Interim Results

Grainger Trust PLC 19 June 2001 INTERIM RESULTS FOR THE SIX MONTHS ENDED 31st MARCH 2001 Grainger Trust plc, the tenanted residential property specialist, today announces Interim Results for the six months ended 31st March 2001. Highlights are as follows:- * Pre-tax profit up 58% to £13.5 million before exceptional item (2000: £8.5 million) * Earnings per share before exceptional item up 60% to 36.7p (2000: 22.9p). * 50% investment in BPT via a joint venture with Deutsche Bank Real Estate Private Equity Group, offer declared unconditional on May 25th 2001. * £37m of investment property sold during the period. * Net Asset Value per share fell to £9.61 (as at 30th September 2000: £9.85). NNNAV has increased to £7.47 (as at 30th September 2000: £7.41). * Interim dividend of 2.65p per share, an increase of 15% (2000: 2.3p). Commenting on the results, Stephen Dickinson, Managing Director, said:- 'We are very pleased with another good set of results from the Group. Pre-tax profits prior to exceptionals have increased by 58%, due to the strength of our trading performance, particularly residential land. 'The acquisition of the 50% investment in BPT reflects well on our capability to carry through such transactions and is of great importance to the future of the Group. We look forward to the future with confidence.' Enquiries Stephen Dickinson Managing Director Grainger Trust plc 020 7795 4700 Andrew Cunningham Financial Director Grainger Trust plc 020 7795 4700 Tom Buchanan Brunswick Group 020 7404 5959 Tricia Parish Brunswick Group 020 7404 5959 GRAINGER TRUST plc INTERIM RESULTS FOR SIX MONTHS ENDED 31ST MARCH, 2001 RESULTS/NAV AND DIVIDENDS The unaudited results for the six months ended 31st March, 2001 show pre-exceptional profit before tax of £13.5m (March 2000: £8.5m). An exceptional item of £3.5m arises from premiums paid on the buying in and cancellation of £8.3m of the Group's £18m 10.5% and 11.75% 2024 Quoted Debentures which reduce the 6 months pre-tax profit to £10.0m. Pre-exceptional earnings have increased by 58% arising from increases in trading profits, particularly residential land development. Earnings per share on a pre-exceptional basis have increased to 36.7p (2000: 22.9p), and after the exceptional item are 26.8p. NAV has fallen from £9.85 at 30th September 2000 to £9.61 at 31st March 2001. As we have not revalued our properties at the half year, the movement in NAV represents retained earnings (which have been depressed by the debenture repayment premiums), provision for capital gains tax arising from the investment property disposal programme and the elimination of revaluation surpluses on trading properties sold. After allowing for contingent tax at £1.91 and an FRS 13 adjustment after tax of 23p, NNNAV increases by 6p to £7.47 per share over the period. The interim dividend of 2.65p, an increase of 15%, will be paid on 20th July 2001 to shareholders on the register at the close of business on 29th June 2001. BPT The most important transaction for your company since the start of the financial year has been the offer made on 10th April 2001 to acquire the issued share capital of BPT plc, which was declared unconditional on 25th May 2001. The offer was made by Bromley Property Holdings Ltd, a 50/50 joint venture company with Deutsche Bank Real Estate Private Equity Group. BPT, which will be delisted shortly, is currently the largest quoted company in the tenanted residential market sector. The BPT portfolio, as at 5th October 2000 (the date of its interim results), comprised some 11,000 residential units valued at £800m of which some 6,000 were regulated tenancies. It is intended that the initial level of gearing will be reduced by the sale of the non-regulated assets. The first step will be to create a structure to attract new funding into both the assured and life tenancy portfolios, whilst retaining an asset management role for BPT which will continue to be run as a separate entity to Grainger. We have seconded Rupert Dickinson, our Deputy Managing Director, to BPT to act as an interim Chief Executive for a period of 9 months. His main task will be to carry out the initial disposal programmes, initiate the fund raising process and recruit a full time Chief Executive. REVIEW OF OPERATIONS Given the faster than expected pace of the investment property disposal programme, and the growing importance of development, Group structure has been simplified into two divisions, Tenanted Residential and Development/ Trading. TENANTED RESIDENTIAL The operating contribution has increased by 4% to £9.9m (2000: £9.5m). Net rentals fell by £0.4m because of an increase in property expenditure and refunds caused by the reintroduction of capping. Trading profits increased by £1.3m and featured improved selling prices throughout the country. This is caused by the ripple effect working through following a sustained period of increasing prices in the South East. We have been selling tenanted properties at the lower end of the price spectrum, typically ex-nationalised industry stock, to investors who will pay in excess of vacant possession value, basing their decision on income yields. As a result of this, housing numbers have fallen from 5,250 to 5,100 since 30th September 2000, whilst the total vacant possession value of our stock based on 30th September 2000 estimates and values attributed to purchases during the period has remained constant. We purchased £10m of replacement stock in the period, and a further £9m since. DEVELOPMENT/TRADING The operational contribution has increased by 69% to £10.3m (2000: £6.1m). Net rentals, after property and development expenses came to £3.8m, and trading profit £7.2m. Commercial Development, Trading and Investment Construction of the four unit, 157,000 sq.ft. warehouse scheme at Dolphin Park, Thurrock has been completed. One unit has been sold, one let, and negotiations continue with interested parties for the other two units. We have started construction of the 170,000 sq.ft. mixed use development, Landmark Place in the centre of Slough, together with our joint venture partners, Frontier Estates. Completion is expected by the end of calendar 2002, and the hotel element has already been sold to an established operator. Construction of the first phase of some 50,000 sq.ft. at our B1 Park at Kennel Farm should start during the next financial year. Two office buildings in Clerkenwell, Gensurco House 26,600 sq.ft., and 65 Clerkenwell Road, 13,700 sq.ft. have been acquired. These will be refurbished, the former to a limited extent over a period, and the latter more extensively with the intention of sale on completion. Our investment property disposal programme has proceeded well and during the period we have completed and exchanged contracts on 22 properties for a total consideration of £37m. This figure, after allowing for disposal costs, exceeded the year end valuation by £1m. The major disposal was the Winsford Shopping Centre for £18m. The part redemption of the Quoted Debentures was necessary to obtain the release of funds arising from the sale of properties charged as security for those loans. Residential Development During the period we sold a property in Eaton Square, prior to development, and the majority of the flats at Redcliffe Backs, Bristol. Since the end of the period we have sold the outstanding balance of the 21 flats at Redcliffe Backs and 1 Uxbridge Street, Kensington, having obtained vacant possession and planning permission for residential development. The Pimlico flat development mentioned in previous statements is taking a long time to come to maturity, but we are currently hopeful that the final approvals will be available shortly. Residential Land The infrastructure programme at Kennel Farm is now well advanced and during the period we sold 13 acres to a major house builder. We continue with the pre-development consultation and planning procedures at the 12 acre site immediately adjoining Kennel Farm, the large site at West Waterlooville over which we have an option, and the Bere Regis and Northumberland Coastal Plain projects. PERSONNEL The period has been dominated by the involvement of our Managing Director, Stephen Dickinson, and his executive colleagues, in bringing the acquisition of our 50% interest in the BPT joint venture to a successful conclusion. I wish in particular to record our gratitude to Rupert Dickinson who initiated and carried through the negotiations, since the start of the process in August 2000, and to Andrew Cunningham, our Finance Director, who has been heavily committed in resolving the financing required. We are also very grateful to all our staff for the effective way in which they have dealt with the demands made on them during the period. We are pleased that Nicola Pease has agreed to join the Board as a Non Executive Director. She is currently Chief Executive of J.O. Hambro Capital Management and a Director of Northern Rock plc. PROSPECTS The Group operates with the strong background of its Tenanted Residential and Residential Land activities which continue to produce material profitability and cashflows. Over the period, we have reduced further our Commercial Investment portfolio to provide funds for the more entrepreneurial approach becoming evident in our development and trading activities. To this we have added the major impetus of the BPT joint venture, which substantially strengthens the future shape and prospects of the Group. Your directors are delighted at the completion of this transaction, and look forward to the future with confidence. Registered Office: Robert Dickinson Times Square, Chairman Newcastle upon Tyne NE1 4EP 19th June 2001 GRAINGER TRUST plc CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE SIX MONTHS ENDED 31st MARCH 2001 Six Months Ended 31.03.01 Six Excluding Months Year Exceptional Exceptional Ended Ended Item Item Total 31.03.00 30.9.00 £000s £000s £000s £000s £000s Turnover 54,443 54,443 33,232 68,218 ______ ______ ______ ______ ______ Gross rentals 12,277 12,277 12,267 24,705 Trading profits 14,813 14,813 8,627 19,441 Other income 142 142 147 346 ______ ______ ______ ______ ______ 27,232 - 27,232 21,041 44,492 Less: Property expenses (4,889) (4,889) (3,839) (9,054) Administrative expenses (2,168) (2,168) (1,564) (3,391) ______ ______ ______ ______ ______ Operating Profit 20,175 - 20,175 15,638 32,047 Net profit/(loss) on disposal of & provisions against fixed assets 994 - 994 113 (699) ______ ______ ______ ______ Profit on ordinary activities before interest 21,169 - 21,169 15,751 31,348 Net interest payable and similar charges (7,658) (3,487) (11,145) (7,216) (15,252) ______ ______ ______ ______ ______ Profit on ordinary activities before taxation 13,511 (3,487) 10,024 8,535 16,096 Taxation (4,454) 1,046 (3,408) (2,732) (5,150) ______ ______ ______ ______ ______ Profit on ordinary activities after taxation 9,057 (2,441) 6,616 5,803 10,946 Dividends (653) (653) (584) (2,666) ______ ______ ______ ______ ______ Retained profit for the period 8,404 (2,441) 5,963 5,219 8,280 ______ ______ ______ ______ ______ Earnings per share 36.7 p (9.9) p 26.8 p 22.9 p 43.3 p ______ ______ ______ ______ ______ Fully diluted earnings per share 36.6 p (9.9) p 26.7 p 22.8 p 43.1 p ______ ______ ______ ______ ______ All results relate to continuing operations STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE SIX MONTHS ENDED 31st MARCH 2001 Six Six Months Months Year Ended Ended Ended 31.03.01 31.03.00 30.09.00 £000s £000s £000s Profit attributable to shareholders 6,616 5,803 10,946 Taxation on realisation of property revaluation gains of previous years (1,760) (950) Surplus on investment properties transferred to stock (7,931) Unrealised surplus/(deficit) on revaluation of properties 3,249 (269) Release of valuation deficit to the profit & loss account 400 ______ ______ ______ Total gains and losses recognised since the last report 5,256 9,052 1,796 _____ ______ ______ GRAINGER TRUST plc CONSOLIDATED BALANCE SHEET AT 31ST MARCH 2001 31.03.01 31.3.00 30.09.00 £000s £000s £000s Fixed assets Tangible assets 29,789 135,865 64,886 Investments 863 272 866 Intangible assets 64 95 80 _______ _______ _______ 30,716 136,232 65,832 _______ _______ _______ Current assets Stocks 226,792 158,943 220,157 Debtors: Amounts falling due within one year 22,944 4,360 7,276 Cash at bank and in hand 25,119 1,538 7,549 _______ _______ _______ 274,855 164,841 234,982 _______ _______ _______ Creditors: amounts falling due within one year Short term borrowings 23,429 13,428 26,092 Other creditors 24,615 22,667 20,287 _______ _______ _______ Net current assets 226,811 128,746 188,603 _______ _______ _______ Total assets less current liabilities 257,527 264,978 254,435 Creditors: amounts falling due after more than one year 158,825 155,936 159,461 Provision for liabilities and charges Deferred taxation 4,701 6,072 5,576 ______ _______ _______ Net assets 94,001 102,970 89,398 ______ _______ _______ Capital and reserves Called-up share capital 6,164 6,344 6,164 Share premium account 20,738 20,704 20,738 Revaluation reserve 7,558 25,371 11,258 Capital redemption reserve 185 - 185 Capital reserves - 14,093 - Profit and loss account 59,352 36,454 51,049 ______ _______ _______ Equity shareholders' funds 93,997 102,966 89,394 Minority interests 4 4 4 ______ _______ _______ Total capital employed 94,001 102,970 89,398 ______ _______ _______ GRAINGER TRUST GROUP CASHFLOW STATEMENT FOR THE SIX MONTHS ENDED 31ST MARCH 2001 Six Six Months Months Year Ended Ended Ended 31.03.01 31.03.00 30.09.00 £000s £000s £000s Operating profit 20,175 15,638 32,047 Depreciation 91 93 157 Amortisation of goodwill 16 19 39 Decrease / (increase) in debtors 2,332 (170) (3,086) Increase in creditors 3,134 1,480 1,089 Increase in stocks (6,635) (29,665) (50,175) _______ _______ _______ Net cash inflow / (outflow) from 19,113 (12,605) (19,929) operating activities _______ _______ _______ Returns on investments and servicing of finance Interest received 249 208 282 Interest paid (12,944) (8,321) (15,571) Dividends received 18 2 7 _______ _______ _______ (12,677) (8,111) (15,282) _______ _______ _______ Taxation UK corporation tax paid (2,074) (2,736) (7,312) _______ _______ _______ Capital expenditure and financial investment Purchase of fixed asset investments (234) (828) Purchase of tangible fixed assets (326) (909) (1,477) Sale of tangible fixed assets 18,909 1,389 19,905 _______ _______ _______ 18,583 246 17,600 _______ _______ _______ Acquisitions and disposals Purchase of subsidiaries (5,859) (5,859) Costs on purchase of subsidiaries (120) (125) Net cash acquired with subsidiaries 271 271 _______ _______ _______ (5,708) (5,713) _______ _______ _______ Equity dividends paid (2,076) (1,847) (2,438) Cash inflow / (outflow) before financing 20,869 (30,761) (33,074) _______ _______ _______ Financing New loans raised 21,523 12,876 43,388 Repayment of loans (24,822) (2,741) (17,064) Issue of shares 102 140 Buy back of shares (4,273) _______ _______ _______ (3,299) 10,237 22,191 _______ _______ _______ Increase/(decrease) in cash in 17,570 (20,524) (10,883) the period _______ _______ _______ NOTES 1. Property valuations For NAV purposes, all properties are shown at valuation. Investment properties are shown in the balance sheet at valuation, while trading stock, which consists of tenanted residential properties and development/trading properties, are shown at the lower of cost and net realisable value. Property valuations at 31st March 2001 are based upon those relevant at 30th September 2000, or otherwise at cost to Group. The comparison of cost, net of provisions, against valuation, on the above basis, is as follows: 31st March 2001 30th September 2000 Cost Valuation Cost Valuation £m £m £m £m _____ _____ _____ _____ Investment properties 25.1 29.3 56.3 64.5 _____ _____ _____ _____ Trading stock Tenanted residential properties 155.3 258.6 152.4 258.9 Development/trading 71.5 111.2 67.8 114.6 _____ _____ _____ _____ 226.8 369.8 220.2 373.5 _____ _____ _____ _____ Total properties 251.9 399.1 276.5 438.0 _____ _____ _____ _____ 2. Net asset value per share (NAV) This consists of balance sheet equity plus the excess of market value over book cost of trading stock divided by the number of shares in issue. Net asset value per share at 31st March 2001 before the adjustments referred to below was £9.61, compared to £9.85 at 30th September 2000. Two proforma adjustments are commonly made to NAV per share to calculate net net net asset value per share (NNNAV): (i) Contingent tax This is the tax that would be payable if all Group properties were disposed of at valuation, and amounts to £1.91 per share (£2.18 at 30th September 2000). (ii) FRS13 This records the difference between the current market value of fixed rate debt and derivatives and their book values. After allowing for tax, this adjustment has fallen to 23p from 26p at 30th September 2000. The resultant NNNAV at 31st March 2001 was £7.47 compared to £7.41 as at 30th September 2000. 3. Earnings per share The calculation of earnings per share is based on the following number of shares: 30.03.01 30.03.00 30.09.00 No. of No. of No. of Shares Shares shares 000's 000's 000's Number of shares for basic earnings per share (March and September 2000: weighted average) 24,65 525,328 25,259 ______ ______ ______ Weighted average number of shares for diluted earnings per share 24,772 25,428 25,376 ______ ______ ______ 4. This announcement does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. Statutory accounts for the period ended 30th September 2000 have been filed with the Registrar of Companies. The auditors have reported on these accounts; their report was unqualified and did not contain any statement under Section 237(2) or (3) of the Companies Act 1985. 5. Copies of this statement are being sent to all shareholders. Copies can be obtained from the Company's registered office, Times Square, Newcastle upon Tyne. NE1 4EP. 6. The Board of Directors approved the Interim Report on 19th June 2001. This interim report has neither been audited nor reviewed by the auditors.

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