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Minerva PLC (MNR)

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Friday 26 March, 2004

Minerva PLC

Interim Results

Minerva PLC
26 March 2004



26th March 2004


                     MINERVA PLC ANNOUNCES INTERIM RESULTS


Minerva plc, the FTSE 250 property company, announced today its preliminary
results for the 6 months ended 31st December 2003.

Highlights

   •Net rental income increased by 9.8% to £25.5 million (2002: £23.2 million).

   •Profit before tax of £0.6 million from Minerva's core business (2002:
    £1.2 million).

   •Including Minerva's share of the joint venture results of Scarlett Retail, 
    the loss before tax for the period was £4.4 million.

   •Interim dividend for the year increased by 1.9% to 1.07 pence per share
    (2002: 1.05 pence).

   •Cash reserves of £129.4 million (June 2003: £141.2 million).

   •The Group has been given the go ahead for The Minerva Building which
    comprises a 1 million sq.ft. prime office development in the City of London,
    designed by British architects, Grimshaw.

   •The Group intends to start the demolition process this year, in readiness
    for the commencement of the construction of The Minerva Building anticipated
    in 2005.

   •The Group is concluding the necessary legal documentation prior to the
    commencement of the compulsory purchase process in respect of the town
    centre shopping development at Park Place, Croydon.

   •Minerva intends to acquire the Allders department store in Croydon, which
    will further consolidate its control of the development site required for
    Park Place.

   •The Group has entered into a contract for the sale of The Brooks Shopping
    Centre, Winchester for £13 million, in excess of its current net book value.

   •Since the acquisition of Allders by Scarlett Retail last year, the
    new management has embarked upon a deep and broadly based re-direction of
    the Group's activities to position itself for future growth, the results of
    which we expect to feed through in 2005.


Andrew Rosenfeld, Chief Executive of Minerva, said:


"With three major London development opportunities; The Minerva Building, Park
Place and The Walbrook, a high quality office portfolio and cash of £130
million, we are well placed to benefit from the recovery in the London market.


Having obtained the go ahead for The Minerva Building we intend to provide
certainty to the tenant market by starting the demolition process later this
year in readiness for the construction of the tower which is anticipated to
commence in 2005."


Enquiries:

Andrew Rosenfeld                                 Tel: (020) 7535 1000
Chief Executive, Minerva plc


Ian Lindsley                                     Tel: (020) 7621 9999
Jefferson Communications

26th March 2004



MINERVA PLC

CHAIRMAN'S STATEMENT


Since the Group's year end we have been successful in obtaining the green light
for what we believe will prove to be one of Minerva's most significant
development opportunities. With an improving Central London office market
supported by a strengthening economic backdrop, the prospect of developing the
City of London's largest single headquarters office building will provide
shareholders with a unique opportunity to participate in further significant
value.


Before I deal with the Group's activities in more detail, I would like to turn
to the financial results for the six months to 31 December 2003.


Profit before tax of £0.6 million was made by Minerva's core business (2002:
£1.2 million). After the inclusion of our share of the results of Scarlett
Retail Group Limited ("Scarlett Retail"), the loss for the half year before tax
was £4.4 million (2002: £1.2 million profit).


The Group's cash reserves at the period-end stood at £129.4 million (30 June 
2003: £141.2 million).


You will recall from my statement in September that we regard this period as one
of transition with the inevitable trade-off between income and future
development surpluses. With this in mind, the Directors have resolved to pay an
interim dividend of 1.07 pence per share (2002: 1.05 pence) and this will be
paid on 12 May 2004 to those shareholders on the register at close of business
on 13 April 2004.


Since I last wrote to you we have been given the go ahead to develop The Minerva
Building. This headquarters office tower, designed by British architects,
Grimshaw, comprising 50 storeys, rising at its apex to a height of 245 metres
and extending to over 1 million sq. ft. of net lettable accommodation, will
quite simply be the largest building of its kind ever constructed in the City.
It has taken nearly three years since we first formulated our proposals and we
have pursued a delicate path of consultation and negotiation which has resulted
in the successful outcome that we have now been able to achieve. In adopting
this carefully considered path we have been able to avoid the uncertainties of a
time consuming and costly public inquiry, the outcome of which is never certain.
As a consequence of our approach The Minerva Building is the first major
"developer led" office tower in the City of London to be granted consent without
the need for referral to a third party for determination.


With an improving London economy and an increase in momentum in the London
commercial real estate sector, Minerva has now been given the go ahead for three
major projects each of which has the potential to provide significant further
shareholder value. Two of these projects are office developments in the City of
London; The Minerva Building London EC3 (1 million sq. ft. net) and The Walbrook
London EC4 (450,000 sq. ft. net) and the remaining project being a retail
development, Park Place, Croydon (1 million sq. ft. net).


With a combined end value of around £2 billion it is clear that a successful
implementation of these developments will have a dramatic impact on the Group's
net assets.


Our philosophy for each development continues to be centred around the
elimination of unnecessary speculative risk and with an improving market
environment, the prospect of achieving a necessary level of pre-letting prior to
the commencement of the construction programme is looking ever more likely.


As we have now been given the opportunity to develop The Minerva Building, it is
our current intention to commence the demolition process this year, in readiness
for the construction of the building which we anticipate will commence in the
autumn of 2005. By providing certainty in respect of the timing of construction
we will be better able to attract one of the growing number of tenant enquiries
that has emerged in the City in recent months.


Turning now to our Park Place shopping centre development, we are in the final
stages of concluding our legal agreements with Croydon Council which will then
be followed by the Compulsory Purchase procedures promoted by the Council,
enabling us to acquire those interests which form an integral part of the
intended development. Subject to conclusion of this procedure and satisfactory
funding, we expect to commence work on site by the end of 2005. With a major
anchor tenant for the department store and significant interest in the unit
shopping, we are confident that when commenced this development will provide a
first class asset for the Group and be a major part of the regeneration of
Croydon. We intend to acquire the existing Allders store in Croydon for the sum
of circa £48.8 million which will further consolidate our control of the
development site. The property which comprises a gross internal area of 535,000
sq. ft. is subject to a lease with Allders Department Stores Limited, a
subsidiary of Allders Limited, for an unexpired term of circa 31 years at an
initial annual net rent of approximately £3.4 million. This lease is subject to
the existing development agreement which provides for Allders relocation and the
possession of the existing store in order to allow Park Place to proceed.


We have continued to maintain a flexible leasing strategy for the existing
buildings comprising The Walbrook development which, as I mentioned above, has a
planning permission for a circa 450,000 sq. ft. headquarters office development
designed by Foster & Partners, located at the very heart of the City of London,
adjacent to the Mansion House and between Bank and Cannon Street Stations. This
is an important development opportunity which, in the context of an improving
City office market, has the potential to provide significant returns to
shareholders.


Minerva's property portfolio is predominantly London based and is therefore well
placed to benefit from the general recovery in the London market. In addition to
the developments that I have mentioned above, the Group has a series of further
assets in the West End of London, Holborn and the South Bank adjacent to the new
Tate Gallery, 'Bankside'. This latter location has been the scene of extensive
development activity and our riverside investments in this location extend to
around 550,000 sq. ft. of net lettable office accommodation with future
development potential.


We have entered into a contract for the sale of The Brooks Shopping Centre,
Winchester for £13 million. This asset, which was originally acquired as part of
a larger portfolio, did not form part of our core asset base. As a consequence
of our successful management and leasing strategy we have contracted to dispose
of this property in excess of net book value, the financial consequences of
which will be recognised on completion.


I would now like to turn to the position of Scarlett Retail which is the holding
company for the Allders Group. The principal reason for acquiring our joint
venture interest in Scarlett Retail was to secure an important land holding at
the centre of our proposed Park Place development. You will recall that our
original investment in the shares of Allders plc was £30 million and, as a
consequence of Scarlett Retail acquiring Allders plc, we realised £33 million.
As part of the transaction we invested around £10.4 million for a majority stake
in Scarlett Retail in partnership with Lehman Brothers and new management headed
by Terry Green and Phil Cox.


This management team has, over the past twelve months, embarked upon a deep and
broadly based re-direction of Allders' activities which, along with a difficult
trading environment, has led to losses in Scarlett Retail, a share of which we
are required to incorporate within the Group's half year results. We believe
that the quality of the management team and the new direction that they have
imposed at an operational level will, subject to satisfactory retail market
conditions, ultimately reap rewards as Allders trades through 2005.


The next few years have the potential to be the most significant for the Minerva
Group since its flotation in 1996. With three major London development projects,
sitting within a broad based London investment portfolio, set against the
backdrop of an improving London commercial property market, the Group is well
placed to reap significant rewards as a result of the implementation of
development and entrepreneurial asset management.


You will by now appreciate that any enthusiasm I may display is always tempered
with varying degrees of caution having mind to my experience in the sector over
many years and the broader economic and political environment that affects us
all. We must therefore be vigilant for the market risks that might emerge,
whilst at the same time seeking to unlock opportunities so as to secure
enhancement in net asset value within a favourable environment.


Sir David Garrard
Chairman




CONSOLIDATED PROFIT AND LOSS ACCOUNT

For the six months ended 31 December 2003

                                       (Unaudited)    (Unaudited)      (Audited)
                                        Six months     Six months        Year to
                                               to              to   30 June 2003  
                                       31 December    31 December   
                                              2003           2002    
                                                      (restated)*    (restated)*
                                                       
                               Note        £'000          £'000          £'000
                               ------      -------        -------        -------

Group and share of joint           1     161,114         28,490        136,115
venture turnover
Less: Share of joint venture    11a     (130,371)             -        (78,256)
turnover                                 
                                         ---------      ---------       --------
Total turnover                     1      30,743         28,490         57,859
Net property outgoings             1      (5,226)        (5,260)       (10,284)
Administrative expenses                   (3,627)        (3,363)        (6,625)
Other income                                 142             98            196
                                         ---------      ---------       --------
Group operating profit                    22,032         19,965         41,146
Share of joint venture         11a/b        (911)             -         (4,026)
operating loss                 
                               
-----------------------       -------    ---------      ---------       --------
Share of operating (loss)/                  (331)             -          1,002
profit
Share of exceptional items                  (244)             -         (4,792)
Goodwill amortisation                       (336)             -           (236)
------------------------        ------   =========      =========       ========
Total operating profit                    21,121         19,965         37,120
Income from listed                             -            943            952
investments
Group net financing costs          3     (21,384)       (19,720)       (41,210)
Share of joint venture net       11a      (4,159)             -         (2,060)
financing costs                          
                                         ---------      ---------       --------
(Loss)/profit on ordinary                 (4,422)         1,188         (5,198)
activities before taxation
Taxation                           4        (323)          (287)           465
                                         ---------      ---------       --------
(Loss)/profit on ordinary                 (4,745)           901         (4,733)
activities after taxation
Dividends                          5      (1,720)        (1,682)        (5,046)
                                         ---------      ---------       --------
Retained loss                             (6,465)          (781)        (9,779)
                                         ---------      ---------       --------

(Loss)/earnings per share -        6        (3.0p)          0.6p          (3.0p)
basic and diluted                        
                                         ---------      ---------       --------

* Restated as described in note 1.




CONSOLIDATED BALANCE SHEET

As at 31 December 2003

                                           (Unaudited)   (Unaudited)   (Audited)
                                                 As at         As at       As at
                                           31 December   31 December     30 June   
                                                  2003         2002         2003
                                                    
                                    Note         £'000        £'000        £'000
                                  ------       -------      -------      -------

Fixed assets
Investment properties                 7      1,065,352    1,089,481    1,059,543
Tangible fixed assets                            1,034        1,416        1,267
Investments                                      5,041       29,889          107
Investment in joint venture       11a/b             -            -         3,069
------------------------          ------     ---------    ---------     --------
Share of gross assets                              -            -        105,727
Share of gross liabilities                         -            -      (115,890)
Goodwill                                           -            -         13,232
------------------------           ------    =========    =========     ========
                                             1,071,427    1,120,786    1,063,986
                                             ---------    ---------     --------
Current assets
Debtors                                         10,051       20,953       10,275
Cash at bank and in hand                       129,442       85,718      141,168
                                             ---------    ---------     --------
                                               139,493      106,671      151,443
Creditors: Amounts falling due                (40,548)     (42,444)     (43,827)
within one year                              
                                             ---------    ---------     --------
Net current assets                              98,945       64,227      107,616
                                             ---------    ---------     --------

Total assets less current                    1,170,372    1,185,013    1,171,602
liabilities

Creditors: Amounts falling due
after more than one year                     (660,555)    (618,892)    (658,290)
Provisions for liabilities and       10        (5,546)      (4,211)      (5,223)
charges
Provision for joint venture       11a/b         (2,001)           -            -
------------------------          ------     ---------    ---------     --------
Share of gross assets                          122,744            -            -
Share of gross liabilities                   (137,641)            -            -
Goodwill                                        12,896            -            -
------------------------           ------    =========    =========     ========
Net assets                                     502,270      561,910      508,089
                                             ---------    ---------     --------

Capital and reserves
Called up share capital                         40,161       40,048       40,048
Share premium account                          197,634      197,101      197,101
Revaluation reserve                            241,413      286,236      241,413
Other reserves                                  41,795       41,795       41,795
Profit and loss account                       (18,733)      (3,270)     (12,268)
                                             ---------    ---------     --------
Equity shareholders' funds                     502,270      561,910      508,089
                                             ---------    ---------     --------

Net assets per share                 12         312.7p       350.8p       317.2p
                                             ---------    ---------     --------




STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

For the six months ended 31 December 2003

                                              (Unaudited)  (Unaudited) (Audited)
                                                      Six         Six       Year
                                                months to   months to         to
                                                       31          31    30 June
                                                 December    December       2003
                                                     2003        2002
                                                                          
                                                  £'000       £'000      £'000
                                                  -------     -------    -------

(Loss)/profit on ordinary activities after       (4,745)        901     (4,733)
taxation
Unrealised deficit on revaluation of                  -           -    (44,823)
investment properties                           
                                                ---------   ---------   --------
Total recognised (losses)/gains for the          (4,745)        901    (49,556)
period                                          
                                                ---------   ---------   --------



NOTE OF HISTORICAL COST PROFITS AND LOSSES

For the six months ended 31 December 2003

                                              (Unaudited) (Unaudited)  (Audited)
                                                      Six         Six       Year
                                                months to   months to         to
                                                       31          31    30 June
                                                 December    December       2003   
                                                     2003        2002
                                                                          
                                                  £'000       £'000      £'000
                                                  -------     -------    -------

(Loss)/profit on ordinary activities before      (4,422)      1,188     (5,198)
taxation                                        
                                                ---------   ---------   --------

Historical cost (loss)/profit on ordinary        (4,422)      1,188     (5,198)
activities before taxation                      
                                                ---------   ---------   --------
Historical cost loss for the period retained     (6,465)       (781)    (9,779)   
after taxation and dividends                                                    
                                                ---------   ---------   --------



RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

For the six months ended 31 December 2003

                                              (Unaudited) (Unaudited)  (Audited)
                                                      Six         Six       Year
                                                months to   months to         to
                                                       31          31    30 June
                                                 December    December       2003
                                                     2003        2002
                                                                          
                                                  £'000       £'000      £'000
                                                  -------     -------    -------

(Loss)/profit on ordinary activities after       (4,745)        901     (4,733)
taxation
Dividends                                        (1,720)     (1,682)    (5,046)
                                                ---------   ---------   --------
                                                 (6,465)       (781)    (9,779)
Unrealised deficit on revaluation of                  -           -    (44,823)
investment properties
New share capital issued                            646           -          -
                                                ---------   ---------   --------
Net movement in shareholders' funds              (5,819)       (781)   (54,602)
Opening shareholders' funds                      508,089     562,691    562,691
                                                ---------   ---------   --------
Closing shareholders' funds                      502,270     561,910    508,089
                                                ---------   ---------   --------





SUMMARY CONSOLIDATED CASH FLOW STATEMENT

For the six months ended 31 December 2003

                                               (Unaudited) (Unaudited) (Audited)
                                                      Six         Six       Year
                                                months to   months to         to
                                                       31          31    30 June
                                                 December    December       2003
                                                     2003        2002
                                                                          

                                      Note        £'000       £'000      £'000
                                      ------      -------     -------    -------

Net cash inflow from operating        13 a       20,468      20,248     42,544
activities
Dividend received from joint                      1,750           -          -
venture
Returns on investments and servicing            (20,186)    (15,720)   (35,734)
of finance
Taxation                                              -           -          -
                                                ---------   ---------   --------
Net operating cash inflow                         2,032       4,528      6,810
Capital expenditure and financial               (11,268)    (21,966)    (4,190)
investment
Acquisitions                                       (107)    (21,209)   (23,023)
Equity dividends paid                            (3,302)     (3,315)    (4,960)
                                                ---------   ---------   --------
Cash outflow before use of liquid
resources and financing
                                                (12,645)    (41,962)   (25,363)
Movements in liquid resources                    14,248      33,884    (21,186)
Financing                                           919       7,444     46,295
                                                ---------   ---------   --------
Increase/(decrease) in cash           13 b        2,522        (634)      (254)
                                                ---------   ---------   --------



Notes to the accounts


1.      Accounting policies

The financial information included in the Interim Report comprises the
consolidated profit and loss account and balance sheet, statement of total
recognised gains and losses, note of historical cost profits and losses,
reconciliation of movements in shareholders' funds, summary consolidated cash
flow statement and summary notes. This has been prepared in accordance with the
normal accounting policies of the Group, except for that disclosed below and in
note 7 regarding valuation of investment properties.


In November 2003, the Accounting Standards Board issued an amendment
(application note G) to FRS 5. Recoverable property expenses, which include
service charge expenses and insurance, had previously been shown net of the
contributions received from tenants within net property outgoings. Following the
issue of application note G, the gross value of these expenses is included
within net property outgoings and the contribution from tenants is included
within turnover. Concession sales and staff discounts were previously included
gross in the Group's share of joint venture turnover. Following the issue of
application note G, the Group's share of joint venture turnover includes
commission only on concession sales and sales to staff net of discounts.


The effect of adopting application note G was to decrease group and share of
joint venture turnover by £31,867,000 (year to 30 June 2003: £14,268,000; six
months to 31 December 2002: £2,390,000 increase), increase total turnover by
£2,621,000 (year to 30 June 2003: £4,779,000; six months to 31 December 2002:
£2,390,000) and increase net property outgoings by £2,621,000 (year to 30 June
2003: £4,779,000; six months to 31 December 2002: £2,390,000). The relevant
disclosures have been restated, resulting in no change to the (loss)/profit on
ordinary activities for the respective periods. This is illustrated in the table
below:

                                              (Unaudited) (Unaudited)  (Audited)
                                                      Six         Six       Year
                                                months to   months to         to
                                                       31          31    30 June
                                                 December    December       2003
                                                     2003        2002
          
                                                  £'000       £'000      £'000
                                                -------     -------    -------
Group and share of joint venture turnover
-------------------------------------------
As previously stated                            192,981      26,100     150,383
Recoverable property expenses                     2,621       2,390       4,779
Joint venture turnover                          (34,488)          -     (19,047)
                                              ---------   ---------   --------
As restated                                     161,114      28,490     136,115
                                              ---------   ---------   --------

Total turnover
----------------
As previously stated                            28,122       26,100      53,080
Recoverable property expenses                    2,621        2,390       4,779
                                             ---------    ---------     --------
As restated                                     30,743       28,490      57,859
                                             ---------    ---------     --------

Net property outgoings
-------------------------
As previously stated                           (2,605)     (2,870)      (5,505)
Recoverable property expenses                  (2,621)     (2,390)      (4,779)
                                             ---------   ---------      --------
As restated                                    (5,226)     (5,260)      (10,284)
                                             ---------   ---------      --------





2.      Companies Act 1985

The financial information for the year to 30 June 2003 does not constitute
statutory accounts within the meaning of Section 240 of the Companies Act 1985.
It is extracted from the statutory accounts for that period, on which the
auditors, PricewaterhouseCoopers LLP, gave an unqualified report under Section
236 of the Companies Act 1985 which did not contain a statement under Section
237(2) or Section 237(4) of the Companies Act 1985. Statutory accounts for the
year to 30 June 2003 have been delivered to the Registrar of Companies.


The financial information for the six months to 31 December 2003 has neither
been audited nor reviewed by the Group's auditors.



3.      Group net financing costs

                                              (Unaudited) (Unaudited)  (Audited)
                                                      Six         Six       Year
                                                months to   months to         to
                                                       31          31    30 June
                                                 December    December       2003
                                                     2003        2002
                                                                          
                                                  £'000       £'000      £'000
                                                  -------     -------    -------

Bank interest payable and similar charges       (23,609)    (23,678)   (46,955)
Capitalised during the period                         -       1,970      1,971
Exceptional charge relating to early loan             -           -       (504)
repayments                                      ---------   ---------   --------
                                                (23,609)    (21,708)   (45,488)
Interest receivable                               2,225       1,988      4,278
                                                ---------   ---------   --------
Group net financing costs                       (21,384)    (19,720)   (41,210)
                                                ---------   ---------   --------


4.      Taxation
                                          (Unaudited)   (Unaudited)    (Audited)
                                                  Six           Six         Year
                                            months to     months to           to
                                                   31            31      30 June 
                                             December      December         2003
                                                 2003          2002

                                              £'000         £'000        £'000
                                              -------       -------      -------

UK corporation tax                                -             -            -
Deferred tax                                    323           287        1,299
                                            ---------     ---------     --------
Group corporation tax charge                    323           287        1,299
Share of tax credit of joint venture              -             -       (1,764)
                                            ---------     ---------     --------
Total taxation charge/(credit)                  323           287         (465)
                                            ---------     ---------     --------




5. Dividends

The interim dividend of 1.07 pence (2002: 1.05 pence) per ordinary share is
payable on 12 May 2004 to members on the register at close of business on 13
April 2004. The interim dividend has been calculated based on 160,738,453 (31
December 2002: 160,193,213) ordinary shares currently in issue.


6. (Loss)/earnings per share

(Loss)/earnings per share have been calculated on a weighted average of
160,373,550 ordinary shares of 25 pence each in issue throughout the period
(year to 30 June 2003: 160,193,213 ordinary shares; six months to 31 December
2002: 160,193,213 ordinary shares), and have been based on loss on ordinary
activities after taxation of £4,745,000 (year to 30 June 2003: £4,733,000; six
months to 31 December 2002: £901,000 profit).


Diluted (loss)/earnings per share have been calculated after allowing for the
exercise of share options, and have been based on 160,448,023 ordinary shares of
25 pence each in issue throughout the period (year to 30 June 2003: 160,318,750
ordinary shares; six months to 31 December 2002: 160,375,792 ordinary shares).


7. Investment properties

Investment properties owned at 30 June 2003 are included in the balance sheet at
31 December 2003 at the independent valuation at 30 June 2003, as adjusted for
UITF 28, plus costs incurred on the properties since that date, less disposals
at valuation. Investment properties acquired during the period under review are
included at the cost of acquisition plus any costs incurred on the property
since the date of acquisition.



8. Borrowings

The debt maturity profile of the Group's bank and building society borrowings at
31 December 2003 is as follows:

                                   (Unaudited)         (Unaudited)     (Audited)
                                         As at               As at         As at
                                            31                  31       30 June 
                                      December            December          2003
                                          2003                2002
                                                                          
                                       £'000               £'000          £'000
                                       -------             -------       -------

Less than one year                     6,937               7,571         7,687
Between one and two years              7,203              89,817         8,137
Between two and five years           214,047             101,650       107,067
Over five years                      443,186             431,492       547,261
                                     ---------           ---------      --------
                                     671,373             630,530       670,152
Unamortised loan issue costs          (3,881)             (4,067)       (4,175)
                                     ---------           ---------      --------
                                     667,492             626,463       665,977
                                     ---------           ---------      --------


9.      Fair value of financial instruments

A valuation was carried out as at 31 December 2003 by J C Rathbone Associates 
Limited to calculate the fair value of the Group's financial instruments 
used to protect its current and future interest rate costs. The fair
value adjustment represents the cost of replacing the existing financial
instruments on 31 December 2003 at rates prevailing on that date. The fair value
deficit at 31 December 2003 was £34,702,000 (30 June 2003: £66,665,000; 31
December 2002: £50,146,000), which if taken to reserves after tax relief at 30
per cent, would reduce the Group's net asset value by £24,291,000 (30 June 2003:
£46,666,000; 31 December 2002: £35,102,000) or 15.1 pence per share (30 June
2003: 29.1 pence; 31 December 2002: 21.9 pence).


10.    Provisions for liabilities and charges

                                 (Unaudited)        (Unaudited)        (Audited)
                                      As at              As at             As at
                                31 December        31 December           30 June
                                       2003               2002              2003
         
                                      £'000             £'000             £'000
                                     -------          -------            -------

At beginning of period               5,223            3,924              3,924
Charge for the period                  323              287              1,299
                                   ---------        ---------           --------
At end of period                     5,546            4,211              5,223
                                   ---------        ---------           --------


The provision is entirely for deferred taxation primarily relating to
accelerated capital allowances and other timing differences.




11.    Joint venture



a.      Summarised financial information: The Group has an investment in
Scarlett Retail Group Limited ("Scarlett Retail"), a joint venture with Lehman
Brothers and a new management team. The Group's share of the consolidated
financial results, gross assets and gross liabilities of Scarlett Retail at 31
December 2003 are as follows:

                                            (Unaudited)   (Unaudited)  (Audited)
                                            Six months    Six months   Period to
                                                    to            to     30 June   
                                           31 December   31 December        2003
                                                 2003           2002    
                                                                     (restated)*  
                                                                      
                                                  £'000       £'000      £'000
                                                  -------     -------    -------
Summarised share of profit and loss account
---------------------------------------------
Turnover                                        130,371           -     78,256
                                               ----------   ---------   --------
Operating (loss)/profit before exceptional         (331)          -      1,002
items and goodwill
Exceptional item - restructuring costs             (244)          -     (4,792)
Goodwill amortisation                              (336)          -       (236)
                                               ----------   ---------   --------
Operating loss                                     (911)          -     (4,026)
Net financing costs                              (4,159)          -     (2,060)
                                               ----------   ---------   --------
Loss before taxation                             (5,070)          -     (6,086)
Taxation                                              -           -      1,764
                                               ----------   ---------   --------
Retained loss                                    (5,070)          -     (4,322)
                                               ----------   ---------   --------

*Restated as described in note 1.



                                              (Unaudited) (Unaudited)  (Audited)
                                                       As          As         As
                                                       at          at         at
                                                       31          31    30 June
                                                 December    December       2003
                                                     2003        2002
                                                    £'000       £'000      £'000
                                                  -------     -------    -------

Summarised share of gross assets and
liabilities
-----------------------------------
Share of gross assets
Tangible fixed assets                              74,528          -      70,357
Current assets                                     48,216          -      35,370
                                               ----------   ---------   --------
                                                  122,744          -     105,727
                                               ----------   ---------   --------
Share of gross liabilities
Creditors: Amounts falling due within one year   (47,951)          -    (34,278)
Creditors: Amounts falling due after one year    (77,339)          -    (70,796)
Provisions for liabilities and charges           (12,351)          -    (10,816)
                                               ----------   ---------   --------
                                                (137,641)          -   (115,890)
                                               ----------   ---------   --------


b.      Goodwill
At beginning of period                            13,232           -           -
Acquisition during period                              -           -      13,468
Amortisation charge                                (336)           -       (236)
                                              ----------   ---------    --------
At end of period                                  12,896           -      13,232
                                              ----------   ---------    --------





12.    Net assets per share

Net assets per share have been calculated on 160,645,671 ordinary shares of 25
pence each in issue at 31 December 2003 (30 June 2003: 160,193,213; 31 December
2002: 160,193,213) and have been based on net assets attributable to
shareholders of £502,270,000 (30 June 2003: £508,089,000; 31 December 2002:
£561,910,000).



13.    Cash flow statement

a. Reconciliation of operating profit to net cash movement from operating
activities

                                              (Unaudited) (Unaudited)  (Audited)
                                               Six months  Six Months    Year to
                                                       to          to    30 June
                                              31 December 31 December       2003
                                                     2003        2002
                                                                          
                                                  £'000        £'000      £'000
                                                  -------     -------    -------

Group operating profit                           22,032      19,965     41,146
Depreciation charge                                 316         293        530
Profit on sale of tangible fixed assets             (11)         (7)        (7)
Movement in debtors                              (1,762)     (3,483)    (1,840)
Movement in creditors                              (107)      3,480      2,715
                                                ---------   ---------   --------
Net cash movement from operating activities      20,468      20,248     42,544
                                                ---------   ---------   --------


b. Reconciliation of net cash flow to net debt

                                              (Unaudited) (Unaudited)  (Audited)
                                               Six months  Six Months    Year to
                                                       to          to    30 June
                                              31 December 31 December       2003
                                                     2003        2002

                                                  £'000       £'000      £'000
                                                  -------     -------    -------

Increase/(decrease) in cash during the            2,522        (634)      (254)
period
Cash (inflow)/outflow from movement in liquid   (14,248)    (33,884)    21,186
resources
Cash inflow from movement in debt financing        (248)     (7,444)   (45,343)
Other movements                                  (1,267)     (4,340)    (5,955)
                                                ---------   ---------   --------
Movement in net debt during the period          (13,241)    (46,302)   (30,366)
Opening net debt                               (524,809)   (494,443)  (494,443)
                                                ---------   ---------   --------
Closing net debt                               (538,050)   (540,745)  (524,809)
                                                ---------   ---------   --------

                                   (Unaudited)      (Unaudited)        (Audited)
                                            As               As               As
                                            at               at               at
                                            31               31          30 June
                                      December         December             2003
                                          2003             2002
                                                                         
                                       £'000            £'000            £'000
                                       -------          -------          -------

Net debt
Debt due within one year              (6,937)          (7,571)          (7,687)
Debt due after one year             (660,555)        (618,892)        (658,290)
                                    ----------        ---------         --------
                                    (667,492)        (626,463)        (665,977)
Cash at bank and in hand             129,442           85,718          141,168
                                    ----------        ---------         --------
                                    (538,050)        (540,745)        (524,809)
                                    ----------        ---------         --------



14.  Copies of the Interim Report

Copies of the Interim Report are available from the Company Secretary at 42
Wigmore Street, London W1U 2RY.






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