Final Results - Part 3

Quintain Estates & Development PLC 4 June 2001 PART 3 14. Short term investments 2001 2000 2001 2000 Group Group Company Company £000 £000 £000 £000 Treasury stock 19 17 - - Listed shares - 1,123 - - ______ ______ ______ ______ 19 1,140 - - ====== ====== ====== ====== 15. Creditors: amounts due within one year 2001 2000 2001 2000 Group Group Company Company £000 £000 £000 £000 Bank and other loans (secured) 25,489 169,752 - 62,927 Trade creditors 2,238 1,209 124 242 Other creditors 4,026 4,939 122 361 Amounts due to subsidiary undertakings - - 50,791 - Dividend proposed 5,116 4,610 5,116 4,610 Corporation tax payable 5,106 5,520 - - Other taxation and social security 536 53 543 44 Accruals and deferred income 21,703 16,440 4,984 2,846 ______ ______ ______ ______ 64,214 202,523 61,680 71,030 ====== ====== ====== ====== 16. Creditors: amounts falling due after more than one year 2001 2000 2001 2000 Group Group Company Company £000 £000 £000 £000 Bank and other loans (secured) 339,279 219,710 34,800 28,000 Convertible unsecured loan stock 3,000 3,000 3,000 3,000 10% First Mortgage Debenture Stock 2011 9,251 9,469 - - ______ ______ ______ ______ 351,530 232,179 37,800 31,000 Net obligations under hire purchase contracts 16 27 16 27 ______ ______ ______ ______ 351,546 232,206 37,816 31,027 Deferred finance costs (3,272) (3,736) (44) (35) ______ ______ ______ ______ 348,274 228,470 37,772 30,992 ====== ====== ====== ====== The loans are secured by fixed and floating charges over assets owned by subsidiary undertakings. In addition, the Company has guaranteed the bank loans, undertaking a minimum net worth covenant for the Group of £170,000,000. The unlisted convertible unsecured loan stock is repayable on 1 April 2007 and interest is charged at 8% per annum. The loan stock is convertible at any time at the option of the holder into ordinary shares of the Company at a conversion price of 150p per share. The 10% First Mortgage Debenture Stock 2011 issued by Estates Property Investment Company Limited is secured by fixed and floating charges over the assets of the subsidiary undertaking and has a redemption value of £8,250,000. The premium over par arising from fair valuing the debenture on acquisition is amortised over its remaining life. 17. Borrowings The Group is subject to interest rate, liquidity and foreign currency risk. The Group does not speculate in treasury products but uses these only to limit potential interest rate fluctuations. It usually borrows at floating rates of interest and uses hedging mechanisms to achieve an interest rate profile where the majority of borrowings are fixed or capped. At the year end 77% (2000 : 58%) of the Group's net debt was fixed or protected, and the weighted average rate of debt was 7.18% (2000 : 7.36%). The Group's policy is to finance its activities with equity and long term debt, with a gearing target of 100%. The weighted average tenure of the Group's sterling debt is now 8 years (2000 : 5 years). The Group borrows in the same currency as the assets being financed to minimise foreign currency risk. No currency derivatives are used. The maturity profile of the Group's debt was as follows: Bank loans 2001 2000 and Other Total Total overdrafts loans debt debt £000 £000 £000 £000 Up to one year 15,989 9,500 25,489 169,752 Between one and two years 77,527 - 77,527 2,909 Between two and five years 117,735 - 117,735 73,228 Over five years 144,017 12,251 156,268 156,042 ______ ______ ______ ______ 355,268 21,751 377,019 401,931 ====== ====== ====== ====== continued... 2001 2000 Undrawn Undrawn facilities facilities £000 £000 Up to one year - - Between one and two years 17,000 - Between two and five years 48,751 9,633 Over five years 68,357 79,880 ______ ______ 134,108 89,513 ====== ====== After taking account of interest rate swap arrangements, the risk profile of the Group's borrowings as at 31 March 2001 was as follows: 2001 Fixed Capped Floating Total £000 £000 £000 £000 Sterling 145,706 90,000 122,181 357,887 French francs 4,218 - - 4,218 United States dollars 14,914 - - 14,914 ______ ______ ______ ______ 164,838 90,000 122,181 377,019 ====== ====== ====== ====== continued... 2000 Fixed Capped Floating Total £000 £000 £000 £000 Sterling 100,093 90,000 194,335 384,428 French francs - - 4,285 4,285 United States dollars 13,218 - - 13,218 ______ ______ ______ ______ 113,311 90,000 198,620 401,931 ====== ====== ====== ====== The sterling benchmark rate for floating rate liabilities is LIBOR. The interest rate profile of the Group's fixed rate debt was as follows: Percent 2001 2000 £000 £000 3.0-4.0 - 10,000 5.0-6.0 4,218 - 6.0-7.0 89,500 46,829 7.0-8.0 49,869 44,482 8.0-9.0 21,251 12,000 ______ ______ 164,838 113,311 ====== ====== The weighted average rate and the weighted average period of the Group's fixed rated debt as at 31 March 2001 were as follows: 2001 2000 % Years % Years Sterling 7.13 8 6.90 5 French francs 5.63 5 - - United States dollars 7.74 8 7.74 9 Group 7.14 8 6.96 6 The weighted average rate of the Group debt as at 31 March 2001 was 7.18% (2000 : 7.36%). The fair value of the Group's financial liabilities as at 31 March 2001 was as follows: Book value/ Fair 2001 2000 notional principal value Difference Difference £000 £000 £000 £000 Fixed rate debt 31,383 32,071 (688) 930 Interest rate swaps 133,455 139,331 (5,876) 826 Caps 90,000 89,955 45 537 ______ ______ ______ ______ 254,838 261,357 (6,519) 2,293 ====== ====== ====== ====== The fair values were calculated by JC Rathbone Associates as at 31 March 2001 and reflect the replacement values of the financial instruments used to manage the Group's exposure as at that date. The Group has taken advantage of the exemption under FRS13 to exclude short term debtors and creditors from these disclosures. As at 31 March 2001, the Group had financial assets comprising cash at bank and in hand of £46,513,000. The fair value of the Group's cash at bank and in hand approximates to the carrying value because of its short maturity. The maturity profile of the Group's share of floating rate debt held within its joint ventures as at 31 March 2001 was as follows: 2001 2000 £000 £000 Up to one year 9,735 1,103 Between one and two years - 8,661 Between two and five years 14,438 9,445 ______ ______ 24,173 19,209 ====== ====== 18. Provisions for liabilities and charges The movement in the year in provisions for liabilities and charges was as follows: £000 Balance 1 April 2000 2,101 Exchange movement 29 Release to profit and loss account (155) ______ Balance 31 March 2001 1,975 ====== The provisions represent deferred tax comprising: Group 2001 2000 Provided Not provided Provided Not provided £000 £000 £000 £000 Accelerated timing differences and revaluation surplus 881 25,138 819 26,388 Other timing differences 1,094 - 1,282 - ______ ______ ______ ______ 1,975 25,138 2,101 26,388 ====== ====== ====== ====== Other timing differences relate to swap breakage costs where a deduction has been claimed in one of the Group's subsidiaries in an earlier year but a corresponding credit is being released to the profit and loss account of another subsidiary over the life of a new swap arrangement. 19. Called up share capital £000 Authorised 200,000,000 shares of 25p each 50,000 ====== Allotted, called up and fully paid In issue at 1 April 2000: 131,710,317 ordinary shares of 25p each 32,928 Issue on exercise of options over 36,765 shares at 136p 9 Purchase and cancellation of 3,840,000 own shares at between 160p and 181p (960) ______ In issue at 31 March 2001: 127,907,082 ordinary shares of 25p each 31,977 ====== At year end, the following options granted under the Company's Share Option Schemes remained outstanding: Date of grant Number of Exercise ordinary price Exercise shares per share period from to 26.07.94 130,000 110.0p 26.07.97 26.07.04 18.08.95 270,000 114.0p 18.08.98 18.08.05 23.07.96 158,494 113.0p 23.07.99 23.07.06 06.08.97 253,747 136.0p 06.08.00 06.08.07 22.02.99 1,257,752 151.5p 22.02.02 22.02.09 28.05.99 399,596 163.2p 28.05.02 28.05.09 13.06.00 442,070 155.3p 13.06.03 13.06.10 12.07.00 47,059 170.0p 12.07.03 12.07.10 ________ 2,958,718 ======= On 6 December 1993, Scottish Equitable PLC and The Standard Life Assurance Company were granted options over 1,500,000 ordinary shares each. The options may be exercised at any time, in whole or in part, before 6 December 2003 at an exercise price of 110p per ordinary share. Scottish Equitable PLC holds £3,000,000 of the Company's unlisted convertible unsecured loan stock repayable by 1 April 2007. The loan stock is convertible into ordinary shares at a conversion price of 150p per ordinary share. 20. Reserves Capital Share redemption Merger premium reserve reserve £000 £000 £000 Group Balance 1 April 2000 38,297 - 106,062 Premium on issue of shares 40 - - Purchase of own shares - 960 - Surplus (deficit) on revaluation Investment properties - - - Joint ventures - - - Associate - - - Realisation of property revaluation gains of previous years - - - Tax on realisation of revaluation surplus - - - Exchange movement in year - - - Short leasehold amortisation - - - Retained profit for the - - - financial year _____ _____ ______ Balance at 31 March 2001 38,337 960 106,062 ===== ===== ===== Company Balance 1 April 2000 38,297 - 106,062 Premium on issue of shares 40 - - Purchase of own shares - 960 - Retained profit for the financial year - - - _____ _____ ______ Balance 31 March 2001 38,337 960 106,062 ===== ===== ===== continued... Capital Re-valuation Profit and reserve reserve loss account £000 £000 £000 Group Balance 1 April 2000 2,750 102,446 31,324 Premium on issue of shares - - - Purchase of own shares - - (6,425) Surplus (deficit) on revaluation Investment properties - 44,818 - Joint ventures - (1,937) - Associate - 238 - Realisation of property revaluation gains of previous years - (9,786) 9,786 Tax on realisation of revaluation surplus - (1,361) - Exchange movement in year - - 496 Short leasehold amortisation - (80) 80 Retained profit for the - - 9,490 financial year _____ ______ ______ Balance at 31 March 2001 2,750 134,338 44,751 ===== ====== ====== Company Balance 1 April 2000 25,688 Premium on issue of shares - Purchase of own shares (6,425) Retained profit for the financial year 8,746 _____ Balance 31 March 2001 28,009 ===== As permitted by section 230 of the Companies Act 1985, the profit and loss of the Company is not presented as part of these financial statements. The profit for the year attributable to shareholders dealt with in the financial statements of the Company was £17,076,000 (2000 : £13,805,000). 21. Capital commitments As at 31 March 2001, the Group had capital commitments of £27,985,000 (2000 : £11,181,000). 22. Commitments under operating leases As at 31 March 2001, the Group had annual commitments under non-cancellable operating leases as set out below: 2001 2000 Land and Land and buildings buildings £000 £000 Operating leases which expire: Within one year - 15 In two to five years 278 265 _____ _____ 278 280 ===== ===== 23. Contingent liabilities The Group through Chesterfield Properties Limited has guaranteed the payment of current interest on a secured bank loan facility of US $27,800,000 (of which US $27,647,000 was drawn down as at 31 March 2001) in the event of default by Hanford Mall Partners, a limited partnership in which the Group has a 50% interest, but is not the general partner. 24. Notes to the Consolidated Cash Flow Statement a. Reconciliation of operating profit to net cash inflow from operating activities 2001 2000 £000 £000 Operating profit 36,688 31,546 Depreciation charge 885 135 (Profit) loss on sale of fixed assets (8) 74 Decrease in debtors 3,119 1,331 Increase (decrease) in creditors 5,475 (6,619) Decrease in trading stock 24,091 44,491 Write-down of trading stock - 41 _____ _____ 70,250 70,999 ===== ===== b. Reconciliation of net cash flow movement to net debt 2001 2000 £000 £000 (Decrease) increase in cash during year (42,590) 33,150 Cash outflow (inflow) from debt and lease financing 25,834 (81,562) Cash outflow from increase in liquid resources 34,963 1,140 _____ ______ Change in net debt resulting from cash flows 18,207 (47,272) Costs of issue of non-equity finance 885 3,349 Amortisation of issue costs (1,350) (1,315) Net debt acquired with subsidiaries - (182,601) Other non-cash movements (910) 490 _____ _______ Movement in net debt during year 16,832 (227,349) Net debt, beginning of year (344,063) (116,714) ________ ________ Net debt, end of year (327,231) (344,063) ======= ======= c. Analysis of net debt As at As at 1 April 31 March 2000 Cash flow Other 2001 £000 £000 £000 £000 Liquid resources 1,140 34,963 - 36,103 Cash 53,019 (42,590) - 10,429 Debt due after more than one year (228,470) (118,429) (1,375) (348,274) Debt due within one year (169,752) 144,263 - (25,489) _______ _____ _____ ________ (344,063) 18,207 (1,375) (327,231) ======= ===== ===== ======= Liquid resources consist of short term investments and cash which is not available on demand. 25. Divisional analysis and performance Further information on the split between the Group's two divisions, QED and Q3P, and their performance in the year is set out below. Q3P Including joint venture RPI properties Total QED Q3P Group Investment properties 657,734 559,199 98,535 123,339 (£000) ====== ====== ===== ===== Ungeared return (%) 15.2 16.0 8.8 10.3 (3b) ====== ====== ===== ===== Ungeared return adjusted for administrative expenses 14.2 15.0 6.8 8.8 (%) ====== ====== ===== ===== Geared return - ungeared return adjusted for administrative expenses and 23.0 25.5 4.7 7.7 net interest payable (%) ====== ====== ===== ===== Financial Summary Year ended 31 March 2001 2000 1999 1998 1997 £000 £000 £000 £000 £000 Assets employed Properties 688,886 640,676 322,996 302,182 132,735 Cash at bank 46,513 53,019 19,869 11,240 3,235 Other assets 40,667 57,978 7,888 6,689 3,773 ______ ______ ______ ______ ______ 776,066 751,673 350,753 320,111 139,743 ====== ====== ====== ====== ====== Financed by Share capital 31,977 32,928 23,020 22,456 11,695 Reserves 327,198 280,879 166,942 128,387 53,202 ______ ______ ______ ______ ______ Equity shareholders' funds 359,175 313,807 189,962 150,843 64,897 Borrowings 377,019 401,931 138,285 150,198 67,953 Other liabilities 37,444 31,163 19,431 16,723 6,893 Equity minority interests 2,428 4,772 3,075 2,347 - ______ ______ ______ ______ ______ 776,066 751,673 350,753 320,111 139,743 ====== ====== ====== ====== ====== Net asset value per share (pence) Undiluted 281 238 206 168 139 Diluted 276 236 202 164 136 Gearing (%) 92 111 62 92 100 ===== ===== ===== ===== ===== Net rental income 40,288 34,684 22,806 20,221 8,931 ===== ===== ===== ===== ===== Revenue profit 14,875 13,223 8,084 7,489 3,289 Profit on sale of properties 5,950 2,945 1,080 3,027 201 _____ _____ _____ _____ _____ Pre-tax profit 20,825 16,168 9,164 10,516 3,490 ===== ===== ===== ===== ===== Profit for the financial year 17,820 12,857 7,881 8,660 2,805 Dividends (8,330) (7,244) (4,160) (4,387) (1,404) _____ _____ _____ _____ _____ Retained profit 9,490 5,613 3,721 4,273 1,401 ===== ===== ===== ===== ===== Earnings per share (pence) Undiluted 13.7 10.5 8.7 10.3 6.6 Diluted 13.5 10.4 8.5 10.0 6.5 Dividends per share (pence) 6.5 5.5 4.5 4.0 3.0 Dividend cover (x) 2.1 1.8 1.9 2.0 2.0 ===== ===== ===== ===== ===== Total return (%) 20.8 18.2 25.3 23.7 16.4 ===== ===== ===== ===== ===== The total return is calculated by reference to the increase in net asset value per share with the dividend added back divided by the opening net asset value per share. The financial information set out in this announcement does not constitute the Group's statutory accounts for the years ended 31 March 2001 or 2000 but is derived from these accounts. Statutory accounts for 2000 have been delivered to the Registrar of Companies whereas those for 2001 will be delivered following the Group's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. 1. Subject to approval at the Annual General Meeting, the recommended final dividend of 4.0p per ordinary share will be paid on 26 July 2001 to shareholders on the register on 29 June 2001. This will bring the total dividend for the year to 6.5p, an increase of 18.2%. 2. The 2001 Annual General Meeting of Quintain Estates and Development PLC will be held at 58 Davies Street, London W1K 5JF on 24 July 2001 at 10.30 hours. 3. The Report and Financial Statements for the year ended 31 March 2001 will be posted to shareholders shortly. Non-shareholders may request a copy from the Company Secretary at the registered office, 58 Davies Street, London W1K 5JF. By order of the Board of Quintain Estates and Development PLC Rebecca Worthington Company Secretary 4 June 2001

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