Final Results

Helical Bar PLC 05 June 2003 5 June 2003 HELICAL BAR PLC ('Helical'/'Company') PRELIMINARY RESULTS FOR THE YEAR TO 31 MARCH 2003 HELICAL DE-RISKS HIGHLIGHTS * Pre-tax profits of Â£25.2m (2002: Â£22.6m) - up 12 per cent * Total ordinary dividend of 15.00p per share (2002 : 13.75p) - up 9 per cent * Adjusted diluted net asset value of 770p per share (2002 : 769p) - unchanged * 'Triple net' asset value of 702p per share (2002 : 663p) - up 6 per cent * Current gearing of 45% (6 June 2002 : 89%) * Â£190m of London and South East office investment sales since January 2002. John Southwell, Chairman, commented; 'At a time of cyclical downturn in the London office market we have sought to protect our long term growth record by scaling down our development activity and de-risking our investment portfolio. We have accepted more pedestrian short term returns because we believe our enhanced capacity to take advantage of any future market weakness will more than compensate in the future.' Further information: Helical Bar plc Tel: 020 7629 0113 (after 2.00 p.m.) Michael Slade (Managing Director) Nigel McNair Scott (Finance Director) Issued by: Financial Dynamics Tel: 020 7831 3113 Stephanie Highett/Dido Laurimore FINANCIAL HIGHLIGHTS Notes Year Ended Year Ended 31 March 31 March 2003 2002 Â£m Â£m ______ ______ Development profits 4.6 17.1 Net rental income 25.6 27.8 Trading profits 0.3 0.2 Other gross profits 0.6 (0.1) Profits before tax 25.2 22.6 Adjusted profits before tax 1 16.7 20.3 pence pence Diluted earnings per share 59.2 57.8 Total dividends per share 15.00 13.75 Adjusted diluted net assets per share 2 770 769 Adjusted diluted 'triple net' assets per share 3 702 663 Â£m Â£m Value of investment portfolio 342.5 439.9 Net borrowings 140.9 152.4 Equity shareholders' funds 235.9 237.3 Net gearing 59% 64% Notes 1. Excludes profit on sale of investment properties, loss on sale of subsidiary and negative goodwill. 2. After adding back additional deferred taxation arising from the clawback of capital allowances on sale of investment properties. 3. Adjusted for contingent liabilities of deferred taxation on chargeable gains on investment properties and the market value of financial instruments but after adding back the deferred taxation referred to in 2. above. Chairman's Statement The year to 31 March 2003 continued the repositioning of the Company in preparation for the impact of the next economic cycle on the property development and investment sectors. The office development programme narrowed as buildings were completed and only one new scheme started during the year. At the same time strategic positions were taken in several major projects which are expected to come to fruition in the second half of the decade. On the investment side the Company continued to degear, switching away from Central London offices towards the retail and industrial sectors. This process has continued since the year end with the Â£41m sale of Capital House, London NW1. Results The year to 31 March 2003 produced a good level of profits with pre-tax profits up 12 per cent to Â£25.2m. Diluted earnings per share rose to 59.2p per share (2002 : 57.8p ). Falling rental levels in Central London resulted in a revaluation deficit for the first time since January 1996. Despite this the Company's adjusted net asset value remained steady at 770p per share (2002:769p) and the Company's adjusted triple net asset value (taking account of the contingent liabilities of deferred tax and the market value of financial instruments) rose 6 per cent to 702p per share ( 2002 : 663p ). The continued level of profits enables the Board to recommend to shareholders a final dividend of 9.00p per share ( 2002 : 8.25p ) an increase of 9%. This proposed dividend, together with the interim dividend of 6.00p ( 2002 : 5.50p ) paid in December 2002, makes a total dividend of 15.00p per share ( 2002 : 13.75p ). This is an increase of 9% on last year. The total dividend is covered over 4 times by profits after tax. The future The Company is, in many respects, at a turning point. The sale of over Â£190m of London and South East offices since January 2002 has significantly reduced the gearing of the Company strengthening its balance sheet and preparing it to take advantage of the opportunities the start of the next cycle will bring. With gearing at the lowest level since it became a property company and high levels of unutilised cash resources, loan facilities and ungeared investment properties, the Company has the ability to make substantial investment in its chosen sectors. The development programme is de-risked with only one major scheme, at 40 Berkeley Square, London W1, under construction, whilst future schemes are being worked up. Opportunities will come; timing is everything. John Southwell Chairman Development programme Profits from the Company's development programme have fallen from Â£17.1m to Â£4.6m to reflect both the decreased level of development and the worsening office occupational market in our main sphere of activity being London and the Western Corridor. The company finances the majority of its development programme with institutions thereby sharing the risk with these partners. With only one scheme currently on site the company is concentrating for the future on acquiring key positions in several major schemes to enable a development pipeline to be built up ready for when the market improves. Development schemes Current programme Funding Space Completion Size Institution Tenants Let Offices Sq ft Sq ft West End 40 Berkeley Square, March 2004 75,000 Morley The Blackstone 20,000 London W1 Group Thames Valley The Meadows, March 2002 140,000 Scottish Camberley Widows The Waterfront Oct 2002 56,000 Aberdeen One building 12,000 Business Park, Fleet Property sold to Conair Investors The Heights, Weybridge April 2003 337,000 Prudential Portfolio Managers Retail Market Square, June 2003 62,000 Bilsdale Wilkinsons, 50,000 Accrington JJB Sports, Poundland and others Towy Retail Park, Dec 2003 35,000 Private Currys, 35,000 Carmarthen individuals PC World Friary Retail Park, May 2004 38,500 Stafford Development schemes Future programme Size Offices Sq ft City Mitre Square, London EC3 350,000 West End Wood Lane, White City Up to 1m Mixed Use Thames Valley Amen Corner, Bracknell 500,000 Mixed Use Retail The Mint Quarter, Ipswich 295,000 Trinity Square, Nottingham 235,000 Offices The office letting market remains in a state of lethargy with rental levels in London and the South-East falling as landlords compete for the few potential tenants that are around. The focus of the Company over the last year has been to complete those schemes under construction, looking for tenants for this space and to prepare a small number of major new schemes for the future. During the year the Company has completed the office developments at 3 Bunhill Row, London EC1, The Heights, Weybridge and The Waterfront Business Park, Fleet. Its only remaining office development under construction is at 40 Berkeley Square, London W1. The site at Bridge Wharf, Chertsey was sold during the year at cost with a share in any potential profits from a future sale of the site. Preparations continue in respect of new schemes at Mitre Square, London EC3, Wood Lane, White City and Amen Corner, Bracknell. Completed office developments Since the Company recommenced its development activity in 1993, it's development team has completed new office developments with a value at completion of over Â£925m. During the year to 31 March 2003 the Company completed the following office developments: 3 Bunhill Row, London EC1 3 Bunhill Row is a 95,000 sq ft office development completed in January 2003. The building was pre-let to solicitors Linklaters with an option for them to hand back circa 30,000 sq.ft. to the Company: this option was not exercised so the whole building has been handed over to the tenant. Shortly after the pre-letting the development was forward sold for Â£63.5m, reflecting a yield of 6.65%, to a limited partnership formed by Matrix Securities on behalf of its investors. Under the terms of the sale the total sale proceeds were paid to Helical in advance of construction with an obligation to provide the limited partnership with a rental stream to the date the tenant starts to pay rent. Consequently, the Company's cash balances at the year end include a sum of Â£4.8m (2002: Â£28.3m) payable to third parties over the period until the tenant starts to pay rent. The Heights, Weybridge The Heights, Weybridge is a 22 acre office campus development of the highest quality comprising 337,000 sq.ft. of speculative space in five distinct buildings. The scheme which is adjacent to the UK headquarters of Proctor & Gamble was completed in April 2003 and is forward funded with Prudential Portfolio Managers. The Waterfront Business Park, Fleet The office development at The Waterfront Business Park, Fleet comprises three buildings completed in October 2002, forward funded by Aberdeen Property Investors. The smallest building of 12,000 sq.ft. has been sold to Conair Group for its own occupation. The two remaining buildings comprising 17,400 sq ft and 26,700 sq ft are available to let. The Meadows, Camberley The Meadows, Camberley, comprises four office buildings totalling 140,000 sq ft located by the Blackwater railway station, Camberley opposite the Meadows Retail Park. Completed in March 2002 and currently available to let, the development was funded by Scottish Widows. Current office development programme 40 Berkeley Square, London W1 40 Berkeley Square is a prime office development of 75,000 sq ft on the west side of Berkeley Square. Comprising eight floors of high specification offices, the building is being redeveloped in a joint venture with owners Morley Fund Management. During the year the top three floors, comprising 20,000 sq ft were let to The Blackstone Group at a rent of Â£80 psf. This development is due to be completed in Spring 2004. Future office development programme Former Dairy Crest Site, Wood Lane, White City A former milk processing plant and distribution unit, this 10.3 acre site was purchased from Dairy Crest in conjunction with Morley Fund Management in October 2002. The site lies to the south of the A40(M) and is adjacent to the White City Underground station. The area is emerging as one of Central London's most significant regeneration opportunities, with Chelsfield's 1.3 million sq ft retail and leisure scheme to the south and the BBC proposing a further 1.45 million sq ft of broadcasting and production space opposite the site. A major mixed use development is planned and detailed discussions are taking place with the London Borough of Hammersmith & Fulham, the Greater London Authority and adjoining landowners. Amen Corner, Bracknell Helical has acquired a number of residential properties and options over adjoining land to the extent that ownership or control extends to approximately 24 acres of land at Amen Corner, Bracknell. The Company is working to bring forward this site for commercial/residential development. Mitre Square, London EC3 The company is working in partnership with Ansbacher Property Holdings who own part of the site. It is the intention to submit a planning application for circa 350,000 sq.ft. net internal area of offices shortly. A substantial pre-let will be sought before commencing on site. Retail developments During the year Helical's retail subsidiary, Helical Retail renewed its joint venture with Oswin Developments, run by Jonathan Cox, David Egan and Adrian Russell and entered into a new joint venture with Overton Developments run by Jim Kelly. After a quiet period consolidating its position Helical Retail now has a number of retail schemes in various stages of development. Market Square, Accrington Market Square, Accrington is a new town centre development comprising 11 shops including stores for Wilkinsons, JJB and Poundland. The scheme has a floor area of 62,000 sq ft and an end value of Â£7.6m. Forward sold to private investor Bilsdale Properties Ltd the scheme is due to be completed in January 2004. Towy Retail Park, Carmarthen Towy Retail Park, Carmarthen is a development of two stores totalling 35,000 sq ft for the Dixon Stores Group. Currys will occupy one unit of 20,000 sq ft and PC World the second unit of 15,000 sq ft. Building work is due to commence in June 2003 with completion in January 2004. Friary Retail Park, Stafford Friary Retail Park, Stafford is a retail scheme due to start on site in late 2003. The scheme has the benefit of open A1 consent for 38,500 sq ft and terms have been agreed for a pre-letting to PC World for a unit of 15,000 sq ft and Pizza Hut for a restaurant of 3,189 sq ft. Discussions are under way with a number of other retailers for the remaining space. The Mint Quarter, Ipswich The Mint Quarter, Ipswich is an in-town retail development of approximately 295,000 sq ft in partnership with NCP. The scheme is currently being marketed with a view to securing an anchor tenant after which a planning application will be progressed. If an anchor tenant can be signed up by the end of 2003 the scheme could start in 2005 with a target opening date of pre-Christmas 2006. Trinity Square, Nottingham Trinity Square is a retail led mixed-use development in the heart of the city centre shopping district adjoining the Victoria Centre. Comprising approximately 175,000 sq ft of retail space, 60,000 sq ft of leisure and restaurants, 500 residential units and 450 parking spaces it will be a dramatic landmark building constructed of glass and steel offering double height retail frontages. A full planning application will be submitted in June 2003 and construction is due to commence during March 2004 with an eighteen month build programme in time for trading late 2005 and early 2006. Residential Developments The Company has from time to time acquired sites and created value through obtaining planning consents for retirement villages. Lime Tree Village, Dunchurch, Rugby This development involves the refurbishment of a Victorian country house and the construction of 150 bungalows, cottages and apartments for retirement. Work has commenced on the site and is due to be completed by late 2004. Bramshott Place, Liphook Planning negotiations continue for a retirement village development comprising 144 apartments, cottages and bungalows. Subject to planning, work is due to start in 2004/2005. Investment Portfolio Over recent years we have maintained a large exposure in Central London offices as the boom in rents has delivered exceptional returns. By the start of 2002 the cycle appeared to be turning - vacancy rates were beginning to rise and rental values starting to fall. Taking such warning signals to heart, we embarked on a sales programme and have raised Â£190 million, cutting our capital invested in London and South East offices by more than half. During the financial year we sold 60 Sloane Avenue, SW3 for Â£65.6 million, Cheapside House, EC2 for Â£47.8 million and 141/3 Drury Lane, WC2 for Â£13.3 million. The combined initial yield on these sales was 6.7%. Further office sales in Basingstoke and Epsom, which were also subject to imminent lease expiries, raised an additional Â£7.3 million. Since the financial year end we have sold Capital House, NW1 for Â£41 million where the leases were subject to break clauses and lease expiries in 2004. The profit over historic cost on these transactions (all acquired from 1997 - 1999) is well over Â£50 million. As a result of these sales only 6.3% of the net office income is now vulnerable to breaks or lease expiries over the next three years when occupational market conditions are likely to be weakest. The net surplus of sales over valuation was Â£2.1 million over the financial year. Over the last six years we have sold Â£464 million of property representing turnover of 148% based on the current portfolio size. In every year we have exceeded valuations on sales. Despite our sales programme, we were unable to insulate ourselves fully from the impact of the downturn in the office market. We are disappointed to report a valuation decline of 4.1% due to a write down of 9.4% on our London offices. Some comfort was provided by our retail warehouses up 11.6%, and our South East offices, which rose 6.4% due to restructuring the principal occupational lease at High Wycombe. A town centre retail decline of 3.3% was due to writing off the acquisition costs of the purchase of Garden Square, Letchworth made at the year end. A major setback for the year was the loss of a 90,000 sq ft letting to Metronet at Shepherds Building which aborted after nearly a year of negotiations. Had the letting signed, the uplift in value on this property would have extinguished most of this year's valuation decline across the entire portfolio. The current valuation yields of 7.9% initial, 9.2% reversionary and an equivalent yield of 8.9% allow for notional purchasers' cost of 5.75%. In practice, Helical earns a yield of 8.3%, anticipated to rise to 9.8% on assuming full occupancy at current rental values. During the financial year we made seven material purchases - four industrial estates, two retail warehouses and a shopping centre amounting to Â£48 million, with a further Â£10 million industrial estate acquired after the year end. We continue to take a cautious view of market conditions and are only seeking to acquire properties where value can be added through change of use, lease restructurings and lettings, refurbishment and owner occupier sales. Despite the downturn in the office market, we have managed to assemble a collection of properties with potential. These include: - Industrial estates at Slough and Harlow with schemes ongoing or planned for owner occupier sales at premium prices. - Properties in Fleet, Dunstable, Cardiff and Milton Keynes with latent value to be released via change of use to residential. - Two pre-let developments and two lease restructurings of retail warehouses at Weston Super Mare, Milton Keynes and Sevenoaks. - A shopping centre at Letchworth with terms agreed to change the anchor tenant and scope for infill development. Over the coming year we would anticipate our office weighting to fall further. In the meantime, our current level of gearing which, at 45%, is the lowest at any time in Helical's history as a property company, places us in a strong position to capitalise on any market weakness. Investment portfolio - valuation statistics Capital value Initial Reversionary Equivalent True movements yield yield yield equivalent yield % % % % % Central London offices -9.4 8.1 9.0 8.6 9.1 South East offices +6.4 7.5 8.0 8.6 9.1 Industrial +0.3 8.4 10.7 10.3 11.0 Out of town retail +11.6 6.4 7.5 7.3 7.6 Town centre retail -3.3 7.0 9.1 8.4 8.8 Total portfolio -4.1 7.9 9.2 8.9 9.4 Sector Weightings June 2003 June 2002 Change West End 12% 36% -24% City 6% 15% -9% Other London 25% 20% +5% All Central London offices 43% 71% -28% South East offices 5% 5% 0% Industrial 32% 18% +14% Out of town retail 13% 6% +7% Town centre retail 7% 0% +7% Investment properties Address Size Average Vacancy Year % (sq. ft) passing rent rate acquired ownership (psf) (where not 100%) Central London Offices Rex House SW1 91,000 Â£57 0% 2000 71 Kingsway WC2 30,000 Â£37 27% 1998 5-10 Bury St EC3 28,000 Â£34 14% 1997 66 Prescot St E1 110,000 Â£22 0% 2001 50% 61 Southwark St SE1 65,000 Â£18 0% 1998 4/5 Paris Gardens SE1 45,000 Â£25 0% 2000 Interchange NW1 65,000 Â£32 0% 1999 90% Rotunda Complex NW1 51,000 Â£22 10% 1998 Shepherds Building W14 155,000 Â£25 65% 2000 ----------- ----- ------ 640,000 Â£30 15% South East Offices Waterfront Business Pk, Fleet 45,000 Â£22 0% 2000 Westfields House, High Wycombe 27,000 Â£12 7% 2001 --------- ----- ----- 72,000 Â£19 2% Out of Town Retail Weston Retail Pk, Weston Super Mare 140,000 Â£8 0% 1999 75% Sainsbury Superstore, Wednesfield 69,000 Â£10 0% 2001 75% 1&2 Sprucefield Retail Pk, Lisburn 52,000 Â£15 0% 2001 50% Otford Road Retail Pk, Sevenoaks 43,000 Â£14 0% 2003 75% Homebase, St Austell 36,000 Â£8 0% 2002 75% ----------- ----- ----- 340,000 Â£10 0% Town Centre Retail Garden Square, Letchworth 165,000 Â£35ZA 10% 2003 WH Smiths, Chiswick 5,000 Â£85ZA 0% 2000 ----------- -------- ----- 170,000 Â£40ZA 9% Industrial Aycliffe Portfolio 1,570,000 Â£2.60 17% 1987 Peterlee Portfolio 640,000 Â£2.50 25% 1987 Hawtin Park, Blackwood 251,000 Â£2.85 0% 2003 Sawston, Cambridge 235,000 Â£4.30 0% 2003 67% Avonbridge, Avonmouth 234,000 Â£4.75 8% 1995 Walton Summit, Preston 142,000 Â£3.75 0% 1990 Standard Estate, Woolwich 105,000 Â£6.30 57% 2002 70% Golden Cross, Hailsham 102,000 Â£5.00 0% 2001 Waterside, Fleet 45,000 Â£6.50 0% 1999 ------------- ------- ----- 3,324,000 Â£3.10 16% All properties are freehold except Rex House (expires 2035), Avonbridge (expires 2071), Letchworth (expires 2187) and Blackwood (expires 3002). Trading properties Address Description Year % acquired ownership Bus Depot, Milton Keynes Optioned site, pre-let to Homebase 2001 50% (80,000 sq ft) subject to planning Leisure Plaza, Milton Keynes 119,000 sq ft leisure scheme with 2003 50% potential for residential or supermarket use Mill Street, Slough 164,000 sq ft industrial estate to be 2002 90% refurbished and redeveloped this year in 13 units Barrows Road, Harlow 125,000 sq ft industrial estate in 2002 80% course of refurbishment and redevelopment for owner occupier sales Southfield Road, Dunstable 103,000 sq ft vacant industrial shed 2002 100% with residential potential plus a let 34,000 sq ft office Cardiff Royal Infirmary Vacant hospital let on a 1988 75% peppercorn lease with residential potential 2/6 Curtain Road, London EC2 7,000 sq ft office forming part of 2001 50% a 700,000 sq ft development site Computer Centre, Wythenshawe 111,000 sq ft vacant computer centre 2002 50% All properties are freehold except Wythenshawe (expires 2067). Weighted average unexpired lease term Offices 10.2 Industrial 7.9 Retail 12.4 ----- Total 9.6 Financial Review Profits Profits before tax , including exceptional items , increased by 12% to Â£25.2m (2002: Â£22.6m). Profits after tax and minority interest rose by 2% to Â£17.4m (2002: Â£17.1m). Rental income Gross rental income for the year fell to Â£29.3m (2002: Â£31.4m) reflecting the Company's decision to sell some of its main Central London office investments. During the year Â£131m of investment properties, yielding Â£8.8m of rental income were sold. Â£50m was used to add to the investment and trading portfolio with passing rent of Â£3.4m. Rent reviews and new lettings, net of lease expiries and rent free periods, added rental income of Â£3.6m on the remaining portfolio. These additions to the Company's rental stream did not compensate for the loss of rental income as the Company continued its drive to de-gear and reduce its exposure to the Central London office market. Rental costs rose from Â£3.6m to Â£3.7m. Net rents, after deduction of these rental costs, fell to Â£25.6m from Â£27.8m. Trading and other profits Trading profits of Â£0.3m were up on last year (2002 : Â£0.2m) and came from the sale of a small industrial unit in Slough purchased last year and a small office in Cardiff. The Company made Â£0.4m from short term dealing in the shares of listed property companies. Development profits Profits from the Company's funded development programme were substantially down on the previous year at Â£4.6m (2002: Â£17.1m). In the year to 31 March 2003 the Company recognised the remaining office development profits at 1 Bunhill Row, London EC1, 200 Hammersmith Road, London W6 and One Plough Place, London EC4. In addition it booked profits at its office development at 3 Bunhill Row, London EC1 . This latter development provided the majority of the development profits in the year as City solicitors, Linklaters, committed themselves to the remaining floors in the building. 2003 2002 2001 2000 1999 Developments Â£ 000 Â£ 000 Â£ 000 Â£ 000 Â£ 000 Profits 4,630 17,072 29,507 19,345 21,601 Administrative expenses Administrative expenses, before an exceptional negative goodwill credit, fell by 41% from Â£10.9m to Â£6.4m due to the reduced level of performance related bonuses. Administrative expenses, before goodwill and executive bonuses fell by 3% from Â£6.1m to Â£5.9m. The result for the year included the write back of negative goodwill of Â£6.4m as a consequence of the disposal of 60 Sloane Avenue, London SW3 by a subsidiary, Glenlake Limited. As was explained in last year's annual report and accounts, this negative goodwill arose as a result of the restatement of the acquisition of Glenlake following the adoption of FRS19 by the group and the recognition of a deferred tax asset in Glenlake as at the date of its acquisition. The tax losses giving rise to this deferred tax asset have been used during the period (against profits arising on the disposal of investment properties) and the deferred tax asset of Â£5.7m has therefore been written off as part of the tax charge for the period resulting in an increase in the deferred tax provision in the consolidated balance sheet. The net impact of the write back of negative goodwill and the increase in deferred tax is an increase in distributable profits of Â£0.7m. Profit on sale of investment properties During the year to 31 March 2003 the Company sold Â£134.7m of investment property on which it made Â£2.1m (2002: Â£2.5m) of profit over book value and sale costs. The properties sold included office investments at 60 Sloane Avenue, London SW3, Cheapside House, London EC2, 141-143 Drury Lane, London WC2, Dextra Court, Basingstoke and West Street Epsom. In addition a small industrial unit in Hailsham was sold. Net interest payable The Company has always sought to protect itself against adverse movements in interest rates through the use of interest rate caps and short to medium term fixed rates when rates are low rather than through the issue of expensive longer term debentures and other fixed rate borrowings. This policy has continued to bear fruit in the year under review where the application of prevailing low rates of interest to the reduced level of borrowings resulted in a reduction in interest payable to Â£11.9m (2002: Â£18.0m). Interest receivable during the year on cash balances was Â£2.2m (2002: Â£2.6m). The Company tends to keep actual cash balances to the minimum to reduce the costs of borrowing but as with last year there was a higher than normal level of cash on deposit throughout the year due to the forward sale of 3 Bunhill Row. The proceeds received at the time of the pre-sale have now been expended on the construction of the offices resulting in much reduced cash balances at the year end. Finance arrangement costs of Â£0.8m (2002: Â£0.4m) reflect a higher than normal write off of refinancing costs in respect of cancelled bank facilities. Interest has been capitalised in respect of the development sites at Amen Corner, Bracknell and Liphook but is much reduced from previous periods. 2003 2002 2001 2000 1999 Net interest payable Â£ 000 Â£ 000 Â£ 000 Â£ 000 Â£ 000 Interest payable on bank 9,543 14,804 19,514 17,893 14,097 loans Other interest payable 2,351 3,215 1,343 2,350 1,760 Finance arrangement costs 783 408 572 365 256 Interest capitalised (795) (1,006) (1,597) (2,661) (2,088) Interest receivable (2,244) (2,642) (591) (1,563) (1,510) Loan termination costs - - - (36) - _____ _____ _____ _____ _____ 9,638 14,779 19,241 16,348 12,515 _____ _____ _____ _____ _____ Taxation The corporation tax charge for the year is greater than the standard rate of 30% due to the sale of Â£134.7m of investment property. However, despite these sales and the release of revaluation gains of Â£34.0m, the use of tax losses and the impact of indexation has reduced the taxable element of these profits to Â£10.0m. The use of available tax losses is expected to mean that a corporation tax charge to the profit and loss account in the year to 31 March 2004 will not arise out of the sale of Capital House, London, NW1. The deferred tax charge for the year reflects the write off of the deferred tax asset referred to above and the additional provision required in respect of capital allowances claimed in the year. These charges have been offset by a reduction in the provision where we have sold investment property and no longer have a potential liability arising from a clawback of the allowances claimed to date. Dividends The Board is recommending to shareholders at the Annual General Meeting on 23 July 2003 a final dividend of 9.00p per share (2002: 8.25p) to be paid on 24 July 2003 which, with the interim dividend of 6.00p, makes a total of 15p. This is an increase of 9% on the previous year's dividend of 13.75p. This is covered over 4 times by profits after tax. 2003 2002 2001 2000 1999 Dividends pence pence pence pence pence Interim 6.00 5.50 5.00 4.40 4.00 Final 9.00 8.25 7.50 6.75 6.00 15.00 13.75 12.50 11.15 10.00 Special - 100.00 - - 100.00 _____ _____ _____ _____ _____ 15.00 113.75 12.50 11.15 110.00 _____ _____ _____ _____ _____ Including special dividends, the Company average dividend over the last five years was 52p or 8% on the current share price. Earnings per share Earnings per share in the year to 31 March 2003 were 61.2p (2002: 60.0p) per share and on a diluted basis were 59.2p (2002: 57.8p) per share. 2003 2002 2001 2000 1999 Earnings per share pence pence pence pence pence Earnings per share 61.2 60.0 70.0 55.0 66.7 Diluted earnings per share 59.2 57.8 67.7 53.7 50.7 Investment portfolio During the year the investment portfolio changed significantly with sales of over Â£130m of Central London offices and the purchases of over Â£42m of retail and industrial units. In addition around Â£5m of capital expenditure was spent on refurbishing various office, industrial and retail buildings. At 31 March 2003 there was a revaluation deficit of Â£13.4m (2002: surplus Â£18.5m) on the investment portfolio. 2003 2002 2001 2000 1999 Investment portfolio Â£ 000 Â£ 000 Â£ 000 Â£ 000 Â£ 000 Cost or valuation at 439,911 453,607 419,570 332,457 250,718 1 April Additions at cost 47,175 32,838 24,341 163,029 76,920 Disposals (131,168) (65,062) (29,624) (106,320) (14,357) Revaluation (13,434) 18,528 39,320 30,404 19,176 _______ _______ _______ _______ _______ Cost or valuation at 31 March 342,484 439,911 453,607 419,570 332,457 _______ _______ _______ _______ _______ Since the year end Capital House has been sold at its 31 March 2003 valuation of Â£41m. Net asset values The retained profits of Â£13.1m (2002: retained losses Â£15.3m) less the revaluation deficit of Â£13.4m (2002: surplus Â£18.5m) and movements in minority interest led to a reduction in net assets to Â£238.5m (2002 Â£239.1m after payment of Â£28.4m special dividend). In calculating the net assets per share a provision has been made for the deferred tax which would become payable should all the capital allowances claimed to date be clawed back as a taxable adjustment in the Company's tax computations. The Company believes this clawback is unlikely and accordingly, has calculated the diluted net asset value assuming this not to be the case in line with current practice. Adjusted diluted net assets per share of 770p compare to 769p in 2002. After allowing for the unprovided deferred tax on revaluation surpluses and the value ascribed to financial instruments, the adjusted diluted triple net asset value of the Company has increased from 663p to 702p at 31 March 2003. 2003 2002 2001 2000 1999 Net asset values pence pence pence pence pence per share Diluted net asset value - 1 770 769 754 581 473 Diluted net asset value - 2 702 663 655 516 406 1 - net asset value diluted for share options but adding back the provision of deferred tax on clawback of capital allowances. 2 - net asset value diluted for share options, unprovided deferred tax, FRS 13 value of financial instruments but adding back the provision of deferred tax on clawback of capital allowances. Borrowings and financial risk The Company's ongoing reduction in its exposure to the Central London office market has continued the reduction in debt and, at 31 March 2003, net debt had fallen to Â£140.9m from Â£152.4m. The Company's net gearing fell to 59% from 64% at 31 March 2002. The sale of Capital House since the year end has further reduced net debt and gearing to Â£105.6m and 45% at 5 June 2003. 2003 2002 2001 2000 1999 Net debt and gearing Net debt Â£140.9m Â£152.4m Â£232.8m Â£243.1m Â£174.5m Gearing 59% 64% 96% 131% 123% 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 Â£53m of undrawn bank facilities and cash of Â£16.1m (2002: Â£75.5m). In addition it had Â£115m of uncharged property on which the Company could borrow funds. As at 5 June 2003 Helical's average interest rate was 5.6%. FRS13 requires disclosure of financial instruments on a fair value basis and at 31 March 2003 an adjustment to reflect this basis would reduce net assets, after tax relief, by Â£5.1m (2002: Â£3.6m) which, if provided for, would reduce diluted net assets by 15p per share (2002: 6p). Performance measures In order to evaluate its overall performance against other small to mid-size capital companies, both here and abroad, Helical looks at equity value added and total shareholder return ('TSR'). The performance of the property portfolio as measured by the Investment Property Databank ('IPD') is also noted below. Equity value added Year ended 31 March 2003 2002 2001 2000 1999 Capital employed Â£m 377 390 466 430 316 Return on capital % 3.9 10.5 18.2 19.8 18.6 Weighted average cost % 6.1 6.3 5.9 6.0 6.2 of capital Spread (2.2) 4.2 12.3 13.8 12.4 Equity value added/(lost) (8.5) 19.6 52.9 43.7 32.2 Total shareholder return Total shareholder return measures the return to shareholders from share price movements and dividend income. The returns were as follows: 1 year 3 years 5 years 10 years 15 years from from from from from 2002 2000 1998 1993 1988 % pa % pa % pa % pa % pa Helical Bar plc (26.0) 6.7 9.3 20.5 10.6 UK equity market (29.8) (15.4) (6.6) 5.5 8.5 Listed real estate sector (22.2) 0.9 (4.2) 6.9 3.7 index Direct property 10.6 9.0 10.6 11.5 9.8 Source: New Bridge Street Consultants Investment Property Databank ('IPD') Helical has compared its ungeared property performance against that of portfolios within the Investment Property Databank for the last 13 years. Despite this year's result, Helical has still managed to outperform all other parties over 3, 5, 10 and 13 years. The returns on shareholder capital earned by Helical are generally higher than those measured by IPD due to the use of gearing. IPD (monthly and quarterly valued funds) ungeared returns Total Returns % In year to 31 March 2003 2002 2001 2000 1999 Helical 6.0 15.6 23.2 23.6 20.1 IPD benchmark 9.9 7.0 9.9 15.1 10.9 Percentile rank 90 1 0 2 1 Total Returns % Annualised over 3yrs 5 yrs 10 yrs 13 yrs Helical 14.7 17.5 18.2 17.2 IPD benchmark 8.7 10.4 11.4 7.5 Percentile rank 0 0 0 0 '0' means the top ranked fund HELICAL BAR PLC FOR THE YEAR ENDED 31 MARCH 2003 GROUP PROFIT AND LOSS ACCOUNT UNAUDITED Notes Year Ended Year Ended 31 March 2003 31 March Â£000 2002 Â£000 _______ _______ Turnover (including share of joint ventures' turnover) 136,758 137,618 Less: share of joint ventures' turnover (1,566) (986) _______ _______ Turnover 1 135,192 136,632 Cost of sales (103,968) (91,646) _______ _______ Gross profit 1 31,224 44,986 Administrative expenses - administration 2 (6,391) (10,888) - negative goodwill 6,362 - _______ _______ Operating profit 31,195 34,098 Share of operating profit in joint ventures 1,544 986 Profit on sale of investment properties 3 2,126 2,463 Loss on sale of subsidiary - (195) Net interest payable 4 (9,638) (14,779) _______ _______ Profit before tax 25,227 22,573 Taxation 5 (7,660) (5,353) Minority interest (160) (164) _______ _______ Profit for the year 17,407 17,056 Dividends - interim 6 (1,705) (1,563) - special 6 - (28,420) - final proposed 6 (2,570) (2,345) _______ _______ Transfer to/(from) reserves 13,132 (15,272) _______ _______ Earnings per share - Basic 7 61.2p 60.0p - Diluted 59.2p 57.8p Ordinary dividends per share Interim - paid 19 December 2002 6.00p 5.50p Special Dividend - 100.00p Final - payable 24 July 2003 9.00p 8.25p _______ _______ Total 15.00p 113.75p _______ _______ Net assets per share - Basic 15 789p 793p - Diluted 15 762p 766p - Diluted, adding back 15 770p 769p FRS19 provision - Diluted for FRS 13 15 702p 663p adjustment and unprovided deferred tax, adding back FRS19 provision Reconciliation of movements in shareholders' funds Year Ended Year Ended 31 March 31 March 2003 2002 Â£000 Â£000 _______ _______ Profit for the year 17,407 17,056 Dividends paid and proposed (4,275) (32,328) _______ _______ Retained profits/(losses) 13,132 (15,272) Revaluation of investment property - subsidiaries (13,434) 18,792 - joint ventures (470) 1,477 Minority interest in revaluation surplus (599) (905) Issue of shares - 8 _______ _______ Net change in shareholders' funds (1,371) 4,100 Opening shareholders' funds 237,252 233,152 _______ _______ Closing shareholders' funds 235,881 237,252 _______ _______ Statement of Total Recognised Gains and Losses. Year Ended Year Ended 31 March 31 March 2003 2002 Â£000 Â£000 _______ _______ Profit for the year after taxation 17,567 17,220 Minority interest (160) (164) Revaluation of investment property - subsidiaries (13,434) 18,792 - joint ventures (470) 1,477 Minority interest in revaluation surplus (599) (905) _______ _______ Total recognised gains and losses 2,904 36,420 Prior year adjustment - (7,079) _______ _______ Total recognised gains and losses since last financial 2,904 29,341 statements _______ _______ BALANCE SHEETS UNAUDITED Notes 31 March 31 March 2003 2002 Â£000 Â£000 Â£000 Â£000 _______ _______ _______ _______ Shareholders' funds 235,881 237,252 ===== ===== ===== ===== Represented by: Fixed assets Intangible assets - goodwill 912 122 - negative goodwill 8 - (6,362) Tangible assets 9 614 774 Investment property 9 342,484 439,911 Investments 9,011 9,599 Investment in joint ventures Share of gross assets 23,244 23,184 Share of gross liabilities (21,482) (21,247) 1,762 1,937 _______ _______ _______ _______ 354,783 445,981 Current assets Stock 10 41,112 29,585 Debtors 25,793 21,289 Investments 13 1 Cash 11 16,137 75,514 Creditors: amounts falling due within one year (85,643) (107,936) _______ _______ _______ _______ Total assets less current liabilities 352,195 464,434 Creditors: amounts falling due after more than one year (110,992) (224,597) Provision for liabilities and charges - deferred tax 13 (2,706) (728) _______ _______ _______ _______ Net assets 238,497 239,109 Equity minority interests (2,616) (1,857) _______ _______ _______ _______ Shareholders' funds 235,881 237,252 ===== ===== ===== ===== CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2003 UNAUDITED Year Ended Year Ended 31 March 31 March 2003 2002 Â£000 Â£000 ________ ________ Net cash (outflow)/inflow from operating activities (27,133) 65,634 Returns on investment and servicing of finance (9,910) (16,062) Taxation (3,945) (4,967) Capital expenditure and financial investment 86,588 40,068 Acquisitions (841) (178) Equity dividends paid (32,470) (3,694) ________ ________ Cash flow before management of liquid resources and financing 12,289 80,801 Management of liquid resources 28,634 (20,285) Financing - issue of shares - 8 - decrease in debt (71,594) (37,046) - refinancing costs (57) (96) ________ ________ (Decrease)/increase in cash in the year (30,728) 23,382 ________ ________ Reconciliation of net cash flow to movement in net debt (Decrease)/increase in cash in the year (30,728) 23,382 Cash (outflow)/inflow from management of liquid resources (28,634) 20,285 Cash outflow from change in debt 71,651 37,142 Debt arrangement expenses (783) (408) ________ ________ Movement in net debt in the year 11,506 80,401 Net debt at beginning of the year (152,399) (232,800) ________ ________ Net debt at end of the year (140,893) (152,399) ________ ________ Notes to the Preliminary Announcement 1. 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 2003 2002 Â£000 Â£000 _______ _______ Trading property sales 2,588 2,282 Rental income 29,334 31,384 Developments 91,412 102,803 Other income and provisions 11,858 163 _______ _______ 135,192 136,632 _______ _______ Gross Profit Year Ended Year Ended 31 March 31 March 2003 2002 Â£000 Â£000 _______ _______ Trading property sales 349 154 Rental income 25,619 27,827 Developments 4,630 17,072 Other income and provisions 626 (67) _______ _______ Gross profit 31,224 44,986 Central overheads (6,391) (10,888) Interest payable less receivable (9,638) (14,779) Share of joint venture company profits 1,544 986 _______ _______ Profit before taxation, profit on sale of investment properties, loss on sale of subsidiary and negative goodwill 16,739 20,305 _______ _______ 2. Administrative expenses Year Ended Year Ended 31 March 31 March 2003 2002 Â£000 Â£000 _______ _______ Total administrative expenses (29) 10,888 _______ _______ Operating profit on ordinary activities is stated after: Staff costs 3,853 8,294 Depreciation 230 267 Auditors remuneration 108 106 Amortisation 51 52 Remuneration in respect of directors was as follows: Profit on exercise of Salary/ Benefits Cash share Incentive 2003 2002 Fees in kind bonuses options plan Total Total Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Chairman J.P. Southwell 45 13 - - - 58 60 Non-executive directors C.G.H. Weaver 25 - - - - 25 25 A R Beevor 25 - - - - 25 25 Executive directors M E Slade 478 32 - - - 510 1,906 N.G. McNair Scott 175 26 - - - 201 664 G A Kaye 210 28 474 - - 712 2,299 P M Brown 175 35 - 393 - 603 1,672 ____ ____ ____ ____ ____ ____ ____ 1,133 134 474 393 - 2,134 6,651 ____ ____ ____ ____ ____ ____ ____ Continued: Pensions Pensions 2003 2002 Total Total Â£000 Â£000 Chairman J.P. Southwell - - Non-executive directors C.G.H. Weaver - - A R Beevor - - Executive directors M E Slade 2 2 N.G. McNair Scott 35 35 G A Kaye - - P M Brown - - ____ ____ 37 37 ____ ____ In order to compensate share option holders for the payment of the 100p special dividend in April 2002, the company pays a cash bonus of 100p per share on the dates option holders exercise their options. The profit on exercise of share options of PM Brown includes a Â£100,000 cash bonus arising out of the exercise on 28 January 2003 of an option over 100,000 shares. 3. Profit on sale of investment properties Year Ended Year Ended 31 March 31 March 2003 2002 Â£000 Â£000 _______ _______ Net proceeds from sale of investment properties 133,294 67,525 Book value (131,168) (65,062) _______ _______ Profit on sale of investment properties 2,126 2,463 _______ _______ 4. Net interest payable Year Ended Year Ended 31 March 31 March 2003 2002 Â£000 Â£000 _______ _______ Interest payable on bank loans and overdrafts 9,543 14,804 Finance arrangement costs 783 408 Other interest and similar charges 2,351 3,215 Interest capitalised (795) (1,006) Interest receivable and similar income (2,244) (2,642) _______ _______ 9,638 14,779 _______ _______ Interest payable on bank loans and overdrafts includes the Company's share of interest payable by joint ventures of Â£935,000 (2002: Â£708,000). 5. Taxation on profit on ordinary activities Year Ended Year Ended 31 March 31 March 2003 2002 Â£000 Â£000 _______ _______ The tax charge is based on the profit for the year and represents: - United Kingdom corporation tax at 30% (2002: 30%) 8,337 4,811 - Adjustments in respect of prior periods (2,847) 1 _______ _______ Current tax charge 5,490 4,812 Deferred tax - origination of timing differences 2,170 541 _______ _______ Tax on profit on ordinary activities 7,660 5,353 _______ _______ The deferred tax charge includes the Company's share of the deferred tax provision of joint ventures of Â£192,000 (2002 : nil). No provision has been made for taxation which would accrue on capital gains if the investment properties were sold at their revalued amounts. The amount for which no provision has been made amounted to Â£17.1m (2002: Â£32.1m) which, if provided for, would reduce diluted net asset value by 53p (2002: 99p) per share. 6. Dividends Year Ended Year Ended 31 March 31 March 2003 2002 Â£000 Â£000 _______ _______ Attributable to equity share capital Ordinary - interim paid 6.00p (2002: 5.50p) per share 1,705 1,563 - final proposed 9.00p (2002: 8.25p) per share 2,570 2,345 _______ _______ Total 15.00p (2002: 13.75p) per share 4,275 3,908 - special payable nil (2002: 100.00p) per share - 28,420 _______ _______ 4,275 32,328 _______ _______ The interim dividend of 6.00p was paid on 19 December 2002 to shareholders on the register on 29 November 2002. The special dividend of 100.00p was paid on 26 April 2002 to shareholders on the register on 2 April 2002. The final dividend, if approved at the AGM on 23 July 2003, will be paid on 24 July 2003 to shareholders on the register on 13 June 2003. 7. Earnings per share The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year. Shares held by the ESOP, which has waived its entitlement to receive dividends, are treated as cancelled for the purposes of this calculation. The calculation of diluted earnings per share is based on the basis earnings per share, adjusted to allow for the issue of shares and the post tax effect of dividends on the assumed exercise of all dilutive options. Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below. Year ended 31 March 2003 Earnings Weighted average Per share amount Â£ no. of shares pence __________ __________ __________ Basic earnings per share 17,407,000 28,421,537 61.2 Dilutive effect of share options 964,200 __________ __________ __________ Diluted earnings per share 17,407,000 29,385,737 59.2 __________ __________ __________ Year ended 31 March 2002 Earnings Weighted average no. of Restated per share Â£ shares amount pence __________ __________ __________ Basic earnings per share 17,056,000 28,419,782 60.0 Dilutive effect of share options 1,090,450 __________ __________ __________ Diluted earnings per share 17,056,000 29,510,232 57.8 __________ __________ __________ 8. Intangible fixed assets Negative goodwill Goodwill Â£000 Total Â£000 Â£000 ________ ________ ________ Cost at 1 April 2002 767 (6,238) (5,471) Additions 841 - 841 Disposals - 6,238 6,238 ________ ________ ________ Cost at 31 March 2003 1,608 - 1,608 ________ ________ ________ Amortisation at 1 April 2002 645 124 769 Provisions for the year 51 - 51 Eliminated on disposals - (124) (124) ________ ________ ________ Amortisation at 31 March 2003 696 - 696 ________ ________ ________ Net book amount at 31 March 2003 912 - 912 ________ ________ ________ Net book amount at 31 March 2002 122 (6,362) (6,240) ________ ________ ________ Negative goodwill arose, at 31 March 2002, as a consequence of the adoption of FRS19 and represented the excess of the value of the restated assets of Glenlake Limited over the consideration paid for those assets in June 1999. The assets included a sum of Â£6,362,000 (net of acquisition costs) representing the fair value of tax losses acquired with Glenlake Limited. 9. Tangible fixed assets Investment Investment Short leasehold Vehicles & Properties Properties property office & equipment Total Freehold Leasehold improvements Â£000 Â£000 Â£000 Â£000 Â£000 ________ ________ ________ ________ ________ Cost or valuation at 1 April 2002 397,061 42,850 646 968 441,525 Additions at cost Disposals 23,929 23,246 - 152 47,327 Revaluation (131,168) - - (256) (131,424) (10,138) (3,296) - - (13,434) ________ ________ ________ ________ ________ Cost or valuation at 31 March 2003 279,684 62,800 646 864 343,994 ________ ________ ________ ________ ________ Depreciation at 1 April 2002 - - 319 521 840 Provision for the year - - 47 183 230 Eliminated on disposals - - - (174) (174) ________ ________ ________ ________ ________ Depreciation at 31 March 2003 - - 366 530 896 ________ ________ ________ ________ ________ Net book amount at 31 March 2003 279,684 62,800 280 334 343,098 ________ ________ ________ ________ ________ Net book amount at 31 March 2002 397,061 42,850 327 447 440,685 ________ ________ ________ ________ ________ Interest capitalised in respect of the development of investment properties is included in tangible fixed assets to the extent of Â£1,013,000 (2002: Â£2,244,000). Interest capitalised during the year in respect of investment properties in the course of development was nil (2002: Â£365,000). 10. Stock 31 March 31 March 2003 2002 Â£000 Â£000 _______ _______ Development sites 20,593 15,464 Properties held as trading stock 20,519 14,121 _______ _______ 41,112 29,585 _______ _______ Interest capitalised in respect of the development of sites is included in stock to the extent of Â£1,141,000 (2002: Â£633,000). Interest capitalised during the year in respect of development sites amounted to Â£795,000 (2002: Â£641,000). 11. Cash 31 March 31 March 2003 2002 Â£000 Â£000 _______ _______ Rent deposits and cash secured against debt repayable within one year 2,142 3,247 Cash held to fund future development costs 5,087 28,300 Free cash 8,908 43,967 _______ _______ 16,137 75,514 _______ _______ 12. Financing and financial instruments 31 March 31 March 2003 2002 Â£000 Â£000 _______ _______ Bank overdraft and loans - maturity Due after more than one year 110,992 224,597 Due within one year 46,038 3,316 _______ _______ 157,030 227,913 _______ _______ The Company has various undrawn committed borrowing facilities. The facilities available at 31 March 2003 in respect of which all conditions precedent had been met were as follows: 31 March 31 March 2003 2002 Â£000 Â£000 _______ _______ Expiring in one year or less 9,500 10,000 Expiring in more than one year but not more than two years 10,000 10,000 Expiring in more than two years 33,560 86,233 _______ _______ 53,060 106,233 _______ _______ Interest Rates 31 March % Expiry 2003 Â£000 _______ _______ _______ Fixed rate borrowings - fixed 9.050 Feb 2009 8,830 - swap rate plus bank margin 5.656 Sep 2005 9,040 - swap rate plus bank margin 4.965 Mar 2007 5,925 - swap rate plus bank margin 5.846 Jun 2006 3,500 _______ _______ _______ Weighted average 7.140 Apr 2007 27,295 Floating rate borrowings 130,493 _______ _______ _______ Total borrowings 157,788 Deferred arrangement costs (758) _______ 157,030 _______ Floating rate borrowings bear interest at rates based on LIBOR. 12. Financing and financial instruments (continued) Hedging In addition to the fixed rates, borrowings are also hedged by the following financial instruments. Instrument Value Rate Start Expiry Â£000 % ______ ______ ______ ______ Current - cap 49,000 6.000-6.100 July 2004 - cap 80,000 7.500 Jan 2006 - collar 31,000 4.730-6.500 Jan 2006 - floor 49,000 4.730 Jan 2006 Future - floor 80,000 4.830 Jan 2004 Jan 2006 - collar 80,000 4.800-7.000 Jan 2006 Sept 2009 Gearing 31 March 31 March 2003 2002 Â£000 Â£000 _______ _______ Total borrowings 157,030 227,913 Cash (16,137) (75,514) _______ _______ Net borrowings 140,893 152,399 _______ _______ Net assets 238,497 239,109 Gearing 59% 64% Net borrowings exclude the Company's share of borrowings in joint ventures of Â£14,355,000 (2002: Â£14,520,000). Fair value of financial assets and financial liabilities 31 March 31 March 31 March 31 March 2003 2003 2002 2002 Book Fair Book Fair value value value value Â£000 Â£000 Â£000 Â£000 _______ _______ _______ _______ Borrowings 157,788 159,127 229,383 230,256 Interest rate swaps - 555 - 1,242 Other financial instruments (223) 5,185 (223) 565 _______ _______ _______ _______ 157,565 164,867 229,160 232,063 _______ _______ _______ _______ The fair value of financial assets and liabilities represents the mark to market valuations at 31 March 2003 and 31 March 2002. The adjustment to net assets from a recognition of these values would be to reduce diluted net asset value per share by 15p (2002: 6p). 13. Provision for liabilities and charges - deferred taxation Deferred taxation provided for in the financial statements is set out below: 31 March 31 March 2003 2002 Â£000 Â£000 _______ _______ Accelerated capital allowances 3,124 5,822 Other timing differences 42 754 _______ _______ 3,166 6,576 Less: - tax losses carried forward - (5,684) - discount (460) (164) _______ _______ Discounted provision for deferred tax 2,706 728 _______ _______ The Company has applied the provisions of FRS19 Deferred Tax, which requires that deferred tax be recognised as a liability or asset if the transactions or events that give the Company an obligation to pay more or less tax in the future have occurred by the balance sheet date. In accordance with FRS19, the Company makes full provision for timing differences which are primarily in respect of capital allowances on plant and machinery, industrial buildings allowances, chargeable gains on investment properties sold since the balance sheet date and tax losses. Amounts unprovided are: Unrealised capital gains 17,144 32,102 _______ ______ 17,144 32,102 _______ ______ No provision has been made for taxation which would accrue if the investment properties were sold at their revalued amounts. The adjustment to net assets resulting from a recognition of these amounts would be to reduce diluted net asset value per share by 53p (2002: 99p). 14. Share capital 31 March 31 March 2003 2002 Â£000 Â£000 ________ ________ Authorised - 688,954,752 ordinary shares of 5p each 34,448 34,448 ________ ________ 34,448 34,448 ________ ________ Allotted, called up and fully paid Attributable to equity interests: - 29,913,476 ordinary shares of 5p each 1,496 1,496 ________ ________ 1,496 1,496 ________ ________ Share options At 31 March 2003 options over 2,553,323 (2002: 2,489,221) new ordinary shares in the Company and 1,361,939 (2002: 1,491,939) purchased shares held by the ESOP had been granted to directors and employees under the Company's share option schemes. During the year options over 64,102 new ordinary shares were granted and options over 130,000 purchased shares were exercised. 15. Net assets per share Number p.p.s. Change since of Shares 31.03.2002 Â£000 000's +/(-) % _______ _______ _______ _______ Net asset value ('NAV') 235,881 29,913 789 -0.5 Add: potential exercise of options 11,525 2,554 _______ _______ _______ _______ Diluted NAV 247,406 32,467 762 -0.5 Adjustment for: - capital allowances provided for but unlikely to be clawed back 2,706 - 8 _______ _______ _______ _______ Adjusted diluted NAV 250,112 32,467 770 0.1 Adjustment for: - potential capital gains unprovided for (17,144) - (53) - mark to market value of interest rate hedging agreements (5,111) - (15) _______ _______ _______ _______ Adjusted diluted triple NAV 227,857 32,467 702 5.9 _______ _______ _______ _______ 16. Reconciliation of operating profit to net cash flow from operating activities Year Ended Year Ended 31 March 2003 31 March 2002 Â£000 Â£000 Operating profit 31,195 34,098 Depreciation of fixed assets 230 267 Release of provision - (53) Loss on sale of fixed assets 38 7 Amortisation of goodwill 51 52 Negative goodwill (6,362) - Dividend from associates 150 179 (Increase)/decrease in debtors (3,704) 10,429 (Decrease)/increase in creditors (37,999) 22,212 Increase in stock (10,732) (1,557) _______ _______ Net cash (outflow)/inflow from operating activities (27,133) 65,634 _______ _______ 17. Basis of preparation of the preliminary announcement The preliminary announcement includes extracts from the draft statutory accounts for the year to 31 March 2003. The figures relating to the year to 31 March 2003 are unaudited. The comparative figures relating to the year to 31 March 2002 are taken from the audited statutory accounts for that year. This information is provided by RNS The company news service from the London Stock Exchange

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