RNS Number:5060Z
Warner Estate Holdings PLC
08 June 2004
PROPERTY FUNDS DRIVE WARNER'S PERFORMANCE
Warner Estate Holdings PLC ("Warner Estate"), the property investment company
has today announced its preliminary results for the year ended 31 March 2004.
Highlights
* Property under management up 46% to #877m (2003: #602m)
* Formation of three new funds with property under management of #249m
* Adjusted* revenues per share up 5.3% to 24.5p (2003: 23.3p). Basic
EPS 24.8p (2003: 27.4p)
* Commercial rent roll under management up 32% to #62m (2003: #47m)
* Adjusted* NAV up 13% to 498p (March 2003: 440p restated)
* Triple NAV** up 14% to 475p (2003: 415p restated)
* Adjusted* shareholders' funds up 13% to #251m (2003: #222m restated).
Equity shareholders' funds #246m (2003: #217m restated)
* 33rd year of unbroken dividend growth
* Dividend raised by 6.25% to 17p (2003: 16p)
*adjusted for deferred tax
**adjusted for deferred tax and fair value debt
Philip Warner, Executive Chairman of Warner Estate commented,
"Warner Estate continues to deliver good performance, driven by our evolving
asset management strategy. This year we have established another three major
specialist funds. With our partners we now own close to #1 billion of property
assets, managed by our excellent team which focuses on adding value to all of
our properties.
"I am delighted to report results which demonstrate a successful strategy and a
performance which ranks us at the top of our industry. They have enabled us to
increase the dividend for the thirty-third year in succession, a track record of
which we are rightly proud.
"Looking forward we have the platform to maintain growth in the scale of our
operations. We are aiming to attract both new properties and financial partners
to invest in our specialist property funds. The future for the company is
promising and I am confident of reporting further progress shortly."
- ends-
Date: 8 June 2004
For further information contact:
Warner Estate Holdings PLC City Profile Group
Philip Warner, Chairman Simon Courtenay
Richard Moore, Property Director Chris Lane
Peter Collins, Finance Director 020-7448-3244
020-7907-5100
Web: www.warnerestate.co.uk
CHAIRMAN'S STATEMENT
Good performance deriving from a clear-cut strategy has been maintained this
year, underpinned by a 14% rise in triple net asset value and the formation of
three further funds. Property assets under management in joint venture at the
year end were valued at #542 million and those wholly owned at #335 million, a
total of #877 million (2003: #602 million), which exceeds the target of #750
million referred to last year. The annualised rent roll at 31 March 2004,
including that under management, was #62 million (2003: #47 million). Adjusted
shareholders' funds (pre FRS 19) now exceed #250 million for the first time.
RESULTS OVERVIEW
In a highly competitive market, all the specific sub sectors selected by the
Group have contributed to an excellent 13% increase in net asset value from 440p
to 498p. Triple net asset value, which adjusts for deferred tax and the fair
value of debt, performed even better, rising 14% from 415p to 475p.
For the third year in succession the total return made by our benchmarked wholly
owned property assets has placed us in the top quartile of their benchmark,
15.0% against the IPD All Fund return of 12.6%. As heralded last year, the
Agora Shopping Centre Fund has also been benchmarked and returned an impressive
result in the top 5%.
During the year, ten investment properties were purchased at a cost of #58
million, and 13 were purchased in joint venture for #180 million. After
disposals, which realised a profit of #1.6 million, the valuation of the 79
wholly owned investment properties was #317 million at the year end (2003: 81
properties and #334 million).
Growth in recurring revenue, the measure of core maintainable income, has been
held back temporarily, as reported at the half year, as a result of our planned
strategic move to create an additional income stream from asset management.
There was also a loss of dividend income following the disposal of the Group's
successful investment in Merivale Moore in August. Nevertheless, recurring
profits before tax rose to #14.2 million (2003: #14.1 million) and adjusted
recurring earnings per share to 22.9p (2003: 22.2p), comfortably ahead of the
Group's own budget.
Pre-tax profits were #15.7 million (2003: #16.6 million) and adjusted earnings
per share 26.31p (2003: 26.40p). Revenue profits before tax, which exclude the
effect of fixed asset disposals, were #14.1 million (2003: #15.0 million) and
adjusted revenue earnings per share 24.54p (2003: 23.32p). Basic earnings per
share were 24.84p (2003: 27.41p)
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 6.25% rise in dividends per share from 16.0p to 17.0p,
well above the current rate of inflation and the Company's 33rd successive
increase. The dividend is covered 1.35 times by recurring revenue earnings and
1.44 times by revenue earnings. If approved at the Annual General Meeting, the
final dividend per share of 8.75p will be paid on 15 September 2004 to
shareholders on the register at close of business on 27 August 2004.
STRATEGY
We have continued to build successfully on the strategy first set out three
years ago. Co-investment in funds to provide an additional income stream from
asset management alongside the asset backing provided by our wholly owned core
portfolio has produced for shareholders over this period rising net assets,
rising dividends and a rising share price. Your Board believes that this
strategy will maintain that progress.
During the year, a seventh Northwest shopping centre, the Pyramids in
Birkenhead, was added to the Agora Shopping Centre Fund taking the value at 31
March to #293 million and, as anticipated last year, the #113 million Skipper
Regional Office Fund and the #116 million Radial Distribution Warehouse Fund
were established. A further #20 million fund, invested in industrial properties,
was also formed. We shall seek to expand these funds during the current year
through additional properties and partners with a view to achieving a target of
#1.1 billion of property under management, including our core portfolio. If our
research and risk analysis process identifies a further suitable sector for
investment, a further fund may be formed. Development remains an important part
of our asset management process, particularly in the Agora Fund, and
shareholders should expect this to increase.
Publication of the Government's consultation paper on Property Investment Funds,
(PIFs or REITs), maintained progress towards a tax transparent vehicle for
property investment. We shall monitor the consultation process and it may be,
depending on the details and the conversion costs, that such a structure will be
suitable for Warner Estate or its funds.
Adjusted gearing (pre FRS 19) has fallen from 87% to 69% at the year end. If the
element of non-recourse debt is excluded, the figure is 47% (2003: 61%). Our
share of the #236 million of debt in the joint ventures is also non-recourse
except for approximately #7 million. Although the economic outlook has improved
during the year, there is an increased adverse risk from global events and our
policy that gearing should not exceed 100% continues. Interest is covered 2.8
times (2003: 1.9 times) by recurring profit before interest and tax. A prudent
hedging policy remains in place which limits our current exposure.
PROSPECTS
The UK outlook is promising with the economy growing, interest rates at
historically low levels, despite recent and probably further rises, and signs of
rental growth allied to a recovering occupational market. Allocations to
property by institutions are increasing which should support the strong
investment market seen over the past year and if PIFs come to fruition we shall
see that pressure on supply maintained. Substantial demand will make
purchasing for the Group more difficult but the value of property already under
management should continue to benefit and interest in indirect ownership through
funds such as those managed by the Group is expected to increase. A note of
caution is pertinent in respect of the global picture where the risks from
terrorism and currently, oil prices may impinge upon the more benign scenario at
home. However, the Group is well placed for the forthcoming year with
relatively low gearing, sufficient facilities to permit expansion as strategy
and opportunity dictate and a worthwhile quantum of existing assets from which
to extract value. I am confident our experienced team will ensure continuing
progress.
Philip Warner
Chairman
PROPERTY REVIEW
In March 2001 we set out our strategy for becoming recognised as active asset
managers. The key to our success would be growth of rental income, being a
measure of management skill which can be seen, assessed and valued. This year
the excellent results are an amalgam of our own efforts in all sectors together
with the added bonus of an improvement in yields across the board. Just to
reinforce the point, although yields are an external factor outside our control,
albeit one from which we can seek to derive benefit, it is the potential for
rental growth which the skilled asset manager can identify, invest in and
realise through active management. On the evidence of our results we truly are
active asset managers.
2003 was another year dominated by shopping centre transactions. Some #6.2bn
worth of assets changed hands. The scramble for ownership mainly came from the
institutions. This has led inevitably to yields falling to levels not seen in
this sector since the eighties. Buying both for our wholly owned Core portfolio
and for the Agora Fund has been hard and being second is no consolation. Our
enthusiasm remains undiminished and it will be interesting to see whether
shopping centres follow the example of retail warehousing in both yield and
ownership.
The offices sector remained fairly static with the hotspots of Manchester, Leeds
and Birmingham being driven by restructuring in the financial sector. Skipper
has representation in all these locations and should continue to thrive.
However, the market has started to anticipate growth in the West End, hence our
interest in Benchmark plc. It could still be some 12 months before there are
real signs of rental growth which makes the present the ideal time for a
strategic move. This shift also holds out some hope for both the City and
Thames Valley.
From the purchase of the #166 million Morley Portfolio, we have created
foundations for the #116 million Radial Distribution Warehouse Fund, owned 50/50
with Bank of Scotland, and the #20 million Bareway Industrial Fund, owned 50/50
with Barclays Bank. Our interest in Distribution stems from the increase in EU
legislation and our own country's logistical problems which provide an avenue
for major growth. Warner Estate already has a good historical base in the
manufacturing sector and the Bareway Fund will complement growth in our Core
portfolio.
Institutional funds have returned to the market in some strength, especially
towards the latter part of 2003. They are now being driven by the need to
increase their weighting in property. Such a move has had an impact on yields
in all sectors and is also hindering the flow of stock coming from them. A
consequence of their difficulties in obtaining stock appears to be an increase
in their willingness to enter into joint ventures or indirect vehicles in order
to obtain representation in a particular sector. We are ideally placed to
satisfy their requirements and our continuing high IPD performance reinforces
our reputation for competence in our chosen sectors. Maintaining our sector
balance and ensuring we make the most of our asset management initiatives are
keys to our success.
KEY STATISTICS
Total 2003/04 2003/04 2002/03 2001/02 2000/01
Owned and Owned* Owned* Owned* Owned*
under
management
Capital Value #877m #317m #334m #403m #290m
Annualised rent roll #62.0m #24.4m #29.0m #32.5m #22.6m
Initial Yield 6.85% 7.39% 8.68% 8.06% 7.9%
Average Unexpired 10.5 yrs 12.3 yrs 12.4 yrs 11.5 yrs 10.3 yrs
Lease Term
Void Rate 3% 3% 3% 5% 8%
Number of Properties 112 79 81 93 90
Average Lot Size #7.83m #4.01m #4.12m #4.3m #3.2m
* Investment properties only
The breakdown by sector at 31 March 2004 was as follows:
No. of Value #m Annual Rent Net initial Weighting
Properties Roll #m yield
Retail
Retail Warehouses 7 27.0 2.0
High Street 10 30.3 2.1
Retail sub total 17 57.3 4.1 7.19% 18%
Offices
London 4 10.0 0.8
South East 21 92.0 7.3
Rest of UK 10 59.9 4.9
Offices sub total 35 161.9 13.0 7.69% 51%
Distribution and Industrial
South East 13 50.0 2.9
South West 2 6.3 0.6
Midlands 9 27.7 2.9
North 3 14.2 0.9
Distribution & Industrial 27 98.2 7.3 7.68% 31%
sub total
Total 79 317.4 24.4 7.39% 100%
Trading 9 17.5 0.8 6.67%
Total directly held 88 334.9 25.2
Funds (50% owned)
Agora Shopping Centres 7 293.0 18.5 6.10%
Skipper Regional Offices 6 112.7 8.6 7.25%
Radial Distribution 8 116.4 8.2 6.75%
Bareway Distribution 3 19.8 1.5 7.40%
Total under management 112 876.8 62.0
AGORA SHOPPING CENTRE FUND (A JOINT VENTURE WITH BANK OF SCOTLAND)
Value - #293m Initial yield - 6.1%
No. Tenants Area Income Value
Shopping Centres 7 482 160,635 sq. m #18.5m #293.0m
(1,732,600 sq. ft)
The Agora Fund was launched in late March 2003 focussed on the Northwest Region.
The concept is to create a portfolio of community shopping centres, dominant
in their locations, where we can build upon the customer loyalty already
evident. Additional capital will be allocated as appropriate to each centre,
enhancing by design their retail floor plates in order to ensure they fit modern
needs. We have seven shopping centres in the Northwest of England within a 35
miles radius of Manchester City Centre, giving us both a strong geographical
spread throughout the region and exposure to all levels of the retail hierarchy.
We intend to purchase further shopping centres which complement the
geographical and retail blend and which are capable of extension, improvement
and refurbishment. This year we completed extensions at Sale and Ellesmere
Port, which, both by demolishing the old and through reconfiguration, produced
143,000 sq. ft. of new space and added a further #1.072m rent to the Fund.
The following properties are held in this fund:-
BOLTON, MARKET PLACE
29,248 sq. m. (320,000 sq. ft.)
Market Place is Bolton's premier retail location. Following DB3's opening in
2002 the upper mall has been reconfigured to provide an extended unit of 8,600
sq. ft. for River Island and a re-geared lease. Additionally, a new shop has
been pre-let to La Senza helping to push the rental income up by a further
#39,000 p.a. with another #74,000 to follow on full letting. We successfully
held an architectural competition in Autumn 2003 following which Van Heyningen
and Haward were appointed to sympathetically re-design the current Victorian
market hall. The new plan will show an additional 100,000 sq. ft. of retail
space in the centre and our application, with the Local Authority's
recommendation, will be submitted in the summer.
PRESTON, FISHERGATE
33,445 sq. m. (360,000 sq. ft.)
In 2003 Preston was granted City status. We intend to improve our centre by
increasing the retail fashion offer and widening the shopping opportunities. In
December 2003 we submitted an application to extend the centre by 189,000 sq.
ft. and to add a new multi-deck car park which will take the total number of
spaces from 736 to 1062 spaces. The application is due to be heard this
summer. We have already received consent to remodel the front entrance
incorporating a brand new high quality 3,000 sq. ft unit spread over two levels.
In addition to this, Debenhams have now completed and opened their 30,000 sq.
ft. extension and are trading on four levels in a total area of 130,000 sq. ft.
MIDDLETON
25,300 sq. m. (272,300 sq. ft.)
After years of lack of investment, plans for the revitalisation of this centre
are moving ahead. A brand new #5m bus hub terminal, developed by the Greater
Manchester Passenger Transport Executive, is already on site. In December 2003
we submitted our application to extend the centre by a further 44,000 sq. ft.
In addition, we have already agreed terms to purchase adjacent land from
Rochdale Borough Council to facilitate our extension of the centre. We have
also purchased the adjoining Suffield and
Colmar Houses, thereby affording further opportunities to extend the quality and
quantity of retail units in Middleton.
ELLESMERE PORT, PORT ARCADES
27,615 sq. m. (297,248 sq. ft.)
To understand the Agora concept in action, a visit to the Port Arcades is
recommended. Phases 1 and 2 of our development have just completed and, with
new lettings to Wilkinsons, JJB Sports, Mecca, Poundland, Savers and others, we
have, through demolition and reconfiguration, increased the centre by a 77,000
sq. ft. generating new lettings worth #698,000 per annum. Only one 2,500 sq. ft.
shop remains on the market. We have received planning permission for a new
8,200 sq. ft. unit in Phase 3 where we expect to start work in summer 2004. We
plan to capitalise on Asda's proposed relocation to a new 95,000 sq. ft.
superstore on the car park at the rear of Port Arcades by adding another 57,000
sq. ft. of retail (Phase 4) looking on to the car park. We submitted a planning
application for this project in December 2003.
SALE, THE SQUARE
21,390 sq. m. (230,240 sq. ft)
Sale is another success story. In April 2004 we completed our extension of The
Square Shopping Centre. New units have been built for Peacocks, Quality Save
and Wilkinsons enlarging the centre by 66,000 sq. ft. and providing #374,000 of
new rental income. They opened for trading in summer 2003. Since then we have
developed Wilkinsons' old unit into a new 16,000 sq. ft. shop which is being
marketed. New lettings carried out during the year have breached the #40.00
Zone A threshold and in February this year we completed a new letting to Dr &
Herbs at a record rent for the shopping centre of #47.00 Zone A. This is a
satisfying endorsement of our regeneration programme, breathing new life into
The Square and into Sale town centre.
LIVERPOOL, CAVERN WALKS
10,137 sq. m (109,820 sq. ft.)
In October 2003 we welcomed Vivienne Westwood to Cavern Walks in a new bespoke
unit. This is Vivienne Westwood's third store outside London and is a magnet
for haute couture labels, reinforcing Cavern Walks' position within the high
fashion hierarchy in Liverpool City Centre. At the same time,
one of our existing tenants, Cricket, extended their unit from 1,500 sq. ft. to
5,800 sq. ft. We are now trying to satisfy demand from similar retailers for
new units through active management initiatives to continue this exciting trend.
Liverpool's winning of the nomination for Europe's Capital of Culture in 2008
has created a buzz of enthusiasm in the City and in Cavern Walks. In the office
tower we let two floors to Direct Line in July 2003 (26,700 sq. ft.) which
generated an additional #240,000 of rent. We now have only two floors vacant
one of which is under offer and the other is undergoing a comprehensive
refurbishment prior to marketing.
BIRKENHEAD, THE PYRAMIDS
13,300 sq. m. (143,000 sq. ft.)
The Pyramids is the most recent acquisition by the Agora Fund, purchased in June
2003. First developed in 1986, it has 49 tenants including Marks & Spencer,
River Island, Next and Boots. In August 2003 we secured planning permission to
add a further two units (total 24,000 sq. ft.) to a redesigned food court in the
heart of the centre which when pre-let will allow us to further enhance the
fashion offer within the centre. We have also secured a letting to Faith for a
new 10 year lease, adding to the fashion content of the centre and driving the
Zone A rental level forward to #88. The Pyramids is situated in the prime
pedestrianised Grange Road, adjacent to a 400 space multi storey car park which
we have agreed to purchase from Wirral Borough Council and to integrate fully
into the shopping centre.
SKIPPER REGIONAL OFFICES FUND (A JOINT VENTURE WITH THE ROYAL BANK OF SCOTLAND)
Value - #112.7m Initial yield - 7.25%
No. Tenants Area Income Value
Offices 6 43 54,852 sq. m #8.6m #112.7m
(590,441 sq ft)
Launched in July 2003 with the Royal Bank of Scotland, the objective of our
Regional Office Fund is to own investments in central business districts of the
UK. We identified this sub-sector as having a healthy income proportion of
total return, relatively low volatility, stable long term supply and demand
characteristics and strong covenants. The income yield on the portfolio is
7.25% of which over 50% is let to FTSE 100 and 250 companies or the Government
and 65% income is secure for 10 years or more. Our business model is founded on
improving the quality, quantity and longevity of income through active
management initiatives which can include controlled refurbishment projects on a
pre-let or re-geared basis.
The following properties are held in this fund:-
EDINBURGH, APEX 123
8,796 sq. m. (94,683 sq. ft)
This is a modern air conditioned office building in the Haymarket district of
Edinburgh, let to the Secretary of State, Abbey National, Scottish Enterprise
and others. A unit of 17,869 sq. ft. will become
vacant on a lease expiry in December 2004 which will provide an opportunity to
refurbish, re-let and drive our rental income forward. Other opportunities
include potential lease re-gearings and the possibility of re-ordering the
tenants occupation laterally across large single open plan floors.
BIRMINGHAM, SOLIHULL, SAPPHIRE COURT
8,041 sq. m. (86,553 sq. ft.)
Nearly half of our income in this building is Government backed with lease
expiries typically in 2013 and 2014. In February this year we replaced the
remaining term of nine years until expiry held by the First Secretary of State
on 18,345 sq. ft. with a new lease expiring in 2028 with a single tenant break
option in 2021. We have similar initiatives targeted for other tenants and the
building has excellent potential for expansion by a further 25,000 sq. ft.,
subject to demand.
KINGSTON, LEVER AND SURREY HOUSE
14,832 sq. m. (159,661 sq. ft.)
We completed our ownership of this important island site with the purchase of
Cheltenham House in March this year. The principal office building - Lever
House - is let to Lever Brothers until December 2072 and has an outstanding
review from December 2003 which is currently being negotiated. There is asset
management potential with Surrey House where both office floors (comprising
32,400 sq. ft.) are let on a flexible basis and, subject to demand, will be
refurbished and re-let on new secure leases.
GLASGOW, BATH STREET
8,183 sq. m. (88,084 sq. ft.)
This building is one of the few Grade A refurbished office buildings in the City
core that offers open plan floors of around 14,000 sq. ft. It is let to two
principal office tenants on relatively flexible leases, Teletech (UK) Ltd who
are guaranteed by their US parent company and NAG Europe Ltd, and opportunities
exist with both for future re-gearing initiatives.
BOURNEMOUTH, HOLLAND HOUSE
7,450 sq. m. (80,187 sq. ft.)
We completed a re-gearing of the First Secretary of State's lease in April 2003,
exchanging nine relatively short term leases over the eight floors for a single
overriding lease until 2028 with a single tenant's option to determine in 2021.
This is a good example of the active management initiatives we seek to execute
within our portfolio. The pace of capital growth has continued since the lease
re-gearing with strong institutional demand for long dated Government stock.
LEEDS, YORKSHIRE HOUSE
7,552 sq. m. (81,293 sq. ft.)
Our renovation of the common parts of this multi tenanted 1960's office building
has started and throughout the forthcoming year we will be refurbishing office
suites that become vacant to an air conditioned standard so that we can re-let
on new higher rents. This refurbishment programme will continue throughout the
building and is being matched by Lupton Fawcett, the principal office tenant
with some 34% of the total office space, initiating their own high quality
refurbishment this year. On completion we aim to have totally refurbished the
entrances, common parts and lifts to create a high standard of air conditioned
offices, consequently increasing revenue by over 25%.
RADIAL DISTRIBUTION FUND (A JOINT VENTURE WITH BANK OF SCOTLAND)
Value - #116.4m Initial yield - 6.75%
No. Tenants Area Income Value
Distribution Warehouses 8 8 13,066 sq. m. #8.2m #116.4m
(1,482,734 sq. ft.)
Our Radial Distribution Fund was launched with the Bank of Scotland in September
2003. We have identified this sub-sector as having strong growth potential
given the relative scarcity of new sites available for distribution. The UK's
increasing reliance on importing and moving goods swiftly and efficiently around
the country requires increasingly sophisticated logistics networks. We are
seeking high bay warehousing investments located at or near ports, airports,
rail freight terminals or major motorway intersections. The Fund's assets are
typically between 200,000 sq. ft. and 500,000 sq. ft. of very modern stock
featuring low site coverage of about 40%. This provides opportunities for
tenants to expand and for the Fund to re-gear tenants' leases. The average
unexpired term across the portfolio is 12 years. Tenants include Tesco,
Sainsburys, Antalis, Focus DIY and Dunlop Tyres.
The following properties are held in this fund:-
LEICESTER, ANTALIS UNIT, INTERLINK BUSINESS PARK, BARDON
21,160 sq. m. (227,763 sq. ft.)
Interlink Business Park is a recent commercial development located close to
junction 22 of the M1 via the A50 trunk road. The Antalis unit was purpose
built for the tenant in 1997 and subsequently extended in 2001; its site
coverage is now 42% over 5.05 hectares (12.47 acres) with potential for a
further a
50,000 sq. ft. Antalis, part of Worms et Cie, use this facility as their
national distribution hub for stationery and paper supplies. The property is
let until 2017 on institutional terms.
BRISTOL, WESTERN APPROACH, SEVERNSIDE
22,679 sq. m. (244,113 sq. ft.)
Western Approach Business Park is approximately 9 miles north west of Bristol
with access via the M5 (junction 18A), the A403 trunk road, and the M48. It is
3 miles from the Avonmouth container port. The property was built in 1997 and
is occupied by Focus DIY as their South and Southwest UK distribution hub. The
site area is 5.7 hectares (14.08 acres) with a site cover of 40% and includes
expansion land able to accommodate a 30,000 sq. ft. extension. The property is
let until 2022 on institutional terms with a tenant's break clause in 2017.
COLESHILL, HIGH POINT (1) - COLLINS & AIKMAN
13,066 sq. m. (140,646 sq. ft.)
Highway Point at Coleshill, Warwickshire is a purpose built distribution park 8
miles north east of Birmingham on the A446 trunk road with direct access to the
M6 (junction 4) and the M42 (junction 9). It is within a short distance of the
international rail freight terminal at Hams Hall and Birmingham International
Airport. The site extends to 3.94 hectares (9.73 acres) representing 33% site
coverage and there is expansion land for extending the facility on which
additional rent is paid. The property is let to Collins & Aikman, guaranteed
by its US parent until 2027, with a tenant's break option in 2017.
COLESHILL, HIGHWAY POINT (2) - GREENWOODS COMMUNICATIONS
11,170 sq. m. (120,238 sq. ft.)
On adjacent land to the Collins & Aikman unit there is a purpose built
distribution facility let to Greenwoods Communications. The site extends to 3.2
hectares (7.9 acres) representing 35% site coverage, and there is expansion land
for which the tenants pays an additional rent. Greenwoods Communications have
centralised into this building from nine local satellite operations and it is
now their national distribution hub. It is let until 2022 with a tenant's
option to determine in 2017.
WEYBRIDGE, BROOKLANDS BUSINESS PARK
29,091 sq. m. (313,135 sq. ft.)
This distribution facility was purpose built for the current tenant, Tesco, in
1983 and subsequently extended in 1989. It services Tesco's southern Home
Counties network and the South Coast. Situated on the west side of London close
to junctions 10 (A3) and 12 (M3) of the M25, and approximately 9 miles south of
Heathrow Airport, the site area is 5.91 hectares (14.58 acres) with a site
coverage of just under 50%. Brooklands is a multi use commercial estate and
other occupiers include Mercedes Benz (building their motor sport heritage
facility), several other distribution units and a retail park including Marks &
Spencer. The unit is let to Tesco until 2014.
YATE, GREAT WESTERN BUSINESS PARK
23,078 sq. m. (248,410 sq. ft.)
Great Western Business Park is situated between junctions 18 and 19 of the M4
motorway, 7 miles north east of Bristol with access via the A432 and M32. The
unit is on a site of 5.8 hectares (14.36 acres) representing around 40% site
coverage. The facility has been fitted out substantially for cold store use and
is capable of division into 5 self contained units of circa 50,000 sq. ft. each.
It is let to Sainsbury until 2019.
MANCHESTER, STAKEHILL INDUSTRIAL ESTATE
9,525 sq. m. (102,526 sq. ft.)
Stakehill Industrial Estate is an established distribution location
approximately 8 miles north east of Manchester, just south of junction 19 of the
M62 and 2 miles from junction 20 of the M60 Manchester Orbital motorway. The
property has a site area of 2.94 hectares (7.25 acres) with site coverage of 32%
offering plenty of room for future expansion as tenants require. Neighbouring
occupiers include Booker, Christian Salvesen, Aldi and Tesco. Trafford Park's
World Freight Centre is located approximately 12 miles south of Stakehill and
Manchester International Airport is 15 miles to the south. It is let to Dunlop
Tyres until 2020 with a tenant break option in 2010.
TAMWORTH, RELAY POINT
7,981 sq. m. (85,903 sq. ft.)
Relay Point is a recently built manufacturing and distribution park close to
junction 10 of the M42 at its intersection with the A5 trunk road in
Staffordshire. The site is 2.28 hectares (5.63 acres) representing 35% site
coverage. Neighbouring occupiers include Britvic, Safeway Distribution, AAH
Pharmaceuticals and Swish Products. The property is let to UCI Logistics until
2018.
BAREWAY INDUSTRIAL PORTFOLIO (A JOINT VENTURE WITH BARCLAYS)
Value - #19.8m Initial yield - 7.4%
No. Tenants Area Income Value
Industrial Estates 3 30 31,114 sq. m #1.5m #19.8m
(334,911 sq. ft)
Bareway is currently the smallest of our funds and we are pleased to have
Barclays join us as a partner. Formed in August 2003, the joint venture invests
in high yielding, multi-let industrial estates in the South and Southeast of
England with strong asset management potential. We have plans to expand the
Fund with similar stock during the coming year both by buying new assets in the
market and by transferring complementary stock from the existing Warner Core
Portfolio.
The following properties are held in this fund:-
NORWICH, HELLESDON HALL INDUSTRIAL ESTATE
11,648 sq. m. (125,380 sq. ft.)
Located just off the inner ring road and within one and a half miles of Norwich
Airport, this is a 28 unit modern industrial estate arranged over three adjacent
terraces. The properties are fully let with the exception of two units
(comprising 15,269 sq. ft.) one of which is under offer.
HARLOW, ROYDONBURY INDUSTRIAL ESTATE
9,455 sq. m. (101,773 sq. ft.)
First constructed in 1979, Roydonbury Industrial Estate comprises nine units
arranged around a cul-de-sac in two terraces and provides a mix of warehouse and
office accommodation with an external yard area. The relatively low site area
of 42% coverage over 2.25 hectares (5.55 acres) offers opportunity for
extensions to units as tenants may require.
WITNEY, WITAN PARK
10,011 sq. m. (107,758 sq. ft.)
Witan Park comprises an estate of seven units built in the late 1970's and
principally let to the Fabulous Bakin Boys until 2010 (66,390 sq.ft.) and Swan
Laundry (27,917 sq. ft.) until 2018 with tenant options to determine in 2011.
The estate is situated in Witney's prime industrial area, close to the A40 dual
carriageway.
CORE PORTFOLIO
Value - #317.4m Initial yield - 7.39%
No. Tenants Area Income Value
79 294 322,467 sq. m #24.4m #317.4m
(3,247,802 sq. ft.)
The purpose of our Core Portfolio has been clearly defined as providing the
asset backing for the Group's financial strategy. Our intention is to hold
between #300m and #400m of property directly on balance sheet. It will be
weighted in line with the balanced portfolio defined by IPD. This means we
shall continue to hold property in retail, office and industrial sectors.
Whilst all our funds will be benchmarked against the appropriate IPD fund the
Core will continue to be matched against the All Fund Index.
The challenge for the Core is to both outperform the Index and at the same time
with opportunities to test out new sectors. At present, stock is held in the
Core which when transferred to the funds will offer us fresh opportunities for
reinvestment.
Cushman & Wakefield Healey & Baker carried out a valuation of the investment
portfolio as at 31 March 2004, which, together with a Directors' valuation,
produced a figure of #317 million and an average lot size of #4.0 million (March
2003 : #334 million and #4.1 million). The valuation produced an uplift
of #13.5 million, net of capital expenditure, of which #2.3 million was in
respect of disadvantaged area status. The apportionment of this uplift is
illustrated below:
Investment 1st Half 2nd Half Share of JV
Property
Valuation Stamp Total Valuation Stamp Total Sales Sub Valuation Stamp Total Total
Total
#m #m #m #m #m #m #m #m #m #m #m #m
Retail 1.7 0.4 2.1 1.1 - 1.1 - 3.2 4.3 3.4 7.7 10.9
Offices - (0.2) 0.2 - 0.7 - 0.7 - 0.7 - - - 0.7
London
Offices - (0.2) 1.0 0.8 2.4 - 2.4 - 3.2 0.7 0.2 0.9 4.1
Rest of UK
Industrial 2.9 0.6 3.5 3.1 0.1 3.2 (0.3) 6.4 - - - 6.4
Total 4.2 2.2 6.4 7.3 0.1 7.4 (0.3) 13.5 5.0 3.6 8.6 22.1
The sales column represents 1st half revaluations that have been reversed
through property sales during the 2nd half of the year.
RETAIL
Value - #57.3m Initial yield - 7.19% Weighting - 18%
No. Tenants Area Income Value
17 42 36,609 sq. m #4.1m #57.3m
(421,803 sq. ft.)
We have some excellent gains in our retail investment holdings with a 9.82%
increase in the capital value of high street retail stock along with a massive
19% increase in income. Retail Warehousing has also seen an 8.6% increase in
value even after the growth provided by last year's bout of rent reviews.
The continuing reduction in yields across the whole of the retail sector has
severely curtailed our opportunities to purchase at prices which we consider
reasonable. Our desire for a shopping centre remains and we are reviewing other
retail sub-sectors to assess their potential.
Looking at individual properties, notable successes have been achieved at
Ashford where we have seen a 37.78% increase in income through letting units 3
and 4, at Erdington with an 11.26% rental increase through the buying in of an
intermediate leasehold interest, at Islington where a 27.33% increase followed
the rent reviews for Boots and Burger King and finally at Rugby with an 11.75%
increase following the buying in of the adjoining property. From a construction
perspective we completed the refurbishment and re-letting at Williamson Street,
Liverpool by letting the 2nd unit to Peacocks on a turnover rent. This has
boosted our first year's rental income by an additional #100,000 per annum.
On the retail warehouse front, we acquired the No Frills DIY unit at Wingate
Road, Luton for #1,7625m at a yield of X. This directly adjoins our existing
retail warehouse at Beechwood Road and provides excellent potential for a
combined redevelopment at a future date.
OFFICES
Value - #161.9 Initial yield - 7.69% Weighting - 51%
No. Tenants Area Income Value
35 114 105,198 sq. m. #13.0m #161.9m
(876,131 sq. ft.)
The weighting in our office portfolio remains high mainly due to three
properties which may be transferred out to the Skipper Fund (#49.8m). Of the 31
properties which remain, our strategy is to concentrate on areas in and around
the M25 which give us balanced growth. The nature of the representation means
our average lot size is between #3m and #7m.
One of the key factors this year has again been rental growth which has been
limited to the locations where strong economic dynamics are ahead of the market
generally. Surplus space in specific areas has been well reported but this
should not be seen as detrimental to the entire sector for there are still
rewards for well researched investment.
Many of our properties have been in our ownership for some time and provide us
with a robust rental income stream. The only unit to decline this year has been
at Millennium Centre, Reading where we agreed to take a surrender of one of the
leases. Here a substantial reverse premium was paid by the tenant which allows
us to refurbish the space and re-let. Elsewhere improvements in rental income
were achieved from the re-letting of space at Wokingham, restructuring leases at
Horsham and settling rent reviews at Vauxhall, London and Guardian House, West
Bromwich. Voids at 6% have been kept well below the statistical average.
Selective sales have been made at Charter Court, Hemel Hempstead and Pembroke
Road, Sevenoaks where yield movements enabled us to take advantage of
significant improvements in value and to sell at a profit.
Yield compressions have been evident in the office sector and translated into a
5.5% improvement in the capital value of our office portfolio on a like for like
basis. We shall maintain our strategy for the
office portfolio of refurbishment, making opportunistic sales and buying in
carefully identified locations to improve the lot size and quality of buildings.
INDUSTRIAL
Value - #98.2m Initial yield - 7.68% Weighting 31%
No. Tenants Area Income Value
27 138 180,160 sq. m. #7.3m #98.2m
(1,949,868 sq. ft.)
At present the Core industrial holding has a balance of manufacturing units
which we continue to work on and individual properties which may be transferred
into either the Radial or Bareway Funds. Whilst each fund has a distinct remit,
the Core has a much wider brief giving us the flexibility to move into new areas
of growth ahead of the herd. We are continually moving the stock forward in both
lot size and standard of accommodation.
From the #166m Morley purchase, #34m worth of stock was taken directly into the
Core Portfolio. Since the acquisition we have achieved increased rental income
from new lettings at Milton Keynes, Bradford and Hinckley. In addition to this,
despite concerns raised by analysts about the continuation of rental growth, we
saw a 36% increase in our income at Abbot House, Park Royal via a lease renewal
with Littlewoods. We also achieved further increases on rent reviews at
Wythenshawe, Walthamstow, and Bedworth.
Our acquisition of a property at Whiston for #7.6m was a notable achievement.
The 135,885 sq. ft. property is used for both manufacturing and distribution
facilities and does not fit into either fund. Currently let to Business Express
Network Services Ltd (part of the Littlewoods mail order operations), on a 15
year lease from June 2003 at a rent of #550,000 per annum, it is occupied by JCM
Media Ltd on a sub-lease. The initial yield on the purchase price was 7.1%.
We are pleased to report a 10.4% improvement in capital value on industrial
property held throughout the year. This has resulted in a fall in our running
yield to 7.82% but our industrial holdings retain their reversionary potential
and, with our expectations of rental growth better than that projected for this
sector, we are confident of continued improvement in their performance.
TRADING
Value - #17.5m Initial yield - 6.67%
No. Tenants Area Income Value
9 34 13,344 sq. m. #0.8m #17.5m
(256,663 sq. ft.)
We have, as stated last year, been working out our trading portfolio and we are
pleased to advise that of the 14 properties reported last year we have completed
the sale of Wisbech, Felixstowe and Bridgend in addition to exchanging
conditionally on Bridge House, Swindon and Palatine Building, Blackpool.
These sales have occurred through working each of the properties to maximise
their potential on disposal, for example through the obtaining of planning
permission at Bridgend and by refurbishing the substantial retail space at
Blackpool in conjunction with pre-letting the created space to New Look and
Supergifts.
At Bridge House, outline residential planning consent subject to the
requirements for provision of Assisted Housing led to a conditional exchange of
contracts for the sale of the property.
Falmouth saw significant improvement in rental value, like many principal
centres in the Southwest, and increasing property values across the region.
This has resulted in the successful marketing and sale of the property since the
year end.
Of the remaining properties, we are carrying out improvement works at both
Hagley Road, Birmingham and Wellington House, Leicester and have gained good
interest in the vacant office space which will enable re-letting and subsequent
disposal of these two buildings. Both buildings have vacant space under offer.
DEVELOPMENT
As anticipated last year, we have completed the disposal of the remaining
properties in our joint venture, Trade Centre Developments, with the sale of the
last property at Southend which completed in March.
Our current involvement in development is through our asset management
initiatives in the Funds, where we have some 600,000 sq. ft. of refurbishment
and extensions in the pipeline. Our view of development, as a sector of the
market, is that it should be part of the Group's armoury giving us the
opportunity to source new investment for both the Core and future funds. We
are exploring the possibility of involvement on an alliance basis, which would
give us the advantages of sharing the skills and experience of proven experts
and of reducing risk.
We are exploring specific situations which we will bring to the fore during the
forthcoming year on an alliance basis. These will allow us the advantages of
sharing the skills and experience of proven experts and have a low cost entry
into the sector.
DISPOSALS
Sales of investment properties have occurred where individual assets no longer
meet our strategic performance requirements or we are able to effect a sale at a
level exceeding our expectations of value.
We have this year successfully completed a number of sales. The estate
break-up and sale of individual units to private investors or tenants at Perram
Works, Guildford and Aldermaston has been concluded. Disposals of smaller
investments at Pembroke Road, Sevenoaks at #1.4m and Marlowes, Hemel Hempstead
at #1.53m both followed our policy of concentrating on larger lot sizes and
taking advantage of the very strong levels of demand at the lower value end of
the market. Charter Court, Hemel Hempstead was sold for #2.2m to a local
investor following our re-organising of the lease arrangements on the property.
Similarly at Stevenage we successfully completed a sale following the new
letting to Waitrose on the ground floor and the sale by way of a long leasehold
granted on the upper parts which combined provided sale proceeds of #1.14m.
From the trading portfolio individual sales were completed at Bridgend, Wisbech
and Felixstowe again driven by strong demand in the sub #2m market.
PROSPECTS
The weight of institutional money coming into the market is making purchasing
harder. However, each type of market brings its own challenges and we are
confident we shall still find suitable stock. It is the ability to meet such
challenges which sets apart the winning team and whichever segment of our
business we look at we are in good shape.
Looking at what we are already managing both in the Funds and in the Core,
reveals exciting potential. We have bought well ensuring good medium to long
term growth. The organisation is balanced with key skills aligned to extract
the growth. This year Nigel Marsden has joined us from Morley and Jonathan
Gardner from Maybrook Properties working on the Core and the Radial Fund
respectively. We also have strength in depth with our very first Graduate
Surveyor, Ginny Smith, who qualified as a MRICS. All of these are now ensuring
we keep up our performance and attract the interest of other investors who may
wish to work with us. The commitment and expertise of our team, together with
our ability to harmonise both financial and property requirements, provide us
with an edge in a very competitive market.
Richard Moore
Property Director
FINANCE REVIEW
This review explains the background behind the year's financial results, during
a period of continued rapid evolution, and highlights the reasons for the strong
underlying performance of the Group.
The Group's strategy, which is reflected in these results, is to grow its
recurring profitability through active property management and the building of
managed property funds from which the Group derives management fee income.
In the last financial year the impact of this strategy has seen the creation of
three new funds with property under management of #249m and a further #45m
expansion in the Agora fund to bring our total property funds within joint
ventures to #542m. This activity included the sale of the Regional Office
portfolio into the Skipper joint venture in July 2003 which had the effect of
reducing recurring profitability in the short term as advised at the interim
stage. The result of this, together with the impact of selling the Group's owned
shopping centres into the Agora fund that was set up in March 2003, was that in
the first half of this year recurring profits declined. However, over the year
as a whole they showed a small increase to #14.2m (#14.1m : March 2003). It is
not inconceivable that such dips will reoccur as the Group continues to build
the business to enhance long term recurring profitability that itself supports
dividend growth for shareholders.
The results incorporate the effect of the Group's early adoption of UITF 37
(Purchases and Sales of Own Shares) and UITF 38 (Accounting for ESOP Trusts)
which has the effect of treating shares owned by the Group in itself as a
reduction in shareholders' funds rather than as an asset, thereby reducing
shareholders' funds this year by #1.7m and last year's restated numbers by a
similar #1.7m. The effect of this on the Group's reported earnings and net asset
value per share is of no material effect.
RETURN ON CAPITAL
The Group measures its own performance, and that of management, on a total
return which incorporates both profit and net revaluation achieved on
shareholder's triple net asset funds. This equates closely to the returns
shareholders actually achieve, namely dividends, which are within management's
control, and share price movement which can be influenced by external factors.
In 2004 our return on shareholders' net triple asset funds was 19.1% (6.6% :
2003) of which two thirds arose from net revaluation gains and one third from
post tax profit. The large contribution from unrealised gains comes from a
combination of a significant reduction in yields, particularly within the
sub-sectors in which the Group and its joint ventures are invested, a valuation
uplift of #5.9m for stamp duty deprived area status and the fixing of #280m of
joint venture debt at interest rates of between 4.1 and 4.3%. This is a
significant change from last year when profits accounted for nearly all the
total return.
2004 2003
restated
#m #m
Profit before tax 15.70 16.55
Tax (pre FRS 19) (1.75) (3.28)
13.95 13.27
Gains taken through reserves 24.91 3.73
Deferred tax arising on unrealised (gains)/losses (5.69) 1.52
Change in the fair value of the cost of Group debt 6.70 (4.95)
Total return for the year 39.87 13.57
Shareholders net triple asset funds at start of year 209.1 203.9
Return on shareholders triple net funds 19.1% 6.6%
Of which
- Post tax profit 6.6% 6.5%
- net property revaluation 9.2% 2.3%
- net increase in value of investments 0.1% 0.2%
- change in fair value of debt 3.2% (2.4%)
RESULTS
The headline numbers are that overall profitability declined to #15.7m from
#16.6m due to a fall in non-recurring profits to #1.5m from #2.5m last year.
This movement is analysed in the table below.
The breakdown between recurring profits and non-recurring profits is as follows:-
2004 2004 2003 2003 Change
#m #m #m #m #m
Recurring profit 14.2 14.1 0.1
Non-recurring profit
Non-recurring revenue items (0.2) 0.2 (0.4)
Trading (loss)/profit (0.1) 0.5 (0.6)
Property trading 15.5 8.1
Cost of sales (15.4) (7.3)
Write down of
trading stock (0.2) (0.3)
Capital profits - own 1.6 1.2 0.4
- share of
associate - 0.4 (0.4)
Associate - 0.1 (0.1)
Operating profit - 1.4
Interest - (1.0)
Dividend received - (0.3)
Joint ventures - trading
profits 0.2 0.1 0.1
Profit on ordinary
activities before tax 15.7 16.6 (0.9)
As can be seen the disposal of the associate which made no contribution in the
current year, the proceeds of which were only received at the end of August
2003, had a material impact on non recurring profits as did the sharp decline in
trading profits. However, the most notable changes to these results lie within
recurring profits where the contribution from joint ventures was #4.9m compared
to #1.3m last year. The following table shows the key elements to recurring
profitability:-
Recurring Profits 2004 2004 2003 2003 Change
#m #m #m #m #m
Owned Property 8.8 11.6 (2.8)
Rental income 27.5 37.0
Property outgoings (5.6) (6.8)
Administration expenses (1.7) (2.2)
Non recurring profits/(costs) 0.2 (0.2)
Group interest (11.6) (16.2)
Dividend from associate - 0.4 (0.4)
Investment income 0.5 0.8 (0.3)
Joint ventures 4.9 1.3 3.6
Income from joint ventures 4.4 1.3
Management fees 1.4 0.4
Management costs (0.7) (0.1)
Interest receivable from j.v's 3.7 1.0
Share of profits from joint
ventures 0.5 0.0
Share of operating profit 13.7 2.4
Share of net interest (12.9) (2.3)
Less non recurring trading
profits (0.3) (0.1)
14.2 14.1 0.1
The #2.8m reduction in recurring profit from owned property largely reflects the
impact of the sale of three shopping centres into the Agora joint venture in
March 2003 which contributed recurring profits of #0.2m in 2003 together with
disposal of the Regional Office portfolio into the Skipper joint venture in July
2003 which contributed recurring profits of #2.9m in 2003 but only #0.7m in the
first four months of the current year. The converse of this is the large rise in
the contribution from joint ventures with the Agora fund producing a full year's
contribution of #1.7m, Skipper an eight months contribution of #2.3m and the
Radial Distribution Warehouse Fund (Fairway Industrial Limited) and Bareway
Industrial Fund (Bareway Industrial Properties Limited) producing a seven month
contribution of #1.3m and #0.3m respectively, before management costs of #0.7m.
The latter was treated as a subsidiary at the interims as the Group exercised
full control at that time but is now accounted for as a joint venture as control
is now undertaken jointly.
Whilst the returns that the Group achieves on the assets held in joint ventures
is lower than would have been obtained had these assets been 100% owned, it
would not have been possible for the Group to have owned these assets without
additional investment and gearing. For an investment of #89m the Group has a 50%
share in assets of #561m compared to #162m of equity invested in #375m of on
balance sheet assets. The result is an overall improvement in the Group's
recurring profitability and this is before any long term performance gains that
the Group might achieve if certain performance targets are met in the joint
ventures. It also leaves the Group with a gearing level of 69% providing the
capacity to continue the expansion of the Group.
Within profits there have also been two other significant changes:
Net interest is shown as #20.83m (#18.35m : 2003) however the Group's net
interest has almost halved at #7.99m (#15.10m : 2003) the balance being in
respect of joint ventures which except for #0.2m is all in respect of
non-recourse. Significantly this means that net interest is covered 2.8 times by
recurring pre interest profits compared to 1.9 times last year.
The tax charge is #3.2m (#2.7m : 2003) however if the FRS 19 adjustments are
excluded, which then more closely represents the actual tax payable, the
comparator numbers are #1.8m (#3.2m : 2003). This reduction mainly reflects the
over provision for tax in previous years accounts.
2004 2003
#m #m
Profit on ordinary activities 15.7 16.6
Tax @ 30% 4.7 5.0
Use of losses (0.5) (0.5)
Use of allowances
- Capital & industrial building (1.0) (1.5)
- Other (0.1) -
Release of prior year's provision (1.3) 0.2
Pre FRS 19 deferred tax provision 1.8 3.2
FRS 19 deferred tax net charge/(release) 1.4 (0.5)
Total tax charge in the accounts 3.2 2.7
Total adjusted earnings per share were virtually the same as last year at 26.31p
(26.40p : 2003) of which 24.54p (23.32p : 2003) is attributable to revenue and
1.77p (3.08p : 2003) to capital profits. The 5% improvement in revenue earnings
is the result of a 3% increase in recurring revenue earnings to 22.93p (22.18p :
2003) and a low tax charge, partially offset by a reduction in trading profits
and the loss of associate income. Capital earnings were marginally higher than
last year.
CASH FLOW
As a main statement in the accounts this is becoming of increasing importance
showing as it does the actual operating cash flows of the business. Even so the
inclusion of some of the Group's property as
trading stock rather than fixed assets does mean that cash generated by an
essentially non recurring activity is included within operating cash flow. If
the operating cash flow is adjusted to remove this
effect the Group this year generated a net inflow from operating activities of
#27.2m (#27.4m : 2003). This is the cash generated without property acquisitions
and disposals to pay interest, tax and dividends with as well as to help fund
the Group's expansion.
The other major inflows that created the net inflow in the year of #39.5m arose
mainly as a result of the receipts of #110m from the disposal of the regional
offices into the Skipper joint venture and of #8.9m received from the sale of
the Group's shareholding in the associate Merivale Moore. This was offset by
investments in joint ventures of #56.5m and property purchases of #59.7m which
were partly financed by additional long term debt of #22.8m.
Since the year end there has been an outflow of #1m relating to further
investments in joint ventures.
BALANCE SHEET
The Group's net worth has increased substantially this year with adjusted
shareholder's funds increasing by #29.5m to #251m, an increase of 13.3% after an
#8.6m dividend payout, with adjusted NAV per share increasing to 498p (440p :
2003 restated). Of this overall increase of #38.1m just over a third came from
profits with revaluation uplifts on our owned portfolio accounting for #13.5m,
our share of joint ventures #8.6m and our investments #2.8m. It should also be
noted that within these property revaluation uplifts some #5.9m was attributable
to stamp duty disadvantaged area status of which #2.3m was in respect of owned
properties and the balance of #3.6m in respect of our share of the joint venture
surplus.
As with the Profit and Loss account the nature of the Group's balance sheet has
changed substantially in its make up this year with investments in joint
ventures now accounting for 19% of gross assets compared to 5.5% last year. This
is reflected in the change in overall portfolio split between directly held
property and the Group's share of joint venture properties as shown in the
following table:-
Share of
Directly held Joint ventures Associate Total Total under
management
#m #m #m #m #m
Investment property 333.8 111.6 20.1 465.5 556.3
Trading property 46.1 2.3 5.2 53.6 46.1
At March 2003 379.9 113.9 25.3 519.1 602.4
Investment property:
Externally valued 259.3 181.2 - 440.5 621.7
Directors valuation 58.1 89.7 - 147.8 237.6
Investment property 317.4 270.9 - 588.3 859.3
Trading property 17.5 - - 17.5 17.5
At March 2004 334.9 270.9 - 605.8 876.8
Movement in year
Revaluation 13.5 8.6 - 22.1 30.7
(Disposals)/additions to
joint ventures:
Investment property (83.0) 54.8 - (28.2) 26.6
Trading property (26.6) (2.3) - (28.9) (26.6)
Other additions/(disposals) 51.1 95.9 (25.3) 121.7 243.7
Total (45.0) 157.0 (25.3) 86.7 274.4
Triple net asset value per share rose to 474.7p from 414.8p (restated) after a
dividend payout of 17p, an increase of 15%. The reason for this improvement
exceeding the 12.6% at the gross level being the impact of the fair value
adjustment to debt where rising interest rates have reduced the negative impact
of the Group's high interest long term debenture and created positive value in
the swaps taken out against non recourse debt in the joint ventures. The
calculation of triple net asset value is as follows:-
2004 2004 2003 2003
restated restated
#m Pence per #m Pence per
share share
Shareholders' funds at 31 March 246.3 487.6 217.6 431.3
Add back FRS19 adjustment, including
that in joint ventures (notes14 & 18) 5.1 10.2 4.3 8.6
Adjusted shareholders' funds 251.4 497.8 221.9 439.9
Less potential deferred tax (note 18) (6.2) (12.2) (0.6) (0.9)
Less fair value adjustment for debt,
net of tax (5.5) (10.9) (12.2) (24.2)
Triple net asset value 239.7 474.7 209.1 414.8
BORROWINGS
The net debt of the Group at 31st March 2004 was #174.6m (#192.8m : 2003)
including #56.8m of non-recourse debt (#57.1m : 2003) in addition the Group's
share of debt in the joint ventures was #235.7m (#109.8m : 2003) of which #7.2m
was recourse debt (none at 2003). The movement of debt on balance sheet and in
the joint ventures mainly reflects the sale of properties into the Skipper
regional office fund, the disposal of the stake in the associate Merivale Moore
offset by the #34m purchase of industrial property and #15m office purchase onto
the Group balance sheet together with increases in the Group's share in the
joint ventures debt. This was due to the purchase by Agora of the Birkenhead
shopping centre and the establishment of the Regional Office, Distribution and
Industrial joint ventures that took place in the first half of the year. The
following table shows the split of this debt compared to the position a year
ago:
On balance sheet Share of joint Total
ventures
#m #m #m
Net short term debt 19.5 45.1 64.6
Long term debt 155.1 190.6 345.7
Total net debt at 31 March 2004 174.6 235.7 410.3
Of which:
Total net recourse debt 117.8 7.2 125.0
Long term non-recourse debt 56.8 228.5 285.3
Gearing (on adjusted shareholders' funds) 69% 163%
Recourse gearing 47% 50%
Total debt at 31 March 2003 192.8 106.5 299.3
Gearing (on adjusted shareholders' funds) 86% 134%
Recourse gearing 61% 60%
The substantial increase in our adjusted shareholders' funds and the reduction
in on balance sheet debt shows gearing falling from 86% to 69% with a
corresponding decrease in recourse gearing from 61% to 47%.
The Interest rate exposure of the Group's debt is that #62m is fixed and the
balance is covered by swaps or caps. However the rates on these derivatives are
such that the Group does have some exposure to upward movements in interest
rates that would have an impact on recurring profitability although with #134m
of swaps and caps the Group is protected against a significant shift in interest
rates. With respect to the Group's share of #236m of net debt in the joint
ventures #140m is swapped at rates between 4.1% and 4.3% the balance of #96m is
currently not fixed.
As at 31 March the Group had undrawn borrowing facilities of #39m.
INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS")
As previously advised all quoted companies in the United Kingdom will be
required to adopt IFRS for accounting periods ending on or after 31 December
2005. We will continue to apply UK Accounting Standards up to and including our
year ending 31 March 2005, but will adopt IFRS for the year to 31 March 2006.
The new IFRS's have yet to be completely finalised so we are not yet able to
provide information about the impact of these changes on our accounts, which
are likely to be material, but will do so as soon as practicable.
Whilst many of the new IFRS are similar to existing UK standards, there will be
significant changes some of which will impact particularly on property companies
such as the treatment of leasehold property and capital gains tax. Others such
as the treatment of swaps and caps will affect companies generally. What can be
said is that company results will be more volatile and it will be more difficult
to establish underlying business trends from the numbers themselves, although
the cash flow statement will be largely unaffected and continue to provide a
good picture of what is actually happening in the business.
Peter Collins
Finance Director
SIGNIFICANT EVENTS DURING THE YEAR ENDED 31 MARCH 2004
Date
Purchase of Pyramids Shopping Centre, Birkenhead by Agora Fund for June 2003
#41.75m
The #109m Regional Office Fund formed through a joint venture with
The Royal Bank of Scotland.
Sale of six office properties into the Regional Office Fund for #109m July 2003
The #113m Radial Distribution Fund formed through a joint venture
with Bank of Scotland with the purchase of eight large distribution
warehouses August 2003
The #19m Industrial Fund formed through a joint venture with
Barclays Bank with the purchase of three industrial estates August 2003
A further four distribution warehouses and three industrial estates
purchased for #34m for the Core portfolio August 2003
Sale of shares in Merivale Moore PLC for net proceeds of #8.9m August 2003
Purchase of an office property in Manchester for #14.8m September 2003
Purchase of a warehouse property in Whiston, Lancashire for #7.6m January 2004
Planning application submitted to enlarge significantly Fishergate
Shopping Centre, Preston January 2004
Planning permission received to increase size of Middleton Shopping
Centre March 2004
SIGNIFICANT EVENTS POST 31 MARCH 2004
Date
Purchase of distribution unit near Glasgow by Radial Distribution
Fund for #5.675m May 2004
Purchase of an office property in Birmingham for #43.5m May 2004
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Notes 2004 2003
restated
#000 #000
TURNOVER: GROUP AND SHARE OF JOINT VENTURES AND
ASSOCIATE 2 63,029 53,113
less: Share of joint ventures and associate (18,663) (7,589)
GROUP TURNOVER 2 44,366 45,524
Cost of sales (21,904) (14,554)
GROSS PROFIT 2 22,462 30,970
Administrative expenses (1,685) (2,241)
GROUP OPERATING PROFIT 20,777 28,729
Share of operating profit in:
Joint ventures 2 13,655 2,392
Associate 2 - 1,424
13,655 3,816
TOTAL OPERATING PROFIT 34,432 32,545
Profit on sale of fixed assets 5 1,576 1,552
Income from fixed asset investments 6 518 814
PROFIT ON ORDINARY ACTIVITIES BEFORE INTEREST 36,526 34,911
Net interest payable and similar charges 7 (20,825) (18,354)
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 15,701 16,557
Taxation on profit on ordinary activities 8 (3,177) (2,728)
PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 12,524 13,829
Dividends 10 (8,587) (8,115)
Retained Profit 3,937 5,714
BASIC EARNINGS PER SHARE 11 P P
Revenue 21.72 24.33
Capital 3.12 3.08
24.84 27.41
DILUTED EARNINGS PER SHARE 11 P p
Revenue 21.69 24.32
Capital 3.12 3.07
24.81 27.39
ADJUSTED EARNINGS PER SHARE 11 P p
Revenue 24.54 23.32
Capital 1.77 3.08
26.31 26.40
* 2003 Profit and Loss Account restated as explained in Note 2(c).
BALANCE SHEETS
Group
Notes 2004 2003
Restated
#000 #000
FIXED ASSETS
Tangible Fixed Assets
Investment properties 12 317,453 333,821
Other tangible assets 13 429 504
317,882 334,325
Joint Ventures 14
Share of gross assets 280,595 121,466
Share of gross liabilities (266,081) (115,847)
Loan accounts 74,498 19,354
89,012 24,973
Investments 15 13,371 19,450
420,265 378,748
CURRENT ASSETS
Property stock 17,477 46,044
Debtors 16 9,580 11,301
Cash at bank and in hand 16,647 16,638
43,704 73,983
CURRENT LIABILITIES
Creditors: amounts falling due
within one year 17 (58,848) (95,164)
NET CURRENT LIABILITIES (15,144) (21,181)
TOTAL ASSETS LESS CURRENT 405,121 357,567
LIABILITIES
Creditors: amounts falling due after 17 (155,061) (135,475)
more than one year
PROVISION FOR LIABILITIES AND
CHARGES
Deferred taxation 18 (3,496) (4,364)
NET ASSETS EXCLUDING PENSION 246,564 217,728
LIABILITY
Pension liability 3 (313) (235)
NET ASSETS 246,251 217,493
CAPITAL RESERVES
Called up share capital 20 2,548 2,548
Share premium account 21 5,559 5,548
Revaluation reserve 22 33,730 12,920
Other reserves 22 193,019 187,344
Profit and loss account 22 13,084 10,811
Investment shares 23 (1,689) (1,678)
EQUITY SHAREHOLDERS' FUNDS 246,251 217,493
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Notes 2004 2003
#000 #000
Profit on ordinary activities after taxation 12,524 13,829
Unrealised surplus/(deficit) on revaluation of properties
Group 12/22 13,525 3,745
Joint Ventures 14/22 8,607 (4)
Associate - (748)
Unrealised surplus on disposal of investment properties - 1,190
into joint venture
Unrealised surplus/(deficit) on revaluation of investments 15/22 2,777 (1,404)
Actuarial loss on pension scheme assets 3/22 (122) (317)
Deferred tax arising on pension scheme assets 3/22 34 85
TOTAL RECOGNISED GAINS AND LOOSES RELATING TO THE YEAR 37,345 16,376
NOTE OF HISTORICAL COST PROFITS AND LOSSES
Notes 2004 2003
#000 #000
Revenue profit on ordinary activities before taxation 14,125 15,005
Capital profit on ordinary activities before taxation 5 1,576 1,552
Reported profit on ordinary activities before taxation 15,701 16,557
Realisation of revaluation surpluses of previous years 22 4,099 5,444
HISTORICAL COST PROFIT ON ORDINARY ACTIVITIES BEFORE 19,800 22,001
TAXATION AND DIVIDENDS
Retained profit for the year
Revenue 2,361 4,162
Capital 5,675 6,996
HISTORICAL COST PROFIT FOR THE YEAR RETAINED AFTER TAXATION 8,036 11,158
AND DIVIDENDS
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Notes 2004 2003
restated
#000 #000
Profit on ordinary activities after taxation 12,524 13,829
Dividends 10 (8,587) (8,115)
3,937 5,714
New share capital issued 20/21 11 27
Disposal of investment in own shares 23 119 -
Acquisition of investment in own shares 23 (130) (218)
Other recognised gains and losses 22 24,821 2,547
Net increase in shareholders' funds 28,758 8,070
Opening shareholders' funds as reported 219,171 210,883
Prior year adjustment on adoption of UITF 37 and UITF 38 (1,678) (1,460)
Opening shareholders' funds as restated 217,493 209,423
CLOSING EQUITY SHAREHOLDERS FUNDS 246,251 217,493
CONSOLIDATED CASH FLOW STATEMENT
Notes 2004 2004 2003 2003
#000 #000 #000 #000
NET CASH INFLOW FROM OPERATING ACTIVITIES 24 55,741 34,812
DIVIDENDS RECEIVED FROM JOINT VENTURES AND 42 358
ASSOCIATE
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 2,164 327
Interest and similar charges paid (11,869) (16,301)
Dividends received from listed investments 518 814
NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS
AND SERVICING OF FINANCE (9,187) (15,160)
TAXATION
UK corporation tax paid (2,630) (1,770)
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENTS
Purchases of tangible fixed assets (59,805) (23,108)
Sales of tangible fixed assets 90,508 94,635
Purchase of listed investments - (65)
Loans to joint ventures (57,549) (17,739)
Repayment of short term loans from joint 2,405 253
ventures
Premiums paid on sinking fund policy - (6)
NET CASH (OUTFLOW)/INFLOW FROM CAPITAL
EXPENDITURE AND FINANCIAL INVESTMENTS (24,441) 53,970
ACQUISITIONS AND DISPOSALS
Disposal of shares in associate 8,856 -
undertaking
Acquisition of shares in joint ventures (1,343) (5,525)
Disposal of shares in joint ventures - 2,164
NET CASH INFLOW/(OUTFLOW) FROM
ACQUISITIONS AND DISPOSALS 7,513 (3.361)
EQUITY DIVIDENDS PAID (8,332) (11,480)
MANAGEMENT OF LIQUID RESOURCES
Disposal of current asset investment - 44
NET CASH INFLOW BEFORE FINANCING 18,706 57,413
FINANCING
Repayment of bank loan (1,100) (600)
Repayment of mortgage and other loans (794) (1,508)
Bank loan advances 22,757 -
Issue of shares 11 27
Purchase of own shares for LTIP, AESOP and
share option schemes (130) (218)
NET CASH INFLOW/OUTFLOW FROM FINANCING 20,744 (2,299)
INCREASE IN CASH 25/26 39,450 55,114
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
UITF 37 (Purchases and Sales of Own Shares) and UITF 38 (Accounting for ESOP
Trusts) have been adopted for the first time in these accounts. They require
own shares held to be shown as a reduction in shareholders' funds rather than as
asset.
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.
NOTES TO THE FINANCIAL STATEMENTS
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 consists of gross rental income, trading property sales and management
fees earned calculated on an accruals basis, together with sale and services in
the ordinary course of business, excluding sale of investment properties.
Rental income receivable in the period from lease commencement to the earlier of
the first market rent review and the lease end date is spread evenly over that
period. Any incentive for lessees to enter into a lease agreement is spread
over the same period.
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.
NOTES TO THE FINANCIAL STATEMENTS
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. Profits
and losses in respect of financial instruments, where they have been entered
into in accordance with the Group's policies in relation to hedging of interest
rate risk, are recognised on an accruals basis, reflecting the cashflows over
the life of the instrument.
No adjustment is made in the accounts in respect of the market value of such
instruments unless such instruments are judged to be in excess of current or
future hedging requirements.
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 SHARE OF SHARE OF
INVESTMENT TRADING TOTAL JOINT ASSOCIATE TOTAL
VENTURES (a)
Year ended 31 March #000 #000 #000 #000 #000 #000
2004
Turnover:
Rents receivable (b) 25,932 1,526 27,458 15,379 - 42,837
Management fees (c) 1,391 - 1,391 - - 1,391
Property trading - 15,517 15,517 3,284 - 18,801
Total turnover 27,323 17,043 44,366 18,663 - 63,029
Property outgoings (4,828) (843) (5,671) (1,947) - (7,618)
Management fee costs (656) - (656) - - (656)
Cost of sales - (15,393) (15,393) (2,939) - (18,332)
Writedown cost of
trading stock - (184) (184) - - (184)
Gross profit 21,839 623 22,462 13,777 - 36,239
Administrative expenses (1,649) (36) (1,685) (122) - (1,807)
Operating profit 20,190 587 20,777 13,655 - 34,432
PROPERTY PROPERTY GROUP SHARE OF SHARE OF
INVESTMENT TRADING TOTAL JOINT ASSOCIATE TOTAL
VENTURES (a)
Year ended 31 March 2003 #000 #000 #000 #000 #000 #000
restated (b)
Turnover:
Rents receivable (b) 33,230 3,767 36,997 2.690 1,942 41,629
Management fees (c) 426 - 426 - - 426
Property trading - 8,101 8,101 2,954 3 11,058
Total turnover 33,656 11,868 45,524 5,644 1,945 53,113
Property outgoings (5,657) (1,179) (6,836) (476) (251) (7,563)
Management fee costs (90) - (90) - - (90)
Cost of sales - (7,291) (7,291) (2,501) (62) (9,854)
Writedown cost of trading stock - (337) (337) - - (337)
Gross profit 27,909 3,061 30,970 2,667 1,632 35,269
Administrative expenses (2,002) (239) (2,241) (275) (208) (2,724)
Operating profit 25,907 2,822 28,729 2,392 1,424 32,545
All turnover and operating profit has arisen from continuing operations.
(a) The investment in the associate was disposed of in August 2003.
(b) Rents receivable includes #100,000 (2003 : nil) of rent allocated to rent
free periods
(c) Management fees receivable are now material and are included in turnover.
The comparatives have been restated since in previous year's management
fees receivable were set off against property outgoings or administration
costs as appropriate.
(d) Turnover does not include monies received from tenants in respect of
service charge costs the tenants bear on their properties of #6,336,000
(2003 : #7,000,000). Service charge costs not recovered ("void costs")
are included within property outgoing of #723,000 (2003 : #1,330,000).
2004 2003
#000 #000
Operating profit is stated after charging:
Depreciation 127 133
Loss on disposal of tangible fixed assets 5 -
Operating lease charges - properties 691 759
During the year the following amounts were charged to the profit and loss
account in respect of auditors' remuneration:
2004 2003
#000 #000
Audit services (Company: #65,000 (2002 : #41,000)) 107 137
Audit related services (1) 15 7
Non-audit services : Taxation 105 156
: Other - -
227 300
(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 #321,000 (March
2003 : #220,000) was charged by the auditors for tax and accounting work in
connection with the setting up of the three new joint ventures (March 2003
relates to the setting up of the Agora Joint Venture).
3 EMPLOYEES
2004 2003
#000 #000
Staff Costs
Wages and salaries 3,606 3,708
Social security costs 456 291
Other pension costs 285 190
4,347 4,189
2004 2003
Number Number
The average number of persons employed during the year was:
Management and administrative 40 36
Repairs and service 19 13
59 49
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 #254,000
(2003 : #190,000). Pension premiums paid in advance were #61,000 (2003 :
#47,000).
The Group operates a defined benefit scheme in the UK, The Warner Estate Group
Retirement Benefits Scheme. A full valuation was carried out at 31 March 2003
by a qualified independent actuary.
It has been agreed with the Trustees that the Group contributes 23% of
pensionable salary plus #67,000 per annum.
The following assumptions were made by the Company:
% per annum
Discount rate 5.5
Rate of increase of salaries 3.4
Rate of increase in payment and deferred pensions 2.8
Price inflation 2.9
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 2004 return March 2003
expected at expected at
31 March 31 March
2004 2003
% #'000 % #'000
Equities 7.75 696 7.0 502
Fixed interest 5.4 4,125 5.4 3,995
Cash 4.0 104 4.0 90
TOTAL MARKET VALUE OF ASSETS 4,925 4,587
Present value of Scheme liabilities (5,372) (4,922)
Deficit (447) (335)
Related deferred tax asset 134 100
NET PENSION LIABILITY (313) (235)
Included within the above value of Scheme assets and liabilities is #4,056,000
(2003 : #3,917,000) relating to insured pensioners' liability.
Analysis of amount charged to operating profit
2004 2003
#000 #000
Current service cost 33 35
Analysis of the movements in the Scheme deficit during the year
2004 2003
#000 #000
Deficit in the Scheme at beginning of year (335) (51)
Movements in year:
Current service cost (33) (35)
Contributions paid 55 65
Other finance (cost)/income (12) 3
Actuarial gains and (losses):
Actual return less expected return on the Scheme assets 88 (198)
Experience losses arising on the Scheme liabilities (26) (24)
Change in assumptions underlying the present value of
the Scheme liabilities (184) (95)
Actuarial losses recognised in statement of total
recognised gains and losses (122) (317)
DEFICIT IN SCHEME AT END OF YEAR (447) (335)
4 DIRECTORS' REMUNERATION
A summary of Directors' remuneration, including disclosure required by the
Companies Act 1985 and those specified by the Financial Services Authority, is
contained in the Report and Accounts that will be published in due course.
5 PROFIT ON SALE OF FIXED ASSETS
2004 2003
#000 #000
Surplus over book value
Investment properties 888 1,187
Disposal of Group undertakings 679 -
Share of joint ventures 9 -
Share of associate - 365
1,576 1,552
Prior years' revaluation surpluses realised
Investment properties (240) 5,444
Other investments 4,270 -
Joint ventures 69 -
4,099 5,444
6 INCOME FROM FIXED ASSET INVESTMENTS
2004 2003
#000 #000
Dividends from fixed asset listed investments 518 814
7 NET INTEREST PAYABLE AND SIMILAR CHARGES
2004 2003
#000 #000
Interest payable and similar charges on bank loans and
overdrafts, mortgages and other loans:
repayable within five years not by instalments 2,565 6,419
repayable wholly or partly in more than five years by instalments 9,056 9,612
11,621 16,031
Charge in respect of cost of raising finance 503 575
12,124 16,606
Less capitalised interest - (53)
12,124 16,553
Interest receivable and similar income:
From joint ventures (note 14) (3,679) (1,052)
Other interest (466) (400)
7,979 15,101
Other finance cost/(income)
Expected return on pension scheme assets (259) (271)
Interest on pension scheme liabilities 271 268
12 (3)
7,991 15,098
Share of joint ventures' net interest 12,834 2,258
Share of associate's net interest - 998
20,825 18,354
Included within interest payable is #222,000 (2003 : #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
2004 2003
#000 #000
Taxation on profit on ordinary activities
UK corporation tax:
Current at 30 % (2003 : 30%) 2,824 2,701
Deferred 1,422 (555)
4,246 2,146
Under provision in respect of prior year's tax charge (1,300) 214
2,946 2,360
Share of tax in joint ventures 231 47
Share of tax in associate - 321
3,177 2,728
2004 2003
Reconciliation of taxation charge #000 #000
Tax at 30% (2003 : 30%) of profit on ordinary activities before 4,710 4,967
taxation
Use of losses (533) (529)
Dividends received not taxable (155) (244)
Capital allowances claimed (1,050) (1,471)
Profits attributable to joint ventures (249) (40)
Profits attributable to associate - (122)
Other differences 101 140
2,824 2,701
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 #10,436,000 (2003 : #10,953,000)
which has been dealt with in the accounts of the Company.
10 DIVIDENDS
2004 2003
#000 #000
On Ordinary 5p shares
Interim 8.25p paid 28 February 2004 (2003 : 7.75p) 4,167 3,950
Final proposed 8.75p payable 15 September 2004 (2003 : 8.25p) 4,458 4,203
Adjustment to 2003 final on shares held under the LTIP and share (38) (38)
option scheme (2003 : adjustment to 2002 final on shares held
under the LTIP and Share Option Scheme)
8,587 8,115
11 EARNINGS PER SHARE
Earnings per share of 24.84p (2003 restated : 27.41p) are calculated on the
profit on ordinary activities after taxation of #12,524,000 (2003 :
#13,829,000) and the weighted average of 50,411,074 (2003 restated : 50,452,312)
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 #1,576,000 (2003 : #1,552,000).
Diluted earnings per share of 24.81p (2003 restated : 27.39p) are calculated on
the profit on ordinary activities after taxation of #12,524,000 (2003 :
#13,829,000) and the weighted average of 50,473,891 (2003 restated : 50,478,826)
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 of #1,422,000 (2003 : credit of #509,000) 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 Total
assets held with over 50
for resale years
unexpired
#'000 #'000 #'000 #'000
Group:
At 31 March 2003 208,280 81,030 44,511 333,821
Additions 50,079 1,654 7,994 59,727
Disposals (6,936) (82,684) - (89,620)
251,423 - 52,505 303,928
Surplus on revaluation 12,023 - 1,502 13,525
At 31 March 2004 263,446 - 54,007 317,453
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 2004.
Investment properties were valued as follows:
#000
Cushman & Wakefield Healey & Baker 259,340
Directors' valuation 58,113
317,453
Included within investment properties is interest capitalised of #1,296,000 at
31 March 2004, none of this arose in the year (2003 : #53,000).
On an historical cost basis the investment properties which have been included
above at valuation would have been shown at cost as #296,715,000 (2003 :
#326,848,000).
13 OTHER TANGIBLE ASSETS
#000
Group
Cost
At 31 March 2003 950
Additions 78
Disposals (39)
AT 31 MARCH 2004 989
Depreciation
At 31 March 2003 446
Charge for year 127
Eliminated in respect of disposals (13)
AT 31 MARCH 2004 560
NET BOOK VALUE AT 31 MARCH 2004 429
Net book value at 31 March 2003 504
Other tangible assets include plant, machinery, fixtures, fittings, motor
vehicles and equipment.
14 JOINT VENTURES
Group
Share of joint ventures: #000
At 31 March 2003 24,973
Share of profit for the year 599
Surplus on revaluation of investments 8,607
Net equity movements (311)
Net loan movements 55,144
AT 31 MARCH 2004 89,012
Group
2004 2003
#000 #'000
Unlisted shares at cost less amounts written off 6,865 5,525
Group's share of post acquisition retained profits and reserves 7,649 94
14,514 5,619
Amounts owed by joint ventures 74,498 19,354
89,012 24,973
Included in share of joint ventures' gross assets and liabilities are:
To 31 March 2004 Agora Skipper Fairway Bareway Others Total
Shopping Offices Industrial Industrial (e)
Centres Limited Limited (c) Properties
(a) (b) Limited (d)
#'000 #'000 #'000 #'000 #'000 #'000
Group share of results
Turnover 9,374 3,072 2,486 447 3,284 18,663
Operating profit 7,924 2,680 2,346 405 300 13,655
Capital profit - - - - 9 9
Net interest payable and
similar charges (7,920) (2,393) (2,102) (346) (73) (12,834)
Profit on ordinary
activities before taxation 4 287 244 59 236 830
Taxation on profits on
ordinary activities 9 (85) (74) (18) (63) (231)
Profit on ordinary
activities after taxation 13 202 170 41 173 599
Asset management fees 762 315 244 46 - 1,367
Interest receivable 880 1,747 780 248 69 3,724
Group share of:
Investment properties 146,451 56,349 58,202 9,889 - 270,891
Other current assets 4,294 2,419 2,147 478 366 9,704
Gross assets 150,745 58,768 60,349 10,367 366 280,595
Current liabilities
Loans (127,354) (55,024) (48,887) (9,797) - (241,062)
Other liabilities (9,007) (2,573) (11,242) (429) (162) (23,413)
Deferred taxation (461) (1,145) - - - (1,606)
Gross liabilities (136,822) (58,742) (60,129) (10,226) (162) (266,081)
Share of net assets 13,923 26 220 141 204 14,514
Effective Group share 50% 50% 50% 50% 50%
Potential recourse to the Group Nil Nil Nil 7,150 Nil
To 31 March 2003 (d) Agora Skipper Fairway Bareway Others Total
Shopping Offices Industrial Industrial (e)
Centres Limited Limited (c) Properties
(a) (b) Limited (d)
Group share of results
Turnover 576 - - - 5,068 5,644
Operating profit 487 - - - 1,905 2,392
Net interest payable
and similar charges (442) - - - (1,816) (2,258)
Profit on ordinary
activities before taxation 45 - - - 89 134
Taxation on profits on
ordinary activities (24) - - - (23) (47)
Profit on ordinary
activities after taxation 21 - - - 66 87
Asset management fees 73 - - - 344 417
Interest receivable 49 - - - 1,003 1,052
Group share of:
Investment properties 111,304 - - - 226 111,530
Trading properties - - - - 2,336 2,336
Other current assets 6,498 - - - 1,102 7,600
Gross assets 117,802 - - - 3,664 121,466
Current liabilities
Loans (106,467) - - - (3,341) (109,808)
Other liabilities (5,790) - - - (249) (6,039)
Deferred taxation - - - - - -
Gross liabilities (112,257) - - - (3,590) (115,847)
Share of net assets 5,545 - - - 74 5,619
Effective Group share 50% - - - 50%
Potential recourse to the Group Nil - - - Nil
(a) Agora Shopping Centres was set up on 5 March 2003 and subsequently
acquired the Pyramids in Birkenhead on 25 June 2003.
(b) Skipper Offices Limited was set up on 23 July 2003.
(c) Fairway Industrial Limited was set up on 29 August 2003.
(d) Bareway Industrial Properties was set up on 29 August 2003.
(e) The profit or loss that arose from the Bolton and Middleton shopping
centre joint ventures prior to the setting up of the Agora Shopping Centres
joint venture was included in "other" and accounted for #1,151,000 of
operating profit and #1,571,000 of net interest payable in the year to
31 March 2003.
Group
2004 2003
#000 #000
Loans to joint ventures comprise:
Agora Shopping Centres Limited 23,596 16,949
Skipper Offices Limited 29,000 -
Fairway Industrial Limited 16,518 -
Bareway Industrial Properties Limited 5,384 -
Trade Centre Developments Limited - 2,405
74,498 19,354
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 - 6,647 6,647
Skipper Offices Limited - 29,000 29,000
Fairway Industrial Limited - 16,518 16,518
Bareway Industrial Properties Limited - 5,384 5,384
Trade Centre Developments Limited (2,405) - (2,405)
(2,405) 57,549 55,144
15 Fixed Asset Investments
Group
2004 2003
restated
#000 #000
Investment in associate (a) - 8,856
Listed investments (b) 13,371 10,594
13,371 19,450
(a) Investment in associate Group
#000
At 31 March 2003 9,107
Disposal (9,107)
AT 31 MARCH 2004 -
Negative goodwill
At 31 March 2003 (251)
Written off during the year 251
AT 31 MARCH 2004 -
Net investment in associate
AT 31 MARCH 2004 -
At 31 March 2003 8,856
(b) Listed investments Group
#000
Listed on the London Stock Exchange
At 31 March 2003 10,594
Surplus on revaluation 2,777
AT 31 MARCH 2004 13,371
Group
#000
Historic cost of listed investments
AT 31 MARCH 2004 7,013
At 31 March 2003 7,013
16 DEBTORS
Group
2004 2003
#000 #000
Amounts falling due within one year
Trade debtors 2,231 3,077
Other debtors 1,384 5,168
Prepayments and accrued income 5,965 3,056
9,580 11,301
17 CREDITORS
Group
2004 2003
restated
#000 #000
Amounts falling due within one year
Bank loans and overdrafts 35,352 73,143
Mortgages and other loans 794 794
Trade creditors 444 1,659
Amounts owed to joint ventures 3,730 -
Dividends payable 4,458 4,203
Corporation tax 1,289 2,395
Other taxation and social security 923 997
Other creditors 1,654 1,276
Accruals and deferred income 10,204 10,697
58,848 95,164
Amounts falling due after more than one year
Mortgages and other loans 79,520 80,259
Bank loan 75,541 55,216
155,061 135,475
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
2004 2003
#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 24,889 24,874
11.655% First Mortgage Debenture Stock 2015 (reducing to 9.75% from
2009) 10,000 10,000
9.635% First Mortgage Debenture Stock 2015 12,445 12,430
Mortgage repayable in 2019 at an interest rate of 0.9% over LIBOR 49,785 49,757
97,119 97,061
Other mortgages and loans
Redeemable in quarterly instalments of #250,000 maturing 2006: 22,313 -
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% 10,429 12,254
Redeemable in quarterly instalments of #125,000 maturing 2014 at an
interest rate of 9.15% 4,590 5,582
Redeemable in quarterly instalments of #74,000 maturing 2014 at an
interest rate of 9.06% 2,700 3,284
157,151 138,181
Summary of borrowings
Bank loans and overdrafts Other borrowings
2004 2003 2004 2003
#000 #000 #000 #000
Group
Within one year or on demand 35,352 73,143 794 794
Between one and two years 22,750 650 794 794
Between two and five years 4,500 4,250 2,382 2,382
In five years or more 48,679 50,556 76,669 77,464
111,281 128,599 80,639 81,434
Future finance costs (387) (240) (326) (381)
110,894 128,359 80,313 81,053
Of the borrowings at 31 March 2004 #56,568,000 were non-recourse loans (2003 :
#57,518,000).
18 DEFERRED TAXATION
Group
2004 2003
#000 #000
Deferred taxation arising from the
timing differences noted below:
Capital and industrial building 3,486 4,328
allowances claimed on investment
properties
Short term timing differences 10 36
3,496 4,364
The movement in deferred tax is as follows:
Accelerated Short term Total
Capital timing
Allowances differences
#000 #000 #000
Deferred tax liability at 31 March 2003 4,328 36 4,364
Provision for capital allowances claimed 1,439 - 1,439
Other 9 (26) (17)
Total profit and loss account impact 1,448 (26) 1,422
Disposed by way of disposal to joint (2,290) - (2,290)
venture entities
Deferred tax liability at 31 March 2004 3,486 10 3,496
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:
2004 2003
#000 #000
Group 6,165 1,409
19 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.
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 31 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:
2004 2003
#000 #000
Floating rate financial liabilities - -
Capped rate financial liabilities 98,751 108,798
Fixed rate financial liabilities 93,169 101,235
191,920 210,033
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:
2004 2003
% %
Weighted average interest rate:
Group 8.00 7.97
Joint Ventures 5.52 5.63
2004 2003
Years Years
Weighted average period for which interest rate is fixed:
Group 6.00 6.45
Joint Ventures 4.12 5.01
Maturity of financial liabilities
2004 2003
#000 #000
Group
Within one year or on demand 36,146 73,937
Between one and two years 23,544 1,444
Between two and five years 6,882 6,632
In five years or more 125,348 128,020
191,920 210,033
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.
2004 2003
#000 #000
Expiring in one year or less
Total facilities 72,442 147,100
Unutilised 39,340 74,573
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.
2004 2004 2004 2003
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
long term floating debt 34,102 34,102 - -
Long term debt (over one year) 61.350 71,744 (10,394) (13,469)
Assets
Financial assets
Long term loan notes (over one year) (19,838) (19,131) (707) (141)
Fixed rate loan (5,384) (5,354) (30) -
DERIVATIVE INSTRUMENTS HELD TO MANAGE DEBT
Interest rate swaps - 1,562 (1,562) (3,089)
Interest rate caps (449) (234) (215) (293)
JOINT VENTURES
PRIMARY FINANCIAL INSTRUMENTS
Long term debt (over one year) 19,838 19,131 707 141
Fixed rate loan 2,692 2,677 15 -
DERIVATIVE INSTRUMENTS HELD TO MANAGE DEBT
Interest rate swaps - (4,328) 4,328 (581)
The effect on net assets per share of the total fair value adjustment
(#7,858,000 less tax of #2,357,000) would be a decrease of 10.8 pence (2003 :
23.9 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
#100,000,000 capped at 7.25% to 2007
Joint Venture:
#175,000,000 swapped at 4.1% to 2008
#34,800,000 swapped at 4.24% to 2008
#70,000,000 swapped at 4.265% 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 2003 2,795
Prior year losses recognised during the year (863)
Unrecognised losses arising during the year (604)
Unrecognised losses on hedges at 31 March 2004 1,328
#000
Of which expected to arise:
In year to 31 March 2005 595
In year to 31 March 2006 or later 733
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.
20 SHARE CAPITAL
2004 2003
#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 2003 (50,950,197 2,548 2,547
shares)
Allotted under share option schemes (4,573 shares) - 1
Allotted, called up and fully paid at 31 March 2004 (50,954,770 2,548 2,548
shares)
At 31 March 2004 there were share options to subscribe for Ordinary shares under
the Warner Estate Holdings 1995 Share Option Scheme as follows:
At 303.5p per share between 16 August 2004 and 15 August 2011 (to be read in
conjunction with Note 23) 285,755 shares
At 319p per share between 17 July 2005 and 16 July 2012 (to be read in
conjunction with Note 23) 331,702 shares
At 367.5p per share between 27 June 2006 and 26 June 2013 (to be read in
conjunction with Note 23) 331,219 shares
During the year 4,573 new Ordinary shares of 5p each were allotted for a cash
consideration of #11,547 in accordance with the provisions of the Warner Estate
Holdings 1995 Share Option Scheme.
21 SHARE PREMIUM ACCOUNT
2004 2003
#000 #000
At 31 March 2003 5,548 5,522
Premium on shares issued under share option schemes (note 20) 11 26
At 31 March 2004 5,559 5,548
22 RESERVES
Other Reserves
Capital other *profit
Redemption capital
Revaluation reserve merger reserve and
Reserve reserve loss
account
#000 #000 #000 #000 #000
Group
At 31 March 2003 12,920 303 7,693 179,348 10,811
Transfer from profit and loss
account - - - 1,576 (1,576)
Realised on disposal of
investment properties 240 - - (240) -
Realised on disposal of
investments (4,270) - - 4,270 -
Realised on disposal of joint
ventures' investment properties (69) - - 69 -
Revaluation surplus on
investment properties 13,525 - - - -
Share of joint ventures'
revaluation surplus on
investment properties 8,607 - - - -
Increase on revaluation of
investments 2,777 - - - -
Actuarial losses on pension
scheme assets - - - - (122)
Deferred tax on pension assets - - - - 34
Retained profit for the year - - - - 3,937
AT 31 MARCH 2004 33,730 303 7,693 185,023 13,084
*The closing balance on the profit and loss account includes #313,000 liability
(2003 : #235,000) stated after a deferred tax asset of #134,000 (2003 : #100,000) in
respect of the Group's defined benefit pension scheme as set out in note 3 to the
accounts.
23 INVESTMENT IN OWN SHARES
Group
Number Cost
#000
At 31 March 2003 543,172 1,678
Additions 42,109 130
Disposals (32,243) (119)
At 31 March 2004 553, 038 1,689
Included in investment in own shares are shares relating to the Inland Revenue
Approved All-Employee Share Ownership Plan, as follows:
2004 2003
Number Cost Market Number Cost Market
value value
#000 #000 #000 #000
Partnership shares purchased by 20,668 - 99 12,371 - 41
employees, not yet vested
Matching and Free shares not 70,912 251 339 37,100 121 122
yet vested
91,580 251 438 49,471 121 163
The vesting of Matching and Free shares is conditional on meeting the conditions
of the scheme which will be summarised in the Directors' Remuneration Report of
the Report and Accounts.
24 RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM
OPERATING ACTIVITIES
2004 2003
#000 #000
Operating profit 20,777 28,729
Depreciation of tangible fixed assets 127 133
Loss on sale of other tangible fixed assets 5 -
Decrease in stocks 28,567 7,330
Decrease/ (increase) in debtors 3,702 (2,096)
Decrease in creditors 2,563 716
Net cash inflow from operating activities 55,741 34,812
25 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
2004 2003
#000 #000
Increase in cash in the year 39,450 55,114
(Increase)/decrease in long term mortgages and loans (21,236) 1,787
18,214 56,901
Opening net debt (192,774) (249,675)
Closing net debt (174,560) (192,774)
26 ANALYSIS OF NET DEBT MOVEMENT
2003 Reclassification Cash Flow Non-cash 2004
Items
#000 #000 #000 #000
#000
Cash at bank and in hand 16,638 - 9 - 16,647
Bank overdrafts/short (72,543) - 39,441 - (33,102)
term borrowings
- 39,450
Debt due within one year
Mortgage and other loans (794) - - - (794)
Bank loan (600) (650) (1,000) - (2,250)
(650) (1,000) -
Debt due after one year
Mortgage and other loans (80,259) - 794 (55) (79,520)
Bank loan (55,216) 650 (20,657) (318) (75,541)
- (20,863) (373)
Net Debt (192,774) - 18,587 (373) (174,560)
27 CONTINGENT LIABILITIES
2004 2003
#000 #000
Contingent liabilities in respect of guarantees given by the
Company are as follows:
Mortgage debenture and loans 80,640 81,435
Bank overdrafts 68,970 107,680
Bank loans of joint ventures 14,300 -
163,910 189,115
28 OPERATING LEASE COMMITMENTS
2004 2003
#000 #000
Group
Annual commitments in respect of operating leases on properties are as
follows:
Expiring after five years 691 667
29 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:
2004 2003
Mr G A Cooke #000 #000
Director of ATIS Real Weatheralls Limited - Secondment of trainee - 18
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.
There are no related party transactions other than those listed above.
30 PROFIT ON SALE OF ASSOCIATE
In August 2003 the Group disposed of its twenty-six percent shareholding in
Merivale Moore plc for #8.9million. No profit was made on the disposal.
31 OTHER INFORMATION
Accounting for employee share schemes and ESOP Trusts, UITF Abstract 37 "
Purchases and Sales of Own Shares" and UITF Abstract 38 "Accounting for ESOP
Trusts" require that a company's own shares held for employee share schemes and
through an ESOP Trust be shown as a deduction from shareholders' funds. The
impact of the adoption of UITF 37 and UITF 38 on the current year's and prior
year's shareholders' funds is shown below. There is no effect on the profit
and loss account.
At 31 March 2004
As reported Adjustment Without change in
accounting policy
#000 #000 #000
Investments - (1,438) 1,438
Creditors (58,848) (251) (58,597)
Net assets 246,251 (1,689) 247,940
Investments in shares (1,689) (1,689) -
Shareholders' funds 246,251 (1,689) 247,940
At 31 March 2003
As restated Adjustment As previously reported
#000 #000 #000
Investments - (1,557) 1,557
Creditors (95,164) (121) (95,043)
Net assets 217,493 (1,678) 219,171
Investments in shares (1,678) (1,678) -
Shareholders' funds 217,493 (1,678) 219,171
32. The figures and financial information for the year ended 31 March 2004 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 2003 included
in the preliminary announcement are extracted, but do not 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 a statement under Section 237(2) or (3) of the
Companies Act 1985.
FIVE YEAR RECORD
ANALYSIS OF GROSS RENTAL INCOME
Year to Year to Year to Year to Year to 18 months
31 March 31 March 31 March 31 March 31 March ended
2004 2003 2002 2001 2000 31 March
2001
By Property #000 #000 #000 #000 #000 #000
Type
Residential - - - 2,104 2,243 3,233
Offices 16,846 22,535 13,801 11,808 5,616 15,350
Retail 4,035 8,527 8,333 9,835 7,898 13,934
Industrial 6,577 5,935 5,273 4,071 2,485 5,247
27,458 36,997 27,407 27,818 18,242 37,764
By Activity
Property 25,932 33,230 24,686 25,139 15,536 33,431
Investments
Property 1,526 3,767 2,721 2,679 2,706 4,333
Trading
27,458 36,997 27,407 27,818 18,242 37,764
ANALYSIS OF VALUATION OF COMPLETED INVESTMENT PROPERTIES
March March 2003 March March March March
2004 2002 2001 2000 2001
#000 #000 #000 #000 #000
Residential - - - - 39,697 -
Offices 161,903 227,790 218,402 101,388 98,478 101,388
Retail 57,309 47,260 117,898 121,920 93,479 121,920
Industrial 98,241 58,771 66,886 66,876 37,992 66,876
371,453 333,821 403,186 290,184 269,646 290,184
KEY PROFIT AND LOSS ACCOUNT AND BALANCE SHEET FIGURES
Year to Year to Year to Year to Year to 18 months
31 March 31 March 2003 31 March 31 March 31 March ended
2004 Restated 2002 2001 2000 31 March
2001
#000 #000 #000 #000 #000
Operating profit 34,432 32,545 25,268 24,587 15,137 34,299
Profit before 36,526 34,911 27,954 40,759 23,783 52,591
interest and tax
Profit before tax
Revenue 14,125 15,005 13,067 8,224 9,882 12,852
Capital 1,576 1,552 2,083 13,449 3,314 14,320
Total 15,701 16,557 15,150 21,673 13,196 27,172
Properties 334,930 379,865 456,560 321,658 343,858 321,658
Fixed assets 420,265 378,748 430,578 379,691 354,674 379,691
Pre FRS 19 251,343 221,821 215,720 211,294 172,504 211,294
shareholders' funds
FRS 19 adjustment (5,092) (4,328) (4,837) (3,681) (3,171) (3,681)
Equity shareholders' 246,251 217,493 210,883 207,613 169,333 207,613
funds
Year to Year to Year to Year to Year to 18 months
31 March 31 March 31 March 31 March 31 March ended
2004 2003 2002 2001 2000 31 March
2001
Adjusted
earnings per
share p p p p p
Revenue 24.54 23.32 21.42 15.61 15.50 22.56
Capital 1.77 3.08 3.56 24.78 5.82 25.88
TOTAL 26.31 26.40 24.98 40.39 21.32 48.44
Dividends per
share 17.00 16.00 15.00 14.00 13.70 21.00
Adjusted net
assets per
share 498 440 423 404 324 404
Triple net
assets per
share 475 415 403 387 277 384
The Company changed its year end to 31 March in 2001. The 4th and 5th 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.
The figures prior to 2003 have not been adjusted for the changes resulting from
the adoption of UITF Abstract 37 (Purchases and Sales of Own Shares) and UITF
Abstract 38 (Accounting for ESOP Trusts).
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SSWFAWSLSEFM
Wt Wner Usd (LSE:WNER)
과거 데이터 주식 차트
부터 6월(6) 2024 으로 7월(7) 2024
Wt Wner Usd (LSE:WNER)
과거 데이터 주식 차트
부터 7월(7) 2023 으로 7월(7) 2024
