Interim Results

London & Assoc Properties PLC 26 September 2000 LONDON & ASSOCIATED PROPERTIES PLC: INTERIM RESULTS FOR SIX MONTHS TO 30th JUNE 2000 London & Associated Properties PLC is a London-based specialist retail property investor focused on larger in-town shopping centres across the country. H I G H L I G H T S * First Half Rent roll advances to record £4.44m + 17% * Pre-tax profits increase to £1.1m +3% * New lettings totalling annualised income of £280,000 agreed during period * Further rental income of £225,000 a year currently under offer * Two-thirds of property portfolio comprises five strategic shopping centres * Positive impact of intensive property management programme 'Demand from retailers continues at record levels across our entire portfolio, resulting in the lowest level of voids in many years. All this indicates that the results for the full year should be satisfactory,' Michael Heller, Chairman. Chairman's Statement There has been a marked growth in rental income, from £3.79 million to a record £4.44 million during the six months to 30th June 2000 reflecting last year's acquisition of Orchard Square shopping centre in Sheffield and our vigorous property management programme. Since the beginning of this year new lettings with a gross annualised income of £280,000 have been completed with a further £225,000 of annual rent presently under offer. LAP's total annualised rent roll now stands at £8.3 million while the ERV of the property portfolio has risen to £10.6 million, an increase of over £400,000, as a direct result of the excellent lettings carried out during the first 6 months of this year.On a group basis, including Bisichi Mining and Dragon Retail Properties, the group income is £9.2 million and the group ERV is some £12 million. Almost 80% of our rental income is derived from national multiples while almost two thirds of our property investment portfolio comprises five strategic Shopping Malls, all of which are effectively fully let. The property portfolio currently stands at approximately £100 million. When Bisichi Mining and Dragon Retail Properties are included, this increases to £107 million. Pre-tax profits for the period, which are derived primarily from rental income, have increased to £1.093m from £1.063m for the same period a year ago. This profits growth has been achieved despite a higher level of borrowings, rising interest rates and increased overheads. As shareholders know it is not our policy to declare an interim dividend. As at 30th June 2000, gearing was a comfortable 103% with more than half of the company's borrowings at variable interest rates. Interest payable is currently covered by a conservative 2.0 times rental income. None of this progress could have been achieved without our intensive management approach to the property portfolio, where we have implemented a strategic long term plan for each of our major centres. Since acquiring Orchard Square Shopping Centre in Sheffield just over a year ago, we have achieved a number of the objectives we set ourselves at the time of acquisition. For example, we have obtained planning consent for the creation of a new larger unit which we have pre-let at £83,000 per annum, representing a 15% increase over the current rent levels at Orchard Square. Work is underway and the unit will be ready for occupation early in the New Year. We are confident that this letting will have a positive impact on the rest of the Centre, both in terms of marketing units when they become available, and at rent review. Planning consent to improve the branding of the centre through banners to the front and rear, and through a new arch at the entrance on Fargate has been obtained. This initiative has been enthusiastically received by all of the tenants and fully supported by the Local Authority. Elsewhere within Orchard Square further lettings, at record levels, have also been achieved on a number of smaller units producing annualised rents of £60,000, of which approximately £20,000 is incremental. As a result of our management strategy the net annualised rent generated by Orchard Square is £1.3 million compared with £1.21million net at the time of our purchase while, more importantly, the ERV has increased from £1.75m to £1.9 million today. At Saxon Square, Christchurch, we have also continued our active management strategy and, through the acquisition of an adjoining shop, will be able to extend two of our existing units to meet demand from retailers. This again underpins the excellent levels of demand from retailers who wish to be represented in this Centre, and should lead to further growth at rent review and lease renewal. In The Brunel Centre, Bletchley we have let the final remaining unit in the concourse, again at a record Zone A rate, and I am also pleased to report that negotiations are at an advanced stage with several tenants for our adjoining development at Wetherburn Court. Additional lettings have also been achieved at our Shopping Centres in Dagenham and West Bromwich and once again they have resulted in improved rental levels at both centres. We are continuing with our stated policy of selling older retail properties where we believe the potential for growth is limited. A portfolio of these properties is currently being marketed we have received an encouraging level of interest. Since the balance sheet date, our 50% owned joint venture, Dragon Retail Properties, has sold part of its investment at Bromsgrove for £875,000 and plans are already in hand to reinvest the proceeds. I can also report that trading at our associate, Bisichi Mining, has improved. This is principally due to a turnaround at the Black Wattle Colliery. We anticipate that this improvement will continue, and will benefit your group. Demand from retailers continues at record levels across our entire portfolio, resulting in the lowest level of voids in many years. All this indicates that the results for the full year should be satisfactory. Michael Heller 26 September 2000 Chairman Consolidated profit and loss account Six months ended 30 June 2000 6 months 6 months Year ended ended ended 30 June 30 June 31 Dec 2000 1999 1999 Note £'000 £'000 £'000 Revenue Property: Income 4,442 3,794 7,911 Less - ground rents (207) (204) (406) - direct property expenses (472) (462) (901) - attributable overheads (735) (676) (1,330) ------ ------ ------ 3,028 2,452 5,274 ------ ------ ------ Listed investments: Investment sales 395 331 619 Cost of sales (311) (229) (381) ------ ------ ------ 84 102 238 Dividends receivable 46 60 113 Less - attributable overheads (6) (5) (12) ------ ------ ------ 124 157 339 ------ ------ ------ Operating profit 3,152 2,609 5,613 Share of operating profit (loss) of associate 75 (41) 1 Share of operating profit of joint venture 66 5 113 ------ ------ ------ 3,293 2,573 5,727 Interest receivable 43 21 48 Interest payable (2,235) (1,525) (3,665) Exceptional items (8) (6) (10) ------ ------ ------ Profit on ordinary 1,093 1,063 2,100 activities before taxation Taxation of profit on ordinary activities 1 334 327 531 ------ ------ ------ Profit for the period 759 736 1,569 ------ ------ ------ Earnings per share - basic 2 0.99p 0.97p 2.06p Earnings per share - diluted 2 0.96p 0.94p 1.98p Dividend per share - - 1.10p Consolidated balance sheet at 30 June 2000 30 June 30 June 31 Dec 2000 1999 1999 Note £'000 £'000 £'000 Fixed assets Properties and other tangible assets 3 97,122 75,578 96,273 Investments 3,282 3,012 3,294 ------ ------ ------ Total fixed assets 100,404 78,590 99,567 ------ ------ ------ Current assets Debtors 2,013 1,609 1,485 Investments (Market value - 4 2,376 2,464 2,451 £3,314,000) Bank balances 91 3,072 1,085 ------ ------ ------ 4,480 7,145 5,021 ------ ------ ------ Creditors due within one year Creditors and accruals (7,492) (6,155) (7,349) Bank borrowings (3,316) (3,559) (3,772) ------ ------ ------ (10,808) (9,714) (11,121) ------ ------ ------ Net current liabilities (6,328) (2,569) (6,100) ------ ------ ------ Total assets less current liabilities 94,076 76,021 93,467 Creditors due after more than one year (47,979) (34,343) (48,121) Provisions for liabilities and charges (94) (111) (94) ------ ------ ------ Net assets 46,003 41,567 45,252 ------ ------ ------ Equity shareholders' funds 46,003 41,567 45,252 ------ ------ ------ Consolidated statement of total recognised gains and losses Six months ended 30 June 2000 6 months 6 months Year ended ended ended 30 June 30 June 31December 2000 1999 1999 £'000 £'000 £'000 Profit for the financial period 759 736 1,569 Currency translation difference on foreign currency net investments (8) 4 (2) Increase on revaluation of investment properties: Company - - 3,130 Associate and joint venture - - 406 ------ ------ ------ Total gains and losses recognised in the period 751 740 5,103 ------ ------ ------ Consolidated cash flow statement Six months ended 30 June 2000 6 months 6 months Year ended ended ended 30 June 30 June 31December 2000 1999 1999 £'000 £'000 £'000 Operating profit 3,152 2,609 5,613 Depreciation 46 52 107 (Profit) on disposal of fixed assets (5) Dividend from associated company - - 48 (Increase)decrease in current assets (223) 40 868 ------ ------ ------ Net cash flow from operating activities 2,970 2,701 6,636 Returns on investments and servicing of finance (2,229) (1,589) (3,515) Taxation (16) - (111) Capital expenditure and financial investment (1,113) (3) (17,293) Equity dividends paid - - (591) ------ ------ ------ Cash (outflow) inflow before use of liquid resources and financing (388) 1,109 (14,874) Management of liquid resources - 12 - Cash inflow (outflow) from financing (100) - 13,995 ------ ------ ------ Increase (decrease) in cash in the period (488) 1,121 (879) ------ ------ ------ Reconciliation of net cash flow to movement on net debt Increase (decrease) in cash in the period (488) 1,121 (879) Net cash outflow (inflow) from reduction (increase) in debt 100 - (14,000) ------ ------ ------ (388) 1,121 (14,879) Movements on current asset investments (75) 42 29 ------ ------ ------ (463) 1,163 (14,850) Net debt at beginning of period (48,736) (33,886) (33,886) ------ ------ ------ Net debt at end of period (49,199) (32,723) (48,736) ------ ------ ------ Analysis of net debt Bank balances in hand 91 3,07 1,085 Bank overdrafts (3,066) (2,999) (3,572) Bank bridging loan - (560) - Debt due within one year (250) - (200) Debt due after one year (48,350) (34,700) (48,500) Current asset investments 2,376 2,464 2,451 ------ ------ ------ (49,199) (32,723) (48,736) ------ ------ ------ Notes to the interim results 1.Taxation 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2000 1999 1999 £'000 £'000 £'000 Company 323 318 501 Associate 6 8 26 Joint Venture 5 1 4 ------ ------ ------ 334 327 531 ------ ------ ------ The tax charges have been reduced due to the effect of accelerated capital allowances 2.Earnings per share have been calculated as follows:- 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2000 1999 1999 Group profit on ordinary activities after tax £759,000 £736,000 £1,569,000 Weighted average number of shares in issue for the period ('000) 76,380 75,791 76,060 Basic earnings per share 0.99p 0.97p 2.06p Dilution adjustments to earnings £34,000 £36,000 £68,000 Diluted number of shares in issue ('000) 82,797 82,208 82,477 Fully diluted earnings per share 0.96p 0.94p 1.98p 3. Properties are included at valuation as at 31 December 1999 adjusted for additions and disposals since that date at cost. 4. Investments held as current assets 30 June 30 June 31 December 2000 1999 1999 £'000 £'000 £'000 Listed investment portfolio at market value 3,314 3,574 3,773 Unrealised excess of market value over costs 938 1,110 1,322 ------ ------ ------ Listed investment portfolio at cost 2,376 2,464 2,451 ------ ------ ------ 5. The above financial information does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The figures for the year ended 31st December 1999 are based upon the latest statutory accounts which have been delivered to the Registrar of Companies; the report of the auditors on those accounts was unqualified and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985. The six months figures use the same accounting policies as for the year ended 31 December 1999, and have not been audited or subject to review by the auditors. 6.Board approval These interim accounts were approved by the Board of London & Associated Properties PLC on 25 September 2000. 7. Posting to shareholders The interim statement will be posted to shareholders shortly. Copies are available at the Company's Registered Office: 8-10 New Fetter Lane, London EC4A 1AF. Contact: London & Associated Properties PLC Tel: 020 7415 5000 Michael Heller, John Heller, or Robert Corry Bankside Consultants Limited Tel: 020 7220 7477 Baron Phillips

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