Interim Results
Derwent Valley Holdings PLC
06 September 2006
6 September 2006
Derwent Valley Holdings plc ("Derwent Valley" / "Group")
Interim results for the half year ended 30th June 2006
Derwent Valley, a specialist investor and refurbisher of Central London
commercial property, announces its results for the half year ended 30th June
2006.
Highlights
Half year Half year Year Change
to 30.06.06 to 30.06.05 to 31.12.05 %
Adjusted net asset value per share (p) 1,540 1,176 1,335 15.4 *
Adjusted net property income (£m)** 23.6 23.5 46.6 0.4
Adjusted profit before tax (£m) *** 9.7 8.7 16.7 11.5
IFRS profit before tax (£m) 122.6 61.5 150.4 99.3
Adjusted earnings per share (p) *** 15.33 13.25 26.23 15.7
Dividend per share (p) 4.225 3.925 13.65 7.6
Total return (%) 16.1 10.3 25.5 -
* Change based on 31st December 2005
** Excludes development income
*** Excludes the development income, revaluation movement on investment
properties, profit on the disposal of investment properties and the movement in
fair value of derivative financial instruments, together with the related tax
effects for earnings per share.
• Adjusted net asset value per share rose 205p to 1,540p reflecting letting
activity and the strength of the Central London property market.
• Value of investment portfolio increased by an underlying 9.7% to £1.14
billion; average uplift in valuation of West End and City properties of
9.7% and 9.6% respectively.
• Adjusted profit before tax increased £1.0 million to £9.7 million.
• Development income £6.3 million - the initial share of profit from the
Telstar redevelopment, prelet to Rio Tinto.
• Interim dividend increased by 7.6% to 4.225p.
• Strong progress with asset management and letting activity; 6,200 sq m of
vacant space let during the period at a contracted rent of £1.3 million;
significant lettings made in the second half to date, particularly at The
Johnson Building.
• Acquisitions totalled £34.1 million; two freehold interests from the Crown
were purchased subsequent to the half year for £14.65 million.
• Five major projects underway (39,400 sq m) and further advances in the
delivery of the Group's project pipeline with two major planning
permissions recently obtained.
John Ivey, Chairman, commented:
"Derwent Valley owns a portfolio which is exclusively focused on one of the
areas of choice for both investors and tenants. With rental values maintaining
their upward trend and an extensive pipeline of projects, we remain confident of
continuing to deliver strong returns for shareholders.
For further information, contact:
Derwent Valley Holdings plc 020 7659 3000 - after 11:00 am
John Burns, Managing Director
Financial Dynamics 020 7831 3113
Stephanie Highett/ Dido Laurimore
CHAIRMAN'S STATEMENT
Half year review
The board is pleased to report strong progress in the half year to 30th June
2006 with an adjusted net asset value per share increase of 15.4% to 1,540p
against 9.5% for the equivalent period last year. Ongoing asset management and
letting activity, together with further advances in our development pipeline,
were key achievements during the period under review. This momentum has been
maintained since the half year end.
Valuation
The investment portfolio was valued at £1.14 billion, reflecting an underlying
valuation increase of 9.7%. The valuation surplus was £99.6 million before
deducting the lease incentive adjustment of £0.4 million. This uplift was
achieved by way of lettings and improved rental values during the period, which
together accounted for £38.1 million of the surplus. Yield compression
contributed £57.2 million, due to an almost relentless demand from the
investment market. Those properties under refurbishment or redevelopment
increased in value by £2.6 million, with further surpluses expected to accrue as
the developments reach completion. The balance of £1.7 million came from
acquisitions. The portfolio is apportioned in value between the West End at
£846 million (74%) and the City borders at £294 million (26%). An uplift of
9.7% in the West End marginally exceeded that for the City borders of 9.6%. The
smaller City borders' portfolio enjoyed a substantial uplift from two of its
largest properties - The Johnson Building (post completion) and the Tea Building
(rental improvement). The West End villages enjoyed strong growth, with Soho/
Covent Garden 10.5%, Victoria 9.4% and North of Oxford Street 8.8%. On a like
for like basis, the increase in rental value for the portfolio for the period
was 3.4% against 2.8% for the comparable period last year.
Results
Profit before tax, adjusted to show the recurring element of the group's profit,
was £9.7 million against £8.7 million for the comparable half year period. The
£1.0 million increase reflects the rise in gross property income, and lower
interest charges, which were partially offset by higher vacant property costs.
Gross property income rose from £24.8 million to £26.1 million with the main
increases coming from lettings (£1.2 million) and surrender premiums received
(£0.9 million), offset by voids arising from new schemes (£0.9 million). The
redevelopment and refurbishment programme caused an increase in property
outgoings and, consequently, net property income would have remained
approximately the same at £23.6 million but for the development income from the
Telstar project estimated at £6.3 million. IFRS profit before tax was £122.6
million compared with £61.5 million for the equivalent period last year. In
addition to the net revaluation surplus of £99.2 million, and the profit on
disposal of investment properties of £1.7 million, the IFRS results also
included a revaluation surplus from the joint venture property of £3.5 million.
Total return for the half year was 16.1% compared to 10.3% for the first half of
2005.
Dividend
The board has declared a dividend of 4.225p per share, an increase of 7.6% on
the 3.925p paid at the interim stage last year. Further details concerning the
dividend are given in note 11 of the interim financial statements.
Portfolio review
In the half year to 30th June 2006, our most significant acquisition was the
landmark Astoria retail/entertainment centre in Charing Cross Road, WC2,
together with a small adjacent property in Oxford Street, W1, for £23.75
million. This purchase adds to our existing holdings in the area and offers an
excellent opportunity for future redevelopment. Property sales in the first
half have been at a more modest level than in the past with the disposal of the
residential accommodation at The Johnson Building and three properties from the
Islington portfolio realising £12.0 million in total.
The highlight of the first half was the early pre-letting of Telstar,
Paddington, W2. Rio Tinto, a leading international company, has agreed to lease
the entire 9,900 sq m office building at a rental level of £498 per sq m, which
is the highest figure achieved in Paddington. This redevelopment, which we are
carrying out as development manager for Prudential, is due to be completed in
autumn 2007. We have a profit participation in the project and our share of the
estimated total profit will be taken in stages, with £6.3 million being
recognised in this half year.
Since the half year end, we have made significant progress in letting The
Johnson Building, Hatton Garden, EC1. Here, Grey Advertising and Faber Maunsell
have taken 4,700 sq m and 3,400 sq m respectively, and considerable interest is
being shown in the remaining space. This success is further evidence of our
ability to produce quality space for tenants, and confirms Midtown as a viable
alternative to the West End. In addition, we have purchased two freehold
interests from The Crown Estate: at Riverwalk House, SW1 for £13.0 million and
at Argosy House, W1 for £1.65 million. In both instances we already held
medium-term leases. The properties have development or refurbishment potential
and by bringing them under our direct control as freeholder, we have positioned
ourselves to extract maximum benefit. Linked to this transaction was the sale
of our leasehold interest in Morley House, W1 to the freeholder, The Crown
Estate, for £17.5 million.
The second half will see progress on various schemes from the development
pipeline, with Horseferry House, Victoria, SW1 being the most significant. A
comprehensive refurbishment of the entire building is being undertaken and
completion is scheduled for the beginning of 2008. This project includes
reconfiguring the layout, which will increase the floor area by 1,200 sq m to
15,100 sq m. With tenant demand improving, we are confident both about this
location and the product. Other schemes include a 4,400 sq m office development
at Gresse Street, W1, a mixed-use project at Portobello Dock, W10 of 6,400 sq m
of office and residential space, and a 3,600 sq m refurbishment at City Road,
EC1. Planning permission has been obtained at Wedge House, SE1 to replace the
existing 3,600 sq m building with an 8,100 sq m office block. This scheme is
likely to commence when the occupational lease expires in 2008.
Financing
At the half year, net debt was £327.0 million. The increase of £23.1 million
since the year end is due primarily to acquisitions of £32.3 million which,
together with capital expenditure of £8.4 million, exceeded disposal proceeds of
£12.0 million. With a number of schemes starting in the second half, capital
expenditure for the whole of 2006 is forecast to be £34 million with a further
£49 million in 2007. On a comparable basis to last year, profit and loss
gearing for the half year was 2.07 compared with 1.86 for the equivalent period
in 2005 and 1.84 for the whole of 2005. Balance sheet gearing decreased to
47.1% from 50.1% at the year end, as the increase in debt was more than
compensated by the increase in net assets. Currently, 62% of net debt is either
at fixed rates or hedged using various interest rate derivative products. The
weighted average cost of borrowing is 6.4%. The fair value adjustment figure
for the debenture was a negative £13.0 million compared to a negative £14.1
million at the year end and a negative £13.5 million at 30th June 2005. This is
equivalent to 17p per share after tax (31st December 2005: 18p; 30th June 2005:
18p).
REITs
The board continues to evaluate the benefits of becoming a REIT. Whilst the
March budget statement resolved the major issues, a number of operational
matters, relevant to the refurbishment and redevelopment activities of our
business, remain outstanding. We expect these matters to be progressively
resolved. We shall advise shareholders as soon as we are satisfied that to
become a REIT will be in the best interest of the company and its shareholders.
Prospects
Our portfolio is exclusively focused on one of the areas of choice for both
investors and tenants. Therefore, with rental values maintaining their upward
trend and an extensive pipeline of current and future projects, we remain
confident of continuing to deliver strong returns for shareholders.
J.C. Ivey
6th September 2006
OPERATING REVIEW
We continue our strategy of delivering our distinctive brand of offices into an
improving Central London market, where tenant demand is strong and where there
is a lack of good quality space.
Current projects are expected to create over 55,000 sq m of modern space, which
will become available over the next three years. Furthermore, we are advancing
through the planning process a number of significant opportunities within our
medium- and longer-term development pipeline, which could add a similar level of
space.
Redevelopment and refurbishment
Projects currently in progress include:
• Telstar, Paddington, W2
We are acting here as development managers on behalf of the Prudential in a
9,900 sq m office development. Construction is progressing well, with the
structural frame already out of the ground and the cladding installation due to
commence shortly. Completion of the development is anticipated in autumn 2007.
We have recently pre-let the entire building at £4.95 million per annum to the
international mining company, Rio Tinto, for their European headquarters. This
successful letting endorses not only Paddington as an important core West End
office location but also the quality of the building's design.
• Horseferry House, Victoria, SW1
Acquired last year with short-term income, vacant possession has been obtained
and work has now commenced on this 15,100 sq m scheme. Our proposals seek to
re-invent this imposing 1930s property over the next 12 months with the emphasis
on creating contemporary office space in the Derwent Valley style. The building
will be completely refocused through the creation of a new central circulation
core around the existing atrium. A striking, spacious entrance with improved
ground floor uses will allow retail and restaurant space, and introduce street
life to this location.
• 16-19 Gresse Street, Noho, W1
Following receipt of planning permission last year for a new office development,
we have finalised the design and construction process, enabling a 4,400 sq m
office scheme to commence. Whilst this was taking place, the building was
fully let on a short-term basis although vacant possession has now been
obtained. We expect this project, which will be completed towards the end of
2007, to generate strong demand from the media and communication sectors.
• Portobello Dock and Kensal House, Ladbroke Grove, W10
Work has commenced on the 6,400 sq m mixed use scheme in this canal-side
setting. We have identified this as an interesting regeneration area, and by
using the character of the original buildings and the setting, we will create
unique office spaces and high-grade residential units. Completion is expected
in autumn 2007.
Planning permissions and applications
The company has made significant progress with the following schemes:
• 20 Leonard Street, EC2
Planning permission has now been obtained for development of this site, which is
an improving location on the edge of the City to the rear of our Oliver's Yard
building. The scheme will create 2,000 sq m of offices and 47 private
residential apartments. The planning requirement for affordable housing was
successfully negotiated off site and will be located at two other properties
within our Islington portfolio. Construction will commence in autumn 2006.
• Wedge House, Blackfriars Road, SE1
This 3,600 sq m building is our only ownership south of the Thames and we have
recently been granted planning consent to redevelop 8,100 sq m of new offices.
The property is currently let at a low rent, and it is anticipated the
redevelopment will commence upon lease expiry in mid 2008.
• 40-43 Chancery Lane, Holborn, WC2
A planning application has recently been submitted for a 9,900 sq m office
development around a central courtyard. This application encompasses an
adjacent building, the owner of which also owns the freehold of part of our
site. If successful the scheme could potentially commence in 2008. In the
interim, we are maximising the short-term income.
Lettings
Lettings in the first half totalled 6,200 sq m in 36 transactions, which will
generate rental income of £1.3 million per annum. This activity was across the
portfolio and included suites at the Tea Building, Turnmills and Morelands,
which all offer studio style office space. In addition, we achieved lettings at
our recent scheme at St. Cross Street and the reconfigured Holden House retail
unit in Oxford Street.
Since the half year end, there has been further important letting activity. In
particular, nearly 60% of the space at The Johnson Building has been let. This
recently completed project, which is our largest to date, provides 13,900 sq m
of stylish and innovative office space. The building, a blend of new and
refurbished accommodation, created architectural and construction challenges and
is set around a dramatic central atrium, which provides a nucleus for the
building. It was the intention to create space that would draw West End
occupiers to this Midtown location. In this we have been successful. Grey
Advertising, a leading media agency, is relocating from the West End, and has
taken 4,700 sq m at £1.8 million per annum on a fifteen year lease, with a break
at year ten. In addition, Faber Maunsell, an international engineering and
management consultancy, has taken 3,400 sq m at £1.3 million per annum. We are
in discussion with other potential tenants for the balance of the space.
After adjusting for these transactions, the amount of space available for
letting is 15,300 sq m or 6% of the portfolio's rental value. This is higher
than the 9,500 sq m at last year end, principally reflecting the balance of The
Johnson Building, which was completed in the first half. Even with The Johnson
Building now being classified as available for letting, vacant space under
refurbishment or identified for refurbishment increased from 28,600 sq m at last
year end to 32,400 sq m at the half year end. This is a direct consequence of
progressing our project programme within a favourable Central London environment
where the outlook is positive for the foreseeable future.
Acquisitions and disposals
The investment market remains exceptionally competitive driven by a shortage of
stock, and further evidence of rental growth. Against this background, we have
made £34.1 million of additions to the portfolio during the first half:
• The Astoria, 157-165 Charing Cross Road, WC2 and 17 Oxford Street, W1
These properties, which were acquired in June for £23.75 million, excluding
costs, comprise an entertainment venue and retail space, and are positioned
adjacent to Tottenham Court Road underground station at the junction of Oxford
Street an Charing Cross Road. The total income is £1.3 million per annum. This
4,200 sq m acquisition provides an important strategic opportunity to be
involved with the regeneration of the area, which has been designated as part of
the West End Special Policy Retail Area and also identified within the long-term
Crossrail proposals. When combined with our existing holding at 135-155 Charing
Cross Road, these create the prospect of a substantial redevelopment.
Architectural studies have been initiated to evaluate the long-term potential of
such a scheme.
• 35 Kentish Town Road, Camden, NW1
Having owned this leasehold property for a number of years, we have been able to
improve our holding through the acquisition of the freehold interest for £2.25
million, excluding costs. Together with our adjacent ownership, which has canal
frontage, we envisage a mixed-use scheme of approximately 3,300 sq m in this
established village location. A planning application will be submitted later
this year for a scheme in 2008.
• 186-188 City Road, EC1
Following acquisition in February 2006 for £6.8 million, excluding costs, vacant
possession has now been obtained at this 3,600 sq m building and refurbishment
will commence shortly. Situated close to our Oliver's Yard building, the
refurbishment is designed to offer good value office space with rents around
£270 per sq m.
Since the half year end, we have completed an important transaction with The
Crown Estate. This involved the acquisition of two freehold interests for
£14.65 million and the disposal of a leasehold property for £17.5 million. We
acquired the freeholds of Argosy House, 215-217 Great Portland Street, W1 (2,800
sq m) and Riverwalk House, 157-166 Millbank, SW1 (6,900 sq m) where we already
held leasehold interests of 55 years and 57 years respectively. The merger of
the freehold and leasehold interests creates an immediate uplift in value with
the prospect that further value can be unlocked. A modest refurbishment scheme
had been planned at Argosy House but with the improved tenure we can now
consider a more extensive project to meet market demands. Riverwalk House
occupies an important position with strategic Thames frontage, and we are
evaluating the longer term potential of this under-utilised site. The
transaction included the sale of Morley House, 314-322 Regent Street, W1, where
we held a 71 year leasehold interest and where we had undertaken a rolling
refurbishment over the last few years.
On the disposal front, the first half was somewhat quieter than the first half
of last year with £12.0 million raised against £58.6 million. Net disposal
proceeds came from the 14 residential loft style apartments at Sweeps, Hatton
Garden for £5.7 million, and three Islington properties for £6.3 million.
J.D. Burns
6th September 2006
GROUP INCOME STATEMENT (UNAUDITED)
Half year Half year Year
to 30.6.06 to 30.06.05 to 31.12.05
Note £m £m £m
Gross property income 26.1 24.8 49.5
Development income 2 6.3 - -
Property outgoings (2.5) (1.3) (2.9)
_______ _______ _______
Net property income 29.9 23.5 46.6
Administrative expenses (4.2) (4.1) (8.8)
_______ _______ _______
25.7 19.4 37.8
Revaluation surplus 99.2 49.7 124.1
Profit on disposal of investment properties 3 1.7 4.5 9.6
_______ _______ _______
Profit from operations 126.6 73.6 171.5
Finance income 0.2 0.2 0.4
Finance costs (9.9) (10.9) (21.5)
Movement in fair value of derivative
financial instruments 2.2 (1.4) -
Share of results of joint ventures 4 3.5 - -
_______ _______ _______
Profit before tax 122.6 61.5 150.4
Tax expense 5 (30.4) (13.1) (33.7)
_______ _______ _______
Profit for the period 10 92.2 48.4 116.7
_______ _______ _______
Earnings per share 6 172.42p 90.71p 218.63p
_______ _______ _______
Diluted earnings per share 6 170.98p 89.94p 216.81p
_______ _______ _______
All amounts are attributable to the equity holders of the parent company.
GROUP BALANCE SHEET (UNAUDITED)
30.6.06 30.06.05 31.12.05
Note £m £m £m
Non-current assets
Investment property 7 1,144.6 926.2 1,015.6
Property, plant and equipment 8 0.3 0.4 0.4
Investments in joint ventures 5.3 1.8 1.8
Other receivables 13.7 12.6 13.3
________ ________ ________
1,163.9 941.0 1,031.1
________ ________ ________
Current assets
Trade and other receivables 16.6 13.8 12.3
Cash and cash equivalents 7.2 7.9 14.7
________ ________ ________
23.8 21.7 27.0
________ ________ ________
Total assets 1,187.7 962.7 1,058.1
Current liabilities
Bank overdraft - - 2.0
Trade and other payables 21.0 29.7 20.7
Corporation tax liability 3.8 2.3 3.0
Provisions 0.1 0.1 0.1
________ ________ ________
24.9 32.1 25.8
________ ________ ________
Non-current liabilities
Bank loans 280.0 242.0 262.0
10 1/8% First Mortgage Debenture Stock 34.5 34.5 34.5
2019
Leasehold liabilities 19.7 22.1 20.1
Derivative financial instruments 0.9 4.5 3.1
Provisions 1.3 1.1 1.2
Deferred tax liability 9 131.8 88.4 105.2
________ ________ ________
468.2 392.6 426.1
________ ________ ________
Total liabilities 493.1 424.7 451.9
________ ________ ________
Total net assets 694.6 538.0 606.2
________ ________ ________
Equity attributable to equity holders
of the parent company 10
Share capital 2.6 2.6 2.6
Share premium 156.1 154.9 155.1
Other reserves 2.7 0.6 2.3
Retained earnings 533.2 379.9 446.2
________ ________ ________
Total equity 694.6 538.0 606.2
________ ________ ________
GROUP CASH FLOW STATEMENT (UNAUDITED)
Half year Half year Year
to 30.6.06 to 30.06.05 to 31.12.05
£m £m £m
Operating activities
Cash received from tenants 29.5 27.0 46.3
Direct property expenses (2.2) (1.7) (3.0)
Cash paid to and on behalf of employees (2.9) (2.7) (4.5)
Other administrative costs (1.6) (1.4) (2.8)
Interest received 0.2 0.2 0.4
Interest paid (10.6) (10.3) (21.7)
Tax expense paid in respect of operating activities (2.2) (0.4) (1.0)
________ ________ ________
Net cash from operating activities 10.2 10.7 13.7
________ ________ ________
Investing activities
Acquisition of investment properties (32.3) (4.0) (40.3)
Capital expenditure on investment properties (8.4) (12.2) (26.7)
Disposal of investment properties 12.0 62.3 97.8
Tax expense paid in respect of investment activities (0.8) (2.1) (3.2)
________ ________ ________
Net cash (used in)/from investment activities (29.5) 44.0 27.6
________ ________ ________
Financing activities
Movement in bank loans 18.0 (46.0) (26.0)
Net proceeds of share issue 1.0 0.8 1.0
Dividends paid (5.2) (4.8) (6.8)
________ ________ ________
Net cash from/(used in) financing activities 13.8 (50.0) (31.8)
________ ________ ________
(Decrease)/increase in cash and cash equivalents in
the period (5.5) 4.7 9.5
Cash and cash equivalents at the beginning of the
period 12.7 3.2 3.2
________ ________ ________
Cash and cash equivalents at the end of the period 7.2 7.9 12.7
________ ________ ________
NOTES TO THE FINANCIAL STATEMENTS
1 This statement does not comprise statutory accounts as defined in
Section 240 of the Companies Act 1985. The results for the half year to 30th
June 2006, and the comparative period for the half year to 30th June 2005, have
not been audited. The results to 31st December 2005 are extracted from the
financial statements for that year. These received an unqualified independent
auditor's report and have been filed with the Registrar of Companies.
The results for the half year to 30th June 2006 include those for the holding
company and all of its subsidiaries, together with the group's share of the
results of its joint ventures. The results are prepared on the basis of the
accounting policies set out in the 2005 annual report and financial statements
with the addition of a policy for development income. This is recognised in
accordance with IAS 18, Revenue, and is based on the directors' assessment of
the stage of completion of the project, the future costs and the expected value
of the completed building.
2 Development income
The amount of £6.3 million is the proportion of the total profit share estimated
to have been earned by the group in the half year to 30th June 2006 from the
construction and letting of a property on behalf of a third party in accordance
with the accounting policy stated above.
3 Profit on disposal of investment properties
Half year Half year Year
to 30.6.06 to 30.06.05 to 31.12.05
£m £m £m
Disposal proceeds 12.0 58.6 97.8
Carrying value (10.3) (54.1) (90.1)
Leasehold liabilities - - 1.9
________ ________ ________
1.7 4.5 9.6
________ ________ ________
4 Share of results of joint ventures
Half year Half year Year
to 30.6.06 to 30.06.05 to 31.12.05
£m £m £m
Profit from operations before revaluation surplus - - -
Revaluation surplus 3.5 - -
________ ________ ________
3.5 - -
________ ________ ________
5 Tax expense
Half year Half year Year
to 30.6.06 to 30.06.05 to 31.12.05
£m £m £m
Corporation tax expense
UK corporation tax and income tax on profits
for the period 3.8 1.4 4.0
Adjustment for under provision in prior periods - 0.8 0.6
________ ________ ________
3.8 2.2 4.6
________ ________ ________
Deferred tax expense
Origination and reversal of temporary differences 26.6 10.9 30.9
Adjustment for over provision in prior periods - - (1.8)
________ ________ ________
26.6 10.9 29.1
________ ________ ________
________ ________ ________
30.4 13.1 33.7
________ ________ ________
The tax for all periods is lower than the standard rate of corporation tax in
the UK. The differences are explained below:
Half year Half year Year
to 30.6.06 to 30.06.05 to 31.12.05
£m £m £m
Profit before tax 122.6 61.5 150.4
________ ________ ________
Expected tax charge based on the standard
rate of corporation tax in the UK of 30%
(2005: 30%) 36.8 18.5 45.1
Indexation relief on investment properties (6.7) (4.4) (8.0)
Difference between tax and accounting profit on
disposals 0.3 (1.6) (1.4)
Other differences - (0.2) (0.8)
________ ________ ________
Tax expense on current period's profit 30.4 12.3 34.9
Adjustments in respect of prior periods' tax - 0.8 (1.2)
________ ________ ________
30.4 13.1 33.7
________ ________ ________
Tax charged directly to reserves
Deferred tax on fair value of derivative financial
instruments - - (0.9)
Deferred tax on share-based payments - - (1.4)
________ ________ ________
- - (2.3)
________ ________ ________
6 Earnings per share
Weighted
average
Profit for number of Earnings
the period shares per share
£m '000 p
Half year ended 30th June 2006 92.2 53,475 172.42
Adjustment for dilutive share-based payments - 451 (1.44)
________ ________ ________
Diluted 92.2 53,926 170.98
________ ________ ________
Half year ended 30th June 2005 48.4 53,303 90.71
Adjustment for dilutive share-based payments - 455 (0.77)
________ ________ ________
Diluted 48.4 53,758 89.94
________ ________ ________
Year ended 31st December 2005 116.7 53,378 218.63
Adjustment for dilutive share-based payments - 447 (1.82)
________ ________ ________
Diluted 116.7 53,825 216.81
________ ________ ________
Half year ended 30th June 2006 92.2 53,475 172.42
Adjustment for development income (4.4) - (8.23)
Adjustment for deferred tax on capital allowances 1.6 - 2.99
Adjustment for disposal of investment properties (1.0) - (1.87)
Adjustment for group revaluation surplus (75.7) - (141.56)
Adjustment for share of joint venture's
revaluation surplus (2.9) - (5.43)
Adjustment for derivative fair value movement (1.6) - (2.99)
________ ________ ________
Adjusted 8.2 53,475 15.33
________ ________ ________
Half year ended 30th June 2005 48.4 53,303 90.71
Adjustment for deferred tax on capital allowances (0.1) - (0.22)
Adjustment for disposal of investment properties (3.0) - (5.71)
Adjustment for group revaluation surplus (39.2) - (73.40)
Adjustment for derivative fair value movement 1.0 - 1.87
________ ________ ________
Adjusted 7.1 53,303 13.25
________ ________ ________
Year ended 31st December 2005 116.7 53,378 218.63
Adjustment for deferred tax on capital allowances (0.8) - (1.50)
Adjustment for disposal of investment properties (7.0) - (13.11)
Adjustment for group revaluation surplus (94.9) - (177.79)
________ ________ ________
Adjusted 14.0 53,378 26.23
________ ________ ________
The adjusted earnings per share excludes the after tax effect of fair value
adjustments to the carrying value of assets and liabilities, development income
and the profit or loss arising from the disposal of investment properties in
order to show the underlying trend. The adjusted earnings per share figure also
excludes the deferred tax charge in respect of capital allowances claimed on the
basis that it is unlikely that a liability will ever crystallise.
7 Investment property
Freehold Leasehold Total
£m £m £m
Carrying value
At 1st January 2006 724.2 291.4 1,015.6
Transfer 2.5 (2.5) -
Additions 40.1 0.4 40.5
Disposals (10.3) - (10.3)
Revaluation 81.5 17.7 99.2
Movement in grossing up of headlease liabilities - (0.4) (0.4)
________ ________ ________
At 30th June 2006 838.0 306.6 1,144.6
________ ________ ________
At 1st January 2005 595.4 320.2 915.6
Additions 13.6 0.9 14.5
Disposals (31.9) (21.7) (53.6)
Revaluation 40.3 9.4 49.7
________ ________ ________
At 30th June 2005 617.4 308.8 926.2
________ ________ ________
At 1st January 2005 595.4 320.2 915.6
Transfer 23.2 (23.2) -
Additions 64.6 1.4 66.0
Disposals (55.4) (34.7) (90.1)
Revaluation 96.4 27.7 124.1
________ ________ ________
At 31st December 2005 724.2 291.4 1,015.6
________ ________ ________
Adjustments from fair value to carrying value
At 30th June 2006
Fair value 851.8 287.8 1,139.6
Adjustment for lease incentives (13.8) (0.9) (14.7)
Adjustment for grossing up of headlease liabilities - 19.7 19.7
________ ________ ________
Carrying value 838.0 306.6 1,144.6
________ ________ ________
At 30th June 2005
Fair value 629.4 288.1 917.5
Adjustment for lease incentives (12.0) (1.4) (13.4)
Adjustment for grossing up of headlease liabilities - 22.1 22.1
________ ________ ________
Carrying value 617.4 308.8 926.2
________ ________ ________
At 31st December 2005
Fair value 737.5 272.3 1,009.8
Adjustment for lease incentives (13.3) (1.0) (14.3)
Adjustment for grossing up of headlease liabilities - 20.1 20.1
________ ________ ________
Carrying value 724.2 291.4 1,015.6
________ ________ ________
The investment property was revalued at 30th June 2006 at £1,139.6m (30th June
2005: £917.5m; 31st December 2005: £1,009.8m) by either CB Richard Ellis Limited
or Keith Cardale Groves (Commercial) Limited, as external valuers, on the basis
of market value as defined by the Appraisal and Valuation Manual published by
the Royal Institution of Chartered Surveyors.
At 30th June 2006, the historical cost of investment property owned by the group
was £667.4m (30th June 2005: £617.5m; 31st December 2005: £635.6m).
8 Property, plant and equipment
30.6.06 30.06.05 31.12.05
£m £m £m
Net book value
At beginning of period 0.4 0.6 0.6
Disposals - (0.1) (0.1)
Depreciation (0.1) (0.1) (0.1)
________ ________ ________
At end of period 0.3 0.4 0.4
________ ________ ________
Net book value at end of period
Cost 1.3 1.3 1.3
Accumulated depreciation (1.0) (0.9) (0.9)
________ ________ ________
0.3 0.4 0.4
________ ________ ________
9 Deferred tax liability
Revaluation Capital
surplus allowances Other Total
£m £m £m £m
At 1st January 2006 91.6 13.6 - 105.2
Provided during the period 24.1 1.6 0.9 26.6
________ ________ ________ ________
At 30th June 2006 115.7 15.2 0.9 131.8
________ ________ ________ ________
At 30th June 2005 72.9 14.3 1.2 88.4
________ ________ ________ ________
The deferred tax on the revaluation surplus at 30 June 2006 includes an amount
of £0.6m in relation to the revaluation surplus in the joint venture.
Deferred tax on the revaluation surplus is calculated on the basis of the
chargeable gains that would crystallise on the sale of the investment property
portfolio as at each balance sheet date. The calculation takes account of
indexation on the historic cost of the properties and any available capital
losses.
10 Equity
Share Share Other Retained
capital premium reserves earnings
£m £m £m £m
At 1st January 2006 2.6 155.1 2.3 446.2
Premium on issue of shares - 1.0 - -
Share-based payments expense
transferred to reserves - - 0.4 -
Profit for the period - - - 92.2
Dividend paid - - - (5.2)
________ ________ ________ ________
At 30th June 2006 2.6 156.1 2.7 533.2
________ ________ ________ ________
11 Dividend
The results for the half year to 30th June 2006 do not include the dividend
declared after the end of the accounting period. In respect of these results, a
dividend of 4.225p per share (2005 interim: 3.925p; 2005 final: 9.725p) will be
paid on 6th November 2006 to those shareholders on the register at the close of
business on 13th October 2006.
12 Net asset value per share
Net asset
Net Number of value per
assets shares share
£m '000 p
At 30th June 2006 694.6 53,656 1,295
Adjustment for deferred tax on capital allowances 15.2 - 28
Adjustment for deferred tax on revaluation surplus 115.7 - 216
Adjustment for post tax fair value of derivative
financial instruments 0.6 - 1
________ ________ ________
Adjusted 826.1 53,656 1,540
________ ________ ________
At 30th June 2005 538.0 53,425 1,007
Adjustment for deferred tax on capital allowances 14.3 - 26
Adjustment for deferred tax on revaluation surplus 72.9 - 137
Adjustment for post tax fair value of derivative
financial instruments 3.2 - 6
________ ________ ________
Adjusted 628.4 53,425 1,176
________ ________ ________
At 31st December 2005 606.2 53,472 1,134
Adjustment for deferred tax on capital allowances 13.6 - 26
Adjustment for deferred tax on revaluation surplus 91.6 - 171
Adjustment for post tax fair value of derivative
financial instruments 2.2 - 4
________ ________ ________
Adjusted 713.6 53,472 1,335
________ ________ ________
Adjusted net assets excludes the deferred tax provided in respect of capital
allowances claimed, on the basis that it is unlikely that this liability will
ever crystallise. The deferred tax on the revaluation surplus and the post tax
fair value of derivative financial instruments are also excluded, on the basis
that these amounts are not relevant when considering the group as an ongoing
business.
13 Total return
Total return for the half year to 30th June 2006 is 16.1% (half year to 30th
June 2005: 10.3%; year to 31st December 2005: 25.5%). Total return is the
movement in adjusted net asset value per share, as derived in note 12, plus the
dividend per share paid during the period expressed as a percentage of the
adjusted net asset value per share at the beginning of the period.
14 Gearing
Balance sheet gearing at 30th June 2006 is 47.1% (30th June 2005: 54.0%; 31st
December 2005: 50.1%). This is defined as net debt divided by net assets.
Profit and loss gearing for the half year to 30th June 2006 is 2.07 (half year
to 30th June 2005: 1.86; year to 31st December 2005: 1.84). This is defined as
recurring net property income less administrative costs divided by net interest
payable, having reversed the reallocation of ground rent payable on leasehold
properties to interest payable of £0.6m (half year to 30th June 2005: £0.7m;
year to 31st December 2005: £1.3m).
15 Post balance sheet events
On 31st July 2006, the group completed the purchase of the freehold interests of
two of its leasehold investment properties for £14.7m, excluding costs, and the
disposal of an investment property for £17.5m, excluding costs.
16 Copies of this announcement are being posted to shareholders on 15th
September 2006 and will be available on the company's website,
www.derwentvalley.co.uk, from the date of this statement. Copies will also be
available from the Company Secretary, Derwent Valley Holdings plc, 25 Savile
Row, London, W1S 2ER.
This information is provided by RNS
The company news service from the London Stock Exchange
Tuesday, 4th June 2024
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