Interim Results
Peel Hldgs PLC
20 December 2002
Chairman's Statement
Results
Profit on ordinary activities before taxation for the half year ended 30th
September 2002 increased marginally to £11.27m (2001: £11.15m). The increase in
underlying operating profit of £1.11m was offset by a fall in profits from the
disposal of fixed assets of £0.64m, from £4.14m in the previous year to £3.50m
this time. Total net rental income for the Group in respect of the half year was
£50.40m (2001: £48.36m).
Profit on ordinary activities after taxation increased to £7.13m (2001: £7.06m
restated), to give diluted earnings per ordinary share of 10.52p (2001: 10.43p
restated). The results for 2001 have been restated following the adoption of FRS
19 'Deferred Tax'.
The Board has declared an interim dividend of 4.8p per ordinary share (2001:
4.8p). This will be paid on 7th April 2003 to ordinary shareholders on the
register at the close of business on 7th March 2003.
Balance Sheet
Consolidated shareholders' funds increased during the half year by £69.92m to
£825.50m, compared to £755.58m at 31st March 2002, producing fully diluted net
assets per ordinary share of 1,230p, compared to 1,125p at 31st March 2002, an
increase of 105p.
The increase in shareholders' funds was mainly due to a £71.38m uplift from the
revaluation of certain of the Group's investment properties and land assets as
at 30th September 2002, together with the retained profit for the half year of
£3.71m. This combined increase in shareholders funds was partially offset by a
foreign exchange loss of £5.07m.
Finances
Net Group borrowings at 30th September 2002 stood at £881.13m compared to
£865.30m at 31st March 2002. Gearing at the half year improved to 106.5% (31st
March 2002: 114.2%) following the increase in shareholders' funds at 30th
September 2002. Net interest payable for the half year was £36.80m (2001:
£36.44m).
The Trafford Centre
There have been some very mixed reports nationally from retailers over the
period to 30th September 2002 with suggestions that the combined effects of the
World Cup, the Queen's Golden Jubilee and the mild Autumn have discouraged
shoppers. This view however, is not borne out by the Centre's own experience, as
visitor numbers yet again show an increase of approximately 5% over the same
period last year. Furthermore, returns from retailers suggest that average
trading figures within The Trafford Centre show like-for-like growth in sales of
7.7% for the six month period, more than twice the national figures reported by
the British Retail Consortium (3.5%). At the half year end, the annualised rent
roll stood at £51.27m (2001: £49.81m) and turnover rents produced £1.76m (2001:
£1.38m) for the six month period. Both figures reflect satisfactory growth
against the same period last year.
Planning consent has been granted for a new direct access into the Centre from
Junction 9 of the M60 motorway, which will help balance traffic flows at the
Centre and work is expected to start early in 2003.
The situation regarding the possibility of bringing the Metrolink tram system to
the Centre remains uncertain. There has been a recent announcement on extra
funding required for expansion of the rest of the network and meaningful
discussions are expected to take place in the new year regarding possible
funding for the Trafford Park line.
Property
Falling yields and rising capital values continued to prevail in the commercial
property market during the six months to 30th September 2002. Again, this has
suited our continued strategy of disposing of secondary properties with limited
long term growth whilst focussing on the Group's prime properties. Completed
sales of £17.13m, largely attributable to the sale of a town centre retail
investment in Huddersfield, provided a profit over book value of £1.63m, whilst
removing a passing rental income of £1.43m per annum. In keeping with the
Group's investment policy of acquiring strategic landholdings, property assets
with a capital value of £7.83m were acquired with a rental income of £0.63m per
annum.
As at 30th September 2002, annualised rental income for the UK investment
property portfolio (excluding The Trafford Centre) was £35.98m compared to
£36.06m at 1st April 2002. Whilst there was a small net reduction in rental
income after allowing for sales and purchases, new lettings of void units
created additional rental income of £1.38m per annum. In addition, completed
rent reviews and lease renewals added annualised rental income of £0.65m. Offset
against these rental increases, was rent lost due to new vacancies which
totalled £0.60m per annum. Although voids represent annualised rental income of
£2.80m at the half year (compared with £2.69m at 1st April 2002) proposed new
lettings are forecast to generate additional rental income of £0.87m per annum.
Property development profits tend to be uneven with £0.85m generated in the
period compared with £0.80m last year, but this belies the substantial work in
progress in this Division.
Planning approvals have been obtained to extend the Group's existing retail
warehouse parks at Barnsley (70,000 sq. ft.), at Straiton, near Edinburgh
(50,000 sq. ft.) and at Stockport (14,000 sq. ft.). With pre-lets under
negotiation and in many cases agreed, construction is expected to commence at
Stockport and Barnsley shortly. Planning approval has also been obtained for 156
residential units at St Georges, Hulme, Manchester. Construction of a 17
apartment development at Leicester Street, Walsall, is nearing completion and at
Wakefield, adjacent to Junction 39 of the M1 motorway, a 20,000 sq. ft. pre-let
office development is under construction.
An outline planning application has been submitted at Gloucester Docks on 60
acres for a mixed development of retail, offices, industrial and residential.
Valued at over £200m, this significant regeneration scheme is a joint venture
with British Waterways. At Ellesmere Port, adjacent to Junctions 7 and 8 of the
M53 motorway, an outline planning application has been submitted on 87 acres of
land for 1.3m sq. ft. of B1, B2 and B8 uses. A detailed planning application for
a 90,000 sq. ft. leisure development at Blackburn Town Centre has also been
submitted and pre-lets for a 10 screen cinema, a 22,500 sq. ft. health and
fitness unit, a 35,000 sq. ft. bowling unit and a 3,000 sq. ft. fast food unit
are close to agreement.
In the present planning climate the Group is concentrating on maximising the
potential of its urban and brownfield landholdings, whilst at the same time
pursuing regionally important regeneration schemes such as Salford Forest Park
and Estuary Commerce Park in South Liverpool. Housing land sales in the half
year to 30th September 2002 totalled £5.69m and further land sales have been
negotiated exceeding £7m for completion in the second half of the year. The
Group continues to be active in the acquisition of land which has long term
potential for development or which consolidates its existing holdings and is
currently negotiating the purchase of sites in excess of 1,000 acres.
The Waste and Minerals Division had a successful start to the half year,
achieving settlements of outstanding claims as well as promoting new and
promising projects for the future within the Group's existing landholdings. With
output from the Group's two hard rock quarries remaining stable at the increased
levels achieved last year and gate prices at landfill sites continuing in a slow
upward trend, income for the half year reached £1.01m (2001: £0.26m).
Port
The half year was a challenging period for the Port with the tonnage handled
significantly down on the first half of last year. This decrease in tonnage
resulted from a major rationalisation by Shell U.K. Limited of its oil
distribution within the UK and Ireland. Tonnage handled for this customer from
its refinery adjacent to the Canal at Ellesmere Port fell by 0.80m tonnes
compared to the same period last year. Overall, the tonnage handled through the
Port in the half year was 3.23m tonnes (2001: 4.13m tonnes), this generated a
reduced operating profit of £0.75m (2001: £1.84m).
In the Lower Reaches of the Canal (Eastham to Runcorn) liquid tonnage to other
Canalside operations remained relatively strong. Tonnage to the dry cargo
operation at Runcorn increased by 7% and further investment has been made in
additional bulk storage warehousing. This latest investment means the amount of
covered storage available at Runcorn Docks has doubled in the last ten years.
The operation at Ellesmere Port had a more difficult time as markets for certain
commodities weakened and tonnage dropped by 12% compared to the first six months
last year. A number of factors accounted for a drop in tonnage to the Upper
Reaches of the Canal (Runcorn to Manchester) and the throughput was 0.48m tonnes
(2001: 0.57m tonnes) in the period.
Airports
The first half of the financial year saw Liverpool John Lennon Airport continue
to develop its 'low cost' role and also make substantial inroads into the
charter market. Total passenger numbers are expected to reach 2.82m for the
calendar year 2002, an increase of 24% over the record of the previous year.
The scheduled passenger market remains buoyant with increases in passengers in
the period largely attributable to new services to Paris and Brussels operated
by easyJet and Ryanair respectively. Liverpool John Lennon also made significant
progress in the charter market in the 2002 summer season with passengers in this
sector up significantly, helping the Airport become the fastest growing charter
airport in the UK. However, 2002 has been a difficult year for the cargo market
and for the six months ended 30th September 2002, total cargo throughput,
compared to the same period last year, fell by 22% to 15,500 tonnes.
As a result turnover from the Airport's operations for the half year, covering
the peak summer season, was £11.53m (2001: £8.19m). Despite the increased
turnover, the results produced an adjusted operating loss of £0.66m compared to
a profit of £0.34m for the same period in 2001, largely due to increased
overhead costs and an increased charge for depreciation following the investment
in the new terminal building.
Subsequent to the opening of the new terminal building by Her Majesty The Queen,
the Airport received planning approval to further expand capacity to 4.5m
passengers per annum. Although future prospects for the Airport are encouraging,
the aviation industry remains a highly competitive and challenging environment.
The Inspector who considered the Group's Planning Application for the
redevelopment of Doncaster Finningley as a commercial airport passed his report
to the Office of the Deputy Prime Minister in September 2002 for consideration
and a decision is anticipated early in 2003.
One year on from acquiring a 50% interest in Sheffield City Airport Limited, the
Airport's operating costs have been reduced and the business realigned to focus
on the general business aviation market.
Board Changes
Although Robert Hough stepped down after 13 years, as Executive Deputy Chairman
on 1st November 2002, he continues as Non-executive Deputy Chairman and Chairman
of the Group's Airports Division. Also, Martin Hill will step down as a
Non-executive Director on 31st December 2002.
On 16th December 2002 the Group appointed Michael Butterworth as Property
Director, David Glover as Construction Director, Peter Hosker as Legal and
Corporate Affairs Director and Peter Nears as Strategic Planning Director.
Clydeport
On 18th November 2002, your Board together with the Board of Clydeport plc
announced a recommended offer for Clydeport, a port operator and property
investment and development group focused principally on the West Coast of
Scotland. We strongly believe that the proposed acquisition of Clydeport will
diversify and enhance the port and property activities of the enlarged Group.
The offer was extended on 9th December 2002 to 23rd December 2002 after the
Group received acceptances from Clydeport Shareholders for 56% of the shares
then issued which when taken together with the Group's own shareholding
represented 66% of the Clydeport shares then issued. A further announcement on
the level of acceptances will be made on 24th December 2002.
Future
In line with our stated strategy we continue to concentrate on opportunities in
the property and transport sectors with good prospects for growth. Whilst
uncertain and mixed economic signals have prevailed, through intensive
management the Group has made satisfactory progress in most areas in which it
operates. The Group maintains a continual review and selection process on its
asset base and assuming economic conditions do not weaken, the Group is well
placed to seek out opportunities, where our asset management and expertise can
deliver above average growth.
John Whittaker 20th December 2002
Chairman
Group Profit and Loss Account
for the half year ended 30th September 2002
Unaudited Unaudited Audited
6 months to 6 months to Year to
30th September 30th September 31st March
2002 2001 2002
Restated
Note £'000 £'000 £'000
Turnover 76,907 74,609 146,813
Operating profit 44,559 43,446 90,256
Profit on disposal of fixed assets 3,504 4,140 15,928
Profit on ordinary activities before
interest and taxation 48,063 47,586 106,184
Net interest payable and similar charges (36,798) (36,440) (72,760)
Profit on ordinary activities before taxation 11,265 11,146 33,424
Tax on profit on ordinary activities (4,136) (4,086) (11,011)
Profit on ordinary activities after taxation 7,129 7,060 22,413
Minority interests (68) (55) (84)
Profit for the period 7,061 7,005 22,329
Dividends on non-equity share capital (362) (365) (726)
Profit for the financial period attributable to
ordinary shareholders 6,699 6,640 21,603
Dividends on equity share capital (2,986) (2,984) (9,330)
Retained profit for the financial period 3,713 3,656 12,273
Earnings per ordinary share 1
Basic earnings 10.77p 10.68p 34.74p
Diluted earnings 10.52p 10.43p 33.25p
Group Balance Sheet
as at 30th September 2002
Unaudited Unaudited Audited
As at As at As at
30th September 30th September 31st March 2002
2002 2001
Restated
Note £'000 £'000 £'000
Fixed assets
Intangible assets 2,092 2,238 2,148
Tangible assets
Investment Properties 1,637,856 1,569,500 1,571,314
Other fixed assets 109,782 92,554 108,459
Investments 43,296 9,188 27,419
1,793,026 1,673,480 1,709,340
Current assets
Stocks 5,781 14,783 6,600
Debtors 27,748 34,816 26,473
Cash at bank and in hand 127,746 167,417 193,503
161,275 217,016 226,576
Creditors (amounts falling due within one
year) (105,793) (122,487) (111,200)
Net current assets 55,482 94,529 115,376
Total assets less current liabilities 1,848,508 1,768,009 1,824,716
Creditors (amounts falling due after more
than one year) (972,193) (989,755) (1,022,449)
Provision for liabilities and charges (32,978) (22,163) (29,983)
Accruals and deferred income (15,742) (9,203) (14,775)
Net assets excluding pension asset 827,595 746,888 757,509
Pension asset 78 4,430 183
Net assets including pension asset 827,673 751,318 757,692
Financed by capital and reserves
Called-up share capital 39,276 39,280 39,280
Share premium account 103,789 103,789 103,789
Capital redemption reserve 115,672 115,672 115,672
Revaluation reserve 696,644 623,789 625,260
Capital reserve 45,065 45,065 45,065
Merger relief reserve 7,954 7,954 7,954
Profit and loss account (122,575) (125,987) (121,108)
Consolidated capital and reserves 885,825 809,562 815,912
Shares held by Largs Limited in Peel Holdings
p.l.c (60,328) (60,328) (60,328)
Shareholders' funds 2 825,497 749,234 755,584
Equity minority interests 2,176 2,084 2,108
827,673 751,318 757,692
Net assets per ordinary share
Fully diluted 3 1,230p 1,115p 1,125p
Group Cash Flow Statement
for the half year ended 30th September 2002
Unaudited Unaudited Audited
6 months to 6 months to Year to
30th September 30th September 31st March 2002
2002 2001
Restated
Note £'000 £'000 £'000
Cash flow from operating activities
(pre-exceptional item) 4 (a) 44,650 35,430 101,946
Exceptional abortive costs - - (358)
Cash flow from operating activities 44,650 35,430 101,588
Dividends received from joint ventures - - 312
Returns on investments and servicing of finance 4 (b) (40,623) (41,156) (85,085)
Taxation 2,457 5,182 4,686
Capital expenditure and financial investment 4 (c) (15,944) (13,791) (33,676)
Acquisitions and disposals 4 (d) - (5,494) (5,506)
Equity dividends paid (8,811) (2,982) (9,326)
Cash flow before management of liquid resources
and financing (18,271) (22,811) (27,007)
Management of liquid resources (1,670) 1,015 (21,589)
Financing 4 (e) (48,745) 16,389 47,649
Decrease in cash in the period (68,686) (5,407) (947)
Reconciliation of Cash Flow to Movement in Net Debt
Unaudited Unaudited Audited
6 months to 6 months to Year to
30th September 30th September 31st March 2002
2002 2001
Restated
Note £'000 £'000 £'000
Movement in cash in the period 5 (68,686) (5,407) (947)
Cash movement from management of liquid resources 5 1,670 (1,015) 21,589
Net movement in debt due within one year 5 (299) (15,428) (7,363)
Net movement in debt due after more than 5
one year 50,256 730 (33,714)
Translation and other non-cash adjustments 5 1,229 (382) 146
Change in net debt in the period (15,830) (21,502) (20,289)
Net debt at beginning of period (865,299) (845,010) (845,010)
Net debt at end of period (881,129) (866,512) (865,299)
Notes to the Interim Results
for the half year ended 30th September 2002
1. Earnings per Ordinary Share
The calculation of earnings per ordinary share is based on a profit after tax,
non-equity dividends and minority interests of £6,699,000 (2001: £6,640,000) and
on 62,205,919 ordinary shares (2001: 62,173,605) being the weighted average
number of ordinary shares in issue during the period ended 30th September 2002.
The weighted average number of ordinary shares used in the calculation of
diluted earnings per ordinary share is 67,136,909 ordinary shares (2001:
67,188,075). This has been adjusted for the effect of the conversion of all the
5.25% convertible cumulative non-voting preference shares of £1 each.
2. Reconciliation of Movements in Shareholders' Funds
Unaudited Unaudited Audited
6 months to 6 months to Year to
30th September 30th September 31st March
2002 2001 2002
Restated
£'000 £'000 £'000
Profit for the period 7,061 7,005 22,329
Dividends (3,348) (3,349) (10,056)
Unrealised net surplus on revaluation of investment
properties 71,384 - 473
Foreign exchange adjustments (5,074) (1,787) (146)
Actuarial loss relating to the pension fund - - (4,381)
Purchase of own shares (110) - -
Net increase in shareholders' funds 69,913 1,869 8,219
Opening shareholders' funds as previously stated 755,584 758,192 758,192
Prior period adjustments (Note 6) - (10,827) (10,827)
Opening shareholders' funds as restated 755,584 747,365 747,365
Closing shareholders' funds 825,497 749,234 755,584
3. Fully Diluted Net Assets per Ordinary Share
Unaudited Unaudited
As at As at As at
30th September 30th September 31st March
2002 2001 2002
Restated
£'000 £'000 £'000
Shareholders' funds per balance sheet 825,497 749,234 755,584
Assumed cash receipts on exercise of share options - 69 -
Adjusted shareholders' funds 825,497 749,303 755,584
Number Number Number
Ordinary shares in issue at period end 98,982,154 98,959,021 98,997,154
Shares held by Largs Limited in Peel Holdings p.l.c. (36,785,416) (36,785,416) (36,785,416)
62,196,738 62,173,605 62,211,738
Assumed conversion of 13,806,882 (2001: 13,913,657 5.25%
(plus tax credit) convertible preference shares £1 each 4,930,990 4,969,123 4,930,990
Outstanding options for ordinary shares - 55,000 -
Number of ordinary shares deemed to be in issue assuming
full conversion of the 5.25% (plus tax credit)
convertible cumulative preference shares and full
exercise of share options 67,127,728 67,197,728 67,142,728
Fully diluted net assets per ordinary share 1,230p 1,115p 1,125p
4. Notes to the Cash Flow Statement Unaudited Unaudited Audited
6 months to 6 months to Year to
30th September 30th September 31st March 2002
2002 2001
Restated
£'000 £'000 £'000
(a) Cash flow from operating activities
Operating profit 44,559 43,446 90,256
Non-cash adjustments 6,239 4,256 7,194
Movement in stocks 819 (3,880) 2,060
Movement in debtors (4,643) (7,273) (1,438)
Movement in creditors (2,324) (1,119) 3,874
44,650 35,430 101,946
(b) Returns on investments and servicing of
finance
Interest received 2,886 3,984 6,721
Interest paid (including capitalised) (39,747) (40,502) (80,006)
Finance lease interest paid (150) (173) (318)
Non-equity dividends paid (362) (365) (732)
Other costs of finance (3,250) (4,100) (10,750)
(40,623) (41,156) (85,085)
(c) Capital expenditure and financial
investment
Purchase of fixed assets (42,488) (33,509) (95,475)
Sale proceeds from fixed assets 26,661 22,336 61,982
Loans to associated undertakings (117) (2,618) (183)
(15,944) (13,791) (33,676)
(d) Acquisitions and disposals
Purchase of minority interest in subsidiary
undertaking - (2,400) (2,412)
Purchase of interests in joint venture - (3,094) (3,094)
companies
- (5,494) (5,506)
(e) Financing
Purchase of own shares (110) - -
Movement in loans (49,955) 14,698 40,429
Grants received 1,320 1,691 7,220
(48,745) 16,389 47,649
5. Analysis of Movement in Group Net Debt
1st April Exchange/ 30th September
2002 Cash Other 2002
£'000 £'000 £'000 £'000
Cash at bank and overdrafts 98,415 (68,686) 1,309 31,038
Cash deposits 90,248 1,670 - 91,918
Debt due within
one year (excluding
overdrafts) (31,513) (299) (80) (31,892)
Debt due after more
than one year (1,022,449) 50,256 - (972,193)
(865,299) (17,059) 1,229 (881,129)
6. Prior Period Adjustments
Following the adoption of FRS 17 'Retirement Benefits' and FRS 19 '
Deferred Tax' as at 31st March 2002, the comparative figures for the six months
to 30th September 2001 have been restated.
7. Interim Results
The board of directors approved the above results on 20th December
2002.
The interim results for the half year ended 30th September 2002 have been
prepared using accounting policies stated in the Group's Report and Accounts for
the year ended 31st March 2002 and are unaudited.
They do not comprise full financial statements within the meaning of
the Companies Act 1985 and have not been reported upon by the auditors under
Section 235 of the Companies Act 1985.
The comparative figures for the year ended 31st March 2002 are an
abridged version of the Group's full accounts and, together with other financial
information contained in these interim results, do not constitute statutory
accounts of Peel Holdings p.l.c. within the meaning of Section 240 of the
Companies Act 1985. The statutory accounts for the year ended 31st March 2002
have been delivered to the Registrar of Companies. The report of the auditors
was not qualified and did not contain a statement under Section 237 (2) and (3)
of the Companies Act 1985.
Copies of this interim report will be despatched to shareholders by post.
Further copies may be obtained from the Company Secretary, Peel Holdings p.l.c.,
Peel Dome, The Trafford Centre, Manchester M17 8PL.
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