Interim Results
Benchmark Group PLC
01 March 2004
EMBARGOED UNTIL 7.00AM MONDAY 1 MARCH
INTERIM RESULTS
For the Six Months Ended 31 December 2003
Benchmark Group PLC ('Benchmark'), the specialist Central London property
investment and development company, announces results for the six months ended
31 December 2003.
Financial Highlights
30 June 03
31 Dec 03 (audited)
(unaudited) (restated) %
Total properties owned including share of
joint ventures (£ million) 657.4 730.8 (10.0)
Adjusted net assets per share - diluted (pence) 281.1 279.5 0.6
Net gearing excluding share of joint venture net debt (%) 65.3 95.2 (31.4)
Net gearing including share of joint venture net debt (%) 126.4 171.0 (26.1)
Six months to Six months to
31 Dec 03 31 Dec 02
(unaudited) (unaudited) %
Net rental income including share of
joint ventures (£ million) + 29.3 26.3 11.4
Profit before tax (£ million) + 11.9 3.6 230.6
Profit after tax and minority interests (£ million) +^ 14.9 1.4 964.3
Earnings per share (pence) 15.3 1.5 920.0
Adjusted earnings per share (pence)** 14.0 3.6 288.9
Dividend per share (pence) 1.95 1.95 -
* Net of deferred tax on capital allowances
** Net of deferred tax on capital allowances, post-tax losses on the sale of
properties and provision against investments
+ Includes lease assignment premium received of £7.9 million, of which our
share is £4.0 million
^ Includes release of tax provisions of £8.5 million
Corporate Highlights
• Profit after tax and minority interests increased to £14.9
million from £1.4 million previously, the increase is mainly due to the £7.9
million lease assignment premium received from Visa International at 99/121
Kensington High Street, W8, of which our share is £4.0 million, and the release
of tax provisions of £8.5 million. Correspondingly, the earnings per share
increased to 15.3p from 1.5p previously.
• The value of the investment properties showed a net
reduction of £7.5 million based on independent valuation over the 30 June 2003
figures, representing a 1.3% decline or a total of 7.0% over the 12 months from
31 December 2002.
• The diluted adjusted net assets per share of 281.1p as at
31 December 2003 represent a 0.6% increase over the restated 30 June 2003 figure
of 279.5p (278.4p before restatement).
• Total disposals of £87.0 million in the six months to 31
December 2003 (2002: £29.0 million). This has resulted in the net gearing
reducing to 65.3% as at 31 December 2003 compared to 95.2% as at 30 June 2003.
If our share of the joint venture net debt is included, the net gearing falls to
126.4% from 171.0%.
• An interim dividend of 1.95p per share has been declared
(2002: 1.95p).
For further information:
Benchmark Group PLC Tavistock Communications Ltd
Nigel Kempner, Chief Executive Jeremy Carey / Molly Dover
Tel: 020 7659 0500 Tel: 020 7920 3150
www.benchmarkgroup.plc.uk
www.benchmarkdirect.com
The Company will make a presentation to analysts at 11.00 am on Monday 1 March
2004 at 1 Cornhill, EC3. A copy of the slide presentation is available on
www.benchmarkgroup.plc.uk.
Chairman's Statement
RESULTS
Profit after tax and minority interests for the six months ended 31 December
2003 was £14.9 million (2002 - £1.4 million). The increase is due mainly to the
recognition of our share of a lease assignment premium and the release of £8.5
million tax provisions.
During the period under review a premium of £7.9 million was received from a
tenant, Visa International Service Association, who assigned its leases on the
offices it occupied at 99/121 Kensington High Street, W8. Our share of the
premium received is £4.0 million.
DIVIDEND
The Directors have declared an interim dividend of 1.95 pence per share (2002 -
1.95 pence per share) - which will be paid on 14 April 2004 to shareholders on
the register at 19 March 2004.
THE MARKET
Over the past few weeks we have continued to see increasing interest from
potential occupiers seeking modern offices in the West End at today's relatively
low net effective rents and we have seen some existing occupiers, who had been
seeking to reduce their space currently occupied, withdrawing their surplus
space from the market. With a shortage of new developments this should, over
the next 12 months, produce a better balance of supply and demand and a gradual
reduction in incentives being offered to tenants. Prime office rents in Mayfair
and St James's fell some 8% since January 2003, and this is a much reduced rate
of decline than over the previous year.
The strength and length of the West End office market recovery will depend on
the quality and sustainability of global economic growth, led by the United
States of America, and its effects on the UK economy.
Investment interest in the West End, particularly from overseas private
investors, has remained strong especially as many investors can begin to sense
the bottom of the cycle and imminent rental growth.
LETTINGS
During the six month period ended 31 December 2003, we concluded four office
lettings extending to 20,600 sq ft at rents totalling £590,000 per annum.
Since 31 December 2003, we have contracted further lettings of 39,200 sq ft at
rents totalling £1.3 million per annum. These include 20,900 sq ft of offices
to Lloyds TSB Bank plc at 125 Shaftesbury Avenue, WC2, concluding the letting of
the first phase of the refurbishment, as well as the last remaining office suite
at Medius on Wardour Street, W1, which is now fully let. In addition we have
recently exchanged contracts for the sale of 17,600 sq ft of vacant offices at
Cubitt House, The Halkins, SW1 on a long leasehold basis. Following these
transactions, our vacancy rate has fallen to around 9%, based on our share of
the portfolio.
ACQUISITIONS AND DISPOSALS
There were no acquisitions by the Company during the period while disposals
amounted to £87.0 million. The disposals during the period included 120
Cheapside, 4 Wood Street, EC2, New Chapter House, Bishopsgate, EC2 and 158/164
Bishopsgate, EC2. Also during the period Spirella House, Oxford Circus, W1 was
sold to WEL Property Limited Partnership. The book loss on the disposals
totalled £1.6 million.
DEVELOPMENTS
The construction of 60,000 sq ft of offices, retail and leisure space at Golden
Square, W1 has progressed well and within budget and practical completion is
scheduled for October 2004. A pre-letting campaign for the retail and leisure
element is planned to start in May 2004.
At Melrose House, 4/6 Savile Row, W1, we have resolved all of the conditions
under the development agreement with the freeholder, The Pollen Estate, and are
scheduled to start on site in August 2004 to produce 33,000 sq ft of new office
and retail space due for completion in April 2006.
At 99/121 Kensington High Street, W8, we now have possession of 140,000 sq ft of
offices, following an assignment by Visa of its leases and we are preparing the
plans for a refurbishment scheme.
THE WEST END OF LONDON PROPERTY UNIT TRUST ('WELPUT')
In October 2003, WEL Property Limited Partnership ('WEL Property') completed the
acquisition from the Company of Spirella House, Oxford Circus, W1 in return for
an increase in the Company's interest in WEL Property. At the same time the
Schroder Exempt Property Unit Trust subscribed for £11.5 million of units in
WELPUT.
On 31 December 2003, Allied Dunbar redeemed 18,541 of its units in WELPUT. As a
result of these transactions the Group's effective interest in WELPUT is 56.6%
(30 June 2003 - 55.3%).
NET ASSET VALUE AND GEARING
The adjusted diluted net asset value per share as at 31 December 2003 was 281.1
pence (30 June 2003 - 279.5 pence).
DTZ Debenham Tie Leung Limited valued our investment properties, including those
held in our joint ventures with JER Partners, and CB Richard Ellis valued the
properties in the West End of London Property Unit Trust ('WELPUT'), on the
basis of market value as at 31 December 2003. The value of the property
portfolio in which the Company has an interest at 31 December 2003 fell by £7.5
million, a decline of 1.3%, compared with the valuation of the same interest as
at 30 June 2003. However, the increase in the retained profit of the Company
for the six month period more than offset the fall in the valuation of the
investment property portfolio.
As at 31 December 2003 the Company had net borrowings of £175.7 million compared
with £253.7 million as at 30 June 2003. As a consequence, the gearing of the
company has fallen to 65.3% (30 June 2003 - 95.2%). If our share of the net
borrowings in joint ventures is included, then net gearing has fallen to 126.4%
(30 June 2003 - 171.0%).
Tan Sri Quek Leng Chan
Chairman
27 February 2004
Consolidated Profit and Loss Account
Six months ended 31 December 2003
Six months to Six months to Year to
31 Dec 03 31 Dec 02 30 Jun 03
(unaudited) (unaudited) (audited)
Note £'000 £'000 £'000
GROSS RENTAL INCOME
Group and share of joint ventures 24,367 28,977 56,850
Less: share of joint ventures (7,802) (11,016) (20,410)
16,565 17,961 36,440
NET RENTAL INCOME
Group and share of joint ventures 29,345 26,269 51,650
Less: share of joint ventures (6,868) (10,385) (18,808)
2 22,477 15,884 32,842
Administration expenses (2,249) (2,526) (5,527)
GROUP OPERATING PROFIT 20,228 13,358 27,315
Share of operating profit in joint ventures 10 5,613 9,097 16,224
TOTAL OPERATING PROFIT 25,841 22,455 43,539
(Loss)/profit on disposal of investment properties 3 (1,152) 760 (3,678)
Share of profit/(loss) on disposal of investment
properties in joint ventures 3 88 (1,094) (3,128)
Provision against investments 4 - (1,260) (1,260)
PROFIT ON ORDINARY ACTIVITIES BEFORE
INTEREST 24,777 20,861 35,473
Group net interest payable and similar charges 5 (6,824) (8,199) (15,890)
Share of net interest payable in joint ventures 10 (6,070) (9,089) (16,698)
PROFIT ON ORDINARY ACTIVITIES BEFORE
TAXATION 11,883 3,573 2,885
Taxation 6 7,367 (1,605) 1,078
PROFIT ON ORDINARY ACTIVITIES AFTER
TAXATION 19,250 1,968 3,963
Minority interests (4,331) (520) (1,116)
PROFIT FOR THE FINANCIAL PERIOD 14,919 1,448 2,847
Dividends 7 (1,891) (1,899) (4,905)
RETAINED PROFIT/(LOSS) FOR THE PERIOD 13,028 (451) (2,058)
EARNINGS PER SHARE - BASIC 8 15.3p 1.5p 2.9p
- DILUTED 8 14.1p 1.5p 2.9p
ADJUSTED EARNINGS PER SHARE 8 14.0p 3.6p 10.7p
All income was derived from within the United Kingdom from continuing
operations.
Consolidated Balance Sheet
As at 31 December 2003
As at As at
As at 31 Dec 02 30 Jun 03
31 Dec 03 (unaudited) (audited)
(unaudited) (restated) (restated)
Note £'000 £'000 £'000
FIXED ASSETS
Investment and development properties 9 405,008 508,682 482,611
Joint ventures
Share of gross assets 265,229 367,736 295,491
Share of gross liabilities (185,820) (282,507) (224,374)
10 79,409 85,229 71,117
Investments 1,160 1,159 1,160
Other tangible assets 400 582 510
485,977 595,652 555,398
CURRENT ASSETS
Debtors 9,973 18,090 13,770
Investments 916 916 916
Cash at bank and in hand 13(e) 16,553 6,501 4,999
27,442 25,507 19,685
CREDITORS - AMOUNTS FALLING DUE
WITHIN ONE YEAR (31,961) (31,660) (31,632)
NET CURRENT LIABILITIES (4,519) (6,153) (11,947)
TOTAL ASSETS LESS CURRENT LIABILITIES 481,458 589,499 543,451
CREDITORS - AMOUNTS FALLING DUE
AFTER MORE THAN ONE YEAR (192,232) (257,931) (258,668)
PROVISIONS FOR LIABILITIES AND CHARGES 11 (9,446) (10,817) (10,028)
NET ASSETS 279,780 320,751 274,755
CAPITAL AND RESERVES
Called up share capital 60,912 60,906 60,908
Share premium account 12 151,497 151,490 151,492
Revaluation reserve 12 1,580 75,962 17,222
Other reserves 12 51 51 51
Profit and loss account 12 54,795 21,117 36,921
EQUITY SHAREHOLDERS' FUNDS 268,835 309,526 266,594
Minority interests 10,945 11,225 8,161
TOTAL CAPITAL EMPLOYED 279,780 320,751 274,755
NET ASSETS PER SHARE - BASIC 8 275.8p 317.6p 273.6p
- DILUTED 8 275.8p 317.6p 273.6p
ADJUSTED NET ASSETS PER SHARE - BASIC 8 281.1p 322.9p 279.5p
- DILUTED 8 281.1p 322.4p 279.5p
Consolidated Statement of Total Recognised Gains and Losses
Six months ended 31 December 2003
Six months to Six months to Year to
31 Dec 03 31 Dec 02 30 Jun 03
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Profit for the financial period 14,919 1,448 2,847
Share of deficit arising on revaluation of
investment properties (8,129) (68,370) (107,470)
Tax on realisation of revaluation surpluses on
investment property disposals (2,667) (551) (2,780)
Total recognised gains and losses for the period 4,123 (67,473) (107,403)
Prior period adjustment 1,055
Total recognised gains and losses since
last annual report 5,178
Note of Historical Cost Profits and Losses
Six months ended 31 December 2003
Six months to Six months to Year to
31 Dec 03 31 Dec 02 30 Jun 03
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Profit on ordinary activities before taxation 11,883 3,573 2,885
Realisation of property revaluation surpluses
in prior periods 7,513 2,492 22,132
Historical cost profit on ordinary activities
before taxation 19,396 6,065 25,017
Historical cost profit/(loss) retained after tax,
minority interests and dividends 17,874 1,490 (14,514)
Reconciliation of Movements in Shareholders' Funds
Six months ended 31 December 2003
Six months to Year to
Six months to 31 Dec 02 30 Jun 03
31 Dec 03 (unaudited) (audited)
(unaudited) (restated) (restated)
£'000 £'000 £'000
Total recognised gains and losses for the period 4,123 (67,473) (107,403)
Dividends (1,891) (1,899) (4,905)
Issue of shares 9 - 4
Increase/(decrease) in shareholders' funds 2,241 (69,372) (112,304)
Opening shareholders' funds (originally
£265,539,000 before adding prior period
adjustment of £1,055,000) 266,594 378,898 378,898
Closing shareholders' funds 268,835 309,526 266,594
Consolidated Cash Flow Statement
Six months ended 31 December 2003
Six months to Six months to Year to
31 Dec 03 31 Dec 02 30 Jun 03
(unaudited) (unaudited) (audited)
Note £'000 £'000 £'000
NET CASH INFLOW FROM OPERATING
ACTIVITIES 13(a) 24,631 9,939 24,998
DISTRIBUTIONS RECEIVED FROM
JOINT VENTURES 1,322 184 1,941
RETURNS ON INVESTMENTS AND SERVICING OF
FINANCE
Interest received 129 161 441
Interest paid (6,894) (8,106) (16,332)
NET CASH OUTFLOW FOR RETURNS ON
INVESTMENTS AND SERVICING OF FINANCE (6,765) (7,945) (15,891)
TAXATION
Corporation tax paid (2,423) (5,868) (6,727)
CAPITAL EXPENDITURE
Property additions and other capital expenditure (5,304) (10,782) (16,030)
Disposals and other capital receipts 74,707 19,292 20,085
Purchase of other fixed assets - (413) (425)
Repayment of loan notes by associate - 1,848 1,848
NET CASH INFLOW FOR CAPITAL EXPENDITURE 69,403 9,945 5,478
ACQUISITIONS AND DISPOSALS
Investment in joint ventures (5,175) (7,738) (11,640)
NET CASH OUTFLOW FOR ACQUISITIONS
AND DISPOSALS (5,175) (7,738) (11,640)
EQUITY DIVIDENDS PAID (3,012) (3,020) (4,905)
CASH INFLOW/(OUTFLOW) BEFORE MANAGEMENT
OF LIQUID RESOURCES AND FINANCING 77,981 (4,503) (6,746)
MANAGEMENT OF LIQUID RESOURCES
Increase in blocked deposits 13(b) (11,100) - -
NET INFLOW FROM MANAGEMENT OF
LIQUID RESOURCES (11,100) - -
FINANCING
Issue of shares 9 - 4
(Decrease)/increase in debt 13(b) (66,436) 5,832 6,569
NET (OUTLFOW)/INFLOW FROM FINANCING (66,427) 5,832 6,573
INCREASE/(DECREASE) IN CASH IN THE PERIOD 13(b) 454 1,329 (173)
Notes to the Accounts
1 ABRIDGED ACCOUNTS
The results for the six months ended 31 December 2003 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 the revaluation of
investment properties as at 31 December 2003, 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 2003 except
for the treatment of investments held long term which have been restated to
their net asset value. This compares with such investments previously being
carried at cost less provisions to reflect any impairment in value. The effect
of this change in accounting policy is to increase shareholders' funds by
£1,055,000 as at 31 December 2003, 30 June 2003 and 31 December 2002. The
change of accounting policy does not affect the profit and loss accounts as
previously reported.
The comparative figures for the financial year ended 30 June 2003 are extracted
from 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 2003 were approved by
the Directors on 27 February 2004.
2 NET RENTAL INCOME
Six months to Six months to Year to
31 Dec 03 31 Dec 02 30 Jun 03
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Group gross rental income 16,565 17,961 36,440
Lease assignment premium received 7,918 - -
Ground rents (930) (1,067) (2,015)
Irrecoverable property costs (1,864) (1,165) (2,267)
Amortisation of leasehold properties (432) (450) (890)
UITF 28 adjustment 436 (10) 306
21,693 15,269 31,574
Property advisory and management fees 784 615 1,268
Net rental income 22,477 15,884 32,842
3 (LOSS)/PROFIT ON DISPOSAL OF INVESTMENT PROPERTIES
Six months to Six months to Year to
31 Dec 03 31 Dec 02 30 Jun 03
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Aggregate consideration 87,036 29,046 78,445
Less: sales costs (741) (373) (963)
Net proceeds 86,295 28,673 77,482
Less: historical cost of properties (80,881) (27,715) (73,525)
Historical cost profit 5,414 958 3,957
Less: net surpluses recognised in prior periods (7,055) (2,492) (7,392)
(1,641) (1,534) (3,435)
Less: loss on retained interest 196 - -
Less: permanent impairment in properties
disposed of post period-end - - (4,671)
(1,445) (1,534) (8,106)
Add: write back of accruals 381 1,200 1,300
(1,064) (334) (6,806)
Attributable to:
Group (1,152) 760 (3,678)
Share of joint ventures 88 (1,094) (3,128)
(1,064) (334) (6,806)
4 PROVISION AGAINST INVESTMENTS
In the year ended 30 June 2003, 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 03 31 Dec 02 30 Jun 03
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Amounts payable on bank loans and overdrafts 5,277 6,693 13,015
5.75% Convertible Unsecured Loan Stock 2013 1,449 1,449 2,875
6,726 8,142 15,890
Amortisation of loan issue costs 227 232 459
6,953 8,374 16,349
Interest receivable (129) (175) (459)
6,824 8,199 15,890
6 TAXATION
Six months to Six months to Year to
31 Dec 03 31 Dec 02 30 Jun 03
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Taxation based on profit for the period:
Corporation tax at 30% (2002 - 30%) 2,003 1,232 2,536
Tax arising on capital items (323) (135) (1,034)
Release of prior year provisions (8,465) (140) (2,140)
Current tax (credit)/charge for the period (6,785) 957 (638)
Deferred taxation (credit)/charge on revenue profit (1,983) 592 1,204
Deferred taxation on permanent impairment on
property values 1,401 - (1,401)
Group tax (credit)/charge (7,367) 1,549 (835)
Share of tax in joint ventures - 56 (243)
(7,367) 1,605 (1,078)
Factors affecting the tax (credit)/charge for the period
The tax assessed for the period is lower than the standard rate of corporation
tax in the UK of 30% (31 December 2002 - 30%). The differences are explained
below:
Six months to Six months to Year to
31 Dec 03 31 Dec 02 30 Jun 03
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Profit on ordinary activities before taxation 11,883 3,573 2,885
Profit on ordinary activities multiplied by the standard rate
of corporation tax at 30% 3,565 1,072 866
Capital allowances (753) (694) (1,544)
Additional/(reduced) tax on property sales 666 (35) 1,007
Expenses disallowed 188 810 930
Lease assignment premium (1,986) - -
Release of prior year provisions (8,465) (140) (2,140)
Share of tax from joint ventures - (56) 243
Tax (credit)/charge on profit on ordinary activities (6,785) 957 (638)
7 DIVIDENDS
An interim dividend of 1.95p (31 December 2002 - 1.95p) per share is payable on
14 April 2004 to shareholders on the register at 19 March 2004 based on
97,458,188 ordinary shares of 62.5p each (31 December 2002 - 97,450,278) in
issue.
8 EARNINGS/NET ASSETS PER SHARE
Earnings per share
Earnings per share of 15.3 pence (year ended 30 June 2003 - 2.9 pence, six
months ended 31 December 2002 - 1.5 pence) are calculated on the weighted
average number of shares in issue during the period of 97,456,541 (30 June 2003
- 97,450,290, 31 December 2002 - 97,450,246) and attributable earnings of
£14,919,000 (30 June 2003 - £2,847,000, 31 December 2002 - £1,448,000).
Diluted earnings per share of 14.1 pence are calculated on the weighted average
number of shares in issue during the period of 112,959,595 and attributable
earnings of £15,953,000. For the year ended 30 June 2003 and the six months
ended 31 December 2002, neither the conversion of the 5.75% Convertible
Unsecured Loan Stock 2013 nor the exercise of outstanding share options result
in a dilution to the stated earnings per share.
Adjusted earnings per share are calculated after adjusting for the effect of
property disposals, provisions against investments and deferred tax on capital
allowances. Adjusted earnings per share of 14.0 pence (year ended 30 June 2003
- 10.7 pence, six months ended 31 December 2002 - 3.6 pence) are calculated
based on the weighted average number of shares in issue during the period of
97,456,541 (30 June 2003 - 97,450,290, 31 December 2002 - 97,450,246) and after
making the following adjustments to attributable earnings:
Six months to 31 Dec 03 Six months to 31 Dec 02 Year to 30 Jun 03
(unaudited) (unaudited) (audited)
Pence per Pence per Pence per
£'000 share £'000 share £'000 share
Earnings attributable to ordinary
shares 14,919 15.3 1,448 1.5 2,847 2.9
Adjustments:
Loss on sale of investment
properties 1,064 1.1 334 0.3 3,435 3.5
Provision for impairment on
investment properties sold
after the year end - - - - 4,671 4.7
Share of loss on sale of joint
venture trading properties - - - - 1,128 1.2
Provision against investment - - 1,260 1.3 1,260 1.3
Capital accruals written back - - - - (1,300) (1.3)
15,983 16.4 3,042 3.1 12,041 12.3
Tax on adjustments (1,715) (1.8) (135) (0.1) (2,773) (2.8)
14,268 14.6 2,907 3.0 9,268 9.5
Deferred tax in respect of capital
allowances (591) (0.6) 592 0.6 1,204 1.2
Adjusted earnings 13,677 14.0 3,499 3.6 10,472 10.7
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.
Net assets per share
Net assets per share of 275.8 pence (30 June 2003 (restated) - 273.6 pence, 31
December 2002 (restated) - 317.6 pence) are calculated based on the number of
shares in issue at 31 December 2003 of 97,458,188 (30 June 2003 - 97,452,344, 31
December - 97,450,278) and net assets attributable to shareholders of
£268,835,000 (30 June 2003 (restated) - £266,594,000, 31 December 2002
(restated) - £309,526,000).
Neither the conversion of the 5.75% Convertible Unsecured Loan Stock 2013 nor
the exercise of outstanding share options result in a dilution of the net assets
per share of the Group as at 31 December 2003, 30 June 2003 or 31 December 2002.
Adjusted net assets per share are calculated after adjusting for the deferred
tax liability in respect of capital allowances, as the Group's experience is
that it is very unusual for capital allowances to be claimed back through
balancing charges. Adjusted net assets per share are based on the number of
shares in issue at 31 December 2003 of 97,458,188 (30 June 2003 - 97,452,344, 31
December 2002 - 97,450,278) and are calculated as follows:
As at 31 Dec 03 As at 31 Dec 02 As at 30 Jun 03
(restated) (restated)
Pence per (restated) Pence per (restated) Pence per
£'000 share £'000 share £'000 share
Net assets attributable to
ordinary shares 268,835 275.8 309,526 317.6 266,594 273.6
Adjustments:
Deferred tax in respect of capital
allowances 5,144 5.3 5,123 5.3 5,735 5.9
Adjusted net assets attributable to
ordinary shares 273,979 281.1 314,649 322.9 272,329 279.5
As at 31 December 2003 and 30 June 2003 there is no diluting effect to adjusted
net assets per share. As at 31 December 2002 diluted adjusted earnings per
share were 322.4 pence (restated) based on adjusted net assets of £364,041,000
(restated) and shares in issue of 112,911,457.
9 FIXED ASSETS - INVESTMENT AND DEVELOPMENT PROPERTIES
All properties were valued as at 31 December 2003, by qualified professional
valuers working for the company of DTZ Debenham Tie Leung, Chartered Surveyors
('DTZ'), acting in the capacity of External Valuers. All such valuers are
Chartered Surveyors, being members of the Royal Institution of Chartered
Surveyors.
All properties were valued on the basis of Market Value. All valuations were
carried out in accordance with the RICS Appraisal and Valuation Standards. Our
valuation report is dated 10 January 2004 (the 'Valuation Report'). Paul
Wolfenden has been the signatory of valuation reports provided to Benchmark
Group PLC for the same purpose as the Valuation Report for a continuous period
since July 1996. DTZ has been carrying out valuations for Benchmark Group PLC
for the same purpose as the Valuation Report for the same period.
Historically, DTZ has acted as letting agents for the Group on a number of
properties. In addition, DTZ has also historically provided ad-hoc investment,
acquisition, disposal and building consultancy advice, however DTZ has not
provided any such services throughout the twelve month period prior to 31
December 2003.
DTZ Debenham Tie Leung is a wholly owned subsidiary of DTZ Holdings plc. In DTZ
Holdings financial year to 30 April 2003, the proportion of total fees payable
by the Group to the total fee income of DTZ Holdings was significantly less than
5%.
Analysis of property portfolio:
Our Under
share management
£'000 £'000
100% owned 405,008 405,008
BJER 1 & 2 111,786 223,676
WELPUT 140,609 248,260
Total 657,403 876,944
10 JOINT VENTURES
£'000
At 1 July 2003 at valuation 71,117
Net equity investments 16,675
Deficit on revaluation of investment properties (6,558)
Share of retained loss for the period (369)
Distributions received (1,456)
Share of net assets at 31 December 2003 79,409
Summarised aggregated financial statements:
Benchmark Benchmark WEL Property
JER 1 JER 2 Limited
Limited Limited Partnership and Total Total
Partnership Partnership WELPUT 2003 2002
£'000 £'000 £'000 £'000 £'000
Percentage interest at period end 50.0% 49.9% 56.6%*
Profit and loss accounts -
Group share
Period from 1 July 2003 to
31 December 2003
Operating profit 1,836 253 3,524 5,613 9,097
Profit/(loss) on disposal of investment
properties 6 - 82 88 (1,094)
Net interest payable (2,544) (646) (2,880) (6,070) (9,089)
(Loss)/profit on ordinary activities before
taxation (702) (393) 726 (369) (1,086)
Taxation - - - - (56)
(Loss)/profit for the period (702) (393) 726 (369) (1,142)
Balance sheets - Group share
As at 31 December 2003 Total Total
2003 2002
£'000 £'000 £'000 £'000 £'000
Investment properties at valuation 85,841 25,945 140,609 252,395 349,379
Trading properties - - - - 6,425
Cash 1,408 587 7,903 9,898 8,958
Other current assets 813 408 1,715 2,936 2,974
Current liabilities (692) (2,664) (8,487) (11,843) (33,273)
Borrowings (59,298) (21,288) (93,391) (173,977) (249,234)
28,072 2,988 48,349 79,409 85,229
*The Group has a 27.2% interest in WEL Property Limited Partnership ('WEL
Partnership') and a 40.4% interest in WELPUT which has a 72.8% interest in WEL
Partnership giving an effective economic interest of 56.6%. 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.
The investment properties are stated on the basis of their market values as at
31 December 2003. The valuations were carried out by DTZ Debenham Tie Leung
Limited (BJER 1 & 2 portfolios) and CB Richard Ellis (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
Deferred tax in respect of short term timing differences.
£'000
At 1 July 2003 10,028
Released during the period (582)
At 31 December 2003 9,446
2003 2002
£'000 £'000
Group
Potential tax on unrealised investment
property surpluses 3,241 3,241
Capitalised interest 1,061 2,453
Capital allowances 5,144 5,123
9,446 10,817
There was no net unprovided deferred tax on unrealised investment property
surpluses as at 31 December 2003.
12 RESERVES
Share Revaluation Other Profit and
Premium Reserve Reserves loss account Total
£'000 £'000 £'000 £'000 £'000
At 1 July 2003 (as reported) 151,492 16,167 51 36,921 204,631
Prior period adjustment (note 1) - 1,055 - - 1,055
At 1 July 2003 (as restated) 151,492 17,222 51 36,921 205,686
Premium on shares issued 5 - - - 5
Share of deficit arising on revaluation
of investment properties - (8,129) - - (8,129)
Revaluation surpluses realised
on investment property disposals - (7,513) - 7,513 -
Tax on realisation of revaluation
surpluses on investment property
disposals - - - (2,667) (2,667)
Profit for the financial period - - - 14,919 14,919
Dividends - - - (1,891) (1,891)
At 31 December 2003 151,497 1,580 51 54,795 207,923
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 03 31 Dec 02 30 Jun 03
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Operating profit 20,228 13,358 27,315
Depreciation 110 86 170
Amortisation of leasehold properties 432 450 890
Decrease/(increase) in debtors 3,504 (2,322) (1,352)
Increase/(decrease) in creditors 357 (1,633) (2,025)
Net cash inflow from operating activities 24,631 9,939 24,998
(b) Reconciliation of net cash flow to movement in net debt
Six months to Six months to Year to
31 Dec 03 31 Dec 02 30 Jun 03
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Increase/(decrease) in cash in the period 454 1,329 (173)
Increase in liquid resources in the period 11,100 - -
Decrease/(increase) in debt in the period 66,436 (5,832) (6,569)
Movement in net debt 77,990 (4,503) (6,742)
Net debt at start of period (253,669) (246,927) (246,927)
Net debt at end of period (175,679) (251,430) (253,669)
(c) Analysis of net debt
As at As at
31 Dec 03 30 Jun 03
(unaudited) Cash flow (audited)
£'000 £'000 £'000
Cash at bank and in hand 5,453 454 4,999
Cash in blocked deposit account 11,100 11,100 -
16,553 11,554 4,999
Debt due after more than one year (192,232) 66,436 (258,668)
Net debt (175,679) 77,990 (253,669)
(d) Significant non-cash transactions
During the period the Group contributed a property, Spirella House, W1 to WEL
Property Limited Partnership in return for an increased interest in the
partnership.
(e) Cash subject to restriction
Included within cash in the balance sheet as at 31 December 2003 of £16,553,000
is £11,100,000 of cash held in a blocked deposit account in a subsidiary
company.
14 REPORT CIRCULATION
Copies of the Interim Report are being sent to shareholders and will be
available from the Company's Registered Office at 11 Grafton Street, London, W1S
4EW
Independent Review Report by KPMG Audit Plc to Benchmark Group PLC
INTRODUCTION
We have been engaged by the Company to review the financial information set out
in the consolidated profit and loss account, consolidated balance sheet,
consolidated statement of total recognised gains and losses, note of historical
cost profits and losses, reconciliation of movements in shareholders' funds,
consolidated cash flow statement and notes 1 to 14 and we have read the other
information contained in the interim report and considered whether it contains
any apparent misstatements or material inconsistencies with the financial
information.
This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the Listing
Rules of the Financial Services Authority. Our review has been undertaken so
that we might state to the Company those matters we are required to state to it
in this report and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than the Company
for our review work, for this report, or for the conclusions we have reached.
DIRECTORS' RESPONSIBILITIES
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the Directors. The Directors
are responsible for preparing the interim report in accordance with the Listing
Rules which require that the accounting policies and presentation applied to the
interim figures should be consistent with those applied in preparing the
preceding annual accounts except where they are to be changed in the next annual
accounts in which case any changes, and the reasons for them, are to be
disclosed.
REVIEW WORK PERFORMED
We conducted our review in accordance with guidance contained in Bulletin 1999/
4: Review of interim financial information issued by the Auditing Practices
Board for use in the United Kingdom. A review consists principally of making
enquiries of group management and applying analytical procedures to the
financial information and underlying financial data and, based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review is substantially less
in scope than an audit performed in accordance with Auditing Standards and
therefore provides a lower level of assurance than an audit. Accordingly we do
not express an audit opinion on the financial information.
REVIEW CONCLUSION
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 December 2003.
KPMG Audit Plc
Chartered Accountants
London
27 February 2004
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