Interim Results

FOR IMMEDIATE RELEASE 29th September 2003 LONDON & ASSOCIATED PROPERTIES PLC: INTERIM RESULTS FOR SIX MONTHS TO 30TH JUNE 2003 HIGHLIGHTS * Pre-tax profits advance by over 5% to £1.42m * Net assets rise to £55.6m and diluted NAV per share increases to 68.8p - up 6.2% from same period a year ago * Since year end acquired £50m St Helen's shopping centre through Analytical Properties - LAP's JV with Bank of Scotland - taking Analytical Properties' portfolio to £100m * A further £243,000 of annualised rents contracted during period taking LAP's current annualised rent roll to £8.4m against an ERV of £9.2m * Despite further property sales of £1.7m LAP now directly owns or manages retail properties on behalf of Analytical Properties, Dragon Retail Properties and Bisichi Mining plc with gross value approaching £225m 'We have considerable cash and undrawn facilities even after our substantial development programme. The new lettings highlighted above that we have carried out at both existing units and our developments will provide increased income as rent free periods expire. The Company continues to trade well and I am confident of a satisfactory result for the full year, ' Michael Heller, Chairman. -more- Contact: London & Associated Properties PLC. Tel: 020 7415 5000 John Heller, Chief Executive Robert Corry, Finance Director Baron Phillips Associates Tel: 020 7920 3161 Baron Phillips CHAIRMAN'S STATEMENT INTERIM REPORT 2003 Profit before tax for the six months to 30 June 2003, was £1.42 million. This is an increase of over 5% and is particularly pleasing as the interim results for 2002 included some £567,000 of profits from the sale of investment properties. Shareholders will recall that we have sold a number of smaller, mature investment properties over last 12 months. These have also accounted for the loss of some £450,000 of annualised rental income, of which £180,000 occurred during the period under review. In light of the above factors, our results have been creditable. Profits for the first half of 2003 benefited from a contribution of some £230,000 from Analytical Properties, our joint venture with Bank of Scotland. We anticipate that this contribution will grow as Analytical has now bought its second property, thus increasing the income to LAP generated by the joint venture. Net assets, including the listed portfolio at market value, have risen to £55.6 million while fully diluted net assets per share have increased to 68.8p, an uplift of 6.2% over the same period last year. We continue to take advantage of the strong investment market. Consequently, we have sold a further £1.7 million of properties at levels which are £95,000 above their valuation at the year end. Since 30 June 2003, Analytical Properties has acquired the long leasehold interest in Church Square Shopping Centre, St. Helens for £50 million in an off-market transaction. Net rental income is £3.6 million, reflecting an initial yield of 7.1% although this will rise quickly following a number of major rent reviews due this year. LAP's investment is £3.9 million and we will, once again, provide asset management services for a fee. This is another milestone in the development of the company. Church Square comprises two separate centres and is located in St Helens' prime retail core. St. Helens has a population in excess of 150,000 people and Church Square is the town's dominant shopping location. The majority of the town's principal retailers including Bhs, Boots, Next and the town's market are located in our new centre. We have already identified significant opportunities to work with St Helens Council to extend and improve the shopping centre over the medium term. These plans include creating significant amounts of new space for major retailers who have expressed a wish to come to the town, as well as for existing retailers within the shopping centre who are trading successfully and now require larger units. Church Square also benefits from long unexpired leases, and therefore provides a good balance to Analytical's other shopping Centre, King Edward Court in Windsor which was purchased with a shorter lease profile. This acquisition takes Analytical's portfolio to approximately £100 million, which means that LAP directly owns or manages retail property on behalf of Analytical, Bisichi Mining plc and Dragon Retail Properties Limited, with a gross value approaching £225 million. All our major centres have experienced continued strong tenant demand. In our directly owned portfolio, we have contracted a further £243,000 of annualised rental income during the period under review, from both new lettings and successful rent reviews. This takes LAP's current annualised rent roll to £ 8.4m. Our estimated rental value now stands at £9.2m. At King Edward Court, Windsor, we continue to work up a substantial redevelopment proposal for part of the shopping centre, involving the demolition of a supermarket and a number of small units to create approximately 100,000 sq.ft. of modern retail space together with a 100 room hotel. We have entered into discussions with a number of major fashion retailers and interest so far has been extremely positive. We expect to make a planning application within the next few months. At the time of the acquisition of King Edward Court, there were two empty units. We have now carried out a major letting of a prime unit to Morada Interiors, a quality home furnishings chain at a rent of £77,500 pa, equating to a Zone A rate of over £101 per sq. ft. This compares favourably with the estimated rental value of £92.50 per sq.ft.at the date of acquisition in December 2002 and provides strong evidence for the lease renewal programme which commences in 2004. There is good interest in the one remaining unit and we expect to complete that letting shortly. We have completed one lease renewal since acquisition, when we renewed an office lease to Rank Hovis McDougall for 10 years at £54,000 pa against an estimated rental value of £47,500 and a passing rent of £47,250 at the time of acquisition. At Orchard Square, Sheffield, we concluded a successful rent review with Virgin Records, increasing the rent from £248,000 to £312,500, against an estimated rental value of £310,000. The new unit which we are developing for Clarks Shoes is nearing completion and I am pleased to report that we accepted a surrender for the adjacent unit and have immediately put it under offer to an upmarket national fashion retailer at £56,000 pa, a small increase over the previously passing rent of £55,000 but further strong evidence of a Zone A rate of over £ 70. The centre remains fully let, and retailers are still showing strong interest in any potential space in this centre. At Kings Square, West Bromwich, we have developed a new unit on a site adjacent to the centre which is now completed and let to Coral Bookmakers at £30,000 pa. Construction costs were under £200,000, leaving a substantial surplus in value which will be taken into account in the year end valuation. At The Mall, Dagenham, we have completed the sub-division of a large empty shop into two smaller but better configured units. The first of these has been let to Ethel Austin at £37,500 pa and the second is under offer to another national fashion retailer at £45,000 pa. Both lettings are in excess of estimated rental value and dramatically ahead of the previous passing rent of the entire unit which was £45,000. At Saxon Square, Christchurch, we have successfully completed a round of rent reviews and added £73,000 pa to the rent roll which is ahead of estimated rental value. We continue to negotiate with the planners over the redevelopment of a number of kiosks to the rear of the centre and expect to make a planning application soon. At the Brunel Centre, Bletchley, we have completed the construction of the new 35,000 sq.ft. unit on the former Wetherburn Court site. Construction costs total about £1.7 million including fees. The principal tenant, Wilkinson, has leased 23,500 sq.ft. at £162,500 pa and is in the process of fitting out their unit which will open during October 2003. Bisichi Mining, our 42% owned associate, had an extremely good first half. LAP's share of its operating profits rose to £417,000, against £177,000 for the comparable period last year. This increase is due to better productivity, higher output and improved operating conditions at Black Wattle Colliery, Bisichi's principal coal mine subsidiary. We have considerable cash and undrawn facilities even after our substantial development programme. The new lettings highlighted above that we have carried out at both existing units and our developments will provide increased income as rent free periods expire. The Company continues to trade well and I am confident of a satisfactory result for the full year. London & Associated Properties PLC Consolidated profit and loss account six months ended 30 June 2003 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2003 2002 2002 Note £'000 £'000 £'000 Gross rental income Group and share of joint ventures 5,263 4,179 8,336 Less:joint ventures-share of (1,260) (88) (318) rental income 4,003 4,091 8,018 Less: property overheads - Ground rents (515) (214) (455) Direct property expenses (507) (399) (899) Attributable overheads (894) (840) (1,742) (1,916) (1,453) (3,096) Less: joint ventures - share of 413 12 70 overheads (1,503) (1,441) (3,026) Net rental income 2,500 2,650 4,992 Listed investments - net income 1 34 (372) (355) Operating profit 2,534 2,278 4,637 Share of operating profit of joint 852 75 249 venture Share of operating profit of 417 177 407 associate Profit on ordinary activities 3,803 2,530 5,293 before interest Interest Interest receivable 173 134 334 Interest payable - group (1,826) (1,839) (3,728) - joint ventures (758) (57) (219) 2 (2,411) (1,762) (3,613) Exceptional items: Profit on sale of investment properties: Company 95 567 757 Associate and joint venture (63) 19 11 3 32 586 768 Profit on ordinary activities 1,424 1,354 2,448 before taxation Taxation of profit on ordinary 4 384 341 605 activities Profit for the period 1,040 1,013 1,843 Earnings per share - basic 5 1.30p 1.28p 2.32p Earnings per share - fully diluted 5 1.28p 1.27p 2.30p Dividend per share - - 1.425p The revenue and operating profit derives from continuing operations. Consolidated balance sheet at 30 June 2003 30 June 30 June 31 December 2003 2002 2002 Note £'000 £'000 £'000 Fixed assets Properties and other tangible 6 96,295 95,450 96,143 assets Investments 8,147 Investments in joint ventures - Share of gross assets 27,714 2,587 27,452 - Share of gross liabilities (24,780) (1,684) (24,524) - Share of net assets 2,934 903 2,928 Other investments 5,504 3,035 5,219 8,438 3,938 8,147 Total fixed assets 104,733 99,388 104,290 Current assets Debtors 1,716 2,300 1,375 Investments (Market value - £ 7 2,393 2,070 2,193 2,847,000) Bank balances 1,393 6,808 6,718 5,502 11,178 10,286 Creditors due within one year Creditors and accruals (8,551) (7,005) (7,070) Bank borrowings (3,678) (4,617) (5,853) (12,229) (11,622) (12,923) Net current liabilities (6,727) (444) (2,637) Total assets less current 98,006 98,944 101,653 liabilities Creditors due after more than one (41,130) (46,338) (45,971) year Provisions for liabilities and (1,702) (1,532) (1,657) charges Net assets 55,174 51,074 54,025 Equity shareholders' funds 55,174 51,074 54,025 Net assets per share* (pence) Basic 69.31 65.49 67.69 Fully Diluted 68.80 64.78 66.98 *Including current asset investments at market value. This interim statement was approved by the board of directors on 26 September 2003. Consolidated statement of total recognised gains and losses 6 months ended 30 June 2003 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2003 2002 2002 £'000 £'000 £'000 Profit for the financial period 1,040 1,013 1,843 Currency translation difference on foreign currency net investments 77 31 90 Increase on revaluation of investment properties Company - - 2,408 Associate and joint venture - - 528 Total gains and losses recognised in the period 1,117 1,044 4,869 Prior year adjustment 8 - (1,434) (1,434) 1,117 (390) 3,435 Consolidated cash flow statement 6 months ended 30 June 2003 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2003 2002 2002 £'000 £'000 £'000 Operating profit 2,534 2,278 4,637 Depreciation 41 47 92 (Loss) profit on disposal of fixed (3) - 3 assets Dividend from associated company - - 44 Dividend from joint venture - - 40 Decrease (increase) in current 405 (706) (557) assets Net cash flow from operating 2,977 1,619 4,259 activities Returns on investments and servicing of finance (1,556) (1,681) (3,343) Taxation - 195 152 Capital expenditure and financial investment (103) 2,973 1,222 Equity dividends paid - - (700) Cash inflow before use of liquid resources and financing 1,318 3,106 1,590 Management of liquid resources 350 (727) (163) Cash inflow (outflow) from (5,118) (105) (254) financing (Decrease) increase in cash in the (3,450) 2,274 1,173 period Reconciliation of net cash flow to movement on net debt (Decrease) increase in cash in the (3,450) 2,274 1,173 period Net cash outflow from reduction in debt 5,150 150 300 1,700 2,424 1,473 Movements on current asset 200 (435) (312) investments 1,900 1,989 1,161 Net debt at beginning of period (43,242) (44,403) (44,403) Net debt at end of period (41,342) (42,414) (43,242) Analysis of net debt Bank balances in hand 1,393 6,808 6,718 Bank overdrafts (3,378) (4,242) (5,253) Debt due within one year (300) (375) (600) Debt due after one year (41,450) (46,675) (46,300) Current asset investments 2,393 2,070 2,193 (41,342) (42,414) (43,242) Notes to the interim results 1 Listed investments 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2003 2002 2002 Investment sales 189 229 301 Dividends receivable 51 42 88 240 271 389 Cost of sales (196) (636) (726) 44 (365) (337) Less - attributable overheads (10) (7) (18) 34 (372) (355) 2. Interest 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2003 2002 2002 £'000 £'000 £'000 Interest receivable 173 134 334 Interest payable - Bank loans and overdrafts (677) (732) (191) Other loans (1,058) (1,058) (3,431) Interest capitalised 28 14 31 Share of associates' interest (119) (63) (137) payable (1,653) (1,705) (3,394) Share of joint ventures' interest (758) (57) (219) payable (2,411) (1,762) (3,613) 3. Exceptional items 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2003 2002 2002 £'000 £'000 £'000 Profit(loss) on sale of freehold 95 567 757 property Profit on sale of freehold property: Associate (16) 6 3 Joint ventures (47) 13 8 32 586 768 4.Taxation 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2003 2002 2002 £'000 £'000 £'000 Company - Current tax 204 317 388 - Deferred tax 45 (17) 108 Associate and Joint Ventures - Current tax 139 41 108 - Deferred tax (4) - 1 384 341 605 No provision has been made for deferred tax on gains recognised on revaluing property to its market value or on the sale of properties where potentially taxable gains have been rolled over into replacement assets. Such tax would become payable only if the property were sold without it being possible to claim rollover relief. The total amount unprovided for is £ 3,734,000 ( June 2002 £4,499,000, December 2002 £ 4,015,000). At present it is not envisaged that any tax will become payable in the forseeable future. 5.Earnings per share have been calculated 6 months 6 months Year as follows:- ended ended ended 30 June 30 June 31 December 2003 2002 2002 £'000 £'000 £'000 Group profit on ordinary 1,040 1,013 1,843 activities after tax Weighted average number of shares in issue for the period ('000) 80,140 78,899 79,474 Basic earnings per share 1.30p 1.28p 2.32p Dilution adjustments to earnings £9,000 £7,000 £18,000 Diluted number of shares in issue 81,659 80,576 81,011 ('000) Fully diluted earnings per share 1.28p 1.27p 2.30p 6. Properties are included at their valuation at 31 December 2002, adjusted for additions and disposals since that date at cost or valuation. 7. Investments held as current assets 30 June 30 June 31 December 2003 2002 2002 £'000 £'000 £'000 Listed investment portfolio at 2,847 2,744 2,385 market value Unrealised excess of market value 454 674 192 over costs Listed investment portfolio at 2,393 2,070 2,193 cost 8. Prior year adjustment At 30 June and 31 December 2002 the company adopted FRS 19, a change in accounting policy to recognise in full deferred tax liabilities that had not previously been recognised as they were not expected to crystallise in the foreseeable future. The prior year adjustment, being a reduction in reported net assets at 31 December 2001, was £1,434,000. 9.The above financial information does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. The figures for the year ended 31st December 2002 are based upon the latest statutory accounts, which have been delivered to the Registrar of Companies; the report of the auditors on those accounts was unqualified and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985. The six months figures use the same accounting policies as for the year ended 31 December 2002, and have not been audited or subject to review by the company's auditors. 10. Posting to shareholders The interim statement will be sent to shareholders by mail. Copies are now available at the Company's Registered Office: 8-10 New Fetter Lane, London EC4A 1AF and may also be downloaded from the Company's website - www.laprops.co.uk.

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