Interim Results 2001

Slough Estates PLC 30 August 2001 SLOUGH ESTATES plc INTERIM STATEMENT FOR THE SIX MONTHS TO 30TH JUNE 2001 Summary of Results - Core property investment income net of interest up 16.4 per cent to £66.7 million (2000 £57.3 million) - Adjusted* profit before tax up 7.4 per cent to £69.9 million (2000 £65.1 million) - Adjusted* earnings per share up to 13.3 pence - Interim dividend up 8.5 per cent to 5.1 pence - Interim property valuation increase of 1.0 per cent - Diluted net assets per share increase 3.1 per cent to 536 pence - Occupancy largely unchanged at 93 per cent - Construction starts made on major schemes at Farnborough, Cambridge and South San Francisco. Investment development expenditures in six months amounted to £108 million - Two City of London offices sold and Elk Grove, Chicago industrial parks sold. Investment property sale proceeds in six months amounted to £91 million. Toronto industrial properties have been offered for sale. * Adjusted to exclude investment property sales Commenting on the results, the Chairman, Sir Nigel Mobbs, said: 'Slough's strategy of investing in prime business centres, both in the UK and overseas, in a diversity of property sectors, is supported by years of experience in those locations. This policy should underpin operating performance as well as provide gains from new developments. The Group's prudent financial base and its emphasis on increasing and creating new rental streams should maintain its good interest and dividend cover and ensure that shareholders continue to receive superior returns on their investment.' For further information: Sir Nigel Mobbs, Chairman 01753 537171 Slough Estates plc Derek Wilson, Chief Executive 01753 537171 Slough Estates plc Andrew Best 0207 321 5010 Shared Value Limited Slough Estates Web Site www.sloughestates.com INTERIM STATEMENT 2001 In the first half of 2001 the Group has continued with its well established strategy of developing quality buildings in prime business centres whilst strengthening its existing customer base for the long term good of its portfolio. Starts have been made on three new business park projects at Farnborough, Cambridge and Oyster Point, South San Francisco. Two central London offices have been sold, as have the Elk Grove, Chicago industrial parks and the Group's Toronto properties have been offered for sale. Occupancy remains good at 93.3 per cent compared with 93.6 per cent at December 2000 and new leases signed in the UK in the first half amounted to 69,000 sq.m., 19 per cent higher than in the first six months of 2000. An interim external valuation has been undertaken for the first time and this shows a valuation surplus of 1.0 per cent, resulting in a 3.1 per cent increase in diluted net assets per share from 520p to 536p for the six months to June. Results The half year profit before tax at £70.2 million was £4.4 million higher than the prior year. Though core property investment income net of interest was 16.4 per cent higher at £66.7 million, income from property trading, utilities and other activities did not match the levels achieved in the first half of 2000. Adjusted to exclude the sale of investment properties, profits before tax increased by 7.4 per cent. With taxation being provided at an effective rate of 15 per cent compared with a 20 per cent rate in the first half of 2000, earnings per share adjusted for investment property sales increased by 22.0 per cent to 13.3p. The estimated effective tax rate of 20 per cent for the half year 2000 was subsequently reduced for the full year to 8 per cent following agreement with the Inland Revenue of a significant tax recovery during the second half of 2000. The contribution to rental income from new developments was £9.1 million whilst the loss of rental income resulting from property sales was £3.1 million. Trading property profits of £6.0 million earned mainly on developments sold in Belgium and Germany were £1.0 million more than 2000, though other income was £2.2 million lower as a result of the low number of realisations of venture capital investments due to the current weak market conditions. The reason for the deterioration in Utilities' performance is dealt with later. Dividends An interim dividend of 5.1p per share will be paid on 12 October 2001 to shareholders on the register on 14 September 2001. This represents an increase of 8.5 per cent over the 2000 interim dividend of 4.7p per share. Balance Sheet For the first time an interim valuation of investment properties was undertaken by external valuers as at 30th June. Overall the valuation increase was £33.3 million or 1.0 per cent which, together with retained earnings and other minor capital changes, resulted in a 3.1 per cent increase in diluted net assets per share to 536 pence. In the UK the valuation increase was £23.9 million or 0.9 per cent. Increases of 1.2 per cent for industrial properties arose from continued rental rate increases offset by valuation yields softening a little. Office properties increased 0.8 per cent benefiting from recent development completions. The retail centres, excluding joint ventures, declined in value by 0.9 per cent, entirely due to yield changes. The overall surplus was better than has been shown by the leading UK property indices for the same period. In North America, the Californian portfolio produced a surplus of 1.2 per cent. The Elk Grove, Chicago industrial assets were sold in May at a small discount to their prior valuation. In Canada the valuation was unchanged and the French and Belgian investment portfolios produced a satisfactory increase of 1.9 per cent. Following a sustained comparative under-performance by the Canadian real estate market, the decision has been taken to sell our portfolio. The Toronto properties should be sold in the second half, whereas the Vancouver assets will probably not be sold until the current developments are completed and leased. In aggregate they have a book value of £189 million and the disposal proceeds will contribute to the funding of the US development programme. The balance sheet remains very strong and conservatively geared, with a net debt to equity ratio of 54 per cent. Expenditure of £108 million was incurred on the purchase and development of investment properties, which is expected to increase to £250 million for the full year. This is lower than projected in March and reflects the current economic climate in which new development starts require greater prudence. Sales of investment properties produced £91 million net proceeds, from office sales in London and Bournemouth and the realisation of the Chicago industrial portfolio. Other than in Toronto, no major sales are expected in the second half. In February the debt profile was enhanced by the issue of a new unsecured Eurobond which raised £150 million for 21 years at a coupon of 7 per cent. As at 30th June 2001 the weighted average cost of total borrowings was 7.5 per cent, down from 7.8 per cent at December 2000. Review of Activities Development Programme In the first half of 2001, 111,000 sq.m. of buildings were completed, of which 76 per cent have been leased or sold, 240,000 sq.m. is under construction of which 52 per cent is leased and 107,000 sq.m. of new space is likely to start construction before the year end. The Group's development potential on land that it already controls was reported in March as 1.3 million sq.m. at an incremental development cost of £1.1 billion and there were no new land acquisitions in the first half. These developments offer significant opportunities to achieve superior future cash flow and value growth. The global economic cooling and decreasing business confidence of the past six months mean that the time frame for these developments may be extended. If conditions improve, as some commentators are predicting, the Group is ready to respond rapidly to customer demand. United Kingdom For industrial space, occupier demand continues to be firm in all of our regions and market rental rates have continued to see some growth. Office space in the Thames Valley, which has been the subject of much comment in the light of the serious reversals suffered by leading global TMT companies, has moved from a phase of excess occupier demand closer to equilibrium. Of the Group's total UK portfolio of industrial, office and retail space, valued at £2.59 billion, only 15 per cent is let to businesses in the IT and communications industries. The Group's UK occupancy has remained firm at 92.5 per cent and this is expected to continue. In the six months to June, 69,000 sq.m. was leased to new tenants, compared with 58,000 sq.m. in the first half of 2000 indicating a sound occupier market for general business and industrial premises. Two Bath Road Slough office buildings totalling 10,200 sq.m. were completed, having been leased early during construction to pharmaceutical companies. Industrial developments completed at Wokingham, Luton and Uxbridge have all been letting well and a new phase has begun at Elstree of 10,700 sq.m. At Farnborough Business Park, which has planning consent for 155,000 sq.m. of office and R&D space, the first phase of road, landscaping and utilities infrastructure is under construction as are two office buildings of 8,000 sq.m. net and 3,600 sq.m. net due for completion in January. Further phases are being progressed through design and planning. At Cambridge Research Park the first phase of construction is also under way totalling 11,300 sq.m. in nine units ranging from 3,600 sq.m. down to 400 sq.m., designed to meet local demand. With the road and services infrastructure nearing completion the park will have an outstandingly good working environment. In total 64,000 sq.m. of new space has been completed or put under construction in the first half and starts for the second half could be up to 48,000 sq.m., of which 18,000 sq.m. will be in respect of pre-let agreements already in hand. The increase in utilities losses for the first half year to £4.6 million is very disappointing. The utilities operation, Slough Heat & Power (SH&P), has suffered seriously from the New Electricity Trading Arrangements (NETA) introduced by the regulator Ofgem at the end of March. The arrangements, designed to reduce the potential for price manipulation by large generators, have created great operational and commercial difficulties for small generators and renewable energy producers who have been seriously disadvantaged. Consequently it has been uneconomic for SH&P to export any electricity to the Grid since March. The Energy Minister has ordered a review by the regulator of the impact of NETA on small generators and the outcome is awaited. Unless this review leads to effective and fair provisions for small, green generators, it is possible that the carrying value of SH&P's standing plant, which has a book value of circa £60 million, may have to be reconsidered at the year end. The new plant being built to satisfy the NFFO4 supply contract, which is to be commissioned this autumn, is ring fenced from the implications of NETA. This plant will generate a guaranteed inflation adjusted revenue stream for 15 years from recycling paper and plastic into electricity. North America Following the sale of the 110,000 sq.m. Elk Grove, Chicago industrial properties, the Group's US interests are concentrated mainly in the San Francisco Bay area and San Diego, where Slough is the leading developer of health science research buildings. In California, the health science industry, in contrast to the TMT sector, continues to grow strongly as demonstrated by the continued take-up of our developments largely on a pre-let basis. The Group's built portfolio in California is 73 per cent occupied by health science businesses, 3 per cent by IT and communications users and the balance of 24 per cent by general business services. At the Torrey Pines Science Centre, San Diego, the 58,600 sq.m. research campus for Pfizer is progressing well, with 9,700 sq.m. occupied, 21,400 sq.m. under construction completing this year and further phases of 27,500 sq.m. due for delivery in 2003 and 2004. Of two speculative units totalling 12,240 sq.m. the larger of 7,700 sq.m. is now let. The continued strength of the health science market and shortage of development land in the Torrey Pines area will support the start of a further speculative unit of 6,500 sq.m. later this year on the last available site at this park. In the Bay Area our occupancy remains high at 99.2 per cent. At the Oyster Point, South San Francisco research park, which has consent for 53,000 sq.m., infrastructure construction commenced in the Spring and work has started on four initial buildings totalling 27,300 sq.m., all of which have been pre-let to three companies. Construction can be commenced very quickly on the remaining phases when occupiers have been confirmed. The take-up of this park has been exceptionally good. At the nearby 11 hectare East Grand site, planning consents are being sought for 65,000 sq.m. of similar space. In Toronto, the market for industrial space has remained good and occupancy is high at 94.9 per cent. The 27,000 sq.m. office joint venture development at Burnaby, Vancouver, has 10,200 sq.m. pre-let and completes construction in 2002. Continental Europe The Belgian, French and German operations have continued to contribute well to Group performance. With an increasing rent roll from recent developments in Brussels and Paris, and a growing trading portfolio in the Dusseldorf area, returns from these three prime business centres are exceeding our expectations. Progress at Pegasus Park, close to Brussels airport, is very strong. Of 49,700 sq.m. of offices recently completed or under construction, 33,700 sq.m. has been pre-let. A 230 room four star hotel is also under construction on a site sold to the operator. In France, the rapid development and letting of the Marly la Ville site during 2000 has resulted in reduced activity in the first half of 2001. At St. Fargeau, south of Paris, a pre-let 23,000 sq.m. logistics warehouse is under construction and a similarly sized unit will start later this year. With 250,000 sq.m. of large logistics warehouse space having been successfully developed in Paris in recent years, the experience gained is now benefiting schemes in Belgium and Germany. At Bornem and Rumst, between Brussels and Antwerp, two sites have been acquired and a first phase of 16,500 sq.m. of distribution space has started whilst at Kapellen, close to Dusseldorf, a large logistics unit of 22,500 sq.m. has also been started. In Germany, where the Group tends to sell completed developments, three industrial parks totalling 35,200 sq.m. were sold, realising a profit of £3.2 million. The Board As I announced at the Annual General Meeting, Mr Stephen Howard was welcomed to the Board as a non-executive director with effect from 16th May. He is the Chief Executive of Cookson Group plc, an appointment he has held since 1997. He is American and resident in the UK. Outlook In times of economic uncertainty and change, the attributes of property as an investment become more clear. Contractual rental cashflows over the medium to long term from durable assets not vulnerable to rapid depreciation, in strong locations will last through economic cycles. Slough's strategy of investing in prime business centres, both in the UK and overseas, in a diversity of property sectors, is supported by years of experience in those locations. This policy should underpin operating performance as well as provide gains from new developments. The Group's prudent financial base and its emphasis on increasing and creating new rental streams should maintain its good interest and dividend cover and ensure that shareholders continue to receive superior returns on their investment. Group profit and loss account Year to Half year Half year 31 to to December 30 June 30 June 2000 2001 2000 audited unaudited unaudited For the six months ended 30 June Note £m £m £m 2001 Turnover: Group 2 145.2 153.7 281.3 Joint ventures 7.5 7.4 14.9 ======= ======= ======= Operating income: Property investment 105.9 95.3 196.7 Property trading 6.0 5.0 6.7 Utilities (4.6) (1.2) (3.6) Other income 1.8 4.0 5.4 Administration expenses (6.6) (6.1) (12.9) ------ ------ ------ Operating profit 2 102.5 97.0 192.3 Share of operating profit of joint ventures and associate Property 6.9 6.9 14.0 Other - - 0.2 ------ ------ ------ 6.9 6.9 14.2 Profit on sale of investment 0.3 0.7 0.6 properties ------ ------ ------ Profit before interest and taxation 109.7 104.6 207.1 Interest (net) 3 (39.5) (38.8) (78.2) ------ ------ ------ Profit on ordinary activities before taxation 70.2 65.8 128.9 Taxation 4 (10.5) (13.2) (10.3) ------ ------ ------ Profit on ordinary activities after taxation 59.7 52.6 118.6 Minority interests - equity 0.6 (1.2) (0.5) Preference dividends (5.8) (5.8) (11.6) ------ ------ ------ Profit attributable to ordinary Shareholders 54.5 45.6 106.5 Ordinary dividends 5 (21.1) (19.4) (50.0) ------ ------ ------ Retained profit 9 33.4 26.2 56.5 ------ ------ ------ Basic earnings per ordinary share 13.2p 11.1p 25.8p Adjustment for profits and losses on sale of investment properties net of tax and minority 0.1p (0.2p) (0.1p) ------- ------ ------ Adjusted basic earnings per ordinary share 13.3p 10.9p 25.7p ------ ------- ------ Weighted average number of ordinary shares in issue (millions) 414.1 413.0 413.3 Statement of Group total recognised gains and losses Year to Half year to Half year to 31 December 30 June 2001 30 June 2000 2000 unaudited unaudited audited For the six months ended 30 June £m £m £m 2001 Profit attributable to ordinary shareholders 54.5 45.6 106.5 Surplus on revaluation of properties 33.3 - 247.5 (Deficit)/surplus on revaluation of - Joint ventures (1.7) - 6.5 - Associate (0.3) - 0.3 ------ ------ ----- 31.3 - 254.3 Exchange differences 8.4 11.5 12.5 Other items (0.4) (0.9) (0.5) Taxation - - (0.5) Minority interests (0.2) - (4.2) ------ ------ ----- Total other recognised gains and losses 7.8 10.6 7.3 ------ ------ ----- Total recognised gains and losses for the period 93.6 56.2 368.1 ------ ----- ----- The comparative results for the six months ended 30 June 2000 do not include any adjustments for revaluation of properties or investments held at 30 June 2000. Reconciliation of movement in Group Shareholders' funds Year to Half year to Half year to 31 December 30 June 2001 30 June 2000 2000 unaudited unaudited audited For the six months ended 30 June 2001 £m £m £m Profit attributable to ordinary shareholders 54.5 45.6 106.5 Ordinary dividends (21.1) (19.4) (50.0) ------- ------- ------- 33.4 26.2 56.5 Revaluation surpluses 31.3 - 254.3 Other recognised gains and losses 7.8 10.6 7.3 Ordinary shares issued 1.2 1.1 2.1 ------- ------- ------- Net increase in shareholders' funds 73.7 37.9 320.2 Shareholders' funds at 1 January 2,427.1 2,106.9 2,106.9 ------- ------- ------- Shareholders' funds at 30 June 2,500.8 2,144.8 2,427.1 Summarised Group cash flow statement Year to Half year to Half year to 31 December 30 June 2001 30 June 2000 2000 unaudited unaudited audited For the six months note £m £m £m ended 30 June 2001 Net cash inflow from operating activities 12(1) 93.7 100.5 179.6 Dividends from joint ventures and associate 4.4 4.0 8.3 Returns on investments and servicing of finance Interest received 4.4 3.9 5.6 Interest paid (52.9) (49.0) (99.9) Dividends paid to preference and minority shareholders (6.1) (6.0) (12.1) ----- ------ ------ (54.6) (51.1) (106.4) Taxation (6.5) (3.2) (4.3) ------ ------ ----- Net cash inflow before investing activities, financing and 37.0 50.2 77.2 equity Dividends Capital expenditure and financial investment Purchase and development of investment Properties (108.2) (144.0) (264.4) Sales of investment 90.9 40.0 49.6 properties Other asset additions less (15.4) 1.5 (11.5) sales ------ ------ ------ (32.7) (102.5) (226.3) Acquisitions and disposals Purchase of subsidiary undertakings (net of cash and bank - - (0.1) overdrafts acquired) Net movement on joint ventures, associate and 11.7 (0.8) (2.9) others ------ ------ ------ 11.7 (0.8) (3.0) Equity dividends (30.6) (28.1) (47.5) paid ------ ----- ------ Net cash outflow before use of liquid resources (14.6) (81.2) (199.6) and financing Management of liquid resources Investment in term deposits (65.5) (25.8) 14.0 ------ ------ ------ Net cash (outflow) / inflow from the management of liquid resources (65.5) (25.8) 14.0 Financing Issue of ordinary shares 1.2 1.1 2.1 Increase in debt 12(2) 119.5 113.2 174.3 ------ ------ ------ Cash inflow from financing 120.7 114.3 176.4 ------ ------ ------ Increase / (decrease) in cash 40.6 7.3 (9.2) ====== ====== ====== Summarised Group balance sheet 31 December 30 June 30 June 2000 2001 2000 audited unaudited unaudited As at 30 June 2001 Note £m £m £m Fixed assets Tangible assets - properties 6 3,541.6 3,074.2 3,463.8 - other 7 83.1 69.0 79.7 Investments in joint ventures: - share of gross assets 224.5 221.2 229.9 - share of gross liabilities (46.0) (41.8) (42.2) ------- ------- ------- 8 178.5 179.4 187.7 Investment in associate 8 4.0 3.6 4.1 ------- ------- ------- 3,807.2 3,326.2 3,735.3 ------- ------- ------- Current assets Stocks 112.9 85.3 106.4 Debtors, prepayments and accrued 60.4 63.7 53.7 income Trading investments 42.2 37.0 38.9 Assets held for resale 36.4 24.4 29.3 Cash and deposits 146.2 94.0 36.9 ------- ------- ------- 398.1 304.4 265.2 ------- ------- ------- Total assets 4,205.3 3,630.6 4,000.5 ======= ======= ======= Capital and reserves Called up share capital 9 138.7 138.5 138.6 Share premium account 9 328.4 326.4 327.3 Capital reserves 9 1,677.6 1,392.1 1,642.5 Profit and loss account 9 356.1 287.8 318.7 ------- ------- ------- Shareholders' funds 2,500.8 2,144.8 2,427.1 Minority interests 22.8 17.1 21.4 Provisions for liabilities and 5.2 4.1 6.2 charges Creditors falling due within one year Borrowings 10 49.9 66.6 54.6 Other 184.7 176.6 197.9 Creditors falling due after more than one year Borrowings 10 1,438.2 1,214.9 1,289.9 Other 3.7 6.5 3.4 ------- ------- ------- 4,205.3 3,630.6 4,000.5 ======= ======= ======= Shareholders' funds attributable to: Equity shareholders - ordinary 2,360.6 2,004.5 2,286.8 shares Non - equity shareholders - preference shares 140.2 140.3 140.3 ------- ------- ------- 2,500.8 2,144.8 2,427.1 ------- ------- ------- Ordinary shares in issue 414.4 413.4 413.9 (millions) Dilutive adjustments (millions) 52.5 52.9 53.0 ------- ------- ------- Ordinary shares in issue diluted 466.9 466.3 466.9 (millions) ------- ------- ------- Net assets per ordinary share - basic 570p 485p 553p - diluted 536p 460p 520p Notes to the interim Financial Statements 1. Basis of preparation The accounting policies used for the audited financial statements at 31 December 2000 have been used in the preparation of the interim financial statements. The interim financial statements are unaudited and do not comprise full financial statements. The results for the year to 31 December 2000 are an abridged statement of the Group financial statements for that year which have been delivered to the Registrar of Companies, and on which the auditors' report was unqualified. Investment properties are included at 30 June 2001 valuations. At 30 June 2000 no formal external valuation of the property portfolio was undertaken. 2. Segmental information Turnover Half Year to Half Year to Year to 30 June 30 June 31 December 2001 2000 2000 unaudited unaudited audited £m £m £m Business segments: Property investment 117.0 104.6 216.4 Property trading 19.8 37.4 42.9 Utilities 8.4 11.7 22.0 Other activities Common costs ------- ------- ------- 145.2 153.7 281.3 ------- ------- ------- Geographical segments: United Kingdom 88.4 89.3 179.6 Canada 8.1 6.9 14.5 USA 21.4 15.8 37.2 Europe 27.3 41.7 50.0 ------- ------- ------- 145.2 153.7 281.3 ------- ------- ------- Operating Profit Half Year to Half Year to Year to 30 June 30 June 31 December 2001 2000 2000 unaudited unaudited audited £m £m £m Business segments: Property investment 105.9 95.3 196.7 Property trading 6.0 5.0 6.7 Utilities (4.6) (1.2) (3.6) Other activities 1.8 4.0 5.4 Common costs (6.6) (6.1) (12.9) ------- ------- ------ 102.5 97.0 192.3 ------- ------- ------- Geographical segments: United Kingdom 70.2 69.5 137.8 Canada 5.8 4.6 10.1 USA 11.2 12.4 23.9 Europe 15.3 10.5 20.5 ------- ------- ------- 102.5 97.0 192.3 ------ ------ ------- 3. Net Interest Half Year Half Year to Year to to 30 June 31 December 30 June 2000 2000 2001 unaudited audited unaudited £m £m £m Interest paid 56.7 50.1 103.1 Less interest received (3.7) (3.6) (5.9) Less amount charged to - the development of trading properties (1.2) (0.6) (1.3) - the development of investment (12.8) (8.8) (20.5) properties - the development of utilities plant (0.9) - (0.5) ------- ------ ------- Charged to profit and loss account - group 38.1 37.1 74.9 - joint ventures and associate 1.4 1.7 3.3 ------- ------- ------ 39.5 38.8 78.2 ------- ------- ------- 4. Taxation An effective tax charge of 15% (2000 half year 20%, 2000 full year 8%) of profit on ordinary activities before tax has been included for the six months and is based on the estimated full year rate. 5. Ordinary dividends Half Year to Half Year to Year to 30 June 30 June 31 December 2001 2000 2000 unaudited unaudited audited £m £m £m Ordinary dividends payable per share: Interim dividend at 5.1p per share 21.1 19.4 19.4 (2000 4.7p) Final 2000 dividend at 7.4p - - 30.6 ------- ------- ------- 21.1 19.4 50.0 ------- ------- ------- 6. Tangible assets - investment properties UK Canada USA Europe Total £m £m £m £m £m At 1 January 2001 2,653.9 173.5 425.4 211.0 3,463.8 Exchange movement - 8.8 24.2 (8.8) 24.2 Additions 48.7 7.0 40.5 15.1 111.3 Disposals (48.7) - (32.7) (9.6) (91.0) Surplus on valuation 23.9 - 5.5 3.9 33.3 ------ ------ ------ ------ ------ At 30 June 2001 2,677.8 189.3 462.9 211.6 3,541.6 ------- ------- ------- ------- ------ Completed properties 2,413.9 168.5 330.2 179.6 3,092.2 Properties for or under development 263.9 20.8 132.7 32.0 449.4 ------ ------ ------ ------ ------ 2,677.8 189.3 462.9 211.6 3,541.6 ------- ------ ------ ------ ------ The Group's completed investment properties and land held for development were externally valued as at 30 June 2001 by Insignia Richard Ellis or Conrad Colliers Ritblat Erdman or C B Hillier Parker in the United Kingdom, in the USA by Realty Services International, Inc., in Canada by Fish Marks Jenkins, in Belgium by King Sturge and in France by Bourdais Expertises s.a. 7. Tangible assets - other Cost Depreciation Net £m £m £m At 1 January 2001 127.1 (47.4) 79.7 Additions 6.3 (2.9) 3.4 Disposals (0.1) 0.1 - ------- ------- ------- At 30 June 2001 133.3 (50.2) 83.1 ------- ------- ------- The net book value includes utilities plant and equipment amounting to £80.9 million (31 December 2000 £77.7 million). 8. Investments Joint Total Total Associate Ventures 2001 2000 £m £m £m £m At 1 January 2001 4.1 187.7 191.8 181.7 Exchange movement 0.3 1.2 1.5 1.5 Additions - - - 1.4 Return of capital - (10.0) (10.0) - Reduction on joint venture becoming a subsidiary - - - (2.3) Dividends received (0.2) (4.2) (4.4) (8.2) Valuation (deficit)/surplus (0.3) (1.7) (2.0) 6.8 Share of profits net of taxation 0.1 5.5 5.6 10.9 ------ ------ ------ ------ At 30 June 2001 4.0 178.5 182.5 191.8 ------ ------ ------ ------ 9. Capital and reserves Share Capital Capital Profit Share premium reserve reserve and capital account unrealised realised loss Total £m £m £m £m £m £m At 1 January 2001 138.6 327.3 1,507.7 134.8 318.7 2,427.1 Realisation of revaluation gains and losses of previous - - 9.6 (9.6) - - years Revaluation surpluses - - 31.3 - - 31.3 Other recognised gains and losses - - 8.5 (4.1) 3.4 7.8 Retained profit for the period - - - - 33.4 33.4 Shares issued 0.1 1.1 - - - 1.2 Reserve transfer - - 7.8 (8.4) 0.6 - ------ ------ ------ ------ ------ ------- At 30 June 2001 138.7 328.4 1,564.9 112.7 356.1 2,500.8 ------ ------ ------- ------ ------ ------ 10. Borrowings 30 June 30 June 31 December 2001 2000 2000 unaudited unaudited audited £m £m £m Maturity profile of Group debt In one year or less 49.9 66.6 54.6 In more than one year but less than two 73.6 20.5 46.2 In more than two years but less than five 129.6 152.3 186.5 In more than five years but less than ten 377.3 327.2 356.4 In more than ten years 857.7 714.9 700.8 ------ ------ ------ Total Group debt 1,488.1 1,281.5 1,344.5 ------ ------ ------ Split between secured and unsecured borrowings Secured (on land and buildings) 204.2 201.8 183.0 Unsecured 1,283.9 1,079.7 1,161.5 ------- ------- ------- 1,488.1 1,281.5 1,344.5 ------- ------- -------- Maturity profile of undrawn borrowing facilities In one year or less 42.4 25.6 35.1 In more than one year but less than two 39.6 52.3 18.0 In more than two years 428.6 469.8 415.0 ------- ------- ------- Total available undrawn facilities 510.6 547.7 468.1 ------- ------- ------- Fair value of borrowings and associated derivatives Book value 1,488.1 1,281.5 1,344.5 Net fair market value 1,562.2 1,329.0 1,457.8 ------- ------- ------- Pre-tax mark to market adjustment 74.1 47.5 113.3 Tax relief due on early (14.3) redemption/termination (22.2) ------- (34.0) - ------ ------- After tax mark to market adjustment 51.9 33.2 79.3 ------- ------- ------- 11. Contingent Tax No provision has been made for taxation estimated at £341.0 million (2000 half year £247.0 million, 2000 full year £329.0 million) which might become payable if the Group's properties and plant were sold at their book value. 12. Notes to Group cash flow statement Half Year Half Year to Year to to 30 June 31 December 30 June 2000 2000 2001 unaudited audited unaudited £m £m £m (1) Reconciliation of operating profit to net cash inflow from operating activities Operating profit 102.5 97.0 192.3 Less other income reallocated (2.2) (3.2) (5.1) Add back depreciation 2.9 2.7 5.6 Adjust for other non-cash items - (0.6) (0.5) Net rental income from trading 0.4 0.6 1.1 properties -------- -------- -------- 103.6 96.5 193.4 Other movements arising from operations: (Increase)/decrease in stocks (6.3) 8.0 (8.7) Increase in debtors (4.3) (4.6) (3.2) Increase/(decrease) in creditors 0.7 0.6 (1.9) ------- ------- -------- Net cash inflow from operating 93.7 100.5 179.6 activities ------- ------- ------- (2) Reconciliation of net cash flow to movement in net debt Increase/(decrease) in cash in the 40.6 7.3 (9.2) period Increase in debt (119.5) (113.2) (174.3) Increase/(decrease) in liquid resources 65.5 25.8 (14.0) ------- ------- ------- Change in net debt resulting from cash flows (13.4) (80.1) (197.5) Reduction of debt due to disposal of subsidiary - 4.1 4.0 Translation difference (20.9) (21.6) (24.2) ------- ------- ------- Movement in net debt in the period (34.3) (97.6) (217.7) Net debt at 1 January 2001 (1,307.6) (1,089.9) (1,089.9) ------- ------- ------- Net debt at 30 June 2001 (1,341.9) (1,187.5) (1,307.6) -------- ------- ------- (3) Analysis of net debt At Cash Exchange At 1 Jan 2001 Flow Movement 30 June £m £m £m 2001 £m Cash in hand and at bank * 14.4 43.9 (0.2) 58.1 Overdrafts (2.4) (3.3) (5.7) ------- 40.6 Loan capital (1,342.1) (119.5) (20.8) (1,482.4) Term deposits * 22.5 65.5 0.1 88.1 ------- ------- ------- ------- (1,307.6) (13.4) (20.9) (1,341.9) ------- ------- ------- ------- * Cash per balance sheet

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