Interim Results

Benchmark Group PLC 5 March 2001 5 March 2001 INTERIM RESULTS Six months to 31 December 2000 Benchmark Group PLC ('Benchmark'), the specialist Central London property investment and development company, announces its Interim Results for the six months to 31 December 2000. Highlights * NAV per share increased 5.9% to 363.2p (343.1p as at 30 June 2000) * Investment properties showed net increase of 3.2% or £23.9 million based on independent valuation * Net rental income increased by 52.6% to £14.8 million (1999: £9.7 million) * Pre-tax profit increased by 44.0% to £14.4 million (1999: £10.0 million) * Basic earnings per share up 30.9% to 8.9p (1999: 6.8p) * Interim dividend of 1.95p (1999: 1.85p) - increase of 5.4% * Net gearing as at 31 December 2000 of 64.4% (86.7% including joint venture funding) compared to 64.3% as at 30 June 2000 * £152.3 million spent on acquisitions in Central London during the period including 6/10 Bruton Street; Melrose House, Savile Row and our 50% share in the joint venture with JER Partners for the acquisition of a portfolio from MEPC. * £68.9 million of sales achieved during the period providing a net profit above book value of £3.1 million (4.8%) - £22.5 million over historic cost * Sale of majority interest in Nexus Estates, realising a pre-tax profit of £6.5 million Tan Sri Quek Leng Chan, Chairman of Benchmark, said: 'We have now established a strong Central London portfolio. We will continue to concentrate on the Central London market, making sales when attractive prices can be obtained and seeking to expand our portfolio by development and acquisitions, on our own or in joint ventures, where we can see opportunities to add value using our specialist expertise. 'The prospects are good but must be tempered because of general concerns about a downturn in the US economy, from which we cannot be totally insulated in the UK. However, the potential for lower interest rates may make property at current price levels an attractive asset for investment.' For further information, please contact: Benchmark Group PLC Tavistock Communications Ltd Nigel Kempner, Chief Executive Jeremy Carey / Bella Pagdin Tel: 020 7287 6881 Tel: 020 7600 2288 Chairman's Statement The Central London property market has remained strong in all sectors in which we specialise, with demand and supply being fairly well balanced. Having regard to the latest low vacancy factor in the office market, there is a marked absence of speculative space being developed. However, it remains to be seen whether the current level of tenant demand is sustainable. At the present time, the prospects for rental and capital growth continue to be good. We now control and manage around £1 billion of offices and commercial space in Central London comprising some 2 million sq ft. In this strong market the Company has enjoyed a busy and successful first half of our current financial year. NET ASSET VALUE Our freehold and leasehold investment properties, including those investment properties held in joint ventures, were valued as at 31 December 2000 by our external valuers, DTZ Debenham Tie Leung Limited, Chartered Surveyors. This showed a net increase of £23.9m, a 3.2% uplift since 30 June 2000. Consequently, the net asset value per share at 31 December 2000 rose to 363.2p (1999: 299.0p) compared with 343.1p at 30 June 2000, an increase of 5.9%. RESULTS Pre-tax profits for the six months to 31 December 2000 were £14.4m (1999: £ 10.0m), an increase of 44.0% over the same period last year. They reflect a £ 3.1m profit on property disposals achieved during the period and a £6.5m profit on the sale of the majority of our interest in Nexus Estates PLC. Earnings per share were 8.9p (1999: 6.8p) representing an increase of 30.9% over the same period last year. Net rental income for the period increased by 52.6% from £9.7m to £14.8m, principally due to the expiry of rent free periods granted on the successful letting of completed developments, such as Stirling Square in St James's. The net rental income on an annualised basis at the date of this report including our share in the joint venture is now £48.2m, compared with £39.7m at 26 September 2000, the date of our last report. Our net borrowings at 31 December 2000 were £283.2m resulting in a gearing of 64.4% compared to 64.3% as at 30 June 2000. If our share of the JER joint venture funding were included, the gearing would be 86.7%. DIVIDEND The Directors have declared an interim dividend of 1.95p (1999: 1.85p) which will be paid on 10 April 2001 to shareholders on the register at 16 March 2001. This represents an increase of 5.4% over the interim dividend last year. ACQUISITIONS AND DISPOSALS During the six month period we spent £152.3m on the acquisition of properties in Central London, including £125m on the acquisition of a portfolio of properties from MEPC Ltd, as part of our 50% share in a new joint venture formed with JER Partners, a US fund manager. We also acquired 6/10 Bruton Street and Melrose House, Savile Row, both in Mayfair. During the same period we have furthered our policy of converting unrealised valuation surpluses into realised profits and we made disposals from our portfolio realising total sales of £68.9m at a net profit of £3.1m. This gives a surplus of 4.8% above our book value or £22.5m over historic cost. We completed the sale of our remaining residential units at Stirling Square, including one sold just after the end of the calendar year, at an overall average price of £1,100 per sq ft, which is a satisfactory result. In addition we have been successful in finding a buyer for Nexus Estates, to facilitate its expansion in the UK and internationally. 85% of our shares have been sold to a management buy-out, sponsored by the private equity arm of Henderson Global Investors. The existing executive Directors of Nexus received a 3% stake and we retained our freehold or long leasehold interests in the centres at 1 Cornhill, 147 Leadenhall Street and 8 Grafton Street on new market leases. We achieved a pre-tax profit of £6.5m on the sale and have received a 12% stake in the business. DEVELOPMENT Medius in Wardour Street, W1 will provide 67,000 sq ft of new offices and will be available for hand-over to a tenant in June 2001. Much interest has been expressed and the 10,000 sq ft of retail space has already been let to YHA plc on a 15 year lease at an annual rental of £240,000. At our Belgravia Estate, we are still waiting to finalise our Section 106 agreement with Westminster City Council before commencing works on the new Waitrose store and the road improvement scheme. We are also awaiting Westminster's decision on our planning application to redevelop 41,500 sq ft of offices, 5,000 sq ft of leisure use, 12,000 sq ft of retail space and 7,200 sq ft of residential accommodation on the south side of Golden Square. We hope to receive the decision later this year. At 6/10 Bruton Street we are now marketing the 17,000 sq ft of newly refurbished offices above The Square restaurant and for which we have already received many enquiries. CONCLUSION We have now established a strong Central London portfolio. We will continue to concentrate on the Central London market, making sales when attractive prices can be obtained and seeking to expand our portfolio by development and acquisitions, on our own or in joint ventures, where we can see opportunities to add value using our specialist expertise. The prospects are good but must be tempered because of general concerns about a downturn in the US economy, from which we cannot be totally insulated in the UK. However, the potential for lower interest rates may make property at current price levels an attractive asset for investment. Tan Sri Quek Leng Chan Chairman 2 March 2001 Consolidated Profit and Loss Account Six months ended 31 December 2000 Six months Six months Year to to to 30 Jun 31 Dec 00 31 Dec 99 00 Note (unaudited)(unaudited)(audited) £'000 £'000 £'000 GROSS RENTAL INCOME Group and share of joint venture 19,258 11,814 25,129 Less: share of joint venture (1,740) - - 17,518 11,814 25,129 Ground rents (874) (681) (1,398) Irrecoverable property costs (1,440) (1,195) (3,009) Amortisation of leasehold properties (400) (216) (464) NET RENTAL INCOME 14,804 9,722 20,258 Net operating profit/(loss) from serviced 2 593 (588) (1,064) offices Profit on disposal of trading properties 3 645 2,504 3,193 Administration expenses (1,577) (1,536) (3,903) GROUP OPERATING PROFIT 14,465 10,102 18,484 Share of operating profit in joint venture 1,660 - - TOTAL OPERATING PROFIT 16,125 10,102 18,484 Profit on disposal of investment 3 2,474 4,140 8,790 properties Profit on disposal of shares in subsidiary 6,500 - - undertaking PROFIT ON ORDINARY ACTIVITIES BEFORE INTEREST 25,099 14,242 27,274 Net interest payable and similar charges 4 (10,678) (4,248) (11,790) PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 14,421 9,994 15,484 Taxation 5 (3,999) (1,840) (2,220) PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 10,422 8,154 13,264 Minority interests 363 73 236 PROFIT FOR THE FINANCIAL PERIOD 10,785 8,227 13,500 Dividends 6 (2,362) (2,230) (5,014) RETAINED PROFIT FOR THE PERIOD 8,423 5,997 8,486 EARNINGS PER SHARE EXCLUDING NET PROFITS ON DISPOSALS 7 3.3p 2.8p 3.5p EARNINGS PER SHARE - BASIC 7 8.9p 6.8p 11.2p - DILUTED 7 8.6p 6.7p 11.2p Consolidated Balance Sheet As at 31 December 2000 As at As at As at 31 Dec 00 31 Dec 99 30 Jun (unaudited) (unaudited) 00 Note (audited) £'000 £'000 £'000 FIXED ASSETS Tangible assets Investment and development properties 8 707,766 585,282 690,802 Other tangible assets 258 2,451 2,979 Joint venture Share of gross assets 136,860 - - Share of gross liabilities (104,506) - - 9 32,354 - - Investments 3,213 3,048 1,953 743,591 590,781 695,734 CURRENT ASSETS Trading properties - 7,656 4,892 Debtors 10 37,921 10,443 26,510 Investments 916 750 750 Cash at bank and in hand 4,731 1,977 1,317 43,568 20,826 33,469 CREDITORS - AMOUNTS FALLING DUE WITHIN ONE YEAR (39,854) (22,914) (55,573) NET CURRENT ASSETS/(LIABILITIES) 3,714 (2,088) (22,104) TOTAL ASSETS LESS CURRENT LIABILITIES 747,305 588,693 673,630 CREDITORS - AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR (238,617) (173,610)(192,095) CONVERTIBLE UNSECURED LOAN STOCK (49,291) (49,237) (49,265) PROVISIONS FOR LIABILITIES AND CHARGES 11 (3,234) (3,669) (3,234) NET ASSETS 456,163 362,177 429,036 CAPITAL AND RESERVES Called up share capital 60,543 60,280 60,518 Share premium account 12 150,297 149,737 150,234 Revaluation reserve 12 146,569 95,781 145,040 Other reserves 12 51 51 51 Profit and loss account 12 82,336 54,573 59,452 SHAREHOLDERS' FUNDS 439,796 360,422 415,295 Minority interests 16,367 1,755 13,741 TOTAL CAPITAL EMPLOYED 456,163 362,177 429,036 NET ASSETS PER SHARE 7 363.2p 299.0p 343.1p Group Statement of Total Recognised Gains and Losses Six months ended 31 December 2000 Six months Six months Year to to to 30 Jun 31 Dec 00 31 Dec 99 00 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Profit for the financial period 10,785 8,227 13,500 Share of surplus arising on revaluation of investment properties 20,862 29,812 82,290 Revaluation surplus arising from part disposal of investment property - 1,870 1,870 Tax on realisation of revaluation surpluses on investment property disposals (4,872) (3,383) (4,212) Total recognised gains and losses for the period 26,775 36,526 93,448 Note of Historical Cost Profits and Losses Six months ended 31 December 2000 Six months Six months Year to to to 30 Jun 31 Dec 00 31 Dec 99 00 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Profit on ordinary activities before taxation 14,421 9,994 15,484 Realisation of property revaluation surpluses in prior periods 19,333 19,594 22,813 Historical cost profit on ordinary activities before taxation 33,754 29,588 38,297 Historical cost profit retained after tax and dividends 22,521 25,518 26,851 Reconciliation of Movements in Shareholders' Funds Six months ended 31 December 2000 Six months Six months Year to to to 30 Jun 31 Dec 00 31 Dec 99 00 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Total recognised gains and losses for the 26,775 36,526 93,448 period Dividends (2,362) (2,230) (5,014) Issue of shares 88 - 735 Increase in total capital employed 24,501 34,296 89,169 Opening shareholders' funds 415,295 326,126 326,126 Closing shareholders' funds 439,796 360,422 415,295 Consolidated Cash Flow Statement Six months ended 31 December 2000 Six months Six months Year to to to 30 Jun 31 Dec 00 31 Dec 99 00 Note (unaudited) (unaudited) (audited) £'000 £'000 £'000 OPERATING ACTIVITIES Net cash inflow before sales of and additions to trading properties 20,815 8,952 13,820 Net cash inflow from sales of and additions to trading properties 5,537 4,169 7,622 NET CASH INFLOW FROM OPERATING ACTIVITIES 13(a) 26,352 13,121 21,442 RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest received 185 115 368 Interest paid (10,228) (5,681) (14,085) NET CASH OUTFLOW FOR RETURNS ON INVESTMENTS AND SERVICING OF FINANCE (10,043) (5,566) (13,717) TAXATION Corporation tax paid (180) (12) (1,097) CAPITAL EXPENDITURE Acquisition of investment properties (54,518) (119,164) (222,314) Disposals and other capital receipts 54,372 70,019 129,176 Purchase of other fixed assets (990) (1,003) (1,860) Repayment of loan notes by investment - - 1,095 NET CASH OUTFLOW FOR CAPITAL EXPENDITURE (1,136) (50,148) (93,903) ACQUISITIONS AND DISPOSALS Purchase of joint venture (28,438) - - NET CASH OUTFLOW FOR ACQUISITIONS AND DISPOSALS (28,438) - - EQUITY DIVIDENDS PAID (2,785) (2,411) (4,641) CASH OUTFLOW BEFORE USE OF LIQUID RESOURCES AND FINANCING (16,230) (45,016) (91,916) FINANCING Issue of shares 88 - 735 Increase in debt 13(b) 19,556 46,711 92,216 NET INFLOW FROM FINANCING 19,644 46,711 92,951 INCREASE IN CASH IN THE PERIOD 13(b) 3,414 1,695 1,035 Notes to the Accounts 1 ABRIDGED ACCOUNTS The results for the six months ended 31 December 2000 do not constitute full statutory accounts within the meaning of Section 240 of the Companies Act 1985. The figures for the year to 30 June 2000 are based on the audited accounts for that year which have been reported on, without qualification, by the auditors and have been delivered to the Registrar of Companies. 2 NET OPERATING PROFIT/(LOSS) FROM SERVICED OFFICES Six months to Six months to Year to 31 Dec 00 31 Dec 99 30 Jun 00 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Gross operating income 2,764 49 975 Operational overheads (1,926) (423) (1,657) Gross operating profit/(loss) 838 (374) (682) Central overheads (245) (214) (382) Operating profit/(loss) 593 (588) (1,064) 3 PROFIT ON DISPOSAL OF TRADING AND INVESTMENT PROPERTIES The profit on disposal of trading and investment properties for the period ended 31 December 2000 comprises: Trading Investment properties properties Total £'000 £'000 £'000 Aggregate consideration 5,650 63,221 68,871 Less: sales costs (113) (872) (985) Net proceeds 5,537 62,349 67,886 Less: historical cost of properties (4,892) (40,542) (45,434) Historical cost profit 645 21,807 22,452 Less: revaluation surpluses in prior periods - (19,333) (19,333) 645 2,474 3,119 4 NET INTEREST PAYABLE AND SIMILAR CHARGES Six months Six months Year to to to 30 Jun 00 31 Dec 00 31 Dec 99 (audited) (unaudited) (unaudited) £'000 £'000 £'000 Amounts payable on bank loans and 9,419 5,757 12,881 overdrafts 5.75% Convertible Unsecured Loan Stock 2013 1,469 1,479 2,940 Less: interest capitalised (1,314) (2,881) (3,648) 9,574 4,355 12,173 Interest receivable (175) (107) (383) Group interest charge 9,399 4,248 11,790 Share of joint venture's net interest 1,279 - - 10,678 4,248 11,790 5 TAXATION The effective rate of taxation of 28% reflects the benefits of capital allowances claimed. 6 DIVIDENDS The interim dividend of 1.95p (1999 interim: 1.85p) per share is payable on 10 April 2001 to shareholders on the register at 16 March 2001. Dividends are calculated on 121,085,930 (1999 interim: 120,559,542) ordinary shares in issue. 7 EARNINGS/NET ASSETS PER SHARE The weighted average number of shares in issue during the period was 121,060,413 (1999: 120,559,542) and the earnings attributable to ordinary shares was £10,785,000 (1999: £8,227,000). The earnings on ordinary activities, excluding net profits on disposal of trading and investment properties and the disposal of shares in subsidiary undertakings, comprise net rental income less administration expenses less net interest payable and attributable taxation and amounted to £3,989,000 (1999: £3,332,000). The number of shares in issue at 31 December 2000 was 121,085,930 (1999: 120,559,542) and the net assets attributable to shareholders at 31 December 2000 was £439,796,000 (1999: £360,422,000). Diluted earnings per share reflect the potential exercise of conversion rights relating to the 5.75% Convertible Unsecured Loan Stock 2013 ('CULS') and of share options. In calculating diluted earnings per share, earnings have been adjusted to £11,813,000 (1999: £9,242,000) and the weighted average number of shares increased to 137,645,300 (1999: 137,041,041). Diluted net assets per share, reflecting the potential exercise of conversion rights relating to the CULS, were 356.1p as at 31 December 2000 (1999: 299.0p), based on net assets of £489,087,000 (1999: £360,422,000) and shares in issue of 137,340,117 (1999: 120,559,542). 8 FIXED ASSETS - TANGIBLE ASSETS The freehold and leasehold investment properties are stated on the basis of their open market values as at 31 December 2000. The valuation was carried out by DTZ Debenham Tie Leung Limited, Chartered Surveyors ('DTZ'), acting as External Valuers and in accordance with the Appraisal and Valuation Manual of the Royal Institution of Chartered Surveyors. The open market values are contained in the DTZ report dated 12 January 2001 with comparative figures as at 31 December 1999 also so stated. Additions and disposals are recognised upon unconditional exchange of contracts provided that completion takes place around 30 days thereafter. 9 JOINT VENTURE £'000 Share of net assets acquired 28,438 Surplus on revaluation of investment properties 3,649 Share of profit for the period 267 Share of net assets as at 31 December 2000 32,354 During the period the Group established a 50% partnership interest in Benchmark JER 1 Limited Partnership, which operates in the United Kingdom. The Group's share of that entity's results, assets and liabilities is as follows: Profit and loss account Period from 18 October to 31 December 2000 £'000 Operating profit 1,660 Net interest payable (1,279) Profit on ordinary activities before taxation 381 Taxation (114) Retained profit for the period 267 Balance sheet As at 31 December 2000 £'000 Investment properties at valuation 114,665 Trading properties 18,696 Cash 2,182 Other current assets 1,317 Current liabilities (4,328) Borrowings (100,178) 32,354 10 DEBTORS Included within debtors at 31 December 2000 are amounts totalling £28,605,000 representing the proceeds receivable from the sale of 27/28 Soho Square, W1 and the sale of 85% of the Group's interest in its serviced offices subsidiary, Nexus Estates PLC. 11 PROVISIONS FOR LIABILITIES AND CHARGES Provisions for liabilities and charges comprise deferred tax in respect of short term timing differences. 12 RESERVES Share Revaluation Other Profit premium reserve reserves and Total £'000 £'000 £'000 loss £'000 account £'000 As at 1 July 2000 150,234 145,040 51 59,452 354,777 Premium on shares issued 63 - - - 63 Share of surplus arising on revaluation of investment properties - 20,862 - - 20,862 Revaluation surpluses realised on investment property disposals - (19,333) - 19,333 - Tax on realisation of revaluation surpluses on investment property - - -(4,872) (4,872) disposals Retained profit for the period - - - 8,423 8,423 As at 31 December 2000 150,297 146,569 51 82,336 379,253 13 NOTES TO THE CONSOLIDATED CASHFLOW STATEMENT (a) Reconciliation of operating profit to operating cash flows Six months Six months Year to to to 30 Jun 31 Dec 00 31 Dec 99 00 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Operating profit 14,465 10,102 18,484 Depreciation 464 116 445 Profit on sale of trading properties (645) (2,504) (3,193) Amortisation of leasehold properties 400 216 464 Decrease/(increase) in debtors 5,755 (2,208) (8,013) Increase in investments (166) - - Increase in creditors 542 3,230 5,633 Net cash inflow before sales of and additions to trading properties 20,815 8,952 13,820 Net cash inflow from sales of and additions to trading properties 5,537 4,169 7,622 Net cash inflow from operating activities 26,352 13,121 21,442 (b) Reconciliation of net cash flow to movement in net debt Six months to Six months to Year to 31 Dec 00 31 Dec 99 30 Jun 00 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Increase in cash in the period 3,414 1,695 1,035 Cash inflow from increase in debt (19,556) (46,711) (92,216) Movement in net debt (16,142) (45,016) (91,181) Net debt at start of period (267,035) (175,854) (175,854) Net debt at end of period (283,177) (220,870) (267,035) (c) Analysis of net debt As at As at 31 Dec 00 Cashflow 30 Jun 00 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Cash at bank and in hand 4,731 3,414 1,317 Debt due within one year - 26,992 (26,992) Debt due after more than one year (287,908) (46,548) (241,360) Net debt (283,177) (16,142) (267,035) 14 REPORT CIRCULATION Copies of the interim report are available from the Company's Registered Office at 25 Sackville Street, London, W1S 3EL.

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