Interim Results
FOR IMMEDIATE RELEASE
29th September 2003
LONDON & ASSOCIATED PROPERTIES PLC:
INTERIM RESULTS FOR SIX MONTHS TO 30TH JUNE 2003
HIGHLIGHTS
* Pre-tax profits advance by over 5% to £1.42m
* Net assets rise to £55.6m and diluted NAV per share increases to 68.8p - up
6.2% from same period a year ago
* Since year end acquired £50m St Helen's shopping centre through Analytical
Properties - LAP's JV with Bank of Scotland - taking Analytical Properties'
portfolio to £100m
* A further £243,000 of annualised rents contracted during period taking
LAP's current annualised rent roll to £8.4m against an ERV of £9.2m
* Despite further property sales of £1.7m LAP now directly owns or manages
retail properties on behalf of Analytical Properties, Dragon Retail
Properties and Bisichi Mining plc with gross value approaching £225m
'We have considerable cash and undrawn facilities even after our substantial
development programme. The new lettings highlighted above that we have carried
out at both existing units and our developments will provide increased income
as rent free periods expire.
The Company continues to trade well and I am confident of a satisfactory result
for the full year, ' Michael Heller, Chairman.
-more-
Contact: London & Associated Properties PLC. Tel: 020 7415 5000
John Heller, Chief Executive
Robert Corry, Finance Director
Baron Phillips Associates Tel: 020 7920 3161
Baron Phillips
CHAIRMAN'S STATEMENT
INTERIM REPORT 2003
Profit before tax for the six months to 30 June 2003, was £1.42 million. This
is an increase of over 5% and is particularly pleasing as the interim results
for 2002 included some £567,000 of profits from the sale of investment
properties. Shareholders will recall that we have sold a number of smaller,
mature investment properties over last 12 months. These have also accounted for
the loss of some £450,000 of annualised rental income, of which £180,000
occurred during the period under review.
In light of the above factors, our results have been creditable. Profits for
the first half of 2003 benefited from a contribution of some £230,000 from
Analytical Properties, our joint venture with Bank of Scotland. We anticipate
that this contribution will grow as Analytical has now bought its second
property, thus increasing the income to LAP generated by the joint venture.
Net assets, including the listed portfolio at market value, have risen to £55.6
million while fully diluted net assets per share have increased to 68.8p, an
uplift of 6.2% over the same period last year. We continue to take advantage of
the strong investment market. Consequently, we have sold a further £1.7 million
of properties at levels which are £95,000 above their valuation at the year
end.
Since 30 June 2003, Analytical Properties has acquired the long leasehold
interest in Church Square Shopping Centre, St. Helens for £50 million in an
off-market transaction. Net rental income is £3.6 million, reflecting an
initial yield of 7.1% although this will rise quickly following a number of
major rent reviews due this year. LAP's investment is £3.9 million and we will,
once again, provide asset management services for a fee. This is another
milestone in the development of the company.
Church Square comprises two separate centres and is located in St Helens' prime
retail core. St. Helens has a population in excess of 150,000 people and Church
Square is the town's dominant shopping location. The majority of the town's
principal retailers including Bhs, Boots, Next and the town's market are
located in our new centre.
We have already identified significant opportunities to work with St Helens
Council to extend and improve the shopping centre over the medium term. These
plans include creating significant amounts of new space for major retailers who
have expressed a wish to come to the town, as well as for existing retailers
within the shopping centre who are trading successfully and now require larger
units.
Church Square also benefits from long unexpired leases, and therefore provides
a good balance to Analytical's other shopping Centre, King Edward Court in
Windsor which was purchased with a shorter lease profile. This acquisition
takes Analytical's portfolio to approximately £100 million, which means that
LAP directly owns or manages retail property on behalf of Analytical, Bisichi
Mining plc and Dragon Retail Properties Limited, with a gross value approaching
£225 million.
All our major centres have experienced continued strong tenant demand. In our
directly owned portfolio, we have contracted a further £243,000 of annualised
rental income during the period under review, from both new lettings and
successful rent reviews. This takes LAP's current annualised rent roll to £
8.4m. Our estimated rental value now stands at £9.2m.
At King Edward Court, Windsor, we continue to work up a substantial
redevelopment proposal for part of the shopping centre, involving the
demolition of a supermarket and a number of small units to create approximately
100,000 sq.ft. of modern retail space together with a 100 room hotel. We have
entered into discussions with a number of major fashion retailers and interest
so far has been extremely positive. We expect to make a planning application
within the next few months.
At the time of the acquisition of King Edward Court, there were two empty
units. We have now carried out a major letting of a prime unit to Morada
Interiors, a quality home furnishings chain at a rent of £77,500 pa, equating
to a Zone A rate of over £101 per sq. ft. This compares favourably with the
estimated rental value of £92.50 per sq.ft.at the date of acquisition in
December 2002 and provides strong evidence for the lease renewal programme
which commences in 2004. There is good interest in the one remaining unit and
we expect to complete that letting shortly.
We have completed one lease renewal since acquisition, when we renewed an
office lease to Rank Hovis McDougall for 10 years at £54,000 pa against an
estimated rental value of £47,500 and a passing rent of £47,250 at the time of
acquisition.
At Orchard Square, Sheffield, we concluded a successful rent review with Virgin
Records, increasing the rent from £248,000 to £312,500, against an estimated
rental value of £310,000. The new unit which we are developing for Clarks Shoes
is nearing completion and I am pleased to report that we accepted a surrender
for the adjacent unit and have immediately put it under offer to an upmarket
national fashion retailer at £56,000 pa, a small increase over the previously
passing rent of £55,000 but further strong evidence of a Zone A rate of over £
70. The centre remains fully let, and retailers are still showing strong
interest in any potential space in this centre.
At Kings Square, West Bromwich, we have developed a new unit on a site adjacent
to the centre which is now completed and let to Coral Bookmakers at £30,000 pa.
Construction costs were under £200,000, leaving a substantial surplus in value
which will be taken into account in the year end valuation.
At The Mall, Dagenham, we have completed the sub-division of a large empty shop
into two smaller but better configured units. The first of these has been let
to Ethel Austin at £37,500 pa and the second is under offer to another national
fashion retailer at £45,000 pa. Both lettings are in excess of estimated rental
value and dramatically ahead of the previous passing rent of the entire unit
which was £45,000.
At Saxon Square, Christchurch, we have successfully completed a round of rent
reviews and added £73,000 pa to the rent roll which is ahead of estimated
rental value. We continue to negotiate with the planners over the redevelopment
of a number of kiosks to the rear of the centre and expect to make a planning
application soon.
At the Brunel Centre, Bletchley, we have completed the construction of the new
35,000 sq.ft. unit on the former Wetherburn Court site. Construction costs
total about £1.7 million including fees. The principal tenant, Wilkinson, has
leased 23,500 sq.ft. at £162,500 pa and is in the process of fitting out their
unit which will open during October 2003.
Bisichi Mining, our 42% owned associate, had an extremely good first half.
LAP's share of its operating profits rose to £417,000, against £177,000 for the
comparable period last year. This increase is due to better productivity,
higher output and improved operating conditions at Black Wattle Colliery,
Bisichi's principal coal mine subsidiary.
We have considerable cash and undrawn facilities even after our substantial
development programme. The new lettings highlighted above that we have carried
out at both existing units and our developments will provide increased income
as rent free periods expire.
The Company continues to trade well and I am confident of a satisfactory result
for the full year.
London & Associated Properties PLC
Consolidated profit and loss
account
six months ended 30 June 2003
6 months 6 months Year
ended ended ended
30 June 30 June 31
December
2003 2002 2002
Note £'000 £'000 £'000
Gross rental income
Group and share of joint ventures 5,263 4,179 8,336
Less:joint ventures-share of (1,260) (88) (318)
rental income
4,003 4,091 8,018
Less: property overheads -
Ground rents (515) (214) (455)
Direct property expenses (507) (399) (899)
Attributable overheads (894) (840) (1,742)
(1,916) (1,453) (3,096)
Less: joint ventures - share of 413 12 70
overheads
(1,503) (1,441) (3,026)
Net rental income 2,500 2,650 4,992
Listed investments - net income 1 34 (372) (355)
Operating profit 2,534 2,278 4,637
Share of operating profit of joint 852 75 249
venture
Share of operating profit of 417 177 407
associate
Profit on ordinary activities 3,803 2,530 5,293
before interest
Interest
Interest receivable 173 134 334
Interest payable - group (1,826) (1,839) (3,728)
- joint ventures (758) (57) (219)
2 (2,411) (1,762) (3,613)
Exceptional items:
Profit on sale of investment
properties:
Company 95 567 757
Associate and joint venture (63) 19 11
3 32 586 768
Profit on ordinary activities 1,424 1,354 2,448
before taxation
Taxation of profit on ordinary 4 384 341 605
activities
Profit for the period 1,040 1,013 1,843
Earnings per share - basic 5 1.30p 1.28p 2.32p
Earnings per share - fully diluted 5 1.28p 1.27p 2.30p
Dividend per share - - 1.425p
The revenue and operating profit derives from
continuing operations.
Consolidated balance sheet
at 30 June 2003
30 June 30 June 31
December
2003 2002 2002
Note £'000 £'000 £'000
Fixed assets
Properties and other tangible 6 96,295 95,450 96,143
assets
Investments 8,147
Investments in joint ventures
- Share of gross assets 27,714 2,587 27,452
- Share of gross liabilities (24,780) (1,684) (24,524)
- Share of net assets 2,934 903 2,928
Other investments 5,504 3,035 5,219
8,438 3,938 8,147
Total fixed assets 104,733 99,388 104,290
Current assets
Debtors 1,716 2,300 1,375
Investments (Market value - £ 7 2,393 2,070 2,193
2,847,000)
Bank balances 1,393 6,808 6,718
5,502 11,178 10,286
Creditors due within one year
Creditors and accruals (8,551) (7,005) (7,070)
Bank borrowings (3,678) (4,617) (5,853)
(12,229) (11,622) (12,923)
Net current liabilities (6,727) (444) (2,637)
Total assets less current 98,006 98,944 101,653
liabilities
Creditors due after more than one (41,130) (46,338) (45,971)
year
Provisions for liabilities and (1,702) (1,532) (1,657)
charges
Net assets 55,174 51,074 54,025
Equity shareholders' funds 55,174 51,074 54,025
Net assets per share* (pence)
Basic 69.31 65.49 67.69
Fully Diluted 68.80 64.78 66.98
*Including current asset investments at
market value.
This interim statement was approved by the board of directors on 26
September 2003.
Consolidated statement of total
recognised gains and losses
6 months ended 30 June 2003
6 months 6 months Year
ended ended ended
30 June 30 June 31
December
2003 2002 2002
£'000 £'000 £'000
Profit for the financial period 1,040 1,013 1,843
Currency translation difference on
foreign
currency net investments 77 31 90
Increase on revaluation of
investment properties
Company - - 2,408
Associate and joint venture - - 528
Total gains and losses recognised
in
the period 1,117 1,044 4,869
Prior year adjustment 8 - (1,434) (1,434)
1,117 (390) 3,435
Consolidated cash flow statement
6 months ended 30 June 2003
6 months 6 months Year
ended ended ended
30 June 30 June 31
December
2003 2002 2002
£'000 £'000 £'000
Operating profit 2,534 2,278 4,637
Depreciation 41 47 92
(Loss) profit on disposal of fixed (3) - 3
assets
Dividend from associated company - - 44
Dividend from joint venture - - 40
Decrease (increase) in current 405 (706) (557)
assets
Net cash flow from operating 2,977 1,619 4,259
activities
Returns on investments and
servicing
of finance (1,556) (1,681) (3,343)
Taxation - 195 152
Capital expenditure and financial
investment (103) 2,973 1,222
Equity dividends paid - - (700)
Cash inflow before use of liquid
resources
and financing 1,318 3,106 1,590
Management of liquid resources 350 (727) (163)
Cash inflow (outflow) from (5,118) (105) (254)
financing
(Decrease) increase in cash in the (3,450) 2,274 1,173
period
Reconciliation of net cash flow to
movement on net debt
(Decrease) increase in cash in the (3,450) 2,274 1,173
period
Net cash outflow from
reduction in debt 5,150 150 300
1,700 2,424 1,473
Movements on current asset 200 (435) (312)
investments
1,900 1,989 1,161
Net debt at beginning of period (43,242) (44,403) (44,403)
Net debt at end of period (41,342) (42,414) (43,242)
Analysis of net debt
Bank balances in hand 1,393 6,808 6,718
Bank overdrafts (3,378) (4,242) (5,253)
Debt due within one year (300) (375) (600)
Debt due after one year (41,450) (46,675) (46,300)
Current asset investments 2,393 2,070 2,193
(41,342) (42,414) (43,242)
Notes to the interim results
1 Listed investments
6 months 6 months Year
ended ended ended
30 June 30 June 31
December
2003 2002 2002
Investment sales 189 229 301
Dividends receivable 51 42 88
240 271 389
Cost of sales (196) (636) (726)
44 (365) (337)
Less - attributable overheads (10) (7) (18)
34 (372) (355)
2. Interest 6 months 6 months Year
ended ended ended
30 June 30 June 31
December
2003 2002 2002
£'000 £'000 £'000
Interest receivable 173 134 334
Interest payable -
Bank loans and overdrafts (677) (732) (191)
Other loans (1,058) (1,058) (3,431)
Interest capitalised 28 14 31
Share of associates' interest (119) (63) (137)
payable
(1,653) (1,705) (3,394)
Share of joint ventures' interest (758) (57) (219)
payable
(2,411) (1,762) (3,613)
3. Exceptional items 6 months 6 months Year
ended ended ended
30 June 30 June 31
December
2003 2002 2002
£'000 £'000 £'000
Profit(loss) on sale of freehold 95 567 757
property
Profit on sale of freehold
property:
Associate (16) 6 3
Joint ventures (47) 13 8
32 586 768
4.Taxation 6 months 6 months Year
ended ended ended
30 June 30 June 31
December
2003 2002 2002
£'000 £'000 £'000
Company
- Current tax 204 317 388
- Deferred tax 45 (17) 108
Associate and Joint Ventures
- Current tax 139 41 108
- Deferred tax (4) - 1
384 341 605
No provision has been made for deferred tax on gains recognised on revaluing
property to its market value
or on the sale of properties where potentially taxable gains have been rolled
over into replacement assets.
Such tax would become payable only if the property were sold without it being
possible to claim rollover relief.
The total amount unprovided for is £ 3,734,000 ( June 2002 £4,499,000, December
2002 £ 4,015,000).
At present it is not envisaged that any tax will become payable in
the forseeable future.
5.Earnings per share have been calculated 6 months 6 months Year
as follows:-
ended ended ended
30 June 30 June 31
December
2003 2002 2002
£'000 £'000 £'000
Group profit on ordinary 1,040 1,013 1,843
activities after tax
Weighted average number of shares
in issue
for the period ('000) 80,140 78,899 79,474
Basic earnings per share 1.30p 1.28p 2.32p
Dilution adjustments to earnings £9,000 £7,000 £18,000
Diluted number of shares in issue 81,659 80,576 81,011
('000)
Fully diluted earnings per share 1.28p 1.27p 2.30p
6. Properties are included at their valuation at 31 December 2002, adjusted for
additions and disposals
since that date at cost or
valuation.
7. Investments held as current
assets
30 June 30 June 31
December
2003 2002 2002
£'000 £'000 £'000
Listed investment portfolio at 2,847 2,744 2,385
market value
Unrealised excess of market value 454 674 192
over costs
Listed investment portfolio at 2,393 2,070 2,193
cost
8. Prior year adjustment
At 30 June and 31 December 2002 the company adopted FRS 19, a change in
accounting policy to recognise
in full deferred tax liabilities that had not previously been recognised as
they were not expected to crystallise
in the foreseeable future. The prior year adjustment, being a
reduction in reported net assets at
31 December 2001, was £1,434,000.
9.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 2002
are based upon the latest
statutory accounts, 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.
The six months figures use the same accounting policies as for the year ended
31 December 2002, and
have not been audited or subject to review by the
company's auditors.
10. 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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