Final Results

Peel Hldgs PLC 28 June 2002 PEEL HOLDINGS p.l.c. PRESS RELEASE The preliminary announcement of the audited results of Peel Holdings p.l.c. for the year ended 31st March 2002 was made today 28th June 2002. Increase/ (decrease) 2002 2001 from Restated last year Â£'000 Â£'000 Â£'000 Turnover 146,813 140,817 5,996 Profit on ordinary activities before taxation 33,424 33,669 (245) Tax on profit on ordinary activities (11,011) (274) (10,737) Minority interests (84) 1,296 (1,380) Profit for the financial year 22,329 34,691 (12,362) Earnings per ordinary share Basic earnings 34.74p 51.65p (16.91)p Diluted earnings 33.25p 49.13p (15.88)p Adjusted earnings per ordinary share Basic earnings 51.95p 60.55p (8.60)p Diluted earnings 49.19p 57.40p (8.21)p Ordinary dividend 15.0p 15.0p - Increase/ (decrease) 2002 2001 from Restated last year Shareholders' funds 755,584 747,365 8,219 Net assets 757,692 749,556 8,136 Net assets per ordinary share Fully diluted 1,125p 1,112p 13p Adjusted fully diluted 1,164p 1,135p 29p APPENDED ARE: (1) The Preliminary Announcement of the results to the London Stock Exchange. (2) Extracts from the Chairman's Statement and the Operating and Financial Review. Peel Holdings p.l.c. and subsidiary undertakings Preliminary Announcement of the audited results for the year ended 31st March 2002 Group Profit and Loss Account for the year ended 31st March 2002 2002 2001 Restated Note Â£'000 Â£'000 Turnover 2 146,813 140,817 Operating profit before exceptional item 2 90,256 84,848 Exceptional item 3 - (4,603) Operating profit after exceptional item 90,256 80,245 Profit on disposal of fixed assets 15,928 22,514 Profit on ordinary activities before interest and taxation 106,184 102,759 Net interest payable and similar charges (72,760) (69,090) Profit on ordinary activities before taxation 33,424 33,669 Tax on profit on ordinary activities 4 (11,011) (274) Profit on ordinary activities after taxation 22,413 33,395 Minority interests (84) 1,296 Profit for the financial year 22,329 34,691 Dividends 5 (10,056) (9,249) Retained profit for the financial year 12,273 25,442 Earnings per ordinary share Basic earnings 6 34.74p 51.65p Diluted earnings 6 33.25p 49.13p Adjusted earnings per ordinary share Basic earnings 6 51.95p 60.55p Diluted earnings 6 49.19p 57.40p Group Balance Sheet as at 31st March 2002 2002 2001 Restated Note Â£'000 Â£'000 Fixed assets Intangible assets 2,148 - Tangible assets Investment properties 1,571,314 1,567,299 Other fixed assets 108,459 79,789 Investments 27,419 2,007 1,709,340 1,649,095 Current assets Stocks 6,600 10,903 Debtors 26,473 39,320 Cash at bank and in hand 193,503 173,899 226,576 224,122 Creditors (amounts falling due within one year) (111,200) (107,747) Net current assets 115,376 116,375 Total assets less current liabilities 1,824,716 1,765,470 Creditors (amounts falling due after more than one year) (1,022,449) (993,735) Provisions for liabilities and charges and deferred income (44,758) (26,609) Net assets excluding pension asset 757,509 745,126 Pension asset 183 4,430 Net assets including pension asset 757,692 749,556 Financed by capital and reserves Consolidated capital and reserves 815,912 807,693 Shares held by Largs Limited in Peel Holdings p.l.c. (60,328) (60,328) Shareholders' funds 755,584 747,365 Equity minority interests 2,108 2,191 757,692 749,556 Net assets per ordinary share Fully diluted 7 1,125p 1,112p Adjusted fully diluted 7 1,164p 1,135p Group Cash Flow Statement for the year ended 31st March 2002 2002 2001 Note Â£'000 Â£'000 Cash flow from operating activities (pre-exceptional item) 8(a) 101,946 74,811 Exceptional abortive costs (accrued year ended 31 March 2001) (358) (1,000) Cash flow from operating activities 101,588 73,811 Dividends received from joint ventures 312 - Returns on investments and servicing of finance 8(b) (85,085) (73,823) Taxation 4,686 (4,281) Capital expenditure and financial investment 8(c) (33,676) 21,623 Acquisitions and disposals 8(d) (5,506) - Equity dividends paid (9,326) (7,786) Cash flow before management of liquid resources and financing (27,007) 9,544 Management of liquid resources 8(e) (21,589) 188,459 Financing 8(f) 47,649 (113,632) (Decrease)/increase in cash in the year (947) 84,371 Reconciliation of Cash Flow to Movement in Net Debt 2002 2001 Â£'000 Â£'000 Movement in cash in the year (947) 84,371 Cash movement from management of liquid resources 21,589 (188,459) Net movement in debt due within one year (7,363) 10,238 Net movement in debt due after more than one year (33,714) (8,981) Translation and other non-cash adjustments 146 1,001 Change in net debt in the year (20,289) (101,830) Net debt at 1st April 2001/1st April 2000 (845,010) (743,180) Net debt at 31st March 2002/31st March 2001 (865,299) (845,010) Statement of Total Recognised Group Gains and Losses for the year ended 31st March 2002 2002 2001 Restated Note Â£'000 Â£'000 Profit for the financial year 22,329 34,691 Other recognised gains and losses Unrealised net surplus on revaluation of investment properties 473 15,474 Foreign exchange adjustments (146) 5,375 Actuarial loss relating to the pension fund (4,381) (2,625) (4,054) 18,224 Total recognised net gains and losses for the financial year 18,275 52,915 Prior year adjustment 1 (10,827) - Total recognised gains and losses since last annual report 7,448 52,915 Reconciliation of Movements in Group Shareholders' Funds for the year ended 31st March 2002 2002 2001 Restated Note Â£'000 Â£'000 Profit for the financial year 22,329 34,691 Dividends (10,056) (9,249) Other recognised gains and losses for the financial year (4,054) 18,224 Issue of shares - 32 Purchase of own shares - (112,009) Net increase/(decrease) in shareholders' funds 8,219 (68,311) Shareholders' funds at 1st April 2001/1st April 2000 as previously stated 758,192 821,377 Prior year adjustment 1 (10,827) (5,701) Shareholders' funds at 1st April 2001/1st April 2000 as restated 747,365 815,676 Shareholders' funds at 31st March 2002/31st March 2001 755,584 747,365 Notes 1. Prior Year Adjustment FRS 17 'Retirement Benefits' and FRS 19 'Deferred Tax' have been adopted for the first time in these results. The adoption of both FRS 17 and 19 has resulted in a change in accounting policy and a restatement of the prior year's results. FRS 17 deals with the treatment of the Group's defined benefits pension scheme and, as required by the Standard, the surplus in the scheme has been recognised as an asset in the accounts. FRS 19 deals with the treatment of deferred taxation and, as required by the Standard, full provision has been made for all timing differences that have originated, but not reversed, at the balance sheet date that may give rise to an obligation to pay more or less tax in the future. The effect of this restatement is summarised below: Year ended 31st March 2002 Without changes in accounting Adoption Adoption As policies of FRS 17 of FRS 19 Reported Â£'000 Â£'000 Â£'000 Â£'000 Profit and Loss Account Profit on ordinary activities before taxation 33,232 192 - 33,424 Tax on profit on ordinary activities (250) (58) (10,703) (11,011) Retained profit for the financial year 22,842 134 (10,703) 12,273 Balance Sheet Shareholders' funds 781,361 183 (25,960) 755,584 Year ended 31st March 2001 As Previously Adoption Adoption As reported of FRS 17 of FRS 19 Restated Â£'000 Â£'000 Â£'000 Â£'000 Profit and Loss Account Profit on ordinary activities before taxation 33,905 (236) - 33,669 Tax on profit on ordinary activities 1,991 71 (2,336) (274) Retained profit for the financial year 27,943 (165) (2,336) 25,442 Balance Sheet Shareholders' funds 758,192 4,430 (15,257) 747,365 2. Turnover and Operating Profit All turnover and operating profit has arisen from continuing operations. 3. Exceptional Item There was no exceptional item within operating profit for the year ended 31st March 2002. The exceptional item of Â£4,603,000 in the year ended 31st March 2001 represents expenditure on an aborted scheme at Liverpool John Lennon Airport. 4. Tax on Profit on Ordinary Activities 2002 2001 Restated Â£'000 Â£'000 Current tax: UK corporation tax (48) 514 Advance corporation tax (recovered)/written-off (598) 204 Adjustments in respect of prior years - UK corporation tax - (2,677) Total current tax (646) (1,959) Deferred tax: Origination and reversal of timing differences 11,303 2,304 Movement in FRS 17 pension surplus deferred taxation 58 (71) Total deferred tax 11,361 2,233 Share of associates tax (joint ventures) 296 - Total tax on profit on ordinary activities 11,011 274 5. Dividends 2002 2001 Â£'000 Â£'000 Convertible preference 726 810 Ordinary 9,330 8,339 B shares - 100 Total dividends 10,056 9,249 An interim dividend of 4.8p (2001: 4.8p) per ordinary share was paid on 8th April 2002. The directors recommend a final dividend of 10.2p (2001: 10.2p) per ordinary share which, if approved at the Annual General Meeting, will be paid on 3rd October 2002 to ordinary shareholders on the register at the close of business on 6th September 2002. This would make a total distribution for the year of 15.0p (2001: 15.0p) per ordinary share. The tender offer buyback contract in the year ended 31st March 2001 provided for a dividend of Â£100,000 to be paid to Credit Lyonnais Securities as holder of the B shares. The B shares were cancelled on 11th July 2000. 6. Earnings per Ordinary Share The calculation of earnings per ordinary share is based on profit after tax, non-equity dividends and minority interests of Â£21,603,000 (2001: Â£33,881,000) and on 62,189,381 ordinary shares (2001: 65,585,672) being the weighted average number of ordinary shares in issue during the year ended 31st March 2002. The weighted average number of ordinary shares used in the calculation of diluted earnings per ordinary share is 67,156,716 ordinary shares (2001: 70,607,778). This has been adjusted for the effect of potentially dilutive share options under the Group's share option scheme and the conversion of all the 5.25% convertible cumulative non-voting preference shares of Â£1 each. An adjusted earnings per share figure has been calculated in addition to the earnings per share required by FRS 14 'Earnings per share' and is based on earnings excluding the effect of the exceptional item detailed in note 3 and the effect of FRS 19 'Deferred Tax' detailed in note 1. It is calculated to allow shareholders to gain a clearer understanding of the performance of the Group. Details of the adjusted earnings per share are set out below: Basic Diluted Basic Diluted 2002 2002 2001 2001 Restated Restated p p p p Earnings per ordinary share (FRS 14) 34.74 33.25 51.65 49.13 Add back effect of FRS 19 (note 1) 17.21 15.94 3.56 3.31 Add back effect of exceptional item (note 3) - - 5.34 4.96 Adjusted earnings per ordinary share 51.95 49.19 60.55 57.40 7. Fully Diluted Net Assets per Ordinary Share Fully diluted net assets per ordinary share are calculated as follows: 2002 2001 Restated Â£'000 Â£'000 Shareholders' funds per Group balance sheet 755,584 747,365 Assumed cash receipts on exercise of share options - 69 Revised shareholders' funds 755,584 747,434 Add back effect of FRS 19 (note 1) 25,960 15,257 Adjusted shareholders' funds excluding impact of FRS 19 781,544 762,691 2002 2001 Number Number Ordinary shares in issue at 31st March 2002/31st March 2001 98,997,154 98,959,021 Shares held by Largs Limited in Peel Holdings p.l.c. (36,785,416) (36,785,416) 62,211,738 62,173,605 Assumed conversion of 13,806,882 (2001: 13,913,657) 5.25% (plus tax credit) convertible cumulative non-voting preference shares of Â£1 each 4,930,990 4,969,123 Outstanding options for ordinary shares - 55,000 Number of ordinary shares deemed to be in issue at 31st March 2002/31st March 2001 67,142,728 67,197,728 Fully diluted net assets per ordinary share 1,125p 1,112p Adjusted fully diluted net assets per ordinary share excluding impact of FRS 19 1,164p 1,135p 8. Notes to the Group Cash Flow Statement 2002 2001 Restated Â£'000 Â£'000 (a) Cash flow from operating activities (pre-exceptional item) Operating profit 90,256 84,848 Non-cash adjustments: - current cost of servicing pension 593 1,046 - depreciation 4,863 4,447 - impairment loss 525 - - amortisation of prepayment premia 648 648 - amortisation of goodwill 102 - - share of net results of joint venture companies 788 - - movement on other investments 49 52 - grant release (374) (336) - stock write-down - 2,766 Movement in stocks 2,060 (3,784) Movement in debtors (1,438) (3,103) Movement in creditors 3,874 (11,773) 101,946 74,811 (b) Returns on investments and servicing of finance Interest received 6,721 11,508 Interest paid (including capitalised) (80,006) (77,484) Finance lease interest paid (318) (392) Exceptional interest charges paid (accrued year ended 31st March 2000) (10,750) (6,481) Non-equity dividends paid (732) (974) (85,085) (73,823) (c) Capital expenditure and financial investment Purchase of fixed assets (95,475) (48,214) Sale proceeds from fixed assets 61,982 69,833 Loans to associated undertakings and joint ventures (183) 4 (33,676) 21,623 8. Notes to the Cash Flow Statement continued 2002 2001 Restated Â£'000 Â£'000 (d) Acquisitions and disposals Purchase of remaining minority interest in subsidiary undertakings (2,412) - Purchase of interests in joint ventures (3,094) - (5,506) - (e) Management of liquid resources Movements from cash deposits (21,589) 188,459 (f) Financing Shares issued - 32 Purchase of own shares - (112,009) New loans 16,000 - Other movement in loans 25,143 (1,567) Movement in finance lease creditor (714) (338) Grants received 7,220 250 47,649 (113,632) 9. The board of directors approved the above results on 28th June 2002. The auditors have given an unqualified opinion on the financial statements for the year ended 31st March 2002 which will be delivered to the Registrar of Companies following the Annual General Meeting. 10. The preliminary results do not comprise full financial statements within the meaning of the Companies Act 1985. They include abridged information from the published Group accounts for the year ended 31st March 2001, lodged with the Registrar of Companies and on which the auditors' report was unqualified. Extract from the Chairman's Statement I am pleased to report sound progress for the Group for the year ended 31st March 2002. It was a year of quite patchy economic conditions, although the retail and residential property sectors, where a significant part of the Group's interests lie directly or indirectly, performed well. Before taking account of profit on the sale of fixed assets and therefore looking at the underlying performance of the Group, pre-tax profit for the year amounted to Â£17.49m compared with Â£11.16m (Â£15.76m excluding the exceptional item) in the previous year. Asset disposals produced profits of Â£15.93m against the unusually high Â£22.51m the previous period. This resulted in overall profit before tax of Â£33.42m compared with Â£33.67m the previous year and which, after a tax charge of Â£11.01m, produced basic earnings per ordinary share of 34.74p (2001: 51.65p). Following the adoption for the first time of FRS 17 'Retirement Benefits' and FRS 19 'Deferred Tax', prior year results have been restated and further explanation is included within the Operating and Financial Review. On that basis, adjusted basic earnings per ordinary share, that is to say excluding the impact of FRS 19, was 51.95p (2001: 60.55p). Your Board recommends an unchanged final dividend of 10.2p per ordinary share which, if approved by shareholders, will make a total distribution for the year of 15.0p (2001: 15.0p) per ordinary share, covered 2.3 times by earnings. Adjusted net asset value per ordinary share rose by 2.6% to 1,164p (2001: 1,135p), largely attributable to adjusted retained profits of Â£22.97m for the financial year, before a non-cash deferred tax provision under the newly applicable FRS 19 of Â£25.96m, equivalent to 39p per ordinary share, reduced this to 1,125p (2001: 1,112p). Based on an internal review by the Group's qualified surveyors, your Board considers that there has been no material movement in the value of the Group's investment property assets from their present book values and, on that basis, it was decided not to undertake any formal external valuation for the year end. This time last year, I set out the guiding principles to take our Group forward in the new era of subdued inflation and lower rental growth and I mentioned, in particular, that it was becoming harder to generate net asset increases from conventional property investment. Asset ownership and rent collecting alone were no longer likely to deliver the necessary returns and hence our strategy to be more adventurous and fleet footed to respond to new opportunities. Those remarks hold true a year later and underpin our continuing strategy to increase net asset growth by investing in and robustly managing a selective and quality property portfolio and, quite separately, bringing forward and developing other assets in the property, land and transport sectors which have substantial growth prospects in the medium term. Within this range for Peel, there is a carefully assembled mix of business units, extending from the core investment properties in the engine room at one end to our long term landholdings and investment in airports at the other. The overall financial model, of course, requires that these longer term goals are supported by a steady income flow from the base property investment portfolio to sustain their development. Rationalisation of the investment property portfolio is now largely complete with a greater focus on more easily managed and higher quality assets. Total net rental income from the investment portfolio totalled Â£98.06m, of which Â£52.48m was derived from The Trafford Centre. A solid profit stream also flowed during the financial year from the Port Division which increased its operating profit from Â£2.88m to Â£3.70m. Our Waste and Minerals Division generated record income of Â£1.97m, whilst the Group's Advertising Department saw its gross income increase to Â£2.07m. Our Land and Planning Department again progressed several major schemes. The application of our expertise and intellectual capital in this area to bring about planning gain or a change of use is a key part of our overall strategy. Of the Group's profit of Â£15.93m from fixed asset disposals, Â£7.98m was derived from land sales. The Group's Development and Construction unit enjoyed another successful year and contributed Â£8.09m of realised and unrealised profit and started a further six significant schemes comprising 180,000 sq. ft. as well as overseeing the construction of the new Â£32.5m terminal at Liverpool John Lennon Airport. The tragic events of 11th September 2001 caused turbulence in the aviation sector, but the low cost carriers, including easyJet which is the principal airline operating from Liverpool, have won a significant market share. Liverpool John Lennon Airport, which increased its turnover by 21.4% to Â£14.79m and passenger numbers by 11.6% to 2.31m looks well positioned in the new aviation landscape for Europe, whilst we remain very confident about the commercial opportunities for Doncaster Finningley Airport once the planning application is determined. On the corporate front, on 3rd August 2001 your Board announced it was considering proposals to reorganise the Peel Group which involved the opportunity for shareholders to realise their investment in the Company. However, following the political and economic uncertainty both at home and internationally after the events of 11th September, it was decided that it was inappropriate to continue with those proposals. That situation still remains. During the year and again since the year end, Peel has also acquired share stakes in Clydeport PLC and The Mersey Docks & Harbour Company, of 8% and 4% respectively, both of which your Board believes are sound businesses and offer good growth prospects especially once any upswing in the global economy gathers pace. Looking ahead, Peel will continue to cast its net widely to take advantage of growth opportunities and to exploit its asset base in the broadest sense, whether it be through its buildings, its landholdings, its minerals, its waterways or its runways and whether it be for business, for living or for pleasure or to provide space, communication or energy. All these opportunities lie within our existing asset base and by being flexible, we can continue to be imaginative and provide the unexpected in what is a fast changing world. The results reported here have been achieved during a financial year in which economic conditions have been far from easy and despite interest rates being at their lowest level for many years and a high level of consumer spending, expectations for economic growth are still low. Moreover, sooner or later the consumer and housing boom must start to wane, although in such uncertain conditions, property is likely to remain a safe haven for investment, especially when compared with the more volatile equity markets. Our policy remains to invest in and develop asset backed opportunities which will deliver above average growth in the property and transport sectors. We believe that these principles, together with the continuing emphasis on strong financial management disciplines, will deliver shareholder rewards. John Whittaker Chairman 28th June 2002 Extracts from the Operating and Financial Review Accounting Standards and Policies Three new financial standards were adopted for the first time during the financial year, namely FRS 17 'Retirement Benefits', FRS 18 'Accounting Policies ' and FRS 19 'Deferred Tax'. In addition, UITF 28 'Operating Lease Incentives' was also adopted for the first time. The implementation of FRS 18 has required no change in accounting policies or presentation, and similarly the adoption of UITF 28 has had no material impact on the results of the Group. However, the implementation of both FRS 17 and FRS 19 has resulted in the prior year's figures being restated to reflect the adoption of these two Standards. The effect of the restatement is summarised in Note 1 to the preliminary announcement. FRS 17 deals with the treatment of the Group's defined benefits pension scheme, and as required by the Standard, the surplus in the scheme has been recognised as an asset in the accounts, net of deferred tax, totalling Â£0.18m (2001: Â£4.43m). FRS 19 deals with the treatement of deferred taxation, and as required by the Standard, full provision has been made for all timing differences that have originated, but not reversed, at the balance sheet date that may give rise to an obligation to pay more or less tax in the future. The effect of the Standard is to increase the tax charge for the current and the prior year by Â£10.70m and Â£2.34m respectively. The provision for deferred taxation at 31st March 2001 has also been restated and increased by an additional Â£15.26m. The Standard does not require deferred tax to be recognised on the revaluation surplus of investment properties. In practice however, the deferred tax provision on the investment property portfolio is unlikely to crystallise, and therefore the Standard has no impact on the actual tax paid. For this reason, the impact of FRS 19 has been excluded when calculating adjusted earnings per share and adjusted net assets per share. The financial statements therefore comply with all accounting standards issued by the Accounting Standards Board applicable to financial statements at 31st March 2002. The Group's accounting policies have been applied consistently throughout the year and the preceding year, with the exception of deferred taxation and pension costs as noted above. Earnings Operating profit after exceptional items increased by Â£10.01m (12.5%) to Â£90.26m (2001: Â£80.25m). This was largely due to certain one-off charges in 2001 not being repeated in 2002, namely an exceptional item of Â£4.60m relating to expenditure on an aborted scheme at Liverpool John Lennon Airport and a year end stock write-off of Â£2.77m. With regard to the individual operating divisions, property investment profit increased by Â£3.74m to Â£83.86m (2001: Â£80.12m) and property trading profit by Â£0.25m (excluding the stock write-off of Â£2.77m in 2001) to Â£0.87m (2001: Â£0.62m). Port and canal operating profit increased by Â£0.82m to Â£3.70m (2001: Â£2.88m) and airport operating profit increased by Â£0.22m to Â£1.02m (2001: Â£0.80m). The Group decided to fully amortise the goodwill arising on the purchase of a 50% stake in Sheffield City Airport Limited, a joint venture company, resulting in a write-off during the year of Â£1.54m (2001: Â£nil). Profit on disposal of fixed assets decreased by Â£6.58m to Â£15.93m (2001: Â£22.51m), mainly due to a reduced profit of Â£16.27m (2001: Â£22.37m) from the disposal of investment properties from total sale proceeds of Â£51.86m (2001: Â£75.73m). The profit on disposal of fixed assets also included a loss on the disposal of other fixed assets and investments of Â£0.34m (2001: Â£0.14m profit). The net interest charge increased by Â£3.67m (5.3%) to Â£72.76m (2001: Â£69.09m) which led to a small decrease in the cover of net rental income to total net interest to 134.8% (2001: 139.6%). Capitalised interest in the year totalled Â£0.43m (2001: Â£0.10m). As a result of all of the above factors, profit before tax fell slightly by Â£0.25m (0.7%) to Â£33.42m (2001: Â£33.67m). Tax on profit on ordinary activities was Â£11.01m (2001: Â£0.27m), an effective rate of 32.9% of pre-tax profit and arose largely due to the implementation of FRS 19 and the resultant total deferred tax charge of Â£11.36m (2001: Â£2.23m) for the year. The adjusted basic earnings per share decreased by 8.60p (14.2%) to 51.95p (2001: 60.55p), mainly as a result of the higher tax charge compared to last year. After minority interests and preference dividends, the profit attributable to ordinary shareholders for the year amounted to Â£21.60m (2001: Â£33.88m). The directors therefore propose an unchanged final dividend of 10.2p (2001: 10.2p) per ordinary share which, if approved at the Annual General Meeting on 3rd October 2002, will be paid on 3rd October 2002 to ordinary shareholders on the register at the close of business on 6th September 2002. This will make a total distribution for the year of 15.0p (2001: 15.0p) per ordinary share which is covered by earnings 2.3 times (2001: 4.0 times). Balance Sheet Consolidated shareholders' funds increased by Â£8.22m (1.1%) to Â£755.58m (2001: Â£747.36m), producing fully diluted net assets per ordinary share of 1,125p (2001: 1,112p) an increase of 13p (1.2%). However, after adding back the impact of FRS 19, the adjusted fully diluted net assets per ordinary share increased to 1,164p (2001: 1,135p). The increase in shareholders' funds was mainly as a result of the retained profit in the year of Â£12.27m offset by a Â£4.38m actuarial loss as a result of the adoption of FRS 17. Only one investment property was professionally valued in the year, generating an uplift of Â£0.47m (2001: Â£15.47m). Other movements in shareholders' funds included a foreign exchange loss of Â£0.15m (2001: Â£5.38m gain). The investment property portfolio of the Group at 31st March 2002 totalled Â£1,571.31m and is analysed over the various property sectors as follows: Undeveloped Capital Capital Land Sq.Ft. Sq.Metres Value Value Acres '000 '000 Â£'000 % The Trafford Centre - 1,425 132 901,322 57.4 Out-of-town retail 2 1,775 165 292,403 18.6 Town centre retail - 211 20 23,566 1.5 Offices - 762 71 86,932 5.5 Industrial 59 1,504 140 54,260 3.5 Sports and leisure 400 386 36 28,948 1.8 Land 11,532 829 77 131,871 8.4 Waste and minerals 1,998 - - 7,583 0.5 Overseas land and property investment 32 212 20 44,429 2.8 14,023 7,104 661 1,571,314 100.0 The Group's portfolio of stock properties decreased to Â£6.60m compared with Â£10.90m at 31st March 2001, as a result of trading property sales in the year and the completion and subsequent reclassification of The Alexandra Building, Salford Quays from stock to investment properties. Cash Flow The Group's net debt increased by Â£20.29m (2.4%) to Â£865.30m (2001: Â£845.01m) at the financial year end. A positive cash flow from operating activities and proceeds from the sale of fixed assets were exceeded by interest paid, capital expenditure and the purchase of fixed asset investments. Borrowings and Financial Resources The Group's net borrowings at 31st March 2002 of Â£865.30m produced a marginally increased gearing ratio of net debt to shareholders' funds of 114.5% (2001: 113.1%), the increased debt being partially offset by the increase in shareholders' funds. The amount of fixed long term debt in the Group at the financial year end was Â£866.42m (2001: Â£866.93m) representing 81.8% of total gross borrowings (2001: 85.1%) and was held at a fixed annual borrowing cost of 7.9% (2001: 7.9%). During the year, the Group continued to comply with all its borrowing covenants. The principal covenants relate to net worth, gearing, asset cover and interest cover, all of which were satisfied by a substantial margin at the financial year end. At 31st March 2002, the Group had spare bank facilities of Â£106.88m (2001: Â£130.62m). The Group did not enter into any further interest rate swaps, currency swaps, forward contracts or any other derivative financial instruments in the year ended 31st March 2002. For the purposes of FRS 13 the present market value of the Group's fixed rate debt shows a post-tax 'marking to market' value of Â£92.84m in excess of book value (2001: Â£86.05m) (or Â£132.63m pre-tax (2001: Â£122.92m)). If these adjustments were incorporated into the balance sheet at the year end, it would deduct 138p and 198p respectively from the fully diluted net asset value of each ordinary share (2001: 128p and 182p). The Trafford Centre Once again the Group is pleased to report an increase in footfall of approximately 6% over the previous twelve months with most retailers reporting increases in trade of between 10% and 15%. This is particularly pleasing because there was a view last year that the Centre's figures were boosted by the effect of the foot and mouth epidemic and by the presence of Cirque du Soleil on site. It is inevitable that the rate of growth in footfall will begin to level off and possibly the Centre will see signs of this over the next year or two but The Trafford Centre is now firmly established and has developed considerable customer loyalty. For the financial year, total rental income was Â£52.48m (2001: Â£51.59m), which included turnover rents of Â£3.22m (2001: Â£2.38m). The Centre will have been open for five years in September 2003 and the majority of the leases provide for a rent review around that time. During the period there has been a number of changes in the tenant line-up. Such changes invariably generate more income, fresh interest for shoppers and reduce any opportunity for complacency. A totally new arrival has been Dreamieland, an imaginative animated childrens' ride, the first of its kind in a UK shopping centre and a welcome addition to the range of family attractions. Also new is the online shopping facility that has been added to the Centre's website www.traffordcentre.co.uk. A virtual mall now sits alongside the real thing. It has made a slow start but we hope that it will gather momentum as more retailers take advantage of this opportunity. Operationally the Centre continues to function smoothly. The Centre's commitment to the wellbeing of visitors and its employees has recently been acknowledged by several awards, most notably The British Safety Council National Safety Award 2001 and The European Week for Health and Safety (Health and Safety Executive Award). With regard to the land in the vicinity of the Centre, the main issue continues to be the Metrolink. Tenders were received by GMPTE at the beginning of the year and once a preferred bidder has been selected, negotiations will commence on a possible contribution by the Group to help fund a line through Trafford Park to The Trafford Centre. Subject to the Metrolink, consent has been granted for a 200,000 sq. ft. retail park on the land known as Giants Field close to the Centre. Trafford Metropolitan Borough Council has also resolved to grant consent for an office development of just over 100,000 sq. ft. to be located opposite the main entrance to The Trafford Centre on Trafford Boulevard. UK Commercial Property Investment Portfolio Whilst economists warned of economic recession during the year, interest rates remained low and consequently property yields of approximately 9% on secondary properties remained attractive to investors. This suited the Group's strategy of disposing of secondary properties whilst continuing to invest in a better class of property. Overall, capital receipts from sales were Â£29.05m removing a passing rent of Â£2.50m per annum from the rent roll and producing a profit over book value of Â£2.89m after costs. Sales included a variety of secondary retail and office properties mainly located in town centres with relatively small lot sizes. In the previous year, the whole of the Group's UK commercial investment property portfolio was externally valued. An internal valuation at 31st March 2002 by the Group's qualified surveyors produced only a minor differential to the last external valuation, and as a result it was not considered appropriate to undertake a full external valuation. The majority of the Group's prime properties remain in the retail park sector and it is this sector which has seen the most significant rental and capital growth in recent years. During the financial year, annualised rental income increased from Â£33.23m to Â£36.11m. The completion of rent reviews and lease renewals increased rental income on an annualised basis by Â£2.09m per annum compared with Â£0.58m per annum in the previous year. This was mainly due to five yearly rent reviews of certain properties in the retail park portfolio. In similar fashion to the previous year, there was reasonable activity on new lettings of vacant space which produced additional rent of Â£3.59m per annum (2001: Â£3.58m per annum) against lost rent as a consequence of tenants vacating of Â£0.80m per annum (2001: Â£2.22m per annum). The most significant transaction was the letting of the Jupiter Building adjacent to The Trafford Centre to Argos in April 2001 following its purchase the previous month. Properties developed by the Group and retained within the portfolio brought in additional rent of Â£0.72m per annum and included a 120 bed Tulip Inn Hotel adjacent to The Trafford Centre and a Park & Ride scheme at Weaste, Salford. Acquisitions of properties strategically located close to the Group's key land holdings brought in additional rent of Â£0.24m per annum and include various industrial properties adjacent to the Group's proposed joint re-development scheme with British Waterways Board at Gloucester Quays. Vacant property as at 31st March 2002 totalled 497,000 sq. ft. with an estimated rental value of Â£2.69m per annum. Of this, 396,000 sq. ft. is classified as development property leaving just 101,000 sq. ft. (2001: 188,000 sq. ft.), representing 2.4% of the total floor space, as property held for investment purposes. In the year, the Group acquired four properties in separate locations adjacent to certain of the Group's prime retail warehouse parks. A process of improving the planning consents prevailing on the Group's retail park portfolio was also implemented during the year. Shortly after the year end, Manchester Ship Canal Developments Limited, the Group's joint venture with Manchester City Council, acquired the freehold of Barton Aerodrome in Salford. Overseas The Group's overseas properties include a 138,000 sq. ft. shopping mall and offices in Hamilton, Bermuda and in Nassau, Bahamas, two office buildings totalling 73,000 sq. ft. During the year Beaumont House in Nassau was seriously damaged by fire and plans to reinstate the property are currently in hand. These properties generated income of Â£3.78m per annum (2001: Â£3.72m). Property Development The Property Development Department again made a substantial contribution to the Group's profitability during the year with trading profits, the sale of residential land and increased value from properties developed and held as investments. At Salford Quays, detailed planning approval for 260 residential apartments was obtained and the land sold to a national house-builder. The Group also sold 12 acres of land in Runcorn close to the Manchester Ship Canal to Halton Borough Council for development as an Educational College. The Group's association with the Runcorn/Widnes area is being further strengthened by its joint venture company with Halton Borough Council which is designed to carry out development on certain landholdings in the borough. At Blackburn, the construction of a 55,000 sq. ft. retail warehouse development for Matalan and Staples was completed. At the Peel Centre Stockport, the Group continued to expand the retail park by completing the construction of a 5,000 sq. ft. unit let to Holiday Hypermarket and at the Peel Centre Hyndburn, a 10,000 sq. ft. unit for Carpetworld was also added. The Department remains very active with a similar number of schemes planned for the present financial year. Advertising Advertising income for the financial year was Â£2.07m (2001: Â£2.03m). Additional poster sites have been installed within the new terminal building at Liverpool John Lennon Airport. Although some poster sites reached the end of their life on completion of the relevant construction work, in overall terms, there has been an increase in advertising space. The events of 11th September produced a national downturn in advertising spend, but the Group's own advertising income has remained stable. Land and Planning Once again, the breadth of the land portfolio with both brownfield and greenfield sites combined with continued strength in the residential development sector ensured good returns. In total, 560 plots were sold in the year. Receipts of Â£14.03m produced a profit of Â£7.98m. At Kendal Road Stretford, the Group gained planning permission for a waterside housing scheme adjacent to a new marina on the Bridgewater Canal. The housing land has been sold to Westbury Homes and a Marina with an associated public house is to be constructed shortly. At Tyldesley Wigan, the Group worked with the local rugby club to relocate its ground to a new site with new pitches and a clubhouse. The former ground was sold to Barratts for housing development. At Fairhills Road Irlam, the first phase of this major site of 350 houses has been sold to Persimmon. Two further phases are scheduled for sale over the next two years. A decision is awaited on the Group's proposal for a Motorway Service Area at Junction 21 of the M6 which went to a Public Inquiry in the early part of last year. Other developers have also promoted schemes at Junctions 20 and 22. A planning application for Salford Forest Park has been submitted to Salford City Council for its consideration. It includes a new Manchester Racecourse as well as community facilities. The scheme will be of the highest quality and will include improvements to natural habitat including the 350 acre Botany Bay Wood where the Group has been working with the Forestry Authority and Red Rose Forest on a management programme for a number of years. Following the report into draft Regional Planning Guidance for the North West, the Secretary of State has now published his revised version for consultation. This seeks to concentrate development in a belt of land between Liverpool and Manchester to be called the North West Metropolitan Area. This will include the areas of North Warrington and Ellesmere Port. The Group had expressed concerns at the lack of priority given to these areas in the original draft. The Manchester Ship Canal and adjacent land also receives specific mention and the Group will continue to focus attention on the potential of the Manchester Ship Canal Corridor. A decision is also awaited on the planning application for Phase 2 of Estuary Commerce Park on the old Northern Airfield at Liverpool where the Group has applied for 3m sq. ft. of B1, B2 and B8 development. This prestigious site within the Speke Garston development area is of regional significance. Besides having completed a number of small sales (typically for garden extensions or modification of covenants), the Estates section has concluded negotiations with certain farm tenants to release property with potential for development from their tenancies and has also actively promoted many sites with potential for telecommunications use. Waste and Minerals The Department had a very satisfactory financial year producing income of Â£1.97m (2001: Â£1.80m). Finalisation of the settlement with Viridor Waste Management led to collection of previously outstanding rents and royalties due from the Whitehead landfill site. Progress was also made on an extremely complex and long running claim for compensation from the Highways Agency which delivered an interim payment of Â£0.50m. In trading terms, the Group's two hard rock quarries had their best ever year producing over 700,000 tonnes of rock and generating a combined revenue of Â£0.28m. The downside is the more rock that is extracted, the quicker the quarries will be exhausted. Following the events of 11th September and the collapse of Enron, the proposal by AES to build a new gas fired power station at Carrington stalled. The ensuing dispute may be heading to a resolution with TXU Energy who have now bought the site from AES and new terms have been agreed. A complex situation has developed at the Arpley Landfill Site which remains unresolved. The site operator has again been prosecuted for environmental offences but is now managing the site in a markedly more professional manner. Two proposals for waste recycling centres had very different outcomes. One at Eastham Wirral was approved whilst the other at Partington Trafford was refused. The situation on this later proposal is currently being reviewed. Biffa's long outstanding planning application for landfilling at Fletcher Bank Quarry was refused. Biffa's contract with the Group had already expired and again the situation is being reviewed. Port With an increase in the level of both bulk liquids and dry cargoes handled through the Port, tonnage overall during the financial year increased to 8.01m tonnes (2001: 7.80m tonnes). This generated income of Â£19.89m (2001: Â£19.28m) and an operating profit of Â£3.70m (2001: Â£2.88m). After a difficult previous year, tonnage through the specialist oil dock located at Eastham increased by 0.20m tonnes. Imports of chemicals levelled out and the improvement resulted from additional movements of automotive fuel destined for the retail market. Further growth in this sector is anticipated in the coming year. The level of bulk liquid handled for Shell UK fell slightly on the previous year and following rationalisation in Shell's distribution methods it looks set to drop again in the coming year. At other locations on the Canal, bulk liquid tonnage increased on last year with another particularly strong performance being recorded from a berth in the Runcorn area where traffic grew by 5%. Exports of chemicals from this location are anticipated to increase again in the medium term. Despite difficult trading conditions in some sectors of industry, the total amount of dry cargo handled through the port grew marginally on the previous year. After a disappointing year in 2000/01 tonnage through the docks at Ellesmere Port increased this time by 19% as new business was attracted to the operation. Unfortunately, the sectors of industry serviced at Runcorn, mainly glass and ceramic producers, saw factory closures during the year resulting in a drop in tonnage through the docks. Investment in additional covered storage facilities continued at both Ellesmere Port and Runcorn to ensure the operations remain attractive to customers in a competitive market. It was encouraging to see further growth, albeit modest, in tonnage using the section of Canal between Runcorn and Manchester, a total tonnage of 1.11m tonnes being handled (2001: 1.08m tonnes). Exports of cement from the distribution depot located alongside the waterway at Weaste increased significantly on the previous year and tonnage to all other locations remained strong. The operating deficit in this section of the Canal, at Â£1.17m, was similar to that of the previous year. Major masonry work was undertaken on the sets of locks at Mode Wheel and Barton and upgrading of the flood sluices located alongside the locks, and used to control water flows on the Canal, continued. During the financial year, a new set of 50 ft. steel gates for the locks at Eastham were constructed and delivered and these will be installed in the coming months. In addition other major works were undertaken on the infrastructure of this section of the Canal, including upgrading of the facilities in the specialist oil dock at Eastham. Airports Liverpool John Lennon Despite the challenging economic climate and particularly following events in the United States, considerable progress was made during the year with Liverpool John Lennon Airport continuing to focus on the niche 'low cost' market. Passenger throughput was 2.31m, an increase of 11.6% over the previous year. Although the rate of growth has slowed, agreements completed with Ryanair and the Thomson Travel Group should deliver further growth in the longer term. With new links to Paris and Brussels recently announced by easyJet and Ryanair respectively, Liverpool John Lennon Airport is building a credible range of flights to popular European destinations. Although the Airport's base operator, easyJet, has emerged relatively unscathed from the effects of the terrorist attacks earlier in the financial year, both freight and charter operators faced uncertain and volatile markets. Freight throughput fell from 46,000 tonnes in 2001 to 31,000 tonnes in 2002, a decrease of 32.6%, and the outlook for the coming year remains unclear. Every effort is being made to identify new opportunities to increase activity in this sector of the Airport's business. In the financial year, the Airport generated income of Â£14.79m (2001: Â£12.18m) and a net operating loss after interest of Â£0.84m (2001: Â£0.76m loss). Major construction work completed during the year included a new Control Tower (Â£3.7m) and a Terminal Building (Â£32.5m) catering for up to 3m passengers which will be officially opened by Her Majesty the Queen in July 2002; both projects attracted European Regional Development Fund support. The completion of the Terminal Building will strengthen the revenue stream from retail units, most of which have been let to recognised brand leaders. Other commercial activities included the buy-out of the external management of the car park, an additional aviation fuel supply contract to Shell and the launch of a new Airport website, www.liverpooljohnlennonairport.com. The renaming and branding of the Airport as Liverpool John Lennon Airport achieved worldwide media coverage, raising the Airport's profile both within the aviation industry and with the travelling public. A further planning application has been submitted to enable the Airport to achieve its current forecast throughput of 4.5m passengers by 2006. Although medium term prospects remain encouraging, the aviation industry remains a highly competitive and challenging environment and the new financial year will be affected by additional costs, depreciation and interest flowing from the new Terminal. Doncaster Finningley The Public Inquiry into the Group's planning application for the re-development of Doncaster Finningley as a commercial airport concluded in March 2002. At the close, the Inspectors indicated that they hoped to complete their report by the end of October 2002 at which stage it would go to the Deputy Prime Minister's Office for his consideration. A decision is hoped for in early 2003. Sheffield City In August 2001, in a move expected to secure its short to medium term future, Peel Airports Limited acquired a 50% interest in Sheffield City Airport Limited. The Airport was substantially affected by the downturn in aviation and steps were put in hand to reduce operating costs in line with the level of commercial air activity. Whilst efforts continue to secure other commercial carriers, it is not possible to predict when any additional routes will be generated. The market opportunity to develop the Airport for general and business aviation and as a heliport is however being progressed. For further information on this document contact Mr P A Scott on 0161 629 8200 website www.peel.co.uk This information is provided by RNS The company news service from the London Stock Exchange

Companies

Peel Hunt Limited NPV (PEEL)

Tuesday, 14th May 2024

COMPANIES COVERED:

VOD OTB CURY

Currys impressed this morning as sales performance improved after Christmas, whilst the reshaped Vodafone also found support from full yar earnings. On The Beach was however looking stranded as the cost of living crisis continues to bite.

Full Archive

UK 100

Latest directors dealings

4 hours ago Intercede Group
5 hours ago Serco Group
5 hours ago Shell
6 hours ago Serica Energy
6 hours ago Mortgage Advice Bureau (Holdings)

All directors dealings today