Final Results

Helical Bar PLC 6 June 2001 6 June 2001 HELICAL BAR PLC ('Helical') PRELIMINARY RESULTS FOR THE YEAR TO 31 MARCH 2001 HELICAL GROWS NET ASSET VALUE BY 30% AGAIN HIGHLIGHTS * Net assets per share at 803p (2000: 620p) - up 30 per cent * Record pre-tax profits of £25.8m (2000: £22.0m) - up 17 per cent * Total dividend of 12.5p per share (2000: 11.15p) - up 12 per cent * Total Shareholder Return of 186p: 33 per cent * John Southwell, Chairman, commented: 'Helical had another good year. It completed its major London developments at One Bunhill Row, EC1 and 100 Wood Street, EC2 and its investment portfolio benefited from refurbishment schemes and rising rental values in Central London. Given the more uncertain outlook, Helical has reduced gearing and increased liquidity to take advantage of any opportunities arising.' Further information: Helical Bar plc Tel: 020 7629 0113 Michael Slade (Managing Director) after 2.00 p.m. Nigel McNair Scott (Finance Director) Issued by: Financial Dynamics Tel: 020 7831 3113 Stephanie Highett Review of the results The year to 31 March 2001 was another very good year for Helical with exceptional profits being generated by the company's development programme leading to record pre-tax profits of £25.8m (2000: £22.0m). Diluted net assets per share continue to grow and have increased by 135% in the last five years, from 330p to 776p, even after total ordinary dividends of 153p during that period. The Board recommends a final dividend of 7.50p per share (2000: 6.75p), an increase of 11%. This proposed dividend, together with the interim dividend of 5.00p paid in December 2000, makes a total of 12.50p per share (2000: 11.15p). This is an increase of 12% on last year. The total dividend of 12.50p per share is covered over 5 times by profits after tax. The undiluted net asset value per share of the company rose by 30% for the second consecutive year to 803p (2000: 620p). On a diluted basis, net asset value per share rose by 29% to 776p (2000: 603p). These figures take no credit for any surplus of value in the trading and development stock. During the year the company's share price rose from 569.0p to 742.5p, an increase of 30%, and currently stands at 826p. This share price performance contributed to a Total Shareholder Return of 33% in the year to 31 March 2001. The last year has seen a substantial reduction in quoted property companies as management teams became frustrated at the continuing disparity between net asset values and share prices and the financial rewards of performing in the private sector became more attractive. Helical has, generally, operated at a sector premium. A highly motivated and incentivised management team is regarded as the key to continued success. The Executive Board, led by Michael Slade and Nigel McNair Scott with Gerald Kaye and Michael Brown running the development and investment divisions, have created an enviable record of performance. Helical's property portfolio has outperformed all property portfolios in the IPD index (all monthly and quarterly valued funds) over 1 and 10 years. It is this consistency of performance that your Board is looking to repeat in future. IAN BUTLER It is with deep regret that I must record the recent death of Ian Butler, a non-executive director of the company since 1993. Ian contributed enormously to the running of the company using the knowledge and experience gained as an executive director of many companies over the years. His insight into the development of corporate governance gained as a member of the Cadbury Committee helped the company implement the Cadbury, and subsequently the Greenbury, Hampel and Turnbull recommendations. His contribution to Board and Audit & Remuneration Committee meetings will be missed. STAMP DUTY As predicted by the industry, the raising of Stamp Duty to its current level is substantially reducing investment turnover and is undermining property as an important asset class. The company continues to support industry moves to bring this to the attention of the authorities. THE FUTURE Since the year end, growth in property values has slowed, reflecting the fall in demand for space caused by the slowdown in the high-tech sector. Helical has reduced its gearing, building liquidity to take advantage of any opportunities which may be thrown up by the uncertainties in the market. It will continue to aim to make exceptional returns on shareholders' funds. John Southwell Chairman 6 June 2001 REVIEW OF OPERATIONS Developments It is our objective to provide a continuing flow of development profits from pre-let and speculative office, retail and industrial schemes in partnership with funding institutions. Whilst a small number of schemes are financed with bank funding and, therefore, remain on our balance sheet, the majority of our schemes are pre-sold or forward sold. This policy has a significant effect on our return on capital employed and has enabled us to create and sustain one of the largest development programmes in the country. Development programme - end values Office Retail Industrial Total £m £m £m £m _______ _______ _______ _______ Completed programme Let and sold 1993-2001 563 202 23 788 Current programme For completion in year to: 31 March 2002 107 31 14 152 31 March 2003 225 41 - 266 31 March 2004+ 225 75 - 300 _______ _______ _______ _______ 557 147 14 718 _______ _______ _______ _______ Offices During the year the company completed its two largest offices to date whilst work continued at a number of office developments which should provide a continuing stream of development profits in the next few years. 100 Wood Street, London EC2 Completed at the end of the last financial year this 146,000 sq.ft. office development designed by Foster and Partners and forward funded by Deka Immobilien Investment GmbH ('Deka') was let within three months. In April 2000 Chase Manhattan took the top four floors comprising 56,500 sq.ft. In July, Friends Ivory Sime plc took 38,600 sq.ft. on the first and second floors, Schroder Investment Management 34,600 sq.ft. on the third and fourth and Law Debenture 16,700 sq.ft. on the fifth floor. The successful letting of this development contributed to our exceptional half year results and to the record pre-tax profits for this year. One Bunhill Row, London EC1 This 360,000 sq.ft. office development, formerly called 25 Chiswell Street, London EC1, was completed in December 2000. Pre-let to solicitors Slaughter and May and also forward funded by Deka, it is the largest office development completed to date. One Plough Place, London EC4 One Plough Place is a 55,000 sq.ft. office development situated at the junction of Fetter Lane and Plough Place in Holborn, London. Completed in May 2001 this property was forward funded by Henderson Investors and is currently one of very few new office buildings available to let in Central London. 200 Hammersmith Road, London W6 200 Hammersmith Road will be a highly specified headquarters office building situated in the centre of Hammersmith, London. Forward funded with a Merrill Lynch Investment Managers/HQ Global Offices Limited partnership, this 65,000 sq.ft. office development will be run as a serviced offices facility by HQ Global Offices. It is due to be completed in October 2001. The Saunders Building, London W6 The Saunders Building will be a 14,000 sq.ft. self-contained air conditioned office building newly constructed behind an existing facade. Situated next to 200 Hammersmith Road, its development is internally funded and will be completed in November 2001. The Meadows, Camberley, Hampshire The Meadows Business Park is a prime office development of 140,000 sq.ft. comprising four distinct office buildings. Close to junction 4 of the M3 the buildings will be completed in November 2001. This development is a joint venture with Morgan Grenfell Property Unit Trust and is forward funded by Scottish Widows. Future Developments 3 Bunhill Row, London EC1 3 Bunhill Row will provide approximately 95,000 sq.ft. of office accommodation of which 57,600 sq.ft. has been pre-let to solicitors Linklaters at £44 p.s.f. on the ground floor and £46 p.s.f. on floors one to four. The development is adjacent to the new City University Business School and our own development at One Bunhill Row. It is due to be completed in December 2002. 40 Berkeley Square, London W1 40 Berkeley Square, to be redeveloped in a joint venture with the current owners Morley Fund Management, will provide approximately 75,000 sq.ft. of office accommodation on the west side of Berkeley Square. The development is to be started in March 2002 and will comprise eight floors of modern offices overlooking the Square. It is due for completion in March 2004. The Heights, Weybridge, Surrey The Heights, Weybridge, Surrey is to be an office campus development, forward funded with Prudential Portfolio Managers, comprising approximately 340,000 sq.ft. of offices in five buildings. Construction of the buildings will commence shortly with completion due in November 2002. The Waterfront Business Park, Fleet The Waterfront Business Park, Fleet is a mixed use park located off junction 4a of the M3 and held as an investment by Helical. The park was purchased with developable land on which 54,000 sq.ft. of offices are planned. Forward funded by Aberdeen Property Investors, the scheme comprises three buildings. Completion is due in June 2002. Other office developments The company is progressing discussions with the planning authorities, in partnership with owners NCP, of an 80,000 sq.ft. redevelopment of a car park in Brewer Street, London W1 which will also incorporate a residential element. In Chertsey, a site has been acquired with the potential for an office development of 145,000 sq.ft. Retail Helical Retail, our joint venture with Oswin Developments, is now led by Jonathan Cox following the decision of Jim Kelly to step down from his role as managing director. The company has had a quieter year, completing two developments whilst taking options, agreeing terms for site purchases and negotiating positions to enable its development programme to continue. In Bolton, the largest DIY store in Europe has been developed for B&Q as phase II of the Bolton Gate Retail Park completed in 1998. This store, with a garden centre and building compound, comprises over 175,000 sq.ft. taking the total floor area developed on the 20 acre retail site to over 300,000 sq.ft. Completed in April 2001 this phase II was forward funded by HSBC, an in-house client of LaSalle Investment Management. In Solihull, Helical Retail has just completed an additional phase to an existing retail park. Working in partnership with the Local Authority to re- locate an Adult Training Scheme, a retail unit of 12,500 sq.ft. has been built. Let to Daewoo, the scheme was forward sold to Nestle Pension Fund. In addition to these two developments, the company has sold its remaining interests in Middlesbrough Town Centre to a local developer. Looking forward, a 52,700 sq.ft. redevelopment of Accrington town centre is to start later this year. Forward sold to Bilsdale and pre-let to Wilkinsons, Bass, JJB Sports and others, it will be completed in the summer of 2002. Negotiations continue in respect of developments in Great Yarmouth, Wigan, Dorchester, Blackburn, Ipswich and Hanley. Industrial Since the year end the company has completed its only industrial development, a 104,300 sq.ft. warehouse at Hayes, near to Heathrow, London. Pre-let to Allport Limited, the building is forward funded by Hill Samuel Property Unit Trust. INVESTMENT PORTFOLIO Helical actively manages its investment portfolio, rotating between sectors to maximise its exposure to growth stock. Last year our principal focus was to continue to augment our holdings in Central London, the best performing sector of the market, principally by carrying out a number of refurbishment schemes. Highlights across the portfolio are as follows: - Capital values rose on average by 10%, rental values by 15%. - The valuation yields on the portfolio were 7.0% rising to 9.4% on reversion to rack rental values. As valuation yields allow for notional purchasers' costs of 5.75%, the yields Helical actually earns on its portfolio are 7.4% rising to 9.9%. - £44.5m of properties were sold, all above valuation. The principal sale was our offices at CBX2, Milton Keynes for £26m which showed 45% p.a. capital appreciation during the period of ownership (1998-2000). - £52m was spent, principally on refurbishment costs on our central London offices. However, we also bought and sold at a profit a telehousing site in Madrid and acquired a 49.9% stake in Level 3 House, 66 Prescot Street E1, a top specification City office building at an initial yield of 8% on a very low passing rent of £22 p.s.f. - Helical's exposure to Central London increased to 70% from 59% the previous year. Central London Offices - Capital values grew by 16%, rental values by 23%. - Average rents passing remain low at £29 p.s.f. with average rental values £ 35 p.s.f. - 100% of Helical's exposure has been acquired since 1997. - Every building has been built or refurbished within the last 10 years with the exception of Drury Lane where a scheme is envisaged for 2003. - Refurbishment schemes were completed during the year at: - 4 & 5 Paris Gardens, Southwark SE1 - 45,000 sq.ft., 100% prelet to Guardian IT. - 48 Gracechurch Street, EC3 - 20,000 sq.ft., 100% let to 9 tenants. - Rex House, Regent Street, SW1 - 63,000 sq.ft. of offices recently completed, 70% let. - Shepherds Building, Shepherds Bush - a 155,000 sq.ft. refurbishment is scheduled for completion in August and is 25% prelet. This scheme is currently held at cost. Our London portfolio is highly reversionary with an initial yield of 6.5% rising to 9.3% on current rental values. The yields Helical actually earns are 6.9% rising to 9.8%. Outlook Both the occupational and investment markets have cooled in recent months albeit from exceptional levels of activity last year. Whilst supply remains tight in Central London and the development pipeline constrained, occupiers are more cautious about committing to new accommodation especially at headline grabbing rents. However, demand is proving resilient for economic, affordable office space and our portfolio is orientated towards this segment of the market. Investment yields have risen to reflect slower growth rates and the more uncertain economic outlook. Investors are also nervous about paying full value for the reversionary potential of low rented properties in case rental values should fall. All these factors have been reflected by our valuers in preparing our year end valuations and explain why the rental values have grown significantly faster than capital values. Our judgement is that even on a downside basis we do not anticipate the rental values of our portfolio to fall. Consequently, as we achieve our rental value at rent review on each property the yield basis should adjust favourably as the risks are removed, releasing considerable value. Further value will also be generated by letting up our scheme at Shepherds Building and the remaining voids at Rex House. It is interesting to note that as interest rates have fallen, yet our reversionary yield has risen, a very substantial cashflow benefit is in prospect. Our reversionary yield of 9.9% is far in excess of our current average cost of debt at 6.8% and if interest rates remain low it seems unlikely that property yields will rise materially further and may indeed start to edge lower. PEROPERTIES WITH VALUE IN EXCESS OF £10M (87% OF ASSETS) (All freehold except Rex House) CITY OFFICES Cheapside House, Cheapside, London EC2 70,000 sq. ft. of multi-let offices refurbished and let in 1998 plus prime retail. Acquired: 1997 Growth since acquisition % per annum: - rental value: 18.2% - capital value: 13.4% Current average passing rent psf: £28.00 48 Gracechurch Street, London EC3 20,000 sq.ft. of multi-let offices refurbished and let in 2000 including retail. Acquired: 2000 Growth since acquisition % per annum: - rental value: 26.3% - capital value: 30.8% Current average passing rent psf: £48.00 66 Prescot Street, London E1 110,000 sq.ft. top specification office built in 1992. 50% share. Acquired at financial year end. Acquired: 2001 Growth since acquisition % per annum: - rental value: - - capital value: - Current average passing rent psf: £22.00 WEST END OFFICES 60 Sloane Avenue, Brompton Cross, London SW3 75,000 sq. ft. flagship office building built in 1994, let to Leo Burnett plus 32,000 sq. ft. of retail and restaurant accommodation. Acquired: 1999 Growth since acquisition % per annum: - rental value: 12.9% - capital value: 8.2% Current average passing rent psf: £31.50 Capital House, Marylebone Road, Paddington, London NW1 90,000 sq.ft. 1991 built multi-let offices plus 47,000 sq. ft. let to Marks & Spencer at £0.60 p.s.f. until December 2002. Acquired: 1998 Growth since acquisition % per annum: - rental value: 13.8% - capital value: 17.0% Current average passing rent psf: £32.00 Rex House, Lower Regent Street, London SW1 63,000 sq. ft. of newly refurbished offices (19,000 sq.ft. vacant) plus 28,000 sq.ft. restaurant and gym. Leasehold expiring 2035. Acquired: 2000 Growth since acquisition % per annum: - rental value: 45.4% - capital value: 66.4% Current average passing rent psf: £57.00 141-143 Drury Lane, Covent Garden, London WC2 40,000 sq. ft. multi-let office building scheduled for refurbishment or residential conversion after 2002. Acquired: 1998 Growth since acquisition % per annum: - rental value: 19.7% - capital value: 18.1% Current average passing rent psf: £23.50 71 Kingsway, London WC2 30,000 sq. ft. office building subject to rolling refurbishment. Acquired: 1998 Growth since acquisition % per annum: - rental value: 16.5% - capital value: 18.9% Current average passing rent psf: £29.00 OTHER CENTRAL LONDON 61 Southwark Street, London SE1 65,000 sq. ft. of multi-let offices subject to rolling refurbishment programme. Acquired: 1998 Growth since acquisition % per annum: - rental value: 37.3% - capital value: 44.8% Current average passing rent psf: £17.00 4 & 5 Paris Gardens, Southwark, London SE1 45,000 sq. ft. offices acquired vacant and simultaneously pre-let to Guardian IT. Refurbished in 2000. Acquired: 2000 Growth since acquisition % per annum: - rental value: 24.9% - capital value: 46.5% Current average passing rent psf: £24.50 The Interchange, Camden Lock, NW1 65,000 sq. ft. of loft offices let to Associated Press Television News. Acquired: 1999 Growth since acquisition % per annum: - rental value: 18.0% - capital value: 24.9% Current average passing rent psf: £23.00 The Rotunda Complex, Oval Road, Camden NW1 50,000 sq. ft. of multi-let loft office village. Acquired: 1998 Growth since acquisition % per annum: - rental value: 32.3% - capital value: 25.6% Current average passing rent psf: £16.00 Shepherds Building, London W14 Vacant 155,000 sq. ft. loft offices in course of refurbishment. 35,000 sq.ft. pre-let. Acquired: 2000 Growth since acquisition % per annum: - rental value: 25.0% - capital value: - Current average passing rent psf: £25.00 SOUTH EAST OFFICES Waterfront Business Park, Fleet 40,000 sq. ft. of 1990s offices plus 50,000 sq. ft. of 1960s industrial capable of office redevelopment. Acquired: 2000 Growth since acquisition % per annum: - rental value: 5.6% - capital value: 8.3% Current average passing rent psf: £19.00 CBXII & Midsummer Court, Milton Keynes Sold during financial year. Acquired: 1998 Growth since acquisition % per annum: - rental value: 17.3% - capital value: 44.9% Current average passing rent psf: - OUT OF TOWN RETAIL Castle Retail Park, Nottingham 112,000 sq. ft. anchored by PC World. Acquired: 1997 Growth since acquisition % per annum: - rental value: 3.3% - capital value: 1.7% Current average passing rent psf: £10.00 Weston Retail Park, Weston Super Mare 140,000 sq. ft. anchored by Great Mills, Comet and Carpetright. 75% share. Acquired: 1999 Growth since acquisition % per annum: - rental value: 17.2% - capital value: 16.9% Current average passing rent psf: £6.50 INDUSTRIAL Aycliffe & Peterlee 1.9 million sq. ft. of industrial assets. Acquired: 1987 Growth since acquisition % per annum: - rental value: 5.2% - capital value: 11.3% Current average passing rent psf: £2.50 FINANCIAL REVIEW Profits Gross profits for the year were £56.3m. These compare with gross profits for the year to 31 March 2000 of £43.5m and include net rental income after property overheads of £25.5m (2000: £23.7m) and trading profits of £0.9m (2000: £0.4m). Our development programme contributed £29.5m (2000: £19.3m). The surplus on book value on sale of investment properties was £0.7m (2000: £ 4.6m). Interest paid on borrowings, net of interest received on cash balances increased from £16.3m to £19.2m. This was after capitalisation of £1.6m of interest (2000: £2.7m). Pre-tax profits rose by 17% from £22.0m to £25.8m. With an effective tax charge of 20% (2000: 27%) and minority interest of £0.1m (2000: £0.1m), profits before dividends increased by 28% to £20.4m. Earnings per share on a diluted basis rose by 27% to 68.3p per share. Dividends The Board is recommending to members at the Annual General Meeting on 25 July 2001 a final dividend of 7.50p per share (2000: 6.75p) to be paid on 26 July 2001 which, with the interim dividend of 5.00p, makes a total of 12.50p. This is an increase of 12% on the previous period's dividend of 11.15p. This is covered over five times by profits after tax. Net assets The increase in value of investment properties of £39.3m (2000: £30.4m) and the retained profits of £16.8m (2000: £12.7m) led to a rise in Helical's net assets to £241.9m. Net assets per share of 803p compare with 620p in 2000. Diluted net assets per share rose from 603p to 776p and, after taking account of the value ascribed to financial instruments under FRS13 and unprovided deferred tax, rose from 564p to 686p, a 22% increase. Borrowings and financial risk Net debt fell to £232.8m from £243.0m and with the rise in net assets Helical reduced its net gearing at 31 March 2001 to 96% from 131%. The company seeks to manage financial risk by ensuring that there is sufficient financial liquidity to meet foreseeable needs and to invest surplus cash safely and profitably. At the year end Helical had £120m of undrawn bank facilities and cash of £31.8m (2000: £17.0m). Helical insures against adverse movements in interest rates. It has insured against such interest rate movements through the use of a number of interest rate hedging instruments. Borrowings of £160m are capped until 2004 and £111m until 2006 at interest rates between 6.00% and 7.50%. Of current borrowings £ 20m is fixed at 8.625% until September 2001, a further £99m at an average rate of 6.72% until Autumn 2002 and £9.6m reducing to £5.0m at 9.05% until 2009. Using interest rate floors the company is able to benefit from the reduction of rates down to 4.73% and 4.83% on £160m until January 2006. Our average cost of debt is 6.8%. FRS13 requires financial instruments to be valued on a fair value basis, and at 31 March 2001 an adjustment to reflect this basis would reduce net assets by £3.2m (2000: increase of £2.4m) which, if provided for, would reduce diluted net assets by 10p (2000: increase by 7p) per share. Helical uses various measures to evaluate its returns. It compares its ungeared property performance against that of portfolios within the Investment Property Databank. The tables below show the results. IPD (monthly and quarterly valued funds) Ungeared Returns Total Returns % - In the year to 3/01 3/00 3/99 3/98 3/97 ________ ________ ________ ________ ________ Helical 23.9 24.7 22.7 26.4 19.9 IPD 10.6 15.6 11.3 16.5 11.2 Percentile rank 1 2 3 3 2 continued.. In the year to 3/96 3/95 3/94 3/93 3/92 ________ ________ ________ ________ ________ Helical 13.2 13.2 19.4 14.4 9.7 IPD 4.2 5.8 25.8 -0.6 -1.4 Percentile rank 2 1 88 1 5 Total Returns % - Annualised over 1 yr 2 yrs 3 yrs 4 yrs 5 yrs ________ ________ ________ ________ ________ Helical 23.9 24.3 23.7 24.4 23.5 IPD 10.6 13.0 12.4 13.4 13.0 Percentile rank 1 2 2 2 2 continued.. Annualised over 6 yrs 7 yrs 8 yrs 9 yrs 10 yrs ________ ________ ________ ________ ________ Helical 21.7 20.5 20.3 19.7 18.6 IPD 11.5 10.7 12.4 10.9 9.6 Percentile rank 1 1 1 1 1 Returns on capital employed In order to evaluate its overall performance against other small to mid size capital companies, both here and abroad, it looks at returns on equity and equity value added. Our internal calculations show the following record over the last four years: Equity Value Added Year ended 31 March 2001 2000 1999 1998 ________ ________ ________ ________ Capital employed (£m) 475.7 430.3 316.1 260.3 Return on capital (%) 18.4 19.8 18.6 18.7 Weighted average cost of capital (%) 5.9 6.0 6.2 8.1 Spread (%) 12.5 13.8 12.4 10.6 Equity value added (£m) 51.7 43.7 32.2 29.6 Price/Value Added 2001 2000 1999 1998 £m £m £m £m ________ ________ ________ ________ Earnings after tax 20.5 16.0 16.1 14.6 Revaluation surpluses 39.5 30.4 19.8 23.6 Value added 60.0 46.4 35.9 38.2 Market capitalisation 222.1 167.6 141.6 152.7 Price/value added - times 3.7 X 3.6 X 5.5 X 4.0 X HELICAL BAR PLC PRELIMINARY ANNOUCEMENT FOR THE YEAR ENDED 31 MARCH 2001 GROUP PROFIT AND LOSS ACCOUNT UNAUDITED Year Ended Year Ended 31 March 31 March 2001 2000 £000 £000 ________ _______ Turnover (2) 165,259 149,922 Cost of Sales (108,958) (106,440) ________ _______ GROSS PROFIT (2) 56,301 43,482 Administrative expenses (3) (12,031) (9,669) OPERATING PROFIT 44,270 33,813 Profit on sale of investment properties (4) 709 4,555 Share of associated company profits 86 - Net interest payable (5) (19,241) (16,348) ________ _______ PROFIT BEFORE TAX 25,824 22,020 Taxation (6) (5,284) (6,032) Minority interest (126) (77) ________ _______ PROFIT FOR YEAR 20,414 15,911 Ordinary dividends Interim (1,438) (1,272) Final proposed (7) (2,132) (1,951) ________ _______ TRANSFER TO RESERVES 16,844 12,688 ________ _______ EARNINGS PER SHARE - Basic 70.6p 55.0p - Diluted 68.3p 53.7p ORDINARY DIVIDENDS PER SHARE Interim 5.00p 4.40p Final 7.50p 6.75p ________ _______ TOTAL 12.50p 11.15p ________ _______ Net assets per share - Basic 803p 620p - Diluted 776p 603p - Diluted for FRS13 adjustment and deferred tax 686p 564p Year Ended Year Ended 31 March 31 March 2001 2000 £000 £000 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS Profit for the year 20,414 15,911 Dividends paid and proposed (3,570) (3,223) ________ _______ RETAINED PROFITS 16,844 12,688 Revaluation of investment property 39,467 30,404 Minority interest in revaluation surplus (385) (1,068) Issue/(redemption) of shares 777 (20) ________ _______ Net addition to shareholders' funds 56,703 42,004 Opening shareholders' funds 183,528 141,524 ________ _______ Closing shareholders' funds 240,231 183,528 ________ _______ STATEMENT OF NET ASSETS UNAUDITED 31 March 31 March 2001 2000 £000 £000 ________ _______ SHAREHOLDERS' FUNDS 240,231 183,528 ________ _______ Represented by: FIXED ASSETS Intangible assets 657 683 Tangible assets 973 784 Investment property 453,607 419,570 Investments 9,546 3,656 Investment in associate (8) 185 - ________ _______ 464,968 424,693 CURRENT ASSETS Fixed assets for resale 525 525 Stock (9) 27,861 22,020 Debtors 36,439 54,786 Investments 1 5,236 Cash (10) 31,841 16,991 Creditors: amounts falling due within one year (88,331) (80,515) ________ _______ TOTAL ASSETS LESS CURRENT LIABILITIES 473,304 443,736 Creditors: amounts falling due after more than one year (231,395) (257,384) Provision for liabilities and charges - (1,500) ________ _______ NET ASSETS 241,909 184,852 Equity minority interests (1,678) (1,324) ________ _______ SHAREHOLDERS' FUNDS 240,231 183,528 ________ _______ CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2001 UNAUDITED Year ended Year ended 31 March 31 March 2001 2000 £000 £000 ________ _______ Net cash inflow from operating activities 58,683 45,569 Returns on investment and servicing of finance (20,582) (19,486) Taxation (5,785) (4,560) Capital expenditure and financial investment (16,741) (4,886) Acquisitions (2,106) (12,555) Equity dividends paid (3,389) (31,910) ________ _______ Cash flow before management of liquid resources and financing 10,080 (27,828) Management of liquid resources (15,553) 30,347 Financing - issue/(redemption) of shares 777 (20) - increase in debt 4,141 441 ________ _______ (Decrease)/increase in cash in the year (555) 2,940 ________ _______ Reconciliation of net cash flow to movement in net debt (Decrease)/increase in cash in the year (555) 2,940 Cash outflow/(inflow) from management of liquid resources 15,553 (30,347) Cash inflow from change in debt (4,141) (441) Debt arrangement expenses (572) (365) Liability acquired with subsidiary - (40,383) ________ _______ Movement in net debt in the year 10,285 (68,596) Net debt at beginning of the year (243,085) (174,489) ________ _______ Net debt at end of the year (232,800) (243,085) ________ _______ Notes to the Preliminary Announcement 1. Reconciliation of operating profit to net cash inflow from operating activities Year ended Year ended 31 March 31 March 2001 2000 £000 £000 ________ _______ Operating profit 44,270 33,813 Depreciation of fixed assets 253 226 Write down of fixed assets - 703 Loss/(profit) on sale of fixed assets 16 (7) Profit on sale of investments (1,144) - Amortisation of goodwill 64 612 Decrease/(increase) in debtors 20,770 (12,819) (Decrease)/increase in creditors (4,698) 7,346 (Increase)/decrease in stock (848) 15,695 ________ _______ Net cash inflow from operating activities 58,683 45,569 ________ _______ 2. Turnover and gross profit on ordinary activities before taxation The analysis of turnover and gross profit by function is as follows: Turnover Year ended Year ended 31 March 31 March 2001 2000 £000 £000 ________ _______ Trading property sales 14,552 3,890 Rental income 28,642 26,656 Developments 115,176 116,243 Other income and provisions 6,889 3,133 ________ _______ 165,259 149,922 ________ _______ Gross Profit Year ended Year ended 31 March 31 March 2001 2000 £000 £000 ________ _______ Trading property sales 920 372 Rental income 25,532 23,652 Developments 29,507 19,345 Other income and provisions 342 113 ________ _______ Gross profit 56,301 43,482 Central overheads (12,031) (9,669) Interest payable less receivable (19,241) (16,348) Share of associated company profits 86 - ________ _______ Profit before taxation and profit on sale of investment properties 25,115 17,465 ________ _______ 3. Administrative expenses 31 March 31 March 2001 2000 £000 £000 ________ _______ Operating profit on ordinary activities is stated after: Staff costs 9,225 6,280 Depreciation and amortisation 825 591 Auditors remuneration 129 76 Deficit in ESOP - 703 Goodwill 64 612 ________ _______ Included in directors remuneration are directors' salaries, benefits in kind and bonuses totalling £7.6m (2000: £4.7m). 4. Profit on sale of investment properties 31 March 31 March 2001 2000 £000 £000 ________ _______ Net proceeds from sale of investment properties 30,333 110,875 Book value (29,624) (106,320) ________ _______ Profit on disposal 709 4,555 ________ _______ 5. Net interest payable 31 March 31 March 2001 2000 £000 £000 ________ _______ On bank loans and overdrafts 19,514 17,893 Finance arrangement costs 572 365 Other interest and similar charges 1,343 2,350 Interest capitalised (1,597) (2,661) Loan termination costs - (36) Interest receivable and similar income (591) (1,563) ________ _______ 19,241 16,348 ________ _______ 6. Taxation on profit on ordinary activities 31 March 31 March 2001 2000 £000 £000 ________ _______ UK corporation tax at 30% (2000: 30%) 6,784 4,532 Deferred taxation (1,500) 1,500 ________ _______ 5,284 6,032 ________ _______ In accordance with the group's current accounting policy, no deferred taxation provision has been made in respect of either capital allowances claimed in excess of depreciation or other short term timing differences not expected to reverse in the foreseeable future. At 31 March 2001 the amount for which no provision has been made in respect of industrial buildings allowances and other short term timing differences amounted to £1.3m (2000: £1.4m) which, if provided for, would reduce diluted net asset value by 4p (2000: 4p) per share. No provision has been made for taxation which would accrue on capital gains if the investment properties sold at their revalued amounts. The amount for which no provision has been made amounted to £24.6m (2000: £13.7m) which, if provided for, would reduce diluted net asset value by 76p (2000: 42p) per share. 7. Final ordinary dividend The final ordinary dividend is payable on 26 July 2001 to shareholders on the share register on 15 June 2001 subject to the approval of shareholders at the Annual General Meeting to be held on 25 July 2001. 8. Investment in associate During the year the company acquired a 49.9% stake in a 110,000 sq.ft. office investment at 66 Prescot Street, London E1 in a company jointly owned with US insurance company St Pauls. 9. Stock 31 March 31 March 2001 2000 £000 £000 ________ _______ Development sites 22,249 16,621 Properties held as trading stock 5,612 5,399 ________ _______ 27,861 22,020 ________ _______ 10. Cash 31 March 31 March 2001 2000 £000 £000 ________ _______ Cash secured against debt repayable within one year 2,314 4,761 Free cash 29,527 12,230 ________ _______ 31,841 16,991 ________ _______ 11. Gearing 31 March 31 March 2001 2000 £000 £000 ________ _______ Bank overdrafts and loans - due within one year 33,246 2,692 - due after more than one year 231,395 257,384 ________ _______ 264,641 260,076 Cash balances (31,841) (16,991) ________ _______ Net bank borrowings 232,800 243,085 ________ _______ Net assets 241,909 184,852 Gearing 96% 131% 12. Fair value of financial assets and financial liabilities 31 March 31 March 31 March 31 March 2001 2001 2000 2000 Book value Fair value Book value Fair value £000 £000 £000 £000 ________ _______ ________ _______ Borrowings 266,002 267,152 262,444 263,668 Interest rate swaps - 825 - (1,551) Other financial instruments (223) 1,051 (223) (2,299) ________ _______ ________ _______ 265,779 269,028 262,221 259,818 ________ _______ ________ _______ The fair value of financial assets is the book value. The fair value of financial liabilities represents the mark to market valuations at 31 March 2000 and 31 March 2001. The adjustment to net assets from a recognition of these values would be to reduce diluted net asset value per share by 10p (2000: increase of 7p). 13. Basis of preparation of the preliminary announcement The preliminary announcement includes extracts from the draft statutory accounts for the year to 31 March 2001. The figures relating to the year to 31 March 2001 are unaudited. The comparative figures relating to the year to 31 March 2000 are taken from the audited statutory accounts for that year filed at Companies House.

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