Final Results (part 2)
Hammerson PLC
01 March 2004
PART 2
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31 December 2003
2003 2002
Unaudited Audited
Notes £m £m
Gross rental income, after rents payable 1 215.3 197.1
Other property outgoings 1 (25.8) (21.2)
Net rental income 189.5 175.9
Loss on disposal of properties held for
resale 9 (0.1) -
Management fees receivable 3.3 2.8
Cost of property activities (15.8) (16.6)
Corporate expenses (12.3) (10.5)
Administration expenses (24.8) (24.3)
Operating profit 164.6 151.6
Exceptional items: (Loss)/Profit on the sale
of investment properties (18.8) 5.3
Profit on ordinary activities before
interest 145.8 156.9
Cost of finance (net) 2 (78.7) (66.0)
Profit on ordinary activities before tax 67.1 90.9
Current tax 3(a) (1.7) (2.5)
Deferred tax 3(b) (13.1) (11.1)
Tax charge on profit on ordinary activities (14.8) (13.6)
Profit on ordinary activities after tax 52.3 77.3
Equity minority interests (2.0) (1.7)
Profit for the financial year 50.3 75.6
Dividends 4 (46.4) (43.6)
Retained profit for the financial year 16 3.9 32.0
Basic earnings per share 5 18.3p 27.1p
Diluted earnings per share 5 18.2p 27.1p
Adjusted earnings per share 5 29.8p 29.2p
All results derive from continuing operations.
CONSOLIDATED BALANCE SHEET
as at 31 December 2003
2003 2002
Unaudited Restated*
Audited
Notes £m £m
Fixed assets
Land and buildings 6 3,955.5 3,907.6
Fixtures, fittings and equipment 1.3 1.2
Tangible assets 3,956.8 3,908.8
Investments 8 40.7 39.4
3,997.5 3,948.2
Current assets
Properties held for resale 9 - 30.8
Debtors - Due within one year 10 109.7 121.3
- Due after more than one year 10 32.8 12.8
Cash and short term deposits 11 187.0 242.2
329.5 407.1
Creditors falling due within one year
Borrowings 12 (556.3) (85.7)
Other 13 (253.8) (316.6)
Net current(liabilities)/assets (480.6) 4.8
Total assets less current liabilities 3,516.9 3,953.0
Creditors falling due after more than one
year
Borrowings 12 (1,215.9) (1,797.9)
Other 13 (36.0) (39.6)
Provisions for liabilities and charges
Deferred tax 3(b) (58.7) (37.2)
Equity minority interests (38.1) (40.1)
2,168.2 2,038.2
Capital and reserves
Called up share capital 15 69.1 69.0
Share premium account 16 594.1 592.3
Revaluation reserve 16 764.7 786.8
Capital redemption reserve 16 7.2 7.2
Other reserves 16 8.4 6.5
Profit and loss account 16 726.9 578.6
Investment in own shares 17 (2.2) (2.2)
Equity shareholders' funds 2,168.2 2,038.2
Diluted net asset value per share 5 784p 738p
Adjusted net asset value per share 5 803p 751p
* Comparative figures have been restated following the adoption of UITF 38 (see
note 22).
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 31 December 2003
2003 2002
Unaudited Audited
Notes £m £m
Profit for the financial year 50.3 75.6
Unrealised surplus/(deficit) on revaluation
of properties 110.8 (19.1)
Unrealised surplus on revaluation of
investments and minority interests 0.5 0.4
Unrealised surplus on acquisition of minority
interest 1.5 -
Negative goodwill - 5.0
Current tax on property disposals (0.3) -
Deferred tax on property disposals 3(b) (4.7) (13.9)
Exchange translation movements 16.4 15.9
Total recognised gains and losses for the year 174.5 63.9
NOTE OF HISTORICAL COST PROFITS AND LOSSES
for the year ended 31 December 2003
2003 2002
Unaudited Audited
£m £m
Profit on ordinary activities before tax 67.1 90.9
Realisation of previous years' revaluation gains 145.2 185.0
Historical cost profit on ordinary activities before tax 212.3 275.9
Historical cost profit for the financial year after tax,
equity minority interests and dividends 144.1 203.1
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the year ended 31 December 2003
2003 2002
Unaudited Restated*
Audited
£m £m
Retained profit for the financial year 3.9 32.0
Amortisation of investment in own shares - 0.3
Other recognised gains and losses 124.2 (11.7)
Purchase and cancellation of own shares - (25.1)
Issue of shares 1.9 4.0
Net increase/(decrease) in shareholders' funds 130.0 (0.5)
Equity shareholders' funds at 1 January (restated*) 2,038.2 2,038.7
Equity shareholders' funds at 31 December 2,168.2 2,038.2
* Comparative figures have been restated following the adoption of UITF 38 (see
note 22).
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2003
2003 2002
Unaudited Audited
Notes £m £m
Net cash flow from operating activities 18 173.5 147.5
Returns on investment and servicing of finance 18 (104.6) (89.7)
Tax paid (0.5) (0.2)
Capital expenditure and investment 18 176.1 30.3
Acquisitions and disposals 18 (60.9) (178.2)
Equity dividends paid (44.4) (42.0)
Cash inflow/(outflow) 139.2 (132.3)
Decrease in short term deposits 20 50.9 103.4
Net cash (outflow)/inflow from financing 19 (195.2) 53.6
(Decrease)/Increase in cash in the year (5.1) 24.7
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
for the year ended 31 December 2003
2003 2002
Unaudited Audited
Notes £m £m
(Decrease)/Increase in cash in the year (5.1) 24.7
Net decrease/(increase) in debt 197.1 (74.7)
Decrease in short term deposits (50.9) (103.4)
Change in net debt resulting from cash flows 141.1 (153.4)
Short term deposits acquired on acquisition of
subsidiaries - 102.1
Debt acquired on acquisition of subsidiaries - (197.5)
Exchange adjustment (84.9) (58.1)
Movement in net debt in the year 56.2 (306.9)
Net debt at 1 January (1,641.4) (1,334.5)
Net debt at 31 December 20 (1,585.2) (1,641.4)
NOTES TO THE ACCOUNTS
1 SEGMENTAL ANALYSIS
Gross Other 2003 2002
rental Rents property Net rental Net rental
income payable outgoings income income
£m £m £m £m £m
Rental income
United Kingdom
Retail: Shopping centres
London & 50.5 (0.9) (5.7) 43.9 41.5
South
Midlands & 23.7 (0.5) (4.9) 18.3 23.5
North
Retail parks 17.1 - (0.8) 16.3 4.6
91.3 (1.4) (11.4) 78.5 69.6
Office: City 31.1 (5.0) (1.0) 25.1 29.4
West End 13.1 (0.4) (0.6) 12.1 16.1
Docklands & 12.0 (1.4) (1.7) 8.9 8.8
other
56.2 (6.8) (3.3) 46.1 54.3
Total United Kingdom 147.5 (8.2) (14.7) 124.6 123.9
Continental Europe
Retail: France 42.4 - (4.6) 37.8 32.7
Germany 17.8 (0.3) (5.7) 11.8 11.8
60.2 (0.3) (10.3) 49.6 44.5
Office: France 16.1 - (0.8) 15.3 7.5
Total
Continental
Europe 76.3 (0.3) (11.1) 64.9 52.0
Group
Retail 151.5 (1.7) (21.7) 128.1 114.1
Office 72.3 (6.8) (4.1) 61.4 61.8
Total Group 223.8 (8.5) (25.8) 189.5 175.9
Included in net rental income for 2003 is £8.8m (2002: £2.5m) in respect of
accrued rent receivable allocated to rent free periods and a deduction of £0.8m
(2002: £0.9m) in respect of amortisation of lease incentives.
2003 2002
Restated*
Assets Net Net Net
employed debt assets assets
£m £m £m £m
Net assets
United Kingdom 2,490.4 (484.7) 2,005.7 1,794.6
Continental Europe 1,263.0 (1,100.5) 162.5 243.6
3,753.4 (1,585.2) 2,168.2 2,038.2
Net assets have not been analysed by retail and office sectors as net debt
cannot be allocated to these sectors.
*Comparative figures have been restated following the adoption of UITF 38 (see
note 22).
NOTES TO THE ACCOUNTS
2 COST OF FINANCE (NET)
2003 2002
£m £m
Interest payable on:
Bank loans and overdrafts 22.9 19.3
Other loans 85.6 85.3
Other interest payable 5.2 -
Interest payable and similar charges 113.7 104.6
Less:
Interest payable capitalised (25.1) (24.6)
Interest receivable (9.9) (14.0)
Cost of finance (net) 78.7 66.0
3 TAXATION
(a) Current tax
2003 2002
Tax charge £m £m
UK corporation tax on profits for the year 1.1 0.2
Foreign tax 0.6 2.3
1.7 2.5
2003 2002
Tax reconciliation £m £m
Profit on ordinary activities before tax 67.1 90.9
Profit multiplied by UK corporation tax rate of 30% 20.1 27.3
Effects of:
Utilisation of UK tax losses (10.9) (12.2)
Capital allowances for the year (6.4) (7.3)
Tax relief for capitalised interest (6.7) (7.2)
Foreign tax (3.4) 0.6
Losses on property disposals not relievable 5.6 -
Pre-acquisition surpluses in subsidiaries 2.7 -
Other items 0.7 1.3
Current tax charge for the year 1.7 2.5
Factors that may affect future tax charges
In 2003 the group utilised UK tax losses brought forward and it is anticipated
that further brought forward UK losses will be utilised in 2004 and subsequent
years. If elections for French SIIC status are made (see page 8), the 2004
accounts will show the French exit tax payable and a release of deferred tax.
NOTES TO THE ACCOUNTS
3 TAXATION (continued)
(b) Deferred tax
2003 2002
Movement in year £m £m
Opening provision 34.8 7.6
Charge in profit and loss account 13.1 11.1
Charge on realisation of revaluation gains on property disposals 4.7 13.9
Corporate acquisitions and disposals (0.5) 1.2
Exchange differences 2.7 1.0
Closing provision 54.8 34.8
The charge on the realisation of revaluation gains on property disposals relates
to disposals in France which used French tax losses.
2003 2002
Net deferred tax provision Notes Notes £m £m
UK
Capital allowances 27.1 27.3
Other timing differences 1.5 3.4
Tax losses (18.6) (29.4)
Net UK deferred tax provision 10.0 1.3
France
Tax depreciation 35.9 28.5
Other timing differences 8.9 5.8
Tax losses - (0.8)
Net France deferred tax provision 44.8 33.5
Net deferred tax provision 54.8 34.8
Analysed as:
Deferred tax asset 10 (3.9) (2.4)
Deferred tax provision 58.7 37.2
54.8 34.8
(c) Contingent tax
Should the group's properties and investments be sold at book value, it is
estimated that the maximum tax liabilities arising, in addition to the deferred
tax provided in the balance sheet, would be:
2003 2002
£m £m
France 123.0 112.0
UK 99.0 83.0
Germany - 3.0
222.0 198.0
Effect on diluted net assets per share 80p 71p
If the French subsidiaries elect for SIIC status (see page 8), exit taxes
estimated at £70m will become payable but £45m of deferred tax and £121m of
contingent tax will be released.
The tax arising on UK disposals may be reduced depending on how sales are
structured. In particular the total liability would be £45m less if the group
retains all capital allowances on disposals.
NOTES TO THE ACCOUNTS
4 DIVIDENDS
2003 2002
£m £m
Interim paid 5.12p (2002: 4.81p) per share 14.1 13.3
Final proposed 11.71p (2002: 10.99p) per share 32.3 30.3
46.4 43.6
The directors have declared a final dividend of 11.71p per share payable on 13
May 2004 to shareholders on the register at the close of business on 16 April
2004.
5 EARNINGS PER SHARE AND NET ASSET VALUE PER SHARE
The calculations for earnings per share, diluted earnings per share and adjusted
earnings per share, based on the weighted average number of shares, are shown in
the table below:
2003 2002
Earnings Shares Pence Earnings Shares Pence
£m million per share £m million per share
Basic 50.3 275.4 18.3 75.6 278.8 27.1
Adjustments:
Dilutive
share - 0.3 (0.1) - 0.3 -
options
Diluted 50.3 275.7 18.2 75.6 279.1 27.1
Adjustments:
Exceptional
items 18.8 - 6.8 (5.3) - (1.9)
Deferred 13.1 - 4.8 11.1 - 4.0
tax
Adjusted 82.2 275.7 29.8 81.4 279.1 29.2
The weighted average numbers of shares shown above exclude those shares held in
the Hammerson Employee Share Ownership Plan (note 17) which are treated as
cancelled.
The calculations for basic, diluted and adjusted net asset value per share are
shown in the table below:
Shareholders' Net asset value
funds Shares per share
£m million pence
Basic 2,168.2 276.4 784
Company's own
shares held in
Employee Share
Ownership Plan - (0.7) n/a
Unexercised share
options 10.5 2.3 n/a
Diluted 2,178.7 278.0 784
Deferred tax 54.8 - n/a
Adjusted 2,233.5 278.0 803
NOTES TO THE ACCOUNTS
6 LAND AND BUILDINGS
Valuation Cost
2003 2002 2003 2002
£m £m £m £m
Investment properties
Fully developed properties 3,627.7 3,439.5 2,882.1 2,655.7
Properties held for or in the
course of development 327.8 468.1 302.3 459.0
3,955.5 3,907.6 3,184.4 3,114.7
All properties are stated at market value as at 31 December 2003, valued by
professionally qualified external valuers. In the United Kingdom, office
properties and the group's interests in the Birmingham Alliance properties were
valued by DTZ Debenham Tie Leung, Chartered Surveyors, and all other retail
properties were valued by Donaldsons, Chartered Surveyors. In France and Germany
the group's properties were valued by Cushman & Wakefield Healey & Baker,
Chartered Surveyors. The valuations have been prepared in accordance with the
Appraisal and Valuation Standards of the Royal Institution of Chartered
Surveyors.
At 31 December 2003 the total amount of interest included in development
properties was £8.6m (2002: £26.1m) and is calculated based on the group's
average cost of borrowings.
Long Short
Freeholds leaseholds leaseholds Total
£m £m £m £m
Movements in the year
Balance at 1 January 2003 2,086.3 1,812.3 9.0 3,907.6
Exchange adjustment 108.7 - 0.3 109.0
Acquisition of freehold 154.5 (154.5) - -
Additions at cost 208.3 130.8 0.1 339.2
Disposals at valuation (406.0) (130.2) - (536.2)
Capitalised interest 11.3 13.8 - 25.1
Revaluation surplus/(deficit) 16.2 97.6 (3.0) 110.8
Balance at 31 December 2003 2,179.3 1,769.8 6.4 3,955.5
2003 2002
£m £m
Capital commitments 362.4 356.3
NOTES TO THE ACCOUNTS
7 JOINT INVESTMENTS AND DEVELOPMENTS
As at 31 December 2003 certain property and corporate interests have been
proportionally consolidated, and these are set out in the following table:
Group share Partner(s)
%
Investments
Brent Cross Shopping
Centre 41.2 Standard Life Investments
Brent Cross Shopping
Park 40.6 Standard Life Investments
Cricklewood
Redevelopment 50 Pillar Property PLC
Limited
Essen Shopping
Center 22 Algemeen Burgerlijk Pensioenfonds
BV
Opera Capucines SCI 50 MAAF Assurances
Shires Limited
Partnership 60 Hermes
The Bull Ring
Limited 33.33 Land Securities PLC, Pearl Assurance plc
Partnership
The Grosvenor Street
Limited Partnership 50 Grosvenor West End Properties
The London Wall
Limited Partnership 50 Kajima London Wall Limited
The Martineau
Galleries Limited
Partnership 33.33 Land Securities PLC, Pearl Assurance plc
The Martineau
Limited 33.33 Land Securities PLC, Pearl Assurance plc
Partnership
The Oracle Limited
Partnership 50 Akaria Investments Limited
West Quay Shopping
Centre Limited 50 Barclays Bank plc
Developments
9 place Vendome SCI 50 AXA
The Moor House
Limited 33.33 Greycoat Estates Limited, Pearl Assurance
Partnership plc
Union Square
Developments Limited 50 Stannifer Group Holdings Limited
Wensum Developments
Limited 50 Gazeley Properties Limited
The following summarised profit and loss account and balance sheet show the
proportion of the group's results, assets and liabilities which are derived from
its joint investments and developments:
Profit and loss account
2003 2002
£m £m
Net rental income 46.2 37.3
Administration expenses (0.2) (0.2)
Operating profit 46.0 37.1
Exceptional items: Profit on the sale of investment properties - 0.3
Cost of finance (net) 0.3 (4.5)
Profit on ordinary activities before tax 46.3 32.9
Balance sheet
2003 2002
£m £m
Land and buildings at valuation 1,339.0 1,087.7
Fixed assets 1,339.0 1,087.7
Other current assets 12.3 38.2
Cash and short term deposits 22.2 15.8
34.5 54.0
Borrowings falling due within one year - (1.6)
Other creditors falling due within one year (35.3) (38.2)
Net current (liabilities)/assets (0.8) 14.2
Total assets less current liabilities 1,338.2 1,101.9
Borrowings falling due after more than one year (15.9) (11.3)
Other creditors falling due after more than one year (15.0) (7.2)
Provisions for liabilities and charges (0.6) (0.6)
Net assets 1,306.7 1,082.8
NOTES TO THE ACCOUNTS
8 INVESTMENTS
2003 2002
Restated*
£m £m
Value Retail Investors Limited Partnerships 25.3 23.6
Interests in Value Retail plc and related companies 14.0 12.6
Other investments 1.4 3.2
40.7 39.4
*Comparative figures have been restated following the adoption of UITF 38 (see
note 22). The shares of Hammerson plc, which were included in investments at an
amortised cost of £2.2m at 31 December 2002, are now shown as a deduction from
equity shareholders' funds.
9 PROPERTIES HELD FOR RESALE
At 31 December 2002 properties held for resale represented part of a portfolio
of properties acquired from the former Railtrack Developments. These properties
were sold to Ballymore Properties Limited on 28 February 2003 for a total
consideration of £31.3m, resulting in a loss on disposal of £0.1m, net of
additions of £0.6m.
10 DEBTORS
2003 2002
Notes £m £m
Due within one year
Trade debtors 39.5 44.8
Other debtors 66.5 69.5
Corporation tax 0.7 0.8
Prepayments 3.0 6.2
109.7 121.3
Due after more than one year
Other debtors 28.9 10.4
Deferred tax 3(b) 3.9 2.4
32.8 12.8
Other debtors due after more than one year included a loan of €11.0m (2002:
€nil) advanced to Value Retail European Holdings BV bearing interest at 13% and
maturing on 31 July 2005 and a loan of €30.0m (2002: €16.0m) to Value Retail plc
bearing interest based on EURIBOR and maturing on 10 October 2006.
11 CASH AND SHORT TERM DEPOSITS
2003 2002
£m £m
Cash at bank 29.6 34.2
Short term deposits 157.4 208.0
187.0 242.2
Analysis by currency
Sterling 169.9 232.4
Euro 17.1 9.8
187.0 242.2
At 31 December 2003 short term deposits mainly comprised deposits placed on
money markets with rates linked to LIBOR for maturities of not more than 1
month, at an average interest rate of 3.5% (2002: 4.1%).
NOTES TO THE ACCOUNTS
12 BORROWINGS
2003 2002
£m £m
Unsecured
£200 million 7.25% Sterling bonds due 2028 197.3 197.3
£250 million 6.875% Sterling bonds due 2020 246.6 246.5
£200 million 10.75% Sterling bonds due 2013 194.9 194.7
€500 million 6.25% Euro bonds due 2008 350.1 323.5
€300 million 5% Euro bonds due 2007 210.1 194.1
£78.3 million 7.875% Sterling bonds due 2003 - 78.0
Bank loans and overdrafts 556.7 465.6
1,755.7 1,699.7
Exchange difference on currency swaps - (11.8)
1,755.7 1,687.9
Secured
Sterling variable rate mortgages due 2007 16.0 11.3
Sterling variable rate loans due between 2003 and 2007 0.5 169.6
Euro mortgages due between 2003 and 2023 - 14.8
16.5 195.7
1,772.2 1,883.6
Security for secured borrowings as at 31 December 2003 is provided by charges on
property.
Maturity
Bank loans Other 2003 2002
and overdrafts loans Total Total
£m £m £m £m
After 5 years - 641.7 641.7 978.4
From 2-5 years 15.8 559.9 575.7 564.5
From 1-2 years (0.2) (1.3) (1.5) 255.0
Due after more than one year 15.6 1,200.3 1,215.9 1,797.9
Due within one year 557.6 (1.3) 556.3 85.7
573.2 1,199.0 1,772.2 1,883.6
Undrawn committed facilities
2003 2002
£m £m
Expiring within 1 year 0.5 -
Expiring after more than 2 years 181.7 294.1
182.2 294.1
NOTES TO THE ACCOUNTS
12 BORROWINGS (CONTINUED)
Interest rate and currency profile
2003
Floating rate
Fixed rate borrowings borrowings Total
% Years £m £m £m
Sterling 8.09 17 655.4 (0.8) 654.6
Euro 5.78 4 560.4 557.2 1,117.6
7.03 11 1,215.8 556.4 1,772.2
2002 Floating rate
borrowings
Fixed rate borrowings Total
% Years £m £m £m
Sterling 7.67 16 694.3 131.3 825.6
Euro 4.72 5 515.5 542.5 1,058.0
6.40 12 1,209.8 673.8 1,883.6
13 CREDITORS - OTHER
2003 2002
£m £m
Falling due within one year
Trade creditors 64.7 50.4
Tax and social security 39.6 38.8
Other creditors 104.9 180.8
Accruals 12.3 16.3
Dividends payable 32.3 30.3
253.8 316.6
Falling due after more than one year 36.0 39.6
Other creditors
At 31 December 2002, other creditors falling due within one year included £61.7m
in respect of the acquisition of the former Railtrack Developments portfolio,
which completed on 28 February 2003.
NOTES TO THE ACCOUNTS
14 FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
2003 2002
Book value Fair value Book value Fair value
£m £m £m £m
Overdrafts and
short term
borrowings (557.9) (557.9) (99.6) (101.6)
Gross long term
borrowings (1,229.6) (1,397.1) (1,809.0) (1,933.1)
Unamortised borrowing 15.3 15.3 18.0 18.0
costs
Interest rate
swaps - (0.5) (4.8) 0.5
Currency swaps - - 11.8 14.2
Total borrowings (1,772.2) (1,940.2) (1,883.6) (2,002.0)
The fair values of the group's long term borrowings have been estimated on the
basis of quoted market prices. The fair values of the group's outstanding
interest rate swaps have been estimated by calculating the present value of
future cash flows, using appropriate market discount rates. The adjustment on
interest rate swaps of £0.5m (2002: £5.3m asset) includes £0.5m (2002: £1.5m
asset) relating to swaps maturing in less than one year.
Details of the group's cash and short term deposits are set out in note 11.
Their fair values and those of other long term debtors and creditors equate to
their book values. Short term debtors and creditors have been excluded from
these disclosures as permitted by Financial Reporting Standard 13 'Derivatives
and other financial instruments: disclosures'.
At 31 December 2003 the fair value of financial liabilities exceeded their book
value by £168.0m (2002: £118.4m), equivalent to 60 pence per share (2002: 43
pence per share) on a diluted net asset value per share basis (see note 5). On a
post tax basis, assuming a tax rate of 30%, the difference was equivalent to
42 pence per share (2002: 30 pence per share).
15 SHARE CAPITAL
Authorised Called up, allotted
and fully paid
2003 2002 2003 2002
£m £m £m £m
Ordinary shares of 25p each 94.8 94.8 69.1 69.0
Number
Movements in issued share capital
Number of shares in issue at 1 January 2003 275,951,054
Exercise of share options - Share option scheme 432,190
- Save As You Earn 38,424
Number of shares in issue at 31 December 2003 276,421,668
NOTES TO THE ACCOUNTS
16 RESERVES
Share Capital Profit
premium Revaluation redemption Other and loss
account reserve reserve reserves account
£m £m £m £m £m
Balance at 1
January 2003 592.3 786.8 7.2 6.5 578.6
Exchange
adjustment - 11.8 - 0.4 4.2
Premium on
issue of
shares 1.8 - - - -
Surplus
arising on
revaluation of
properties - 110.8 - - -
Unrealised
surplus on
acquisition of
minority
interest - - - 1.5 -
Surplus
arising on
revaluation of
investments
and minority
interests - 0.5 - - -
Tax on
property
disposals - - - - (5.0)
Transfer to
profit and
loss account
on disposal of
properties - (145.2) - - 145.2
Retained
profit for the
year - - - - 3.9
Balance at 31
December 2003 594.1 764.7 7.2 8.4 726.9
17 INVESTMENT IN OWN SHARES
2003 2002
Restated*
£m £m
Ordinary shares of Hammerson plc 2.2 2.2
*Comparative figures have been restated following the adoption of UITF 38 (see
note 22).
The Trustees of the Hammerson Employee Share Ownership Plan acquired 700,000 of
the Company's own shares at a cost of £3.2m (nominal value £0.2m). The shares
may be awarded to participants in accordance with the terms of the Plan. The
number of shares held as at 31 December 2003 was 642,414 (2002: 700,000)
following awards to participants during the year of 57,586 shares (2002: nil).
The cost of the shares is being amortised over the anticipated vesting periods,
taking account of the group's financial performance. The amortisation is
included in staff costs within administration expenses.
NOTES TO THE ACCOUNTS
18 ANALYSIS OF CASH FLOWS
2003 2002
£m £m
Reconciliation of operating profit to net cash inflow from
operating activities
Operating profit 164.6 151.6
Depreciation and amortisation 1.3 1.6
Increase in accrued rents receivable (8.8) (2.5)
Decrease/(Increase) in debtors 11.8 (10.0)
Increase in creditors 4.6 6.8
173.5 147.5
Returns on investment and servicing of finance
Interest received 7.4 14.1
Interest paid (110.8) (103.4)
Dividends paid to minorities (1.2) (0.4)
(104.6) (89.7)
Capital expenditure and investment
Purchase and development of property (363.8) (484.3)
Purchase of investments (16.3) (5.0)
Sale of property 556.2 519.6
176.1 30.3
Acquisitions and disposals
Purchase of subsidiary companies (60.9) (195.8)
Cash acquired with subsidiary companies - 17.6
(60.9) (178.2)
19 ANALYSIS OF CASH FLOW FROM FINANCING
2003 2002
£m £m
Purchase of own bonds for cancellation - (8.4)
Issue of shares 1.9 4.0
Purchase of own shares for cancellation - (25.1)
(Decrease)/Increase in medium and long term borrowings (661.3) 23.6
Increase in short term borrowings 464.2 59.5
Net cash (outflow)/inflow from financing (195.2) 53.6
20 ANALYSIS OF MOVEMENT IN NET DEBT
Short term Cash at Borrowings Borrowings Net debt
deposits bank due within due after
one year one year
£m £m £m £m £m
Balance at 1
January 2003 208.0 34.2 (85.7) (1,797.9) (1,641.4)
Cash flow (50.9) (5.1) (464.2) 661.3 141.1
Exchange 0.3 0.5 (6.4) (79.3) (84.9)
Balance at 31
December 2003 157.4 29.6 (556.3) (1,215.9) (1,585.2)
NOTES TO THE ACCOUNTS
21 CONTINGENT LIABILITIES
There are contingent liabilities of £16.8m (2002: £16.4m) relating to guarantees
given by the parent company in respect of certain group companies.
22 OTHER INFORMATION
Accounting for ESOP trusts
UITF Abstract 38 'Accounting for ESOP trusts' requires that a company's own
shares held through an ESOP trust be shown as a deduction from shareholders'
funds. The impact of the adoption of UITF 38 on the current and prior year net
assets is shown below. There is no effect on the profit and loss account.
Net assets
£m
As at 31 December 2003
Excluding UITF 38 2,170.4
Adjustment (2.2)
As reported 2,168.2
As at 31 December 2002
As previously reported 2,040.4
Adjustment (2.2)
As restated 2,038.2
23 FINANCIAL STATEMENTS
The consolidated profit and loss account and balance sheet set out above are not
statutory accounts within the meaning of Section 240 of the Companies Act 1985.
Statutory accounts for the year ended 31 December 2003 will be finalised on the
basis of the financial information presented by the directors in this
preliminary announcement and will be delivered to the Registrar of Companies
following the Company's Annual General Meeting.
The financial information for the year ended 31 December 2002 is derived from
the statutory accounts for that year which have been reported on by the
Company's auditors and delivered to the Registrar of Companies. The audit report
on the 31 December 2002 financial statements was unqualified and did not contain
a statement under Section 237(2) or Section 237(3) of the Companies Act 1985.
The unaudited financial information in this report has been prepared on the
basis of the accounting policies set out in the full statutory accounts for the
year ended 31 December 2002 with the exception of the adoption of UITF 38 as
explained in note 22.
24 NOTICE OF MEETING
The Annual General Meeting will be held at 10.30am on Thursday, 6 May 2004 at
100 Park Lane, London W1K 7AR.
PORTFOLIO REVIEW
PROPERTY PORTFOLIO INFORMATION
for the year ended 31 December 2003
Net Properties True Underlying Estimated Revers-
rental at equivalent valuation Total Vacancy Rents rental ionary
income valuation yield change return rate passing value /(over-
rented)
£m £m % % % % £m £m %
Notes (1) (2) (3) (4)
United Kingdom
Retail: Shopping
centres
London & 43.9 921.7 6.0 10.4 16.1 2.8 50.4 55.7 8.2
South
Midlands & 18.3 445.1 6.4 11.0 17.7 3.8 23.5 27.2 9.3
North
Retail 16.3 447.8 6.3 8.7 14.8 6.5 19.4 25.5 22.0
parks
78.5 1,814.6 6.2 10.1 16.2 4.2 93.3 108.4 11.4
Office: City 25.1 461.8 7.5 (5.1) 1.8 21.2 25.5 21.6 (37.4)
West 12.1 172.7 7.4 (4.5) 2.2 15.4 11.3 11.6 (13.7)
End
Docklands & 8.9 149.4 8.6 (9.9) (4.8) 19.5 10.5 13.6 0.8
other
46.1 783.9 7.7 (5.9) 0.5 19.5 47.3 46.8 (20.5)
Total United
Kingdom 124.6 2,598.5 6.5 4.7 11.0 7.8 140.6 155.2 1.0
Continental
Europe
Retail: France 37.8 668.3 6.6 3.7 9.9 2.6 40.5 49.4 19.9
Germany 11.8 221.5 6.3 (5.5) (2.7) 9.5 12.9 16.0 13.2
49.6 889.8 6.5 1.3 6.5 5.3 53.4 65.4 18.2
Office: France 15.3 467.2 6.4 (3.7) 1.0 53.5 16.4 30.4 1.3
Total
Continental
Europe 64.9 1,357.0 6.5 (0.5) 4.6 12.6 69.8 95.8 12.3
Group
Retail 128.1 2,704.4 6.3 7.1 12.7 4.6 146.7 173.8 13.9
Office 61.4 1,251.1 7.2 (5.1) 0.7 26.8 63.7 77.2 (11.9)
Total Group 189.5 3,955.5 6.5 2.9 8.7 9.2 210.4 251.0 5.0
Notes
(1) True equivalent yield is based on rents passing and estimated
rental values. The calculation excludes properties in the course of
development.
(2) Rents passing after deducting head and equity
rents.
(3) Estimated rental value including vacant space and after deducting
head and equity rents.
(4) The amount by which the estimated rental value exceeds or falls
short of the rents passing, together with the estimated rental value
of vacant space after any rent free period.
PORTFOLIO REVIEW
SECURITY OF INCOME/REVERSION
as at 31 December 2003
Average
Rents passing that expire/break in ERV of leases that expire/break in unexpired
2004 2005 2006 2004 2005 2006 lease term
£m £m £m £m £m £m years
Notes (1) (1) (1) (2) (2) (2)
United Kingdom
Retail: Shopping centres
London & South 0.9 1.7 1.4 1.1 2.0 1.7 14
Midlands & North 0.6 0.3 0.3 0.5 0.2 0.3 14
Retail parks 0.1 0.4 0.3 0.1 0.4 0.3 16
1.6 2.4 2.0 1.7 2.6 2.3 14
Office: City 0.4 5.5 1.1 0.3 4.0 0.8 7
West End 2.2 1.9 - 2.1 1.4 - 12
Docklands & other 0.2 0.6 1.0 0.4 0.5 0.8 8
2.8 8.0 2.1 2.8 5.9 1.6 8
Total United Kingdom 4.4 10.4 4.1 4.5 8.5 3.9 12
Continental Europe
Retail: France 1.4 2.1 1.9 2.0 2.7 2.5 6
Germany 2.3 0.8 0.3 2.6 1.0 0.3 5
3.7 2.9 2.2 4.6 3.7 2.8 6
Office: France 2.1 0.5 1.1 2.4 0.8 1.3 5
Total Continental
Europe 5.8 3.4 3.3 7.0 4.5 4.1 6
Group
Retail 5.3 5.3 4.2 6.3 6.3 5.1 11
Office 4.9 8.5 3.2 5.2 6.7 2.9 7
Total Group 10.2 13.8 7.4 11.5 13.0 8.0 10
Notes
(1) These figures show the amount by which rental income, based on rents passing
at 31 December 2003, could fall in the event that occupational leases due to
expire are not renewed or replaced by new leases. For the UK it includes
tenants' break options. For France and Germany, it is based on the earliest
date of lease expiry.
(2) The estimated rental value at 31 December 2003 for space that expires or
breaks in each year, after deducting head and equity rents and ignoring the
impact of rental growth and any rent free periods.
PORTFOLIO REVIEW
RENT REVIEWS
as at 31 December 2003
Projected rent at
current ERV of
Rents passing subject leases subject to
to review in review in
Outstanding 2004 2005 2006 Outstanding 2004 2005 2006
£m £m £m £m £m £m £m £m
Notes (3) (3) (3) (3) (4) (4) (4) (4)
United Kingdom
Retail: Shopping
centres
London & 1.1 8.3 11.4 8.9 1.2 9.7 13.0 9.4
South
Midlands 1.7 1.1 1.7 4.7 1.9 1.2 1.8 4.9
& North
Retail 5.8 1.5 4.9 0.8 7.7 2.1 5.7 0.9
parks
8.6 10.9 18.0 14.4 10.8 13.0 20.5 15.2
Office: City 0.1 7.4 3.5 15.5 0.1 7.4 3.5 15.5
West 2.9 - 3.2 - 3.1 - 3.2 -
End
Docklands 0.4 2.1 4.0 1.4 0.8 2.3 4.0 1.4
& other
3.4 9.5 10.7 16.9 4.0 9.7 10.7 16.9
Total United
Kingdom 12.0 20.4 28.7 31.3 14.8 22.7 31.2 32.1
The majority of rents in France and Germany are subject to annual indexation
Notes
(3) These figures show the rental income passing at 31 December 2003, after
deducting head and equity rents, which is subject to review in each year.
(4) These figures are the projected rents for space that is subject to review in
each year and is based on the higher of the current rental income and the
estimated rental value as at 31 December 2003, after deducting head and
equity rents and ignoring the impact of changes in rental values before the
review date.
CURRENT DEVELOPMENTS
Project Estimated total
development
Ownership Cost at Retail/ cost* Size Anticipated
interest 31 December Office £m m2 completion
2003* date
£m
Moorhouse, 33% 45 Office 67 30,500 Dec 2004
London EC2
Bishops
Square, 75% 102 Office 270 75,000 June 2005
London E1
(pre-let)
9, place
Vendome, 50% 54 Office 96 28,200 April 2006
Paris 1er
* Hammerson Share
GLOSSARY OF TERMS
Adjusted figures Reported amount adjusted to exclude exceptional items and deferred tax.
Average cost of borrowing The cost of finance expressed as a percentage of the weighted average of
borrowings during the period.
Dividend cover Adjusted earnings per share divided by dividend per share.
Earnings per share Profit after tax divided by the average number of shares in issue during the year.
ERV The estimated market rental value of space.
Gearing Net debt expressed as a percentage of shareholders' funds.
Interest cover Net rental income divided by net interest expense before capitalised interest.
Interest rate and currency swap An agreement with another party to exchange an interest or currency rate obligation
for a pre-determined period of time.
Like-for-like / underlying When applied to net rental income, the year-on-year change for completed properties
owned throughout both years after taking account of exchange translation movements.
When applied to property valuations, the year-on-year valuation change for
properties held at the current year end, after taking account of capital expenditure
and exchange translation movements.
Net asset value per share Shareholders' funds divided by the number of shares in issue at the year end.
Over-rented Space that is let at a rent above its ERV.
Passing rent The annual rental income receivable which may be more or less than the ERV (see
over-rented and under-rented).
Pre-let A lease signed with a tenant prior to completion of a development.
Return on shareholders' equity Capital growth and profit for the year expressed as a percentage of shareholders'
funds at the beginning of the year, all excluding deferred tax.
Reversionary or under-rented Space where passing rent is below the ERV.
Total return Net rental income and capital growth expressed as a percentage of
opening book value adjusted for capital expenditure during the year.
This information is provided by RNS
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