taxation (£000)
- before adjustment 1,060 875 2,401
- after adjustment 1,013 828 2,306
Earnings per share - basic
- before adjustment 1.34p 1.13p 3.07p
- after adjustment 1.28p 1.07p 2.95p
Earnings per share - diluted
- before adjustment 1.32p 1.08p 3.02p
- after adjustment 1.27p 1.03p 2.91p
Shareholders funds (£000)
- before adjustment 52,554 49,743 51,360
- after adjustment 51,074 48,357 49,926
Net assets per share - basic
- before adjustment 67.37p 65.03p 65.73p
- after adjustment 65.49p 63.25p 63.92p
Net assets per share - diluted
- before adjustment 66.62p 61.37p 64.93p
- after adjustment 64.78p 59.72p 63.15p
2. Exceptional items 6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2002 2001 2001
£'000 £'000 £'000
Profit(loss) on sale of freehold property 567 (6) 47
Compensation for early surrender of lease - - 885
567 (6) 932
Profit on sale of freehold property:
Associate 6 2 2
Joint venture 13 - -
586 (4) 934
3.Taxation 6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2002 2001 2001
£'000 £'000 £'000
Company 300 288 (32)
Associate 33 15 34
JointVenture 8 9 16
341 312 18
The tax charge for 2001 and 2002 has been reduced due to the effect of
accelerated
capital allowances
4.Earnings per share have been calculated as 6 months 6 months Year
follows:-
ended ended ended
30 June 30 June 31 December
2002 2001 2001
Group profit on ordinary activities after tax (£ 1,013 828 2,306
000)
Weighted average number of shares in issue
for the period ('000) 78,899 77,607 78,185
Basic earnings per share 1.28p 1.07p 2.95p
Dilution adjustments to earnings £7,000 £34,000 £17,000
Diluted number of shares in issue ('000) 80,576 84,014 79,952
Fully diluted earnings per share 1.27p 1.03p 2.91p
5. Properties are included at valuation as at 31 December 2001 adjusted for
additions and disposals since that date at cost or valuation.
6. Investments held as current assets
30 June 30 June 31 December
2002 2001 2001
£'000 £'000 £'000
Listed investment portfolio at market value 2,744 3,160 2,965
Unrealised excess of market value over 674 726 460
costs
Listed investment portfolio at cost 2,070 2,434 2,505
7.The above financial information does not constitute statutory accounts within
the meaning of section 240 of the Companies Act 1985. The figures for the year
ended 31st December 2001 are based upon the latest statutory accounts, as
adjusted for FRS 19 (Note 1), which have been delivered to the Registrar of
Companies; the report of the auditors on those accounts was unqualified and did
not contain a statement under Section 237(2) or (3) of the Companies Act 1985.
Save for the adoption of FRS 19 in 2002, the six months figures use the same
accounting policies as for the year ended 31 December 2001, and have not been
audited or subject to review by the company's auditors.
8. Posting to shareholders
The interim statement will be sent to shareholders by mail. Copies are now
available at the Company's Registered Office: 8-10 New Fetter Lane, London EC4A
1AF and may also be downloaded from the Company's website - www.laprops.co.uk.
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