Interim Results
FOR IMMEDIATE RELEASE
27th September 2006
LONDON & ASSOCIATED PROPERTIES PLC:
INTERIM RESULTS FOR THE SIX MONTHS TO 30TH JUNE 2006
HIGHLIGHTS
London & Associated Properties PLC is fully listed and is focussed on the
acquisition of, and long-term management of, well-located shopping centres and
other retail investments. Today it owns and manages £265m of retail
investments.
* Sale of Church Square, St Helens for £75m since period end - showing net
return on capital of 256%
* £50.2m acquisition of Central London mainly retail portfolio - since the
period end
* Net assets advance to £89.3m (net assets would have been £103.4m under UK
GAAP)
* Gross property assets now total £265m
* Pre-tax profits at £1.27m down from £1.85m as a result of:
*
+ Impact of reduced rents at Sheffield following development of new River
Island flagship store
+ Sale of Brierley Hill centre
+ Acquisition of further development site at Sheffield - non-income
producing
* Estimated Rental Value now £17.9m against current rent roll of £15.6m
* Interim dividend of 0.6p a share declared
* Strong tenant demand for existing portfolio - £439,000 of annualised
incremental income generated over period
"The first nine months of the year have been an exceptionally busy period for
the company. We have realised a substantial profit on our interest in Church
Square, St Helens and invested meaningfully for the first time in Central
London. In the coming months we will be able to report further on progress
within this recently acquired portfolio, and I look forward to updating
shareholders accordingly. The current year has been both exciting and
productive and I feel confident about the remainder of 2006," Michael Heller,
Chairman.
Contact:
John Heller, Chief Executive, LAP Tel: 020 7415 5000
Robert Corry, Finance Director, LAP Tel: 020 7415 5000
Baron Phillips, Baron Phillips Associates. Tel: 020 7920 3161
27 SEPTEMBER 2006
LAP INTERIM RESULTS FOR SIX MONTHS TO 30TH JUNE 2006
CHAIRMAN'S STATEMENT
The past eight months have been some of the most exciting and positive in the
company's history. During the period we completed our largest acquisition to
date, and our joint venture with Bank of Scotland, Analytical Properties, has
sold Church Square shopping centre in St Helens for a substantial profit.
We have also been active on our existing shopping centre portfolio where we
continue to see strong demand for our units, and our £25 million development
programme is making excellent progress.
For the six months to 30th June 2006, profits before tax were £1.27 million
compared to £1.85 million for the same period a year ago. This reduction
reflects a number of factors. These include the vacating of a number of units
at Sheffield with a combined rent of over £532,250 per annum to enable
construction of a new flagship store for River Island, as well as the sale of a
shopping centre at Brierley Hill and the acquisition and funding costs of The
Stonehouse at Sheffield, which is currently non-income producing.
Indeed, we contracted in our directly owned property portfolio over the period
a net £439,000 of annualised incremental income. This figure includes the
letting to River Island at Sheffield at an annual rent of £667,000 per annum.
Today our Estimated Rental Value is now £17.9 million per annum compared to an
annualised contracted rent roll of £15.6 million.
Net assets as at 30th June 2006 increased to £89.3 million from £88.3 million
at the end of December 2005. Under UK GAAP, our net assets would have been £
103.4 million while our gross assets, including those of Analytical Properties,
Bisichi Mining plc and Dragon Retail Properties, are £265 million.
We are declaring an interim dividend of 0.6p payable on 26th January 2007 to
shareholders on the register as at 5th January 2007.
Over the last few years we have explored numerous opportunities to acquire
shopping centre investments. However, we have been unable to justify the prices
paid for them while maintaining our rigorous investment criteria. We also
believe that one of the areas with the strongest potential for future growth is
prime central London, particularly where there are residential opportunities
over the medium and longer term. This results from demand from overseas
investors who now view London as Europe's undisputed premier financial centre.
The London Portfolio
Since 30th June 2006 we have completed our largest acquisition to date, a £50.3
million Central London-based mainly retail portfolio. It comprises a wide range
of retail properties in prime locations such as Chelsea and Notting Hill. The
properties include a number of well-established and well-known antiques
centres, as well as traditional shops. The purchase price reflects a net
initial yield of 5.7% although we believe that there is considerable scope to
greatly enhance the income stream and cut irrecoverable costs over the medium
term.
Two of the properties are well-known Kings Road landmarks: the antiques centre
Antiquarius and Chenil House, the building which is adjacent to Chelsea Town
Hall and which has at ground floor children's toy and clothing retailer Daisy
and Tom. Both properties have significant Kings Road frontage and cover
substantial areas.
There is considerable scope to improve the income from the upper parts of the
Daisy and Tom property, which currently comprise multi-let office suites that
occupy only a relatively small portion of the site. There is an existing
planning consent to extend the offices element over the flat roof of the ground
floor shop and we are considering the best configuration for the property.
At nearby Antiquarius there are five shop units fronting one of the best
sections of the Kings Road, as well as 110 antique stallholders and two
well-let office suites above. There is also a 1,300 sq ft vacant flat in need
of refurbishment. We will bring this flat up to tenantable condition in the
short term and we estimate that, having done so, it will command an annual
income of around £50-60,000.
In Notting Hill we have acquired a freehold antiques centre on Portobello Road
and an adjoining freehold house in the exclusive residential street, Chepstow
Villas. There is some scope for improving the antiques market which runs into
the basement of the house in Chepstow Villas. However, we intend to return the
basement of the house to residential use once we have vacant possession next
year. We estimate that this will cost some £250,000. We will then have the
option of selling the freehold of the extended house. Residential values in
this part of London are now in excess of £1,000 a sq ft and the house will have
a gross internal area of some 3,200 sq ft.
The portfolio also includes two famous and well-established markets in Brixton,
South London: Market Row and Brixton Village. Market Row is successful with
high occupancy levels and we intend to grow the rents there on the back of
strong tenant demand. Brixton Village, covering a site of approximately 40,000
sq ft, is not as successful, particularly in its less prime parts. We believe
there may be better ways of extracting value from this site than is achievable
in its current configuration.
The final element of this portfolio is three properties in Upper Street,
Islington, the area's prime retailing location. These comprise a freehold Grade
II listed antiques arcade with offices and a restaurant above. This building
offers several opportunities to enhance both income and value over the medium
term.
Adjacent to the antiques arcade, there is a freehold detached listed house in
need of internal refurbishment. We believe that by investing approximately £
200,000 in the residential property, it will have a rental value of £40- 50,000
a year. Finally, there is a newly developed office building let to Foxtons, the
estate agents, at £230,000 a year.
Church Square, St Helens,
Since the half year end, Analytical Properties has sold the Church Square
shopping centre in St Helens for £75 million. The sale comes almost exactly
three years to the day since Analytical acquired this property for £50 million,
and a disposal at this level shows a net return on capital of 256% and is £10
million above last December's valuation.
We will receive cash proceeds from the sale from Analytical Properties
amounting to approximately £11.8 million. This will be added to our existing
cash resources and used to expand our portfolio when suitable opportunities
arise.
Remaining Portfolio
Within the rest of our portfolio I am pleased to report satisfactory progress
and continued demand for vacant space that becomes available.
At Windsor our partial redevelopment of King Edward Court which includes a new
Waitrose supermarket, a net 57,000 sq ft of large shops and a 113 bedroom
hotel, is progressing smoothly. Ground works, the riskiest part of any
development, are finished and the above ground construction is proceeding
according to plan. We are hopeful of achieving a straightforward run through to
completion early next year.
Elsewhere in the Centre, I am pleased to report that we continue to benefit
from exceptional retailer demand for units within King Edward Court on the back
of the redevelopment. Over the period we have let the last vacant unit shop to
Polarn O. Pyret, a Swedish children's clothing chain which has opened its first
UK store in our shopping centre.
At Orchard Square, Sheffield, development of a new flagship store for River
Island is progressing well and we anticipate completion early in 2007. Zone A
rents in adjacent shops on Fargate continue to grow and we expect to benefit
from this as rent reviews occur on our own units in Fargate. Latest shop rents
achieved opposite our Centre are £250 per square foot Zone A compared to the £
230 we negotiated on the River Island unit and £200 at our adjacent Virgin
unit.
A planning application to amalgamate the Stonehouse Pub into Orchard Square
will be submitted shortly. Demand from retailers for this space remains strong,
and I look forward to updating shareholders once we achieve a satisfactory
outcome at this part of the scheme.
We continue to experience good levels of interest from retailers at all of our
centres. There is good demand for well-located and well configured shops. Our
experience and successful track record of creating space in line with the
specific needs of prospective tenants has led to high occupancy levels and
unsatisfied demand that we are working hard to meet.
The first nine months of the year have been an exceptionally busy period for
the company. We have realised a substantial profit on our interest in Church
Square, St Helens and invested meaningfully for the first time in Central
London. In the coming months we will be able to report further on progress
within this recently acquired portfolio, and I look forward to updating
shareholders accordingly. The current year has been both exciting and
productive and I feel confident about the remainder of 2006.
Michael Heller
Chairman
27th September 2006
Consolidated income statement for the six months ended 30 June 2006
6 months 6 months Year
ended ended ended
30 June 30 June 31
2006 2005 December
(unaudited) (unaudited 2005
and (audited)
restated)
Notes £'000 £'000 £'000
Gross rental income
Group and share of joint 5,798 6,229 12,392
ventures
Less: joint ventures - (2,281) (2,354) (4,525)
share of rental income
3,517 3,875 7,867
Less: property overheads:
Direct property expenses (670) (485) (1,918)
Attributable overheads (1,189) (1,115) (2,829)
(1,859) (1,600) (4,747)
Less: joint ventures - 389 190 1,337
share of overheads
Property overheads (1,470) (1,410) (3,410)
Net rental income 2,047 2,465 4,457
Listed investments held for 32 50 169
trading
Operating profit before 2,079 2,515 4,626
adjustments
Lease surrender - (173) (173)
Profit on sale of - 436 1,230
investment properties
Net gain on revaluation of - - 10,078
investment properties
Net increase in value of 225 260 831
investments held for trading
Operating profit after 2,304 3,038 16,592
adjustments
Share of profit of joint 387 264 3,659
ventures
Share of profit of 120 301 1,232
associate
2,811 3,603 21,483
Interest receivable 1 350 451 820
Interest payable 1 (1,888) (2,201) (4,408)
Profit before taxation 1,273 1,853 17,895
Income tax 2 417 (268) (3,046)
Profit for the period 1,690 1,585 14,849
Basic earnings per share 3 2.22p 1.96p 18.83p
Diluted earnings per share 3 2.22p 1.95p 18.79p
Consolidated balance sheet at 30 June 2006
30 June 30 June 31
2006 2005 December
(unaudited) (unaudited) 2005
(audited)
Notes £'000 £'000 £'000
Non current assets
Value of properties 117,913 104,743 116,971
attributable to group
Present value of head 8,582 9,103 8,582
leases
Property 4 126,495 113,846 125,553
Plant and equipment 964 529 975
Investments in joint 18,398 14,638 18,033
ventures
Investments in associated 6,294 5,430 6,495
company
Held to maturity 3,784 3,784 3,784
investments
155,935 138,227 154,840
Current assets
Trade and other receivables 4,212 2,651 4,608
Financial 4,761 4,411 4,586
assets-investments held for
trading
Cash and cash equivalents 6,397 8,011 6,212
15,370 15,073 15,406
Total assets 171,305 153,300 170,246
Current liabilities
Financial (3,138) (2,197) (2,446)
liabilities-borrowings
Trade and other payables (6,764) (7,999) (6,724)
Current tax liabilities - (337) (177)
(9,902) (10,533) (9,347)
Non current liabilities
Financial (52,502) (49,838) (52,494)
liabilities-borrowings
Present value of head (8,582) (9,103) (8,582)
leases on properties
Deferred tax (11,049) (8,832) (11,482)
(72,133) (67,773) (72,558)
Total liabilities (82,035) (78,306) (81,905)
Net assets 89,270 74,994 88,341
Equity
Share capital 8,232 8,232 8,232
Share premium account 5,228 4,919 5,228
Translation reserve (261) (49) 81
Capital redemption reserve 47 47 47
Other reserves 429 429 429
Retained earnings 82,227 67,911 80,956
Treasury shares (6,632) (6,495) (6,632)
Total shareholders' equity 89,270 74,994 88,341
Net assets per share 5 117.26p 98.38p 116.04p
Diluted net assets per 5 117.10p 98.26p 115.88p
share
Consolidated statement of changes in recognised income and expense
for the six months ended 30 June 2006
30 June 30 June 31
2006 2005 December
(unaudited) (unaudited) 2005
(audited)
£'000 £'000 £'000
Profit for the period 1,690 1,585 14,849
Currency translation in (342) (165) (35)
associate
Translation adjustment on - 948 948
adoption of IAS 39
Deferred tax thereon - (311) (311)
Total recognised income 1,348 2,057 15,451
and expense for the year
Consolidated statement of changes in shareholders' equity
for the six months ended 30 June 2006
Share Share Translation Other Treasury Retained Total
capital premium reserve reserves shares earnings equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 8,232 5,226 116 476 (581) 67,131 80,600
2005
Acquisition of own - (307) - - (5,914) - (6,221)
shares
Value of financial - - - - - 727 727
assets less deferred
tax
Joint venture share - - - - - (186) (186)
of financial
liabilities
Currency exchange - - (165) - - - (165)
adjustment in
associate
Dividend - - - - - (1,346) (1,346)
Profit for the period - - - - - 1,585 1,585
Balance at 30 June 8,232 4,919 (49) 476 (6,495) 67,911 74,994
2005
* The retained
earnings are adjusted
for
amendments to
balances at 1 January
2005
on adoption of IAS
39, as stated
Balance at 1 January 8,232 5,226 116 476 (581) 67,131 80,600
2005
Value of financial - - - - - 732 732
assets less deferred
tax
Associate share of - - - - - 91 91
financial assets
Joint venture share - - - - - (186) (186)
of financial
liabilities
Issue expenses of own - (1) - - - - (1)
shares
Acquisition of own - - - - (6,721) - (6,721)
shares
Disposal of own - - - - 670 - 670
shares
Gain/(loss) on - 3 - - - (306) (303)
disposal of own
shares
Currency exchange - - (35) - - - (35)
adjustment in
associate
Dividend - - - - - (1,355) (1,355)
Profit for the year - - - - - 14,849 14,849
Balance at 31 8,232 5,228 81 476 (6,632) 80,956 88,341
December 2005
Currency exchange - - (342) - - (342)
adjustment in
associate
Dividend - - - - - (419) (419)
Profit for the period - - - - - 1,690 1,690
Balance at 30 June 8,232 5,228 (261) 476 (6,632) 82,227 89,270
2006
Consolidated cash flow statement for the six months ended 30 June 2006
6 months 6 months Year
ended ended ended
30 June 30 June 31
2006 2005 December
2005
(unaudited) (unaudited (audited)
and
restated)
£'000 £'000 £'000
Operating activities
Operating profit after 2,304 3,038 16,592
adjustments
Depreciation 80 52 125
Gain on disposal of (7) (9) (1)
non-current assets
Profit on sale of - (436) (1,230)
investment properties
Net gain on revaluation of - - (10,078)
investment properties
Net increase in value of (225) (260) (831)
investments held for trading
Increase in net current (1,036) (812) (695)
assets
Cash generated from 1,116 1,573 3,882
operations
Net Interest paid (1,972) (1,804) (3,825)
Income tax paid (243) (75) (843)
Cash flows after interest (1,099) (306) (786)
and tax
Investing activities
Cash flows from investing 761 987 786
activities
Financing activities
Cash flow from financing (169) (6,213) (7,580)
activities
Net decrease in cash and cash (507) (5,532) (7,580)
equivalents
Cash and cash equivalents at 3,766 11,346 11,346
beginning of period
Cash and cash equivalents at end 3,259 5,814 3,766
of 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
2006 2005 2005
£'000 £'000 £'000
Cash and cash equivalents 6,397 8,011 6,212
Bank overdraft (3,138) (2,197) (2,446)
Cash and cash equivalents at end 3,259 5,814 3,766
of period
Notes to the interim report
1.Finance costs 6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2006 2005 2005
(restated)
£'000 £'000 £'000
Interest receivable 350 451 820
Interest payable -
Interest on bank loans and overdrafts (960) (928) (1,923)
Other loans (1,052) (1,052) (2,106)
Interest on obligations under finance leases (220) (221) (442)
Total borrowing costs (2,232) (2,201) (4,471)
Less : amounts included in the cost of 344 - 63
qualifying assets
(1,888) (2,201) (4,408)
(1,538) (1,750) (3,588)
2.Income tax 6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2006 2005 2005
(restated)
£'000 £'000 £'000
Current tax 16 52 524
Deferred tax (433) 216 2,522
(417) 268 3,046
3.Earnings per share 6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2006 2005 2005
Group profit after tax (£'000) 1,690 1,585 14,849
Weighted average number of shares in issue
for the period ('000) 76,129 80,804 78,839
Basic earnings per share 2.22p 1.96p 18.83p
Diluted number of shares in issue ('000) 76,230 81,261 79,021
Fully diluted earnings per share 2.22p 1.95p 18.79p
4.Property
Properties at 30 June 2006 are included at valuation as at 31 December 2005
plus additions in the period.
5. Net assets per share 30 June 30 June 31 December
2006 2005 2005
'000 '000 '000
Shares in issue ('000) 76,129 76,229 76,129
Net assets per balance sheet 89,270 74,994 88,341
Basic net assets per share 117.26p 98.38p 116.04p
Shares in issue diluted by outstanding share 76,279 76,379 76,279
options ('000)
Net assets after issue of share options 89,322 75,046 88,393
Fully diluted net assets per share 117.10p 98.26p 115.88p
6.Changes to the consolidated income statement for the six months ended 30 June
2005
The following changes have been made to the last interim report figures to make
them comparable to
the IFRS accounts published for the full year to 31 December 2005. The
amendments relate to the allocation of joint venture and associate interest
and tax to the appropriate income statement heading in order to
show a minimum of netting off.
Amended Original Variance
Gross rental income £'000 £'000 £'000
Group and share of joint ventures 6,229 6,229 -
Less: joint ventures - share of rental (2,354) (2,354) -
income
3,875 3,875 -
Less: property overheads:
Ground rents - (796) 796
Direct property expenses (485) (485) -
Attributable overheads (1,115) (1,115) -
(1,600) (2,396) 796
Less: joint ventures - share of overheads 190 765 (575)
Property overheads (1,410) (1,631) 221
Net rental income 2,465 2,244 221
Listed investments held for trading 50 50 -
Operating profit before adjustments 2,515 2,294 221
Lease surrender (173) (173) -
Profit on sale of investment properties 436 436 -
Net gain on revaluation of investment - - -
properties
Associate/jv profit on sale of investment - 55 (55)
properties
Net increase in value of investments held 260 260 -
for trading
Operating profit after adjustments 3,038 2,872 166
Share of profit of joint ventures 264 (181) 445
Share of profit of associate 301 267 34
3,603 2,958 645
Interest receivable 451 499 (48)
Interest payable (2,201) (1,980) (221)
Profit before valuation gains 1,853 1,477 376
Profit before taxation 1,853 1,477 376
Income tax (268) 108 (376)
Profit for the period 1,585 1,585 -
7.Financial information
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 2005 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 ended 30 June 2006 uses the same accounting policies as for the
year ended 31 December 2005, and the interim results have not been audited or
subject to review by the company's auditors.
8.Board approval
These interim results were approved by the Board of London & Associated
Properties PLC on 27 September 2006.
9.Posting to shareholders
The interim report will be sent to shareholders by mail. Copies are
now available at the company's registered office: Carlton House, 21a St James's
Square, London, SW1Y 4JH
and may also be downloaded from the company's website:
www.lap.co.uk.
Friday, 10th January 2025
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