Interim Results
Benchmark Group PLC
27 February 2003
INTERIM RESULTS
For the Six Months Ended 31 December 2002
Benchmark Group PLC ('Benchmark'), the specialist Central London property
investment and development company, announces results for the six months ended
31 December 2002.
Financial Highlights for the six months to 31 December 2002
• Pre-tax profits: £3.6 million (2001: £9.6 million)
• Adjusted earnings per share: 3.6 pence (2001: 4.3 pence)
• Adjusted net assets of £313.6 million (2001: £363.8 million)
• Adjusted diluted net assets per share: 321.5 pence (2001: 366.1 pence)
• Interim dividend per share of 1.95 pence (2001: 1.95 pence)
• Net gearing excluding share of joint venture net debt of 81.5% compared to
65.4% as at 30 June 2002
Corporate Highlights
• Total annualised net rental income is £52.9 million compared with £53.0
million as at 17 September 2002
• Current vacancy level of 4.1% in terms of rental value
• Total value of properties under management down 8.7% to £1,084.6 million
from £1,188.2 million
• Effective interest in WELPUT reduced to 55.3% from 73.0% previously
Tan Sri Quek Leng Chan, Chairman of Benchmark, said: 'The condition of the
rental market has caused the value of our own portfolio to decline over the last
6 months, particularly where we have pending or existing vacancies. In stronger
markets these would provide the opportunities for value enhancement but in more
difficult times the values are heavily discounted by valuers.
'These are challenging times for a London property owner and, as a Central
London specialist, we are concentrating our efforts on leasing vacant space,
where we have recently seen more tenant interest.
'As long-term investors and developers, we are beginning to see interesting
opportunities in our specialist areas from which we can build the portfolio for
the future so as to be a beneficiary of the West End recovery when it arrives.'
For further information:
Benchmark Group PLC Tavistock Communications Ltd
Nigel Kempner, Chief Executive Jeremy Carey / Molly Dover
Tel: 020 7659 0500 Tel: 020 7600 2288
www.benchmarkgroup.plc.uk
www.benchmarkdirect.com
The Company will make a presentation to analysts at 10.00 am on Thursday, 27
February 2003 at 1 Cornhill, EC3. A copy of the slide presentation is available
on www.benchmarkgroup.plc.uk.
CHAIRMAN'S STATEMENT
The demand for Central London office investments that benefit from leases to
good covenants on unexpired terms of at least 15 years has remained strong,
enhanced by the lowest interest rates we have seen for many years. Returns from
property have remained attractive compared with many other asset classes.
According to independent market commentary, Central London has seen property
investment activity during 2002 of around £7.5 billion, significantly in excess
of the £6.8 billion recorded in 2001.
The West End market does however continue to be affected by weak tenant demand
for offices, though not as severely as the City. The encouraging factor is that
little new office development is taking place in the West End, where 88% of our
assets by value are located, and leasing transactions continue to be completed.
Vacancy levels in the West End have remained at around 10% in the last 6 months
but tenant controlled space probably represents about 75% of all available
offices. Incentives to tenants have been increasing and rental levels for good
modern offices in St James's and Mayfair have come down by around 20% during the
last 12 months.
The condition of the rental market has caused the value of our own portfolio to
decline over the last 6 months, particularly where we have pending or existing
vacancies. In stronger markets these would provide the opportunities for value
enhancement but in more difficult times the values are heavily discounted by
valuers.
NET ASSET VALUE
The adjusted diluted net asset value per share as at 31 December 2002 was 321.5p
compared with 366.1p as at 31 December 2001, a reduction of 12.2% over the year.
Compared with 382.4p as at 30 June 2002, this represents a reduction of 15.9%.
DTZ Debenham Tie Leung Limited valued our investment properties, including those
held in our joint venture with JER Partners, on the basis of open market value
as at 31 December 2002. CB Hillier Parker Limited and Atis Real Weatheralls
Limited valued the properties in the West End of London Property Unit Trust ('
WELPUT'). The value of the properties held at 31 December 2002 reduced by £76.9
million, a decline of 8.4% compared to the valuation as at 30 June 2002. This
represents a decline of £59.4 million (6.6%) over the 31 December 2001
valuation.
It is interesting that in the second half of 2002, 8.9% of the reductions in
value were caused by falls in rents and estimated rents.
RESULTS
Pre-tax profits for the six months to 31 December 2002 were £3.6 million (2001:
£9.6 million). This reduction of 62.5% over the same period last year resulted
from a combination of a lower level of disposals and losses from disposals and
provision against investments totalling £1.6 million (2001: £2.1 million
profit).
Net rental income for the period, including our share of joint ventures,
increased by 9.6% to £26.3 million (2001: £24 million).
Including our sales and acquisitions since 31 December 2002, annualised net
rental income, including our share of joint ventures is £52.9 million per annum,
compared with £53.0 million per annum as at 17 September 2002.
Our net borrowings at 31 December 2002 were £251.4 million resulting in a
gearing of 81.5% compared with 65.4% as at 30 June 2002. The increase was
largely the result of the decline in property values that reduced shareholders'
funds to £308.5 million from £377.8 million as at 30 June 2002. If our share of
the non-recourse joint venture borrowings was included, the gearing would be
159.4% (30 June 2002: 129.6%).
DIVIDEND
The Directors have declared an interim dividend of 1.95p (2001: 1.95p) which
will be paid on 9 April 2003 to shareholders on the register at 14 March 2003.
ACQUISITIONS AND DISPOSALS
There were no acquisitions by Benchmark during the six month period to 31
December 2002. During the same period, disposals amounted to £29.0 million
which included the freehold of 147/148 Leadenhall Street, EC3, the long
leasehold of 65/68 South Molton Street, W1, our 50% share of 100 Fetter Lane,
EC4 and 4 flats at The Halkins, Belgravia, SW1. The book loss on the disposals
totalled £1.5 million.
THE WEST END OF LONDON PROPERTY UNIT TRUST ('WELPUT')
In September 2002, the WEL Property Limited Partnership ('WEL LP') contracted to
acquire the freehold of Invensys House, Carlisle Place, SW1 from the trustee of
the Schroder Exempt Property Unit Trust ('SEPUT') for £26.1 million. The
acquisition was completed on 9 January 2003 and SEPUT subscribed for £15.1
million of units in WELPUT. Also in January, WEL LP purchased the long
leasehold of Regent Arcade House, Regent Street, W1 for £29.0 million from
Allied Dunbar Assurance PLC, who subscribed for £10.5 million of units in
WELPUT. In January 2003 WEL LP sold the freehold of 24/28 Sackville Street, W1
for £22.95 million.
Following these transactions, Benchmark's effective interest in WELPUT has been
reduced from 73.0% to 55.3%. This may rise to 59.1% if certain units in WELPUT
are redeemed by Allied Dunbar in December 2003.
MANAGEMENT INITIATIVES
Our direct office leasing initiative, Benchmark Direct, set up in 2002, has been
successful in a difficult market and since 30 June 2002 has been involved in
lettings of around 70,000 sq ft in our portfolio under management, generating an
annualised total income of £2.9 million. This is equivalent to 4.8% of our
share of the annualised rent roll.
The current vacancy level in our portfolio is 4.1% in terms of rental value.
This may increase to 11.8% later this year when our current refurbishment
schemes become available for letting.
To improve further the overall operations of the Company, we have set up an
Executive Committee to assist the Chief Executive in implementing the corporate
strategy set by the Board. The Chief Executive, Nigel Kempner, will chair the
Executive Committee and the other members are K C Wong, the Managing Director of
Finance, and Paul Connellan, the Head of Property.
CONCLUSION
These are challenging times for a London property owner and, as a Central London
specialist, we are concentrating our efforts on leasing vacant space, where we
have recently seen more tenant interest.
As long-term investors and developers, we are beginning to see interesting
opportunities in our specialist areas from which we can build the portfolio for
the future so as to be a beneficiary of the West End recovery when it arrives.
Tan Sri Quek Leng Chan
Chairman
26 February 2003
Financial Highlights
Six months ended 31 December 2002
31 Dec 02 30 June 02 %
(unaudited) (audited)
Total properties owned including 864.5 942.5 -8.3
share of joint ventures
(£ million)*
Properties under management (£ 1,084.6 1,188.2 -8.7
million)*
Adjusted net assets (£ million) + 313.6 382.4 -18.0
Adjusted net assets per share - 321.5 382.4 -15.9
diluted (pence) +
Net gearing excluding share of 81.5 65.4 24.6
joint venture net debt (%)
Six months to Six months to %
31 Dec 02 31 Dec 01
(unaudited) (unaudited)
Net rental income including share
of joint ventures
(£ million) 26.3 24.0 9.6
Profit before tax (£ million) 3.6 9.6 -62.5
Profit after tax (£ million) 2.0 5.8 -65.5
Adjusted earnings per share (pence) 3.6 4.3 -16.3
Dividend per share (pence) 1.95 1.95 -
Special dividend per share (pence) - 60.0 -
* See note 9 for details
+ See note 8 for details
Consolidated Profit and Loss Account
Six months ended 31 December 2002
Six months to Six months to Year to
31 Dec 02 31 Dec 01 30 Jun 02
Note (unaudited) (unaudited) (audited)
£'000 £'000 £'000
GROSS RENTAL INCOME
Group and share of joint ventures 29,582 26,959 54,737
Less: share of joint ventures (11,016) (8,885) (19,375)
18,566 18,074 35,362
NET RENTAL INCOME
Group and share of joint ventures 26,269 24,018 48,554
Less: share of joint ventures (10,385) (8,637) (18,523)
2 15,884 15,381 30,031
Administration expenses (2,526) (2,099) (5,968)
GROUP OPERATING PROFIT 13,358 13,282 24,063
Share of operating profit in joint ventures 10 9,097 8,074 17,801
TOTAL OPERATING PROFIT 22,455 21,356 41,864
Profit on disposal of investment properties 3 760 2,060 2,287
Share of loss on disposal of investment properties 3 (1,094) - -
in joint ventures
Provision against investments 4 (1,260) - -
PROFIT ON ORDINARY ACTIVITIES BEFORE
INTEREST 20,861 23,416 44,151
Group net interest payable and similar charges 5 (8,199) (6,005) (13,914)
Share of net interest payable in joint ventures 10 (9,089) (7,818) (16,674)
PROFIT ON ORDINARY ACTIVITIES BEFORE
TAXATION 3,573 9,593 13,563
Taxation 6 (1,605) (3,791) (1,734)
PROFIT ON ORDINARY ACTIVITIES AFTER
TAXATION 1,968 5,802 11,829
Minority interests (520) (374) (107)
PROFIT FOR THE FINANCIAL PERIOD 1,448 5,428 11,722
Dividends 7 (1,899) (74,904) (77,925)
RETAINED LOSS FOR THE PERIOD (451) (69,476) (66,203)
EARNINGS PER SHARE - BASIC 8 1.5p 4.7p 11.0p
- DILUTED 8 1.5p 4.7p 11.0p
ADJUSTED EARNINGS PER SHARE 8 3.6p 4.3p 9.6p
All income was derived from within the United Kingdom from continuing
operations.
Consolidated Balance Sheet
As at 31 December 2002
As at As at As at
31 Dec 02 31 Dec 01 30 Jun 02
(unaudited) (unaudited) (audited)
Note £'000 £'000 £'000
FIXED ASSETS
Investment and development properties 9 508,682 522,241 571,112
Joint ventures
Share of gross assets 367,736 382,845 382,361
Share of gross liabilities (282,507) (284,183) (278,471)
10 85,229 98,662 103,890
Investments 104 3,213 3,213
Other tangible assets 582 276 255
594,597 624,392 678,470
CURRENT ASSETS
Debtors 18,090 13,305 14,902
Investments 916 916 916
Cash at bank and in hand 6,501 6,215 5,172
25,507 20,436 20,990
CREDITORS - AMOUNTS FALLING DUE
WITHIN ONE YEAR (31,660) (41,199) (39,866)
NET CURRENT LIABILITIES (6,153) (20,763) (18,876)
TOTAL ASSETS LESS CURRENT LIABILITIES 588,444 603,629 659,594
CREDITORS - AMOUNTS FALLING DUE
AFTER MORE THAN ONE YEAR (208,539) (165,198) (202,734)
CONVERTIBLE UNSECURED LOAN STOCK (49,392) (49,337) (49,365)
PROVISIONS FOR LIABILITIES AND
CHARGES 11 (10,817) (12,668) (10,225)
NET ASSETS 319,696 376,426 397,270
CAPITAL AND RESERVES
Called up share capital 60,906 60,861 60,906
Share premium account 12 151,490 151,418 151,490
Revaluation reserve 12 74,907 129,442 145,769
Other reserves 12 51 51 51
Profit and loss account 12 21,117 16,354 19,627
SHAREHOLDERS' FUNDS 308,471 358,126 377,843
Minority interests 11,225 18,300 19,427
TOTAL CAPITAL EMPLOYED 319,696 376,426 397,270
NET ASSETS PER SHARE
- BASIC 8 316.5p 367.8p 387.7p
- DILUTED 8 316.5p 361.1p 378.4p
ADJUSTED NET ASSETS PER SHARE
- BASIC 8 321.8p 373.6p 392.4p
- DILUTED 8 321.5p 366.1p 382.4p
Consolidated Statement of Total Recognised Gains and Losses
Six months ended 31 December 2002
Six months to Six months to Year to
31 Dec 02 31 Dec 01 30 Jun 02
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Profit for the financial period 1,448 5,428 11,722
Share of deficit arising on revaluation of investment
properties (68,370) (25,475) (7,968)
Unrealised profit on sale to WELPUT - 6,573 5,393
Tax on realisation of revaluation surpluses on
investment property disposals (551) (10,573) (10,573)
Total recognised gains and losses for the period (67,473) (24,047) (1,426)
Note of Historical Cost Profits and Losses
Six months ended 31 December 2002
Six months to Six months to Year to
31 Dec 02 31 Dec 01 30 Jun 02
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Profit on ordinary activities before taxation 3,573 9,593 13,563
Realisation of property revaluation surpluses in prior 2,492 20,105 20,105
periods
Historical cost profit on ordinary activities before 6,065 29,698 33,668
taxation
Historical cost profit/(loss) retained after tax, minority
interests and dividends 1,490 (59,944) (56,671)
Reconciliation of Movements in Shareholders' Funds
Six months ended 31 December 2002
Six months to Six months to Year to
31 Dec 02 31 Dec 01 30 Jun 02
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Total recognised gains and losses for the period (67,473) (24,047) (1,426)
Dividends (1,899) (74,904) (77,925)
Issue of shares - 37 154
Decrease in total capital employed (69,372) (98,914) (79,197)
Opening shareholders' funds 377,843 457,040 457,040
Closing shareholders' funds 308,471 358,126 377,843
Consolidated Cash Flow Statement
Six months ended 31 December 2002
Six months to Six months to Year to
31 Dec 02 31 Dec 01 30 Jun 02
Note (unaudited) (unaudited) (audited)
£'000 £'000 £'000
NET CASH INFLOW FROM OPERATING ACTIVITIES 13(a) 9,939 4,776 15,315
DIVIDENDS FROM JOINT VENTURES AND ASSOCIATES 184 - 341
RETURNS ON INVESTMENTS AND SERVICING OF
FINANCE
Interest received 161 539 785
Interest paid (8,106) (6,823) (15,230)
NET CASH OUTFLOW FOR RETURNS ON INVESTMENTS AND SERVICING (7,945) (6,284) (14,445)
OF FINANCE
TAXATION
Corporation tax paid (5,868) (3,885) (7,301)
CAPITAL EXPENDITURE
Property additions and other capital expenditure (10,782) (47,958) (83,629)
Disposals and other capital receipts 19,292 262,097 263,179
Purchase of other fixed assets (413) (39) (65)
Repayment of loan notes by associate 1,848 - -
NET CASH INFLOW FOR CAPITAL EXPENDITURE 9,945 214,100 179,485
ACQUISITIONS AND DISPOSALS
Investment in joint ventures (7,738) (73,144) (74,658)
NET CASH OUTFLOW FOR ACQUISITIONS AND DISPOSALS (7,738) (73,144) (74,658)
EQUITY DIVIDENDS PAID (3,020) (76,170) (78,068)
CASH (OUTFLOW)/INFLOW BEFORE USE OF LIQUID
RESOURCES AND FINANCING (4,503) 59,393 20,669
FINANCING
Issue of shares - 37 154
Increase/(decrease) in debt 13(b) 5,832 (61,033) (23,469)
NET INFLOW/(OUTFLOW) FROM FINANCING 5,832 (60,996) (23,315)
INCREASE/(DECREASE) IN CASH IN THE PERIOD 13(b) 1,329 (1,603) (2,646)
Notes to the Accounts
1. ABRIDGED ACCOUNTS
The results for the six months ended 31 December 2002 do not constitute full
statutory accounts within the meaning of Section 240 of the Companies Act 1985.
The Accounting Standards Board (ASB) has issued a non-mandatory statement '
Interim Reports', which seeks to codify best practice in the presentation of
interim results. The Interim Results, which incorporate a revaluation of
investment properties as at 31 December 2002, have been prepared having regard
to the guidance in the ASB statement and on the basis of the accounting policies
set out in the Group's audited accounts for the year ended 30 June 2002.
The comparative figures for the financial year ended 30 June 2002 are not the
Group's statutory accounts for that financial year. Those accounts have been
reported on by the Company's auditors and delivered to the Registrar of
Companies. The report of the auditors was unqualified and did not contain a
statement under section 237 (2) or (3) of the Companies Act 1985.
The Interim Results for the six months ended 31 December 2002 were approved by
the directors on 26 February 2003.
2. NET RENTAL INCOME
Six months Six months Year
to 31 Dec 02 to 31 Dec 01 to 30 Jun 02
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Group gross rental income 18,566 18,074 35,362
Ground rents (1,067) (1,093) (2,230)
Irrecoverable property costs (1,165) (1,146) (2,227)
Amortisation of leasehold properties (450) (454) (874)
Net rental income 15,884 15,381 30,031
3. PROFIT/(LOSS) ON DISPOSAL OF INVESTMENT PROPERTIES
Six months to Six months to Year to
31 Dec 02 31 Dec 01 30 Jun 02
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Aggregate consideration 29,046 261,718 262,731
Less: sales costs (373) (1,623) (1,551)
Net proceeds 28,673 260,095 261,180
Less: historical cost of properties (27,715) (177,080) (179,118)
Historical cost profit 958 83,015 82,062
Less: revaluation surpluses in prior periods (2,492) (74,382) (74,382)
(1,534) 8,633 7,680
Add: write back of excess accruals 1,200 - -
Less: profit on retained interests - (6,573) (5,393)
(334) 2,060 2,287
Attributable to:
Group 760 2,060 2,287
Share of joint ventures (1,094) - -
(334) 2,060 2,287
4. PROVISION AGAINST INVESTMENTS
Provision has been made against investments to reflect the Directors' estimate
of current values.
5. GROUP NET INTEREST PAYABLE AND SIMILAR CHARGES
Six months to Six months to Year to
31 Dec 02 31 Dec 01 30 Jun 02
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Amounts payable on bank loans and overdrafts 6,894 5,071 11,788
5.75% Convertible Unsecured Loan Stock 2013 1,480 1,477 2,930
8,374 6,548 14,718
Interest receivable (175) (543) (804)
8,199 6,005 13,914
6. TAXATION
Six months to Six months to Year to
31 Dec 02 31 Dec 01 30 Jun 02
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Taxation based on profit for the period:
Corporation tax at 30% (2001 - 30%) 1,232 2,126 2,272
Tax arising on capital items (135) 1,255 1,512
Prior year over-provision (140) - -
957 3,381 3,784
Deferred taxation on revenue profit 592 362 1,325
Release of deferred taxation - - (3,406)
Group tax charge 1,549 3,743 1,703
Share of tax in joint ventures 56 48 31
1,605 3,791 1,734
Factors affecting the tax charge for the period
The tax assessed for the period is lower than the standard rate of corporation
tax in the UK of 30% (2001 - 30%). The differences are explained below:
Six months to Six months to Year to
31 Dec 02 31 Dec 01 30 Jun 02
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Profit on ordinary activities before taxation 3,573 9,593 13,563
Profit on ordinary activities multiplied by the standard
rate of corporation tax at 30% 1,072 2,878 4,069
Capital allowances (694) (362) (1,567)
(Reduced)/additional tax on property sales (35) 637 826
Expenses disallowed 810 276 487
Prior year over-provision (140) - -
Share of tax from joint ventures (56) (48) (31)
Tax on profit on ordinary activities 957 3,381 3,784
7. DIVIDENDS
An interim dividend of 1.95p (2001: 1.95p) per share is payable on 9 April 2003
to shareholders on the register at 14 March 2003 based on 97,450,278 ordinary
shares of 62.5p each (2001 interim: 97,377,866) in issue.
8. EARNINGS/NET ASSETS PER SHARE
Earnings per share
The weighted average number of shares in issue during the period was 97,450,246
(2001: 115,091,705) and the earnings attributable to ordinary shares were
£1,448,000 (2001: £5,428,000).
Adjusted earnings per share are calculated on the same weighted average number
of shares but exclude the post-tax loss arising on sales of trading and
investment properties and the provision against investments totalling £1,459,000
(2001: profit £805,000) and the deferred taxation charge of £592,000 (2001:
£362,000) in respect of capital allowances arising on the adoption of FRS19.
The deferred tax is excluded as the Group's experience is that it is very
unusual for capital allowances to be claimed back through balancing charges on
the disposal of a property.
Diluted earnings per share has been calculated for all periods adopting the
method set out in Financial Reporting Standard 14 - Earnings per Share.
In calculating diluted earnings per share, the weighted average number of shares
has been increased to 97,567,859 (2001: 115,282,419) to take account of the
dilutive effect of share options. The 5.75% Convertible Unsecured Loan Stock
2013 ('CULS') do not dilute earnings and are therefore excluded from the diluted
earnings per share calculation.
Net assets per share
The number of shares in issue at 31 December 2002 was 97,450,278 (2001:
97,377,866) and the net assets attributable to shareholders at 31 December 2002
were £308,471,000 (2001: £358,126,000).
Adjusted net assets per share has been calculated on the same number of shares
but excludes the additional deferred tax liability in respect of capital
allowances of £5,123,000 (2001: £5,673,000) and £4,531,000 as at 30 June 2002
arising from the adoption of FRS19. Adjusted net assets has been calculated on
this basis as the Group's experience is that deferred tax on capital allowances
in relation to investment properties is unlikely to crystallise in practice.
Accordingly, the adjusted net assets as at 31 December 2002 was £313,594,000
(2001: £363,799,000) and as at 30 June 2002 was £382,374,000.
Diluted net assets per share, reflecting the potential exercise of conversion
rights relating to the CULS, was 361.1p as at 31 December 2001 based on net
assets of £407,463,000 and shares in issue of 112,839,084. Net assets per share
as at 31 December 2002 was not diluted by the potential exercise of conversion
rights relating to the CULS.
Diluted adjusted net assets per share was 321.5p as at 31 December 2002 (2001:
366.1p), based on net assets of £362,986,000 (2001: £413,136,000) and shares in
issue of 112,911,457 (2001: 112,839,084). Diluted adjusted net assets per share
was 382.4p as at 30 June 2002 based on net assets of £431,739,000 and shares in
issue of 112,911,458.
9. FIXED ASSETS - INVESTMENT AND DEVELOPMENT PROPERTIES
Investment and development properties are stated on the basis of their open
market values as at 31 December 2002. The valuation was carried out by DTZ
Debenham Tie Leung Limited, Chartered Surveyors ('DTZ'), acting as External
Valuers and in accordance with the Appraisal and Valuation Manual of the Royal
Institution of Chartered Surveyors. The open market values are contained in the
DTZ report dated 20 January 2003. Additions and disposals are recognised upon
unconditional exchange of contracts provided that completion takes place around
30 days thereafter.
Analysis of property portfolio:
Our Under
share management
£'000 £'000
100% owned 508,682 508,682
BJER 1 & 2 140,004 280,120
WELPUT 215,800 295,835
Total 864,486 1,084,637
10. JOINT VENTURES
£'000
At 1 July 2002 at valuation 103,890
Net equity investments 7,738
Deficit on revaluation of investment properties (24,203)
Share of retained loss for the period (2,196)
Share of net assets at 31 December 2002 85,229
Summarised aggregated financial statements:
Benchmark Benchmark WEL Property
JER 1 JER 2 Limited
Limited Limited Partnership Total Total
Partnership Partnership and WELPUT 2002 2001
£'000 £'000 £'000 £'000 £'000
Percentage interest at period end 50.0% 49.9% 72.9%*
Profit and loss accounts - Group Share
Period from 1 July to 31 December 2002
Operating profit 2,908 772 5,417 9,097 8,074
Loss on disposal of investment properties (1,094) - - (1,094) -
Net interest payable (3,448) (660) (4,981) (9,089) (7,818)
Profit on ordinary activities before
taxation (1,634) 112 436 (1,086) 256
Taxation (56) - - (56) (48)
(Loss)/profit for the period (1,690) 112 436 (1,142) 208
Balance sheets - Group Share
As at 31 December 2002
Total Total
2002 2001
£'000 £'000 £'000 £'000 £'000
Investment properties at valuation 105,717 27,862 215,800 349,379 359,221
Trading properties 6,425 - - 6,425 14,238
Cash 2,364 383 6,211 8,958 8,230
Other current assets 404 194 2,376 2,974 1,156
Current liabilities (4,176) (905) (28,192) (33,273) (38,713)
Borrowings (82,847) (21,229) (145,158) (249,234) (245,470)
27,887 6,305 51,037 85,229 98,662
*The Group has a 49.9% interest in WEL Property Limited Partnership ('WEL
Partnership') and a 46% interest in WELPUT which has a 50.1% interest in WEL
Partnership giving an effective economic interest of 72.9%. Under the terms of
the WEL Partnership deed and the WELPUT Trust deed, Benchmark does not control
or have the right to control either entity. However, in view of Benchmark's
effective joint control it has accounted for its WELPUT interests as a joint
venture in accordance with Financial Reporting Standard 9 - Associates and Joint
Ventures. In January 2003, Benchmark's effective interest reduced to 55.3% as a
result of the transactions referred to in note 14.
The investment properties are stated on the basis of their open market values as
at 31 December 2002. The valuations were carried out by DTZ Debenham Tie Leung
Limited (BJER 1 & 2 portfolios), CB Hillier Parker Limited and Atis Real
Weatheralls Limited (WELPUT portfolio), Chartered Surveyors, acting as External
Valuers and in accordance with the Appraisal and Valuation Manual of the Royal
Institution of Chartered Surveyors.
All joint venture borrowings are non-recourse to the Group.
11. PROVISIONS FOR LIABILITIES AND CHARGES
Provisions for liabilities and charges comprise deferred tax in respect of short
term timing differences.
12. RESERVES
Share Revaluation Other Profit and
premium reserve reserves loss account Total
£'000 £'000 £'000 £'000 £'000
At 1 July 2002 151,490 145,769 51 19,627 316,937
Share of deficit arising on revaluation of
investment properties - (68,370) - - (68,370)
Revaluation surpluses realised on
investment property disposals - (2,492) - 2,492 -
Tax on realisation of revaluation
surpluses
on investment property disposals - - - (551) (551)
Profit for the financial period - - - 1,448 1,448
Dividends - - - (1,899) (1,899)
At 31 December 2002 151,490 74,907 51 21,117 247,565
13. NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
(a) Reconciliation of operating profit to operating cash flows
Six months to Six months to Year to
31 Dec 02 31 Dec 01 30 Jun 02
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Operating profit 13,358 13,282 24,063
Depreciation 86 35 82
Amortisation of leasehold properties 450 454 874
Increase in debtors (2,322) (6,231) (7,878)
Decrease in creditors (1,633) (2,764) (1,826)
Net cash inflow from operating activities 9,939 4,776 15,315
(b) Reconciliation of net cash flow to movement in net debt
Six months to Six months to Year to
31 Dec 02 31 Dec 01 30 Jun 02
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Increase/(decrease) in cash in the period 1,329 (1,603) (2,646)
Cash (inflow)/outflow from (increase)/decrease in debt (5,832) 61,033 23,469
Movement in net debt (4,503) 59,430 20,823
Net debt at start of period (246,927) (267,750) (267,750)
Net debt at end of period (251,430) (208,320) (246,927)
(c) Analysis of net debt
As at As at
31 Dec 02 Cash flow 30 Jun 02
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Cash at bank and in hand 6,501 1,329 5,172
Debt due after more than one year (257,931) (5,832) (252,099)
Net debt (251,430) (4,503) (246,927)
14. POST BALANCE SHEET EVENTS
In September 2002, the WEL Property Limited Partnership ('WEL LP') entered into
contractual arrangements to acquire the freehold of Invensys House, Carlisle
Place, SW1 for £26.07 million from the Trustee of the Schroder Exempt Property
Unit Trust ('SEPUT'). The acquisition was completed on 9 January 2003 and SEPUT
subscribed for further units in WELPUT at a cost of £15.1 million. In January
2003, WEL LP also purchased the long leasehold of Regent Arcade House, Regent
Street, W1 for £29.0 million from Allied Dunbar Assurance PLC and Allied Dunbar
subscribed for £10.5 million of units in WELPUT. WEL LP also sold the freehold
of 24/28 Sackville Street, W1 for £22.95 million in January 2003. Following
these transactions, Benchmark's effective interest in WELPUT and WEL Partnership
reduced to 55.3%. This may rise to 59.1% if certain units in WELPUT, issued as
part of the Regent Arcade House transaction, are redeemed by 31 December 2003.
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