Final Results
Derwent Valley Holdings PLC
12 March 2002
DERWENT VALLEY HOLDINGS PLC
Preliminary Results for the year ended 31 December 2001
Derwent Valley is a specialist investor and refurbisher of Central London
commercial property.
• Derwent Valley announces a 15.4% increase in net assets per share for
the year ended 31st December 2001.
Increase
2001 2000
Net asset value per share (p) 1004 870 15.4%
Net rental income (£m) 43.0 35.9 19.8%
Adjusted profit before tax (£m) 17.9 11.7 53.0%
FRS3 profit before tax (£m) 21.7 11.7 85.5%
Adjusted earnings per share (p) 27.73 16.57 67.4%
Dividend per share (p) 9.35 8.50 10.0%
Year 2000 results restated for adoption of UITF28 and FRS19
• Investment portfolio valued at £833m.
• Revaluation surplus of £68.3m.
• Underlying growth in net rental income and adjusted pre tax profit,
excluding a £2.3 surrender premium, was £4.8m (13.4%) and £3.9m (33.3%)
respectively.
• Dividend increased 10% to 9.35p per share.
• Disposals realised £104m in 2001. A further £14m of contracted sales
since the year end.
• Acquisitions of £58m in 2001. Bank facilities of £150m available for
future purchases.
• Capital expenditure during 2001 was £36.4m with a further £53m
planned for 2002 and 2003.
John Ivey, Chairman, commented:
"The 15.4% rise in net asset value per share has continued the group's record of
strong growth which has seen this more than double over four years. The group
remains committed to the Central London property market and this, together with
the management's experience in this location, gives me confidence that the group
is well placed and will take early advantage of any uplift."
12 March 2002
ENQUIRIES:
DERWENT VALLEY HOLDINGS PLC Tel: 020 7568 5900 am
John Burns, Managing Director 020 7659 3000 pm
Derwent Valley Holdings plc
www.derwentvalley.co.uk
COLLEGE HILL Tel: 020 7457 2020
Gareth David Email: gareth.david@collegehill.com
Lisa Pearson Email: lisa.pearson@collegehill.com
Chairman's statement
Results
I am pleased to report an increase in net asset value per share of 134p to 1004p
at 31 December 2001. This has been achieved against the background of a slowing
economy and unpredictable financial markets. The 15.4% rise has continued the
group's record of strong growth which has seen net assets per share more than
double over the last four years, a compound growth rate of 20.1% per annum. For
the same period, average total returns, which includes dividends, were 21.4%.
The group's profit before tax, excluding gains from the disposal of investments,
was £17.9 million, an increase of approximately 53% from last year's £11.7
million which has been restated following the implementation of UITF28.
Included in the year's results is a £2.3 million surrender premium received from
a tenant at 27-32 Old Jewry, EC2. Further details of this transaction and its
effect are given in the property and financial reviews.
Pre tax profits on an FRS3 basis were £21.7 million compared with £11.7 million
last year. The £3.8 million profit on the disposal of investments was mainly
generated by the profit realised on the disposal of Broadwick House, (the
equivalent revaluation surplus was reflected in the interim results).
Dividend
A final dividend of 6.6p is proposed by the directors which would give a total
for the year of 9.35p, an increase of 10% from that paid last year. The final
dividend will be paid on 10th June 2002 to those shareholders on the register on
17th May 2002.
Valuation
The investment portfolio was revalued at the year end at £833.5 million, to
produce an increase for the full year of £68.3 million. This revaluation
surplus included £27.2 million from redevelopment schemes which were completed
during the year. The second half saw a more modest level of revaluation surplus
as the slowing UK economy and uncertainty caused by global events took effect.
Investment properties held throughout the year increased in value by 9.9%
compared with 13.9% for properties held throughout 2000. Over the same period
the Central London Offices Index of the Investment Property Databank increased
by 3.0%. Development properties with a carrying value of £34.4 million were not
revalued at the year end. The valuation showed little movement in investment
yields and in the 'middle market', where the group principally operates, rents
of between £30 and £50 per square foot (£320 and £540 per m2) proved more
resilient than those in the prime West End.
Review
With some doubt over the economy evident, the group entered the year in a
circumspect mood, and took advantage of the active investment market to realise
sales of £104 million, substantially in the first half. The sales included two
completed developments - Broadwick House, Soho, W1 and Hythe House, Hammersmith,
W6. Both are prime examples of Derwent Valley's innovative approach to
refurbishment and development and were sold at attractive levels relative to
their future growth prospects.
Acquisitions are sought which have the characteristics that enable the group to
enhance value - complicated lease management issues; opportunities for planning
improvement; and scope for innovative refurbishment. This led to £46.2 million
of properties being acquired in Paddington and Shoreditch, both areas which are
currently undergoing regeneration and offer excellent prospects for the future.
A further £12.1 million was added to the group's substantial West End portfolio
with the acquisition of Morley House, Regent Street, W1.
The group also continued with its capital expenditure programme, with £36.4
million being added to various projects within the portfolio during the year.
Currently, the main scheme is the redevelopment of Tower House and 5-8
Southampton Street, Covent Garden, WC2, where one of the retail units has
recently been pre-let to Sainsbury's Supermarkets Limited. However, the group
has not been immune from disappointment and the demise of Enron meant that the
previously announced pre-let of three floors at 21 Grosvenor Place did not
materialize. Given the current letting market, the board has decided to delay
the group's office development at Leonard Street, EC2. Further details of the
capital expenditure projects are given in the property review.
Tenant demand in Central London slowed considerably in the last quarter. This,
together with the effect of companies looking to sub-let space which, originally
taken for expansion, is no longer required, has seen vacancy levels rise.
However, this should be viewed in perspective. The rigid planning regulations
that prevail in Central London, especially in the West End, restrict the amount
of new development and consequently limit the impact that lower demand has on
rents. Meanwhile, the investment market remains strong in Central London as low
interest rates, positive initial yields and stable income streams make property
particularly attractive to investors in the current economic environment.
Prospects
The strategy of acquiring investments that can be transformed into future
redevelopment/refurbishment schemes has generated substantial added value for
the group. The board believes that in the current circumstances opportunities
can be found to buy such projects ahead of the market and with this in mind, the
group's borrowing facilities have been increased.
It is unlikely that, whilst rental growth remains restrained, returns in 2002
will match those achieved over the last few years. However, the board remains
committed to Central London, a world class financial centre and cosmopolitan
city, where its management team has considerable experience. This gives me
confidence that the group is well placed and will take early advantage of any
uplift. I look forward to keeping you apprised of the group's progress in these
challenging times.
John C. Ivey
CHAIRMAN
12 March 2002
Property Review
Introduction
Derwent Valley owns and manages an £833 million Central London commercial
property portfolio, which comprises 48 properties totalling 233,000m(2). The
portfolio is located throughout the Central London villages with 72% by value in
the West End, including the areas of Covent Garden, Soho, Victoria, Belgravia
and Paddington. There are over 400 occupiers providing a varied tenant mix.
Professional and business services are the largest sector at 24% of income,
followed by media at 19% and computer and technology at 15%. Retail and its
associated businesses account for 11% of income, Government administration 9%
and financial 6%.
Acquisitions
Three acquisitions totalling £58.3 million were made during the year. In May,
the group purchased 55-65 North Wharf Road, Paddington, W2, for £23.4 million.
This 7,500m(2) multi-occupied property, let at a low average rent of £220 per m
(2), is in an area that is successfully undergoing substantial regeneration.
Recent office lettings in Paddington have attracted companies such as Orange and
Marks & Spencer, and rental levels increased during the year as the area evolved
as a recognised office location. In Shoreditch, Centric House, E1, a 31,700m(2)
warehouse was acquired in June for £22.8 million. This prominent building is
close to the highly successful Broadgate financial district and refurbishment
opportunities exist after the tenant's lease expires in June 2002. Planning
consent has been granted to change the use from warehouse to offices. A
detailed application for conversion into two buildings will shortly be
submitted, to create a new identity and provide contemporary offices.
The group's other acquisition was Morley House, 314-322 Regent Street, W1, close
to Oxford Circus. This multi-let 3,500m(2) leasehold retail/office building was
acquired in December for £12.1 million and offers scope for improvement through
rolling refurbishment and reconfiguration of the office floors as leases expire.
Disposals
The disposal programme continued in line with the board's belief that the
property market would quieten in 2001 and early 2002 and raised £104.5 million,
the highest level in the group's history. These disposals showed a surplus of
£3.8 million over the December 2000 valuation. In addition to Broadwick House,
W1 and Hythe House, W6, the group sold five other properties which included two
properties in Victoria, 6-14 Dean Farrar Street, SW1 and Steel House, 11 Tothill
Street, SW1, and a building in the City, Peek House, 20 Eastcheap, EC3.
Development and refurbishment
The year saw the completion and revaluation of two projects, 1 Oliver's Yard,
EC2 and Panton House, SW1. In March, the 16,600m(2) office refurbishment at 1
Oliver's Yard was completed, having been pre let to Globix Corporation. This
technology company, in common with so many in that sector, has suffered a severe
downturn in its business and has filed for Chapter 11 protection in the US,
while it restructures its finances. Derwent Valley took a two year rental
deposit as security and is negotiating with the tenant to restructure their
lease and consequently reduce the group's exposure to Globix.
Construction is well underway at Tower House and 5-8 Southampton Street, WC2,
the group's current principal development project. This office and retail
scheme, comprising 4,000m(2) of new development and 5,100m(2) of refurbishment,
is located in the heart of Covent Garden and is due for completion by the end of
the year. The offices will offer modern open plan floors, with the new build
accommodation constructed behind a retained facade and a full height atrium.
Since the year-end a pre-let has been achieved on 1,000 m2 of the retail space,
with Sainsbury's Supermarket Limited taking a twenty year lease at £575,000 per
annum.
There are a number of current refurbishment projects in progress, the most
significant being at 135-155 Charing Cross Road, WC2, where 3,200m(2) of this
5,800m(2) building is being refurbished. The retail/restaurant space is being
rationalised to provide larger units to meet current demand and the office floor
plates redesigned. The focal point is a new office courtyard entrance, adjacent
to Soho Square, which has been created from redundant space. At 21 Grosvenor
Place, SW1, the 3,300m(2) first phase of refurbishment has recently been
completed and is now being marketed. This has involved the creation of a new
image for the building with large open plan office floors and a redesigned
entrance.
Portfolio Management
As part of actively managing the portfolio, opportunities to improve value
through refurbishment or lease management are continually explored. The group's
lettings from recently refurbished properties such as 1 Oliver's Yard, EC2, 6
Greencoat Place, SW1, and Holden House, W1, added over £5 million to rental
income in 2001 while rent reviews at 4 Grosvenor Place, SW1, Harcourt House, W1
and Middlesex House, W1 added a further £0.8 million. At 27-32 Old Jewry, EC2,
a surrender premium was negotiated with the Commonwealth Bank of Australia, who
had sub-let all of their accommodation. The transaction creates a direct
relationship with the occupational tenants and the opportunity to implement a
strategy to improve the building and produce a more marketable asset.
Vacancy levels in Central London at December 2000 were 2.8% of floor area, the
lowest for over ten years. Due to the impact of the slowing economy, occupiers
have become more cautious in entering lease commitments and, as a result,
vacancy levels increased during the year to 6.2%. At the year end, the
investment portfolio had 8,600m(2) of floor space available for letting. This
included the schemes at 21 Grosvenor Place, SW1 and Panton House, SW1, which
together accounted for 5,700m(2). A further 16,400m(2) was under refurbishment
and development, including the 9,100m(2) Tower House and 5-8 Southampton Street,
WC2 project. Therefore, vacant accommodation at the year end totalled 25,000m
(2) and represented 10.7% of the portfolio's floor area, with an estimated
rental value in the region of £11.4 million per annum.
In addition to the potential income from vacant space, future reversions,
through lease renewals and rent reviews, could add approximately £19.4 million
per annum to rental income over the next few years. The average passing rent
from the West End properties is £265 per m(2), and throughout the investment
portfolio is £220 per m(2). These are both modest levels. This reversion
combined with income from the vacant space would give an estimated rental value
of approximately £75 million per annum for the investment portfolio.
FINANCIAL REVIEW
Results
Profit before taxation rose £3.9 million from £11.7 million in 2000 to £15.6
million this year, after excluding the results of investment transactions, and
the surrender premium negotiated at Old Jewry, EC2, which is dealt with in the
next paragraph. The basis of the increase was the strong growth in net rental
income from £35.9 million in 2000 to £43.0 million. This showed an increase of
£4.8 million if, again, the Old Jewry surrender premium is excluded. Lettings
added £5.5 million and rent reviews £1.7 million, while voids, mainly due to the
development programme, reduced rental income by £2.4 million. The net effect of
acquisitions and disposals was negligible. Administration costs increased £0.7
million partly as a consequence of legal fees and bank charges incurred as a
result of the renegotiation of the group's bank loans during the year.
At the end of the year, terms were agreed to accept the surrender of the
principal occupational lease at Old Jewry for a premium of £2.8 million, which
has been included in gross rental income. Under the terms of the headlease, the
freeholder of the property received £0.5 million of this premium which left the
net amount of £2.3 million included in net rental income and pre tax profit.
The effect of the surrender was to reduce the value of the property by £2.3
million of which £0.8 million has been taken through the profit and loss account
as a permanent diminution in value. Therefore, the transaction had little
effect on the net assets of the group.
The prior year results have been restated upon the adoption of UITF28, Operating
Lease Incentives and the early implementation of FRS19, Deferred Taxation. Both
were changes in the group's accounting policies, as they have been for most
other property companies. The implementation of UITF28 has added £0.8 million
to pre tax profits in 2001 and £1.0 million in 2000.
Net assets at the year end were £533.7 million which gave a net asset value per
share of 1004p, an increase of 15.4% on the restated prior year figure of 870p.
The implementation of FRS19 has reduced the net asset value per share by 16p in
2001 and 14p in 2000.
Taxation
The total tax chargeable in 2001 was £14.5 million compared with £4.4 million in
2000. The profit and loss account bore £4.8 million of this while the balance
of £9.7 million, consisting of capital gains tax on the disposals' prior year
revaluation surpluses, was charged to the Statement of Total Recognised Gains
and Losses.
In accordance with FRS19, the group has had to provide deferred tax on the value
of capital allowances claimed. Based on historic evidence, this tax, which
amounts to £8.8 million, is unlikely ever to be paid and, therefore, it is
difficult to justify making this provision, other than purely to comply with
this Standard. It seems contradictory that whilst those that drafted FRS19
deemed such a provision necessary, none is required for the capital gains tax
that the group would have to pay, if its land and buildings were sold at their
year end values. This amounts to £74.3 million (2000 - £65.6 million),
equivalent to 140p per share (2000 - 123p).
Financing
It remains the company's preference to finance the group using medium term,
revolving credit facilities, negotiated with a small number of banks on a
bilateral basis. During the second half year, the programme of restructuring
the company's bank loans was completed. This achieved the aim of extending the
term of this debt while both reducing the group's borrowing costs and increasing
the available facilities. On completion of this exercise at the end of the
year, unutilised, committed facilities amounted to over £150 million. Whilst
maintaining such facilities incurs a cost, this is outweighed by the group's
ability to move swiftly to secure acquisitions as a consequence of these loans
being in place.
Debt
At the year end, group debt amounted to £271 million compared with £283 million
a year earlier. With debt decreasing and a rise in the group's net assets,
gearing fell to 51% from the restated figure of 61% at the December 2000 year
end. The strong rental growth and continuation of low interest rates lead to an
improved interest cover of 1.95 compared with 1.63, as restated for the previous
year.
In 2001, property disposals of £104.5 million exceeded the combined amount spent
on acquisitions of £57 million and capital expenditure on developments of £39
million. This gave rise to a cash inflow and a reduction in the group's debt of
£12.4 million. The programme of refurbishments and developments is ongoing and
capital expenditure budgeted for 2002 and 2003 totals £53 million, with the
major investments being at Centric House (£14 million), Tower House (£13
million) and Charing Cross Road (£7.5 million).
Interest rate hedging
The group's policy on interest rate hedging, which is used to protect the group
from the risks of adverse interest rate movements, has not changed from prior
years. At the year end, 53% of debt was either fixed or hedged. At the same
date, the weighted average cost of borrowing was 6.7%. The fair value
adjustment arising as a result of the valuation of fixed rate debt and interest
rate hedging instruments, required to be disclosed by FRS13, Financial
Instruments, was a negative £12.5 million (31st December 2000 : negative £16.1
million), equivalent to a reduction in the group's net asset value per share of
24p (31st December 2000 : 30p). After taking account of tax relief, these
figures would be 17p and 21p respectively. There is no obligation or present
intention to redeem the debenture or any of the hedging instruments other than
at normal maturity.
GROUP PROFIT AND LOSS ACCOUNT
2001 2000
(restated)
Notes £m £m
Gross rental income
Group and share of joint ventures 47.3 39.8
Less share of joint ventures (0.4) (0.3)
Group gross rental income 46.9 39.5
Property outgoings net of recoveries 2 (3.9) (3.6)
Net revenue from properties 43.0 35.9
Administrative costs (6.2) (5.5)
Operating profit 36.8 30.4
Share of operating results of joint ventures 0.3 0.3
Profit on disposal of investments 3 3.8 -
40.9 30.7
Interest receivable 0.1 -
Interest payable 4 (19.3) (19.0)
Profit before taxation 21.7 11.7
Taxation 5 (4.8) (3.0)
Profit after taxation 16.9 8.7
Dividend 6 (5.0) (4.5)
Retained profit 11.9 4.2
All amounts relate to continuing activities
Adjusted earnings per share 7 27.73p 16.57p
Adjustment for disposal of investments 3.95p (0.19p)
Basic earnings per share 7 31.68p 16.38p
Adjustment for dilutive share options (0.07p) (0.02p)
Diluted earnings per share 7 31.61p 16.36p
Dividend per share 6 9.35p 8.50p
Total return 8 16.5% 23.9%
GROUP BALANCE SHEET
2001 2000
(restated)
Notes £m £m
Fixed assets
Tangible assets 9 834.1 771.0
Investments in joint ventures
Share of gross assets 3.1 3.1
Share of gross liabilities (2.9) (3.0)
0.2 0.1
834.3 771.1
Current assets
Properties held for resale 5.4 2.6
Debtors 10.0 9.8
15.4 12.4
Creditors falling due within one year
Bank loans and overdrafts (1.6) (50.1)
Other current liabilities (35.4) (29.3)
Net current liabilities (21.6) (67.0)
Total assets less current liabilities 812.7 704.1
Creditors falling due after more than one year
Bank loans (235.0) (199.0)
10 1/8% First Mortgage Debenture Stock 2019 (34.4) (34.3)
Provision for liabilities and charges
Deferred tax 10 (8.8) (7.7)
Other provisions 11 (0.8) (0.8)
533.7 462.3
Capital and reserves - equity 12
Called up share capital 2.6 2.6
Share premium account 153.7 153.8
Revaluation reserve 294.0 260.3
Other reserves - 0.7
Profit and loss account 83.4 44.9
533.7 462.3
Net asset value per share 13 1004p 870p
Adjusted net asset value per share 13 1020p 884p
Gearing 50.8% 61.3%
GROUP CASH FLOW STATEMENT
2001 2000
Notes £m £m
Net cash inflow from operating activities 14 34.9 32.1
Net cash outflow from return on investments and
servicing of finance (19.7) (17.3)
Corporation tax paid (6.5) (2.9)
Cash inflow/(outflow) from capital expenditure and
financial investment 8.4 (82.1)
Equity dividends paid (4.6) (4.1)
Cash inflow/(outflow) before management of liquid
resources and financing 12.5 (74.3)
Financing
Net proceeds of share issue - 0.2
Movement in bank loans 15 (14.0) 76.0
Net cash (outflow)/inflow from financing (14.0) 76.2
(Decrease)/increase in cash in the period (1.5) 1.9
GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
2001 2000
(restated)
£m £m
Profit for financial year 16.9 8.7
Unrealised surplus on revaluation of investment
Properties 69.2 82.5
Unrealised surplus on revaluation of joint
venture's investment property - 0.3
Taxation on realisation of property revaluation
gains of previous years (9.7) (1.4)
Total gains and losses relating to the year 76.4 90.1
(7.0)
Prior year adjustment 1
Total gains and losses recognised since last full year
financial statements 69.4
Notes
1. The results for the year ended 31st December 2001 include those for the
holding company and all of its subsidiary undertakings, together with the
group's share of the results of its joint ventures. During the year, the group
has adopted Urgent Issues Task Force Abstract 28 'Operating lease incentives'
(UITF28), and Financial Reporting Standard 19 'Deferred tax' (FRS19).
The impact of UITF28 is to spread the effect of lease incentives given on new or
renewed leases on a straight line basis up to the time when the prevailing
market rent will be payable. The previous accounting policy was to recognise
rental income when received under the terms of the lease. The new accounting
policy has been applied to all lease agreements commencing on or after 1st
January 2000.
In accordance with FRS19, full provision is made for timing differences relating
to capital allowances and other reversing timing differences. Upon the sale of
a property, any deferred tax provisions not required will be released to the
profit and loss account. The previous accounting policy was to provide for
taxation on timing differences to the extent that a liability or asset was
expected to arise in the foreseeable future.
The effect of these revised accounting policies on 2001 and the restatement of
the prior year figures is shown below.
2001 2001 2001 2000 2000 2000
UITF28 FRS19 Total UITF28 FRS19 Total
£m £m £m £m £m £m
Group gross rental income net of provision 0.8 - 0.8 1.0 - 1.0
Taxation (0.2) (1.1) (1.3) (0.3) (2.0) (2.3)
Profit after taxation 0.6 (1.1) (0.5) 0.7 (2.0) (1.3)
Prepayments and accrued income net of provision 1.8 - 1.8 1.0 - 1.0
Corporation tax (0.5) - (0.5) (0.3) - (0.3)
Deferred tax - (8.8) (8.8) - (7.7) (7.7)
Net assets 1.3 (8.8) (7.5) 0.7 (7.7) (7.0)
Earnings per share (p)
Basic, adjusted and diluted 1.06 (2.03) (0.97) 1.26 (3.74) (2.48)
Net assets per share (p) 2 (16) (14) 1 (14) (13)
In accordance with UITF28, a provision of £1.2m (2000 - £nil) has been made
against that element of the debtor that is not expected to be recovered.
2. Property outgoings net of recoveries
2001 2000
£m £m
Ground rents 1.4 0.8
Other property outgoings net of recoveries 2.5 2.8
3.9 3.6
3. Profit on disposal of investments
2001 2000
£m £m
Investment properties
Disposals 73.3 46.6
Cost/valuation (71.8) (46.0)
Profit on disposal of investment properties 1.5 0.6
Permanent diminution in value of investment property (0.8) (0.6)
0.7 -
Subsidiary undertaking
Disposal 31.2 -
Net assets on disposal (28.1) -
Profit on disposal of subsidiary undertaking 3.1 -
Total profit on disposal of investments 3.8 -
Profits on the sale of investments are calculated by reference to the valuation
at the last year end plus subsequent additions in the year. The profit on
disposal of the subsidiary undertaking relates to the sale of Broadwick House
through the disposal of Apexzone Limited in the second half of the year.
Broadwick House was revalued at the half year and the £3.1 million profit for
the full year is the realisation of that half year surplus less the fees
incurred on the sale of Apexzone Limited.
4. Interest payable
2001 2000
£m £m
Group 19.0 18.7
Share of joint ventures 0.3 0.3
19.3 19.0
5. Taxation
2001 2000
(restated)
£m £m
UK corporation tax on profit, adjusted for the surplus on disposal
of investments, at 30% (2000 - 30%) 4.5 3.5
Capital allowances (2.3) (2.3)
Deferred tax 1.1 2.0
Other differences - 0.5
3.3 3.7
Taxation on disposal of investments 11.4 1.5
Less amount allocated to the statement of
total recognised gains and losses (9.7) (1.4)
Tax charge in respect of current year profits 5.0 3.8
Adjustments in respect of prior years (0.2) (0.8)
4.8 3.0
6. Dividend
2001 2000
£m £m
Ordinary shares of 5p each
Paid - interim dividend of 2.75p per share (2000 - 2.50p) 1.4 1.3
Proposed - final dividend of 6.60p per share (2000 - 6.00p) 3.6 3.2
5.0 4.5
The final dividend will be payable on 10th June 2002 to those shareholders on
the register at the close of business on 17th May 2002.
7. Earnings per share
Earnings per share have been computed on the basis of profit after taxation of
£16,841,000 (2000 - £8,700,000 as restated) and the weighted average number of
ordinary shares in issue during the year of 53,157,000 (2000 - 53,101,000).
An adjusted earnings per share figure has been calculated using a profit after
taxation of £14,740,000 (2000 - £8,798,000 as restated). This figure excludes
the profit after tax arising from the disposal of investments to show the
recurring element of the group's profit. The diluted earnings per share figure
has been calculated using 53,285,000 (2000 - 53,181,000) ordinary shares which
includes the number of dilutive share options outstanding at the year end.
8. Total return
Total return is the increase in net asset value per share plus dividend per
share expressed as a percentage of the net asset value per share at the
beginning of the year.
9. Tangible assets
Freehold Other
land and Leasehold fixed
buildings property assets Total
£m £m £m £m
Cost or valuation:
At 1st January 2001 538.0 232.4 1.6 772.0
Additions 52.0 42.7 0.2 94.9
Disposals (99.9) - (0.8) (100.7)
Revaluation 50.5 17.8 - 68.3
At 31st December 2001 540.6 292.9 1.0 834.5
Amortisation and depreciation:
At 1st January 2001 - - 1.0 1.0
Disposals - - (0.7) (0.7)
Provision for year - - 0.1 0.1
At 31st December 2001 - - 0.4 0.4
Net book value:
At 31st December 2001 540.6 292.9 0.6 834.1
At 31st December 2000 538.0 232.4 0.6 771.0
Assets stated at cost or valuation:
31st December 2001 valuation 506.2 292.9 - 799.1
Prior years' valuation plus
subsequent costs 34.4 - - 34.4
Cost - - 0.6 0.6
540.6 292.9 0.6 834.1
Short leasehold property with a value of £16.7m (2000 - £14.9m) is included in
leasehold property above. Investment property in the course of development with
a carrying value of £34.4m (2000 - £59.3m) is included in freehold land and
buildings above.
The freehold land and buildings and leasehold property, other than those in the
course of development, were revalued by either Keith Cardale Groves (Commercial)
Limited or CB Hillier Parker Limited, chartered surveyors, at open market value
on 31st December 2001. At 31st December 2001, the historical cost of the
freehold land and buildings and leasehold property owned by the group was
£540.6m (2000 - £510.5m).
10. Deferred tax
£m
At 1st January 2001 -
Prior year adjustment 7.7
At 1st January 2001 as restated 7.7
Provided during the year 1.1
At 31st December 2001 8.8
The provision for deferred tax relates to timing differences on accelerated
capital allowances and other reversing timing differences. A taxation liability
of approximately £74.3m (2000 - £65.6m) would arise on the disposal of land and
buildings at the valuation shown in the balance sheet. This is equivalent to
140p per share (2000 - 123p). In accordance with FRS19 no provision has been
made for this.
11. Other provisions
£m
At 1st January 2001 0.8
Provided during the year 0.2
Released during the year (0.2)
At 31st December 2001 0.8
The provision relates to an onerous lease at the group's previous head office
which expires in 2014. It reflects the discounted present value of future net
payments under that lease.
12. Capital and reserves - equity
Share Profit
Share premium Revaluation Other and loss
capital account reserve reserves account
£m £m £m £m £m
At 1st January 2001 2.6 153.8 260.3 0.7 51.9
Prior year adjustment
UITF28 - - - - 0.7
FRS19 - - - - (7.7)
At 1st January 2001 as restated 2.6 153.8 260.3 0.7 44.9
Surplus on property revaluation - - 69.2 - -
Profit realised on disposal of
investment - - (35.5) - 35.5
Tax attributable to revaluation
surplus realised on disposal of
investments - - - - (9.7)
Amortisation of discount and
costs on issue of debenture - (0.1) - - 0.1
Reserve reclassification - - - (0.7) 0.7
Retained profit for year - - - - 11.9
At 31st December 2001 2.6 153.7 294.0 - 83.4
13. Net asset value per share
Net asset value per share has been calculated on the basis of net assets as at
31st December 2001 of £533,657,000 (2000 - £462,372,000 as restated) and the
number of ordinary shares in issue at the year end of 53,157,000 (2000 -
53,157,000).
An adjusted net asset value per share figure has been calculated using net
assets of £542,415,000 (2000 - £470,048,000 as restated). This figure excludes
the deferred tax required to be provided by FRS19 on the basis that it is very
unlikely that the liability will ever crystallise.
14. Reconciliation of operating profit to net cash inflow from operating
activities
2001 2000
(restated)
£m £m
Operating profit 36.8 30.4
Depreciation charge 0.1 0.2
Increase in debtors (0.2) (1.4)
(Decrease)/increase in creditors (1.3) 7.0
Increase in properties held for resale (2.8) (0.4)
Effect of other deferrals and accruals
on operating activity cash flow 2.3 (3.7)
Net cash inflow from operating activities 34.9 32.1
15. Reconciliation of net cash flow to movement in net debt
2001 2000
£m £m
Decrease/(increase) in cash in the year 1.5 (1.9)
Cash (outflow)/inflow from movement in debt financing (14.0) 76.0
Amortisation of discount and costs on issue of debenture 0.1 -
Movement in net debt in the year (12.4) 74.1
Net debt at 1st January 2001 283.4 209.3
Net debt at 31st December 2001 271.0 283.4
16. Post balance sheet events
Since the year end, the group has sold one property for a consideration of £7.5
million before costs and exchanged contracts for the disposal of a second
property for a consideration of £7.0 million before costs.
17. The announcement set out above, which was approved by the board on 11th
March 2002, does not constitute a full financial statement of the group's
affairs for the year ended 31st December 2001. The auditors have reported on
the full accounts for the said year and have accompanied them with an
unqualified report. The accounts have yet to be delivered to the Registrar of
Companies. The annual report and accounts will be posted to shareholders on
10th April 2002, and the annual general meeting of the company will be held on
16th May 2002.
This information is provided by RNS
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