Interim Results

Quintain Estates & Development PLC 25 November 2003 25 November 2003 QUINTAIN ESTATES AND DEVELOPMENT PLC ('Quintain' / 'Company' / 'Group') Interim Results for the six months ended 30 September 2003 Highlights: • Gross profit up 21% to £19.3m (2002: £16.0m) • Profit before tax stable at £7.3m (2002: £7.4m) • Earnings per share up 4.5% to 4.6p (2002: 4.4p) • Net asset value per share 349p (31 March 2003: 348p) • Interim dividend maintained at 2.75p per share • Strong progress at the Greenwich Peninsula; London Borough of Greenwich unanimously resolved to grant outline planning consent and agreement reached with the Mayor of London on affordable housing • Planning application submitted to London Borough of Brent in October for the regeneration of 42 acres at Wembley • Joint venture agreed with Countryside Properties PLC for £89m mixed use scheme at Merton Abbey Mills, London SW19 • Hanford Mall Shopping Centre in California sold, generating FRS3 profit of £2.4m • Gearing reduced to 60% (31 March 2003: 63%; 30 September 2002: 69%) Nigel Ellis, Chairman, commented: 'I am pleased to report good progress across all areas of the Company during the last six months. The financial results are more than satisfactory, the sales programme is ahead of schedule and great advances are occurring at both the Wembley and Meridian Delta projects. 'The inherent potential within the portfolio, strengthened management and robust underlying earnings are conducive to outperformance and we therefore continue to look to the future with confidence.' For further information: Quintain Estates and Development 020 7495 8968 Adrian Wyatt / Rebecca Worthington Financial Dynamics 020 7831 3113 Stephanie Highett / Dido Laurimore CHAIRMAN'S STATEMENT Once again, I am pleased to report good progress across all areas of the Company during the last six months. The financial results are more than satisfactory, the sales programme is ahead of schedule and great advances are occurring at both the Wembley and Meridian Delta projects. Gross profits increased 21% to £19.3m (2002: £16.0m) incorporating a 14% uplift in rental income to £19.8m (2002: £17.4m). Underlying profits have increased by 19% to £4.5m (2002: £3.7m). Administrative expenses, however, have increased by 85%. The additional costs mainly relate to the operational business at Wembley being included for the entire period under review (2002: two months), but also reflected the Company's decision to appoint some highly skilled individuals to strengthen and expand the property team in order to progress the major urban regeneration projects and develop new business. Earnings per share have risen by 4.5% to 4.6p per share (2002: 4.4p). In light of this and in spite of the unsettled economic climate, the board has good reason to feel optimistic regarding the future. Quintain pursues a progressive dividend policy but, in line with past practice, we have decided to maintain the interim dividend at 2.75p per share. Regarding the property portfolio, as in previous years, we have not carried out a formal revaluation at the half year. Subject to market conditions, we anticipate an uplift at the year end. Gearing has reduced from 63% at the year end to 60% at 30 September 2003 (2002: 69%). This reflects the Company's decision to take advantage of current market pricing to dispose of certain assets and will support the ongoing requirement to fund its major urban regeneration projects. Property Review We have deliberately slowed our acquisition programme as yields have fallen to levels that would not sustain our total return requirement. However, we have purchased one property for £5.8m with an initial yield of 9%. Sales were £33.1m in the first half, at around or in excess of book value, with a further £26.7m exchanging since the period end. Having achieved the resolution to grant planning permission for the development of 14 million sq ft at the Greenwich Peninsula in April of this year, we have agreed the percentage of affordable housing and significant progress is being made on the infrastructure and S106 negotiations. We remain on target to be on site next year. Since the period end, we have bought a 12.6 acre site across the Thames from the Greenwich Peninsula in a joint venture with the London Development Agency. The land is safeguarded for a third Blackwall Crossing and is leased back to Carlsberg-Tetley for a minimum of three years. This acquisition, strategic in the context of both the Olympics and our ongoing involvement on the Peninsula, is in line with our regeneration policy of buying assets early that have an existing income stream, thereby underwriting the planning risk. Yesterday, we consolidated our landholding at Wembley through the acquisition of York House, a 118,000 sq ft office building, for £15.3m, reflecting an initial yield of 8.7%. As a result of this, the acquisition of Wembley (London) Limited last year and the subsequent purchase of the Palace of Industries site, we now own 58 acres at Wembley. Of this, 42 acres were incorporated within a planning application for 5 million sq ft of mixed use development which was submitted at the end of October. Two public consultations took place during the first half of this financial year and a third is planned for December. We are working very closely with the London Borough of Brent, the Greater London Authority and the London Development Agency to secure a successful planning application and to be on-site to deliver the first elements of the scheme by the time Wembley Stadium opens in late 2005. At Merton Abbey Mills, Quintain has signed a joint venture agreement with Countryside Properties PLC for an £89m mixed use development comprising improvements to the existing speciality market, 283 apartments, a pre-let hotel and health and fitness centre and two restaurants. Building of the first phase has commenced and 25% of these 124 residential units have already been reserved. During the period, lettings have taken place at our completed development The Parishes, Scunthorpe and, with rent free periods falling away, its income receivable has increased by £0.9m to £1.8m. A surrender premium was taken in the year to 31 March 2002 on 33,000 sq ft of office space handed back at Smallbrook Queensway, Birmingham. This has now been refurbished and a recent letting of 14,000 sq ft to Mortgage Masters means the building is now 97% let. The works at Neathouse Place, Victoria are complete and negotiations continue with the tenant on settling the outstanding rent review. Quintain's strategy has always been to focus on the UK property market. We have therefore taken advantage of a strong retail market in the United States to sell Hanford Mall, our shopping centre in California. Our share of proceeds was £14.2m, giving a £2.4m profit over book value. Our only remaining asset in the US, the shopping centre in Hialeah, Florida, is being marketed with the intention of it being sold by the year end. Management Regarding the Board, we were sorry that Pam Alexander, who joined us in July of this year as a non-executive director with strong public sector experience, has announced her intention to resign as a result of her appointment as Chief Executive of the South East England Development Agency. We will miss her contribution and wish her all the best. With our growing portfolio of inner city regeneration projects, we feel that the Company does benefit from having a board member with experience of the public sector and are therefore seeking a replacement. We hope to have good news on this front in the near future. Outlook The inherent potential within the portfolio, strengthened management and robust underlying earnings are conducive to outperformance and we therefore continue to look to the future with confidence. Nigel Ellis Chairman 25 November 2003 Quintain Estates and Development PLC Consolidated Profit and Loss Account For the six months ended 30 September 2003 Unaudited Unaudited Audited Six months ended Six months ended Year ended 30 Sept 2003 30 Sept 2002 31 March 2003 Notes £000 £000 £000 _______ _______ _______ Turnover 30,717 32,548 62,660 Less - share of joint ventures' (2,680) (2,477) (5,055) turnover _______ _______ _______ Group turnover 2 28,037 30,071 57,605 Cost of sales 2 (8,742) (14,080) (21,030) _______ _______ _______ Gross profit 19,295 15,991 36,575 Administrative expenses 3 (7,528) (4,060) (10,377) _______ _______ _______ Group operating profit 11,767 11,931 26,198 Share of operating profit in joint 1,977 2,198 4,421 ventures Share of operating profit (loss) in 105 (5) 278 associates Profit on sale of investment properties 2,699 1,229 841 Net interest payable (9,209) (7,983) (17,770) _______ _______ _______ Profit on ordinary activities before taxation 7,339 7,370 13,968 Tax on profit on ordinary activities 4 (1,468) (1,474) (1,647) _______ _______ _______ Profit on ordinary activities after taxation 5,871 5,896 12,321 Equity minority interests (60) (199) (288) _______ _______ _______ Profit for the financial period 5,811 5,697 12,033 Dividends 5 (3,540) (3,499) (10,183) _______ _______ _______ Retained profit for the financial 2,271 2,198 1,850 period ====== ====== ====== Earnings per share 6 Basic 4.6p 4.4p 9.4p ====== ====== ====== Diluted 4.5p 4.4p 9.3p ====== ====== ====== Unaudited Unaudited Audited Six months ended Six months ended Year ended 30 Sept 2003 30 Sept 2002 31 March 2003 £000 £000 £000 _______ _______ _______ Consolidated Statement of Total Recognised Gains and Losses for the six months ended 30 September 2003 Profit for the financial period 5,811 5,697 12,033 Unrealised (deficit) surplus on (429) 33 49,147 revaluation Currency translation movements (135) (146) 190 _______ _______ _______ 5,247 5,584 61,370 ====== ====== ====== Consolidated Note of Historical Cost Profits and Losses for the six months ended 30 September 2003 Profit on ordinary activities before 7,339 7,370 13,968 taxation Realisation of property revaluation gains of previous periods 493 2,812 2,325 _______ _______ _______ Historical cost profit on ordinary activities before taxation 7,832 10,182 16,293 ====== ====== ====== Historical cost profit for the period retained after taxation, minority interests and dividends 2,764 5,010 4,175 ====== ====== ====== Reconciliation of Movements in Equity Shareholders' Funds for the six months ended 30 September 2003 Profit for the financial period 5,811 5,697 12,033 Dividends (3,540) (3,499) (10,183) _______ _______ _______ 2,271 2,198 1,850 Other recognised gains and losses relating to the period (564) (113) 49,337 Negative goodwill - 1,555 1,555 Issue of shares less costs 641 959 2,377 Purchase of own shares - (4,190) (6,166) _______ _______ _______ Net addition to equity shareholders' 2,348 409 48,953 funds Opening shareholders' funds 443,316 394,363 394,363 _______ _______ _______ Closing shareholders' funds 445,664 394,772 443,316 ====== ====== ====== Consolidated Balance Sheet As at 30 September 2003 Unaudited Unaudited Audited As at As at As at 30 Sept 2003 30 Sept 2002 31 March 2003 Notes £000 £000 £000 _______ _______ _______ Fixed assets Investment properties 7 714,529 666,458 722,545 Other fixed assets 454 397 430 Investment in joint ventures Share of gross assets 69,803 60,519 61,589 Share of gross liabilities (31,610) (31,027) (31,055) ________ ________ ________ 38,193 29,492 30,534 Investment in associates 4,501 4,722 4,512 Other fixed asset investments 188 266 188 ________ ________ ________ 757,865 701,335 758,209 ________ ________ ________ Current assets Trading properties 559 1,449 1,750 Debtors 31,688 40,505 48,729 Short term investments 19 18 14 Cash at bank and in hand 12,883 13,697 22,119 ________ ________ ________ 45,149 55,669 72,612 Creditors: amounts falling due within one year (56,225) (77,735) (63,149) ________ ________ ________ Net current (liabilities) assets (11,076) (22,066) 9,463 ________ ________ ________ Total assets less current liabilities 746,789 679,269 767,672 Creditors: amounts falling due after more than one year (290,772) (274,044) (314,346) Provisions for liabilities and charges (8,993) (7,837) (8,659) Equity minority interests (1,360) (2,616) (1,351) ________ ________ ________ Net assets 445,664 394,772 443,316 ======= ======= ======= Capital and reserves Called up share capital 9 31,948 31,813 31,825 Share premium account 43,805 40,736 42,623 Other capital reserves 112,330 110,553 112,330 Revaluation reserve 202,156 153,966 202,148 Profit and loss account 55,425 57,704 54,390 ________ ________ ________ Equity shareholders' funds 445,664 394,772 443,316 ======= ======= ======= Net asset value per share 10 Basic 349p 310p 348p ======= ======= ======= Diluted 342p 304p 342p ======= ======= ======= Consolidated Cash Flow Statement For the six months ended 30 September 2003 Unaudited Unaudited Audited Six months ended Six months ended Year ended 30 Sept 2003 30 Sept 2002 31 March 2003 Notes £000 £000 £000 _______ _______ _______ Net cash inflow from operating activities 11a 6,722 8,425 39,514 ====== ====== ====== Dividends from joint ventures and associates 894 - 1,381 ====== ====== ====== Return on investments and servicing of finance Net interest paid (9,175) (7,411) (17,052) Issue costs of loans (41) (319) (431) _______ _______ _______ Net cash outflow from returns on investments and servicing of finance (9,216) (7,730) (17,483) ====== ====== ====== Corporation tax paid (61) - (1,193) ====== ====== ====== Capital expenditure and financial investment Purchase of tangible fixed assets (17,091) (50,914) (90,663) Proceeds from disposal of tangible fixed assets 40,173 50,813 66,401 Loans to join ventures and associates (5,032) (2,261) (2,261) _______ _______ _______ Net cash inflow (outflow) from capital expenditure and financial investment 18,050 (2,362) (26,523) ====== ====== ====== Acquisitions and disposals Purchase of subsidiary companies - (27,577) (27,335) Net cash acquired with subsidiary - 956 956 companies _______ _______ _______ Net cash outflow from acquisitions and disposals - (26,621) (26,379) ====== ====== ====== Equity dividends paid (6,709) (6,099) (9,599) ====== ====== ====== Net cash inflow (outflow) before management of liquid resources and financing 9,680 (34,387) (40,282) ====== ====== ====== Management of liquid resources 11b 2,905 18,250 18,953 ====== ====== ====== Financing Issue of ordinary shares for cash 641 959 3,079 Loans drawn down 7,499 88,337 161,088 Loan repayments (27,051) (74,669) (132,548) Purchase of own shares - (4,190) (6,869) _______ _______ _______ Net cash (outflow) inflow from (18,911) 10,437 24,750 financing ====== ====== ====== (Decrease) increase in cash 11c (6,326) (5,700) 3,421 ====== ====== ====== Notes to the accounts For the six months ended 30 September 2003 1 Basis of preparation The half year figures for 2003 and 2002 are unaudited and have been prepared on the basis of accounting policies adopted in the accounts to 31 March 2003. The comparative figures for the financial year ended 31 March 2003 are not the Company's statutory accounts for that financial year. These accounts have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. 2 Turnover and cost of sales Unaudited Unaudited Audited Six months ended Six months ended Year ended 30 Sept 2003 30 Sept 2002 31 March 2003 £000 £000 £000 _______ _______ _______ Gross rents receivable 19,825 17,440 37,367 Proceeds from sale of trading 1,439 11,074 12,115 properties Income from leisure operations 5,485 876 5,950 Other income 1,288 681 2,173 _______ _______ _______ Total turnover 28,037 30,071 57,605 ====== ====== ====== Rents payable and other property 4,367 3,981 8,210 outgoings Cost of sales of trading properties 1,254 9,427 9,657 Expenditure on leisure operations 3,121 672 3,163 _______ _______ _______ Total cost of sales 8,742 14,080 21,030 ====== ====== ====== 3 Administrative expenses Unaudited Unaudited Audited Six months ended Six months ended Year ended 30 Sept 2003 30 Sept 2002 31 March 2003 £000 £000 £000 _______ _______ _______ Directors' remuneration 1,475 1,261 2,066 Staff costs 3,675 1,778 4,520 Legal and professional fees 895 263 1,298 Office costs 843 528 1,851 Depreciation 167 126 253 Profit on disposal of fixed assets (9) - (40) General expenses 482 104 429 _______ _______ _______ 7,528 4,060 10,377 ====== ====== ====== In 2002, legal and professional fees included a recovery of £754,000 relating to amounts reflected in that period and in earlier periods. 4 Tax on profit on ordinary activities The effective rate of taxation on profit on ordinary activities of 20% (2002 : 20%) reflects the benefit of available losses, capitalised interest and permanent timing differences in relation to capital allowances. 5 Dividends The interim dividend of 2.75p (2002 : 2.75p) per ordinary share is payable on 19 December 2003 to members on the register as at 12 December 2003. A final dividend of 5.25p in respect of the year to 31 March 2003 was paid during the period. 6 Earnings per share Basic Unaudited Unaudited Audited Six months Six months Year ended 30 September ended 30 September ended 31 March 2003 2002 2003 £000 £000 £000 _______ _______ _______ Profit for the financial 5,811 5,697 12,033 period ====== ====== ====== Weighted average number of shares (000) 127,597 128,438 127,660 ====== ====== ====== Earnings per share on a diluted basis have been calculated on an adjusted profit of £5,895,000 (2002 : £5,781,000) and an adjusted weighted average number of shares of 131,084,000 (2002 : 132,146,000). 7 Investment properties Investment properties are valued annually at the end of each financial year and are shown in the Balance Sheet as at 30 September 2003 at the previous year end valuations adjusted for subsequent expenditure and disposals. 8 Borrowings As at 30 September 2003, J C Rathbone Associates estimated that the fair value of the Group's financial liabilities exceeded their carrying value by £13,476,000 (2002 : £13,427,000). As at 31 March 2003, the excess was £17,084,000. 9 Called up share capital Number Nominal of shares value 000 £000 _______ _______ Shares in issue as at 1 April 2003 127,301 31,825 Issue of shares under Staff Share Option Schemes 491 123 _______ _______ Shares in issue as at 30 September 2003 127,792 31,948 ====== ====== 10 Net asset value per share Net asset value per share on an undiluted basis as at 30 September 2003 has been based on net assets of £445,664,000 (2002 : £394,772,000) and 127,792,000 (2002 : 127,254,000) ordinary shares. Net asset value per share on a diluted basis has been calculated on adjusted net assets of £448,664,000 (2002 : £397,772,000) and 131,279,000 (2002 : 130,962,000) ordinary shares. 11 Notes to the consolidated cash flow statement Unaudited Unaudited Audited Six months ended Six months ended Year ended 30 Sept 2003 30 Sept 2002 31 March 2003 £000 £000 £000 _______ _______ _______ a) Reconciliation of operating profit to net cash inflow from operating activities Operating profit 11,767 11,931 26,198 Depreciation charge 762 567 1,124 Profit on disposal of fixed assets (9) - (40) Increase in debtors (6,813) (10,713) (2,646) (Decrease) increase in creditors (176) 575 7,438 Decrease in trading stock 1,191 6,065 7,440 _______ _______ _______ 6,722 8,425 39,514 ====== ====== ====== b) Reconciliation of net cash movement to net debt (Decrease) increase in cash during (6,326) (5,700) 3,421 period Cash outflow (inflow) from debt and lease financing 19,923 (13,668) (28,540) Cash inflow from decrease in liquid (2,905) (18,250) (18,953) resources _______ _______ _______ Change in net debt resulting from cash 10,692 (37,618) (44,072) flows Costs of issue of non-equity finance 41 319 431 Amortisation of issue costs (315) (415) (743) Other non-cash movements (57) 660 290 _______ _______ _______ Movement in net debt during period 10,361 (37,054) (44,094) Net debt at beginning of period (275,874) (231,780) (231,780) _______ _______ _______ Net debt at end of period (265,513) (268,834) (275,874) ====== ====== ====== c) Analysis of net debt Liquid resources 466 4,074 3,371 Cash 12,436 9,641 18,762 Debt due after more than one year (278,364) (243,945) (297,819) Debt due within one year (51) (38,604) (188) _______ _______ _______ (265,513) (268,834) (275,874) ====== ====== ====== Independent review report by KPMG Audit Plc to Quintain Estates and Development PLC Introduction We have been instructed by the Company to review the attached financial information and we have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Listing Rules of the Financial Services Authority. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where they are to be changed in the next annual accounts in which case any changes, and the reasons for them, are to be disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/ 4: Review of interim financial information issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 September 2003. KPMG Audit Plc Chartered Accountants London 25 November 2003 This information is provided by RNS The company news service from the London Stock Exchange

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