Interim Results
Capital & Regional PLC
23 September 2002
23 September 2002
INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2002
Capital & Regional plc, the co-investing property asset manager, today announces
its interim results for the six months ended 30 June 2002.
Highlights:
• Culmination of plans to convert to a co-investing property asset manager:-
• completion on 3 January of The Junction Fund (retail parks) and on 28
February of The Mall Fund (shopping centres);
• Completed the return of £50m of capital through Tender Offer;
• Profit before property sales and exceptional items up 22.7% to £5.4m
(June 2001: £4.4m);
• Management fees increased to £2.6m from £0.7m during transitional first
half;
• EPS on revenue activities up by 44% to 7.5p (June 2001: 5.2p);
• Fully diluted net assets per share increased by 8.8% to 371.4p (December
2001: 341.3p);
• Dividend increased by 20% to 3.0p (June 2001: 2.5p)
• The Mall Fund: Geared return of 7.5% over the first four months and a
property level return of 5.1%;
• The Junction Fund: Geared return of 8.9% over the first six months and a
property level return of 6.3%;
• Commencement of the Xscape roll-out programme;
• Glasgow Fort, JV with Pillar Property PLC - progressing well;
Commenting on the results, Martin Barber, Chief Executive said:
" The sectors within which we operate are proving extremely resilient. We have
the management teams and focus that we believe will enable our funds to
out-perform the market in general. Whilst our new business model is in its early
days, we are very well placed to build revenues as we progressively deliver
out-performance and expand the scale of the funds we manage."
For further information:
Martin Barber, Chief Executive: 020 7796 4133 on 23 September / 020 7932 8000 thereafter
Lynda Coral, Financial Director: 020 7796 4133 on 23 September / 020 7932 8000 thereafter
Andrew Hayes / Wendy Baker, Hudson Sandler Ltd - 020 7796 4133
CHAIRMAN'S & CHIEF EXECUTIVE'S STATEMENT
The first six months of this year mark the culmination of our plans to convert
Capital & Regional plc from a property investment company to a co-investing
property asset manager. On 3 January we established The Junction Fund and on 28
February we established The Mall Fund.
In April, we completed a £50m Tender Offer to buy back shares, bringing the
total capital returned to shareholders to £94m over the past two years. Our
shareholders overwhelmingly supported the establishment of these funds and the
Tender Offer. The minority of shareholders who opposed our strategy have now
disposed of their holdings in the Group. They have been replaced by several
major international institutions.
As a result of our significant costs involved in the establishment of the funds,
including early debt repayment, there is an exceptional item of £7.2m which has
been taken to the profit and loss account in the first half. The underlying
profits from our ongoing business operations made good progress with profits,
before property sales, exceptional items and taxation up by 22.7%% to £5.4m
(June 2001: £4.4m).
Underlying profits per share on the same basis rose by 42% to 7.4p (June 2001:
5.2p). We are also pleased to report that the asset backing per share is up 8.8%
to 371.4p per share in the six month period after the impact of the exceptional
item referred to above.
STRATEGY
Capital & Regional plc is a co-investing property asset manager. We formed a
retail park fund and a shopping mall fund with a single partner Morley Fund
Management, a division of Aviva plc, which has virtually doubled the value of
properties that our teams are managing. Our strategy is to bring in additional
investors and to further our acquisition policy. We were pleased with Commercial
Union Life Assurance Company Limited's investment of £71 million into The
Junction Fund on 17 July which facilitated the acquisition of a portfolio of
retail warehouse parks costing £145m. Discussions are being held at the present
time with several other institutions to expand both funds.
OUR APPROACH
The Group's success in bringing together top calibre teams is a key feature of
our development strategy, as we expand our current funds and look to establish
complementary new funds. The motivation of our management, which is a vital
influence on the funds' performance, is therefore of crucial importance to both
the funds' investors and the shareholders in the Group. Our ability to deploy
capital as well as management expertise makes Capital & Regional plc the partner
of choice.
A hallmark of our approach to asset management is the priority we attach to
brand development to build awareness of the values and advantages of our
properties to the public. Actively marketing an asset is key to attracting
increased footfall and, therefore, building value. Accordingly, The Junction,
The Mall and Xscape will continue to invest in building their brands in their
respective market segments.
FINANCIAL
In this year of transformation, and with the introduction of new accountings
standards, we believe that it is helpful to shareholders to include a summarised
earnings statement below so that the underlying performance of the Group can be
more clearly understood.
Summarised Profit and Loss Account Year to 25 6 months to
December 2001 24 June 2001
6 months to 30
June 2002 (Restated) (Restated)
£ m £ m £m
Net rental income 8.1 49.0 25.4
Management fees 2.6 1.5 0.7
Snozone profit 0.2 0.1 -
Other operating income 0.2 0.6 0.6
Overheads (5.5) (10.2) (4.1)
Profit before interest in joint ventures and associates and net 5.6 41.0 22.6
interest payable
Share of profit of joint ventures and associates after interest 6.0 0.7 (0.9)
Group net interest payable (6.2) (32.0) (17.3)
Profit before property sales and exceptional items 5.4 9.7 4.4
Profit on sale of trading properties 0.2 0.2 -
Profit before investment property sales and exceptional items 5.6 9.9 4.4
(Loss) / profit on sale of investment properties (1.2) 1.5 0.4
Exceptional items (7.2) - -
(Loss) / profit before taxation (2.8) 11.4 4.8
Corporation Tax and minority interest 0.3 (0.2) -
FRS19 Deferred Tax (0.4) 8.6 (0.1)
Dividend (1.8) (4.8) (2.0)
(Loss) / profit retained in the period (4.7) 15.0 2.7
Profit before property sales and exceptional items per share 7.4p 11.8p 5.2p
Weighted average number of shares 72,857,000 82,272,918 85,746,495
The underlying profit before property sales and exceptional items rose by 22.7%
to £5.4m from £4.4m with profit per share on the same definition increasing by
42.3% to over 7.4p from 5.2p in the previous year. Management fees at £2.6m are
beginning to show their increasing importance to the Group's profitability. The
fully diluted net assets per share increased by 8.8% from 341.3p (restated) to
371.4p in the six month period despite the exceptional cost discussed above.
After adjustment for deferred tax and debt valuation, net assets per share
increased by 27.1p to 356.0p compared to 328.9p at December 2001 (8.2%
increase). Gearing has fallen from 138.9% (restated) at December 2001 to 47.6%,
including the effect of the capital reduction. Through a Tender Offer, the Group
bought back 17,543,744 Ordinary shares at a price of £2.85 per share on 26 April
2002.
A new accounting standard, FRS19, requires us to provide for deferred tax on
capital allowances claimed. As we have demonstrated with the sale of our retail
parks and shopping centre assets into funds, deferred tax provided may not
become an actual liability as capital allowances claimed are rarely passed on to
a purchaser. The implementation of this standard has resulted in a credit to the
profit and loss account of £8.6m in the year ended 25 December 2001.
The dividend is being raised by 20% to 3p per share (June 2001: 2.5p) and
reflects the Board's policy of increasing the dividend as earnings progress and
its confidence in the outlook for the business. This will be paid on 18 October
2002 to shareholders on the register on 4 October 2002.
THE MALL FUND
The Mall Fund, led by Chief Executive, Ken Ford, was launched on 28 February
2002 with initial gross assets of £656 million comprising eleven Malls.
Performance over the first four months (after fees, expenses and interest)
produced a geared return of 7.5% (income: 2.4%, capital: 5.1%) and a property
level return of 5.1%. The Mall Fund objective is to grow assets to in excess of
£2 billion, investing and operating in excess of 30 Malls.
Following the creation of the fund, we launched The Mall, our shopping centre
brand, in March 2002. Our intention is to build a brand that is synonymous with
shopping satisfaction through safe secure centres, an excellent tenant mix,
first class facilities, constantly new and exciting shopping experiences and a
strong community focus.
Over the four month period net rental income has increased by 3.2% to £52.5m per
annum with rental value also rising by 3.5% to £63.8m per annum. The valuation
of the fund's portfolio increased by 4.6% to £685.5 million and we were pleased
to have reduced the void rate from 3% to 2.6%. These encouraging performance
statistics reflect both the positive trading environment for our centres
combined with the success of our active and innovative approach to centre
management.
THE JUNCTION FUND
The Junction Fund, led by Chief Executive Andrew Lewis-Pratt, was launched on 3
January 2002 with initial gross assets of £322 million comprising eleven retail
parks.
In July, The Junction acquired a £145 million portfolio from Burford Holdings
Ltd and simultaneously sold one of the smaller parks for a profit. To provide
equity for the acquisition of this portfolio Commercial Union Life Assurance
Company Limited invested £71m of equity into the fund, thus reducing Capital &
Regional's holding to 35%. The Junction's objective is to grow assets to in
excess of £1 billion, investing and operating in excess of 20 retail parks.
Performance over the first six months (after fees, expenses and interest)
produced a geared return of 8.9% (income: 1.5%, capital: 7.4%) and a property
level return of 6.3%.
Support of The Junction's initiatives is illustrated by the successful
pre-lettings at our first 'Pod' development at The Junction, Hull (due to open
in Spring 2003) to Carphone Warehouse and Starbucks (their first retail park
outlet in the UK). The climbing wall has been let to Silvertrek. The innovative
and futuristic design of the 'Pod' will be introduced over time to many of The
Junction parks. They will provide customers with public conveniences, as well as
places to shop, meet, eat and play.
The Junction offers its investors sectoral specialisation, gearing and a spread
of risk over a dispersed portfolio of large destination parks. The fund's
management team have enormous experience of this sub sector and are strongly
placed to extract value from this asset base.
GLASGOW FORT
We have entered into a joint venture agreement with Pillar Property PLC for the
development of a new park on the M8 east of Glasgow, which will be called
Glasgow Fort. The development comprises 300,000 sq ft of open A1 retail space
and we are currently securing pre-lettings to major retailers at levels above
expectation.
XSCAPE
September marks the first anniversary of the appointment of PY Gerbeau as Chief
Executive of Xscape. The key objective was to exploit the Xscape brand, concept
and vision.
At Xscape, Milton Keynes footfall in the second year of opening has run almost
15% higher than in the first year and visitors are staying considerably longer
than they did in the first year.
We operate Snozone, the real snow slope. This control gives us considerable
advantages as developer and manager as well as a good earnings stream now that
costs have been tightly controlled and an aggressive sales strategy implemented.
Our development programme continues according to plan. At Xscape, Castleford
construction is well underway and expected to open Autumn 2003. 66% of floor
space is pre- let, and a further 10% is either in solicitors' hands or at a well
progressed stage of negotiation. At Xscape, Braehead outline planning consent
has now been received. Marketing of pre-letting has commenced and the current
anticipated start date on site is June 2003.
We are receiving approaches from developers of similar projects from other parts
of the world to assist them with our management expertise and/or possibly to
co-invest. We are continuing to consider these opportunities.
BOARD CHANGE
As we announced on 23 August 2002 Roger Boyland, Director of Corporate Finance
and one of the founding directors of Capital & Regional, will be leaving the
Company on 30 September 2002.
We would like to thank him for his outstanding contribution to the creation and
development of the Group since 1979 and wish him every success in the future.
OUTLOOK
The sectors within which we operate are proving extremely resilient. We have the
management teams and focus that we believe will enable our funds to out-perform
the market in general. Whilst our new business model is in its early days, we
are very well placed to build revenues as we progressively deliver
out-performance and expand the scale of the funds we manage. We look forward
with considerable confidence to the expansion of the funds and our earnings in
the years to come.
Independent Auditors' Report to Capital & Regional plc
We have been instructed by the company to review the financial information for
the period ended 30 June 2002 which comprises the profit and loss account, the
balance sheet, the statement of total recognised gains and losses and the
reconciliation of movements in shareholders' funds, the cash flow statement and
the related notes 1 to 16. We have read the other information contained in the
interim report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors are
responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly, we do not
express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the period ended 30
June 2002.
Deloitte & Touche
Chartered Accountants
London
23 September 2002
CONSOLIDATED PROFIT AND LOSS ACCOUNT
(Restated) (Restated)
(Unaudited) (Unaudited) (Audited)
6 months to 6 months to Year to
30 June 24 June 25 December
Notes 2002 2001 2001
£000 £000 £000
Turnover: group income and share of 3 21,980 34,095 77,735
joint ventures' turnover
Less: share of joint ventures' turnover (7,350) (2,091) (15,620)
Group turnover 14,630 32,004 62,115
Cost of sales (3,692) (5,997) (11,485)
Gross profit 10,938 26,007 50,630
Profit on sale of trading and development properties 4 167 35 183
Administrative expenses (5,536) (4,059) (10,154)
Other operating income 192 605 590
Group operating profit 5,761 22,588 41,249
Share of operating profit in joint ventures and associates 12,886 331 3,068
Total operating profit 3 18,647 22,919 44,317
Exceptional items 5 (7,178) - -
(Loss)/profit on sale of investment properties 4 (1,143) 370 1,439
Profit on ordinary activities before interest 10,326 23,289 45,756
Interest receivable and similar income 661 1,182 1,587
Interest payable and similar charges 6
- Group (6,678) (18,420) (33,533)
- Share of joint ventures and associates (7,071) (1,230) (2,447)
(13,749) (19,650) (35,980)
(Loss) / profit on ordinary activities before taxation (2,762) 4,821 11,363
Taxation 7 (51) (424) 8,145
(Loss) / profit on ordinary activities after taxation (2,813) 4,397 19,508
Equity minority interests (8) 298 250
(Loss) / profit attributable to the shareholders of the (2,821) 4,695 19,758
Company
Equity dividends paid and payable (1,863) (1,971) (4,731)
(Loss) / profit retained in the period 13 (4,684) 2,724 15,027
(Loss) / earnings per share 8 (3.9)p 5.5p 24.0p
(Loss) / earnings per share - diluted 8 (3.9)p 5.5p 22.6p
Earnings per share on revenue activities 8 7.5p 5.2p 12.4p
The 2001 comparative amounts have been restated in accordance with Financial Reporting Standard 19 'Deferred Tax' (see
note 1). Certain comparatives have been reclassified to be consistent with presentation in the current year.
CONSOLIDATED BALANCE SHEET
(Restated) (Restated)
(Unaudited) (Unaudited) (Audited)
As at As at As at
30 June 24 June 25 December
Notes 2002 2001 2001
£000 £000 £000
Fixed assets
Property assets 9 62,082 721,782 703,338
Other fixed assets 13,429 14,542 13,966
75,511 736,324 717,304
Investment in joint ventures 11
Share of gross assets 117,763 86,878 91,497
Share of gross liabilities (69,787) (58,996) (62,014)
47,976 27,882 29,483
Investment in associates 10 261,986 - -
385,473 764,206 746,787
Current assets
Property assets 9 15,158 22,529 28,126
Debtors 36,170 42,995 36,232
Cash at bank and in hand 5,865 935 8,567
57,193 66,459 72,925
Creditors: amounts falling due within one year (31,750) (61,280) (70,655)
Net current assets 25,443 5,179 2,270
Total assets less current liabilities 410,916 769,385 749,057
Creditors: amounts falling due after more than one year (133,503) (439,065) (437,502)
Convertible Unsecured Loan Stock (24,360) (24,268) (24,314)
Provision for liabilities and charges (1,108) (10,576) -
Net assets 3 251,945 295,476 287,241
Capital and reserves
Called up share capital 13 6,171 7,886 7,886
Share premium account 13 162,693 161,927 161,927
Revaluation reserve 13 65,273 95,148 82,988
Other reserves 13 4,290 2,535 2,535
Profit and loss account 13 13,518 27,980 31,905
Equity shareholders' funds and capital employed 251,945 295,476 287,241
Net assets per share 12 408.3p 374.7p 364.3p
Net assets per share - diluted 12 371.4p 350.2p 341.3p
The 2001 comparative amounts have been restated in accordance with Financial Reporting Standard 19 'Deferred Tax' (see
note 1).
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
(Restated) (Restated)
(Unaudited) (Unaudited) (Audited)
6 months to 6 months to Year to
30 June 24 June 25 December
2002 2001 2001
£000 £000 £000
Share of unrealised surplus/(deficit ) on valuation of 432 (14,309) (33,003)
investment properties
Share of unrealised (deficit )/surplus on valuation of other (421) 341 (117)
fixed assets
Share of unrealised surplus/(deficit ) on valuation of 20,990 (653) (537)
properties in joint ventures and associates
Share of tax on revaluation surpluses realised in period (1,574) 489 (3,218)
Deferred tax provided on unrealised revaluation surpluses - - 2,205
19,427 (14,132) (34,670)
(Loss) / profit attributable to the shareholders of the Company (2,821) 4,695 19,758
Total recognised gains and losses relating to the period 16,606 (9,437) (14,912)
Prior year adjustment (see note 1) (1,870)
Total recognised gains and losses since last annual report 14,736
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
(Restated) (Restated)
(Unaudited) (Unaudited) (Audited)
6 months to 6 months to Year to
30 June 24 June 25 December
2002 2001 2001
£000 £000 £000
(Loss) / profit attributable to shareholders of the Company (2,821) 4,695 19,758
Equity dividends paid and payable (1,863) (1,971) (4,731)
(Loss) / profit retained in the period (4,684) 2,724 15,027
Share capital and share premium issued in period 806 34 34
Share capital purchased and cancelled in period (including expenses) (50,845) (23,325) (23,325)
Other recognised gains and losses relating to the period (see above) 19,427 (14,132) (34,670)
Net reduction to shareholders' funds (35,296) (34,699) (42,934)
Opening shareholder's funds as previously stated 289,111 340,617 340,617
Prior year adjustment (see note 1) (1,870) (10,442) (10,442)
Opening shareholders' funds' as restated 287,241 330,175 330,175
Closing shareholders' funds 251,945 295,476 287,241
The 2001 comparative amounts have been restated in accordance with Financial Reporting Standard 19 'Deferred Tax' (see
note 1).
SUMMARY CASH FLOW STATEMENT
(Unaudited) (Unaudited) (Audited)
6 months to 6 months to Year to
30 June 24 June 25 December
Notes 2002 2001 2001
£000 £000 £000
Net cash (outflow) / inflow from operating activities 14 (13,202) 20,327 38,232
Distributions received from joint ventures 465 400 928
Distributions received from associates 1,880 - -
Returns on investments and servicing of finance (10,726) (17,722) (33,895)
(21,583) 3,005 5,265
Taxation (6,020) (2,501) (2,777)
Net operating cash flow (27,603) 504 2,488
Capital expenditure and financial investment 636,049 171,758 190,990
608,446 172,262 193,478
Acquisitions, disposals and exceptional items (254,448) (2,882) (2,929)
353,998 169,380 190,549
Equity dividends paid (2,770) (2,884) (4,855)
Cash inflow before financing 351,227 166,496 185,694
Financing:
Issue of ordinary share capital 806 34 34
Purchase of ordinary share capital (50,845) (33,491) (33,491)
Cash (out) / inflow from debt financing (303,891) (138,195) (149,761)
(Decrease)/Increase in cash in the period (2,702) (5,156) 2,476
Reconciliation of net cash flow to movement in net debt (Unaudited) (Unaudited) (Audited)
6 months to 6 months to Year to
30 June 24 June 25 December
2002 2001 2001
£000 £000 £000
Decrease/(Increase) in cash in the period (2,702) (5,156) 2,476
Cash outflow from debt financing 303,891 138,195 149,760
Change in net debt resulting from cash flows 301,189 133,039 152,236
Reclassification of debt in joint arrangement - - -
Net debt at beginning of period (457,265) (609,501) (609,501)
Net debt at end of period (156,076) (476,462) (457,265)
Analysis of net debt (Unaudited) (Unaudited) (Audited)
6 months to 6 months to Year to
30 June 24 June 25 December
2002 2001 2001
£000 £000 £000
Cash in hand and at bank 5,865 935 8,567
Debt due within one year (3,450) (13,543) (3,540)
Debt due after one year (158,491) (463,854) (462,292)
(156,076) (476,462) (457,265)
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies
The financial information included in the Interim Report comprises
consolidated profit and loss account, balance sheet, statement of total
recognised gains and losses, reconciliation of movement in shareholders'
funds and summary cash flow statement. They have been prepared on the basis
of the accounting policies set out in the Report and Accounts for the year
ended 25 December 2001, save for the adoption of FRS 19, "Deferred tax".
The comparatives have been restated to comply with the requirements of FRS
19.
Deferred tax is provided in accordance with FRS 19 on all timing differences
which have originated but not reversed at the balance sheet date. Deferred
tax is measured on a non-discounted basis. The Group previously only
provided for deferred tax to the extent that liabilities or assets were
expected to reverse in the foreseeable future.
On disposal of a property, any provision for deferred tax no longer required
will be released to the profit and loss account.
Deferred tax is not provided on revaluation gains unless by the balance
sheet date there is a binding agreement to sell the assets, and the gain or
loss arising on sale has been recognised in the financial statements.
The effect of this restatement, together with the impact on the current
period's results are summarised below:
(Unaudited)
(Unaudited) 6 months to (Audited)
6 months to 24 June Year to
30 June 2001 25 December
2002 £000 2001
£000 £000
Profit and loss account
Increase / (decrease) in deferred tax charge 393 134 (8,572)
Balance sheet
Reduction in net assets 2,263 10,576 1,870
2. Financial information and presentation
The results and cash flows for the six months ended 30 June 2002 represent
the Group's results and cash flows for the period from 26 December 2001 to
30 June 2002. The comparative figures represent the Group's results and cash
flows for the periods from 26 December 2000 to 24 June 2001 and 26 December
2000 to 25 December 2001.
The interim results have not been audited but have been reviewed by the
auditors and do not constitute statutory accounts.
The comparative figures for the year ended 25 December 2001 do not
constitute statutory accounts but have been extracted from the statutory
accounts for that period, which have been filed with the Registrar of
Companies. The auditors' report in respect of the year ended 25 December
2001 is unqualified and does not contain a statement under Companies Act
1985 sections 237 (2) or (3).
NOTES TO THE FINANCIAL STATEMENTS (CONT)
3. Segmental analysis
Turnover, profit on ordinary activities before taxation and operations arise
in the UK.
(Restated) (Restated)
(Unaudited) (Unaudited) (Audited)
6 months to 6 months to Year to
30 June 24 June 25 December
2002 2001 2001
£000 £000 £000
Turnover
Rental income 10,075 29,590 57,084
Property and asset management 2,644 738 1,509
Snozone 1,911 1,676 3,522
Group turnover 14,630 32,004 62,115
Joint ventures 7,350 2,091 15,620
Turnover: Group turnover and share of joint ventures 21,980 34,095 77,735
Operating profit
Rental income 8,268 25,899 49,622
Property and asset management 2,644 738 1,509
Snozone 218 (25) 89
Sale of trading & development properties 167 35 183
11,297 26,647 51,403
Associates 10,382 - -
Joint ventures 2,504 331 3,068
24,183 26,978 54,471
Administrative expenses (5,536) (4,059) (10,154)
Total operating profit 18,647 22,919 44,317
Net assets
Rental income 62,082 721,781 703,338
Property and asset management - - -
Sale of trading & development properties 15,158 22,529 28,126
Snozone 142 95 145
Other 13,287 14,447 13,821
Associates 261,986 - -
Joint ventures 47,976 27,882 29,483
Other assets / (liabilities) and group debt (148,686) (491,258) (487,672)
Net assets 251,945 295,476 287,241
NOTES TO THE FINANCIAL STATEMENTS (CONT)
4. Asset sales
Fixed assets Current assets
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
6 months ended 6 months ended 6 months ended 6 months ended
30 June 2002 24 June 2001 30 June 2002 24 June 2001
£000 £000 £000 £000
Net sale proceeds 648,857 189,994 18,687 423
Cost of sales (611,284) (164,842) (18,520) (388)
Historical cost profit 37,573 25,152 167 35
Revaluation surplus (38,716) (24,782) - -
(Loss) / profit recognised (1,143) 370 167 35
on sale of assets
5. Exceptional items
(Unaudited) (Unaudited) (Audited)
6 months to 6 months to Year to
30 June 24 June 25 December
2002 2001 2001
£000 £000 £000
Loan breakage costs 3,929 - -
Transaction costs 2,148 - -
Group reorganisation costs 1,101 - -
Total cost of fundamental reorganisation 7,178 - -
Group reorganisation costs include the redundancy costs of seven members of
staff.
6. Interest payable and similar charges
(Unaudited) (Unaudited) (Audited)
6 months to 6 months to Year to
30 June 24 June 25 December
2002 2001 2001
£000 £000 £000
Bank loans and overdrafts 6,151 17,669 31,985
Other loans 897 863 1,663
7,048 18,532 33,648
Capitalised in period (370) (112) (115)
6,678 18,420 33,533
Share of associates and joint ventures interest payable 7,071 1,230 2,447
13,749 19,650 35,980
NOTES TO THE FINANCIAL STATEMENTS (CONT)
7. Taxation
The taxation charge for the period has based on an estimate of the likely
effective tax rate for the year.
(Unaudited) (Unaudited) (Audited)
6 months to 6 months to Year to
30 June 24 June 25 December
2002 2001 2001
£000 £000 £000
Group
Current period corporation tax 167 262 1,335
Prior years (273) - (1,135)
Tax credit on exceptional items (1,509) - -
Deferred tax 1,443 134 (8,572)
Share of tax of joint ventures 223 28 227
Total 51 424 (8,145)
The tax credit in respect of the restated comparatives for the year ended 25
December 2001 has arisen due to the release of deferred tax provisions in
respect of capital allowances permanently retained on property disposals.
8. (Loss) / earnings per share
(Loss) / earnings per share have been calculated on a weighted average of
72,857,000 Ordinary shares of 10p each in issue during the period (six
months to 24 June 2001: 85,746,495, year to 25 December 2001: 82,272,918)
and have been based on loss on ordinary activities after taxation and
minority interests of £2,821,000 (six months to 24 June 2001 restated:
profit £4,695,000, year to 25 December 2001 restated: profit £19,758,000).
Diluted earnings per share have been calculated after allowing for the
exercise of share options which have met the required exercise conditions.
The calculation does include the full conversion of the Convertible
Unsecured Loan Stock, if the effect on earnings per share is dilutive. The
weighted average number of Ordinary shares of 10p each is 72,857,000, (six
months to 24 June 2001: 86,065,241, year to 25 December 2001: 95,025,530)
and the relevant loss is £2,821,000 (six months to 24 June 2001: profit
£4,695,000, year to 25 December 2001: profit £21,446,000).
Earnings per share on revenue activities exclude the loss on the sale of
investment properties and exceptional items and associated tax charge and
minority interests thereon, of £8,255,000 (six months to 24 June 2001:
profit £259,000, year to 25 December 2001: profit £9,579,000).
NOTES TO THE FINANCIAL STATEMENTS (CONT)
9. Property assets
Fixed Current Total
property property property
assets assets assets
£000 £000 £000
Cost or valuation
As at 25 December 2001 703,338 28,126 731,464
Refurbishment and development expenditure 280 4,757 5,037
Amortisation of short leasehold properties (101) - (101)
Disposals (641,867) (17,725) (659,592)
Revaluation 432 - 432
As at 30 June 2002 62,082 15,158 77,240
Fixed property assets at 30 June 2002 as per balance sheet 62,082
UITF 28 adjustment at 30 June 2002 included in current assets 523
Total fixed property assets as valued below 62,605
The fixed property assets were valued at 30 June 2002, as follows: £000
DTZ Debenham Tie Leung Open Market Value 37,060
Insignia Richard Ellis Limited Open Market Value 18,675
Directors Open Market Value 220
Directors Net sale proceeds of properties sold after 30 June 2001 6,650
62,605
Valuations are at open market value or existing use value as defined in the
Appraisal and Valuation Manual of The Royal Institution of Chartered
Surveyors.
NOTES TO THE FINANCIAL STATEMENTS (CONT)
10. Associates
The Mall The Junction Total to 30 June Total to 24 June
Partnership Partnership 2002 2001
Associates
£000 £000 £000 £000
Profit and loss account
Turnover 19,471 8,827 28,298 -
Operating profit 13,764 7,000 20,764 -
Net interest payable (5,861) (4,628) (10,489) -
Profit for the period 7,903 2,372 10,275 -
Balance sheet
Investment properties 685,550 336,180 1,021,730 -
Current assets 28,036 8,532 36,568 -
Current liabilities (27,644) (8,180) (35,824) -
Borrowing due in more than one (328,559) (169,098) (497,657) -
year
Net assets 357,383 167,434 524,817 -
Group share
Percentage interest at period end 50.0% 50.0%
Group share of
Operating profit 6,882 3,500 10,382 -
Interest (2,931) (2,314) (5,245) -
Profit for the period 3,951 1,186 5,137 -
Revaluation surplus for the period 8,652 5,711 14,363 -
Associate net assets 178,691 83,717 262,408 -
Unrealised profit on sale of (422) - (422) -
property to associate
Group share of associates net 178,269 83,717 261,986 -
assets
NOTES TO THE FINANCIAL STATEMENTS (CONT)
11. Joint ventures
Xscape Xscape Castleford Capital Hill
Joint ventures Milton Partnership Partnership
Keynes
Partnership
£000 £000 £000
Profit and loss account
Turnover 1,818 - 1,044
Operating profit 1,472 - 1,021
Net Interest (payable) / receivable (1,684) - 7
(Loss) / profit for the period (212) - 1,028
Balance sheet
Investment properties 71,810 12,443 38,480
Current assets 7,559 227 1,356
Current liabilities (3,812) (71) (878)
Borrowing due in more than one year (46,800) (4,000) -
Net assets 28,757 8,599 38,958
Group share
Percentage interest at period end 50.0% 66.7% 50.0%
Group share of
Turnover 909 - 522
Operating profit 736 - 511
Interest (842) - 4
(Loss) / profit for the period (106) - 515
Revaluation (deficit) / surplus for the period (264) - 472
Joint venture net assets 8,653 5,733 19,481
NOTES TO THE FINANCIAL STATEMENTS (CONT)
Auchinlea Sauchiehall Centre Total Total
Joint ventures Partnership Limited Others to 30 June 2002 to 24 June 2001
continued £000 £000 £000 £000 £000
Profit and loss
account
Turnover 377 1,312 10,148 14,699 4,181
Operating profit 273 1,308 934 5,008 662
Interest (payable) / (289) (994) (351) (3,311) (2,403)
receivable
(Loss) / profit for (16) 314 583 1,697 (1,741)
the period
Balance sheet
Investment 29,350 45,222 7,625 204,930 150,785
properties
Current assets 682 3,301 13,246 26,371 22,970
Current liabilities (570) (7,535) (5,597) (18,463) (21,873)
Borrowing due in (11,000) (34,501) (12,200) (108,501) (85,686)
more than one year
Net assets 18,462 6,487 3,074 104,337 66,196
Group share
Percentage interest 50.0% 50.0% 50.0%
at period end
Group share of
Turnover 189 656 5,074 7,350 2,091
Operating profit 137 654 467 2,505 331
Interest (145) (497) (176) (1,656) (1,202)
Profit / (loss) for (8) 157 291 849 (871)
the period
Revaluation 3,939 2,676 (196) 6,627 645
(deficit) / surplus
for the period
Joint venture net 9,231 3,243 1,635 47,976 27,882
assets
12. Net assets per share
Net assets per share have been calculated on 61,711,015 Ordinary shares of
10p each (24 June 2001: 78,855,975, 25 December 2001: 78,855,975) in issue
at 30 June 2002 and have been based on net assets attributable to
shareholders of £251,945,000 (24 June 2001: £295,476,000, 25 December 2001:
£287,241,000).
Diluted net assets per share assumes that all of the Convertible Unsecured
Loan Stock ("CULS") had been converted at the balance sheet date. Diluted
net assets per share have been calculated on Ordinary shares of 10p each and
have been based on adjusted net assets attributable to shareholders of
£276,214,000 (24 June 2001 restated: £319,654,000, 25 December 2001
restated: £311,464,000) by adding the £24,268,000 (24 June 2001:
£24,178,000, 25 December 2001; £24,223,000) balance sheet value of the CULS.
Triple net asset value per share for 30 June 2002 is 356.0p (24 June 2001
restated: 329.6p, 25 December 2001 restated: 328.9p). Triple net asset value
has been adjusted for contingent deferred tax at 30 June 2002 of £10,243,000
(24 June 2001 restated: £17,257,000, 25 December 2001 restated: £8,815,000)
and the fair value adjustment of fixed rate debt instruments to market value
at 30 June 2002 (note 15) of £1,170,000 (24 June 2001: £1,548,000, 25
December 2001: £2,499,000).
NOTES TO THE FINANCIAL STATEMENTS (CONT)
13. Reserves
Property
Revaluation
Share Capital reserve Profit and loss
capital Share premium redemption £000 account Total
£000 £000 reserve £000 £000
£000
At beginning of year 7,886 161,927 2,535 82,988 33,775 289,111
Prior year adjustment - - - - (1,870) (1,870)
- FRS 19
Revised balance as at 7,886 161,927 2,535 82,988 31,905 287,241
25 December 2001
Issue of share 40 766 - - - 806
capital
Share buy back and (1,755) - 1,755 - (50,845) (50,845)
cancellation
Revaluation of
investment properties - - - 11 - 11
& other fixed assets
Share of revaluation
surplus of JV's & - - - 20,990 - 20,990
associates
Tax on revaluation
surpluses realised in - - - - (1,574) (1,574)
the period
Realisation of
surplus on disposal - - - (38,716) 38,716 -
of investment
properties
Profit retained in - - - - (4,684) (4,684)
the period
At end of period 6,171 162,693 4,290 65,273 13,518 251,945
NOTES TO THE FINANCIAL STATEMENTS (CONT)
14. Reconciliation of net cash inflow from operating activities
(Restated) (Restated)
(Unaudited) (Unaudited) (Audited)
6 months to 6 months to Year to
30 June 24 June 25 December
2002 2001 2001
£000 £000 £000
Group operating profit 5,761 22,588 41,249
Profit on sale of trading and development properties (167) (35) (183)
5,594 22,553 41,066
Depreciation of other fixed assets 174 218 486
Amortisation of short leasehold properties 101 86 202
Amortisation of tenant incentives 344 1,100 1,741
Profit on disposal of fixed assets (5) (31) (74)
Decrease / (increase) in trade debtors, other debtors and prepayments (6,087) 7,567 3,564
(Decrease) / increase in trade creditors, other creditors, taxation (13,323) (11,166) (8,753)
and social security and accruals
Net cash flow from operating activities (13,202) 20,327 38,232
15. Debt valuation
The table below shows the market value of fixed rate debt instruments, and
reflects the difference between the interest yield curve as at 30 June 2002
and the rates historically committed; namely the fair value adjustment.
(Unaudited) (Unaudited) (Audited)
As at As at As at
30 June 24 June 25 December
2002 2001 2001
£000 £000 £000
Book value and notional principal 190,542 198,642 198,642
Fair value (192,213) (200,854) (202,212)
Fair value adjustment attributable to the Group (1,671) (2,212) (3,570)
Net of tax at 30% (1,170) (1,548) (2,499)
Effect on fully diluted net asset per share (1.6)p (1.7)p (2.7)p
16. Copies of the Interim Report
Copies of the Interim Report are available from the Company's registered office
at 10 Lower Grosvenor Place, London, SW1W 0EN.
This information is provided by RNS
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