Interim Results
Grainger Trust PLC
19 June 2001
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31st MARCH 2001
Grainger Trust plc, the tenanted residential property specialist,
today announces Interim Results for the six months ended 31st
March 2001. Highlights are as follows:-
* Pre-tax profit up 58% to £13.5 million before exceptional item (2000:
£8.5 million)
* Earnings per share before exceptional item up 60% to 36.7p (2000:
22.9p).
* 50% investment in BPT via a joint venture with Deutsche Bank Real
Estate Private Equity Group, offer declared unconditional on May 25th
2001.
* £37m of investment property sold during the period.
* Net Asset Value per share fell to £9.61 (as at 30th September 2000:
£9.85). NNNAV has increased to £7.47 (as at 30th September 2000:
£7.41).
* Interim dividend of 2.65p per share, an increase of 15% (2000: 2.3p).
Commenting on the results, Stephen Dickinson, Managing Director, said:-
'We are very pleased with another good set of results from the
Group. Pre-tax profits prior to exceptionals have increased by
58%, due to the strength of our trading performance, particularly
residential land.
'The acquisition of the 50% investment in BPT reflects well on
our capability to carry through such transactions and is of great
importance to the future of the Group. We look forward to the
future with confidence.'
Enquiries
Stephen Dickinson Managing Director Grainger Trust plc 020 7795 4700
Andrew Cunningham Financial Director Grainger Trust plc 020 7795 4700
Tom Buchanan Brunswick Group 020 7404 5959
Tricia Parish Brunswick Group 020 7404 5959
GRAINGER TRUST plc
INTERIM RESULTS FOR SIX MONTHS ENDED 31ST MARCH, 2001
RESULTS/NAV AND DIVIDENDS
The unaudited results for the six months ended 31st March, 2001
show pre-exceptional profit before tax of £13.5m (March 2000:
£8.5m). An exceptional item of £3.5m arises from premiums paid
on the buying in and cancellation of £8.3m of the Group's £18m
10.5% and 11.75% 2024 Quoted Debentures which reduce the 6 months
pre-tax profit to £10.0m. Pre-exceptional earnings have
increased by 58% arising from increases in trading profits,
particularly residential land development. Earnings per share on
a pre-exceptional basis have increased to 36.7p (2000: 22.9p),
and after the exceptional item are 26.8p.
NAV has fallen from £9.85 at 30th September 2000 to £9.61 at 31st
March 2001. As we have not revalued our properties at the half
year, the movement in NAV represents retained earnings (which
have been depressed by the debenture repayment premiums),
provision for capital gains tax arising from the investment
property disposal programme and the elimination of revaluation
surpluses on trading properties sold. After allowing for
contingent tax at £1.91 and an FRS 13 adjustment after tax of
23p, NNNAV increases by 6p to £7.47 per share over the period.
The interim dividend of 2.65p, an increase of 15%, will be paid
on 20th July 2001 to shareholders on the register at the close
of business on 29th June 2001.
BPT
The most important transaction for your company since the start
of the financial year has been the offer made on 10th April 2001
to acquire the issued share capital of BPT plc, which was
declared unconditional on 25th May 2001. The offer was made by
Bromley Property Holdings Ltd, a 50/50 joint venture company with
Deutsche Bank Real Estate Private Equity Group. BPT, which will
be delisted shortly, is currently the largest quoted company in
the tenanted residential market sector.
The BPT portfolio, as at 5th October 2000 (the date of its
interim results), comprised some 11,000 residential units valued
at £800m of which some 6,000 were regulated tenancies. It is
intended that the initial level of gearing will be reduced by the
sale of the non-regulated assets. The first step will be to
create a structure to attract new funding into both the assured
and life tenancy portfolios, whilst retaining an asset management
role for BPT which will continue to be run as a separate entity
to Grainger. We have seconded Rupert Dickinson, our Deputy
Managing Director, to BPT to act as an interim Chief Executive
for a period of 9 months. His main task will be to carry out the
initial disposal programmes, initiate the fund raising process
and recruit a full time Chief Executive.
REVIEW OF OPERATIONS
Given the faster than expected pace of the investment property
disposal programme, and the growing importance of development,
Group structure has been simplified into two divisions, Tenanted
Residential and Development/ Trading.
TENANTED RESIDENTIAL
The operating contribution has increased by 4% to £9.9m (2000:
£9.5m). Net rentals fell by £0.4m because of an increase in
property expenditure and refunds caused by the reintroduction of
capping. Trading profits increased by £1.3m and featured
improved selling prices throughout the country. This is caused
by the ripple effect working through following a sustained period
of increasing prices in the South East.
We have been selling tenanted properties at the lower end of the
price spectrum, typically ex-nationalised industry stock, to
investors who will pay in excess of vacant possession value,
basing their decision on income yields. As a result of this,
housing numbers have fallen from 5,250 to 5,100 since 30th
September 2000, whilst the total vacant possession value of our
stock based on 30th September 2000 estimates and values
attributed to purchases during the period has remained constant.
We purchased £10m of replacement stock in the period, and a
further £9m since.
DEVELOPMENT/TRADING
The operational contribution has increased by 69% to £10.3m
(2000: £6.1m). Net rentals, after property and development
expenses came to £3.8m, and trading profit £7.2m.
Commercial Development, Trading and Investment
Construction of the four unit, 157,000 sq.ft. warehouse scheme
at Dolphin Park, Thurrock has been completed. One unit has been
sold, one let, and negotiations continue with interested parties
for the other two units. We have started construction of the
170,000 sq.ft. mixed use development, Landmark Place in the
centre of Slough, together with our joint venture partners,
Frontier Estates. Completion is expected by the end of calendar
2002, and the hotel element has already been sold to an
established operator. Construction of the first phase of some
50,000 sq.ft. at our B1 Park at Kennel Farm should start during
the next financial year.
Two office buildings in Clerkenwell, Gensurco House 26,600
sq.ft., and 65 Clerkenwell Road, 13,700 sq.ft. have been
acquired. These will be refurbished, the former to a limited
extent over a period, and the latter more extensively with the
intention of sale on completion.
Our investment property disposal programme has proceeded well and
during the period we have completed and exchanged contracts on 22
properties for a total consideration of £37m. This figure, after
allowing for disposal costs, exceeded the year end valuation by
£1m. The major disposal was the Winsford Shopping Centre for
£18m. The part redemption of the Quoted Debentures was necessary
to obtain the release of funds arising from the sale of
properties charged as security for those loans.
Residential Development
During the period we sold a property in Eaton Square, prior to
development, and the majority of the flats at Redcliffe Backs,
Bristol. Since the end of the period we have sold the
outstanding balance of the 21 flats at Redcliffe Backs and 1
Uxbridge Street, Kensington, having obtained vacant possession
and planning permission for residential development. The Pimlico
flat development mentioned in previous statements is taking a
long time to come to maturity, but we are currently hopeful that
the final approvals will be available shortly.
Residential Land
The infrastructure programme at Kennel Farm is now well advanced
and during the period we sold 13 acres to a major house builder.
We continue with the pre-development consultation and planning
procedures at the 12 acre site immediately adjoining Kennel Farm,
the large site at West Waterlooville over which we have an
option, and the Bere Regis and Northumberland Coastal Plain
projects.
PERSONNEL
The period has been dominated by the involvement of our Managing
Director, Stephen Dickinson, and his executive colleagues, in
bringing the acquisition of our 50% interest in the BPT joint
venture to a successful conclusion. I wish in particular to
record our gratitude to Rupert Dickinson who initiated and
carried through the negotiations, since the start of the process
in August 2000, and to Andrew Cunningham, our Finance Director,
who has been heavily committed in resolving the financing
required. We are also very grateful to all our staff for the
effective way in which they have dealt with the demands made on
them during the period.
We are pleased that Nicola Pease has agreed to join the Board as
a Non Executive Director. She is currently Chief Executive of
J.O. Hambro Capital Management and a Director of Northern Rock
plc.
PROSPECTS
The Group operates with the strong background of its Tenanted
Residential and Residential Land activities which continue to
produce material profitability and cashflows. Over the period,
we have reduced further our Commercial Investment portfolio to
provide funds for the more entrepreneurial approach becoming
evident in our development and trading activities. To this we
have added the major impetus of the BPT joint venture, which
substantially strengthens the future shape and prospects of the
Group. Your directors are delighted at the completion of this
transaction, and look forward to the future with confidence.
Registered Office: Robert Dickinson
Times Square, Chairman
Newcastle upon Tyne
NE1 4EP 19th June 2001
GRAINGER TRUST plc
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE SIX MONTHS ENDED 31st MARCH 2001
Six Months Ended 31.03.01
Six
Excluding Months Year
Exceptional Exceptional Ended Ended
Item Item Total 31.03.00 30.9.00
£000s £000s £000s £000s £000s
Turnover 54,443 54,443 33,232 68,218
______ ______ ______ ______ ______
Gross rentals 12,277 12,277 12,267 24,705
Trading profits 14,813 14,813 8,627 19,441
Other income 142 142 147 346
______ ______ ______ ______ ______
27,232 - 27,232 21,041 44,492
Less:
Property expenses (4,889) (4,889) (3,839) (9,054)
Administrative
expenses (2,168) (2,168) (1,564) (3,391)
______ ______ ______ ______ ______
Operating Profit 20,175 - 20,175 15,638 32,047
Net profit/(loss) on
disposal of &
provisions against
fixed assets 994 - 994 113 (699)
______ ______ ______ ______
Profit on ordinary
activities before
interest 21,169 - 21,169 15,751 31,348
Net interest payable
and similar charges (7,658) (3,487) (11,145) (7,216) (15,252)
______ ______ ______ ______ ______
Profit on ordinary
activities before
taxation 13,511 (3,487) 10,024 8,535 16,096
Taxation (4,454) 1,046 (3,408) (2,732) (5,150)
______ ______ ______ ______ ______
Profit on ordinary
activities after
taxation 9,057 (2,441) 6,616 5,803 10,946
Dividends (653) (653) (584) (2,666)
______ ______ ______ ______ ______
Retained profit for
the period 8,404 (2,441) 5,963 5,219 8,280
______ ______ ______ ______ ______
Earnings per share 36.7 p (9.9) p 26.8 p 22.9 p 43.3 p
______ ______ ______ ______ ______
Fully diluted
earnings per share 36.6 p (9.9) p 26.7 p 22.8 p 43.1 p
______ ______ ______ ______ ______
All results relate to continuing operations
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE SIX MONTHS ENDED 31st MARCH 2001
Six Six
Months Months Year
Ended Ended Ended
31.03.01 31.03.00 30.09.00
£000s £000s £000s
Profit attributable to
shareholders 6,616 5,803 10,946
Taxation on realisation of property
revaluation gains of previous years (1,760) (950)
Surplus on investment properties
transferred to stock (7,931)
Unrealised surplus/(deficit) on
revaluation of properties 3,249 (269)
Release of valuation deficit to the
profit & loss account 400
______ ______ ______
Total gains and losses recognised
since the last report 5,256 9,052 1,796
_____ ______ ______
GRAINGER TRUST plc
CONSOLIDATED BALANCE SHEET
AT 31ST MARCH 2001
31.03.01 31.3.00 30.09.00
£000s £000s £000s
Fixed assets
Tangible assets 29,789 135,865 64,886
Investments 863 272 866
Intangible assets 64 95 80
_______ _______ _______
30,716 136,232 65,832
_______ _______ _______
Current assets
Stocks 226,792 158,943 220,157
Debtors:
Amounts falling due within one year 22,944 4,360 7,276
Cash at bank and in hand 25,119 1,538 7,549
_______ _______ _______
274,855 164,841 234,982
_______ _______ _______
Creditors: amounts falling due
within one year
Short term borrowings 23,429 13,428 26,092
Other creditors 24,615 22,667 20,287
_______ _______ _______
Net current assets 226,811 128,746 188,603
_______ _______ _______
Total assets less current
liabilities 257,527 264,978 254,435
Creditors: amounts falling due
after more than one year 158,825 155,936 159,461
Provision for liabilities and
charges
Deferred taxation 4,701 6,072 5,576
______ _______ _______
Net assets 94,001 102,970 89,398
______ _______ _______
Capital and reserves
Called-up share capital 6,164 6,344 6,164
Share premium account 20,738 20,704 20,738
Revaluation reserve 7,558 25,371 11,258
Capital redemption reserve 185 - 185
Capital reserves - 14,093 -
Profit and loss account 59,352 36,454 51,049
______ _______ _______
Equity shareholders' funds 93,997 102,966 89,394
Minority interests 4 4 4
______ _______ _______
Total capital employed 94,001 102,970 89,398
______ _______ _______
GRAINGER TRUST GROUP
CASHFLOW STATEMENT
FOR THE SIX MONTHS ENDED 31ST MARCH 2001
Six Six
Months Months Year
Ended Ended Ended
31.03.01 31.03.00 30.09.00
£000s £000s £000s
Operating profit 20,175 15,638 32,047
Depreciation 91 93 157
Amortisation of goodwill 16 19 39
Decrease / (increase) in debtors 2,332 (170) (3,086)
Increase in creditors 3,134 1,480 1,089
Increase in stocks (6,635) (29,665) (50,175)
_______ _______ _______
Net cash inflow / (outflow) from 19,113 (12,605) (19,929)
operating activities
_______ _______ _______
Returns on investments and
servicing of finance
Interest received 249 208 282
Interest paid (12,944) (8,321) (15,571)
Dividends received 18 2 7
_______ _______ _______
(12,677) (8,111) (15,282)
_______ _______ _______
Taxation
UK corporation tax paid (2,074) (2,736) (7,312)
_______ _______ _______
Capital expenditure and
financial investment
Purchase of fixed asset
investments (234) (828)
Purchase of tangible fixed
assets (326) (909) (1,477)
Sale of tangible fixed assets 18,909 1,389 19,905
_______ _______ _______
18,583 246 17,600
_______ _______ _______
Acquisitions and disposals
Purchase of subsidiaries (5,859) (5,859)
Costs on purchase of
subsidiaries (120) (125)
Net cash acquired with
subsidiaries 271 271
_______ _______ _______
(5,708) (5,713)
_______ _______ _______
Equity dividends paid (2,076) (1,847) (2,438)
Cash inflow / (outflow) before
financing 20,869 (30,761) (33,074)
_______ _______ _______
Financing
New loans raised 21,523 12,876 43,388
Repayment of loans (24,822) (2,741) (17,064)
Issue of shares 102 140
Buy back of shares (4,273)
_______ _______ _______
(3,299) 10,237 22,191
_______ _______ _______
Increase/(decrease) in cash in 17,570 (20,524) (10,883)
the period
_______ _______ _______
NOTES
1. Property valuations
For NAV purposes, all properties are shown at valuation.
Investment properties are shown in the balance sheet at
valuation, while trading stock, which consists of tenanted
residential properties and development/trading properties, are
shown at the lower of cost and net realisable value.
Property valuations at 31st March 2001 are based upon those
relevant at 30th September 2000, or otherwise at cost to Group.
The comparison of cost, net of provisions, against valuation, on
the above basis, is as follows:
31st March 2001 30th September 2000
Cost Valuation Cost Valuation
£m £m £m £m
_____ _____ _____ _____
Investment
properties 25.1 29.3 56.3 64.5
_____ _____ _____ _____
Trading stock
Tenanted
residential
properties 155.3 258.6 152.4 258.9
Development/trading 71.5 111.2 67.8 114.6
_____ _____ _____ _____
226.8 369.8 220.2 373.5
_____ _____ _____ _____
Total properties 251.9 399.1 276.5 438.0
_____ _____ _____ _____
2. Net asset value per share (NAV)
This consists of balance sheet equity plus the excess of market
value over book cost of trading stock divided by the number of
shares in issue. Net asset value per share at 31st March 2001
before the adjustments referred to below was £9.61, compared to
£9.85 at 30th September 2000.
Two proforma adjustments are commonly made to NAV per share to
calculate net net net asset value per share (NNNAV):
(i) Contingent tax
This is the tax that would be payable if all Group properties
were disposed of at valuation, and amounts to £1.91 per share
(£2.18 at 30th September 2000).
(ii) FRS13
This records the difference between the current market value of
fixed rate debt and derivatives and their book values. After
allowing for tax, this adjustment has fallen to 23p from 26p at
30th September 2000.
The resultant NNNAV at 31st March 2001 was £7.47 compared to
£7.41 as at 30th September 2000.
3. Earnings per share
The calculation of earnings per share is based on the following
number of shares:
30.03.01 30.03.00 30.09.00
No. of No. of No. of
Shares Shares shares
000's 000's 000's
Number of shares for basic
earnings per share
(March and September 2000:
weighted average) 24,65 525,328 25,259
______ ______ ______
Weighted average number of
shares for diluted earnings
per share 24,772 25,428 25,376
______ ______ ______
4. This announcement does not constitute statutory accounts
within the meaning of Section 240 of the Companies Act 1985.
Statutory accounts for the period ended 30th September 2000
have been filed with the Registrar of Companies. The auditors
have reported on these accounts; their report was unqualified
and did not contain any statement under Section 237(2) or (3)
of the Companies Act 1985.
5. Copies of this statement are being sent to all
shareholders. Copies can be obtained from the Company's
registered office, Times Square, Newcastle upon Tyne. NE1 4EP.
6. The Board of Directors approved the Interim Report on
19th June 2001. This interim report has neither been audited
nor reviewed by the auditors.
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