Final Results
London & Assoc Properties PLC
11 March 2002
FOR IMMEDIATE RELEASE
11th March 2002
LONDON & ASSOCIATED PROPERTIES PLC:
PRELIMINARY RESULTS FOR YEAR TO 31ST DECEMBER 2001
HIGHLIGHTS
London & Associated Properties is a focused retail property investment company
with more than two-thirds of its £100m portfolio comprising five strategic
shopping centres located in town + city centres offering considerable scope for
growth. Approximately 80% of LAP's annual rent roll is derived from multiple
tenants.
• Fully diluted NAV per share rises to 64.9p + 7%
• Pre-tax profits increase to £2.32m + 7%
• Net assets reach record £51.8m + 4%
• A final dividend of 1.3p a share recommended + 8%
• Dividend has grown by 8.3% compound over past five years
• Annualised rent roll now stands at £8.2m with an ERV of £9.7m
• £4m of sales of mature properties during year
• Total Group gross assets amount to £123m
• Gearing down to 85% from 98%
'We have ensured that LAP is well placed for the future. The Company has
continued to grow through intensive management of its shopping centres while at
the same time building up sufficient reserves of cash to make acquisitions, as
well as investing in the existing portfolio when opportunities allow. For this
reason I look forward to the year ahead with confidence,' Michael Heller,
Chairman
more...
Contact: London & Associated Properties PLC. Tel: 020 7415 5000
Michael Heller, Chairman
John Heller, Chief Executive
Robert Corry, Finance Director
Baron Phillips Associates Tel: 020 7397 8932
Baron Phillips
Chairman's Statement
Once more I am pleased to report that our strategy of being focused retail
property investors is reflected in higher profits and continued net asset
growth. We have concentrated on improving both the quality of our portfolio and
of our income stream, and have resisted making acquisitions as suitable
investments were not available.
The results, for the 12 months to 31st December 2001, reflect our determination
to grow Net Asset Value through investment in property and other financial
opportunities that present themselves. The success of this approach can be seen
in a 7.3% increase in Net Asset Value per share, on a fully diluted basis, to
64.9p against 60.5p last year.
During 2001 we worked extremely hard to enhance the quality of London &
Associated Properties' rental stream through a very active, and successful,
property management programme. Together with positive financial management,
resulting in the cancellation of £1m of debenture stocks which included a
convertible element, we have now placed the company on a strong footing for
future growth.
We have also implemented our stated strategy of selling smaller, mature
properties that no longer fit our medium-term investment criteria. Sales of
these properties, all of which were at or above book value, amounted to some £4m
and the proceeds have been used to eliminate our short term debt as well as £1m
of debenture stock mentioned above. The debenture had the right to convert into
4.64m new ordinary shares and through its redemption we have increased the fully
diluted NAV by 1.9p per share and reduced the average cost of debt to 7.1% .
Against this background I am pleased to report a 7% increase in pre-tax profits
to £2.32m, up from £2.17m a year ago, and an uplift of over 4% in net assets to
a record £51.8m, having marked our listed share portfolio to market. The Board
is recommending an 8% advance in the final dividend to 1.3p a share, against
last year's 1.2p, which will be paid on 12th July 2002 to those shareholders on
the register at 22nd March 2002. If agreed by shareholders then the dividend
will have grown by a compound rate of 8.3% over the past five years.
Turnover, primarily comprising rental income, was slightly lower during the year
at £8.7m from £8.8m, as a result of our property sales programme. This is
already being offset by our successful property management activities that have
enhanced the rent roll from our core portfolio by £160,000 a year, reflecting
increasing demand from quality tenants for our well located shopping centres.
Today the annualised rental income of LAP's total portfolio, comprising some
£100m of retail property, now stands at £8.2m against an Estimated Rental Value
of £9.7m. At the Group level, which includes properties owned by Bisichi Mining
Plc, our 42% owned associate, and our joint venture company, Dragon Retail
Properties, the total value of the property portfolio is now £112m and generates
rental income of approximately £9.4m against an ERV of £11.4m. The total value
of the gross assets of the Group including Bisichi and Dragon, amount to £123m.
Gearing at the balance sheet date, having adjusted our listed investments to
market value, fell to 85% from 98%. We have maintained our balance of variable
rate borrowings and we continue to benefit from the extremely low interest rate
environment. In spite of the property sales, interest payable is covered more
than twice by rental income.
As shareholders are aware LAP invests exclusively in shopping centres and malls
occupying prime locations in towns and city centres. Today more than 80% of our
total rent roll is derived from multiple tenants while two-thirds of our
portfolio by value comprises five strategic shopping centres that continue to
perform well.
As I indicated earlier we have not made any purchases during the year as none of
the shopping centres for sale met our strict investment criteria of both capital
and rental growth. The low interest rate environment has resulted in the market
maintaining capital values at levels from which it will be hard to justify
continuing future growth. Instead we continue to invest in our existing centres
and during the year we spent £1.4m on our portfolio. Currently we are committed
to spend a further £3.1m, which should lead to annual returns of £350,000.
Elsewhere I am pleased to report that at Dragon Retail Properties, £2.2m worth
of properties were sold or contracted to be sold during the year, while a
strategic retail investment with offices above in Bristol was acquired for £1.4
million. Bisichi Mining had a successful year with its South African coal mine
operating profitably. It also has a fully let property portfolio where values
are growing and which is managed by LAP.
Shareholders will be aware that during the year I split the roles of Chairman
and Chief Executive. I am continuing as Chairman while John Heller has assumed
the role of Chief Executive. John has played a significant part in the
development of the company over the last ten years.
I would also like to take this opportunity to thank both my colleagues on the
Board and all the staff at LAP who have made a substantial contribution to the
continuing success and growth of the Company.
As I have stated above, we have succeeded during the year under review in
ensuring that LAP is well placed for the future. The Company has continued to
grow through intensive management of its shopping centres while at the same time
building up sufficient reserves of cash to make acquisitions as well as
investment in the existing portfolio when opportunities allow. For this reason I
look forward to the year ahead with confidence.
Michael Heller
Chairman
OPERATING REVIEW
Once more we can report on a year of continuing growth within our core portfolio
as we pursue our strategy of improving both the quality of our shopping centres
and the tenant base. Despite £4m of sales of some of the Company's mature
properties, the retail portfolio, at £97.7 million, was only marginally lower
than last year.
Two thirds of the portfolio is accounted for by our five major shopping centres.
These performed well over the year, with values advancing by more than 2%.
This is a very satisfactory performance and was driven by increases in rental
values, not a shift in yields.
Overall there has been a dip in revenue to £8.7m (ERV of £9.7m) following our
sales programme that accounted for £396,000 of annual income. The lower revenue
also reflects significant restructuring at Dagenham where we accepted a
substantial premium from J. Sainsbury for the surrender of its lease. We
simultaneously re-let the unit to the national retailer, Wilkinson, at a lower
rent from which we anticipate good growth in the medium term. The rental income
was also held back at centres such as Christchurch where units have deliberately
been kept vacant to enable us to reconfigure substantial parts of the shopping
centre to achieve higher rents.
A key performance driver continues to be strong tenant demand in our major
centres. Much of the fall in annualised rental income has already been offset
through a mixture of new lettings and rent reviews which have added an
additional £160,000 a year to the rent roll. This incremental rent will rise
further as current negotiations are concluded during 2002.
Over the past year we have invested a total of £400,000 in our major centres on
a wide variety of property management initiatives aimed at improving capital
values and further increasing tenant demand. These initiatives included planning
consents for a number of unit extensions and amalgamations, changes of use, and
lease restructuring. This investment programme will continue this year and we
anticipate an expenditure totalling £3.1m. It is expected that this investment
will generate £350,000 of annualised rental income.
ORCHARD SQUARE, SHEFFIELD
Our programme of delivering value at our prime 117,000 sq ft shopping centre
continues apace. Further lettings have been concluded during the year at a Zone
A rate of between £65 - £70 a sq ft compared to around £50 a sq ft when we
purchased the centre two and half years ago. These new lettings, which underpin
levels achieved over the past 12 months, are important as approximately 70% of
Orchard Square's rent roll will be reviewed during the current year. Since
acquiring Orchard Square in August 1999 for £15.75m we have increased the
estimated rental value of the Centre by around 25%. The impact of this will be
felt in income terms over the next 12 months.
Within the centre itself planning consent was granted for the amalgamation of
five small units, currently producing £55,000 a year, into one large unit for
which there was known demand. The unit is now under offer to a national fashion
retailer for a new lease at a rent of well in excess of £100,000 a year. In
addition we intend submitting plans shortly to create a further 4,000 sq ft of
accommodation within the central square for which, again, there is known demand.
Sales of all of the residential units that were converted from the empty office
space at Orchard Square have now completed, generating £474,000 of revenue and
profits of £191,000.
THE MALL, DAGENHAM
This has been something of a transitional year at The Mall. In October we
accepted a lease surrender from J Sainsbury for a £2.5m cash payment and
simultaneously re-let the space to Wilkinson on a new 29 year lease. This
month's opening was a tremendous success and has generated a lot of interest in
the centre from both tenants and shoppers alike. Footfall in the Centre has
doubled, and we are already negotiating a number of new lettings as a direct
result of Wilkinson's new store. We are also looking at the reconfiguration of
a number of shops in one of the malls.
During 2001, a number of rent reviews were completed at an increased level which
underpinned the year end valuation, and we expect to see further rental growth
in the near future following these positive developments.
BRUNEL CENTRE, BLETCHLEY
The year's highlight at the Brunel Centre was securing planning permission to
create a 35,000 sq ft mixed retail and leisure development on the former
Wetherburn Court site adjacent to the main shopping centre. This is the
successful completion of protracted negotiations to achieve planning consent to
develop this sensitive site and we are pleased to report that 23,500 sq ft of
the new scheme is already under offer to a national retailer. Construction is
expected to get underway during the middle of this year and take about 12 months
to complete.
In the main centre we have added a further £74,000 a year to the rent roll
through new lettings and rent reviews. This has kept the concourse fully let,
and part of the first floor is now occupied for the first time since 1994
following a new lease to an American-style pool bar operator.
SAXON SQUARE, CHRISTCHURCH
Tenant demand continues to be strong at Saxon Square, and a number of new
lettings were completed during 2001. The largest letting was to Priory Sports,
an existing tenant at Saxon Square, who required larger premises within the
centre. They are now paying £70,000 a year for their new unit, which was
formerly occupied by soft furnishings multiple Zoom the Loom on a temporary
basis. Zoom the Loom has in turn taken a new lease on Priory Sports' former
double unit within the centre at a record rent of £46 a sq ft.
We aim to seek consent to create a large single unit at one end of the centre
with a substantial amount of residential accommodation above. The process of
securing vacant possession of the space is already underway and a planning
application will be made shortly.
KINGS SQUARE, WEST BROMWICH
Kings Square continues to be a busy and successful centre. During most of the
year, the former car park to the rear was being redeveloped into the town's
major bus terminus, which should be completed in the first half of 2002. The
bus terminus is being relocated as part of the proposed development of a 120,000
sq. ft. Tesco Extra and other large space stores within 50 yards of our centre.
This will improve West Bromwich as a shopping destination and should lead to
increased rental values over the medium term. Kings Square will remain anchored
by the bus terminus and will form a significant part of the retail loop.
The bus terminus, combined with the adjacent Metro station, will dramatically
increase footfall into the rear of the Centre, and we are therefore refurbishing
and increasing the visibility of the two principal rear entrances. As part of
this development, we intend to create a 1,500 sq ft unit at one of the rear
entrances to the Centre. This unit remains under offer to a national retailer
pending planning consent.
Towards the end of the year, one of the prime units onto the High Street
reverted to us and we are confident that we will find a high quality tenant to
take the space in the near future. We have already had a number of offers on
the unit.
Elsewhere in the portfolio we have been active. At Wednesbury we signed an
option agreement to sell our long leasehold interest in the Union Centre to
Sandwell Borough Council, the freeholder. During the four year life of the
option the Council will pay a fee of £150,000 a year and upon exercising the
option it will acquire our interest for £2m, considerably in excess of our 31st
December 2000 valuation. If the council fails to exercise the option then LAP
can acquire the freehold for £1. We have a detailed planning consent for a
30,000 sq ft retail development on the site which we will commence if the
freehold is transferred to us.
At our joint venture Dragon Retail Properties, specialising in opportunity-led
smaller lot sizes, £2.2m worth of properties were sold, or contracted to be
sold, during the year, at a surplus to book value. In addition Dragon acquired a
£1.4m investment in a prime part of Bristol where, since the purchase, rents
have advanced considerably following a number of key lettings in neighbouring
properties.
This has been another highly successful year for LAP and the foundations have
been laid for future growth within the core portfolio. We will continue our
strategy of disposing of smaller more mature properties that no longer fulfil
our growth criteria and focusing resources on our major properties. We believe
there is still considerable room for growth in the existing portfolio, we
continue to seek new substantial shopping centres to acquire, and feel
optimistic about the future.
John Heller
Chief Executive
Mike Dignan
Director of Property
FINANCE DIRECTOR'S REPORT
Overview
The year under review has been an extremely active one for the company with
sales of some £4.0m of smaller mature properties and the re-purchase of £1m 2010
10.5% debenture stocks for a £710,000 premium.
The money raised from the property sales together with the reduction in debt
gives the company the ability to make further substantial purchases when
appropriate opportunities present themselves.
Cash Flow
The Group redeemed its £580,000 10.5% Convertible and its £420,000 10.5%
Non-Convertible debenture stocks 2010. The convertible element of the Loan
Stock had rights to convert to 4,640,000 shares, and these shares formed the
vast majority of the difference between the Net Asset Value per share and the
fully diluted Net Asset Value per share.
As a result diluted NAV increased by 1.91p per share and the FRS 13 adjustment
reduced by 0.38p per share after tax. The total cash expended for this
transaction was £1.71m, which was funded from existing resources.
We anticipated that interest rates would remain low and this was another reason
which persuaded us to repurchase the stocks. As a result of this transaction we
are currently saving some £20,000 a year in interest costs, in addition to
removing the large number of shares that would have been issued on conversion of
the loan stock diluting existing shareholders.
Our portfolio is now financed by £47.2m of term loans, the shortest of which is
repayable in 2009, with 57% at variable rates of interest. The overall average
interest rate of our debt is 7.1%. We continue to monitor the long and medium
term fixed rates, and are constantly reviewing the position in regard to
covering a proportion of variable rate debt.
It remains the intention not to repay any of the fixed rate long term debt prior
to maturity. However, an adjustment under FRS 13 has a notional impact of 4.89p
per share (2000 - 4.73p), or £3.92m (2000 - £3.67m).
Gearing, net of listed investments, is now 85% down from 98% in 2000, a level at
which your board continues to feel comfortable and which gives us the ability to
make further substantial purchases when appropriate opportunities presents
themselves. Rental income of £8.7m is covering interest payable at 2.02 times
(2000: 1.96 times).
During the year net liquid cash increased to £3.84m (2000: £0.49m). This is
after financing the repayment of the 2010 debenture stocks and investment of
£1.4m in our property fixed assets.
Profit and Loss
Attributable overheads of £1.6m reflect the support required to manage the
property portfolio and are tightly controlled and monitored.
Interest costs fell during the year to £4.31m . This is as a result of property
sales which reduced overall borrowings, with the bulk of the proceeds being
received during the last quarter. Another factor was the reduction in average
LIBOR rates payable on the variable portion of our debt for the year.
The considerable activities during the year together with the continued benefit
of Capital Allowances resulted in a much lower tax charge for the year. Also
there has been a substantial credit relating to prior years.
Balance Sheet
Group net assets, including the listed investments at market value, have
increased to £51.82m (2000: £49.74m), an increase of 4.2%. The diluted Net
Assets per Share have increased to 64.93p per share (2000: 60.5p), an increase
of 7.3%.
Our Associate Company, Bisichi Mining PLC, in which we continue to hold a 42%
stake, made a profit before tax, minority interests and goodwill of £305,000, an
increase of 83% on the previous year. This is despite a collapse in the South
African Rand which occurred at the end of the year and has been reflected in
their results.
Dragon Retail Properties, our joint venture with Bisichi, had another strong
year with net assets growing by a further 15%.
Our equity portfolio remains strong, being principally invested in FTSE 350
companies. The stocks in the portfolio remain extremely liquid and are therefore
treated as effective cash.
Robert Corry
Finance Director
Ends.
London & Associated Properties PLC
Consolidated profit and loss account
for the year ended 31 December 2001
2001 2000
£000 £000
Revenue Notes
Property:
Income 8,692 8,816
Less -ground rents (458) (423)
-direct property expenses (927) (918)
-attributable overheads (1,576) (1,458)
5,731 6,017
Listed investments:
Investment sales 249 721
Cost of sales (134) (517)
115 204
Dividends receivable 81 97
Less - attributable overheads (15) (13)
181 288
Operating profit 5,912 6,305
Share of operating profit of associate 231 157
Share of operating profit of joint venture 186 132
6,329 6,594
Interest receivable 90 63
Interest payable (4,311) (4,499)
Redemption of debenture (718) -
Exceptional items 1 934 14
Profit on ordinary activities before taxation 2,324 2,172
Taxation on profit on ordinary activities 2 (77) 334
Profit on ordinary activities after taxation 2,401 1,838
Dividend 5 1,025 932
Retained profit for the year 3 1,376 906
Earnings per share -basic 4 3.07p 2.39p
-fully diluted 4 3.02p 2.29p
Dividend per share 5 1.30p 1.20p
The revenue and operating profit for the year derives from continuing operations.
Consolidated statement of total
recognised gains and losses
for the year ended 31 December 2001
2001 2000
£000 £000
Profit for the financial year 2,401 1,838
Currency translation difference on foreign currency
net investments of associate (120) (35)
Increase on revaluation of investment properties
Company 663 2,159
Associate and joint venture 254 308
Total gains and losses recognised in the year 3,198 4,270
Consolidated Balance sheet
at 31 December 2001
2001 2000
£000 £000
Fixed Assets
Tangible assets 98,132 100,121
Investments 3,736 3,568
101,868 103,689
Current assets
Debtors 1,819 1,809
Investments at cost 2,505 2,405
(Market value £2,965,000 (2000:£3,278,000))
Bank balances 3,840 493
8,164 4,707
Creditors
Amounts falling
due within one year (11,990) (11,579)
Net current liabilities (3,826) (6,872)
Total assets less current liabilities 98,042 96,817
Creditors
Amounts falling
due after more than one year (46,555) (47,838)
Provision for liabilities and charges (127) (110)
Net assets 51,360 48,869
Capital and reserves
Share capital 7,883 7,761
Share premium account 4,264 4,068
Capital redemption reserve 15 15
Revaluation reserve 25,927 25,658
Other reserves 429 429
Retained earnings 12,842 10,938
Shareholders' funds 51,360 48,869
Net assets per share*
Basic 65.74p 64.09p
Diluted 64.93p 60.50p
*Including current asset investments at market value.
Reconciliation of movement in
shareholders' funds
for the year ended 31 December 2001
2001 2000
£000 £000
Profit for the financial year 2,401 1,838
Dividend (1,025) (932)
Retained profit for the year 1,376 906
Currency translation difference on foreign currency net investments (120) (35)
Unrealised changes on revaluation of investment properties 917 2,467
Shares issued 122 123
Share premium account movements 196 156
2,491 3,617
Shareholders' funds at 1 January 2001 48,869 45,252
Shareholders' funds at 31 December 2001 51,360 48,869
Consolidated cash flow statement
for the year ended 31 December 2001
2001 2000
£000 £000 £000 £000
Net cash inflow from operating activities 7,912 6,349
Returns on investments and servicing of finance
Interest received 42 52
Interest paid (4,022) (4,367)
Net cash outflow from returns on
investments and servicing of finance (3,980) (4,315)
Taxation
Corporation tax (145) (647)
Capital expenditure and financial investment
Redemption of fixed asset investment 2 9
Sale of properties 4,132 20
Sale of office equipment and motor cars 31 15
Purchase of properties (1,243) (1,805)
Purchase of office equipment and motor cars (140) (114)
Net cash inflow (outflow) for capital
expenditure and financial investment 2,782 (1,875)
Equity dividends paid (609) (557)
Net cash inflow (outflow) before use of liquid resources and financing 5,960 (1,045)
Net cash (outflow) inflow from management of liquid resources
(Repayment) drawdown on short term loan from joint venture (3) 95
Financing
Issue expenses (5) (5)
Repayment of debenture loan (1,000) -
Debenture repayment premium (718) -
Repayment of medium term bank loan (300) (200)
Net cash outflow from financing (2,023) (205)
Increase (decrease) in cash in the period 3,934 (1,155)
Reconciliation of net cash flow to movement in net debt
for the year ended 31 December 2001
Increase (decrease) in cash in the period 3,934 (1,155)
Net cash outflow from decrease in debt 1,300 200
5,234 (955)
Other movements on current asset investments 100 (46)
Movement in net debt in the period 5,334 (1,001)
Net debt at 1 January 2001 (49,737) (48,736)
Net debt at 31 December 2001 (44,403) (49,737)
Reconciliation of operating profit to net cash inflow
from operating activities
2001 2000
£000 £000
Operating profit 5,912 6,305
Depreciation charges 100 93
(Profit) on disposal of fixed assets (10) (9)
Inflow from compensation from early suurender of lease 1,329 -
Dividend from associated company 44 44
Dividend from joint venture 40 -
Decrease (increase) in debtors 225 (333)
Increase in creditors 372 203
(Increase) decrease in current asset investments (100) 46
7,912 6,349
Analysis of net debt
At 31
At 1 Cash Other December
January
2001 flow movements 2001
£000 £000 £000 £000
Bank balances in hand 493 3,347 - 3,840
Bank overdrafts (4,135) 587 - (3,548)
Debt due within one year (300) 300 (300) (300)
Debt due after one year (48,200) 1,000 300 (46,900)
Current asset investments 2,405 100 2,505
(49,737) 5,234 100 (44,403)
Notes
2001 2000
1 Exceptional items £000 £000
Profit (loss) on sale of:-
Freehold property 47 20
Investment - (6)
47 14
Compensation for early surrender of lease 885 -
932 14
Associate - profit on disposal of fixed asset investment 2 -
934 14
2 Taxation 2001 2000
£000 £000
Based on the results of the year:
Corporation Tax at 30 per cent (2000: 30 per cent) 45 397
Deferred taxation 17 16
Adjustment in respect of previous years (188) (116)
(126) 297
Associate 33 28
Joint venture 16 9
(77) 334
The tax charge for both 2001 and 2000 has been reduced due to the
effect of accelerated capital allowances.
3 Profit attributable to London & Associated Properties PLC 2001 2000
£000 £000
Dealt with in the financial statements of:
London & Associated Properties PLC 1,340 895
Associate 22 (17)
Joint venture 14 28
1,376 906
4 Earnings per share
Earnings Shares in issue Earnings per share
2001 2000 2001 2000 2001 2000
£000 £000 000 000 Pence Pence
Group profit on ordinary
activities after tax 2,401 1,838
Weighted average share
capital for period 78,185 76,953
Basic earnings per share 2,401 1,838 78,185 76,953 3.07 2.39
Adjustments:
Conversion of convertible
debenture stock - 43 - 4,640
Share options 17 25 1767 1767
Fully diluted earnings
per share 2,418 1,906 79,952 83,360 3.02 2.29
5 Dividend
The proposed final dividend of 1.30p will be paid on 12 July 2002 to
shareholders registered at the close of business on 22 March 2002.
6 The figures for the year ended 31 December 2000 are based on the audited
accounts for that year, which have been delivered to the Registrar of
Companies and on which the Auditors gave an unqualified report. The statutory
accounts for the year ended 31 December 2001 have been completed and an
unqualified opinion has been issued.
The preliminary announcement has been prepared on the basis of the accounting
policies set out in the company's published accounts for the year ended 31
December 2000.
The figures in the preliminary announcement are an extract and do not
constitute statutory accounts within the meaning of the Companies Act 1985.
This preliminary statement was approved by the board on 11 March 2002.
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 10th January 2025
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