RNS Number:0607M
Warner Estate Holdings PLC
09 June 2003
WARNER PERFORMANCE BOOSTED BY SHOPPING CENTRE ACQUISITIONS
Warner Estate Holdings PLC ("Warner Estate"), the property investment company
has today announced its preliminary results for the year ended 31 March 2003.
Highlights
* #602m property under management - annualised rent roll of #47m
* Formation of #223m Agora Shopping Centre Fund with Bank of Scotland
* Pre tax profits up 9% at #16.6m (2002: #15.2m)
* Recurring revenue profits up 28% to #14.1m (2002: #11.0m)
* Adjusted earnings per share up 6% to 26.40p (2002: 24.98p)
* Increase in adjusted NAV of 4% to 439p (March 2002: 423p)
* Increase in triple net NAV* to 414p (2002: 403p) (*adjusted to
deferred tax and fair value debt)
* Gearing down to 86% (2002: 116%)
* Reduction in voids to 3% from 5% in 2002
* 32nd year of unbroken dividend growth
* Dividend raised by 7% to 16p (2002: 15p)
Philip Warner, Executive Chairman of Warner Estate commented,
" The Company has made significant progress this year. Our strategy is to
manage and add value to large portfolios of property assets. We have formed our
first fund to demonstrate the success of this strategy. With our partners at
Bank of Scotland we assembled a #223 million portfolio of shopping centres in
the Northwest, which, with our active management skills, offers excellent
potential for rental and capital growth. We look forward to launching further
funds targeting other sectors of the property market.
Shareholders have again been rewarded with an increase in the dividend. Our
achievement of unbroken dividend growth over 32 years covering widely varying
market conditions is a source of considerable pride.
Looking to the future, we are confident that our strategy will continue to
deliver good results."
-ends-
Date: 9 June 2003
For further information contact:
Warner Estate Holdings PLC City Profile Group
Philip Warner, Chairman Simon Courtenay
Richard Moore, Property Director Ed Senior
Peter Collins, Finance Director 020-7448-3244
020-7907-5100
Web: www.warnerestate.co.uk
CHAIRMAN'S STATEMENT
This year has seen substantial progress in the execution of the Group's stated
strategy. In particular, we have laid a cornerstone for the future with the
formation of our first alliance, the #223 million Agora Shopping Centre Fund,
owned 50/50 with Bank of Scotland. Furthermore, property assets under
management, both wholly owned and in joint venture, increased from #463 million
to #602 million, comfortably exceeding the initial target of #500 million
referred to last year.
RESULTS OVERVIEW
A strong set of results has been achieved over the course of a challenging
twelve months against a background of considerable economic and political
uncertainty.
Recurring revenue, the measure of core maintainable income introduced last year,
saw further excellent growth with profits before tax rising by 28 per cent to
#14.1 million (2002: #11.0 million) and adjusted recurring earnings per share by
21 per cent to 22.3p (2002: 18.4p). This measure provides shareholders with a
clear indicator of the Group's underlying robustness.
Pre-tax profits were #16.6 million (2002: #15.2 million) and adjusted earnings
per share 26.40p (2002: 24.98p). Revenue profits before tax, which exclude the
effect of fixed asset disposals, were #15.0 million (2002: #13.1 million) and
adjusted revenue earnings per share 23.32p (2002: 21.42p). Basic earnings per
share were 27.41p (2002 : 22.72p).
Net asset value per share rose from 423p to 439p and triple net asset value,
which adjusts for deferred tax and the fair value of debt, from 403p to 414p.
These figures do not include the potential benefit from Stamp Duty exemption for
properties in "disadvantaged areas".
The total return of 12.0 per cent made by our benchmarked property assets again
placed us in the top quartile of their benchmark, the IPD All Fund, where the
return was 8.7 per cent. This was a laudable performance in a very active year,
during which six investment properties were purchased at a cost of #173 million,
including three purchased in joint ventures for #156 million. After disposals,
which realised a profit of #1.2 million, the valuation of the 81 wholly owned
investment properties was #334 million at the year end (March 2002: 93
properties and #403 million). The Agora joint venture will also be benchmarked
against an appropriate fund and I shall report to shareholders on its
performance next year.
A more detailed analysis of the period will be found in the Reviews that follow
from the Property Director and the Finance Director.
The Board recommends a further rise in dividends per share from 15.0p to 16.0p,
more than double the current rate of inflation and the Company's 32nd successive
increase. Part of our objective of maximising total return for shareholders is
by dividend growth from an improving earning stream, of which this rise and
these results provide a good illustration. The dividend is covered 1.4 times by
recurring revenue earnings and 1.5 times by revenue earnings. If approved at the
Annual General Meeting, the final dividend per share of 8.25p will be paid on 29
August 2003 to shareholders on the register at close of business on 1 August
2003.
STRATEGY
As indicated above, good progress has been made with strategy. Whilst the proof
of long term performance from alliances will come in future years, the bases for
that performance are being put into place. The quantum of property under
management continues to expand towards the current year's target of #750
million, driving forward income from both our investment portfolio and the asset
management of jointly owned property. The annualised rent roll at 31 March 2003,
including that under management, was #47 million (2002 : #37 million).
Research and risk analysis will continue to determine the sector allocation for
expansion, taking account of both economic and market conditions, and we are
seeking opportunities in the distribution sector. Three more shopping centres in
the Northwest of England were purchased during the year, in joint venture with
the Bank of Scotland, which, with the addition of the three from our own
portfolio, formed our first alliance, the Agora Shopping Centre Fund. We look
forward to launching a further alliance this year, based upon our portfolio of
regional offices. It remains our strategy to seek property and partners for
further alliances, in addition to maintaining our core portfolio. We also
engage in development as part of our asset management process and shareholders
should expect this to increase.
Adjusted gearing (pre FRS 19) has fallen, as anticipated last year, from 116 per
cent to 87 per cent at the year end. If the element of non-recourse debt is
excluded, the figure is 61 per cent (March 2002: 89 per cent). It is not
intended that gearing should exceed 100 per cent while current economic
uncertainty persists. A prudent hedging policy remains in place. The debt in the
joint ventures is also non-recourse and further detail will be found in the
Finance Review.
PROSPECTS
The property investment market remains strong, fuelled by low interest rates
rather than direct institutional allocation. Property has demonstrated its
strength as an alternative asset class but the very weakness of equities may
attract funds to that class. Institutions have tended to increase their exposure
to property through vehicles such as limited partnerships and it is down this
alliance route that the Group is confident of making progress. The underlying
property market is not so promising overall, with weak occupational demand and
reduced prospects for rental growth in the short term. However, it is in such a
market that opportunities arise and I am confident that your Company's strategy
of risk-averse expansion and the skills of our professional team will provide
continuing growth over the forthcoming year.
Philip Warner
Chairman
PROPERTY REVIEW
This was a challenging year by any standard. Significant movements in ownership,
predominantly focussed on the retail sector, resulted in some #4.6 billion of
assets in Shopping Centres alone changing hands. Considerable demand led to
falling yields and doubts about the quality of some of the stock on offer. We
resisted the temptation to pay too much and selected stock suitable for our
particular niche in the Northwest of England.
Again in Retailing, some #2.6 billion of assets in Retail Warehousing changed
hands. Critical mass is of predominant importance in this sector, which,
together with restrictions in supply, means that breaking into this market
requires substantial investment.
Turning to Offices, values in London were badly affected, primarily due to the
decline in the financial services sector in the City, and the downturn impacted
further afield in the Southeast and Thames Valley. Here again we have selected
stock for our own niche. Our view is that there are real opportunities for
growth outside London, particularly in the big eight regional centres. These do
not suffer from such major employment shifts and offer far more stable
prospects.
In the Industrial sector, we see opportunity in the major distribution centres
from which we expect to create a further alliance vehicle. While others may
look towards Europe for their expansion, such moves benefit us as we remain
focussed on the UK. Many of our ideas and concepts can be applied to this
sector. Only the lack of stock is holding us back.
This year has seen further proof of the polarisation occurring in the market.
The major investment funds see the pure fund manager role as theirs, leaving
vacant the position of asset manager. We clearly see ourselves occupying this
position and have developed a team which is research led and understands the
purpose of partnership. Our vision and application will give us a competitive
edge in the building of a good track record.
The launch of the Agora Shopping Centre Fund in March 2003 takes pride of place
in this year of achievement. Our determination to find solutions was one of the
major factors which forged our link with Bank of Scotland Corporate Banking. We
expect this to be the first of many similar alliances, of which our Regional
Office portfolio, which we continue to work upon, will form one. We now clearly
differentiate between our managed funds and our core portfolio, each having its
own dedicated team.
This set of results is a credit to our one team approach of marrying property
and financial talents. We again achieved a top quartile performance with IPD
which is highly pleasing.
KEY STATISTICS
Cushman & Wakefield Healey & Baker continue in their role as our valuers.
Total 2002/03 Owned 2002/03 2001/02 2000/01 1999/2000
and under Owned* Owned* Owned* Owned*
management
Capital Value #602m #334m #403m #290m #230m
Annualised rent roll #47.0m #29.0m #32.5m #22.6m #19.2m
Initial Yield 7.79% 8.68% 8.06% 7.90% 8.35%
Average Unexpired 10.4 yrs 12.4 yrs 11.5 yrs 10.3 yrs 11.9 yrs
Lease Term
Void Rate 3% 3% 5% 8% 9%
Number of properties 101 81 93 90 89
Average Lot Size #6.0m #4.1m #4.3m #3.2m #2.6m
* Investment properties only
Property Owned
We have seen an overall revaluation surplus of #3.7m which, when taken together
with capital profits of #1.2m and unrealised surpluses of a further #1.2m on
the disposal into the Agora joint venture of the Group's shopping centres,
brings the total value uplift on the portfolio to #6.1m, an increase of 1.8%.
This has been mainly due to the improvement obtained from our retail and
regional office stock.
A significant number of properties fall into the category of 'Disadvantaged
Areas' for Stamp Duty. We have taken the view there are anomalies about the
boundaries which require clarification prior to increasing the valuation. This
will be reported at our interims.
This year saw another substantial increase in our annualised rent roll under
management plus a continuing fall in the voids across the portfolio to just 3%
overall.
AGORA SHOPPING CENTRE FUND (A joint venture with Bank of Scotland)
VALUE #223M INITIAL YIELD 7.0%
No. Tenants Area Income Value
Shopping Centres 6 325 142,554m #15.69m #222.6m
Our North West Shopping Centre fund (Agora) was launched in March 2003. We
selected this region following research, which identified the presence of a
unique loyalty from the community to its shopping centres and a lack of major
competition other than Manchester itself and Trafford Park. The intention is to
build a stable of centres which represent a cross section of the region. In
each case the centre will be or will have the potential to be dominant in the
location. They must complement not compete and have the capacity for our team
to add value.
BOLTON 29,748M2 (320,000 SQ. FT)
Developed in 1987 by Grosvenor Estate, the Market Place has the largest enclosed
market in the North West. It is the shopping heart of Bolton with 42 tenants
including Debenhams, Littlewoods, Next, Boots and River Island plus 680 car
parking spaces. We are working with the Borough Council to improve the vitality
of the centre by expanding the retail options and we are shortly to announce an
architectural competition for its design and reconfiguration.
PRESTON FISHERGATE 33,445 M2 (360,000 SQ. FT)
Located at the centre of the transport link for the town, the site was first
developed in 1986. It is unique in that it has a large single level car park of
736 spaces in the town and a total area of over 10 acres. Of the 40 tenants
there are again some impressive names, including Debenhams, T J Hughes, T K
Maxx, Dixons and Argos. There is scope for further retail space in Preston and
the site lends itself to improvements which are now being assessed.
MIDDLETON 25,300 M2 (272,300 SQ. FT)
The second of Sam Chippendale's Arndale centres still retains many of the
fundamental features which brought its success in the 1970s and 80s. It is
situated on the northern hub of the bus transportation route for the region. In
tenant size this is the largest of our centres with some 81 tenants with major
names, such as Tesco, Boots, W H Smith, Argos and Wilkinsons. Configuration of
the units is too small for today's retailers. The Greater Manchester Passenger
Transport Authority together with the Borough Council wish to remodel the bus
station. We are assisting them with these plans which in turn will create the
opportunity for us to develop more and larger ground floor units.
ELLESMERE PORT, PORT ARCADES 24,560 M2 (264,361 SQ. FT)
Phase I is totally let to Wilkinsons on the ground floor with Mecca Bingo on the
first. Phase II is anchored by JJB Sports and Poundland, with three of the
remaining four units all under offer. Although the development programme is
slightly behind our schedule, it is still on time for our tenants to commence
their fitting out programmes. With no other large space units available in the
Centre we have an application for a 1,500 m2 (15,000 sq. ft) unit and are
analysing a potential Phase III to satisfy this demand. Discussions are also
ongoing with the local authority over a Phase IV link with the proposed new Asda
superstore. It is also satisfying to see the results of recent rent reviews
which demonstrate continuing rental growth.
SALE - THE SQUARE 19,364 M2 (208,432 SQ. FT.)
The programme of development here is on time with shop fitting already underway
for Quality Save to be followed by the new Peacocks and Wilkinson units. We are
reviewing plans for enlarging other units in line with tenant demand as we have
only one vacant unit of good size available. Again, the general level of
rentals has improved across the board with settlement of the rent reviews with
major tenants such as Boots, Thomas Cook and Specsavers improving the whole
value of the Centre.
CAVERN WALKS 10,137 M2 (109,820 SQ. FT)
Although the smallest of our Centres this in rental terms has achieved
substantial percentage growth due to the letting of two floors of offices to
Direct Line at #230k per annum and one floor to solicitors, Davies Wallis
Foyster, at #75k per annum. A new reconfigured shop unit of 200m2 (2,000 sq.
ft.) has been structured for Cricket Designwear. A further unit of 400m2 (4,000
sq. ft.) has been identified and negotiations are at an advanced stage with
another well known fashion operator. We have also recently let Unit 15 to
Dantra Limited t/a Cavern Kids which is in line with our desired tenant profile
for the Centre. The intention is to build on the Cavern's image and to increase
the high fashion content. In this manner we shall ensure it has its own place
in the retail hierarchy of Liverpool, a location we hope will be further
enhanced by Liverpool's successful nomination as European Capital of Culture
2008.
REGIONAL OFFICE PORTFOLIO VALUE #108M (of which #26.6m is held in trading
stock)
No. Tenants Area Income Value
Offices 6 49 62,301 sq. m #9.17m #107.6m
The office sector of the property market has had a particularly difficult time
over the last 12 months. We fortunately anticipated at an early stage the
significant problems likely to manifest themselves in the City market, Docklands
and the M4 corridor. Research indicates many of the known regional office
markets are not subjected to such major movements in value. In the big eight
regional centres, tenants make their choice of location and tend to remain.
Good relationships are essential for each party. By building a portfolio which
spans the breadth of the UK we shall create a growth vehicle which in good times
may perform less well than, say, the City but in a slower market still has
potential for increase.
The following properties are held in the Warner Regional Office portfolio for
the purpose of re-sale to an alliance with an appropriate partner:
EDINBURGH - APEX 123 9,044 M2 (94, 683 sq. ft.)
This modern air-conditioned office is located within the Haymarket area of
central Edinburgh which has been improved significantly in recent years with The
Pension Trust, IACS and the Inland Revenue taking new buildings. There are five
tenants with average lease expiries in 12 to 15 years. Opportunities exist here
for enhancing value by lease re-gearings.
BIRMINGHAM, SOLIHULL - SAPPHIRE COURT 8,040 M2 (86,541 sq. ft.)
This property dates from 1975 but was refurbished in 1997. It has a secure
income from excellent tenants of significant covenant strength, 48% of which is
Government backed, with lease expiries in 2013 and 2014.
KINGSTON - LEVER & SURREY HOUSE 14,251 M2 (153,396 sq. ft.)
These properties occupy a key island site in central Kingston. Lever House is
well let to Lever Faberge Ltd, part of Unilever PLC until 2072 and has recently
been totally refurbished to provide Grade A accommodation. Lever Faberge also
lease a 16,000 sq. ft. floor of Surrey House and in total account for 41% of the
rental income. There are a further nine tenants at this property offering
excellent opportunities for asset management initiatives to enhance value.
GLASGOW - BATH STREET 8,183M2 (88,084 sq. ft.)
This significant office building within Glasgow's central business district
provides well specified flexible accommodation with floor plates of 14,425sq.
ft. There are principally two tenants in this property, Teletech (UK) Ltd, who
are guaranteed by their US parent, and NAG Europe Ltd. Discussions are being
held with the tenants to look at regearing their leases to mutual benefit.
BOURNEMOUTH - HOLLAND HOUSE 7,450 M2 (80,187 SQ. FT)
Our restructuring of the lease terms with Mapeley acting on behalf of the First
Secretary of State is complete and we have exchanged 9 leases on varying terms
for a single 25 year lease with tenant's break option in year 18. This resulted
in a net #1.1m value uplift.
LEEDS - YORKSHIRE HOUSE 7,315 M2 (78,738 SQ. FT.)
It had been our intention to commence the main renovation works to the entire
building, on behalf of all tenants early in 2003. It has subsequently
transpired during our discussions with the tenants that their differing
requirements necessitate a scheme being prepared on an individual basis which we
expect to implement once they are signed up.
CORE INVESTMENT PORTFOLIO VALUE #253M (EXCLUDING TRADING PROPERTY)
The original business plan saw the core portfolio being used as a holding
vehicle prior to properties transferring into a fund. The Regional Office
portfolio is currently held on our balance sheet for this purpose, distorting
the weighting in offices prior to its move to an alliance. When the transfer
occurs we shall be seeking to reposition the portfolio, which, following Agora,
is particularly light on retail.
As our experience has increased, the transferring of properties has been made
more difficult by changes in legislation. This has resulted in our reviewing
the role of the core portfolio. We will continue to use IPD as our benchmark
for performance, but it is essential we shift the core's emphasis to retain our
continuing high ranking. In the future the core will also be used to test out
new markets yet at the same time to outperform IPD. We will still operate in
all the three sectors of retail, offices and industrial with the flexibility to
move quickly but it is accepted the skill set of our internal team is different
from that in the managed fund. Our future partners need to see we are in the
market but not competing against their funds. In this manner the core ideally
should have between #300m to #350m invested across our chosen sectors with the
flexibility to change the balance of weighting on market opportunities.
RETAIL VALUE #47M WEIGHTING 18.7%
HIGH STREET
No. Tenants Area Income Value
High Street 12 28 17,358 m2 #2.12m #29.9m
(186,848 sq. ft)
RETAIL WAREHOUSE
No. Tenants Area Income Value
Retail Warehouse 5 5 14,646 m2 #1.43m #17.3m
(157,664 sq. ft)
We have continued to work on our portfolio and improve our holdings in some
locations where possible. The return of growth in High Street rent has been
particularly pleasing as we have found in the settlement of our rent reviews
with rises in Romford and Southampton. On the retail warehouse front, we have
also seen a good performance including that from our rent review in Luton where
we are currently considering an opportunity to expand our holding. We intend
our weighting in retail to be re-balanced by the purchase of either a sizeable
warehouse park or a South East shopping centre.
OFFICES VALUE #147M WEIGHTING 58.1%
REGIONAL OFFICES
No. Tenants Area Income Value
Regional Offices 18 44 53,617m2 #7.91m #91.7m
(577,155 sq. ft)
M25 & GREATER LONDON
No. Tenants Area Income Value
M25 Offices & 18 37 26,231m2 #4.74m #55.0m
London (282,355 sq. ft.)
When the Regional Office Portfolio has been transferred to an alliance, we will
still have a sizeable portfolio of smaller units in this sector. However we did
our buying some time ago and have kept out of the main downturn areas referred
to above. The sector clearly has its problems and yields in general have moved
out but we have found this countered by good growth in rent, evidenced by rent
reviews in Reading, Vauxhall London and Solihull Birmingham and by a lease
renewal in Brighton.
At this stage we do not foresee any further major purchases unless there is an
opportunity for improving the lot size or tenant mix.
INDUSTRIAL VALUE #59M WEIGHTING 23.2%
No. Tenants Area Income Value
Industrial 21 117 94,731 m2 #5.28m #58.7m
(1,019,688 sq. ft)
Our desire to improve our holding in this sector has not diminished but we have
found it difficult to acquire property at a reasonable price. Although
manufacturing continues to struggle, there would be advantages to us from
creating a distribution fund. Regarding the properties held throughout the full
12 month period some of the activities have been:
Stevenage - Babbage Road
We extended our holding in Babbage Road by the purchase of an adjoining site for
the sum of #950k.
Luton - Scott Road
The first phase of this estate is 100% let. We are in dialogue with several
potential tenants over the creation of Phase II. It had been our intention to
commence towards the latter part of the year but as in all of our development
opportunities until the tenant actually signs we will not commence the work.
Erith
This is the last example of the former type of mixed industrial property held in
the portfolio. We are prepared to continue to hold as it still produces good
returns.
TRADING PORTFOLIO
The work on reducing our trading portfolio of holdings and extracting the most
advantageous prices on individual sales continues. Over the last 12 months
seven trading properties were sold showing a surplus against their book value of
#810,000. Of the remaining 14 properties, there has been a slight reduction in
their overall value to #46.0m.
The Directors' valuation produced a surplus of #1m, not shown in the accounts,
with the current yield standing at 8% and the reversionary yield at 11%.
DEVELOPMENT
The last vestige of our former small development joint venture, Trade Centre
Developments, has completed its 5 year format and with our partners we are
currently working out the projects.
Development is an important part of our asset management process and we expect
our exposure to increase as we launch further alliances.
DISPOSALS
Proceeds from disposals of properties which no longer met our performance
criteria raised a total of #38.4m. This included #8.1m from the trading stock
as well as a package of small industrial estates to Royal Bank of Canada Trust
Corporation in association with IO Group and our combined holdings in The
Marlowes, Hemel Hempstead which was acquired by a subsidiary company of Dawnay
Day.
PROSPECTS
When reviewing the factors crucial to our prospects they fall into three key
areas: finding the stock, seeking our finance partner and our own ability to
manage. On all three we are in good shape. Bolton's purchase has put us firmly
on the map for consideration when others are selling. The launch of Agora has
demonstrated our capacity to move swiftly to put together all the components
which make up a major fund. We have formed a team with the ability to ensure
our assets perform well against the IPD benchmark. Our route for growth is
clear. Managed funds will be developed in key target areas. The core portfolio
will continue to underpin our performance. Key staff with the appropriate
skills will be brought into the organisation once we have the property in our
portfolio. All markets set new challenges; the winners are those who can adapt
the best. Warner Estate has a winning team.
Richard Moore
Property Director
FINANCE REVIEW
The results for the year reflect the continuing success of the Group's strategy.
The format of the result, as we advised last year, has changed from previous
years in order to ensure that shareholders and all other users of these accounts
have a clear picture of the Group's results. This has been achieved against a
background of continually changing regulatory requirements. However, we are
always pleased to answer any financial questions on these accounts.
RESULTS
Overall profitability before tax has continued to improve with profits in the
year of #16.6m against #15.2m last year, an increase of 9.3%. This was again
driven by a substantial increase in the Group's core maintainable income
(recurring profits) which rose #3.1m (28%) to #14.1m. Such an increase has
arisen as a direct result of the Group's strategy implemented three years ago of
investing in properties with asset management opportunities supported by a
secure income stream, a period over which recurring profitability has almost
doubled. Additionally this year saw the establishment of our first alliance, the
#223m Agora shopping centre joint venture with Bank of Scotland in early March
with the first, albeit small, contribution from this business activity. This
contribution is treated as recurring profit arising directly from the active
management of the new joint venture by the Group.
The breakdown between recurring profits and non-recurring profits is as follows:
#m #m
Recurring profit 14.1
Non-recurring profit
- Non recurring revenue items 0.2
- Trading Profit 0.5
Property Trading 8.1
Cost of sales (7.3)
Writedown of trading stock (0.3)
- Capital profits 1.6
- Associate 0.1
Operating profit 1.4
Interest (1.0)
Dividend received (0.3)
- Joint ventures 0.1
Operating profit 2.4
Interest (2.3)
Profit on ordinary activities 16.6
Rental income at #37m was some #9.6m up over the previous year and, after
additional property management costs and interest, accounted for the #3.1m
improvement in recurring profitability. Of this improvement approximately #2.2m
arose through the positive yield gap of buying properties at a net yield of
around 6.9% and financing them at 5.2% with the balance arising from a reduction
in voids from 5% to 3%, rent reviews and other asset management initiatives.
As last year the continued development of the Group has resulted in further
changes to the property portfolio with the disposal of the Group's shopping
centres into the Agora joint venture. The change in the overall portfolio
split between directly held property and the Group's share of joint ventures and
associates is shown in the following table:
Share of
#'000 Directly Held Joint Associate Total
Ventures
Investment property 333,821 111,530 20,143 465,494
Trading Property 46,044 2,336 5,191 53,571
At 31 March 2003 379,865 113,866 25,334 519,065
Investment property 403,186 408 18,483 422,077
Trading property 53,374 5,162 4,840 63,376
At 31 March 2002 456,560 5,570 23,323 485,453
Change in year (76,695) 108,296 2,011 33,612
As a result of the changes, the Group's rent roll has reduced to #31m although
there is a further #16m rent roll in the Agora joint venture bringing the total
under management to #47m compared to #37m last year. The Group rent roll of
#31m is secured on leases with an average term in excess of 12 years with #15m
of rents being with low risk covenants, #7m with medium risk and #9m with higher
risk. Additionally, with the exception of Government Agencies which represent
10.7% of the rent roll, only one tenant accounts for 5% of the rent roll and the
Group's exposure in terms of any particular geographic location and business
type remains low. In the Agora Fund the average lease length is 9 years with
44% of the rent roll coming from low risk covenants. There are 325 tenancies and
248 tenants of which the largest is Debenhams with three tenancies totalling
9.7% of the Agora rent roll, followed by Government Agencies which account for a
further 4%. No other tenant accounts for more than 3% of the Agora rent roll.
Because of the way profits are displayed in the Profit and Loss Account, the
profits arising from Joint Ventures and the Associate appear more significant
than they are when viewed in the context of the supporting notes. In addition
this year the Joint Ventures have changed radically with the establishment of
joint ventures with Bank of Scotland to purchase shopping centres in Bolton for
#64.5m and Middleton for #39.5m in August 2002 and September 2002 respectively
which together with the purchase of Preston in March 2003 and the disposal of
the Group's shopping centres at the same time created a joint venture with #223m
of investment property (Group share #111.5m). The other joint ventures which
represented only #14m (Group share #7m) of gross assets at last year end, have
been reduced to #7.3m (Group share #3.65m) and disposal of these remaining
assets is planned to complete in 2003/04.
The contribution from all this activity was:-
#m
Operating profit 2.39
Net interest payable (2.26)
Taxation (0.04)
0.09
of which the three weeks contribution from the Agora Fund was #0.02m.
The contribution of #0.09m represents 0.17p (0.7%) of the adjusted revenue
earnings per share for the year.
The associate, Merivale Moore plc, where the Group has a 25.9% shareholding has
continued to be treated as such despite an announcement by the company that a
bidder controlled by Merivale Moore's chairman may make a bid for the company.
Had it been treated as an investment the after tax profit that would have been
consolidated into the Group's results, would have been the dividends received of
#0.35m compared to the #0.47m actually consolidated. This contribution was as
follows:-
#m
Operating profit 1.42
Capital profit 0.37
Net interest payable (1.00)
Taxation (0.32)
0.47
This represents 0.92p (4%) of the Group's adjusted revenue earnings per share
and the investment is also equivalent to 4% of the Group's net assets.
Capital profits were #1.5m. Included within this amount is #0.05m that arose
from the disposal of the Group's shopping centres into the Agora Fund and is net
of all the direct costs that arose within the Group, in particular in relation
to loan break costs and security transfers that, if they had arisen in the
ordinary course of business would have been reported in other areas of the
Profit & Loss account. In addition to this amount a further #1.19m has been
taken to reserves which reflect the element of the profit arising from the set
up of the Agora joint venture that is not deemed to be a disposal being to a 50:
50 joint venture.
Net interest costs were #18.35m of which #15.10m was in respect of the Group,
the balance arising on Joint Ventures and the Associate. The level of interest,
which is some #3.62m higher than in the previous year, reflects the impact of
the higher levels of debt which were maintained by the Group to fund the Group's
stated strategy and were not substantially reduced until March of this year.
The tax charge before the adjustment for deferred tax required by FRS19 was
#3.24m of which #2.87m was in respect of the Group giving an effective rate of
tax of 19%. Of this the rate applicable to revenue profits was 21% with no tax
charged against capital profits due to the availability of capital losses within
the Group. When the FRS19 adjustment is applied this year the tax charge falls
by #0.5m (last year it rose by #1.2m!) giving a tax charge of #2.73m of which
#2.36m was in respect of the Group at an effective rate of 16%. Whilst we have
to comply with FRS19 as explained in this review last year, the FRS19
liabilities rarely crystallise on transactions. Hence this year, when assets
have been disposed of without giving up the benefit of the tax allowances, the
charge to tax falls dramatically as the FRS 19 provision is no longer required.
For all purposes except the preparation of the accounts, we ignore this FRS as
the pre FRS19 position represents the actual tax payable.
#m
Profit on ordinary activities 16.6
Tax @ 30% 5.0
Use of losses (0.5)
Use of allowances (capital & industrial building) (1.5)
Other 0.2
Pre FRS 19 deferred tax provision 3.2
FRS 19 deferred tax net release (0.5)
Total tax charge in the accounts 2.7
Total adjusted earnings increased by 1.42p to 26.40p of which 23.32p (21.42p in
2002) is attributable to revenue profits and 3.08p (3.56p in 2002) to capital
profits. The increase in revenue earnings of 9% is the result of a 21% increase
in recurring revenue profits to 22.31p (18.38p in 2002) partially offset by a
substantial reduction in profits from joint ventures and the associate and a
small net reduction in trading profits. As a result the total dividend of 16p a
share is covered 1.4 times by recurring earnings compared to 1.2 times last
year.
RECONSTRUCTION
The requirements of ensuring returns are maximised for shareholders in a
business environment of ever increasing regulatory complexity means that ever
more complicated legal structures are required. However, an ongoing programme is
maintained to ensure wherever possible that companies no longer required are
liquidated to minimise the on going regulatory cost.
CASH FLOW
Disposals have generated #95m of which #65m arose in March 2003 on the launch of
the Agora joint venture.
#22m has been invested by the Group in this venture during the year.
BALANCE SHEET
The balance sheet at the year end shows total shareholders funds of #223.5m
(excluding an adjustment for deferred tax required by FRS19 of #4.3m) a #7.8m
increase on last year, after a #8.1m dividend up from #7.5m last year, due to
the improved profits and revaluation surpluses at the interim stage and a
further uplift at the year end. The increase in shareholders funds would
however, have been higher but for the following:-
1. The investment in the Group's associate Merivale Moore has been written
down by #0.8m more than would be required by a straight consolidation of
Merivale Moore's published accounts as at 31 December 2002. This has arisen from
a detailed review of the carrying value of this associate in the light of
current market conditions for office property in Central London.
2. The Group's quoted investments fell in value by #1.35m year on year of
which #1.1 m arose in the second half. Since the year end the value of these
investments has increased by #0.6m as at 1st June.
In addition the disadvantaged area status announced in the Budget affects an
estimated #65m of property owned by the Group and a number of the properties in
the Agora joint venture. Given the content of the announcement the full impact
has not yet been assessed but will be reported on in the Group's next interim
results.
In terms of the uplift in triple net asset value this rose to 413.8p from 403.5p
after the payment of a 16p dividend. However, but for the volatility in
interest rates which were a quarter point higher a week either side of the year
end the uplift in the fair value adjustment would have been slightly lower.
The calculation of triple net asset value is as follows:-
#'000 Pence per
share
Shareholders' funds at 31 March 2003 219,171 430.2
Add back FRS 19 adjustment (note 19) 4,328 8.5
Adjusted shareholders' funds 223,499 438.7
Less potential deferred tax (note 19) (1,409) (2.8)
Adjustment for deferred tax eliminatable 934 1.8
Less fair value adjustment for debt net of tax (note 20) (12,202) (23.9)
Triple net asset value 210,822 413.8
FINANCING
Opening gearing was 116% with net debt of #250m which by the year end had fallen
to 86% with net debt falling to #193m as a result of disposals in the year of
#104m including #67m into the Agora Fund. However this excludes our share of
off-balance sheet debt, all of which is non-recourse in joint ventures of #110m.
Such non-recourse debt means that the Group's only exposure is in terms of its
investment of #25m as the debt is totally ring fenced, by which it is meant that
should the loan be called in by the lenders for what ever reason those lenders
have no recourse to the Group's assets. In addition, of the Group's on balance
sheet net debt of #193m, some #57.1m is non-recourse secured against #79m of
assets. Thus recourse Group debt is only #135m, a gearing level of 61%.
RETURN ON CAPITAL
As a Group we measure ourselves on the increase in triple net asset value plus
the reinvesting of dividends as we can directly control asset value whilst the
share price can be influenced by other factors.
Using the Group's triple net measure produces an after tax total return this
year of 6.6% (2002 : 8.8%).
ACCOUNTING POLICIES
The intention this year had been to incorporate a pro forma of the impact of the
proposed International Accounting Standards that are due to be mandatory in
2005, to show the impact of what are quite radical changes. Unfortunately these
proposed standards remain so fluid that we have been advised that to incorporate
such a pro forma would be premature. As soon as the proposals are finalised we
will use our best endeavours to ensure shareholders are fully appraised of their
impact and the extent to which that impact is real or just presentational.
Peter Collins
Finance Director
SIGNIFICANT EVENTS DURING THE YEAR ENDED 31 MARCH 2003
DATE
Purchase of office property in Bath Street, Glasgow for May 2002
#12.5million
Disposal of major property asset in Warrington Industrial May 2002
Investments Limited joint venture for #2.1million
Sale of 50% shareholding in Midland Commercial Properties Limited July 2002
joint venture for #2.1million
Purchase of Market Place Shopping Centre, Bolton for #64.52million August 2002
through a joint venture with Bank of Scotland
Sale of six smaller lot size properties for #16.6million June/August 2002
Purchase of Middleton Shopping Centre for #39.5million through a September 2002
joint venture with Bank of Scotland
Sale of three industrial estates for #10.85million October 2002
The Agora Fund: March 2003
The #223million Agora Shopping Centre Fund formed through a joint
venture with Bank of Scotland
The transfer of the Bolton and Middleton shopping centre joint
ventures into the Agora Fund
Sale of the Group's shopping centres in Ellesmere Port, Sale and
Liverpool into the Agora Fund for #65million
Purchase of Fishergate Shopping Centre, Preston by the Agora Fund
for #47.5million
SIGNIFICANT EVENTS POST 31 MARCH 2003
There have been no significant events post 31 March 2003.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Notes 2003 2002
#000 #000
TURNOVER: GROUP AND SHARE OF JOINT VENTURES AND ASSOCIATE 2 52,687 40,603
less: Share of joint ventures and associate (7,589) (6,171)
GROUP TURNOVER 2 45,098 34,432
Cost of sales (14,222) (10,487)
GROSS PROFIT 2 30,876 23,945
Administrative expenses (2,147) (1,783)
GROUP OPERATING PROFIT 28,729 22,162
Share of operating profit in:
Joint ventures 2 2,392 754
Associate 2 1,424 2,352
3,816 3,106
TOTAL OPERATING PROFIT 32,545 25,268
Profit on sale of fixed assets 5 1,552 2,083
Income from fixed asset investments 6 814 603
PROFIT ON ORDINARY ACTIVITIES BEFORE INTEREST 34,911 27,954
Net interest payable and similar charges 7 (18,354) (12,804)
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 16,557 15,150
Taxation on profit on ordinary activities 8 (2,728) (3,502)
PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 13,829 11,648
Dividends 10 (8,115) (7,490)
RETAINED PROFIT 5,714 4,158
BASIC EARNINGS PER SHARE 11 P P
Revenue 24.33 19.16
Capital 3.08 3.56
27.41 22.72
DILUTED EARNINGS PER SHARE 11 P P
Revenue 24.32 19.16
Capital 3.07 3.56
27.39 22.72
ADJUSTED EARNINGS PER SHARE 11 P P
Revenue 23.32 21.42
Capital 3.08 3.56
26.40 24.98
BALANCE SHEET
Group
Notes 2003 2002
#000 #000
FIXED ASSETS
Tangible Fixed Assets
Investment properties 12 333,821 403,186
Other tangible assets 13 504 439
334,325 403,625
Joint Ventures 14
Share of gross assets 121,466 7,108
Share of gross liabilities (115,847) (4,902)
Loan accounts 19,354 1,868
24,973 4,074
Investments 15 21,007 22,879
380,305 430,578
CURRENT ASSETS
Property stock 46,044 53,374
Debtors 16 11,301 5,326
Investments 17 - 309
Cash at bank and in hand 16,638 843
73,983 59,852
CURRENT LIABILITIES
Creditors: amounts falling due 18 (95,043) (137,230)
within one year
NET CURRENT (LIABILITIES)/ASSETS (21,060) (77,378)
TOTAL ASSETS LESS CURRENT LIABILITIES 359,245 353,200
Creditors: amounts falling due after (135,475) (137,362)
more than one year
PROVISION FOR LIABILITIES AND CHARGES
Deferred taxation 19 (4,364) (4,919)
NET ASSETS EXCLUDING PENSION LIABILITY 219,406 210,919
Pension liability 3 (235) (36)
NET ASSETS 219,171 210,883
CAPITAL AND RESERVES
Called up share capital 21 2,548 2,547
Share premium account 22 5,548 5,522
Revaluation reserve 23 12,920 15,585
Other reserves 23 187,344 180,348
Profit and loss account 23 10,811 6,881
EQUITY SHAREHOLDERS' FUNDS 219,171 210,883
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Notes 2003 2002
#000 #000
Profit on ordinary activities after taxation 13,829 11,648
Unrealised surplus/(deficit) on revaluation of properties
Group 12/23 3,745 4,022
Joint Ventures 14/23 (4) 15
Associate 23 (748) 185
Unrealised surplus on disposal of investment properties 23 1,190 -
into joint venture
Unrealised (deficit)/surplus on revaluation of investments 15 (1,404) 174
Actuarial loss on pension scheme assets 3/23 (317) (362)
Deferred tax arising on pension scheme assets 3/23 85 98
Tax on realisation of revalued properties 23 - (464)
TOTAL RECOGNISED GAINS RELATING TO THE YEAR 16,376 15,316
NOTE OF HISTORICAL COST PROFITS AND LOSSES
Notes 2003 2002
#000 #000
Revenue profit on ordinary activities before taxation 15,005 13,067
Capital profit on ordinary activities before taxation 5 1,552 2,083
Reported profit on ordinary activities before taxation 16,557 15,150
Realisation of revaluation surpluses of previous years 23 5,444 60,372
HISTORICAL COST PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION AND DIVIDENDS 22,001 75,522
Retained profit for the year
Revenue 4,162 2,331
Capital 6,996 61,735
HISTORICAL COST PROFIT FOR THE YEAR RETAINED AFTER
TAXATION AND DIVIDENDS 11,158 64,066
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Notes 2003 2002
#000 #000
Profit on ordinary activities after taxation 13,829 11,648
Dividends 10 (8,115) (7,490)
5,714 4,158
New share capital issued 21/27 27 613
Share capital purchased and cancelled in year (including - (5,169)
expenses)
Other recognised gains and losses 23 2,547 3,668
Net increase in shareholders' funds 8,288 3,270
Opening shareholders' funds 210,883 207,613
CLOSING EQUITY SHAREHOLDERS' FUNDS 219,171 210,883
CONSOLIDATED CASH FLOW STATEMENT
Notes 2003 2003 2002 2002
#000 #000 #000 #000
NET CASH INFLOW FROM OPERATING
ACTIVITIES 24 34,691 14,783
DIVIDENDS RECEIVED FROM JOINT
VENTURES AND ASSOCIATE 358 296
RETURNS ON INVESTMENTS AND SERVICING
OF FINANCE
Interest received 327 1,469
Interest and similar charges paid (16,301) (12,491)
Dividends received from listed 814 603
investments
NET CASH OUTFLOW FROM RETURNS ON
INVESTMENTS AND SERVICING OF FINANCE (15,160) (10,419)
TAXATION
UK corporation tax paid (1,770) (2,298)
CAPITAL EXPENDITURE AND FINANCIAL
INVESTMENTS
Purchases of tangible fixed assets (23,108) (139,403)
Sales of tangible fixed assets 94,635 33,883
Purchase of listed investments (65) (3,121)
Disposal of listed investments - 69,113
Loans to joint ventures (17,739) (1,317)
Repayment of long term loans to - 350
joint ventures
Repayment of short term loans from 253 -
joint ventures
Premiums paid on sinking fund policy (6) (6)
Purchase of own shares for LTIP and (97) (1,219)
share option scheme
NET CASH INFLOW/(OUTFLOW) FROM CAPITAL
EXPENDITURE AND FINANCIAL INVESTMENTS 53,873 (41,720)
ACQUISITIONS AND DISPOSALS
Purchase of shares in associate - (339)
undertaking
Acquisition of minority interest - (100)
Acquisition of shares in joint (5,525) -
ventures
Disposal of shares in joint ventures 2,164 -
NET CASH OUTFLOW FROM ACQUISITIONS
AND DISPOSALS (3,361) (439)
EQUITY DIVIDENDS PAID (11,480) (8,487)
MANAGEMENT OF LIQUID RESOURCES
Disposal of current asset investment 44 -
NET CASH INFLOW/(OUTFLOW) BEFORE
FINANCING 57,195 (48,284)
FINANCING
Repayment of bank loan (600) (611)
Repayment of mortgage and other (1,508) (827)
loans
Issue of shares 27 613
Share capital purchased and - (5,169)
cancelled
NET CASH OUTFLOW FROM FINANCING (2,081) (5,994)
INCREASE/(DECREASE) IN CASH 25/26 55,114 (54,278)
NOTES TO THE FINANCIAL STATEMENTS
1 ACCOUNTING POLICIES
The financial statements have been prepared in accordance with applicable
accounting standards in the United Kingdom. Following these standards requires
departures from the requirement of the Companies Act 1985 relating to the
depreciation of certain fixed assets as explained in the relevant paragraphs
below. A summary of the more important policies, which have been applied
consistently, is set out below.
BASIS OF ACCOUNTING
The accounts are prepared on the historical cost basis of accounting modified to
include the revaluation of certain fixed assets and the accounting policies set
out below.
CHANGE IN ACCOUNTING PRESENTATION
There have been no new accounting standards this year requiring a change in
accounting presentation and the review of the Group's accounting policies by the
Board, as required by FRS 18, has necessitated no changes in accounting policies
and presentation.
BASIS OF CONSOLIDATION
The Group accounts comprise the consolidated accounts of the Company and its
subsidiary companies.
The results of subsidiaries sold or acquired are included in the consolidated
profit and loss account up to, or from, the date control passes. Intra-group
sales and profits are eliminated fully on consolidation.
On acquisition of a subsidiary, all of the subsidiary's assets and liabilities
that exist at the date of acquisition are recorded at their fair values
reflecting their condition at that date.
GOODWILL
Goodwill, being the excess of the consideration paid over the fair value of the
separable net assets acquired, is capitalised in the balance sheet in the year
of acquisition and amortised over an appropriate period not exceeding 20 years.
Unamortised goodwill attributable to businesses disposed of is charged to the
profit and loss account. Negative goodwill, being the excess of the fair value
of the underlying net assets acquired over the fair value of the purchase
consideration, is capitalised and amortised in a similar manner. As permitted
by FRS 10, the Group has not restated its accounts in respect of goodwill
arising in periods prior to the year ended 30 September 1998 and such goodwill
remains fully written off against reserves.
ASSOCIATES
An associate is defined as an undertaking in which the Group has a participating
interest and where the Group can exercise significant influence.
The consolidated profit and loss account includes the Group's share of the
profits or losses of the associate and the investment in the associate included
in the balance sheet represents the relevant share of net assets based on the
latest published financial statements of the associate, which were made up to 31
December 2002, with appropriate adjustments made to compensate for the different
year end, less any provision for diminution in value.
JOINT VENTURES
A joint venture is an entity in which the Group holds an interest on a long term
basis and is jointly controlled by the Group and one or more independent parties
under a contractual arrangement. The Group's share of profits less losses of
joint ventures is included in the consolidated profit and loss account and the
Group's share of post acquisition retained profits and reserves is added to the
cost of the investment in the consolidated balance sheet. These amounts are
taken from the latest audited or reliable management accounts made up to a date
co-terminous with the financial year of the Company.
TURNOVER
Turnover includes rents receivable from property investment and trading
properties and sales of trading properties, net of value added tax. Turnover
between Group companies is excluded.
REALISED CAPITAL SURPLUSES AND DEFICITS
Realised surpluses and deficits of a capital nature are transferred to other
capital reserve. The Directors do not regard capital surpluses as appropriate
for distribution to shareholders.
SALE OF PROPERTIES
Sales are recognised when unconditional contracts are exchanged for commercial
properties and on completion for residential properties.
INVESTMENT PROPERTIES
Investment properties are stated at open market valuation at the balance sheet
date. The aggregate surplus or temporary deficit arising on revaluation is
transferred to the revaluation reserve and, to the extent that it has not been
previously accounted for against revaluation reserve, any permanent deficits to
the profit and loss account. Development properties are included at cost
including interest and other attributable outgoings less rents received and
provisions. Properties in course of development are reclassified as investment
properties on the earliest of the property becoming fully let, income exceeding
outgoings or two years after completion. Provision is made in the profit and
loss account to the extent that the carrying values of investment and
development properties are expected by the Directors to remain below cost for
the foreseeable future.
DEPRECIATION
In accordance with SSAP 19, no depreciation is provided in respect of freehold
investment properties and leasehold investment properties with over 20 years to
run. Although the Companies Act 1985 would normally require the systematic
annual depreciation of fixed assets, the Directors believe that this policy of
not providing depreciation is necessary in order for the accounts to give a true
and fair view, since the current value of investment properties and changes in
that current value are of prime importance, rather than a calculation of
systematic annual depreciation. Depreciation is only one of the many factors
reflected in the annual valuation and the amount which might otherwise have been
shown cannot be separately identified or quantified.
Other tangible assets are depreciated by equal annual instalments over their
estimated useful lives of between 3 and 10 years.
FIXED ASSET INVESTMENTS
Other than the investment in the associate, referred to in the relevant
paragraph above, listed fixed asset investments are stated at their middle
market quotation on the London Stock Exchange at the balance sheet date.
Provision is made in the profit and loss account to the extent that the carrying
value of listed fixed asset investments are expected to remain below cost for
the foreseeable future.
FINANCIAL INSTRUMENTS
Other than the fixed asset investments referred to above, the Group's financial
instruments are included in the consolidated balance sheet at cost. Gains and
losses on such instruments are accounted for on realisation.
PROPERTY TRADING STOCK
Property trading stock is stated at the lower of cost and estimated net
realisable value. No interest is charged to this stock.
FINANCE COSTS
Costs of raising term loans are charged to the profit and loss account over the
life of the loans. Such costs are included within the carrying value of the
loans.
DEFERRED TAXATION
In accordance with the provisions of accounting standard FRS 19 (Deferred Tax),
deferred tax is provided in respect of all timing differences which have
originated, but not reversed at the balance sheet date where an event has
occurred that results in an obligation to pay more or less tax in the future,
except that:
1. Provision is not made in respect of property revaluation surpluses; and
2. Deferred tax assets are recognised only to the extent that it is more
likely than not there will be suitable taxable profits from which the future
reversal of the relevant timing differences can be deducted.
Deferred tax is measured on a non-discounted basis at the tax rates which apply
at the balance sheet date.
RETIREMENT BENEFITS
(a) The assets of the Group's defined benefit pension scheme are held
separately from those of the Group.
Pension scheme assets are measured using market values. Pension scheme
liabilities are measured using a projected unit method and discounted at the
current rate of return on a high quality corporate bond of equivalent term and
currency to the liability.
The increase in the present value of the liabilities of the Group's
defined benefit pension scheme expected to arise from employee service in the
year is charged to operating profit. The expected return on the scheme's
assets and the increase during the year in the present value of the scheme's
liabilities arising from the passage of time are included in other finance
income. Actuarial gains and losses are recognised in the statement of total
recognised gains and losses.
(b) Payments to employees' personal pension schemes and discretionary
allowances are charged to the profit and loss account as they become payable.
LEASES
Rentals payable under operating leases are charged over the lease terms on a
straight line basis or on the basis of actual rentals payable where this fairly
reflects usage.
2 TURNOVER AND OPERATING PROFIT
The Directors believe that the Group operates in only one segment, namely in
property. The following analysis is provided for information only.
PROPERTY PROPERTY GROUP TOTAL JOINT ASSOCIATE TOTAL
INVESTMENT TRADING VENTURES
Year ended 31 March 2003 #000 #000 #000 #000 #000 #000
Turnover:
Rents receivable 33,230 3,767 36,997 2.690 1,942 41,629
Property trading - 8,101 8,101 2,954 3 11,058
Total turnover 33,230 11,868 45,098 5,644 1,945 52,687
Property outgoings (5,415) (1,179) (6,594) (476) (251) (7,321)
Cost of sales - (7,291) (7,291) (2,501) (62) (9,854)
Writedown cost of trading - (337) (337) - - (337)
stock
Gross profit 27,815 3,061 30,876 2,667 1,632 35,175
Administrative expenses (1,908) (239) (2,147) (275) (208) (2,630)
Operating profit 25,907 2,822 28,729 2,392 1,424 32,545
PROPERTY PROPERTY GROUP TOTAL JOINT ASSOCIATE TOTAL
INVESTMENT TRADING VENTURES
Year ended 31 March 2002 #000 #000 #000 #000 #000 #000
Turnover:
Rents receivable 24,686 2,721 27,407 804 1,862 30,073
Property trading - 7,025 7,025 1,460 2,045 10,530
Total turnover 24,686 9,746 34,432 2,264 3,907 40,603
Property outgoings (4,090) 5 (4,085) (39) (255) (4,379)
Cost of sales - (6,104) (6,104) (1,160) (1,105) (8,369)
Writedown cost of trading - (298) (298) - - (298)
stock
Gross profit 20,596 3,349 23,945 1,065 2,547 27,557
Administrative expenses (1,501) (282) (1,783) (311) (195) (2,289)
Operating profit 19,095 3,067 22,162 754 2,352 25,268
All turnover and operating profit has arisen from continuing operations.
Administrative expenses for the year ended 31 March 2002 included #240,000 of
costs relating to the Tender Offer made by Trefick Limited.
2003 2002
#000 #000
Operating profit is stated after charging:
Depreciation 133 130
Loss on disposal of tangible fixed assets - 11
Operating lease charges - properties 759 316
During the year the following amounts were charged to the profit and loss
account in respect of auditors' remuneration:
2003 2002
#000 #000
Audit services (Company: #65,000 (2002 : #41,000)) 137 104
Audit related services (1) 7 19
Non-audit services : Taxation 156 154
: Other - 5
300 282
(1) These include the cost of the interim audit and audit certifications for
debt covenant purposes.
In addition to the fees charged to the profit and loss account, #220,000 was
charged by the auditors for tax and accounting work in connection with the
setting up of the Agora Joint Venture (March 2002 : #106,000 in connection with
the purchase of commercial properties).
3 EMPLOYEES
2003 2002
#000 #000
Staff Costs
Wages and salaries 3,708 2,396
Social security costs 291 183
Other pension costs 190 135
4,189 2,714
2003 2002
Number Number
The average number of persons employed during the year was:
Management and administrative 36 31
Repairs and service 13 9
49 40
PENSION COMMITMENTS
The Group operates and contributes to pension schemes for certain Directors and
employees and makes some discretionary allowances. The costs charged to the
profit and loss account for the year in respect of these amounted to #190,000
(2002 : #135,000). Pension premiums paid in advance were #47,000 (2002 :
#33,000).
The Group operates a defined benefit scheme in the UK, The Warner Estate Group
Retirement Benefits Scheme. A full valuation was carried out at 1 October 2000
and updated to 31 March 2001, 31 March 2002 and 31 March 2003 by a qualified
independent actuary.
It has been agreed with the Trustees that the Group contributions for the next
three and a half years will be at 28.4% of pensionable salaries, subject to
review by the Scheme Actuary.
The following assumptions were made by the actuary:
% per annum
Discount rate 5.5
Rate of increase of salaries 3.0
Rate of increase in payment and deferred pensions 2.5
Price inflation 2.5
The value of the assets and liabilities of the Scheme together with the expected
rates of return at the beginning and end of the year were as follows:
Long term Value at Long term Value at
rate of 31 rate of 31
return March 2003 return March 2002
expected at expected at
31 March 31 March
2003 2002
% #'000 % #'000
Equities 7.0 502 7.0 654
Fixed interest 5.4 3,995 5.9 3,883
Cash 4.0 90 - -
TOTAL MARKET VALUE OF ASSETS 4,587 4,537
Present value of Scheme (4,922) (4,588)
liabilities
DEFICIT (335) (51)
Related deferred tax asset 100 15
NET PENSION LIABILITY (235) (36)
Included within the above value of scheme assets and liabilities is #3,917,000
(2002 : #3,801,000) relating to insured pensioners' liability.
Analysis of amount charged to operating profit
2003 2002
#000 #000
Current service cost 35 46
Analysis of the movements in the Scheme deficit during the year
2003 2002
#000 #000
(Deficit)/surplus in the Scheme at beginning of year (51) 276
Movements in year:
Current service cost (35) (46)
Contributions paid 65 54
Other finance income 3 27
Actuarial losses:
Actual return less expected return on the Scheme (198) (454)
assets
Experience gains and losses arising on the Scheme (24) 92
liabilities
Change in assumptions underlying the present value of (95) -
the Scheme liabilities
Actuarial losses recognised in statement of total (317) (362)
recognised gains and losses
DEFICIT IN SCHEME AT END OF YEAR (335) (51)
4 DIRECTORS' REMUNERATION
A summary of Directors' remuneration, including disclosure required by the
Companies Act 1985, is contained in the Report and Accounts that will be
published later this month.
5 PROFIT ON SALE OF FIXED ASSETS
2003 2002
#000 #000
Surplus/(deficit) over book value
Investment properties* 1,187 (81)
Investments (see note 29) - 2,164
Share of associate 365 -
1,552 2,083
*Profit on sale of investment properties includes 50% realised profit
on disposal of shopping centres into the Agora Fund (#1,190,000) less
direct costs incurred of #1,141,000
Prior years' revaluation surpluses realised
Investment properties 5,444 2,083
Other investments - 58,244
Joint ventures - 45
5,444 60,372
6 INCOME FROM FIXED ASSET INVESTMENTS
2003 2002
#000 #000
Dividends from fixed asset listed investments 814 603
7 NET INTEREST PAYABLE AND SIMILAR CHARGES
2003 2002
#000 #000
Interest payable and similar charges on bank loans and overdrafts,
mortgages and other loans:
repayable within five years not by instalments 6,419 2,287
repayable wholly or partly in more than five years by instalments 9,612 9,333
16,031 11,620
Charge in respect of cost of raising finance 575 1,003
16,606 12,623
Less capitalised interest (53) (77)
16,553 12,546
Interest receivable and similar income:
From joint ventures (note 14) (1,052) (185)
Other interest (400) (876)
15,101 11,485
Other finance income
Expected return on pension scheme assets (271) (346)
Interest on pension scheme liabilities 268 319
(3) (27)
15,098 11,458
Share of joint ventures' net interest 2,258 245
Share of associate's net interest 998 1,101
18,354 12,804
Included within interest payable is #222,000 (2002 : #222,000) in respect of
amortisation of the fair value adjustment to the debt acquired from the former
Winglaw Group Limited on 1 March 2000.
8 TAXATION
2003 2002
#000 #000
Taxation on profit on ordinary activities
UK corporation tax:
Current at 30% (2002 : 30%) 2,701 1,697
Deferred (555) 1,214
2,146 2,911
Under provision in respect of prior year's tax charge 214 241
2,360 3,152
Share of tax in joint ventures 47 131
Share of tax in associate 321 219
2,728 3,502
2003 2002
Reconciliation of current taxation charge #000 #000
Tax at 30% (2002 : 30%) of profit on ordinary activities before 4,967 4,545
taxation
Use of losses (529) (909)
Dividends received not taxable (244) (181)
Capital allowances claimed (1,471) (1,249)
Profits attributable to joint ventures (40) (153)
Profits attributable to associate (122) (375)
Other differences 140 19
2,701 1,697
2003 2002
#000 #000
Tax on profit on sale of fixed assets
UK corporation tax:
Current at 30% (2002 : 30%) - 256
Deferred - -
- 256
9 PROFIT OF WARNER ESTATE HOLDINGS PLC
The Company has taken advantage of the exemption provided by Section 230 of the
Companies Act 1985 from presenting its own profit and loss account. Profit
attributable to members includes #10,953,000 (2002 : #69,337,000) which has been
dealt with in the accounts of the Company.
10 DIVIDENDS
2003 2002
#000 #000
On Ordinary 5p shares
Interim 7.75p on 50,950,197 shares paid 28 February 2003 (2002 : 3,950 3,657
7.25p)
Final proposed 8.25p on 50,950,197 shares payable 29 August 2003 4,203 3,911
(2002 : 7.75p)
Adjustment to 2002 final on shares held under the LTIP and share (38) (78)
option scheme (2002 : adjustment to 2001 final on shares held
under the LTIP and Share Option Scheme)
8,115 7,490
11 EARNINGS PER SHARE
Earnings per share of 27.41p (2002 : 22.72p) are calculated on the profit on
ordinary activities after taxation of #13,829,000 (2002 : #11,648,000) and the
weighted average of 50,457,216 (2002 : 51,251,783) shares in issue throughout
the year.
Profit on ordinary activities after taxation includes capital profits on the
sale of investment properties net of tax of #1,552,000 (2002 : #1,827,000).
Diluted earnings per share of 27.39p (2002 : 22.72p) are calculated on the
profit on ordinary activities after taxation of #13,829,000 (2002 : #11,648,000)
and the weighted average of 50,483,730 (2002 : 51,254,606) after the dilutive
impact of share options granted.
Adjusted earnings per share are calculated on the same weighted average number
of shares as for the basic earnings per share, but exclude from revenue profits
the deferred taxation credit of #509,000 (2002 : charge of #1,156,000) arising
due to FRS 19. This deferred tax has been excluded as the Group's experience
is that it is very unusual for capital and industrial building allowances to be
claimed back on the disposal of a property.
12 INVESTMENT PROPERTIES
Freehold Freehold Leasehold with Total
assets held over 50 years
for resale unexpired
#000 #000 #000 #000
Group
At 31 March 2002 232,202 102,012 68,972 403,186
Assets reclassified 28,427 (34,795) 6,368 -
Additions 5,183 13,121 3,414 21,718
Disposals (60,169) - (34,659) (94,828)
205,643 80,338 44,095 330,076
Surplus on revaluation 2,637 692 416 3,745
AT 31 MARCH 2003 208,280 81,030 44,511 333,821
The #81,030,000 of freehold properties categorised as assets held for resale
represent assets intended to form the core of a limited partnership or similar
venture.
Properties purchased within twelve months of the balance sheet date are included
at Directors' valuation. The remainder of the Group's investment portfolio was
valued externally by Cushman & Wakefield Healey & Baker on an open market basis
in accordance with the recommended guidelines of the Royal Institution of
Chartered Surveyors as at 31 March 2003.
Investment properties were valued as follows:
#000
Cushman & Wakefield Healey & Baker 319,634
Directors' valuation 14,187
333,821
Additions in respect of freehold properties include #53,000 (2002 : #77,000) of
interest capitalised. Included within investment properties is interest
capitalised of #1,296,000 at 31 March 2003.
On an historical cost basis the investment properties which have been included
above at valuation would have been shown as #326,848,000 (2002 : #394,514,000)
comprising cost of #326,848,000 (2002 : #406,314,000) less provision for
diminution of #Nil (2002 : #11,800,000).
13 OTHER TANGIBLE ASSETS
#000
Group
Cost
At 31 March 2002 752
Additions 198
AT 31 MARCH 2003 950
Depreciation
At 31 March 2002 313
Charge for the year 133
AT 31 MARCH 2003 446
NET BOOK VALUE AT 31 MARCH 2003 504
Net book value at 31 March 2002 439
Other tangible assets include plant, machinery, fixtures, fittings, motor
vehicles and equipment.
14 JOINT VENTURES
Group
Share of joint ventures: #000
At 31 March 2002 4,074
Share of profit/(loss) for the year 87
Deficit on revaluation of investments (4)
Net equity movements 3,330
Net loan movements 17,486
AT 31 MARCH 2003 24,973
Group
2003 2002
#000 #'000
Unlisted shares at cost less amounts written off 5,525 1,457
Group's share of post acquisition retained profits/(losses) 94 749
and reserves
5,619 2,206
Amounts owed by joint ventures 19,354 1,868
24,973 4,074
Included in share of joint ventures' gross assets and liabilities are:
Agora Others Total 2002
Shopping
Centres Ltd
(a)
#000 #000 #000 #000
Group share of results
Turnover 576 5,068 5,644 6,171
Operating profit 487 1,905 2,392 754
Net interest payable and similar charges (442) (1,816) (2,258) (245)
Profit on ordinary activities before 45 89 134 509
taxation
Taxation on profit on ordinary activities (24) (23) (47) (219)
Profit on ordinary activities after 21 66 87 290
taxation
Asset management fees 73 344 417 90
Interest receivable 49 1,003 1,052 185
Group share of:
Investment properties 111,304 226 111,530 408
Trading properties - 2,336 2,336 5,162
Other current assets 6,498 1,102 7,600 1,538
Gross assets 117,802 3,664 121,466 7,108
Current liabilities
Loans (106,467) (3,341) (109,808) (3,853)
Other liabilities (5,790) (249) (6,039) (1,049)
Gross liabilities (112,257) (3,590) (115,847) (4,902)
Share of net assets 5,545 74 5,619 2,206
(a) No profit or loss has been included for Bolton and Middleton that arose prior
to the setting up of the Agora venture on 5 March 2003. These are included in the column
"Others" and account for the sharp increase in operating profit of #1,151,000 and interest
of #1,571,000.
Effective Group share 50% 50%
Potential recourse to the Group Nil Nil
Group
2003 2002
#000 #000
Loans to joint ventures comprise:
Agora Shopping Centres Limited 16,949 -
Warrington Industrial Investments Limited - 253
Trade Centre Developments Limited 2,405 1,615
19,354 1,868
During the year the transactions on the loan accounts between the Group and the
joint ventures were as follows:
Repaid Loaned Total
#000 #000 #000
Agora Shopping Centres Limited - 16,949 16,949
Bolton Market Place Limited (10,300) 10,300 -
Middleton Shopping Centre Limited (6,400) 6,400 -
Warrington Industrial Investments Limited (253) - (253)
Trade Centre Developments Limited - 790 790
(16,953) 34,439 17,486
15 FIXED ASSET INVESTMENTS
Group
2003 2002
#000 #000
Investment in associate (a) 8,856 9,486
Listed investments (b) 10,594 11,933
Own shares held (c) 1,557 1,460
21,007 22,879
(a) Investment in associate Group
#000
At 31 March 2002 9,777
Decrease in share of net assets (670)
AT 31 MARCH 2003 9,107
Negative goodwill
At 31 March 2002 (291)
Amortised in year 40
AT 31 MARCH 2003 (251)
Net investment in associate
AT 31 MARCH 2003 8,856
At 31 March 2002 9,486
The market value of the Group's investment in associate as listed on the London
Stock Exchange at 31 March 2003 was #8,076,000 (2002 : #8,000,000).
On an historical cost basis the shares in the associate would be included in the
balance sheet at #4,586,000 (2002 : #4,586,000).
(b) Listed investments Group
#000
Listed on the London Stock Exchange
At 31 March 2002 11,933
Additions 65
11,998
Deficit on revaluation (1,404)
AT 31 MARCH 2003 10,594
Group
#000
Historic cost of listed investments
AT 31 MARCH 2003 7,013
At 31 March 2002 6,948
(c) Own shares held Group
#000
At 31 March 2002 1,460
Additions 134
Disposals (37)
AT 31 MARCH 2003 1,557
The shares are held under the Warner Estate Holdings Long Term Incentive Plan
and the 1995 Share Option Scheme.
16 DEBTORS
Group
2003 2002
#000 #000
Amounts falling due within one year
Trade debtors 3,077 2,738
Amounts owed by associate - 45
Other debtors 5,168 446
Prepayments and accrued income 3,056 2,097
11,301 5,326
17 CURRENT ASSET INVESTMENTS
2003 2002
#000 #000
Group
Interest in partnerships - 51
Premiums paid on sinking fund policies - 258
- 309
18 CREDITORS
Group
2003 2002
#000 #000
Amounts falling due within one year
Bank loans and overdrafts 73,143 111,862
Mortgages and other loans 794 1,294
Trade creditors 1,659 1,103
Dividends payable 4,203 7,568
Corporation tax 2,395 1,250
Other taxation and social security 997 868
Other creditors 1,276 698
Accruals and deferred income 10,576 12,587
95,043 137,230
Amounts falling due after more than one year
Mortgages and other loans 80,259 112,503
Bank loan 55,216 24,859
135,475 137,362
Bank loans and overdrafts are secured on properties and listed investments owned
by the Group. Mortgages and other loans are all secured on certain properties
owned by the Group and by floating charges on assets of certain subsidiary
companies.
Group
2003 2002
#000 #000
Repayable otherwise than by instalments in more than five years
Loan repayable in 2009 at an interest rate of 1.0% over LIBOR 24,874 24,859
11.655% First Mortgage Debenture Stock 2015 (reducing to 9.75% from 10,000 10,000
2009)
9.635% First Mortgage Debenture Stock 2015 12,430 12,414
Redeemable by sinking fund policies maturing 2013 (note 17) at an - 714
interest rate of 6.5%
Mortgage repayable in 2019 at an interest rate of 0.9% over LIBOR 49,757 49,727
97,061 97,714
Other mortgages and loans
Redeemable in quarterly instalments of #150,000 maturing 2009:
At an interest rate of 6.29% 20,000 20,000
At an interest rate of 6.89% 12,254 12,828
Redeemable in quarterly instalments of #125,000 maturing 2014 at an 5,582 5,535
interest rate of 9.15%
Redeemable in quarterly instalments of #74,000 maturing 2014 at an 3,284 3,272
interest rate of 9.06%
138,181 139,349
Summary of borrowings
Bank loans and overdrafts Other borrowings
2003 2002 2003 2002
#000 #000 #000 #000
Group
Within one year or on demand 73,143 111,862 794 1,294
Between one and two years 650 - 794 1,394
Between two and five years 4,250 - 2,382 5,482
In five years or more 50,556 24,968 77,464 106,238
128,599 136,830 81,434 114,408
Future finance costs (240) (109) (381) (611)
128,359 136,721 81,053 113,797
Of the borrowings at 31 March 2003 #57,128,000 were non-recourse loans (2002 :
#57,518,000).
19 DEFERRED TAXATION
Group
2003 2002
#000 #000
Deferred taxation arising from the timing differences
noted below:
Capital and industrial building allowances claimed on 4,328 4,837
investment properties
Short term timing differences 36 82
4,364 4,919
The movement in the capital and industrial building allowances claimed on
investment properties represents #1,037,000 of allowances claimed reduced by
#1,546,000 on disposal of properties.
The potential amount of deferred taxation, for which no provision has been made
and which would arise if the assets held as long term investments were sold at
the values at which they appear in the balance sheet, has been calculated as
follows:
2003 2002
#000 #000
Group 1,409 2,925
20 FINANCIAL INSTRUMENTS
The Group has taken advantage of the exemption under FRS 13, Derivatives and
Other Financial Instruments: Disclosures, that short term debtors and creditors
be excluded from disclosure on the grounds that they do not have a significant
impact on the financial risk profile of the Group. Disclosure of the Group's
objectives, policies and strategies in holding financial instruments is
contained in the Report and Accounts that will be published later this month.
FINANCIAL ASSETS
The Group has investments in equities listed on the London Stock Exchange. The
value of these equities is contained in note 15 and the details of significant
investments are reported in note 30 Fixed Asset Investments. These investments
are all of a long term strategic nature, but are accounted for on the basis of
the mid-market price of these assets at the Group's year end date. The Group
holds long term loan notes in the Agora Joint Venture with a fixed coupon of 4%
maturing between two and five years. These are included in loans to joint
ventures within the balance sheet at par. The Group's only other financial
assets are short term debtors, current asset investments and cash at bank.
FINANCIAL LIABILITIES
The interest rate profile of the Group's financial liabilities at 31 March
after taking account of interest rate instruments taken out by the Group was:
2003 2002
#000 #000
Floating rate financial liabilities - 131,730
Fixed rate financial liabilities 210,033 119,508
210,033 251,238
The benchmark rate for determining interest payments for the floating rate
financial liabilities was LIBOR/base rate depending upon the facility.
The weighted average interest rate on the fixed rate debt and the average
maturity of that debt was as follows:
2003 2002
% %
Weighted average interest rate:
Group 7.97 7.95
Joint Ventures 5.63 -
2003 2002
Years Years
Weighted average period for which interest rate is fixed:
Group 6.45 7.34
Joint Ventures 5.01 -
Maturity of financial liabilities
2003 2002
#000 #000
Group
Within one year or on demand 73,937 113,156
Between one and two years 1,444 1,394
Between two and five years 6,632 5,482
In five years or more 128,020 131,206
210,033 251,238
Borrowing facilities
The Group has various borrowing facilities that were not fully utilised at the
year end in which the conditions for utilising those facilities were met.
2003 2002
#000 #000
Expiring in one year or less
Total facilities 147,100 155,000
Unutilised 74,573 43,014
Fair values of financial assets and liabilities
The table below sets out by category the book values and the fair values of the
Group's financial assets and liabilities.
2003 2003 2003 2002
Book Value Fair Value Fair Value Fair Value
Adjustment Adjustment
#000 #000 #000 #000
GROUP
PRIMARY FINANCIAL INSTRUMENTS
LIABILITIES
Short term debt and the current portion of 73,937 73,937 - -
long term debt
Long term debt (over one year) 62,822 76,291 (13,469) (9,068)
ASSETS
Financial assets
Long term loan notes (over one year) (16,575) (16,434) (141) -
DERIVATIVE INSTRUMENTS HELD TO MANAGE DEBT
Interest rate swaps - 3,089 (3,089) (1,294)
Interest rate caps (587) (294) (293) 4
JOINT VENTURES
PRIMARY FINANCIAL INSTRUMENTS
Long term debt (over one year) 16,575 16,434 141 -
DERIVATIVE INSTRUMENTS HELD TO MANAGE DEBT
Interest rate swaps - 581 (581) -
The effect on net assets per share of the total fair value adjustment
(#17,432,000 less tax of #5,230,000) would be a decrease of 23.9 pence (2002 :
14.2 pence).
The calculation of the fair values has been arrived at as follows:
Debt has been calculated by discounting cash flows at prevailing rates of
interest.
The equity assets have been valued at the quoted share price based upon the
strategic nature of the holdings compensating for any placing discount.
Interest rate swaps have been valued at the market rate for such swaps.
Interest rate derivatives to manage interest rate profile are analysed as
follows:
Group:
#9,000,000 swapped at 7.52% fixed to 2007
#19,400,000 swapped at 5.965% fixed to 2009
#5,500,000 swapped at 5.88% fixed to 2009
#6,200,000 swapped at 6.56% fixed to 2003
#15,000,000 capped at 7.50% to 2003
#100,000,000 capped at 7.25% to 2007
Joint Venture:
#175,000,000 swapped at 4.1% to 2008
The amounts are swapped or capped relative to 3 month LIBOR.
GAINS AND LOSSES ON HEDGES
The Group uses interest rate derivatives to manage its interest rate profile.
Changes in the fair value of the above instruments are not recognised until the
position matures. An analysis of these unrecognised gains and losses is as
follows:
#000
Unrecognised losses on hedges at 31 March 2002 1,294
Prior year losses recognised during the year (916)
Unrecognised losses arising during the year 2,417
Unrecognised losses on hedges at 31 March 2003 2,795
#000
Of which expected to arise:
In year to 31 March 2004 922
In year to 31 March 2005 or later 1,873
MARKET PRICE RISK
It is the Group's policy to minimise its market price risk which comprises
solely interest rate exposures. This is done by the use of interest rate
instruments to cap the Group's exposure to material increases in rates. The
main thrust of the policy is, however, to ensure the carrying cost of investment
property purchases remains fixed over the expected life of retention of those
properties by the Group hence the use of fixed rate loans. Additionally when
considering a significant investment purchase which may take time to complete,
the Group gives consideration to the use of contingent hedging so as to ensure
that long term rates do not move prior to the Group's ability to fix the
associated debt.
21 SHARE CAPITAL
2003 2002
#000 #000
Authorised
60,000,000 Ordinary shares of 5p 3,000 3,000
Ordinary shares of 5p
Allotted, called up and fully paid at 31 March 2002 (50,939,199 shares) 2,547 2,617
Allotted under share option schemes (10,998 shares) 1 14
Shares purchased and cancelled - (84)
Allotted, called up and fully paid at 31 March 2003 (50,950,197 shares) 2,548 2,547
At 31 March 2003 there were share options to subscribe for Ordinary shares under
the Warner Estate Holdings 1995 Share Option Scheme as follows:
At 252.5p per share between 29 January 2001 and 28 January 2008 4,573 shares
At 303.5p per share between 16 August 2004 and 15 August 2011 (to be read in 285,755
conjunction with Note 15(d)) shares
At 319p per share between 17 July 2005 and 16 July 2012 (to be read in 331,702
conjunction with Note 15(d)) shares
During the year 10,998 new Ordinary shares of 5p each were allotted for a cash
consideration of #27,000 in accordance with the provisions of the Warner Estate
Holdings 1995 Share Option Scheme.
22 SHARE PREMIUM ACCOUNT
2003 2002
#000 #000
At 31 March 2002 5,522 4,923
Premium on shares issued under share option schemes (note 21) 26 599
At 31 March 2003 5,548 5,522
23 RESERVES
OTHER RESERVES
CAPITAL OTHER *PROFIT
REVALUATION REDEMPTION MERGER CAPITAL AND
RESERVE RESERVE RESERVE RESERVE LOSS
ACCOUNT
#000 #000 #000 #000 #000
GROUP
At 31 March 2002 15,585 303 7,693 172,352 6,881
Transfer from profit and loss - - - 1,552 (1,552)
account
Realised on disposal of investment (5,444) - - 5,444 -
properties
Revaluation surplus on investment 3,745 - - - -
properties
Share of joint ventures' (4) - - - -
revaluation deficit on investment
properties
Decrease on revaluation of (2,152) - - - -
investments and shares of
associate
Unrealised surplus on property 1,190 - - - -
disposal into joint venture
Actuarial losses on pension scheme - - - - (317)
assets
Deferred tax on pension assets - - - - 85
Retained profit for the year - - - - 5,714
AT 31 MARCH 2003 12,920 303 7,693 179,348 10,811
Company and subsidiaries 10,519 303 7,693 175,541 9,655
Joint ventures 67 - - - 27
Associate 2,334 - - 807 1,129
AT 31 MARCH 2003 12,920 303 7,693 179,348 10,811
*The closing balance on the profit and loss account includes #235,000 liability (2002 :
#36,000) stated after a deferred tax asset of #100,000 (2002 : #15,000) in respect of the
Group's defined benefit pension scheme as set out in note 3 to the accounts.
24 RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES
2003 2002
#000 #000
Operating profit 28,729 22,162
Depreciation of tangible fixed assets 133 130
Loss on sale of other tangible fixed assets - 11
Decrease/(increase) in stocks 7,330 (24,390)
(Increase)/decrease in debtors (2,096) 19,513
Decrease in creditors 595 (2,643)
NET CASH INFLOW FROM OPERATING ACTIVITIES 34,691 14,783
25 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
2003 2002
#000 #000
Increase/(decrease) in cash in the year 55,114 (54,278)
Decrease in long term mortgages and loans 1,787 1,438
56,901 (52,840)
Opening net debt (249,675) (196,835)
CLOSING NET DEBT (192,774) (249,675)
26 ANALYSIS OF NET DEBT MOVEMENT
2002 Reclassification Cash Flow Non-cash 2003
Items
#000 #000 #000 #000 #000
Cash at bank and in hand 843 - 15,795 - 16,638
Bank overdrafts/short term (111,862) - 39,319 - (72,543)
borrowings
- 55,114 -
DEBT DUE WITHIN ONE YEAR
Mortgage and other loans (1,294) 500 - - (794)
Bank loan - (600) - - (600)
(100) - -
DEBT DUE AFTER ONE YEAR
Mortgage and other loans (112,503) 30,816 1,508 (80) (80,259)
Bank loan (24,859) (30,716) 600 (241) (55,216)
- 2,108 (321)
NET DEBT (249,675) - 57,222 (321) (192,774)
A term facility previously disclosed under mortgage and other loans has been
reclassified as a bank loan to reflect the change in the status of the lender
and the debt repayment profile.
27 OPERATING LEASE COMMITMENTS
2003 2002
#000 #000
Group
Annual commitments in respect of operating leases on properties are as
follows:
Expiring after five years 667 647
28 DIRECTORS' INTERESTS AND RELATED PARTY TRANSACTIONS
The Group has taken advantage of the exemption available under FRS 8, Related
Party Disclosures, from disclosing transactions between related parties within
the Group.
Fees paid in respect of contracts, which provided services in the ordinary
course of business to the Group, and in which Directors have or had interests,
were as follows:
2003 2002
Mr G A Cooke #000 #000
Director of ATIS Real Weatheralls Limited - Secondment of trainee 18 9
During the year there were loan transactions between the Group and joint
ventures, as set out in note 14. Interest payable on these loans and
management charges, payable by the joint ventures, are also set out in note 14.
29 PROFIT ON SALE OF INVESTMENTS
On 5 July 2002 the Group disposed of its fifty percent shareholding in
Midland Commercial Properties Limited joint venture for #2.1million. No profit
was made on the disposal.
30 The figures and financial information for the year ended 31 March 2003 are
extracted from, but do not constitute the statutory financial statements for
that year. Those financial statements have not yet been delivered to the
Registrar, but include the Auditors' Report which was unqualified and did not
contain a statement under Section 237(2) or (3) of the companies Act 1985. The
figures and financial information for the year ended 31 March 2002 included in
the preliminary announcement are extracted from, but do constitute, the
financial statements for that period. Those financial statements have been
delivered to the Registrar and include the Auditors' Report which was
unqualified and did not contain the statement under Section 237(2) or (3) of the
Companies Act 1985.
THE FOLLOWING FIVE YEAR RECORD IS UNAUDITED.
FIVE YEAR RECORD
ANALYSIS OF GROSS RENTAL INCOME
Year to Year to Year to Year to 18 months Year ended Year ended
ended
31 March 31 March 31 March 31 March 31 March 30 Sept 30 Sept
2003 2002 2001 2000 2001 1999 1998
BY PROPERTY TYPE #000 #000 #000 #000 #000 #000 #000
Residential - - 2,104 2,243 3,233 2,205 2,182
Offices 22,535 13,801 11,808 5,616 15,350 4,270 4,791
Retail 8,527 8,333 9,835 7,898 13,934 7,049 5,997
Industrial 5,935 5,273 4,071 2,485 5,247 2,389 2,112
36,997 27,407 27,818 18,242 37,764 15,913 15,082
BY ACTIVITY
Property 33,230 24,686 25,139 15,536 33,431 13,940 12,953
Investments
Property Trading 3,767 2,721 2,679 2,706 4,333 1,973 2,129
36,997 27,407 27,818 18,242 37,764 15,913 15,082
ANALYSIS OF VALUATION OF COMPLETED INVESTMENT PROPERTIES
March 2003 March 2002 March 2001 March 2000 March 2001 Sept 1999 Sept 1998
#000 #000 #000 #000 #000 #000 #000
Residential - - - 39,697 - 41,569 33,152
Offices 227,790 218,402 101,388 98,478 101,388 57,268 36,673
Retail 47,260 117,898 121,920 93,479 121,920 86,711 70,095
Industrial 58,771 66,886 66,876 37,992 66,876 18,099 13,782
333,821 403,186 290,184 269,646 290,184 203,647 153,702
KEY PROFIT AND LOSS ACCOUNT AND BALANCE SHEET FIGURES
Year to Year to Year to Year to 18 months Year ended Year ended
ended
31 March 31 March 31 March 31 March 31 March 30 Sept 30 Sept
2003 2002 2001 2000 2001 1999 1998
#000 #000 #000 #000 #000 #000 #000
Operating profit 32,454 25,268 24,587 15,137 34,299 12,987 11,740
Profit before 34,911 27,954 40,759 23,783 52,591 21,252 18,792
interest and tax
Profit before tax
Revenue 15,005 13,067 8,224 9,882 12,852 9,888 9,051
Capital 1,552 2,083 13,449 3,314 14,320 3,064 1,352
Total 16,557 15,150 21,673 13,196 27,172 12,952 10,403
Properties 379,865 456,560 321,658 343,858 321,658 261,117 178,492
Fixed assets 380,305 430,578 379,691 354,674 379,691 297,193 225,122
Pre FRS 19 223,499 215,720 211,294 172,504 211,294 - -
shareholders'
funds
FRS 19 adjustment (4,328) (4,837) (3,681) (3,171) (3,681) - -
Equity 219,171 210,883 207,613 169,333 207,613 176,884 153,838
shareholders'
funds
Year to Year to Year to Year to 18 months Year ended Year ended
ended
31 March 31 March 31 March 31 March 31 March 30 Sept 30 Sept
2003 2002 2001 2000 2001 1999 1998
Adjusted earnings p p p p p p p
per share
Revenue 23.32 21.42 15.61 15.50 22.56 15.63 13.51
Capital 3.08 3.56 24.78 5.82 25.88 5.21 1.95
Total 26.40 24.98 40.39 21.32 48.44 20.84 15.46
Dividends per share 16.00 15.00 14.00 13.70 21.00 13.60 13.20
Adjusted net assets 439 423 404 324 404 346 301
per share
Triple net assets 414 403 384 277 384 302 255
per share
The Company changed its year end to 31 March in 2001. The 3rd and 4th columns
are pro forma twelve month results to 31 March 2001 and 2000.
Triple net assets per share is after adjustment of debt to fair value and
potential deferred tax disclosed, but not provided in the financial statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SSMFAMSDSEFM