Interim Results

FOR IMMEDIATE RELEASE 13th September 2004 LONDON & ASSOCIATED PROPERTIES PLC: INTERIM RESULTS FOR SIX MONTHS TO 30TH JUNE 2004 London & Associated Properties PLC is a specialist shopping centre investor that owns or manages Â£222m of retail assets. HIGHLIGHTS Pre-tax profits rise from Â£1.42 million to Â£1.60 million +12% Fully diluted net assets per share increase to 90.2p* + 2% (* NB there has been no property revaluation in the first half) Rental income for the period totalled Â£3.9 million (against Â£4.0 million) despite sales of properties with a rent roll of Â£1 million LAP now directly owns or manages Â£222 million of retail property Planning for redevelopment of King Edward Court, Windsor granted - 20,000 sq ft of new retail space pre-let to Hennes - Further two new retail units under off - New 40,000 sq ft supermarket under offer - Hotel pre-let to Travelodge Rent roll at Church Square, St Helens increased by Â£225,000 a year Â£7.5m acquisition of adjoining retail unit at Orchard Square, Sheffield - potential for creation of new 20,000 sq ft flagship shop 'I am pleased to say that the Company is in its strongest ever financial position. In addition to the healthy cash flow generated by both the wholly owned core portfolio and our joint ventures, we currently have substantial cash and undrawn facilities totalling around Â£30 million. This gives us the ability to move quickly should opportunities to invest in shopping centres arise. -more- We continue to seek to expand our shopping centre portfolio as well as improve and grow our existing properties. Against this background we are confident of a satisfactory conclusion to the year and view the future with optimism.' Michael Heller, Chairman. Contact: London & Associated Properties PLC. Tel: 020 7415 5000 John Heller, Chief Executive Robert Corry, Finance Director Baron Phillips Associates. Tel: 020 7920 3161 or 07050 124119 Baron Phillips CHAIRMAN'S STATEMENT I am pleased to report a further advance in profits for the six months to 30th June 2004 together with substantial progress in the management of our properties over the period. Pre-tax profits for the first half of the year rose by 12% to Â£1.60 million from Â£1.42 million for the same period a year ago. This rise is due to two factors: an increased contribution from Analytical Properties, our joint venture with the Bank of Scotland, of Â£446,000 against Â£230,000 last time, and achieving a higher rent roll from our own wholly owned core portfolio of shopping centres as a number of developments and other projects that completed last year started to contribute to rental income. We contracted an additional Â£277,000 of annualised rental income from our core portfolio during the first half. During this period our rental income totalled Â£3.9 million compared to Â£4.0 million for the same period a year ago. We believe this is a creditable achievement as over the last 12 months we have sold mature properties with a combined annual rental income of approximately Â£1 million. London & Associated Properties directly owns or manages retail property on behalf of Analytical, Bisichi Mining and Dragon Retail Properties, with a gross value of some Â£222 million. Net assets, including our listed share portfolio at market value, have grown to Â£74.2 million, compared to Â£72.8 million at 31st December 2003 while fully diluted net assets per share have risen to 90.22p against 88.58p at the year end. As in previous years, we have not declared a dividend at the interim stage. Analytical Properties King Edward Court, Windsor Since the end of the period under review we have been granted planning consent, subject only to a Section 106 agreement for which head of terms have been finalised, for the partial redevelopment of the King Edward Court Shopping Centre, Windsor. We plan to replace an outdated existing supermarket and office tower with 100,000 sq ft of modern retail space and a 113-bed hotel. This will increase the centre's retail content by 60,000 sq ft to over 215,000 sq ft and we hope to commence on site early in the new year. The new retail space will comprise four large shop units ranging in size from 5,000 sq ft to 20,000 sq ft and a new 40,000 sq ft supermarket. I am pleased to report that we have pre-let a 20,000 sq ft retail unit to the fashion group Hennes at an annual rent of Â£395,000. Two further retail units are under offer to first class tenants and the supermarket is also under offer to one of the major chains. The hotel has been pre-let to Travelodge at an annual rent of Â£ 475,000. We anticipate that this redevelopment will add a further Â£1.3 million to the centre's current gross annual rent roll of Â£4.8 million for a capital outlay of approximately Â£15 million. The local authority's contribution will be approximately pro rata to the head lease gearing. Elsewhere at King Edward Court our lease renewal programme is progressing well. At the time of acquisition in December 2002 we estimated the rental value to be around Â£92.50 a sq ft. Today we believe rental values have increased to between Â£97 and Â£101 a sq ft, depending on the location of the unit within the centre. In total 10 tenants' leases expire during the remainder of 2004 and, with the exception of only two tenants, they have asked for new leases. Both these units are in prime positions and we already have one under offer and the other at an advanced stage of negotiation. When they complete both units this will establish a new record rental level and I shall report on the progress of these units and the lease renewal programme at the year end. Church Square, St. Helens Progress at Analytical's other shopping centre investment, the 350,000 sq ft Church Square, St Helens is also ahead of expectations. When we acquired the centre last year we felt there were a large number of reversionary units and that we would achieve rental growth at rent review. I am pleased to report that during the first six months we have increased the annual rent roll by Â£225,000, including Â£158,000 that has come directly from rent reviews. This brings the total rental uplift during our ownership to Â£304,000 a year which is approximately 6% of Church Square's annual gross rent roll of Â£5.4 million. We continue to develop plans for larger retail units to the rear of St Mary's Arcade, which is usually considered the more value-orientated of the two shopping centres that make up Church Square. To date we have received encouraging interest from retailers, and I look forward to updating you on this project in the future. Directly Held Portfolio Orchard Square, Sheffield In March we acquired for Â£7.5 million a large freehold unit on Fargate, adjacent to Orchard Square. This unit is let to Dixons until 2009 at Â£407,750 a year. As a result of this acquisition we have now extended our substantial frontage on to Fargate, Sheffield's prime shopping street, enabling us to extend the unit over the medium term and create a prime 20,000 sq ft flagship shop. Within Orchard Square, we have grown the rents by a further Â£50,000 a year at rent review, again ahead of estimated rental value. We have also commenced building a new unit to the rear of the Shopping Centre which is currently under offer to a national retailer at Â£32,500 a year. The total costs of the construction will be less than Â£270,000. Kings Square, West Bromwich At Kings Square, West Bromwich, we have completed a number of lettings, including a new unit to Card Factory at Â£37,500 a year compared to Â£32,500 on this unit previously. We have also relocated a local multiple tenant at an increased rent of Â£48,500 compared to Â£41,450 a year previously. These two lettings equate to Â£63 and Â£65 per sq ft respectively compared to an existing rental value of Â£ 62 per sq ft. The one empty shop in the main part of the shopping centre has been let to Raid Shoes at Â£30,000 a year. In addition we have taken back a unit at the front of the shopping centre which was occupied by a local tenant who paid Â£68,000 a year. At a cost of around Â£200,000 we are splitting this unit into two smaller but better configured shops, both of which are under offer to national retailers at a combined rent of over Â£90,000 a year, equating to Â£70 a sq ft for the front unit. The Mall, Dagenham At the Mall, Dagenham, we have increased the rents by Â£75,000 a year. This includes a new shop let to Ethel Austin during the first half at Â£45,000 a year following an extension at the rear of the unit. Other properties Elsewhere in our directly held portfolio all the shopping centres continue to perform well. Bisichi Mining plc At Bisichi, our 42% owned associate, LAP's share of operating profits were Â£ 368,000 (2003:Â£417,000). Trading at Black Wattle Colliery, Bisichi's principal coal mining subsidiary, continues to be satisfactory. The acquisition of a `continuous miner' during the second half of 2004 should further increase production. In addition, Black Wattle will continue to benefit from the rise in the selling price of export coal. Current Trading & Prospects I am pleased to say that the Company is in its strongest ever financial position. In addition to the healthy cash flow generated by both the wholly owned core portfolio and our joint ventures, we currently have substantial cash and undrawn facilities totalling around Â£30 million. This gives us the ability to move quickly should opportunities to invest in shopping centres arise. We continue to seek to expand our shopping centre portfolio as well as improve and grow our existing properties. Against this background we are confident of a satisfactory conclusion to the year and view the future with optimism. Michael Heller Chairman 10 September 2004 LONDON & ASSOCIATED PROPERTIES PLC Consolidated profit and loss account six months ended 30 June 2004 Note 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2004 2003 2003 Â£'000 Â£'000 Â£'000 Gross rental income Group and share of joint 6,539 5,263 11,360 ventures Less: joint ventures-share of (2,652) (1,260) (3,469) rental income 3,887 4,003 7,891 Less: property overheads - Ground rents (835) (515) (1,252) Direct property expenses (670) (507) (1,078) Attributable overheads (1,074) (894) (1,787) (2,579) (1,916) (4,117) Less: joint ventures - share of 990 413 1,169 overheads (1,589) (1,503) (2,948) Net rental income 2,298 2,500 4,943 Listed investments - net income 1 180 34 62 Operating profit 2,478 2,534 5,005 Share of operating profit of 1,665 852 2,218 joint ventures Share of operating profit of 406 417 813 associate Profit on ordinary activities 4,549 3,803 8,036 before interest Exceptional items: Profit on sale of investment properties: Company 62 95 157 Associate and joint venture - (63) (67) 2 62 32 90 Interest Interest receivable 357 173 333 Interest payable - group (1,829) (1,826) (3,599) - joint ventures (1,541) (758) (2,052) 3 (3,013) (2,411) (5,318) Profit on ordinary activities 1,598 1,424 2,808 before taxation Taxation of profit on ordinary 4 486 384 404 activities Profit for the period 1,112 1,040 2,404 Earnings per share - basic 5 1.36p 1.30p 2.98p Earnings per share - fully 5 1.36p 1.28p 2.95p diluted Dividend per share - - 1.525p The revenue and operating profit for these financial periods derive from continuing operations in the United Kingdom. LONDON & ASSOCIATED PROPERTIES PLC Consolidated balance sheet at 30 June 2004 Note 30 June 30 June 31 December 2004 2003 2003 Â£'000 Â£'000 Â£'000 Fixed assets Properties and other tangible 6 98,701 96,295 94,601 assets Investments Investments in joint ventures - Share of gross assets 59,395 27,714 59,129 - Share of gross liabilities (49,582) (24,780) (49,427) - Share of net assets 9,813 2,934 9,702 Other investments - Associated company 4,893 3,670 4,636 - Other 3,784 1,834 3,784 18,490 8,438 18,122 Total fixed assets 117,191 104,733 112,723 Current assets Debtors 3,051 1,716 2,362 Investments (Market value - Â£ 7 3,039 2,393 2,135 4,112,000) Bank balances 12,384 1,393 11,451 18,474 5,502 15,948 Creditors due within one year Creditors and accruals (10,866) (8,551) (13,166) Bank borrowings (1,043) (3,678) (1,284) (11,909) (12,229) (14,450) Net current assets (liabilities) 6,565 (6,727) 1,498 Total assets less current 123,756 98,006 114,221 liabilities Creditors due after more than (49,247) (41,130) (40,988) one year Provisions for liabilities and (1,346) (1,702) (1,346) charges Net assets 73,163 55,174 71,887 Equity shareholders' funds 73,163 55,174 71,887 Net assets per share* (pence) Basic 8 90.86p 69.31p 89.39p Fully Diluted 8 90.22p 68.80p 88.58p *Including current asset investments at market value. This interim statement was approved by the board of directors on 10 September 2004. LONDON & ASSOCIATED PROPERTIES PLC Consolidated statement of total recognised gains and losses 6 months ended 30 June 2004 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2004 2003 2003 Â£'000 Â£'000 Â£'000 Profit for the financial period 1,112 1,040 2,404 Currency translation differences on foreign currency net investments of associate 48 77 87 Increase on revaluation of investment properties Company - - 10,127 Associate and joint venture - - 5,660 Taxation on gains on disposals of (130) properties Total gains and losses recognised in 1,160 1,117 18,148 the period LONDON & ASSOCIATED PROPERTIES PLC Consolidated cash flow statement 6 months ended 30 June 2004 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2004 2003 2003 Â£'000 Â£'000 Â£'000 Operating profit 2,478 2,534 5,005 Depreciation 52 41 90 Loss (profit) on disposal of fixed 2 (3) (7) assets Dividend from associated company - - 65 Dividend from joint ventures - - 93 Decrease (increase) in current assets (4,518) 405 4,396 Net cash flow from operating (1,986) 2,977 9,642 activities Returns on investments and servicing (1,606) (1,556) (3,004) of finance Taxation - - (400) Capital expenditure and financial (4,241) (103) 8,515 investment Equity dividends paid - - (783) Cash (outflow) inflow before use of (7,833) 1,318 13,970 liquid resources and financing Management of liquid resources 643 350 307 Cash inflow (outflow) from financing 8,064 (5,118) (5,275) Increase (decrease) in cash in the 874 (3,450) 9,002 period Reconciliation of net cash flow to movement on net debt (Decrease) increase in cash in the 874 (3,450) 9,002 period Net cash inflow from increase in debt (7,950) 5,150 5,300 (7,076) 1,700 14,302 Movements on current asset 904 200 (58) investments Movement in net debt in the period (6,172) 1,900 14,244 Net debt at beginning of period (28,998) (43,242) (43,242) Net debt at end of period (35,170) (41,342) (28,998) Analysis of net debt Bank balances in hand 12,384 1,393 11,451 Bank overdrafts (1,043) (3,378) (984) Debt due within one year - (300) (300) Debt due after one year (49,550) (41,450) (41,300) Current asset investments 3,039 2,393 2,135 (35,170) (41,342) (28,998) LONDON & ASSOCIATED PROPERTIES PLC Notes to the interim results 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2004 2003 2003 Â£'000 Â£'000 Â£'000 1. Listed investments Investment sales 395 189 475 Dividends receivable 59 51 107 454 240 582 Cost of sales (263) (196) (500) 191 44 82 Less - attributable overheads (11) (10) (20) 180 34 62 2. Exceptional items Profit (loss) on sale of freehold property - Company 62 95 157 Associate - (16) (20) Joint ventures - (47) (47) 62 32 90 3. Interest Interest receivable 357 173 333 Interest payable - Bank loans and overdrafts (674) (677) (329) Other loans (1,056) (1,058) (3,095) Interest capitalised - 28 28 Share of associates' interest payable (99) (119) (203) (1,472) (1,653) (3,266) Share of joint ventures' interest (1,541) (758) (2,052) payable (3,013) (2,411) (5,318) 4. Taxation Company - Current tax 348 204 504 - Deferred tax - 45 (306) 348 249 198 Associate and Joint Ventures - Current tax 138 139 211 - Deferred tax - (4) (5) 486 384 404 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 Â£ 5,149,000 (June 2003 Â£3,734,000, December 2003 Â£6,253,000). At present it is not envisaged that any tax will become payable in the forseeable future. LONDON & ASSOCIATED PROPERTIES PLC Notes to the interim results (continued) 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2004 2003 2003 Â£'000 Â£'000 Â£'000 5.Earnings per share have been calculated as follows:- Group profit on ordinary activities 1,112 1,040 2,404 after tax Weighted average number of shares in issue for the period (`000) 81,530 80,140 80,772 Basic earnings per share 1.36p 1.30p 2.98p Dilution adjustments to earnings 8 9 12 Diluted number of shares in issue 82,498 81,659 81,873 ('000) Fully diluted earnings per share 1.36p 1.28p 2.95p 6. Properties are included at their valuation at 31 December 2003, adjusted for additions and disposals since that date at cost or valuation. 7. Investments held as current assets Listed investment portfolio at cost 3,039 2,393 2,135 Unrealised excess of market value 1,073 454 876 over cost Listed investment portfolio at market 4,112 2,847 3,011 value 30 June 30 June 31 December 2004 2003 2003 Â£'000 Â£'000 Â£'000 8. Net assets per share have been calculated as follows:- Shares in issue ('000) 81,707 80,264 81,397 Net assets per balance sheet 73,163 55,174 71,887 Surplus on current asset investments 1,073 454 876 Basic net assets 74,236 55,628 72,763 Basic net assets per share 90.86p 69.31p 89.39p Shares in issue diluted by 82,498 81,306 82,498 outstanding share options Net assets after issue of share 74,433 55,908 73,075 options Fully diluted net assets per share 90.22p 68.80p 88.58p 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 2003 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 2003, 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.

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