Interim Results
Capital & Regional PLC
18 September 2003
18 September 2003
INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2003
Capital & Regional plc, the co-investing property asset manager, today announces
its unaudited interim results for the six months ended 30 June 2003.
Highlights:
• Increase in properties under management from £1.5b to £2.6b over the
six month period including circa £500m from the acquisition of the fund
management business of MWB;
• Net asset value per share increased by 11.6% to 433p over the six month
period on a fully diluted basis (31 December 2002 388p);
• Profit before tax of £8.3m (30 June 2002 £4.4m before exceptionals of £7.2m);
• Total return, including revaluation surplus, of £36.8m (30 June 2002 £16.6m);
• A 4p interim dividend to be paid on 17 October 2003 (2002: 3.0p);
• Planning permission granted for the Junction Fund's retail park development
at Aylesbury;
• Acquisition of Castle Mall Norwich. ISIS Property takes a 19.8% stake
in the Mall fund.
Commenting on the results, Martin Barber, Chief Executive said:
"During the first six months of this year we have begun to see the rewards of
the new strategy of converting the company into a co-investing asset manager".
For further information:
Martin Barber, Chief Executive Tel: 020 7932 8000
William Sunnucks, Group Finance Director Tel: 020 7932 8000
Michael Sandler / Wendy Baker, Hudson Sandler Ltd Tel: 020 7796 4133
CHAIRMAN & CHIEF EXECUTIVE'S STATEMENT
During the first six months of this year we have begun to see the rewards of the
new strategy of converting the company into a co-investing asset manager.
The total portfolio under management has increased substantially from £1.5bn to
£2.6bn. Profit before tax was £8.3m (30 June 2002: £2.8m loss) and our total
return, including revaluation gains, was £36.8m compared to £16.6m for the same
period last year. We are also pleased to report that fully diluted asset
backing per share has increased 11.6% to 433p per share over the six month
period.
DIVIDEND
Following the establishment of a strong flow of fee income from our asset
management business, the Board has decided to increase the dividend from 3p to
4p per share. This will be paid on 17 October to shareholders on the register
on 3 October 2003.
SHOPPING CENTRES
The Mall Fund
Gross assets of The Mall Fund have increased from a year end figure of £724.8m
to £978.4m. This includes two principal acquisitions completed in the half
year:
• The Mall Chester - £105.7m
• The Mall Sutton Coldfield - £104.0m
In addition, our ownership at The Mall, Epsom was consolidated with the purchase
of the adjacent High Street, Waterstones unit for £1.6m. These transactions now
bring the total square footage in the Mall Fund to 4.1m.
Mall Fund performance for the half year was 8.0% ungeared and 12.1% geared. The
annualised geared fund return since inception in March 2002 is 26.1%. Rental
values excluding acquisitions made in the half year grew by 1.85% to £83m. Net
rental annual income has risen to £71.25m, an increase of 4.5% on a like for
like basis.
In March 2003, the Fund's equity base was enhanced by a £31m investment by
Scottish Amicable which diluted the Group's share of the fund from 49.4% to
45.8%. At the same time the life of the fund, and of the Group's management
agreement, was extended from 10 to 15 years.
Yesterday we announced that the Mall fund has agreed to buy the Castle Mall
shopping centre in Norwich for £115m. ISIS Property, the vendor, is investing
the entire proceeds in the Mall fund, diluting C&R's interest from 45.8% to
36.7%.
RETAIL PARKS
The Junction Fund
The gross assets of The Junction Fund have increased from a year end figure from
£536m to £749m at June 2003. The first six months performance was 7.4% ungeared
and 11.1% geared. It is estimated that the rental values have increased in the
period by 5.8%. Passing rent has risen by 8% on a like for like basis, and rent
reviews are being achieved above expectations.
In February 2003, The Junction Limited Partnership was part of a consortium
which acquired a substantial portfolio from Chartwell a subsidiary of
Kingfisher. This transaction brought approximately £143m of new stock into The
Junction.
Our first rebranded Junction retail park opened in Hull in April with our first
pre-let "Pod". The occupiers, which include Starbucks and Carphone Warehouse,
are reporting good trade and the visitor numbers to the park and the dwell time
have both increased.
We heard last week that the planning permission for 159,000 sq ft of retail
space had been granted for the Fund's site at Aylesbury. We expect building
work to start later this year.
The Glasgow Fort, Auchinlea
Our retail park division has a joint venture with Pillar to develop a new retail
and leisure park near Glasgow and we are pleased to report significant progress
with a start on site made in March 2003. Leases have been exchanged so far for
a total of £6.1m per annum representing approximately two thirds of the target
rents for the first phase. The key tenants which have been signed to date
include Next, JJB Sports, Virgin, River Island, Arcadia, Argos and Boots. It is
expected that this project will be open for trade in Autumn 2004, and that the
estimated total cost of this phase will be £124m.
Swansea Retail Park
The Group acquired this 30 acre site from Swansea City Council for £24m in July
2003 and construction has just started. It has planning consent for 322,000 sq
ft of retail space and 30,000 sq ft of leisure space. Occupier demand has been
encouraging with pre-lets obtained of more than 190,000 sq ft to destination
anchors including a B&Q store of 102,000 sq ft.
LEISURE
X-Leisure
In January 2003, we acquired a leisure property fund business from Marylebone
Warwick Balfour which manages approximately £500m of leisure property held in
three separate funds. The funds own 18 leisure assets with 2.9m sq ft of space,
including Fountain Park in Edinburgh, Star City in Birmingham and O2 in North
London. A team of 17 joined Capital & Regional and has been merged with the
Capital & Regional unit which manages the Xscape joint ventures, led by PY
Gerbeau.
Since taking over, we have introduced a programme of seasonal events supported
by marketing and PR campaigns. The effect has been to raise awareness in local
communities and increase footfall. The number of voids in the portfolio has
fallen.
We have also started to focus on medium term business plans for adding value to
each individual property. We are now starting to discuss with the investors of
X-Leisure the possibilities for restructuring of the three funds.
Xscape
Our Xscape operations are progressing well. The Milton Keynes Xscape has seen
consistent increases in footfall which is expected to exceed 6m visitors this
year, a 22% increase on last year. This has resulted in increased rental values
as the occupiers trade profitably. The Castleford Xscape is on programme for
completion of construction at the end of September this year with an official
launch in mid October. The project is on budget and on time. 81% of the floor
area has been leased to date with detailed negotiations progressing with
additional operators.
We hope to commence our third Xscape at Braehead, Glasgow in partnership with
Capital Shopping Centres in the summer of 2004.
Great Northern
On 30 May the Group entered into a 50:50 joint venture with AWG, the owners of
the Great Northern Leisure and Retail Complex in Manchester.
This property offers significant opportunities to use Capital & Regional's
retail and leisure expertise to add value through new lettings and more
imaginative use of the space available. The terms of the joint venture enable
us to participate in a disproportionate share of the upside.
OUTLOOK
There is strong interest from investors, both institutional and private for
property in the sectors in which we operate and this has contributed to the
increased valuations. What is really important to us, however, is that our
particular occupiers are generally trading well and demand for space is strong
in all three of the sectors in which we operate. We see no reason in the medium
term for either of these to change and therefore are confident of our future
growth.
INDEPENDENT REVIEW REPORT TO CAPITAL & REGIONAL PLC
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 June 2003 which comprises the profit and loss account,
the statement of total recognised gains and losses, the reconciliation of
movements in shareholders' funds, the balance sheet, the cash flow statement and
related notes 1 to 13. 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.
This report is made solely to the company in accordance with Bulletin 1999/4
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the company, for our review work, for this report, or for the conclusions we
have formed.
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
polices and presentation applied to the interim figures are 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 the 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 six months
ended 30 June 2003.
Deloitte & Touche LLP
Chartered Accountants
London
18 September 2003
CONSOLIDATED PROFIT AND LOSS ACCOUNT
(Unaudited) (Unaudited) (Audited)
6 months to 6 months to Period to
30 June 30 June 31 December
2003 2002 2002
Notes £000 £000 £000
Turnover: group income and share of
joint ventures' turnover 13,318 21,980 34,998
Less: share of joint ventures' turnover (1,342) (7,350) (8,788)
Group turnover 2 11,976 14,630 26,210
Cost of sales (2,762) (3,692) (5,763)
Gross profit 9,214 10,938 20,447
Profit/(loss) on disposal of trading and development
properties - 167 (1,023)
Administrative expenses (8,662) (5,344) (14,261)
Group operating profit 552 5,761 5,163
Share of operating profit in joint ventures and 8a 20,263 12,886 27,298
associates
Total operating profit 20,815 18,647 32,461
Exceptional costs of a fundamental reorganisation - (7,178) (7,184)
Profit/(loss) on sale of investment properties 1,398 (1,143) (789)
Share of profit on sale of investment properties in
associates and joint ventures 8b 497 - 2,609
Profit on ordinary activities before interest 22,710 10,326 27,097
Interest receivable and similar income 503 661 1,043
Interest payable and similar charges
- Group 3 (3,672) (6,678) (10,649)
- Share of associates (10,060) (5,371) (12,451)
- Share of joint ventures (1,220) (1,700) (2,967)
(14,952) (13,749) (26,067)
Profit/(loss) on ordinary activities before taxation 8,261 (2,762) 2,073
Taxation 4 (2,691) (51) (1,220)
Profit/(loss) on ordinary activities after taxation 5,570 (2,813) 853
Equity minority interests - (8) (8)
Profit/(loss) attributable to the shareholders of the 5,570 (2,821) 845
Company
Equity dividends paid and payable (2,505) (1,863) (4,333)
Profit/(loss) retained in the period 10 3,065 (4,684) (3,488)
Earnings/(loss) per share 5 9.0p (3.9)p 1.3p
Earnings/(loss) per share - diluted 5 8.2p (3.9)p 1.2p
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
(Unaudited) (Unaudited) (Audited)
6 months to 6 months to Period to
30 June 30 June 31 December
2003 2002 2002
£000 £000 £000
Profit/(loss) before tax 8,261 (2,762) 2,073
Movements in revaluation reserve:
on investment properties 154 11 509
on other fixed assets (660) - (920)
on properties held in joint ventures and 32,006 20,990 38,302
associates
(Loss)/gain on deemed disposals (344) - 2,377
Minority interests - (8) (8)
Total gains before tax 39,417 18,231 42,333
Tax shown in profit and loss account (2,691) (51) (1,220)
Tax on revaluation surplus realised 54 (1,574) (3,556)
Deferred tax - - (485)
Total tax charge (2,637) (1,625) (5,261)
Total recognised gains for the period 36,780 16,606 37,072
Return on equity for the period 13.6% 6.2% 14.6%
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
(Unaudited) (Unaudited) (Audited)
6 months to 6 months to Period to
30 June 30 June 31 December
2003 2002 2002
£000 £000 £000
Profit/(loss) attributable to shareholders of the Company 5,570 (2,821) 845
Equity dividends paid and payable (2,505) (1,863) (4,333)
Profit/(loss) retained in the period 3,065 (4,684) (3,488)
Share capital and share premium issued in period 826 806 868
Share capital purchased and cancelled in period (including
expenses) - (50,845) (50,845)
Other recognised gains and losses relating to the period 31,210 19,427 36,227
Net increase in/(reduction to) shareholders' funds 35,101 (35,296) (17,238)
Opening shareholders' funds 270,003 287,241 287,241
Closing shareholders' funds 305,104 251,945 270,003
CONSOLIDATED BALANCE SHEET
(Unaudited) (Unaudited) (Audited)
As at As at As at
30 June 30 June 31 December
2003 2002 2002
Notes
£000 £000 £000
Fixed assets
Intangible assets 6 16,820 - -
Investment property assets 7 35,074 62,082 55,475
Other fixed assets 12,676 13,429 12,934
64,570 75,511 68,409
Investment in joint ventures:
share of gross assets 151,807 117,763 77,857
share of gross liabilities (106,628) (69,787) (53,168)
8c 45,179 47,976 24,689
Investment in associates 8b 324,597 261,986 286,367
434,346 385,473 379,465
Current assets
Property assets 7 7,756 15,158 7,773
Debtors 27,050 36,170 27,325
Cash at bank and in hand 2,348 5,865 4,159
37,154 57,193 39,257
Creditors: amounts falling due within one year (23,153) (31,750) (29,281)
Net current assets 14,001 25,443 9,976
Total assets less current liabilities 448,347 410,916 389,441
Creditors: amounts falling due after more than one year (140,312) (157,863) (117,041)
Provision for liabilities and charges (2,931) (1,108) (2,397)
Net assets 2 305,104 251,945 270,003
Capital and reserves
Called up share capital 10 6,219 6,171 6,175
Share premium account 10 163,534 162,693 162,752
Revaluation reserve 10 102,957 65,273 74,005
Other reserves 10 4,290 4,290 4,290
Profit and loss account 10 28,104 13,518 22,781
Equity shareholders' funds 305,104 251,945 270,003
Net assets per share 9 491p 408p 437p
Net assets per share - diluted 9 433p 364p 388p
SUMMARY CASH FLOW STATEMENT
(Unaudited) (Unaudited) (Audited)
6 months to 6 months to Period to
30 June 30 June 31 December
2003 2002 2002
Notes £000 £000 £000
Net cash inflow/(outflow) from operating activities 11 1,797 (13,202) 2,031
Distributions received from joint ventures 350 465 3,355
Distributions received from associates 8,116 1,880 9,418
Returns on investments and servicing of finance (3,652) (10,726) (15,085)
6,611 (21,583) (281)
Taxation (2,660) (6,020) (7,606)
3,951 (27,603) (7,887)
Capital expenditure and financial investment 19,677 636,049 673,039
23,628 608,446 665,152
Acquisitions, disposals and exceptional items (44,158) (254,448) (269,219)
(20,530) 353,998 395,933
Equity dividends paid (2,482) (2,770) (4,623)
Cash (outflow)/inflow before financing (23,012) 351,228 391,310
Financing:
Issue of ordinary share capital 826 806 868
Purchase of ordinary share capital - (50,845) (50,845)
Cash inflow/(outflow) from debt financing 20,375 (303,891) (345,741)
Decrease in cash in the period (1,811) (2,702) (4,408)
Reconciliation of net cash flow to movement in net debt (Unaudited) (Unaudited) (Audited)
6 months to 6 months to Period to
30 June 30 June 31 December
2003 2002 2002
£000 £000 £000
Decrease in cash in the period (1,811) (2,702) (4,408)
Cash (outflow)/inflow from debt financing (20,375) 303,891 345,740
Change in net debt resulting from cash flows (22,186) 301,189 341,332
Net debt at beginning of period (115,933) (457,265) (457,265)
Net debt at end of period (138,119) (156,076) (115,933)
Analysis of net debt (Unaudited) (Unaudited) (Audited)
6 months to 6 months to Period to
30 June 30 June 31 December
2003 2002 2002
£000 £000 £000
Cash in hand and at bank 2,348 5,865 4,159
Debt due within one year (200) (3,450) (3,450)
Debt due after one year (140,267) (158,491) (116,642)
Total (138,119) (156,076) (115,933)
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies
The interim financial information has been prepared on the basis of the
accounting policies set out in the annual report for the period ended 31
December 2002.
The comparative figures represent the Group's results and cash flows for the
periods from 26 December 2001 to 30 June 2002 and from 26 December 2001 to 31
December 2002. The comparative figures for the period ended 31 December 2002 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 period ended 31 December 2002 is
unqualified and did not contain a statement under Companies Act 1985 sections
237 (2) or (3).
2. Segmental analysis
Turnover, profit on ordinary activities before taxation and operations arise in
the UK.
Share of joint Total (Audited)
ventures and (Unaudited) Period to 31
associates Wholly owned 6 months December
Asset Snow slope £000 properties to 30 June 2002
management business £000 2003 £000
£000 £000 £000
Asset management fees 7,130 - - - 7,130 7,262
Performance fees - - - - - 2,781
Snow slope income - 2,096 - - 2,096 4,044
Rental and other income - - - 2,750 2,750 12,123
Group turnover 7,130 2,096 - 2,750 11,976 26,210
Share of joint ventures and
associates operating profit - - 20,263 - 20,263 27,298
Direct expenses - (1,996) - (766) (2,762) (5,763)
Net interest payable:
non recourse - - (10,921) - (10,921) (14,956)
own borrowings (net) - - (2,301) (1,227) (3,528) (10,068
Contribution 7,130 100 7,041 757 15,028 22,721
Indirect expenses (8,081) (14,261)
Amortisation of goodwill (581) -
Profit on disposals (net) 1,895 2,319
Profit before exceptionals 8,261 10,779
Exceptional items - - - - - (8,706)
Profit before taxation - - - - 8,261 2,073
Net assets 18,629 349 274,276 11,850 305,104 270,003
No performance fee income has been recognised for the six months ended 30 June
2003 as the fees are based on performance over the full year, and it is not
possible to estimate, at 30 June 2003, the amount of fees, if any, which might
be earned for the year.
NOTES TO THE FINANCIAL STATEMENTS (CONT)
3. Interest payable and similar charges
(Unaudited) (Unaudited) (Audited)
6 months to 6 months to Period to
30 June 30 June 31 December
2003 2002 2002
£000 £000 £000
Bank loans and overdrafts 2,884 6,151 9,498
Other loans 877 897 1,684
3,761 7,048 11,182
Capitalised in period (89) (370) (533)
3,672 6,678 10,649
4. Taxation
The taxation charge for the period is based on an estimate of the likely
effective tax rate for the year.
(Unaudited) (Unaudited) (Audited)
6 months to 6 months to Period to
30 June 30 June 31 December
2003 2002 2002
Current tax £000 £000 £000
UK corporation tax (at 30%) 2,131 167 580
Tax credit in respect of exceptional items - (1,509) (1,510)
Adjustment in respect of prior years 23 (273) (274)
Share of joint ventures tax 3 223 177
Total current tax 2,157 (1,392) (1,027)
Deferred tax
Origination and reversal of timing differences 534 1,443 2,247
Total taxation 2,691 51 1,220
5. Earnings/(loss) per share
Six months to June 2003
Earnings Number of Earnings
£000 shares per share
Basic 5,570 61,907,166 9.0p
Exercise of share options - 419,461
Conversion of Convertible Unsecured Loan Stock 598 12,670,912
Diluted 6,168 74,997,539 8.2p
Six months to June 2002
(Loss) Number of (Loss)
£000 shares per share
Basic (2,821) 72,857,000 (3.9)p
Exercise of share options - - -
Diluted (2,821) 72,857,000 (3.9)p
Period to 31 December 2002
Earnings Number of Earnings
£000 shares per share
Basic 845 67,339,312 1.3p
Exercise of share options - 607,924 -
Diluted 845 67,947,236 1.2p
The calculation includes the full conversion of the Convertible Unsecured Loan
Stock where the effect on earnings per share is dilutive.
NOTES TO THE FINANCIAL STATEMENTS (CONT)
6. Intangible assets
The MWB fund management business was acquired on 24 January 2003 for a total
consideration of £31,357,000 which included MWB's 13.29% interest in Leisure
Fund I, 5.72% in Leisure Fund IIa and 7.09% interest in Leisure Fund IIb. The
fair value of the Limited Partner interests in the three funds acquired was
£13,955,000. The remaining £17,402,000 has been treated as goodwill. No
separate value has been attributed to deferred fees which may be receivable as
their realisation is uncertain.
The goodwill is being amortised over 121/2 years and the charge for the period
is £581,000.
7. Wholly owned property assets
Other fixed Investment Trading Total
property assets property property property
£000 assets assets assets
£000 £000 £000
Cost or valuation
As at 1 January 2003 12,500 55,475 7,773 75,748
Refurbishment and development expenditure - 5 - 5
Amortisation of short leasehold properties (40) (101) - (141)
Disposals - (20,459) (17) (20,476)
Revaluation (660) 154 - (506)
As at 30 June 2003 11,800 35,074 7,756 54,630
Investment property assets at 30 June 2003 as per balance sheet 35,074
Tenant incentive adjustment at 30 June 2003 included in current assets 259
Total investment property assets as valued below 35,333
The investment property assets were valued at 30 June 2003, as follows: £000
DTZ Debenham Tie Leung Open Market Value 16,450
Insignia Richard Ellis Limited Open Market Value 3,605
Directors Open Market Value 2,733
Directors Net sale proceeds of properties sold after 30 June 12,545
2003
35,333
The Independent property valuations as at 30 June 2003, were performed by
qualified professional valuers working for DTZ Debenham Tie Leung, Chartered
Surveyors and Insignia Richard Ellis Limited, Chartered Surveyors.
The properties were valued on the basis of Market Value, with the exception of
10 Lower Grosvenor Place, London SW1, which was appraised on the basis of
Existing Use Value. All valuations were carried out in accordance with the RICS
Appraisal and Valuation standards.
8. Associates and joint ventures
8a. Share of operating profit (Unaudited) (Unaudited) (Audited)
6 months to 6 months to Period to
30 June 30 June 31 December
2003 2002 2002
£000 £000 £000
Associates 19,250 10,382 23,894
Joint ventures 1,013 2,504 3,404
20,263 12,886 27,298
NOTES TO THE FINANCIAL STATEMENTS (CONT)
8b. Associates Total to Total to
The Mall The Junction X-Leisure 30 June 30 June
LP LP LPs 2003 2002
£000 £000 £000 £000 £000
Profit and loss account (100%)
Turnover 40,297 17,214 17,161 74,672 28,298
Property expenses (6,891) (779) (1,540) (9,210) (3,676)
Net rental income 33,406 16,435 15,621 65,462 24,622
Fund and property management
expenses (2,855) (2,135) (1,222) (6,212) (2,704)
Administrative expenses (1,052) (490) (195) (1,737) (1,154)
Share of joint venture's
operating profit - 1,484 - 1,484 -
Operating profit 29,499 15,294 14,204 58,997 20,764
Sale of investment properties - 1,799 - 1,799 -
Net interest payable (13,665) (9,171) (10,169) (33,005) (10,489)
Profit before and after tax 15,834 7,922 4,035 27,791 10,275
Balance sheet (100%)
Investment properties and joint
ventures 977,778 745,740 489,753 2,213,271 1,021,730
Current assets 49,137 33,611 26,599 109,347 36,568
Current liabilities (45,170) (21,369) (49,313) (115,852) (35,824)
Borrowing due in more than one
year (517,102) (404,433) (290,608) (1,212,143) (497,657)
Net assets (100%) 464,643 353,549 176,431 994,623 524,817
C&R interest at period end 45.81% 27.7% 13.29%
5.72%
7.09%
Group share of
Operating profit 14,014 4,233 1,003 19,250 10,382
Sale of investment properties - 497 - 497 -
Net interest payable (6,485) (2,539) (700) (9,724) (5,245)
Profit for the period 7,529 2,191 303 10,023 5,137
Revaluation surplus for the
period 15,440 7,619 188 23,247 14,363
Investment properties and joint
ventures 447,881 206,570 39,170 693,621 510,865
Current assets 22,508 9,310 2,161 33,979 18,284
Current liabilities (20,691) (5,919) (8,991) (35,601) (17,912)
Borrowing due in more than one
year (236,864) (112,028) (18,088) (366,980) (248,829)
Associate net assets 212,834 97,933 14,252 325,019 262,408
Unrealised profit on sale of
property to associate (422) - - (422) (422)
Group share of associate net
assets 212,412 97,933 14,252 324,597 261,986
NOTES TO THE FINANCIAL STATEMENTS (CONT)
Xscape Xscape Auchinlea
8c. Joint ventures Milton Keynes Castleford Partnership
Partnership Partnership
£000 £000 £000
Profit and loss account (100%)
Turnover 1,898 - 352
Property expenses (210) - (150)
Net rental income 1,688 - 202
Fund and property management expenses (50) - -
Administrative expenses (104) (3) -
Operating profit/(loss) 1,534 (3) 202
Sale of investment properties - - -
Net Interest (payable)/receivable (1,593) - (528)
Loss before tax (59) (3) (326)
Taxation and minority interests - - -
Loss after tax (59) (3) (326)
Balance sheet (100%)
Investment properties 74,290 40,783 87,950
Current assets 5,280 924 3,045
Current liabilities (2,297) (3,412) (2,385)
Borrowing due in more than one year (46,800) (29,750) (38,775)
Net assets (100%) 30,473 8,545 49,835
C&R Interest at period end 50.0% 66.7% 50%
Group share of
Turnover 949 - 176
Operating profit/(loss) 767 (2) 101
Sale of investment properties - - -
Net interest payable (797) - (264)
Loss before tax (30) (2) (163)
Taxation and minority interests - - -
Loss after tax (30) (2) (163)
Revaluation surplus for the period 513 - 8,246
Investment properties 37,145 27,187 43,975
Current assets 2,641 616 1,523
Current liabilities (7,169) (2,274) (1,193)
Borrowing due in more than one year (23,400) (19,833) (19,387)
Joint venture net assets 9,217 5,696 24,918
Capital & Regional's share of net assets of Xscape Milton Keynes Partnership is
less than its 50% interest due to the accumulated preferred return payable on
additional non-equity capital provided by joint venture partners.
NOTES TO THE FINANCIAL STATEMENTS (CONT)
8c. Joint ventures (cont) Total Total
Morrison Merlin Others to 30 June 2003 to 30 June 2002
£000 £000 £000 £000
Profit and loss account (100%)
Turnover 434 - 2,684 14,699
Property expenses 337 8 (15) (8,054)
Net rental income 771 8 2,669 6,645
Fund and property management
expenses - - (50) (50)
Administrative expenses (371) (108) (586) (1,587)
Operating profit/(loss) 400 (100) 2,033 5,008
Sale of investment properties - - - -
Net interest (payable)/receivable (293) 20 (2,394) (3,311)
Profit/(loss) before tax 107 (80) (361) 1,697
Taxation and minority interests - (9) (9) (276)
Profit/(loss) after tax 107 (89) (370) 1,421
Balance sheet (100%)
Investment properties - - 203,023 204,930
Current assets 75,896 1,244 86,389 26,371
Current liabilities (3,289) (946) (12,329) (18,463)
Borrowing due in more than one
year (62,500) - (177,825) (62,500)
Net assets (100%) 10,107 298 99,258 150,338
C&R Interest at period end 50.0% 50.0%
Group share of
Turnover 217 - 1,342 7,350
Operating profit 200 (53) 1,013 2,504
Sale of investment properties - - - -
Net interest (payable)/receivable (147) 10 (1,198) (1,655)
Profit/(loss) before tax 53 (43) (185) 849
Taxation and minority interests - (3) (3) (138)
Profit/(loss) after tax 53 (46) (188) 711
Revaluation surplus for the
period - - 8,759 6,627
Investment properties - - 108,307 104,539
Current assets 37,948 772 43,500 13,224
Current liabilities (1,644) (478) (12,758) (14,869)
Borrowing due in more than one
year (31,250) - (93,870) (54,918)
Joint venture net assets 5,054 294 45,179 47,976
NOTES TO THE FINANCIAL STATEMENTS (CONT)
9. Net assets per share
As at 30 June 2003
Net assets Number of Net assets
£000 shares per share
Basic 305,104 62,189,911 491p
Conversion of Convertible Subordinated Unsecured
Loan Stock
("CULS") (net of unamortised issue costs) 24,359 12,670,912 -
Exercise of share options 6,004 2,681,738 -
Fully diluted 335,467 77,542,561 433p
Deferred tax not provided (22,701) - -
Loan fair value adjustment (note 12) (7,094) - -
Triple net 305,672 77,542,561 394p
As at 30 June 2002
Net assets Number of Net assets
£000 shares per share
Basic 251,945 61,711,015 408p
Conversion of Convertible Subordinated Unsecured
Loan Stock
("CULS") (net of unamortised issue costs) 24,268 12,670,912 -
Exercise of share options 7,918 3,599,524 -
Fully diluted 284,131 77,981,451 364p
Deferred tax not provided (10,243) - -
Loan fair value adjustment (note 12) (1,170) - -
Triple net 272,718 77,981,451 350p
As at 31 December 2002
Net assets Number of Net assets
£000 shares per share
Basic 270,003 61,746,441 437p
Conversion of Convertible Subordinated Unsecured
Loan Stock
("CULS") (net of unamortised issue costs) 24,314 12,670,912 -
Exercise of share options 6,901 3,160,408 -
Fully diluted 301,218 77,577,761 388p
Deferred tax not provided (13,996) - -
Loan fair value adjustment (note 12) (4,604) - -
Triple net 282,618 77,577,761 364p
NOTES TO THE FINANCIAL STATEMENTS (CONT)
10. Reserves
Share Property Capital
Share premium revaluation redemption Profit and
capital account reserve reserve loss account Total
£000 £000 £000 £000 £000 £000
At beginning of year 6,175 162,752 74,005 4,290 22,781 270,003
Issue of share capital 44 782 - - - 826
Revaluation of investment
properties & other fixed
assets - - (506) - - (506)
Share of revaluation
surplus of JV's &
associates - - 32,006 - - 32,006
Tax on revaluation
surpluses realised in the
period - - - - 54 54
Realisation of surplus on
disposal of investment
properties - - (2,548) - 2,548 -
Loss on deemed disposal - - - - (344) (344)
Profit retained in the
period - - - - 3,065 3,065
At end of period 6,219 163,534 102,957 4,290 28,104 305,104
11. Reconciliation of net cash inflow/(outflow) from operating activities
(Unaudited) (Unaudited) (Audited)
6 months to 6 months to Period to
30 June 30 June 31 December
2003 2002 2002
£000 £000 £000
Group operating profit 552 5,761 5,163
(Loss)/profit on sale of trading and development properties - (167) 1,023
552 5,594 6,186
Depreciation of other fixed assets 219 174 482
Amortisation of short leasehold properties 101 101 203
Amortisation of tenant incentives (15) 344 308
Amortisation of goodwill 581 - -
Profit on disposal of fixed assets (6) (5) (6)
Decrease/(increase) in trade debtors, other debtors and
prepayments 60 (6,087) 8,708
Decrease in trade creditors, other creditors, taxation and
social security and accruals (378) (13,323) (13,850)
Non cash movement relating to the LTIP 683 - -
Net cash flow from operating activities 1,797 (13,202) 2,031
NOTES TO THE FINANCIAL STATEMENTS (CONT)
12. Debt valuation
The table below reflects the adjustment to the accounts, after the impact of
corporation tax, required to adjust the carrying value of fixed rate debt and
swaps to market value. The figures include the group share of debt held by
joint ventures and associates.
(Unaudited) (Unaudited) (Audited)
As at As at As at
30 June 30 June 31 December
2003 2002 2002
£000 £000 £000
Decrease in net assets 7,094 1,170 4,604
13. Copies of the Interim Report
Copies of the Interim Report will be available from the Company's registered
office at 10 Lower Grosvenor Place, London, SW1W 0EN when they have been
printed.
Additional information
Property under management 30 June 2003 31 December 2002
£m £m
Investment properties 35 56
Trading properties 8 8
Mall fund 978 724
Junction fund 749 536
Leisure funds 494 -
Other joint ventures 278 133
Other properties under management 40 40
Total 2,582 1,497
Fund Portfolio information at
30 June 2003 Junction X-Leisure X-Leisure X-Leisure
Mall Fund Fund Fund 1 Fund 2a Fund 2b
Number of core properties 13 18 7 5 7
Number of tenants 1,069 284 42 79 59
Square feet (000) 4,096 3,571 919 1,226 741
Properties at valuation (note 1) £978m £749m £125m £231m £138m
Initial yield % 6.99% 5.15% 6.97% 6.69% 6.81%
Equivalent yield % (note 2) 7.40% 6.58% 7.90% 7.15% 7.34%
Vacancy rate (note 3) 2.3% 6.4% 3.5% 2.8% 0.5%
Net rental income (£m per annum) £71.2m £39.5m £8.7m £15.5m £9.4m
Estimated rental value (£m pa) (note 4) £83.0m £50.9m £9.5m £17.8m £10.1m
Rental increase (ERV) 1.84% 5.46% 1.69% 3.55% 2.43%
Reversionary % (note 5) 7.72% 19.00% 8.49% 7.93% 5.88%
Loan to value ratio 53% 54% 63% 64% 65%
Underlying valuation change since 31 3.73% 4.56% 0.42% (0.26)% 1.61%
December 2002
Increase in unit value or NAV since 31 7.70% 8.40% 1.12% (0.72)% 4.83%
December 2002
Total return, annualised since 26.1% 20.2% 12.2% 3.0% (1.5)%
inception
C&R share 45.81% 27.70% 13.29% 5.72% 7.09%
Notes:
1. Properties under management include tenant incentives which are transferred
to current assets for accounting purposes (see note 8).
2 The equivalent yield is the nominal equivalent yield based on rents passing
and estimated rental values at 30 June 2003.
3 The vacancy rate is based on the % of ERV
4 Estimated rental value at 30 June 2003 including vacant space and after
deducting head and equity rents
5 The amount by which the estimated rental value, excluding that relating to
vacant space, exceeds the rents passing at 30 June 2003
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