1st Quarter Results
Workspace Group PLC
09 August 2004
WORKSPACE REPORTS IMPROVEMENT IN OCCUPANCY
IN FIRST QUARTER
Workspace Group PLC ('Workspace'), the leading provider of flexible business
accommodation to small and medium sized enterprises ('SMEs') in London and the
South East today announces its results for the three months ended 30 June 2004.
• Turnover £13.40m for the quarter, up 12.5% (2003: £11.91m)
• Pre-tax profits of £3.51m for the quarter, up 6.7% (2003: £3.29m).
• Basic earnings per share at 15.1p for the quarter up 4.9% (2003: 14.4p).
• Like-for-like occupancy 90.0% at end of quarter (31 March 2004: 88.9%).
Overall occupancy including development schemes, 84.3% at end of quarter (31
March 2004: 83.8%)
• Annual rent roll £38.77m up 1.8% on the quarter (31 March 2004: £38.09m)
and 9.4% on 12 months ago (30 June 2003: £35.43m).
• One acquisition in the quarter; contracts subsequently exchanged on
another.
• Disposals of £11.9m in the quarter; contracts subsequently exchanged on
another.
• Net asset value per share £18.29 at 30 June 2004 (31 March 2004: £18.43)
(30 June 2003: £15.22). Diluted net asset value per share £17.69 (31 March
2004: £17.72) (30 June 2003: £14.75).
• See the Financial Review for an explanation of the reduction in NAV per
share over the quarter.
Harry Platt, Chief Executive of Workspace commented,
' We have enjoyed an encouraging start to the year. The SME sector is in
excellent health. Enquiries levels are higher than a year ago, confidence among
our customers appears to be improving and consequently, we are making solid
progress. We have worked hard on our marketing initiatives and I am delighted to
report that our efforts are paying off. Our like-for-like occupancy has improved
to 90% and the recently refurbished space is filling up in line with our
expectations.
' We are still focused on offering our customers flexible, good quality, low
cost business accommodation. Given that the bulk of our portfolio is in Greater
London, the average rent of £8.62 per sq. ft makes our space extremely
attractive to small businesses.
' We have made a number of purchases and sales, in line with our plans for the
year - all in all a good start to a promising year.'
-ends-
Date: 9 August 2004
For further information:
Workspace Group PLC City Profile Group
Harry Platt, Chief Executive Simon Courtenay
Mark Taylor, Finance Director 020-7448-3244
020-7247-7614
e-mail: info@workspacegroup.co.uk
Web: www.workspacegroup.co.uk
-------------------------------
Operating & Financial Review
Overview
The business continues to show good progress. Turnover, pre-tax profits and
earnings per share are all up on the same quarter last year, and during the
quarter, both occupancy and the rent roll increased. Compared to a year ago the
annual rent roll is up 9.4% (including net acquisitions) to £38.77 million and
the NAV per share is up 20% to £18.29.
During the quarter one acquisition was secured for £4.64m, whilst contracts have
been exchanged on another (value £16.0m) since the end of the quarter. Following
planning approval for change of use and redevelopment, sites at Hooley Lane,
Redhill and Union Street SE1, were sold during the quarter for £11.9m. Following
the quarter end contracts were exchanged for the sale of 3 Mills (including the
Group's properties on Sugar House Lane) for a consideration of £22.5m.
Enquiries in June were running at much higher levels than last year inspiring
confidence that occupancy and the total rent roll will continue to improve over
forthcoming periods.
Portfolio
Overall occupancy increased during the quarter from 83.8% to 84.3%. This measure
includes properties undergoing refurbishment (Barley Mow, Enterprise and
Clerkenwell) as well as 3 Mills. It also includes (at the quarter end) The
Quadrangle which was only 77% let at the time of its acquisition. Excluding
these properties, the occupancy of the like-for-like portfolio increased from
88.9% to 90%.
A similar pattern can be seen in the rent roll. During the quarter this
increased by 1.8% from £38.09m at 31 March 2004 to £38.77m. Of this total
increase of £0.68m, £0.33m reflected the acquisition of The Quadrangle offset by
a reduction of £0.18m at Clerkenwell as this was vacated pending refurbishment.
The balance of £0.53m reflects growth in the like-for-like rent roll in the
quarter. This increase is attributable principally to improvements in occupancy.
As a result, average rents of the like-for-like portfolio have increased
marginally to £8.55 per sq. ft.
One acquisition and two disposals were made in the quarter. Details are given
below: -
Name of Description Acquisition/Sale Annual
Property Price Income
£000
-----------------------------------------------------------------------------
Acquisition:
The
Quadrangle, 26,000 sq. ft business £4.64m 328.0
Fulham, SW6 centre (26 units)
Disposals:
Hooley Lane,
Redhill Land for development £10.0m NIL
Union Street
Site, SE1 Land for development £1.88m 12.0
The acquisition of The Quadrangle has provided the Group with a presence in
Fulham where we have long sought better representation.
Full details of the disposals at Hooley Lane and Union Street were given in the
Group's Annual Report and Accounts 2004. In brief, following the grant of
planning consents for change of use and development, these sites were sold to
residential developers. Substantial pre-tax internal rate of returns of 49%
(Hooley) and 23% (Union Street) were achieved on these properties.
Financial Review
Key statistics and indicators may be summarised as:
Quarter to Year to Quarter to
30 June 2004 31 March 2004 30 June 2003
Trading gross profit:
turnover 73% 72% 72%
Trading operating profit:
turnover 59% 58% 57%
Trading PBT: turnover 26% 28% 28%
EPS per share (pence) 15.1 65.7 14.4
NAV per share (£) 18.29 18.43 15.22
Interest cover 1.80 1.97 1.92
Trading interest cover 1.79 1.91 1.91
Gearing 101% 103% 99%
Available facilities (£m) 20.5 15.5 60.5
Trading operations exclude profits and losses on disposal of investment
properties and other exceptional items.
As may be seen, trading ratios (Trading gross profit: turnover, Trading
operating profit: turnover and Trading PBT: turnover) remain consistent with
previous periods. EPS per share is up 4.9% on the comparable period in the
previous year.
Net asset value per share reduced by 14 pence over the quarter from £18.43 to
£18.29, despite recording a £2.43m profit attributable to shareholders. This
reduction was caused by two factors. Firstly, during the quarter two properties
(Hooley Lane and Union Street) were sold. These sales were for consideration
close to the 31 March 2004 book value (following revaluation) and so the surplus
on disposal was small (£23,000). However, the surplus on original cost was
£8.35m and a tax charge of £2.49m arose, £7,000 of which was taken to the P & L
account with the balance being treated as a reserves adjustment. As a result, as
may be seen from the Statement of Total Recognised Gains and Losses, the net
movement in reserves over the period after taking account of the retained profit
for the period was small (a marginal reduction of £51,000). Secondly, during the
period 130,000 new shares were issued; 80,000 on conversion of loan stock at £5
stock per share and 50,000 on exercise of an option at £3.40 per share.
Following the quarter end a revised facility agreement was exchanged with
National Westminster Bank increasing the bank's facility from £100m to £150m and
renewing the term of this enlarged facility to a five year period. This
increased the available facilities to £70.5m.
Occupancy and Trading Statistics
The Group's key statistics relating to its trading operations are given in the
table below:
30 June 31 March
2004 2004
----------------------------------------------------------------------
Number of estates 101 102
Total floorspace at end of period (sq. ft.)
of which: 5,335,073 5,316,951
Like for like portfolio (sq. ft.) 4,763,456
Net Acquisitions/Disposals (sq. ft.) 26,012
3 Mills and developments (sq. ft.) 545,605
Lettable units (number) 4,584 4,547
Annual rent roll of occupied units (£) 38,766,883 38,091,471
Average rent (£/sq. ft) 8.62 8.55
Average rent of like-for-like portfolio (£/sq. ft) 8.55 8.53
Occupancy overall 84.3% 83.8%
Occupancy of like-for-like portfolio 90.0% 88.9%
Comparisons from period to period may be distorted by acquisitions, disposals
and transfers. The like-for-like portfolio is defined as those properties,
excluding 3 Mills (which due to the short term nature of lettings of studio
space has a volatile occupancy rate which can obscure overall patterns), that
have been held throughout the year to date and which are not subject to
refurbishment/redevelopment programmes.
Prospects
The Group continues to improve occupancy levels, and enquiry levels continue at
higher levels than a year ago. Excluding development schemes, occupancy should
continue to improve. It is when the Group is working at a full effective
occupancy level of 90% to 95% that rental growth can be achieved and that the
rent review/ lease renewal programme produces greater returns.
In the current quarter the Group expects to conclude further acquisitions, and
by the half year stage to have achieved half of its £65m target acquisition
programme for the year. In doing so it will continue to consolidate its position
as the leading provider of space to SMEs in London and the South East. Further
disposals are expected to be completed in the quarter.
The Group is currently on track to meet market expectations for the year.
Consolidated Profit and Loss Account
for the 3 months ended 30 June 2004
Audited Unaudited 3 months ended 30 June
year ended
31 March
----------------------------------------------------------------------------------------
2004 Trading Other Total Total
Operations Items
2004 2003
£000 Notes £000 £000 £000 £000
----------------------------------------------------------------------------------------
51,068 Turnover - continuing 2 13,404 - 13,404 11,912
operations
(14,229) Rent payable and (3,597) - (3,597) (3,383)
direct costs
----------------------------------------------------------------------------------------
36,839 Gross profit 9,807 - 9,807 8,529
(7,145) Administrative expenses (1,932) - (1,932) (1,698)
----------------------------------------------------------------------------------------
29,694 Operating profit - 7,875 - 7,875 6,831
continuing operations
1,009 Surplus on disposal of - 23 23 27
investment property
45 Interest receivable 3 18 - 18 11
(15,628) Interest payable and 4 (4,407) - (4,407) (3,582)
similar charges
----------------------------------------------------------------------------------------
15,120 Profit on ordinary 3,486 23 3,509 3,287
activities before
taxation
(4,587) Taxation on profit on 5 (1,071) (7) (1,078) (987)
ordinary activities
----------------------------------------------------------------------------------------
10,533 Profit attributable to 6 2,415 16 2,431 2,300
shareholders
(4,981) Dividends - - - -
----------------------------------------------------------------------------------------
5,552 Retained for the 2,415 16 2,431 2,300
period
----------------------------------------------------------------------------------------
65.7p Basic earnings per 7 15.0p 0.1p 15.1p 14.4p
share
63.9p Diluted earnings per 7 14.7p 0.1p 14.8p 14.1p
share
=========================================================================================
Statement of Total Recognised Gains and Losses
------------------------------------------------------------------------
Audited Unaudited
year ended 3 months ended
31 March 30 June
------------------------------------------------------------------------
2004 2004 2003
£000 £000 £000
------------------------------------------------------------------------
10,533 Profit for the financial period 2,431 2,300
49,699 Unrealised surplus on revaluation - -
of investment properties
(1,215) Taxation on valuation surpluses (2,482) -
realised on sale of properties
------------------------------------------------------------------------
59,017 Total recognised (losses)/gains (51) 2,300
relating to the financial period
========================================================================
Note of Historical Cost Profits and Losses
----------------------------------------------------------------------
Audited Unaudited 3 months
year ended ended 30 June
31 March
----------------------------------------------------------------------
2004 2004 2003
£000 £000 £000
----------------------------------------------------------------------
15,120 Reported profits on ordinary 3,509 3,287
activities before taxation
4,408 Realisation of property revaluation 8,324 -
gains/(losses) of previous years
(1,215) Taxation on valuation surpluses (2,482) -
realised on sale of properties
----------------------------------------------------------------------
18,313 Historical cost profit on ordinary 9,351 3,287
activities before taxation
======================================================================
8,745 Historical cost profit for the 8,273 2,300
period retained after taxation and
dividends
======================================================================
Consolidated Balance Sheet
as at 30 June 2004
-------------------------------------------------------------------------
Audited Unaudited 30 June
31 March
-------------------------------------------------------------------------
2004 Notes 2004 2003
(Restated) £000 (Restated)
£000 £000
-------------------------------------------------------------------------
Fixed Assets
Tangible assets
626,060 Investment properties 8 621,613 509,789
3,654 Other fixed assets 3,639 3,368
-------------------------------------------------------------------------
629,714 625,252 513,157
-------------------------------------------------------------------------
Current Assets
6,795 Debtors 9 14,019 7,292
1,150 Investments 10 3,259 1,053
181 Cash at bank and in hand 122 765
-------------------------------------------------------------------------
8,126 17,400 9,110
(30,942) Creditors: amounts falling 11 (36,707) (31,129)
due within one year
=========================================================================
(22,816) Net current liabilities (19,307) (22,019)
-------------------------------------------------------------------------
606,898 Total assets less current 605,945 491,138
liabilities
(305,756) Creditors: amounts falling 12 (303,943) (243,036)
due after more than one
year (including Convertible
Loan Stock)
(5,483) Provision for liabilities 14 (5,714) (4,311)
and charges
-------------------------------------------------------------------------
295,659 296,288 243,791
=========================================================================
Capital and reserves
1,673 Called up share capital 15 1,686 1,670
42,912 Share premium account 16 43,469 42,783
209,565 Revaluation reserve 16 201,241 164,274
47,715 Profit and loss account 16 55,988 41,270
(6,206) Investment in own shares 17 (6,096) (6,206)
-------------------------------------------------------------------------
295,659 Shareholders' funds - 18 296,288 243,791
equity interests
=========================================================================
£18.43 Net asset value per 7 £18.29 £15.22
share
-------------------------------------------------------------------------
£17.72 Diluted net asset value 7 £17.69 £14.75
per share
=========================================================================
Consolidated Cash Flow Statement
for the 3 months ended 30 June 2004
------------------------------------------------------------------------------
Audited year Unaudited 3 months
ended 31 March ended 30 June
------------------------------------------------------------------------------
2004 Notes to 2004 2003
Cash Flow
£000 £000 £000
------------------------------------------------------------------------------
31,615 Net cash inflow from 1 9,948 8,387
operating activities
(15,692) Return on investments and 2 (4,006) (3,198)
servicing of finance
(4,110) Taxation (1,220) (1,100)
(70,155) Capital (expenditure)/ 2 (19) (2,924)
proceeds - net
(4,952) Equity dividends paid - -
------------------------------------------------------------------------------
(63,294) Net cash inflow/(outflow) 4,703 1,165
before use of liquid
resources and financing
1,959 Management of liquid 2 (2,109) 2,056
resources
59,720 Financing 2 (1,330) (2,912)
------------------------------------------------------------------------------
(1,615) Net cash inflow/(outflow) 3 1,264 309
------------------------------------------------------------------------------
Reconciliation of net cash
flow to movement in net
debt
(1,615) Increase/(decrease) in 1,264 309
cash
(1,959) Increase/(decrease) in 2,109 (2,056)
liquid resources
(59,766) Inflow/(outflow) from 1,813 2,954
movements in debt
financing
------------------------------------------------------------------------------
(63,340) Changes in net debt 3 5,186 1,207
resulting from cash flows
(242,425) Net debt at beginning of (305,765) (242,425)
period
------------------------------------------------------------------------------
(305,765) Net debt at period end (300,579) (241,218)
==============================================================================
Notes to the cash flow statement
for the 3 months ended 30 June 2004
1. Reconciliation of operating profit to operating cash flows
----------------------------------------------------------------------------------
Audited year Unaudited 3 months
ended 31 March ended 30 June
----------------------------------------------------------------------------------
2004 2004 2003
£000 £000 £000
----------------------------------------------------------------------------------
29,694 Operating profit 7,875 6,831
585 Depreciation charges 174 133
- Profit on sale of tangible - (3)
fixed assets
56 (Increase)/decrease in (2,620) (382)
debtors
1,280 Increase in creditors 4,519 1,808
----------------------------------------------------------------------------------
31,615 9,948 8,387
==================================================================================
2. Analysis of cash flow
------------------------------------------------------------------------------
Audited year Unaudited 3 months
ended 31 March ended 30 June
------------------------------------------------------------------------------
2004 Notes to 2004 2003
£000 cash flow £000 £000
------------------------------------------------------------------------------
Returns on investments and
servicing of finance
45 Interest received 18 11
(15,737) Interest paid (including (4,024) (3,209)
financing costs)
------------------------------------------------------------------------------
(15,692) Net cash outflow (4,006) (3,198)
==============================================================================
Capital expenditure
(81,934) Purchase of tangible (6,850) (4,225)
fixed assets
28 Net distribution of own 110 28
shares
11,751 Sale of tangible fixed 6,721 1,273
assets
------------------------------------------------------------------------------
(70,155) Net cash outflow (19) (2,924)
==============================================================================
Management of liquid
resources
1,959 (Increase)/decrease in 3 (2,109) 2,056
short-term deposits
------------------------------------------------------------------------------
1,959 Net cash (outflow)/ (2,109) 2,056
inflow
==============================================================================
Financing
220 Issue of ordinary share 170 88
capital
59,500 (Repayment)/drawdown of 3 (1,500) (3,000)
bank loans
------------------------------------------------------------------------------
59,720 Net cash (outflow)/ (1,330) (2,912)
inflow
==============================================================================
3. Analysis of net debt
----------------------------------------------------------------------------
At 1 April Cash flow Non-cash At 30 June
2004 £000 Items 2004
£000 £000 £000
----------------------------------------------------------------------------
Cash at bank and in hand 181 (59) - 122
Bank overdrafts (1,340) 1,323 - (17)
----------------------------------------------------------------------------
(1,159) 1,264 - 105
Debt due after one
year:
11% Convertible Loan (2,900) - 400 (2,500)
Stock
11.125% First Mortgage
Debenture (12,500) - - (12,500)
11.625% First Mortgage (7,000) - - (7,000)
Debenture
Bank loans (284,500) 1,500 - (283,000)
Less cost of 1,144 - (87) 1,057
raising finance
----------------------------------------------------------------------------
(305,756) 1,500 313 (303,943)
Short-term deposits 1,150 2,109 - 3,259
----------------------------------------------------------------------------
Total (305,765) 4,873 313 (300,579)
============================================================================
1. Basis of Preparation
The unaudited financial information contained in this quarterly report does not
comprise statutory accounts within the meaning of Section 240 of the Companies
Act 1985. The statutory accounts for the year ended 31 March 2004 included an
unqualified report of the auditors. The Group's unaudited accounts for the
period ended 30 June 2004 have been prepared on the basis of the accounting
policies set out in the Annual Report and Accounts for the year ended 31 March
2004, save for the implementation of UIFT 38 as described in Note 17.
2. Segmental Analysis
-----------------------------------------------------------------------
Audited Year Unaudited 3 months
ended 31 March ended 30 June
2004 2004 2003
£000 £000 £000
-----------------------------------------------------------------------
39,504 Rental Income 10,721 9,480
9,059 Service charge and other 2,398 2,099
recoveries
2,505 Services fees, commissions, and 285 333
sundry income
-----------------------------------------------------------------------
51,068 13,404 11,912
=======================================================================
3. Interest receivable
-----------------------------------------------------------------------
Audited Year Unaudited 3 months
ended 31 March ended 30 June
-----------------------------------------------------------------------
2004 2004 2003
£000 £000 £000
-----------------------------------------------------------------------
30 Short-term deposits 17 11
15 Other 1 -
-----------------------------------------------------------------------
45 18 11
=======================================================================
4. Interest payable and similar charges
---------------------------------------------------------------------
Audited Year Unaudited 3 months
ended 31 March ended 30 June
---------------------------------------------------------------------
2004 2004 2003
£000 £000 £000
---------------------------------------------------------------------
319 11% Convertible Loan Stock 80 80
2011
1,391 11.125% First Mortgage 347 347
Debenture Stock 2007
814 11.625% First Mortgage 204 204
Debenture Stock 2007
14,210 Bank and other interest on 3,992 3,157
amounts wholly repayable
within five years*
---------------------------------------------------------------------
16,734 4,623 3,788
(1,106) Interest capitalised on (216) (206)
development properties
---------------------------------------------------------------------
15,628 Charged to profit and loss 4,407 3,582
account
=====================================================================
* includes amortisation of cost of raising finance
5. Taxation
-----------------------------------------------------------------------
Audited year Unaudited 3 months
ended 31 March ended 30 June
-----------------------------------------------------------------------
2004 2004 2003
£000 £000 £000
-----------------------------------------------------------------------
Current tax:
3,534 UK corporation tax on profit 847 783
for the period
(323) Adjustment in respect of - -
previous periods
-----------------------------------------------------------------------
3,211 Total current tax 847 783
-----------------------------------------------------------------------
Deferred tax:
1,376 Origination and reversal of 231 204
timing differences
-----------------------------------------------------------------------
4,587 Tax on profit on ordinary 1,078 987
activities
=======================================================================
6. Dividends
------------------------------------------------------------------------
Audited year Unaudited 3 months
ended 31 March ended 30 June
------------------------------------------------------------------------
2004 2004 2003
£000 £000 £000
------------------------------------------------------------------------
1,653 Interim dividend per ordinary - -
share
3,321 Final dividend per ordinary - -
share
7 Under provision in prior year -
------------------------------------------------------------------------
4,981 - -
========================================================================
7. Earnings per share and net assets per share
The following table shows a reconciliation of profits used in calculating
earnings per share.
------------------------------------------------------------------------------------------------------------
Audited year ended 31 March Unaudited 3 months ended 30 June
------------------------------------------------------------------------------------------------------------
Profit Earnings per Profit Profit Earnings per Earnings per
share share share
2004 2004 2004 2003 2004 2003
£000 Pence £000 £000 Pence Pence
------------------------------------------------------------------------------------------------------------
10,533 65.7 Profit for the period attributable 2,431 2,300 15.1 14.4
to shareholde
(706) (4.4) Other items (16) (19) (0.1) (0.1)
------------------------------------------------------------------------------------------------------------
9,827 61.3 Profit for the period attributable 2,415 2,281 15.0 14.3
to shareholders used for
calculating earnings per
share excluding other items
============================================================================================================
Reconciliation of profit used in calculating diluted earnings per share
------------------------------------------------------------------------------------------------------------
Audited year ended 31 March Unaudited 3 months ended 30 June
------------------------------------------------------------------------------------------------------------
Profit Earnings per Profit Profit Earnings per Earnings per
share share share
2004 2004 2004 2003 2004 2003
£000 Pence £000 £000 Pence Pence
------------------------------------------------------------------------------------------------------------
10,533 Profit for the period attributable 2,431 2,300
to shareholders used for
calculating basic earnings per share
223 Interest saving net of taxation on 48 56
11% Convertible Loan Stock
------------------------------------------------------------------------------------------------------------
10,756 63.9 Profit for the period attributable 2,479 2,356 14.8 14.1
to shareholders used in
calculating the underlying diluted
earnings per share
(706) (4.2) Other items (16) (19) (0.1) (0.1)
------------------------------------------------------------------------------------------------------------
10,050 59.7 Profit for the period attributable 2,463 2,337 14.7 14.0
to shareholders used in
calculating the diluted earnings
per share excluding other items
============================================================================================================
The following table shows a reconciliation of the weighted average number of shares used for calculating the
basic and diluted earnings per share
------------------------------------------------------------------------------------------------------------
Audited year ended Unaudited 3 months ended 30 June
31 March 2004
2004 2003
------------------------------------------------------------------------------------------------------------
16,021,462 Used for calculating basic earnings per 16,053,769 15,984,574
share
227,276 Dilution due to Share Option Scheme 190,022 125,346
580,000 Dilution due to Convertible Loan Stock 500,000 580,000
------------------------------------------------------------------------------------------------------------
16,828,738 Used for calculating diluted earnings per 16,743,791 16,689,920
share
============================================================================================================
Net assets per share have been calculated by dividing net assets of £296,288,000 (2003: £243,791,000) by
16,196,745 (2003: 16,015,675) being the number of shares in issue at 30 June 2004 less investment in own
shares of 667,066 (2003: 689,666).
Diluted net assets per share have been calculated by dividing net assets (as
previously shown) plus £2,500,000 (2003: £2,900,000) for the conversion of the
Convertible Loan Stock by the number of shares as below:
--------------------------------------------------------------------------
Audited year Unaudited 3 months
ended 31 March ended 30 June
--------------------------------------------------------------------------
2004 2004 2003
--------------------------------------------------------------------------
16,733,811 Shares in issue at year-end 16,863,811 16,705,341
(689,666) Less ESOT shares (667,066) (689,666)
580,000 Dilution due to Convertible 500,000 580,000
Loan Stock
227,276 Dilution due to Share Option 190,022 125,346
Scheme
--------------------------------------------------------------------------
16,851,421 16,886,767 16,721,021
==========================================================================
8. Investment properties
--------------------------------------------------------------------------------------------------------------------
Unaudited 30 June
-----------------
Audited Freehold Mainly Freehold Long leasehold Short leasehold Total Total
31 March 2004 2004 2003
£000 £000 £000 £000 £000 £000 £000
--------------------------------------------------------------------------------------------------------------------
505,490 Balance at 1 469,310 85,875 70,875 - 626,060 505,490
April 2004/2003
79,726 Additions during 7,094 218 21 - 7,333 3,657
the period
642 Reclassification - - - - - 642
from other fixed
assets
(9,497) Disposals during (11,780) - - - (11,780) -
the period
49,699 Revaluation - - - - - -
during the
period
--------------------------------------------------------------------------------------------------------------------
626,060 Balance at period 464,624 86,093 70,896 - 621,613 509,789
end
====================================================================================================================
The historical cost
of investment
properties
--------------------------------------------------------------------------------------------------------------------
416,039 Balance at 310,678 53,721 55,510 7 419,916 345,065
period end
====================================================================================================================
Valuation
No valuation of investment properties has been carried out at 30 June 2004. The
valuation shown in the unaudited accounts is based on the independent valuation
at 31 March 2004, plus additions at cost less disposals at value.
9. Debtors
----------------------------------------------------------------------
Audited Unaudited 30 June
31 March
----------------------------------------------------------------------
2004 2004 2003
£000 £000 £000
----------------------------------------------------------------------
Amounts falling due within one year:
4,765 Trade debtors 4,690 4,535
- Deferred consideration on investment 5,000 -
sale
464 Deposits on investment acquisitions - 805
4 Taxation and social security 4 34
1,562 Prepayments and accrued income 4,325 1,918
----------------------------------------------------------------------
6,795 14,019 7,292
======================================================================
10. Investments
Investments of £3,259,000 (2003: £1,053,000) comprise short-term deposits with
an original maturity date of less than three months and tenants' security
deposits.
11. Creditors: Amounts falling due within one year
Audited 31 Unaudited 30 June
March
-----------------------------------------------------------------------
2004 2004 2003
£000 £000 £000
-----------------------------------------------------------------------
1,340 Bank overdraft (secured) 17 -
1,902 Trade creditors 4,092 3,459
2,242 Corporation tax payable 4,351 1,607
1,757 Taxation and social security 4,328 2,776
5,461 Tenants' deposits 5,638 5,179
9,884 Accruals 9,970 9,678
5,035 Deferred income - rent and service 4,990 5,138
charges
3,321 Dividends 3,321 3,292
-----------------------------------------------------------------------
30,942 36,707 31,129
=======================================================================
12. Creditors: Amounts falling due after more than one year
Audited 31 Unaudited 30 June
March
-----------------------------------------------------------------------
2004 2004 2003
£000 £000 £000
-----------------------------------------------------------------------
Long-term borrowings consist of:
Unsecured:
2,900 11% Convertible Loan Stock 2011 2,500 2,900
Secured:
12,500 11.125% First Mortgage Debenture 12,500 12,500
Stock 2007
7,000 11.625% First Mortgage Debenture 7,000 7,000
Stock 2007
283,356 Other secured loans 281,943 220,636
-----------------------------------------------------------------------
305,756 303,943 243,036
=======================================================================
13. Borrowings and financial instruments
i Maturity of financial liabilities
A maturity analysis of loans is shown below:
-----------------------------------------------------------------------
Audited 31 Unaudited 30 June
March
-----------------------------------------------------------------------
2004 2004 2003
£000 £000 £000
-----------------------------------------------------------------------
1,340 Less than one year 17 -
- Between one year and two years - -
- Between two years and three years 83,000 -
304,000 Between three years and four years 219,500 81,500
- Between four years and five years - 160,000
2,900 In five years and more 2,500 2,900
-----------------------------------------------------------------------
308,240 305,017 244,400
(1,144) Less cost of raising finance (1,057) (1,364)
-----------------------------------------------------------------------
307,096 303,960 243,036
=======================================================================
ii Fair value of financial assets and liabilities
Book and fair values of financial assets and liabilities are:
--------------------------------------------------------------------------------------------------
Audited 31 March Unaudited 30 June
--------------------------------------------------------------------------------------------------
Book value Fair value Book Value Fair value
2004 2004 2004 2003 2003
£000 £000 £000 £000 £000
--------------------------------------------------------------------------------------------------
Book Value Fair Value
Primary financial
instruments
(1,340) (1,340) Short-term (17) (17) - -
liabilities
(305,756) (312,196) Long-term (303,943) (310,060) (243,036) (248,560)
borrowing
1,331 1,331 Financial assets 3,381 3,381 1,818 1,818
Derivative financial
instruments
206 (2,639) Interest rate 196 (1,603) 235 (7,433)
collars
--------------------------------------------------------------------------------------------------
(305,559) (314,844) (300,383) (308,299) (240,983) (254,175)
==================================================================================================
The fair value of the interest rate collars have been determined by reference to
market prices and discounted expected cash flows at prevailing interest rates.
All other fair values have been calculated by discounting expected cash flows at
prevailing interest rates. The total fair value adjustment equates to 48.9p per
share (2003: 82.4p) (21.0p (2003: 63.0p) based on diluted share capital).
14. Provision for liabilities and charges
---------------------------------------------------------------------------
Audited 31 Unaudited 30 June
March
---------------------------------------------------------------------------
2004 2004 2003
£000 £000 £000
---------------------------------------------------------------------------
Deferred taxation:
4,107 Balance at 1 April 2004/2003 5,483 4,107
1,376 Deferred tax charge for the period 231 204
---------------------------------------------------------------------------
5,483 Balance at period end 5,714 4,311
===========================================================================
If the investment properties were sold for their revalued amount there would
be a potential liability to corporation tax of £48,175,000 (31 March 2004:
£51,293,000, 30 June 2003: £38,889,000).
15. Share capital
---------------------------------------------------------------------------
Audited 31 Unaudited 30 June
March
---------------------------------------------------------------------------
2004 2004 2003
Number Number Number
---------------------------------------------------------------------------
Authorised:
21,500,000 Ordinary shares of 10p each 21,500,000 21,500,000
===========================================================================
2004 2004 2003
£ £ £
---------------------------------------------------------------------------
Issued:
1,673,381 Fully paid ordinary shares of 1,686,381 1,670,534
10p each
===========================================================================
No charge to profit and loss has been made in respect of share options (under
UITF Abstract 17 (revised 2003) - Employee Share Schemes) since all executive
share options are granted at market price on the date of grant and SAYE share
options are exempt under the UITF.
16. Other reserves
-----------------------------------------------------------------------
Audited 31 Unaudited 30
March June
-----------------------------------------------------------------------
2004 2004 2003
£000 £000 £000
-----------------------------------------------------------------------
(a) Share premium account
42,697 Balance at 1 April 2004/2003 42,912 42,697
215 Additions 557 86
-----------------------------------------------------------------------
42,912 Balance at period end 43,469 42,783
=======================================================================
(b) Revaluation reserve
Property valuation surplus:
164,274 Balance at 1 April 2004/2003 209,565 164,274
(4,408) Disposals during the period (8,324) -
49,699 Revaluation adjustment - -
-----------------------------------------------------------------------
209,565 Balance at period end 201,241 164,274
=======================================================================
(c) Profit and loss account
38,970 Balance at 1 April 2004/2003 47,715 38,970
5,552 Retained profit for the period 2,431 2,300
4,408 Transfer from revaluation reserve 8,324 -
(1,215) Taxation on valuation surpluses (2,482) -
realised on sale of properties
-----------------------------------------------------------------------
47,715 Balance at period end 55,988 41,270
=======================================================================
17. Investment in own shares
The Company has established an Employee Share Ownership Trust (ESOT) to purchase
shares in the market for distribution at a later date in accordance with the
terms of the 1993 and 2000 Share Option Schemes. The shares are held by an
independent trustee and the rights to dividend on the shares have been waived.
At 30 June 2004, the Trust held 667,066 shares (2003: 689,666) with a nominal
value of £66,707 (2003: £68,967) and a book value of £6,096,157 (2003:
£6,205,627). At 30 June 2004 the market value of the shares held by the Trust
was £12,190,631. 665,930 shares held by the Trust are subject to option awards.
In accordance with UITF Abstract 38 - Accounting for ESOP trusts, investment in
own shares has been reclassified as a deduction from shareholders' funds giving
rise to restatement of 2003/04 comparatives.
18. Reconciliation of movements in shareholders' funds
----------------------------------------------------------------------
Audited 31 Unaudited 30 June
March
----------------------------------------------------------------------
2004 2004 2003
(restated) (restated)
£000 £000 £000
----------------------------------------------------------------------
10,533 Profit for the financial period 2,431 2,300
(4,981) Dividends - -
49,699 Unrealised surplus on revaluation - -
of properties
(1,215) Taxation on valuation surpluses (2,482) -
realised on sale of properties
220 Issue of shares 570 88
28 Net distribution/(purchase) of 110 28
own shares
----------------------------------------------------------------------
54,284 Net addition to shareholders' 629 2,416
funds
241,375 Opening shareholders' funds 295,659 241,375
----------------------------------------------------------------------
295,659 Closing shareholders' funds 296,288 243,791
======================================================================
19. Capital commitments
At the period end the estimated amounts of commitments for future capital
expenditure not provided for were:
----------------------------------------------------------------------
Audited 31 Unaudited 30 June
March
----------------------------------------------------------------------
2004 2004 2003
£000 £000 £000
----------------------------------------------------------------------
8,166 Under contract 2,115 22,503
15,391 Board authorised but not contracted 20,227 4,116
======================================================================
20. Post Balance Sheet Events
Following the quarter end the Company exchanged contracts for the purchase of
Southbank House, London SE1 for a consideration of £16.0m and for the sale of 3
Mills for a consideration of £22.54m.
21. Quarterly statement
This statement was approved by the Board on 6 August 2004. Copies of this
statement will be dispatched to shareholders on Monday 9 August 2004 and will be
available from the Group's registered office at Magenta House, 85 Whitechapel
Road, London E1 1DU from 9.00am on that day.
This information is provided by RNS
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