Interim Results

Hammerson PLC 27 August 2003 Hammerson Half Year Results Hammerson plc announces its unaudited results for the six months to 30 June 2003. Six months to 30 June 2003 2002 Increase Net rental income £97.5m £83.5m +16.8% Profit before tax(1) £47.4m £37.3m +27.1% Adjusted profit before tax(2) £43.7m £40.6m +7.6% Earnings per share 13.7p 10.0p +37.0% Adjusted earnings per share(3) 15.3p 14.0p +9.3% Dividend per share 5.12p 4.81p +6.4% 30 June 2003 31 Dec 2002 Shareholders' funds £2,106m £2,040m +3.2% Adjusted net asset value per share(4) 779p 752p +3.6% Gearing 75% 80% Note: (1) In 2003 there was an exceptional profit of £3.7 million compared with an exceptional loss of £3.3 million in 2002. (2) Excluding exceptional profits and losses. (3) Excluding exceptional profits and losses and deferred tax. (4) Excluding deferred tax. Highlights: • Strong rental growth with a 9.5% like-for-like increase. • Retail portfolio value, representing 69% of the total portfolio, increased by 2.8%, more than offsetting a decline of 3.5% in the office portfolio value. • Bullring shopping centre, Birmingham opening on 4 September 2003, with over 95% of expected retail rental income secured. • Grantchester successfully integrated and several development projects advanced. • Disposals contracted since 30 June 2003 total £200 million. The Chairman, Ronald Spinney, said today: ' Hammerson demonstrated continued progress in the first six months of the year, with good increases in both net rental income and earnings. The recently acquired retail park portfolio showed a strong performance. Despite slowing retail sales growth in the UK and France, demand for space from retailers in Hammerson's centres has been good and the outlook remains encouraging. In contrast, demand for office space in central London and Paris remained subdued, although there has been a recent increase in the level of enquiries from prospective occupiers. Hammerson is a resilient business with a strong balance sheet and substantial financial resources. Steps taken over the last few years to improve the quality of the portfolio, both through developments and the recycling of capital into assets providing good returns, mean that the group now has a robust income stream offering further growth potential.' For further information: John Richards Tel: 020 7887 1000 Chief Executive Simon Melliss Tel: 020 7887 1000 Group Finance Director Christopher Smith Tel: 020 7887 1019 Director of Corporate Affairs email: csmith@hammerson.co.uk Financial Calendar Ex dividend date 24 September 2003 Record date 26 September 2003 Interim dividend payable 31 October 2003 Hammerson is making a presentation to investors and analysts at 9 a.m. today at the offices of Dresdner Kleinwort Wasserstein, 20 Fenchurch Street, London EC3. A copy of the slide presentation and the full script will be simultaneously posted on the website (www.hammerson.co.uk). CHAIRMAN'S STATEMENT Results and Dividend Hammerson demonstrated continued progress in the first six months of the year, with good increases in both net rental income and earnings. Net rental income for the six months to 30 June 2003 was £98 million, compared with £84 million for the corresponding period in 2002. On a like-for-like basis, the increase was 9.5%, as a result of additional income from the renewal of expiring leases and rent reviews. The net cost of finance charged to the profit and loss account in the first six months increased by £8.9 million to £41.7 million, principally reflecting additional borrowings incurred in connection with the acquisition of Grantchester at the end of 2002. Administration costs rose by £1.9 million to £12.0 million, due to increases in staff levels and professional fees. Profit before tax was £47.4 million, compared with £37.3 million in the first half of 2002. In 2003, there was an exceptional profit of £3.7 million, whilst in 2002 there was an exceptional loss of £3.3 million. Adjusted profit before tax, excluding exceptional items, increased by £3.1 million, or 7.6%, to £43.7 million in 2003. Adjusted earnings per share rose by 1.3 pence, or 9.3%, to 15.3 pence, reflecting both the increase in profit and the reduction in the number of shares in issue following the Company's purchase of its own shares during the second half of 2002. The directors have declared an interim dividend of 5.12 pence per share payable on 31 October 2003, an increase of 6.4%. Balance Sheet and Cash Flow Net assets increased by £66 million to £2,106 million in the six months to 30 June 2003. The components were a valuation uplift of £30 million and retained profits of £24 million, whilst exchange translation and other movements amounted to £12 million. Adjusted net asset value per share increased by 27 pence, or 3.6%, to 779 pence in the first six months of the year. The group's operating cash flow totalled £125 million in the first six months of 2003, whilst financing costs and dividends were £75 million and £30 million respectively. Capital expenditure was £225 million, compared with £334 million realised from property disposals. Overall, there was a net cash inflow of £129 million in the first half of 2003. Reflecting the cash inflow, gearing reduced by five percentage points to 75% at 30 June 2003. The group's liquidity is strong, with cash and unutilised committed bank facilities of £440 million at 30 June 2003. Since June, the group has sold Merseyway Shopping Centre, Stockport, generating net proceeds of £128 million, and has exchanged contracts for the sale of Luisencenter, Darmstadt, for £72 million. Tax In France, the detailed regulations allowing property companies listed in that country to elect for exemption from tax on income from French property assets are expected shortly. Management is monitoring closely these changes and their implications for Hammerson. Markets and Outlook Although UK retail sales growth slowed during the first half of 2003, this was from the high levels of the previous year, and the outlook is for continued modest increases in consumer expenditure. Against this background, rental growth for prime shopping centres and retail parks has continued. There has been good investment demand for prime retail assets. In France, consumer uncertainties reflecting increasing unemployment, resulted in a slowdown in retail sales growth. Shopping centre rents grew in line with indexation. Since 30 June, there has been a pick up in interest from retailers. Investment demand has remained strong, but there have been few transactions, with existing investors reluctant to sell. Germany has remained a challenging market. A rise in unemployment has contributed to a downturn in consumer confidence and led to a reduction in retail sales. Rents and values for retail properties have generally weakened. In central London, the availability of office space rose by around 20% during the first half of the year. Lack of confidence on the part of occupiers was exacerbated by development completions and the further return of surplus space to the market. This resulted in a decrease in prime rents in the City of around 15%. The West End office market was more resilient. Investment demand for London offices with secure income streams has remained healthy, supported by the low interest rate environment. Looking ahead, a gradual improvement in occupational demand and a reduction in development activity should lead to a stabilisation in market conditions. In central Paris, occupiers also showed caution, leading to a reduction in prime rents of around 5% in the first six months of the year. Nevertheless, recently there has been a noticeable increase in the level of enquiries in a market where the supply of new office accommodation is limited. Demand from investors for prime well let office buildings remains strong. Portfolio The group's property portfolio was valued at £3.9 billion at 30 June 2003. During the first six months, the retail weighting of the portfolio increased from 65% to 69%. The geographic distribution of the portfolio was little changed. The average unexpired lease term was ten years and the portfolio was nearly 6% reversionary overall. The retail portfolio was reversionary by 12%, whilst the office portfolio was 10% over-rented. The area vacant within the Hammerson portfolio increased from 5.0% at 31 December 2002 to 5.7% at 30 June 2003. The vacancy in the group's UK and French shopping centres remained low at around 2.0%. The portfolio continues to provide a high quality income stream with good growth potential. The refurbishment and extension at Liberty Centre, Romford was successfully completed in April 2003, and has led to a significant improvement in the tenant mix and the overall rental value of the centre. The sale of two London office buildings, Globe House and 16 Old Bailey, was completed in March, raising a total of £192 million and reducing the central London office weighting by four percentage points to 19%. In June, the office property at 53 quai d'Orsay, Paris was sold for £74 million. During the first six months of the year, the underlying value of the group's portfolio increased by 0.8%. An increase of 2.8% in the value of the retail portfolio was partly offset by a decline of 3.5% in the value of the offices. There was a strong performance from the group's retail parks portfolio, which showed a valuation uplift of 6.4%. Following Hammerson's entry into this market in the second half of last year, the group has been seeking additional opportunities in the sector. In February, Hammerson acquired Sittingbourne Industrial Park in Kent for £17 million and is planning a retail redevelopment. Reflecting the weaker market conditions, the portfolio in Germany declined in value by 4.4%. This included a reduction of £10 million in respect of Luisencenter, Darmstadt, for which a contract for sale has been exchanged since 30 June 2003. A table of portfolio valuation movements in the six months to 30 June 2003 is shown below. Country Shopping Centres Retail Parks Offices Total UK 3.6% 6.4% -4.1% 1.5% France 2.9% - -2.3% 0.7% Germany -4.4% - - -4.4% Total Portfolio 2.3% 6.4% -3.5% 0.8% Current Developments Hammerson maintains an active development programme with the objectives of achieving good financial returns and creating assets which are not readily available on the open market. The group continues to build on its excellent reputation for its approach to urban regeneration, its ability to forge strong relationships with local authorities, and its skills in delivering complex development projects. At present six major developments are underway, five of them in joint ventures. The cost of these six developments at 30 June 2003 was just under £500 million, and the projects have an estimated total cost of £777 million. Of the latter figure, £440 million, or 57%, relates to two buildings, Bullring shopping centre in Birmingham, and the Bishops Square office building in the City of London. The letting risks of these two schemes have been largely eliminated with the former over 95% let and Bishops Square pre-let to a leading international firm of lawyers, Allen & Overy. A schedule of current developments at 30 June 2003 is shown below: Project Ownership Size Cost at Estimated total Anticipated interest development cost completion m(2) 30 June 2003 £m £m date Shopping centre Bullring, Birmingham 33 1/3% 110,000 145* 170 * Sept 2003 Offices Neo, 14 boulevard Haussmann, 100% 26,900 184 199 Sept 2003 Paris 9eme One London Wall, London EC2 50% 19,300 37* 49 * Sept 2003 10 Grosvenor Street, London 50% 6,100 14* 22 * Dec 2003 W1 Moorhouse, London EC2 33 1/3% 29,100 37* 67 * Sept 2004 Bishops Square, 75% 74,000 79* 270 * June 2005 London E1 (pre-let) * Hammerson's share The Bullring has been developed by The Birmingham Alliance joint venture, with Hammerson as the development manager. On a site of 11 hectares in the heart of Birmingham, it provides a total of 110,000 m(2) of retail space. The scheme opens next week with over 95% of the anticipated retail income secured and an excellent tenant line up, which augurs very well for its future success. Hammerson currently has three speculative office schemes underway in central London, all in joint ventures, where the total commitment is £138 million, representing less than 4% of the group's total property assets. One London Wall, London EC2, is nearing completion. At 10 Grosvenor Street, London W1, completion is due at the end of 2003. At Moorhouse, construction of the 17 storey building is now due to be completed in Autumn 2004. In the financial district of Paris, work is nearing completion on Neo, 14 boulevard Haussmann, where Hammerson is creating 26,900 m(2) of high quality accommodation at an estimated total development cost of £199 million. Despite the subdued market conditions, the group is in discussions with several prospective tenants. Development Pipeline In addition to the current developments, Hammerson has created opportunities for a substantial number of potential schemes which can be advanced over the next few years in the light of market conditions. These fall into four principal categories. Firstly, retail-led city centre projects in the UK. This category includes existing schemes, such as Brent Cross in north London and The Shires in Leicester, where major expansions are planned, and new schemes such as Broadmead in Bristol and Union Square in Aberdeen. Broadmead is a three way partnership for a major retail-led development, where planning consent has already been granted. Other schemes, including those in Kingston-upon-Thames, Peterborough, and the New Retail Quarter in Sheffield city centre, are at preliminary stages of planning. Secondly, UK retail parks and warehouses. The acquisition of Grantchester in Autumn 2002 gave Hammerson immediate critical mass in this sector, and provided the potential to add a further 100,000 m(2) of space through development. Although the planning environment is restrictive, the group has made excellent progress in advancing these schemes. Hammerson received planning consent in June 2003 for the first of these major developments, a retail park on the outskirts of Merthyr Tydfil in Wales, and has also gained planning consent for substantial extensions at Victoria Retail Park, Nottingham and Cleveland Retail Park, Middlesbrough. Planning decisions are awaited on new schemes at St. Oswald's Retail Park, Gloucester and Westwood & East Kent Retail Park, Thanet. Thirdly, office and mixed-use schemes in central London. The potential schemes, which could provide over 80,000 m(2) of space, include two major office buildings in the City, Norton Folgate and Shoreditch High Street, and one in Paddington. The group has no immediate plans to start these developments, some of which have not yet received planning permission. Finally, the group has two mixed-use schemes in Paris. At 9 place Vendome, planning consent has been received for a scheme comprising 22,900 m(2) of offices and 5,300 m(2) of retail space to be carried out in a 50:50 joint venture with AXA. A building permit has been granted and it is anticipated that a start on site will be made in 2004. The group also has a joint venture with MAAF, a leading French insurance company, to create a building of around 10,000 m(2) at 4 place de l'Opera, a prime central location. The Board I am delighted that David Edmonds joined the Board as a non-executive director in May 2003. Currently the Director General of Telecommunications ('Oftel'), he brings with him a wealth of experience, both of the property industry and Government. Summary Hammerson demonstrated continued progress in the first six months of the year, with good increases in both net rental income and earnings. The recently acquired retail park portfolio showed a strong performance. Despite slowing retail sales growth in the UK and France, demand for space from retailers in Hammerson's centres has been good and the outlook remains encouraging. In contrast, demand for office space in central London and Paris remained subdued, although there has been a recent increase in the level of enquiries from prospective occupiers. Hammerson is a resilient business with a strong balance sheet and substantial financial resources. Steps taken over the last few years to improve the quality of the portfolio, both through developments and the recycling of capital into assets providing good returns, mean that the group now has a robust income stream offering further growth potential. Ronald Spinney Chairman 27 August 2003 Property Portfolio Information For the six months ended 30 June 2003 Net True Underlying Estimated rental Properties equivalent valuation Vacancy Rents rental Reversionary/ income at yield change rate passing value (Over-rented) valuation £m £m % % % £m £m % Notes (1) (2) (3) (4) United Kingdom Retail: Shopping centres London & South 22.0 866.3 6.1 4.3 1.0 47.5 53.5 8.2 Midlands & North 10.5 520.7 7.3 2.4 2.6 21.5 23.3 5.9 Retail warehouses 7.6 357.3 6.6 6.4 5.3 17.1 22.6 20.5 40.1 1,744.3 6.5 4.1 2.8 86.1 99.4 10.2 Office: City 13.0 439.2 7.5 (2.7) nil 25.9 18.5 (40.0) West End 7.2 167.4 7.6 (5.7) nil 11.2 9.8 (14.1) Docklands & other 4.6 153.7 9.2 (6.3) 21.4 10.4 14.7 10.0 24.8 760.3 8.0 (4.1) 10.9 47.5 43.0 (17.3) Total United Kingdom 64.9 2,504.6 6.9 1.5 4.8 133.6 142.4 1.2 Continental Europe Retail: France 18.5 652.7 7.0 2.9 2.5 39.7 47.8 18.4 Germany 5.8 299.4 6.5 (4.4) 11.2 17.9 21.3 9.6 24.3 952.1 6.8 0.5 6.2 57.6 69.1 15.6 Office: France 8.3 452.1 6.7 (2.3) 19.6 15.1 19.3 6.0 Total Continental Europe 32.6 1,404.2 6.8 (0.4) 7.4 72.7 88.4 13.3 Group Retail 64.4 2,696.4 6.6 2.8 4.1 143.7 168.5 12.3 Office 33.1 1,212.4 7.6 (3.5) 12.1 62.6 62.3 (10.2) Total Group 97.5 3,908.8 6.8 0.8 5.7 206.3 230.8 5.6 Selected information at 31 December 2002 Group Retail 2,536.7 6.7 3.1 135.6 159.5 13.6 Office 1,370.9 7.3 11.3 74.2 73.1 (7.3) Total Group 3,907.6 6.9 5.0 209.8 232.6 6.3 Notes (1) True equivalent yield is based on rents passing and estimated rental values. The calculation excludes properties in the course of development. (2) Rents passing after deducting head and equity rents. (3) Estimated rental value 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 or falls short of the rents passing, post any rent free period. Consolidated Profit and Loss Account Year ended Six months Six months ended ended 31 December 2002 30 June 2003 30 June 2002 Audited Unaudited Unaudited £m Notes £m £m 197.1 Gross rental income, after rents payable 108.3 92.9 (21.2) Property outgoings (10.8) (9.4) 175.9 Net rental income 1 97.5 83.5 - Loss on disposal of properties held for resale 8 (0.1) - 2.8 Management fees receivable 1.5 1.0 (16.6) Cost of property activities (8.1) (6.7) (10.5) Corporate expenses (5.4) (4.4) (24.3) Administration expenses (12.0) (10.1) 151.6 Operating profit 85.4 73.4 5.3 Exceptional Profit/(Loss) on the sale of investment 3.7 (3.3) items: properties 156.9 Profit on ordinary activities before interest 89.1 70.1 (66.0) Cost of finance (net) 2 (41.7) (32.8) 90.9 Profit on ordinary activities before tax 47.4 37.3 (2.5) Current tax 3(a) (0.7) (0.7) (11.1) Deferred tax 3(b) (8.3) (7.9) (13.6) Tax charge on profit on ordinary activities (9.0) (8.6) 77.3 Profit on ordinary activities after tax 38.4 28.7 (1.7) Equity minority interests (0.8) (0.7) 75.6 Profit for the period 37.6 28.0 (43.6) Dividends 4 (14.1) (13.5) 32.0 Retained profit for the period 14 23.5 14.5 27.1p Earnings per share 5 13.7p 10.0p 27.1p Diluted earnings per share 5 13.7p 10.0p 29.2p Adjusted earnings per share 5 15.3p 14.0p Consolidated Balance Sheet 31 December 2002 30 June 2003 30 June 2002 Audited Unaudited Unaudited £m Notes £m £m Fixed assets 3,907.6 Land and buildings 6 3,908.8 3,542.3 1.2 Fixtures, fittings and equipment 1.2 0.9 3,908.8 Tangible assets 3,910.0 3,543.2 41.6 Investments 7 40.8 33.5 3,950.4 3,950.8 3,576.7 Current assets 30.8 Properties held for resale 8 - - 121.3 Debtors: Due within one year 9 119.8 87.6 12.8 Due after more than one year 9 15.2 20.4 242.2 Cash and short term deposits 10 319.4 279.1 407.1 454.4 387.1 Creditors falling due within one year (85.7) Borrowings 11 (75.3) (29.6) (316.6) Other 12 (270.8) (169.7) 4.8 Net current assets 108.3 187.8 3,955.2 Total assets less current liabilities 4,059.1 3,764.5 Creditors falling due after more than one year (1,797.9) Borrowings 11 (1,826.8) (1,601.0) (39.6) Other 12 (32.3) (34.0) Provisions for liabilities and charges (37.2) Deferred tax 3(b) (51.4) (32.7) (40.1) Equity minority interests (42.4) (38.8) 2,040.4 2,106.2 2,058.0 Capital and reserves 69.0 Called up share capital 69.0 70.2 592.3 Share premium account 14 592.9 592.2 786.8 Revaluation reserve 14 747.7 826.1 7.2 Capital redemption reserve 14 7.2 5.9 6.5 Other reserves 14 8.4 7.2 578.6 Profit and loss account 14 681.0 556.4 2,040.4 Equity shareholders' funds 2,106.2 2,058.0 739p Diluted net asset value per share 5 762p 732p 752p Adjusted net asset value per share 5 779p 743p Statement of Total Recognised Gains and Losses Six months Six months Year ended ended ended 31 December 2002 30 June 2003 30 June 2002 Audited Unaudited Unaudited £m £m £m 75.6 Profit for the period 37.6 28.0 (19.1) Unrealised surplus/(deficit) on revaluation of 30.2 (9.0) properties Unrealised (deficit)/surplus on revaluation of investments and (1.1) 0.6 0.4 minority interests - Unrealised surplus on acquisition of minority 1.5 - interest 5.0 Negative goodwill - 5.7 - Current tax on property disposals (0.3) (1.8) (13.9) Deferred tax on property disposals (note 3(b)) (2.6) (13.0) 15.9 Exchange translation movements 14.0 16.0 63.9 Total recognised gains and losses for the period 79.3 26.5 Note of Historical Cost Profits and Losses Six months Six months Year ended ended ended 31 December 2002 30 June 2003 30 June 2002 Audited Unaudited Unaudited £m £m £m 90.9 Profit on ordinary activities before tax 47.4 37.3 185.0 Realisation of previous years' revaluation gains 78.1 154.8 275.9 Historical cost profit on ordinary activities before tax 125.5 192.1 Historical cost profit for the period after tax, equity 203.1 minority interests and dividends 98.7 154.5 Reconciliation of Movements in Shareholders' Funds Six months Six months Year ended ended ended 31 December 2002 30 June 2003 30 June 2002 Audited Unaudited Unaudited £m £m £m 32.0 Retained profit for the period 23.5 14.5 (11.7) Other recognised gains and losses 41.7 (1.5) (25.1) Purchase and cancellation of own shares - - 4.0 Issue of shares 0.6 3.8 (0.8) Net increase/(decrease) in shareholders' funds 65.8 16.8 2,041.2 Shareholders' funds at 1 January 2,040.4 2,041.2 2,040.4 Closing shareholders' funds 2,106.2 2,058.0 Consolidated Cash Flow Statement Six months Six months Year ended ended ended 31 December 2002 30 June 2003 30 June 2002 Audited Unaudited Unaudited £m Notes £m £m 147.5 Net cash flow from operating activities 15 124.6 82.7 (89.7) Returns on investment and servicing of finance 15 (75.0) (54.2) (0.2) Tax paid (0.1) (2.0) 30.3 Capital expenditure and investment 15 170.6 34.1 (178.2) Acquisitions and disposals 15 (60.9) - (42.0) Equity dividends paid (30.3) (28.7) (132.3) Cash inflow/(outflow) 128.9 31.9 103.4 Decrease/(Increase) in short term deposits 25.6 (59.9) 53.6 Net cash (outflow)/inflow from financing 16 (52.3) 28.4 24.7 Increase in cash in the period 102.2 0.4 Reconciliation of Net Cash Flow to Movement in Net Debt Six months Six months Year ended ended ended 31 December 2002 30 June 2003 30 June 2002 Audited Unaudited Unaudited £m £m £m 24.7 Increase in cash in the period 102.2 0.4 (74.7) Net decrease/(increase) in debt 52.9 (24.6) (103.4) (Decrease)/Increase in short term deposits (25.6) 59.9 (153.4) Change in net debt resulting from cash flows 129.5 35.7 102.1 Short term deposits acquired on acquisition of - - subsidiaries (197.5) Debt acquired on acquisition of subsidiaries - - (58.1) Exchange adjustment (70.8) (52.7) (306.9) Movement in net debt in the period 58.7 (17.0) (1,334.5) Net debt at 1 January (1,641.4) (1,334.5) (1,641.4) Closing net debt (1,582.7) (1,351.5) Notes to the Accounts 1 NET RENTAL INCOME Six months Six months Year ended ended ended 31 December 2002 30 June 2003 30 June 2002 Audited Unaudited Unaudited £m £m £m 123.9 United Kingdom 64.9 57.8 40.2 France 26.8 19.8 11.8 Germany 5.8 5.9 175.9 97.5 83.5 2 COST OF FINANCE (NET) Six months Six months Year ended ended ended 31 December 2002 30 June 2003 30 June 2002 £m £m £m Interest payable on: 19.3 Bank loans and overdrafts 14.2 6.7 85.3 Other loans 45.2 43.2 104.6 Interest payable and similar charges 59.4 49.9 Less: (24.6) Interest payable capitalised (13.1) (12.0) (14.0) Interest receivable (4.6) (5.1) 66.0 Cost of finance (net) 41.7 32.8 3 TAX (a) Current tax charge Six months Six months Year ended ended ended 31 December 2002 30 June 2003 30 June 2002 £m £m £m 0.2 United Kingdom corporation tax 0.2 0.3 2.3 Foreign tax 0.5 0.4 2.5 0.7 0.7 The current tax charge for the six months ended 30 June 2003 is based on the projected effective tax rate for the full year. Current tax is reduced by brought forward UK tax losses which arose from the group's programme to use surplus Advance Corporation Tax. Notes to the Accounts 3 TAX (continued) (b) Deferred tax 31 December 2002 30 June 2003 30 June 2002 £m Movement in year £m £m 7.6 Opening provision 34.8 7.6 11.1 Charge in profit and loss account 8.3 7.9 13.9 Charge on realisation of revaluation gains on property 2.6 13.0 disposals 1.2 Corporate acquisitions and disposals (0.6) 1.9 1.0 Exchange differences 2.3 - 34.8 Closing provision 47.4 30.4 31 December 2002 30 June 2003 30 June 2002 £m Net deferred tax provision £m £m UK 27.3 Capital allowances 27.2 25.0 3.4 Other timing differences 2.6 (1.3) (29.4) Tax losses (23.0) (26.0) 1.3 UK deferred tax provision/(asset) 6.8 (2.3) FRANCE 28.5 Tax depreciation 33.4 26.4 5.0 Other timing differences 7.2 6.3 33.5 France deferred tax provision 40.6 32.7 34.8 Net deferred tax provision 47.4 30.4 Analysed as: (2.4) Deferred tax asset (note 9) (4.0) (2.3) 37.2 Deferred tax provision 51.4 32.7 34.8 Net deferred tax provision 47.4 30.4 The deferred tax provisions will not crystallise to the extent that capital allowances are retained by the group on UK property disposals and French disposals are made by selling subsidiary companies. There is no deferred tax provision in respect of Germany due to surplus tax losses. The charge on the realisation of revaluation gains on property disposals relates to disposals in France. (c) Contingent tax Should the group's properties and investments be sold at book value a tax liability would arise. If the properties are sold individually and no capital allowances are retained by Hammerson the liability would be £212m (31 December 2002: £198m) in addition to the deferred tax provided in the balance sheet. If account is taken of the likelihood that certain properties would be sold through the sale of shares in subsidiaries, and it is assumed that capital allowances will be retained by the group on all other property sales, then the deferred tax provisions would be written back and the tax liability would be £87m (31 December 2002: £78m). 4 DIVIDENDS The directors have declared an interim dividend of 5.12 pence per share (30 June 2002: 4.81 pence per share) payable on 31 October 2003 to shareholders on the register at the close of business on 26 September 2003. Notes to the Accounts 5 EARNINGS PER SHARE AND NET ASSET VALUE PER SHARE The calculations for earnings per share, diluted earnings per share and adjusted earnings per share, based on the weighted average number of shares, are shown in the table below: Year ended 31 December 2002 Six months ended 30 June 2003 Six months ended 30 June 2002 Pence Pence Pence Earnings Shares per Earnings Shares per Earnings Shares per £m million share £m million share £m million share 75.6 278.8 27.1 Basic 37.6 275.3 13.7 28.0 279.7 10.0 Adjustments: - 0.3 - Dilutive share - 0.2 - - 0.4 - options 75.6 279.1 27.1 Diluted 37.6 275.5 13.7 28.0 280.1 10.0 Adjustments: (5.3) - (1.9) Exceptional items (3.7) - (1.4) 3.3 - 1.2 11.1 - 4.0 Deferred tax 8.3 - 3.0 7.9 - 2.8 81.4 279.1 29.2 Adjusted 42.2 275.5 15.3 39.2 280.1 14.0 The weighted average number of shares shown above exclude those shares held in the Hammerson Deferred Share Plan (note 7) which are treated as cancelled. The calculations for basic, diluted and adjusted net asset value per share are shown in the table below: 30 June 2003 Net asset Shareholders' value funds Shares per share £m million Pence Basic 2,106.2 276.1 763 Company's own shares held in Deferred Share Plan - (0.7) n/a Unexercised share options 12.2 2.7 n/a Diluted 2,118.4 278.1 762 Deferred tax 47.4 - 17 Adjusted 2,165.8 278.1 779 Deferred tax has been excluded from the calculations of earnings per share and net asset value per share as, in practice, deferred tax balances are not expected to crystallise. Notes to the Accounts 6 LAND AND BUILDINGS Properties held for or in Fully developed the course of properties development Total Valuation Cost Valuation Cost Valuation Cost £m £m £m £m £m £m Movements in the period Balance at 1 January 2003 3,439.5 2,655.7 468.1 459.0 3,907.6 3,114.7 Exchange adjustment 79.5 67.3 11.3 12.9 90.8 80.2 Additions 57.3 57.3 107.6 107.6 164.9 164.9 Disposals (297.8) (219.7) - - (297.8) (219.7) Transfers (23.5) (34.5) 23.5 34.5 - - Capitalised interest - - 13.1 13.1 13.1 13.1 Revaluation surplus 13.8 - 16.4 - 30.2 - Balance at 30 June 2003 3,268.8 2,526.1 640.0 627.1 3,908.8 3,153.2 All properties are stated at market value as at 30 June 2003, valued by professionally qualified external valuers. In the United Kingdom, office properties and the group's interests in the Birmingham Alliance properties were valued by DTZ Debenham Tie Leung, Chartered Surveyors, and all other retail properties were valued by Donaldsons, Chartered Surveyors. In France and Germany the group's properties were valued by Cushman & Wakefield Healey & Baker, Chartered Surveyors. The valuations have been prepared in accordance with the Appraisal and Valuation Manual of The Royal Institution of Chartered Surveyors. At 30 June 2003 the total amount of interest included in development properties was £39.8m (31 December 2002: £26.1m) and was calculated based on the group's average cost of borrowings. 7 INVESTMENTS 31 December 2002 30 June 2003 30 June 2002 £m £m £m 23.6 Value Retail Investors Limited Partnerships 23.6 22.9 12.6 Interests in Value Retail plc and related companies 13.9 3.6 2.2 Ordinary shares of Hammerson plc (Deferred Share Plan) 1.8 2.1 3.2 Other investments 1.5 4.9 41.6 40.8 33.5 8 PROPERTIES HELD FOR RESALE At 31 December 2002 properties held for resale represented part of a portfolio acquired from the former Railtrack Developments. These properties were sold to Ballymore Properties Limited on 28 February 2003 for a total consideration of £31.3m, resulting in a loss on disposal of £0.1m, net of additions of £0.6m. Notes to the Accounts 9 DEBTORS 31 December 2002 30 June 2003 30 June 2002 £m £m £m Due within one year 44.8 Trade debtors 38.9 25.1 69.5 Other debtors 78.0 54.1 0.8 Corporation tax 0.7 0.5 - Deferred tax (note 3(b)) - 2.3 6.2 Prepayments 2.2 5.6 121.3 119.8 87.6 Due after more than one year 10.4 Other debtors 11.2 20.4 2.4 Deferred tax (note 3(b)) 4.0 - 12.8 15.2 20.4 At 30 June 2003 other debtors due within one year included a loan of €25.6m to Value Retail plc bearing interest at 13% and maturing on 11 October 2003. Other debtors due after more than one year included a loan of €16.1m to Value Retail plc bearing interest based on EURIBOR and maturing on 11 October 2006. 10 CASH AND SHORT TERM DEPOSITS 31 December 2002 30 June 2003 30 June 2002 £m £m £m 34.2 Cash at bank 136.8 9.9 208.0 Short term deposits 182.6 269.2 242.2 319.4 279.1 Analysis by currency 232.4 Sterling 228.8 267.3 9.8 Euro 90.6 11.8 242.2 319.4 279.1 At 30 June 2003 short term deposits mainly comprised deposits placed on money markets with rates linked to LIBOR for maturities of not more than one month. Notes to the Accounts 11 BORROWINGS 31 December 2002 30 June 2003 30 June 2002 £m £m £m 465.6 Bank loans and Unsecured 627.8 370.1 overdrafts: 180.9 Secured 12.2 - 1,234.1 Other loans: Unsecured 1,269.9 1,230.2 14.8 Secured - 42.4 1,895.4 1,909.9 1,642.7 (11.8) Exchange difference on currency swaps (7.8) (12.1) 1,883.6 1,902.1 1,630.6 Analysis by currency 31 December 2002 30 June 2003 30 June 2002 £m £m £m 825.6 Sterling 657.5 655.0 1,058.0 Euro 1,244.6 975.6 1,883.6 1,902.1 1,630.6 Undrawn committed facilities 31 December 2002 30 June 2003 30 June 2002 £m £m £m 294.1 Expiring after more than two years 121.0 390.6 12 CREDITORS - OTHER 31 December 2002 30 June 2003 30 June 2002 £m £m £m Falling due within one year 50.4 Trade creditors 54.0 42.3 38.8 Tax and social security 38.8 7.2 180.8 Other creditors 147.3 96.0 16.3 Accruals 16.6 10.7 30.3 Dividends payable 14.1 13.5 316.6 270.8 169.7 Falling due after more than one year 39.6 Other creditors 32.3 34.0 Notes to the Accounts 13 FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES 31 December 2002 30 June 2003 30 June 2002 Book Fair Book value Fair value Book value Fair value value value £m £m £m £m £m £m (99.6) (101.6) Overdrafts and short term (84.7) (85.6) (31.4) (31.4) borrowings (1,809.0) (1,933.1) Gross long term borrowings (1,841.3) (2,018.0) (1,629.0) (1,735.0) 18.0 18.0 Unamortised borrowing costs 16.1 16.1 17.7 17.7 (4.8) 0.5 Interest rate swaps - 7.6 - (7.7) 11.8 14.2 Currency swaps 7.8 12.0 12.1 17.5 (1,883.6) (2,002.0) Total borrowings (1,902.1) (2,067.9) (1,630.6) (1,738.9) The fair values of the group's long term borrowings have been estimated on the basis of quoted market prices. The fair values of the group's outstanding interest rate and currency swaps have been estimated by calculating the present value of future cash flows, using appropriate market discount rates. The adjustment on interest rate swaps at 30 June 2003, a £7.6m surplus (31 December 2002: £0.5m), includes a £1.0m deficit (31 December 2002: £1.5m deficit) relating to swaps maturing in less than one year. Included in the adjustment are interest rate swaps with a surplus of £6.4m (31 December 2002: £7.0m surplus) which are cancellable by the counterparties on 20 June 2004 and annually thereafter until maturity on 20 June 2008. At 30 June 2003 the fair value of financial liabilities exceeded their book value by £165.8m (31 December 2002: £118.4m), equivalent to 60 pence per share (31 December 2002: 43 pence per share) on a diluted net asset value per share basis. On a post tax basis, the difference was equivalent to 42 pence per share (31 December 2002: 30 pence per share). 14 RESERVES Share Capital Profit premium Revaluation redemption Other and loss account reserve reserve reserves account £m £m £m £m £m Balance at 1 January 2003 592.3 786.8 7.2 6.5 578.6 Exchange adjustment - 9.9 - 0.4 3.7 Premium on issue of shares 0.6 - - - - Deficit arising on revaluation of investments and minority interests - (1.1) - - - Surplus arising on revaluation of properties - 30.2 - - - Unrealised surplus on acquisition of minority - - - 1.5 - interest Tax on property disposals - - - - (2.9) Transfer to profit and loss account on - (78.1) - - 78.1 disposal Retained profit for the period - - - - 23.5 Balance at 30 June 2003 592.9 747.7 7.2 8.4 681.0 Notes to the Accounts 15 ANALYSIS OF CASH FLOWS Six months Six months Year ended ended ended 31 December 2002 30 June 2003 30 June 2002 £m £m £m Reconciliation of operating profit to net cash inflow from operating activities 151.6 Operating profit 85.4 73.4 1.6 Depreciation and amortisation 0.7 0.7 (2.5) Increase in accrued rents receivable (5.3) (0.3) (10.0) Decrease/(Increase) in debtors 20.6 3.8 6.8 Increase in creditors 23.2 5.1 147.5 124.6 82.7 Returns on investment and servicing of finance 14.1 Interest received 4.4 4.4 (103.4) Interest paid (79.4) (58.6) (0.4) Dividends paid to minorities - - (89.7) (75.0) (54.2) Capital expenditure and investment (484.3) Purchase and development of property (147.2) (286.2) (5.0) Purchase of investments (16.7) (6.0) 519.6 Sale of property 334.5 326.3 30.3 170.6 34.1 Acquisitions and disposals (195.8) Purchase of subsidiary companies (60.9) - 17.6 Cash acquired with subsidiary companies - - (178.2) (60.9) - 16 ANALYSIS OF CASH FLOW FROM FINANCING Six months Six months Year ended ended ended 31 December 2002 30 June 2003 30 June 2002 £m £m £m (8.4) Purchase of own bonds for cancellation - (8.4) 4.0 Issue of shares 0.6 3.8 (25.1) Purchase of own shares for cancellation - - 23.6 (Decrease)/Increase in medium and long term (37.2) 29.1 borrowings 59.5 (Decrease)/Increase in short term borrowings (15.7) 3.9 53.6 Net cash (outflow)/inflow from financing (52.3) 28.4 17 OTHER INFORMATION The financial information contained in this report does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. The results for the year ended 31 December 2002 are an abridged version of the full accounts for that year which received an unqualified report from the auditors and did not contain a statement under s237(2) or (3) of the Companies Act 1985. The full accounts for the year ended 31 December 2002 have been filed with the Registrar of Companies. The unaudited financial information contained in this report has been prepared on the basis of the accounting policies set out in the full accounts for the year ended 31 December 2002. The interim report was approved by the Board on 27 August 2003. This information is provided by RNS The company news service from the London Stock Exchange

Companies

Hammerson (HMSO)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today