Interim Results - Part 2
Great Portland Estates PLC
20 November 2001
PART 2
Notes Forming Part of the Interim Statement
1 BASIS OF PREPARATION OF INTERIM FINANCIAL INFORMATION
The interim financial information has been prepared on the basis of the
accounting policies set out in the Group's 2001 statutory accounts as amended
by the introduction of FRS 17 to FRS 19. The comparative interim financial
information has only had to be restated to reflect FRS 19, which relates to
deferred tax, and the effect of the restatement is set out in note 16. The
financial information contained in this report does not constitute statutory
accounts within the meaning of section 240 of the Companies Act 1985. The
abridged accounts for the year ended 31st March 2001, which are an extract
from the accounts for that year which, together with an unqualified audit
report, have been delivered to the Registrar of Companies, have also been
restated to reflect FRS 19.
2 TURNOVER AND SEGMENTAL ANALYSIS
Rent receivable by location:
Year to Six months to Six months to
31st 30th 30th
March September September
2001 2001 2000
£m £m £m
---------- -------------- --------------
20.3 West End - North of Oxford Street 10.6 9.6
20.7 Other West End and Covent Garden 10.7 10.3
18.0 City and Holborn 8.5 9.1
11.3 South East Offices 4.3 6.4
23.0 Shopping Centres 9.8 11.2
13.5 Rest of United Kingdom 1.2 10.9
---------- ------------- ----------------
106.8 45.1 57.5
Rent receivable is stated exclusive of value added tax, and arose wholly from
continuing operations in the United Kingdom. No operations were discontinued
during the period.
3. ADMINISTRATION EXPENSES
Year to Six months to Six months to
31st 30th 30th
March September September
2001 2001 2000
£m £m £m
-------- ------------- ---------------
Administration expenses
5.2 Other 2.4 2.8
---------- ------------- --------------
Exceptional items
- Costs of early repayment of 0.3 -
debenture
1.9 Capital restructuring - 1.9
--------- -------------- -----------------
7.1 2.7 4.7
--------- ------------ -----------
4 INTEREST RECEIVABLE
Year to Six months to Six months to
31st 30th 30th
March September September
2001 2001 2000
£m £m £m
---------- ---------- ------------
2.3 Short-term deposits 0.4 1.5
0.5 Other 0.1 0.4
--------- ---------- -------------
2.8 0.5 1.9
--------- ----------- ------------
5. INTEREST PAYABLE
Year to Six months to Six months to
31st 30th 30th
March September September
2001 2001 2000
£m £m £m
--------- -------------- ------------
Interest payable
12.2 Bank loans and overdrafts 5.5 5.0
43.4 Other 17.7 22.1
--------- ------------- --------------
55.6 23.2 27.1
Exceptional items
- Premium on early repayment of debenture 28.2 -
5.0 Premium on early redemption of loan - 5.0
stock
-------- ----------- --------------
60.6 51.4 32.1
-------- ------------ -------------
6 TAX ON (LOSS)/PROFIT ON ORDINARY ACTIVITIES
Year to Six months to Six months to
31st 30th 30th
March September September
2001 2001 2000
as as restated
restated
£m £m £m
-------- ----------- -------------
9.2 UK corporation tax (credit)/charge for (3.6) 4.8
the period
2.3 Deferred tax - current period 0.7 1.2
(3.3) - relating to prior periods (0.3) (1.8)
------- -------------- -------------
8.2 Tax on (loss)/profit on ordinary (3.2) 4.2
activities
------- ------------- ------------
Adoption of FRS 19 has required a change in the method of accounting for
deferred tax. As a result the comparative figure for tax on profit on ordinary
activities for the six months to 30th September 2000 has been restated from
the previously reported amount of £4.8 million to £4.2 million, and for the
year to 31st March 2001 has been restated from the previously reported amount
of £9.2 million to £8.2 million. The impact of adopting FRS 19 on the results
for the six months to 30th September 2001 is an increase to the tax charge of
£0.4 million.
Taxation has been calculated using the estimated effective tax rate for the
full year. The difference between the standard rate of tax and the effective
rate arises from the items set out below:
Year to Six months to Six months to
31st 30th 30th
March September September
2001 2001 2000
as as restated
restated
£m £m £m
--------- ------------- ------------
24.4 (Loss)/profit on ordinary activities (8.6) 7.9
before tax
--------- ------------- ------------
7.3 Tax on (loss)/profit on ordinary (2.6) 2.3
activities at standard rate
0.3 Expenses not deductible for tax purposes 0.2 0.1
(2.3) Capital allowances (0.7) (1.2)
3.9 (Profit)/Loss on sale of investment (0.5) 3.6
properties covered by capital losses
--------- ------------- -------------
9.2 UK corporation tax (credit)/charge for (3.6) 4.8
the period
---------- ------------ ------------
Taxation on capital gains of approximately £45.7 million would have arisen if
the Group's investment properties had been sold for their book value at the
balance sheet date. No provision for this contingent liability has been made
as it is not expected that any liability will arise in the foreseeable future.
7 DIVIDENDS
An interim dividend of 3.33p per share (2000: 3.25p) will be paid on 3rd
January 2002 to shareholders on the register at 30th November 2001.
8 EARNINGS PER SHARE
Earnings per share for the six months are based on the loss attributable to
ordinary shareholders of £5,400,000 (2000: profit of £3,700,000) and on the
weighted average of 212,907,037 shares in issue (2000: 341,215,548 shares).
There is no impact on earnings per share of conversion of the convertible
bonds, or the exercise of share options.
The directors believe that earnings per share before deferred tax, exceptional
items and profits or losses on sales of investment properties provide
a more meaningful measure of the Group's performance. Accordingly, earnings
per share on that adjusted basis have been disclosed on the face of the profits
and loss account, and calculated as follows:
Year to Six months Six months Six months Six months
31st to 30th to 30th to 30th to 30th
March September September September September
2001 2001 2001 2000 2000
as restated as restated as restated
Earnings Profit Earnings Profit Earnings
per share after tax per share after tax per share
pence £m pence £m pence
------- ------------- ------------- --------------- ------------
5.9 Basic (5.4) (2.6) 3.7 1.1
(0.4) Deferred 0.4 0.2 (0.6) (0.2)
tax
1.7 Exceptional 20.0 9.4 4.8 1.4
items
(Profit)/
loss on
sale of
4.6 investment (1.7) (0.8) 12.0 3.5
properties
---------- ------------ ---------- -------------- ----------
11.8 Adjusted 13.3 6.2 19.9 5.8
----------- ------------ ------------ -------------- ----------
9. INVESTMENT PROPERTIES
Leasehold
over Leasehold
Freehold 900 years 50-250 years Total
£m £m £m £m
----------- ------------ ----------- ----------
At 1st April 2001 1,101.9 126.2 274.5 1,502.6
Additions at cost 12.4 0.1 3.1 15.6
Disposals (85.3) - - (85.3)
----------- -------------- -------------- ------------
1,029.0 126.3 277.6 1,432.9
Deficit on revaluation (21.9) (2.5) (5.1) (29.5)
----------- ------------- -------------- ------------
At 30th September 2001 1,007.1 123.8 272.5 1,403.4
------------ ------------ -------------- ------------
The freehold and leasehold investment properties were valued on the basis of
Open Market Value by CB Hillier Parker as at 30th September 2001 in accordance
with the Appraisal and Valuation Manual of the Royal Institution of Chartered
Surveyors.
10 DEBTORS
31st 30th 30th
March September September
2001 2001 2000
£m £m £m
---------- -------------- ------------
6.0 Rental debtors 14.0 12.0
7.6 Corporation tax 11.1 9.2
11.0 Other debtors 8.0 19.8
0.3 Prepayments 0.5 0.9
---------- ------------ ------------
24.9 33.6 41.9
----------- ------------ ----------
11. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
31st March 30th September 30th September
2001 2001 2000
£m £m £m
----------- --------------- ---------------
0.4 Unsecured loan notes 2007 0.6 -
44.0 Accruals and rents in advance 38.3 46.7
5.7 Corporation tax 2.5 12.1
3.1 Other taxes and social security 2.3 3.5
costs
5.1 Other creditors 3.4 3.2
13.9 Proposed dividend 6.8 7.0
---------- ------------- -------------
72.2 53.9 72.5
---------- -------------- -------------
12 DEBENTURE LOANS
31st 30th 30th
March September September
2001 2001 2000
£m £m £m
---------- --------------- --------------
First mortgage debenture stock
27.4 £24 million 11 3/16 per cent. 27.3 27.6
debenture stock 2009/14
100.0 £100 million 9 1/2 per cent. - 100.0
debenture stock 2016
130.0 £130 million 10 3/4 per cent. 130.0 130.0
debenture stock 2021
97.7 £100 million 7 1/4 per cent. 97.7 97.6
debenture stock 2027
98.9 £100 million 5 5/8 per cent. 98.9 98.9
debenture stock 2029
-------- ------------- -------------
454.0 353.9 454.1
--------- ------------- -------------
Certain of the freehold and leasehold properties are charged to secure the
first mortgage debenture stock.
13. CONVERTIBLE LOANS
31st 30th 30th
March September September
2001 2001 2000
£m £m £m
--------- ------------- -------------
58.0 5 1/4 per cent. convertible bonds 2008 58.0 58.0
(1.2) Costs of issue (1.2) (1.3)
----------- ------------ ------------
56.8 56.8 56.7
--------- ------------ -------------
The bonds, which are unsecured, are convertible by the bondholder at any time
until 2008 at a price of £3.10 per share, and redeemable by the Company in
2008 at par.
14 BANK AND OTHER LOANS
31st 30th 30th
March September September
2001 2001 2000
£m £m £m
---------- --------------- --------------
175.0 Bank loans 175.0 190.0
7.7 Unsecured loan notes 2007 7.3 7.7
--------- ------------ -------------
182.7 182.3 197.7
(0.4) Falling due within one year (0.6) -
--------- -------------- -------------
182.3 Falling due after one year 181.7 197.7
---------- ------------ -------------
The bank loans are unsecured and expire between 2002 and 2005. The Company has
entered into swap arrangements to fix the rate of interest on the bank loans,
which has resulted in a weighted average rate of 6.7 per cent. The unsecured
loan notes, which together with an associated guarantee attract a floating
rate of interest of 0.275 per cent. in aggregate above LIBOR, are redeemable
at the option of the noteholder until 2007, and by the Company in 2007.
15 BORROWINGS
Maturity of financial liabilities
The maturity profile of the financial liabilities of the Group at 30th
September 2001 was as follows:
31st 30th 30th
March September September
2001 2001 2000
£m £m £m
--------- -------------- --------------
0.4 In one year or less, or on demand 0.6 -
175.0 In more than two years but not more 175.0 190.0
than five years
518.1 In more than five years 417.4 518.5
---------- ------------ --------------
693.5 593.0 708.5
---------- ------------ -------------
Borrowing facilities
Undrawn committed borrowing facilities available to the Group at 30th
September 2001 were as follows:
31st 30th 30th
March September September
2001 2001 2000
£m £m £m
---------- -------------- --------------
15.0 Expiring in one year or less 15.0 15.0
- Expiring in more than one year but 25.0 -
not more than two years
45.0 Expiring in more than two years 20.0 25.0
---------- ------------ -------------
60.0 60.0 40.0
------------ ------------ ---------------
Fair values of financial assets and financial liabilities
31st 31st March 30th 30th 30th 30th
March September September September September
2001 2001 2001 2001 2000 2000
Book Value Fair Value Book Value Fair Value Book Value Fair Value
£m £m £m £m £m £m
----------- ------------ ------------- -------------- -------- ----------
0.4 0.4 Short-term 0.6 0.6 - -
borrowings
693.1 785.5 Long-term 592.4 648.0 708.5 795.4
borrowings
- 6.3 Interest - 6.2 - 2.6
rate swaps
----------- ------------ ------------- -------------- -------- ----------
693.5 792.2 593.0 654.8 708.5 798.0
---------- ----------- ------------- ------------ -------- --------
The fair values of the Group's cash and short-term deposits are not materially
different from those at which they are carried in the accounts. Market values
have been used to determine the fair value of listed long-term borrowings, and
interest rate swaps have been valued by reference to market rates of interest.
The market values of all other items have been calculated by discounting the
expected future cash flows at prevailing interest rates.
16. PROVISIONS FOR LIABILITIES AND CHARGES
31st 30th 30th
March September September
2001 2001 2000
as restated as restated
£m £m £m
-------- ------------- -------------
Deferred tax
18.7 At the beginning of the period 17.7 18.7
(1.0) Profit and loss account charge/ 0.4 (0.6)
(credit)
--------- ------------- --------------
17.7 At the end of the period 18.1 18.1
--------- ------------ -------------
The provision for deferred tax arises solely from capital allowances exceeding
depreciation. The adoption of FRS 19 Deferred Tax has required changes in the
method of accounting for deferred tax assets and liabilities. As a result of
these changes in accounting policy the comparatives have been restated as
follows:
Provisions for
Liabilities and Profit and Shareholders'
Charges Loss Reserve Funds
£m £m £m
-------------------- ------------------- ------------------
31st March 2001 as - 142.9 865.1
previously reported
------------ -------------- --------------
Adoption of FRS 19 18.7 (18.7) (18.7)
at 1st April 2000
During year ended (1.0) 1.0 1.0
31st March 2001
------------ -------------- -------------
Adoption of FRS 19 17.7 (17.7) (17.7)
at 31st March 2001
------------- --------------- ----------------
31st March 2001 as 17.7 125.2 847.4
restated
--------------- -------------- ----------------
17 SHARE CAPITAL
Year to Year to Six months to Six months to
31st March 31st March 30th September 30th September
2001 2001 2001 2001
Number £m Number £m
-------------- ----------- ------------------- -------------
Ordinary
shares of
50p each
Allotted,
called up
and fully
paid
356,830,258 178.4 At the 214,249,114 107.1
beginning of
the period
(142,732,104) (71.3) Capital - -
reduction
300,960 0.1 Exercise of - -
share
options
(150,000) (0.1) Repurchased (8,860,000) (4.4)
--------------- ------------ ---------------- ----------------
214,249,114 107.1 At the end 205,389,114 102.7
of the
period
------------- ------------- ----------------- ----------------
Six months to Six months to
30th 30th
September September
2000 2000
Number £m
--------------------- ----------------
Ordinary shares of 50p each
Allotted, called up and fully paid
At the beginning of the period 356,830,258 178.4
Capital reduction (142,732,104) (71.3)
Exercise of share options - -
Repurchased (150,000) (0.1)
--------------- -----------------
At the end of the period 213,948,154 107.0
-------------------- -----------------
On the 11th September 2000, as part of a Court confirmed capital reduction,
the ordinary shares of the Company were consolidated on the basis of three new
shares for every five existing ones, and the authorised share capital was
reduced
from 500,000,000 shares to 300,000,000 shares. There have been no other
movements in the authorised share capital since 1st April 2000.
18 SHARE PREMIUM
Year to Six months to Six months to
31st 30th September 30th
March September
2001 2001 2000
£m £m £m
-------- --------------- -------------
238.4 At the beginning of the period 24.8 238.4
(214.1) Capital reduction - (214.1)
0.5 Premium on exercise of share options - -
----------- ------------- -------------
24.8 At the end of the period 24.8 24.3
---------- ------------- -------------
19 RESERVES
Other Reserves
--------------------------------------
Capital Profit and
Redemption Acquisition Revaluation Loss
Reserve Reserve Total Reserve Account
£m £m £m £m £m
-------------- ------------- ------------ ----------- --------
At 1st 10.8 8.6 19.4 570.9 125.2
April 2001
Realised on - - - (2.8) 2.8
disposal of
properties
Repurchase 4.4 - 4.4 - (24.2)
of shares
Deficit on - - - (29.5) -
revaluation
Retained - - - - (12.2)
loss for
the period
------------- ------------ ----------- ---------- ----------
At 30th 15.2 8.6 23.8 538.6 91.6
September
2001
------------- ------------ ----------- ---------- ----------
The balance of profit and loss account reserve as at 1st April 2001 has been
restated for the adoption of FRS 19 (see note 16).
20 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
For the six months ended 30th September 2001
Year to Six months to Six months to
31st March 30th September 30th September
2001 2001 2000
As restated as restated
£m £m £m
------------ ------------------- ------------------
16.2 (Loss)/profit for the (5.4) 3.7
period
(20.9) Dividends (6.8) (7.0)
-------------- ------------------ -----------------
(4.7) (12.2) (3.3)
(0.4) Repurchase of shares (24.2) (0.4)
(285.4) Capital reduction - (285.4)
0.6 New shares issued - -
28.2 Other recognised gains (29.5) 34.9
and losses relating to
the period
---------- --------------- --------------
(261.7) Net decrease in (65.9) (254.2)
shareholders' funds
1,109.1 Opening shareholders' 847.4 1,109.1
funds
-----------
847.4 Closing shareholders' 781.5 854.9
funds
---------- --------------- -------------
The opening shareholders' funds at 1st April 2001 as previously reported
amounted to £865.1 million before the prior year adjustment of £17.7 million,
and at 1st April 2000 as previously reported amounted to £1,127.8 million
before the prior year adjustment of £18.7 million (see note 16).
21. NOTES TO THE GROUP STATEMENT OF CASH FLOWS
21.1 Reconciliation of Operating Profit to Net Cash Inflow from Operating
Activities
Year to Six months to Six months to
31st 30th September 30th
March September
2001 2001 2000
£m £m £m
------------ --------------- ------------
95.0 Operating profit 40.6 50.1
(5.5) Decrease/(increase) stock of 3.4 (3.1)
trading properties
1.1 (Increase)/decrease in debtors (8.7) (4.9)
(9.0) Decrease in creditors (1.6) (6.5)
------------ ------------- -------------
81.6 Net cash inflow from operating 33.7 35.6
activities
---------- ------------- ---------------
21.2. Reconciliation of Net Cash flow to Movement in Net Debt
Year to Six months to Six months to
31st 30th September 30th September
March
2001 2001 2000
£m £m £m
------------- ------------------ ---------------
2.3 Increase in cash in the period 4.6 4.8
9.8 Cash (withdrawn from)/placed (95.2) (65.7)
on short-term deposits
72.9 Cash outflow from repayment of 128.6 57.9
borrowings
----------- ------------- -------------
85.0 Change in net debt arising 38.0 (3.0)
from cash flows
(5.0) Other non-cash movements (28.1) (5.0)
----------- ------------- -------------
80.0 Movement in net debt in the 9.9 (8.0)
period
(677.5) Net debt at the beginning of (597.5) (677.5)
the period
----------- ------------ ------------
(597.5) Net debt at the end of the (587.6) (685.5)
period
---------- ------------ ------------
21.3 Analysis of Net Debt
At At
1st April Cash Flow Non-cash 30th September
2001 Changes 2001
£m £m £m £m
------------ --------------- -------------- ---------------
Cash 0.8 4.6 - 5.4
Short-term 95.2 (95.2) - -
deposits
Debt due within (0.4) 0.4 (0.6) (0.6)
one year
Debt due after one (693.1) 128.2 (27.5) (592.4)
year
------------ ------------- ------------- --------------
(597.5) 38.0 (28.1) (587.6)
---------- --------------- --------------- -------------
Portfolio Analysis
By location/user
At 30th September 2001
Offices Retail Total Valuation
£m £m £m Movement
---------- --------------- ------------- -----------
London: West End and
Covent Garden
- North of 368.3 60.8 429.1 -1.9%
Oxford Street
- Other 224.1 122.0 346.1 -2.1%
----------- ------------- -------------
- Total 592.4 182.8 775.2 -2.0%
City and 253.2 - 253.2 -0.7%
Holborn
--------- ------------ -------------
Total 845.6 182.8 1,028.4 -1.7%
South East Offices 96.7 - 96.7 -2.8%
Shopping Centres - 235.5 235.5 -0.6%
Other 26.0 16.8 42.8 -15.2%
------------ ------------ --------------
968.3 435.1 1,403.4 -2.1%
----------- --------- -----------
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