Interim Results
Workspace Group PLC
24 November 2003
WORKSPACE ANNOUNCES ROBUST INTERIM RESULTS
Workspace Group PLC ('Workspace') today announces its interim results for the
six months to 30 September 2003. Workspace is the leading provider of flexible
business accommodation to small and medium size enterprises ('SMEs') in London
and the South East.
• Pre-tax profits on trading operations up 13.2% to £6.61 million
(2002: £5.84 million)
• Pre-tax profits up 54.4% to £6.64 million (2002: £4.30 million)
• Basic earnings per share on trading operations up 12.1% to 28.8p
(30 September 2002: 25.7p)
• Basic earnings per share up 52.1% to 28.9p (30 September 2002: 19.0p)
• Valuation surplus of £14.4 million - total investment property valuation
of £555.4 million
• Net Asset Value per share at 30 September 2003 £16.15, up 7.0% over the
half year, and up 14.0% over the year (31 March 2003: £15.10; 30 September
2002: £14.17)
• Acquisitions of £35.0 million assisted increase of total annual rent roll
during the half year by 3.1% to £37.0 million (up 10.7% on 30 September
2002)
• Dividend distribution re-balanced to ratio of 1:2 (2002/03: 1:2.75)
between interim and anticipated final dividend leading to 37% increase
of interim dividend from 7.5p to 10.3p
Commenting on the results, Harry Platt, Chief Executive, said,
' Workspace has delivered an encouraging set of results within a challenging
economic environment. This validates the robust nature of our business model,
which has delivered growth in a period of general economic uncertainty. We have
increased profits, earnings, dividends and net assets. During the first half we
have also put in place a number of initiatives that should accelerate our future
growth.
' Workspace has continued to grow its market leading position. We have invested
over £35 million in new acquisitions including a portfolio of properties from
Lambeth Borough Council. We are confident that under our style of intensive
management the performance of these properties will improve significantly.
Looking ahead, we are working hard to re-furbish and improve a number of key
properties in our estate. This enhanced space offering will boost our future
performance.
' The Group continues to reinforce its long term position as the main provider
of flexible, affordable space for SMEs in the growing London economy. We look
forward to reporting a year of good growth in earnings and NAV '.
-ends-
Date: 24 November 2003
For further information:
Workspace Group PLC City Profile Group
Harry Platt, Chief Executive Simon Courtenay
Mark Taylor, Finance Director 020-7448-3244
020-7247-7614
e-mail: info@workspacegroup.co.uk
------------------------------------
web: www.workspacegroup.co.uk
------------------------------------
Operating & Financial Review
Chairman's Statement
In a challenging economic environment the Group has made continuing progress -
growing trading profits (up 13%) and earnings per share (up 12%), increasing net
assets per share (up 14%) on the same period last year and extending its market
leading position as a supplier of space to SMEs in London and the South East.
The Board has reviewed its policy for dividend distributions and has resolved to
adjust the balance between the interim and final payments to an approximate 1 :
2 ratio (2002/03: 1:2.75). This, coupled with general performance which would
indicate an increase for the year of 10% in line with previous practice, has
resulted in our increasing the interim dividend by 37% to 10.3p (2002/03: 7.5p).
Given the strengthening of the economy and the future benefit of our investments
as they come on stream, the Group remains confident of reporting a year of good
growth in both earnings and net assets per share.
Chief Executive's Statement
Over the half year total rents, including acquisitions, increased by £1.1
million (or 3.1%) from £35.9 million to £37.0 million. Acquisitions contributed
some £2.45 million to this increase in the rent roll. Elsewhere, the majority
(£1.0m) of the total reduction of £1.35m was attributable to voids secured in
properties in order to facilitate refurbishments or where we sought vacant
possession in anticipation of our disposing of the property for redevelopment.
Occupancy has been maintained in the second quarter and now stands at 83.3% in
overall terms, and 87.4% on a like-for-like basis (excluding acquisitions and
developments). Average rentals, on a like-for-like basis whilst down in the
quarter due to mix variations, are level over the six month period at £8.17 per
sq. ft.
The stable occupancy has underpinned our valuation performance, which has also
been assisted by a yield improvement, particularly in our industrial estates,
and the removal of stamp duty in disadvantaged areas (comprising over half our
stock). Our properties have again been valued independently by CB Richard Ellis
at the half year stage. The valuation of investment properties of £555.4
million, shows an increase in value of 2.7% and a valuation surplus of £14.4
million (for accounts purposes). In addition to this, properties held as trading
stock (for disposal) or as fixed assets showed a surplus of £1.8 million which
is not included in the accounts.
Net Asset Value per share (NAV) of £16.15 at 30 September 2003, is 7.0% up on 31
March 2003, and some 14.0% up on 30 September 2002. The NAV growth has been
fuelled principally by the 79p per share valuation surplus for the half year,
recorded at a time when central London office property values have been under
pressure. The differing performance of the Group's assets compared with West End
and City properties is a reflection in part of the different characteristics of
the markets in London in which the Group invests.
Over £35 million of properties were acquired in the half year. Further
acquisitions are being tracked and, following the period end, contracts were
exchanged for Atlas Business Centre at Staples Corner in North London. Contracts
have also been exchanged during the period for the conditional disposal of 3
properties - Thurston Road, land at Canalot Studios and Payne Road - whilst
other substantial disposals, including that of Kingsland Viaduct and the
adjacent Union Walk, are in negotiation. These disposals reflect the Group's
active management to maximise value.
The Group has reorganised its Vylan digital services network bringing in Centric
Telecom as the principal service provider and creating with Centric a larger and
more robust network which will be beneficial both to customer service and Group
profits.
Portfolio
The table below shows the main details of acquisitions during the half year: -
Name of Description Acquisition Initial Market
Property Price Annual Rent at
Income 30/09/03
Acquisitions
First
Quarter
Poplar
Business Park,
London E14 Modern B1 scheme, £16.10m £1.134m £1.140m
comprising 33 units
totalling 75,000 sq.ft
Second
Quarter
Progress Way
Business Park,
Croydon, CR0
4XD 18 units totalling £3.38m £0.260m £0.268m
31,000 sq. ft
Portfolio of 7
properties
purchased from
Lambeth
Borough
Council 109 units, totalling £15.53m £1.056m £1.295m
169,460 sq. ft mainly
single storey light
industrial building
---------------------------
£35.01m £2.450m £2.703m
---------------------------
The Lambeth portfolio will integrate well with the Group's existing holdings in
South London extending and improving the range of the accommodation offer to our
customers. The Group is confident that, as its management and marketing methods
are applied to this stock, improvements in income will be achieved. The Poplar
Business Park is close to Canary Wharf and, like the Lambeth portfolio, has been
an acquisition target for the Group for some 10 years. Finally, Progress Way,
Croydon, gives the Group exposure in a part of London where it was not
previously represented.
Following these acquisitions the portfolio statistics, and progress through the
year to date, may be summarised as follows:
30 September 30 June 31 March
2003 2003 2003
Number of estates 101 92 92
Total floorspace at end of
period (sq.ft.) 5,363,701 5,103,237 5,104,519
of which:
Like for like portfolio (sq.ft.) 4,568,509 4,594,513 4,596,246
Net Acquisitions/Disposals (sq.ft.) 272,697 - -
Three Mills and developments (sq.ft.) 522,495 508,724 508,273
Lettable units (number) 4,454 4,228 4,190
Annual rent roll of occupied units (£) 37,002,573 35,429,332 35,906,404
Average rent (£/sq.ft) 8.28 8.37 8.21
Average rent of like-for-like
portfolio (£/sq.ft) 8.17 8.30 8.19
Occupancy overall 83.3% 83.0% 85.7%
Occupancy of like-for-like portfolio 87.4% 87.3% 89.3%
Comparisons of overall occupancy and rent roll are distorted by acquisitions,
disposals and transfers. The 'like-for-like portfolio' is defined as those
properties, excluding Three Mills (which due to the short term nature of
lettings of studio space has a volatile occupancy rate which can obscure overall
patterns), that have been held throughout the year to date and which are not
subject to refurbishment/redevelopment programmes.
The reduction over the quarter in like-for-like average rent is attributable to
a reduction in occupancy in higher value properties, particularly those where
development and refurbishment development works are in progress or planned, with
lettings and occupancy increasing elsewhere in lower rental value industrial
accommodation. This position will reverse in time as these works, details of
which are given below, are completed.
During the half year the Group has undertaken works at Barley Mow; Quality
Court; Europa House; Enterprise House; Leathermarket and Tower Bridge. The works
at Quality Court, Europa House and Tower Bridge are now complete; with lettings
now in place at both Europa House and Tower Bridge and marketing of Quality
Court about to commence. Phase 1 of the works at Enterprise House and the works
at the Leathermarket and Barley Mow will complete over the next six months.
These improvement works will lead to further rental growth with occupancy
improving as the currently void space lets up.
After a quiet period in terms of occupancy and rents, there has been a
noticeable increase in enquiries since the quarter end. We believe this is
partly due to the stronger economy and partly to our recent marketing
programmes. As these convert to lettings they offer the prospect of improvements
in both occupancy and in the rent roll in the final months of the year and
subsequently.
Financial Review
Once again, good progress has been made over the half year with turnover (up
12.4%), trading PBT (up 13.2%) and NAV (up 14.0%) well ahead of comparable
values.
Net cash inflow from operating activities was £13.77m (2002: £11.84m). Following
a net capital expenditure outflow of £46.19m (2002: £45.01m) and financing
inflows of £45.18m (2002: £42.48m) the net cash outflow for the period was
£0.73m (2002: inflow of £2.64m). Net debt at the end of the period was £287.4m
(30 September 2002: £220.6m, 31 March 2003: £242.4m) taking the Group's gearing
to 108%. Of the Group's debt at 30th September, 62% was either fixed or the
subject of hedging arrangements. The average cost of funds (based on 30th
September LIBOR rates) was 5.61%. Interest cover over the period was 1.90 times.
With cover at this level the Group is comfortably able to service its debts and
has the capacity to service higher levels of borrowings. At the period end the
Group had committed but undrawn loan facilities of £37.5m, sufficient to cover
its immediate investment plans. It remains on target to achieve its plan of
doubling its portfolio through organic growth financed by debt over a five year
period.
Key financial statistics and indicators may be summarised as follows: -
----------------------- ---------- ---------- ----------
6 Months to Year to 6 Months to
30/09/2003 31/03/2003 30/09/2002
----------------------- ---------- ---------- ----------
Gross profit: turnover 72% 71% 71%
Operating profit: turnover 58% 57% 56%
PBT: turnover 28% 30% 20%
EPS per share (pence) 28.9 64.3 19.0
NAV per share (£) 16.15 15.10 14.17
Interest cover 1.90 *2.18 *2.02
Trading interest cover 1.90 *1.97 *1.97
Gearing 108% 98% 95%
Available facilities (£m) 30.0 75.0 57.0
----------------------- ---------- ---------- ----------
* Excludes non cash refinancing costs in 2002/3 (none in 2003/4)
Taxation
Tax has been provided at the rate of 30% (2002/3: 30%) being the estimated rate
of tax on ordinary activities for the year as a whole. It should be noted that
the full year tax charge on total profits on ordinary activities will be
affected by the timing and extent of disposals
Prospects
The Group continues to maintain stable levels of occupancy and rents in a
difficult environment. With increasing levels of interest in space, rentals and
as a result, earnings should continue to grow, supported by renewed
contributions from the recently completed refurbishment schemes.
The Group continues to monitor a number of properties and anticipates further
acquisitions and disposals before the year-end. In so doing, the Group will
further reinforce its position as the main provider of flexible, affordable
space for SMEs in the growing London economy. It remains confident of reporting
a year of good growth in earnings and NAV.
Consolidated Profit and Loss Account
for the 6 months ended 30 September 2003
Audited Unaudited Unaudited 6 months ended 30 September
year ended 3 months ended
31 March 30 September
-------- ------
2003 Trading Other Total Total
Operations Items
£000
-------- -------------------- ------ ------ -------- -------- ------ ------- -------
Notes 2003 2002 £000 £000 2003 2002
£000 £000 £000 £000
-------------------- ------ ------ -------- -------- ------ ------- -------
44,965 Turnover - 2 12,102 11,036 24,014 - 24,014 21,367
continuing
operations
(12,944) Rent payable and (3,271) (3,266) (6,654) - (6,654) (6,214)
-------- direct costs
-------------------- ------ ------ -------- -------- ------ ------- -------
32,021 Gross profit 8,831 7,770 17,360 - 17,360 15,153
(6,554) Administrative (1,709) (1,638) (3,407) - (3,407) (3,264)
-------- expenses
-------------------- ------ ------ -------- -------- ------ ------- -------
25,467 Operating profit - 7,122 6,132 13,953 - 13,953 11,889
continuing
operations
2,766 Surplus on disposal 5 311 - 32 32 313
of investment
property
173 Interest 3 7 60 18 - 18 94
receivable
(14,993) Interest payable and 4 (3,782) (5,089) (7,364) - (7,364) (8,000)
-------- similar charges
-------------------- ------ ------ -------- -------- ------ ------- -------
13,413 Profit on ordinary 3,352 1,414 6,607 32 6,639 4,296
activities before
taxation
(3,046) Taxation on profit 5 (1,031) (417) (2,008) (10) (2,018) (1,282)
-------- on ordinary
activities
-------------------- ------ ------ -------- -------- ------ ------- -------
10,367 Profit on ordinary 19 2,321 997 4,599 22 4,621 3,014
activities after
taxation
- Equity minority - - - - - -
-------- interests
-------------------- ------ ------ -------- -------- ------ ------- -------
10,367 Profit attributable 6 2,321 997 4,599 22 4,621 3,014
to shareholders
(4,471) Dividends (1,658) (1,156) (1,658) - (1,658) (1,179)
-------- -------------------- ------ ------ -------- -------- ------ ------- -------
5,896 Retained for the 663 (159) 2,941 22 2,963 1,835
-------- period
-------------------- ------ ------ -------- -------- ------ ------- -------
64.3p Basic earnings per 7 14.5p 6.7p 28.8p 0.1p 28.9p 19.0p
share
62.8p Diluted earnings per 7 14.2p 6.7p 28.2p 0.1p 28.3p 18.8p
share
Statement of Total Recognised Gains and Losses
-------- ---------------------------------- ------------------
Audited Unaudited
year ended 6 months ended
30 September
31 March
-------- ---------------------------------- ------------------
2003 2003 2002
£000 £000 £000
-------- ---------------------------------- ---------- ----------
10,367 Profit for the financial period 4,621 3,014
19,701 Unrealised surplus on revaluation 14,398 8,091
-------- of investment properties ---------- ----------
----------------------------------
30,068 Total recognised gains relating to 19,019 11,105
-------- the financial period ---------- ----------
----------------------------------
Note of Historical Cost Profits and Losses
-------- ------------------------------------- ------------------
Audited Unaudited
year ended 6 months ended 30
September
31 March
-------- ------------------------------------- -------------------
2003 2003 2002
£000 £000 £000
-------- ------------------------------------- -------- ---------
13,413 Reported profits on ordinary 6,639 4,296
activities before taxation
15 Realisation of property revaluation - (87)
-------- (losses)/gains of previous years -------- ---------
-------------------------------------
13,428 Historical cost profit on ordinary 6,639 4,209
-------- activities before taxation -------- ---------
-------------------------------------
5,911 Historical cost profit for the period 2,963 1,748
-------- retained after taxation and -------- ---------
dividends
-------------------------------------
Consolidated Balance Sheet
as at 30 September 2003
Audited Unaudited 30
31 March September
---------- -------------------------- ------- -------- ---------
2003 Notes 2003 2002
£000 £000 £000
---------- -------------------------- ------- -------- ---------
Fixed Assets
Tangible assets
505,490 Investment properties 8 555,355 462,763
3,866 Other fixed assets 3,467 3,830
6,234 Investment in own shares 9 6,206 6,249
---------- -------------------------- ------- -------- ---------
515,590 565,028 472,842
---------- -------------------------- ------- -------- ---------
Current Assets
- Stock: properties for 10,673 150
sale
7,386 Debtors 10 10,002 6,619
3,109 Investments 11 3,962 1,032
456 Cash at bank and in hand 414 1,002
---------- -------------------------- ------- -------- ---------
10,951 25,051 8,803
(28,835) Creditors: amounts falling 12 (29,331) (24,381)
---------- due within one year ------- -------- ---------
--------------------------
(17,884) Net current liabilities (4,280) (15,578)
---------- -------------------------- ------- -------- ---------
497,706 Total assets less current 560,748 457,264
liabilities
(245,990) Creditors: amounts falling 13 (291,101) (221,821)
due after more than one
year (including Convertible
Loan Stock)
(4,107) Provision for liabilities 15 (4,502) (3,742)
---------- and charges ------- -------- ---------
--------------------------
247,609 265,145 231,701
---------- -------------------------- ------- -------- ---------
Capital and reserves
1,668 Called up share capital 16 1,672 1,661
42,697 Share premium account 17 42,868 42,467
164,274 Revaluation reserve 17 178,672 152,766
38,970 Profit and loss account 17 41,933 34,807
---------- -------------------------- ------- -------- ---------
247,609 Shareholders' funds - 265,145 231,701
equity interests
- Equity minority interests 19 - -
---------- -------------------------- ------- -------- ---------
247,609 Capital Employed 18 265,145 231,701
---------- -------------------------- ------- -------- ---------
£15.10 Net asset value per share 7 £16.15 £14.17
---------- -------------------------- ------- -------- ---------
Consolidated Cash Flow Statement
for the 6 months ended 30 September 2003
---------- --------------------------- --------- ----------------
Audited year Unaudited
ended 31 March 6 months ended 30
September
---------- --------------------------- --------- ----------------
2003 Notes 2003 2002
to
£000 Cash £000 £000
---------- --------------------------- Flow
---------- -------- ---------
29,112 Net cash inflow from 1 13,767 11,835
operating activities
(13,454) Return on investments and 2 (7,417) (6,780)
servicing of finance
(2,372) Taxation (1,915) (1,259)
(75,225) Capital (expenditure)/ 2 (46,190) (45,011)
proceeds - net
(4,227) Equity dividends paid (3,299) (3,035)
---------- --------------------------- -------- ---------- ---------
(66,166) Net cash outflow before use (45,054) (44,250)
of liquid
resources and financing
2,334 Management of liquid 2 (853) 4,411
resources
66,715 Financing 2 45,175 42,477
---------- --------------------------- -------- ---------- ---------
2,883 Net cash (outflow)/inflow 3 (732) 2,638
---------- --------------------------- -------- ---------- ---------
Reconciliation of net cash
flow to movement in net
debt
2,883 (Decrease)/increase in (732) 2,638
cash
(2,334) Increase/(decrease) in 853 (4,411)
liquid resources
(66,907) Outflow from movements in (45,111) (42,738)
---------- debt financing -------- ---------- ---------
---------------------------
(66,358) Changes in net debt 3 (44,990) (44,511)
---------- resulting from cash flows -------- ---------- ---------
---------------------------
(176,067) Net debt at beginning of (242,425) (176,067)
period
(242,425) Net debt at period end (287,415) (220,578)
---------- --------------------------- -------- ---------- ---------
Notes to the cash flow statement
for the 6 months ended 30 September 2003
1. Reconciliation of operating profit to operating cash flows
------------ --------------- -------------- ----------------
Audited year Unaudited
ended 31 March
6 months ended 30
September
------------ -------------------- -------- --------------------
2003 2003 2002
£000 £000 £000
------------ -------------------- -------- ---------- --------
25,467 Operating profit 13,953 11,889
742 Depreciation charges 281 366
(3) Profit on sale of - -
tangible fixed assets
1,339 (Increase)/decrease in (1,061) (449)
debtors
1,567 Increase in creditors 594 29
------------ -------------------- -------- ---------- --------
29,112 13,767 11,835
------------ -------------------- -------- ---------- --------
2. Analysis of cash flow
Audited year Unaudited 6 months
ended 31 March ended 30 September
---------- ----------------------- -------- ----------------
2003 Notes 2003 2002
£000 to cash flow £000 £000
---------- ----------------------- -------- ----------- -------
Returns on investments
and servicing of
finance
191 Interest received 18 109
(13,645) Interest paid (7,435) (6,889)
(including financing
costs)
---------- ----------------------- -------- ----------- -------
(13,454) Net cash outflow (7,417) (6,780)
---------- ----------------------- -------- ----------- -------
Capital expenditure
(73,192) Purchase of tangible (47,496) (45,747)
fixed assets
(5,219) Net distribution/ 28 -
(purchase) of own
shares
3,037 Sale of tangible fixed 1,278 727
assets
149 Grants received - 9
---------- ----------------------- -------- ----------- -------
(75,225) Net cash outflow (46,190) (45,011)
---------- ----------------------- -------- ----------- -------
Management of liquid
resources
2,334 (Increase)/decrease in 3 (853) 4,411
---------- short-term deposits -------- ----------- -------
-----------------------
2,334 Net cash (outflow)/ (853) 4,411
inflow
---------- ----------------------- -------- ----------- -------
Financing
687 Issue of ordinary share 175 449
capital
180,500 Drawdown of bank 3 45,000 156,500
loans
(114,472) Repayment of 3 - (114,472)
---------- securitised loan -------- ----------- -------
-----------------------
66,715 Net cash inflow 45,175 42,477
---------- ----------------------- -------- ----------- -------
3. Analysis of net debt
Audited year ended 31 March 2003 Unaudited 6 months ended 30 September
------- ------ ------------- ------ ------ ------- ------ ------ ----
At Cash At At Cash At At Cash At
01/04/02 flow 31/03/03 01/04/03 flow 30/09/03 01/04/02 flow 30/09/02
£000 £000 £000 £000 £000 £000 £000 £000
------- ------ ------- ------------- ------ ------ ------- ------ ------ ----
340 116 456 Cash at bank 456 (42) 414 340 662 1,002
and in hand
(2,767) 2,767 - Bank - (690) (690) (2,767) 1,976 (791)
------- ------ ------- overdrafts ------ ------ ------- ------ ------ ----
(2,427) 2,883 456 456 (732) (276) (2,427) 2,638 211
------- ------ ------- ------------- ------ ------ ------- ------ ------ ----
Debt due
within one
year:
(3,660) 3,660 - Securitised - - - (3,660) 3,660 -
loan
307 (307)* - Less cost of - - - 307 *30 337
raising
finance
Debt due
after one
year:
(2,900) - (2,900) 11% (2,900) - (2,900) (2,900) - (2,900)
Convertible
Loan Stock
(12,500) - (12,500) 11.125% First (12,500) - (12,500) (12,500) - (12,500)
Mortgage
Debenture
(7,000) - (7,000) 11.625% First (7,000) - (7,000) (7,000) - (7,000)
Mortgage
Debenture
(110,812) 110,812 - Securitised - - - (110,812) 110,812 -
loan
(44,500) (180,500) (225,000) Bank loans (225,000) (45,000) (270,000) (44,500) 156,500)(201,000)
1,982 (572)* 1,410 Less cost of 1,410 *(111) 1,299 1,982 *(740) 1,242
------- ------ ------- raising of ------ ------ ------- ------ ------ ----
finance
-------------
(179,083) (66,907) (245,990) (245,990) (45,111) (291,101) (179,083) 42,738)(221,821)
------- ------ ------- ------------- ------ ------ ------- ------ ------ -----
5,443 (2,334) 3,109 Short-term 3,109 853 3,962 5,443 (4,411) 1,032
------- ------ ------- deposits ------ ------ ------- ------ ------ -----
-------------
(176,067) (66,358) (242,425) Total (242,425) (44,990) (287,415) (176,067) (44,511)(220,578)
------- ------ ------- ------------- ------ ------ ------- ------ ------ -----
* Includes non-cash write-downs of financing costs.
Notes to the Half Year Results
1.Basis of Preparation
The unaudited financial information contained in this interim report does not
comprise statutory accounts within the meaning of Section 240 of the Companies
Act 1985. The statutory accounts for the year ended 31 March 2003 included an
unqualified report of the auditors. The Group's unaudited accounts for the
period ended 30 September 2003 have been prepared on the basis of the accounting
policies set out in the Annual Report and Accounts for the year ended 31 March
2003. The full accounts for the year ended 31 March 2003 have been filed with
the Registrar of Companies.
2.Segmental Analysis
---------- --------------------- --------------- ---------------
Audited Year Unaudited Unaudited
ended 31 March
3 months ended 6 months ended
---------- --------------------- 30 September 30 September
--------------- ---------------
2003 2003 2002 2003 2002
£000 £000 £000 £000 £000
---------- --------------------- -------- -------- --------- --------
35,667 Rental Income 9,606 8,780 19,086 16,969
7,410 Service charge and 2,042 1,728 4,141 3,584
other recoveries
1,888 Services fees, 454 528 787 814
---------- commissions, and -------- -------- --------- --------
sundry income
---------------------
44,965 12,102 11,036 24,014 21,367
---------- --------------------- -------- -------- --------- --------
3. Interest receivable
--------------------- --------------- ---------------
Audited Year Unaudited Unaudited
ended 31 March
3 months ended 6 months ended
30 September 30 September
---------- --------------------- --------------- ---------------
2003 The following amounts 2003 2002 2003 2002
were earned during
the year
£000 £000 £000 £000 £000
---------- --------------------- --------- ------- --------- --------
106 Short-term deposits 7 60 18 93
67 Other - - - 1
---------- --------------------- --------- ------- --------- --------
173 7 60 18 94
---------- --------------------- --------- ------- --------- --------
4. Interest payable and similar charges
--------------------- --------------- ---------------
Audited Year Unaudited Unaudited
ended 31 March
3 months ended 6 months ended
---------- --------------------- 30 September 30 September
--------------- ---------------
2003 2003 2002 2003 2002
£000 £000 £000 £000 £000
---------- --------------------- --------- ------- --------- --------
361 11% Convertible Loan 79 79 159 159
Stock 2011
1,391 11.125% First 347 347 695 695
Mortgage Debenture
Stock 2007
814 11.625% First 204 204 407 407
Mortgage Debenture
Stock 2007
1,884 Mortgage interest on - 246 - 1,884
securitised loan not
wholly repayable
within five years*
9,241 Bank and other 3,386 2,520 6,543 3,299
interest on amounts
wholly repayable
within five years*
1,861 Finance costs written - 1,861 - 1,861
---------- off --------- ------- --------- --------
---------------------
15,552 4,016 5,257 7,804 8,305
(559) Interest capitalised (234) (168) (440) (305)
---------- on development --------- ------- --------- --------
properties
---------------------
14,993 Charged to profit and 3,782 5,089 7,364 8,000
---------- loss account --------- ------- --------- --------
---------------------
* includes amortisation of cost of raising finance
5.Taxation
---------- --------------------- --------------- ---------------
Audited year Unaudited Unaudited 6
ended 31 March months ended 30
September
3 months ended
30 September
---------- --------------------- --------- ------- --------- --------
2003 2003 2002 2003 2002
£000 £000 £000 £000 £000
---------- --------------------- --------- ------- --------- --------
Current tax:
3,225 UK corporation tax on 840 276 1,623 905
profit for the year
(921) Prior year - - - -
---------- adjustments --------- ------- --------- --------
---------------------
2,304 Total current tax 840 276 1,623 905
---------- --------------------- --------- ------- --------- --------
Deferred tax:
742 Origination and 191 141 395 377
---------- reversal of timing --------- ------- --------- --------
differences
---------------------
3,046 Tax on profit on 1,031 417 2,018 1,282
---------- ordinary activities --------- ------- --------- --------
---------------------
Timing differences are mainly in respect of capital and industrial building
allowances and capitalised interest.
6. Dividends
---------------------- ------------- --------------
Audited Unaudited Unaudited
year
ended 31 3 months ended 6 months ended
March 30 September 30 September
--------- ---------------------- ------------- --------------
2003 2003 2002 2003 2002
£000 £000 £000 £000 £000
--------- ---------------------- -------- ------- ------- ---------
1,193 Interim dividend per 1,651 1,193 1,651 1,193
ordinary share 10.3p
(2002: 7.5p)
3,292 Final dividend per - - - -
ordinary share (2002:
20.6p)
(14) Under/(over) provision 7 (37) 7 (14)
--------- in prior year -------- ------- ------- ---------
----------------------
4,471 1,658 1,156 1,658 1,179
--------- ---------------------- -------- ------- ------- ---------
The proposed interim dividend is payable on 2 February 2004 to shareholders on
the register at the close of business on 5 January 2004.
7. Earnings per share and net assets per share
The following table shows a reconciliation of profits used in calculating
earnings per share.
------------- ----------------------- ------------------------
Audited year Unaudited 6 months ended 30 September
ended 31 March
-------- ------- ----------------------- ------- ------- ------- --------
Profit Earnings per Profit Profit Earnings per Earnings
share share
2003 2003 2003 2002 2003 per share
£000 Pence £000 £000 Pence 2002
Pence
-------- ------- ----------------------- ------- ------- ------- --------
10,367 64.3 Profit for the period 4,621 3,014 28.9 19.0
attributable to
shareholders
(671) (4.2) Other items (22) 1,057 (0.1) 6.7
-------- ------- ----------------------- ------- ------- ------- --------
9,696 60.1 Profit for the period 4,599 4,071 28.8 25.7
-------- ------- attributable to ------- ------- ------- --------
shareholders used for
calculating earnings
per share excluding
other items
-----------------------
Reconciliation of profit used in calculating diluted earnings per share
Audited year Unaudited 6 months ended 30 September
ended 31 March
-------- ------- ----------------------- ------- ------- ------- --------
Profit Earnings per Profit 2003 Profit Earnings per Earnings per
share share 2003 share
2003 2003 £000 2002 Pence 2002
£000 Pence £000 Pence
-------- ------- ----------------------- ------- ------- ------- --------
10,367 Profit for the period 4,621 3,014
attributable to
shareholders used for
calculating basic
earnings per share
223 Interest saving net of 112 112
-------- ------- taxation on 11% ------- ------- ------- --------
Convertible Loan
Stock
-----------------------
10,590 62.8 Profit for the period 4,733 3,126 28.3 18.8
attributable to
shareholders used in
calculating the
underlying diluted
earnings per share
(671) (4.0) Other items (22) 1,057 (0.1) 6.3
-------- ------- ----------------------- ------- ------- ------- --------
9,919 58.8 Profit for the period 4,711 4,183 28.2 25.1
-------- ------- attributable to ------- ------- ------- --------
shareholders used in
calculating the diluted
earnings per share
excluding other items
-----------------------
The following table shows a reconciliation of the weighted average number of shares used for
calculating the basic and diluted earnings per share
Audited year 6 months ended 30 September
ended 31 March
2003
2003 2002
-------- -------- ----------------------------- ------------- ------------
16,119,277 Used for calculating basic 16,002,851 15,865,684
earnings per share
158,075 Dilution due to Share Option 155,290 217,832
Scheme
580,000 Dilution due to Convertible Loan 580,000 580,000
-------- -------- Stock ------------ ------------
----------------------
16,857,352 Used for calculating diluted 16,738,141 16,663,516
-------- -------- earnings per share ------------ ------------
----------------------
Net assets per share have been calculated by dividing net assets of £265,145,000 (2002: £231,701,000)
less investment in own shares of £6,205,627 (2002: £6,249,150) by 16,031,788 (2002:,15,906,795 ) being
the number of shares in issue at 30 September 2003 less investment in own shares of 689,666 (2002:
699,190).
8. Investment properties
Unaudited 30
-------- ---------------- -------- ------- -------- -------- September
-----------
------
Audited Freehold Mainly Freehold Long leasehold Short leasehold Total Total
31 March 2003 £000 £000 £000 £000 2003 2002
£000 £000 £000
-------- ---------------- -------- ------- -------- -------- ------- ------
414,707 Balance at 1 377,935 71,060 56,495 - 505,490 414,707
April 2003/
2002
73,680 Additions during 25,272 3,852 16,374 - 45,498 40,353
the period
(2,598) Disposals during - - - - - (388)
the period
- Reclassification 589 53 - - 642 -
from other
fixed
assets
- Reclassification (10,673) - - - (10,673) -
to current
assets
19,701 Revaluation 9,652 3,400 1,346 - 14,398 8,091
-------- during the -------- ------- -------- -------- ------- ------
period
----------------
505,490 Balance at 402,775 78,365 74,215 - 555,355 462,763
-------- period end -------- ------- -------- -------- ------- ------
----------------
The historical
-------- cost of -------- ------- -------- -------- ------- ------
investment
properties
----------------
340,472 Balance at 270,573 52,514 58,791 7 381,885 309,237
-------- period end -------- ------- -------- -------- ------- ------
----------------
Valuation
The Group's investment properties were valued by CB Richard Ellis, Chartered
Surveyors, at 30 September 2003 on the basis of open market existing use value
and in accordance with the guidance notes issued by the Royal Institution of
Chartered Surveyors.
9. Investment in own shares
The Company has established an Employee Share Ownership Trust (ESOT) to purchase
shares in the market for distribution at a later date in accordance with the
terms of the 1993 and 2000 Share Option Schemes. The shares are held by an
independent trustee and the rights to dividend on the shares have been waived.
At 30 September 2003, the number of shares held by the Trust totalled 689,666
shares (2002: 699,190) with a nominal value of £68,967 (2002: £69,919) and the
book value of the shares amounted to £6,206,000 (2002: £6,249,000). The shares,
whilst legally not the property of the Company, have been included in fixed
asset investments. At 30 September 2003 the market value of the shares held by
the Trust was £8,241,500. 665,030 shares held by the Trust are subject to option
awards.
10.Debtors
--------- ---------------------------- ----------------
Audited Unaudited 30
September
31 March
--------- ---------------------------- ----------------
2003 2003 2002
£000 £000 £000
--------- ---------------------------- --------- ---------
Amounts falling due within one year:
6,294 Trade debtors 4,781 4,407
37 Taxation and social security 2,776 26
1,055 Prepayments and accrued income 2,445 2,059
--------- ---------------------------- --------- ---------
7,386 10,002 6,492
--------- ---------------------------- --------- ---------
Amounts falling due after one year:
- Advance commissions - 127
--------- ---------------------------- --------- ---------
7,386 Total debtors 10,002 6,619
--------- ---------------------------- --------- ---------
11. Investments
Investments of £3,962,000 (2002: £1,032,000) comprise short-term deposits with
an original maturity date of less than three months and rental deposits.
12. Creditors: Amounts falling due within one year
Audited 31 Unaudited 30
March September
----------- --------------------------- ----------------
2003 2003 2002
£000 £000 £000
----------- --------------------------- --------- ---------
- Bank overdraft (secured) 690 791
3,026 Trade creditors 4,023 2,088
1,925 Corporation tax payable 1,632 1,638
1,946 Taxation and social security 284 998
5,154 Tenants' deposits 5,261 4,575
8,231 Accruals 10,506 7,780
5,261 Deferred income - rent and service 5,284 5,318
charges
3,292 Dividends 1,651 1,193
----------- --------------------------- --------- ---------
28,835 29,331 24,381
----------- --------------------------- --------- ---------
13.Creditors: Amounts falling due after more than one year
Audited 31 Unaudited 30
March September
----------- ---------------------------- ---------- ---------
2003 2003 2002
£000 £000 £000
----------- ---------------------------- ---------- ---------
Long-term borrowings consist of:
Unsecured:
2,900 11% Convertible Loan Stock 2011 2,900 2,900
Secured:
12,500 11.125% First Mortgage Debenture 12,500 12,500
Stock 2007
7,000 11.625% First Mortgage Debenture 7,000 7,000
Stock 2007
223,590 Other secured loans 268,701 199,421
----------- ---------------------------- ---------- ---------
245,990 291,101 221,821
----------- ---------------------------- ---------- ---------
14. Borrowings and financial instruments
i Maturity of financial liabilities
A maturity analysis of loans is shown below:
Audited 31 Unaudited 30
March September
----------- --------------------------- --------- ----------
2003 2003 2002
£000 £000 £000
----------- --------------------------- --------- ----------
- Less than one year 690 791
- Between three years and four 289,500 -
years
244,500 Between four years and five - 220,500
years
2,900 In five years and more 2,900 2,900
----------- --------------------------- --------- ----------
247,400 293,090 224,191
(1,410) Less cost of raising finance (1,299) (1,579)
----------- --------------------------- --------- ----------
245,990 291,791 222,612
----------- --------------------------- --------- ----------
ii Fair value of financial assets and liabilities
Book and fair values of financial assets and liabilities are:
Audited 31 March Unaudited 30 September
-------------- --------------------------
Book value 2003 Fair value 2003 Book value Fair value Book value Fair value
£000 £000 2003 2003 2002 2002
£000 £000 £000 £000
-------- -------- ---------------- -------- -------- -------- --------
Primary
financial
instruments
- - Short-term (690) (690) (791) (791)
liabilities
(245,990) (251,093) Long-term (291,101) (296,621) (221,821) (227,514)
borrowing
3,565 3,565 Financial 4,376 4,376 2,034 2,034
assets
Derivative
financial
instruments
244 (6,724) Interest rate 225 (4,936) 264 (5,358)
-------- -------- collars -------- -------- -------- --------
----------------
(242,181) (254,252) (287,190) (297,871) (220,314) (231,629)
-------- -------- ---------------- -------- -------- -------- --------
The fair value of the interest rate collars have been determined by reference to
market prices and discounted expected cash flows at prevailing interest rates.
All other fair values have been calculated by discounting expected cash flows at
prevailing interest rates. The total fair value adjustment equates to 66.6p per
share (46.6p based on diluted share capital).
15. Provision for liabilities and charges
Audited 31 Unaudited 30
March September
----------- -------------------------- ------------------------
2003 2003 2002
£000 £000 £000
----------- -------------------------- ---------- ----------
Deferred taxation:
3,365 Balance at 1 April 2003/ 4,107 3,365
2002
742 Deferred tax charge for the 395 377
----------- period ---------- ----------
--------------------------
4,107 Balance at period end 4,502 3,742
----------- -------------------------- ---------- ----------
If the investment properties were sold for their revalued amount there
would be a potential liability to corporation tax of £44,305,000 (31
March 2003: £39,986,000, 30 September 2002: £40,050,000). In accordance
with FRS 19 no provision has been made for these amounts.
16. Share capital
---------------------- --------------- --------- ----------
Audited 31 Unaudited 30 September
March
2003 2003 2002
----------- -------------------------- --------- ----------
Number Number Number
----------- -------------------------- --------- ----------
Authorised:
21,500,000 Ordinary shares of 10p each 21,500,000 21,500,000
----------- -------------------------- --------- ----------
----------- -------------------------- --------- ----------
2003 2003 2002
£ £ £
----------- -------------------------- --------- ----------
Issued:
1,667,808 Fully paid ordinary shares of 1,672,145 1,660,599
----------- 10p each --------- ----------
--------------------------
17. Other reserves
----------------
Audited 31 Unaudited 30
March --------------------------- September
-----------
--------- ---------
2003 2003 2002
£000 £000 £000
----------- --------------------------- --------- ---------
(a) Share premium account
42,030 Balance at 1 April 2003/2002 42,697 42,030
667 Additions 171 437
----------- --------------------------- --------- ---------
42,697 Balance at period end 42,868 42,467
----------- --------------------------- --------- ---------
(b) Revaluation reserve
Property valuation surplus:
144,588 Balance at 1 April 2003/2002 164,274 144,588
(15) Disposals during the period - 87
19,701 Revaluation adjustment 14,398 8,091
----------- --------------------------- --------- ---------
164,274 Balance at period end 178,672 152,766
----------- --------------------------- --------- ---------
(c) Profit and loss account
33,059 Balance at 1 April 2003/2002 38,970 33,059
5,896 Retained profit for the period 2,963 1,835
15 Transfer from revaluation - (87)
----------- reserve --------- ---------
---------------------------
38,970 Balance at period end 41,933 34,807
----------- --------------------------- --------- ---------
18. Reconciliation of movements in equity shareholders' funds
Audited 31 Unaudited 30
March September
----------- ---------------------------- ---------------
2003 2003 2002
£000 £000 £000
----------- ---------------------------- -------- ---------
10,367 Profits for the financial period 4,621 3,014
(4,471) Dividends (1,658) (1,179)
19,701 Unrealised surplus on revaluation of 14,398 8,091
properties
687 Issue of shares 175 450
----------- ---------------------------- -------- ---------
26,284 Net addition to equity shareholders' 17,536 10,376
funds
221,325 Opening equity shareholders' funds 247,609 221,325
----------- ---------------------------- -------- ---------
247,609 Closing equity shareholders' funds 265,145 231,701
----------- ---------------------------- -------- ---------
19.Equity minority interests
Audited 31 Unaudited 30
March September
----------- ---------------------------- -------- ---------
2003 2003 2002
£000 £000 £000
----------- ---------------------------- -------- ---------
74 Share of loss of subsidiary 35 76
undertaking
(74) Provision against losses of subsidiary (35) (76)
undertaking
----------- ---------------------------- -------- ---------
- - -
----------- ---------------------------- -------- ---------
£nil has been appropriated to minority interests in all periods shown in this
statement.
20.Capital commitments
At the period end the estimated amounts of commitments for future capital
expenditure not provided for were:
--------------
Audited 31 Unaudited 30
March September
------------ ----------------------------- -------- -------
2003 2003 2002
£000 £000 £000
------------ ----------------------------- -------- -------
8,038 Under contract 4,349 3,762
2,913 Board authorised but not contracted 2,474 3,919
------------ ----------------------------- -------- -------
21. Subsequent events
Following the period end contracts were exchanged for the purchase of the Atlas
Business Centre in North London for a cash consideration of £12.65 million.
22. Interim statement
This statement was approved by the Board on 21 November 2003. Copies of this
statement will be dispatched to shareholders on Monday 24 November 2003 and will
be available from the Group's registered office at Magenta House, 85 Whitechapel
Road, London E1 1DU from 9.00am on that day.
This information is provided by RNS
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