Final Results

Hammerson PLC 4 March 2002 Hammerson plc - Results for the year ended 31 December 2001 2001 2000 Change Net rental income £159.9m £141.1m + 13.3% Profit before taxation £69.1m £89.2m - 22.5% Exceptional items (£8.2m) £17.2m Adjusted profit before taxation(1) £77.3m £72.0m + 7.4% Earnings per share 21.4p 28.0p - 23.6% Adjusted earnings per share(1) 24.3p 22.0p +10.5% Fully diluted net asset value per share 731p 667p +9.6% Return on equity 8.3% 16.3% Gearing 65% 67% Recommended final dividend of 10.26 pence (2000: 9.6 pence) making a total for the year of 14.84 pence, an increase of 6.0%. Note (1) Excluding exceptional items, which comprise profits and losses on the sale of investment properties and, in 2001, the costs of redeeming convertible bonds. Copies of the Chairman's Statement, preliminary results statement, profit & loss account, balance sheet and cash flow statement are attached. Highlights • Investment of nearly £400 million, included £197 million in respect of acquisitions and £138 million on developments. • Property disposals realised £313 million. Since the year end, a retail property in Paris sold for £103 million. • Office development at 280 Bishopsgate, London EC2, completed at an estimated cost of £103 million with £15 million annual rental income commencing in April 2002. • Portfolio reversionary by 18%. • A total of 15.6 million shares purchased at a cost of £70 million and at an average price per share of 448 pence. Ronald Spinney, Chairman, said: 'Hammerson's strategy of focusing on prime retail and office properties in Europe has resulted in a strong performance in 2001. The group achieved good underlying growth in rents, completed one of its most successful developments, at 280 Bishopsgate in London, and advanced several major new projects. Our high quality portfolio provides secure revenue and potential for considerable income growth. The development programme enhances the group's prospects and I am therefore confident that Hammerson will achieve good returns in the future.' For further information: John Richards Tel: 020 7887 1000 Chief Executive Fax: 020 7887 1010 Simon Melliss Group Finance Director Christopher Smith Director of Corporate Affairs CHAIRMAN'S STATEMENT Introduction The Board's objective is to create value from property investment and development and from actively managing Hammerson's capital. The group's strategy, of focusing on prime retail and office properties in Europe, has resulted in a strong performance in 2001. Hammerson achieved good underlying growth in rents, completed one of its most successful developments, at 280 Bishopsgate in London, and advanced several major new projects. Results and Dividend Profit before tax for the year to 31 December 2001 was £69.1 million after exceptional losses of £8.2 million. Excluding exceptional items, profit increased by 7.4% in 2001, whilst adjusted earnings per share rose by 10.5% to 24.3 pence. Diluted net asset value per share increased by 9.6%, to 731 pence. The principal reasons for this were an underlying increase of 3.2% in the value of the group's properties, retained earnings and the purchase by the Company of its own shares and its convertible bonds. The return on equity in 2001 was 8.3% compared with 16.3% in 2000. The lower return in 2001 was attributable principally to a smaller increase in the valuation of the property portfolio. The directors are recommending a final dividend of 10.26 pence, compared with 9.6 pence in 2000. This makes a total dividend for the year of 14.84 pence, an increase of 6.0%. Purchase of the Company's own Shares In 2001, the Company purchased 15.6 million of its own shares, representing some 5.3% of the shares then in issue, at an average price of 448 pence and a total cost of £70 million. It is our intention that financial resources, when not required by the business, will be returned to shareholders in the most efficient manner, through dividends or purchases of the Company's own shares. Markets and Outlook For the second consecutive year, commercial property, both in the UK and on the continent, performed more strongly than other asset classes. For instance in the UK, provisional total returns from commercial property in 2001, as measured by IPD, were 7.1%, compared with 3.9% from gilts and a loss of 13.3% from equities. In the UK, retail sales grew strongly in 2001 despite the slowdown in the overall economy. Consumers continue to favour shopping destinations which provide a comprehensive retail offer in an attractive and safe environment. Rents for prime centres grew by about 2%, but with retailers being more selective and leases taking longer to conclude. The investment market saw a slight recovery in values in the second half of the year, albeit with few transactions for prime properties. The outlook for further growth in rents and values appears encouraging. The French retail sector had another good year in 2001 with consumer expenditure feeding through to a rise in rents of approaching 10%. Investment demand remained strong, leading to a further increase in capital values. With rents linked to an index of building costs, which is increasing at a rate in excess of inflation, the outlook for continued rental growth is good. In Germany, the long anticipated upturn in consumer expenditure failed to materialise. Rents remained little changed and there was a slight reduction in values. Demand for office accommodation in central London weakened in the second half of 2001 halting the strong rental growth of the last few years. Economic uncertainties have led to lower tenant demand and some softening of rents. However, the amount of new development projects underway is modest and the medium term outlook for a resumption of growth in rental values is good. Investment demand is continuing to be driven by investors' desire for secure income and an attractive initial yield, coupled with growth potential. In Paris, the strong occupier demand for offices, which had pushed availability of space to an all time low by the beginning of 2001, tailed off somewhat towards the end of the year and is likely to result in a slight reduction in rents in 2002. Nevertheless, the fundamentals of the market are attractive. The supply of modern flexible accommodation in the central business district remains limited, the volume of development completions over the next three years is forecast to be modest and investment demand should continue to be healthy. Conclusion The medium term fundamentals in Hammerson's principal markets are attractive. The group has a high quality portfolio providing secure revenue and potential for considerable income growth. The development programme enhances the group's prospects and I am therefore confident that Hammerson will achieve good returns in the future. Ronald Spinney Chairman 4 March 2002 FINANCIAL REVIEW Return on shareholders' equity • Hammerson's return on shareholders' equity for 2001 was 8.3% compared with 16.3% in 2000 and an estimated cost of equity of 8.1%. The principal reason for the reduction in 2001 was a lower underlying increase in the value of the portfolio. Also, 2000 benefited from exceptional profits of £17.2 million on the disposal of properties. Hammerson's return on shareholders' equity over the last three years has averaged 15.6% per annum. • Hammerson's return on invested capital was 6.8% in 2001, marginally below its estimated weighted average cost of capital of 7.0%. Profit and loss account • Net rental income of £159.9 million for 2001 compared with £141.1 million in 2000. Net rental income included turnover rents of £3.5 million, and car park and other income from properties of £6.2 million. • An analysis of net rental income is shown below: 2001 2000 £m £m Properties owned throughout: 112.8 101.1 Acquisitions completed 2000/2001 12.7 5.8 Developments completed 2000/2001 23.4 9.5 Properties sold 2000/2001 9.1 23.6 Exchange translation and other 1.9 1.1 Total 159.9 141.1 • On a like-for-like basis, net rental income increased by £11.7 million or 11.6%. • Asset management initiatives, such as the remodelling of space at Brent Cross shopping centre in north London and at Italie 2 shopping centre in Paris, together with rent reviews within the UK portfolio, were the main reasons for the strong growth in like-for-like rental income. In addition to the growth in like-for-like income, there were full year rental contributions from recently completed developments at West Quay, Southampton; 54 boulevard Haussmann, Paris; and 16 Old Bailey, London. There were also full year contributions from the acquisitions made in 2000 of the Bercy 2 shopping centre and Les Trois Quartiers, both in Paris. • Administration costs of £18.3 million in 2001 were £2.6 million higher than in 2000. The principal reasons for this increase were additional staff numbers, reflecting new business activity, and higher UK pension costs following an actuarial review and resumption of contributions in April 2001. • The group's net financing costs increased by £14.2 million to £67.6 million, mainly due to the cost of financing the development programme. The average cost of borrowing was 6.4% in 2001, compared with 6.5% in 2000. Interest cover remained unchanged at 1.9 times. • Profit before tax in 2001 was £69.1 million after charging exceptional costs of £3.3 million incurred in the redemption of the £110 million convertible bonds and losses of £4.9 million on property disposals. In 2000, the profit before tax of £89.2 million included an exceptional profit of £17.2 million from property disposals. • Adjusted profit before tax, excluding exceptional items, was £77.3 million compared with £72.0 million in 2000, an increase of 7.4%. • The tax charge for the year was £7.9 million, representing an effective tax rate of 10.2% on profit before tax and exceptional items. The low rate reflected the benefit of tax reliefs brought forward from earlier years to cover UK tax payable for 2001. A balance of reliefs remains available which it is anticipated will be used to reduce UK taxable profits in 2002 and 2003. • Earnings per share for 2001 were 21.4 pence. Excluding the losses from disposals and the exceptional cost of redeeming the convertible bonds, adjusted earnings per share were 24.3 pence, compared with 22.0 pence in 2000, an increase of 10.5%. • A final dividend of 10.26 pence per share is proposed which, together with the interim dividend of 4.58 pence per share, makes a total for the year of 14.84 pence per share. This represents an increase of 6.0% on the total dividend for 2000. Cash flow • Operating cash flow after interest for the year ended 31 December 2001 was £57 million, compared with £69 million in 2000, the reduction due mainly to higher interest payments. • The cash outflow for 2001 was £59 million, compared with £385 million in 2000. The principal reason for the reduced cash outflow was the proceeds raised from the sale of properties, which amounted to £313 million in 2001, compared with £75 million in 2000. Balance sheet • At 31 December 2001, Hammerson's portfolio was valued at £3,488 million, compared with £3,338 million at the end of 2000. The movement in the value of the portfolio reflected additional investment of £71 million, after disposals, and a valuation surplus of £108 million, partly offset by an exchange translation movement of £29 million. • The portfolio includes development properties with a valuation of £370 million, £32 million above cost. This reflects a valuation that is discounted for the estimated costs to complete, including interest and a profit margin that a potential purchaser might apply. The group does not intend to dispose of any of its developments prior to their completion and management believes that, in current market conditions, the future surpluses are likely to be substantially in excess of £32 million. • The portfolio includes a number of joint ventures. These had a value of £1,956 million of which the group's share was £822 million, or 24% of the total group portfolio, at 31 December 2001. • In October, the Company gave notice of redemption of its £110 million 2006 convertible bonds. In order to minimise the dilution from issuing new shares, £45.4 million of bonds were subsequently purchased in the market at an average price of 103.68% and £2.8 million were redeemed at par. The balance was converted into 14.2 million new ordinary shares at the conversion price of 435.6 pence. Subsequently, Hammerson purchased and cancelled 15.6 million of its own ordinary shares at an average price per share of 448 pence, and a total cost of 70 million. • The group's net assets at 31 December 2001 amounted to £2,049 million, an increase of £112 million over the previous year's figure, reflecting the revaluation surplus of £107 million and retained profits of £19 million, partially offset by changes to share capital and exchange translation movements. • Diluted net asset value per share increased by 64 pence, or 9.6%, from 667 pence to 731 pence at the year end. Of this increase, the revaluation surplus contributed 35 pence and retained profits and other items 5 pence. The purchase and cancellation of Hammerson shares and the redemption of convertible bonds increased the diluted net asset value per share by 24 pence. Borrowings • At the end of 2001, the group had borrowings of £1,553 million and cash and short term deposits of £218 million, so that net debt was £1,335 million. Undrawn committed facilities were £234 million. • At the end of the year, the weighted average maturity of borrowings was approximately 11 years, with 43% maturing after more than 10 years. Reflecting the group's financing policy, 97% of borrowings were unsecured. • The market value of borrowings and financial instruments was £1,631 million at the year end, which was £78 million greater than the actual liability, equivalent to 19 pence per share after tax. During 2001 the margin above gilts in the Company's long term bonds reduced by around 110 basis points, which increased the market value of the bonds by approximately £46 million. • Gearing at 31 December 2001 was 65%, compared with 67% at the 2000 year end. Financial reporting • The group has adopted the transitional arrangements permitted under Financial Reporting Standard ('FRS') 17 'Retirement benefits'. Had the standard been adopted in full during 2001, net assets would have been reduced by approximately 1 pence per share. • FRS 19 'Deferred tax' will be adopted for the year ended 31 December 2002. This will require full provision to be made against the possible recovery of tax relief received on capital allowances, tax depreciation and capitalised interest. In practice, the group does not normally pay tax on these items when properties are sold. If FRS 19 had been adopted in 2001, the group's deferred tax liability at 31 December 2001 would have been £7.6 million and there would have been a deferred tax credit to the profit and loss account of £15.9 million. PROPERTY PORTFOLIO REVIEW Property Portfolio Information for the year ended 31 December 2001 Net Underlying Average rental Properties valuation Total unexpired income at change return Reversionary lease valuation term £m £m % % % years Note (1) United Kingdom Retail 61 1,175 0.7 6.3 8.7 14 Office 51 1,126 6.6 12.8 25.8 13 Total United Kingdom 112 2,301 3.5 9.5 17.3 13 Continental Europe Retail: France 28 543 6.6 12.6 23.0 7 Germany 11 285 (4.1) (0.7) 14.9 4 39 828 2.7 8.0 20.4 6 Office: France 9 359 2.5 8.1 24.7 3 Total Continental Europe 48 1,187 2.6 8.0 21.2 6 Group Retail 100 2,003 1.4 7.1 13.5 11 Office 60 1,485 5.6 11.8 25.7 12 Total Group 160 3,488 3.2 8.9 18.4 11 Note 1. The amount by which the estimated rental value, excluding that relating to vacant space, exceeds the rents passing at 31 December 2001. • At 31 December 2001, Hammerson's portfolio had a book value of £3,488 million and included developments of £370 million. • Reflecting increased investment in continental Europe, the portfolio in France and Germany increased from 32% to 34% during the year. The split in the portfolio between retail and offices was little changed. • During 2001, the group invested a total of £386 million, of which £138 million was spent on development projects, £197 million on acquisitions and £51 million on improving existing properties and other investment. • Property disposals in 2001 raised proceeds of £313 million. Since the year end, the sale of 54 boulevard Haussmann, Paris for £103 million has been completed. Valuation movements • The underlying valuation increases for 2001 in the UK and continental Europe were 3.5% and 2.6% respectively, giving rise to an underlying increase of 3.2% for the group as a whole. • The valuation growth in the UK retail portfolio was 0.7% with an increase in the second half of the year of 2.8%, more than offsetting the fall in the first half. In France, the shopping centres increased in value by 6.6% due to strong income growth and a reduction in investment yields. In Germany, there was a reduction in value of 4.1%. • In the UK, the value of the office portfolio increased by 6.6%, mainly due to a further development surplus at 280 Bishopsgate, London and continuing growth in rental income at Harbour Exchange and 99 Bishopsgate, both in London. Total return • The total return from the portfolio was 8.9%. The returns in the UK and France were 9.5% and 11.0% respectively, whilst Germany showed a negative return of 0.7%. Portfolio (£m) Total return UK - Offices 1,126 12.8% France - Retail 543 12.6% France - Offices 359 8.1% UK - Retail 1,175 6.3% Germany - Retail 285 -0.7% 3,488 8.9% Income quality • At 31 December 2001, the average unexpired lease term of the group's properties was 11 years. • The group's ten largest retail tenants by rental income account for approximately 13% of total rental income. Major tenants include Hennes & Mauritz (3.9%); Arcadia (1.4%); Next (1.1%); Boots (1.1%) and REWE (1.1%). Given the spread of tenants in the retail portfolio, the risk to Hammerson of individual tenant default is very low. • The group's five largest office tenants account for approximately 23% of total rental income and comprise: The Royal Bank of Scotland (7.8%); Deutsche Bank (5.0%); BAT (3.8%); Lazards (2.9%) and Railtrack (2.8%). • Overall, the portfolio was 18% reversionary at the year end, compared with 20% reversionary at the end of 2000. Management believes that the portfolio will show strong income growth in each of the next three years from rent reviews and indexation, from the renewal of expiring leases, and from recently completed development projects. Rent Reviews • The following table shows projected UK rents, after reviews, based on current estimated rental values ('ERV'). It is not a forecast and takes no account of increases or decreases in rental values before the relevant review dates. 2002 2003 2004 Total £m £m £m 2002/2004 £m Rents passing from leases subject to review 8 16 20 44 Projected rent after review at current ERV 13 22 23 58 Potential rent increase 5 6 3 14 • In the UK, rents passing subject to review in 2002-2004 amount to £44 million. Rents receivable in respect of these leases would increase by £14 million to £58 million by 2004 if reviewed at current ERV. In addition, it is estimated that reviews remaining to be settled from 2001, could increase rents by around £8 million in 2002. • In France and Germany, rents are not generally subject to review but are indexed annually. In France, they are linked to the INSEE, a cost of construction index, which increased in 2001 by 4.8%. In Germany, they are linked to a cost of living index, which increased in 2001 by 2.2%. Lease Expiries and Breaks • The following table shows projected rents, assuming renewals or new lettings at current rental values, of leases where there are expiries or tenants' break clauses. It is not a forecast and takes no account of void periods, tenant incentives, or possible changes in rental values before the relevant lease expiry dates. 2002 2003 2004 Total £m £m £m 2002/2004 £m Rents passing from leases subject to expiries or breaks 10 10 12 32 Current ERV 13 14 16 43 Potential rent increase 3 4 4 11 • Over the three years 2002-2004, leases with current rents passing of £32 million either expire or are subject to tenant break clauses. Management estimates that, assuming renewals at current ERV, additional rents from this element of the portfolio would total £11 million by 2004. Income from Developments • Additional income will also be secured from completed development projects. In 2002, Hammerson will receive, from April, an annual rent of 15 million from The Royal Bank of Scotland, in respect of 280 Bishopsgate, London EC2 and an annual rent of £2 million from Martineau Place, Birmingham. • Other major development projects are due for completion over the next two years, although at this stage are mostly unlet. If let at current estimated rental values, these projects would generate additional annual rents of £40 million by the end of 2004. Retail Portfolio • The group's retail portfolio had a book value of £2,003 million at 31 December 2001, and rents passing of £110 million. The ERV was £130 million and the portfolio was 14% reversionary overall. • The vacancy rate at the end of the year in the retail portfolio was 3.2%, compared with 2.9% at the end of 2000. Investment activity • Retail acquisitions during the year amounted to £41 million. In the UK, an investment of £10 million was made in the Grosvenor House Hotel in Sheffield, where Hammerson has been nominated as preferred development partner by the city. Hammerson also increased its investment in the designer outlet centre at Bicester by £6 million. • In continental Europe, the freehold interest in Luisen Center, Darmstadt was acquired for £19 million, facilitating the current refurbishment project. A further 25% interest in B5, the designer outlet centre outside Berlin, was purchased for £6 million, giving Hammerson control over this asset and the remaining 25% interest has been acquired since the year end. • At the beginning of October, Hammerson sold the Queensmere Shopping Centre, Slough for £105 million, with £10 million of the consideration being deferred in the form of a five year interest bearing loan. Shortly after the year end, the disposal of 54 boulevard Haussmann, Paris for £103 million was completed. The latter property was redeveloped by Hammerson in 2000 at a total development cost of £72 million, and a capital profit of £31 million was realised on sale. • Other projects in 2001 in the UK, included the reconfiguration of space at Brent Cross to enhance the retail offer at the centre and the refurbishment of West Riding House in Leeds. At Freshney Place in Grimsby, refurbishment works were completed with the opening of a TK Maxx store in the former food court. A letting to Next also improved the retail offer in the centre. At Merseyway in Stockport, work continued to reconfigure the former C&A store. • In France, works on the food court at Italie 2 are now complete, while at Place des Halles, Strasbourg, the reconfiguration of the BHV and Squash units is due for completion shortly. • At Markisches Zentrum, Berlin and Luisen Center, Darmstadt, the refurbishment projects are on course for the expected completion dates of March and September 2002 respectively. Letting has progressed well and will result in an enhanced income stream from these centres. Developments • The major development projects at Bull Ring and Martineau Place in Birmingham, were progressed, with the latter achieving practical completion in December 2001 approximately 95% let. Construction is progressing well and handover of the anchor store to Selfridges took place in February 2002. At Romford, the redevelopment of the Liberty Centre also made progress towards its scheduled completion in April 2003 and approximately two thirds of the new income from the project has been secured. • In addition to the major development projects currently underway, Hammerson is advancing a number of potential future projects. These include the redevelopment of the Broadmead area in Bristol, where Hammerson and its partners in The Bristol Alliance will, in mid 2002, be submitting a revised planning application for a major regional shopping centre. In Sheffield, the group is in the initial stages of preparing a major, retail led city centre redevelopment. Retail operations • Local initiatives are co-ordinated at the group's offices in London, Paris and Berlin. The overall retail portfolio is managed by the Retail Group which has been established to encourage the exchange of ideas and working practices across Hammerson's operations in Europe and to develop a more co-ordinated approach to multinational retailers. • As an important element in distinguishing Hammerson centres to both tenants and customers, a separate shopping centre management company currently operates in France under the name of Marketing & Valorisation. During 2002, Hammerson Management Services, a newly formed operating company in the UK, will assume responsibility for the management of the group's UK shopping centres. In 2001, non-rental income from car parks, mall initiatives and management fees amounted to 8 million and the group will aggressively develop these and other alternative sources of income from Hammerson's assets. • The portfolio contains a number of shopping centres, that are strong local, and in certain cases national, brands. These brands are promoted so as to increase their value through growth in footfall and sales. The group makes extensive use of research, including customer surveys and sales data from retailers, to judge the success of the retail offer to consumers and to develop strategies for the continued success of the centres. Office Portfolio • The group's office portfolio had a book value of £1,485 million at 31 December 2001. Rents passing of £75 million compared with ERV of £99 million. The office portfolio is now 26% reversionary, compared with 27% reversionary a year ago. • The vacancy rate at the end of the year in the office investment portfolio was 6.7%, compared with 3.9% at the end of the previous year. The increase was due to lease surrenders at Harbour Exchange in Docklands, and vacancies at 4 place de l'Opera and Les Trois Quartiers, both in Paris. Investment and development activity • Investment in the office portfolio in 2001 amounted to £156 million. During the year four office properties were sold for a total of 225 million: Senator House, Gan House and 4 St Dunstan's Hill in London; and 40 rue de Courcelles in Paris. • Acquisitions included the purchase of a 33.3% interest in Moor House, a development property next to Moorgate station in the City, for 20 million in September. This partnership, with Greycoat Estates Limited and Pearl Assurance plc, a subsidiary of Henderson Global Investors, will deliver over 29,000 m(2) of office space when completed in spring 2004. Hammerson also acquired the outstanding 33.3% interest in Spitalfields Development Group for £11 million and is continuing discussions with the planning authorities and potential tenants with a view to bringing forward a major development project at Bishops Square, London E1, in conjunction with the Corporation of London. • Works on existing developments in the UK were progressed during the year, notably at 280 Bishopsgate in London, where the building was handed over to the tenant a week ahead of schedule in October, at an estimated final cost of £103 million. At 31 December 2001, the valuation surplus on this property was £123 million. The rent will commence in April 2002, giving a yield on the total development cost of over 14%. • At 1 London Wall, the project to build a 19,300 m(2) office building in a joint venture with Kajima continued, with a scheduled completion of summer 2003. In the West End, a new development was commenced at 10 Grosvenor Street, in partnership with Grosvenor, to create 6,100 m(2) of office accommodation, also with completion in summer 2003. • In Paris, Hammerson acquired the freehold of 14 boulevard Haussmann for £107 million, and began a redevelopment to create 26,900 m (2) of high quality office space in this prime location. The total cost is expected to be £174 million. A 50% interest in 4 place de l'Opera was acquired and a joint venture to refurbish the 6,800 m(2) of office space in the building was entered into with MAAF Assurances. The developments at 53 quai d'Orsay and 148 rue de l'Universite started during 2001 and are scheduled for completion in September of this year. These buildings which are in a prime location in the 7eme arrondisement will provide a total of 19,600 m(2) of accommodation and interest from potential occupiers is encouraging. • Good progress was made in respect of the proposed joint venture with AXA to redevelop 9 place Vendome and 368/374 rue Saint Honore in Paris to develop 26,000 m(2) of prime offices and 3,000 m(2) of retail space. • In respect of each of the group's developments, the breakeven rents are below the estimated rental value of the space if available today. Consolidated Profit and Loss Account for the year ended 31 December 2001 2001 2000 Unaudited Audited Notes £m £m Gross rental income, after rents payable 1 175.6 157.0 Other property outgoings 1 (15.7) (15.9) Net rental income 159.9 141.1 Management fees receivable 1.9 2.0 Cost of property activities (11.4) (9.6) Corporate expenses (8.8) (8.1) Administration expenses (18.3) (15.7) Operating profit 141.6 125.4 Exceptional items: (Loss)/Profit on the sale of investment (4.9) 17.2 properties Profit on ordinary activities before interest 136.7 142.6 Exceptional cost of finance 2 (3.3) - Other cost of finance (net) 2 (64.3) (53.4) Profit on ordinary activities before taxation 69.1 89.2 Taxation 3 (7.9) (8.2) Profit on ordinary activities after taxation 61.2 81.0 Equity minority interests (0.9) (1.3) Profit for the financial year 60.3 79.7 Dividends 4 (41.5) (39.4) Retained profit for the financial year 18.8 40.3 Earnings per share 5 21.4p 28.0p Diluted earnings per share 5 21.4p 27.8p Adjusted earnings per share 5 24.3p 22.0p All results derive from continuing operations. Movements on reserves are set out in note 16. Consolidated Balance Sheet as at 31 December 2001 2001 2000 Unaudited Audited Notes £m £m Fixed assets Land and buildings 6 3,487.5 3,337.8 Fixtures, fittings and equipment 7 1.0 0.8 Tangible assets 3,488.5 3,338.6 Investments 9 31.4 15.2 Current assets 3,519.9 3,353.8 Debtors - Due within one year 10 81.4 71.0 - Due after more than one year 10 14.4 - Cash and short term deposits 11 218.4 150.4 314.2 221.4 Creditors falling due within one year Borrowings 12 (24.2) (11.2) Other 13 (173.2) (146.7) Net current assets 116.8 63.5 Total assets less current liabilities 3,636.7 3,417.3 Creditors falling due after more than one year Borrowings 12 (1,528.7) (1,428.7) Other 13 (22.1) (18.3) Equity minority interests (37.1) (33.0) 2,048.8 1,937.3 Capital and reserves Called up share capital 15 70.0 70.3 Share premium account 16 588.6 529.2 Revaluation reserve 16 978.0 939.6 Capital redemption reserve 16 5.9 2.0 Other reserves 16 1.5 1.5 Profit and loss account 16 404.8 394.7 Equity shareholders' funds 2,048.8 1,937.3 Net asset value per share 5 734p 689p Diluted net asset value per share 5 731p 667p Statement of Total Recognised Gains and Losses for the year ended 31 December 2001 2001 2000 Unaudited Audited £m £m Profit for the financial year 60.3 79.7 Unrealised surplus on revaluation of properties 106.5 199.8 Exchange translation movements (6.3) 1.6 Total recognised gains and losses for the year 160.5 281.1 Note of Historical Cost Profits and Losses for the year ended 31 December 2001 2001 2000 Unaudited Audited £m £m Profit on ordinary activities before taxation 69.1 89.2 Realisation of previous years' revaluation gains 62.7 10.4 Historical cost profit on ordinary activities before taxation 131.8 99.6 Historical cost profit for the financial year after taxation, equity minority 81.5 50.7 interests and dividends Reconciliation of Movements in Shareholders' Funds for the year ended 31 December 2001 2001 2000 Unaudited Audited £m £m Retained profit for the financial year 18.8 40.3 Other recognised gains and losses 100.2 201.4 Purchase and cancellation of own shares (70.5) (31.3) Issue of shares 63.0 1.2 Net increase in shareholders' funds 111.5 211.6 Equity shareholders' funds at 1 January 1,937.3 1,725.7 Equity shareholders' funds at 31 December 2,048.8 1,937.3 Consolidated Cash Flow Statement for the year ended 31 December 2001 2001 2000 Unaudited Audited Notes £m £m Net cash flow from operating activities 17 134.8 127.8 Returns on investment and servicing of finance 17 (77.8) (59.0) Corporation tax (paid)/received (2.9) 21.9 Capital expenditure and investment 17 (72.9) (369.6) Acquisitions and disposals 17 - (67.0) Equity dividends paid (39.7) (38.8) Cash outflow (58.5) (384.7) (Increase)/Decrease in short term deposits (78.1) 4.0 Net cash inflow from financing 18 126.5 388.1 (Decrease)/Increase in cash in the year (10.1) 7.4 Reconciliation of Net Cash Flow to Movement in Net Debt for the year ended 31 December 2001 2001 2000 Unaudited Audited Notes £m £m (Decrease)/Increase in cash in the year (10.1) 7.4 Net increase in debt (133.9) (418.4) Increase/(Decrease) in short term deposits 78.1 (4.0) Change in net debt resulting from cash flows (65.9) (415.0) Adoption of secured bank debt on acquisition of subsidiary - (10.6) Exchange adjustment 20.9 (5.4) Movement in net debt in the year (45.0) (431.0) Net debt at 1 January (1,289.5) (858.5) Net debt at 31 December 19 (1,334.5) (1,289.5) Notes to the Accounts 1. SEGMENTAL ANALYSIS Gross rental Rents Other 2001 Net 2000 Net income payable property rental income rental outgoings income £m £m £m £m £m Rental income United Kingdom Retail: London & South 49.0 (0.8) (6.1) 42.1 34.4 Midlands & North 21.9 (0.7) (2.4) 18.8 15.9 70.9 (1.5) (8.5) 60.9 50.3 Office: City 29.5 (5.3) - 24.2 26.0 West End 18.5 (0.5) (0.5) 17.5 16.1 Docklands & other 11.6 (1.5) (0.6) 9.5 6.4 59.6 (7.3) (1.1) 51.2 48.5 Total United Kingdom 130.5 (8.8) (9.6) 112.1 98.8 Continental Europe Retail: France 30.7 - (2.5) 28.2 20.1 Germany 14.3 (0.2) (3.4) 10.7 10.9 45.0 (0.2) (5.9) 38.9 31.0 Office: France 9.1 - (0.2) 8.9 11.3 Total Continental Europe 54.1 (0.2) (6.1) 47.8 42.3 Group Retail 115.9 (1.7) (14.4) 99.8 81.3 Office 68.7 (7.3) (1.3) 60.1 59.8 Total 184.6 (9.0) (15.7) 159.9 141.1 Management fees receivable 1.9 - - 1.9 2.0 Cost of property activities - - (11.4) (11.4) (9.6) Net property income 186.5 (9.0) (27.1) 150.4 133.5 Included in net rental income for 2001 is £3.8m (2000: £6.1m) in respect of accrued rent receivable allocated to rent free periods. 2001 2000 Assets Net debt Net rental Net rental employed income income £m £m £m £m Net assets United Kingdom 2,231.6 (450.8) 1,780.8 1,691.3 Continental Europe 1,151.7 (883.7) 268.0 246.0 3,383.3 (1,334.5) 2,048.8 1,937.3 Net assets have not been analysed by retail and office sectors as net debt cannot be allocated to these sectors. Notes to the Accounts 2. COST OF FINANCE (NET) 2001 2000 £m £m Interest payable on: Bank loans and overdrafts 25.2 18.5 Other loans 71.0 71.6 Interest payable and similar charges 96.2 90.1 Less: Interest payable capitalised (19.1) (20.1) Interest receivable (12.8) (15.7) Other cost of finance (net) 64.3 53.4 Exceptional cost of finance 3.3 - Cost of finance (net) 67.6 53.4 The exceptional cost of finance represents the cost incurred in redeeming the Company's £110m 6.5% convertible bonds. 3. TAXATION 2001 2000 £m £m United Kingdom corporation tax at 30% 21.2 23.2 Advance corporation tax ('ACT') written back (13.5) (15.3) Overseas tax 0.2 0.3 7.9 8.2 Contingent tax Should the group's properties and investments be sold at book value a tax liability would arise. The liability would be £203 million (2000: £197 million) if properties are sold individually and no capital allowances retained by Hammerson. If account is taken of the likelihood that some properties would be sold through the sale of shares in subsidiaries, and it is assumed that capital allowances will be retained by the group for all other property sales, the liability would be reduced to approximately £49 million (2000: £57 million). On a diluted net asset value per share basis these amounts are equivalent to 72 pence per share and 17 pence per share (2000: 64 pence per share and 18 pence per share) respectively. FRS 19 - Deferred tax Financial Reporting Standard 19 ('FRS 19') will apply for the year ended 31 December 2002. This will require provision to be made for the tax that would be payable in the event that disposals are made such that all capital allowances and other deductions previously claimed reverse. Had FRS 19 been applied to the accounts for the year ended 31 December 2001, there would have been a deferred tax credit of £15.9m in the profit and loss account, a deferred tax charge of £11.5m in the statement of total recognised gains and losses and the net deferred tax liability at the year end would have been £7.6m. Notes to the Accounts 4. DIVIDENDS 2001 2000 £m £m Interim 4.58p (2000: 4.40p) per share 12.8 12.5 Final proposed 10.26p (2000: 9.60p) per share 28.7 26.9 41.5 39.4 The directors have declared a final dividend of 10.26p per share payable on 23 May 2002 to shareholders on the register at the close of business on 15 March 2002. 5. EARNINGS PER SHARE AND NET ASSET VALUE PER SHARE Basic earnings per share is calculated by dividing the profit for the financial year of £60.3m by the weighted average number of ordinary shares in issue during the year of 281.4m, excluding those shares held in the Hammerson Deferred Share Plan (note 9) which are treated as cancelled. Basic net asset value per share is calculated from the value of equity shareholders' funds at 31 December 2001 of £2,048.8m (2000: £1,937.3m) and the number of shares in issue at that date of 279.3m (2000: 280.7m), again excluding shares held in the Hammerson Deferred Share Plan. Earnings per share 2001 2000 Weighted Weighted average average number of number of shares shares Earnings Pence Earnings Pence million million £m per share £m per share Basic 60.3 281.4 21.4 79.7 284.5 28.0 Adjustments: Dilutive share options - 0.2 n/a - 0.2 n/a Convertible bonds - - n/a 6.5 25.2 n/a Diluted 60.3 281.6 21.4 86.2 309.9 27.8 Adjusted earnings per share 2001 2000 £m £m Profit for the financial year 60.3 79.7 Adjustments: Exceptional items 4.9 (17.2) Exceptional cost of finance 3.3 - Adjusted profit for the financial year 68.5 62.5 Weighted average number of shares (million) 281.4 284.5 Adjusted earnings per share (pence) 24.3 22.0 Net asset value per share Shareholders' Shares Net asset value funds per share £m million pence Basic 2,048.8 279.3 734 Unexercised share options 11.8 2.7 n/a Diluted 2,060.6 282.0 731 Notes to the Accounts 6 LAND AND BUILDINGS Valuation Cost 2001 2000 2001 2000 £m £m £m £m Investment Properties Fully developed properties 3,117.4 3,040.0 2,165.9 2,175.8 Properties held for or in the course of development 370.1 297.8 337.7 214.5 3,487.5 3,337.8 2,503.6 2,390.3 Freeholds Long Short Total leaseholds leaseholds £m £m £m £m Movements in the year Balance at 1 January 2001 1,639.0 1,689.3 9.5 3,337.8 Exchange adjustment (27.5) (1.2) (0.1) (28.8) Transfers 43.5 (43.5) - - Additions at cost 235.2 142.9 0.4 378.5 Disposals at valuation (235.0) (91.7) - (326.7) Capitalised interest 6.2 12.9 - 19.1 Revaluation surplus 50.1 57.7 (0.2) 107.6 Balance at 31 December 2001 1,711.5 1,766.4 9.6 3,487.5 2001 2000 £m £m Capital commitments 271.9 235.1 7 FIXTURES, FITTINGS AND EQUIPMENT Cost Depreciation Net book value £m £m £m Balance at 1 January 2001 1.9 (1.1) 0.8 Additions 0.5 - 0.5 Charge for the year - (0.3) (0.3) Disposals (0.1) 0.1 - Balance at 31 December 2001 2.3 (1.3) 1.0 Notes to the Accounts 8 JOINT INVESTMENTS AND DEVELOPMENTS As at 31 December 2001 certain property and corporate interests have been proportionally consolidated, and these are set out in the following table: Group share % Partner(s) Investment portfolio Brent Cross Shopping Centre 41.2 The Standard Life Assurance Company Essen Shopping Center BV 22 Algemeen Burgerlijk Pensioenfonds The Martineau Galleries Limited Partnership 33.33 Land Securities PLC, Pearl Assurance plc The Martineau Limited Partnership 33.33 Land Securities PLC, Pearl Assurance plc The Oracle Limited Partnership 50 Akaria Investments Limited Opera Capucines SCI 50 MAAF Assurances West Quay Shopping Centre Limited 50 Barclays Bank plc Development portfolio The Bull Ring Limited Partnership 33.33 Land Securities PLC, Pearl Assurance plc The Grosvenor Street Limited Partnership 50 Grosvenor West End Properties The London Wall Limited Partnership 50 Kajima London Wall Limited The Moor House Limited Partnership 33.33 Greycoat Estates Ltd, Pearl Assurance plc The following summarised profit and loss account and balance sheet show the proportion of the group's results and net assets before partner funding which is derived from its joint investments and developments: Profit and loss account 2001 2000 £m £m Net rental income 29.4 19.7 Administration expenses (0.2) (0.1) Operating profit 29.2 19.6 Cost of finance (net) 0.4 0.8 Profit on ordinary activities before taxation 29.6 20.4 Balance sheet 2001 2000 £m £m Land and buildings at valuation 822.0 728.5 Fixed assets 822.0 728.5 Other current assets 13.8 10.5 Cash 10.8 16.8 24.6 27.3 Borrowings falling due within one year (0.1) (0.1) Creditors falling due within one year (20.6) (20.5) Net current assets 3.9 6.7 Total assets less current liabilities 825.9 735.2 Borrowings falling due after more than one year (10.4) - Creditors falling due after more than one year (7.7) - Net assets before partner funding 807.8 735.2 Notes to the Accounts 9. INVESTMENTS 2001 2000 £m £m Value Retail Investors Limited Partnerships 20.9 13.8 Ordinary shares of Hammerson plc (Deferred Share Plan) 2.5 1.4 Other investments 8.0 - 31.4 15.2 10. DEBTORS 2001 2000 £m £m Due within one year Trade debtors 27.2 20.4 Other debtors 48.4 38.6 Corporation tax 0.8 7.3 Prepayments 5.0 4.7 81.4 71.0 Due after more than one year Other debtors 14.4 - 11. CASH AND SHORT TERM DEPOSITS 2001 2000 £m £m Cash at bank 9.4 19.5 Short term deposits 209.0 130.9 218.4 150.4 Analysis by currency Sterling 211.4 144.2 Euro 7.0 6.2 218.4 150.4 Notes to the Accounts 12. BORROWINGS 2001 2000 £m £m Unsecured £200 million 7.25% Sterling bonds due 2028 197.3 197.2 £250 million 6.875% Sterling bonds due 2020 246.4 198.6 £200 million 10.75% Sterling bonds due 2013 194.4 194.2 €500 million 6.25% Euro bonds due 2008 303.2 - €300 million 5% Euro bonds due 2007 181.8 186.6 £110 million 6.5% Sterling convertible bonds due 2006 - 108.2 £86.4 million 7.875% Sterling bonds due 2003 85.5 85.0 Bank loans and overdrafts 315.3 459.4 1,523.9 1,429.2 Exchange difference on currency swaps (15.4) (26.4) 1,508.5 1,402.8 Secured Sterling variable rate mortgages due 2007 10.4 - Euro mortgages 5.24%-6.95% due between 2002 and 2023 31.9 34.8 Euro loans 3.749%-7.25% due between 2011 and 2019 2.1 2.3 44.4 37.1 1,552.9 1,439.9 Undrawn committed facilities 2001 2000 £m £m Expiring after more than two years 233.6 65.2 13. CREDITORS - OTHER 2001 2000 £m £m Falling due within one year Trade creditors 39.2 39.5 Taxation 4.9 6.1 Other creditors 91.1 63.8 Accruals 9.3 10.4 Dividends payable 28.7 26.9 173.2 146.7 Falling due after more than one year Other creditors 22.1 18.3 Notes to the Accounts 14 FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES 31 December 2001 31 December 2000 Book value Fair value Book value Fair value £m £m £m £m Overdrafts and short term borrowings (25.9) (25.9) (13.1) (13.1) Gross long term borrowings (1,560.1) (1,632.2) (1,359.1) (1,404.0) Convertible bonds - - (110.0) (121.3) Unamortised borrowing costs 17.7 17.7 15.9 15.9 Interest rate swaps - (9.4) - (10.7) Currency swaps 15.4 18.5 26.4 29.4 Total borrowings (1,552.9) (1,631.3) (1,439.9) (1,503.8) The fair value of the group's cash, short term deposits, other long term debtors and creditors equate to their book values. 15. SHARE CAPITAL Authorised Called up, allotted and fully paid 2001 2000 2001 2000 £m £m £m £m Ordinary shares of 25p each 94.8 94.8 70.0 70.3 Number Movements in issued share capital Number of shares in issue at 1 January 2001 281,064,406 Conversion of convertible bonds 14,177,717 Exercise of share options - Share option scheme 347,809 - Save As You Earn 6,640 Purchase and cancellation of own shares (15,635,791) Number of shares in issue at 31 December 2001 279,960,781 16. RESERVES Share Revaluation Capital Other Profit and premium reserve redemption reserves loss account reserve account £m £m £m £m £m Balance at 1 January 2001 529.2 939.6 2.0 1.5 394.7 Exchange adjustment - (5.4) - - (0.9) Premium on issue of shares 59.4 - - - - Purchase of own shares for cancellation - - 3.9 - (70.5) Surplus arising on revaluation of properties - 106.5 - - - Transfer to profit and loss account on - (62.7) - - 62.7 disposal Retained profit for the year - - - - 18.8 Balance at 31 December 2001 588.6 978.0 5.9 1.5 404.8 Notes to the Accounts 17. ANALYSIS OF CASH FLOWS 2001 2000 £m £m Reconciliation of operating profit to net cash inflow from operating activities Operating profit 141.6 125.4 Depreciation and amortisation 1.6 0.5 Increase in accrued rents receivable (3.8) (6.1) Increase in debtors (9.1) (4.0) Increase in creditors 4.5 12.0 134.8 127.8 Returns on investment and servicing of finance Interest received 13.3 15.5 Interest paid (91.1) (74.0) Dividends paid to minorities - (0.5) (77.8) (59.0) Capital expenditure and investment Purchase and development of property (363.3) (442.7) Purchase of investments (22.6) (1.7) Sale of property 313.0 74.8 (72.9) (369.6) Acquisitions and disposals Disposal of subsidiary companies - (0.2) Purchase of subsidiary company - (67.6) Cash acquired with subsidiary company - 0.8 - (67.0) 18. ANALYSIS OF CASH FLOW FROM FINANCING 2001 2000 £m £m Issue of bonds 348.5 198.6 Purchase of own bonds for cancellation (48.2) - Issue of shares 1.3 1.0 Purchase of own shares for cancellation (70.5) (31.3) (Decrease)/Increase in medium and long term borrowings (119.6) 248.4 Increase/(Decrease) in short term borrowings 15.0 (28.6) Net cash inflow from financing 126.5 388.1 19. ANALYSIS OF MOVEMENT IN NET DEBT Short term Cash at Borrowings due Borrowings due deposits bank within one after one year year Net debt £m £m £m £m £m Balance at 1 January 2001 130.9 19.5 (11.2) (1,428.7) (1,289.5) Cash flow 78.1 (10.1) (15.0) (180.7) (127.7) Conversion of convertible bonds - - - 61.8 61.8 Exchange - - 2.0 18.9 20.9 Balance at 31 December 2001 209.0 9.4 (24.2) (1,528.7) (1,334.5) Notes to the Accounts 20 CONTINGENT LIABILITIES There are contingent liabilities of £2.5m (2000: £3.2m) relating to guarantees given by the parent company in respect of certain group companies. 21 FINANCIAL STATEMENTS The consolidated profit and loss account and balance sheet set out above are not statutory accounts within the meaning of Section 240 of the Companies Act 1985. Statutory accounts for the year ended 31 December 2001 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The financial information for the year ended 31 December 2000 is derived from the statutory accounts for that year which have been reported on by the Company's auditors and delivered to the Registrar of Companies. The audit report on the 31 December 2000 financial statements was unqualified and did not contain a statement under Section 237(2) or Section 237(3) of the Companies Act 1985. The unaudited financial information in this report has been prepared on the basis of the accounting policies set out in the full statutory accounts for the year ended 31 December 2000. 22. NOTICE OF MEETING The Annual General Meeting will be held at 10.30am on Thursday, 9 May 2002 at 100 Park Lane, London W1K 7AR. Property Portfolio Information for the year ended 31 December 2001 Net True Underlying Estimated rental Properties equivalent valuation Total Vacancy Rents rental income at valuation yield change return rate passing value Reversionary £m £m % % % % £m £m % Notes (1) (2) (3) (4) United Kingdom Retail: London & South 42.1 750.6 6.3 0.1 5.3 0.8 41.8 47.6 9.1 Midlands & North 18.8 424.5 7.5 1.6 8.3 5.0 23.9 26.9 8.0 60.9 1,175.1 6.7 0.7 6.3 1.7 65.7 74.5 8.7 Office: City 24.2 644.8 7.5 10.3 16.8 0.1 38.2 43.5 13.5 West End 17.5 313.5 8.0 0.4 6.4 1.4 17.9 25.0 37.1 Docklands & other 9.5 167.5 9.7 5.3 11.9 14.9 10.4 17.8 47.7 51.2 1,125.8 8.1 6.6 12.8 5.5 66.5 86.3 25.8 Total United Kingdom 112.1 2,300.9 7.3 3.5 9.5 3.3 132.2 160.8 17.3 Continental Europe Retail: France 28.2 542.6 7.0 6.6 12.6 3.9 30.6 39.0 23.0 Germany 10.7 284.6 6.6 (4.1) (0.7) 5.5 14.0 16.9 14.9 38.9 827.2 6.9 2.7 8.0 4.6 44.6 55.9 20.4 Office: France 8.9 359.4 7.3 2.5 8.1 20.9 8.3 12.6 24.7 Total Continental Europe 47.8 1,186.6 7.0 2.6 8.0 5.7 52.9 68.5 21.2 Group Retail 99.8 2,002.3 6.8 1.4 7.1 3.2 110.3 130.4 13.5 Office 60.1 1,485.2 8.0 5.6 11.8 6.7 74.8 98.9 25.7 Total Group 159.9 3,487.5 7.2 3.2 8.9 4.0 185.1 229.3 18.4 Notes (1) True equivalent yield is based on rents passing and estimated rental values at 31 December 2001. The calculation excludes properties in the course of development. (2) Rents passing at 31 December 2001 after deducting head and equity rents. (3) Estimated rental value at 31 December 2001 including vacant space and after deducting head and equity rents. (4) The amount by which the estimated rental value, excluding that relating to vacant space, exceeds the rents passing at 31 December 2001. Security of Income/Reversions as at 31 December 2001 Average Expiries/Breaks Rents passing that expire/ ERV of leases that expire/ unexpired break in break in lease 2002 2003 2004 2002 2003 2004 term years £m £m £m £m £m £m Notes (1) (1) (1) (2) (2) (2) United Kingdom Retail: London & South 2.9 0.6 0.9 3.4 0.7 0.9 15 Midlands & North 1.5 0.3 1.5 1.9 0.4 1.6 12 4.4 0.9 2.4 5.3 1.1 2.5 14 Office: City 0.2 - 0.4 0.4 - 0.5 14 West End 0.1 4.5 2.5 0.1 7.9 3.0 13 Docklands & other 0.7 0.3 1.3 1.7 0.4 2.4 8 1.0 4.8 4.2 2.2 8.3 5.9 13 Total United Kingdom 5.4 5.7 6.6 7.5 9.4 8.4 13 Continental Europe Retail: France 2.0 1.6 1.1 3.1 2.3 1.6 7 Germany 1.5 1.3 2.4 1.7 0.6 2.9 4 3.5 2.9 3.5 4.8 2.9 4.5 6 Office: France 0.8 0.9 2.3 1.0 1.6 3.0 3 Total Continental Europe 4.3 3.8 5.8 5.8 4.5 7.5 6 Group Retail 7.9 3.8 5.9 10.1 4.0 7.0 11 Office 1.8 5.7 6.5 3.2 9.9 8.9 12 Total Group 9.7 9.5 12.4 13.3 13.9 15.9 11 Rent Reviews Rents passing subject to review Projected rent at current ERV in of leases subject to review in Outstanding 2002 2003 2004 Outstanding 2002 2003 2004 £m £m £m £m £m £m £m £m Notes (3) (3) (3) (3) (4) (4) (4) (4) United Kingdom Retail: London & South 3.8 1.7 0.8 9.0 4.9 2.0 0.9 10.2 Midlands & North 2.9 2.4 2.6 1.4 3.5 2.9 2.6 1.5 6.7 4.1 3.4 10.4 8.4 4.9 3.5 11.7 Office: City 9.2 0.3 0.1 7.4 14.9 0.4 0.2 7.8 West End 0.3 2.8 11.0 - 0.5 5.2 15.0 - Docklands & other 0.3 0.9 1.0 2.4 0.3 2.6 2.6 3.6 9.8 4.0 12.1 9.8 15.7 8.2 17.8 11.4 Total United Kingdom 16.5 8.1 15.5 20.2 24.1 13.1 21.3 23.1 (1) These figures show the amount by which rental income, based on rents passing at 31 December 2001, could fall in the event that occupational leases due to expire are not renewed or replaced by new leases. For the UK it includes tenants' break options. For France and Germany, it is based on the earliest date of lease expiry. (2) The estimated rental value at 31 December 2001 for space that expires or breaks in each year, after deducting head and equity rents and ignoring the impact of rental growth and any rent free periods. (3) These figures show the rental income, after deducting head and equity rents, at 31 December, which is subject to review in each year. (4) These figures are the projected rents for space that is subject to review in each year and is based on the higher of the current rental income and the estimated rental value as at 31 December 2001, after deducting head and equity rents and ignoring the impact of rental growth. Current Developments Ownership Cost at Retail/ Estimated total Size m2 Completion date interest 31/12/01 £m Office development cost Project £m Bull Ring, Birmingham 33% 74 Retail 184 110,000 Sep 2003 1 London Wall, London 50% 9 Office 51 19,300 Jul 2003 EC2 10 Grosvenor Street, 50% 6 Office 18 6,100 Jun 2003 London W1 Moor House, London 33% 25 Office 69 29,100 Feb 2004 EC2 53 quai d'Orsay, 100% 42 Office 57 9,200 Sep 2002 Paris 7eme 148 rue de 100% 45 Office 62 10,400 Sep 2002 l'Universite, Paris 7eme 14 boulevard 100% 111 Office 174 26,900 Jul 2003 Haussmann, Paris 9eme This information is provided by RNS The company news service from the London Stock Exchange

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